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Levels of Control

Anthony gave 3 levels of control in an organization: 1. Strategic planning involves setting objectives and plans for the future of the organization and considers the external environment. Information is imprecise and speculative. 2. Management control focuses on reaching targets through effectiveness and efficiency. Information encompasses the whole organization and is often expressed financially. 3. Operational control ensures day-to-day tasks are carried out effectively. Information is detailed and quantified in terms of quantities, rates, and times.

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306 views

Levels of Control

Anthony gave 3 levels of control in an organization: 1. Strategic planning involves setting objectives and plans for the future of the organization and considers the external environment. Information is imprecise and speculative. 2. Management control focuses on reaching targets through effectiveness and efficiency. Information encompasses the whole organization and is often expressed financially. 3. Operational control ensures day-to-day tasks are carried out effectively. Information is detailed and quantified in terms of quantities, rates, and times.

Uploaded by

Meghan Kaye Liwen
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Levels of control

Anthony gave 3 levels of control in an organization.

Strategic
planning

Management control

Operational control

Just as there are different levels of management control, so are there different information
characteristics.

i. Strategic planning

“It is the process of deciding on objectives of the organization, on changes in these objectives,
on resources to attain these objectives and on the policies that are to govern the acquisition
use and disposal of these resources.”
It is concerned with setting a course for the future of the organization, including how it will cope
with threats and opportunities in its environment.
Information will have an external outlook i.e. it considers the industrial environment, economic
and political climate.
Usually the top management will be involved in the use of this information. Information will in
most cases have a future orientation. This level has an ad hoc control system and reports will
be imprecise and speculative.
The outcomes of this information processing by this level of management will be targets and
plans. Involvement of the management accountant at this level will be minimum unless in
strategic management accounting.

ii. Management control

“The process by which managers ensure resources are obtained and used effectively and
efficiently in the accomplishment of the organizations objectives.” It is concerned with reaching
targets set through strategic planning.
Effectiveness-ensuring goals are reached.
Efficiency- describes a quantity where more output is gotten from a given level of input.
Information may embrace the whole organization and may also involve specific responsibility
centres.
Much of the information may be expressed in financial and volumes terms. This is where
management accounting plays a big role. Examples of information include productivity

TEXT
measures, budgetary measures, labour statistics, capacity utilization etc.

iii. Operational control

STUDY
“It is the process of assuring that specific tasks are carried out effectively and efficiently.” It is
mainly concerned with the day to day implementation of the plans of the organization.
These are short-0term control information e.g. transaction data. The information is very detailed
in nature. It is less likely to be summarized financially but rather to be in terms of quantity, rates
and times.

Communication process

Having defined briefly what information is and how different levels of management use it, we will
describe the communication process.

Source Transmitter Channel Receiver Destination

NOISE NOISE

Management accountant Appropriate channel e.g. phone, post or e-mail.


Preparation of reports Reading of report Manager
Noise

Term used in communication theory for any influences or factors which cause
the message at the receiver being different to the message transmitted i.e.
distortion e.g. wrong coding, poor presentation, bad form design, illegible
handwriting and technical jargon. “Noise” should be kept at a minimum and
it’s up to the management accountant to ensure all processes provide
maximum effectiveness.

4.4DECISION MAKING PROCESS


TEXT
STUDY

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