Kranworth Chair Corporation Case
ACCT 463/CCMA523
Winter 2015
Assignment #1
KRANWORTH CHAIR CORPORATION
CASE
Executive Summary
The present paper has as a subject Kranworth Chair Corporation (KCC) management initiative of decentralization (authority for making decisions pushed down to lower levels) the transition from a functional organization structure to a product division structure and some aspects that derive from this decision.
We will first present advantages and disadvantages of the new proposed Product Division Structure and how this new structure impact on the decision making process. We will identify the key recurring decisions that must be made effectively for Kranworth Chair Corporation to be successful and how the authority for making these decisions is shifting between the two organizational structures.
Further we evaluate the proposed design for performance evaluation and incentive system linked with the new Product Division Organization Structure. We will assess the alignment (congruence) of performance measurement system with the company’s strategy and strategic objectives and at the same time if meets the criteria of an effective system: controllability, precision, objectivity, timeliness and cost efficiency.
Finally we will explore the alternative of further decentralize (give to the product divisions) the R&D function and asses if this decision will trigger changes to the design of KCC performance measurement and incentive system. We will analyze advantages and disadvantages of decentralization of R&D function and give our opinion as what will be the best decision for KCC.
Company Overview
Kranworth Chair Corporation (KCC) was incorporated in 1987 by Weston Krantz and Kevin Wentworth. KCC is a manufacturing company, and is associated with the FOLD-IT! brand that includes the production of high-quality and fashionable portable, folding chairs and related products.
The main manufacturing line was concentrated to produce (i) folding chairs (produced
Winter 2015
Assignment #1
KRANWORTH CHAIR CORPORATION
CASE
Executive Summary
The present paper has as a subject Kranworth Chair Corporation (KCC) management initiative of decentralization (authority for making decisions pushed down to lower levels) the transition from a functional organization structure to a product division structure and some aspects that derive from this decision.
We will first present advantages and disadvantages of the new proposed Product Division Structure and how this new structure impact on the decision making process. We will identify the key recurring decisions that must be made effectively for Kranworth Chair Corporation to be successful and how the authority for making these decisions is shifting between the two organizational structures.
Further we evaluate the proposed design for performance evaluation and incentive system linked with the new Product Division Organization Structure. We will assess the alignment (congruence) of performance measurement system with the company’s strategy and strategic objectives and at the same time if meets the criteria of an effective system: controllability, precision, objectivity, timeliness and cost efficiency.
Finally we will explore the alternative of further decentralize (give to the product divisions) the R&D function and asses if this decision will trigger changes to the design of KCC performance measurement and incentive system. We will analyze advantages and disadvantages of decentralization of R&D function and give our opinion as what will be the best decision for KCC.
Company Overview
Kranworth Chair Corporation (KCC) was incorporated in 1987 by Weston Krantz and Kevin Wentworth. KCC is a manufacturing company, and is associated with the FOLD-IT! brand that includes the production of high-quality and fashionable portable, folding chairs and related products.
The main manufacturing line was concentrated to produce (i) folding chairs (produced