Qualifi Level 6 BA601: Management Control Assessment Answer Solution

Qualifi Level 6 BA601 Assessment Introduction

Aim

This unit aims to make students familiar with applications and concepts of management control systems that are used in business organisations. 

Assignment Question

Scenario

Learners may use their own employment context, or that of another organisation with which they are very familiar, to base their assignment. However, in the case that they are not able to do so, please use the scenario:

You are working as a senior manager in a small or medium-sized organisation, with roles and responsibilities to manage effective and efficient control within the organisation with your team, in order to comply with performance to applicable standards, plans, or objectives is in line with regulatory and industry code of practice requirements. You are given a task to write a piece of paper to describe the importance of the Management control within the organisation to achieve the organisational strategy and how top management of the organisation utilises management theories, models, techniques, approaches, and strategies to plan, implement and evaluate the effective control system. Your reflective paper/assignment should contain a minimum of 2000 words in length for topics that you have covered with the Management Control in order to meet the learning outcomes of the unit. 

BA601 Task 1. Be able to identify the characteristics of management control systems

AC 1.1 Explain the evolution of control systems in an organisation.

Answer: 

The control systems of management in organisations have evolved as businesses have evolved to become more difficult and competitive. These systems did not manifest themselves in their entirety; they were developed over a period of time to assist managers in planning and monitoring, as well as making performance adjustments to ensure that the organisation attained its strategic objectives.

1.Control Systems Early, Simple, and Informal: 

During the initial period of business organisations were small and most of the control became informal. Founders and managers were using direct supervision, instinct, and immediate feedback from customers or workers to monitor performance. At this stage:

• Communication was informal.
• Management was grounded in rigorous individual supervision.
• Tools and systems of measurement were few.

As an example, in a small start-up, the owner may observe the production with his or her own eyes and may discuss with the workers on a daily basis. When an issue was observed, they made corrections on the spot - this was an unofficial control system.

2.Implementation of Formal Processes and Accounting Controls.

With the increase in the size of organisations, formal controls were required since managers could no longer monitor everything. At this phase, the following were introduced:

• Such standardisation in accounting as budgeting.
• Performance standards and work measures.
• Organisational hierarchy.

Such tools assisted the managers in comparing the actual and the planned (e.g. expected sales or costs). Organisations were now able to identify differences and react more systematically.

3.Co-ordination and Integration throughout the Organisation.

As organisations continued to grow, basic accounting controls proved to be inadequate. They required systems that aligned the activities between departments. At this stage:

• Institutional planning processes were put in place.
• Product groups or divisions were formed.

Performance centres, such as investment centres, had been initiated by the management where profitability was discussed throughout the business. This assisted in linking strategy and day-to-day operations and ensured that various sectors of the company were geared towards common goals.

4.New Control Systems in Management.

The modern-day control systems have become very advanced and strategic. These are both financial and non-financial indicators, and they facilitate innovation, the implementation of strategies, and enhance performance. Some of the current control tools are:

• Balanced Scorecards
• Benchmarking
• Activity‑based costing
• TQM (total quality management)
• Just‑In‑Time (JIT)

These systems aid organisations in gauging such things as customer satisfaction, quality, or process efficiency as opposed to financial outcomes.

The modern systems are also built in such a way that:

• Promote strategic thinking.
• Learning and adaptation Support.
• Encourage ongoing improvement as opposed to annual number checking.

5.The significance of this Evolution to practice.

In the case of your organisation, a small or medium-sized business, the evolution is relevant as it demonstrates the way in which the control systems may vary with the business expansion:

• Initially, you may have to use direct observations and unofficial feedback.
• Formal budgets and reviews can also be introduced later.

When the complexity rises, you will require such tools as balanced scorecards or quality control systems to monitor strategies.
Every step introduces additional structure to enable the organisation to be more responsive to internal issues and external competition.

AC 1.2 Identify organisational control systems for effective organisational performance.

Answer:

The organisation's control systems are the tools, processes and methods which managers employ in the process of ensuring that the organisation is achieving its goals efficiently and effectively. Within a small or medium-sized business, the availability of the right control systems aids in the monitoring of performance, problem identification at an early stage, and decision-making that would enable the attainment of strategic goals. 

1.Finland Control Systems

These systems monitor the financial performance of the organisation and assist the manager in making sound decisions: 
-Budgeting: Prepare revenues and expenditure; actual performance against planned performance. 
-Cash Flow Management: Provides sufficient liquidity to cover the short-term liabilities.
-Cost control systems: Find and eliminate extraneous costs. 
Scenario Example: You are a senior manager, and you may be watching departmental budgets monthly to ensure that teams are not spending extravagantly at the expense of team meeting production targets. 

