Beruflich Dokumente
Kultur Dokumente
BEHAVIOUR IN ORGANIZATION
Goal Congruence:-In a goal congruent process,the actions people are led to take in accordance with their perceived self-interest are also best interest of the organization. In evaluating any MCS practice: What action does it motivate people to take in their own self interest? Are these actions in the best interest of the organization? Informal factors that influence goal congruence Both formal systems and informal process influence human behaviour in organization Formal control systems consists of strategic planning,budgeting and reporting. Informal processes consists of work ethic,culture,management style etc. Informal having internal and external factors that play a key role in achieving goal congruence
Contd..
1.External factors:are norms of desirable behaviour that exist in the society of which the organization is a part.The norm include a set of attitude ,work ethics,which is manifested in employees loyalty to the organization,their diligence,their spirit and their pride in doing a good job e.g India and China. 2.Internal Factors: Culture:The most important internal factor is the organization own culture-the common beliefs,shared values,norms of behaviour& assumptions that are implicitly accepted and explicitly manifested throughout the organization. Management Style:The internal factor that probably has the strongest impact on management control is management style.usually,subordinates attitudes reflect what they perceive their superiors attitude to be and their superior attitudes ultimately stem from the CEO.
Contd..
Informal Organization:-the production manager of div A reports to the general manager of div A To fulfill her responsibilities,the production manager of Div A actually communicate with other people in the organization as well as other managers ,support units,headquarters staff. Perception and Communication:Working towards the goals of the organization,operating managers must know these goals are and what action are supposed to take to achieve them. Receive their information through various channels,both formal (e.g budget and their official documents)and informal(e.g conversation)
Contd..
This includes cross-checking totals with details requiring signatures and other evidence that a transaction has been authorized separating duties,counting cash and other portable assets frequently and a no.of.other procedures described in texts on auditing .They also include checks of the systems performed by internal and external auditors. Task Control System:is the process of ensuring that specific tasks are carried out efficiently and effectively
Goals&Strategy
Reward(feedback)
yes
Strategic planning
budgeting
Responsibilitycenter performance
revise
Revise Correction action
measurement
no feedback communication
TYPES OF ORGANISATION Organization structure are grouped into 3 categories 1.A Functional Structure:in which each manager is responsible for a specified function such as production or marketing 2. A business unit structure:in which business unit managers are responsible for most of the activities of their particular units and the business unit functions as a semi independent part of the company 3. A matrix structure in which functional units have dual responsibilities.
Functional Organization
Chief executive officer
staff
Manufacturing manager
Marketing manager
staff
stafff
manager plant1
manager
manager
manager
manager
manager
Plant 2
Plant 3
Region A
Region B
Region C
Cont.
Supervising internal audit and accounting control procedures to ensure the validity of information,establishing adequate safeguards against theft and fraud and performing operational audit. Developing personnel in the controller organization and participating in the education management personnel in matters relating to the controller function.
In business unit managers have two performance objectives: 1)They should generate adequate profits from the resources at their disposal. 2)They should invests in additional resources only when the investment will produce an adequate return or else disinvest the assets which give inadequate returns.
Total equities.700
Income Statement Revenue..1000 Expenses,except depreciation850 Depreciation..50 900 Income before taxes..100 Capital charges(500*10%)50 Economic value added(EVA)50
MEASURING ASSETS EMPLOYED In deciding what investment base to use to evaluate the investment center manager,headquarters ask two questions: 1.what practices will motivate B.U managers to use their assets most efficiently and to acquire the proper amount kind of new assets?while using the criteria of ROI or EVA SBU managers should take goal congruent decisions. 2.what practices bets measure the performance of the unit as an economic entity? CASH:-most companies control cash centrally because central control permits use of a smaller cash balance. It permits smaller cash balances at SBU levels. B.U cash balances will be only the float between daily receipts and daily disbursements. The actual cash balance at the business unit level tend to be much smaller than would be required if the business unit were an independent company. If only the actual cash were shown ,the return by internal units would appear abnormally high and mislead senior management.
INVENTORIES:-are often recorded at end-of-period balances through an intra period average would be better Accounting policies like LIFO could show a very low amount during inflation period so standard cost or avg cost is used . WORKING CAPITAL IN GENERAL:-At one extreme companies include all CA in investment base with no offset for CL.this method is sound from motivational standpoint if the SBU cannot influence accounts payable or other CL. The amount of corporate capital required to finance the B.U because the CL are a source of capital,often at zero interest cost. PROPERTY PLANT AND EQUIPMENT:-
(Rs.000)
600
Fixed Assets
100
Cost Depreciation
200
700 350
350
100
60 170 220
450
800
800
BUSINESS UNIT INCOME STATEMENT Revenue Expenses less depreciation Depreciation Income before taxes Capital charges 600*10%(assumed 10% as normal return) 1000 50 1050 150 60 1200
(Rs.000)
EVA
90
Suppose the B.U has an opportunity to acquire a new machnie at a cost of Rs 120,000,which is estimated to produce a cash saving of Rs.33000 a year for 5 years.if the company has a required return 10%, Investment in machine-life 5years Cash inflows Rs.33000 per year Present value of cash inflow 33,000*cum pv at 10% for 5 years that is 33,000*3.791 Net present value (Rs.000) 120
125
Without the machine Revenue Expenses less depreciation depreciation 1000 50 1050 150 60 90 150 600 25% 159 720 1200 1000-33 =967 50+24 =74 10% on 600+120
year
ROI 2/1
1 2 3 4 5
If Assets are leased Revenue Expenses other 1000 1200 than depreciation and rental Depreciation Rental 1050 Income before tax Capital charge 10% on 600 EVA ROI 150 600 150 60 90 =25% 130 250 10%on250 50 70 1070 130 25 105 =52% 1000 1200
LEASED ASSETS: IDLE ASSETS:- if a B.U has idle assets hat can be used by other units,it may be permitted to exclude them from the investment base if it classifies them as available.The purpose of this permission is to encourage B. u managers to released underutilized assets to units that may have better use for them.