National Tractor Case Study
Management control decisions should be based on both historical and present information that might indicate impending problems to the organization. With National Tractor's problem of fluctuating sales and profits, information gathered to alleviate the problem were analyzed. Trends were established based on historical information and were assessed whether it posses the capability of warning the company to address the given issues. After evaluation of the information provided, it was found out that some of the information was not used properly. Some of the information provided (that might have been an important indicator) was ignored resulting to a further decline in sales and loss of leadership on market share position of the company. Had such information were assessed properly, problems in achieving the company objective might have been minimized or even avoided. In conclusion, it was recommended that the company should seriously monitor its key indicators with respect to competitors that will lead to further improvement of quality control, investments in product development and upgrade of facilities in order to address issue of lost sales due to poor quality, limited variety of tractor types, and decreasing profits due to increasing warranty costs. It is also recommended that the company establish measurement tools such as allowance for warranty expense and target increase in sales in order to be forewarned for any impending problem that may arise.
I. Case Context
National Tractor and Equipment Company, a manufacturer of a wide line of farm tractors, has a goal of being the sales leader in each of the type of tractor that it produces. However, the company had experienced an erratic showing of sales of type x tractors. Moreover, profits of this department had also fluctuated widely. Faced with these problems, the management wanted to know how they can regain their market leadership and prevent further fluctuations in both volume of sales and profits given the information provided in the reports gathered by the controller's department.
II. Problem definition
How should National prevent further decline in sales and profits of type x tractor and regain market leadership?
The following steps were taken and the different areas were considered in resolving the issues presented:
1. Identification of company objective.
2. Analysis of the reports gathered and presented by the controller's department by establishing relationships between factors identified and identifying its effect on the issues presented.
3. Identify critical variables that may have a direct effect on the fluctuation of sales and profits of the company and propose monitoring tools to measure the company's performance.
4. Propose recommendations which will address the issue of preventing further decline in sales and profits.
The company's objective is to be the market...