Running head: MANAGEMENT CONTROL SYSTEM 1

Management Control System

Student’s name

Institution of affiliation

Date
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Introduction

In a world where organization is faced with various challenges, organizational manager

are expected to device ways of protecting the organization against both external and internal

factors. By definition management Control System (MCS) are the means through which

managers obtain and employ resources so as to ensure that the organization attains its set goals

and objectives. MCS since they ensure that the company is broken down into sub-units which are

allocated different managers. Through the manager, the unit should establish a clear goal which

confines with organizational objectives. Furthermore Hall, Mikes & Millo (2015), defined

organization control as the process by which most company managers regulate business

operation in an attempt to ensure that standards performance is reached. These paper looks at the

factors that affect the geographical locations of a business and how external factors like

economic expansion, cultural norms, and political climates can force/trigger the manager to shift

from one MCS to the other.

Analysis

From the definition, MSC entails planning and monitoring resources to ensure that the

organization attains its overall objectives. It should be notes that the best business control

strategy is more reliant of external factors surrounding the business (Strauß & Zecher, 2013).

One of the predominant factors that affect mangers choice of control system is political

climates (Bedford, 2015). The business productivity and overall performance is affected when

the political atmosphere is not conducive. During political campaigns and voting process, most

managers adopt more cautious measures. In most cases, they reduce productivity level and invest

more in selling the products in stock. These are because, political period attracts chaos which

may disrupt and cause hue amount of losses (Rana, Wickramasinghe, & Bracci, 2019). Contrary
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to political chaos, the government may decide encourage both local internal markets by giving

subsidies and reducing taxes of goods for exports. In such a case the managers increases their

overall production to capitalize on the opportunity presented. Cultural norms debit, the way

people live and associate with others. These norms contribute greatly to the business strategies

since they give the organization a direction to where the preference of the customers lays most

(Arena, Arnaboldi and Palermo, 2017). When the organization target market is the people in the

urban lifestyle, production is centered at fashion, elegancy and uniqueness. However when the

organization is located in rural areas where cloths are more of essential than fashion, durability is

the main key (Rad, 2016). Economic factors on the hand represent factors which are vital in the

overall productivity of the organization (Caldarelli, Fiondella, Maffei, & Zagaria, 2015). Some

of the factors that pose a threat to the economy include labor, land and entrepreneur (Thambar,

Brown & Sivabalan, 2019). As a manager, these factors affect the management control system

greatly. When labor is low, the managers are forced compress workload or source outside help

from other places (Soin, & Collier, 2013). The performance of the organization relays mostly of

the decision that the manager makes.

This article looks at the three major factors and why managers decide to implement

different controlling tool to mitigate risk (Themsen & Skærbæk, 2018).

Conclusion

Through different tools like limited budgeting, cost reduction, performance evaluation,

training and continuous improvement, managers are in a more controlling position to ensure that

the organization is not affected by the three mentioned factors (economic expansion, cultural

norms, and political climates)

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References

Arena, M., Arnaboldi, M. & Palermo, T. (2017). The dynamics of (dis)integrated risk

management: A comparative field study, Accounting, Organizations and Society, 62, 65-

81.

Bedford, D. S. (2015). Management control system across different modes of innovation:

Implication for firm performance, Management Accounting Research, 28, 12-30.

Caldarelli, A. Fiondella. C., Maffei, M. & Zagaria, C. (2015). Managing risk in credit

cooperative banks: Lessons from a case study, Management Accounting Research, 27, 2–

26.

Hall, M., Mikes, A. & Millo, Y. (2015). How do risk managers become influential? A field

study of toolmaking in two financial institutions, Management Accounting Research, 26,

3-22.

Rad, A. (2016). Risk management–control system interplay: case studies of two banks, Journal

of Accounting & Organizational Change, 12(4), 522-546.

Rana, T., Wickramasinghe, D., & Bracci, E. (2019). New Development: Integrating Risk

Management in Management Control Systems—lessons for Public Sector Managers,

Public Money & Management, 39(2), 148–151.

Soin, K. & Collier, P. (2013). Risk and risk management in management accounting and

control, Management Accounting Research, 24, 82–87.

Strauß, E. & Zecher, C. (2013). Management control systems: a review, Journal of Management

Control, 23, 233-268.

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Thambar, P. J., Brown, D. A., & Sivabalan, P. (2019). Managing systemic uncertainty: The role

of industry-level management controls and hybrids. Accounting, Organizations and

Society.

Themsen, T. N. & Skærbæk, P. (2018). The performativity of risk management frameworks and

technologies: The translation of uncertainties into pure and impure risks, Accounting,

Organizations and Society, 67, 20-33.