, SOLUTION 1: BUDGETING & PLANNING;
PERFORMANCE MEASUREMENT; STANDARD
COSTING; RELEVANT DECISION – MAKING;
ABSORPTION & DIRECT COSTING SYSTEMS;
COST – VOLUME – PROFIT (CVP) ANALYSIS;
TRANSFER PRICING; ETHICS; & BUSINESS
VALUATIONS
(a) Goal Congruence
(i) Goal congruence refers to the situation that exists when controls motivate
employees to behave in a way that is in tune with the organization’s goals.
Results controls can promote a number of harmful side-effects. They can lead
to a lack of goal congruence when employees seek to achieve the
performance targets in a way that is not organizationally desirable. They can
also lead to data manipulation and negative attitudes, which can result in
a decline in morale and a lack of motivation as employees strive to achieve
the targeted return on investment, residual income and gross profit margin at
all costs.
(ii) Potential negative consequenses of decentralization
The major potential disadvantage of divisionalization is that there is a danger
that divisions may compete with each other excessively and that divisional
managers may be encouraged to take action that will increase their own
profits at the expense of the profits of other divisions and the company as a
whole. This may adversely affect cooperation between the divisions and lead
to a lack of harmony in achieving the overall organizational goals of the
company.
Coordination may become complex due to diverse policies and procedures
followed by different divisions of the company.
Decentralisation results in a duplication of staff effort as each division might
have access to purchasing, personnel, marketing and other specialists in
order to be independent. As a result, each division will be expected to engage
a large group of staff specialists at ernomous cost.
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Ian09. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $11.67. You're not tied to anything after your purchase.