II.

Boundaries of Management Control

• Management Control Systems are tools to
implement strategies.
• Strategies differ between organizations and
controls should be tailored to the
requirements of specific strategies.
Types:

Management Control is one of the several types:

• (a) strategic planning and

• (b) task or operational control.

1. Management Control:

Management control is the process by

which managers influence other members of
the organization to implement the
organization’s strategies. Several aspects of
the process are given below:
It involves a variety of activities including:

• Planning what the organization should do

• Co-ordinating the activities of several parts of the
organization
• Communicating information
• Evaluating information
• Deciding what, if any, action should be taken
• Influencing people to change their behaviour
2. Strategic Formulation

• Strategic formulation is the process of deciding

the goals of the organization and the strategies
for attaining these goals. Goals describe the
broad overall aims of the organization and the
term objectives describe specific steps to
accomplish the goals within a given timeframe
Goal Means ……

• Earning a satisfactory profit or more

specifically, a satisfactory return on
investment is an important goal, in others,
attaining a large market share is a goal.
• An organization may select any ways of seeking to
attain its goals e.g., if goal is profitability, the
organization may select one or more product
lines.
• The need for formulating strategies arises either
in response to a perceived threat.
Example: Market in roads by competitors, a
change in customer taste or new government
regulation. (Or)
• To take advantage of a perceived opportunity
Example : Opportunities of technical
innovations, or development of new
applications for existing products.
3. Task Control/Operational Control
• Task control is the process of assuring that specific
tasks are carried out effectively and efficiently.

• Task control is transaction oriented i.e., it involves

the control of individual tasks.

• Numerically controlled machine tools, process

control computers and robots are task control
devices
• Human beings are used in these tasks only if they
are less expensive than computers or other
control devices.
• Type of task e.g. procurement system, scheduling
systems, order entry systems, logistic systems,
quality control systems, cash management
systems and many others.
 Distinction between Task Control and
Management Control
Task Control Management Control
Systems are scientific Can never be reduced to science.
Human beings are not involved Managers interact with other
managers
Different task control system for Basically similar throughout the
each type of task organization.
Focus is on specific task Focus is on organization units.
performed e.g. manufacturing
Job, ordering etc
Managers decide what is to be Relates to specified tasks
done within the general
constraints of the strategies
 II. Understanding Strategies

A. GOAL

B. CONCEPT OF STRATEGY

C. CORPORATE LEVEL STRATEGY

D. BUSINESS UNIT STRATEGY

• Different strategies require different task.
• Different Skills.
• Different factors.
 A.GOAL
Meaning :
• Corporation does not have a goal.
• Corporate goal are defined by the CEO of the
corporation.
Ex: Henry Ford – Ford Motor Company
Alfred P.Sloan – General Motors Corporation
2. Profitability :
• In a business profitability is usually the most
important goal.
• Profitability is expressed in a sound sense.
•
Return on Investment = Revenue – Expenses Revenues
• X
Revenues Investment