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CONTROL SYSTEMS
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IntroductionA critical task of managers is to control the
activities of their organization.
Controls are necessary to make sure anorganization is operating efficiently and in a
manner consistent with its intended strategy.
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Without adequate controls, control loss occurs
and the organizations performance will
suffer.
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Control systemManagement control is a systematic effort
to set performance standards with planning
objectives, to design information feedback systems, to compare actual performance with these
predetermined standards, to determine whether there are any deviations
and to measure their significance
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Control systemAnd to take any action required to assure that all
corporate resources are being used in the most
effective and efficient way possible inachieving corporate objectives.
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Within organizations, control can be viewed as
the process through which managers regulate
the activities of individuals and units so theyare consistent with the goals and standards of
the organization.
A key element in the control process isgenerating the right goals and standards.
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Standard is defined as a performance
requirement that the organization is meant to
attain on an on going basis.
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Types of organizational control There are three primary types of
organizational control:strategic control,
management control, and operational control.
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Strategic control, the process of evaluating
strategy, is practiced both after the strategy is
formulated and after it is implemented.Strategy is defined as long-term action plan for
achieving a goal
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Management control focuses on the
accomplishment of the objectives of the
various substrategies comprising the masterstrategy and the accomplishment of the
objectives of the intermediate plans (for
example, "are quality control objectives being
met?").
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Operational control is concerned individual
and group performance as compared with the
individual and group role as required byorganizational plans ( for example, "are
individual sales quota being met?").
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Each of these types of control is not a separate
and distinct entity and, in fact, may be
indistinguishable from others.Moreover, similar measurement techniques may
be used for each type of control.
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Strategic controlStrategic control is concerned with tracking the
strategy as it is being implemented, detecting
any problems areas or potential problemareas, and making any necessary adjustments.
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Steering control is to highlight some importantcharacteristics of strategic control.
Ordinarily, a significant time span occursbetween initial implementation of a strategyand achievement of its intended results.
During that time, numerous projects are
undertaken, investments are made, andactions are undertaken to implement the newstrategy.
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Strategic controls are necessary to steer the firm
through these events.
They must provide some means of correcting thedirections on the basis of intermediate
performance and new information.
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Operating ControlOperational control systems are designed to
ensure that day-to-day actions are consistent
with established plans and objectives.It focuses on events in a recent period.
Operational control systems are derived from the
requirements of the management controlsystem.
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Corrective action is taken where performance
does not meet standards.
This action may involve training, motivation,leadership, discipline, or termination.
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Differences Between Strategic
And Operational Control
The differences between strategic and
operational control are highlighted by
reference to a general definition ofmanagement control: "Management control
is the set of measurement, analysis, and
action decisions required for the timely
management of the continuing operation of
a process".
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Differences Between Strategic
And Operational Control: Measurement
Strategic control requires data from more
sources. The typical operational control
problem uses data from very few sources. Strategic control requires more data from
external sources. Strategic decisions are
normally taken with regard to the externalenvironment as opposed to internal operating
factors.
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Strategic control are oriented to the future. This is
in contrast to operational control decisions in which
control data give rise to immediate decisions that
have immediate impacts.
Strategic control is more concerned with
measuring the accuracy of the decision premise.
Operating decisions tend to be concerned with thequantitative value of certain outcomes
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Strategic control standards are based on external
factors. Measurement standards for operating
problems can be established fairly by past
performance on similar products or by similar
operations currently being performed.
Strategic control relies on variable reporting
interval. The typical operating measurement isconcerned with operations over some period of time:
pieces per week, profit per quarter, and the like.