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MANAGEMENT

CONTROL SYSTEMSINTRODUCTION

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INTRODUCTION

ELEMENTS OF MCS include:-

- Strategic Planning

- Budgeting

- Resource Allocation- Performance Measurement, Evaluation &

Reward

- Responsibility Centre Allocation,

- Transfer Pricing

MCS is a must in a DECENTRALIZED set-up.

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INTRODUCTION

ELEMENTS of a CONTROL SYSTEM:- DETECTOR / SENSOR- ASSESSOR- EFFECTOR / FEEDBACK

- COMMUNICATIONS NETWORK E.g.; THERMOSTAT, BODY TEMPERATURE &

AUTOMOBILE DRIVER Difference / Contrast in case of Management:

- no preset standards

- not automatic- requires coordination among individuals- action required may not be clear- more of self control

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INTRODUCTION

System: A system is a prescribed andusually repetitious way of carrying out anactivity or a set of activities.

Boundaries of Management Control STRATEGY FORMULATION & TASKCONTROL

Management Control Activities planning,coordinating, communicating, evaluating,deciding & influencing.

Goal Congruence Organization & Individual

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INTRODUCTION

Tools for implementing Control Management Control (System) primarily focuson Strategy execution.

Framework for Strategy Implementation the mechanism

- aid in developing new strategy

Strategy Formulation & Task Control howare they different from MCS

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INTRODUCTION

IT & MCS:- Implementing IT controls will greatlyenhance the internal controls of your

organization because greater reliance canbe placed on automated controls than onmanual controls.

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DESIGNING MCS

Contingency Approach: also known assituational approach, is a concept inmanagement stating that there is no one

universally applicable set of managementprinciples (rules) by which to manageorganizations.

Cybernetics Approach: "Cybernetics" comesfrom a Greek word meaning "the art ofsteering". It is about having a goal and takingaction to achieve that goal.

http://en.wikipedia.org/wiki/Goalhttp://en.wikipedia.org/wiki/Goal

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DESIGNING MCS

Control Process Hierarchy : A Hierarchical control systems is a form of

control system in which a set of devices and

governing software is arranged in ahierarchicaltree. A command hierarchy has among its notable

features the organizational chart of

superiors, subordinates, and lines oforganizational communication. Hierarchicalcontrol systems are organized similarly todivide the decision making responsibility.

http://en.wikipedia.org/wiki/Control_systemhttp://en.wikipedia.org/wiki/Control_systemhttp://en.wikipedia.org/wiki/Control_systemhttp://en.wikipedia.org/wiki/Hierarchicalhttp://en.wikipedia.org/wiki/Tree_(data_structure)http://en.wikipedia.org/wiki/Hierarchicalhttp://en.wikipedia.org/wiki/Tree_(data_structure)http://en.wikipedia.org/wiki/Command_hierarchyhttp://en.wikipedia.org/wiki/Organizational_charthttp://en.wikipedia.org/wiki/Organizational_charthttp://en.wikipedia.org/wiki/Organizational_charthttp://en.wikipedia.org/wiki/Organizational_communicationhttp://en.wikipedia.org/wiki/Organizational_communicationhttp://en.wikipedia.org/wiki/Organizational_communicationhttp://en.wikipedia.org/wiki/Organizational_charthttp://en.wikipedia.org/wiki/Command_hierarchyhttp://en.wikipedia.org/wiki/Tree_(data_structure)http://en.wikipedia.org/wiki/Hierarchicalhttp://en.wikipedia.org/wiki/Control_system

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DESIGNING MCS

Adopt solutions from the top of the hierarchybefore considering those lower down.

Some control techniques are:-- Elimination

- Substitution- Controlling risk at source- Education & Training- Personal Protective Equipment

Managing Risk Control Systems: The purpose of arisk control system is to make sure that work placeprecautions are implemented and kept in place. Thegreater the hazard or risk, the more robust andreliable the control system should be.

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DESIGNING MCS

Management Control Systems Design :

The Management Control System must be future-oriented andallow a holistic approach to effectively managingthe performance of any business, aligning strategy and

execution across the organization. Must be able to make connections between people, information

and decision-making processes around the management cycle,allowing timely corrective action.

Designing a set of tools oriented more for the future rather

than the past, involves the need for diagnosis of past andpresent realities and the definition of a field of action for thefuture. The setting of objectives, the choice of action plans anddesign reports for monitoring and decision support activitiesthat are essential to manage the future.

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DESIGNING MCS

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DESIGNING MCS

Management Control System should be provided with

tools that allow to monitor the entire managementcycle from agreeing targets to performanceassessment (planning, execution and performancemonitoring)

enabling strategic alignment across organizationand monitoring performance in different aspects and

providing tools so that managers can set and definegoals, plan and monitor the results,

but also instruments of orientation behavior,which help managers to have a business conduct thatfavors the interests of company in management of

its sector.

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DESIGNING MCS

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DESIGNING MCS

A Management Control System (MCS) is asystem which gathers and uses information toevaluate the performance of differentorganizational resources like human, physical,

financial and also the organization as a wholeconsidering the organizational strategies.Finally, MCS influences the behavior oforganizational resources to implementorganizational strategies. MCS might be formal

or informal. Anthony & Young (1999) showed management

control system as a BLACK BOX.

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DESIGNING MCS

http://en.wikipedia.org/wiki/File:Management_Control_Systems_as_an_interdisciplinary_subject.jpg

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DESIGNING MCS

Management Control Systems use techniques as: Balanced scorecard Total quality management (TQM) Kaizen (Continuous Improvement) Activity-based costing Target costing Benchmarking and Benchtrending JIT

Budgeting Capital budgeting Program management techniques, etc

http://en.wikipedia.org/wiki/Balanced_scorecardhttp://en.wikipedia.org/wiki/Total_quality_managementhttp://en.wikipedia.org/wiki/Kaizenhttp://en.wikipedia.org/wiki/Activity-based_costinghttp://en.wikipedia.org/wiki/Target_costinghttp://en.wikipedia.org/wiki/Benchmarkinghttp://en.wikipedia.org/wiki/JIThttp://en.wikipedia.org/wiki/Budgetinghttp://en.wikipedia.org/wiki/Capital_budgetinghttp://en.wikipedia.org/wiki/Capital_budgetinghttp://en.wikipedia.org/wiki/Budgetinghttp://en.wikipedia.org/wiki/JIThttp://en.wikipedia.org/wiki/Benchmarkinghttp://en.wikipedia.org/wiki/Target_costinghttp://en.wikipedia.org/wiki/Activity-based_costinghttp://en.wikipedia.org/wiki/Activity-based_costinghttp://en.wikipedia.org/wiki/Activity-based_costinghttp://en.wikipedia.org/wiki/Kaizenhttp://en.wikipedia.org/wiki/Total_quality_managementhttp://en.wikipedia.org/wiki/Balanced_scorecard