Abram: Company Who Evaluates Their Top Mangement

1) a) evaluate of the concerns expressed by the Top Management: i) Transfer price of parts from divisions to AM (internal sales) – AM parts didn’t sale before, no data about the price, arbitrated by division or vice president. ii) Divisions treated AM as captive customer, satisfy OEM customer first, related to top management practice and image of company, can't purchase parts outside by AM iii) 4 department carries excessive inventories, large no. of employee Christmas holiday but still have a large no. of inventory Delivery and part availability pressure led to excessive inventory. How should this inventory problem be solved?
b) Recommendation: 2) a) Overall evaluation of Abrams management control system: Discuss the pros and cons of the ROI measure at Abrams?

b) Strength and weakness of MCS not mentioned before:

c) Changes of MCS recommend to the top management:

Company Background:
Manufacture in automobile, trucks, buses, and farm equipment
3 major groups: ignition發火裝置, transmission, and engine parts 2 markets: OEMs and AM 4 divisions: 1 for AM, 3 for OEMs (ignition, transmission, and engine parts)

* AM expected to reach 50% of total sales
PLANTS and AM ROI * Manufacturing plant: Target VS Actual ROI (incl. overhead exp and tax, reason: a. resemble to external financial report and b. manager has clear perspective of cost and contribution) * For b/f net asset: top management think investment in the current year will only increase for future profit but not the current year profit.
Marketing Strategies * OEMs sale department worked with OEM’s engineer for develop new product * Expected to meet sale target * Customer different between OEM and AM, sales organization can't be combined, even inside OEM, it can't be combined. * 2 of 3 OEM divisions are independent before and have their own OEM marketing practice. * Abrams’ executive thinks of success: innovative to satisfy