Evolution of Mgt.

Control System
MCS is highly influenced by BEHAVIOR
of the people involved in it.

Organizational Structure &

Style
Leadership Style

Organizational Behavior
Organization’s Strategy

Hence MCS evolved simultaneously along with

developments in these areas.

October 17, 2008 hmahesh45@yahoo.com, VIM Pune 1

Evolution of Mgt. Control System
Phase 1

• Functional set up of organization

–for reasons of economies of scale .

• Difficulty in measuring the performance

- attributing the individual functional
department’s performance to overall goal.
• Lead to difficulty in control.

• Planning and controlling concentrated at

top.

October 17, 2008 hmahesh45@yahoo.com, VIM Pune 2

Evolution of Mgt. Control System
Phase 2
• Evolution of Business Unit structure.
SBU

• Planning & control decentralized.

• Focus of control became more

specific.

• Though BU’s functional departments

remained under its operational
control
October 17, 2008 hmahesh45@yahoo.com, VIM Pune 3
Evolution of Mgt. Control System
BU control benefited from autonomy
granted by top mgt. Thereby Control
System got improved – on account of …
….
 Speed, Quality of decision improved.
 Top mgt. now can concentrate on broader issues.
 Enhanced profit consciousness
 Provided training ground in General management.
 BU mgr is relieved of constraints.
 Performance of BU become easier to evaluate by top
mgt.
 Lead to competitive pressure on BU mgr.

October 17, 2008 hmahesh45@yahoo.com, VIM Pune 4

Evolution of Mgt. Control System
But BU simultaneously it posed following
problems
 Top mgt. may feel it as loosing control.
 Availability of competent BU mgrs.
 Co operation among BU’s become difficulty.
 Friction among BU’s – e.g. transfer price.
 More emphasis on short term/BU goal.
 Additional cost of operation due to duplication of
activity at various BUs’.

October 17, 2008 hmahesh45@yahoo.com, VIM Pune 5

 Thank You.

October 17, 2008 hmahesh45@yahoo.com, VIM Pune 6