T.

C
Atilim University
Ankara, Turkey
Software Engineering Department
MANAGEMENT CONTROL SYSTEM

Prepared by: Llahm Omar Faraj Ben Dalla (SE)

 Outline

• Introduction
• Management control systems (MCS)
• Management control system techniques
• Related work
• Control (management)
• Organizational and operational control
• Importance of control
• Main contribution
• Conclusion and future work
• References 2

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 Introduction
Management control systems (MCS) are tools to aid
management for steering an organization toward its strategic
objectives and competitive advantage.
Management controls are only one of the tools which
managers use in implementing desired strategies.
Management control system influences the behavior of
organizational resources to implement organizational
strategies.
Management control system might be formal or informal
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Figure 1. Management control systems (MCS) 4

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Figure 1.2. Steps of control processes schema adapted from (Malmi and Brown, 2008). 5

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 Related work
• According (Chenhall, 2003) contingency-based research has a long tradition in the study of management control

systems (MCS). examining designs that best suit the nature of the environment, technology, size, structure,

strategy and national culture. the possibility that contingency-based ideas could encompass insights from a

variety of theories to help understand MCS within its organizational context (Merchant and Van der Stede, 2007).

• Simons, (1990) has announced that for the last two decades, management control systems have been

conceptualized in terms of implementing a firm's strategy. This view fails to recognize, however, the power of

management control systems in the strategy formulation process. management control systems focus

organizational attention on strategic uncertainties. He also declared that this process is examined in two

competing firms to illustrate how top managers use formal systems to guide the emergence of new strategies and
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ensure continuing competitive advantage. 6
Control (management) principles
• Control is a continuous process
• Control is a management process
• Control is embedded in each level of organizational hierarchy
• Control is forward looking
• Control is closely linked with planning
• Control is a tool for achieving organizational activities
• Control is an end process
• Control compares actual performance with planned performance
• Control point out the error in the execution process

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Organizational and operational control

Used in the program of review and evaluation depends on the reason for the
evaluation that is, is it because the system is not effective

When a system has failed or is in great difficulty, special diagnostic techniques

may be required to isolate the trouble areas and to identify the causes of the
difficulty.

Operational control serves to regulate the day-to-day output relative to schedules,

specifications, and costs
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Management concerns monitoring the behavior of individuals

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Controlling output also suggests the difficulty of controlling individuals'

Importance of control

• Increasing size of business

• Motivation for efficient employees

• For complete discipline

• Helpful in future planning

• Aids efficiency

• Reduce in risk

• Helpful in coordination 9

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• Helpful in decentralization
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Table 1.1. Types of Normative Control
Contribution 03/21/2024
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• Table. 1.1. Compression of MCS characteristics and advantages as well as disadvantages

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Conclusion
• The management control system MCS of an owner-manager of a small firm emerges from a mix of
risk of management and MCS, financial and nonfinancial returns from the firm, considering the effects
of firm-specific risk-factors such as liquidity pressures, lack of diversification, limited financial
flexibility, control issues (related to management control system), a desire to limit or avoid
accountability and restricted ownership transferability as well as external human resources. The
traditional and rational thinking of wealth maximization of using management control system into
bounded rationality, especially in small traditional organizations. Owner managers of these small
traditional organizations in this study seem to be more satisfied with modest financial earnings from
the business when they are simultaneously pursuing their business in many non-financial ways.
• To sum up, this explorative study has provided exceptionally extensive information on MCS practices
and information as well as on characteristics relating to their use and importance. This information and
results can serve as a good base and encouragement for further academic research in this business
context. 16

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 References
Abernethy, M. A., Bouwens, J., & Van Lent, L. (2010). Leadership and control system design. Management Accounting
Research, 21(1), 2-16.

Anthony, R. N., Govindarajan, V., & Dearden, J. (2007). Management control systems (Vol. 12). New York, NY: McGraw-
Hill.

Armesh, H., Salarzehi, H., & Kord, B. (2010). Management control system. Interdisciplinary Journal of Contemporary
Research in Business, 2(6), 193-206.

Anthony, R. N. (1988). The management control function. Harvard Business School Press.S

Abernethy, M. A., & Lillis, A. M. (1995). The impact of manufacturing flexibility on management control system design.
Accounting, Organizations and Society, 20(4), 241-258.

Billings, C. E. (2018). Aviation automation: The search for a human-centered approach. CRC Press.

Bonner, J. M., Ruekert, R. W., & Walker Jr, O. C. (2002). Upper management control of new product development projects
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and project performance. Journal of Product Innovation Management, 19(3), 233-245.

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Thank You for Your
Attention

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