case studies in management control system PDF

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LEO’s FOUR PLEX THEATERAVP DURATION: 15 : 35AVP Distribution:Introduction of the case (including characteristic, current situation, observation explained)- characteristic and current situation is voice over, however, observation is included in the AVP while being explained in the voice overManagemen...

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LEO LEO’’s FO FOUR UR PLE PLEX XT THE HE HEA ATER

AVP DU DURA RA RAT TION ION:: 1 15:3 5:3 5:35 5 AVP Di Distri stri stribu bu butio tio tion: n: In Intro tro trodu du ductio ctio ction n of the cas case e (including characteristic, current situation, observation explained)characteristic and current situation is voice over, however, observation is included in the AVP while being explained in the voice over Ma Manage nage nagemen men ment: t:  Operations  Sales  People Per Persons sons Invol Involved ved Leo Antonelli is the owner Bill Reilly manages the theatre Park Cockerill is an accounting professor Observat Observations ions  General Admission seating and not assigned (first come, first served). Colour coded tickets, stamped and dated. Tickets also indicate prices and serial.  Invariable cash counts, less than expected. Shortage up to $100, prior to observation.  Attendants are young and unexperienced. They also have a large network, hence a small city, also fails to collect cash.  Screening rooms are manned by attendants, where customers entering through a turnstile. Although, counts of customers entering and leaving did not reconcile. There was found wrong colour tickets and free passes with Billy’s signature Elements: Lack of direction (LD) Lack of motiv motivation ation (LM) Per Personal sonal limitations (PL) Management control rrather ather than str strategic ategic control Management control prob problems lems 1. Cashier’s collect less cash than the value of the tickets sold (or missing).LD LD (Discrepancies in the cash counts of the ticket booths) a. Solution: make the cashier’s pay for the shortage, or at least have shortages comprise a significant portion of the employees’ performance evaluation (Action control)

2. The ticket collectors are admitting friends without paying for a ticket.MP MP (Failure of the cash collection from known customers) a. Solution: Supervision or undercover surveillance, and they should be held accountable, to discourage other employees to do so. 3. The managers are giving away too many passes, including some for unacceptable purposesLD LD and MP (Unethical practice at the ticket booth) a. Solution: pass policy must be clarified for manager, as well as warned not to abuse the privilege 4. Taking advantage of family relationshipMP MP a. Solution: Supervision or undercover surveillance, they must be held responsible of the action 5. Discrepancies revealed in test countLD LD a. Solution: Attendants at the turnstile should check the tickets carefully since tickets with the wrong dates and colors go into the wrong stub boxes. They must be counter check 6. Some refreshment stand sales seem to be lost because the attendants do not collect cash from the customers (perhaps their friends) and this are attended by high school or college students. Several solutions listed below:LD, LD, MP MP,, and PL a. Direct supervision (Action control) b. Separation of duties between the person who rings up the sale and the person who delivers the refreshments to the customer (Action control) c. Hire more attendants who re capable and reside from a different town because they would be less likely to know customers (action control) 7. The tickets of the wrong color or wrong date are found in the stub boxes.LD LD a. Solution: Ones receiving the tickets must be aware of colors and dates, and they must be held accountable for the control (action controls) b. They must separate the tickets accordingly Strat Strategic egic formulation: CONTROL IMPROVEMENTS Objective setti setting ng of the company Owner of the theatre should give proper direction to manager in order to guide the employees to overcome dire situation in order to achieve the organizational goals Establish code of conduct Set up basic principles for employees to understand what is expected and follow the rules Manager should take responsibility to set up the code of conduct Monitoring employe employees es work Hire someone to supervise the employee’s work Checking the cash register twice per day At the refreshment stand to avoid failure of the stand attendants to collect cash

Segregation of duties Segregate the cashier duties and the one who will collect the cash Probability that fraud to happen will be reduced Authority and responsibility The manager should be more responsible towards the company Bill Reilly shows the unethical type of behavior by giving free theater passes with his signature on them He should display a manner that will lead the employees to act in a proper way and increase their integrity in doing the works Hire qualified staff staffs/employee s/employee s/employeess Overcome the issues of lack of control and discipline problem faced by the theater. Individuals who have the ability to perform specific role or task, committed to behave ethically towards the company and also knowledgeable are very much needed to be part of the company proper training should be provided or conducted as it is a great opportunity to introduce employees to the company’s culture and policies Recommendations: MO MOTIV TIV TIVA ATION Increase Motivation ACTION Provide Ownership Increase Incentives Employee Appreciation

EXAMPLE Democratize Decisions Rewards Program, Recognition Friends and Family Day, Discounts

DISCIPLINE Develop Disciplinary Procedures ACTION Clarity Rules Build Accountability Implement Consequences

EXAMPLE Post Rules, Employee Oath Split Roles, Supervision Performance Reviews, Termination

MANAGEMENT AND HIRING Employee Competence ACTION Strengthen Leadership Change Employee Demographics

EXAMPLE Restrict Bill’s Power, Re establish authority, Lead by example Hire the elderly or retirees and youth from

Build Loyalty and Reliability of employees

neighboring towns Peer Review system, Group Decisions

TRAINING Training Procedures ACTION Increase comprehensions of color/date systems

EXAMPLE Offer courses or Training sessions...