Lecture 1. - Intro Flashcards
(!) Describe PM in general & its evolvement
General:
- Depend on goals
- Depend on structure & strategy
- Seek to meet goals efficient & effective
- Must express company & scope
- MCS as a black box: Can’t be fully monitored
- Must fit actors: Since MA is a sociotechnical skill
__________
Traditional view on org.:
- Static
- Inflexible
- Functional, division, matrix
__________
Dynamic view on org.:
General:
- Ref. Growth view
Require firm understanding:
- Firm context & structure
- Internationalization type
Tools & techniques:
- Responsibility centres
- Performance measurement
Frameworks & approaches:
- Anthony: Mechanical
- Pragmatic constructivism
Aim:
- Align local performance & firm obj.
Importance:
- More non-financial today
- Support function: Today both private & public sector
- Extra complexity if service-firm
- Major implications for DM
- Quality considerations
Draw the growth view
General:
- The dynamic view
- Ref. Greiner
- Poss. To fail by stages
(!) Describe a multinational company & motivations
General:
- Operate across border
- Processes, not product
- Direct investment
- Active management
- Strategic mentalities
- Often danish firms
- Eg. Prod. in Asia
Motivation:
- Low cost poss
- Seek markets
- High R&D cost
- Short PLC
- Secure key suppliers
- Large investments in high tech
- Eye opener: New info & knowledge sources
- Improve competitiveness
Facilitation:
- Deregulation of market
Prior conditions for internationalization:
- Strategic competencies
- Management capabilities
- Performance management
Types:
- International strategic mentality
- Multi-domestic strategic mentality
- Global strategic mentality
- Transnational strategic mentality
(!) Describe international strategic mentality
General:
- Off shore manufacturing
- Foreign markets attached
- Compete in home market: Domestic focus
- Oversea operations as remote outpost
- Product dev. in home market, yet sold abroad
___________
Pros & cons:
- Not responsive to local environment
- Moderate efficiency
- One way learning
___________
Manager:
- Often from inland
- Chosen due to language skills
Knowledge:
- Developed at center
- Transferred to foreign units : Learning
DM & responsibility:
- Centralized
- Coordinated at HQ
Tradeoff:
- Learning > Efficiency + Local adaptiveness
Examples.
- US-companies: (Harley Davidson)
- Danish-companies: (B&O)
(!) Describe multi-domestic strategic mentality
General.
- Adapt to local env.
- International activities highly important
- Diff. btw. domestic & foreign market demand
- Portfolio of independent BU´s
- Know it require more than developed for domestic market
__________
Pros & cons:
- More flexible approach to international activities
- Responsive to local environment
- Inefficiency
- No learning
__________
Manager:
- Abroad
- Often nationals
- Often independent entrepreneurs
Knowledge:
- Dev. & retained within each unit
DM & responsibility:
- Decentralized
Tradeoff:
- Local adaptiveness > Efficiency + Learning
Examples:
- European companies
- Food industry: (Eg. Coca cola differ in taste globally)
(!) Describe global strategic mentality
General:
- Born global
- World = One unit
- Products for world market
- Central coordination & R&D
- Standardized products
- Similar demands
- Homogenous products
- “The same thing, the same way, everywhere”
- Came w. tech. dev.
- Since popularity more requirements & restrictions
- Customers have national preferences, but desire low price for high quality
__________
Pros & cons:
- Highly efficient factories
- Volatility hinder efficiency: Change in exchange rates
- Non responsive but powerful
__________
Managers:
- Worldwide responsible
Knowledge:
- Dev. & retained at center
DM & responsibility:
- Centralized
Tradeoff:
- Efficiency > Local adaptiveness & learning
Examples:
- Japanese companies
- IT, office products, housekeeping products, &cameras
(!) Describe transnational strategic mentality
General:
- Respond to local needs
- Link & coordinate operations
- World wide operations
- More than one center
- Companies changing
- Ress. & activities spread but specialized
- Interdependent, integrated networks
__________
Pros:
- Efficient & flexible
- Scale the economy
- More sophisticated & subtle approach
- Learning
Cons:
- Complicated coordination & cooperation
- Performance ambiguity
__________
Knowledge:
- Transferred among units
DM & responsibility:
- Neither centralized or decentralized
Tradeoff:
- Efficiency = Local adaptiveness = Learning
Deployment of functions & tasks:
- See insert picture
Example:
- Phillips
(!) How is the strategic mentality decided upon?
