Page 267 - DMGT514_MANAGEMENT_CONTROL_SYSTEMS

Management Control Systems

Notes Several factors make control more difficult internationally than it is domestically:
1. Distance: In spite of growth in e-mail and fax transmissions, many communications are
still being handled through face-to-face or voice-to-voice contact. The Geographical distance
(especially, when operations span multiple time zones) and cultural disparity separating
countries increase the time, expense and possibility of error in cross-national
communication.
2. Diversity: When market size, types of competition, nature of the product, labour cost, the
currency and a host of other factors differentiate operations among countries, the task of
setting standards and evaluating performance to improve between functions is extremely
complicated.
3. Uncontrollable: Effective corrective actions may be minimal because many foreign
operations must contend both with the dictates of outside shareholders in the foreign
company whose objectives may differ from those of the parent and with government
regulations over which the company has no short-term influence. Further, most companies
handle their international operations through foreign subsidiaries which are separate
legal entities.

4. Degree of Certainty: Control implies setting goals and developing plans to meet those
goals. Economics and industry data are much less complete and accurate from some
countries than for others. Further, political and economic conditions are subject to rapid
change in some countries.
Although the above factors make control more difficult in the international context,
managers try to ensure that foreign operations comply with overall corporate goals and
philosophies. The following are the five aspects of the international control process.

(i) Planning
(ii) Organisation Structure
(iii) Location of decision-making
(iv) Control mechanism

(v) Special situations including the dynamics of control
14.4.1 Planning

!
Caution Planning is an essential element of management control and the company must
adapt its resources and objectives to different and changing international markets.
The first step (i) is to develop a long range strategic intent, an objective or mission that will hold
the organisation together over a long period, while it builds global competitive viability.

Example: Honda and Canon developed strategic intent to become major global
competitors.
The strategic intent provides whether and where the company wants to be a leader –

Example: Dominating its domestic market, dominating a regional or global market or
attaining profit goals without being the market leader.

262 LOVELY PROFESSIONAL UNIVERSITY