Management Control System

1357 Words Mar 26th, 2014 6 Pages
Management control system (MCS), as a vital part of an organization, which purpose allows organizations to ensure that their activities achieve the objects they desire. The process of designing and improving MCSs requires addressing three basic questions. What is desired? What is likely to occur? And What is the effect of contextual factors ?Then managers must address each of these questions. What controls should be used?
In recent years, contingency-based research has maintained its popularity with studies including these variables but redefining them in contemporary terms. This paper provides a critical review of findings from contingency-based studies over the past 20 years, deriving a series of propositions relating MCS
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But the degree to which personnel and cultural controls are effective can vary significantly across individuals, groups, and societies. They also have limitation in addressing motivational problems. Personnel / cultural controls are sufficient only if the employees in the particular roles being considered understand what is required, are capable of performing well, and are motivated to perform well without additional rewards or punishments.
The environmental uncertainty, It has been long established in the literature that the external environment exerts a strong influence on the design of MCS (Duncan, 1972; Fisher, 1996;Gordon & Narayanan, 1984; Sharma, 2002). At a fundamental level the MCS is designed to address decision-makers informational needs, which are known to be influenced by the nature of the external environment. MCS are an instrument used by organizations to reduce uncertainty and insulate against changes in the environment (Abernethy & Stoelwinder, 1991; Flamholtz, 1983; Thompson, 1967).. As organizations face increasingly uncertain environments they will tend to increase their use of new MCS techniques, since these techniques have been developed in recent years and are therefore more likely be able to address contemporaneous organisational needs. Activity based costing, balanced scorecard, economic value added, and benchmarking are examples of MCS techniques that have

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