Management Control Systems Essay

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Management control systems" Kenneth a. Merchant Wim A. Van der Stede Part A completed.

In order to properly evaluate the established management control system, it is important to organize regular reviews that can be implemented company-wide every three or six months. This type of reviews will evaluate the management control system instruments based on several key indicators: the degree to which the control system was able to discover, in due time, a potential problem in the organization; the direct cost savings that the control system was able to create; the direct financial gains that the system made and whether the management control system that has been implemented is aligned with the company's strategic objectives.

For each of the management control system instruments that have been implemented, the indicators can be customized so as to reflect the specific area of activity.

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For example, the financial indicators can be customized to show the way revenue has varied. However, the indicators should also be flexible enough so as to be aligned with the company's strategic objectives: if the company's goal has been to increase its market share, then the fluctuation of the revenues for a given period of time may be irrelevant.

The reviews underscored several key observations. First of all, the costs that the management control system in place incurs are significant and there are several reasons for this, including the fact that this is a global organization and that the system is holistic, involving a large number of human and financial resources.

Second, the role of the management control system is to show potential problems in time and to allow for….....

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