...Homework Assignment 3, Kranworth Chair Corporation Case Study-Pratistha Das TO: Kevin Wentworth, CEO, Kranworth Chair Corporation FROM: Das Consulting Associates DATE: September 11, 2015 RE: Effectiveness of Decentralization of organizational structure in Kranworth Chair Corporation, Evaluation of its new performance measurement and incentive system and analysis of decentralization of R&D Kranworth Chair Corporation (KCC) was co-founded by Weston Krantz and Kevin Wentworth in 1987. In early years, KCC specialized in a broad line of high quality and fashionable portable, folding chairs, which were branded as various models of Fold-it! Brand and were sold exclusively to distributors. Over the years, KCC diversified its product range and produced chairs of various sizes, models, designs, chairs with various add-on features, of different prices and even of different materials. KCC also introduced some related products like ottomans, tripods, cots and stadium seats. It employed screen-printing artists and seamstresses to customize certain products. It kept track of its Stock Keeping Units. To boost sales volume KCC invested in advertising, added other distribution channels and tied up with major retail chains like Walmart, target, K-Mart, etc. in order to lower labor costs, KCC moved its manufacturing facilities to Mexico and China, except for some customizing and assembling facilities in Denver...
Words: 2713 - Pages: 11
...Identify the most important key recurring decisions that must be made effectively for KCC to be successful. In KCC’s functional organization, who had the authority to make these decisions? Who has the authority to make these decisions in KCC’s new divisionalized organization? Did KCC top management go too far in decentralizing the corporation? Did they not go far enough? Or did they get it just right? Why? Evaluate KCC’s new performance measurement and incentive system. Assuming that KCC will retain its new divisionalized organization structure, what changes would you recommend, if any? Why? Assume that the R&D function is to be decentralized (given to the divisions). Would this necessitate changes to KCC’s performance measurement and incentive system? If so, which and why? If not, why not? Points from chapter that should highlighted: Financial responsibility centres (revenue, expense (ECC, DCC), profit (GMC, IPC, BPC, CPC, Investment centre) and the organization of these centres Ratios or specific elements used for measure Transfer pricing (market-based (ideal method), marginal cost (rare and not extremely useful), marginal cost and lump-sum fee,full-cost / full-cost and mark-up (most widely used), negotiated (can lead to power struggles), dual-rate OVERVIEW OF THE CASE As of 2003, Kranworth designed and manufactured a large range of foldable chairs and alternative portable seating. It also offered a print-screening customization service...
Words: 1459 - Pages: 6
...ACCT 463/CCMA523 WINTER 2015 ASSIGNMENT 1 KRANWORTH CHAIR CORPORATION Company Overview Kranworth Chair Corporation (KCC) was incorporated in 1987 by Weston Krantsz and Kevin Wentworth. KCC is a manufacturing company, and the name of the Company is associated with FOLD-IT! brand that includes production of high-quality and fashionable portable, folding chairs and related products. The main manufacturing line was concentrate to produce (i) folding chairs (produced at several price points) and related products (tripod stools, ottomans, costs, and stadium seats) in Mexico and China manufacturing facility and (ii) custom-designed products in the Denver location. The main KCC’s customers were: • Major retail chains (Wal-Mart, K-Mart, Target) that provided highest sales volumes but with lower gross margin; • Other retail chains (e.g. sporting goods); • Corporations for custom-design products orders. From the begging of activity KCC was a Company that had little competition and high margin rate. However, since 1999 the Company faces some cash and business issues related to the new loan, the new competitors on the market and the worldwide recession. At that point of time Kevin realized that in order to keep the business in good shape new changes should be done . This changes are to solve the main strategic issues the company faces, which include: eroding profit margin, fierce completion, inventory in more than a thousand types of products and parts and rather tight...
Words: 2503 - Pages: 11
...Kranworth Chair 1. Identify the most important key recurring decisions that must be made effectively for KCC to be successful. In KCC’s functional organization, who had the authority to make these decisions? Who has the authority to make these decisions in KCC’s new divisionalized organization? Some of the most important key recurring decisions that must be made were contracts with distributors, marketing and R&D. In the beginning all of these decisions were made by top management. Though contracts many times were from sales teams, the majority of the big deals had some involvement of the top management. In the new divisionalized organization, most of this is divided up to the two divisions. Though R&D is still a centralized division, with their team head reporting only to top management, all of their decisions and outputs are determined by the division heads. So most of the decisions used to be determined by the top management but most of these have been given down to the division leaders. Kevin broke it out to profit centres. 2. Did KCC’s top management go too far in decentralizing the corporation? Did they not go far enough? Or did they get it just right? Why? I personally believe from Kevin’s point of view they went too far. For the example, Joe talking with a new advertising agency, Kevin didn’t believe this was the right approach as he thought the actual marketing was fine it was just the product placement in the actual stores which caused the...
Words: 962 - Pages: 4
...------------------------------------------------- Course OutlineDepartment of Accounting and FinanceSchool of Business and Economics | ACCT 4250-01 Advanced Management Accounting (3,0,0) MWF 1:30-2:20 PM A&E 208 Instructor: Dr. Laura Jean Kreissl Office: IB 2060 Office Hours: please check office door Email: lkreissl@tru.ca Email is strongly recommended over voicemail as it is checked more frequently Phone/Voice Mail: 250-852-7675 Last Updated: November30, 2015 Calendar Description Building on ACCT 3250: Intermediate Management Accounting, students explore the integrative and interdisciplinary role of management accounting and its contribution to the strategic management process and the provision of quantitative and non-quantitative information for planning, control, and decision making. Topics include management control systems; results controls, action, personnel and cultural controls; control system tightness; control system cost; designing and evaluating management control systems; financial responsibility centers including transfer pricing; planning, and budgeting; incentive systems; financial performance measures; the myopia problem; uncontrollable factors; corporate governance; and ethical issues. | Educational Objectives/Outcomes Upon completing this course, students will be able to: 1. Locate the role of Management Control Systems (MCS) in both strategy and operations. 2. Describe results control and its applications. ...
Words: 7415 - Pages: 30
