The Effect of Business Strategy and External Environment on Management Control Systems

3336 Words Oct 18th, 2012 14 Pages
International Journal of Business and Social Science

Vol. 2 No. 13 [Special Issue - July 2011]

THE EFFECT OF BUSINESS STRATEGY AND EXTERNAL ENVIRONMENT ON MANAGEMENT CONTROL SYSTEMS: A STUDY OF MALAYSIAN HOTELS Sofiah Md Auzair Senior Lecturer School of Accounting Faculty of Economics and Management Universiti Kebangsaan Malaysia, Malaysia E-mail: sofiah@.ukm.my, phone: 03-89213745 Abstract
This study was undertaken to investigate the use of Management Control Systems (MCS) in Malaysian hotels. MCS was conceptualized as Action/Results controls, Formal/Informal, Tight/Loose controls, Restricted/Flexible, Impersonal/Interpersonal controls and Financial/Non Financial information to represent management control bureaucracy. The
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Section 4 sets out the methodology of this study including a discussion on measurement of the variables. Section 5 reports the findings of this study. Section 6 summarises the study, identifies the limitation and suggests areas for future research.

2. Literature Review
Hotels face great competition from one another in the attempt to attract and maintain customer. The survival and success of hotel businesses thus, will depend on managers‟ endeavor towards meeting their customers‟ expectation. 236

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Damonte et al. (1997) contended that, an appropriate information system in a hotel can help managers satisfy their customers‟ expectations and achieve organizational goals. It must be acknowledged however, due to the level of uncertainty in the work faced by managers, empirical evidence available in the manufacturing industry may not be directly applicable to hotel industry (Mia and Partiar, 2001). It is also important for managers in the hotel industry to understand the business strategy in order to achieve competitive advantage. It has been suggested that the management control system (MCS), as a system that provide information to business, should be tailored explicitly to support the strategy of the business to lead to superior performance (Langfield-Smith, 1997). The design of MCS in hotels should also consider the external

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