ACCFIN4004 : Management Control Systems

Consideration of control system costs is important in management control system design for an organization since it involves key organizational components such as strategic planning, budgeting, resource allocation, evaluation and reward as well as performance measurement (Verbeeten, & Spekle, 2015). Control systems in an organization are set up to ensure the organization meets its strategic goals. While control systems play vital roles in the success of an organization, it is vital to ensure that the benefits of these systems outweigh their costs (Verbeeten & Spekle, 2015).

Philip is faced with the conflict of meeting professional and career goals and long-term customer satisfaction goals in an environment that seems to allow just one option. Philip's bosses have set goals for his branch that are more aligned with selling specific products and meeting various objectives according to his sales budget. Philip has chosen to concentrate on selling products that are best for his clients.

Stuart and Co. seems to be employing both bureaucratic and output controls. This system is however limited by the long distance between the head office and subsidiaries. Furthermore, output controls employed with regard to meeting specific sales target is limited by the degree of uncertainty in the market (Bedford, 2015).

A corporate culture approach would be more suited to the specific situation Philip finds himself in. In this approach, employees internalize corporate objectives and build strong sets of values to guide the management towards these goals (Bedford, 2015). It is such a culture that lured Philip to the company to first. Furthermore, this approach would acknowledge Philip's accomplishments in other spheres such as an increase in clientele base and client retention.  

References:

Bedford, D. S. (2015). Management control systems across different modes of innovation: Implications for firm performance. Management Accounting Research, 28, 12-30. Retrieved from https://pdfs.semanticscholar.org/2218/e466f0fb95bdcc7d7ba7a794d713940b5a3c.pdf

Verbeeten, F. H., & Spekle, R. F. (2015). Management control, results-oriented culture and public sector performance:: Empirical evidence on new public management. Organization studies, 36(7), 953-978. Retrieved from https://dialnet.unirioja.es/servlet/articulo?codigo=5100002