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THE NATURE OF MANAGEMENT

CONTROL SYSTEMS

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Basic Concepts

Elements of a control system consists of:

1. A detector

2. An assessor

3. An effector

4. A communication network

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1. A detector or sensoris a device that measurewhat is actually happening in the process being

controlled.2. An assessoris a device that determines the

significance of what is actually happening bycomparing it with some standards or

epectations of what should happen.3. An effector (feedback)is a device that alters

behavior if the assessor indicates the need todo so.

4. A communications networkconsist of devicesthat transmit information between the detectorand the assessor and between the assessorand the effector.

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Example: You are driving a car

!etectors" #our eyes

Assessor" #our brain

Effector" #our foot

$ommunication network" #our nerves

system

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#our eyes %detectors&measure actual speed byobserving the speedometer. #our brain

%assessor&compares actual speed with desiredspeed %standard: the highest speed is '(km)hour& to detect a deviation from standard.#our brain %assessor&directs your foot %effector&

to ease up the accelerator if actual speed %*(km)hour&is faster than the standard speed %'(km)hour&+press down the accelerator if the actualspeed %,( km)hour&is slower than standardspeed %'( km)hour&.And+ your nerves%communication network&form thecommunication system that transmits informationfrom eyes %detectors& to brain %assessor& andbrain %assessor& to foot %effector&.

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Boundaries of Management Control

Strategy formulationis the process of

deciding on the goalsof the organi-ation and

the strategiesfor attaining these goals.

Management control%Anthony and

ovindara/an+ 2((4&: is the process by whichmanagers influence other members of

organi-ation to implementthe organi-ation0s

strategies.

Task controlis the process of ensuring thatspecified tasks are carried out effectively and

efficiently.

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Distinctions between strategyformulation and management control:

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Characteristics Strategy Formulation Management Control

System design Unsystematic, Strategicdecision may be madeany time

Rhythmic,predeterminedprocedures

Nature ofinformation

ai!ored"made to facedprob!ems, more e#terna!and predicti$e, !essaccurate

%ntegrated, moreinterna! and historica!,more accurate

&ommunicationof information

Simp!e 'ifficu!t

%n$o!$ed peop!e op management andstaffs

op management and!ine managers

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Distinctions between strategyformulation and management control:

(

Characteristics Strategy Formulation Management Control

Number ofin$o!$ed peop!e

)e* peop!e +any peop!e

+enta! acti$ity &reati$e and ana!ytic dministrati$e andpersuasi$e

'iscip!ine -conomics Socia! psycho!ogy

ime hori.on end to !ong"term end to short"term

-nd products /oa!s, strategies Strategy imp!ementation

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Distinctions between management and taskcontrols:

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Characteristics Management Control Task Control

)ocus ofacti$ity

he *ho!e of operation %ndi$idua! tas ortransaction

Nature of

information

%ntegrated, many financia!

data

ai!ored"made to

indi$idua! tas, morenon"financia! data

%n$o!$ed peop!e +anagement Super$isor or none

+enta! acti$ity dministrati$e andpersuasi$e

)o!!o* direction ornone

-nd products Strategy imp!ementation ass are carried outeffecti$e!y andefficient!y

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Distinctions between management and taskcontrols:

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Characteristics Management Control Task Control

+enta! acti$ity dministrati$e andpersuasi$e

)o!!o* direction ornone

'iscip!ine Socia! psycho!ogy -conomics, physics

ime hori.on ee!y, month!y,annua!!y

'ai!y

ype of cost 'iscretionary costs -ngineered costs

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Examples of decisions in planning and control function:

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Strategy

Formulation

Management

Control

Task Control

-nter a ne* business -#pand a p!ant Schedu!e production

&hange debt toeuity ratio

%ssue ne* debt +anage cash f!o*s

dd direct mai!se!!ing

'eterminead$ertising budget

oo commercia!s

'ecide magnitudeand direction ofresearch

&ontro! of researchorgani.ation

Run indi$idua!research proect

cuire an unre!atedbusiness

%ntroduce ne*product or brand*ithin product !ine

&oordinate orderentry

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