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Management

Control systems

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Nature Of

ManagementControl systems

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Nature of Management

Control Systems System is a prescribed & usually repetitious way of

carrying an activity or set of activities

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Nature of Management

Control Systems Robert N. Anthony defined Management Control as, the

process by which managers influence other members ofthe organization to implement the organizationsstrategies

Management control systems are tools to aid managementfor steering an organization toward its strategic objectives

Management controls are only one of the tools whichmanagers use in implementing desired strategies Strategies get implemented through management

controls, organizational structure, human resources

management and culture Management Control System Evaluates performance of

different organizational resources and organization as a

whole considering the organizational strategies

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Nature of Management

Control Systems According to Chenhall - terms management accounting

(MA), management accounting systems (MAS),management control systems (MCS), and organizationalcontrols (OC) are sometimes used interchangeably.

In this case

MA refers to a collection of practices such as budgeting orproduct costing

MAS refers to the systematic use of MA to achieve some goal MCS is a broader term that encompasses MAS and also

includes other controls OC is sometimes used to refer to controls built into activities

and processes such as statistical quality control, just-in-timemanagement

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Nature of Management

Control Systems According to Maciariello Management control is concerned

with coordination, resource allocation, motivation, andperformance measurement

Practice and design of management control systems drawsupon a number of academic streams -

Involves extensive measurement and hence requirescontributions from accounting especially managementaccounting

Involves resource allocation decisions and is therefore

related to economics especially managerial economics Involves communication, motivation which means it

must draw contributions from social psychologyespecially organizational behavior

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Management Control

System - Activities Planning

Coordination Communication

Evaluation of information Initiate activities, direction

Influence people to work towards goals

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Elements of Control System Detector or sensor

Observed information about what is happening

Assessor Comparison with Standard

Effector (feedback)

Behavior altering communication, if needed

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Importance of Control

Systems Nature of decisions

Resources quality,quantity, availability

Decision at higher level .. Execution down the level

Decisions are systematic and rhythmic

Strategies, core values, mission-vision, procedures,policies

Strategy implementation tool

Needs framework, infrastructure, control to implement

Behavioral Considerations

Direction, motivation, strengths - limitations

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Characteristics of good

Management Control System Future oriented

Clear objective

Minimum control losses

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Strategy formulation

Strategy formulation is the

process of deciding on the goals& strategies for attaining those

goals

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Activity

Strategy formulation

Management Control

Task control

Result - Output

Goals, Strategies,Policies

Implementation strategies

Efficient & effectiveperformance Ofindividual task

Strategy Formulation ManagementControl Task Control

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Strategy

formulation

Management

Control

Task control

Basic & AppliedResearch

Control ResearchOrganisation

Execute & MonitorIndividual Research

Projects

ImproveCurrent Ratio

Inventory/Receivables

Control

- No. of months RMinventory

- Slow/non movinginventory

- Credit period scrutiny