1. Management Control Systems
Chapters 1 & 2,
Management Control Systems, 12th Ed.,
Anthony and Govindarajan

2. Strategy Corporate Strategy Business Strategy
To maximize use of resources
Business Strategy
To compete in selected markets

3. Goals and Strategy Strategy Formulation
How to attain
Strategy Implementation (Execution)
Objectives
Management Control Systems

4. Management Control
The process by which managers influence other members of the organization to implement the organization’s strategies.

5. Management Control Activities include: Planning Coordinating
Communicating
Evaluating
Deciding
Influencing

6. Management Control Systems
Facilitate management control
Primarily focus on strategy execution
Encompass both quantitative and qualitative performance measures
Concerned with broadly defined activities

7. Conflict of Interests
Goal congruence implies that individual goals and organizational goals are consistent
Agency Theory implies the opposite

8. Good Management Control
Achieves goal congruence by aligning
Organizational goals
Individual goals

9. Goal Congruence Influenced by Informal factors Formal factors
External – work ethic
Internal – culture, management style, informal organization, perception, communication
Formal factors
Rules
Formal control system

10. Organizational Structure
Functional organization
Highly centralized
Matrix organization
Business unit organization
Highly decentralized

11. Lines of Control within the Organization
Solid lines
Direct reporting
Dotted lines
Coordination / reporting

12. The Controller Responsible for Normally the CFO
Design of the Management Control System
Operation of the Management Control System
Normally the CFO