Management Control Systems and Organizational Size
This paper examines how management control systems (MCS) vary according to organizational size and life cycle stage. Drawing on research into service organizations, it argues that control systems governing marketing, employee development, and financial oversight must evolve as firms grow from small, entrepreneurial entities into large, bureaucratic organizations. The paper illustrates these shifts with examples such as Starbucks and discusses how firm type — particularly the distinction between mass service and professional service firms — further shapes the design and emphasis of management control systems. The central finding is that failure to align MCS with life cycle stage leads to inefficient resource allocation and strategic misalignment.
- Introduction: Organizational Life Cycles and Control Systems: Life cycle stages drive need for varied MCS
- Marketing Allocation Across Growth Stages: Marketing spend and strategy shift as firms grow
- Employee Learning, Growth, and Organizational Mission: Training needs expand with organizational size
- Risk, Conservatism, and Firm Maturity: Mature firms favor formal controls and cautious decisions
- Firm Type and Bureaucratic Control: Service vs. product firms differ in MCS emphasis
✍️ How to write this paper — guide, tools & examples ▾
What makes this paper effective
- Uses concrete, relatable examples — Starbucks's varying product emphasis across markets — to ground abstract management concepts in observable business reality.
- Maintains a clear comparative structure throughout, consistently contrasting small/startup firms against large/mature ones to highlight how control system needs evolve.
- Distinguishes between different firm types (mass service vs. professional service) rather than treating all organizations as equivalent, adding analytical nuance.
Key academic technique demonstrated
The paper demonstrates effective use of a single authoritative source to anchor multiple analytical points. Rather than simply summarizing Auzai (2010), the author extends each cited claim with an original illustrative example — a technique that shows the writer can apply theoretical frameworks to real-world scenarios rather than merely paraphrase them.
Structure breakdown
The paper opens by establishing the life cycle premise and its connection to control systems, then moves logically through three concrete domains — marketing, employee development, and financial conservatism — before closing with a firm-type distinction. Each paragraph introduces a new dimension of the central argument, building cumulative support for the claim that MCS must adapt to organizational size and stage.
Introduction: Organizational Life Cycles and Control Systems
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 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 with changes in the competitive environment, business mission, and generic strategy. Failure to account for the stages of the life cycle in budgetary policies has been found to result in inefficiencies of resource allocation" (Auzai 2010: 56).
Marketing Allocation Across Growth Stages
A small entity might find that relatively inexpensive marketing efforts are sufficient in relation to its other, more immediately pressing financial needs. Word-of-mouth advertising and low-cost methods of promotion — such as free social media content — may be adequate. In fact, too aggressive a marketing campaign might prove unwise if demand quickly exceeds the entity's ability to serve the public. Consider a restaurant that grows "hot" too soon and has difficulty meeting the needs of a rapidly expanding clientele. But as the organization grows, marketing allocations might change: investing in television advertising or other costly efforts might yield greater returns. Conversely, locally oriented strategies for raising customer awareness may become less useful as the organization broadens its reach.
Employee Learning, Growth, and Organizational Mission
Other control systems, such as those governing the learning, growth, and development of employees, are also affected by organizational size. Training employees in a small entity is less critical when the initial staff are members of the founding team who already have a clear understanding of the organizational mission. But as the entity grows larger and more bureaucratic, that shared understanding can no longer be assumed. The mission itself might evolve — shifting from simply serving specific customer needs to adjusting its focus based on the different countries in which the company operates.
For example, Starbucks might promote itself as a midmarket European coffee "experience" in America, stressing the ambiance of its stores. In other countries, however, ground coffee and instant coffee might make up a greater proportion of revenue, demanding a different system of metrics to track relative successes and failures.
References
Auzai, S. (2010). Organisational life cycle stages and management control systems in service organisations. International Journal of Business and Management, 5(11): 56–65.
Create your account
Always verify citation format against your institution’s current style guide requirements.