BLOCK 5

BLOCK 5 – NOTES 1
Management and Control

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 BLOCK 5

Learning Objective

Reading List – Willian CH2

1. Learning outcomes
Contrast perspectives on what managers do in terms of leading managerial and economic
theories.

Key elements
What do Managers do? Economics vs. Managerial approaches. Compare Drucker and
Mintzberg to the way that managers are presented in the principal-agent theory

Idea
 What do managers do?" - write down 10 bullet points

2. Learning outcomes
Explain the agency problem, using examples.

Key elements
Agency problem

Idea
 You might be familiar with it already but you will need to know this in detail for the
exam. It is very examinable, especially because they can use it in such a diverse range of
questions.

3. Learning outcomes
Critically assess whether the agency problem can be solved through contracts

Key elements
Can the agency problem be solved?

Idea
 Think through the logic of this. Too many students just assume that it can be completely
solved. It's extremely important, if you are going to understand PA and score well on the
exam, you realise that it is absolutely intractable. It cannot be solved, without full
monitoring which is a) impossible and b) so time and resource inefficient as to be
pointless.

4. Learning outcomes
Explain why accounting and finance numbers can be seen as a social construct

Key elements

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 BLOCK 5

Numbers as a social construct

Idea
 this is an important topic again, because students can show criticality through their
discussion of it. Using lots of examples until they really get it is important.

Activity
 Compare and contrast between the way that managers are portrayed by a) Drucker, b)
Mintzberg c) PA theory.

 Make up your own case study of PA Theory, either using a real company or making one
up, to show how they tried to resolve agency theory and what happened.

 Prepare an example of how numbers are socially constructed using internet research.

Go through the assumptions of principal agency theory and argue whether they are realistic
or not.

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