Mangement_Ontrol_Systems

Management Control Systems A management control system is a logical integration of techniques for gathering and using information (Horngren, 2008). The system should acknowledge the goals of the company and demonstrate ways of achieving those goals with the use and help of its employees. According to Horngren, managers should identify responsibility centers, develop performance measures, establish a monitoring and reporting structure, weigh costs and benefits, and provide motivation to achieve goal congruence and managerial effort. This would be the best way to design a management control system that meets the organization’s needs (p.389) Guillermo furniture currently has to make some tough decisions concerning the company. A management control system needs to be developed and implemented. Guillermo first has to decide on its goals. Once the goals have been identified, he will be able to move forward with the system. Since Guillermo’s competitors are continually rising, he has to be able to control his costs. Secondly, Guillermo has to devise a plan and put it into action. The plan should include ways to achieve the goals. For example Guillermo wants to enter into different markets and he wants to increase his overall profits. He has to implement a new product in order to keep up with his competitors, save money and increase profits as well. Next, Guillermo should establish a monitoring and reporting structure. He will be able to see if the company is making any progress toward achieving his goals. Reports can be written by management on a weekly or bi-weekly basis allowing all progress to be documented. Following this, Guillermo needs to weigh its costs and benefits. Lastly, Guillermo has to evaluate and reward its staff. Motivation has to be provided to achieve goal congruence and managerial effort. He could provide incentives pay or even give time off for good performance. If employees are not motivated, it would be hard for them to work to achieve the goals of the company. References: Horngren at el. (2008) Introduction to Management Accounting (14th ed.) New Jersey:Pearson-Prentice Hall.