MANAGEMENT CONTROL SYSTEMS

Basic Concepts
Elements of control system consists of : A detector An assessor An effector A communication network

A Detector or Sensor: device that measure what is actually happening in the process being controlled. An Assessor: device that determines the significance of what is actually happening by comparing it with some standards or expectations.

An Effector (feedback): device that alters behavior if the assessor indicates the need to do so. A Communication Network: consists of devices that transmit information between detector and assessor and between assessor and effector.

Example of Control System

Automobile Driver: Detector: your eyes Assessor: your brain Effector: your foot Communication Network: your nerves

MANAGEMENT CONTROL
Process by which managers influence other members of organization to implement the organizations strategies. It tend to short term. Its end product is strategy implementation. Can be done weekly, monthly, annually.

Management

The main objective of management is to achieve the strategic goal through effective and efficient utilization of resources.

Control

The objective of control is to ensure that the things/activities follow the pre-determined track.

System

It is a well prescribed way of doing an activity usually in a repetitive manner.

Nature of Management Control System

Management
Implement the Strategy

Control
Detect, Assess & Effect

M.C.S.

Successful Strategy Implementation

System
Structured Framework to carry out a (control) task

Nature of Management Control Systems

Implementation of prescribed method to ensure that the organization is marching towards a common goal. It is the process by which managers at all levels ensure that the people they supervise implement their intended strategies. MCS is like designing and implementing a road map. Shows final destination and best way to get there and ensures everything follows the map.

Objectives of Management Control Systems

Finding out why a certain thing is happening Comparisons Increase the efficiency Decide Corrective Actions Co-ordination

SCOPE
Policies Control: Successful business depends on formulation of sound policies and their proper implementation. Control over organization: Involves designing and organizing the various departments for smooth running of the business. Removes causes of friction. Control over personnel: Anything that the business accomplishes is the result of the action of people who work in organization.

SCOPE cont
Control over costs: Delicate task and is supplemented by budgetary control systems. Control over techniques: Involves use of best methods and techniques as to eliminate all wastages in time, energy and material. Control over capital expenditure: Every project is evaluated in terms if the advantage it accrues to the firm. Overall Control: A master plan is prepared for the overall control.