2.Operation Control Systems: 

Operational controls are concerned with the daily operations to ensure that the processes are running fine: 
-Standard operating procedure (SOPs): Procedure on operations. 
-Quality control systems: Products/services are checked regularly to make it according to standards.
-Inventory management systems: Monitor inventory to eliminate excess inventory or shortages. 
Scenario Example: An example of a simple checklist system of team performance is to make sure that tasks are completed in an appropriate way, and the products are of good quality. 

3.Human resource and behavioural control system

Human beings are an important constitutent or organisational performance. The following controls are useful in controlling the staff: 
-Performance appraisal systems: Monitor the performance of employees in terms of target achievement. 
-Training and development: Make sure that employees are skilled to work effectively. 
-Behavioural standards: Conduct codes and organisational culture policies. 
Scenario example: Conducting quarterly appraisals to give feedback motivates employees to work harder and also helps in making the efforts of the employees match the organisational goals. 

4.Strategic and management control systems.

These systems connect organisational strategy with the operational performance: 
-Balanced scorecard: Measures the financial, customer and internal process and learning points of view. 
-Key performance indicators (KPIs): Monitor definite measures to help track whether the goals are being achieved. 
-Management by objective (MBO): Employees and managers establish goals. 
Scenario example: Sales growth or customer satisfaction can be measured with the help of KPIs, which enable the top management to monitor the progress and modify the strategies accordingly. 

5.Information and technology Control systems

Contemporary companies are dependent on IT infrastructure to aid in decision-making and performance measurement: 
-Enterprise resource planning (ERP): This is a system that combines the information of Finance, HR, inventoru and operations. 
-Customer relationship management (CRM): Monitors customer relationships and sales performance. 
-Business Analytics: Gives an insight into the trends and performance gaps. 

AC 1.3 Explain the importance of accounting and budgeting systems functions to influence human behaviour. 

Answer:

Accounting and budgeting systems are not just financial tools since they directly impact the way individuals act within an organisation. These systems direct the decisions and behaviours of employees by offering structure, clarity and feedback, which is directed towards the achievement of organisational goals. 

1.Human Behaviour and accounting systems.

Financial transactions are documented and reported by the accounting systems and aid the manager in tracking performance. They affect behaviour in several ways: 

• Transparency and accountability: The workers understand that their efforts are influencing the financial performance of the organisation. For example, in the given sceanario a department manager observes the price of material and understands that excessive utilisation will be counterproductive to profit and thus takes care to utilise them. 
• Performance Measurement: Financial reports give a response to outcomes against targets. Employees react to this feedback by modifying their behaviours to live up to the expectations. 
• Decision-making influence: The accounting information assists the manager in making informal decisions. When the employees have an insight into the effects of costs and revenues, they tend to make cost-effective decisions. 

2.Human Behaviour and Budgeting Systems.

Budgets are resource allocation systems and performance expectation systems. They are strong in the conditioning of behaviour:

• Goal Setting: Budgets establish definite goals for departments and individuals. For Examples: When your team is given a sales limit in a budget, the employees will be motivated to achieve or surpass it.
• Motivation and Performance: Budgets may serve as an incentive measure, rewarding accomplishment and punishment for spending. For examples: Your employees may be motivated to rein in expenses by providing them with a bonus if they stay within budget.
• Coordination: The relationship between all these departments needs to be well coordinated. Coordination: All these departments must be well coordinated. Budgets relay the organisational priorities to the entire staff. Employees know what to do, and they align themselves with organisational strategy. 
• Behavioural Control: Ethical and efficient behaviour can be affected by the budgets. For example, well-defined budget constraints deter excessive spending and encourage sensible spending.

3.The connection between accounting and budgeting and organisational behaviour.

These systems combine to form a feedback loop in which the accounting follows results, budgeting expectations, and performance communicated by managers. The employees get to know what the organisation appreciates (e.g., cost efficiency, sales growth, quality) and will modify their behaviour to fulfil expectations. They are also useful in eliminating conflict since they are objective in their measures, but not subjective. 
Example of a Scenario: You, as the senior manager in a small or medium-sized business, can apply monthly budget reviews and financial reports. By knowing how their actions affect the budget and profits, the employees would instinctively change their work habits in order to save money, increase efficiency, and achieve the goals. 

AC 1.4 Identify leadership as a method of control.

