FermosaPlastics

Case Summary:

This case describes the control system used by the largest private corporation in Taiwan. The case describes the company's organization and responsibility centers, budgeting processes and, particularly, methods of evaluating the performances of profit center managers when profit is to a large extent uncontrollable. It requires consideration of the controllability problem and approaches to the solution of this problem. The results of at least some of the FPG divisions are greatly affected by uncontrollable factors. At Formosa Plastics, the approach to this problem is high use of subjectivity in performance evaluations. Also, the division's profits are measured, but the division manager is apparently not held accountable for the profits. Finally, the case illustrates some cross national or cultural differences in control systems. Formosa Plastics is a Taiwanese company that has some characteristics that are quite different from U.S. companies.

Case Questions:

1. Identify the major elements of Formosa Plastics Group's control system.
2. Is thePolyolefindivision a profit center?