Management Planning And Control Essay

1410 words - 6 pages

The rapid economical development and civilization progress, as well as technological innovation and globalization have encouraged the need for mgt control arising to give companies the opportunity of greater growth and expansion than what have been possible earlier. Since Weber's golden age, the strong belief in bureaucracies has been torn down. Burns & Stalker (1961) suggested that bureaucracies limited effectiveness and flexibility of post-industrial and fast-pace businesses. This reform in organizational structures has also exerted significant influence on the evolution of management control system (henceforth MCS). The development of the modern capitalism economy provides a rich ...view middle of the document...

For implementing MCS it is necessary to be aware of what is desired from the MCS and what is likely to happen while utilizing the MCS. As described by Merchant and Van der Stede(2012) the need for MCS can be categorized into three class: 1. lack of direction 2. motivational problems 3. personal limitations Lack of direction might lead to the situation where the individuals do not know what are expected for them. Motivational problems might caused by the conflict between individuals' and organization's interests. Personal limitations might prevent individuals from achieving targets. The primary focus of the MCS must be put on the areas where the control problems might occur, then two fundamental decisions (i.e. the choice of controls and the degree of tightness or looseness) must be made as a result. Four mgt control alternatives ( i.e. result controls, action controls, personnel and cultural controls) are stated by Merchant and Van der Stede(2012), and the efficiencies of which can be adjusted and controlled by the tightness or looseness. As specified, a tight result control system must include result dimensions congruent with the organization’s true objectives, specific performance targets, feedback in short time intervals and effective communication of the desired result ( Mechant & Van der Stede, 2012). As I will argue

below, I think that all these factors are met at the stores of TML. Firstly, TML uses cost control to lower costs and increase profits so as to raise the level of enterprise and enhance its core competitiveness. Furthermore, inventory management models are adopted to reduce total supply chain costs and improve supply chain operational efficiency and increase profits. Besides, non-financial measures such as customer satisfaction index are put to use to enable them to overcome various deficiencies of financial measures to increase customers' satisfactory level. As argued by Otley (1999), the current literature of MCS studies has focused excessively on simply examining financial performance implications. He believes that it is not adequate to give “a sufficiently rich picture of the internal activities of organisations to provide reliable guidance to the designers of management control systems”. Secondly, as a specific method of performance management, target management has been proved to be an ideal way guiding employee’s performance in TML. The shopkeeper of per store has even set themselves an ambitious performance target , e.g., operating profit, now less than 3% of revenues, is to be 10% of revenues by 2015. Thirdly, TML increases the frequency of the feedback loops through 24-hour-avaliable online feedback from both employees and customers in the problem areas for the reason that short feedback loops is able to enhance control. An independent department deals with these feedbacks and updates relevant plans. Lastly, the results are communicated effectively through regular meetings per week. Because TML recognizes that...

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