“h.J. Heinz Company: The Administration of Policy” Case Analysis Summary

Published: 2021-06-29 07:00:59
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Kyle Percival6/13/2017MBA 676Dr. Todd Thomas“H.J. Heinz Company: The Administration of Policy” Case Analysis SummaryProblem / Key IssuesWhat is the main problem?How can James Cunningham, President and CEO of Heinz, implement change to encourage ethical and legal financial reporting along with production processes for the company?What are the key issues that must be analyzed in order to solve the main problem?What internal audit controls can be implemented at all levels to prevent future unethical financial and production practices? What changes can be made to the incentive program to that foster growth for division leaders and not the use of unethical practices.What changes need to be made corporate wide to promote ethics and honesty within the entire organization?What case data / facts helped you resolve the Key Issues?-Joseph Stangerson—senior vice president, secretary, and general counsel for Heinz—asked the advertising agency about the alleged practices. Not only had the agency personnel confirmed the allegation about Heinz USA, it indicated that similar practices had been used by Star-Kist Foods, another Heinz division. The divisions allegedly solicited improper invoices from the advertising agency in fiscal year (FY) 1974 so that they could transfer income to FY 1975.-After a sluggish period in the early 1960s, a reorganization was undertaken to position Heinz for growth. Under the guidance of John Bailey and James Cunningham, Heinz prospered through a major recession, government price controls, and major currency fluctuations-Throughout the 1970s Heinz’s major objective was consistent growth in earnings.-Heinz’s commitment to decentralized authority as an organizational principle aided the management of internal growth as well as acquisitions.-In 1979 Heinz was organized on two primary levels. The corporate world headquarters, located in Pittsburgh, consisted of the principal corporate officers and historically small staffs (management described the world headquarters as lean). World headquarters had the responsibility for “the decentralized coordination and control needed to set overall standards and ensure performance in accordance with them.”-Heinz’s divisions were largely autonomous operating companies. Division managers were directly responsible for the division’s products and services, and they operated their own research and development, manufacturing, and marketing facilities. Division staff reported directly to division managers and had neither formal reporting nor dotted-line relationships with corporate staff.-World headquarters officers monitored division performance through conventional business budgets and financial reports. If reported performance was in line with corporate financial goals, little inquiry into the details of division operation was made.

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