Subject :Business performance measurement
1. Explain the role of Management control systems? (please give at least 8 to 9 points for role )
2."Responsibility centres are effective in measuring performance" elaborate this statement with
a)methodology of responsibility centres
b)types of responsibility centres and
c)Organisation structure of responsibility centres ?
3.Explain the role of the information systems in management control system?( please give at least 8 to 9 points for role)
4. "All management control systems are effective " ?discuss with the suitable example? (please answer in 200 to 250 words)
Management control systems help in aiding a company towards achieving its strategic objectives. Secondly, they help the company be innovative and creative; giving it a competitive advantage. Thirdly, management controls help managers implement their desired changes towards the strategic plan, and help plan, staffing, organize, and direct the company. Lastly, management control systems identify errors and take corrective measures to ensure the company goals are achieved.
Responsibility centres are useful in measuring performance since it focuses on a specific aspect and ensures its maximization. It ensures broader freedom and control of action that decision centre managers can make informed decisions and be held responsible for the consequences of their decisions. They co-relate from one responsibility centre to another, and thus senior executives can identify the reason for non-performance or excellent performance. There are four key responsibility centres: profit centre, revenue centre, cost centres, and investment centres. The organization structure of responsibility centres is decentralized since all operations are allocated their line managers for the four responsibility centres.
Information system helps in strategic planning, operational control, and transaction processing in management control systems. It further helps in data processing in a transaction, data analysis, and gives the status of a particular record and reference of the desired document.
All management control systems are effective since controls are at every focal point of inputs, processes and outputs. The management control system helps the company in achieving the desired goal. They mostly are accurate as they generate precise data and information, timely since they require immediate action. Controls ensure that the information reaches the critical decision-makers on time when they require it.
Management control systems are not rigid but relatively flexible to allow for proper planning. They should be acceptable to all concerned stakeholders to avoid frustration from workers. They are typically planned to allow for integration, economic feasibility, strategic placement, and corrective action. These factors make the management control systems to be beneficial in the long run.