MANAGEMENT CONTROL SYSTEM
Attempt all questions.
1.
Describe
the need for MIS in a business organization focusing on Management Control
System. Also explain the important considerations
in designing Management Information System (M l S) for the purpose of
Management Control.
(10)
2.
Explain the following ( Any SIX) (30)
(a)
Management
by Objectives (MBO)
(b)
Concept
of Six Sigma
(c)
Flexible
Budgeting
(d)
Balance Score Card
(e)
Elements
of a Control System
(f)
R O I
Approach
(g)
Performance Budgetting
3.
Explain how by designing an appropriate Management Control System ,
the different types of risks faced by the banks can be tackled.
|
|
(10)
|
|
4.
|
What are different functions involved in the
control of an Organization.
|
|
Explain them?
(10)
|
|
|
5.
|
Consider a Retail Outlet. What should be the objectives of Management
|
Control system for the retail outlet? Examples
would strengthen your views. (10)
SUB : MANAGEMENT CONTROL SYSTEMS
CASE STUDY : 1
Traditional Forecasting
Many organizations seek to mitigate some of the traditional
budgeting problems noted above by implementing some form of forecasting. This
allows managers to update budgeted numbers with actual results for the periods
that have already occurred. The forecasts are used to predict what will happen
in the future, often seeking to confirm whether predetermined annual targets
will still be met.
While financial managers think of forecasting in terms of periodic
forecasts, operating managers are constantly adjusting plans, including sales
estimates, which are converted to operating plans for production and inventory
control levels. Most of these planning efforts are conducted in numerous
discrete systems supporting different functional areas. A great deal of effort
is required to integrate and reconcile these different views of the future.
Financial forecasts are performed on a preset schedule, typically
quarterly or monthly.
According to David Axson, author of "Best Practices in
Planning and Management Reporting" 4. Axson explains that these process
cycle times are extended due to:
The difficulty in getting timely information;
The high level of details required taking significant time to
forecast each item; and
The fact
that much of this data is developed in a series of disconnected spreadsheets
making integration a time-consuming process.
Many companies use a purely financial process that is disconnected
from its specific business drivers-a mere financial accumulation of trends.
These companies often determine their monthly forecasts by subtracting the
actual results to date from their annual targets and then dividing the
remaining gap by the months remaining. They then view the monthly result to see
if it is even possible to attain, All their forecasting work focuses on
achieving the predefined annual targets, even if the underlying assumptions
that went into creating those targets are now Incorrect.
The level of detail used often mirrors the annual plan. Some
planners forecast at the same level of detail that is used for actual
reporting, This can result in tremendous efforts in calculating variances and
the related explanation process.
These misconceptions often turn traditional forecasting into merely
a different pc version of the problems with traditional budgeting. Let's
examine why.
For many organizations, forecasting is a mechanical process that
adjusts future run rates upward or downward as necessary so that the predetermined
annual targets are still met.
They ignore the fact that targets were set based on various
assumptions. What happens when the annual targets are held but their underlying
basis proves incorrect? The great quality guru W. Edwards Deming noted that
"if you pay people to hit targets, they often will, even if it destroys
your company."
Q1) Explain the process of cycle times given by
David Axson. (20 Marks)
Methodology :
Jimmy Carter, who introduced ZBB for resources allocation and
control in government explains, "In ZBB, the budget is broken into units
called DPs which are prepared by managers at each level. These packages include
an analysis of purpose, cost, measures of performance and benefits, alternative
courses of action and consequences of not performing the activity. Then all
packages are to be ranked in order of priority. After several discussions
between department heads and the chief executive, the rankings are finalized,
and packages upto the level of affordability are approved and funded."
In more
specific terms the ZBB methodology as well as the sequential stages in its
introduction may be outlined as follows:
•
Defining the Decision Units (DUs) within the firm: A DU is a
tangible activity or group of activities for which a single manager is
responsible for successful performance. The DU concept is akin to that of the
responsibility center. A traditional cost center, a group of people or even a
project may be a DU.
•
Defining objectives of each DU : In clear and specific terms and in
conformity with the enterprise, objectives and goals.
•
Identifying activities in the form of DPs: The term D P focuses on
the analysis of each activity in the manufacturing process according to the
incident of the relevant cost and the importance of that activity in the
overall cost structure of the organization. Thus, in essence DPs not only refer
to the costs but also the benefits of an activity of process.
•
Ranking of alternative DPs in the order of decreasing benefit to
the organization, using cost-benefit analysis technique. This problem can be
reduced by concentrating on marginal priority packages. This is because
ultimately all the packages presented for funding would generally fall into
three categories:
(1)
those with a high priority and high probability of funding; (2) those with a
marginal priority and which may be funded or not funded depending on the
resources available, and (3) those with a low priority and low probability of
funding.
•
Forwarding the ranked DPs to the next higher organizational units,
for review, merger with other comparable DPs and for re-ranking (as the DPs are
consolidated and re-ranked, the perspective and objectives are broadened). The
consolidation and re-ranking should preferably be done by a committee
comprising all managers whose DPs are being considered and a chairman selected
from the next higher organizational level.
