Ch 1 Management Control System
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Management Control Systems
What is Control ?
Controlling is the measurement and correction of performance of activities in order to ensure that the planned objectives are accomplished. Control, centres on the prevention and correction of deviations in a system’s behaviour from those of standards that have been specified at a given time.
Control
An organization must be controlled by placing all its elements in its appropriate position to ensure that its strategic intentions are achieved. Controlling organization is very complicated
Feedback
Key element for control procedure is feedback. Comparison of output values is made with the standards and information concerning the degree of deviation is fed back to the other elements in the system’s structure so that preplanned activities may be changed if necessary.
A feedback system is driven by two signals: Input Signal & Feedback Signal. It gives the system capability to act as a selfcorrecting mechanism. It decreases the effects of disturbance and noise signals in the forward path of the feedback loop.
Systems: Closed/Open Closed Systems: Information tight control Open Systems: No information tight control
Management Control System
Is the process of evaluating, monitoring and controlling the various sub-units of the organization so that there is effective and efficient allocation and utilization of resources in achieving the predetermined goals.
Elements Of A Control System Assessor
Effectors
Detector
Communication Network
Characteristics of Control System In Organization
Involvement of people Information about the actual state of the organization is compiled by people. It is compared by people. With the desired state decided by people. For significant difference, a course of action is recommended by people Action taken by people
The management decides the desired state or standards against which performance is compared. It decides what the organization plans to achieve in a given time framework which is known as Planning Process. Actual Performance is compared to Planned Performance in control, so planning and controlling are interlinked and are known as P&C systems
Measurement Co-ordinating Multivariable Control System
3-Level Management
Corporate Management: Responsible for the performance of the organization as a whole. Divisional Management: Responsible for total performance of particular regions or product divisions. Operating Management: Management of unit operations, responsible for the accomplishment of specific operational tasks.
3-Levels of Decision Making
The institutional level for strategic thinking and planning. The managerial level focuses on gathering, coordinating and allocating resources for the organization. The technical level involving the acquisition and utilization of technical knowledge for operational controls.
Types Of Control
Organizational
Informal Group
Individual Level
Controls
Controls
Controls
Organizational Control
Consists of formal rules and standard operating procedures plus the informal procedures that are also communicated throughout the organization.
Informal Group Control
Based on the principle of mutual controls, which envisage checks and balances on each other’s activities as a result of the mutual commitments of the members of the group to each other.
The Individual Level Control
Is the result of control exercised by the individual on himself or herself with a view to achieving personal goals and aspirations.
Internal Control
Based on Internal check and mutual control. Encompasses every type of accounting technique and can be extended beyond the internal audit to encompass management audit.
Insidious Control
Dangerous and powerful due to deceptive nature. Various Kinds: Control through indicating intentions. Pleasures & Displeasures Through informal controls By imposing time discipline
Through dominant coalition Through employees’ loyalty By keeping insiders at key strategic positions By constantly reminding employees of their dependence on org. By not allowing individuals to become bigger than org. By rewarding loyal employees
Punishing vocal employees Informal dinner Business meetings Distorting facts & information Spouse’s tales
What is Control ?
Controlling is the measurement and correction of performance of activities in order to ensure that the planned objectives are accomplished. Control, centres on the prevention and correction of deviations in a system’s behaviour from those of standards that have been specified at a given time.
Control
An organization must be controlled by placing all its elements in its appropriate position to ensure that its strategic intentions are achieved. Controlling organization is very complicated
Feedback
Key element for control procedure is feedback. Comparison of output values is made with the standards and information concerning the degree of deviation is fed back to the other elements in the system’s structure so that preplanned activities may be changed if necessary.
A feedback system is driven by two signals: Input Signal & Feedback Signal. It gives the system capability to act as a selfcorrecting mechanism. It decreases the effects of disturbance and noise signals in the forward path of the feedback loop.
Systems: Closed/Open Closed Systems: Information tight control Open Systems: No information tight control
Management Control System
Is the process of evaluating, monitoring and controlling the various sub-units of the organization so that there is effective and efficient allocation and utilization of resources in achieving the predetermined goals.
Elements Of A Control System Assessor
Effectors
Detector
Communication Network
Characteristics of Control System In Organization
Involvement of people Information about the actual state of the organization is compiled by people. It is compared by people. With the desired state decided by people. For significant difference, a course of action is recommended by people Action taken by people
The management decides the desired state or standards against which performance is compared. It decides what the organization plans to achieve in a given time framework which is known as Planning Process. Actual Performance is compared to Planned Performance in control, so planning and controlling are interlinked and are known as P&C systems
Measurement Co-ordinating Multivariable Control System
3-Level Management
Corporate Management: Responsible for the performance of the organization as a whole. Divisional Management: Responsible for total performance of particular regions or product divisions. Operating Management: Management of unit operations, responsible for the accomplishment of specific operational tasks.
3-Levels of Decision Making
The institutional level for strategic thinking and planning. The managerial level focuses on gathering, coordinating and allocating resources for the organization. The technical level involving the acquisition and utilization of technical knowledge for operational controls.
Types Of Control
Organizational
Informal Group
Individual Level
Controls
Controls
Controls
Organizational Control
Consists of formal rules and standard operating procedures plus the informal procedures that are also communicated throughout the organization.
Informal Group Control
Based on the principle of mutual controls, which envisage checks and balances on each other’s activities as a result of the mutual commitments of the members of the group to each other.
The Individual Level Control
Is the result of control exercised by the individual on himself or herself with a view to achieving personal goals and aspirations.
Internal Control
Based on Internal check and mutual control. Encompasses every type of accounting technique and can be extended beyond the internal audit to encompass management audit.
Insidious Control
Dangerous and powerful due to deceptive nature. Various Kinds: Control through indicating intentions. Pleasures & Displeasures Through informal controls By imposing time discipline
Through dominant coalition Through employees’ loyalty By keeping insiders at key strategic positions By constantly reminding employees of their dependence on org. By not allowing individuals to become bigger than org. By rewarding loyal employees
Punishing vocal employees Informal dinner Business meetings Distorting facts & information Spouse’s tales
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