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39 Cards in this Set
- Front
- Back
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Organisations are collectives of people who join together in common pursuit of shared goals What is distinguishes organisations from other collectives (families or social groups)? |
Goal-orientation and formalisation of structure
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Systems theory was developed from the work of a biologist called ? How many levels of complexity has his work been classified? |
Ludwig von Bertalanffy, 9 |
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Systems theory has been the foundation for much of the theory of management accounting control systems as well as non-financial performance measurement. What does systems theory emphasises? |
The importance of hierarchy in complex systems. Systems are composed of multiple sub-systems.
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Organisations exist in an environment of markets for products and services where resource suppliers, producers and customers meet. What are some other environmental factors for organisation |
+political, +economic, +technological, +environmental +social and cultural factors |
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Systems theory separates the organisation from its environment. These boundaries are not always clear as organisations carry out a lot of boundary-spanning activity such as ?
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+ market research, + lobbying with government, + benchmarking with competitors + working with community groups. |
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What is a Closed System?
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A set of inter-related components that is separate from its environment.
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What is an Open system?
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Open systems are capable of self-regulation when they have more than one part and contain a programme. In simple terms, a programme is pre-determined information that guides subsequent behaviour. A programme exercises control through the processing of information and decision-making. |
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what are the three levels of control in a cybernetic organisation
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1. Target - Setting (KPI's, Sales Targets) 2. Operations (Staff Levels, Productivity) 3. Control (Quality control) |
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Organisations establish targets in order to achieve their goals and objectives. These targets for a business organisation will typically be related to the achievement of shareholder value, a financial measure or a non-financial measure. Give some example of targets |
Financial - Economic Value Added - Return on Investment Non Financial -Market Share - Customer satisfaction -Product Quality - Employee Morale
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What is the operational level of control concerned with?
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Converting inputs (materials, labour, technology) into outputs (products, services)
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Control may be carried out through two systems. What are they? |
Closed loop system there is no provision for corrective action, as no human action is involved Open loop system there is a provision for corrective action applying either a feedback or feed forward process. |
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A control is a method of ensuring that targets are achieved and performance standards attained. Control as it is used in the context of a 'control system' is the power to? |
Directing or restraining, a means of regulation and a standard or comparison for checking
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However, feedback and feed forward processes do not work for non-cybernetic systems, because objectives are ambiguous, outputs not measurable or the effects of interventions unknown. How are Non-cybernetic system controlled |
Through intuition, judgement and the exercise of power and influence.
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What is Feed Forward control?
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The Process of Forecasting differences between actual and planned outcomes and implementation of action before the event.
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What is Feedback control?
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The Measurement of differences between planned outputs and actual outputs achieved and the modification of subsequent action and or plans to achieve future required results.
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What are the three types of Feedback
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Positive Feedback (better than plan) Negative Feedback (worse than plan) Double Loop Feedback (wrong plan) |
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What are the 5 major standards against performance can be compared?
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1. Previous time period 2. Similar organisations 3. Estimates of future organisation performance 4. Estimates of what might have been achieved 5. Performance needed to achieve defined goals |
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In Management control System what is Control ?
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The Ability to direct the financial and operating polices of an entity with a view to gaining benefit from its activities
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In Management control System what is Management Control ? |
All of the processes used by manager to ensure that the organisational goals are achieved and procedures adhered to, and that the organisation responds appropriately to changes in its environment. |
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In Management control System what is Control Environment ? |
This is the overall attitude, awareness and actions of the directors and management style and corporate culture and values shared by the employees. It provides a background against which the various other controls are operated.
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In Management control System what is Control Procedures ? |
Control Procedures are those policies and procedures in addition to the control environment which are established to achieve the entities specific objectives
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How did Anthony (1965) define management Control?
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The process by which managers assure that resources are obtained and used effectively in the accomplishments of the organisation's objectives
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Anthony's (1965) classic categorisation of control was at what three levels?
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Strategic control: Strategic control exists at the board and chief executive level. Control enviroment Management control: Management control takes place at the middle management level. Responsibility centres and non-financial information systems Operational control: Operational control takes place at the task level of day-to-day activity, where structured and repetitive activities take place. Control is via short-term data such as workloads, volume of processing and output data. |
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Otely & Berry's model of management control was developed on the cybernetic control process that involved what four conditions?
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1. The existence of an objective which is desired
2. A means of measuring process outputs in terms of this objective 3. The ability to predict the effect of potential control actions 4. The ability to take actions to reduce deviations from the objective |
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Otely & Berry's model of management control involved the creation of Predictive Model process. this actual output not the same as expected output four things could happen what are they? |
1. change inputs (First -order control) 2. Amend objectives (second-order control) 3. Amend Model of process (internal learning) 4. Change process (systemic learning) |
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What was Simon Model of Management Control
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Management Control Systems are the methods by which information could be used to maintain or alter patterns in organisational activity
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Emmanuel et al. 1990 said ... Organisational structure is a potent form of control because by arranging people in a hierarchy with defined patterns of authority and responsibility a great deal of their behaviour can be influenced. the organisational form is a result of what five variables |
Task People Structure Reward system Infromation and decision Process |
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What is Functional structure?
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The functional structurelocates decision-making at the top of the organisational hierarchy, with functional responsibilities for marketing, operations, human resources, finance, and so on allocated to departments.
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What is Divisional Structure?
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The divisional structure is based on a head office with corporate specialists supporting the chief executive, with divisions established for major elements of the business. These divisions may be based on geographic territories or different products or services. Each division will typically have responsibility for all the functional areas: marketing, operations, human resources and accounting.
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What is Matrix Structure?
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Matrix structures are a combination of functional and divisional forms, with dual reporting to a functional manager as well as a product or service group manager. A matrix structure may be appropriate when an organisation has a wide geographic spread
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What is Revenue centre? and it's method of control?
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Revenue centre mainly generates revenue with relatively little cost (e.g sales team) Sale variance Sale price variance Sales Volume Variance |
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What is a cost centre? and it's method of control?
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Generates cost but no revenue. (accounts team) Labour efficiency Labour rate Material Prices Fixed and variable overhead measures |
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What is a Profit centre? and it's method of control?
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Part of business that generates cost and revenue. Manufacture plant Gross Profit, contribution margin |
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What is Investment Centre? and it's method of control?
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A division of the company that manger control the acquisition and utilisation of assets as well as revenue and cost Return on investment, residual income |
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Return of investment used to evaluate investment centres can be used in which two ways?
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Capital Turnover ratio (Sale / investment) Profit Margin on Sales (Net Income / Sales) |
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How do you calculate Residual Income?
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RI = Income - Cost of Capital
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What is Goal Congruence?
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Is that state in a control system which leads the individual or groups to take actions which are in their self interest and also in the best interest of the entity
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Give two way you could increase capital turnover
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1. Increase sale with same investment base 2. Decrease investment base with same sale levels |
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Give three ways you could increase profit margin (Return on sales)
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1. Reduce cost without reduction in sale 2. Increase prices with no change in sales 3. Increase sale without any increase in prices or cost |
