Premium Essay

Business and Finance

In: Business and Management

Submitted By edzky15
Words 114680
Pages 459
Principles of Management Control Systems
20 Fo rI B
ICFAI UNIVERSITY

S

U

se

O nl y

C

la s

s

of

09

Principles of Management Control Systems
20 Fo rI B
ICFAI Center for Management Research
Road # 3, Banjara Hills, Hyderabad – 500 034

S

U

se

O nl y

C

la s

s

of

09

 The Institute of Chartered Financial Analysts of India, January 2006. All rights reserved.
No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means – electronic, mechanical, photocopying or otherwise – without prior permission in writing from Institute of Chartered Financial Analysts of India.

Fo

ISBN 81-7881-995-3 Ref. No. PMCS/A 01 2K6 31
For any clarification regarding this book, the students may please write to ICFAI giving the above reference number, and page number. While every possible care has been taken in preparing this book, ICFAI welcomes suggestions from students for improvement in future editions.

rI B

S

U

se

O nl y

C

la s

s

of

20

09

Contents
PART I: AN OVERVIEW OF MANAGEMENT CONTROL SYSTEMS Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Introduction to Management Control Systems Approaches to Management Control Systems Designing Management Control Systems Key Success Variables as Control Indicators Organizing for Adaptive Control Autonomy and Responsibility Transfer Pricing 3 15 28 42 57 71 87

PART II: MANAGEMENT CONTROL ENVIRONMENT

Chapter 8 Chapter 9 Chapter 10 Chapter 11 Chapter 12 Chapter 13 Chapter 14 Chapter 15 Chapter 16

Strategic Planning and Programming Budget as an Instrument of Control Reward Systems

20

PART III: MANAGEMENT CONTROL PROCESSES

09

99 114 139 152 163 177 185 208 221 234 242 258 279 287 295 301 304

Continuous Process Improvement...

Similar Documents

Premium Essay

Business Finance

...NATURE AND AIMS OF BUSINESS To better understand and appreciate the study of business finance. The Philippine Economy Today Ours is a growing economy. Visible and increasing signs of healthy economic progress are now transforming the face of the country. A growing number of firms, mills, factories, plants.-business enterprises that represent the different aspects of economic activities- dot the many parts and regions of the country thereby changing sleepy towns and communities into progressive ones. Impact of Business Someone has aptly remarked that, "business enterprise is people". This observation is not only correct but very striking indeed for business directly affects, or even rules, the everyday life of the people. In developing countries, like the Philippines, the standard of living rises only as more and more people learn and are able to engage in various aspects of economic activities. Thus, the growth and development of business enterprise in any country is the product of the people's drive, their bold experimentation and continuous adoption to changing conditions and environment brought about by technological improvements in industry and other human pursuits. Role of Business Under the free enterprise system, the growth of the economy lies in the ability of private individuals to achieve economic objectives. The quest for profit is usually undertaken by engagement in business activities. Business is largely responsible for bringing into the market a......

Words: 1045 - Pages: 5

Premium Essay

Business Finance

...Running Header: Business Financing and the Capital Structure 1 Business Financing and Capital Structure Clifton Williams Strayer University Professor Henderson Fin 100 May 24, 2014 Business have to make many financial decision that a direct impact on operations and the ability to successfully compete in the marketplace. I will assume that I am a financial advisor to a business. I will give advice that I would give to the client for raising business capital using both debt and equity options in today’s economy. I will give advantages and disadvantages of each option. I will summarize the advice that I will give the client on selecting an investment banker to assist the business in raising capital. I will discuss the historical relationships between risk and return for common stock versus corporate bonds. I will explain the manner in which diversification helps in risk reduction in portfolio. I will support my response with actual data and concept learn from class. As financial advisor to a business I will give my client advice on raising business capital using debt and equity capital with their advantages and disadvantages. As my clients advisor I would describe the two most common types of financing which are debt and equity capital. I would tell them the difference between the two and the advantage and disadvantage of the two. Debt capital is an agreement contract between lenders and companies trying to start or grow its organizations.......

