Rendell Company

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Q.1 What is the organizational philosophy of Martex with respect to the controller function? What do you think of it? Should Rendell adopt this philosophy?

Martex Corporation has adopted a close relationship between the corporate controllers and the division controllers. Each business unit manager does not have his own staff. Divisional controllers informed directly to the corporate controller. Martex management looks for transparency and impartial access to information, whether operational or financial, at each business unit so that: a) Each business unit's goal will be more congruent with the company's goal b) Top management will be able to make more sound decisions if corporate staff will have access to unbiased information c) Corporate will have better control of the information reported to top management in order to avoid sugar coating of the financial information and operating statistics d) Corporate will have better and quicker response on red flag information on each business unit (for example, a business unit that overspent on marketing expenses instead of previsional budget) We believe that this philosophy can be a real strong asset for the company because it enables producing reliable reports for each division and data statistical budget.

We believe that the organizational philosophy used by Martex is a key effective factor for the company as it enables to produce fair and objective reports on division budgets, financial statements and operating statistics. We think that it would be difficult and costly for Rendell to implement this philosophy because workers are accustomed to work another way. They might feel over watched and decrease the level of trust even within a team. It could lead to a bad working atmosphere and problems…...

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