Prof. Naik,

Flow of lecture 1Relation of course with overall MMS/PGDM syllabusNewspaper cuttingsMeasurementTaxi Riksha faresThird wave-Alvin TofflerCost centre-Responsibility CentreProfit centreTransfer priceController

A few months from now, most of you will be working or having your own set upSome of you may work for a large organisation, some for small; some for MNCs, some in family businessBut no matter where you work, all organisations will have something in commonWHAT IS IT?

Persp ICost & MgmtAccountingFMIOB & HRMPersp Mgmt IIMCSBusiness PolicyWhere does MCS stand in your education?

Admission ManiaIt is that time of the year which brings anxiety to parents and students seeking college admissions. Government of Maharashtra brought another scheme this year - 85% or above Percentage reserved for students appearing for SSC board to compensate for the extra marks being allegedly awarded by ICSE and other boards. Our correspondents moved from South Mumbai colleges to Central and Western Suburban Colleges and finally to colleges in the Eastern suburbs.

Admission ManiaHere is what they found out.

Students appear to prefer Commerce streams over Art and Science.

College Sydenham60,000 70,000HR College70,000 1,00,000Poddar40,000 60,000Ruparel Arts60,000 65,000Ruia30,000 40,000Elphistone25,000NM70,000Kelkar25,000Ruparel Science80,000

What Counts gets measuredWhat gets done gets rewardedWhat gets measured gets doneWhat gets rewarded really countsStrategy

MCSUnderstanding Strategies Perspective of Management Control Systems. Basic concepts Boundaries of Management Controls Goals The concept of Corporate and Business Unit Strategies

Financial Goal SettingEVA, Free Cash Flow market Gap, RONW, P/E, EPS and their Inter- relationship, ROI and Sensitivity Analysis.Organization Hierarchies and BehaviorGoal Congruence, Information Factors that influenceGoal Congruence, Types of Organization and the Formal Control Systems, Functions of Controller

Responsibility CentersResponsibility Centre, Revenue, Expenses and Investment Centers, Administrative Support and R and D Centers, Responsibility Budgeting

Profit CentersGeneral Consideration, concept, Identification and Creation Matrix Structure, Profit Centers for Control and Decentralization

Transfer PricingObjectives, Cost, Market and Margin based Methods, Pricing Corporate Services, Administration of TPs

Measuring and Controlling Profits and AssetsEVA, Free Flow, ROI and Residual Income Measuring Assets Employed, Alternatives for Managerial Performance Management

Performance Measurement and ControlInformation for performance control, Interactive Control, Balance Scorecard

MCS in Service and Non Profit OrganizationsService Organizations in General, Professional and Non-Profit Organizations

Summing UpControls for Differentiated Strategies, Top Management Styles, Summing up

AuditEfficiency Audit and Management Audit

Case Study: West Port Electric CompanyCase Study: North Country Auto or any Other Similar CaseCase Study: Birch Paper CompanyCase Study: Quality Metal ServiceCase Study: General Electric B

Suggested ReadingsManagement Control systems by Rober Antony and Vijay Govindrajan (Tata McGraw Hill)Management Control Systems Dr. R.S Aurora and Prof S R kale (Jaico Publishing House) OTHER INFORMATION

Each session of 90 Minute duration. For Quantitative topics, basis application knowledge required but advanced techniques topics, basic application knowledge is required but advanced techniques are not expected to be coveredEmphasis should be covering the subject of Management Control as a Process (and not as Techniques)Due attention would be given to behavioral aspects of all the topics

Strategy and Strategic Management

Concept of Strategy

Strategic Managent

Concept of strategyStrategy indicates the general direction in which an organisation plans ot move to attain its goals

In some organisations it may not be stated explicitly

Strategy is usually developed by matching core competencies with industry oportunities. Another school of thought-NOT MATCH STRETCH

Strategic Management

Develop vision, missionSet objectivesCraft strategy to achieve objectivesImplement and execute strategyMonitor, evaluate, take corrective action

MCS

Management Control Systems are systems intended to help implement strategies.In your First Semester Perspective Management course, you have covered that control cannot exist without planning and that planning and control are two sides of the same coinControl includes Planning and Control processes

MCSCourse is designed to help you to think through how you would manage strategy implementation dilemas in which operating managers find themselves. In particular, course is meant for you to gain knowledge, insights and analytical skills related to how managers go about designing and implementing formal systems for strategy implementation

KEY IDEAS

Obviously different organisations ,even in the same industry have different strategies

Different Control Systems are required to effectively implement strategies

MCSThe following material is based on correspondence with Dr AnthonyAny technological process should and does bring about improvementObviously technology will lead to improvements in the effectiveness and efficiency of management control in ways not foreseen

Dr Anthony (contd)Framework for MCS was developed in the 60sMuch technological changes, particularly in the field of IT have taken place sinceHowever, MCS framework has not changed and is unlikely to change in the immediate future

BECAUSE IT IS GROUNDED ON HUMAN NATURE

Dr Anthony(contd)Management Control Proces is behavioural-involving interactions among managers, between managers and their subordinatesBecause managers differ from one another in their ability, leadership qualities, interpersonal skills, experience, approach to decision making, understanding ability and affinity to numbers and in other ways the DETAILS of management control process varies from organisation to organisation and among centres

Dr Anthony(contd)The differences relate to the way the control system is USED. However, to function effectively, the FORMAL system must be basically the same THROUGHT the organisationThe importance of the subject matter covered in this subject is captured well in the widely accepted truism among management consultants- that over 90%of business and (nonprofit organisations) keep foundering on the rocks of implementation---

Dr Anthony(contd)----either strategies never come into being, or get distorted or the implementation is much more costly and time consuming than anticipated. However laudable strategic intentions maybeto change the product mix, to improve the quality of products, to become the lowest cost producer, to build market share or to maximise short term earnings and cash flowif the strategies do not get converted into reality, they are usually not the paper they are written on

Dr Anthony (contd)Soon most of you will be soon in positions, where you will be directly responsible for strategy implementation, material in this course is of high relevance to you

BUT

Dr Anthony(contd)The topic is completely new,and the early reaction of students is one of frustrationIn particular, first two topics (covered in Chapters 1 and 2)in which some of the givens must be recognised and dealt with in the design of a control system, frequently dont make the impact on the students (AT THE TIME) that is desirable

Dr Anthony (contd)The Gap between student achievement and faculty expectation reduces in Chapters 3 &4 when students begin to fit the earlier pieces together in specific CASE contexts.The delayed student appreciation of the intellectual content and administrative importance of the course is unavoidableAdditional Case Studies(10 marks in paper and 20 marks in internal assessment plus theory is reinforced)Class participationRegularity in attendence/studiesPerseverance