ch 1 the nature of mgt control systems
TRANSCRIPT
Iwan Pudjanegara SE., MM. 1
The Nature of ManagementControl Systems
Management Control SystemsChapter 1
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Iwan Pudjanegara SE., MM. 2
PurposeTo understand The Nature of
Management Control SystemsBasic Concepts
Boundaries of Mgt ControlUnderstanding MCS
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Basic ConceptsSystems:
A system is a prescribed and usually repetitious way of carrying out an activity or a set of activities.
Systematic Un-systematic
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Basic ConceptsControl:
All those activities undertaken to ensure that actual operations conform to planned operations (Fred R. David).
A process in which corporate activities and performance results are monitored so that actual performance can be compared with desired performance (Thomas L. Wheelen & J. David Hunger)
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Basic ConceptsElements of a Control System :1. A detector or sensor2. An assessor3. An effector4. A communication network
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Basic ConceptsElements of a Control System: A detector or sensor: 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.
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Basic Concepts An effector: a device (feedback) that
alters behavior if the assessor indicates the need to do so.
A communication network: devices that transmit information between the detector & the assessor and between the assessor & the effector.
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Basic ConceptsManagement:
An organization consists of a group of people who work together to achieve certain common goals (ex. Profit).
Led by a hierarchy of managers (CEO & Managers)
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Basic ConceptsThe Management Control
Process... is the process by which managers at all levels ensure that the people they supervise implement their intended strategies.
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Boundaries of Management Control
Management ControlIs the process by which managers
influence other members of the organization to implement the organization’s strategies.
Involves planning, coordinating, communicating, evaluating, deciding, & influencing.
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Boundaries of Management Control
Management Control Activities:• Planning What the organization should do.
• Coordinating the activities of several parts of the organization.
• Communicating information.• Evaluating information.• Deciding what action should be taken.• Influencing people to change behavior.
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Boundaries of Management Control
The management control system should be designed and operated with the principle of goal congruence in mind.
Goal Congruence means that the goals of an organization’s individual members should be consistent with the goals of the organization itself.
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Boundaries of Management Control
Management Control focuses primarily on strategy execution.
Management controls are only one of the tools managers use in implementing desired strategies.
Strategies are also implemented through the organization’s structure, management of HR, and its culture.
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Boundaries of Management Control
Three planning and control functions that are present in almost every organization are :1) Management Control2) Strategy Formulation3) Task Control
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Boundaries of Management Control
Strategy Formulation Is the process of deciding on the goals of the
organization and the strategies for attaining these goals.
Goals are timeless exist until changed and changed only rarely.
The need for formulating strategies usually arises in response to a perceived threat and opportunity.
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Distinctions between Strategy Formulation & Management Control
Strategy Formulation• The process of deciding on
new strategies.• Unsystematic, strategic
decisions may be made at any time.
• Strategic analysis involves much judgement and the numbers used in the process are usually rough estimates.
• Involves few people.
Management Control• The process of implementing
those strategies.• Systematic• Involves a series of steps that
occur in a predictable sequence according to a more-or-less fixed timetable, & with reliable estimates.
• Involves managers & staffs at all levels.
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Boundaries of Management Control
Task ControlIs the process of ensuring that specified
tasks are carried out effectively and efficiently.
Is transaction-oriented. It involves the performance of individual tasks according to rules established in the management control process.
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Distinctions between Task Control & Management Control
Task Control• Scientific.• Interaction is between a
manager and a nonmanager.• Focus on specific tasks
performed by these organizational units.
• Relates to specified tasks, and require little or no judgement to perform.
Management Control• Involves the behavior of
managers and cannot be expressed by equations.
• Managers interact with other managers.
• Focus on organizational units.
• Concerned with the broadly defined activities of managers.
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Boundaries of Management Control
Impact of the internet on Mgt ControlMgt Control systems involve informationOrganizations require an infrastructure to
process that information.The internet provides that infrastructures,
making the processing of information easier & faster, with fewer errors.
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Boundaries of Management Control
Benefits of Internet compare to Telephone:Instant accessMulti-targeted communicationCostless communicationAbility to display imagesShifting power & control to the
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