Inhoud
H1. Management control. ....................................................................................................................... 5
1.1. Management and control. .......................................................................................................... 5
1.1.1. Objective setting. .................................................................................................................. 5
1.1.2. Strategy formulation. ........................................................................................................... 5
1.2.3. Management control versus strategic control. ................................................................... 5
1.1.4. Behavioral emphasis. ............................................................................................................ 6
1.2. Causes of management control problems. .................................................................................. 6
1.2.1. Lack of direction. ................................................................................................................... 6
1.2.2. Motivational problems.......................................................................................................... 6
1.2.3. Personal limitations. ............................................................................................................. 6
1.3. Characteristics of good management control. ........................................................................... 6
1.4. Control problem avoidance. ........................................................................................................ 7
1.4.1. Activity elimination. .............................................................................................................. 7
1.4.2. Automation. .......................................................................................................................... 7
1.4.3. Centralization. ...................................................................................................................... 7
1.4.4. Risk sharing. .......................................................................................................................... 7
1.5. Control alternatives. ........................................................................................................................ 7
H2. Results controls. ............................................................................................................................... 8
2.2. Prevalence of results controls...................................................................................................... 8
2.3. Results controls and the control problems. ................................................................................. 8
2.4. Elements of results controls. ....................................................................................................... 8
2.5. Conditions determining the effectiveness of results controls. .................................................... 9
2.5.1. Knowledge of desired results................................................................................................ 9
2.5.2. Ability to influence desired results (controllability).............................................................. 9
2.5.3 Ability to measure controllable results effectively. ............................................................... 9
2.5.4 Precision. .............................................................................................................................. 10
2.5.5. Objectivity. .......................................................................................................................... 10
2.5.6. Timeliness. .......................................................................................................................... 10
2.5.7. Understandability. .............................................................................................................. 10
2.5.8. Cost efficiency. .................................................................................................................... 10
H3. Action, Personnel and cultural controls. ........................................................................................ 10
3.1. Action Controls........................................................................................................................... 10
3.1.1. Behavioral constraints. ....................................................................................................... 10
3.1.2. Preaction reviews. ............................................................................................................... 11
, 3.1.3. Action accountability. ......................................................................................................... 11
3.1.4. Redundancy. ....................................................................................................................... 11
3.2. Action controls and the control problems. ................................................................................ 11
3.3. Prevention versus detection. ..................................................................................................... 12
3.4. Conditions determining the effectiveness of action controls.................................................... 12
3.4.1. Knowledge of desired action. ............................................................................................. 12
3.4.2. Ability to ensure that desired actions are taken. ................................................................ 12
3.5. Personnel actions. ...................................................................................................................... 12
3.5.1. Selection and placement..................................................................................................... 12
3.5.2 Training. ............................................................................................................................... 12
3.5.3. Job design and provision of necessary resources. .............................................................. 13
3.6. Cultural controls. ....................................................................................................................... 13
3.6.1. Codes of conduct. ............................................................................................................... 13
3.6.2. Group rewards. ................................................................................................................... 13
3.6.3. Other approaches to shape organizational culture. ........................................................... 13
3.6.4. Intraorganizational transfers. ............................................................................................. 13
3.7. Personnel/cultural controls and the control problems. ............................................................ 14
3.8. Effectiveness of personnel/cultural problems. .......................................................................... 14
H4. Control system tightness. ............................................................................................................... 14
4.1. Tight results control. .................................................................................................................. 14
4.1.1. Definition of desired results................................................................................................ 14
4.1.2. Congruence (overeenstemming). ....................................................................................... 14
4.1.3. Specificity. ........................................................................................................................... 14
4.1.4. Communication and internalization. ................................................................................. 14
4.1.5. Completeness...................................................................................................................... 15
4.1.6. Performance management. ................................................................................................ 15
4.1.7. Incentives. ........................................................................................................................... 15
4.2. Tight actions control. ................................................................................................................. 15
4.2.1. behavioral constraints......................................................................................................... 15
4.2.2. Preaction reviews. ............................................................................................................... 15
4.2.3. Action accountability. ......................................................................................................... 15
4.2.4. Action tracking. ................................................................................................................... 15
4.2.5. Action reinforcement. ......................................................................................................... 15
4.2.6. Tight personnel / cultural problems. ................................................................................. 15
H5. Control system costs. ..................................................................................................................... 16
5.1. Direct costs................................................................................................................................. 16
, 5.1.2. Indirect costs. ...................................................................................................................... 16
