DIMENSIONS DEFINITIONS
The extent to which written rules and records
Formalization are maintained in the organization
The extent of dividing the organizational
Specialization activities into sub-groups
• Functional structure
• Divisional structure
• Matrix structure
• Horizontal structure
• Hybrid structures
Transfer pricing
• A transfer pricing is the internal price
charged by a selling department,
division, or subsidiary of a company
for a raw material, component, or
finished good or service which is
supplied to a buying department,
division, or subsidiary of the same
company.
Responsibility structure
• Responsibility centers
• Cost centres
• Revenue centers
• Profit centers
• Investment centers
Designing responsibility centers
• While designing responsibility structures,
organizations need to first consider three
concepts.
• Controllability
• Goal congruence
• Transfer pricing
Designing control systems
• Action controls:-
• Hierarchy and reporting relationships
• Clarity of roles, responsibilities, authorities and
distribution of power between key positions
• Workflows and channels of communication
• Behavior-based appraisal and reward systems
• Disciplinary action on absenteeism, violation of rules and
regulations, fraud, etc
• Change management: business process reengineering,
organizational restructuring
Designing control systems
• Result control:-
• Employee performance management –
goal setting, performance appraisal, and
feedback
• Performance–based incentives and
disincentives for non performance
Designing control systems
• Personnel / cultural controls:-
• Recruitment, selection, and placement, guidelines on
qualification, experience, skills, attitudes and behavioral traits.
• Orientation and socialization , especially for cultural values and
ethical norms
• Employee training, job skills, soft skills
• Management development, career planning, succession
planning
• Trait/ knowledge/ skill- based appraisal
• Compensation- merit pay, skill based pay
• Befits schemes to foster belongingness and a sense of security
• Quality of work life (QWL)
• Workers participation in management
• Employee relation to pre-empt conflicts
• VRS
Management control of International Business