Rendell Company

By: Abeer Edgar Luminita

 Presentation & Overview of the Case - Edgar

Organizational Structure - Edgar
Described Issues- Edgar
Proposed Solution - Luminita
SWOT Analysis Current State - Luminita
SWOT Analysis Martex System Luminita
Case Questions & Conclusion Abeer

Rendell Company

President
James Hodgkin

50 years in business
Corporate Office:

Controller
Fred Bevins

Divisional
General
Manager

Divisional
Controller

Financial Accounting
Internal Auditing
Budget Analysis

Seven Divisions:

Responsible for
Manufacturing and
Marketing of specific
product line
Preparation of budgets
and performance
reports

 The Divisional GM and his Controller were

responsible for the preparation of budgets
and performance reports.
The Corporate Controller thought that he
was not getting frank and unbiased reports
from the Divisions due to the organizational
structure of the company.

 The Corporate Controller believed that

Divisions were not reporting accurate
information to Corporate. He thought that if
Divisional Controllers reported directly to
him, he would be better informed.

Problem: Some difficulties

in implementing its
modern techniques

Problem: Added fat to

the organization budgets
Solution: Change to
Martex organizational
structure

Weaknesses:

Strengths:
- Current setup is more efficient;
- Better relationship between
division managers and divisional
controllers.

- Biased information is provided by

the division controllers to the
corporate controller.

-The current set-up allows tactical

issues to be resolved more easily.

- Difficulties to implement new

control techniques.

- Hidden fats in expense budget.

Rendell Company
Current State

Threats:
Opportunities:
Martex System

- Ability of Divisional GM to conceal

financial flaws
- Lack of empowerment to
Divisional controllers

Weaknesses:
Strengths:
-Unbiased and objective reports on division
budgets and performance from division
controllers to the corporate controller.
-Corporate controller is more confident in
reports given by the division controllers
-Minimized fats in expense budget
-Easier to implement new control programs

-Difficult to implement change in

organizational structure
-Change may not be suitable for diversified
companies
-Division managers might isolate division
controllers from the management team
-Organizational change may lead to
dysfunction and inefficiencies
-Change may lead to conflict between division
mangers and division controllers

Rendell Company
Martex System

Opportunities:

Threats:

Current System

Outside Competition

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?

Transparency of information on budget

issues.

Advantages and Disadvantages

Rendell Company should retain its current

organizational structure with additional
control systems to address budget issues

2. To whom should the divisional controllers

report in the Rendell Company? Why?
To the divisional general managers of Rendell
Company.
The current setup is more efficient
New programs are difficult to implement and
there are hidden fats in the expense budget.

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?

Unbiased information is provided by the

division controllers to the corporate
controller and to easily implement new
programs.

Corporate
controller is to be
more confident in
reports given by
the divisional
controller.

4. Would you recommend any major changes

in the basic responsibilities of either the
corporate controller or the divisional controller?
Basic responsibility of the corporate controller:
-

Establish the management control system, strategic

plans and budgets,
Preparing financial statements and financial reports
Evaluate the performance per division
Developing personnel in the controller organization

Basic responsibility of the divisional controller:

-

Implement the strategy setup by the corporate

controller
Evaluate the performance of the department within
the division

THANK YOU