For the last years of operations, Combine limited has been engaged in the manufacture and sale of refrigerators and freezers. As you all now the company aims has been to become the leading producers and supplier of high quality, long lasting and environmental friendly product to our costumers’ globally. We have tried to achieve a sixty percent market share owing to our modern technology and self driven human resource expertize in all fields of production. However, it is worth noting that all high-performing organizations, whether public or private, are, and must be, interested in developing and deploying effective design of financial performance and performance management measurement (Artley and Stroh, 2001).
As part of the companies’ strategic plan to deliver quality and remain relevant in effective and efficient operations, the management of Combine limited plans to have two divisions. The two divisions will be represented by a delegated profit concept which is more or less an investment responsibility. These divisions will perform similarly but separately the basic business functions of planning, production, accounting, marketing, and some financing activities as described by William Bentz in 2000.
The domestic refrigerator division performance management will entail production of compact refrigerators and refrigerator-freezers. defines’ a refrigerator as a cabinet designed for the refrigerated storage of food at temperatures above 32° Fahrenheit (F) and below 39°F, configured for general refrigerated food storage, and having a source of refrigeration requiring single phase, alternating current electric energy input only. As a quality control measure, the division will avoid the use of chlorofluorocarbons (CFCs).
Hermana (2009), encourages that for this division, packaging shall not contain inks, dyes, pigments, adhesives, stabilizers, or any other additives to which any lead, cadmium, mercury or hexavalent chromium has been included as an element during manufacture or distribution in such a way that the sum of the concentrations levels of such lead, cadmium, mercury or hexavalent chromium exceed the following concentration level: 100 parts per million by weight (0.01%). This will help the company reduce the amount of toxic substances generated and ultimately treatment and disposal costs lowered (Wheiser, 2008).
The Industrial freezer division will consist of unlimited range of industrial refrigeration cooling systems. The division will be customized for specific needs. The major dealings will be: pilot plants and specialty chemicals, reactor and vessel cooling, direct refrigerant systems and air-cooled process chillers production and supply.
According to Lee in 2002, for the success of any company, the financial performance has to be considered. This can only be achieved through the alignment of the company’s strategy and performance measures with the divisional managers in conveying the company’s mission, vision, values and strategic direction to employees and external stakeholders. For this reason, Combine limited wants to focus on designing a measurable financial performance measures which will act as a key pillar of any company health in cost benefits and thus contribute to the success of the company as we meet our stakeholders’ expectations.
The design of financial performance measures for the divisional managers to be adopted for the two company’s units are set to exercise at all the stages of manufacturing, marketing and supply of both products and services. These are anticipated to form appropriate agents of change. By comparing the past actions and a long historical profile of combine limited, it is worth addressing the budgetary control and financial indicators such as return on investment.
The divisional managers will be evaluated normally on cost accounting and cost management (Kennerley and Neely, 2003). As described by Ong and Teh, 2008, the company is in break of changes such as globalization, advancement of information technology and increased world-wide competitive pressures, it is my pleasure to provide this key area to align with the new circumstances. The managers will ensure that positive employee attitudes and productivity remains high.
The divisional managers will use accounting and performance measurement systems to monitor and improve their respective division operations (Norton and Kaplan, 1993). To enhance a sound financial measure for the division, the products quality, supply flexibility and delivery will be critically observed.
Combine Limited through the responsibility of the divisional mangers will be able to attain more sales and thus higher profits through decentralization. Business strategists, Neely et al in 2001 identified the key indicators of financial measures as defect free production, minimum inventories, high productivity and low cost. This will be monitored using the profit planning and control systems that will be put in place for both domestic refrigerator division and the industrial freezer division. Divisional managers will be evaluated on short-term (monthly, quarterly and even yearly) performance measures on residual income (RI) and return on investment (ROI).
The overall results anticipated by the company will be a maintained high market share on products and services, increased productivity, offer up-to-date product range, and ultimately increased profits. We hope that the two divisions will work explicitly as described by Richard and Cross in 1988 and benefit the company through adoption of more balanced performance metrics, deviating from an apparent reliance upon the more financially-oriented.
Cross, K.F. and Richard, L. (1988). The SMART Way to Define and Sustain Success, National Productivity Review, New York, 8, 23-34.
Hermana (2009), Domestic Refrigerators, Full-Sized and Compact.
Kaplan, R.S. and Norton, D.P. (1993). Putting the balanced scorecard to work. Harvard Business Review, 134-147.
Kennerley, M. and Neely, N. (2003). Measuring performance in a changing business environment. International Journal of Operations & Production Management, 23, 213- 229.
Neely, A., Adams, C. and Crowe, P. (2001). The performance prism in practice. Measuring Business Excellence, MCB University Press, 6-12.
Tze San Ong and Boon Heng the, 2008, Factors Influencing the Design and Use of Performance Measurement Systems in the Malaysian Electrical and Electronics Industry.
Wheiser B. Denton, (2008), Hazardous Materials: Chemical Storage Asset Requirements.
Will Artley and Suzanne Stroh (2001), The performance based handbook, a six-volume compilation of techniques and tools for implementing the government performance and results act of 1993(GPRA).
William F. Bentz (2000), Standard Overhead Costing Illustration.
Youngsu Lee (2002), from design features to financial performance: a comprehensive model of design principles for online stock trading sites.