Answer:

Management control is signified through leadership as it has the power to shape the behaviour of people, inspire them to perform and coordinate individual behaviour with organisational goals. As opposed to formal means such as budgets or accounting systems, the leadership works through instructions, examples, and organisational culture in order to control. 

1.Organisational Behaviour is a product of leadership:

Leaders establish norms, values, and expectations for the employees. They have an effect on behaviour; by acting as examples of what one wants to do and making them accountable. Example (situation): As a top manager at a small corporation, when you are always observed to show care to quality and efficiency, your followers will tend to follow in the same tradition in their work.

2.Control mechanism of Leadership:

Leadership may serve as a mode of control in the following ways:

• Direct Supervision: Leaders monitor work, give feedback and rectify actions that are not up to the standards. This is a personal and direct type of control that is appropriate with small teams.
• Motivation and Incentives: Leaders can control the behaviour of employees through encouragement, recognition, or rewards.
• Illustration: Employees should be praised when they do their duties effectively to promote more occasions that will be good.
• Creation of Organisational Culture: Leaders inculcate common values and behavioural standards, and this makes the employees behave in a certain manner even when not being closely monitored.
• Illustration: Fostering accountability and responsibility would mean that employees will regulate their performance themselves. 
• Delegation and Empowerment: Leaders delegate power to workers and believe in them to perform. This promotes initiative and also controls performance by monitoring performance.

3.Strategic Alignment and Leadership:

Leadership makes sure that control goes beyond rules or monitoring; it is also concerned with guiding the employees to comprehend the organisational strategy. For Examples: In a case of a medium-sized business, a manager is able to match the day-to-day activities of the team with the development goals of the company, and apply leadership to influence and guide the employees to work towards the strategic objectives.

4.Human-Centred Control:

Control is a soft and human-oriented kind of leadership: it is more influenced by interaction, motivation, and trust and does not depend on strict rules. It goes hand in hand with formal control schemes, like accounting or budget, rendering them more effective, as employees have a knowledge of the intention behind the rules.

BA601 Task 2. Be able to evaluate management control systems for strategic planning and development in an organisation

AC 2.1: Assess core control systems in an organisation.

Answer:

Effective management is in place with the assistance of core control systems that enable the organisations to monitor performance, allocate resources, and achieve strategic objectives. These systems in a small or medium business integrate financial, operational, human resource, and strategic controls in order to promote efficiency and organisational analysis, with organisational objectives. 

1.Financial Control Systems:

The fundamentals of financial tools are budgets, accounting reports, and cash flow monitoring. They assist the managers with tracking costs and revenue as well as profitability. Practically, comparing the budgeted and actual figures will allow the variances to be promptly identified, provoking a corrective response. To illustrate, departmental expenses monitoring in the scenario will make sure that resources are utilised efficiently and also help in decision-making.

2.Operation Control Systems:

Operational controls are day-to-day processes. Tasks are also done consistently and effectively through Standard Operating Procedures (SOPs), quality checks and inventory management. In this case, the use of quality checklists and inspections would ensure that products are as expected by the customers and that there is less wastage.

3.Human Resource Controls:

Employees work and become motivated by the performance appraisals, training programs, and standards that dictate behaviour. Core HR controls ensure that the actions of staff are in line with organisational aims. As an example, quarterly appraisals will make your team know what to expect, increase engagement, and productivity.

4.Strategic and Management Controls:

Balanced scorecards, KPIs, and Management by Objectives (MBO) are needed to make sure that the long-term strategy is supported by daily activities. These systems offer quantifiable measures in terms of financial, customer, internal process, and learning lenses. In the scenario, KPIs may help the management to monitor the sales, customer satisfaction, and the efficiency of the processes to estimate the performance and modify strategies. 

AC 2.2: Identify the relationship between planning and control.

Answer:

The connection between planning and control is very close in any organisation since control is essential in ensuring that plans are implemented properly, whereas planning gives control the framework. A lack of control lacks direction without planning, and a lack of a plan may result in a lack of achievement of plans. 

1.Planning creates the Foundation of Control

Planning entails the establishment of targets, the finding of resources and the action that is required to accomplish objectives. These plans are used as features of control to monitor performance.
Example (situation): You develop a sales target plan in the next quarter in a medium-sized business. The plan specifies anticipated outcomes and schedules, which will be compared later under the control system to actual sales.

2.Manages Control monitors, and plans.

