Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Standard view
Full view
of .
Look up keyword
Like this
0 of .
Results for:
No results containing your search query
P. 1
-2002 Management-control-system

-2002 Management-control-system

Ratings: (0)|Views: 283|Likes:
Management-control-system – 4th Sem -
Management-control-system – 4th Sem -

More info:

Published by: MAHENDRA SHIVAJI DHENAK on May 27, 2010
Copyright:Attribution Non-commercial


Read on Scribd mobile: iPhone, iPad and Android.
download as DOC, PDF, TXT or read online from Scribd
See more
See less





Generated by Unregistered Batch DOC & DOCX Converter 2010.2.406.1388,please register!
Q.1 Short notes:a. Impact of management style on management controls:Ans:
The internal factor that probably has the strongest impact on management control ismanagement style. Usually, subordinates attitude reflects that what they perceive their superiors’ attitude ultimately stem them from the CEO. Managers come in all shapes andsizes. Some are charismatic and outgoing, others are less ebullient. Some spend much timelooking and talking to people, others rely more heavily on written reports.Examples: when Reginald Jones was appointed CEO of GE in the early 1970s, the companywas a large, multi-industry company that performed fairly well in a number of maturemarkets. But the company did have its problems; price fixing scandals that sent severalexecutive in jail, coupled with GEs sound defeat in, and subsequent retreat from, themainframe company. Jones’ management style was well suited to bring more discipline to thecompany. Jones awes formal, dignified, refined, bright, and both willing and able to delegateenormous amounts of authority. He instituted formal strategist planning and built up one of the first strategic planning unit in Major Corporation.After Jones, jack Welch, outspoken, impatient, informal, entrepreneur. These qualities arewell suited in the era of 80s & 90s. In 2001, when jack Welch after 20 years at the helm, Jeff Immelt was chosen as new chairmen an d CEO, Immelt plan to focus on GE’s customer orientation, business mix, management diversity & technology.GE has well-deserved reputation for producing sterling business managers who have verydifferent styles but a common ability to lead successfully.
b. . Free Cash Flow:
A measure of financial performance calculated as operating cash flow minus capitalexpenditures. Free cash flow (FCF) represents the cash that a company is able to generateafter laying out the money required to maintain or expand its asset base. Free cash flow isimportant because it allows a company to pursue opportunities that enhance shareholdevalue. Without cash, it's tough to develop new products, make acquisitions, pay dividendsand reduce debt. FCF is calculated as: It can also be calculated by taking operating cash flow and subtracting capital expenditures.Free Cash Flow of the Firm is calculated as follows:-A measure of financial performance that expresses the net amount of cash that is generatedfor the firm, consisting of expenses, taxes and changes in net working capital andinvestments.
Generated by Unregistered Batch DOC & DOCX Converter 2010.2.406.1388,please register!
Calculated as:This is a measurement of a company's profitability after all expenses and reinvestments. It'sone of the many benchmarks used to compare and analyze financial health.A positive value would indicate that the firm has cash left after expenses. A negative value,on the other hand, would indicate that the firm has not generated enough revenue to cover itscosts and investment activities. In that instance, an investor should dig deeper to assess whythis is happening - it could be a sign that the company may have some deeper problems.
c. Management control process in organization:Ans:
Management control is the process by which managers influence other members of the organization to implement the organization’s strategies. Management control processinvolves informal interactions between one manger and another manager and his or her subordinates. Informal communications occurs by means of memoranda, meetings,conversations, and even by facial expression. The informal interactions take place within aformal planning and control system. Such system includes the following activities:1] Strategic planning,2] Budget preparation,3] Execution,4] Evaluation of performance.Each activity leads to next in a regular cycle.
1] Strategic planning:
it is process of deciding on the major programs that organizationundertakes to implement its strategies and appropriate amount of resources that will bedevoted to each. The output of the process called as strategic planning. This is the first stepin management control cycle.
2] Budget planning:
budget represent fine tuning of the strategic planning, incorporatingmost current information. In budget, revenue and expenses are rearranged from programme tothe responsibility centre, thus budget shows the expenses that each managers expected tooccur. The process of budget preparation is essentially one of the negotiations between themanagers of each responsibility centre and their superior.
3] Execution:
managers execute the programme or part of the programme for which they areresponsible and also report on what has happened in the course of fulfilling thatresponsibility. Reports on responsibility centre may show budgeted and actual information,financial and non-financial performance measures, internal & external information.
Generated by Unregistered Batch DOC & DOCX Converter 2010.2.406.1388,please register!
4] Evaluation of performance:
the process of evaluation is comparison of actual expensesand those that should have been incurred under circumstances. If the circumstances assumedin the budget process are unchanged, the comparison between budgeted and actual amounts.If circumstances have changed, these changes are taken into accounts. Ultimately, theanalysis leads to praise or constructive criticism of the responsibility centre managers.
d. Implication of differentiated strategies on controls:
Ans:Any organization, however well aligned its structures is to the chosen strategy, cannot effectively implement its strategies without a consistent management control system.While organization structure defines the reporting relationship and responsibilities andauthorities of different managers, it needed an appropriately designed control system to thefunction effectively.Different corporate strategies imply the following differences in the context in which controlsystems need to be designed:1.As firms become more diversified, corporate level managers may not have significantknowledge of, or experience in, the activities of the company’s various business units.If so, corporate level managers for highly diversifies firms can not expect to controlthe different businesses on the basis of intimate knowledge of their activities and performance evaluation tends to be carried out at arm’s length.2.Single industry and related diversified firms possess corporate wide corecompetencies on which the business units are based. Communication channels andtransfer of competencies across business units. Therefore, are critical in such firms. Incontrast, there are low levels of interdependence among the business units of unrelated diversified firms. This implies that as firm becomes more diversified, it may be desirables to the change the balance in control system from an emphasis onfostering cooperation to an emphasis on encouraging entrepreneurial spirit.
Q.2 Under which conditions Management is better advised not to create ProfitCenters? Explain the advantage of creation of Profit Centers?Ans.
When a responsibility centre`s financial performance is measured in terms of profit(i.e by the difference between the revenue and expenditure) the centre is called the profitcentre. Profit is particularly useful performance measure since it allows senior managementto use one comprehensive indicator rather than several.Many management decisions involve proposals to increase expenses with the expectations of an even greater increase in sales revenue. Such decisions are said to involve expenses /

Activity (17)

You've already reviewed this. Edit your review.
1 thousand reads
1 hundred reads
Pritesh Sheth liked this
Pramesh Adhikari liked this
naserkhwaja liked this
suplab liked this
gaurav19sinha liked this
nitinvasu liked this
chitra_sweetgirl liked this

You're Reading a Free Preview

/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->