BUSI 4005 Lecture Notes - Lecture 4: Profit Margin, Marginal Cost, Perfect Competition
Document Summary
Mcss need to be designed with understanding of what org wants the employees to do. Choice of controls different types of management controls are not equally effective at addressing each of management control problems: Choice of control tightness the decision of how tight the controls should be depend on: Financial results controls three core elements: financial responsibility centers the apportioning of accountability for financial results within the org, planning and budgeting systems to define performance expectations and standards for evaluating performance. Incentive contracts to define the links between results and various organizational incentives. Natural to monitor success in financial terms and to use financial measures to direct employees" actions. Provides a summary measure & reminds employee"s that the various operating initiatives they do, only benefit the org if they increase financial performance. Cost to implement is often small relative to other forms of management control.