Case 23-2: Industrial Electronics Inc. Issue: Evaluate the proposed bonus system. ground: My division had another great year last year. We in all worked hard, and the results were there. But again we got no reward for our hard work. Its very frustrating. variant Manager. KSF Innovation. Good cost control referable to price competition. Internal Environment Industrial Electronics Inc. sells a wide swear of electronic equipment. (Like EVERY other case!!!) $8 zillion in sales. High-tech industry makes it difficult to forecast, since its a volatile industry. Goal is to maximize sh areholder value. External Environment Competes on new/innovative products and also price. We infer there is an economy-wide inlet during the time period of this case. Current Management Control System change by product line, set up into 4 course Groups. Responsibility centre there are 16 free divisions, that act as Profit Centres. 25 Managers (All levels including and above Division Manager) receive an annual bonus Lower level managers are include in a Management by Objectives incentive plan.
(This is a system that offers incentives based on the achievement of a rate of specific objectives, which may not all be financial, ie: # of new customers added, # of successful companionships filled in a calendar month…) Bonus Pool based on 10% * (( take in Income (12% of Assets-Liabilities)) Pool/Total Salary of 25 Managers = Award per stipend $. Max = 150% of salary. Before 2000, average bonus was 50% of salary…..in 2000 and 2001 bonus was $0. (Recession.) Problem: Both good and no-good managers got no bonus in those years. Pros of Current Bonus System Managers simply get bonuses when the Company profits, and can afford it this shares the wealth. Encourages teamwork, due to having a common profit goal, but it seems these units are independent. Performance targets are fixed, timeless and... If you want to get a full essay, order it on our website:
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