Case Analysis – ATH Technologies (A,B,C)

Question 1: What is the problem of having earn out structure of payout as seen in
Table - A of Case ATH (A)?
Answer 1: Earn out structure as per the Table A of the Case ATH (A) is focused
primarily on short term revenue targets and profit maximization which is expected
to capitalize in 3 year period(2013-2015) in addition, Scepter would pay ATH
shareholders $150 million if the target sales and earnings goals are achieved.
However, what the case did not mention was any differential break-up. There was
also no elaborate and separate Sales and Earnings goals, for both goals, bonus tied
up was same. It does not mention how to achieve these targets and bonuses. Also,
we do not know whether these payout structures are defective or not. There is also
a lack of integration of these earn out goals. The case does not mention a profit
plan and budget jointly developed or developed in consultation with the senior
management. The payouts also do not mention the future performance payouts.
To summarize, it’s a complete de-centralization, a poor reward system, missing
accountability in system, missing long term commitment, direction missing,
Scepter just gave money and ATH produced to meet the targets with major
noncompliance to FDA regulations due to high defective products.

Question 2: What is lacking in employee’s understanding the strategy at ATH?

Answer 2: Communication to the management and employees of ATH for the
intent of Scepter for the strategy and its implementation is the biggest reason for
the failure. Due to no proper communication management & employees of ATH
worked relentlessly for revenue achievement and profitability however due to no
communication on mandatory requirement of quality, cost & regulatory
compliance there was total failure of process due to which the employees focused
only on meeting the financial targets and their incentives.

Question 3: What are the oldest control systems identified?

Answer 3: Oldest control systems identified for an organization are financial
control systems, e.g. budgets. Organizations basically can control through two
different ways- its people and assets. As time has progressed Assets have changed
from tangible to intangible in the modern days as knowledge assets. A higher order
of management control systems rather than financial control systems is Balanced

EPGP10-063 SI Assignment 1
Score Card. BSC has 2 major internal controls – Process and Systems and People
for training and skills.

End of Assignment

EPGP10-063 SI Assignment 2