2. Basic Concepts
• Control:
Devices should be in place to ensure that
strategic intentions are achieved
Elements of control system:
Detector or sensor – to measure actual behaviour
Assessor – compare actual with standard
Effector – called ‘feedback’, it alters behavior if
assessor indicates need to do so
Communications network – transmit information
between detector and assessor & assessor and
effector
3. Management
• CEO or team of senior managers decides on
overall strategies that enable the organisation to
meet its goals
• Various business unit managers formulate
additional strategies for their respective units
subject to CEO’s approval
• Number of layers in organisation are based on
its Complexity
• Management control process is the process
where managers at all levels ensure that the
people they supervise implement their intended
4. Management Control Processes
• Standard is not preset
• Management control is not automatic
manager must personally be the assessor
• Management control requires coordination
among individuals
• Connection from perceiving the need for action
to determining the action required to obtain the
desired result may not be clear
System works like a “Black Box
• Much management control is self-control
5. System
• It is a prescribed and usually repetitious way of
carrying out an activity or set of activities
• Here, more or less routine decisions are taken for
which recurring series of steps are available
• Management control systems:
far more complex & judgemental
rules are not well-defined
managers have to use their best judgement to
decide on best course of action
6. Management Control
• It is the process by which managers influence
other members of the organisation to implement
organisational strategies
• Its activities include:
planning
coordinating
communicating
evaluating
deciding
influencing
7. Management Control
• Goal Congruence
• Tool for implementing strategy
Management
Controls
Strategy
Organisation
Structure
HRM
Culture
Performance
8. Management Control
• Financial and non-financial emphasis
financial – ‘bottomline’ of the company
non-financial parameters like product quality,
market share, customer satisfaction etc.
• Aid in developing new strategies:
Interactive control focuses management
attention on positive and negative developments,
which signal the need for new strategy formation
information of non-financial nature is used to
make strategic decisions
9. Strategy Formulation
• It is the process of deciding on goals of the
organisation and the strategies for attaining those
goals
• Strategies are important, big plans, showing the
direction in which senior management wanted the
organisation to move
• Need for formulating strategies usually arises in
response to a perceived threat or opportunity
• Complete responsibility should never be
assigned to a particular person or organisational
unit
10. Strategy Formulation v/s Management
Control
• Definition
•Strategy formulation is essentially unsystematic
while management control is systematic
• Strategy formulation involves much judgement
and numbers are usually rough estimates while
management control has a series of steps in a
predictable sequence and with reliable estimates
• Strategy formulation involves relatively few
people, while management control involves
managers & staff at all levels in the organisation
11. Task Control
• It is the process of assuring that specified tasks
are carried out effectively and efficiently
• Task control is transaction-oriented
• Many task control activities are scientific i.e.
using management science and OR techniques
• Most of the information in an organisation is
task control information
• Many activities performed by managers in the
past have been automated and are task control
activities
12. Task Control v/s Management Control
• Task control is scientific but management
control can never be reduced to a science
• Managers interact with other managers in
management control; in task control, either human
beings are not involved at all or the interaction is
between a manager and a non-manager
• Management control focuses on organisational
units while task control focuses on specific tasks
performed by these organisational units
13. Internet for Management Control
• Instant access
• Costless communication
• Multi-targeted communication
• Ability to display images
• Shifting power and control to the individual
• Facilitates coordination and control
• Availability of large amounts of data
14. Elements of Management Control
• Judgements required to design & operate
optimal control system involve:
understanding relative importance of
competing goals
developing specific objectives for business
units, functional areas and departments
determining key variables for an individual’s
contribution to strategic goals
evaluating actual performance
designing right reward structure