Case Hcc Industries - 2151 Words

08 Fall 08 Fall 1. Evaluate the decision to use â€Å"minimum performance standard â€Å" (MPS) targets instead of â€Å"stretch† targets. We evaluate the decision to use â€Å"minimum performance standard† targets by looking at how good this new target system achieves the four purposes of planning and budgeting processes. First of all, planning and budgeting processes have to enhance management control. Derived from the case, we think corporate managers have too much control on the targets. General managers give corporate managers an estimate of the targets they can achieve but in all the divisions, targets were adjusted. The CEO always has the last call on the targets and in the case of Sealtron we see that this isn’t good. No one believes Sealtron†¦show more content†¦2. Should HCC managers have expected that the MPS target-setting philosophy would be equally effective in all four operating divisions described? No, they should not think so. The new MPS budget system has both advantages and disadvantages, which do not have effect on every division to the same extent and thus result in the difference of the effectiveness of the MPS target-setting philosophy on different divisions. We will answer this question with the comparison of the 4 divisions’ reaction to the MPS system by looking over the characteristics of their managers, staffs, markets and other relevant aspects. We believe that Hermetic Seal is relatively suitable for the MPS philosophy. As mentioned in the text, Hermetic Seal’s customers were mostly military customers, indicating that their contacts and sales did not change significantly according to the economic fluctuations and were more or less stable. So Hermetic Seal was more likely to make a correct expectation about their future and make an achievable, as well as challenging, budget, which is the key of the MPS. Mike, the manager of Hermetic Seal, who was looking for a large bonus, would make more conservative budgets to ensure that he could always meet the targets. He intentionally lowered the budget target that he used to make, in order to let off the pressure to meet the targets, so at the same time he reduced the motivation to fight for more challengingShow MoreRelatedCase Hcc Industries2159 Words   |  9 Pagesbudgeting processes. First of all, planning and budgeting processes have to enhance management control. Derived from the case, we think corporate managers have too much control on the targets. General managers give corporate managers an estimate of the targets they can achieve but in all the divisions, targets were adjusted. The CEO always has the last call on the targets and in the case of Sealtron we see that this isn’t good. No one believes Sealtron can achieve a PBT of 1milion $ and still the CEO wantsRead MoreHcc Industries988 Words   |  4 PagesHCC 1. 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