1. NATURE OF MANAGEMENT CONTROL SYSTEMS

2. Basic Concepts Control: Devices should be in place to ensure that strategic intentions are achieved Elements of control system: Detector or sensor to measure actual behaviour Assessor compare actual with standard Effector called feedback, it alters behavior if assessor indicates need to do so Communications network transmit information between detector and assessor & assessor and effector 3. Management CEO or team of senior managers decides on overall strategies that enable the organisation to meet its goals Various business unit managers formulate additional strategies for their respective units subject to CEOs approval Number of layers in organisation are based on its Complexity Management control process is the process where managers at all levels ensure that the people they supervise implement their intended 4. Management Control Processes Standard is not preset Management control is not automatic manager must personally be the assessor Management control requires coordination among individuals Connection from perceiving the need for action to determining the action required to obtain the desired result may not be clear System works like a Black Box Much management control is self-control 5. System It is a prescribed and usually repetitious way of carrying out an activity or set of activities Here, more or less routine decisions are taken for which recurring series of steps are available Management control systems: far more complex & judgemental rules are not well-defined managers have to use their best judgement to decide on best course of action 6. Management Control It is the process by which managers influence other members of the organisation to implement organisational strategies Its activities include: planning coordinating communicating evaluating deciding influencing 7. Management Control Goal Congruence Tool for implementing strategy Management Controls StrategyOrganisation StructureHRM CulturePerformance 8. Management Control Financial and non-financial emphasis financial bottomline of the company non-financial parameters like product quality, market share, customer satisfaction etc. Aid in developing new strategies: Interactive control focuses management attention on positive and negative developments, which signal the need for new strategy formation information of non-financial nature is used to make strategic decisions 9. Strategy Formulation It is the process of deciding on goals of the organisation and the strategies for attaining those goals Strategies are important, big plans, showing the direction in which senior management wanted the organisation to move Need for formulating strategies usually arises in response to a perceived threat or opportunity Complete responsibility should never be assigned to a particular person or organisational unit 10. Strategy Formulation v/s Management Control Definition Strategy formulation is essentially unsystematic while management control is systematic Strategy formulation involves much judgement and numbers are usually rough estimates while management control has a series of steps in a predictable sequence and with reliable estimates Strategy formulation involves relatively few people, while management control involves managers & staff at all levels in the organisation 11. Task Control It is the process of assuring that specified tasks are carried out effectively and efficiently Task control is transaction-oriented Many task control activities are scientific i.e. using management science and OR techniques Most of the information in an organisation is task control information Many activities performed by managers in the past have been automated and are task control activities 12. Task Control v/s Management Control Task control is scientific but management control can never be reduced to a science Managers interact with other managers in management control; in task control, either human beings are not involved at all or the interaction is between a manager and a non-manager Management control focuses on organisational units while task control focuses on specific tasks performed by these organisational units 13. Internet for Management Control Instant access Costless communication Multi-targeted communication Ability to display images Shifting power and control to the individual Facilitates coordination and control Availability of large amounts of data 14. Elements of Management Control Judgements required to design & operate optimal control system involve: understanding relative importance of competing goals developing specific objectives for business units, functional areas and departments determining key variables for an individuals contribution to strategic goals evaluating actual performance designing right reward structure