Stewart Box Company

Topics: Strategic management, Cost accounting, Strategic planning Pages: 9 (2829 words) Published: January 24, 2008
Stewart Box Company

Executive Summary:

The management control systems and organization structure should support the overall corporate strategy for the effective and efficient accomplishment of its goal. This is the essence of the Stewart Box Company or SBC case.

SBC was a well-established manufacturer of paperboard cartons and boxes. These were sold as packages for consumer products. SBC's main strategy was to produce high quality products primarily by designing to customer specifications and provide excellent customer service mainly by delivering at scheduled dates. This strategy was meant to adequately meet the strong competition in its industry due potential overall capacity in most plants. Competition for large orders was very keen and price cutting was commonly resorted to.

A closer review was done on their current control systems in relation to the strategies that the company has in place. The company mainly employs a strategy of focusing on product quality and probably prompt and reliable delivery as manifested by its reputation on costumer service; hence the control systems are geared towards this. This strategy of course is important in identifying the direction of the control systems that the company has in place. It is also an important tool in identifying areas in the present control system that needs improvement. Thus, a closer analysis on the current control systems per division was made in identifying issues that must be addressed by the company. Suggestions were given in order to improve these areas, and consequently how they can be better made to fit and apply the company's current strategy.

Case Context:

SBC was a well-established packaging company that manufactured both paperboard cartons and boxes. The paperboard and carton industry where it belonged was characterized by strong competition among companies due to potential overcapacity of most plants. Competitors were keen on getting large orders. Most industry players resort to price cutting to get these orders. SBC had a different approach. In order to meet competition it produced high quality products primarily by designing to customer specifications and provided excellent customer service mainly by delivering products as scheduled.

The paperboards produced by its mill were sold to external customers and were also supplied to the carton factory as raw materials. The carton factory manufactured the cartons and boxes for direct sales to external customers. The paperboard mill and the carton factory are considered as profit centers by the company.

The management control systems of SBC primarily had the following components:

Strategic planning – The company had a five-year plan revised annually by a management team composed of the president, vice presidents and the superintendents of both the mill and the carton factory. Capital budgeting was employed to determine profitable major investments. Accounting system – Job cost accounting system using standard costs was used by both the paperboard mill and the carton factory. The rates being applied were established yearly. Budget preparation – The final sales estimates were the basis for the budget preparation of the responsibility centers. Product pricing – The price calculated in the estimate was often adjusted for quotation purposes based on circumstances. Reports – The system generated various reports for the president, for the other executives, for the two profit centers and for the 15 expense centers. The effectiveness of these reports as to content and frequency were not fully established,

The organizational structure had salient characteristics:

The management team composed of the president, the vice presidents and superintendents annually revised the strategic plan. The controller was responsible for the annual budgeting process and saw to it that the sales staff prepared sales estimates....
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Essay on An Overview of the Stewart Box Company
  • Essay on Stewart Box Company
  • American Box Company Case Analysis Essay
  • Essay about Manufacturing Company
  • Company Law Essay
  • Essay about Martha Stewart Case Study
  • Great Little Box Company Case Study Essay
  • In A Box Essay

Become a StudyMode Member

Sign Up - It's Free