Define Management Control System and explain its characterstics

 Definition   ::  Management Control System is defined a ‘set of policies and procedures designed to keep  operations going according to plan”

CHARACTERISTIC FEATURES OF MANAGEMENT CONTROL SYSTEM :

(a)    It focuses on ‘programmers’ and “responsibility centers’. Responsibility centre is an unit or sub unit or sub unit of an organization usually headed by a manager, who becomes responsible and accountable for the activities or that unit or sub unit.

(b)    For the purpose of control, managers use two types of data, viz. planned data and actual data. Planned data relate to estimate, budget, and standard and forecast details of future events or activities.

(c)  The control process is a set of actions such as programming, budgeting, monitoring, evaluating, analyzing and reporting. It is a continuous or an on going process. “Just as the navigator in an aircraft or sea voyage continually takes reading to ascertain whether or not he is relative to a planned course.

(d)  It is a ‘total system’ covering all aspects of a company’s operations. This is important because management function assures that all parts are balanced with one another. Unless management obtains information about each of them, coordination between all the activities is not possible.

(e)    The system is normally coordinated and integrated so that the same set of information can be used by other units for some other purpose. Management Control system is a set of interlocking sub systems generating a single system. While designing reporting format, this aspect is carefully considered by the systems manager.

(f)    The system is usually designed with financial figures and not with physical units of input and output. Because, monetary unit is the only common denominator which can be used to express heterogeneous input and resources, such as, kgs., pcs., litre, machine hour, labour hour, etc.

(g)    The system tends to be rhythmic, not ad hoc, one time or occasional. It follows a regular time table like daily, weekly, fortnightly, monthly, quarterly, half yearly and annual, year after year. All reports are prepared and forwarded to the persons mentioned in the circulation list at regular intervals.

(h)   Line and staff managers are equally involved in the control process. Line managers are, therefore, the focal points in management control.

(i)    G.W. Dalton and P.R. Lawrence added two other features in Management Control System:

(a)    Reciprocity. Every living being tries to control its environment as a mean of fulfilling its needs.

(b)  Expansibility. Control in an organization is a variable rather than a constant element, because it can expand or contract. The influence of an individual in the organization changes from time to time.

Finally, the purpose of a Management Control System is to encourage managers to take actions that are in the best interests of the company. Although systematic, the Management Control System is by no means mechanical. The process involves interactions among individuals.

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When is a company is said to be born?

Ans.: The Companies Act, 1956, provides for registration of companies. Persons interested in forming a company need to submit a memorandum of association (MOA) and articles of association (AOA) of the proposed company to the Registrar of Companies. A company is ‘born’ when the Registrar issues the certificate of incorporation.

Before incorporation, the interested persons would need to settle on the type of company they wish to form. The Companies Act makes it possible to incorporate different kinds of companies.

Some companies companies are created by Statutes (Acts), these are called statutory companies. Examples of statutory companies are Unit Trust of India and State Bank of India. In contrast to the statutory companies are the companies registered under the Companies Act.

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Explain the classification of Companies by Liability of Members

The Companies Act, 1956 provides for registration of different kinds of companies in India.

The companies can be classified in terms of the liability of its members :

1.    Limited companies

                  2.    Unlimited liability of the members
                  3.    Limited by guarantee

Companies can have different degrees of liabilities for its members. Limited companies are companies where the liability of the members is limited to the share contribution. Limited liability companies are also called share companies.

A company, however, can be created with the memorandum of association providing for unlimited liability of the members. Even in these companies, creditors cannot approach the shareholders directly and claim from their assets, for the fulfillment of the company’s obligations.

The creditor only has a right to ask for the dissolution of the company and claim its assets towards the repayment of his loan. In such a situation, that is, winding up of the company, the company can lay claims to the personal assets of the shareholders to meet its liabilities.

Another from of company with respect to liability is a company limited by guarantee. In such companies, the subscribers to the memorandum of association undertake to contribute a specified amount to the company so as to meet its liabilities in the case of winding up.

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One of the Public Ltd Companies

The companies can be classified in terms of the ownership and numbers of its share holders. According to this classification a company can be :

1. A Private Limited or

2. A Public Limited

·         A private company can be formed by minimum two or maximum 50 people subscribing to the memorandum of association.

·         All the members put together need to pay a minimum capital of Rs. One lakh at the time of registration.

·         The articles of association of a private company should impose restriction on the selling of shares by its shareholders.

