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MGAD40H3 Lecture : Diagnosing & Aligning Lec 9 Ch.10-11

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pucelouse641
21 Mar 2011
School
UTSC
Department
Financial Accounting
Course
MGAD40H3
Professor
Prof.Jan Klakurka

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Document Summary

Diagnostic vs. interactive control systems: maintain our return on management. sales rammed into part of last month. structure looking to bring in new individuals. two tier: retail and wholesale (mary kay to consultants) every new superstar may have moved too fast. recruit from own group, standardized program to ensure right types of people. indiv sales ppl have reason to deliver performance. cost of customer acquisition vs retention www. notesolution. com. acquisition costs stay with sales agent team, maybe not transparent. qualitative aspect of hiring (70% turnover rate), sales exp, training. feed yourself, let people expand as organization. ask the 5 w"s, leading to why. elements of storm model may not work for full broad spectrum of mary kay. costs of repossession , allowance make may think twice if have to pay for it if don"t need it. set baseline with limit (500 cars = )

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Related Questions

Provide describe a type of management control (i.e., action,personnel, or cultural). What challenges might the organizationalleaders face when implementing it?

What are potential causes of employee frustration and demotivation?How can management control systems (MCS) be leveraged to improveemployee motivation? Please feel free to use an example.

9-56 Management Control System at Procter & Gamble
Setting up management control systems and determining measurementmethods and who should be
responsible for particular revenues, costs, and information can bea large task. The structure of the
organization plays a part in how well a particular measure islikely to work. Ensuring that the goals of
the organization are in concert with the management control systemis also an important factor. It is
not possible to evaluate a company’s management control system froman Internet site. What we can
do, however, is to use a site as an example and apply some of theconcepts of the chapter to measures
and tools that would be possibilities for a fi rm.
1. A well-known and well-established company with worldwideacceptance is Procter & Gamble
(P&G) . Log on to the company’s Web site at www.pg.com . Locatethe most recent annual report
by following the links under the “Investor/Shareholder Relations”tab to “Financial Reporting.”
Examine the “Letter to Shareholders” section of the annual report.What does P&G consider to be
the most important factors that drive their growth strategy? Howdoes P&G ensure that managers
meet the company's objectives?
2. The company has numerous products, and the Web site divides theminto different categories and
brands to help customers find relevant product information. Clickon “Brands and Innovation.”
What are the major categories of brands listed on the Web site?Click on the “Household Care”
category. What are some of the brands in this category that you arefamiliar with? How could a
system be set up to help measure the success of the firm’s goal tobuild brands in the “Household
Care” category? What would be three possible financial measures?What about three nonfinancial
measures?

True-False

Indicate whether each statement istrue (T) or false (F).

___ 1. A company’smarket share is an example of external nonfinancialinformation.

___ 2. A good reasonfor using ROI as a performance measure rather than RI is that goalcongruence is more likely to be promoted by using ROI.

___ 3. The DuPontmethod of profitability analysis recognizes two basic ingredientsto profit making: increasing income per dollar of revenues andusing assets to generate more revenues.

___ 4. If companiescompensate managers on the basis of changes in the market price ofthe company’s stock, this approach tends to shorten managers’ timehorizon because stock prices incorporate the expected future periodeffects of current decisions.

___ 5. Those who favorusing net book value as the investment base in ROI calculationsclaim this approach enables more accurate comparisons to be madeacross subunits.

___ 6. Comparingperformance of the divisions of a multinational company isdifficult because of economic, legal, political, cultural, andcurrency differences.

___ 7. The necessaryand sufficient condition for moral hazard to exist in a company isthat the employee’s interest differs from the owner’s interest.

___ 8. Performancemeasures that are sensitive to the manager’s performance motivatethe manager but limit his or her exposure to uncontrollablerisk.

___ 9. It can be costeffective to benchmark a manager’s performance against the bestlevels of performance available within the company or in othercompanies.

___ 10. Holding managers and otheremployees accountable for and rewarding them for achievingperformance goals in diagnostic control systems needs to becounter-balanced with boundary systems, belief systems, andinteractive control systems.