Raviraj Soni

Nature of Management control system

The main objective of the MCS is to implementation of the strategy in right way. Management
control is many important in any organization which practices decentralization. There are four
elements of control system, Detector, Assessor, Effector and Communicator network.
Management control is a way to praise people of organization to implement the strategies.
Which includes various activities like planning, coordinating, communicating, evaluating,
deciding, influencing.

Strategy formulation is one part of the management control; it is a process of deciding

on the goal of the organization and strategies for attaining these goals, here goals describes the
broad overall aim of an organization. The other one is Task control, the process of ensuring that
specified tasks are carried out effectively and efficiently.

Management control systems are tools to implement strategies. Strategies are plans to
achieve goals of organization. The main goals of the organizations can be Profitability,
Maximizing shareholder value, Risk, Multiple shareholder approach etc. there are two level of
strategy are corporate level and Business unit level. Corporate level strategy is about being with
right mix of businesses. At the corporate level the main issues are define right business in which
the firm will participate & distribution of resources among those businesses the option for this
level are 1) Single industry firm 2) Related diversified firm 3) Unrelated diversified firm. Business
unit level, a business unit in one firm competes with a business unit in another firm. There are
two strategic issues 1) What should be the business unit’s mission? 2) How the business units
complete to accomplish its mission?

Strategy planning shows the targets of next few year and way of implementing the
strategies to achieve that goal. During the analyzing proposed new programs, the organization
requires to do capital investment analysis and Organisation for analysis, which does not follow
timetable: Senior manager make the decisions as soon as the required its need.

The strategic planning process start in the spring and complete in the fall, which involves the
steps like Update strategy plan from last year, Deciding assumption on and guidelines, first
iteration of the new strategic plan, Analysis, second iteration of the new strategic plan & Final
review and approval.

These information are useful for the company while preparing the future plan, In
additional to developing new programs, many companies have systematic way to analyzing the
ongoing programs like Value chain analysis, Activity-based costing and use of ABC information.
These techniques can aid in the strategic planning process.