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Control Mechanisms Team Paper - Essay Example

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Control mechanisms are a part of management and marketing strategies aimed to manage, organize and direct changes and planning functions. For AIG, an American insurance Corporation, control mechanism is more than the act of regulation or governing. Both strategic planning and marketing intelligence are fundamental to the development of effective controls, since they attempt to assure the guidance of a business to its predetermined marketing objectives (Daft, 2003)…
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Running Head Control Mechanisms Control Mechanisms Introduction Control mechanisms are a part of management and marketing strategies aimed tomanage, organize and direct changes and planning functions. For AIG, an American insurance Corporation, control mechanism is more than the act of regulation or governing. Both strategic planning and marketing intelligence are fundamental to the development of effective controls, since they attempt to assure the guidance of a business to its predetermined marketing objectives (Daft, 2003). Control encompasses the monitoring of management and administrative activities to see if plans are being carried out; the analysis of marketing performance in terms of standards and objectives; authority, force, or coercion to guide marketing to the achievement of objectives; and constraining and regulating decisions and actions.
The main types of control mechanisms used by AIG are administrative control and management control, budgeting an cost control, quality control and auditing. For AIG, control is a multidimensional activity. It is diagnostic and prognostic. It examines past activities and proposes future improvements. It monitors present activities to assess a company's health. It must foresee future barriers and prepare to overcome them. Though realistic and concrete, control must be concerned with hypothetical sales potentials and future goals. It deals with firm yardsticks and standards, yet requires flexibility (Dobson and Starkey 2004).
Control helps AIG management to reach goals efficiently with a minimum of error. From knowledge gained through control mechanisms, management is better able to relate resources and programs to goals. Control mechanisms are intertwined with planning. Without a plan there is nothing to control, and without control, marketing plans probably cannot be realized. Inseparable components of management, both use many of the same tools, such as sales forecasts and budgets. The general purpose of control mechanisms is to help achieve internal and external balance. Specifically, it is designed (1) to assure that corporate and management goals will be achieved and that the company is moving in the proper direction; (2) to assess the effectiveness of the use of management resources; (3) to reassess goals and standards of management accomplishments; and (4) to balance marketing emphasis among departments activities (Robbins, 2002). The basis of effective control is management intelligence, which is used to determine standards and assess position. Information on the past and future is available from accounting records, sales analyses, marketing research, sales forecasts, distribution, cost accounting, and simulation. Control mechanisms may be differentiated on the basis of their scope and importance. As with plans, there are strategic, functional, and tactical controls. Strategic control mechanisms evaluate and adjust management objectives, directions, plans, and the total management processes. Functional controls relate to adjustments in the functional areas, such as sales management, that are also longer range and broad in scope. Tactical control mechanisms, more minor and immediate, adjust such matters as advertising schedules or package design. For AIG, control mechanisms are complicated by the impact of external factors and the existence of multiple goals (AIG Home Page 2008).
In AIG, a -control mechanism contains realistic standards against which management performance can be assessed. It also includes marketing intelligence about current levels of achievement, an assessment and evaluation of management performance, recommendations for adjustments and realignments of resources, standards, or both, and the power to institute recommendations (Daft, 2003). Control mechanisms are dependent on information. Because of the spans of time, distance, and authority, management cannot personally oversee all activities. For instance, it is impossible to evaluate personally the performance of salesmen spread over a widely diversified geographic area, management must rely on information from reports to evaluate the effectiveness of performance and determine whether adjustments are necessary.
References
AIG Home Page. (2008). Retrieved 31 October 2008 from www.aig.com/
Daft, R. L. (2003). Organizational Theory and Design. 9th Edition. South-Western College
Pub; 8 edition.
Dobson, P., Starkey, K. (2004). The Strategic Management: Issues and Cases. Blackwell
Publishing.
Robbins, S. P. (2002). Organizational Behavior. Prentice Hall; 10 edition. Read More
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