• April 1st, 2016

Management Control Systems

Paper, Order, or Assignment Requirements

Question One

  1. Firstly, there will be lack of coordination between top and lower level managers since the goals are set by the top management and the lower level staffs are only follow the guides.

Secondly, the budget plan set by the top management will be less accurate. The reason is that they have less knowledge about the daily operation, so it hard to create a harmony organization environment.

Thirdly, since the senior and junior managers are lack of communications, the targets set by the top management maybe unattainable and unachievable, so the budget plan is difficult to control.

However, as the top management need not to communicate with the lower level managers, the cost and the time to set up the budget and target is less. And the budget can be looser in planning other operations.

  1. Firstly, planning a budget under bottom-up budget approach will be very time consuming, expensive and the information maybe delay since it involve lots of people. As a result, budget may become less accurate.

Secondly, it may lead to budget slack because lower level managers can cope with uncertainty easily and avoid the initial budget being cut back.

Thirdly, the budget may lack of whole view of picture for the company because junior managers only focus narrowly on their part of work and for their own personal goals.

Nonetheless, the senior managers can get more understanding about the operation and the needs for the frontline staff, so that they can have a better, achievable and attainable budget planning.

  1. First, as the budget targets are imposed by senior management so that top and junior managers do not need to communicate with each other. Hence, the staffs may lack of coordination for work on the budgets and they only need to follow the handing down guides.

Furthermore, top management may have less understanding for the needs of the frontline staff and less appreciation of the wider organisation.

  1. Bottom-up approach may encourage coordination and communication between managers and have a better understanding of the whole organisation.

Also, it may reduce the conflict between top and lower level management in order to attain the goal congruence. At a result, it can create a better organisation culture since management have the same target.

  1. Top-down budget approach means the budget targets are imposed by senior managers on the junior managers who have little participation on planning and setting budget target. In another word, most of the decisions are handed down from the top management and the subordinates follow and carry out. So that this budget approach also called authoritative budgeting.
  2. Bottom-up budget approach means the junior manager have a say in the final figure budget where people at the lower managerial and operation levels play an active part in setting their own budgets. In this approach, the decisions are made at the departmental levels and the junior staffs can also participating in setting budget, so that it also called participative budgeting.

(494 words)

Question Two

Companies use Internet can enhance cost leadership effectively. Since there are lots of social networking platform which are free of charges and no time limit for advertisement, companies can lower their advertisement and marketing cost. Moreover, it is easy to entry into business through online platform such as Taobao and Amazon; it can save the cost in renting a solid shop and staff wages, and lead to a better cost control. Furthermore, instant communication systems through internet can also enhance cost leadership in businesses especially for the global business. Companies can communicate with different customers immediately and at the same time. Therefore, labour cost and time cost can be lower than communicate with customer one by one.

Companies can also enhance the differentiation strategy through the Internet. Online marketing can affect the uniqueness of products and services to customers significantly. For example, internet allows companies to response to their customers quickly also customers can spread their satisfaction and dissatisfaction back to companies instantly. Since there is an efficiently and timely process in purchasing and ordering goods, it can add value in the trading process for customer. Online business can enhance the selling and buying process for companies and customers since it can provide users a freedom environment to visit, search and purchasing the goods they need. Therefore, it can provide a unique experience for customers. (Johnson, G; Scholes, K; Whittington, R; 2009)

(232 words)

Question Three

  1. Apple Inc. is successful because it is the leader of innovation that brings the simple personal computing (iphone, ipad, imac) to customers. They bring the best, personal and unique experience to customers like the Genius Bar for repairing.

Its business strategy is to create their own fans which are the loyalist even though there are lots of competitors (Williams 2014). The innovation for computing system, that is the IOS X, make the uniqueness of their products, they innovate their products continuously in order to state ahead to its competitors as many fans may look forward to their products. They add value to experience for customers through different activities such as the pre-order, delivery, warranty service and online instant enquiry. It can build up the brand which is difficult to imitate (Stark , Karl ; Stewart, Bill; 2012).

  1. AirAsia is the low-cost carrier model of airline in Southeast Asian region. They have flexibility in operations and providing customers with low price and the choice of customizing services without compromising on quality.

It adopts multiply strategies which are to provide low prices with high quality services by omitting unnecessary services for low cost leadership. They also provide additional service such as shuttle bus and founded tune hotel to enhance a range of current offerings and make more valuable to customers. Moreover, AirAsia operates a single type of aircraft, it turnarounds time only 25 minutes to save on operating cost. Hence they can increase customer confidence and to enhance their satisfaction which are difficult to imitate, rare and without substitutes. (AirAsia Berhad n.d.)

  1. Huawei Limited is successful because it is the largest telecommunication equipment manufacturer in China. It grows fast behind Cisco recently and going to challenge for the first global position.

Huawei uses low cost strategies to increase its market share, that is, provide telecommunication equipment to local business at a lower price than other international competitors. Also, it cooperates with different foreign companies like IBM. Therefore, it has the ability on corporate management as well as the western company. Furthermore, Huawei well educated their labour force so that they can provide high quality products with lower cost since there is low labour cost in Mainland China. Lastly, Huawei has good network with Chinese government and Chinese Development Bank. So they can have sufficient financial support in order to expand their business. (Huawei Technologies Co., Ltd. n.d.)

(398 words)

Question Four

  1. Controllable costs are the cost that assigned to responsibility center is significantly influenced by the actions of the manager or someone within the responsibility center.

As the manager’s performance, especially of the cost center, depends on their ability to achieve the planned output levels with the given budgetary constraint. Therefore, cost allocation must conform to goal congruence. This is important to evaluating the performance of managers as they can influence the cost significantly if the cost is controllable cost. (Divisional Performance Management 2013)

  1. Firstly, cost center managers create budget slack is a way to coping with uncertainty. So that they will not being punished if there is an accident that they cannot reach the budgeted target and the cost amount over the target.

Secondly, cost center managers may focus on their own personal goal which is to receive more commission. They may create budget slack so that their performance may look better if they can beat the target easily.

Thirdly, create budget slack is a way to insulate against initial budget requests being cut back by management. The reason is that if the cost used this year is lower than the planned target, the cost assigned next year may be being cut back and the target will become difficult to meet.

Lastly, cost center manager creates budget slack because tight target may influence the working incentive of staff. Therefore, cost center manager may set an overestimate cost budget to improve morale and create a better organization environment.  (249 words)

Latest completed orders:

Completed Orders
# Title Academic Level Subject Area # of Pages Paper Urgency