Words: 1104 - Pages: 5

Premium Essay

Business Finance

...Copyright : All rights reserved. No part of this course may be reproduced in any form by any means without prior permission in writing from: 0    BUSINESS FINANCE OUbs002223 January 2014 OUbs002223 Business Finance Table of Contents      Unit 1 Agency Issue between shareholders and managers Unit 2 Investment appraisal methods Unit 3 Risks and Return Unit 4 Asset Pricing Models, CAPM & APT Unit 5 Capital Market Efficiency and Stock Market Anomalies Unit 6 Cost of Capital, Shareholder’s wealth, Gearing & Leasing Unit 7 The dividend decision Unit 8 Corporate Restructuring 1    Aim of the Module  To provide learners with knowledge of the principles and practice of the financing decisions of enterprises. Learners will learn about the decisions which firms make about financing their investments in productive capital. Teaching and learning strategy  The teaching and learning strategy is designed to develop in students an ability to understand the mechanisms of financial markets and the issues pertaining to investment decision in those markets. Students should be able to understand and apply the time value concepts with regards to investment decision. They should also be able to evaluate the risks and returns of financial......

Words: 8084 - Pages: 33

Premium Essay

Business Finance

...Investigating Finance Control | | | By: Harmol Sehmi 11H1 | | Contents Page 1. Front Page 2. Contents page 3. Introduction 4. Business Costs 5. Carrying on Business costs 6. Carrying on Business Costs 7. Cash flow forecasts 8. Financial documents 9. Carrying on financial documents 10. Carrying on financial documents 11. Managing business finances 12. Managing business finances Introduction In this assignment I will summarise the difference between start-up and running costs, which will include a table showing these. Along with, summarising the difference between fixed and variable costs which will also including a table showing these. I will then write a summary explaining the importance of the following: * Sales revenue * Calculating total revenue (unit sales price x number of units sold) * Gross and net profit * Maximising profits (increasing revenue and/or decreasing costs) Later I will then calculate the profit or loss for the first year, using the data in Project 3 and advise him as to how he can make his Business more profitable. Secondly, I will create a PowerPoint presentation showing the usefulness of break-even analysis. I will start by writing a detailed description of what is break even analysis and explain the reasons why break even analysis is important to a business. I will then construct a Break Even chart using the data given for Julian & Johns’ business. I will......

Words: 3640 - Pages: 15

Premium Essay

Business Finance

...decisions are of vital importance to all, since they determine the potential to succeed. The decision whether or not to invest in a particular business would be based on a careful consideration of some key financial indicators of that particular business. Aqua America (formerly Philadelphia Suburban Corp.) is the largest U.S.-based publicly traded water utility, providing water and waste services in 10 states: Pennsylvania, Ohio, Illinois, Texas, New Jersey, Indiana, North Carolina, Virginia, Florida and Georgia (unregulated). The first factor considered is ‘Volume’; volume here refers to the number of stocks bought and sold in a single day of trading. The average volume of stock traded has to be over 500000; if lower, then liquidity is low. Technical analysts strongly believe that “It takes volume to make price move” (Kapoff, 1987). The average daily volume of this organization was estimated to be 771119 which is above the 500000 mark, this indicates that the company’s stock is quite liquid which make investment worthwhile. The second factor considered is ‘Beta’ (volatility); according to the CAPM of William Sharpe (1964) and John Lintner (1965), ‘a stock’s risk is summarized by its beta.’ Investments with a high beta are always very risky while otherwise for investments with a low beta. It usually make more sense to invest in business with a low risk level in as much as the higher the risk the higher the return, it makes more sense to play safe while investing which is......

Words: 644 - Pages: 3

Premium Essay

Business Finance

...Recent advances in evolutionary psychology and the cognitive neurosciences may be able to reconcile the EMH with behavioural anomalies. There is an old joke, widely told among economists, about an economist strolling down the street with a companion. They come upon a $100 bill lying on the ground, and as the companion reaches down to pick it up, the economist says, ‘Don’t bother – if it were a genuine $100 bill, someone would have already picked it up’. This humorous example of economic logic gone awry is a fairly accurate rendition of the efficient markets hypothesis (EMH), one of the most hotly contested propositions in all the social sciences. It is disarmingly simple to state, has far-reaching consequences for academic theories and business practice, and yet is surprisingly resilient to empirical proof or refutation. Even after several decades of research and literally thousands of published studies, economists have not yet reached a consensus about whether markets – particularly financial markets – are, in fact, efficient. The origins of the EMH can be traced back to the work of two...

