Management Control

In: Science

Submitted By TheoDekker8
Words 528
Pages 3
6a6Management Control Research
Wrap-up for the first two weeks!

During the first two weeks the main goal was to provide a holistic overview and understanding about management control research. After these two weeks you should be able to: 1. Understand what are MACS (book, p. 5) + developed further in chapter 4 of the book. a. Agency theory: Organizations are a web of two-person contracts between owner (principal) and managers/employees (agents). MACS are used to monitor, control, and motivate the agents (e.g. incentive system) – owner’s position; b. Nerve center: Managers need (formal and informal) information to support their decisional, interpersonal and informational roles – manager’s position; c. Accounting symbolism: MACS are used in a ceremonial way: more symbolic than functionalistic. Can be used either to influence or persuade (offensively) or to a posteori justify decisions (defensively) – accounting’s position; d. Labor process: MACS are used to weaken and exploit workers (managers can both be victims and users of MACS) – workers’ position; e. Dialectic controls: Historical analysis and evolution / change based on tensions amongst organizational elements – managers and workers’ position.

2. Understand two typologies about Management Control Research. a. The three paradigms proposed by Chua (1986) and their main characteristics.

Dialectic controls

Labor process

Nerve center

Agency theory Symbolism

Slides 15+16

Slides 17+18

Slides 13+14

See also three alternative approaches (attached) and DEBATE (lecture 1) Mainstream accounting research – Standard in USA, dominates PhD and Master programs and academic journals. Interpretive research – Describe, understand and interpret the meanings that human actors apply to accounting information. Critical research – Does not belief in a neutral view of the uses of accounting (often…...

Similar Documents

Change Management and Control

... specifically capture the effects of each prior year’s investments on current in- 222 Academy of Management Journal February vestments, as well as controlling for unobserved variables that are manifested in the prior year’s investments. We also controlled for several factors that are likely to affect analysts’ recommendations as well as firms’ investment decisions and repurchase announcements: firm revenue and earnings per share, which account for changes in a firm’s financial health; cash, since firms with greater amounts of cash may have more flexibility but also face heightened pressure to return it to shareholders through dividends or repurchases; the long-term debt-to-equity ratio, which likely affects firms’ investment and share repurchase policies; industry revenue (the sum of revenue by four-digit SIC code), to capture changes in firms’ overall competitive environment; stock price, measured as the average of the high, low, and closing price in a previous year; and the log of the number of analysts’ recommendations, that is, the number of analysts covering a firm in a given year. The control variables were lagged one year in our models. Finally, in each model we controlled for alternative uses of cash, which are not independent from decisions concerning the dependent variable. Specifically, in the model to test Hypothesis 1, we included dividends per share and the value of repurchase announcements in the current period as potential alternatives to strategic......

Words: 15241 - Pages: 61

Management Control System Project

...Management control systems provide information that is intended to be useful to managers in performing their jobs and to assist organizations in developing and maintaining viable patterns of behaviour. Any assessment of the role of such information therefore requires consideration of how managers make use of the information being provided to them. management control describes a feedback process of planning, objective setting, monitoring, feedback and corrective action to ensure that outcomes are in accordance with plans. Two attempts have been made in the past to link this framework with strategy. The first is Anthony’s ( 1965, 1988) - strategies are taken as given and management control systems motivate, monitor and report on their implementation. Another attempt to couple strategy and management control can be seen in the concept of strategic control. Strategic control has been described as a system to assess the relevance of the organization’s strategy to its goals, and when discrepancies exist, to highlight areas needing attention. My research indicates that management control systems are not only important for strategy implementation, but also for strategy formation. I define management control systems, therefore, to recognize that these systems are more than devices of constraint and monitoring: management control systems are the formalized procedures and systems that use information to maintain or alter patterns in organizational activity. Using this definition...

Words: 2092 - Pages: 9

Management Control

...! Thermolysis It is a system that is subject to the waste tire materials to heating in an environment in which there is no oxygen. High temperatures and lack of oxygen has the effect of destroying the chemical bonds. Then appear hydrocarbon chains. Is how to get, again, the original composition of the tire, making it the method that achieves full recovery of the components of the tire. Makes metals, coal and hydrocarbon gases, they can return to the industrial chains either tire production or to other activities. PYROLYSIS It is still not widespread, due to problems of separation of carbon compounds that are already being overcome. According to company data Chemysis SA. This procedure (pilot plant) is operating in Taiwan since 2002 with four lines of pyrolysis to recycle 9000 tonnes / year. At present, the procedure has been improved and is capable of treating 28,000 tons of used tires per year, through a single line. The products obtained do after the pyrolysis process are mainly: GAZ similar to propane which can be used for industrial / – industrial liquid oil can be refined into diesel. / Coke / Steel Incineration Process which produces the combustion of organic materials of the tire at high temperatures in furnaces with high-quality refractory materials is an expensive process and also has the disadvantage of the different rates of combustion of the different components and the need for purification waste so that it is not easy to control and also contamination...

