leo's four plex theater
Marshall School of Business
University of Southern California
Leo’s Four-Plex Theater
Teaching Note
Purpose of Case
This case is intended as an in-class, “warm-up” case. It is particularly useful on the first day of class where students cannot be made to prepare a longer case prior to class. The case motivates the students (1) to think about the meaning of good control; (2) to consider a number of different forms of controls; (3) to think about the design vs. the implementation of the various forms of controls; and (4) to consider costs in their recommendations.
Questions
1. Where is the theater’s control system lacking? Are the controls themselves weak or incomplete, or are the theatre’s problems caused primarily because of lack of discipline in using the existing controls?
2. What control improvements would you suggest for Leo’s Four-Plex?
Analysis
I recommend starting the discussion by asking students to list the controls discussed in the case and the purpose of each. That will lead to the preparation of the chart shown in Exhibit TN-1 below. Then the discussion can move into the analysis of the problems and possible solutions:
1. The cashier’s collect less cash than the value of the tickets sold (or missing). The common solution is to make the cashier’s pay for the shortage, or at least have shortages comprise a significant portion of the employees’ performance evaluation.
2. Some refreshment stand sales seem to be lost because the attendants do not collect cash from the customers (perhaps their friends). There are several possibilities here. One is better direct supervision. Another is separation of duties between the person who rings up the sale and the person who delivers the refreshments to the customer. (The delivery would not be made unless the customer had a receipt.) A third is to hire more attendants from a different town because they would be less likely to know, and thus to collude, with the customers. Professor
University of Southern California
Leo’s Four-Plex Theater
Teaching Note
Purpose of Case
This case is intended as an in-class, “warm-up” case. It is particularly useful on the first day of class where students cannot be made to prepare a longer case prior to class. The case motivates the students (1) to think about the meaning of good control; (2) to consider a number of different forms of controls; (3) to think about the design vs. the implementation of the various forms of controls; and (4) to consider costs in their recommendations.
Questions
1. Where is the theater’s control system lacking? Are the controls themselves weak or incomplete, or are the theatre’s problems caused primarily because of lack of discipline in using the existing controls?
2. What control improvements would you suggest for Leo’s Four-Plex?
Analysis
I recommend starting the discussion by asking students to list the controls discussed in the case and the purpose of each. That will lead to the preparation of the chart shown in Exhibit TN-1 below. Then the discussion can move into the analysis of the problems and possible solutions:
1. The cashier’s collect less cash than the value of the tickets sold (or missing). The common solution is to make the cashier’s pay for the shortage, or at least have shortages comprise a significant portion of the employees’ performance evaluation.
2. Some refreshment stand sales seem to be lost because the attendants do not collect cash from the customers (perhaps their friends). There are several possibilities here. One is better direct supervision. Another is separation of duties between the person who rings up the sale and the person who delivers the refreshments to the customer. (The delivery would not be made unless the customer had a receipt.) A third is to hire more attendants from a different town because they would be less likely to know, and thus to collude, with the customers. Professor