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- ROBSEN HOMEWARES CASE

Introduction

Robsen Homewares is a medium sized business, specialising in the manufacture of quality fabric homeware products, including curtains, sheets and towels. Until recently the business was made up of one operating plant, which undertook a number of activities including fabric manufacture, fabric printing and product manufacture. While each of these activities had a supervisor, they were not regarded as separate work units.

At the end of last year Sam Li, supervisor in charge of fabric manufacture, approached the board of management with a proposal. He had become increasingly aware that there was demand for his intermediate product – the fabric he manufactured – from external customers. He suggested to the board that he be allowed to sell any excess fabric manufactured on the external market. Not only did the board agree, they decided that the business’s organisational structure would be altered to support this new initiative. The fabric and printing activities were combined and the new department was named simply the Fabric Department. It became a distinct work unit within the operating plant, separate from the Manufacturing Department, which also became a distinct department in its own right. Managers were appointed to both departments. Each manager was given autonomy for all day-to-day decision making. Responsibility accounting was introduced and each department was treated as a profit centre, with managers rewarded based on departmental profit.

The Manufacturing Department

Catherine Lucas was appointed the manager of the Manufacturing Department. The Department was responsible for the production of all Robsen Homewares products. Most of its products required the use of fabric in their manufacture. The department usually sourced all of its fabric requirements from the Fabric Department.

The Fabric Department

Sam Li, supervisor of fabric manufacture under the old structure, became manager of the new...