Citibank Indonesia Case Solution

Case Solution

Describes a dilemma experienced by Citibank's country manager for Indonesia. His superiors have asked for him to improve his profit goal for 1984. But to produce elevated profits he'd either have to decrease the amount given at below-market rates, particularly to prime clients and government organizations, to be able to raise the bank's sovereign risk throughout time of the recession inside the Indonesian economy. The goal is always to illustrate the part of country managers along with a couple of from the difficult trade offs they face.

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Questions Covered

1. How does the Citibank budgeting process work?

2. Is this a participative budgeting process? Is participative budgeting consistent with decentralized planning?

3. What challenges does Mistri face?

4. How did Mistri feel about the budget he submitted?

5. What precautions did Mistri take concerning sovereign risk?

6. How should Gibson allocate the $4 million increase in profits that he has committed to?

7. How might Citibank discourage Mistri and other country managers from taking actions to meet their short-term goals at the expense of Citibank's long-term good?