Managerial Control Systems

The main reference:
Merchant, K.A., Van der Stede, W.A. 2012, Management Control Systems Performance Measurement, Evaluation and Incentives, Third Edition, Prentice Hall

-Case study “Statoil”, p.487, Chapter 11 Remedies to the Myopia Problem.

1. Read the case study carefully, Case study “Statoil”
2. As an example, have a look at the case study " CATALYTIC SOLUTIONS, INC" p.458 in the same book and its questions and its answers to know out how to answer( the main points and the method). 3. have a look at Chapter 8 in the same book " Planning and Budgeting"
4. Answer the required questions
7- uagement model that is very well-suited COMPANY BACKGROUND
an turbulence and rapid change. It enables
repr-lomize quickly So that we can fend Statoil, headquartered in Stavanger, Norway, was a
i seize opportunities. This is much more larger multlnetlenal energy eomP3~”Y- The eempany
u-aditjm-ta] budget” worm, was formed in 1972 by the Norwegian government
Helge Land, C50. smog; and was wholly state owned until 2001 when its
y shares were listed on both the Oslo and New York
e Nerweglee energy eempaey’ ueee stock exchanges. After the 2007 merger with the oil
E iperfeenelfilee management Pmeess eaeee and gas division of Hydro, a Norwegian competitor,
feeeee te eeeelete the eemeeey S Statoil became the world’s largest offshore energy
e” ‘ ee mte eeetelgle eeleeeveej key. peg producer, the world’s third largest seller of crude oil,
L tn caters, neede actions, and 1nd1V1dUh and Eu1“ope’s second largest gas supplier. Statoil
A emee tlfe mefegemeet eeeee_pe‘”’ t _e was also the largest company based in Scandinavia
reeerd and eeyend budgeting _ In measured by market capitalization (nearly US$70
3‘ . f _ _ _ billion) and annual sales (US$70 billion). The com-
meeteeen e Fee Ame1eee“te’eeeee pany employed 20,000 people in 34 countries.
ltl taken a lon time but b 2010 it had – 5
3 = Statoil s original focus was on the exploration,
j”i ‘mp1emeetee_ eereee _Ste[ee’ In August production and development of oil and gas on the
‘Z-H‘ 3- Begeeee (vlee President’ Perfermeeee Norwegian continental shelf. The company’s dis-
I Deveieemem)’ Tepeeee thee tinctive competency was deep water offshore drilling
ll? Core Values is to Challenge accepted .[mthS_ in harsh environments. Ov er the years, it div ersified
l’1li- 7 gut our ammai budgeting process back in into refining and retailing of petroleum products
‘II z 2010, we decided to throw out the calendar. and production of alternative forms of energy, such
HISMHCS implementing event-Clf’1Ven dyflalflic as wind power. In October 2010, Statoil spun off its
H” g» No 1011361 €19 We require ‘c1I1)’_fofeCa5_lS ‘O retail business to create a separate public corpora-
A: v-r d at any fixed time, and the plannuig horizons t-Ion’ Stamil Fuel & Retaip
g:- -“dig 0“ thefbuslness 0‘ °Ee:aeen’lWe_ere Statoil’s strategy was to grow its long-term oil
7 in e mt‘ en He P‘.“°e55 7 S e ‘?g‘° p_emmg’ and gas production profitably while gradually build-
setting, action planning, forecasting totally . .t. . bl 6 d t. Th
C. done as needed. We want our management leg e peel we In reeewa e_ nergy Pro “C me’ e
to be bus-meSS_dn-wen’ not Ca13ndaI_dfiV€n_ This oil reserves on the Norwegian continental shelf, on
accounting. Our aim is to create the conditions Welch the Company has‘ felled for man)’ Years: were
it-. for teams in Statoil to perform to their ful] being depleted. International growth was a key
strategy. Statoil managers knew that the company
was entering a new more competitive and more
ew Ambmon_to-Acuon recess had already unpredictable era, so faster responsiveness to change
t many benefits. But Byarte acknowledged
was deemed critical. i
it e Statoil managers were still uncomfortable
x Ambition-to-Actio1i process. “It’s a long
3′, and it should be. Changing mindsets is not
‘N ” ‘ fiX,” he Said. 1 Moreinformation on the company canbefound
tease was prepared by Professor Kenneth A. Merchant and Wim A. Van der Stede.
jsv-I I © by Kenneth A. Merchant and Wirn A. Van der Stede.


Managerial Control Systems
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