UNIVERSITY OF LAGOS

SCHOOL OF POSTGRADUATE STUDIES

M. SC. ACCOUNTING (FULL TIME)

OGAH ELIZABETHMARY
199021080

Assignment on Management Accounting and Control (ACC802)

Topic: Internal and External factors militating against the
achievement of Control in an Organisation

DR O. J. OGUNLEYE

July, 2021.
Introduction

Control is the process of monitoring, measuring, evaluating and correcting actual results to ensure
that a business enterprise’s goals and plans are achieved. Control is accomplished with the use of
feedback. Feedback is information that can be used to evaluate or correct the steps being taken to
implement a plan.

The major objective of control is to put processes in place to achieve managerial goals. There is a
need to check if control is effective Control can also reveal inappropriate standards and in that
case, the corrective action could involve a change in the original standards rather than a change in
performance.

It needs to be mentioned that, unless managers see the control process through to its conclusion,
they are merely monitoring performance rather than exercising control.

The objective of this paper is to highlight the internal and external factors that militate against the
achievement of control in an organisation.

Managing control is essential to making sure that a process or system is running effectively within
an organization. There are sometimes barriers to testing, measuring, communicating, or observing
how effectively a system or process is running. These barriers can reduce the efficacy of the
organization, not only in the process being controlled but also in the controlling process. Barriers
to organizational control can include scarcity of resources, inaccurate measurements of the
process, improper information flow, and incorrect analyses. These barriers can be internal or
external.

INTERNAL BARRIERS

1. Resource Scarcity

Managing control typically requires a number of resources. These resources include supervisory
staff, skilled specialists, tools for measuring the control of the system, and often complex
statistical software and other tracking technologies. A lack of any (or all) of these crucial inputs
can drastically reduce the ability of the control team to collect and communicate their findings.
This under-funding of the control system creates resource scarcity for the process.
2. Inaccurate Measurement

Inaccurate measurement while managing control can happen for a number of different reasons,
including;

 Inaccurate measuring devices

 Misunderstanding of the measurement process by staff
 Inaccurate or misleading measurement processes
 Lack of staff training to determine how to measure the control process

These issues can result in inaccurate measurements, which can make the control process more of a
danger to the evolution of the process than an asset. All measurement tests need to be tested
themselves; an understanding of best practices in taking measurements is critical in project
management

3. Information Flow Issues

A particularly complex barrier to offset is information flow. Information is collected at one point
in the process and analysed contextually at another. This time lag in information flow can
misdirect management to problems at the wrong time in the sequence. Ensuring timely discovery
and reporting of measurements mitigates this risk.

Even with adequate resources to manage control and accurate measurement and information flow,
barriers to analyzing data can still appear. These can be introduced by human error or software
error. It is useful to think statistically: a good manager will consider a 99% confidence interval
that a given process is underperforming as sufficient evidence to take action to improve it, despite
the fact that one time out of a hundred the issue will not be significant. Even one failure out of one
hundred adds up in an organization with thousands of processes to monitor.

A lack of resources, inaccurate measurements, information flow errors, and incorrect analyses can
all result in significant barriers to managing control of a process or system. Managers should be
aware of these barriers and do their best to avoid them through training and accuracy.

EXTERNAL BARRIERS
The external factors like politics, competitors, economy, customers, and weather are beyond your
control but can make a huge impact on your organization’s performance and success. On the other
hand, internal factors like processes, staff, culture, and financial situation can be controlled by
you.

You need to understand that external factors are equally important for the stability and
profitability of your company. Though you cannot control such factors or changes in them, you
can establish a flexible environment to manage the unforeseen market challenges. Such a
proactive approach could mean a world of difference for your organization’s productivity.

For example – If the government introduces a new taxation scheme, every company will need
competent staff, new procedures, and make some changes to existing processes. The slow
response to the scheme could mean a lot of challenges in the change management and potential
penalties from the government for respective delays.

Political Factors: These include the government actions or approaches that can influence the
economy, which eventually will impact the way organizations operate regardless of the industry
they belong to. This includes political stability, government policies, public investments, tax
policies, local infrastructure, and national as well as international trade agreements.

Economic Factors: The economic conditions like changes in the ratio of demand and supply may
directly impact organizational effectiveness and efficiency. The economic factors include
inflation, changes in the exchange rate, economic growth/decline, and changes in interest rates.

Market Factors: The ever-changing market environment that reflects customer preferences. This
may include competition, emerging trends, supply chain relationships, population analytics,
customer needs, and demographics.

Technological Factors: It includes the impact of technological advancements and innovations

evolving in the market. The most common examples here are automation, new equipment,
technology awareness, etc.
Environmental Factors: It majorly covers the environmental aspects that impact the organization’s
processes and customer demands. The examples here could be the change in weather, CSR
initiatives, and much more.
Compliance and Regulatory Factors: It includes the changes due to the compliance standards and
their latest revisions.
Every external factor is responsible to bring some change for the entire organization and all the
changes need to be managed effectively and efficiently to transform the unfavorable conditions
into improvement opportunities.