Business Management: Case Study Of AB Hi-Fi

b)

Production

Based on the case study of AB Hi-Fi, we are able to identify a few weaknesses that occur in the company’s production department. The first weakness is that there is no authorisation control in the AB Hi-Fi management. The production planning clerk of AB Hi-Fi knows a lot of private and confidential information. They are able to access to all the sensitive production data such as new product specs, raw materials (BOM) and the production sequences. Having a weak authorisation control will enable the company’s worker to abuse their power. If the workers abuse their power, there might be a possibility that the company’s worker will steal the company important and confidential and sell it to other competitive company. For instance,

In AB Hi-Fi, the product planning clerk did most of the important tasks for the company and this shows the company is over rely on the clerk. This is a very danger and serious problem for the company because the product planning clerk has so much power. There may be a high possibility that the production department will stop working if the clerk is not around or under medical leave. Moreover, the clerk may also commit fraud or manipulate the data of the company, this will cause the company to lose money and decrease in productivity.

Managers may be reluctant to participate in setting budgeting due to the following reasons:

Managers may consider that they do not engage in true participation if their opinions are rejected without reasonably and lack of influences on budget. According to Libby, 1999, it is important for subordinates to receive an explanation if their views and opinions are not taken into account, and they cannot influence the final budget.

They may also consider that the budgets where they will be engaging in will be used in a recriminatory manner by their superiors because they are lack of understanding of the budget process. Due to this reason, there may be unfair exist as they are be short of knowing the aspects of budgeting. Thus, managers might reluctant to take part in setting of

The impact of the budgetary process on a group of persons may be different from the individual within the group. Participation by individual values their membership of the group and sees the goals of the group as collective targets that they all regard as desirable. Whereas a group does not have such cohesion, the performance of an individual may be reduced by participation within the group. They may divert their efforts into minimizing the adverse variances rather than making positive steps towards overall performance improvement in