Robert Lutz, when president and chief operating officer at the former Chrysler (now DaimlerChrysler), was determined to replace the company’s old cost-management system with one that could report costs by process and could separate value-added from non-value-added activities. After reading an article about activity-based costing_and activity-based management, Lutz decided this was the system for his company. As Chrysler introduced ABC/ABM, many employees at various levels resisted. The new system represented a threat by changing the existing power structure and revealing inefficient processes hidden by the old cost-management system.

Required

a. Write a short report explaining why you think the Chrysler employees opposed ABC/ABM.

b. Recommend steps to take to mitigate the resistance of employees to the new cost-management system.