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Limitations of Financial Control Systems: It may encourage short-term actions not in the companys long
term interests Business unit managers may not undertake useful long-term actions, in order to obtain short term profits, e.g. investments promising long-term benefits may not be undertaken
Interactive Control
Its main objective is to facilitate creation of a learning organisation In industries that are subject to very rapid environmental changes, management control information can also provide basis for thinking about new strategies; this is interactive control there is a fundamental difference between critical success factors and strategic uncertainties Interactive controls alert management to uncertainties, either troubles like complaints or opportunities like a new market
Interactive Control
It has the following characteristics: subset of management control information that has an effect on strategic uncertainties facing business becomes the focal point senior executives take information seriously managers at all levels in organisation focus attention on information produced by system superiors, subordinates and peers meet face-toface to interpret and discuss implications of the information for future strategic initiatives
Interactive Control
face-to-face meetings take the form of debate and challenge of underlying data, assumptions and appropriate actions Firms should monitor following technological discontinuities: internet an e-commerce growth have potential implications for many firms emergence of ubiquitous point-and-click interfaces based on open standards increasing power of computing and communication technologies
Interactive Control
growth in mobile communications for both voice telephony and internet access development and deployment of speech recognition and machine-based language translation technologies convergence technologies will have effects such as blending of hardware and software, integration of chemical and digital technologies etc. miniaturization can provide opportunities for firms in consumer electronics and appliances shifts from physical goods to services
Interactive Control
Following discontinuities have potential to create new opportunity due to globalisation: liberalisation, deregulation and privatisation have potential to create huge new customer segments in emerging markets like India & China new competitors from emerging markets may become global players in the future interactive control information usually, but not exclusively, tends to be nonfinancial interactive controls are an integral part of the management control system
Interactive Control
Subsystem should satisfy following conditions before being used as an interactive system: data contained in the subsystem should be unambiguous & simple to understand & interpret the subsystem must contain data on strategic uncertainties data in subsystem should help the firm to develop new strategies Mittal Steel wants to expand its customer reach across the world, necessary data has to be collected