Question - Reflect on the business model for a modern technology firm (e.g. Mobitel case part 1 (the early days of Mobitel as described in the Sandelin paper). Many similar organizations (e.g.: Google in the early phase of the business) are increasingly structured in a non-hierarchical and flexible manner to enable them to operate as a nimble and adaptive organization, able to respond quickly and effectively to the demands of its business environment. These organizations are different to the traditional hierarchical organizations which operate in more stable business environments. A key characteristic of many of these organisations is that work is organised around projects, with staff moving between projects as they progress; with project teams often being made up of people with different disciplinary expertise.
Responsibility centres were used as an effective form of results and action based management control systems in these traditional organizations but may be more difficult to operationalize and use these 'project' based organizations.
Describe how responsibility centres may be operationalised in a modern, project-based organization.
Your description should include:
1. Describe the key activities conducted a modern technology firm (e.g.Mobitel case part 1) - you may like to use the business model template from seminar 1.
2. Describe key control problems facing these sorts of organisations.
3. Choose one key activity. Describe responsibility centre which would probably be most appropriate for the activity and briefly explain why.
4. What other types of controls could be used to complement the control of the activity - and provide a brief justification of the appropriateness of these controls. HINT: you may like to put this into a table
5. Reflect on what challenges may be associated with using responsibility centres a key form of control in the context of your answer for parts 1 to 4.