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8/12/2019 Management Control Systems in Japan
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Management Contro
Systems in JapanMatsushita Electric Industrial, Ltd.
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Presented By
Patrick Kanny Sarkar (801)
Md. Awlad Hossain (815)
Rayhan Ahmed (820)
Md. Nafeesur Rahman Khan (821)
Md. Shakhawat Ullah (825)
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What is Management Control
An abbreviated phrase for management planning and cont
A Mechanism for managers to control their subordinate manachieving organizational goal.
A process supported by many systems but management accprimary one.
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Management Control at Matsus
Divisionalized system first launched in May 1933
The system invented in USA but Matsushita invented the systethe same time.
The system was created from the notion of Optimally scaled
Basically a decentralized system.
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Management Control at Matsus
The company has many kinds of management control or ma
accounting system, they can be classified in two ways,
TopManagement
(President)
Divisional
managers
Departmentalmanagers
Control tools
Control tools
1. Divisional
2. Internal c
3. Monthly a
1. Budget sys
(Departmen
2. Monthly a
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Divisional Planning System
Each division prepares its own plan
Corporate plan of the whole company is prepared form the
One year plan
Outputs of the plan,
Production Plan
Sales Plan
Budgeted income statement
Capital Expenditure Plan
Budgeted Fund Statement
Budgeted Balance Sheet
Working Capital Sheet
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Divisional Planning System There some steps in divisional planning process,
Announcement ofbasic corporate
policy
Instruction ofdivisional planning
guideline
Preparation of eacdepartmental plan
Preparation ofproposed
departmental
budget
Preparation ofproposed divisional
budget
Authorized divisionalplan
(budget)
Authorizeddepartmental plan
(budget)
Checking anddetermining
divisional plan
Handing over thedivisional plan
outline
(king sealed doc.)
Instruction ofdivisional planning
policy
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Divisional Planning System Accounting Staff for Centralized Management
Number of staffs is about 1500 (only 100 work for central accoun
the rest work for divisions and profit centers).
Monthly evaluation system
Staffs from corporate level and divisional level collaborate to ma
to measure monthly results of the division.
Supports various departments within a division by providing nece
prepare departmental plan.
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Divisional Planning System
Damlike Management and Nondebt Policy
Independent Business
Has no bank loans
A company should have buffer in every aspect of business (humantechnology, inventory)
Excess liability can may cause poor performance
Profit management and fund management
Increase of profit
Management of A/R, A/P
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Internal Capital Internal capital for a division is some of fixed assets and working
the division.
To measure working capital (current asset, current liability) a staapplied against which actual amount is compared and judgedCapital=Standard working capital + fixed assetsreserves.
Internal capital is given by central office to the divisions
Rules of internal capital system,
1. Structure of internal capital
2. 1% interest charge for internal capital to central office in each mon
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Internal Capital
3. 3% of sales must be paid to central office by divisions to cover e
should be 10% of sales after the payment.
4. 60% of net profit should be deposed of as dividends and taxes a
earned surplus. Dividends and taxes should be paid to central o
5. Additional investment for the fixed assets and working capital shdivisional own fund
6. If the fund is insufficient division can borrow from central office.
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Evaluating Division ManagerPerformance
Annual Accounting Settlement
Divisional Managers performance is evaluated in terms of profit relative to
There are four ranks (Rank A not less than 9%, Rank B not less than 6%, Ran
4% Rank D less than 4%)
If Rank D persists for 2 years at a division the manager is transferred.
Monthly Accounting Settlement
Calculated almost in the same way as the annual settlement
Calculated for each division on the twentieth of the month
Comparison of budgeted plan and actual plan
It is used by top management to measure the performance of divisions and
to measure the performance of the respective departments.
Performance is compared with that of prior three years and projected three
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Evaluating Division ManagerPerformance
Monthly Accounting Settlement
Has two purposes (1. Profit Management, 2. Invigorating the divis
managerial consciousness in each responsible person in the bud
Steps to achieve this goals are,
Measuring results
Finding Problems
Sharing problems with the concrened managers
Resolving the problems
Examining the results of the improvements
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Performance Check Meeting
Participative approach.
Responsible persons from all budget units meet a meeting whperformance is checked.
Identifies the reason for the inefficiency (except human recomachine factors)
Dialy analysis of results and corrective actions.
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Budget system for cost control
Departmental budget for each division.
Subsystem of overall divisional system
Cost control from input side Cost control from output side
Labor or Machine rate
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Budget system for cost control Procedure for preparing the divisional plan using the budget system are a
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