H&GHM INSTITUTE OF

MANAGEMENT

ASSIGNMENT ON:

MANAGEMENT
CONTROL SYSTEMS
QUESTION PAPER 2005

SUBMITTED BY:

NAMES ROLL NO.

PANKAJ DARYANI 14

JITESH JASUJA 20

NINAD LOHAGAONKAR 31

SUBMITTED TO:
GANACHARI SIR
1. Discuss and illustrate difference and similarities between management control, strategy
formulation and task control.

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 this process are
amplified below.

Management Control Activities Management control involves a variety of activities, including:

Planning what the organization should do.

Coordinating 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 behavior.

Management control does not necessarily require that all actions correspond to a previously
determined plan, such as a budget. Such plans are based on circumstances believed to exist at the
time they were formulated. If these circumstances have changed at the time of implementation,
the actions dictated by the plan may no longer be appropriate. While a thermostat responds to the
actual temperature in a room, management control involves anticipating future conditions in
order to ensure that the organization's objectives are attained. If a manager discovers a better
approach-one more likely than the predetermined plan to achieve the organization's goals-the
management control system should not obstruct its implementation. In other words, conforming
to a budget is not necessarily good, and departure from a budget is not necessarily bad.

Strategy Formulation

Strategy formulation is the process of deciding on the goals of the organization and the strategies
for attaining these goals. In this book, we use the word goals to describe the broad overall aims
of an organization, and the term objectives to describe specific steps to accomplish the goals
within a given time frame.

Goals are timeless; they exist until they are changed, and they are changed only rarely. For many
businesses, earning a satisfactory return on investment is an important goal; for others, attaining
a large market share is equ~ important. Nonprofit organizations also have goals; in general, they
seek to provide the maximum services possible with available funding. In the strategy
formulation process, the goals of the organization are usually taken as a given, although on
occasion strategic thinking can focus on the goals themselves.
Task Control

Task control is the process of assuring that specified tasks are carried out effectively and
efficiently. Task control is traitsaction-oriented-that is, it involves the performance of individual
tasks according to rules established in the management control process. Task con to 1 often
consists of seeing that these rules are followed, a function that in some cases does not even
require the presence of human beings. Numerically controlled machine tools, process control
computers, and robots are mechanical task control devices. Their function involves humans only
when the latter prove less expensive or more reliable; this is likely to happen only if unusual
events occur so frequently that programming a computer with rules for dealing with these events
is n'ot worthwhile.

Many task control activities are scientific; that is, the optimal decision or the appropriate action
for bringing an out-of-control condition back to the desired state is predictable within acceptable
limits. For instance, the rules for economic order quantity determine the amount and timing of
purchase orders.Task control is the focus of manv management science and operations research
techniques. Most of the information in an organization is task control information.
3. describe and illustrate significance of human behavior patterns in management control.

ANS: Management control systems influence human behavior. Good management control
systems influence behavior in a goal congruent manner; that is, they ensure that individual
actions taken to achieve personal goals also help to achieve the organization's goals.

We begin this chapter by explaining the concept of goal congruence, describing how it is affected
both by informal actions and by formal systems. The formal systems can be divided into two
categories: "rules," broadly defined, and systematic methods for planning and for maintaining
control.
Different structures are used to implement strategies in various types of organizations; an
effective management control system should be designed to fit the particular structure.
In the final section of the chapter, we describe the role of the controller-the person responsible
for the design and operation of the management control system.

Senior management wants the organization to attain the organization's goals. But the individual
members of the organization have their own personal goals, and they are not necessarily
consistent with those of the organization. The central purpose of a management control system,
then, is to ens1.fre (insofar as is feasible) a high level of what is called "goal congruence." In a
goal congr:uent process, the actions people are led to take in accordance with their perceived
;elfinterest are also in the best interest of the organization.
Obviously, in our imperfect world, perfect congruence between individual goals and
organizational goals does not exist-if for no other reason than that individual participants usually
want as much compensation as they can get while the organization maintains that salaries can go
only so high without adversely affecting profits. .