MANAGEMENT CONTROL

SYSTEMS

The course MCS is about how mangers design and

implement the management systems that are
used to plan and control the firms performance.
The elements of MCS include;
Strategic planning; budgeting; resource allocation;
performance measurement; evaluation & reward
;responsibility centre allocation and transfer
pricing.
MCS is a must in any organisation that practices
decentralisation.
World class companies are successful because
they have designed systems and processes that
energize their employees to execute the
strategies effectively.

Understanding the Control part of MCS

Control is the regulating ,directing ,restraining
and also unifying action in an organisation.
An organisation must be controlled; that is
devices must be in place to ensure that the
strategic intentions are achieved.
Control systems has four basic elements viz.
a. A Detector or Sensor- A measuring device
that measures what is actually happening in
the process being controlled.
b. An Assessor- A device that determines the
significance of what is actually happening by
comparing it with some standard or
expectation of what should happen.

c. An Effector A device usually called

feedback that alters behaviour if the
assessor indicates the need to do so.
d. A Communication Network- Device that
transmit information between the detector
and the assessor and between the
assessor and effector.
Thus for Control of expenses
Detector charts of Accounts
Assessor Standard or Budget
Effector Variance report or Deviation report
Communication Network Budget Meetings.

Element of the Control Process

Ex.1 Thermostat
The component of thermostat are:
a. A thermometer ( the detector), measures current
temp.
b. An Assessor, compares the current temp. with
the accepted standard.
c. An effector, which tells the furnace to emit heat (
if the temp is lower than the standard) or
activates the air conditioner (if the temp. Is
higher than the standard) and shuts off the
appliance when the required standard is reached.
d. Communication network, transmits information
from thermometer to assessor and from the
assessor to heating or cooling element.

Ex. Body Temperature

The standard temp. In humans is 98.6 degree
farhenite. The control mechanism used by body
are
a. Detector- The sensory nerves scattered in the
body.
b. Assessor- The hypothalamus center in the brain,
compares information received from detector
with 98.6 standard.
c. Effectors- the muscles and organs reduce the
temp when it exceed the standard in the form of
sweating, opening the skin pores. Raises the
temp when it falls below the standard by
shivering and closing the skin pores.
d. Communication Network- the nervous system