Fpg Case Note

Control system in FPG

FPG was use a target costing approach to the budget planning, where the changing target costs are used to motivate continuous improvement. Each sectors has their own target ROI and an extensive set of monthly performance reports are analyzed to continuous improve the business. FPG also has bonus plan to motivate its employees to work at their best efficiency. In addition, the chairman and president held a monthly detailed performance review meetings with 30 senior managers.

Planning process

FPG establish a four months planning process to help the company go on the right track. It is more a bottom-up planning, where the division level managers submitted their sales plan to the top management and the top management will make suggestion to revise the plan. The revision process usually takes 2 or 3 rounds. In order to continue improve the business performance, top management adopted targeting pricing approach that reduce the cost by using improvement projects.

Evaluation process

FPG used the budget as the basis and it sometimes will revised according to the uncontrollable environmental changes. Managers are evaluated by considering the controllable factors such as the overall quantity of products, production efficiency, meeting schedules, and etc. There are other factors will affect the evaluation which are the person’s ability and potential for the future, years in the company, teamwork, and etc.

Issue

The major issue for FPG is the retirement of its chairman and president. Given that there are many uncertainties of the chairman changes, the management team were confused about their future direction of managing the company. Since the new managers were educated in the western company, they might adopt different ways to manage the company which may arise many problem like: will the employee willing to accept the new system?

FPG management were facing the major problems with their labors. Labor shortage and the rising wages make FPG lose...