TABLE OF CONTENTS:
2. Definitions of Management Control System (MCS)
3. Definition of Strategy
4. The interrelationship between Management Control System and Strategy
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 MCS should be tailored explicitly to support the strategy of the business to lead to competitive advantage and superior performance (Dent, 1990; Samson et al., 1991; Simons, 1987a, 1990).
2. DEFINITION OF MANAGEMENT CONTROL SYSTEM:
Many scholars have definitions for Management Control System (MCS). MCS have been defined as process for influencing behaviour (flamholtz et al., 1985). Management control systems are viewed typically as tools of strategy implementation (Simon, 1991). More analytical, MCS are broadly defined as the formalised routines and procedures using information to maintain or alter patterns in organisational activity, and include formalised information-based processes for planning, budgeting, cost control, environmental scanning, competitor analysis, performance evaluation, resource allocation, and employee rewards (Simon, 1987a, p. 49).
3. DEFINITION OF STRATEGY:
There are many definitions of strategy, for instance strategy has been described as a pattern of decisions abou...
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Johnson, G. & Scholes, K. (1989): Exploring Corporate Strategy: Text and Cases. London: Prentice-Hall.
Kober, R. et al. (2007): The interrelationship between management control mechanisms and strategy. In: Management Accounting Research, 18: 425-452.
Miles, R. W., & Snow, C. C (1978): Organizational Strategy, Structure, and Process. New York: McGraw-Hill.
Mintzberg, H.(1978): Patterns in Strategy Formation, Management Science, pp. 934-948.
Roberts, J. (1990): Strategy and Accounting in a U.K. Conglomerate, Accounting, Organfratfons and Society , pp. 107-125.
Simons, R. (1994): How new Top Manager Use Control Systems as Levers of Strategic Renewal. Strategic Management Journal, Vol. 15, No. 3, 169-189.
Simons, R. (1990): The Role of Management Control System in Creating Competitive Advantage: New Perspectives. Accounting, Organizations and Society 15, 127-143.
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