Erasmus University Rotterdam FEB 13007 Tutorial 3.- Advanced MA Tutorial 3: Case 6.3 BARCA PRODUCTS Theory Recap Responsibility centres: An organizational unit that is lead by a manager

Theory Recap
Responsibility centres: “An organizational unit that is lead by
a manager who is responsible for its activities”
Each responsibility centre has its own objectives. If each
centre meets its objectives, the ultimate goal of the
organization is achieved.
Four types of responsibility centres: revenue, expense, profit
and investment

Summary 6.3
 Barca Products, S.A.
 Textile company founded during World War II
 Five divisions: cotton, knitted goods, woolens, artificial fiber
products and artificial leather
 Decentralized structure, one division general manager
(DGM) for each division
 Reports to show difference in budget and actual results
 Sales – 28 mln, Profit – 3 mln.
 Sales -100 mln, Profit – 3mln.
Company generate revenue and not profit.
Why didn’t profits move up with sales? Where did you lose control of
costs? Or prices?
1. Companies hold sales or clear out inventory at discount prices.
Companies could do this to generate cash to cover short-term debt