class1 110812
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MANAGEMENT CONTROL
SYSTEMS
Class 1The nature of Management control systems
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Todays contents
Exam
Motorola case
Syllabus
Management control system elements Motorola case
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Elements of a control system
Management: Performed by management
System: Prescribed and usually repetitious way
of carrying out an activity or a set of activities.
Control: Mechanism that allows to determine if aprocess is performing appropriately.
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Elements of a control system
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1. Detector.
Information aboutwhat is happening
2. Assessor.
Comparison withstandard
3.Effector.
Behavior alteration,if needed
Communication Network
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Why a Management control system?
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STRATEGY EXECUTION
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Planning and control System
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Object ives and
Strategies
Financial and non-Financial :
P&L Variances analysis
Balance Scorecard
ROI
EVA
Planning st ructure:
BudgetResponsabi l ity centers
Transfer prices
Compensat ion
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Why am I taking this course?
7Management Planning and Control SystemsCF2003
We want you to become Controller, CFOs
We want you to become Managers, not any Manager, General Managers
We want you to achieve your professional objectives
We want you to achieve your personal objetives
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Motorola case
Integrated Circuit- Chip
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The concept of strategy
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Profitability
Revenues- Expenses * RevenuesRevenues Investment
Maximizing shareholder value
Preserve company assets
Plans to achieve organization goalsDEFINITION
Process of deciding on the goals of the
organizations and the strategies for attaining
these goals.
STRATEGY
FORMULATION
GOALS:
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Management Control activities
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Planning what the organization should do
Coordinating the activities of several parts
of the organization
Communicating information Evaluating information
Deciding what, if any, action should be
taken
Influencing people to change their
behaviour
Strategy
Formulation
Management
Control
Goals
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Strategy Formulation
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Strategies are for :
1. The whole organization
(Corporate strategies)
2. Business units
Environmental
analysis
Competitor
Customer
Supplier
Regulatory
Social/Political
Internal analysis
Technology know-how
Manufacturing know-how
Marketing know-how
Distribution know-how
Logistics know-how
Opportunities andThreats
Identifyopportunities
Strengths andweaknesses
Identify corecompetencies
Fix internal competencies withexternal opportunities
Firms strategies
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Strategy FormulationCorporate Strategies
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Single-industry
Related diversification
Unrelated diversification
Degree of
Relatedness
Extend of Diversification
Where to compete?High
High
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Strategy FormulationBusiness units strategies
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1. Its mission: What are its overall objectives?
- BCG model and GE model provide a guide to corporations to
select its mission.
2. Its competitive advantage: How should the business unit compete
in its industry to accomplish its mission?
- Michael Porter Industry analysis and Value Chain analysis
Business units strategies depend on two aspects:
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Strategy Formulation
BCG Model
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Divest
Harvest
Hold
Build
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Strategy Formulation
GE Model
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Strategy Formulation
Industry analysis
Five Forces Michael Porter
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S
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Strategy Formulation
Industry analysis
Five Forces Michael Porter
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Management Planning and Control Systems
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Motorola mapping
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Management Planning and Control Systems
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Motorola- Questions
1. What are the key success factors for Motorolas ASIC Division?
2. Does a traditional standard cost system address these sucess factors?
3. What are good measures of these key sucess factors?
4. How would you control de plant using this measures and the current
structure of the plant?
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Conclusiones
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1. Un sistema de control se establece una vez definidas las metas u objetivos
2. Una vez establecido el objetivo,
se establecen las estrategias y se establece
el sistema de control que nos permitan
cumplir estas estrategias.
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3. La definicin de estrategias
puede apoyarse en las 5
fuerzas de Michael Porter, el
modelo BCG o el modelo de
cadena de valor de Michael
Porter
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Conclusiones
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4. Una vez definidas las estrategias implemento un sistema de control que me
permita asegurar que las estrategias se cumplan.
Considero lo siguiente:
Un detector:
Regularmente reportes que comparan informacin.
Indicadores
Algo que me muestre lo que est sucediendo
Un asesor:
Una persona o sistema que analice la informacin mostrada por el
detector y me diga si es bueno o malo
Un efector:
Una persona responsable que en caso que el resultado del anlisis
resulte negativo, tome una accin correctiva.
Un canal de comunicacin
Un mail
Una pltica
Una junta
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