Codman & Shurtleff

Published: 2021-10-08 22:10:12
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This will insure a continuous system is in place to explore methods to manufacture technological superior products with less costs. 3. Recommendations 1. Continue using the J&J’s 5 and 10 year planning and control system and align the Codman’s strategy with J&J’s strategy 2. Focus on resolving the profit shortfall by focusing on actions that have a long-term effect on operations rather than short term performance 3. Introduce the “stage gate” product development process 4. Discussion: 4. 1 Analyze annual planning and control processes:
Codman prepares its plan and strategy consistent with J& J’s, as they believe the key elements in success is due to three basic tenets “a basic belief in decentralized management , a sense of responsibility, a desire to manage for long term” as David Clare does. 4. 1. 1 short-term & long-term planning and control Codman & Shurtleff is carrying out the financial plan in terms of two different time span. The short-term plans are included a budget for upcoming year, and second-year forecast. The long-term plans contain annual five- and ten-year plan. The planning horizon focuses on two years and remains fixed over a five-year period.
The concept is illustrated in Figure 1. The profit plan and second-year forecast are used to control the business and evaluated mangers in respective of “planning, forecasts, and achievement”. Under these plans, managers can prompt find problems by reviewing the budget on three occasions, comparing the variances between real number and estimated number, and correcting the errors in order to achieve the long term target. Managers can perceive and understand how and why their estimates have changed over time; consequently, they will control themselves to meet their long-term targets on their own initiative. . 1. 2. Corporate-level & subsidiaries-level planning and control Also, financial plan can be varied due to various accountabilities in different subsidiaries, which ensure the subsidiary managers have freedom with boundary set up by corporate level. In our case, Codman makes its own plan and budget, and then formalizes it after acceptance by corporate committees. For decentralized system in J&J, the complex with both levels of planning and control, provides real benefits. For example, more accurate information and fair measurements have been preferably delivered through bottom-up process.
The subsidiary managers will run the business in the same direction of the whole Corporation, simultaneously deal with problems by their own ability and wisdom, rather than leave them to the corporate level. Lastly, the current planning and control at Codman based on J&J’s strategy is worth to be continuously carried out. What we should emphasis on is the long term plan is more like blue print, which stimulates people to reach the future goal and focus on actions that have long-term effect on operations, rather than being caught up by day-to-day activities.
Subsidiary mangers should conduct planning and control under this basis. Every time when they make adjustment and decisions, they should not only intend to achieve the short term budget, with compromising long-term benefits. We will analyze the planning and control system more in-depth, through following 4. 2 Evaluating planning and control system The planning and control system used in J&J is based on the five – and ten-year planning concept which delivers long-term visions for the company.
The reason why J&J adapted the five – and ten-year planning concept rather than a moving planning horizon is that managers need to always include in their plans an account of how and why their estimates have changed over time, and also, it shows company an objective way of setting aspirations. Johnson & Johnson is managed on a decentralised basis and comprises about 155 autonomous subsidiaries. According to its excerpt form the 1985 Annual Report, the company is organised on the principle of decentralised management and conducts its business through operation subsidiaries, for the most part, integral, autonomous operations.
Direct responsibility for each company lies with its operating management, headed by the president, general manager or managing director who reports directly or through a company group chairman to a member of the Executive Committee. Therefore, the effectiveness of planning and control system is closely related to this typical structure of the company. 4. 2. 1. Strength There are numeral advantages of this type of structure. Managers can revise their thinking and evaluate their operations over time. Problems involved in operations can be found out on time so managers can see the results from performance immediately and response quickly.
Generally, employees that are in decentralised companies have relative higher morale compared to other type of structures. The reason is that managers have more controls over the performances of the subsidiaries, the innovation (product development) and other services required etc. This planning and control system, however, is not used to punish but to try and find and correct problems (Bruns, 1998). 4. 2. 2. Weakness In another aspect of the planning and control system used by Johnson & Johnson, there are also two limitations exist.
The first one is that the system might be costly to use. As the company has a decentralized structure so it requires specialists (management) to ran their business for each operating subsidiaries. This could be one factor that causes excessive budget. The other weakness may exist is that managers may be forced to cut off some necessary spending to follow the budget. To illustrate this weakness in this case, take an example, when the two million shortfalls occur, managers in Codman become so sensitive about this figure.

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