Management Control System

Case Analysis 8-3

Emerson Electric Co.
Amir Qayyum Che Norddin G1337179
Ahsan Mohamed Nazim

G1338449

Nabila Syafiqa Mohyen

G1321200

Nabila Syaqira Mohyen

G1326036

1. Evaluate CEO Knights Strategy for Emerson Electric Co. In

view of the strategy, evaluate the planning and control system
described in the case. What are its strong points and weak
points?
Evaluate CEO Knights Strategy for Emerson Electric Co.
Low cost producer to best cost producer.
Emerson strategy to shift their strategy from low cost producer to best
cost producer is good. It is because they can remain competitive in
the market, especially when Japanese company that perceived to have
better quality product than Emerson. Through best cost producer
strategy, Emerson is just not focusing on cost reduction, but also try
to improve its product quality, through cost reduction in planning
process

In view of Strategy, evaluate planning and control system

described in the case (strong and weak points)

In the view of strategy, planning and control system at Emerson seems

to be well planned
Each fiscal year (from November to July), CEO and corporate officers
will have division planning conference with management of each
divisions to review division management plan.
Before the division conference, division president submits for standard
exhibits to top management; Value Measurement Chart, Sales Gap
Chart, Sales Gap Line Chart and 5-Back by 5-forward P&L Chart
Value Measurement Chart compares the divisions actual performance
five years before, forecasted current year performance and forecasted
performance five years after.

5-Back by 5-forward P&L Chart compares details of divisions data for

current year with 5 years historical data and five years forecasted data.
Top management will listens to divisions management view of
customers, market, plans for new product, analysis of competition and
reviews of cost reductions, quality, capacity, productivity, inventory
levels and compensation
In August, the reviews at the division planning conference will be
reviewed at the headquarters by top management
In September, annual corporate planning conference will be held for
top management to presents the corporate and divisions forecasts for
the next year as well as strategic plan for the next five years
Based on this planning and control system, we can infer that top
management heavily involving the divisions management in
order to plan for the company. This is good because, through best
cost producer strategy, high quality and low cost can be achieved
through reduction in planning process. They also focus on
manufacturing strategy

Strong Points
-

Commitment to total quality and customer satisfaction

Knowledge of the competition and the basis on which they compete
Focused manufacturing strategy
Competing on process as well as product design
Effective employee communication and involvement
Formalized cost-reduction programs, in good times and bad
Commitment to support the strategy through capital expenditure
Involvement of divisions management in planning process give them
autonomy and sense of belongings to the company in designing the
company future

Weak Points
-

Incapability to be as innovative as their competitors

Late entrant in the marketplace
Previous low-cost producer strategy have left low quality image
circulating to Emersons image
It did not concentrate much on the basis on which they compete

2. What changes, if any, would you recommend to the CEO?

a. Invest more in R&D in order to combat late entrance
Emerson is viewed as efficient world-class manufacturer. However late entrance of the
Emerson into marketplace cause them not to be considered as technology leader. In order to
solve this issue, firstly, Emerson to invest more in R&D in order to improve its capability and
capacity to be innovative

b. Revising planning and control system to combat time responsiveness

Due to long process in planning and processing that involve top management and
divisions management, it takes longer time for Emerson to respond to the market demand
and change in technology. Revising the planning and control system at Emerson should
improve the time responsiveness to the market demand and change in technology

c. Larger acquisition to boost up growth

Emerson follows growth through acquisition strategy but no one acquisition has been
very large. So Emerson need to research more on the market when they decide for
acquisition.

3. What role should the eight business segments managers have in Emersons planning
and control system?
The role of the eight business segment managers is to monitor the activities and
performance of forty divisions in term of admin and management. Although they might not
involve directly in the meeting and conferences with the top managers, they are responsible
to take care and ensure the operation of all divisions run smoothly. For example
a. Business segments managers can function as the industry scout, to find new industry or
business opportunities for Emerson to discover
Due to their nature that managing the divisions that comprises of different product
they have better understanding to discover what is the nest best product to be
discover by Emerson.
b. Recognizing business investment prospects
c. Set target for the company to achieved e.g. sales
d. Defining strategies to be implemented
e. Encouraging values like team work and discipline to achieved the
target goal
f. Revising the previous action plan for continuous improvement.
g. Assisting top management in deciding the proper action plan need to
be taken to bridge the gap between actual and desired result