Case 4-5 Westport Electric Corporation

Case 4-5 Westport Electric Corporation James King, the supervisor of the administrative staff budget for Westport Electric Company, one of the giant US corporations that manufactures and sells electric and electronic products had a meeting with Peter Ensign, the controller of Westport Electric, along with Michael Kelly, the manager of the budget department. King reported to Kelly and Kelly reported to Ensign. The purpose of the meeting was to discuss King’s concerns about the increases in expenditures that were being proposed in the 1988 budgets of the various administrative offices. His overall concern was about the process in which Westport Electric reviewed and approved the administrative budgets each year (Anthony & Govindariajan, 2007). The company has six staff offices that are tasked with providing direction and advice to top management as well as advising the operating divisions and other staff. They also have responsibilities of coordination among the divisions. King felt that the evaluation process didn’t work and that the president and executive vice president didn’t have enough information to make informed decisions on whether to approve or challenge a department’s budget. As a member of the Westport executive team, I would change the process. One option to consider would be to move to a business unit organization. This would move the administrative functions under each of the four operating divisions and give them budget responsibilities making these roles departments more like a profit center than an expense center. By doing this, the groups might cut back on expenses they don’t feel they need, i.e. training programs that don’t add value, as well as demand better use of resources like the legal department that takes weeks to review and approve a simple contract. Another