Case 25-3 Formosa Plastics Group
For many years, managers at Formosa Plastics Group (FPG) used a management control system with an element that was somewhat unique for a large corporation – all employees were evaluated subjectively. In making their judgments, evaluators looked at objective performance measures but subjectively made many adjustments for factors they deemed to be beyond the employee’s control. One effect of this system was that bottom-line profit was not even considered in the evaluations of some profit center managers: These managers were evaluated only in terms of the controllable factors driving profit, such as meeting production schedules, efficiency, cost control, and quality.
The FPG system seemed to work; the
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The major corporations were comprised of multiple divisions (see Exhibit 2), each responsible for one product line. The divisions, which were organized functionally, were reasonably autonomous; their managers were able to make their own plans and arrange all production and marketing aspects of their business within the scope of their approved authorizations. The division managers, who ranged in age from 40-60 years, were invariably career FPG employees (as were most other employees).
Many administrative functions, including engineering and construction management, technology (research and development), accounting, finance, procurement, data processing, legal, public relations, and personnel were centralized to take advantage of economies of scale. A unique feature of the corporate organization was a large (340-person) “president’s office” comprised of 15 “teams” of specialists whose function was to help division management. The president’s office form of organization began when the corporation was small. The central staff personnel set up procedures, trained management, monitored performance, and facilitated the spreading of effective practices from one division to others. At times, some of the central staff/division dealings had been confrontational; some division managers had referred to the staffs as “the Red Guard.” But more recently, with increased management professionalization, the staff teams placed greater emphasis on
Arthur Andersen followed a centralized management structure, a structure that follows one central line of command, and promised the firm would speak as one voice and as one firm. This would remain true no matter how large the company became. The company adopted this as its culture, and employees followed, given that Andersen was very selective when hiring
While working for the department, it became very apparent that the practices and management style of the Department Director significantly affected the culture and daily activities of the individual sections under his leadership. First, he would set objectives and standards for the individual sections. These objectives usually looked good on paper but were often unrealistic when applied to daily operations. These lofty ideals, set as goals to middle management, seemed overwhelming and out of touch with the reality of hands on field operations. As a result, middle management would frequently choose to either change or completely disregard the given directives. This disconnect in the chain of command would often cause confusion and inconsistencies at the operations level. Additionally, lack of follow-up meant the Department Director assumed his set objectives were being carried out while lower level employees remained uninformed.
Organizational and Industrial (I/O) psychology is used to improve different types of organizational functions. When tasks and employee relationships are not working properly within a company production and profit will be compromised. Some of the issues that I/O manages addresses include poor work habits and dysfunctional work relationships. The following will address group and team concepts that could be implemented to improve performance and diversity, leadership theories that can improve the relationship between management and floor workers, the influence
A managing team would be split up into three groups; top-level, middle and lower. There is specialisation in this managing sector where each group can focus on their own targets so that the large firm on the whole could potentially accomplish. The top level would be responsible for strategic decisions and so they must look into future prospects and be aware of external factors like markets. This can be advantageous, for the firm is looked upon wholly in comparison to the rest of the world. The middle level would be in charge of making the tactical decisions where they are responsible for carrying out choices made by the top level. This part of the sector would be the active doers where they put the ideas into practice. Finally the lower level managing group are responsible for the operational choices. They would concentrate on making sure that the other two are carrying out their goals. They can be portrayed as the motivating unit, to make sure that there isn’t any lack of action. This organisation of the division of labour can be extremely beneficial in achieving their goals. Management has a method where they would start by planning what they will do, following with organising to make optimum use of the resources required. Then there would be some motivation and leading where there would be some exhibition of skills. Lastly some controlling to ensure the plan is being followed. The procedure of
Jon Fries (CEO), Fletcher Anderson (COO), Craig Schuster (CFO), and Catherine Sprauer (division controller) were the four central figures in this case. Identify the key responsibilities associated with the professional roles these individuals occupied. Briefly describe the
Kroger Co. holds management responsible for the company’s Internal Controls. With the participation of the chief executive Officer and the Chief Financial Officer, Kroger’s management conducted an evaluation of the effectiveness of the Internal Control for the company’s financial reporting. This evaluation was based on the framework and criteria established in Internal Control-Integrated Framework which was issued by the Committee of Sponsoring Organization of the Treadway Commission. Based on the evaluation, the Kroger management concluded that the Company’s
Each division is operating independently with its own division manager. Also, each division’s performance had been judged on its profit and return on investment (ROI). The company policy of decentralizing responsibility and authority for all
4. Differentiation is under loose results control. Managers are given freedom for decision-making at their department, they can decide on design of the products, marketing methods, raw materials, etc. as long as they provide high quality environmental friendly products and quality customer services. However, they have the 3-5% growth limitations that prevent them from behaving “too well”. They are rewarded for the same percentage as employees if the company makes profits.
The purpose of this paper is to analyze a case study related to issue of control and how organizations can utilize different approaches of control in order to improve quality and performance in all arenas, domestic and global. The focus of this case revolves around Lincoln Electric, an Ohio based company that has set the bar for how to develop and implement a successful management system. This paper will use the Lincoln Electric case analysis to present recommendations on how managers can use control methods to enhance employee performance, increase employee participation and empowerment, and improve organizational quality in
* Since management compensation is tied to firm performance, managers are incentivized to keep costs under control and maintain profitability. However, it is important to balance cost-controls with
Deriving from this structure, with regard to separate businesses, each division demanded standardization and had an overall "Frankfurt is Orlando" mindset. However, it was recognized that each division was very different than the next and had varying distribution and selling methodologies. Hence, each division would have its own instance of the system to manage the customer fulfillment process, and a decentralized approach to implementation details (such as each division choosing its own partners). This minimized the risk of having the relative requirements of one organization driving the practices of another.
Another problem is the fact that there is no control or monitoring by a responsible team. As we explained above, managers have the freedom to evaluate performance as they want and sometimes there are some abuses. For this reason there should be someone with aim of supervise the all process or give support to the evaluators. The main cause for this problem is, again, the low importance that Vitality gives to the performance system.
Due to the coordination and control problem that surfaced during the 1920s, most large American corporations that include GM had adopted the Multi-divisional organizational structures better known as the M-form structure to respond to the crisis. M-form consists of operating divisions, each representing a separate business or profit centre in which the top corporate officer delegates responsibilities for day-to-day operations and business-unit strategy to division managers. Each division represents a distinct, self-contained business with its own functionality
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In the early 1900’s, some of the first ideas were thrown together to allow an organization to flourish in the upcoming modern era. The first theories were known as scientific and classical management, which focused on three separate theories from Frederick Taylor, Henri Fayol, and Max Weber. The three theories have similar ideology in the fact that organization is driven by management authority, employees only source of motivation is money, and organizations are machinelike with employees making up the parts of the machine (Papa, Daniels, & Spiker, 2008). In the Prophecy Fulfilled case study, Mary Ann (senior auditor) takes on a management role with subordinates similar to that of Weber’s Bureaucratic Theory (Daniels 1987, pp. 77-78).