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Management control systems

Organisations as systems

1.1 Introduction

 An organisation is a social system, in which people combine
together to carry out the purpose(s) for which the organisation
exists.

1.2 Characteristics of systems

 A system is a set of interacting components that operate together to accomplish
a purpose. Essentially this consists of Input > process > output

 Companies are open systems – they react to their environment

 A system must have an objective – everything else is geared towards this

 Control - A system must be controlled to keep it stable or to allow it to change
safely. Control is dependent on receiving and processing information.

 Feedback control – 'The measurement of differences between planned
outputs and actual outputs achieved, and the modification of subsequent action
and/or plans to achieve future required results.'

– Negative feedback = feedback taken to reverse a deviation from
standard.

– Positive feedback = feedback taken to reinforce a deviation from
standard.

 Feedforward control – 'The forecasting of differences between actual and
planned outcomes and the implementation of actions before the event to
prevent such differences.'

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