Words: 11295 - Pages: 46

Premium Essay

Business Finance

...BUSINESS FINANCE FAO: DIRECTORS, NATURALLY FRESH PLC CONTENTS Page(s) 1. Introduction 3 2. Required Rate of Return on Equity 3 3. Beta 3 4. Capital Asset Pricing Model 4 5.1 Limitations of CAPM 4 5.2 The APT Model 4 5.3 The Three-Factor Model 4 5.4 Required Rate of Return using APT or Three-Factor 5 Model 5. Bonds 5 6.5 How bond prices are determined 5 6.6 The Rate of Return on the bonds 6 6. Conclusion 7. Appendices 6.1 Appendix 1 – after tax rate of return on bonds 7 6.2 Appendix 2 – Excel Working and screen shot 8. References 9. Bibliography 1. Introduction Naturally Fresh Plc are considering converting a number of their farms in Southern Europe into campsites following difficult trading conditions. This report will look at the required rate of returns on the equity as well as the bonds, whilst explaining the models used to calculate the returns and also provide a recommendation on whether the investment opportunity should be accepted by Naturally Fresh Plc. 2. Required Rate of Return on Equity Key | | E(R) | Expected/Required Rate of Return | R(f) | Risk Free Rate | B | Beta | R(m) | Market Return | R(m)-R(f) | Market Premium | Capital Asset Pricing Model (CAPM): E(R) = Rf + B(Rm-Rf) E(R) = 2% + 0.8(12%-2%) E(R) = 10% The required rate of......

Words: 2713 - Pages: 11

Premium Essay

Business and Finance

...Business Strategy ST3S03A Module Workbook: 2015 CONTENTS 1. Module Introduction 2. Module Aims and Learning Outcomes 3. Teaching methods 4. Lecture/Tutorial Programme 5. Unit Descriptors 6. Reading 7. Assessment Please note that information contained in this document may be subject to amendment. This workbook is the copyright of Dan Taylor, Simon Brooks & Paul Davies. The material contained in it may only be used for teaching purposes in association with the Business School of the University of South Wales, and with the explicit permission of the authors. 1. Module Introduction – What is this module about? Welcome to the workbook for Business Strategy. This book contains all the background information you need for the whole course, together with the lecture and tutorial programme. Use this book as your key reference for information on the course. Most of the frequently asked questions you are likely to raise are answered here. Please note that while this information is correct at the time of going to press, we reserve the right to alter the programme and other course details from time to time. This will be done through announcements in lectures and on Blackboard, the web-based learning environment. It is imperative that students access Blackboard regularly to ensure they are aware of any changes. This course is intended to be an informative and interesting introduction to......

Words: 4077 - Pages: 17

Premium Essay

Business Finance

...School of Management, Operations and Marketing COMM331: Integrative Business Capstone Subject Outline 6 credit points Subject Information Autumn, 2016 Wollongong On Campus Lecture Information: Mondays, 08:00 - 08:00, All COMM331 lectures are online via Moodle Pre-requisites: 96 Credit Points including all Faculty of Business undergraduate 1st year core subjects Co-requisites: Nil Restrictions: COMM333 Contact Hours: Online lectures plus 1 hour of tutorial (up to week 6) and 2 hours of computer lab (from week 7 up to week 13) Online Subject Material: The lecture material for COMM331 is all online. Students can access online materials via Moodle. COMM331 is supported by a UOW Libguide available at http://uow.libguides.com/index Teaching Staff Teaching Role Name Coordinator, Lecturer and Dr Belinda Gibbons Tutor Telephone Email 42215824 bgibbons@uow.edu.au Room Consultation Times 40.247 Wednesday 10:30 - 12:30 Thursday 13:30 - 15:30 Head Tutor Ms Natalie Akmacic NA akmacic@uow.edu.au NA TBA Tutor Ms Jinqi Xu NA vivenx@uow.edu.au NA TBA Tutor Mr Viktor Tomeski NA viktor@uow.edu.au NA TBA Tutor Ms Lynda Lorkovic NA lbricevs@uow.edu.au NA TBA Tutor Ms Nadeera Ranabahu Mudiyanselage NA nadeera@uow.edu.au NA COMM331 Subject Outline Autumn, 2016 TBA Page 1 of 21 Email Etiquette: Consultation with your subject coordinator and/or teachers......

