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granger Stokes, managing partner of the venture capital firm of Halston and Stokes, was dissatisfied




Question;granger Stokes, managing partner of the venture capital firm of Halstonand Stokes, was dissatisfied with the top management of PrimeDrive, amanufacturer of computer disk drives. Halston and Stokes had invested$20 million in PrimeDrive, and the return on their investment had beenbelow expectations for several years. In a tense meeting of the board ofdirectors of PrimeDrive, Stokes exercised his firm's rights as the majorequity investor in PrimeDrive and fired PrimeDrive's chief executive officer(CEO). He then quickly moved to have the board of directors of PrimeDriveappoint himself as the new CEO.Stokes prided himself on his hard-driving management style. At the firstmanagement meeting, he asked two of the managers to stand and firedthem on the spot, just to show everyone who was in control of thecompany. At the budget review meeting that followed, he ripped up thedepartmental budgets that had been submitted for his review and yelled atthe managers for their ?wimpy, do nothing targets.? He then orderedeveryone to submit new budgets calling for at least a 40% increase insales volume and announced that he would not accept excuses for resultsthat fell below budget.Keri Kalani, an accountant working for the production manager atPrimeDrive, discovered toward the end of the year that her boss had notbeen scrapping defective disk drives that had been returned by customers.Instead, he had been shipping them in new cartons to other customers toavoid booking losses. Quality control had deteriorated during the year as aresult of the push for increased volume, and returns of defective diskdrives were running as high as 15% of the new drives shipped. When sheconfronted her boss with her discovery, he told her to mind her ownbusiness. And then, to justify his actions, he said, ?All of us managers arefinding ways to hit Stokes's targets.?Required:1.Is Granger Stokes using budgets as a planning and control tool?2. What are the behavioral consequences of the way budgets are beingused at PrimeDrive?3. What, if anything, do you think Keri Kalani should do?


Paper#42666 | Written in 18-Jul-2015

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