5.2. Operating delays. ...................................................................................................................... 17
5.2.1. Negative attitudes produces by result controls. ................................................................. 17
5.2.2. Negative attitudes produced by action controls. ............................................................... 17
H6. Designing and evaluating management control systems. .............................................................. 17
6.1. What is desired? And what is likely to happen? ........................................................................ 17
6.2. Choice of controls. ..................................................................................................................... 18
6.3. Personnel / cultural controls as an initial consideration. ........................................................ 18
6.4. Advantages and disadvantages of action controls. ................................................................. 18
6.5. Advantages and disadvantages of result controls. .................................................................... 18
6.6. Choice of control tightness. ....................................................................................................... 19
6.7. Simultaneous tight-loose controls. ............................................................................................ 19
6.8. Adapting to change. ................................................................................................................... 19
6.9. Keeping behavioral focus. .......................................................................................................... 19
6.10. Maintaining good control. ....................................................................................................... 19
H7. Financial responsibility centers. ..................................................................................................... 19
7.1. Advantages of financial results control systems. ....................................................................... 20
7.1.1. Profit centers....................................................................................................................... 20
7.1.2. Revenue centers. ................................................................................................................ 20
7.1.3. Cost centers. ....................................................................................................................... 20
7.1.4. Variations. ........................................................................................................................... 20
7.2. Choice of financial responsibility centers. ................................................................................. 21
7.3. The transfer pricing problem. .................................................................................................... 21
7.3.1 Purposes of transfer pricing. ................................................................................................ 21
7.3.2. Transfer pricing alternatives. .............................................................................................. 21
7.3.3. Market based transfer prices. ............................................................................................. 21
7.3.4. Marginal cost transfer pricing. ............................................................................................ 21
7.4. Transfer pricing. ......................................................................................................................... 21
7.5. Variations. ................................................................................................................................. 21
H8. Planning and budgeting. ................................................................................................................. 22
8.1. Purposes of planning and budgeting. ........................................................................................ 22
8.2. Planning cycles. ......................................................................................................................... 22
8.3. Target setting. ........................................................................................................................... 23
8.3.1. Types of financial performance targets. ............................................................................. 23
8.4. Fixed vs. flexible targets. ............................................................................................................ 23
8.4.1. Internal vs. external targets. ............................................................................................... 23
H1. Management control. ....................................................................................................................... 5
1.1. Management and control. .......................................................................................................... 5
1.1.1. Objective setting. .................................................................................................................. 5
1.1.2. Strategy formulation. ........................................................................................................... 5
1.2.3. Management control versus strategic control. ................................................................... 5
1.1.4. Behavioral emphasis. ............................................................................................................ 6
1.2. Causes of management control problems. .................................................................................. 6
1.2.1. Lack of direction. ................................................................................................................... 6
1.2.2. Motivational problems.......................................................................................................... 6
1.2.3. Personal limitations. ............................................................................................................. 6
1.3. Characteristics of good management control. ........................................................................... 6
1.4. Control problem avoidance. ........................................................................................................ 7
1.4.1. Activity elimination. .............................................................................................................. 7
1.4.2. Automation. .......................................................................................................................... 7
1.4.3. Centralization. ...................................................................................................................... 7
1.4.4. Risk sharing. .......................................................................................................................... 7
1.5. Control alternatives. ........................................................................................................................ 7
H2. Results controls. ............................................................................................................................... 8
2.2. Prevalence of results controls...................................................................................................... 8
2.3. Results controls and the control problems. ................................................................................. 8
2.4. Elements of results controls. ....................................................................................................... 8
2.5. Conditions determining the effectiveness of results controls. .................................................... 9
2.5.1. Knowledge of desired results................................................................................................ 9
2.5.2. Ability to influence desired results (controllability).............................................................. 9
2.5.3 Ability to measure controllable results effectively. ............................................................... 9
2.5.4 Precision. .............................................................................................................................. 10
2.5.5. Objectivity. .......................................................................................................................... 10
2.5.6. Timeliness. .......................................................................................................................... 10
2.5.7. Understandability. .............................................................................................................. 10
2.5.8. Cost efficiency. .................................................................................................................... 10
H3. Action, Personnel and cultural controls. ........................................................................................ 10
3.1. Action Controls........................................................................................................................... 10
3.1.1. Behavioral constraints. ....................................................................................................... 10
3.1.2. Preaction reviews. ............................................................................................................... 11
, 3.1.3. Action accountability. ......................................................................................................... 11
