chap22 - David Franz, 2012 Chapter 22 MANAGEMENT CONTROL...

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Chapter 22 – MANAGEMENT CONTROL SYSTEMS, TRANSFER PRICING, AND MULTINATIONAL CONSIDERATIONS I. Management control systems gather and use information to aid and coordinate the planning and control decisions throughout a firm and guide the behavior of managers and employees A. Balanced Scorecard (detailed in Chapter 13) is a popular control system using four perspectives to evaluate the firm’s internal performance and its relationships with customers, suppliers, and investors with both financial and nonfinancial information. B. Decentralized Organizations 1. Decentralization of decision-making gives lower level managers the freedom to make decisions 2. Benefits of decentralization include: more knowledgeable of varying local needs; quicker decision-making; increased motivation of local managers; and improved manager’s development. 3. Disadvantages of decentralization include: subunit decisions may hurt the overall organization, e.g. two subunits competing for the same customer; duplication of functions; and loyalty to the subunit rather than to the organization as a whole, e.g.
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chap22 - David Franz, 2012 Chapter 22 MANAGEMENT CONTROL...

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