American Red Cross Blood Services: Northeast Region

Recounts the financial difficulties and management changes experienced by American Red Cross Blood Services: Northeast Region (NER) during the 1980s. After summarizing industry-wide changes in the collection, testing, and distribution of blood and blood products, the case describes the way in which NER management responded to those changes. The types of changes highlighted include: the transition from non-financial to financial planning and monitoring systems; organizational restructuring; increased dissemination of financial information among line management; and conversion to a cost accounting system based on cost center accountability. The primary teaching objective is to illustrate both the need for and the challenges of changing management control systems in response to changes in an organization's marketplace and strategy. The case reveals various factors that must be considered to implement major control changes including management training, differing management styles, information systems capabilities, corporate culture, and a continually changing market.