Vishwakarma Institute of Management

S.No.3/4, Laxminagar, Kondhwa (Bk), Pune (India) 411 048 Phone: 020- 26932800  Fax:  020- 26932700

MCS Book CONTENTS -

 

MANAGEMENT CONTROL SYSTEM – Introduction

1. MANAGEMENT

Duties of the Management –Principles of Management - Functions of Management -Levels of Management – Types of Management – Role of Management in Business Organization

2. CONTROL FUNCTION OF MANAGEMENT

Nature of Control Function – Significance of Control – Performance Standards – Types of Standards – Steps in Controlling – Characteristics of Control System – Advantages of Control System – Limitations of Control – Feedback Control Mechanism - Feed Forward Control Mechanism

3. SYSTEM’S APPROACH & MANAGEMENT CONTROL

Characteristics of a System - Management Control and System’s Approach

4. MANAGEMENT CONTROL SYSTEM

Introduction - Management Control System -What is Management Control System?- Management Control Process – Phases of Management Control – Different Aspects of Management Control Process –  Characteristics of Effective MCS

Area and Situations Where MCS Normally Fails

5. ORGANIZATION STRUCTURE; BEHAVIOR AND MCS

Organization Structure - Functional Organization – Business Unit Structure – (Strategic Business Unit) - Implication on Management Control System - Organizational Behavior and its Implications on Management Control System– Management Style and its Implications on Management Control System

GOAL CONGRUENCE

Factors Those Influence Goal Congruence – Informal Factors – Formal Factors

6. STRATEGY; STRATEGIC CHOICE AND MCS

Strategy and Management Control System - Strategy - Types/Levels of Strategies - Role of Mission in Business Units - Goals and Objectives – Critical Success Factors – Strategic Choice and Management Control System - Strategic Choice and its Implication on Organization Structure

Strategic Choice and its Implication on Management Control System – Business Unit Strategic Choice and its Implications on Management Control System - Mission and Competitive  Advantage and its Implication on MCS - Strategic Mission -  Competitive Advantage

7. FUNCTIONS OF THE CONTROLLER

Role of Controller - Controller’s Organization and Possible Reporting Relationship - Controller’s Role in Line Organization – Controller’s Role in Business Unit

TYPES OF MANAGEMENT CONTROLS

Action Control – Result Control - Personnel & Cultural Control – Control Tightness – Cost of Control – Direct and Indirect

8. EVOLUTION, NATURE & SCOPE OF MCS

EVOLUTION OF CONTROL SYSTEM

NATURE OF MCS - THE CYBERNETIC PARADIGM (by Griesinger 1979)

Working of Control Process

SCOPE OF MCS

Strategy Formulation V/S Management Control - Management Control V/S Operating Planning - Strategic Planning V/S Management Control

MANAGEMENT CONTROL SYSTEM- A FORMAL PROCESS

Relating MCS to Organizational Goal

9. INPUT – OUTPUT RELATIONSHIP

Inputs & Outputs – Measurement

10. STRATEGIC PLANNING – LONG RANGE PLANNING

Strategic Planning Steps – Strategy Formulation V/S Strategic Planning - Advantages of Strategic Planning – Disadvantages – Programming/Strategic Planning

STRATEGIC PLANNING PROCESS –

LRP Process – Steps - Strategic Planning V/S Operating Planning - Strategic Planning and Management Control

 

 

11. RESPONSIBILITY CENTERS

Implementation of Management Control through Responsibility Centers – Advantages of Responsibility Accounting – Linking Rewards to Results in Responsibility Centers

12. TYPES OF RESPONSIBILITY CENTERS –

Revenue Center

Expenses Center

Engineered Costs V/S Discretionary Costs – Engineered Expenses Center - Discretionary Expenses Center - Control Characteristics –  Administrative and Support Centers – Research and Development Centers – Marketing Centers – Committed Cost & Budget – Engineered Cost & Budget – Discretionary Cost and Budget

Profit Center

Implementation of Profit Center – Essentials of Profit Center – Advantage of Defining Responsibility Center as Profit Center – Disadvantages- Profit Center V/S Revenue Center –  Business Unit as Profit Center - Functional Units as Profit Center - Service & Support Units as Profit Center - Profitability Measures For Profit Centers