Performance is measured, deviations are identified, and corrective action is taken. It is used to make sure that the organisation is moving towards the right direction towards the intended goals.
Example (scenario): When monthly sales are lower than expected, as a top manager, you are able to research, find the problems (e.g., lack of marketing efficiency or personnel shortage) and change the plan or take some corrective measures.

3.Feedback Loop Planning and Control.

Successful organisations possess a feedback programme, whereby control directs the future planning. Control system performance data assists managers in strengthening forecasting, determining realistic goals, and refining strategies.
The example: Sales planning of next quarter is informed by the review of the performance of the last quarter, which creates continuous improvement. 

4.Human Implications and Strategic Implications.

Employee behaviour is also affected by planning and control. Monitoring with clear plans promotes accountability, focus and alignment to organisational strategy.
Example: In your case, team members know what is required, and this is one of the reasons they strive to achieve goals without wasting resources.

AC 2.3: Evaluate the contingency framework for strategic planning and development.

Answer:

A contingency framework is a versatile management control strategy, which acknowledges that no one way of planning or controlling an organisation exists. Rather, the most effective approach and control systems are based on the size, structure, environment and resources of the organisation. 

1.Knowledge about the Contingency Framework.

According to the contingency framework, the control systems should correspond to the context of the organisation.
The important factors influencing the framework include:

• Organisation size: Direct supervision can be applied in small businesses, but in bigger companies, formal reporting is required.
• Environment: A dynamic market needs to be controlled flexibly; a stable environment is allowed to base itself on standard practices.
• Technology and process: The complicated production might demand high-level operational controls.
• Human factors: The controls most effective depend on skills, motivation and culture.

Scenario example: in a mid-sized company where customer demand is changing fast, it may not be suitable to have a rigid budgeting system. Rather, the managers can respond swiftly with the help of flexible control systems that track real-time sales information.

2.Position in Strategic Planning and Development.

The contingency framework is such that control systems assist in strategic goals, and at the same time, they are flexible.
Control methods are determined by managers depending on the circumstances:

• Budgets as cost management controls.
• Operations controls such as SOPs of uniform quality.
• Long-term growth strategic controls such as KPIs and balanced scorecards.

Example (scenario): In the case where your company is intending to introduce a new product, a flexible budgeting with market research and periodic review of the performance could be used as the contingency approach to suit the shifting customer tastes. 

3.Benefits of a Contingency Framework.

• Flexibility: The controls can change depending on the circumstances.
• Introduction Consistency with Strategy: Alignment with strategy assures alignment of controls with strategy instead of impeding it.
• Better Decision-Making: Managers apply the appropriate tools to the appropriate environment, making them more effective.
• Motivation among Employees: Custom-made controls take into account employee abilities and promote participation.

BA601 Task 3. Be able to evaluate the control systems in an organisation

AC 3.1 Evaluate the use of project management tools in an organisation

Answer:

Project management tools are vital control mechanisms within organisations since they enable organisations to plan, monitor, and complete projects in an efficient manner. These tools make sure that the resources are put into effective use, deadlines are met and that the project's objectives are in line with the strategic objectives of the organisation. 

1.Planning and Scheduling Tools.

Gantt charts, project timelines, and work breakdown structures (WBS) are tools that enable managers to visualise what is required to be done, when and what is due, and dependencies.
Examples (scenario): In a medium-sized business with a new product, a Gantt chart can give your team a clear understanding of when the design, production and marketing activities should be accomplished and eliminate the chance of delays.

2.Tool of Resource and Budget Management.

Project optimisation software like MS Project or Trello assists in monitoring resources, budgets, and expenses. Managers are able to keep track of expenditure and allocate resources without overspending or underutilising.
Example: In the software, you are able to track the costs of materials and the hours of labour. By tracking this, you are able to see whether the project is within the budget and whether the employees are given duties which suit them. The project management experts have approximately thirty-five years to prepare the proposal. The project management specialists have about thirty-five years to make up the proposal.

3.Communication Media and Cooperation Tools.

Applications such as Slack, Asana, or Microsoft Teams enable communication between a team in real-time, document sharing, and progress reports. They also enhance the visibility, decrease misinterpretations, and enhance coordination in a team.
Scenario: Your team can automatically update milestones on a project, and all parties are in agreement, and any problems are tackled promptly.

4.Monitoring and Evaluation Instruments.

KPI trackers and project dashboards ensure data on real-time performance. Managers can easily spot delays, lack of resources, or quality problems and take the necessary corrective measures.
Example: A project dashboard with production status in relation to the schedule will enable you to make an early intervention to keep the project moving. 

AC 3.2 Assess the nature of control systems in a small business. 

