Dr.

Vrushali Pakhannavar, JCMM, Belagavi

MCS AT LITTLE FRIENDS ELECTRONIC CORPORATION

Little Friends Electronic Corporation, USA, was a defense contractor, which had dealt with
Canada’s defense department on several occasions. John Martins, president of the
corporation, went to Canada for a meeting with top authorities of the defense
department. At the meeting, the secretary of the defense department made a speech
emphasizing the need for tighter control by defense contractors, especially at a time of
inflation. The secretary said that the defense department had decided to pay more
attention to the management practices of its defense contractors, and would consider
favourably only those companies which had effective control systems. On his return to the
US, Martins briefed his Vice President (administration) on the secretary’s speech. He asked
the Vice President to install an effective control system in the company. The Vice president
turned to corporate controller asking him to make arrangements to install an effective
control system. The controller met his staff assistant and ordered him to search for space
literature that would guide them in installing an effective control system. He asked his
assistant to submit a report on his work within a week.

At the end of the week, the assistant came back to the controller saying that he was not
able to find literature pertaining to control systems although he had reviewed dozens of
books and journals. The controller was unhappy with this excuse as he had to submit a
report to the vice president the next day.

Questions

1) Do you think the staff assistant’s approach to finding literature on installing a control
system is right? Support your answer with reasons.
2) If you were the staff assistant, what would your suggestions, for an effective control
be?

Management Control System Case Study (Case adopted from Lovely Professional University, Phagwara)
Dr. Vrushali Pakhannavar, JCMM, Belagavi

Rockford Company

The Rockford Company founded in 1942, is in the business of laying wall-to-wall carpeting.
The company was the brainchild of three persons, who became partners in the company.
The company’s innovation lay in changing the method of laying carpets, it broke the
traditional practice of tacking carpets down. This idea was a great success, and in no time
Rockford became the world leader in producing the tools for laying and stretching
carpeting.

Rockford developed and marketed a special adhesive for carpet laying. In course of time,
the product line was expanded to the production of adhesive for plastic, materials to be
fixed in kitchens, bathrooms, on furniture and elsewhere. The company also expanded its
operations by introducing special products such as steel folding doors for closets and
wardrobes, steel door frames, and other items. The company went global and penetrated
several foreign markets.

All the products were developed in US and were marketed in other countries. At this point,
Rockford decided to move to a strategy of designing new products and making corporate
acquisitions. Before embarking on the strategy, the company took stock of its position:

1) The company had very strong marketing abilities on a national and international basis
in the field of carpet accessories.
2) Its overseas subsidiaries in Sweden, Australia, Japan, New Zealand, etc., were
managed well.
3) Since the product was unique, Rockford faced little competition from other small
companies. The company, therefore, felt that it could spend more than its small
competitors in marketing and investing in specialized capital equipment.

Management Control System Case Study (Case adopted from Lovely Professional University, Phagwara)
Dr. Vrushali Pakhannavar, JCMM, Belagavi

4) The specialized capital equipment used by the company was designed and built by its
own engineers.
5) While the company was leader in some of its products, like floor-covering accessories,
it was subject to small and vigorous local competition in some areas.
6) While the adhesives in relation to floor covering accessories were extremely
marketable and had a large presence in the market, the marketability of its adhesive
applications was limited.

In order to pursue the new product strategy and acquisition program effectively, the board
of directors asked the president to take a decision on the product strategy for the company
at the next meeting.

Questions:

1) What steps should the President take to develop a suitable strategy for Rockford?
2) Suggest a strategy to the Rockford company in the lights of facts and circumstances
given.

Management Control System Case Study (Case adopted from Lovely Professional University, Phagwara)
Dr. Vrushali Pakhannavar, JCMM, Belagavi

VICTOR AUTOMOBILES

Victor Automobiles was established in the year 1985 and employed more than 3,000 people in its
production and operations plants. Its four plants were located at Chennai, Noida, Kolhapur and
Bhubaneswar. The operations manager of the Kolhapur plant, Vikas Kapoor was considered to be
one of the toughest bosses to work with. He gave the employees stringent deadlines and never
bothered to find out if employees were having any difficulty in completing their work. The
employees felt the environment was too tense and were unhappy that there was no career
growth. There was a heavy turnover of employees at the Kolhapur plant.

Sensing that something was wrong, the top management transferred Kapoor to another branch,
and appointed Jaychandran as the operations manager of the unit. Jaychandran had 20 years of
experience as an operations manager. His style of control was different from that of Kapoor’s. He
set strategies in consultation with the workers and designed plans to solve problems jointly. He
did not believe in blaming a particular individual for its occurrence. When he found that an
employee’s performance was moving in an undesirable direction, he met the employee personally
and looked for the reasons for this. He then developed an appropriate solution to the problem.
The reward system under Jaychandran was not based on one or two specific measures of
performance, but on the employee’s overall performance. His style was not to punish employees
for past actions but to help them improve their performance in the future.

He believed in the philosophy of management by walking around, and made it a point to spend
some time talking to employees and listening to their problems. He felt that such informal
communication would help boost the confidence of the employees in their employers.
Jaychandran held the view that through MBWA, the values and culture of the organization could
be instilled in the employees and the problems of the employees too could be sorted out.

Management Control System Case Study (Case adopted from Lovely Professional University, Phagwara)
Dr. Vrushali Pakhannavar, JCMM, Belagavi

Questions:

1) The managerial styles used by Kapoor and Jaychandran were different. What effect do these
managerial styles have on control systems?
2) The case discusses managerial styles and their impact on control systems. What are the
various factors a manager has to consider before finalizing on a particular style?

Management Control System Case Study (Case adopted from Lovely Professional University, Phagwara)