L2 Evolution Of Mcs

Evolution of Mgt. Control System MCS is highly influenced by BEHAVIOR of the people involved in it. Organizational Structure & Style Leadership Style Organizational Behavior Organization’s Strategy Hence MCS evolved simultaneously along with developments in these areas.

October 17, 2008

[email protected], VIM Pune

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Evolution of Mgt. Control System Phase 1 • Functional set up of organization –for reasons of economies of scale . • Difficulty in measuring the performance - attributing the individual functional department’s performance to overall goal.

• Lead to difficulty in control.

• Planning and controlling concentrated at top. October 17, 2008

[email protected], VIM Pune

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Evolution of Mgt. Control System Phase 2 • Evolution of Business Unit structure. SBU • Planning & control decentralized. • Focus of control became more specific. • Though BU’s functional departments remained under its operational control October 17, 2008

[email protected], VIM Pune

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Evolution of Mgt. Control System BU control benefited from autonomy granted by top mgt. Thereby Control System got improved – on account of … ….  Speed, Quality of decision improved.  Top mgt. now can concentrate on broader issues.  Enhanced profit consciousness  Provided training ground in General management.  BU mgr is relieved of constraints.  Performance of BU become easier to evaluate by top mgt.  Lead to competitive pressure on BU mgr. October 17, 2008

[email protected], VIM Pune

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Evolution of Mgt. Control System But BU simultaneously it posed following problems  Top mgt. may feel it as loosing control.  Availability of competent BU mgrs.  Co operation among BU’s become difficulty.  Friction among BU’s – e.g. transfer price.  More emphasis on short term/BU goal.  Additional cost of operation due to duplication of activity at

October 17, 2008

various BUs’.

[email protected], VIM Pune

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Thank You.

October 17, 2008

[email protected], VIM Pune

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