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Management Control Systems
Notes
Figure 2.2: Framework for Strategy Implementation
Management Controls
Organization Human Resources
Strategy Performance
Structure Management
Culture
Organization structure specifies the roles, reporting relationships and divisions of
responsibilities that shape decision-making in an organization.
Human resources management is the selection, training, evaluation promotion and termination
of employees so as to develop the knowledge and skills required to execute organizational
strategy.
Culture refers to the set of common beliefs, attitudes and norms that explicitly or implicitly
guide managerial actions.
Financial and non-financial emphasis: Management control system includes both financial and
non-financial performance measures. The financial dimension focuses on the monetary “bottom
line” – net income after tax, return on equity and so forth. But there are non-financial objectives
as well such as product quality, market share, and customer satisfaction, on time delivery and
employee morale.
Aid in developing new strategies: As discussed earlier, the primary role of management control
is to ensure execution of chosen strategies. In industries where environment is changing rapidly,
management control information especially of non-financial nature can provide a basis for
considering new strategies. This is known as interactive control.
Notes Interactive control calls management attention to developments – both negative
(e.g. loss of market share, customer complaints) and positive (e.g. the opening of a new
market because of elimination of govt. regulations) that indicate the need for new strategic
initiatives.
Self Assessment
Fill in the blanks:
5. Management control is the process by which managers influence other members of the
organization to implement the organization’s ………………… .
6. ………………. means that as far as feasible, the goals of an organization’s individual
members should be consistent with the goals of the organization itself.
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