The Nature of

Management
Control
System

Chapter 1
 Basic Concept
1. Control
2. Management
3. System
Control (the control process in simpler system)
• A detector  a device that measures what is actually
happening in the process being controlled
• An Assessor  a device that determines the significance of
what is actually happening by comparing it with some standard or
expectation of what should happen
• An Effector  a feedback that alters behavior if the assessor
indicates the need to do so.
• A Communication Network  a device that transmit
information between the detector and the assessor and between the
assessor and the effector
 Control Assessor

Detector Affector

Entity
Management
• Management control process 

the process by which managers at all level ensure that

the people they supervise implement their intended
strategies.
System
A system is a prescribed and usually
repetitious way of carrying out an activity
or a set of activities.

If all systems ensured the correct action

for all situations, there would be no need
for human managers.
Boundaries of Management Control
MANAGEMENT CONTROL
Nature of
Activity end Product

Strategy Goals
Formulation Strategy, Policies

Management Implementation
Control of Strategies

Task Efficient & Effective

Control peformance of individual task
Management control activities, including :

• Planning  what the organization should do

• Coordinating  activities of the several parts of the
organization.
• Communicating  information
• Evaluating  information
• Deciding  action should be taken.
• Influencing  people to change their behavior
 • Goal Congruence
• Tools for implementing strategies
Implementation Mechanism

Management
control

Organization
Strategy Structure HRM Peformance

Culture

• Financial & Non Financial Emphasis

• Aid in developing new strategies
 Strategy Formulation
Process of deciding on the goals of the
organization and the strategies for attaining
these goals.

Distinction between Strategy Formulation and

Management Control

• Strategy Formulation is the process of deciding

on new strategies.
• Management Control is the process
implementing those strategies
Task Control

Task control is the process of ensuring

that specified tasks are carried out
effectively and efficiently. Task control is
transaction oriented.
Strategy Management Task Control
Formulation Control
Acquire an unrelated Introduce new product or Coordinate order entry
business brand within product line
Enter a new business Expand of plant Schedule production

Add direct mail selling Determine advertising Book TV commercials

budget
Change debt/equity ratio Issue new debt Manage cash flows

Adopt affirmative action Implement minority Maintain personnel

policy recruitment program records
Devise inventory Decide inventory levels Reorder an item
speculation policy

Decide Magnitude & Control research Run individual research

direction of research organization project
 Impact of the internet on
Management Control
• Instant access
• Multi Targeted communication
• Costless Communication
• Ability to display image
• Shifting power and control to the individual