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Theatre Calgary: Control Systems in an Organization in Crisis

Essay by   •  June 18, 2016  •  Case Study  •  870 Words (4 Pages)  •  2,064 Views

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THEATRE CALGARY: CONTROL SYSTEMS IN AN ORGANIZATION IN CRISIS

I. BACKGROUND

In 1940, Theater Calgary, a nonprofit organization, was established in Calgary,Canada under

the watch of Dr. Betty Mitchell with an organizational mission “ to entertain our audiences with plays produced from the Canadian and international repertoires, and to develop the theatrical community. Over the years, the organization, like at all theatre companies, has a constant struggle to maintain artistic integrity while generating sufficient revenue. By 2002, a troubling trend started when directors and managers began noticing that revenue is not increasing in parallel with its expenses, hence, a deficit was recorded at $500,000. Despite of the magnificent blockbuster productions conducted, the organization posted deficit of $600,000, bringing its accumulated deficit to more than $1.1 million by the end of 2002/2003 season.

In fiscal year 20032004,although the company survived the crisis which threaten financial position on the brink of bankruptcy, management suspect that changes made on the budgeting and control system may no longer sensible for cost control purposes. In the upcoming board meeting, the board of directors want to know if the current budgeting and control system was realistic and efficient to ensure long-term stability of the organization.

II. POINT OF VIEW

BOD (Board of Directors) As the approving body of the organization, this pool assesses the overall  direction and strategy of the organization. With Tom McCabe’s steps to redeem Theater Calgary from a  near bankruptcy, we are taking the BOD’s point of view to be one in assessing the budgeting and control systems under his leadership.

III. CASE PROBLEM

How can Theater Calgary ensure sustainability through its budgeting and control systems?

IV. CASE OBJECTIVES

1. To identify the effects of Theatre Calgary’s nonprofit status to its control system and key success factors.

2. To illustrate a successful organization’s turnaround from a control system viewpoint

3. To assess accuracy of current budgeting system in aiding management to achieve long-term sustainability

4. To build an accurate organizational structure that will reflect proper managerial accountability and enhance stability of budget and control systems

V. ANALYSIS

Looking at the variance for both actual vs budgeted and actual vs projection, Theater Calgary had unfavorable expenses on production overhead and fundraising. The two contributed mostly on the unfavorable anticipated total expenses by the year end.

High loyalty, low acquisition subscribers were highly loyal at Theatre Calgary, and served as a major source of earned revenue. However, the Theatre wasn’t spending marketing dollars in a way that attracted new subscribers or single ticket buyers. Consequently, there weren’t many new patrons coming to the Theatre and replenishing its subscriber prospect pool.

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