THE NATURE OF MANAGEMENT

CONTROL SYSTEMS

Basic Concepts

Elements of a control system consists of:

1. A detector
2. An assessor
3. An effector
4. A communication network

1.

2.

3.

4.

A detector or sensor is a device that measure

what is actually happening in the process being
controlled.
An assessor is a device that determines the
significance of what is actually happening by
comparing it with some standards or
expectations of what should happen.
An effector (feedback) is a device that alters
behavior if the assessor indicates the need to
do so.
A communications network consist of devices
that transmit information between the detector
and the assessor and between the assessor
and the effector.
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Example: You are driving a car

Detectors= Your eyes

Assessor= Your brain
Effector= Your foot
Communication network= Your nerves
system

Your eyes (detectors) measure actual speed by

observing the speedometer. Your brain
(assessor) compares actual speed with desired
speed (standard: the highest speed is 80
km/hour) to detect a deviation from standard.
Your brain (assessor) directs your foot (effector)
to ease up the accelerator if actual speed (90
km/hour) is faster than the standard speed (80
km/hour), press down the accelerator if the actual
speed (70 km/hour) is slower than standard
speed (80 km/hour). And, your nerves
(communication network) form the
communication system that transmits information
from eyes (detectors) to brain (assessor) and
brain (assessor) to foot (effector).
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Boundaries of Management Control

Strategy formulation is the process of

deciding on the goals of the organization and
the strategies for attaining these goals.
Management control (Anthony and
Govindarajan, 2004): is the process by which
managers influence other members of
organization to implement the organizations
strategies.
Task control is the process of ensuring that
specified tasks are carried out effectively and
efficiently.
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Distinctions between strategy

formulation and management control:
Characteristics

Strategy Formulation

Management Control

System design

Unsystematic, Strategic Rhythmic,

decision may be made
predetermined
any time
procedures

Nature of
information

Tailored-made to faced Integrated, more

problems, more external internal and historical,
and predictive, less
more accurate
accurate

Communication Simple
of information

Difficult

Involved people Top management and

staffs

Top management and

line managers
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Distinctions between strategy

formulation and management control:
Characteristics

Strategy Formulation

Management Control

Number of
Few people
involved people
Mental activity Creative and analytic

Many people

Discipline
Time horizon

Economics
Tend to long-term

Social psychology
Tend to short-term

End products

Goals, strategies

Strategy implementation

Administrative and
persuasive

Distinctions between management and task

controls:
Characteristics

Management Control

Task Control

Focus of
activity

The whole of operation

Individual task or
transaction

Nature of
information

Integrated, many financial

data

Tailored-made to
individual task, more
non-financial data

Involved people Management

Supervisor or none

Mental activity

Administrative and
persuasive

Follow direction or
none

End products

Strategy implementation

Tasks are carried out

effectively and
efficiently
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Distinctions between management and task

controls:
Characteristics

Management Control

Task Control

Mental activity

Administrative and
persuasive

Follow direction or
none

Discipline
Time horizon

Social psychology
Weekly, monthly,
annually

Economics, physics
Daily

Type of cost

Discretionary costs

Engineered costs

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Examples of decisions in planning and control function:

Strategy
Formulation

Management
Control

Task Control

Enter a new business Expand a plant

Schedule production

Change debt to
equity ratio

Issue new debt

Manage cash flows

Add direct mail

selling

Determine
advertising budget

Book TV
commercials

Decide magnitude
and direction of
research

Control of research
organization

Run individual
research project

Acquire an unrelated Introduce new

business
product or brand
within product line

Coordinate order
entry
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