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CHARACTERISTICS OF MANAGEMENT
CONTROL SYSTEM
Phase II Direction
Functional organization structure is introduced to separate manufacturing
from marketing activities and job assignments become more specialized
Accounting systems for inventory and purchasing are introduced.
Incentives, budgets and works standards are adopted
Communication becomes more formal and impersonal.
The new manager and his key supervisor take most of the responsibilities for
instituting directing, while lower level supervisors functions as specialist.
Phase III Delegation
Much greater responsibility is given to the managers of plans and market
territories.
Profit centers and bonuses are used to stimulate motivation.
The top executives at headquarters restrain
themselves to managing by
exception, based on periodic reports from different units.
Managers often concentrates on making new acquisition, which can be lined
up besides other decentralized units.
Communication from the top is infrequent usually by correspondence,
telephone or brief visits to decentralized units.
Phase IV Co-ordination
Decentralized units are merged into product groups.
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Formal planning procedures are established and intensively reviewed .
No. of staff persons are hired to initiate programs of control and review for
line managers .
Capital expenditure are carefully pruned across the organization .
Each product group is treated as an investment centre based on ROI
concept.
Phase V Collaboration
The focus is on solving problems quickly through team action.
Teams are combined across functions for task - group activity.
Staff experts are reduced, reassigned and combined in interdisciplinary
teams.
A matrix structure is used in solving appropriate problems.
Previous
formal systems are simplified and combined into single
multipurpose systems.
Conferences of key managers are held frequently to focus on major problem
issues.
T&D programs are given to managers in behavioral skills, teamwork and
conflict resolution.
Goals are defined as broad statements of what the organization wants to achieve in the
long run on a permanent basis and objective are defined as specific statement of
ends, the achievement of which is contemplated within a specified time. Many times
these terms are also used interchangeably. However, both are subsumed under the term
mission, which is indicative of the strategic intent and strategic direction of the
organization. Mission is articulated on the basis of the vision of the founders or the chief
executive. Mission is achieved through a properly formulated strategy and action plan
with appropriately in - built mid - course correction system. Mission, vision and action
indicate the interactive relationship between strategy and management control system.
Goal Congruence
Although systematic, the management control process is by no means mechanical; it
involves interactions among individuals, which cannot be described as mechanical.
Managers have personal as well as organizational goals. The central control process is to
induce managers to act in pursuit of their personal in ways that will help attain the
organization's goals as well. Goal congruence means that as far as feasible, the goals of
an organizations individual members should be consistent with goals of the
organization itself. The management control system should be designed and operated
with the principles of goal congruence in mind.
Strategic Planning
Management Control
Operational Control
Level
Top management
Supervisory
Scope
Total
Operating unit
Long range
Short to intermediate (1 to 5)
External, towards
developing internal
Internal only
Basic objectives
Relatively
unstructured
Activity patterns
Irregular
Rhythmic, Regular
Highly repetitive
Character of activity
Creative
Administrative, persuasive
Entire organization
Operating unit
Time frame
Environment
Goals and objectives
Structuring
Focal point
situation.
Cybernetics
is
derived
from
the
Greek
work
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The particular version of the paradigm developed by Grissinger (1979)
(Grissinger, Donald W. Management Theory - A Cybernetic Perspective,
Graduate Management Centre Jan. 86) captures all the elements of the control
process, which may be enumerated as follows:
Measure achievement
Compare achievement with goals
Compute the variances as the result of the proceeding comparison
Reporting the variances
Determine the cause of variances
Take action to eliminate the variances
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To ensure that data are controlled from all the input centers in time.
To see that data are processed speedily and expeditiously for developing
performance reports
To review reports at successive levels to identify remedial actions
To analyze the reports with a view to identify trends and highlighting the
areas requiring follow up action
To assist in formulating corrective actions