Sperry Corporation Case Analysis

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Due to the cost plus percentage contracting of US government during World War II, tax payers had to bear the $15 billion extra burden. For the eradication of this policy, US Government opted for the fixed price contracts along with the improvements in government cost auditing efforts.After new legislation ,it was believed that government has extended its control over cost accounting practices in manufacturing industries.But,in reality government didn’t do anything sound enough to exercise its control. On the other hand, the individual government organization (Navy & Maritime Commission) inspectors were assigned to the companies for scrutinizing cost accounting procedures, which proved to be a time consuming and worthless effort for the industry.…show more content…
The corporation voluntarily decreased their prices due to the reduction in their prime costs. This in turn benefited US government by saving $128 million. Sperry contribution didn’t end here, till the end of war; Sperry also trained and housed around 70,000 soldiers about their products operating. During the wartime, Sperry Corporation relied heavily on Subcontractors. They not only successfully negotiated the agreements with subcontractors but also posed this as a milestone for dealing with subcontracting in any manufacturing process. Their internal cost planning indicate that ,just for their one product factory, they have employed around 100 employees to look after the matters with sub contractos,which involves, cost estimation, direct labor hours reeuired,total machine hours and the space needed to operate machines in the future. Their planning manager also laid down some basic points about managing subcontracting operations, some of them are mentioned…show more content…
With the growth in sales, company also employees thousands of new workforces in its factories by the end of war. Sperry Corporation invested heavily on its R & D activities before and after the world war. According to the company official, 85% of sales revenue generated by company during world war era was the result of its R & D activities before the war. As a result of this investment, their R & D expenditures also rose enormously during wartime. It was found from records that, Company used to listed R & D related expenses under the “Experimental Expenses” account. On paper, Sperry Corporation organization structure seems to be a hallmark of perfection. The company organizational plan was written in four manuals. The Organizational Manual defined the delegation of authorities and responsibilities. On the other hand, the Standard Practicing Manual gained utmost importance due to its detail accounts for operating procedures and instructions on each type of work in the company. However, on practical grounds lack of proper implementation was also found. During the world war, around 57% of the employees found to be having less than a years’ experience with Sperry

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