Words: 2406 - Pages: 10

Management Control System

...Management Control System CHAPTER 1 : THE NATURE OF MANAGEMENT CONTROL SYSTEMS By: Amirul Affan (115020305121001) Maria Dias Ika S (115020307121009) FACULTY OF ECONOMICS AND BUSINESS BRAWIJAYA UNIVERSITY 2014 A. Basic Concepts 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 considering the organizational strategies. MCS influences the behavior of organizational resources to implement organizational strategies. MCS might be formal or informal. Control An organization must be controlled to ensure that is strategic intentions are achieved. But controlling an organization is much more complicated than controlling devices. Every control system has at least four elements: 1. Detector or sensor Device that measures what is actually happening in the process being controlled. 2. Assessor Device that determines the significance of what is actually happening by comparing it with some standard or expectation of what should happen. 3. Effector Device that alters behavior if the assessor indicates the need to do so 4. Communications network Device that transmit information between the detector and the assessor and between the assessor and the effector. Management An organization consists of a group of people who work together to achieve certain common goals (in...

Words: 1243 - Pages: 5

Management Control System

...Introduction Management control system (MCS), as a vital part of an organization, which purpose allows organizations to ensure that their activities achieve the objects they desire. The process of designing and improving MCSs requires addressing three basic questions. What is desired? What is likely to occur? And What is the effect of contextual factors ?Then managers must address each of these questions. What controls should be used? In recent years, contingency-based research has maintained its popularity with studies including these variables but redefining them in contemporary terms. This paper provides a critical review of findings from contingency-based studies over the past 20 years, deriving a series of propositions relating MCS to organizational context. The paper examines issues related to the purpose of MCS, the elements of MCS, the meaning and measurement of contextual variables, and issues concerning theory development (Robert H. Chenhall 2003). on the effect of contextual variables on the design of Management Control System (MCS). It is tests the effect of each contextual variable on the relationship between MCS design and performance by using survey instruments. It is demonstrates that contextual variables contribute to the design of MCS. The following sections describe how to address each of these questions. What it is the organization Objectives and, more importantly, strategies that are derived from a good understanding of the organization’s...

Words: 1371 - Pages: 6

Management Control System

...ijcrb.webs.com OCTOBER 2010 VOL 2, N O 6 INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS Management Control System Hamed Armesh Faculty of Management ,MMU,Malaysia Listed in ULRICH S Dr. Habibollah Salarzehi , Dr.Baqer Kord Faculty of Management, University of Sistan and Baluchestan Abstract A management control systems (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 considering the organizational strategies. Finally, MCS influences the behaviour of organizational resources to implement organizational strategies. Keywords: Management , Control , Systems 1. Introduction To introduce this topic and understanding the importance of management control system we know that In the present globalised world, organisations need to use management control systems that go beyond the strategies that focus on acquisition of technology and logistics which are not sufficient to give the organisation sustained long-term competitive edge over its competitors. Management Control Systems (MCS) as defined by Anthony (cited by LangfieldSmith, 1997) is the process by which managers ensure that resources are obtained and used effectively and efficiently in the accomplishment of the organization s objectives . MCS is a system used in an organization which collects and uses information to evaluate the performance of the organizational...

Words: 5165 - Pages: 21

Management Control

...Analysis of the article: From comfort to stretch zones: A field study of two multinational companies applying “beyond budgeting” ideas by Anatoli Bournistrov and Katarina Kaarboe (2013), Sociological perspective The article by Bournistrov and Kaarboe can be seen using the sociological perspective on studying the budgeting, since the focus of the research is aimed at the organizational level and how applying beyond budgeting ideas in its management control systems (MSC) has influenced the decision making of the managers. The research was conducted as a field study in two multinational companies who recently rejected the traditional budgeting process in favor of beyond budgeting to better respond the ever-changing business environment. The basic premise of study was that introducing a new MSC without budgets, the decision maker in company are moved from “comfort zone” to the “stretch zone” thus creating a new organizational structures and supply and demand of information. For OilCo, the other company in the research that the main reasons for adopting new practices, was that the traditional budgeting was seen as a restriction to innovating and reacting to changing environment, as it set up boundaries for employees to operate instead of utilizing emerging opportunities that would need resources. New “from ambition to action” system allowed managers to start up new projects and gain resources when seen profitable opportunities emerged. For TelCo the new MCS was also brought...

