What Management Control System Would You Recommend for O’reilley Associates ?

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Questions #1What management control system would you recommend for O’Reilley Associates ?

O’Reilley Associates is a Professional Service Organization. Because they had a special characteristics, like:

* Goals. A professional organization has relatively few tangible assets; its principal asset is the skill of its professional staff, which doesn’t appear to each balance sheet.

* Professionals. Professional organizations are labor intensive, and the labor is of a special type. Many professionals prefer to work independently, rather than as part of team.

* Output and input measurement. Revenue earned is one measure of output in some professional organizations, but these monetary amounts, at most, relate to the quantity of service rendered, not to their quality (although poor quality is reflected in reduced revenues in the long run).

* Small size. Professional organizations are relatively small and operate at a single location.

* Marketing. Marketing is an essential activity in almost all organizations.

Management Control system that our group recommend for Reilley Associates are Strategic Planning and Budgeting. In a professional organization, the principal assets are people. We can see on the case that O’Reilley was organized into six divisions, which each division were working together to reach the goals and meet the client needs. Budget are an important tool for effective short-term planning and control of organization:

* A budget estimate the profit potential of the business unit

* It is stated in monetary terms, although the monetary amounts may be backed-up by nonmonetary amounts

* Its generally covers a period of a year

* It is a management commitment

Question #2What would you include in Anil Chitkara’s report described at the end of the case?

* Profitability estimate O’Reilley have to estimate the client’s profit for knowing profitability of using advertising agency.

* Performance evaluation O’Reilley have to...