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-Prof. Naik,
Flow of lecture 1Relation of course with overall MMS/PGDM syllabusNewspaper cuttingsMeasurementTaxi Riksha faresThird wave-Alvin TofflerCost centre-Responsibility CentreProfit centreTransfer priceController
A few months from now, most of you will be working or having your own set up
Some of you may work for a large organisation, some for small; some for MNCs, some in family business
But no matter where you work, all organisations will have something in common
WHAT IS IT?
Persp IPersp ICost & MgmtAccounting
Cost & MgmtAccounting FM
IFMI
OB & HRMOB & HRM
Persp Mgmt II
Persp Mgmt II MCSMCS
Business PolicyBusiness Policy
Where does MCS stand in your education?
Admission ManiaIt is that time of the year which brings anxiety to
parents and students seeking college admissions.
Government of Maharashtra brought another scheme this year - 85% or above Percentage reserved for students appearing for SSC board to compensate for the extra marks being allegedly awarded by ICSE and other boards.
Our correspondents moved from South Mumbai colleges to Central and Western Suburban Colleges and finally to colleges in the Eastern suburbs.
Admission ManiaHere is what they found out.College
Sydenham 60,000 – 70,000
HR College 70,000 – 1,00,000
Poddar 40,000 – 60,000
Ruparel Arts 60,000 – 65,000
Ruia 30,000 – 40,000
Elphistone 25,000
NM 70,000
Kelkar 25,000
Ruparel Science 80,000
Students appear to prefer Commerce streams over Art and Science.
What Counts gets
measured
What Counts gets
measured
What gets done gets rewarded
What gets done gets rewarded
What gets measured gets done
What gets measured gets done
What gets rewarded
really counts
What gets rewarded
really counts
StrategyStrategy
MCS
Understanding Strategies Perspective of Management Control Systems.
Basic concepts Boundaries of Management Controls Goals The concept of Corporate and Business Unit Strategies
Financial Goal Setting
EVA, Free Cash Flow market Gap, RONW, P/E, EPS and their Inter- relationship, ROI and Sensitivity Analysis.
Organization Hierarchies and BehaviorGoal Congruence, Information Factors that
influenceGoal Congruence, Types of Organization and
the Formal Control Systems, Functions of Controller
Responsibility Centers
Responsibility Centre, Revenue, Expenses and Investment Centers, Administrative Support and R and D Centers, Responsibility Budgeting
Profit Centers
General Consideration, concept, Identification and Creation Matrix Structure, Profit Centers for Control and Decentralization
Transfer Pricing
Objectives, Cost, Market and Margin based Methods, Pricing Corporate Services, Administration of TPs
Measuring and Controlling Profits and Assets
EVA, Free Flow, ROI and Residual Income Measuring Assets Employed, Alternatives for Managerial Performance Management
Performance Measurement and Control
Information for performance control, Interactive Control, Balance Scorecard
MCS in Service and Non Profit Organizations
Service Organizations in General, Professional and Non-Profit Organizations
Summing Up
Controls for Differentiated Strategies, Top Management Styles, Summing up
Audit
Efficiency Audit and Management Audit
Case Study: West Port Electric CompanyCase Study: North Country Auto or any Other
Similar CaseCase Study: Birch Paper CompanyCase Study: Quality Metal ServiceCase Study: General Electric B
Suggested Readings
1. Management Control systems by Rober Antony and Vijay Govindrajan (Tata McGraw Hill)
2. Management Control Systems Dr. R.S Aurora and Prof S R kale (Jaico Publishing House)
OTHER INFORMATION
1. Each session of 90 Minute duration. For Quantitative topics, basis application knowledge required but advanced techniques topics, basic application knowledge is required but advanced techniques are not expected to be covered
2. Emphasis should be covering the subject of Management Control as a “Process” (and not as Techniques)
3. Due attention would be given to behavioral aspects of all the topics
Strategy and Strategic Management
Concept of Strategy
Strategic Managent
Concept of strategyStrategy indicates the general direction in which an
organisation plans ot move to attain its goals
In some organisations it may not be stated explicitly
Strategy is usually developed by matching core competencies with industry oportunities. Another school of thought-NOT MATCH STRETCH
Strategic Management
Develop vision, missionSet objectivesCraft strategy to achieve objectivesImplement and execute strategyMonitor, evaluate, take corrective action
MCS
Management Control Systems are systems intended to help implement strategies.
In your First Semester Perspective Management course, you have covered that control cannot exist without planning and that planning and control are two sides of the same coin
Control includes Planning and Control processes
MCSCourse is designed to help you to think
through how you would manage strategy implementation dilemas in which operating managers find themselves. In particular, course is meant for you to gain knowledge, insights and analytical skills related to how managers go about designing and implementing formal systems for strategy implementation
KEY IDEAS
Obviously different organisations ,even in the same industry have different strategies
Different Control Systems are required to effectively implement strategies
MCSThe following material is based on
correspondence with Dr AnthonyAny technological process should and does
bring about improvementObviously technology will lead to
improvements in the effectiveness and efficiency of management control in ways not foreseen
Dr Anthony (contd)Framework for MCS was developed in the 60sMuch technological changes, particularly in the field
of IT have taken place sinceHowever, MCS framework has not changed and is
unlikely to change in the immediate future
BECAUSE IT IS GROUNDED ON HUMAN NATURE
Dr Anthony(contd)Management Control Proces is behavioural-involving
interactions among managers, between managers and their subordinates
Because managers differ from one another in their ability, leadership qualities, interpersonal skills, experience, approach to decision making, understanding ability and affinity to numbers and in other ways the DETAILS of management control process varies from organisation to organisation and among centres
Dr Anthony(contd)The differences relate to the way the control system is
USED. However, to function effectively, the FORMAL system must be basically the same THROUGHT the organisation
The importance of the subject matter covered in this subject is captured well in the widely accepted truism among management consultants- that over 90%of business and (nonprofit organisations) keep foundering on the rocks of implementation---
Dr Anthony(contd)----either strategies never come into being, or get
distorted or the implementation is much more costly and time consuming than anticipated. However laudable strategic intentions maybe—to change the product mix, to improve the quality of products, to become the lowest cost producer, to build market share or to maximise short term earnings and cash flow—if the strategies do not get converted into reality, they are usually not the paper they are written on
Dr Anthony (contd)Soon most of you will be soon in positions,
where you will be directly responsible for strategy implementation, material in this course is of high relevance to you
BUT
Dr Anthony(contd)The topic is completely new,and the early
reaction of students is one of frustrationIn particular, first two topics (covered in
Chapters 1 and 2)in which some of the ‘givens’ must be recognised and dealt with in the design of a control system, frequently don’t make the impact on the students (AT THE TIME) that is desirable
Dr Anthony (contd)The Gap between student achievement and faculty
expectation reduces in Chapters 3 &4 when students begin to fit the earlier pieces together in specific CASE contexts.
The delayed student appreciation of the intellectual content and administrative importance of the course is unavoidable
Additional Case Studies(10 marks in paper and 20 marks in internal assessment plus theory is reinforced)
Class participationRegularity in attendence/studiesPerseverance