Introduction To Management Control Information System

Introduction to Management control information system 1.

Controlling a car -brakes & accelerator

2

controlling temp. of body/driving car Sensory nerves/eyes Brain Muscle & organs/legs & hands

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• Sensor or detector • Assessor • Effectors

Management control It is a set of interrelated communication structures that facilitates the processing of information to assist the managers in coordinating the parts to achieve goals on continuous basis bringing out the unity /harmony out of the diverse activities.

Management control /simple control • Standard ( like 98.6 ) are not preset • It is adaptive & needs planning & control together • Not automatic as car because it involves human beings • Coordination among individuals • Actions taken are not specified • It is more about self control

System A prescribed & repetitive way to carry out operations.But the management problems are uncertain & complex. Systematic control -formal management control eg:-task control Unsystematic control informal management control eg:-strategy control (IBM mainframe to PC )

PURPOSE OF MCIS •

Planning of activities-

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Coordinating Activities- Harmony among functional unit

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Communicating

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Evaluating

- information & decide actions

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Influencing

- people to change their behaviour

control actual accomplishment with set plans

- information to various levels of hierarchy

Domain of MCS • • • • •

Strategic planning Management control Task control Control of strategy Control of operations

Strategy formulation

Management control

Task control

unsystematic

Lies in between Systematic

Top managers

Staff at all levels Task group

Threat,estimate , Not very often opportunities

scientific

Top managers

Use of computers & man

Interaction between managers

Definition of MCIS Process by which managers influence others -Anthony & Govindrajan Basic phase & essential part of M’ment functions -Newman Cybernetic view- entire organisation is a control system & considers both strategy & operations -Stafford Beer Book “ cybernetic 1947” – Norbert Weiner

Organisation context of MCS •Organisation is divided into sub units having independent autonomy & objectives •MCS lowers cost to coordinate them •MCS bring out efficiency & effectiveness •Now MCS meet requirement of constituents & overall purpose both •Facilitates adaptation, innovation. •Maintain inducement-contribution balance among stakeholders •To maintain MCS- Understand human behaviour as human beings are rational, creative, strong /week morals, desire association/community

Adaptive control system •System is said to be adaptive when its sub systems are internally consistent with each other •Control system of two organisation differs but basic 5 subsystems are common •Formal system makes explicit the structure, rules, procedures, policies to be followed by the managers by documentation - Plans, budgets, regulations, quotas •Informal system consists of interpersonal relationships & supplement adaptability in dynamic & unpredictive environment - strategy control

Infrastructure •Organisation structure •Strategy/SBU •Operations •Pattern of autonomy •Measurement methods •Responsibility centers •Transfer pricing

Management style & culture •Prevailing style •External/internal/mixed Principal values (corporate culture) •Norms & beliefs

•Formal control process •Strategic planning -capital budget •Operation planning – cost account & budgeting •Reporting systems ( monthly/qtrly ) •Operation/variance analysis •Strategy & project M'ment

Rewards •Individual & group •Strategic & operational •Promotion policy

Coordination & integration •Standing committee •Strategy ( Top Mgmt.) •Operations •Formal conference •Involvement techniques

Management style & culture Management style & culture

Infrastructure •Personal contacts •Networks •Expertise oriented •Minimal structure •Emergent roles

•Prevailing •Prevailingstyle style •External/internal/mixed •External/internal/mixed Principal values •Normsvalues & beliefs Principal

( informal relationship)

•Norms & beliefs •Informal control process •Search /alternative generation •Adhoc ( for particular purpose ) •Uncertainty coping •Rationalization/dialogue ( compare with value & beliefs) Informal rewards •Recognition & respect •Status oriented •personal involvement of giver •Performance & stature oriented

Coordination & integration •Based upon trust •Simple /direct/personal/cross org group •Telephone/communication vehicle •Personal memo/adhoc teams

Interaction between formal & informal system • Control system should support org. in both stable & unstable environment • Both formal & informal control system support/overlap each other • In times of major change---informal dominates • When environment settles---formalise rules,procedures • Key is to use the system according to situation • Each sub system in a system support the other. • Both set of subsystems mutually supportable • Indoctrination socializes members to values/policies while skill training imparts knowledge of methods.combination is effective for a control process