Management Control Systems

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 Name some successful companies in India or
Abroad

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 Indicate the products produced or
Services offered by them

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 What could be secret of their success?

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 Some of the secret of Success?

They have
Developed Good Strategies
Designed systems and processes
Energized their employees
Executed Strategies effectively
and efficiently

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 What is Management ?

An art of getting things done through other people

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 4 functions of
Management

Strategic Preparation
Management of
Financial
Statements
Planning & Management
Decision &
Making Operational
Control
 functions of
Management

A strategy is a set of goals and specific

Strategic Action plans that, if achieved, provide
Management the desired competitive advantage

SM involves identifying and implementing

these goals and action plans
 4 functions of
Management

Planning & It involves budgeting, profit planning, cash flow,

Decision others decisions related to firm’s operations, such
Making as deciding when to buy or lease a facility, when to
repair or replace a piece of equipment, when to
change a marketing plan and when to begin new
product development
 4 functions of
Management

Management
& OC takes place when mid level managers monitors
Operational the activities of operating level managers
Control

MC is the evaluation of mid-level managers

by upper level managers
 4 functions of
Management

Preparation
of
Management complies with Financial
financial reporting requirements Statements
as per law
 What is Control ?

Picture of Car
Film Director
Formula 1

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 What is a System ?

A system is a prescribed and

usually repetitious way of
carrying out activity or set of
activities

Electric Current
Computers
Mobile Phone
Machine
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 What is Management Control ?

Management Control Process is a process by which managers

at all levels ensure that the people they supervise implement
their intended strategies

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 What is a Control System ?

A Detector An Assessor

An Effecter

A Communication
Network

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 2 Assessor
Control Comparison with
Devices
standard

1 Detector
What is happening ? 3Effector
Behaviour alteration
if needed

Entity
Being
Controlled

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Elements of the Control Process
 3 examples

Body Automobile
Thermostat Temperature Driver

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 Elements of Management Control Systems?

Strategic Planning

Budgeting

Resource Allocation
Performance
Measurement
Evaluation & Reward
Responsibility Centre Allocation

Transfer Pricing
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 Boundaries' of Management Control

Strategy Goals, Strategies and Policies

Formulation

Management
Implementation of Strategies
Control

Task Efficient and effective

Control Performance of individual tasks

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 Management Control Activities

Planning
Coordination
Communication
Evaluation
Deciding Action
Influencing Behavior
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 Management Control Essentials

Goal Congruence
Tasks for implementing
Strategy
Organizational Structure
Financial-NF Factors
Developing New Strategies

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 Management Control Essentials- implementing strategy

Managemen
t
Control

Performance
Org HRM
Strategy Structure

Culture

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 Simpler Process and Management Control Process

1 No Standard is set
2 No automatic Control
3 Not much clarity
4 Self Controlled

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 Strategy Formulation

Strategy Formulation is the process of deciding on the goals

of the Organization and the strategies for attaining these
Goals

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 Strategies

Strategies are big plans

Important Plans
Directions in which organization Moves
Need Arise in response to threat
Falling market share
Government Regulations
Change in Customer Behaviour
Development of New Product

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 Few More Clarifications

Goals are overall Aims of the Organization

Goals are Timeless, exists until changed
ROI
Market Share
Customer Satisfaction……

Objectives are specific steps to accomplish

Goals

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 Strategy Formulation & M Control

SF is process of deciding new Strategies

MC is the process of implementing these
Strategies

Strategic Analysis varies with the nature of

strategy
MC predictable sequence with fixed schedule

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 Task Control

Task Control is the process of ensuring that

Specified Tasks
are carried out effectively and efficiently

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 Task Control

Task Control •No .of Customer

Orders
Involves performance of individual tasks •Tons of Materials Used
Regulated according to rules •No. Of hrs employee
May not require human beings worked
May be Mechanically Controlled • Cash Disbursed
Many TC activities are scientific

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  Task Control & M Control- differences

TC many TC Systems are Scientific

MC cant be reduced to science
MC is behavioral

MC –the focus on entire organization

TC – focus on task or job

MC-judgmental, decisions, constraints..

TC- no judgment may be required

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  Strategy Formulation-Task Control & M Control
compared

Strategy Management Task

Formulation Control Control

Devise inventory Decide inventory Reorder an

Speculation policy Levels Inventory item

Schedule
Enter a new Expand a plant Production
Business

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 questions

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 Case
Discussion

Nucor Wal-Mart
Corporation Stores

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