laura thompson newly appointed controller of allied networking 268310 | Homework Solutions

Laura Thompson, newly appointed controller of Allied Networking Services Inc. (ANSI), a rapidly growing company, has just been asked to serve as lead facilitator of a team charged with designing a cost management system (CMS) at ANSI. Also serving on the team are Tom Weiss, company president; Susan Turner, vice president of finance; and George Wipple, vice president of marketing.

At the team’s organizational meeting, Weiss suggested that the performance measurements to be built into the CMS should have a primary focus on ANSI’s ultimate goal. Thompson advised the team that it would therefore be necessary for the team to gain consensus on the issue of an appropriate goal on which to focus the emphasis for the CMS’s primary measurements.

When the team members pressed Weiss for what he thought ANSI’s goal should be, he indicated that he believed that maximization of company profits was the most reasonable choice. At this, Wipple chimed in that because sales are the lifeblood of the company, the team should think about making customer satisfaction ANSI’s ultimate goal.

Turner, who had been silently listening to the discussion, was prompted by Thompson to give her opinion on the issue. Turner said that much of the professional literature advocates maximization of shareholder wealth as the ultimate goal of business. She did not see why it should not be the same at ANSI. After all, the stockholders provide the financial capital, take the ultimate risk, and are responsible for organizing the company.

Therefore, she asserted, the primary emphasis of measurements in the CMS should focus on whether or not stockholder wealth is being maximized.

A heated debate ensued. Wipple said, “Look, without customers, the company has no reason for existence how profitable is a company without customers, and how well off would its managers and stockholders be without revenues?” To this, Turner replied, “Without stockholder funds, you have no company!” Weiss responded, “Unless we manage ANSI profitably, there’ll be no company to provide customers with products and services or to provide a basis for stockholder wealth!” The team decided to reconvene after everyone had a chance to assess what had been said.

a. Should the CMS design team be deciding the company’s ultimate goal? If not, who should make such a decision?

b. What do you believe should be the ultimate goal for a business? Defend your answer.

c. Can one group of stakeholders effectively be served at the expense of the other stakeholders? Discuss.