2. THE MANAGEMENT CONTROL
SYSTEMS (MCS)
• In the management parlance , control
traditionally refers to the activities of
establishing standards of performance,
evaluating actual performance against
these standards, and implementing
corrective actions to accomplish
organizational objectives
3. The nature of MCS
• The central focus of MCS is Business
Strategy Implementation.
• MCS provides knowledge , insight, and
analytical skills related to how a
corporation’s senior executive design and
implement the on going management
systems that are used to plan and control
the firms performance
4. The elements of MCS
• Elements of MCS include
• Strategic Planning,
• Budgeting,
• Resource Allocation ,
• Performance Measurement,
• Evaluation, And Rewards,
• Responsibility Centers, Transfer Pricing
5. Concepts of MCS
• The MCS builds on concepts from
• Business Strategy,
• Organizational Behavior,
• Human Resource and
• Financial & Managerial Accounting.
6. Collapse Of Companies
• Consider the collapse of companies such
as World Com, Enron and Global
Crossings. Part of their demise was the
lapse in controls. CEO and Top
management compensation in these
companies was so heavily tied to stock
options that executives were motivated to
manipulate financials to buoy the short
term stock price
7. World-Class Companies
• Consider the world-class companies such
as 3M corporation, Dell Computers, Wal-
Mart, South west Airlines. Their long term
success is not just because they have
developed good strategies, but more
importantly, they have designed systems
and processes that energize their
employees to execute those strategies
effectively
8. Control System of A Car
• Press the accelerator , and your car goes
faster, rotate the steering wheel, and it
changes direction. Press the brake pedal,
and the car slows or stops. With these
devices, you control speed and direction, if
any of them is inoperative, the car does
not do what you want it to . In other words,
it is out of control
9. Control of an Organization
• An organization must also be
controlled. That is devices must be in
place to ensure that its strategic
intentions are achieved. But
controlling an organization is much
complicated than controlling a car
10. Elements of Control System
• Every control system has at least four elements
1.Detector or Sensor – a device that measures
what is actually happening in the process being
controlled.
2.An Assessor – a device that determines the
significance of what is actually happening by
comparing it with some standard or expectation
of what should happen
11. Elements of Control System
3.An effectors – a device that alters
behavior if the assessor indicates the
need to do so.
4. A communications network – a device
that transmit information between the
detector and the assessor and between
the assessor and the effectors
12. The Three examples of CS
1. Thermostat
2. Body Temperature
3. Driver of an automobile
13. Thermostat
1. Thermometer which measures the current
temperature of a room (detector)
2. An Assessor which compares the current
temperature with the accepted standard
for what the temperature should be.
14. Thermostat
3.An effectors which prompts a furnace to
emit heat or activates an air conditioner
which also shuts off these appliances
when the temperature reaches the
standard levels
4. A communication network, which transmit
information from thermometer to the
assessor and from the assessor to the
heating or cooling element
15. Body temperature
1. The sensory nerves scattered through
the body
2. The Hypothalamus center in the brain,
which compares information received
from detectors with the 98.6 f standard.
3. The muscles and organs (effectors) that
reduce the temperature when it exceeds
the standard and rise the temperature
when it falls below the standard
16. Body temperature
4. The overall communications system of
nerves is self regulating. If the system is
functioning properly, it automatically
corrects for deviations from the
standards with out requiring conscious
effort.
17. Automobile Driver
• Assume you are driving on a high way
where the legal speed 65 kmph. Your
control system acts as the following.
1. your eyes measures actual speed by
observing the speedometer.
2. your brain compares the actual speed
with desired speed, and, upon detecting a
deviation from the standard.
18. Automobile Driver
3. Directors your foot to ease up or press
down on the accelerator.
4. As in body temperature regulation your
nerves form the communication system
that transmit information from eyes to
brain and brain to foot.
19. Management
• An organization consist of a group of
people who work together to achieve
certain common goals. The CEO decides
on the overall strategies that will enable
the organization to meet its goals.
• Subject to the approval of the CEO , the
various business unit mangers formulate
additional strategies that will enable their
respective units to further these goals
20. Management
• The management control process is the
process by which managers at all levels
ensure that the people they supervise
implement their intended strategies.
21. systems
• A system is a prescribed and usually
repetitious way of carrying out an activity
or a set of activities. Systems are
characterized more or less rhythmic,
coordinated, and recurring series of steps
intended to accomplish a specified
purpose.
22. Control
• Management control is the process by which
managers influence other members of the
organization to implement the organization’s
strategies. It includes
• Planning
• Coordinating
• Communicating
• Evaluating
• Deciding
• Influencing
23. Thank you
• Wise men talk because they have
something to say; Fools also talk,
because they have to say something.
• God grant me the serenity to accept
the things I cannot change, courage
to change the things I can, and
wisdom to know the difference.
