Detailed Contents
Preface
PART I
THE CONTROL FUNCTION OF MANAGEMENT
1 Management and Control
Management and control
Causes of management control problems
Characteristics of good management control
Control problem avoidance
Control alternatives
Notes
Leo's Four-Plex Theatre
Wong's Pharmacy
Private Fitness, Inc.
PART II
MANAGEMENT CONTROL ALTERNATIVES AND THEIR EFFECTS
2 Results Controls
Prevalence of results controls
Results controls and the control problems
Elements of results controls
Conditions determining the effectiveness of results controls
Conclusion
Armco, Inc. -- Midwestern Steel Division
Visionary Design Systems: Are Incentives Enough?
HoustonFearless 76, Inc.
3 Action, Personnel, and Cultural Controls
Action controls
Action controls and the control problems
Prevention versus detection
Conditions determining the effectiveness of action controls
Personnel controls
Cultural controls
Personnel/cultural controls and the control problems
Effectiveness of personnel/cultural controls
Conclusion
Atlanta Home Loan
Alcon Laboratories, Inc. (A)
Axeon N.V.
4 Control System Tightness
Tight results control
Tight action controls
Tight personnel/cultural controls
Multiple forms of controls
Conclusion
Lincoln Electric Co.
Controls at the Bellagio Casino Resort
5 Control System Costs
Out-of-pocket costs
Behavioral displacement
Gamemanship
Operating delays
Negative attitudes
Conclusion
Sears Auto Centers (A)
Disctech, Inc.
Philip Anderson
6 Designing and Evaluating Management Control Systems
Understanding what is desired and what is likely
Decision 1: choice of controls
Decision 2: Choice of control tightness
Adapting to change
Keeping a behavioral focus
Maintaining good control
Rabobank Nederland
Airtex Aviation
Puente Hills Toyota
PART III
FINANCIAL RESULTS CONTROL SYSTEMS
7 Financial Responsibility Centers
Advantages of financial results control systems
Types of financial responsibility centers
Choice of financial responsibility centers
The transfer pricing problem
Conclusion
Kranworth Chair Corporation
ToyotaMotor Sales
Zumwald, AG
Global Investors, Inc.
Boise Cascade Corporation
8 Planning and Budgeting
Purposes of planning and budgeting systems
Planning cycles
Performance target setting
Variations in practice
Criticisms of companies' planning and budgeting processes
Conclusion
Citibank Indonesia(HBS case no. 9-185-061 same as in prior edition)
HCC Industries (HBS case no. 9-189-096 same as in prior edition)
Borealis (HBS case no. 9-102-048 new case)
Patagonia, Inc. (same as in prior edition)
9 Incentive Systems
Purposes of incentives
Monetary incentives
Incentive system design
Criteria for evaluating incentive systems
Group rewards
Conclusion
Superconductor Technologies, Inc.
Loctite Company De Mexico, S.A.de C. V.
Tsinghua Tongfang
PART IV
PERFORMANCE MEASUREMENT ISSUES AND THEIR EFFECTS
10 Financial Performance Measures and their Effects
Value creation: the primary goal of for-profit organizations
Market measures of performance
Accounting measures of performance
Investment and operating myopia
Return-on-investment measures of performance
Residual income measures as a possible solution to the ROI measurement problems
Conclusion
Behavioral Implications of Airline Depreciation Accounting Policy Choices
Las Ferreterias de Mexico, S.A. de C.V.
Industrial Electronics
Berkshire Industries PLC
11 Combinations of Measures and Other Remedies to the Myopia Problem
Addressing the myopia problem
Measure a set of value drivers: combination-of-measures systems
Measure changes in shareholder value directly
Control investments with preaction reviews
Use "improved" accounting profit measures
Extend the measurement horizon (use long-term incentive plans)
Reduce pressure for short-term profit
Conclusion
Catalytic Solutions, Inc.
Diagnostic Products Corporation
Bank of the Desert (A) and (B)
First Commonwealth Financial Corporation
12 Using Financial Results Control in the Presence of Uncontrollable Factors
The controllability principle
Types of uncontrollable factors
Controlling for the distorting effects of uncontrollables
Other uncontrollable factor issues
Conclusion
Olympic Car Wash
Hoffman Discount Drugs, Inc.
Formosa Plastics Group, Inc.
Southern CaliforniaEdison
Beifang Chuang Ye Vehicle Group
PART V: CORPORATE GOVERNANCE, IMPORTANT CONTROL-RELATED ROLES, AND ETHICS
13 Corporate Governance and Boards of Directors
The Sarbanes-Oxley Act of 2002
Boards of directors
Audit committees
Compensation committees
Conclusion
Pacific Sunwear of California, Inc.
Financial Reporting Problems at Molex, Inc.
Golden Parachutes?
Vector Aeromotive Corporation
14 Controllers and Auditors
Controllers
Auditors
Conclusion
Don Russell: Experiences of a Controller/CFO
ITT Corporation: Control of the Controllership Function, 1977 vs. 1991
Desktop Solutions, Inc. (A): Audit of the St. LouisBranch
Desktop Solutions, Inc. (B): Audit of Operations Group Systems
Landale PLC
15 Management Control-Related Ethical Issues and Analyses
The importance of good ethical analyses
Ethical models
Analyzing ethical issues
Why do people behave unethically?
Some common management control-related ethical issues
Spreading good ethics within an organization
Conclusion
Two Budget Targets
Conservative Accounting in the General Products Division
Education Food Services at CentralMaineStateUniversity
The "Sales Acceleration Program"
Expiring Software License
The PlatinumPointeLandDeal
Lernout & Hauspie Speech Products
PART VI
SIGNIFICANT SITUATIONAL INFLUENCES ON MANAGEMENT
CONTROL SYSTEMS
16 The Effects of Environmental Uncertainty, Organizational Strategy, and Multinationality on Management Control Systems
Environmental uncertainty
Organizational strategy
Multinationality
Conclusion
Conagra Grocery Products Company
LincolnElectric: Venturing Abroad
Teco Electric & Machinery Co. Ltd.
Driessen Autogroep
17 Management Control in Non-Profit Organizations
Differences in for-profit and non-profit organizations
Goal ambiguity and conflict
Difficulty in measuring performance
Accounting differences
External scrutiny
Legal constraints
Employee characteristics
Services provide
Conclusion
BostonLyric Opera
City of Yorba Linda, California
Waikerie Co-Operative Producers Ltd.
Universityof Southern California: RevenueCenterManagement System
Index