Bac322

cChapter 1 the nature of management control system

Have an ultimate goal→formulate a strategy to achieve that goal

The strategy is “the general direction in which an organization plans to move ahead to attain its goal”.

Everything that a firm does should revolve around its STRATEGY.

Once policies and programs are in place for the strategy, management needs some way to ensure that people in the organization do what they are supposed to do (i.e. that their efforts are aligned with the overall strategy).

MANAGEMENT CONTROL is the process used to do this: to ensure that performance matches the objectives and strategy.

Control is the process of guiding a set of variables to attain a preconceived goal or objective.

Elements of control system:

1. Detector or sensor: information about what is happening

2. Assessor: comparison with standard

3 effector: behaviour alteration, if needed

4 communications network

The differences between the management control process and the simpler processes

1 the standard is not preset

2 management control is not automatic

3 management control requires coordination among individuals

4 the connection from perceiving the need for action to determining the action required to obtain the desired result may not be clear.

5 much management control is self-control

SYSTEM :“a system is a prescribed and usually repetitive way of carrying out an activity or set of activities”

Management Control Systems fit between Strategy Formulation and Task Control.

-------------------------------------------------

-------------------------------------------------

Strategy Formulation Mgmt Control Systems Task Control

-------------------------------------------------

-------------------------------------------------

- goals, strategies and policies - implementation of strategies - performance of individual tasks

-------------------------------------------------

-...