3.1.4. Redundancy. ....................................................................................................................... 11
3.2. Action controls and the control problems. ................................................................................ 11
3.3. Prevention versus detection. ..................................................................................................... 12
3.4. Conditions determining the effectiveness of action controls.................................................... 12
3.4.1. Knowledge of desired action. ............................................................................................. 12
3.4.2. Ability to ensure that desired actions are taken. ................................................................ 12
3.5. Personnel actions. ...................................................................................................................... 12
3.5.1. Selection and placement..................................................................................................... 12
3.5.2 Training. ............................................................................................................................... 12
3.5.3. Job design and provision of necessary resources. .............................................................. 13
3.6. Cultural controls. ....................................................................................................................... 13
3.6.1. Codes of conduct. ............................................................................................................... 13
3.6.2. Group rewards. ................................................................................................................... 13
3.6.3. Other approaches to shape organizational culture. ........................................................... 13
3.6.4. Intraorganizational transfers. ............................................................................................. 13
3.7. Personnel/cultural controls and the control problems. ............................................................ 14
3.8. Effectiveness of personnel/cultural problems. .......................................................................... 14
H4. Control system tightness. ............................................................................................................... 14
4.1. Tight results control. .................................................................................................................. 14
4.1.1. Definition of desired results................................................................................................ 14
4.1.2. Congruence (overeenstemming). ....................................................................................... 14
4.1.3. Specificity. ........................................................................................................................... 14
4.1.4. Communication and internalization. ................................................................................. 14
4.1.5. Completeness...................................................................................................................... 15
4.1.6. Performance management. ................................................................................................ 15
4.1.7. Incentives. ........................................................................................................................... 15
4.2. Tight actions control. ................................................................................................................. 15
4.2.1. behavioral constraints......................................................................................................... 15
4.2.2. Preaction reviews. ............................................................................................................... 15
4.2.3. Action accountability. ......................................................................................................... 15
4.2.4. Action tracking. ................................................................................................................... 15
4.2.5. Action reinforcement. ......................................................................................................... 15
4.2.6. Tight personnel / cultural problems. ................................................................................. 15
H5. Control system costs. ..................................................................................................................... 16
5.1. Direct costs................................................................................................................................. 16
, 5.1.2. Indirect costs. ...................................................................................................................... 16
5.2. Operating delays. ...................................................................................................................... 17
5.2.1. Negative attitudes produces by result controls. ................................................................. 17
5.2.2. Negative attitudes produced by action controls. ............................................................... 17
H6. Designing and evaluating management control systems. .............................................................. 17
6.1. What is desired? And what is likely to happen? ........................................................................ 17
6.2. Choice of controls. ..................................................................................................................... 18
6.3. Personnel / cultural controls as an initial consideration. ........................................................ 18
6.4. Advantages and disadvantages of action controls. ................................................................. 18
6.5. Advantages and disadvantages of result controls. .................................................................... 18
6.6. Choice of control tightness. ....................................................................................................... 19
6.7. Simultaneous tight-loose controls. ............................................................................................ 19
6.8. Adapting to change. ................................................................................................................... 19
6.9. Keeping behavioral focus. .......................................................................................................... 19
6.10. Maintaining good control. ....................................................................................................... 19
H7. Financial responsibility centers. ..................................................................................................... 19
7.1. Advantages of financial results control systems. ....................................................................... 20
7.1.1. Profit centers....................................................................................................................... 20
7.1.2. Revenue centers. ................................................................................................................ 20
7.1.3. Cost centers. ....................................................................................................................... 20
7.1.4. Variations. ........................................................................................................................... 20
7.2. Choice of financial responsibility centers. ................................................................................. 21
7.3. The transfer pricing problem. .................................................................................................... 21
7.3.1 Purposes of transfer pricing. ................................................................................................ 21
7.3.2. Transfer pricing alternatives. .............................................................................................. 21
7.3.3. Market based transfer prices. ............................................................................................. 21
7.3.4. Marginal cost transfer pricing. ............................................................................................ 21
7.4. Transfer pricing. ......................................................................................................................... 21
7.5. Variations. ................................................................................................................................. 21
H8. Planning and budgeting. ................................................................................................................. 22
8.1. Purposes of planning and budgeting. ........................................................................................ 22
8.2. Planning cycles. ......................................................................................................................... 22
8.3. Target setting. ........................................................................................................................... 23
8.3.1. Types of financial performance targets. ............................................................................. 23
8.4. Fixed vs. flexible targets. ............................................................................................................ 23
8.4.1. Internal vs. external targets. ............................................................................................... 23
