MANAGEMENT CONTROL SYSTEMS (MCS)

Course Outline (2 credits: 10 sessions)

Faculty : Prof. Rajesh Agrawal

Course Objectives

This course is designed to help the students think through managing the strategy
implementation dilemmas faced by the operating managers. The long-term success of
world class companies is not only a function of their good strategies, but more
importantly, their design of systems and processes to execute their strategies effectively.
The key ideas underlying the course are that (a) strategic intentions have no value if they
do not get converted into reality (b) different organizations typically have different
strategies, and (c) different control systems are needed to effectively implement different
strategies.

In particular, the course is designed to allow the students to gain knowledge, insights and
analytical skills related to how an organization’s managers go about designing and
implementing ongoing formal systems used to plan and control the organization’s
activities to achieve its goals.

The course builds upon the concepts learned from strategy, organizational behavior,
human resources, and managerial accounting.

Pedagogy

The conceptual materials are primarily provided in the textbook. The cases will be used
for different topics to:

a) Introduce and discuss key issues for several of the most important control
systems in use in business.
b) Illustrate and emphasize the need for a good “fit” between a particular control
system and the strategy chosen by the organisation.

Evaluation

Quizzes/ Exam - 10%

Assignments/ End term - 25%
Class Participation - 15%

Text Book

Management Control Systems, 12th Edition (2007), Anthony & Govindarajan (AG)
Class Preparation and participation

The most important requirement for this course is a thorough preparation and analysis of
the assigned case and reading material, and active participation in the classroom. The
course is built exclusively around case method. It is essential that you mentally get inside
the case situation, and do not approach a case as you would a chapter in a book or article
in a magazine. Feel the pressures of the protagonist with respect to tradeoffs, limited
resources, organizational politics, or whatever. Once in class, share your ideas with others
as we work jointly to resolve the issues.

Session Plan

Session Particulars
1 Topic The Nature of Management Control Systems
Reading a) AG - Chapter 1
b) Developments in MCS by John Dearden [Booklet]
Case General Electric Company [Booklet]
2 Topic Responsibility Centers: Discretionary Expense Centers
Reading AG - Chapter 4
Case 4.5, Westport Electric Corporation
3 Topic Transfer Pricing
Reading AG - Chapter 6
Case 6.2, Birch Paper Company
4 Topic Profit Centers
Reading AG - Chapter 5
Case 5.2, North Auto, Inc.
5 Topic Investment Responsibility Centers
Reading AG - Chapter 7
Case Cheetah Division [Booklet]
6 Topic Investment Responsibility Centers
Reading AG - Chapter 7
Case 7.4, Aloha Products
7 Topic Management Compensation
Reading AG - Chapter 12
Case 12.2, Crown Point Cabinetry
8 Topic Control Dynamics
Case Premier Paper Mills (B) [Booklet]
9 Topic MCS in Nonprofit Organizations
Read AG - 14
Case Jalabhumi Nutritional Programme (A) [Booklet]
10 Topic Review
Case To be announced