Question

Wilesco CNC is a firm that produces computer numerical control (CNC) machining tools, such as drills, lathes, etc. Unlike some of their competitors, Wilesco CNC is highly vertically integrated. For example, they write the code for the software of their machines, and design and make the circuit boards and electronic components of the machines. The firm currently has around 100 employees, who all work at their headquarters (which also serves as their R&D and manufacturing facility) in Charleston, South Carolina.

Wilesco CNC was started 20 years ago, and has only made CNC machines during this time. However, they recently acquired the firm Robot Dog. Robot Dog is working on developing a large robotic dog that resembles a St. Bernard. The robot not only looks like a St. Bernard, but also is very friendly and can appear to drool (if water is added). However, this robot has one big advantage over a real St. Bernard- it does not require dog food, only electricity to recharge its batteries occasionally. However, the software has not yet been perfected. For example, sometimes the robotic dog acts aggressively, which is not consistent with the typical behavior of a real St. Bernard. The firm Robot Dog is located in Florida and had around 80 employees before the acquisition by Wilesco CNC. Robot Dog however is less vertically integrated. While they designed most of the robotic St. Bernard and developed the software, the robot is actually produced by a specialized manufacturing firm. Wilesco CNC made the acquisition because it believed it could transfer some of its competencies in software development and electronics into the newly acquired business. They also believe that long-term, the substantial sharing of R&D equipment and expertise would bring about cost reductions and enhanced differentiation for both businesses.

After the acquisition, the firm’s name was changed to Wilesco Automation, a name that is reflective of the firm’s two businesses. The CEO of Wilesco CNC became the CEO of Wilesco Automation. The firm was divided into two divisions to reflect the two industries it competes in: a CNC division and a robotic pet division. However, a major challenge remains of determining the control systems that will work for the two divisions of the entire company. You have been hired as a consultant to help determine what control systems should be implemented in each division, to both effectively measure performance and ensure that the divisions cooperate effectively so that competencies are transfer/economies of scope are realized between the two businesses.

Discuss what the most important control mechanisms are that you would recommend the CEO of Wilesco Automation put in place for each division, and justify your recommendations. Focus on bureaucratic, output, market, and incentive controls for your recommendation. Recommend at least six controls for each division. Note that some of the controls that you recommend may be recommended for both divisions.

Answer 1

The controls mechanisms for CNC depending are as follows-

1-) Bureaucratic control - This type of control is inherent in large Organisations. In this type of mechanism , rules and procedures are given out to subordinates from the top management which influence their actions. In the CNC department, it will be helpful as it consists of many Employees and any changes to design or software will require higher permission.

2-) Output controls - This type of control is implemented keeping in mind a goal or target to achieve. The goal or target predefines a certain path to be followed and hence all the deviations are controlled.

3-) Cultural control - Cultural control is a very important control mechanism and it is an effective attribute to measure profitability. Culture control means that what is the work culture like , are the Employees committed to work etc. By this Employees doesn't need supervison, they themselves adapt to work culture.

Controls for robotic pet division

1-) Person control - It is the type of control where managers personally meet subordinates and inform them about the various controls. In pet division, as it relies more on software part, it is beneficial for them to have a personal relationship with colleagues and managers.

2-) Performance evaluation - This type of control is also beneficial as the control is done according to Performance evaluation. For example benchmarks bare set and any activity beyond the benchmark will have to be controlled.

Common control mechanism followed are

1) Incentives - This type of control is beneficial for both department because this type of control is directly linked to incentive. Any unusual activity beyond control , will result in less incentives given to Employees.

2-) Rules oriented mechanism- it is a rules oriented mechanism where the departments shall be controlled by the rules and policies of the company.