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MANAGEMENT CONTROL

SYSTEMS

Class 1The nature of Management control systems

1Management Planning and Control SystemsCF2003

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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

4

1. Detector.

Information aboutwhat is happening

2. Assessor.

Comparison withstandard

3.Effector.

Behavior alteration,if needed

Communication Network

Management Planning and Control Systems

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Why a Management control system?

5

STRATEGY EXECUTION


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Planning and control System

6

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?


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

9

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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BCG Model

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Divest

Harvest

Hold

Build

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GE Model

15Business Strategies

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Industry analysis

Five Forces Michael Porter

16

S

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Industry analysis

Five Forces Michael Porter

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CF2013

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Motorola mapping

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CF2013

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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.


CF2003

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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Documents

Class1 110812