Words: 957 - Pages: 4

Management Control

...6a6Management Control Research Wrap-up for the first two weeks! During the first two weeks the main goal was to provide a holistic overview and understanding about management control research. After these two weeks you should be able to: 1. Understand what are MACS (book, p. 5) + developed further in chapter 4 of the book. a. Agency theory: Organizations are a web of two-person contracts between owner (principal) and managers/employees (agents). MACS are used to monitor, control, and motivate the agents (e.g. incentive system) – owner’s position; b. Nerve center: Managers need (formal and informal) information to support their decisional, interpersonal and informational roles – manager’s position; c. Accounting symbolism: MACS are used in a ceremonial way: more symbolic than functionalistic. Can be used either to influence or persuade (offensively) or to a posteori justify decisions (defensively) – accounting’s position; d. Labor process: MACS are used to weaken and exploit workers (managers can both be victims and users of MACS) – workers’ position; e. Dialectic controls: Historical analysis and evolution / change based on tensions amongst organizational elements – managers and workers’ position. 2. Understand two typologies about Management Control Research. a. The three paradigms proposed by Chua (1986) and their main characteristics. Dialectic controls  Labor process   Nerve center  Agency theory  Symbolism  Slides 15+16 Slides 17+18 Slides...

Words: 528 - Pages: 3

Management Control Systems

...Management control systems Solutions to Chapter 16 questions (a) See Chapter 16 for the answer to this question. In particular, your answer should stress: (i) The need for a system of responsibility accounting based on a clear definition of a manager’s authority and responsibility. (ii) The production of performance reports at frequent intervals comparing actual and budget costs for individual expense items. Variances should be analysed according to whether they are controllable or non-controllable by the manager. (iii) The managers should participate in the setting of budgets and standards. (iv) The system should ensure that variances are investigated, causes found and remedial action is taken. (v) An effective cost control system must not be used as a punitive device, but should be seen as a system that helps managers to control their costs more effectively. (b) Possible problems include: (i) Difficulties in setting standards for non-repetitive work. (ii) Non-acceptance by budgetees if they view the system as a punitive device to judge their performance. (iii) Isolating variances where interdependencies exist. (a) See ‘Planning’, ‘Motivation’ and ‘Performance evaluation’ in the section on the multiple functions of budgets in Chapter 15 for the answer to this question. The answer should emphasize that the role of motivation is to encourage goal congruence between the company and the employees. (b) See ‘Conflicting roles of budgets’ in Chapter 15 for an explanation of...

Words: 6086 - Pages: 25

Management Control System

...management control system targets. Therefore, conventional management control systems focus on getting better operational efficiency. But as operational efficiency is no longer adequate to create sustainable competitive advantages, management control systems must be expanded to managerial practices that cultivate employee cooperation and creativeness in the discovery and development of new business opportunities. This is especially the case in the high-tech industries that are at the faced with the challenges of globalisation and employee teams must combine efficient communication with creativity. ``Project managers and product designers in software and other industries thus need to find ways to divide up products and tasks so that even teams of many of clever people can work and communicate efficiently as well as creatively'' (Cusumano, 1997). Simons (1987 and 1990) argued that control systems is in four categories, namely i. ii. iii. iv. Diagnostic control systems Boundary control systems Interactive systems Belief systems. These four different management control systems are identified recently by companies as effective categories of controlling system, companies must apply them in a way that maximizes operational effectiveness without limiting employee creativity. This task can be accomplished by using diagnostic measures as a way to improve operational effectiveness and the other three types of control measures as a way to mitigate its negative effects on employee...

Words: 4444 - Pages: 18

Management Control

... no motivation for motivation should be challenging not discouraging. * Lack of to attain their target because it is impossible which lead to a failure. Balance of Control * There are imbalance of controls due to many shortcomings of the management and the employees from the planning of the management control up to its implementation. * Strong balanced controls were practiced in stage 3 for they were good(tight) controls .A cost benefit analysis of the controls reflects that the benefits outweigh the costs in stage 3 due to the good(tight) controls. * Cultural control and Personnel control were used the least even though they are thought to be the soft controls but these controls can be seen here as effective since they recognize the employees potential and psychological needs. * Most of the controls used where action control and it is no surprise for the firm need to achieve a target. * Getting there desired actions has to be followed and the schedule too done to attain the desired outcomes. * Result control was also used to reward and keep employees motivated to achieve their required targets. * The controls came through three stages to be balanced: (i) it reflects that there is no optimal control for large matured firm like PCL ; (ii)management have to make thorough plans; and (iii) choose the mix that yield them more benefits rather than costs to be used in the firm. All the three controls have to be used together and I cannot say...

