Critically Evaluate the Impact of Globalization on Management Control System

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Critically Evaluate the Impact of Globalization on Management Control System

Management control is the process by which managers assure that resources are obtained and used effectively and efficiently in the accomplishment of the organization’s objectives (Berry, Broadbent & Otley 1995). The purpose of a management control system is to encourage managers to take actions that are in the best interest of the company. Technically, this purpose can be described as goal congruence. It is also ensure the strategy of the organization is reflected in the tasks carried out. It is the process by which managers of all levels ensure that the people they supervise implement their intended strategies’ (Anthony and Govindarajan, 2004).

A management control system is, or should be, a coordinated, integrated system. In a sense, the management control system is a single system, but it is perhaps more accurate to think of it as a set of interlocking subsystems. The formal management control system is only a part of the management control process, actually a relatively unimportant part. The system can help motivate the manager to make decisions that are in the best interests of the organization, and the system can provide information that aids the manager in making decisions.

The factors influencing and shaping management accounting practices, especially at the macro level, include production and information technology, competition, organization structure, organizational processes inter-organizational relationship, strategy, education, administration and social controls, legislation, regulation, financial markets, and national and organizational culture (Chow et al. forthcoming; Dent 1996) and the globalization should be part of it.

Globalization is not only a kind of concept, but also a development process phenomenon of the human society. There are many definitions of globalization at the moment. In the usual sense, globalization refers to the growing enhanced global linkages, developed human life based on a global scale and the rise of consciousness. The world’s economic activities could beyond the national boundaries and form a worldwide organic economy as a whole through the foreign trade, capital flows, technology transfer and services support. It is interrelated and independent in political and economic between countries.

In my opinion the globalization is a double-edged sword which reflects the worldwide technological progress and national comprehensive reflection in the past 20 years. To a certain extent it is the product of the world’s economic and technological developments which adapts to the requirements of the further development of productive forces and promotes the rapid development of national economies. But at the meanwhile it also faces the potential risks when developing the world economy. On one side, it has a large quantity of positive effects.

First of all, it helps majority countries to optimize, allocate and make the best use of the of production factors. As we all know the markets subject to restrictions from domestic resources and markets no matter how efficiency of their economic operation of a country. Globalization can achieve the most favorable conditions for the whole market.

Second, globalization promotes the development of the international division and the improvement of international competitiveness. The continuously expanding world market deepened the international division and regional harmonization which makes every country could take the advantages to maximize the production and expand production scale in order to achieve the economies of scale, improve management and increase productivity, and actively develop new products, improve their international competitiveness.

Lastly, globalization encourages the rational optimization of economic structure which ensure the research and development of science and technology. The modern science innovation can be spread all over the...
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