ASSIGNMENT 1: THE INTERRELATIONSHIP BETWEEN MANAGEMENT CONTROL SYSTEMS (MCS) AND STRATEGY.
TABLE OF CONTENTS:
1. Introduction
2. Definitions of Management Control System (MCS)
3. Definition of Strategy
4. The interrelationship between Management Control System and Strategy
5. Conclusion
6. References
1. INTRODUCTION:
This assignment examines the interrelationship between management control systems (MCS) and strategy. The conventional view is that the MCS is shaped by organisational strategy, where as more contemporary researches suggest that there may be two-way relationships between the two variables. Recently, there has been interest in the relationship between management control system and strategy, however it has been suggested that the
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Corporate strategy is concerned with decisions about the types of businesses to operate in, including what businesses to acquire or divest, and how best to structure and finance the company (Johnson & Scholes, 1889, p. 9). It is concerned with the way resources are focused to convert distinct competences into competitive advantage (Andrews, 1980, pp. 18-19). Johnson (1987, pp 4-5) stated that strategic decisions occur at many levels of managerial …show more content…
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The literature suggested that “Rapid changes in the external environment of organisations have been accompanied by calls for accountants to change the nature of information they provide, the skills they possess and the role they play in the organisation. The proposed changes, which are encapsulated under the phrase accounting for strategic positioning or strategic management accounting are two pronged. On one hand accountants are required to reposition themselves in the organisation hierarchy where they will be involved in the formulation, implementation and choice of strategies. Accountants are also being urged to adopt a range of techniques whose emphasis is futuristic and external to the firm especially emphasizing the importance of monitoring customers and competitors.” (Nyarnori, 2000). Based on my studies on the industry of stock brokerage, I agree with the statement that “The tools and techniques that were covered in the Strategic Cost Management and Strategic Business Analysis courses are very useful in providing decision oriented information to senior management in my organisation and such information will ultimately enhance its corporate value.” The essay (How Porter’s Five Forces Model shapes strategy for a new and small-size stockbroker) may be one of applications of those techniques learnt from the Strategic Cost Management and Strategic Business Analysis .
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Numerous definitions of strategy exist, in most circumstances strategy can loosely be explained as an overall plan of deployment of resources to ascertain a favourable position within a market (Zablah, Bellenger and Johnston 2004; Grant 1994, p 14). Further, imbedded in many successful organisations are strategies, the importance of which is to remain relevant in the market, and successful in the various attributes of business; profiteering, employee motivation, maintaining sustainable core competencies, effectiveness in operation, or efficiency in the conduction of operations. Therefore challenges involved in the formulation and implementation of a strategy can revolve around the overall external market, as well as internal
Thompson, A. A., Strickland, A. J., & Gamble, J. E. (2008). Crafting & executing strategy: The quest for competitive advantage (16th ed.). New York: McGraw-Hill Irwin.
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In business, management can be defined as (1) the pursuit of organizational goals efficiently and effectively by (2) integrating the work of people through (3) planning, organizing, leading and controlling the organization's resources. Management is a theory and a way of doing business. It is a process that is exercised in order for an organization to be successful. This process is generally broken down into four established functions: planning, organizing, leading, and controlling. Management is the function that determines how the organizations human, financi...
Ackoff identifies five assumptions commonly made by designers of management information systems (MIS). With these assumptions, Ackoff argues that these assumptions are in most cases not justified cases, and often lead to major deficiencies in the resulting systems, i.e. "Management Misinformation Systems." To overcome these assumptions and the deficiencies which result from them, Ackoff recommends that management information system should be imbedded in a management control system.
Over recent years companies have become less dependent on paper and more dependent on technology. Take American Honda Motors for example; the Davenport Parts facility recently converted computer systems to more efficiently manage its inventory. Prior to its new system months of preparation was needed in order to ensure a smooth change over. Without the four basic functions of management all working together success would not have been possible.