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Management Control System (MACS (Responsibility accounting (4 centers)…
Management Control System
Definition of concepts
Controle
Management control system :warning: Schema
Types of control
Actions (behavioural)
Behavioural constraints
Preaction reviews
Action accountability
Harmful effects
Descourage creativity
Personnal & Cultural
Social control
Cultural controls
personnel controls
Harmful effects
group goals may not coincide with firm goals
Result (output control)
Cyber control system :warning:Schéma
MBO Manage by objectives
3 stages
Harmful effects
Membres focus only on what is measure regardless what's the best
Focus on easy measurable items
Subject to data manipulation
lead to negative attitute
MACS
Is the predominant control
Responsibility accounting (4 centers)
Cost/Expense centres
Revenue Centres
Profit centers
Investment centres
2 core elements
Formal planning process
Responsibility accounting
Involves
Setting perfomance targets
Measuring perfomance
Cy perfomance against target
Analysing variance & taking remedial actions
Budgeted or targeted levels of perfomance
Evaluate perfomance
Controllability principle
Types of uncontrollable factors
Eco & competitive factors
Acts of nature
Interdependencies
Flexible budgeting
Target settings
Should be
Clearly defined
Related to task uncerainities
accepted to motivated managers
Divisional accountability
Functional org structure
= investment centre divided by similar type of activities (=cost/revenues centres
Divisional structure
= Separate into investment or profit centres, lead to decentralization of decision making
Pro's
Improved quality of decision
Speeder decision
Increase managerial motivation
Enable top management to devoted more time to strategic issues
Con's
Subordination & may promote a lack of goal congruence
More costly to operate
Loss of controle management
Prerequisite
more appropriate for org with diversified activities