Rendell Co. Case Analysis

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Case 3-3: Rendell Company
Key Issue: The need for a change in the controller relationship. From a “Dotted Line” approach  to a “Solid Line” approach
Dotted Line: divisional controller reports to the divisional general manager. Some decisions (hiring, compensation) are to be be discussed with the corporate controller
Solid Line: divisional controller reports directly to the corporate controller.
• Manufacturing company: 7 operating divisions, all responsible for the manufacturing and marketing of a distinct product line. (Smallest: $50M Biggest $500M)
• James Hodgkin: President Fred Bevins: Corporate Controller
Old controller organization
• Corporate Control Organization is responsible for: a) financial accounting b) internal audit c) analysis of capital budget
• Budget Control System were prepared by each division and submitted to top-management (little analysis)
Present controller organization
• Hodgkin (controller at this time), thought it was essential that corporate control organization played a more active role in establishing budgets and analysing performance o Bevins worked the same way once he was named controller
• Divisional Controllers reported to Divisional general managers o Corporate controller were consulted when hiring new divisional controllers or increasing divisional controllers salary
• Budget and performance reports from each division is the responsibility of that division’s general manager (with the assistance of divisional controller)
• Division general manager reports directly to the corporate controller
• Bevins believed that’s his relationship with divisional controllers was not close enough that he could urge the development and use of new techniques as quickly as he wished.
• He also believed that he wasn’t getting adequate information on what is really happening in each division and that divisional…...

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