M C S

Management Control System Code: D01 Contact Hrs : 45 Credit Points: 3

 

Evaluation: Continuous Internal Assessment – 25 marks Sem. End Exam -- 50 marks

Objective : The main objective of the course is to appraise the students about the concept of MCS as well as its role in efficient management of organizations. 

Pedagogy :Lectures, Assignments, Projects, Practical Exercises and Seminars

 

MODULE 1. Basic Concepts, Goals, Strategies, Key-variables in Management Control Systems, Control characteristics in Business activities.

MODULE 2. Management by Objectives - with emphasis on all functional areas in an organisation, Analysis for effective feedback.

MODULE 3. Ideal Reporting System - Budget Reporting. Estimation in Reporting, Financial Reporting, Project Reporting, Troubles in Reporting, Nature of Economic Reporting.

MODULE 4. Responsibility Center Concept - Types of Responsibility Centers. Evolution of various models of Responsibility Centers - Cost Centers and Associated problems; Profit Center and Associated Problems - special reference to Transfer Pricing; Investment Center and Associated Problems - special reference to Problem of Measurement of Investment; Conversion of one system into the other-when, why and how; Importance of Behavioural Aspects of Management Control.

MODULE 5. Budgetary Control System - Types of Budget, Zero Based Budgeting, Performance Budgeting, Flexible Budgets, Special Problems related to Behavioural Aspects. (Participation, Procedure, Authorization, System and Manual)

MODULE 6. Special Reports, Reporting under Inflationary conditions. Reporting for inter-firm comparison. Financial Control and Reporting in Non-Profit and Non-Government Organisations, Multi-National Organisations and Service Organisations.

References:

1) Study Material as per Class Lectures

2) Management Control Systems, 10th Edn; Robert N. Anthony, Vijay Govindarajan, TMH Edn.

 

Goal Congruence

Goal Congruent Process:

In a goal congruent process, the actions people are led to

take in accordance with their perceived self-interest are also

in the best interest of the organization.

Example:

Organization Goal / Policy : Cost reduction emphasized.

Practice at Implementation level- Reducing cost by reducing quality? - Maintenance of quality with reduction in cost.

Factors that Influence Goal Congruence

• Informal: – External:

• Work ethics, – Internal

• Management style • Culture

• Formal: – Rules

• Physical controls • Manuals• Systems safeguards• Task controlled systems.

– Organizational Structure• Functional Organizations• Business Unit

Relationships between Planning and Control functions

Strategy Formulation

Management Control

Task Control

Goals, Strategies and Policies

Implementation of strategies

Efficient and effective performance of individual tasks

Elements of the Control Process

ControlDevice

Entity being

controlled

2. Assessor. Comparison with standard

3.Effector. Behavior alteration, if needed

1. Detector. Information about what is happening

Framework for Strategy Implementation

Management Controls

Culture

Human Resource

Management

Organization Structure

Strategy Performance

Implementation Mechanisms

Corporate Planning and Strategy Formulation

Three Levels of Strategies

Responsibility Centres

1. Revenue Centres

2. Expense Centres

ProcessOutput(Dollar

Revenue)

Input(Dollar Cost)

Expense Centres

Revenue Centres