anagement control systemFrom Wikipedia, the free encyclopedia This article may require cleanup to meet Wikipedias quality standards. (Consider using more specific cleanup instructions.) Please helpimprove this article if you can. The talk page may contain suggestions. (August 2008)A management control systems (MCS)is a system which gathers and usesinformation to evaluate the performance ofdifferent organizational resources likehuman, physical, financial and also theorganization as a whole considering theorganizational strategies. Finally, MCSinfluences the behavior of organizationalresources to implement organizationalstrategies. MCS might be formal or
informal. The term ‘management control’was given of its current connotations byRobert N. Anthony (Otley, 1994). Robert N. Anthony (2007) definedManagement Control is the process bywhich managers influence other membersof the organization to implement theorganization’s strategies. Managementcontrol systems are tools to aidmanagement for steering an organizationtoward its strategic objectives andcompetitive advantage. Managementcontrols are only one of the tools whichmanagers use in implementing desiredstrategies. However strategies getimplemented through management
controls, organizational structure, humanresources management andculture. Anthony & Young (1999) showedmanagement control system as a blackbox. The term black box is used todescribe an operation whose exact naturecannot be observed. MCS involves thebehavior of managers and these behaviorscannot be expressed by equations.Anthony & Young (1999) showed thatmanagement accounting has three majorsubdivisions: full cost accounting,differential accounting and managementcontrol or responsibility accounting. According to Horngren et al. (2005),management control system is an
integrated technique for collecting andusing information to motivate employeebehavior and to evaluate performance. .According to Simons (1995), ManagementControl Systems are the formal,information-based routines and proceduresmanagers use to maintain or alter patternsin organizational activities Chenhall (2003) mentioned that the termsmanagement accounting (MA),management accounting systems (MAS),management control systems (MCS), andorganizational controls (OC) aresometimes used interchangeably. In thiscase, MA refers to a collection of practicessuch as budgeting or product costing. But
MAS refers to the systematic use of MA toachieve some goal and MCS is a broaderterm that encompasses MAS and alsoincludes other controls such as personal orclan controls. Finally OC is sometimesused to refer to controls built into activitiesand processes such as statistical qualitycontrol, just-in-time management.According to Maciariello et al. (1994),management control is concerned withcoordination, resource allocation,motivation, and performancemeasurement. The practice ofmanagement control and the design ofmanagement control systems draws upona number of academic disciplines.
Management control involves extensivemeasurement and it is therefore related toand requires contributions from accountingespecially management accounting.Second, it involves resource allocationdecisions and is therefore related to andrequires contribution from economicsespecially managerial economics. Third, itinvolves communication, and motivationwhich means it is related to and must drawcontributions from social psychologyespecially organizational behavior (seeExhibit#1).
Exhibit#1: Management control as aninterdisciplinary subject