In The Year 2006, Jiang Wei, CFO of China Resources Corporation, was trying to implement a number of new management control systems inside a complex varied corporation throughout a time of rapid economic expansion in landmass China. Instilling efficiency, productivity, management, and control into what was really a traditional condition-possessed enterprise posed challenges on many fronts. The case allows attorney at law of the several ways that balanced scorecards and strategy maps could be integrated with traditional management control systems to control strategy implementation inside a varied corporation. Furthermore, it enables students to understand the advantages and challenges of utilizing highly formal performance management systems when confronted with proper uncertainty.
1. What is Jiang Wei trying to accomplish with the incentive systems, i.e., performance contracts and EVA-based incentive plans? Does CRC need both incentive systems? Why or why not? Hint: Identify what each system is accomplishing.
2. Would managers behave differently if the performance contract were eliminated? Why not use the EVA-based plan to provide incentives and balanced scorecards to provide information?
3. In the last two paragraphs on page 10 of the case, CRC Chief Financial Officer Jiang Wei identifies his concerns going forward. Do you share his concerns? If so, what recommendations do you have to ensure that CRC does not become too inward focused?