13. TRANSFER PRICING

Control Tool For - Decentralized Business Organization - Concept – Relevance of TP and MCS - Significance -

Methods of Transfer Pricing –

Factors Influencing Transfer Pricing Method –

Market Based Transfer Pricing – Market Price as Transfer Price – Modified Market Price - TP Lower Than MP - Essentials of Market Based Transfer Pricing – Constraints – Advantages of MP as TP - Limitations of MP as TP –

Cost Based Transfer Pricing – Variable Cost as Transfer Price - Full Cost/Absorption Cost as Transfer Price - Standard Cost as Transfer Price - Modified Cost as Transfer Price - General Rule to follow while Setting Cost Based TP –

Other Approaches to Transfer Pricing – Two Step Pricing - Profit Sharing - Two Sets of Prices

Transfer Pricing in MNC’s

14. INVESTMENT CENTERS

Measuring the Inputs/Assets Employed in Business Unit – Performance Measures for Investment Center – ROI And EVA - Return on Investment – ROI - Problems with ROI in Depicting Correct Performance Picture – Economic Value Added – EVA® (Residual Income) - EVA Messages –EVA V/S NPV – Depreciation Effect on EVA and ROI – Effect of Assets Value on EVA – EVA V/S ROI - Uses of EVA in Planning and Control – Evaluation of Strategic Plan - Limitations of EVA

Service Unit as Responsibility Center – Responsibility Centers & Their Responsibilities for Financial Results – Responsibility Centers and Organizational Hierarchy – Performance Evaluation of Manager and Entity

15. MEASURES FOR PERFORMANCE EVALUATION

Financial Measures - Types of Financial Performance Targets – Performance Based Rewards– Types of Rewards/Punishments - Limitations of Financial Measures Based on Accounting Data-

Non Financial Measures/Key Success Factors of Performance Evaluation – Key Success Factors -

Non Financial Measures and How They Culminate in to Financial Performance

BENCHMARKING

Significance of Benchmarking – Essentials of Benchmarking - Important Points to note While Benchmarking

16. BUDGETING

Why Budget – Drawbacks of Budgetary Control – Essential Elements of Budget – Strategic Plan V/S Operating Budget V/S Capital Budget - Budgeting V/S Forecasting – Types of Budgets –

Operating Budgets – Master Budget – Sales/Revenue Budget – Production Cost and Cost Of Sales Budget – Marketing Expenses Budget – Logistic Expenses Budget – General and Administrative Expenses Budget – R & D Budget

Financial Budget – Cash Budget – Capital Budget – Budgeted Balance Sheet & Budgeted Cash Flow Statement –

Fixed and Flexible Budget – Rolling Budget – Performance Budget – Zero Based Budget – Budgeting Exercise – Participative Budgeting – Importance of Budgets to Managers –

Limitations of Budgetary Control Exercise – Interlinkage of Budgets

CAPITAL BUDGETING -

Characteristics of Capital Budgeting Decisions - Accounting Flows and Cash Flows - Methods for Ranking Investment Proposals - Payback Method - Internal Rate of Return - Net Present Value - Capital Rationing

PARTA SYSTEM – (PADTA SYSTEM) - A Control through Micro Budgeting System

17. FINANCIAL PERFORMANCE EVALUATION

Effectiveness and Efficiency – Performance Report – Performance Evaluation Using Flexible Budgets

TOOLS OF FINANCIAL ANALYSIS –

RATIO ANALYSIS

Procedure for Analysis and Interpretation – Ratio Analysis – Ratios For Comparative Analysis - Inter-firm Analysis –

Profitability Ratios - Profit Margin - Return on Investment or Assets - Return on Equity 

Liquidity Ratio - Current Ratio - Quick (Acid-Test) Ratio - Debt Equity Ratio - Proprietary Ratio - Debt Asset Ratio

Turnover Ratios - Inventory Turnover Ratio - Accounts Receivable - Average Collection Period - Asset Turnover Ratio

Valuation Ratios -

Value Added Ratios –

Selection of Ratios – Advantages of Ratio Analysis – Limitation of Ratio Analysis - Management Performance/Achievement Chart/Ratios

