Factors Influencing Management

Control
PUTTU GURU PRASAD
FACULTY
FINANCE & ACCOUNTS
 Effective and Efficiency
• An effective organization is able to
achieve it purpose and goals by
utilizing allotted time and resources.
where as
• Efficiency of an organization is its
ability to achieve outcomes by
utilizing the minimum resources.
 Schemes for classifying controls
Classification Basis Classifications
•Action controls:-Behavioral restrictions
Object of Controls
pre- action appraisals
Action accountability
•Result controls
•Personal / Cultural controls

Extent of Formalization Formal controls

of controls Informal controls
Time of Implementation Open loop control
of Controls Closed loop control:-
Feed forward control
Feedback control
 Formal controls
• Also referred to as bureaucratic controls, involve
establishing standards rules for control of
activities and their out come. the examples of
formal controls are
• Rewards, penalties , and approvals to ensure
compliance. Policies, standard operating
procedures (SOPs), budgetary controls, financial
reporting , audit, performance measurement
systems, and incentive systems.
 Informal controls
• They generally found in organizations which rate
high on innovations and creativity. Such controls
may be nurtured through management training,
office parties, peer interaction, self-initiation,
etc., which encourage establishment of informal
networks and contracts.
• Informal controls complement formal control and
in way, dilute some of the drawbacks of formal
control.
 Contextual factors influencing
Management control
• The design and use of control systems is
dependent upon the particular context of
the environment and organizational setting
in which the controls operate.
• There are different factors which influence
the effectiveness and operation of
management control systems. These
factors can be either internal or external to
the organization.
 Some of the influencing factors of MCS
• The nature and purpose of the organization,
• Organization structure and size
• National culture
• Strategic mission and competitive strategy
• Corporate strategy and
• organizational diversification
• Competitive strategy
• Managerial styles
• Organizational slack
• Stakeholders expectations and controls
• Organizational life cycle
 Competitive strategy
• Michel porter suggested three generic
strategies which a business may pursue to
gain competitive success. They are

• Overall cost leadership

• Differentiation. And
• Focus
 Managerial Styles
• The two common managerial styles are
autocratic and democratic. An autocratic
manager generally takes decisions by
himself, and the subordinates have to
follow them.
• A democratic manager allows the
subordinates to participate in the decision
making process
 Greet Hofstede’s Dimensions of National culture
Dimension
Power distance
Uncertainty avoidance
Masculinity / femininity
Individualism/ collectivism
Definition
Accepting of hierarchical levels,
that is , inequality in the
distribution of power
Avoiding risk and ambiguity
Higher masculinity shows
higher competitive spirit,
independent thinking,
assertiveness, etc., while higher
femininity shows higher
interdependence, nurturing
nature, etc.,
People ‘s preference to work as
individuals or in a team
 Responsibility of Organizations towards stakeholders
Employment/management
Share holders Reward system
Financial returns Safety and health
Sustainable growth Participative Decision making
Job satisfaction
Career growth

Suppliers/creditors Customers
Proper pricing and licensing Organization Right quality and quantity
Continuing business relation Right time and place
Adherence to payment terms Value
Safety and health

Community
Government
Safety and security
Compliance
Protection of the environment
Competitiveness
Promoting human development
Fair business practices
Respecting human rights
 Thank you
• Never trust someone who lies to you.
• Never lie to someone who trusts you.
• A wise man gets more use from his enemies
than a fool from his friends.
• The sole advantage of power is that you can do
more good.
Baltasar Gracian
The Art of Worldly Wisdom, 1647