Rendell Company Essay

Submitted By cbulger
Words: 1144
Pages: 5

Internal Environment Rendell Company has been in business for over 50 years and has been very profitable throughout this time. The company has seven operating divisions varying in size from $50 million in sales to $500 million in sales. Rendell Company currently has James Hodgkin is the president of the company, he joined the company as a controller in 1981 and worked his way up to become the president in 1984. Fred Bevins was hired in 1980 out of concern that the company’s growth had slowed. Mr Bevins was concerned that he was not getting adequate information about what was going on in each division. The corporate control organization was responsible for financial accounting, internal auditing and analysis of capital budgeting requests. The corporate controller was responsible for specifying the accounting system to be used and the procedures to follow with budgeting and reporting performance. The divisional controllers reported to the divisional general managers and the budgets and performance reports were the responsibility of the divisions general manager.

Business Strategy Identification Rendell company operates seven different divisions and each division is responsible for the manufacturing and marketing of a distinct product line. The divisions did transfer some parts and components between divisions but the volume of this inter divisional business was small this shows that the company's extent of diversification is that of a unrelated diversified. Within the company each division has its own division manager that reports directly to top management. The division managers are responsible solely for their own division and have no shared responsibility to other divisions, each division has its own budgets and its own hierarchy of management that report separately to top management, this shows that the degree of relatedness is limited in that each division acts as its own business unit.

Business Unit Level The company has been in business and profitable for the last 50 years but in the 1970's its rate of growth slowed although it continued to be profitable. In response to the company's growth slowing the directors decided to hire Mr. Hodgkin in 1980 in order to create a solution for the company to increase its growth. Mr.Hodgkin is very interested in the Martex company's corporate organization which has two division objectives, one being growth in dollar sales and the second being a specified rate of profit as a percent of sales. The company’s mission is to build as the main goals are for the company are to continue to increase their growth.

Management Control Systems

Description Rendell Company has been using the same management control organization since it began operations. Divisional controllers currently report directly to their divisional general managers. The corporate controller was always consulted prior to the appointment of a new division controller and is also consulted about any salary increases. The corporate controller specified the accounting system to be used by the divisions and the procedures to follow for budgeting and reporting but the budgets and reports coming from a division were the responsibility of the division manager. The division controllers main loyalty was to the division manager and not primarily to the top management. Most of the division controllers had worked for the company for more than 10 years but a few were young being in their early 30's and only had a few years experience. The company’s management control environment is weak as their is not a clear path for unbiased communication to make its way to top management.

Analysis Rendell Company current budget reporting consisted of the division controller submitting reports to his general manager whose responsibility it was to discuss with the top management, although the division controller was usually present at these meetings to give information on technical points, his role was strictly that of a…