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The Nature of Management Control Systems (Chapter 1)
The central focus of this book is strategy implementation. In particular, the book provides knowledge, insight, and analytical skills related to how a corporation’s senior executives design and implement the ongoing management systems that are used to plan and control the firm’s performance. Elements of management control systems include strategic planning; budgeting; resource allocation; performance measurement, evaluation, and reward; responsibility center allocation; and transfer pricing. The book builds on concepts from strategy, organizational behavior, human resources, and managerial accounting.
Management control is a must in any organization that practices decentralization. One view argues that management control systems must fit the firm’s strategy. This implies the strategy is first developed through a formal and rational process, and this strategy then dictates the design of the firm’s management systems. An alternative perspective is that strategies emerge through experimentation, which are influenced by the firm’s management systems. In this view, management control systems can affect the development of strategies. We will consider both points of view, as well as their implications in terms of the design and operation of management control systems. When firms operate in industry contexts where environmental changes are predictable, they can use a formal and rational process to develop the strategy first and then design management control systems to execute that strategy.
However, in a rapidly changing environment, it is difficult for a firm to formulate the strategy first and then design management systems to execute the chosen strategy. Perhaps in such contexts, strategies emerge through experimentation and ad hoc processes that are significantly influenced by the firm’s management control systems.
1- The cashier collect less cash than the value of the tickets sold( or missing)
• Solution: is to make the
The central focus of this book is strategy implementation. In particular, the book provides knowledge, insight, and analytical skills related to how a corporation’s senior executives design and implement the ongoing management systems that are used to plan and control the firm’s performance. Elements of management control systems include strategic planning; budgeting; resource allocation; performance measurement, evaluation, and reward; responsibility center allocation; and transfer pricing. The book builds on concepts from strategy, organizational behavior, human resources, and managerial accounting.
Management control is a must in any organization that practices decentralization. One view argues that management control systems must fit the firm’s strategy. This implies the strategy is first developed through a formal and rational process, and this strategy then dictates the design of the firm’s management systems. An alternative perspective is that strategies emerge through experimentation, which are influenced by the firm’s management systems. In this view, management control systems can affect the development of strategies. We will consider both points of view, as well as their implications in terms of the design and operation of management control systems. When firms operate in industry contexts where environmental changes are predictable, they can use a formal and rational process to develop the strategy first and then design management control systems to execute that strategy.
However, in a rapidly changing environment, it is difficult for a firm to formulate the strategy first and then design management systems to execute the chosen strategy. Perhaps in such contexts, strategies emerge through experimentation and ad hoc processes that are significantly influenced by the firm’s management control systems.
1- The cashier collect less cash than the value of the tickets sold( or missing)
• Solution: is to make the