Rendell Company Management Control System Study Case

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?

In Martex, divisional controllers report directly to the corporate

controller. The divisional controllers are assigned to each division to
monitor and ensure the accuracy of each divisions financial reporting.
They act as the corporate spy, they are identifying organizational slack
and making sure that integrity of reporting is intact.
Therefore, in Martex, the divisional controllers are sort of independent
entities from each division; their loyalty is with the corporate controller.
This strategy is very good strategy because each divisions goals are
aligned with the company objectives and the top management could
receive unbiased information.

Martexs philosophy has both negative and positive side:

+: Financial and performance report within a division is more accurate
and could minimize the existence of biased information. This could make
the management controlling system from the top management been
easier.
-: Divisional Control staff will be acted like a spy, and we predict that the
manager divisional will not trust and entirely opened to the divisional
control staff and they will be excluded from the form of team in this
one line of divisional.

By re-identifying the given theoretical about human behavior, our team

could conclude that there is a differences will be made if Rendell take
Martex as their new philosophy. As it has been explained before, the
internal factors, which affect the goal congruence within a company, are
culture, management style, informal organization, perceptions and
communication. Rendell Company has a really good culture such as
discipline, time management, compliance, and stuffs. This could make
Rendell has a good level for a goal congruence.

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We agree that Rendell should adopt the philosophy of Martex, because by
following this new method and philosophy, top management will receive
the more good quality of information. This philosophy supports the
independencies of divisional controller.
The quality of information given by the divisional in Rendell structure
most of times could be biased information that will affect the top
management respond.
Even if this philosophy could make the divisional control staff wont be
counted as a team, this deficiency could be resolved by the next
explanation on the other questions below.
If we take a look back into the theoretical section, we can see that a
company must has goal congruence within the internal parties inside the
company. That is why we agreed to adopt this new philosophy, because
we think, by this new method and philosophy, corporate controller,
general division, and division controller might reach the perfection of
goal congruence. So, the timing and sources used in Rendell could be as
effective as it could be.

2. To whom should the divisional controllers report in Rendell?

Why?

Management style in a company reflects the internal condition and might

affects the goal congruence level in a company. That is why management
style such as to whom should the divisional controllers report the
information question is being concerned.
This differences report section could lead to a better communication
happened in Rendell Company. And to make the perceptions of any
entities are aligned to be one to reach the goal congruence itself.

We think that it is better if the division controller report both to the

corporate controller and division manager. They report to corporate
controller so the general information wouldnt be biased and corporate
controller will directly aware of surrounding issues. More of it, the
connection between controller division and corporate division would be
more solid, so even if the divisional controller are excluded from the
divisional that they took, they are still part of team which involves in
corporate controller responsibility.

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Reporting to the manager division would build trust relationship between
manager division and division controller, because divisional controller
should have an access to sensitive information in the related division.

3. What should be the relationship between the corporate controller

and the divisional controllers? What steps would you take to
establish this relationship on a sound footing?

The corporate controller should establish a stronger link with the division
controllers by holding regular meetings just to let the division controllers
feel his presence in the company.
The corporate controller should show his authority to the division
controllers by creating stricter metrics to measure their performance,
which will be the basis whether they should be retained, transferred or
replaced. Both corporate controller and division managers will have to
evaluate the performance of the division controllers: the corporate
controller will base it on the overall performance of the division and their
general function, while the division managers will focus on the outputs of
the division controllers based on the specific functions given to them by
the managers.

4. Would you recommend any major changes in the basic

responsibilities of either the corporate controller or the divisional
controller?

We agreed that there is no major change in the basic responsibilities

needed for corporate controller or divisional controller. We recommend
the shifting of controller division responsibility to corporate controller
and suggest a more solid relationship between corporate and divisional
controller so the presence of divisional controller will more a bit
appreciated.
Rendell Company should think more about the effectiveness by
reviewing theorganizational structure and goal congruence. Good
management control system influence behavior in a goal congruent
manner, that is, they ensure that individual actions taken to achieve
personal goals also help to achieve the organizational goals.