Management Control Systems Essay

¶ … Management control systems" Kenneth a. Merchant Wim A. Van der Stede Part A completed. In order to properly evaluate the established management control system, it is important to organize regular reviews that can be implemented company-wide every three or six months. This type of reviews will evaluate the management control system instruments based on several key indicators: the degree to which the control system was able to discover, in due time, a potential problem in the organization; the direct cost savings that the control system was able to create; the direct financial gains that the system made and whether the management control system that has been implemented is aligned with the company's strategic objectives.

For each of the management control system instruments that have been implemented, the indicators can be customized so as...

...

For example, the financial indicators can be customized to show the way revenue has varied. However, the indicators should also be flexible enough so as to be aligned with the company's strategic objectives: if the company's goal has been to increase its market share, then the fluctuation of the revenues for a given period of time may be irrelevant.
The reviews underscored several key observations. First of all, the costs that the management control system in place incurs are significant and there are several reasons for this, including the fact that this is a global organization and that the system is holistic, involving a large number of human and financial resources.

Second, the role of the management control system is to show potential problems in time and to allow for their remediation. In this…

Cite this Document:

"Management Control Systems" (2014, May 13) Retrieved June 24, 2024, from
https://www.paperdue.com/essay/management-control-systems-189143

"Management Control Systems" 13 May 2014. Web.24 June. 2024. <
https://www.paperdue.com/essay/management-control-systems-189143>

"Management Control Systems", 13 May 2014, Accessed.24 June. 2024,
https://www.paperdue.com/essay/management-control-systems-189143

Related Documents

Management Control System Designing Management Control System (MCS) In the contemporary world, most companies apply the use of energy to plan, manage, and execute their operations in accordance with the demands of the market and the industry. This makes energy the most vital aspect of production in business entities. Energy is crucial in running machines, recording of information, execution of communication activities, and provision of lighting within the context of the company.

Johanna Hyvonen (2008) reiterates that management accounting systems operate as a link between strategy and performance. She also notes that organic, flexible performance systems are more effective in terms of product differentiation. There is also a positive relationship between customer accounting and market orientation. The premise of Hyvonen's study is that different management accounting systems are required for different types of companies in order to create the best management effect.

Management Control Systems as a Catalyst of Strategic Agility and Organizational Performance The continual evolution of Management Control Systems as a Package (MCSP) today encompasses accounting, finance, human resources, market-based data, management control and information systems, and the entire culture of an organization, yet defies a precise typology (Merchant, Van der Stede, 2006) (Malmi, Brown, 2008) or a consistent global definition (Cruz, Scapens, Major, 2011). The intent of this analysis is

A broader empirical analysis of the levers of control framework reveals that the differences in the efficacy and appropriateness of this approach depend on whether or not the system of control and measurement is engaged with primarily as a diagnostic device, or more as an interactive system (Widener 2005). As noted above, interaction is a key element of the framework -- arguably the most important element, as the others are

Management Control Systems Vary According to Organizational Size All organizations go through different life cycle stages: even the largest multinational was once a relatively small entity, usually-based domestically, with a relatively narrow range of customers. This variation in terms of organizational size and scope of mission generates the need for different types of management control systems. "Service control systems might need to change throughout the life cycle to fit in

Furuholt, (2006) argues that lack of management engagement to the acceptance of information systems has been a barrier to the implementation of information systems. The issues are even common with organizations in the developing countries where management does not give enough priority to the information systems implementation. Importantly, implementation of information systems requires management support since management will need to approve fund that would be used for IS implementation.