Economic forces:
- Economies of scale & scope
- Factor costs
- Deregulation of markets
Technological forces:
- Manufacturing technology
- Digitalisation
- Standardization & rationalization: Eg. Raw material, products & operations
Competitive forces:
- R&D
- Short LC
- Global consumer taste
- Global competition
- Knowledge & capabilities
- Displace env. standards
Cultural & political forces:
- Taste, consumer pattern, values & social norms
- Government demand
- Capabilities & innovations
- Rising sustainability concerns
- Harming local communities, equality & cultural diversity
- National sovereignty threatened
Management forces:
- (Dis)advantages of decentralization
- Administration
- Under-researched
(?) Describe effectiveness vs. efficiency
Efficiency:
- Ratio of outputs to inputs
Effectiveness
- Relationship btw. responsibility centres outputs & its obj.
(!) Describe Anthonys system approach
Generelt:
- Se indsat figur
- Mechanic approach
- Ref. Agency theory
- Ref. Cause-&-effect
__________
Advantages:
- Decentralize DM
- Hierarchy
- LT planning
- Idea of being in control
- Well known
__________
Disadvantages:
Strategic plan by TM is right:
- Strategy as planned: Linear impl.
- No look-out function at LL
Top-down:
- One way
- TM has goals
- No conflicts about goals
Result control:
- Assume measures = Objective representation: Face value
- Extrinsic motivation
Resources, skills & knowledge available locally:
More rigid:
- Therefore less accurate
Describe Mintzbergs perception of strategy
General:
- Attempt to plan precisely
- Realized not always intended strategy
Plan:
- Strategies made in advance for actions
- Conscious & purposeful dev.
- Intended strategy
Pattern
- Consistency in behavior
- Intended or not
- Emergent strategy
Planned strategy:
- Boston consultant group
Emerging market:
- Mintzberg: Start quite chaotic
(!) Describe Simons levers of control
General:
- Don’t highlight right thing: Humans as self-monitoring
- Explain MCS & strategy relation
- Often trade-off between measures
- Balance creativity & control
- Reinforce one another
Human motives:
- React vs. Active & creative
- Self-interest vs. Contribute
Business context & management:
- Unlimited opportunities
- Limited ress. & management attention
- About balancing poss. & attention
- Creativity vs. direction
- Emergent vs. planned strategy
__________
Diagnostic control:
- Ref. Planned strategy
- Ref. Systems approach
- Ref. Direction
- Monitor goal & profitability
- Achieve goal effective & efficient
- Measure process to target
- Measure output to standard
- Feedback to adjust
- Risk of control failure or crisis
- Eliminate monitoring burden
Interactive systems:
- Ref. Actors approach
- Ref. Creativity
- Ref. Emerging strategy
- TM & subordinate participate in DM
- Info constant change
- Dialogue on whats important
- Track uncertainty: Eg. Customer taste & competition
- Make TM focus on strategy uncertainty: TO
- Increase w. firm size
- Usually simple
- Formal info systems
- Gather info that challenge future vision
Belief system:
- Ref. Dynamic
- Ref. Informal
- Ref. Personnel control
- Core values
- Inspire commitment
- Empower individuals
- Encourage new poss.
- Must active comm. mission & vision
- Guide accepted behavior
- Motivate, inspire & create direction
- Lack substance
- Often broad & short
- TM must live values
Boundary systems:
- Ref. Formal
- Ref. Action control
- Punishment
- Rules of game
- Risk to avoid
- Actions & pitfalls to avoid
- Negative term
- Minimum standard
- Eg. Code of conduct
- Ethical behavior
- Especially if trust as asset
- Act as brakes
- Increase w. firm size
(!) Describe pragmatic constructivism
General:
- Practice more complex than assumed
- Fact-based practice
- Explain accounting world
- Framework to explain practice
- Balance objective & subjective reality
- Method is important: Reflective & interactive
__________
Actor-reality:
- Actor construct relationship to world
- Construction: Real – not illusion
- Doing business is about making things work in practice: Construct causality
Construct causality:
- Make things work in practice:
- Created by manager & employees
- PM important for the obs. & control
- (Integration of all four = Reality of accounting practise)
___________
Integration process of pragmatic constructivism:
General:
- Less restrictive explanation & understanding of practise than realism: Higher poss. validity
- Descriptive reality
- Balance objective & subjective reality
- Rich & attention-directing
Human values:
- What we desire
- Observed
- Motivation
- Intrinsic characteristics
- Influenced by accounting
- Establish & maintain status in society
- Basis to develop principles, rules & procedures for practice
- Instrumental values = Personal & subjective
- By experience & learning
- Requirements: Accepted, attractive, agree w. profession & established
Facts:
- Based on obs. values
- Boundary & substance of values in practice
- Insufficient alone: Req. Poss.
