Management Control Systems & The Crafting of Strategy: A Practice Based View

Prepared by,M.K. Jahid Shuvo

Dept. of A&ISJahangirnagar University

Introduction

Customer manager relationship is vital

The concept of the topic is based on the relationship between day to day activity of management control system (MCS) and activities of Head Office to develop relationship

Two related factors are

1. Balance Scorecard (Non-Financial Information)

2. Subsequent development of strategy development, implementation and refinement

Provides new insights of strategy & management control

Research Design

Aim to run a fieldwork in the restaurant division of United Kingdom

Relationship between management control systems and strategy

Correlated process of identifying, understanding & scheduling systems

Analysis of customer relationship in different individual restaurants

Head Office activity & operations of staff on management control system

Overview of the Restaurant

Developed new units

200 units became profit centers

Wholly-owned restaurant is run by salaried managers

Substantial reform of sales and growth were made

Restaurant is listed in London stock exchange

Restaurant has limited liability and own Board of Directors

Nature of The Research Conducted

Length of the research was 2 years

Interviewers, examination of records, direct observation of management and workshops

Data collection & processing of a series of semi-structured information

Organogram

Group board of

directors

Restaurant Division

managing director

Operations director

Area managers Restaurant managers

Marketing directorFinance and

commercial director

Commercial Finance MIS

Human resources

director

Central financial

services

Based away from Head Office

Information on Fieldwork Activity

Functional breakdown of interviews carried out

Central financial services 1

Head office—Commercial 6

Head office—Finance 11

Head office—HR 4

Head office—Managing Director 1

Head office—Marketing 5

Head office—MIS 2

Head office—Operations 4

Area managers 2

Restaurant managers 9

45

Information on Data Collection

Average interview time was 70 minutes

Interviews were tape recorded and notes were taken in detail

Internal planning controls & financial documents

Head Office managers & all staff specialists across all the functions were studied to gather information

15 other restaurants were visited and studied

Short meeting with assistant managers, chefs and support stuffs helped to gather information

Statements from the managers

“I see the role of the marketing department in driving the sales, driving the top line—inevitably making sure whatever we do, it doesn’t drive the top line to the detriment of profit.”

-----Marketing Director

“The brand’s important at the moment because it gives the customer a certain minimum standard and a reassurance of what they’re gonna get when they go through the door.”

-----Regional General Manager

Process of creating new customers & maintaining relationship

Head office strategy must be formulated through management control system

Ensuring customer satisfaction (Budget constraints in some cases)

Organized balance of control is to be established

Discussion

Management control system reflects the strategy to be followed

Developed brand concept

Emphasizes on specific Head Office activities

Customer group segmentation is suggested

Process oriented strategy is to be formulated

Findings

Performance in Head office & management control system both are important to find the proper strategy to implement

Detailed relation between high level management and strategic planning department is necessary

For management control system, ABC approach was the most important previously

Economic Value Added is now the most used management control system

Management control system usage depends largely on the experience of the managers

Relationship with customers cannot be represented all-time from ‘Mechanical Cause and Effect’ relationship