HRM732 – Introduction to Financial & Management Accounting

Case #3 – Due March 21, 2023 (Worth 10%)

Brandon Hair, managing partner of the venture capital firm of Hair and Brush, was dissatisfied
with the top management of Make-It-Drive, a manufacturer of car tyres. Hair and Brush had
invested $25 million in Make-It-Drive, and the return on their investment had been below
expectations for several years. In the last meeting of the board of directors of Make-It-Work,
Brandon exercised his firm’s right as the major equity investor in Make-It-Work and fired the
CEO. He then had the board of directors appoint as the new CEO.
Brandon adopted an aggressive management style, and at the first management meeting as CEO
he fired three of the managers on the spot to send a message that he was in control. He revoked
the current budget and ordered management to submit new budgets ensuring that it included a
50% increase in sales volume. In addition, he emphasized that no excuses would be entertained
if the new budget targets were not met.
Tricia Kennedy, an accountant working for the production manager at Make-It-Work, discovered
towards the end of the following year that her boss was not discarding defective tyres returned by
customers, but was instead shipping them to new customers to avoid booking the losses. As a
result of the push to increase volume, quality control had dropped and returns of tyres by
customers were as high as 25% of the new shipped. When Tricia asked her boss about the issue
of sending defective tyres to new customers, she was told to mind her own business, and this was
necessary to meet the new targets set by Brandon.

Required:
Discuss the case using the format below. In your submission, be sure to answer the following.
a) Is Brandon using budgets as a planning and control tool?
b) What are the behavioural consequences of the way budgets are being used at Make-It-
Work?
c) What, if anything, should Tricia do?

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 Case Format
• Title Section (3 marks)
o Name of report, team members, and date

• Executive Summary (3 marks)

o Explain what you will examine in the case.

• Findings (5 marks)
o Provide background information and the most relevant facts. Isolate the issues.

• Case Evaluation (10 marks)

o Isolate the sections of the study you want to focus on. In it, explain why
something is working or is not working.

• Proposed Solutions (5 marks)

o Offer realistic ways to solve what isn’t working or how to improve its current
condition.

• Conclusion (3 marks)
o Summarize the main points from the case evaluations and proposed solutions.

• Recommendations (4 marks)
o Talk about the strategy that you should choose. Explain why this choice is the
most appropriate.

• Implementation (5 marks)
o Explain how to put the strategy into action.

• References (2 marks)
o Provide all the citations.

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