MANAGEMENT CONTROL

P. GURU PRASAD FACULTY MEMBER for FINANCE & ACCOUNTS

MCS ± AN OVERVIEW

An enterprise has to use its resources effectively and efficiently, in order to achieve its objectives and excel in its chosen domain of operations. A competitive edge needs to be maintained over competitors in terms of cost and quality.

MCS ± AN OVERVIEW
In order to survive and sustain themselves in a complex business environment, organizations are required to simultaneously meet the growing demands of their stakeholders .

CONTROL
Control refers to the activities of Establishing standards of performance, Evaluating actual performance against these standards, and Implementing corrective actions to accomplish organizational objectives

CONTROL
In a complex and volatile business scenario, the most carefully crafted plans can go wrong. The enterprise requires control systems to monitor the developments in the external marketplace and to adapt to them.

CONTROL
MCS help in not only assuring better quality but also in coping with unanticipated change and creating faster cycles to market

Definition
A management control system is a set of interrelated communication structures that facilitates the processing of information for the purpose of assisting managers in coordinating the parts and attaining the purpose of an organization on a continuous basis

MCS
It assists the management in Formulating strategies, Coordinating the activates of the organization, and in Steering those activates toward the achievement of the overall goals and objectives.

Cybernetic approach to MANAGEMENT CONTROL

Cybernetics is the study of the entire field of control and communication theory, whether in the machine or the animal.

Cybernetic approach to MANAGEMENT CONTROL
When exercising the control function, a manger measures the performance of an individual, a plan, or a program against certain predetermined standards and takes corrective actions if there are any deviations

Basic control process
Determining areas to control Establishing standards Measuring performance Comparing actual performance against standards Rewarding good performance Taking corrective action when necessary Adjusting standards when necessary

Management by Objectives
MBO was a concept popularized by Peter F. Drucker in 1954 in his book ³ The practice of Management ³. The key features of MBO is setting of goals jointly by the supervisor and the subordinate.

Management by Objectives
This helps establish a system of mutual controls within the organizations, which enables mangers to control their subordinates as well as each other

Management by Objectives
The MBO process can be implemented through a series steps. In the first step of the MBO process, managers must determine the mission and strategic goals of he enterprise. Goals must be set for all the key result areas of the organization.

Management by Objectives
In the second stage, goals are set for various organizational levels so that each goal contributes to the achievement of the overall goals set for the organization. Once the goals of various departments, subunits, and individuals have been set, action plans must be developed. Action plans state what is to be done in order to achieve a goal and how, when, where , and by whom.

Management by Objectives
Once the objectives have been set and action plans determined, the subordinates should be given considerable freedom to carry out their activates and implement their plans. MBO is expected to help subordinates get a clear idea of what they should achieve

Management by Objectives
The MBO process not only gives subordinates a sense of direction. It also allows them to evaluate their own progress. Periodic reviews have to be done to ensure that plans are being implemented properly and that objectives are being achieved.

Objectives of management control
According to the committee of sponsoring organizations of the Treadway commission ( COSO):Effectiveness and efficiency of business operations Reliability of financial reporting Compliance with applicable regulatory and legal frame work.

Thanking you
Success is getting what you want. Happiness is wanting what you get. Dale Carnegie Knowledge speaks, but wisdom listens. 
Jimi Hendrix US rock musician & singer (1942 - 1970)

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