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Management Control Systems: - An Introduction

Management control systems involve four key elements: detectors to measure performance, assessors to compare actual performance to standards, effectors to alter behavior if needed, and communication networks to transmit information. Organizations need control systems for strategic advantages, to facilitate management by exception, and to provide efficiency and self-correction. Management control involves planning, coordination, communication, evaluation, and corrective actions across strategic planning, operational control, and management control functions to link organizational strategy to short-term operations.

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55 views13 pages

Management Control Systems: - An Introduction

Management control systems involve four key elements: detectors to measure performance, assessors to compare actual performance to standards, effectors to alter behavior if needed, and communication networks to transmit information. Organizations need control systems for strategic advantages, to facilitate management by exception, and to provide efficiency and self-correction. Management control involves planning, coordination, communication, evaluation, and corrective actions across strategic planning, operational control, and management control functions to link organizational strategy to short-term operations.

Uploaded by

vinits_9
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Management Control Systems

-An Introduction

Elements of Control Systems


Measure what is actually happening -Detector
Comparing it with what should be happeningAssessor

Alters behaviour if assessor so desires- Effector


Transmit information between the detector and the assessor and between the assessor and the

effector- Communication network

Why do organisations need control


In spite of the pitfalls in any control system, why do organisations need control? It is expensive to keep controls It is cumbersome to make investment in systems and processes Possibilities of failure of controls

Why do.
Controls provide strategic advantages
Controls facilitate management by

exception Systems and processes are facilitators of efficiency Provides for a self correcting mechanism

How to go about with MCS?


Standard is not preset- It is a subjective decision of the

management Management control is not automatic-It involves lot of discretionary decisions of the manager Coordination among individuals and people management The connection from perceiving the need for action to determining the action required for the desired result may not be clear Most of Management Control is self control- judgement is the key.

Activities in Management Control


Planning-Depends on the strategic theme

of the organisation Coordination Communicating plans and the process controls using suitable information systems Evaluation of information received Corrective actions- financial as well as other

Scope of Management Control


Strategic Planning
Management Control Operational Control

Strategic Planning
Strategic plan- covers some aspects or part

of business at any given time Not a periodic process-infrequent and need based Linked to external environment Data used for decision making are approximate and not current Limited to top management Covering the long term objectives of the

Operational Control
Planning is task specific
Output is attempted to be defined Input output relationship cannot be

quantitative always Related to direct activities of production Indirect activities come under the purview of management control

Management Control
Focuses on programmes and responsibility

centres Use of planned and actual data Most of the data are real time Covers all aspects of companys operations Same set of information to be used for various purposes System is ongoing and continuous, not one time

Management control involves line and staff

functions Two important features in Management Control- Reciprocity and expansibitlity

Relationship between functionsStrategy, Operations and Management


Management control occurs between the

top and the lower levels- communication of strategies to lower level and reporting operational efficiencies to the top management Strategy long run focus and operationsshort run focus Management control is a combination of both planning and control

Output of MCS
Emphasis on bottom line- using measures

such as ROI and EVA Non Financial- Product quality, market share, customer satisfaction, employee morale etc.- using tools such as Balanced Score card

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