Strategic Management: Formulation and Implementation

Control Systems And Techniques

Since the purpose of control systems is to increase the probability of meeting organizational goals and standards, most organizations use six major systems to boost their prospects for success.

These major control systems are: financial control, budgetary control, quality control, inventory control, operations management, computer-based information systems.

Selecting the appropriate measurement techniques is obviously predicated directly on the performance factor to be measured. The performance standard, if stated properly, should dictate the measurement technique. Although the basis nature and purpose of management control do not change, a variety of tools and techniques have been used over the years to help managers.

Financial Control

Financial control is control of financial resources as they flow into the organization (i.e., revenues, shareholders investments), are held by organization (i.e., working capital, retained earnings), and flow out by the organization (i.e., expenses). This type of control method aid managers in acquiring, allocating, and evaluating the use of financial resource, such as: cash, accounts receivable, accounts payable, inventories, and long-term debt. These methods also enable managers to achieve acceptable liquidity, solvency, and profitability standards.

Financial control techniques include the use of financial statements, ration analysis, break-even analysis and others.

A complete discussion of financial management is beyond the scope of this thesis, but some of financial methods I shall examine in Volume 2.