Strategic Planning, Management

Control and Operational Control

 Strategic Planning
• Process of determining the effectiveness of a
given strategy in achieving the organizational
objectives, and taking corrective actions
wherever required
• Example ITC in FMCG Business
 Management Control
• Management control is the process by which
managers influence other members of the
organization to implement the organization’s
strategies.
 Management Control Activities
• Management control involves a variety of
activities including
• ➢ Planning what the organization should do
• ➢ Coordinating the activities of several parts
of the organization
• ➢ Communicating information
• ➢ Evaluating information
• ➢ Deciding what, if any, action should be
taken
• ➢ Influencing people to change their
behaviour
• Budgets or plans are based on circumstances
believed to exist at the time they were
formulated.
• If these circumstances have changed at the time
of implementation, the actions dictated by the
plan may no longer be appropriate.
• If a manager discovers a better approach – one
more likely than the predetermined plan to
achieve the organization’s goals – the
management control systems should not obstruct
its implementation.
 Task/Operational Control
• Task control is the process of ensuring that
specified tasks are carried out effectively and
efficiently. It is transaction-oriented i.e., it
involves the performance of individual tasks
according to rules established in the management
control process.
• Task control often consists of seeing that these
rules are followed, a function that in some cases
does not even require the presence of human
beings.
 Numerical
• A metal company uses multiple metals to get
their output(billet). In the process of
manufacturing the input and output should
match.
• The input is as follows:
Inputs Outputs

Zinc 840 kg 8 Billets

Lead 60 kg 8 pcs of scrap

@ 12kg per pc

Cadmium 20 kg Zinc Ash 8 kg

Process Scrap 80 kg
 Outputs
• Calculate weight of one billet
• 112 kg
• Four machines are constructed using 100kg of
steel, 20 kg of copper and 40 kg of Aluminium.

• What is the weight per machine?

• 10% raw material is wasted as scrap.

• 36 kg
Four Paradigms of Control
 The first paradigm
• A control system is one that enables
organizations to adapt themselves to their
environment.
The second paradigm
 The third paradigm
• It deals with coordinating control systems with
self control and designing and implementing
systems for controlling the personnel who are
not sincere.
 The fourth paradigm
• The assumption is employees are self
motivated
Four Levers of Control
• Process costing

• Process costing is a method of costing used mainly in

manufacturing where units are continuously mass-
produced through one or more processes. Examples of
this include the manufacture of erasers, chemicals or
processed food.

• In process costing it is the process that is costed (unlike

job costing where each job is costed separately). The
method used is to take the total cost of the process
and average it over the units of production.
• A chocolate making process pass through two
processes. The owner allows 5% chocolates to
be eaten by workers, while working on
process 1. The data for the month just ended
are:
• Rs. 7.89/kg
• The owner can no longer afford to give his
staff 5% of the bars. So he decides to offer the
bars to his staff at a discount. They pay Rs.
0.40 for every kg that they eat. As a result of
this, there is less consumption of chocolate of
10kg
• Calculate per kg cost
• Rs.7.85/kg