MODMGT2

Guide Questions
Case 1 Total Quality Management
Romeo Engine Plant
1. What were the main objectives of the Romeo Engine Plants manufacturing strategy?
2. What specific initiatives did the management of Romeo implement to achieve these objectives?
3. What management control and feedback systems were in-place at Romeo? How did these
management control systems assist with the implementation of Romeos overall manufacturing
strategy?
4. How effective is the actual-to-actual comparisons in the Romeo Engine Plant? Will this be
effectively implemented if the plant produces many models?
5. Evaluate the strengths and weaknesses of the Romeo Engine Plants Total Quality Management
(TQM) implementation. What, if any, improvements would you suggest?
6. Did the managers of Romeo lose control as a result of the empowerment of the line personnel?
7. How could management maintain the needed control while still empowering the line personnel?
8. What types of management control systems work best for managing tension between
empowerment and control? Did Romeos management control systems do a good job of
managing tension?
Case 2 Six Sigma
Six Sigma Implementation at Maple Leaf Foods
Main Issue: How to extend Six Sigma implementation at the Rivermede plant.
1. What is Six Sigma?
2. If you were in the position of Anthony Scire, how would you respond to Louann Hulsmans
request to implement Six Sigma @ the Edge at the Rivermede plant?
3. What questions would you ask Louann?
4. What criteria would you use to evaluate the readiness of the Rivermede plant to proceed with the
implementation of Six Sigma @ the Edge?
5. Why has Six Sigma been successful under Anthonys tenure at Rivermede? Why had it been
unsuccessful previously?
6. What is the role of Six Sigma in the Maple Leaf Foods organization? Is it set of tools or a
manufacturing philosophy? Is it strategic or tactical?
7. What resources would you need to implement Six Sigma @ the Edge?
8. Which group will feel the greatest impact if Six Sigma @ the Edge is implemented: managers,
supervisors or plant workforce? How would Six Sigma @ the Edge affect the managers,
supervisors and plant workforce?
Case 3 Balanced Scorecard
Volkswagen do Brasil: Driving Strategy with the Balanced Scorecard
1. What challenges does Thomas Schmall face upon becoming CEO of Volkswagen do Brasil
(VWB)?
2. Describe VWBs new strategy.
3. How does the strategy map (Exhibit 4) and Balanced Scorecard (Exhibit 5) help Schmall and
Senn implement the new strategy?
4. How well does the strategy map capture VWBs new strategy? What are the strengths and
weaknesses of the scorecard and its implementation?
5. What are the benefits from having all employees understand the strategy?
6. What other actions did VWB take to support strategy implementation?
7. How can Schmall and his team use the scorecard to deal with the challenges faced by the
company in J anuary 2009?
Case 4 Economic Value Added (EVA)
Vyaderm Pharmaceuticals
1. What is Economic Value Added (EVA)?
2. Why did Maurice Vedrine, Vyaderms new CEO, chose to implement an EVA system?
3. Using data from Exhibit 8, calculate the following items:
a. 2000 EVA for the North American Dermatology division.
b. 2000 EVA bonus payout for a manager earning $200,000 assuming that the managers
bonus is based on 100% of the divisions EVA.
c. 2001 EVA and estimated bonus payout for the same manager, assuming that Vyaderm
profits fall back to historical levels and the EVA improvement goal remains constant.
4. Based on your analysis, what would you recommend to Mr. Vedrine?
5. What organizational design issues may arise in the implementation of EVA?
6. How will IFRS/PFRS affect the EVA system?
Case 5 Cost Allocation
Bridgeton Industries: Automotive Component & Fabrication Plant
1. What is the competitive environment for Brigeton?
2. How has Bridgeton reacted to its competitive environment?
3. What did the outside strategic analysis recommend?
4. What is the structure of Bridgetons cost system?
5. The overhead allocation rate used in the 1987 model year strategy study at the Automotive
Component & Fabrication Plant (ACF) was 435% of direct labor cost. Calculate the overhead
allocation rate using the 1987 model year budget. Why you get different numbers?
