The Nature of
Management
Control
System
Chapter 1
Basic Concept
1. Control
2. Management
3. System
Control (the control process in simpler system)
• A detector a device that measures what is actually
happening in the process being controlled
• An Assessor a device that determines the significance of
what is actually happening by comparing it with some standard or
expectation of what should happen
• An Effector a feedback that alters behavior if the assessor
indicates the need to do so.
• A Communication Network a device that transmit
information between the detector and the assessor and between the
assessor and the effector
Control Assessor
Detector Affector
Entity
Management
• Management control process
the process by which managers at all level ensure that
the people they supervise implement their intended
strategies.
System
A system is a prescribed and usually
repetitious way of carrying out an activity
or a set of activities.
If all systems ensured the correct action
for all situations, there would be no need
for human managers.
Boundaries of Management Control
MANAGEMENT CONTROL
Nature of
Activity end Product
Strategy Goals
Formulation Strategy, Policies
Management Implementation
Control of Strategies
Task Efficient & Effective
Control peformance of individual task
Management control activities, including :
• Planning what the organization should do
• Coordinating activities of the several parts of the
organization.
• Communicating information
• Evaluating information
• Deciding action should be taken.
• Influencing people to change their behavior
• Goal Congruence
• Tools for implementing strategies
Implementation Mechanism
Management
control
Organization
Strategy Structure HRM Peformance
Culture
• Financial & Non Financial Emphasis
• Aid in developing new strategies
Strategy Formulation
Process of deciding on the goals of the
organization and the strategies for attaining
these goals.
Distinction between Strategy Formulation and
Management Control
• Strategy Formulation is the process of deciding
on new strategies.
• Management Control is the process
implementing those strategies
Task Control
Task control is the process of ensuring
that specified tasks are carried out
effectively and efficiently. Task control is
transaction oriented.
Strategy Management Task Control
Formulation Control
Acquire an unrelated Introduce new product or Coordinate order entry
business brand within product line
Enter a new business Expand of plant Schedule production
Add direct mail selling Determine advertising Book TV commercials
budget
Change debt/equity ratio Issue new debt Manage cash flows
Adopt affirmative action Implement minority Maintain personnel
policy recruitment program records
Devise inventory Decide inventory levels Reorder an item
speculation policy
Decide Magnitude & Control research Run individual research
direction of research organization project
Impact of the internet on
Management Control
• Instant access
• Multi Targeted communication
• Costless Communication
• Ability to display image
• Shifting power and control to the individual
