Management Control System Unit-1.pptx

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Management Control System

UNIT - I



1.Management control system focuses on programs and centres. A programs is a product, product line, research and

project or similar activity that the organization undertakesachieve its goals.

2. The information in a management control system is of to typ

• "lanned data # programs, budgets and standards.

• Actual data # information on hat is actually happening, borganization and in the e$ternal environment.

%. Management &ontrol 'ystem is a total system in the sense thaall aspects of a company(s operation.

). The Management &ontrol 'ystem is usually built arounstructure.

+. The Management &ontrol process tends to be rhythmic it follopattern and time table.

-. Management &ontrol 'ystem should be a co#ordinated and inte

&A/A&T0/'T&' 3 MA4A50M04T&4T/6 '7'T0M



0volution of Management &ontrol 'ystem rganisation

Meaning of 0volution and /evolution

The term evolution is used to describe theses 8uieter periodsmodest adjustments appear necessary for maintaining grothsmoother periods of evolution, e evidence substantial turbuletermed as revolution. The speed at hich an organization e$phases of evolution and revolution is closely related toenvironment of this industry.

0volution is not an automatic a9air, it is a contest for survivahead, companies must consciously introduce planned structures

are solutions to correct a crisis.3ive phases of 0volution of Management &ontrol 'ystem!

"hase : &reativity

The company(s founders are usually, technically or entrepreneurand they disclaim management activities their physical and meare absorbed entirely on making and selling a ne product.

&ommunication among employees is fre8uent and informal.



"hase : ;irection 3unctional organization structure is introduced to separate m

from marketing activities and job assignments become more sp Accounting systems for inventory and purchasing are introduce ncentives, budgets and orks standards are adopted &ommunication becomes more formal and impersonal. The ne manager and his key supervisor take most of the resp

instituting directing, hile loer level supervisors functions as

"hase : ;elegation Much greater responsibility is given to the managers of plan

territories. "ro*t centers and bonuses are used to stimulate motivation. The top e$ecutives at head8uarters restrain themselves to

e$ception, based on periodic reports from di9erent units. Managers often concentrates on making ne ac8uisition, hic

up besides other decentralized units. &ommunication from the top is infre8uent usually by co

telephone or brief visits to decentralized units.



"hase < : &o#ordination ;ecentralized units are merged into product groups. 3ormal planning procedures are established and intensively rev 4o. of sta9 persons are hired to initiate programs of control

line managers . &apital e$penditure are carefully pruned across the organizatio 0ach product group is treated as an investment centre

concept.

"hase < : &ollaboration The focus is on solving problems 8uickly through team action. Teams are combined across functions for task # group activity. 'ta9 e$perts are reduced, reassigned and combined in in

teams. A matri$ structure is used in solving appropriate problems. "revious formal systems are simpli*ed and combined

multipurpose systems. &onferences of key managers are held fre8uently to focus on

issues. T=; programs are given to managers in behavioral skills,

con>ict resolution.



M&' = rganizational bjectives

5oals are de*ned as ?broad statements of hat the organization ants tlong run on a permanent basis@ and objective are de*ned as ?speci*

ends, the achievement of hich is contemplated ithin a speci*ed timthese terms are also used interchangeably. oever, both are subsumedmission, hich is indicative of the ?strategic intent@ and ?strategic dorganization. Mission is articulated on the basis of the vision of the founde$ecutive. Mission is achieved through a properly formulated strategy ith appropriately in # built mid # course correction system. Mission, viindicate the interactive relationship beteen strategy and management c

5oal &ongruence

Although systematic, the management control process is by no meansinvolves interactions among individuals, hich cannot be described Managers have personal as ell as organizational goals. The central continduce managers to act in pursuit of their personal in ays that ill organizations goals as ell. 5oal congruence means that as far as feasian organization(s individual members should be consistent ith organization itself. The management control system should be designeith the principles of goal congruence in mind.



Diferences - Strategic Planning ManagemControl ! "#erational control

&haracteristics 'trategic "lanning Management &ontrol pe

$e%el To# management &ll le%el - to# to 'ront line

S(#er%ision)Sco#e Total "%erall consisting o' relate*

s(+system"

Time 'rame $ong range S,ort to interme*iate 1 to 5. S,ort #0

n%ironment ternal to0ar*s*e%elo#ing internal

Internal a*(sting to eternal 'actors

oals an* o+ecti%es asic o+ecti%es Tangi+le goals 0it, in 'rame0or o'o%erall o+ecti%es

S,ort o

Str(ct(ring 7elati%ely(nstr(ct(re*

8airly ,ig,ly str(ct(re* +(t 9ei+le :

&cti%ity #atterns Irreg(lar 7,yt,mic 7eg(lar ;i

C,aracter o' acti%ity Creati%e &*ministrati%e #ers(asi%e 8ollo0

8ocal #oint ntire organi<ation &ll o#erations line management "



&ybernetic "aradigm f 5rissinger

This is also referred to as micro control frameork, since it help

establish control or performance measures for a particular pro

speci*c situation. ?&ybernetics@ is derived from the 5

BCybernatics( hich means ?'teersman@. &ybernetics has bee

the ?service of communication and control@. &ybernetics a

4orbert Deiner and it aims at the study of entire *eld of

communication theory. ?&ybernetics@ as a biological phenomen

de*ned as ?ho systems regulate themselves, e$plore and

fundamental concern of cybernetics is ith negative feedback

negative feedback mechanism to e$plain purposive and adopti

This aspect of cybernetics has relevance for the *nancial an



The particular version of the paradigm developed by 5risE5rissinger, ;onald D. Management Theory # A &ybernetic

5raduate Management &entre Ian. J-H captures all the elementsprocess, hich may be enumerated as follos!

'et goals and performance

Measure achievement

&ompare achievement ith goals

&ompute the variances as the result of the proceeding compari

/eporting the variances

;etermine the cause of variances

Take action to eliminate the variances

3ollo up to ensure that goals are met



T,e Cy+ernetic Para*igm o' t,eControl Process

8 i ' , C ll



8(nctions o' t,e Controller

To ensure that data are controlled from all the input centers in To see that data are processed speedily and e$peditiously for d

performance reports

To revie reports at successive levels to identify remedial acti To analyze the reports ith a vie to identify trends and highl

areas re8uiring follo up action To assist in formulating corrective actions

The 3inancial 0$ecutive nstitute of Knited 'tates of America listsfunctions of controller as follos!#

"lanning for control /eporting and interpreting 0valuation and consulting Ta$ administration 5overnment reporting "rotecting of assets through internal control, internal audit nsurance coverage

0conomic appraisal

Management Control System Unit-1.pptx

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