Manage

Zumwald follows a decentralized management approach where the managers of each division have considerable autonomy when it comes to decision making. The management performance was based on meeting the budgeted financial targets of their respective division. The performance evaluation used by Zumwald was the reason for the dispute. Each manager did the best for their division without taking into consideration goal congruence in which they did not look for the best interest of the organization as a whole.

We would suggest Mr. Fettinger to have a better planning and budgeting system in place to avoid future problems. By having the system well implemented, it would allow for a better flow of information, yet each manager would have a better overall perspective of the company through appropriate planning.

The planning and budgeting system is essential for management control. The system allows Zumwald managers to look at the organization as a one function and understand the relationship among its departments. The planning process is a critical part of the system because it creates a goal congruence within the organization, which Zumwald’s management has lacked. The planning should consist of developing objectives of the organization, which is the required work to achieve the organization’s goals while taking into account that it must be strategic and objective.

When it comes to the X73 project, Mr. Fettinger needs to respect the policy that is in place where each decision was based on the decentralized management system. Each manager had made a decision based on the best interests determined by each manager. If Fettinger intervenes in order to award Heidelberg the job, then the company’s credibility will be in jeopardy to outside suppliers. What Mr. Fettinger needs to focus on is to have a better system in place where each manager will work for goal congruence that reflects the objective of the organization as a whole.