Management Control System in Use - Research Paper Example

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A number of different management perspectives and business environments have led to the development of differing management control systems over the years. Businesses and companies must keep a careful track of what management control techniques and strategies they are implementing in order to remain relevant to the needs of the stakeholders. …
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Management Control System in Use
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Download file to see previous pages Businesses and companies must keep a careful track of what management control techniques and strategies they are implementing in order to remain relevant to the needs of the stakeholders. Given that human resource is one of the most important stakeholders in the overall business environment, there is need to keep them motivated and aligned to business objectives. Recent years have seen the careful demarcation of different management control systems that need to be looked into detail before choosing what kind suits an organisation and its business environment as the best. 2. Table of Contents 3. Introduction A management control system (MCS) refers to a framework or mechanism that is used to gather, segregate and analyse information in order to evaluate the performance of various organisational resources. The organisational resources being scrutinised may include (but are not limited to) human, financial and physical resources as well as the entire organisation in the context of organisational strategies. MCS is also critical in influencing the behaviour of organisational resources in order to implement and sustain organisational strategies. The implementation of MCS in an organisation may be carried out under a formal or an informal umbrella (Otley, 1994). Management control has been defined as the process used by managers in order to influence the behaviour of other organisation members in order to implement organisational strategies. MCS can be seen as the tools used to navigate the organisation in the direction of its strategic objectives and hence to competitive advantage. The management controls used are just one of the tools that can be utilised by management in order to implement the required strategies to drive strategic advantage. However, it must be borne in mind that strategies could be implemented using a number of different avenues such as management controls, human resource management, organisational structure and culture (Anthony & Govindarajan, 2007). In contrast to this view, it has been argued that management control system is a black box i.e. it is an operation whose exact nature is not decipherable. It is argued that management control systems rely on the behaviour of managers and this behaviour cannot be properly expressed through equations so it is predictable yet unquantifiable (Anthony & Young, 1999). Others have defined management control systems as a set of integrated techniques that can be utilised for collecting and using information in order to motivate employee behaviour and in order to analyse their performance (Horngren et al., 2005). This text will investigate the nature of management control systems further using an appropriate literature review but will not implement the findings of this review as access to a workplace could not be secured. 4. Introduction to Management Control Systems Control has been defined in different ways over time (Redda, 2007). The more traditional research carried out on the issue tends to define control as an exercise carried out in order to monitor division managers (Otley, 1995). However, it has also been argued that such a point of view may not be applicable and up to date in today’s more flexible environment. More modern reflection on this issue reveals that monitoring employees is not enough in itself but instead it is necessary to support the employees in archiving the goals and objectives of the business. Essentially management control system is an interdisciplinary issue as shown in the diagram below. Figure 1 - Management control system as an interdisciplinary phenomenon In contrast to this view, Merchant and Otley (2007) contend that “a management control system is designed to help an organization adapt to the environment in which it is set and to deliver the key results ...Download file to see next pagesRead More
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