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Unformatted text preview: Management Control Systems Systems What is Control ? What Controlling is the measurement and Controlling correction of performance of activities in order to ensure that the planned objectives are accomplished. are Control, centres on the prevention and Control, correction of deviations in a system’s behaviour from those of standards that have been specified at a given time. have Control Control An organization must be controlled by An placing all its elements in its appropriate position to ensure that its strategic intentions are achieved. intentions Controlling organization is very Controlling complicated complicated Feedback Feedback Key element for control procedure is Key feedback. feedback. Comparison of output values is made with Comparison 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. if A feedback system is driven by two signals: feedback Input Signal & Feedback Signal. Input It gives the system capability to act as a selfcorrecting mechanism. It decreases the effects of disturbance and It noise signals in the forward path of the feedback loop. feedback Systems: Closed/Open Closed Systems: Information tight control Open Systems: No information tight control Management Control System Management Is the process of evaluating, monitoring and Is 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. goals. Elements Of A Control System Elements
Assessor Detector Effectors Communication Network Characteristics of Control System In Organization System Involvement of people Information about the actual state of the Information organization is compiled by people. organization It is compared by people. With the desired state decided by people. For significant difference, a course of For action is recommended by people action Action taken by people The management decides the desired The state or standards against which performance is compared. performance It decides what the organization plans to It achieve in a given time framework which is known as Planning Process. is Actual Performance is compared to Actual Planned Performance in control, so planning and controlling are interlinked and are known as P&C systems and Measurement Co-ordinating Multivariable Control System 3-Level Management 3-Level Corporate Management: Responsible for Responsible the performance of the organization as a whole. whole. Divisional Management: Responsible for Responsible total performance of particular regions or product divisions. or Operating Management: Management of Management unit operations, responsible for the accomplishment of specific operational tasks. tasks. 3-Levels of Decision Making 3-Levels The institutional level for strategic thinking and The institutional planning. planning. The managerial level focuses on gathering, coThe managerial ordinating and allocating resources for the ordinating organization. organization. The technical level involving the acquisition and The technical utilization of technical knowledge for operational controls. controls. Types Of Control Types Organizational Controls Informal Group Controls Individual Level Controls Organizational Control Organizational Consists of formal rules and standard Consists operating procedures plus the informal procedures that are also communicated throughout the organization. throughout Informal Group Control Informal Based on the principle of mutual controls, Based 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. to The Individual Level Control The Is the result of control exercised by the Is individual on himself or herself with a view to achieving personal goals and aspirations. to Internal Control Internal Based on Internal check and mutual Based control. control. Encompasses every type of accounting Encompasses technique and can be extended beyond the internal audit to encompass management audit. audit. Insidious Control Insidious Dangerous and powerful due to deceptive Dangerous nature. 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 By positions positions By constantly reminding employees of By their dependence on org. their By not allowing individuals to become By bigger than org. bigger By rewarding loyal employees Punishing vocal employees Informal dinner Business meetings Distorting facts & information Spouse’s tales ...
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- Spring '10