The Mechanisms Governing The Current Business Relationships Among The Divisions, Budget Allocation Process

1196 WordsMay 1, 20155 Pages
Case Study 2: 1) The mechanisms governing the current business relationships among the divisions, budget allocation process based on gut feelings aren’t generating the profits that they were supposed to be in relation to the efforts put by the partners. The present agreement is causing disappointment to partners who are working harder and generating profits than others, but being paid the same, just as the other two partners. 2) The HVAC division has had the best financial performance in the previous year as the return on invested capital is the highest i.e., each dollar invested in the HVAC division made more money for the company than any dollar that was invested in the other two divisions. 3) No, the budgeting process is not optimum.…show more content…
5) Before making the inexperienced, but well-educated partner’s son the head of a division, he should be hired as an employee, and made to work in different positions for a few years in that division to allow thorough understanding of different operations, their challenges, and get a thorough exposure before heading the affairs. 6) Firstly, clauses would be added that would make partners be rewarded with dividends as per the profits they make for the company. The worth of a partner’s share equation should be altered such that each partner gets the share of his hard work only, and not others efforts. Each of them should be allocated overhead budgets and expenses justifiably as per their division’s requirements, performance, ROIs, scope of making profits Case Study 3: 1) Harry’s mistake of not updating the clients after a job got started through schedules such as CPM to keep the cash coming in and subsequently getting the subcontractors and suppliers paid, ignoring unjustifiable drastic rise in overhead expenses, especially when committing extra resources to complete the project on time even when it’s not his fault, impulsive decisions without taking management’s opinion into cognizance might have caused the cash-flow problems 2) Assuming that keeping the revenues high and the clients content would just be suffice to keep the business to be in good standing, and thinking that generating a little more volume would resolve cash problems, assuming
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