Rent 9780273655961 | Management Control Systems : Performance Measurement, Evaluation and Incentives | Merchant, Kenneth; Van der Stede, Wim @knetbooks.com

Summary Table of Contents

Based on Kenneth Merchant's 'Modern Management Control Systems', this new book comprehensively addresses the complex and multidimensional subject of management control systems (MCSs). The discussions in the book assume a basic level of knowledge of management accounting, but the book is suitable for upper level undergraduates who have taken a prior management accounting course as well as for postgraduates and practicing professionals.<>The book presents an all-encompassing framework within which to consider management control issues. It also pr... MOREesents the needed technical subject content and summaries of the relevant research literature. But perhaps most importantly, it helps students developing their skills of applying the material to specific decision-making situations. This is done with real world text examples and an extensive set of case studies, which reflect the complexity that managers face when using MCSs.<>While the book focuses on the use and effects of "financial results controls," it also describes situations where financial controls are either not effective or are actually counterproductive and discusses alternatives that managers can use in those situations.

Management control systems (MCSs) is a complex and multidimensional subject, which is comprehensively and clearly addressed by this new book. It assumes a basic level of knowledge of management accounting, but it is suitable for upper level undergraduates who have taken a prior management accounting course, as well as for postgraduates and practising professionals.Features and benefits Combination of an extensive set of case studies, text and real-life examples creates a balanced picture of the concepts, theories and issues surrounding the subject and equips students with the requisite skills to apply them to specific decision-making situations that managers face. Case study selection includes many Harvard Business School cases, as well as a range of original cases covering businesses in Europe, the USA and beyond. Coverage of the latest management control-related tools and techniques, such as EVAtrade; and Balanced Scorecard. Inclusion of findings of empirical research on the effectiveness of MCS design within different organizational settings provides a solid foundation to the subject. Greater emphasis on management control in the context of strategy and planning offers students the opportunity to develop their analytical skills in this area. Focus on the use and effects of 'financial results controls' which dominate at managerial levels in all but the smallest organizations. It also provides a broad treatment of alternative management controls that puts the financially-oriented controls into the proper perspective. The authorsProfessor Kenneth A. Merchant is the current holder of the Deloitte & Touche LLP Chair of Accountancy at the University of Southern California. He is an experienced teacher, consultant and the author of seven books. Professor Wim A. Van der Stede is Assistant Professor of management accounting and control at the University of Southern California. He is an experienced author with his publications appearing in several different journals, and he has taught in many different countries.

Preface

Section I THE CONTROL FUNCTION OF MANAGEMENT

Management and Control

(20)

Manageme... MORE

(3)

Effects of management controls on behavior

(1)

Causes of management control problems

(3)

Characteristics of good management control

(1)

Control problem avoidance

(3)

Control alternatives

(1)

Outline of this book

(1)

Notes

(7)

Leo's Four-Plex Theater

(1)

Wong's Pharmacy

(1)

Private Fitness, Inc.

(4)

Section II MANAGEMENT CONTROL ALTERNATIVES AND THEIR EFFECTS

Results Controls

(44)

Instances of results controls

(2)

Results controls and the control problems

(1)

Elements of results controls

(3)

The effectiveness of results controls

(3)

Conclusion

(1)

Notes

(34)

Industrial Electronics, Inc.

(1)

Visionary Design Systems: Are incentives enough?

(18)

Armco, Inc.: Midwestern Steel Division

(14)

Action, Personnel, and Cultural Controls

(57)

Action controls

(3)

Action controls and the control problems

(1)

Prevention versus detection

(1)

The effectiveness of action controls

(2)

Personnel controls

(3)

Cultural controls

(6)

Personnel/cultural controls and the control problems

(1)

The effectiveness of personnel/cultural controls

(1)

Conclusion

(1)

Notes

(38)

The Internal Revenue Service: Automated Collection System

(11)

Alcon Laboratories, Inc. (A)

(11)

Patagonia, Inc.

