Kranworth Chair Case Study

2494 words 10 pages
ACCT 463/CCMA523

Company Overview
Kranworth Chair Corporation (KCC) was incorporated in 1987 by Weston Krantsz and Kevin Wentworth. KCC is a manufacturing company, and the name of the Company is associated with FOLD-IT! brand that includes production of high-quality and fashionable portable, folding chairs and related products.
The main manufacturing line was concentrate to produce (i) folding chairs (produced at several price points) and related products (tripod stools, ottomans, costs, and stadium seats) in Mexico and China manufacturing facility and (ii) custom-designed products in the Denver location.
The main KCC’s customers were:
• Major retail chains (Wal-Mart,
…show more content…

Essentially, the main decisions were still made by the cofounders.

After the divisionalization (NEW), the main responsibilities are split between (i) top management and corporate staff and (ii) divisions’ management (i.e. Retail Product division and Custom Product division). The main goal is to give the Divisions’ management more responsibilities and focus over the control of costs and sale organization of specific line of products and strictly to follow the gross margin. These profit centers, strictly speaking, are incomplete profit centers since they are responsible for only several lines of cost in the income statement such as COGS, advertising and promotion, but not responsible for other lines of cost such as R&D, supply chain, etc

Taking into consideration that Kevin is worried that too much decision-making power will be delegated to division management after divisionalization, some internal audit control should be put in place.

Conclusion: Considering the initial motivation of Kevin, there is still some work to be done in terms of