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Management Control Systems

Notes An organization may select any ways of seeking to attain its goals e.g., if goal is profitability,
the organization may select one or more product lines; territories or to focus on marketing
goods produced by other manufacturers etc.
Strategies are big, important plans which state the direction in which senior management wants
the organization to be heading to. They are timeless - that is, they exist until they are changed.

The need for formulating strategies arises either in response to a perceived threat (e.g. market in
roads by competitors, a change in customer taste or new government regulation) or to take
advantage of a perceived opportunity (e.g. opportunities of technical innovations, or
development of new applications for existing products).

2.2.1 Distinction between Strategic Formulation and Management
Control

1. Strategic formulation is essentially unsystematic. Whenever a threat is perceived or when
a new idea surfaces, strategic formulation takes place. By contrast, the management control
process takes place according to a more or less fixed timetable and the steps occur one after
another.
2. Strategic formulation involves only part of the organization; it may result in a change in
one or a few existing strategies. The management control process, necessarily involves
the whole organization and more important various parts are co-ordinated with one
another.
3. Analysis of a proposed strategy usually, involves relatively few people - the sponsor of
the idea, headquarters staff and senior management. By contrast, the management control
process involves managers and their staff at all levels in the organization.
4. Because relatively few people are involved in strategic formulation, communication among
them is relatively simple. In the management control process, many more people are
involved and communication, therefore, is much more complicated.
5. Behavioural considerations are less important in the strategic formulation process. In the
management control process, managers interact with one another and behavioural
considerations are very crucial.

Self Assessment

Fill in the blanks:
3. …………………. is the process of deciding the goals of the organization and the strategies
for attaining these goals.
4. ………………. considerations is less important in the strategic formulation process.

2.3 Management Control

Management control is the process by which managers influence other members of the
organization to implement the organization’s strategies. Several aspects of the process are
given below:

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