110

(14)

Control Tightness (or Looseness)

124

(53)

Tight results control

124

(4)

Tight action controls

128

(3)

Tight personnel/cultural controls

131

(2)

Multiple forms of controls

133

(1)

Conclusion

133

(2)

Notes

135

(42)

The Lincoln Electric Company

136

(22)

Controls at the Sands Hotel and Casino

158

(19)

Direct and Indirect Control System Costs

177

(38)

Out-of-pocket costs

177

(1)

Behavioral displacement

178

(5)

Gamesmanship

183

(3)

Operating delays

186

(1)

Negative attitudes

187

(2)

Conclusion

189

(1)

Notes

190

(25)

Sears Auto Centers (A)

192

(15)

Disctech, Inc.

207

(8)

Designing and Evaluating Management Control Systems

215

(38)

What is desired and what is likely

215

(2)

Choice of controls

217

(5)

Choice of control tightness

222

(1)

Adapting to change

223

(1)

Keeping a behavioral focus

224

(1)

Maintaining good control

224

(1)

Notes

225

(28)

Rabobank Nederland

226

(12)

Air Tex Aviation

238

(15)

Section III FINANCIAL RESULTS CONTROL SYSTEMS

Financial Responsibility Centers and The Transfer Pricing Problem

253

(49)

Financial results control systems

253

(1)

Financial responsibility centers

254

(4)

Variety within FRC types

258

(1)

A hierarchy of FRCs

258

(1)

Choosing types of FRCs

259

(2)

Performance measurement: entities vs managers

261

(1)

The transfer pricing problem

262

(6)

Conclusion

268

(1)

Notes

269

(33)

Toyota Motor Sales, U.S.A., Inc.

271

(10)

Zumwald AG

281

(2)

Axeon N.V.

283

(7)

Boise Cascade Corporation

290

(12)

Planning and Budgeting Systems

302

(32)

Purposes of planning and budgeting systems

302

(1)

Planning cycles

303

(3)

Forecasting and contingency planning

306

(1)

Performance review processes

307

(1)

Variations in practice

307

(4)

Criticisms of companies' planning and budgeting processes

311

(1)

Conclusion

312

(1)

Notes

313

(21)

Citibank Indonesia

314

(7)

Amgen Inc.: Planning the unplannable

321

(13)

Financial Performance Targets

334

(33)

Types of financial performance targets

334

(4)

Major financial performance target issues

338

(8)

Conclusion

346

(1)

Notes

346

(21)

HCC Industries

348

(11)

Houston Fearless 76, Inc.

359

(8)

Performance-dependent Rewards (and Punishments)

367

(42)

Benefits of performance-dependent rewards

367

(1)

Forms of rewards and punishments

368

(1)

Monetary rewards

369

(3)

Group rewards

372

(1)

Links between rewards and results

373

(1)

Criteria for evaluating reward systems

374

(1)

Monetary rewards and the evaluation criteria

375

(2)

Designing monetary reward systems

377

(1)

Conclusion

378

(1)

Notes

379

(30)

Catalytic Solutions, Inc.

381

(8)

Loctite Company de Mexico, S.A. de C.V.

389

(6)

GTE Corporation: Long-term incentive plan

395

(14)

Section IV PERFORMANCE MEASUREMENT ISSUES AND THEIR EFFECTS

Accounting Performance Measures and their Effects

409

(28)

Value creation

409

(1)

Indicators of value creation

410

(1)

Advantages of APMs of performance

411

(1)

Limitations of APMs of performance

412

(2)

Investment and operating myopia

414

(1)

ROI measures of performance

415

(1)

Return-on-what?

416

(2)

Problems caused by ROI-type measures of performance

418

(3)

Residual income measures

421

(2)

Conclusion

423

(1)

Notes

423

(14)

Behavioral implications of airline depreciation accounting policy choices

425

(2)

Berkshire Industries PLC

427

(6)

Las Ferreterias de Mexico, S.A. de C.V.

