Sport and Energy Drinking Division

671 Words3 Pages
Sport and Energy Drinking Division As a result of tight Management Control System, Sport and Energy drinking division is incurring various indirect costs. Those indirect costs are related to Gamesmanship (Creation of Slack resources and Data manipulation), Negative attitude and Behavioral Displacement. Gamesmanship occurs when the action taken by an employee tend to improve his performance without adding significant value to organization. And it consists of two major forms. 1- Creation of Slack resources, when employees consume in excess resources more what is required due to tight result control. For example during budget preparation managers always trying to create slack budget in order to make sure that they will achieve…show more content…
Some employees would have to be furloughed temporarily. Then in yearly 2008 they would have to incur some overtime costs both to accelerate production and to ship the orders that had accumulated. The sales department was concerned that they would have to deal with customer complaints about shipment delays and product outage. Furthermore, one behavioral displacement issue occurred, when Jack found that some aggressive salespeople where not consistent with the division policy and organization’s objectives. Aggressive salespeople had told customers to accept the shipments now and just pay whenever they sell the product, which was obviously that they were not following the recent policy that is asking customers to pay within 120 days. The main issue incurred in Sports & Energy Drink division is Gamesmanship. So to solve this issue many things should be taken under consideration related costs and benefits. First, The costs of Gamesmanship will be a build-up in inventory and harmed customer relation, which may affect long term profitability. In addition, there might be cost of developing more internal accounting operational policies in order to create tighter control. Moreover, there might be extra cost to recruit internal auditors who can catch managers’ gamesmanship. Final cost might be Bonuses that would be paid to the employees for achieving budgeted target. Second, The
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