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Unit 1: Introduction to Management Control System

Notes
At the end of the week, the assistant came back to the controller saying that he was not able
to find literature pertaining to control systems although he had reviewed dozens of books
and journals. The controller was unhappy with this excuse as he had to submit a report to
the vice president the next day.

Questions
1. Do you think the staff assistant’s approach to finding literature on installing a control
system is right? Support your answer with reasons.

2. If you were the staff assistant, what would your suggestions, for an effective control
system be?

1.6 Summary

 Management control system is an important system which is set of interrelated
communication structure which facilitates the purpose of an organization on a continuous
basis.
 In controlling the organization the leader or manager plays vital role.
 The management control process is the process by which managers at all levels ensure
that the members of the organization implement the departmental strategies to achieve
the goals.
 Every control system has at least four elements, viz. a detector or sensor, an assessor, an
effector and a communication network.
 Management Control does not necessarily mean that actions should correspond to a plan
such as budget.

 Management control systems consist of all organization structures, processes and
subsystems designed to elicit behavior that achieves the strategic objectives of an
organization at the highest level of performance with the least amount of unintended
consequences and risk to the organization.

 It has to be remembered that the control is not automatic and one has to understand the
entire persona of the organization in order to control effectively.

1.7 Keywords

Cybernetics: A term used for service of communication and control in Management control
system.
Goal Congruence: It is a goal of an organization where the goals of individual members are
consistent with those of the organization itself.
Management Control Systems (MCS): A MCS is a set of interrelated communication structures
that facilitates the processing of information for the purpose of assisting managers in
coordinating the parts and attaining the purpose of an organization on a continuous basis.
Task Control: It is an efficient and effective performance of individual task.

1.8 Review Questions

1. After going through the unit, what do you analyse as the characteristics of a management
control system?

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