PROBLEMS ANALYSIS & SUGGESTED REMEDIAL ACTIONS

AWB Company - Problems Analysis & Suggested Remedial Actions



AWB Company - Problems Analysis & Remedial Actions

Introduction

The AWB Company is a multinational company and deals in cosmetic products. It is operating in various countries such as in Thailand, Singapore, China, etc. It has undergone the corporate restructuring recently i.e. restructuring the strategic business units. The restructuring involved changing in the costing and incentive structure that was previously practiced in the organization and change in the responsibilities owing towards Managing Directors of the business units.

Because of the strategic decision taken by the firm, it has given rise to certain concerns or problems. Identification of the problems and remedies are suggested, based on the limited knowledge and text is the aim of the assignment.

Problem Number 01

Problem Identification

The conflict of interest between the roles and responsibilities assigned to the marketing manager and the production manager of the business unit.

Problem Analysis

Under the new restructuring model, three subunits of the business are dedicated towards the responsibility of the production. The department is led by the production managers in order to manufacture the products. However, Managing Directors of these strategic business units are allowed to play a strategic and decision making role in the production as well as marketing too. Marketing managers are the one that are responsible for the marketing of the products and thereby, bolstering the sales of the unit through utilizing appropriate marketing tools and tactics. Production managers are responsible for the manufacturing of the products.

There is a certain problem in such structuring i.e. marketing managers can influence the activity of the production managers. Marketing manager's decision to cherry pick the inventory and slow moving items can render the increment in the scrap and obsolete inventory. The cost associated to the inventory produced is charged to the manufacturing profit and production manager's reward system is associated with it. Such an influential ability of the marketing managers can hinder the rewards of the production managers because of the inter-twined responsibilities.

Suggested Remedy

Organization structures are most important to its performance and position in the industry. Business units play a crucial role in the business success and future viability (Ireland et. al, 2011). Disciplines such as management and various others have highlighted the role business units are playing and benefiting themselves through the virtue of working cohesively and aligning themselves with the objectives, mission and vision of the organization.

As a part of the management team, I can provide a solution to the problem by apportioning appropriate responsibilities to the marketing and production managers through responsibility centres. Responsibility centres are the segregated units of the organization with the domain of certain responsibilities or set of activities assigned to it (Horngren et. al, 2012). Devising appropriate cost, revenue, profit and investment centres will help in solving the problem. Responsibility accounting i.e. a system responsible for the planning, activities, budgets and actual outcomes of a responsibility centre (Horngren et. al, 2012), can help in the alleviation of the ...