Words: 6498 - Pages: 26

Premium Essay

Business Finance

...am keen to my career with organization where I can acquire the requisite experience to improve my skills and knowledge in accounting principles and also adapt to change easily, able to assume authority, supervise people, manage time set objectives and motivate people. SPECIAL SKILLS Hard work with positive mind set towards the achievement of the set standard of the organization. Set confident, effective team work ability and food human relation. I have the ability to learn and work efficiently under pressure to meet deadlines. Excellent writing and communication skills. A good use of Microsoft word and excel. EDUCATIONAL BACKGROUND 2010-2012: Diploma in Business Studies Institution: Sunyani Polytechnic ( Sunyani) Courses: Financial Accounting, Cost Accounting, Business Law, Business Communication, Office Practice and Administration. 2005-2008: West Africa Senior Secondary Examination Certificate (wassec) Institution: Afua Kobi Ampem Girls’ High School. Courses: Chemistry, Biology, Physics, Elective Mathematics 2003-2005: Basic Education Certificate Examination Institution: Holy Spirit Junior High School WORKING EXPERIENCE Institution: Konadu Yiadom International School Position: Teacher Institution: SSNIT Goaso Position: Assistant Clerk Institution: Gabriel K Driving School Position: Assistant Clerk COURSES ATTENDED Blue Software Communication Training (Computer Training) INTEREST AND HOBBIES I like watching......

Words: 396 - Pages: 2

Free Essay

Business Finance

...has grown significantly during its years of operation. The success has been attributed to the strategic planning the company has adopted in running the company’s operations. Exxon Mobil has employed different initiatives in its strategic planning to ensure that the profits of the company are high. One of the primary initiatives in strategic planning is ExxonMobil’s Downstream. ExxonMobil’s Downstream involves the contact of the company directly with the customers. It is a large business network which includes logistics, marketing and refining companies (Exxon Mobil Corporation, 2013). The initiative aims at having a large market base so that the long-term goals of the company are achieved. The initiative also aims at ensuring that the value of the shareholder goes up significantly, keeping pace with the competitors. The initiative is faced with various challenges. There is overcapacity in the sector of refining and the demands are weakening. However, the company ensures that the business cycle is evaluated continually so as to deal with the rising challenges that might be experienced. The company ensures that the projects it undertakes in the downstream strategy are resilient to such disadvantages. In an attempt to ensure the initiative is successful, the company capitalizes on world-class integration. Also, the company ensures quality brand and the use of leading technology in the operations. This has made the company to attract the growing markets hence giving it a......

Words: 317 - Pages: 2

Free Essay

Business Finance

...competitive famous and fragmented space such as Sim Lim square, Funan Digitalife Mall, The Clementi Mall, The Singapura etc…Challenger is a business of providing plenty of difference IT products and services. It has more than 180 IT suppliers and more than 50 product lines. The group has a strong relationship with IT vendors (include Hewlett Parkard Singapore Pte Ltd; Tech Pacific Singapore Ltd; Acer Computer Pte Ltd). This network help the company to provide a wide range of IT products to customers and provide company a lot of benefits such as competitive credit term and price term for payment. Challenger superstore’s product lines include computers, laptops, input devices, hardware, software, printing devices, office products, imaging and video products, multiplayer products, home entertainment appliances and so on. Matrix IT gallery are specialty stores set up to target customer who may not come to Challenger store. These stores offer customer the latest and most popular IT products (hardware or software) and focus on creating sales with lower margins. The group also provided post-purchased IT services to customers even they have not purchased the Challenger’s products. Beyond that Challenger Technologies are also design and produce electronics signage for commercial building, hotels and financial institution on a project-by-project. This business earned about 1.5% of the company revenue and also made a small loss (around $0.6 million). Beyond supply and installation,......

