westport
Westport Electric Corporation (case 4-5)
Case Overview
Westport Electric is a gianta colossal and highly profitable company which that manufactures and sells electric and electronic products.
Organisational structure
Divided into four groups
Each group comprises 25 ““relatively independent”” divisions and each division is a profit centre
6 administrative staff offices Administrative Staff Offices at the corporate level, which operates on a cost centre basis.
Different approaches toin the budget process for the divisions and the Aadministrative Sstaff Ooffices
Responsibilities of the Aadministrative Sstaff Ooffices;
Top management advice
Advice to operating divisions and other staff offices. Operating divisions are free to accept or reject the advice; however, they rarely ignore it.
Coordination among the divisions
Budget of the administrative staff
The Bbudgeting Ddepartment issues instructions and timetables in the early autumn of each year instructions and timetables
Incremental Budget approach
Presented by expense classification and activity
Letter with explanations of changes;
Economic changes
New activities
Dropped activities
Changes to existing activities
Presentation of Budget Proposal;
PresidentPresident and the Eexecutive Vvice Ppresident: approve and ask questions during the presentation
Finance Vvice Ppresident for Finance: no power to approve or disapprove, noreither to intervene during the presentation.
Budgeting Department
Main function: “keep the presentation honest”
No position on budget appropriateness and efficiency
King’s concerns;
Increase in expenditure in the legal and industrial relation office
Legal office: inefficient and getting approval easily
Overall budgeting process of the Aadministrative Sstaff Ooffices
Ability of the Ppresident and Eexecutive Vvice Ppresident to:
Evaluate the efficiency and effectiveness of the Aadministrative Sstaff Ooffices
To assess if additional activities are worthwhile
Case Overview
Westport Electric is a gianta colossal and highly profitable company which that manufactures and sells electric and electronic products.
Organisational structure
Divided into four groups
Each group comprises 25 ““relatively independent”” divisions and each division is a profit centre
6 administrative staff offices Administrative Staff Offices at the corporate level, which operates on a cost centre basis.
Different approaches toin the budget process for the divisions and the Aadministrative Sstaff Ooffices
Responsibilities of the Aadministrative Sstaff Ooffices;
Top management advice
Advice to operating divisions and other staff offices. Operating divisions are free to accept or reject the advice; however, they rarely ignore it.
Coordination among the divisions
Budget of the administrative staff
The Bbudgeting Ddepartment issues instructions and timetables in the early autumn of each year instructions and timetables
Incremental Budget approach
Presented by expense classification and activity
Letter with explanations of changes;
Economic changes
New activities
Dropped activities
Changes to existing activities
Presentation of Budget Proposal;
PresidentPresident and the Eexecutive Vvice Ppresident: approve and ask questions during the presentation
Finance Vvice Ppresident for Finance: no power to approve or disapprove, noreither to intervene during the presentation.
Budgeting Department
Main function: “keep the presentation honest”
No position on budget appropriateness and efficiency
King’s concerns;
Increase in expenditure in the legal and industrial relation office
Legal office: inefficient and getting approval easily
Overall budgeting process of the Aadministrative Sstaff Ooffices
Ability of the Ppresident and Eexecutive Vvice Ppresident to:
Evaluate the efficiency and effectiveness of the Aadministrative Sstaff Ooffices
To assess if additional activities are worthwhile