Codman & Shurtleff Inc.

2325 WordsApr 12, 200410 Pages
Introduction This paper will review the "Codman & Shurtleff, Inc.: Planning and Control System" case study found in the 2nd edition of " Accounting for Managers: Texts and Cases". The case illustrates a comprehensive formal planning and control system used in formulating and implementing strategy at Codman & Shurtleff, one of Johnson & Johnson's 155 subsidiaries. This paper will focus on the relationship between organizational innovation and formal planning and control systems in a decentralized organization as well as the effect of organizational reward practices. Based on the facts presented, the paper will conclude by developing a plan of action Codman & Shurtleff could potentially take to improve their planning and controlling system.…show more content…
(Internet, www.jnj.com) Direct responsibility for each company lies within its own operating management, headed by the president, general manager, or managing director. Reporting is done directly or through a company group chairman to a member of the Executive Committee. A decentralized structure has clear advantages. Managers from the operating companies are continually forced to evaluate their operations and accountability is clear. Since their structure is based on an extensive delegation of authority, managers are immediately able to see the results of their performance, good or bad, and are able to quickly respond to changing environments. J&J's systems of planning and control are not used to punish; they are used to search out and correct problems. (Bruns, 1998) As a result, employee morale is generally higher for employees in this type of structure. Managers have more control of their local operating subsidiary and are more at ease to add and create new products and services to their division. This structure allows each operating subsidiary to have a stricter control and attention of product lines and the ability to implement strategies to cater more effectively to the requirements of a clearly defined customer group. (Stoner & Freeman, 1996) J&J's decentralized structure; however, does come with some limitations. Since each operating subsidiary requires specialists to run their businesses,

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