MANAGEMENT CONTROL SYSTEM Controls for

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MANAGEMENT CONTROL SYSTEM
GROUP TASK

SUMMARY
Controls for Differentiated Strategies

PRESENTED BY

FINA ELWASISTE 0910534030

M. ALVICKY SATYWARDANA 1210534006

MUHAMMAD IRVAN ADHA 1210534022

INTERNATIONAL ACCCOUNTING

2014

Controls for Differentiated Strategies
Focus of chapter is Contingency Theory: A specific structure and process for an organization depends upon various external and internal factors.
Research studies have identified important factors that influence control system design:
Size
Business Environment
Technology
Interdependence
Strategies

Corporate Strategy
Logic for linking controls to strategy depends on:
Different organizations operate in different strategic contexts.
Different strategies require different:
Task priorities
Key success factors
Skills
Perspectives
Behavior patterns
Control systems are measurement systems that influence people being measured
The design of the control system should be monitored for behavior induced by system is consistent with corporate strategy.

Implications for Organization Structure
Corporate strategy is a continuum line from a single industry strategy to an unrelated diversification strategy on the other pole.
Various corporate strategies imply different organization structures and different control systems. Review (Exhibit 13.1)
At the single industry pole companies tend to be functionally organized.
Not all single industry firm are organized as such - for instance:
Fast food chains
Hotels
Supermarkets
Drugstores
They are organized by business units with both production and marketing functions at many facilities.
However, every unrelated, diversified company or conglomerate is organized by autonomous business units.
Senior managers in these firms focus on portfolio management and delegate the development of product/market to the BU managers.
Single industry managers are very familiar with their industry and have expertise in many operating facets.

On the other hand, conglomerate

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