Organizational Size and Management Control Systems Essay

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Management Control Systems Vary According to Organizational Size

All organizations go through different life cycle stages: even the largest multinational was once a relatively small entity, usually-based domestically, with a relatively narrow range of customers. This variation in terms of organizational size and scope of mission generates the need for different types of management control systems. "Service control systems might need to change throughout the life cycle to fit in with changes in the competitive environment, business mission and generic strategy. Failure to account for the stages of the life cycle in budgetary policies has been found to result in inefficiencies of resource allocation" (Auzai 201056). For example, a small entity might find that relatively inexpensive marketing efforts are necessary in relation to its other, more immediately pressing financial needs. Word-of-mouth advertising and general, low-cost methods of promotion such as free social media content might be sufficient -- in fact, too aggressive a marketing campaign might prove unwise if demand quickly exceeds the ability of the entity to serve the public (such as a restaurant that grows 'hot' too soon and has trouble meeting the needs of a rapidly-expanding clientele). But as it grows, marketing allocations might change: using television or more costly efforts might pay off in greater dividends: conversely, local strategies of raising customer awareness might be less useful as the organization grows more broad-based in its orientation.

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Other control systems, such as the learning, growth, and development of employees are affected by organizational size. Training of employees for a small entity is less critical if the initial employees are members of the founding team and have a clear idea of the organizational mission already. But as the entity becomes larger and more bureaucratic, understanding of the central mission cannot be assumed. The mission itself might change from simply serving specific customer needs to slightly altering the scope of its focus, based upon the different countries the company is based within. For example, Starbucks might promote itself as a midmarket European coffee 'experience' in America, stressing the ambiance of its stores but in other countries its ground coffee and instant coffee might make up a greater proportion of its revenue and thus demand a different system of metrics to track its relative successes and failures.

Greater boldness is often necessary for newer firms, to demonstrate the novelty of its product or service. In contrast, "mature firms,….....

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