Company Case Analysis : Vershire Company

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Vershire Company Case Analysis
Commerce 4AA3
Professor: Janet Pierce
Name: Kaiwen Luo
Student Number: 001300672
Due date: January 24th, 2017

Vershire Company is a diversified packaging company with several major divisions, including the Aluminum Can division which is one of the largest manufacturers of aluminum beverage cans in the United States. The Aluminum Can division has to meet customers’ cost and quality specifications or their standards for delivery and customer service, otherwise, customers would choose other available suppliers. Thus, it is important for the company to implement rigid budgetary control system and performance measurement and evaluation system. The major problem Vershire Company faced is
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These visits are extremely significant since plant managers have an opportunity to explain their situations and controllers can be more familiarized with the rationale behind the numbers. As a result, a more accurate and detailed budget report can be produced.
Planning system weaknesses: To begin with, fundamental assumptions, such as new plants, inventory carryovers, packaging trends, etc., which are used for initial sales forecast, are entirely made by corporate headquarters. However, the divisional managers assume full responsibility for the estimates they submitted to the corporate head office. As a result, they have to make efforts to increase the overall accuracy of forecast and avoid making changes in subsequent reviews of the budget. Moreover, each product line uses the same forecasting method. It is ineffective for the company to make accurate budget since factors affecting each product line are different, such as industry trends, customer preferences and so on. Lastly, instead of plant managers, the district sale managers raise the sales budgets. However, the plant managers are held accountable for this budgeted profit number, which is connected with their performance and is not controlled by them.
Control system strengths: Initially, divisional general managers are given full control of their businesses except in the areas of raising capital and labor relations. Full control gives divisional managers power to make
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