Atlanta Home Loan
Marshall School of Business
University of Southern California
Atlanta Home Loan
Teaching Note
Purpose of Case
This case was written as an example of an extreme control failure. It can be used in a class focused on management control, entrepreneurship, or management of small businesses.
Al Fiorini, the manager of a small, but reasonably successful, mortgage lending company in
Atlanta hired managers to run his business while he went back to school, for his executive
MBA, in California. He did his best to monitor the company’s operations while 2,500 miles away. But the managers not only stole from Al, they stole his entire business! The case forces students to analyze the problems Al faced, to identify the controls that he had in place, and to suggest things he might have done to ensure that these problems would not have occurred.
Suggested Assignment Questions
1. Identify the devices (controls) that Al Fiorini used to control his business both before and after he went back to school. Classify each control as a results, action, or personnel/cultural type of control.
2. What went wrong? Did Al use the wrong types of controls? Did he use the right types of controls but fail to design or implement them properly? Or was he just unlucky?
3. What should Al do now? Why?
Professors Kenneth A. Merchant and Wim A. Van der Stede wrote this teaching note as an aid to instructors using the Private
Fitness, Inc. case.
Copyright 2003 by Kenneth A. Merchant and Wim A. Van der Stede. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means without permission.
86
© Pearson Education Limited 2012
Merchant & Van der Stede, Management Control Systems, 3rd edition, Instructor’s Manual
Case Analysis
These are among the questions that the instructor can use to stimulate the in-class discussion:
1. How would you describe the Atlanta Home Loan (AHL) control system at the time Al
Fiorini left for
University of Southern California
Atlanta Home Loan
Teaching Note
Purpose of Case
This case was written as an example of an extreme control failure. It can be used in a class focused on management control, entrepreneurship, or management of small businesses.
Al Fiorini, the manager of a small, but reasonably successful, mortgage lending company in
Atlanta hired managers to run his business while he went back to school, for his executive
MBA, in California. He did his best to monitor the company’s operations while 2,500 miles away. But the managers not only stole from Al, they stole his entire business! The case forces students to analyze the problems Al faced, to identify the controls that he had in place, and to suggest things he might have done to ensure that these problems would not have occurred.
Suggested Assignment Questions
1. Identify the devices (controls) that Al Fiorini used to control his business both before and after he went back to school. Classify each control as a results, action, or personnel/cultural type of control.
2. What went wrong? Did Al use the wrong types of controls? Did he use the right types of controls but fail to design or implement them properly? Or was he just unlucky?
3. What should Al do now? Why?
Professors Kenneth A. Merchant and Wim A. Van der Stede wrote this teaching note as an aid to instructors using the Private
Fitness, Inc. case.
Copyright 2003 by Kenneth A. Merchant and Wim A. Van der Stede. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means without permission.
86
© Pearson Education Limited 2012
Merchant & Van der Stede, Management Control Systems, 3rd edition, Instructor’s Manual
Case Analysis
These are among the questions that the instructor can use to stimulate the in-class discussion:
1. How would you describe the Atlanta Home Loan (AHL) control system at the time Al
Fiorini left for