Words: 855 - Pages: 4

Free Essay

Business Finance

...(1) How far can a company go in controlling its employees' lifestyle? A company should only take into account what affects the performance of an employee. If an employee is performing as would any other employee, in this case one who is not overweight, then it could be considered an intrusion of privacy. Being overweight does not in any form of matter affect the operations of the employees. Employers are expected to treat employees with dignity and respect and should be reminded that they are paying employees to adequately do their job. Part of respect includes allowing an employee to do with their life, and body, as they would like as long as they adhere to the company’s code of conduct. Employers should care about their employees and if obesity is a concern there are different forms around the issue. Employers should suggest and inform employees of a healthier lifestyle but in no instance be forced or penalized for something non related to work. If it is the risk that obesity brings which alarms companies than driving a motorcycle is also a risk, speeding is a risk, airplanes are a risk, automobiles are a risk, crossing the street is a risk, everything has a risk. No one would be hired if one took into account the future risks. Controlling an employer’s lifestyle, especially that of their weight, is discrimination. Discrimination for altering premium prices for different weights. Employers have to draw a line and understand limits and individual rights. (2) Is......

Words: 342 - Pages: 2

Premium Essay

Business Finance

...nitial Installation (Reporting Services) - TechNet - Microsoft https://technet.microsoft.com/.../bb522676(v=sql.105)... Microsoft TechNet SQL Server Reporting Services is installed through the SQL Server 2008 R2 Setup program. You can install Reporting Services alongside other SQL Server ... Considerations for Installing Reporting Services - TechNet https://technet.microsoft.com/.../ms143736(v=sql.105)... Microsoft TechNet Using Setup, you can install Reporting Services with or without other SQL Server ... Hardware and Software Requirements for Installing SQL Server 2008 R2. Download Microsoft® SQL Server® 2008 R2 Reporting ... www.microsoft.com/en-us/.../details.aspx?id=622 Microsoft Corporation Oct 23, 2014 - The Microsoft® SQL Server® 2008 R2 Reporting Services Add-in for Microsoft SharePoint® Technologies allows you to integrate your ... Create a Report Server Database (SSRS Configuration ... https://msdn.microsoft.com/.../ms157285.a... Microsoft Developer Network Reporting Services Native mode uses two SQL Server relational databases to store ... The report server database is not a public schema. ... SQL Server 2008 R2. [PDF]Providing Postmarket Periodic Safety Reports in the ICH ... www.fda.gov/.../drugs/.../ucm346564.pdf Food and Drug Administration Reports in the ICH E2C(R2) Format. (Periodic Benefit-Risk Evaluation Report). Additional copies are available from: Office of Communications. Division of Drug ... Report: Samsung Will Release 2 Versions......

Words: 252 - Pages: 2

Premium Essay

Business Finance

...Question (11-1): Define each of the following terms: a. Project cash flow; accounting income b. Incremental cash flow; sunk cost; opportunity cost; externality; cannibalization; expansion project; replacement project c. Net operating working capital changes; salvage value d. Stand-alone risk; corporate (within-firm) risk; market (beta) risk e. Sensitivity analysis; scenario analysis; Monte Carlo simulation analysis. f. Risk-adjusted discount rate; project cost of capital g. Decision tree; staged decision-tree analysis; decision node; branch h. Real options; managerial options; strategic options; embedded options i. Investment timing option; growth option; abandonment option; flexibility option a. Project cash flow: The process of inflow or outflow of cash in any project is called cash flow. In project cash flow the increase in income results cash inflow on the other hand, expenditure results cash outflow. Accounting income: Accounting income is the result after deducting the total sales revenue from its expenses. The result of accounting income and cash flow differs in the financial statement because accounting income makes records of both cash and non cash transaction. While in cash flow only pure cash transaction are recorded. b) Incremental cash flow: Incremental cash flow is the additional cash that company may receive by taking a new project. If a company sees positive incremental of cash flow then it means the company can get additional cash......

Words: 1697 - Pages: 7