Analyze Control Systems

A management control system (MCS) is a system which gathers and uses information to evaluate the performance of different organizational resources like human, physical, financial and also the organization as a whole in light of the organizational strategies pursued. Management control system influences the behavior of organizational resources to implement organizational strategies. Management control system might be formal or informal. Traditionally, most measures used in management control systems are accounting-based and financial in nature. This emphasis on financial measures, however, distracts from essential non-financial factors such as customer satisfaction, product quality, etc. Furthermore, non-financial measures are better predictors of long-run performance. Consequently, a management control system should include a comprehensive set of performance aspects consisting of both financial and non-financial metrics. The inclusion of non-financial measures has become an essential characteristic of current management control systems, to the point of becoming the main criterion in distinguishing different systems. Therefore, depending on the balance between financial and non-financial measures, a management control system may be characterized as finance-oriented or operations-oriented. Finance-oriented control systems are primarily based on financial accounting data, such as costs, earnings or profitability, whereas operations-oriented control systems are primarily based on non-financial data that focus on operational output and quality, for example service volume, employee turnover, or customer complaints. Management control system techniques.According to Horngren et al. (2005), management control system is an integrated technique for collecting and using information to motivate employee behavior and to evaluate performance.^[9] Management control systems use many techniques such as:

- Activity-based costing - Balanced scorecard

- Benchmarking and Benchtrending -Budgeting

- Capital budgeting -J I T

- Kaizen (Continuous Improvement)

- Program management techniques -Target costing

- Total quality management (TQM)

46. Analyze Control Types

Concurrent Controls. The process of monitoring and adjusting ongoing activities and processes is known as concurrent control. Such controls are not necessarily proactive, but they can prevent problems from becoming worse. For this reason, we often describe concurrent control as real-time control because it deals with the present. An example of concurrent control might be adjusting the water temperature of the water while taking a shower.

Feedback Controls- feedback controls involve gathering information about a completed activity, evaluating that information, and taking steps to improve the similar activities in the future. This is the least proactive of controls and is generally a basis for reactions. Feedback controls permit managers to use information on past performance to bring future performance in line with planned objectives.

Date: 2015-12-18; view: 758