Rendell Company Case Study

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Rendell Company Case Study

Executive Summary

This report will give us a clear perspective as to what the optimal organizational structure that suits Rendell Company plus some additional control system in attaining the company’s main objectives. We will be also tackling the roles, functions and responsibilities of a controller in an organization. This case takes us into Rendell Company which is currently having problems between the corporate controller and the divisional controller. We assessed the advantages and disadvantages of the organization structure of Martex whether it can be applied and be implemented to Rendell Company in order to resolve the problem. Through the frameworks and issues, we concluded that while current setup would cause some budgetary discrepancies because of the lack of loyalty between the divisional controllers to the corporate controller, changing the organization structure of Martex would cause a disparity between the division manager and the divisional controller thus resulting in an anxiety in their working environment which is too costly as compared to maintaining the current setup.

I. Case Context

Rendell Company is experiencing some difficulties in implementing its modern control techniques due to the irking relationship between the divisional controller and the corporate controller (Mr. Bevins) resulting in an added fat to the organization’s budgets. Now, with these problems, Mr. Bevins is interested with the organizational structure of Martex if this will be the solution of the current problem.

II. Problem definition

How Should Rendell resolve the current reporting relationship of the corporate controller and the divisional controllers to achieve goal congruence? Is the controller relationship of Martex better than that of Rendell’s current organizational relationships?

III. Framework

The group worked out on these following considerations in resolving the issue:

1. First we identify the company objective which is to achieve profitability and growth.

2. Attaining goal congruence within the organization is important to support the company’s main objective.

3. Analysis of the current organization and reporting structure by evaluating its strengths and weaknesses.

4. Assessment of the proposed organizational set-up (patterned from the set-up of Martex) by evaluating whether implementa...

... middle of paper ... more active involvement in the budget

VI. Basic Justification

Since an accounting system is already in place in Rendell, change may not be easily accepted by the concerned divisions. Such changes may cause a dysfunction in the organizational structure since making division controllers report directly to corporate controller might cause destabilization in the structure of authority in the divisions. Loyalty issues may also arise because division managers may feel by-passed or spied-upon which may cause more problems in the long run. Thus, more importance should be given in preserving the power structure in each division. It is better that the company face the problem of having fats in the expense budget rather than give up order in each division and jeopardize the established line of authority. As a conclusion, maintaining the current setup would be better than changing it into the structure of Martex in achieving the goals and objectives of Rendell Company.

VII. Operationalize / Implementing our Decision

Implementing our decision would include retaining the current setup and adapt changes (as mentioned on our decision) from Martex to reduce the “fat” in the budget.
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