·         Further, the articles should prohibit any invitation to the public to subscribe to the shares or debentures of the company.

 As a private company cannot ask the public to subscribe to its capital and the total number of shareholders cannot exceed 50, the company necessarily raises share capital from people known to the founding members. After incorporation, a private company can allot shares to new members to raise capital and start its business.

·         For forming a public company, at least seven persons should subscribe their name to the memorandum of association.

·         Unlike a private company, there is no restriction on the number of members.

·         For incorporating a public company, a minimum paid up capital of Rs. Five lakhs is required.

·         A public limited company can seek share contribution form the public.

Most of the public companies raise capital by inviting the public to subscribe. This process of inviting public subscription is stringently regulated by the Companies Act, Securities Exchange Board of India(SEBI) Act and regulations of individual stock exchanges.

  

The key difference between a private company and a public company is that a public company can raise its capital from the public. Thus, it has been made subject to restrictions, scrutiny and supervision, so as to protect the public interest.

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How to make Effective Management Communication?

Using the Three Step Writing Process for Routine and Positive Messages

• To stay focused in your overall business goals

• To emphasise the audience concerns whenever you write

Plan Your Message :

• Even simple messages can benefit from thoughtful planning:

a. Analyse the situation

b. Gather whatever information your audience wants to know

c. Select the right medium-IM and e-mails

d. Organise information effectively by defining the main idea, limiting your scope, selecting a direct or indirect approach and outlining your content

Write Your Message

• Most readers in this category will be either positive or neutral and hence direct approach is most desirable:

a. State the request or the main idea

b. Give necessary details

c. Close with a cordial request for specific action.

d. To maximise impact, give time to revise, produce, proofread and distribute your message

Making Routine Requests :

• For: information, action, products, adjustments, or other matters

• Audience is normally prepared to comply unless you are being unreasonable

Strategy For Routine Requests :

1. Introduction:

• State your Request upfront using Direct Approach.

• Write in a polite, undemanding personal tone

• Assume your audience will comply

• Be specific and precise

2. Body:

• Explain its importance and/or Justify your request

• Explain the potential benefits of responding

• Ask the most important questions first

• Ask only relevant questions

• Deal with one topic per question

• Using a list format help readers sort through multiple questions or requests

3. Close:

• A specific request

• Information about how you can be reached

• Clearly state any important deadline for the request

• An expression of appreciation or goodwill (however, don’t thank the reader in advance)

Common Examples of Routine Requests :

• Asking for information and Action

• Asking for recommendations

• Making claims and requesting adjustments

Asking for Information and Action :

• What you want to know or what you want your readers to do

• Why you are making the request

• Why it may be in your reader’s interest to help you

• Sometimes the purpose of routine request is to reestablish communication with former customers, suppliers

Asking for Recommendations :

• Always ask for permission before using someone as a reference

• Refresh the memory of any potential reference you haven’t been in touch for a while

• Close with appreciation, full contact details where the letter needs to be sent

• Enclose a stamped, preaddressed envelope

• Mention deadline if it is required

Making Claims and Requesting Adjustments

In your claim letter:

• Explain the problem and give details

• Provide backup information-facts

• Request specific action or ask the reader to propose a fair adjustment

• Document your claims

• Send copies and keep the original documents

• Maintain professional tone even if you are extremely frustrated

• Explain the benefits complying with the requests such as continued patronage

Sending Routine Replies and Positive Messages

• To communicate the information or the good news

• Answer all questions

• Provide all required details

• Leave the reader with a good impression of you and your firm

Strategy for Routine Replies and Positive Messages

Introduction:

• Use the direct organisational plan for positive messages

• Start with the main idea that is brief and to the point

• Be clear and concise

Instead of:

• I am pleased to inform you that after careful consideration of a delightfully talented pool of applicants, out HR committee has recommended you for appointment as a financial analyst.

• Make a direct approach and say we are pleased to appoint you as a financial analyst.

Body:

• Provide necessary details and explanation

• Maintain a supportive tone throughout

• Try to embed any negative information in a positive context

• Talk favorably about the choices the customer has made

Instead of:

• We no longer carry the Sportsgirl line of sweaters.

• Depending on the situation either suggest saying now we have comeup with similar but more trendy new line of swaters or if there are no alternatives suggest other good brand.

• End with a courteous close

• Make sure audience understands what to do next and how that action will benefit them

• Encourage them to act promptly

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Meaning of Economics

Adam Smith
Father of Economics

The word economy comes from the Greek word oikonomos, which means “one who manages a household.”

