2. MCS & BEHAVIOURAL CONSIDERATIONS
It involves interactions among individuals/ managers, their personal
goals against organizational goals – Goal Congruence.
PEOPLE ARE IMPORTANT ASSETS FOR AN
ORGANIZATION.
WITHOUT THE COOPERATION OF THE EMPLOYEES,
MANAGERS CAN’T IMPLEMENT THEIR DECISIONS.
3. MCS & BEHAVIOURAL CONSIDERATIONS
TO MANAGE PEOPLE EFFECTIVELY, CONTROL
SYSTEMS ARE REQUIRED FOR THE FOLLOWING
REASONS:
1. LACK OF DIRECTION.
2. MOTIVATIONAL PROBLEMS.
3. PERSONAL LIMITATIONS.
4. MCS & BEHAVIOURAL CONSIDERATIONS
Specification of organization hierarchy/ structure, roles and
reporting relationships.
Responsibilities that shape decision making within the
organization.
Organizational culture guiding managerial actions under
leader’s directions.
5. MCS IN MULTINATIONAL CORPORATIONS
Management Control problems and practices in multinational
corporations are based on foreign operations and domestic operation.
Most of the practices for controlling domestic operations. The
planning and control processes i.e strategic planning, budget
preparation, operating, variance analysis and reporting, performance
evaluation and management compensation generally are applicable to
multinational organizations. Somehow, the control tools are to be
tailored to the context of the specific situation prevailing in a
multinational corporation.
6. PROBLEMS OF GLOBAL ORGANIZATIONS
The problems of global organizations are:-
CULTURAL DIFFERENCES
TRANSFER PRICING.
EXCHANGE RATES.
7. MANAGEMENT CONSIDERATION IN DESIGNING
PERFORMANCE EVALUATION SYSTEMS OF MC
Should subsidiary manager be held responsible for impact of exchange rates on the
bottom line.
Should home currency or the local one be used for evaluation.
Should different types of impact be distinguished.
Should these variations be used to evaluate performance of the subsidiary.
8. CONTROL SYSTEM DESIGN ISSUES.
Subsidiary managers should not be held responsible for translation
effects.
Transaction effects are best handled through centralized
coordination of the MNE’s overall hedging needs.
The subsidiary manager should be held responsible for the
dependence effects of exchange rates resulting from economic
exposure.