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    Madden International

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    Muzaffer Erdem
    Madden International is a pharmaceutical company operating in 23 countries with 15 autonomous subsidiaries overseen by corporate headquarters. HQ has 5 VPs overseeing the subsidiaries, and 2 EVPs oversee the VPs, who report to the company president. Subsidiaries are specialized by drug type and country. They maintain detailed budgets and control systems. Based on Mintzberg's model, Madden has a divisional structure with standardized outputs and middle managers running independent divisions. The case identifies two types of controls: results (budget) and actions (report procedures). However, there is little structural coherence as the budget is not actually used for control and there is no incentive system to meet budget. VP evaluations are also subjective. Some

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    Madden International

    Uploaded by

    Muzaffer Erdem
    272 views2 pages
    Madden International is a pharmaceutical company operating in 23 countries with 15 autonomous subsidiaries overseen by corporate headquarters. HQ has 5 VPs overseeing the subsidiaries, and 2 EVPs oversee the VPs, who report to the company president. Subsidiaries are specialized by drug type and country. They maintain detailed budgets and control systems. Based on Mintzberg's model, Madden has a divisional structure with standardized outputs and middle managers running independent divisions. The case identifies two types of controls: results (budget) and actions (report procedures). However, there is little structural coherence as the budget is not actually used for control and there is no incentive system to meet budget. VP evaluations are also subjective. Some

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    Madden International is a pharmaceutical company operating in 23 countries with 15 autonomous subsidiaries overseen by corporate headquarters. HQ has 5 VPs overseeing the subsidiaries, and 2 EVPs oversee the VPs, who report to the company president. Subsidiaries are specialized by drug type and country. They maintain detailed budgets and control systems. Based on Mintzberg's model, Madden has a divisional structure with standardized outputs and middle managers running independent divisions. The case identifies two types of controls: results (budget) and actions (report procedures). However, there is little structural coherence as the budget is not actually used for control and there is no incentive system to meet budget. VP evaluations are also subjective. Some

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    272 views2 pages

    Madden International

    Uploaded by

    Muzaffer Erdem
    Madden International is a pharmaceutical company operating in 23 countries with 15 autonomous subsidiaries overseen by corporate headquarters. HQ has 5 VPs overseeing the subsidiaries, and 2 EVPs oversee the VPs, who report to the company president. Subsidiaries are specialized by drug type and country. They maintain detailed budgets and control systems. Based on Mintzberg's model, Madden has a divisional structure with standardized outputs and middle managers running independent divisions. The case identifies two types of controls: results (budget) and actions (report procedures). However, there is little structural coherence as the budget is not actually used for control and there is no incentive system to meet budget. VP evaluations are also subjective. Some

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    Madden International is a Pharmaceutical which operates in 23 Countries, each with their own very complex regulatory and market

    specific environment. They have 15 autonomous subsidiaries, which are overseen by Corporate HQ s. HQ s has 5 VP s that over see these 15 subsidiaries. Finally, 2 EVP s oversee the 5 VP s whom report directly to the President of the company. The 15 Subsidiaries are specialized by pharmaceutical type and their respective countries. They maintain elaborate Detail Budgets and Controls Systems. Based on Mintzeberg s organizational structure model, Madden International is a Divisionalized Form, a multi-divisional organisation that relies on standardisation of outputs, middle-line managers and run independent divisions. As noted in the case, this is confirmed by the structure of the Subs and the respective management to each Sub centralized in one location. The two types of controls we have identified in the Madden Case are that of the following: y y Result (budget) Action (report procedures)

    The central problem of the case is there is little structural coherence. The lack of alignment can be observed in the statements below: y y y y Budget is designed as a control but it not used in practice of Ta control There is no reward or incentive system in place to meet budget Perform evaluation criteria is extremely subjective VP s are allowed to build personal relationships and connections to the sub managers to agree on their performance evaluation y Some subs are not in alignment with budget control system as they have other objectives to focus on Answers to the ascertained problems of the case: a) List the strengths and weaknesses of the budgeting and control system at Madden International. y Strengths: o Flexibility to design the organization and processes according to your market which enables quick turn-a-round in addressing your markets

    Group 2 needs o Long term well-being of organization is made visible by the 3, and 5 year budget planning o Sub managers are evaluated on their ability to develop new markets, and their values to the organization rather than based on meeting budget targets o The budgeting method adopted in this company is Bottom-up budgeting, which means budgets are submitted by lower levels of the organization to higher levels and usually imply greater decision management, it enhances the motivation of the lower-level participants by getting them to accept the targets

    Weaknesses: o Too much complexity in control o Overhead of maintaining the control system o Lack of coherence between what s planned as a control system vs. what is actually followed in practice o Decision monitoring is not separated from decision implementation

    b) Why might you expect firms like Madden International to rely so heavily on formal financial control system a. The nature of the specific industry, pharmaceutical b. Risk of uncertainty (bad drug formulation, unsuccessful R&D, patent litigations, legal issues) c. Risk of running low on short term liquidity

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