Que : What is Economics?

Ans : The branch of social science that deals with the production and distribution and consumption of goods and services and their management. Or :

Economics is the study of how the Society manages its scare resources. Or :

A social science that studies how individuals, governments, firms and nations make choices on allocating scarce resources to satisfy their unlimited wants. Economics can generally be broken down into: macroeconomics, which concentrates on the behavior of the aggregate economy; and microeconomics, which focuses on individual consumers.

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Introduction of Environment Protection Act, (1986)

The Environment Protection Act, 1986 was constituted on 19 Nov, 1986, to provide for the protection and improvement of environment and for matters connected with environment.

 OBJECTIVES:

·         To co-ordinate the activities of the various regulatory agencies already in existence

Jairam Ramesh, The Man
Who put Environment in front

·         To appoint environment officers to check environmental pollution

·         To improve the quality of life by protection of environment

·         Establishing environmental laboratories

·         To protect the forests and wildlife in the country

Sources and causes for the pollution

 Natural and man made sources. Though globally man made pollutants from ::  Combustion, Construction, Mining, Agriculture, Warfare, Chemical plants, Coal-fired power plants, Oil refineries, Petrochemical plants, Nuclear  waste, Large livestock farms (dairy cows, pigs, poultry, etc.), PVC factories, Plastics factories and other heavy industry are increasingly significant  in the pollution equation.

The Environment Protection Act, 1986 was constituted on 19 Nov, 1986, to provide for the protection and improvement of environment and for matters connected with environment.

There are four main chapters and different clauses under various chapters which lay down the standards, policies and act of environmental degradations and policies for improvement of environment and prevention of human beings from environmental hazards. The main outlines of this act  are described here .

First chapter describes the definitions of various entities that are related to environment. Here are excerpts of some of the definitions that are directly taken from the Act.

“Environment” includes water, air and land and the inter-relationship which exists among and between water, air and land, and human beings, other living creatures, plants, micro-organism and property.

“Environmental Pollutant” means any solid, liquid or gaseous substance present in such concentration as may be, or tend to be, injurious to environment

“Hazardous Substance” means any substance or preparation which, by reason of its chemical or physico-chemical properties or handling, is liable to cause harm to human beings, other living creatures, plant, micro-organism, property or the environment.

Second chapter describes the role of central government to take measures for environment protection and its improvement along with the economic development.

It includes the appointment of officers, power to give directions, rules to regulate environmental pollution, laying down procedures and standards for industrial waste, emissions, hazardous waste etc.

Third chapter deals with the prevention, control and abatement of environmental pollution.

As per the guidelines, a person running an industry or operation can not emit or discharge environmental pollutants in excess of the permissible limit.

Central government or its officers may take samples of air, water, soil or other substance from any factory for the purpose of analysis and upon failure to satisfy the norms, shall liable to be proceeded against and punished accordingly.

Chapter four lists miscellaneous clauses which are not pertaining to environment but are guidelines for functioning and conduct of officers and government representatives.

Power with Govt. under EPA (1986)

Section 3 of the Act gives extensive powers to the Central Government. It is empowered to make rules in the following areas:

·         Std of quality of air, water and soil for various areas

·         Maximum permissible level of pollutants for diff areas

·         Procedures & Safeguards for handling hazardous substances.

·         Prohibition & restrictions on location of Industries.

The enforcement of rules has been entrusted to the state pollution control Boards.

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Barriers before Intrapreneurs

As we all know that starting an enterprise is not easy, it requires efforts and proper planning. An entrepreneur needs to check market conditions before starting an enterprise. He/ She also need to generate resources and use them efficiently. Moreover, the entrepreneur needs to keep in mind various environmental and social aspects of the business, before starting the enterprise.

The entrepreneurial barriers are  :

• Economic Barriers :
1. Capital
2. Labour
3. Raw Materials
4. Technology  -  Machine & Other resources
5. Macro  Level Environment & its compliances

• Non Economic Barriers
1. Social Barriers
• Social Norms
• Practical Values
• Emotional Blocks

2. Personal Barriers
• Lack of Sustained Motivation
• Unclear or Ambiguous ideas
• Lack of Vision
• Lack of clear perception.  

Here , we try to evaluate these parameters  on Girish  Paranjpe Ex CEO of Wipro.   

