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8/2/2019 Introduction to Mcs
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Management Control Systems
-An Introduction
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Elements of Control Systems
Measure what is actually happening -Detector
Comparing it with what should be happening-
AssessorAlters behaviour if assessor so desires- Effector
Transmit information between the detector and
the assessor and between the assessor and theeffector- Communication network
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Why do organisations need control
In spite of the pitfalls in any control
system, why do organisations need
control?
It is expensive to keep controls
It is cumbersome to make investment in
systems and processes
Possibilities of failure of controls
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Why do.
Controls provide strategic advantages
Controls facilitate management by
exception
Systems and processes are facilitators of
efficiency
Provides for a self correcting mechanism
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How to go about with MCS?
Standard is not preset- It is a subjective decision of themanagement
Management control is not automatic-It involves lot of
discretionary decisions of the manager Coordination among individuals and people management
The connection from perceiving the need for action todetermining the action required for the desired result may
not be clear Most of Management Control is self control- judgement
is the key.
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Activities in Management
Control
Planning-Depends on the strategic theme
of the organisation
Coordination
Communicating plans and the process
controls using suitable information systems
Evaluation of information received
Corrective actions- financial as well as
other
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Scope of Management Control
Strategic Planning
Management Control
Operational Control
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Strategic Planning
Strategic plan- covers some aspects or part
of business at any given time
Not a periodic process-infrequent and need
based
Linked to external environment
Data used for decision making are
approximate and not current
Limited to top management
Coverin the lon term ob ectives of the
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Operational Control
Planning is task specific
Output is attempted to be defined
Inputoutput relationship cannot be
quantitative always
Related to direct activities of production
Indirect activities come under the purview
of management control
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Management Control
Focuses on programmes and responsibility
centres
Use of planned and actual data
Most of the data are real time
Covers all aspects of companys operations
Same set of information to be used for
various purposes
System is ongoing and continuous, not one
time
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Management control involves line and staff
functions
Two important features in Management
Control- Reciprocity and expansibitlity
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Relationship between functions-
Strategy, Operations and
ManagementManagement control occurs between the
top and the lower levels- communication of
strategies to lower level and reportingoperational efficiencies to the top
management
Strategylong run focus and operations-short run focus
Management control is a combination of
both planning and control
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Output of MCS
Emphasis on bottom line- using measures
such as ROI and EVA
Non Financial- Product quality, market
share, customer satisfaction, employee
morale etc.- using tools such as Balanced
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