Management Control

Note: These are tentative cases. Cases may be added or dropped depending on final enrollment of the class.

Leo’s Four-Plex Theater

Questions

1. Where is the theater’s control system lacking? Are the controls themselves weak or

incomplete, or are the theatre’s problems caused primarily because of lack of discipline in using the existing controls?

2. What control improvements would you suggest for Leo’s Four-Plex?

Atlanta Home Loan

Questions

1. Identify the devices (controls) that Al Fiorini used to control his business both

before and after he went back to school. Classify each control as a results, action,

or personnel/cultural type of control.

2. What went wrong? Did Al use the wrong types of controls? Did he use the right

types of controls but fail to design or implement them properly? Or was he just

unlucky?

3. What should Al do now? Why?

Philip Andersen

Questions

Assume that one of Philip’s clients is a married man, aged 36 with two young children, who wishes to reallocate a significant portion of his retirement funds that are currently invested in certificates of deposit. Philip recommends a growth investment, and he identifies the three representative possibilities shown in Table A.

Table A

Three Investment Alternatives

| Alternative A | Alternative B | Alternative C |

Investment | Growth fund from a large investment company | Growth fund from Stuart & Co. | Exchange-traded fund |

Load or commission | None | 5% front-end | 3% to purchase3% to sell |

Average annual total returns over last 5 years (including management fee) | 10.73% | 10.62% | 11.01% |

Risk | Moderate | Moderate | Moderate |

Management fees | 0.4% | 1.2% | – |

1. Which investment alternative:

a. Provides the highest returns to the client?

b. Provides the highest profits to Stuart & Co.?

2. If your answer to (b) is not the same as your answer to (a) and Philip recommends the highest profit choice, is he acting...