LO 9.1Identify and describe the levels of management, including the various types of decisions managers at each level make.
LO 9.1Identify a company where you recently shopped. Assume the company operates with a decentralized structure. Describe how customers might benefit from the decentralized structure.
- Commodities (items such as sugar and high fructose corn syrup that go into many of the beverages)
- Research and development
- Insurance and benefit program
- Foreign currency transactions
- Debt, investments, and other financing activities
Explain why these activities would be centralized functions within PepsiCo as opposed to decentralized like many other activities.
LO 9.2Define segments and describe how identifying segments within a business might help manage the business.
LO 9.2Choose a company and explain how a specific issue, policy, or procedure (for example, granting merchandise returns, establishing sales prices) might look if the business is structured as a decentralized business.
LO 9.2Assume you are the manager of a local Starbucks. What factors do you feel would be relevant to hiring workers (including pay), assuming Starbucks is a centralized organization?
LO 9.2Use Netflix’s 2017 annual report to answer the following questions. How many segments does Netflix have? What are the segments? The annual report also shows selected nonfinancial and financial information for each segment. Prepare a brief presentation listing the “Paid memberships at end of period,” “Revenues,” and “Contribution profit” (also called operating profit) for the three most recent years (2017, 2016, and 2015). In the presentation, include any observations you notice about the trends of each segment.
LO 9.2Reference the Kellogg Company’s 2017 annual report to answer the following question. In “Note 18: Reportable Segments,” you will find selected financial information for segments within Kellogg Company. Prepare a brief presentation listing each segment, along with the “Net Sales,” “Operating Profit,” and “Total Assets.” For Total Assets, you should ignore Corporate and Elimination entries, and you will need to combine the U.S. divisions into a North American total. Report this information for the three most recent years (2017, 2016, and 2015). In the presentation, include any observations you notice about the trends of each segment. You may want to use Microsoft Excel or another spreadsheet application for the numerical data. This information will be used in a subsequent question.
LO 9.2Lavell started out mowing lawns in the neighborhood when he was 13 years old. He did such good work that, without advertising, his business grew steadily each year. After college, Lavell decided to continue the business as a full-time career. One of his concerns, however, is the number of hours he is putting in. Once school lets out, he finds himself working long hours nearly every day of the week. Although he has added workers, his business now handles mowing, trimming, and landscaping for residential, corporate, and nonprofit clients. He is considering adding managers but is not quite sure how to structure the organization. Lavell wants to focus on building the business rather than doing the daily work, so he knows a decentralized structure will be best. He has asked you to develop a potential organizational chart to help him envision the best way to organize the business. Describe the advantages to this approach as well as any concerns he should have.
LO 9.3Describe the concept of responsibility accounting.
LO 9.3Describe the concept of a profit center and, using a specific organization, give an example of how this might be used to achieve the strategic goals of the organization.
LO 9.3Explain the benefits of a residual income structure within an investment center framework. It may help to think of an example using an existing company.
LO 9.4Discuss the concept of transfer pricing.
LO 9.4Discuss the advantages and disadvantages of a cost-based transfer pricing approach.