HCC industries, a manufacturing company that produces hermetically sealed electronic connection devices along with microelectronic packages, is headquartered in Encino, California. Considering their highly sophisticated product line, one of HCC’s main clients was the U.S Military and government funded aerospace programs. HCC is made up of four distinct operating divisions: Hermetic Seal, Sealtron, Glasseal, and Hermetite. The divisions are highly decentralized and completely autonomous of each other. They all have different customer bases, different product lines and even different accounting systems. The divisions are also profit centers, by definition; each was responsible for their sales, costs, and bottom line. Each division also
For under the stretch method, some of the divisions were meeting their goals, and some were not. Goal congruence among the divisions was an increasing worry under the stretch methods, and top management hoped that MPS was the answer. When implemented, some divisions thrived inside the MPS budgeting technique. Mike Pelta, GM of Hermetic Seal was able to trim his budget down to not only meet top managements concerns, but also felt a 95-98% probability of success in attaining his goals. Cark Kalish, the manager at the Glasseal division was met with some initial resistance. His numbers came back a little too conservative, and corporate increased his Profit figure by about 2%. But Kalish still felt 90% as to the accomplishment of the increased figures. Sealtron’s GM, Lou Palamara however was very discouraged in his 1987 budgeted figures. Palamara’s initial proposal was for sales at $6.4 million and PBT at $900k. Palamara felt he had a 95% chance of matching these figures, Goldfarb through the chain of command increased his PBT to $1 million; downgrading Palamara’s felt probability t 60%.
Hermetite, the most recent addition to HCC, produces microelectronic packages and is the only division that doesn’t produce connectors. This was an issue for HCC, as Hermetite struggled