Introduction to Management control

information system
1.

Controlling a car
-brakes & accelerator

controlling temp. of
body/driving car
Sensory nerves/eyes
Brain
Muscle & organs/legs &
hands

Sensor or detector
Assessor
Effectors

Management control
It is a set of interrelated communication
structures that facilitates the processing of
information to assist the managers in
coordinating the parts to achieve goals on
continuous basis bringing out the unity
/harmony out of the diverse activities.

Management control /simple control

Standard ( like 98.6 ) are not preset
It is adaptive & needs planning & control
together
Not automatic as car because it involves
human beings
Coordination among individuals
Actions taken are not specified
It is more about self control

System
A prescribed & repetitive way to carry out
operations.But the management problems
are uncertain & complex.
Systematic control
-formal management control
eg:-task control
Unsystematic control
informal management control
eg:-strategy control (IBM mainframe to
PC )

PURPOSE OF MCIS

Planning of activities-

Coordinating Activities- Harmony among functional unit

Communicating

Evaluating

- information & decide actions

Influencing

- people to change their behaviour

control actual accomplishment with set plans

- information to various levels of hierarchy

Domain of MCS

Strategic planning
Management control
Task control
Control of strategy
Control of operations

Strategy
formulation

Management
control

Task control

unsystematic

Lies in between Systematic

Top managers

Staff at all levels Task group

Threat,estimate , Not very often

opportunities

scientific

Top managers

Use of
computers &
man

Interaction
between
managers

Definition of MCIS
Process by which managers influence others
-Anthony & Govindrajan
Basic phase & essential part of Mment functions
-Newman
Cybernetic view- entire organisation is a control
system & considers both strategy
& operations
-Stafford Beer
Book cybernetic 1947 Norbert Weiner

Organisation context of MCS

Organisation is divided into sub units having independent autonomy
& objectives
MCS lowers cost to coordinate them
MCS bring out efficiency & effectiveness
Now MCS meet requirement of constituents & overall purpose both
Facilitates adaptation, innovation.
Maintain inducement-contribution balance among stakeholders
To maintain MCS- Understand human behaviour as human beings are
rational, creative, strong /week morals, desire association/community

Adaptive control system

System is said to be adaptive when its sub systems are internally
consistent with each other
Control system of two organisation differs but basic 5 subsystems
are common
Formal system makes explicit the structure, rules, procedures,
policies to be followed by the managers by documentation
- Plans, budgets, regulations, quotas
Informal system consists of interpersonal relationships &
supplement adaptability in dynamic & unpredictive environment
- strategy control

Infrastructure
Organisation structure
Strategy/SBU
Operations
Pattern of autonomy
Measurement methods
Responsibility centers
Transfer pricing

Management style & culture

Prevailing style
External/internal/mixed
Principal values (corporate culture)
Norms & beliefs

Formal control process

Strategic planning -capital budget
Operation planning cost account & budgeting
Reporting systems ( monthly/qtrly )
Operation/variance analysis
Strategy & project M'ment

Rewards
Individual & group
Strategic & operational
Promotion policy

Coordination & integration

Standing committee
Strategy ( Top Mgmt.)
Operations
Formal conference
Involvement techniques

Management style & culture

Management style & culture

Infrastructure
Personal contacts
Networks
Expertise oriented
Minimal structure
Emergent roles

Prevailing
Prevailingstyle
style
External/internal/mixed
External/internal/mixed
Principal
values
Normsvalues
& beliefs
Principal

( informal relationship)

Norms & beliefs

Informal control process
Search /alternative generation
Adhoc ( for particular purpose )
Uncertainty coping
Rationalization/dialogue
( compare with value & beliefs)
Informal rewards
Recognition & respect
Status oriented
personal involvement of giver
Performance & stature oriented

Coordination & integration

Based upon trust
Simple /direct/personal/cross org group
Telephone/communication vehicle
Personal memo/adhoc teams

Interaction between
formal & informal system
Control system should support org. in both stable &
unstable environment
Both formal & informal control system support/overlap
each other
In times of major change---informal dominates
When environment settles---formalise rules,procedures
Key is to use the system according to situation
Each sub system in a system support the other.
Both set of subsystems mutually supportable
Indoctrination socializes members to values/policies while
skill training imparts knowledge of methods.combination
is effective for a control process