Summary: Management Control
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Lecture 1
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How does a typical business organization looks like?
Like a pyramid with a hierarchy. -
As a president, you work towards a goal. What do employee usually think?
- Why should I care?
- What's in it for me? -
What's the fundamental control problem?
How do we make sure that everybody in the organization is goal-directed? -
Lack of abilities/Personal limitations
Are they capable of doing what is expected of them?
Limitations are person specific, e.g. lack of aptitude (aanleg), training, experience, stamina, knowledge. All individuals face limitations in their abilities to perceive new problems, to remember important facts and to process information properly. -
What's the solution for lack of abilities/personal limitations?
Solution: training, job assignment/promotion, job design -
What does MC guard against?
It guard against the possibilities that employees will do something the organization does not want them to do, or fail to do something they should do. -
When would there be no need for a management control system?
If all personnel could always be relied on to do what is best for the organization, there would be no need for a management control system. -
Does perfect management control exists?
No -
Does an organization have to strive for a lot of MC systems?
No, MCS are costly. You need to have "enough" controls and need to make a cost-benefit trade-off. -
What does the MC process looks like?
1. Set direction and context
2. Execute and manage performance and health
3. Measure stakeholder value
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