CASE STUDY

CONTROLLING

CHARMIE CONSOLIDATED INDUSTRIES, INC

“I heard it in a management conference I attended,” remarked Marie Ayala, president of Charmie

Consolidated Industries, Inc. a small company whose new pleasure-boat products contributed to
the company’s growth of P5 million in annual sales since its founding five years ago. “ This idea
of running a company by allowing department and section heads to develop their own budgets
seems sound. But I can’t afford it in this company. If I did, these people would spend so much
money that we will soon be bankrupt. As long as I am President, I will tell my people how much
they should spend. There will be no blank checks and I will make sure the company comptroller
gives the profit I expect. I have heard of too many-fast growing companies going red. This idea
of variable budgets is even worse. What would happen if I let everyone vary his target every
month, quarter, or year?

TIME CONTEXT

For the recent 5 years since its launching, Charmie Consolidated Industries,
Inc. has provided outstanding services throughout the manufacturing, machining,
shipment and customer care processes for the pleasure-boat products which in
return earned them huge sales. Providing high quality pleasure boats used for
pleasure, recreation or daily living leisure vessels. All types of vessels (canoes,
motorboats, sailboats, etc.) are what they can offer to their customers.

Information Resources reported that new pleasure-boat products comprised the

company’s growth of P5 million in annual sales for the year since its founding five
years ago.

VIEWPOINT
 Charmie Consolidated Industries, Inc. is a small company which provides new
pleasure-boat products into the market. A pleasure boat is a large boat which takes
people for trips on rivers, lakes, or on the sea for pleasure. Charmie Consolidated
Industries, Inc. provides people with the quality services which will satisfy their
needs and it is dedicated to providing high customer satisfaction. The products are
very classic, versatile, iconic and economically priced. It comes in distinctive
universal sizes and types such as canoes, motorboats, sailboats, etc. The global and
domestic marketplace as a preferred supplier in the design, manufacture, and
support of high technology boats. Their vision is to produce new pleasure-boats
with better quality by instilling a culture of collaboration, flexibility and innovation
to fulfill the unique needs of their customers.

STATEMENT OF THE PROBLEM

If we check out the scope and demand for this business over the globe it’s a
very good business with high profit margin. However, Marie Ayala President of
Charmie Consolidated Industries, Inc. thinks that when the section heads will be
the one to be in charge of the budget allocation of the business, the budget will not
be properly allocated because they might spend so much money to the extent that
the company will soon be bankrupt.

Hence, this study aims to determine how can Marie Ayala, the President of
Charmie Consolidated Industries, Inc, manage and control their budget allocation
so that the company can reach her target profit while avoiding having the company
undergo bankruptcy.

OBJECTIVES

Short Range / Must Objectives

 Through this study, these following objectives are intended to be achieved,
first is to regulate the budget of the departments and advise on how the section
heads must spend the allocated budget. Second, this study seeks to know the
factors that may contribute to the success of sales despite the challenges brought by
the competition in the market and make a strategic plan to increase their profit
sales and earn more sales against their competitors. Lastly, this study aims to create
a new quality of pleasure-boat products to have an edge against competitors and
earn additional profits for the company.

Long Range / Objectives

SMART Objectives and Targets

Specific

The company wants to sell more high quality pleasure-boat products that can
satisfy the customers' need for leisure and relaxation.

Measurable

Must sell 35%-40% more high quality products in the upcoming years compared to
the number of goods sold in the previous years. The sales must surpass the
consistency of the company’s growth of P5 million in annual sales since it was first
launched five years ago.

Attainable

Improve the current customer relationships and promote the business through
referrals, networking and advertisements. This will help the company find more
potential clients and leads therefore creating an increase in revenue for the
business.

Relevant
Increase the market share of the business by 10% by opening new stores in
different places of the country by the end of the year, taking advantage of the
increase in consumption generated by the number of people needing the products
during vacations..

Time-bound

Sell 30% more boat products during the months of early spring or summer taking
advantage of the demand for pleasure boat activities.

V. AREAS OF CONSIDERATION

● Lack of budget plan

● Rising of other companies
● Improper use of budget
● Unity of department heads

VI. ALTERNATIVE COURSES OF ACTION

1.) Conduct a meeting regarding budget matter and plans with the department
heads.

Advantages
● to know what was happening to their budget.
● to promote using budget strategy

Disadvantage
● additional expenses may occur.

2.) Provide the budget strategy

Advantage
● they can regulate the budget and can lessen unnecessary expenses.
 Disadvantage
● not all department heads will follow this

3.) Create a new high-quality boat product that is unique and affordable compared
to their competitors

Advantages
● additional profit for the company
● upgrade old products and to know the weaknesses of the old product

Disadvantage
● a lot of budget will be needed to produce a new product