Gitam Institute of International Business Post Graduate Diploma in Management (IB) (2012-2014) IV Trimester Name of the Course : 402

Management Control Systems No. of Credits : 2 Name of the Faculty : Prof M. Subramanyam Focus and Objectives: Strategies are plans corporations desire to attain. No matter how careful and meticulous corporations are in developing them, they remain unattained unless they are backed by Management Control Systems which are intended to promote desirable organizational behaviour for their attainment. The promotion of desirable behaviour in organizational contexts depends upon Management Control Structures, Processes, Tools and Techniques. The effectiveness of Management Control Systems is determined not only by these but also by consistency among these. In other words, proper fit among these is important. Proper fit is also required between Management Control Systems and Strategies. There is a variety of Management Control Systems in use in organizations. The choice depends upon organizational contexts which is not culture-free. Organizations, therefore, are guided by contingency theory while choosing Management Control Systems appropriate for their strategies. Management Control Systems focus on strategy execution or implementation given corporate strategies. As such their activities start once strategies are formulated. Also they operate at a distance from task control processes which assure that specified tasks are carried out effectively and efficiently. Task control is transaction oriented and it involves compliance of well structured programmes, processes, and procedures. They are highly developed, systematic, and scientific. Whereas, Management Control Systems involve the behaviour of managers at various levels and these can not be reduced to scientific equations. The managerial skills that are essential to promote desirable organizational behavior are more artful and less scientific although we have drawn some science out of that Art. Management Control Systems operate between Corporate Strategy formulation which is essentially unsystematic and task control which is highly systematic. This course aims to develop the delicate art of management control. Increasingly it is believed that most successful organizations play this art wonderfully well. The subject matter of Management Control Systems is highly interdisciplinary in nature and is drawn from such diverse subjects as Cost and Management Accounting, Financial Management, Organizational Behaviour, Managerial Economics, Operations Management, and Organizational Design. It draws on concepts from all these diverse subjects to fuse and use them to promote desirable organizational behaviour for the accomplishment of corporate strategies. The course presents an integrated approach to Management Control Systems. Underlying this presentation is the view that neither structural approach nor behavioural approach is adequate to achieve control in organizations. The structural approach to management control is highly mechanical and relies heavily, perhaps rigidly, on accounting information, whereas the behavioural approach relies on the sociopsychological literature on performance and views control as a problem of social engineering that leads to high performance. The course, therefore, seeks to achieve the following objectives:

GITAM UNIVERSITY

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1. to introduce students to the nature, environment, and process of Management Control Systems; 2. to discuss the key issues for several of the most important Management Control Systems in use in organizations; 3. to illustrate and emphasize the need for achieving a good fit between a particular system and the firms strategy; 4. to emphasize the necessity for achieving a fit between Management Control Structure and Process; 5. to emphasize the necessity for overall compatibility among the set of control systems in use; 6. to develop skills ultimately to design and evaluate Management Control Systems.

Course Contents: Two sessions are devoted for each one of the following topics to give the conceptual inputs and frameworks. While offering these sessions, cases are brought in to bear on class-room discussions. Module-I: Module-II: Nature of Management Control Systems Introduction to Management Control Systems Case : Nucor Corporation Management Control Environment Responsibility Centers: Revenue and Expense Centers and Profit Centers (Session-3) Case : New Jersey Insurance Company (Session-4,5) Transfer Pricing Case : Birch Paper Company Measuring and Controlling Assets Employed Case : Marden Company (Session -6) (Session- 7,8) (Session-9) (Session-10,11) (Session-1) (Session-2)

-3Module-III: The Management Control Process Analyzing Financial Performance Reports Case : Galvor Company Performance Measurement Case : Analog Devices, Inc Management Compensation Case : Lincoln Electric Company Case Presentation (Session-12) (Session-13,14) (Session-15) (Session-16,17) (Session-18) (Session-19,20) (Session-21-23)

Pedagogy:

In view of the nature of Management Control Systems in use in organizations as noted briefly earlier, it is intended to present substantially through case analysis and discussions. However, basic concepts and frameworks are presented through lectures. The entire class will be divided into five groups and each group will be required to do analysis and presentation. While all the groups will come prepared with the case announced one day in advance, one group on the day of Presentation will be required to give Presentation. All the sessions are planned to be interactive. Although one group presents the case assigned, the other group members are expected to participate in the discussions. Evaluation: Evaluation of students will be based on multiple criteria. The criteria and their weights are as below: Quiz Analysis of Case and Presentations: Mid-Term Test End Term Test: 15 15 20 50

Text Book Recommended: Robert N Anthony and Vijay Govindarajan, Management Control Systems, (Irwin) Reference Books Recommended: Joseph A. Maciariello and Calvin J. Kirby, Management Control Systems, (Prentice-Hall of India) Kenneth A. Merchant, Modern Management Control Systems, (Prentice-Hall, New Jersey) * * *