Solartronics Case Essay - 851 Words

Controllership February 29th, 2012 Solartronics Inc. Case 10-2 1. In light of the expected, average monthly profit of $30,000, January results were so poor because the budgeted average monthly sales should be $250,000. This is calculated by dividing the $3,000,000 in sales by 12 months. Unfortunately the actual average monthly sales turned out to be $ 165,000. Another reason that results were so poor is because they were in a normal seasonal downturn. Furthermore, during this period, fixed costs also continued to be high which meant that the total allocation of the fixed costs was not spread over a large scale. 2. Various external forces could help the company analyze the January performance. Some of these factors include:†¦show more content†¦It is in the fast-moving, complex, high competitive health care businesses. It is hard to make a prediction for the future and so the view point is likely to be short-tem focus. It might have adverse effect on long-term corporate performance. Each subsidiary has to develop a five- and ten-year strategic plan and use it as guidance for short-tem profit plans and budgets. Some of its advantages include: Its long lasting performance and the system’s effectiveness. Using the five- and ten-year planning concept, managers are required to include in their plans an explanation of how and why their estimations have changed over time. This allows the company to adjust their thinking over time and to achieve ex-post learning. 3. The center of the control function is the Executive Committee comprising the chairman, president, chief financial officer, vice president of administration, and eight Executive Committee members with responsibilities for company sectors This is a decentralized setup that is necessary for their success. Each subsidiary reports to a member of the Executive Committee. On the other hand, each company develops its own plans and strategies, which remain, fixed over a five-year period. The managers set their targets themselves but also held responsible for their actions. Next, they move toward the goals based on their own