•
Finalization of the budget proposal as well as preparation of
budgets for each DU have to be finally approved by the top management. Before
according approval, the top management is guided, on the one hand, by the
principle of allocating resources to the OPs showing higher benefit to cost
ratios, and the question of affordability, on the other.
Q1) Explain the stages in
specific terms of ZBB Methodology. (20 Marks)
Capital
Expenditures :
Another
approach to deciding on capital expenditure investments is to assign a priority
to each investment proposed. We tend to limit the priority scale to values, as
follows.
1. Absolute Must. Includes security, legal,
regulatory, end-of-life equipment; typically externally mandated, that is, you
really have little or no choice. Simply stated, if you are under very tight
capital expenditure and/or expense budget constraints, the cutoff is drawn
here.
2. Highly Desired/Business-Critical. Includes
short-term "break even" (less than six months), significant
short-term "return to top or bottom line" less than months), and mega
projects already in progress.
3. Wanted. Valuable, with a longer return term
(more than 12 months). Typically, these projects get funded only if there is
capital money remaining, if resources are available, and if revenue projections
are fairly secured.
4. Nice to Have. Given available bandwidth in
people and money, there is a good return on these projects, but typically the
ROI has more intangibles. Unlikely to be funded in this budget year; might go
up the priority list in subsequent budget years. It is important to have some
projects in this priority, as it helps to better calibrate the higher
priorities.
Expenses
The
following items constitute what is most typically referred to as "the
budget." The major categories of budget expenses are:
Personnel
• Salaries and benefits (including hiring fees
and bonuses)
• Training and education
• Travel
• Morale
• Staff-related depreciation
• Temporary help/consultants
• Miscellaneous (space,
telecom, and so on)
Hardware
• Depreciation
• Maintenance
• Repairs
•
Leases Software
• Depreciation
• Maintenance
• Customer support
• Updates
• Repairs
• Leases
Services
• Leased lines
• Oursourced network services
• Security services
• Applications service providers (ASPs)
• Miscellaneous (transport,
courier, periodicals, and so on)
|
Explain the needs of Capital Expenditure
investment.
|
(10 Marks).
|
|
|
Q2)
|
Give any two difference between hardware and
software.
|
(10 Marks).
|
CASE STUDY : 4
Divorce the Forecasting Process from the Target Setting and
Performance Appraisal
Forecasts must not be seen by
senior managers as a tool for questioning or reassessing performance targets.
If managers see that forecasts have an impact on their reward and incentive
plan, they will be reluctant to present an unbiased picture.
Use Forecasts to Support
Leading organizations
Q1) Explain the difference between choosing the Right Forecasting
on frequency and horizon.
(20 Marks)
SUB : MANAGEMENT CONTROL SYSTEMS
Total Marks: 80
Note : All Questions are Compulsory
Each Question Carries Equal
Marks 10 Marks
1. Consider a
Retail Outlet. What should be the objectives of Management Control system for the retail outlet? Examples would strengthen
your views.
4.
Explain the Just-in-time and total quality management
techniques of control. Also, elaborate the implication of these techniques for management
control.
5.
Describe the need for MIS in a business organization
focusing on Management Control System. Also explain the important
considerations in designing Management Information System (M l S) for the
purpose of Management Control
6.
Explain how by designing an appropriate Management
Control System , the different types of risks faced by the banks can be
tackled.
7. Describe and illustrate
significance of human behavior patterns in management control.
8.
Define Transfer pricing. Describe the various transfer pricing methods
in detail
9.
Differences and similarities between Management Control
and Task Control
10.
Give impact of Internet on Management Control.
Management
Control Systems
Q1. Discuss profitability measures.
Q2. Explain Management Audit.
Q3. Give brief on Rishi and ashramic culture.
Q4. Application of MCS in Public Sector.
Q5. Explain R O I Approach.
Q6. Write a short note on Core Competency
Q7. Write a short note on Operating Budget
Q8. Define Budget. Explain the
features of a budget.
Management Control Systems
Q1. Explain ideal Management
Control in organization and its features.
Q2. Highlight the features of a
responsibility center. Explain the different types of responsibility centers.
Q3. Under Operations, What are
the key principles of its Control and Management?
Q4. What are different functions
involved in the control of an Organization. Explain them?
Q5. Application of MCS in Service
Organizations and Proprietary organizations.
Q6. Discuss the nature of
management control systems. (10 marks)
Q7. What are functions of Budget
department. (10 marks)
Q8. What are the limitations of variance analysis.
Management Control
Systems
Q2. Write a short note on Operating Budget
Q3. Write a short note on Core Competency
Q4. Explain R O I Approach.
Q5. Explain Balance Score Card.
Q6. Application of MCS in Public Sector.
Q7. Give brief on Rishi and ashramic culture.
Q8. Write a note
on withholding Tax.
Management Control Systems
Q1.
Explain R O I Approach.
Q2.
Explain Balance Score Card.
Q3.
Explain Management by Objectives.
Q4.
Design the balance score card.
Q5.
Describe the various types of budget with suitable examples.
Q6.
Application of MCS in Service Organizations and Proprietary organizations.
Q7.
Give advantages of flexible Budgeting .
Q8. Distinguish between
task control and management control.
No comments:
Post a Comment