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Published by Dhaval Lagwankar

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Published by: Dhaval Lagwankar on Jun 17, 2010
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Q.4 Explain briefly the various stages of management control process. Citing andcriticality of each?ANS:
The management control process for ongoing operating activities has the followingfour phases:(1)programming(2)Budgeting(3)Execution(4)EvaluationControl process in the of non operating activities such as project consist of the above phases except that two phases, programming and budgeting are combined into a singleactivity. Project planning, they are difference in the nature of a project and that are operatingactivities. A project generally has a single objective and ongoing operating activities havemultiple objective. A project comes to an end when the objective is accomplished. Anongoing operating organization intends to operate indefinitely. In some process cases, thecompletion of project may result into an ongoing operating organization although this mayinvolves complex management control problems.The discussion of the four phases of management control – Programming, budget preparation, Execution, Evaluation- are as follows:
Programming :
Programming is defined as making programs by top/senior management in terms of organization, goals and strategies and deciding the fund and resources needed to accomplishthe programs. Programs can be made about development of new products, research anddevelopment activities, merger takeover, and other activities that are not related much withexisting product lines. In service organizations, such as a hotelChain management may draw programs for each hotel on each region where thehotels are to be set up. In decentralization, organization, for each segment or central, programming can be done.Programming is a long rang plan, covering period of approximately five future years.The reason is that if programming is made for shorter periods, the result and benefits of  programming can not be realized within this period. Some organization like public utilities prepare long rang plans for even a periods of twenty years. Because of relatively long time plan, only rough estimates are possible for revenues, expenses and capital expenditure.
Its top management is convinced that programming is very important. Otherwise programming is likely to become a staff exercise that has little impact an actualdecision making.
It is relatively a large and complex. In small, simple organization, an informalunderstanding of an organization future direction adequate for making decision aboutresources allocation, which a principles purpose of repairing programme.
Considerable uncertainty about the future exists, but organization has the flexibilityto adjust to change the circumstances. In relatively stable organization. A programmay be unnecessary; the future is sufficiently like the past so that the program would be only an exercise in extrapolation. If the future is so uncertain that reasonablyreliable estimates can not be made, preparation of formal programme is a waste of time.
Budgeting :
Budgeting is formal financial plan for each year, know as short rang plan, istechniques of expressing revenues, expenses, physical target like production and sales, profit,asset and liabilities usually for periods of one future year.Budget has functions of motivating manager, coordinating activities, communicatingto persons within an organization, providing standards for judging actual performance andacting as a control tool.
Executing :
After the budget preparation, budgeting is used as tool for coordinating the action of individual and department within the organization. In fact within the execution phase, task control is done to ensure the action and performance match with the and desire result. Which performing the manager’s goals is to achieve budgeted targets, however compliance to budget is not necessary if the plans given in the budget are found as not the best way of achieving the objectives. Adherence to budget is not necessary good, and departure from it isnot necessary bad.
Evaluation :
The management control process ends with evaluation phase in which performance of manager is evaluated. Since it is an after event exercise, the evaluation does effect what hashappened, however evaluation phase act like a powerful stimulus as employees know thattheir performance will be subsequently evaluated. Also on the basis performance evaluation,the future budget and plans are revised.
The management control process is behavioral, manifesting itself in interactionamong manager and between manager and their sub-ordinates. Because managers differ fromanother in technical ability, leadership style, interpersonal skill, experience, approach todecision making, affinity for member, and in many other ways, the details of the managementcontrol process vary from company to company and among the responsibility centre withincompany. The difference relate mainly to the way the control system is used.Programming, budgeting, executing and evaluation are not needed in small, relativelystable organization, and it is not worthwhile in organization that cannot make reliableestimates about the future or in organization whose top management does prepare to managein this fashion.
Q. 8(a)Describe the factor which impact on service organization.Introduction:
For several reasons, management control in service industries is somewhat differentfrom management control in service industries is somewhat different from managementcontrol in manufacturing companies. Some factors that have an impact on most serviceindustries discussed as follows. These factors apply also to the management control of legal,research and development, and other service departments in companies generally.Factors which impact on services organizations
Absence of Inventory Buffer 
Difficulty in controlling quality
Labor intensive
Multiunit organization
Historical development
Absence of inventory buffer
Goods can be held in inventory, which is a buffer that dampens the impact on production activity of fluctuations in sales volume. Services can be stored. The airplane seat,hotel room, hospital operating room, or the hours of lawyers, physicians, scientist, and other  professionals that are used today are gone forever. Thus, although, a manufacturing companycan earn revenue in the future from products that are hand today, a service company cannotdo so. It must try to minimize its unused capacity.Moreover, the cost of many services organizations is essentially fixed in the shortsrun. In short, a hotel cannot reduce its costs substantially by closing off its rooms. Accountingfirms, law firms, and other professional organizations are reluctant to lay off professional personal in times of low sales volume because of the effect on morale and the costs of rehiring and training.A key variable in most service organization, therefore, is the extent to which currentcapacity is matched with demand. Service organization attempts this matching in two ways.First they try to stimulate demand in off –peak periods by marketing efforts and priceconcessions. Cruise lines and resort hotels offer low rates off seasons. Second, if feasible,service organization adjusts the size of workforce to anticipated demand, if feasible, by suchmeasures as scheduling training activities in slack periods and compensating for long hours in busy periods with time off later. The loss from unsold services is so important that occupancyrates and similar indications of success in selling available services are normally key variablein service organizations.
Difficulty in Controlling Quality
A manufacturing company can inspect its products before they are shipped toconsumer, and their quality can be measured visually or with instruments(tolerances ,purity,weight, color, and so on).A service company cannot judge product quality until the momentthe service is rendered, and then the judgment are often subjective. Restaurants managementcan examine the food in the kitchen, but customer satisfaction depends to a considerableextent on the way it is served. The quality of education is so difficult to measure that feweducational organizations have a formal quality control system.
Labor Intensive
Manufacturing companies add equipment and automate production lines, therebyreplacing labor and reducing costs. Most service companies are labor intensive and cannot dothis. Hospitals do add expensive equipment, but mostly to provide better treatment, and thisincrease costs. A law firm expands by adding partners and new support personnel.
Multi-Unit Organizations
Some services organization operate many units in various locations, each unitrelatively small. These organizations are fast-food restaurant chains, auto rental companies,gasoline services stations, and many others. Some of the units are owned; others operateunder a franchise. The similarity of the separate units provides a common basis for analyzing budgets and evaluating performance not available to the manufacturing company. Theinformation for each unit can be compared with system wide or regional averages, and high performance and low performers can be identified. However, because units differ in the mixof services they provide, in the resources that they use, and in other ways, care must be takenin making such companies.

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