433

(4)

Financial Results Control Remedies to the Myopia Problem

437

(23)

Addressing the myopia problems

437

(2)

Measure changes in shareholder value

439

(1)

Control investments

439

(2)

Improve/adjust accounting profit measures

441

(1)

Extend the measurement horizon

442

(1)

Measure a set of value drivers

443

(3)

Reduce pressure for short-term profit

446

(1)

Conclusion

446

(1)

Notes

447

(13)

Chadwick, Inc.: The Balanced Scorecard

448

(4)

Bank of the Desert (A)

452

(3)

Bank of the Desert (B)

455

(5)

Using Financial Results Controls in the Presence of Uncontrollable Factors

460

(33)

The controllability principle

461

(1)

Types of uncontrollable influences

462

(2)

The distorting effects of uncontrollables

464

(1)

Controlling for uncontrollables before the measurement period

464

(2)

Controlling for uncontrollables after the measurement period

466

(5)

Other uncontrollable factor issues

471

(1)

Adjusting for uncontrollables

471

(1)

Notes

472

(21)

Olympic Car Wash

473

(1)

Hoffman Discount Drugs, Inc.

474

(6)

Formosa Plastics Group

480

(8)

Beifang Chuang Ye Vehicle Group

488

(5)

Section V IMPORTANT MANAGEMENT CONTROL ROLES AND ETHICAL ISSUES

Controllers, Auditors and Boards of Directors

493

(60)

Controllers

493

(3)

Auditors

496

(5)

Boards of directors and audit committees

501

(5)

Conclusion

506

(1)

Notes

506

(47)

ITT Corporation: Control of the controllership function, 1977 versus 1991

508

(16)

Desktop Solutions, Inc. (A): Audit of the St. Louis branch

524

(8)

Desktop Solutions, Inc. (B): Audit of Operations Group Systems

532

(3)

Vector Aeromotive Corporation

535

(7)

Landale PLC

542

(11)

Management Control-related Ethical Issues and Analyses

553

(34)

The importance of good ethical analyses

554

(1)

Analyzing ethical issues

555

(4)

Some common management control-related ethical issues

559

(4)

Spreading good ethics within an organization

563

(2)

Conclusion

565

(1)

Notes

566

(21)

Two budget targets

568

(1)

Conservative accounting in the General Products Division

568

(1)

Education Food Services at Central Maine State University

569

(2)

Don Russell: Experiences of a Controller/CFO

571

(7)

Lernout & Hauspie Speech Products

578

(9)

Section VI SIGNIFICANT SITUATIONAL INFLUENCES ON MANAGEMENT CONTROL SYSTEMS

The Effects of Environmental Uncertainty, Organizational Strategy and Multinationality on Management Control Systems

587

(50)

Environmental uncertainty

588

(2)

Organizational strategy

590

(2)

Multinationality

592

(8)

Conclusion

600

(1)

Notes

601

(36)

Lincoln Electric: Venturing abroad

604

(16)

TECO Electric & Machinery Co. Ltd.

620

(6)

ConAgra Grocery Products Company

626

(11)

Management Control in Not-for-profit Organizations

637

(53)

Differences between for-profit and not-for-profit organizations

637

(1)

Goal ambiguity and conflict

638

(1)

Difficulty in measuring performance

639

(1)

Accounting differences

640

(1)

External scrutiny

641

(2)

Legal constraints

643

(1)

Employee characteristics

643

(1)

Services provided

644

(1)

Conclusion

644

(1)

Notes

645

(45)

Boston Lyric Opera

646

(15)

City of Yorba Linda, California

661

(11)

Waikerie Co-Operative Producers Ltd.

672

(8)

University of Southern California: Revenue Center Management System

680

(10)

Index

690

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