Using Diagnostic and Interactive Control Systems - ch.10

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University of Toronto Scarborough
Financial Accounting
Prof.Jan Klakurka

MGTD54 Wk 9 Notes Ch. 10 Using Diagnostic and Interactive Control Systems - communicate strategy to employees - control strategy implementation Diagnostic control systems: levers to communicate critical performance variables, monitor implementation of intended strategies Interactive control systems: focus organization attention on strategic uncertainties, provide lever to alter strategy as competitive markets change Difference the way managers use systems Same profit plan or balanced scorecard either diagnostically or interactively Maximize ROM and effective strategy implementation Diagnostic Control Systems - monthly statements to report actual accomplishments - find deviations, initiate actions Diagnostic control systems: formal info systems managers use to monitor outcome and correct deviations from preset standards of performance Formal info sys can be used diagnostically if: (1) set goal in advance (2) measure outputs (3) compute variances (4) use var info as feedback to alter inputsprocessesto bring performance back in line Common diagnostic control systems: bal scorecards, exp centre budgets, project monitoring sys, brand revmkt share monitor sys, HR sys, std cost-acctg sys Why Use Control Sys Diagnostically? Implement Strategy - Variance info about critical performance variables - Critical performance variables: factors that must be achieved or implemented successfully for intended strategy to succeed - top-down monitoring - communicate and implement strategy effectively in large complex organizations Managers must ensure:
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