Answer:

The control systems in small businesses are systems that assist managers to keep track of performance, directing employee behaviour, and efficiently accomplishing organisational goals. The size of the business, number of management layers, and the close-knit teams pooled together make the small business have relatively simpler and less rigid control systems compared to the large organisations. 

1.Informal Control Systems

Personal communication and observation, as well as direct supervision, are common in small businesses. Managers are regularly in contact with employees and thus are able to detect and rectify problems within a short duration of time.
Example (scenario): Being a top manager, you could visit production departments every day and review the quality and give individual instructions.

2.Financial Control and Budgetary Control.

This is even with simple accounting and budgeting systems that small businesses will use to monitor income, expenses, and cash flow. These systems are used to ensure financial discipline and decision-making.
Example: it is possible with sales monitoring on the basis of comparisons with budgets: in this way, you will be able to modify marketing activities or regulate operational costs. 

3.Operational Controls

Consistency in processes is provided by procedures, checklists and standard operating practices. Small businesses can achieve quality and efficiency even in the absence of systems which are complex through routine systems.
Scenario: A daily task checklist would make sure customer orders are completed correctly and within the right time.

4.Human and Behavioural Controls.

Informal but effective forms of control are culture, leadership, and employee accountability, to which small businesses are focusing. Motivation, feedback, and recognition are all means by which managers affect behaviour as opposed to formal systems.
Examples: The employee reward system, which rewards staff based on their performance against targets, will motivate and orient their behaviour towards corporate objectives. (Northouse, 2021

AC 3.3 Assess the process of discovering strategic core competence in a small business.

Answer:

The core competencies are the unique strengths and capabilities that provide an organisation with a competitive advantage. The identification of these competencies is essential in a small business since the managers can utilise them to concentrate on areas that build value, distinguish themselves in the market, and enhance growth in the long term. 

1.Organisational Resources Analysis.

The initial process is to determine the tangible and intangible resources of the organisation, including the skilled workers, technology, processes, and reputation.
Example (scenario): In a small manufacturing company, it can be seen that testing the knowledge of the team in terms of custom designs could be one of the key strengths that would not be easily reproduced by competitors.

2.Analysing Processes and Capabilities.

The managers examine the utilisation of resources in an attempt to provide value to the customers. Some of the major questions are: What processes are very efficient? What are the products or services that are most recognised by the customers?
Example: In case the business has continuously provided quality items at the right time, operational efficiency might be a core competency. 

3.Competitor Benchmarking.

The comparison of the business performance and the competitors will help to outline the special strengths of the business.
Sample: When the rivals find it difficult to provide personalised services, but your team has no problems with it, it becomes a strategic core competence.

4.Correlation of Competencies and Strategy.

Having noted, core competencies are incorporated in the organisation's strategic planning and control systems.
Examples: In this case, your management control system may target the protection and improvement of these core competency needs, such as investing in staff training or process improvements.

 AC 3.4 Evaluate the use of management control systems

Answer: 

Management control systems (MCS) are mechanisms and procedures that assist managers in planning, overseeing and controlling organisational operations with the aim of accomplishing strategic goals. They give a guideline on how performance can be measured, how behaviour can be influenced and how decision making can be enhanced. MCS are critical in a small or medium-sized business to coordinate day-to-day operations and long-term goals. 

1.Financial Controls

There are financial management systems like budgets, cash flow monitoring and cost control that can assist in providing efficiency in the usage of resources.
Example (scenario): Monthly budget reviews enable you to notice any overspending in one of the departments and establish a corrective measure, which keeps the business in a healthy financial condition.

2.Operational Controls

The consistency and efficiency are ensured by operational controls such as standard operating procedures (SOPs), quality checks and inventory management.
Examples: Production tasks can be implemented using a checklist to make sure that there are quality products and the deadline is met.

3.Human Resource Controls

Employee behaviour and motivation are guided by systems like performance appraisals, training and behavioural standards.
Example: A semiannual appraisal would make the employees realise what is expected of them and enhance their performance.

4.Strategic Controls

KPIs, management by objectives (MBO), and balanced scorecards are some of the tools that have been used to connect long-term strategy with everyday activities.
Examples: A balanced scorecard can be used to monitor customer satisfaction, process efficiency, and sales performance as a way of enabling the management to measure success and also change strategies. 

5.Advantages of Management Control System.

• MCS enhance accountability, resources, and strategic alignment.
• They assist in the decision-making process by giving real-time performance data.
• They inspire workers by explaining the objectives and desired behaviours.