This document discusses the organizational structure of Rendell Company and issues with the current structure. It is proposed that the divisional controllers currently report to both the corporate controller and divisional general managers, but the corporate controller believes this results in biased reporting. The document analyzes Rendell's current structure and the alternative "Martex System" using SWOT analyses. It concludes with questions about changing responsibilities and reporting lines to establish a more transparent relationship between divisional and corporate controllers.

1. Rendell Company
By: Abeer • Edgar • Luminita

2.  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

3. Rendell Company

4. President
James Hodgkin  50 years in business
 Corporate Office:
Controller • Financial Accounting
Fred Bevins • Internal Auditing
• Budget Analysis
 Seven Divisions:
Divisional
General
Manager • Responsible for
Manufacturing and
Marketing of specific
product line
• Preparation of budgets
Divisional and performance
Controller
reports

5.  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.

6.  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.

7. Problem: Some difficulties
in implementing its
modern techniques
Problem: Added fat to
the organization budgets
Solution: Change to
Martex organizational
structure

8. Strengths: Weaknesses:
- Current setup is more efficient; - Biased information is provided by
- Better relationship between the division controllers to the
division managers and divisional corporate controller.
controllers. - Hidden fats in expense budget.
-The current set-up allows tactical - Difficulties to implement new
issues to be resolved more easily. control techniques.
Rendell Company
Current State
Threats:
Opportunities: - Ability of Divisional GM to conceal
financial flaws
Martex System
- Lack of empowerment to
Divisional controllers

9. Weaknesses:
Strengths: -Difficult to implement change in
-Unbiased and objective reports on division organizational structure
budgets and performance from division -Change may not be suitable for diversified
controllers to the corporate controller. companies
-Corporate controller is more confident in -Division managers might isolate division
reports given by the division controllers controllers from the management team
-Minimized fats in expense budget -Organizational change may lead to
-Easier to implement new control programs dysfunction and inefficiencies
-Change may lead to conflict between division
mangers and division controllers
Rendell Company
Martex System
Opportunities: Threats:
Current System Outside Competition

10. 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

11. 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.

12. 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.

13. 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

14. THANK YOU