6. Calculate the overhead allocation rate for each of the model years 1988 through 1990. Are the
changes in 1987 in overhead allocation rates significant? Why have these changes occurred?
7. Consider products in the same product line:
Product 1 Product 2
Expected selling price $ 62 $54
Standard material cost 16 27
Standard labor cost 6 3
Calculate the expected gross margin as a percentage of selling price on each product based on
the 1988 and 1990 model year budgets, assuming selling price and material and labor cost do not
change from standard.
8. Are the product costs reported by the cost system appropriate for use in the strategic analysis?
9. Assume that the selling prices, volumes and material costs for the 1991 model year will not
change for fuel tanks and doors produced by the ACF of Bridgeton Industries. Assume also that
if manifolds are produced, their selling prices, volume and material costs will not change either.
a. Prepare an estimated model year budget for the ACF in 1991:
i. If no additional products are dropped.
ii. If the manifold product line is dropped.
Explain any additional assumptions you make in preparing your estimated model year
budgets.
b. What will be the overhead allocation rate under the two scenarios?
10. Would you outsource manifolds from the ACF in 1991? Why, or why not? What more information
would you want before reaching a final decision?
Case 6 Activity-Based Management
Activity-Based Management at W.S. Industries (A)
1. What are the main differences between the old cost system at WS Industries and the new ABC
system?
2. Is WS a good candidate for ABC? What are the pluses and minuses of the ABC and ABM at WS
Industries?
3. WS Industries used ABC to drive continuous improvement projects (CIPs). Was it good idea to
link incentives to CIPs?
4. Did WS Industries need ABC to execute CIPs? Wouldnt workers dream up CIPs based on their
local knowledge as long as their incentives were linked to savings from CIPs?
5. Is it useful to classify activities as valued added and non-value added for CIPs?
Case 7 Customer Profitability
Slots, Tables and All That Jazz: Managing Customer Profitability at the MGM Grand Hotel
1. Keeping in mind the description of MGMs profitability measurement systems, which of the
following two customers appears more attractive for MGM? Why?
Customer A Customer B
Total theoretical win $2,000 Total folio $1,500
Tables theo $1,300 Hotel $750
Slots theo 700 Restaurant 250
Shows 500
Total Comps $800
Hotel $500
Restaurants 100
Tickets KA 200
Profitability $1,200 Profitability $1,500
Number of trips 2 Number of trips 1
2. Using the information in the MGM Players Club data set, discuss the differences in the various
segments of players at the MGM Grand. Some hints for potential analyses:
a. Begin by classifying customers according to their attractiveness from a static point of
view (current profitability). Measure the concentration of profits.
b. Look at some aspects of behavior of the different groups (please use as cut-off points
total theoretical win of $500, $10,000 and $100,000):
i. Number of trips
ii. Trip length
iii. Whether they play in tables or slots
iv. Loyalty to a certain property
c. Expand your study by measuring attractiveness from a dynamic point of view (current
and future profitability). The three-year span of the databases is insufficient for a rigorous
lifetime value analysis but adequate for a discussion of basic concepts and tools used to
assess customer attractiveness. For instance, what player characteristics in 2002
increase the likelihood that a player will come back in 2004?
3. How does the MGM Grand derive value from its Players Club program and its player information
systems?
4. Do you think it is appropriate for hosts from any property to have access to the entire profile of a
specific customer, regardless of where that customer plays or stays? Why? If you think that hosts
from a certain property should have access only to the information on customers play in their
property, do you think there is anybody who should have a comprehensive view of the customer?
5. Do you think treating each property (MGM Grand, Bellagio, Treasure Island, etc.) as an
independent profit center is the right approach to manage the MGM MIRAGE group? Why?
6. How should MGM view the entertainment business? Is it simply a mechanism for bringing gaming
customers to the property? Is there a distinct entertainment segment of customers? (Hint: look
at the overlap between the Players Club and the Hotel folio data base.)
7. How would you strategically manage the entertainment business? What action plan would you
design to implement your vision?
8. Would your responses to questions 4 and 5 change as a function of your responses to questions
6 and 7?
Case 7 Management Accounting Control Systems
Barrington Products, Inc.
Please refer to the case for guide questions.