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ManagementControl Systems
Wise men talk because they have something to say; Fools also talk, because they
have to say something.
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The Nature of Management Control
Systems
Designing and implementing of managementsystems, used to plan and control the firmsperformance.
They include; (Elements of MCS) Strategic planning
Budgeting
Resource allocation Performance measurement, evaluation, reward
Responsibility center allocation
Transfer pricing
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Concepts of MCS
The MCS builds on concepts from
Business Strategy,
Organizational Behavior, Human Resource and
Financial & Managerial Accounting.
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Nature of Management Control Systems
ManagementManagement
ControlControl M.C.S.M.C.S.
SystemSystem
SuccessfulSuccessfulStrategyStrategyExecutionExecution
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Nature of Management Control Systems
Management is -
- Getting things done in the desired manner.
- Ensure optimum utilization of resources
- Ensure group works towards a common goal.
- Exercise Generic Functions - Planning, organizing,directing, coordinating, motivating, controlling etc
- Ensure, entire organization hierarchy is putting
its efforts towards achieving the set Goal.
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Nature of Management Control Systems
Management:-
The main objective of management isThe main objective of management is
to achieve the strategic goal throughto achieve the strategic goal through
effective and efficient utilization ofeffective and efficient utilization of
resources.resources.
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Nature of Management Control Systems
Control :-
The objective of control isto ensure that the things/activities
follow the pre-determined track.
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Control System of A Car
Press the accelerator , and your car goes
faster, rotate the steering wheel, and it
changes direction. Press the brake pedal,
and the car slows or stops. With these
devices, you control speed and direction, if
any of them is inoperative, the car does
not do what you want it to . In other words,it is out of control
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Control of an Organization
An organization must also be
controlled. That is devices must be in
place to ensure that its strategicintentions are achieved. But
controlling an organization is much
complicated than controlling a car
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Elements of Control System
Every control system has at least four elements
1.Detector or Sensor a device that measures
what is actually happening in the process being
controlled.
2.An Assessor a device that determines the
significance of what is actually happening by
comparing it with
some standard or expectationof what should happen
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Elements of Control System
3.An effectors a device that alters behavior
if the assessor indicates the need to do so.
4. A communications network a devicethat transmit information between the
detector and the assessor and between
the assessor and the effectors
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The Three examples of CS
1. Thermostat
2. Body Temperature
3. Driver of an automobile
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Thermostat
1. Thermometer which measures the
current temperature of a room (detector)
2. An Assessor which compares the current
temperature with
th
e accepted standardfor what the temperature should be.
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Thermostat
3.An effectors which prompts a furnace to emit
heat or activates an air conditioner which also
shuts off these appliances when the temperature
reaches the standard levels
4. A communication network, which transmit
information from thermometer to the assessor
and from the assessor to the heating or cooling
element
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Body temperature
1. The sensory nerves scattered throughthe body
2. The Hypothalamus center in the brain,which compares information receivedfrom detectors with the 98.6 f standard.
3. The muscles and organs (effectors) that
reduce the temperature when it exceedsthe standard and rise the temperaturewhen it falls below the standard
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Body temperature
4. The overall communications system of
nerves is self regulating. If the system is
functioning properly, it automatically
corrects for deviations from the
standards with out requiring conscious
effort.
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Automobile Driver
Assume you are driving on a high way
where the legal speed 65 kmph. Your
control system acts as the following.
1. your eyes measures actual speed by
observing the speedometer.
2. your brain compares the actual speed
with desired speed, and, upon detecting a
deviation from the standard.
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Automobile Driver
3. Directors your foot to ease up or press
down on the accelerator.
4. As in body temperature regulation yournerves form the communication system
that transmit information from eyes to
brain and brain to foot.
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Management
An organization consist of a group ofpeople who work together to achievecertain common goals. The CEO decides
on the overall strategies that will enablethe organization to meet its goals.
Subject to the approval of the CEO , thevarious business unit mangers formulateadditional strategies that will enable theirrespective units to further these goals
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Management
The 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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systems
A system is a prescribed and usually
repetitious way of carrying out an activity
or a set of activities. Systems are
characterized more or less r hythmic,
coordinated, and recurring series of steps
intended to accomplish a specified
purpose.
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Nature of Management Control Systems
System is -
2. Set of coordinated efforts/Components
3. Rhythmic process
4. Recurring pattern giving assured output
1. Well defined/ formal/systematic method of
accomplishing a task.
Thus a system is a - A well prescribed way of
doing an activity usually in repetitive manner.
5. Framework to carry an activity ( I-P-O )
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Boundaries of Management Control
Strategy
formulation
ManagementControl
Task Control
Activity Nature of End Product
Goals, Strategies, policies
Implementation of strategies
Efficient and effective performance
Of individual tasks