Resume Chapter 3 SPM

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FIKRIYAH ARINAL HAQ / 12010006/ TERM 5/

MANAGEMENT CONTROL SYSTEMS

September 16, 2014

Resume chapter 3
Behavior in Organization
The central purposes of the management control system is to assure goal
congruence (its described in chapter 1, pg. 7). Goal congruence is the same
objective between organization and individual (management and labor) objective.
There are the informal factors(influence on the effectiveness of an organizations
management control), both external and internal the goal congruence, there are:
1. External factors are norms of desirable behavior that exist in the society of
which the organization is a part. These norms include a set of attitudes, referred
to work ethic, which is manifested in employees loyalty to the organization,
their diligence, spirit, and pride in doing a good job.
2. Internal factors include:
a. Culture
Cultural norms are extremely importance since they explain why two
organizations, with identical formal management control systems, may vary in
term of actual control. The common beliefs, shared values, norms of behavior
and assumptions that are accepted and manifested throughout the organization.
b. Management style
Subordinates attitudes reflect what they perceive their superiors attitudes
to be, and their superiors attitudes ultimately stem from the CEO (an
institution is the lengthened shadow of a man).
c. The informal Organization
The lines on an organization chart depict the formal relationship -thats the
official authority and responsibilities- of each manager. To fulfilling the
responsibilities, the manager have to make communication with other
divisions. The management control process can be understood with
recognizing the importance of the relationships that constitute the informal
organization.
d. Perception and Organization
A manager is obtain information about what these goals are and what they
have to do to reach them. Managers should communicate to the others
division. Then they get information, but they got it from different sources. So,
it will make different interpretations.

Behavior in Organizations The Management Control Environment

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FIKRIYAH ARINAL HAQ / 12010006/ TERM 5/


MANAGEMENT CONTROL SYSTEMS

September 16, 2014

The formal factor on control system is classified into two types:


a. The management control system itself
b. Rules
Rules are used for all types of formal instructions and controls, including:
standing instructions, job descriptions, standard operating procedures,
manuals, and ethical guidelines. There are some specific types of rules, they
are:
-

Physical Controls
Manuals
System Safeguards
Task Control Systems

Three general categories of organizations structure that influence the design


of the organizations MCS, there are:
a. A functional structure
In which each manager is responsible for a specified function such as
production or marketing.
b. A business unit structure
In which business unit managers are responsible for most of the activities of
their particular unit, and the business unit functions as a semi-independent part of
the company.
c. A matrix structure In which functional units have dual responsibilities. (itll
discuss in chapter 16)
Controller refer to the person who is responsible for designing and operating
the management control system. In many organizations, its named Chief
Financial Officer (CFO). There are functions of controller in organization:
a. Designing and operating operation and control systems
b. Preparing financial statements and financial report (including tax returns) for
shareholder and other external parties.
c. Preparing and analyzing performance reports, interpreting these reports to
managers, and analyzing program and budget proposals from various
segments of the company and consolidating them into an overall annual
budget.
d. Supervising internal audit and accounting control procedures to ensure the
validity of information, establishing adequate safeguards against theft and
fraud, and performing operational audits.
e. Developing personnel in the controller organization and participating in the
education off management personnel in matters to the controller function.

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