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Management Control Systems - Case Study Example

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Control is the process of ensuring that a firm's activities conform to its plan and that its objectives are achieved. Control systems are measurements and information that assist in determining management control and decision making. It encompasses all the methods and procedures that guide employees towards the achievement of organisational goals and objectives…
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Management Control Systems
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Download file to see previous pages The monetary measure becomes a common measure that is understood by all functions of the organisation. Also, profitability measure is essential to the success of all organisations. Thus, management monitors performance in terms of monetary value. Most especially, financial results provide a mechanism to suggest whether the business strategies implemented by an organisation benefited them. (Kimmel, Weygandt, & Kisco, 2000)
This paper focuses on the management control systems established and implemented by a banking institution - Grameen Bank. Grameen Bank is a non-traditional bank that surpasses conventional banking practices of its contemporaries. In view of this, the paper will illustrate the different performance measurements that the organisation established as well as create a performance evaluation of the organisation.
Grameen Bank is a micro-credit organisation that had initiated lending to the rural poor and was very successful that they rise above the normal banking conventions. Muhammad Yunus founded the bank in order to help the poor people in his country. He envisioned create an organisation that would alleviate the poor from poverty. He created the bank because no other banks shared his vision. In his speech as a Nobel Peace Prize Awardee, Yunus started the bank as a home-grown project that was run with the help of his students. Now, the Grameen Bank has increased in multitudes and the Grameen idea has spread around the world. Grameen-type programs are being implemented in almost every country. (Yunus, 2006)
The target market of Grameen is the poorest of the poor in Bangladesh and most of their customers are responsible women of the poor families. Yunus developed a lending methodology where loans are paid in miniature weekly payments. The purpose of micro-credit lending is to detect problems early and increase borrowers' confidence.
The objectives of the Grameen Bank are to extend the banking facilities to the poor people without collaterals but instead of mutual trust, accountability, participation and creativity. The organisation aims to become an enabler for the unutilized and underutilized manpower to create opportunities for self-employment. (Grameen Bank, 2009)
Management control systems
According to Kaplan & Norton (1996), what an organisation cannot measure, the organisation cannot manage. In order for an organisation to be successful in its business, they must know what to look at or the indicators that show the health of the organisation. It is part of the role of management to create strategies for the organisation in order sustain their existence as well as grow in their business environment.
It is the nature of management to have control over the organisation. It is the function of management to define various measures to safeguard its assets; check the reliability and accuracy of accounting information; ensure compliance with management policies; and evaluate operating performance and efficiency. Without control, the people in the organisation will be functioning in chaos and without direction. Management control is one of the reasons that an organisation would look professional, systematic and trustworthy, inside and out.
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