Why Firms Should Not Be An Effective Functioning State Of The Corporations

1647 WordsDec 4, 20167 Pages
Nowadays, most markets are developing into progressively dynamic, thus business corporations encounter accelerating change of business environment. As stated by Ashurst & Doherty (2003), the importance of firms to act in the optimum capabilities increasing because of globalisation and other market factors that boost the competition. Therefore, firms need to imply the best control method to achieve this target. Significantly, the objective of the firms should parallel with the actual state of affairs of a business to maintain effective functioning state of the corporations. Merchant (1982) emphasises the need of control to reassure desirable actions and prohibit inadmissible behaviour. There is a lot management control, including financial and non-financial factors. Ittner and Larcker (2000) stress the limitations of control system based on financial data to measure company performance and support the statement by the survey of U.S. financial services firms. Most of the institutions not satisfied with traditional financially oriented, thus made an extensive change in the control system during the past two years. Therefore, this paper is strongly believed that firms should not rely on quantitative targets in uncertain environments. Thus, this essay aims to evaluate a management control system (MCS) as a package from contingency theory viewpoint and further assess the challenges and solution towards that control. There is a range of ways researchers define MCS.

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