MANAGEMENT CONTROL SYSTEM AS A MEANS OF ACHIEVING ORGANIZATIONAL OBJECTIVES
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MANAGEMENT CONTROL SYSTEM AS A MEANS OF ACHIEVING ORGANIZATIONAL OBJECTIVES
Chapter one
INTRODUCTION
1.1 Background of the Study
Management Control Systems (MCS) are the processes via which managers guarantee that resources are procured and used effectively and efficiently to achieve the organization’s goals.
MCS is a system used in an organisation to gather and use information to evaluate the performance of organisational resources, which will eventually impact the organization’s behaviour in implementing organisational plans (Armesh et al. 2010).
The phrase “management control systems” refers to the use of a variety of strategies in organisations to monitor and evaluate employee performance in relation to specific management objectives.
As a result, traditional management control systems focus on increasing operational efficiency. However, as operational efficiency is no longer sufficient to build long-term competitive advantages, management control systems must be expanded to managerial practices that encourage employee cooperation and creativity in the discovery and creation of new businesses.
opportunities. This is especially true in high-tech industries confronted with globalisation issues, where employee teams must balance effective communication with inventiveness. Simons (1987 and 1990) stated that control systems are classified into four groups, namely
Diagnostic control systems
Boundary Control Systems
3. Interactive systems.
Belief systems.
organisations have lately identified four main management control systems as useful types of controlling systems; nevertheless, organisations must implement them in a way that maximises operational effectiveness while not constraining employee innovation.
This work can be completed by utilising diagnostic measures to increase operational effectiveness and the other three types of control measures to reduce the negative effects on employee creativity (Kimura & Mourdoukoutas, 2000).
Here, we see the role of competition as a potent instrument to influence MCS. As rivalry in global sectors heats up, traditional competitive strategies centred on operational efficiency are insufficient to provide long-term competitive advantage.
They must be supplemented with tactics that promote collective entrepreneurship, i.e., techniques that enable employees to identify and capitalise on new business prospects.
To implement such tactics successfully, businesses must successfully combine four different control systems: the beliefs system, the interactive system, the diagnostic system, and the boundary system.
The beliefs system should be used to define a corporation’s character and mission, as well as to establish parameters for performance goals and appropriate staff behaviour in achieving them.
The interactive system should be used to adapt organisational guidelines to changing market situations, whereas the diagnostic and boundary systems should be utilised to establish standards for increasing efficiency and innovation (Armesh et al. 2010).
One of the most crucial aspects of management is control. Managers must exercise control (Fayol, 1949).The management control system (MCS) is a tool for regulating in administration.
Obviously, managers require criteria to determine and control their performance. In this scenario, measuring performance is a crucial aspect of control. As a result, a system for providing execution-related information is required.
MCS assists managers in gathering information and ensuring that employee performance and behaviours are aligned with organisational objectives.
1.2 Statement of the Problem
Management control is an important role of organisations. Management control issues can result in significant financial losses, reputational damage, and even organisational failure.
Organisations without adequate management control have a low chance of success. Resources are easily mismanaged when there is no effective management control, which has a detrimental impact on the achievement of organisational goals and objectives.
Furthermore, weak managerial control reduces the organization’s operational efficiency. Employees may perform below expectations since there is no management control mechanism in place to regularly review their performance and maximise productivity. Employees do not cooperate when there is no management control.
1.3 Objectives of the Study
The study aims to achieve the following objectives:
To determine the function of the management control system in achieving organisational objectives.
To investigate the impact of management control systems on the organization’s efficiency.
To identify the functions of the management control system.
To demonstrate the importance of a management control system in organisations.
1.4 Research Questions.
The following research questions were generated based on the study’s objectives:
What is the role of management control systems in achieving organisational goals?
What impact does a management control system have on organisational efficiency?
What are the functions of management control systems in organisations?
What is the significance of management control systems in organisations?
1.5 Statement of Hypothesis
As a guide to meet the study’s objectives, the following hypothesis were developed:
Ho: The functions of management control systems in achieving organisational goals do not aid in monitoring employee performance, reducing financial losses, or managing organisational resources effectively.
Ha: Management control systems help to monitor staff performance, reduce financial losses, and manage organisational resources efficiently.
Ho: Management control systems have an impact on organisational efficiency by allowing for effective control of everyday activities and the rapid achievement of organisational goals.
Ha: Management control systems have an impact on organisational efficiency by allowing for effective control of everyday activities and the rapid achievement of organisational goals.
Ho: The functions of an organization’s management control system do not include resource management, activity planning and monitoring, or performance measurement.
Ha: The functions of an organization’s management control system include resource management, activity planning and monitoring, and performance measurement.
Ho: The importance of a management control system in organisations is not to promote organisational growth, avert insolvency, or improve organisational image.
Ho: The importance of management control systems in organisations is to promote organisational growth, prevent insolvency, and improve the organization’s image.
1.6 Significance of the Study
This research endeavour is expected to be significant in the following ways:
It will assist in demonstrating the significance of management control systems in organisations.
It will allow organisational management to understand the responsibilities that management control systems play in achieving their objectives.
The study will promote the use of effective management control systems in organisations.
The work will be a valuable resource for other scholars looking for related information.
1.8 Limitations of the Study
The study’s limitations included the following:
Financial Factor: Inadequate money influenced data collection because the researcher had to travel vast distances to distribute the research questionnaires.
Time Factor: Because the researcher only had two months to finish the study, the size of the sample used was reduced.
Material Issue: A lack of appropriate materials for the literature review constituted a significant challenge.
The study was also confined to data acquired from primary and secondary sources.
1.9 Organisation of the Study
In this research study, the researcher looked critically at ways for managing the survival and growth of SMEs, using a case study of chosen SMEs in Uyo Urban. The research was organised into five chapters.
The first chapter discussed the study’s history, as well as the problem statement, study objectives, research questions, hypothesis statement, relevance of the study scope and limitations, study organisation, and term definitions.
Chapter two examined the relevant literature on the subject and the contributions of various authors.
The fourth chapter covers data presentation, analysis, and interpretation, as well as a discussion of the findings.
Chapter five (5) contains the researcher’s summary, findings, conclusion, and suggestions.
1.10 Definition of Terms.
Management
Control:
Management Control System
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