- Basis for action
- Social construct
- Both objects, actions & events
Possibilities:
- Based on fact analysis: Accounting & logic
- Insufficient alone: Req. Facts
- Fictional if not grounded in facts
- Create room for choices
- Condition for action
- Also impossibilities
- Must align to values
Communication:
- Communicate info from translating poss.
- Communicated to user by accounting method for info reporting
- Social fit across activities & institutional environment
- Enable cooperation
- Influence actor effectiveness
- Intra-professional comm. needed: Agree on accounting facts
Validity:
General:
- Need guidance: Use criteria since accounting practice
Correspondence:
- Values must fit society
- Facts must refer to physical & social
- Poss. must fit accounting logic
- Communication must fit recipient requirements
Coherence:
- Fit between four dim.
(?) Describe MCS
Forelæsning:
- Mobilize strategies
- PM large part of such systems
- PM measures & therefore detect what happens
- Rely on self-control
__________
__________
From text:
General:
- Needed if decentralization
- No standard preset
- Not automatic
- Require coordinated individuals
- No action certainty
- Self-control > Regulation device
MCS fit strategy view:
- Strategy as formal, rational process
- Predictive environment
Strategy fit MCS view:
- Rapid changing environment
__________
Boundaries:
Strategy formulation:
- Goals, strategies & policies
- LT: Approx. future
- Important planning
- Few involved
- Less systematic: Made any time
- Often due to T&O
- Important step-plan to goals
Management control:
- Implement strategies
- Btw. Strategy formulation & task control
- Both ST & LT
- Both plan & control
- Actions may deviate from plan
- Systematic, not mechanical
- Reliable estimates
- Analysis involve all levels
- Not just science
- Manager not an equation
- Focus on goal congruence
- Financial & non-financial measures
- Aid strategy dev.
Task control:
- Efficient & effective performance of tasks
- Systematic
- ST focus
- Accurate data
- Important control
- Scientific
- Focus of specific task
- Eg. Quality control
__________
Examples of MCS:
- Strategic planning
- Budgeting
- Resource allocation
- Performance measurement
- Evaluation
- Reward
- Responsibility center allocation
- Transfer pricing
(!) Describe cause & effect, logical relations & finality
Cause & effect:
General:
- A before B
- B requires A
- A & B obs. close to each other in time & space
- Tight coupling indicators & managers actions
- Link use of indicators as control tool & DM role
Methodology:
- A & B logical independent: Only empirical to infer B from A
- Correlation
- Experiments
Example:
- Eg. Alcohol –> Drunk
Metaphysical:
- Physical science
- Very concrete
- Part of empirical world
- True values of quantity
- Primary properties
- True knowledge
- Hard science
- E.g. A table
__________
Logical relationships:
General:
- From A to B by reason & argument
- Part of language
- Not verifiable
- Not determined empirically
Methodology:
- Logical thinking & arguments
- Accounting models obs. financial result: Not observable in world
Examples:
- Accounting model: Cost reduce profit. NPV Calc.
- Couple = Two people
Anti metaphysical:
- Antiphysical
- Accounting numbers agreed upon
- Aim to increase objectivity
- Measure secondary property: Representation true expression of reality
- Measure available knowledge of object state
___________
Finality:
General:
- Action as mean to end: Reciprocal relationship
- Adapt to persons views & wishes
- No general law: Many means to reach end
- Means may have many other effects which change
Methodology:
- Multiple methods
- Critical test of believes: Empirical & rational
Examples:
- Vision
- Policies
- Goals
- Delivery time
- Customer satisfaction
Relativistic:
- Objectivity desired but not necessary
- Trade-off: Accepted quality vs. Available ress.
- Highlight difficult cause-&-effect link
- Never absolute certainty
- No right or wrong measures: Context dependent
- Ref. Non-financial measures
- Absolute precision meaningless
- Trade-off: Precision vs. costs
- Furthest away from physical world
- Measures are context dependent
- Enough for purpose: Not truth
- Repeatability desired, not needed
- Subjectivity / standard fit other areas
- Measures = Info. Not empirical
- Measure depend on knowledge
- Eg. BSC
