Rendell Company Case

In: Business and Management

Submitted By fitrianoviati
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MANAGEMENT CONTROL SYSTEMS
Executive Case Summary – Case 3-3 Rendell Company
Fitria Noviati / MM UGM International Class

Case 3-3: Rendell Company
Rendell Company that had been operating a profitable business for 50 years, but experienced a considerable slowed growth during the 1970s. Rendell hired its first controller in 1980 to address this exact problem. Rendell had seven divisions, with each division responsible for the manufacturing and marketing of their line of products. A controller was assigned to each of the seven divisions, and they reported to the general manager of their respective division. Frank Bevins, Rendell’s corporate controller, was concerned about the organizational status of his divisional controllers, as they do not report directly to him. Consequently, the company was experiencing difficulties in implementing its modern control techniques due to the strained relationship between the corporate controller and the divisional controllers. Problem Identification
The primary problem faced by Frank Bevins was that he felt he was not obtaining adequate information from the divisional controllers regarding the divisions’ budget and performance reporting. He suspected that it was due to the fact that the divisional controllers reported to their respective division’s general manager. The controllers’ primary loyalty was therefore to their division’s general manager, hence a biased report to the corporate controller. Bevins was facing a dilemma of whether or not Rendell should restructure its organization in such a way that would rectify this issue.

Case Analysis
The divisional controller’s task was to assist the general manager in budgeting and providing performance report. Although the divisional controllers adhered to the accounting standard for budgeting and reporting performance specified by the corporate controller, it…...

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