LockD Berhad is a large organization who operates in a divisionalized structures. LockD's divisional managers are paid a bonus when the budgeted divisional profits for the financial year is achieved or exceeded. The following divisional actions had been discussed during the recent meeting. In each case, the amounts involved have been material in determining whether the division would achieve its budget: Marketing Division Had severely reduce spending on advertisement and roadshow marketing promotion. Sales Division Had persuaded some major customers to place early order. That is by asking these customers to make purchases in the current financial year for purchases that is supposed to be in the first quarter of next financial year. However, before of this action, there will be nil stock at year end. Logistic Division Had renegotiated a contract for a consultancy services in installing SAP systems. The initial contract would require the division to pay progress payment to the consulting firm. It had renegotiated that the consulting firm would invoice the division with the total cost only when the work was completed in the next financial year.
Required:
Problem 1: Critically discuss the issues that will arise from these divisional actions, in particular, the issues related to the dysfunctional behavior of the managers should be discussed. You should also comment on whether LockD group management action is necessary