Girish Paranjpe

Mr. Girish  Paranjpe served as Co-Chief Executive Officer of IT Business at Wipro Ltd., from April 18, 2008 to January 31,2011.

He has been with Wipro for more than 13 years and has headed the finance function in virtually all of Wipro's businesses.

In August 2000, he moved to a business role to head Wipro's fledgling BFSI (Financial Services) practice.

He served as a Director of Wipro Ltd., since April 18, 2008.

He served as Director of Wipro Technologies, Ltd.

He was a Member of Wipro's Corporate Executive Council.

Macro Economic Barriers :

Girish Paranjpe was a keynote speaker for the Fortune Conference, October 8, 2008 in London. Girish spoke about the various measures CEO’s across the world are taking to brace against the downturn. Innovation takes on a different meaning in this scenario. He talked about Wipro’s experience in co-innovating with the customer to help them through the current economic environment.

He introduced the concept of Value delivery where Wipro team got involved with its customers in getting the total solution for sustainable business during recession. It helped Wipro in maintaining a growth rate of 30% plus during bad patch of economy.

 Skill Labour & Knowledge Barriers (Economic) :

He took initiative in implementing the effective knowledge sharing and skill development models. These addressed needs for different levels in the organisation and the specific success behaviours at every role.

 1.        Entry-level program (ELP) - The program covers the junior management employees with the objective of developing managerial qualities in the employee. The target group is campus hires and lateral hires at junior level.

2.        New Leaders’ Program (NLP) - It is popularly known as NLP and aims at developing potential people managers, who have taken such roles or are likely to get into those roles in the near future.

3.       Wipro Leaders’ Program (WLP) - This program is for middle level leader with people, process, business development and project management responsibilities. These leaders are like the flag bearers of Wipro values and Wipro way of doing business. They not only walk the value talk the value but they also have a responsibility of assimilating new leaders with the Wipro culture.

4.       Business Leaders’ Program (BLP) - This is for senior leaders with business responsibility. At this level, people are trained up for revenue generation; and Profit & Loss responsibilities. The program covers commercial orientation, client relationship development, and team building and performance management responsibilities among other things.

5.       Strategic Leaders’ Program (SLP) - This program covers top management employees. The focus is on Vision, Values, Strategy, Global Thinking and Acting, Customer Focus and Building Star Performers. Wipro ties up with leading business schools of international repute to conduct this program for Wipro leaders.

Social Barriers :

He  was  a qualified  CA. By virtue of that to head the financial activities of any firm was quite natural and acceptable.  But he  moved to Business role and took the ownership of those responsibilities which are more acceptable for an Engineer with Management Qualifications. Such a  move socially is discouraged.

But  Mr Pranjpe overcome this thought and moved to accept the responsibilities that included the following business units: Financial Services, Communication, Media, Telecom and Technology vertical. He was also directly responsible for driving Consulting, Business Technology Services, Product Engineering Solutions and other functions under him were Global Delivery, CTO and CIO office & Operations.

Personal Barriers :

In the year 2008 he was appointed as Jt CEO of  WIPRO. Sharing that position is very rare. it is a more complex model. This joint-CEO model was built on strong collaboration and needs high degree of maturity and flexibility.  He took it positively and explained, “But it also has advantages. We took over in April 2008. By then, the clouds of the (financial) crisis were already on the horizon. So we needed more bandwidth at the top.”

When the clouds of financial crisis were over and organisation wanted to return to a simplified model at top, the decision was tough. He could have continued heading the finance portfolio of the business.

He told a newspaper, “So you can’t have collaboration and say that only one of you will succeed in this job. That does not foster collaboration. So it was either both of you will survive, succeed, or both of you will go. And that was always the understanding.”

His vision was clear and motivation intact after leaving WIPRO he accepted an even more challenging role in May, 2006 at Bloom Energy®, a Silicon Valley-based provider of breakthrough solid oxide fuel cell technology that produces clean, reliable, affordable onsite power. He joined as head of Bloom Energy International designated as Managing Director.

As part of his role, Mr Paranjpe will be responsible for developing the global market for Bloom Energy’s presence beyond the US. Mr Paranjpe will also focus on creating new solutions around the Bloom Energy Server, and the flagship Bloom Electrons offering. In an effort to ensure that clean energy reaches millions around the world, Mr Paranjpe will lead Bloom Energy’s initiative in partnering with energy industry innovators, and leading solution and infrastructure providers.

Clean  or Green energy was his dream even at WIPRO.

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