1. Context 1.1 Brief analysis of the situation The management of Armco, Inc.: Midwestern Steel Division began implementing a new performance measurement system in January 1991. Bob Nenni, Director of Finance for the Midwestern Steel Division, explained the rationale for this new system: The old system had managers spending more time explaining why changes in cost were due to accounting system problems than they did fixing the problems. The new system will provide for management better
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Armco, Inc.: Midwestern Steel Division 34. J. Roberts, The Modern Firm: Organizational Design for Performance and Growth (New York, Oxford University Press, 2004), p. 181; and D. L. Wenner and R. W. LeBer, “Managing for Shareholder Value From Top to Bottom,” Harvard Business Review, 67, no. 6 (November–December 1989), pp. 2–8. 35. S. Datar, S. L. Kulp and R. A. Lambert, “Balancing Performance Measures,” Journal of Accounting Research, 39, no. 1 (June 2001), pp. 75–92; G. A. Feltham and J. Xie
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Armco, Inc.: Midwestern Steel Division Armco Inc. is a steel manufacturer that used to be the sixth largest in its industry in US (in 1990). The Kansas City Works within its Midwestern Steel Division was hit by the decline in the business in the US steel industry despite its good performance in the past. Consequently, it downsized and incurred significant losses in most of the 1980s. This entity produces two primary products including grinding media and carbon wire rod, one being recognized in the
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Armco Inc. Armco Inc is a steel manufacturer that used to be the sixth largest in its industry in United States in 1990. The Kansas City Works within its Midwestern Steel Division was hit by the decline in the business in the US steel industry. The firm produces grinding media and carbon wire rod. The first on has been successful in the industry with its great durability compared to the competitors. Carbon wire rods on the other hand were non profitable and covered only some of its fixed costs through
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Case Armco Case Study: Armco, Inc.: Midwestern Steel Division What do you think was the problem with the implementation of the new performance measurement system? In January 1991, Top management of the Kansas City Works of Armco’s Midwestern Steel division began implementing its new performance measurement system. It was designed to give better management focus on the things, which are most important. The new system included less data’s: it allows managers to focus on the 5-6 more important
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1.0 Introduction Armco Inc. is a steel manufacturer that used to be the sixth largest in its industry in US (in 1990). The Kansas City Works within its Midwestern Steel Division was hit by the decline in the business in the US steel industry despite its good performance in the past. Consequently, it downsized and incurred significant losses in most of the 1980s. This entity produces two primary products including grinding media and carbon wire rod, one being recognized in the industry for its durability
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Introduction Armco Inc., is the sixth largest producer of stainless, electrical, and carbon steels and steel products in the United States, and the Armco Inc Midwestern Steel Division is its largest division. The largest subdivision of the Steel Division is the Kansas City Works which produces two products: grinding media and carbon wire rod. In January 1991, a new performance measurement system for Kansas City Works was implemented by Bob Nenni, the Director of Finance, with the aim of providing
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rmco – implementation of the new performance measurement system My task was to write my opinion about the problems of the implementation of the new performance measurement system in Armco, Inc.: Midwestern Steel Division, Kansas City. First, I think there wasn’t a problem with the new performance measurement system itself, as it was stated by the numerous employees. The old system suffers from lack of direction, as employees didn´t really understand the relationship between their responsibility
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eam 4 Case #4 Armco, Inc.: Midwestern Steel Division 1. The old performance measurement system had the following problems: - It did not provide information on the product mix being produced. It provided data on total tonnage produced, but did not breakdown “what” was produced. - The system compared “actual” to “objective” but did not provide data on what factors caused variance. - Costs were not broken down by: o Fixed costs o Variable costs o Relevant
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Team 4 Case #4 Armco, Inc.: Midwestern Steel Division 1. The old performance measurement system had the following problems: - It did not provide information on the product mix being produced. It provided data on total tonnage produced, but did not breakdown “what” was produced. - The system compared “actual” to “objective” but did not provide data on what factors caused variance. - Costs were not broken down by: o Fixed costs o Variable
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