Accounting and Control

Al Jakani Computers

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The objective of the case is to introduce students to the design of an internal accounting system to achieve goal congruence. Students should familiarize themselves with conducting relevance analysis from the perspective of the company and from the perspective of the organizational units (e.g., departments, divisions) and identify potential goal congruence problems. The case could also help students understand the role of transfer pricing policies and, in particular, transfer pricing policies based on cost estimations. As such, the case also offers the opportunity to review basic concepts of cost systems.
Bibliographic citation: Ormazábal, Gaizka; Kadach, Igor; Kanjhan, Bhavishya, "Al Jakani Computers", IESE, C-794-E, 10/2019
Date: 31/10/2019
Author(s): Ormazábal, Gaizka; Kadach, Igor; Kanjhan, Bhavishya
Document type: Case
Department: Accounting and Control
Sector: Direct sale, catalogue sale, Internet Store chains
Languages: English
Year of the events: 2017
Geographic area: United Arab Emirates
Learning objective The class can be structured around the conversation between John, Hari, and Bharat. It is possible that students will take different sides, some supporting John's proposal and others favoring Hari's proposal. One natural way of structuring the discussion is to follow the flow of the conversation and analyze the validity (and perhaps the sincerity) of the arguments provided by John and Hari. This might make some students change their opinion about John and Hari. In any case, the step-by-step analysis will hopefully end up in an in-depth understanding of the issue. The necessary computations could give the impression that the case is very number intensive, but it is not. We suggest the instructor use three boards to conduct the analysis from the perspective of the firm and the two divisions. As the discussion flows, only a few numbers on the boards will need to be adapted, since most of the numbers do not vary from step to step.