Introduction to Management control information system

1. Controlling a car

-brakes & accelerator

2 controlling temp. of body/driving car

– Sensory nerves/eyes

– Brain

– Muscle & organs/legs & hands

• Sensor or detector

• Assessor

• Effectors

Management control

It is a set of interrelated communication structures that facilitates the processing of information to assist the managers in coordinating the parts to achieve goals on continuous basis bringing out the unity /harmony out of the diverse activities.

Management control /simple control

• Standard ( like 98.6 ) are not preset • It is adaptive & needs planning & control

together• Not automatic as car because it involves

human beings• Coordination among individuals• Actions taken are not specified • It is more about self control

SystemA prescribed & repetitive way to carry out operations.But the management problems are uncertain & complex.

Systematic control

-formal management control

eg:-task control

Unsystematic control

informal management controleg:-strategy control (IBM mainframe to

PC )

PURPOSE OF MCIS

• Planning of activities- control actual accomplishment with set plans

• Coordinating Activities- Harmony among functional unit

• Communicating - information to various levels of hierarchy

• Evaluating - information & decide actions

• Influencing - people to change their behaviour

Domain of MCS

• Strategic planning

• Management control

• Task control

• Control of strategy

• Control of operations

Strategy formulation

Management control

Task control

unsystematic Lies in between Systematic

Top managers Staff at all levels Task group

Threat,estimate ,

opportunities

Not very often scientific

Top managers Interaction between managers

Use of computers &

man

Definition of MCISProcess by which managers influence others

-Anthony & Govindrajan

Basic phase & essential part of M’ment functions

-Newman

Cybernetic view- entire organisation is a control

system & considers both strategy

& operations

-Stafford Beer

Book “ cybernetic 1947” – Norbert Weiner

Organisation context of MCS•Organisation is divided into sub units having independent autonomy & objectives

•MCS lowers cost to coordinate them

•MCS bring out efficiency & effectiveness

•Now MCS meet requirement of constituents & overall purpose both

•Facilitates adaptation, innovation.

•Maintain inducement-contribution balance among stakeholders

•To maintain MCS- Understand human behaviour as human beings are

rational, creative, strong /week morals, desire association/community

Adaptive control system

•System is said to be adaptive when its sub systems are internally consistent with each other

•Control system of two organisation differs but basic 5 subsystems are common

•Formal system makes explicit the structure, rules, procedures,

policies to be followed by the managers by documentation

- Plans, budgets, regulations, quotas

•Informal system consists of interpersonal relationships & supplement adaptability in dynamic & unpredictive environment - strategy control

Infrastructure•Organisation structure

•Strategy/SBU•Operations

•Pattern of autonomy•Measurement methods

•Responsibility centers•Transfer pricing

Management style & culture

•Prevailing style•External/internal/mixed

Principal values (corporate culture)•Norms & beliefs

•Formal control process•Strategic planning -capital budget•Operation planning – cost account & budgeting•Reporting systems ( monthly/qtrly )

•Operation/variance analysis•Strategy & project M'ment

Rewards•Individual & group•Strategic & operational•Promotion policy

Coordination & integration•Standing committee

•Strategy ( Top Mgmt.)•Operations

•Formal conference•Involvement techniques

Infrastructure•Personal contacts•Networks

•Expertise oriented•Minimal structure

•Emergent roles( informal relationship)

Management style & culture

•Prevailing style

•External/internal/mixed

Principal values

•Norms & beliefs

Management style & culture

•Prevailing style•External/internal/mixed

Principal values•Norms & beliefs

•Informal control process•Search /alternative generation

•Adhoc ( for particular purpose )•Uncertainty coping•Rationalization/dialogue ( compare with value & beliefs)

Informal rewards•Recognition & respect•Status oriented•personal involvement of giver•Performance & stature oriented

Coordination & integration•Based upon trust•Simple /direct/personal/cross org group•Telephone/communication vehicle•Personal memo/adhoc teams

Interaction between formal & informal system

• Control system should support org. in both stable & unstable environment

• Both formal & informal control system support/overlap each other

• In times of major change---informal dominates• When environment settles---formalise rules,procedures• Key is to use the system according to situation• Each sub system in a system support the other.• Both set of subsystems mutually supportable• Indoctrination socializes members to values/policies while skill training imparts knowledge of methods.combination

is effective for a control process