Management Control Systems

Assignment No: 1

Bharat Donga
SYMMS - 11
ADMI
Mumbai University
Q. 1 Define Strategy Formulation & Task Control?

Strategy Formulation:

Strategy formulation is the process of deciding on the goals of the organization and the
strategies for attaining these goals.

Explanation:- Goals are timeless; they exist until they are changed, and they are changed
only rarely. For many businesses, earning a satisfactory return on investment is an important
goal; for other, attaining a large market share is equally important.

Strategies are big plans, important plans. They state in a general way the direction in which
senior management wants the organization to move. A decision by an automobile
manufacturer to produce and sell an electric automobile would be a strategic decision.

Example: Louis V. Gerstner became the CEO of IBM in 1993.In the course of the next six
years; he transformed the company from a main frame computer manufacturer to a leader in
networking systems, computer services, and e-business solutions.

Task Control

Task Control is the process of ensuring that specified tasks are out effectively and
efficiently

Explanation:- Task Control is transaction-oriented – that is, it involves the performance of

individual tasks according to rules established in the management control process. Task
control often consists of seeing that these rules are followed, a function that in some cases
does not even require the presence of human beings. Numerically controlled machine tools,
process control computers, and robots are mechanical task control devices. Many Tasks
control activities are scientific; that is the optimal decision or the appropriate action for
bringing an out-of-control condition back to the desired state is predictable within
acceptable limits.

Example: An entire steel mill may be controlled by electronic devices, with each piece of
equipment instructed by a computer to carry out prescribed tasks. The computer senses the
environment. If its findings indicate a departure from the desired state, it either initiates
corrective action or, if it lacks the capacity to do so on its own, conveys the need for
correction to a computer that controls all the computers in one section of the mill. This
computer in turn may refer the problem to a co-ordinating computer for the mill as a whole.

Relation between Strategy Formulation and Task Control

Strategy
Goals, Strategies and
Formulation

Management Strategy
Control Implementation

Efficient and
Effective
Task Control
performance of
individual tasks
Q. 2 Explain briefly various stages of management control process citing salient features of
each?

Management control process involves communication of information to the managers at

various levels of hierarchy and their interactions arising out of them. These communications
aim towards attaining the organization's goals. But individual managers have their personal
goals also. For example, a young manager with good education, experience, personality and
social background joins a company like Britannia Industries or Reliance. The company finds
him fit for the position as per job specifications, appoints him and makes him aware of what
the company expects of him. The young manager sets his goals of gaining rich experience
for his career progress besides adequate compensation packages. Naturally, his actions will
be directed towards achieving his own objectives and goals while serving the company.
Thus, his self-interest and the best interest of the organization are apparently in conflict. But
the best results can be achieved by perfectly matching the two interests and this is called
'goal congruence'.

The stages involved are:-

1. Establishment of Standards

2. Measurement

3. Comparing performance with the standards

4. Taking corrective actions

Establishment of Standards is the first step in control process. Standards represent criteria for
performance. A standard acts as reference line or a basis of appraisal of actual performance.
Standards should be set precisely and preferable in quantitative terms. Setting standard or
bench marks is closely linked and is an integral part of the planning process.
The second step is to measure actual performance of various individuals, groups or units.
Management should not depend upon the guess that standards are being met measurement of
performance against standards should ideally be done on a forward looking basis so that
deviations may be detected in advance of their occurrence and avoided by appropriate actions
Comparing Performance with Standards performance or comparing of actual performance
with
pre-determined standards is an important step in control process.
Comparison is easy where standards have been set in quantitative terms as in production and
marketing. In other cases, where results are intangible and cannot be measured quantitatively
direct personal observations, inspection and reports are few methods which can be used for
evaluation. The evaluation will reveal some deviations from the set standards. Taking
Corrective Actions Managers should know exactly where in the assignment of individual or
group duties, the corrective action must be applied. Managers may correct deviations by
redrawing their plans or by modifying their goals. Or they may correct deviations by
exercising their organizing functions through reassignment or clarification of duties. They
may correct, also, by additional stapling or better selection and training of subordinates.