Words: 1052 - Pages: 5

Management Control System

... uncontrollable factors at the divisional level may be difficult. Q. 2 Discuss the significance of human behavioral pattern in management control? Ans. Management control system influence human behavior same as human behavior influences management control system. Human behavior helps in performing a good management control system by goal congruent manner. Thus following are the ways in which the human behavior influences the management control system. Goal congruence: Senior management wants the organization to attain the organization’s goal. But the individual members of the organization have their own personal goals, and they are not necessarily consistent with those of the organization. The central purpose of a management control system, then, is to ensure a high level of what is called “goal congruence”. In a goal congruence process, the actions people are led to take in accordance with their perceived self-interest are also in the best interest of the organization. Obviously in our imperfect world, perfect congruence between individual goals and organizational goals does not exists – if for no other reason than that individual participants usually want as much compensation as they get while the organization maintains that salaries can go only so high without adversely affecting profits. Thus an individual should always think on how he can improvise his organizations goal along with his own goal. Work ethics: There are some external......

Words: 7805 - Pages: 32

Management Control System

... weakness is that its divisions operate as independent companies. Furthermore, all of these profit centers participate in incentive compensation plan that the higher the participant is in the organizational hierarchy, the more “incentive points” he or she will receive based on division profit variance.  * The Abrams Company has three totally independent divisions, and the three divisions are lack of connection. The transactions between the three divisions dispute the transfer pricing.  Recommendation Need to evaluate the performance of financial and nonfinancial measures. For example, EVA, Residual Income and balance score card that evaluates the company from four perspectives, namely financial, customer, process and learning and development. Management of the company Abrams needs to limit the matters that require strategic considerations, uniformity (e.g. accounting method) and so on. Each division has a cart each of which contains the production and marketing activities and should not be allowed to seize the business of other business units. Top-level management must be involved in maintaining the unity of purpose and integrity of the organization. Conclusion Top-level management companies are concerned Abrams on transfer pricing disputes, the behavior that put the OEM products division than the division of AM and excess inventory in each division. For each problem, the authors have provided some solutions in the discussion of the case. Management control......

Words: 1017 - Pages: 5

Management Control Environment

...Management Control Environment Theoretical Introduction An organization consists of responsibility centers. The performance at responsibility center can be measured in terms of Effectiveness and Efficiency of Work.Effectiveness refers to how well the work is done while Efficiency in the engineering sense,is the amount of output per unit of input. Management control involves the planning and control of these centers’ activities so they make the desired contributions toward achieving the organization’s objectives. The management control environment includes the nature of the organization:its rules,guidelines,and procedures;its culture; and its external environment. Responsibility centers use inputs and assets to produce outputs.Responsibility accounting focuses on planned and actual amounts for responsibility center inputs and outputs. It is to be contrasted with full cost accounting, which focuses on products rather than on responsibility centers. There are four types of responsibility centers: revenue centers,in which outputs are measured in monetary terms & are often expense centers as well;expense centers,in which inputs are measured in monetary terms; profit centers, in which both inputs and outputs are measured in monetary terms; and investment centers,in which both profits and assets employed are measured and related to each other.Profits and Assets employed interrelates ( not just mere control of assets) in an investment center. ......

Words: 274 - Pages: 2

Control Management

...Week 7 Student University Emirates Airlines has not made a loss in the past eighteen years despite the airline market being turbulent due to the high fuel costs. This has been due to the airlines long term strategies. The airline recently signed a deal with the Australian carrier Qantas Airways in a bid to expand its routes to Australia. The controlling role employed by Emirates was to expand and tap Australian market thereby expanding its routes. High level management was involved as the deal involved signing a ten year contract with Qantas Airways. The contract situation was a non-cybernetic control. Etihad Airways signed a billion dollar deal with Sabre for the Sabre software solution. This was in an attempt to migrate all its business operations to the Sabre software platform. The role of this control was to simplify management process, auditing and analyzing of important aspects of the airline operations with the aim of minimizing operational costs. The control was top management oriented as it is the airline’s biggest technology investment. The decision to migrate the entire business operations to the Sabre Software is a cybernetic decision. Comparing the given case of Northrop Grumman and Etihad Airways it is clear that both companies are focused easing management by employing solutions and contracts that will make operations of the companies easier and smooth. Etihad aims at reducing costs and meeting the customers need by acquiring the Sabre software, where......

Words: 352 - Pages: 2