Page 51 - DMGT514_MANAGEMENT_CONTROL_SYSTEMS

Management Control Systems

Notes 3.11 Keywords

Business Unit: Division is responsible for all its functions involved in producing and marketing
a specified product line or group of product lines.

Controller: A person responsible for designing and operating Management Control System.
Corporate Culture: A cumulative term consisting of shared values, common perceptions and
common premises that members of the organization apply to its activities and problems.
Entrepreneurial Structure: It is appropriate for an organisation that is owned and managed by
one person.
External Control Style: The decision-making mechanism is managed by top executives after
data are gathered at lower levels.

Formal systems: Include strategic plans, budgets and reports
Goal Congruence: Means that as far as feasible, the goals of organization individual members
should be consistent with the goals of the organization itself.
Informal Process: Takes into account work ethic, management style and culture
Internal Style: More participative and attempts to capitalize upon the internal needs and
motivation of the subordinates
Matrix Structure: Created by assigning functional specialists to work on a special project or a
new product or service
Mixed Control Style: Includes a wide spectrum of styles consisting of combination of the two
extreme styles

3.12 Review Questions

1. Can you trace the evolution of control system in an organisation?
2. What is a business policy and what is its relationship to the business objective? How
should a new policy be established or an existing policy altered?
3. What are the principles applicable to the formation and use of company objectives as an
essential feature of the management control process?

4. “The essence of decentralisation is the freedom to make decisions”. Do you agree?
5. Discuss the benefits of decentralisation.
6. What are the problems and pitfalls of decentralized organisation?
7. Profit centre is often viewed as a synonym for decentralized subunit. Do you agree? Give
reasons.
8. Explain various Managerial Styles? How many styles can be identified? How managerial
style is important to the design of Control System?
9. What do you mean by Corporate Culture? How many different types of corporate culture
can be identified? How Corporate Culture affect the design of Control System?

10. What are the Control Systems in a Functional Organisation, Business Unit Organisation
and Matrix organisation?

46 LOVELY PROFESSIONAL UNIVERSITY