FUNDS FLOW AND CASH FLOW STATEMENTS

Funds Flow Analysis - Funds Flow Statement - General Rules - Steps to Prepare FFS - Cash Flow Statement - Steps to Prepare CFS – Fund Flow Statement Vs Cash Flow Statement

ANALYSIS OF COST DATA AND VARIANCE ANALYSIS

Standard Costing and Variance Analysis - Uses of Standard Costs - Types of Standards - Establishing the Cost Standards - Budgetary Control and Standard Costing – Variance Analysis –

Sales Variance/Revenue Variance – Cost Variance – Overhead Cost Variance – Limitations of Variance Analysis

18. PERFORMANCE MEASUREMENT SYSTEM –

Difficulties with Financial Measure -

19. THE BALANCED SCOREBOARD –

What Is The Balanced Scorecard? - Four Perspectives of BSC - The Balanced Scorecard A Measurement-Based Management - Designing A Scorecard to Tell the Story of Your Strategy -

Linking Strategy to Budgets Through Use of Balanced Scorecard – Linking Balanced Scorecard Measures/Drivers to Strategy – Cause Effect Relationship in BSC - Blend Of  Factors/Measures In BSC - Building Balanced Scorecard - Significance Of Balanced Scorecard - Consideration while Building BSC - Balanced Scorecard Diagrammatic Examples

IMPLEMENTATION OF PERFORMANCE MEASUREMENT SYSTEM BSC

Process of Implementation of BSC - Problems in Implementing BSC

20. INTERACTIVE CONTROL SYSTEM –

Characteristics of Interactive MCS – MCS as Interactive Strategy Builder

21. MANAGEMENT COMPENSATION PLAN

Characteristic of Reward -– Incentives Compensation Plans – Short Term Incentives Plan – Long Term Incentives Plans – CEO Compensation – BU Manager’s Compensation – Agency Theory –

Stock Option and Agency Problem

22. MANAGEMENT CONTROL SYSTEM IN SERVICE ORGANIZATION

Performance Measurement in Service Sector – Manufacturing Organizations V/S Service Organizations – Characteristics of Service Organizations- MCS in Service Organizations – Financial Service Organization and MCS - Health Services and MCS – Non Profit Making Organizations and MCS – MNC Subsidiary and MCS – Management Considerations of MCS For MNC Subsidiary – Projects And MCS

23. AUDIT AS CONTROL TOOL -

Management Audit – Objective of Management Audit – Management Audit Program

Management Performance - SWOT Analysis –

Cost Audit – Internal Audit – Financial Audit/ Statutory Audit

24. TOTAL COST MANAGEMENT

ACTIVITY BASED COSTING - Cost Accounting System - Traditional Cost System - Activity Based Costing - Design and Implementation of ABC System – Steps - Activity Based Management

TARGET COSTING

JUST IN TIME – JIT Techniques – Implications for MCS

25. MANAGEMENT CONTROL IN FUNCTIONAL AREAS OF BUSINESS

Production Control –

Production Control Techniques – Inventory Control – Functions of Inventory Control Department – Control Techniques – Ratios for Inventory Control – Value Analysis –

Marketing Control – Marketing Control Process – Significance of Marketing Control – Techniques for Marketing Control – Marketing Audit – Marketing Cost Analysis – Credit Analysis – Market Share Analysis – Contribution Margin Analysis – Sales Force Evaluation – Advertising Performance Control – Distribution Performance/Cost Control – Techniques Used for Distribution Cost Control

Human Resources Performance Control – Personnel Budgets – Employee Relation Index – Personnel Audit – Activity Analysis – Employee Attitude Survey – HR Accounting

26. VALUE CHAIN ANALYSIS

The Value Chain - Porter's Generic Value Chain Model - Value Chain Analysis – Steps in Value Chain Analysis – Cost Advantage and the Value Chain - Differentiation and the Value Chain - Technology and the Value Chain - Linkages Between Value Chain Activities - Analyzing Business Unit Interrelationships - Outsourcing Value Chain Activities - The Value Chain System

 

Illustrations and Case Studies –