5046117
Description
Flashcards by Lukas Choo, updated more than 1 year ago
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Created by Lukas Choo
about 8 years ago
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| Question | Answer |
| Definition of Management Control Systems | Management Control Systems (MCS) “include everything managers do to help ensure that their organization’s strategies and plans are carried out or, if conditions warrant, that they are modified”*. |
| Relation between Management Control & Strategy | “Strategy formulation is the process of deciding on new external focus of strategies; management control is the process of implementing those strategies” (Anthony & Govindarajan 2007) |
| The four Levers of Control (to renew strategy) - Simons (1995) | Diagnostic Control Systems – critical performance variables; Belief Systems – core values; Boundary Systems – risks to be avoided; Interactive Control Systems – strategic uncertainties |
| Diagnostic Control Systems – critical performance variables | Compare actual performance and pre-set targets and to communicate the objectives to achieve |
| Belief Systems – core values | Core values to contribute to value creation according to the company purpose |
| Boundary Systems – risks to be avoided | Definitions and parameters expressed in negative terms for employees to do it right |
| Interactive Control Systems – strategic uncertainties | Managers-to-subordinates-communication allowing to obtain access to local knowledge and strategic uncertainties |
| Benefits from the four Levers of Control (3) | • Four levers generate dynamic tension between opportunistic innovation and predictable goals achievement for positive growth • The balance facilitates the management of conflicts as well as the creation of dynamic tensions and organizational capabilities • The interactive lever of control plays a significant role in achieving and sustaining the balance between controlling and enabling uses of MCS |
| Revised LOC - three levels of managerial intentions (Tessier 2012) | Types of control (social and technical) organized as four control systems (strategic performance, operational performance, strategic boundaries and operational boundaries) and can be used diagnostically or interactively |
| Types of Control – Individual controls available to managers (from the revised LOC) | o Social - emotional, non-rational elements and includes core values, beliefs, norms and symbols o Technical - how to perform tasks and the organization of people and groups based on rules, procedures, and standards |
| The types of control are organized as four control systems (from the revised LOC) | 1. Strategic Performance - strategic uncertainties to monitor whether the firm has applied a proper strategy to achieve its vision 2. Operational Performance - overseeing what the firm must do well to achieve its strategy, includes feedback systems, values and symbols and procedures 3. Strategic Boundaries - Inform employees of acceptable domain of opportunity-seeking in relation to strategy 4. Operational Boundaries - informing employees about limits of their actions e.g. code of conduct, rules and procedures |
| How LOC can be used (revised LOC) | These four control systems can be used diagnostically or interactively, have an enabling or constraining role and can lead to either reward or punishment representing managerial intentions |
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