Management Control

Systems
Chapter – 1 Basic Concepts –Nature of Management control
systems
Text book Refered :- MCS , Anthony & Govindrajan

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The Nature of Management Control systems
Elements of MCS:-
Strategic Planning
Budgeting
Resources Allocation
Performance Measurement
Evaluation
Reward
Responsibility Center Allocation
Transfer Pricing
etc…….
The Nature of Management Control systems

Different Views :-
View-1
Development of strategy
MCS designed to fit in to the strategy

View -2
Strategies emerge through experimentation – MCS affect
the development of strategies
The Nature of Management Control systems
1. Control :-

Devises that must be in place to ensure that its

strategic intentions are achieved.
The Nature of Management Control systems
Elements of Control System
1. Detector :
a devise that measures what is actually happening
2. Assessor :
a devise that determines the significance of what is
actually happening by comparing with standard
3. Effector :-
a devise that alters the behavior as per the indication of
the assessor
4. Communication network :
Devise that transmit information between detector and
assessor
The Nature of Management Control systems

2. Management

Process by which managers at all levels ensure that the

people they supervise implement their intended
strategies .
The Nature of Management Control systems
Difference Between Management control process and
simple control process
1. No preset standards – standards developed through
careful planning
2. Not Automatic :- Some detectors may be mechanical ,
but mostly managers personally performs the assessors
function
3.Requires Coordination of many individual managers
4. The connection between need for action and desired
result may not be clear .
5. Self control
The Nature of Management Control systems

3. System

Repetitive way of carrying out an activity of set of

activities .
The Nature of Management Control systems