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Explain why the Otley and Berry notions about control maybe useful to the understanding of organisational activities.

Extracts from this document...

Introduction

Question 1) Explain why the Otley and Berry notions about control maybe useful to the understanding of organisational activities. 2) All organisations have controls in different parts of their work. Explain why these are necessary. Provide four different examples of these. 3) Re-state the four examples in (b). Explain what type of classification you will give to each type of control. To start with, an explanation of the meaning of control is important as any precise definition can be misleading. In various articles, we will often come across controls such as financial, management, operational control and many more but it should be noted the implication of each control is often different and a good understanding of each type is worth knowing. A clear distinction between management accounting and financial accounting is common in all text books, but it is not often the same for the control side, this is why I will first of all give a brief description of both. According to Otley et al, financial control is clearly concerned with the management of the finance function within organisations while management control is a general management function concerned with the achievement of overall organisational aims and objectives. From this point, it is clear that the description given is quite narrow, a broader definition of management accounting is further outlined below Lowe (1971) ...read more.

Middle

In the instance of the football activity, suppose the coach notices that four of his players are down with injury, his predictive model, based on his previous experience, indicates that his team might be in a more difficult situation. He further predicts that unless he buys players during the transfer window the objective of winning the league will not be achieved. In haste, he acquires players on loan and predicts and assesses the likely effect. It is obvious that by predicting the consequences of alternative control actions, problems can be anticipated rather than using a reactive model; organisations are able to plan its activities and decide on control actions it should implement. Furthermore, by identifying their objectives, they are able to measure organisational performance by comparing objectives and outcome. However, the only problem faced by the model can be found on the emphasis on predictive model considering the fact that predictive model of organisational behaviours can be inaccurate or weak as it can sometimes imply. Managers, thus, need to reveal their predictive models as organisational activities constantly changes. After considering the usefulness of Otley and Berry notion to the understanding of organisational activities it should be noted that the approach is based on the growing complexity of organisational activities and a clear consideration of why controls are found in different parts of their work needs to be explored in detail. ...read more.

Conclusion

Otley et al, pg. 233), it will be logical to state that different part of an organisation have different ways of thinking since there objectives differ, thus, each culture will have its own appropriate control. In conclusion, it can be found from the essay that a definition of control can often be misleading and Lowe (1971) distinguished various types of controls by giving a detailed definition of Management control. From the definition, it was obvious that the management control has become a complex process which led Otley and Berry (1980) to develop the four conditions stated in Tocher's (1970) cybernetic model and apply it to organisational activities. Out of the four conditions stated, it placed more emphasis on feed forward control than feed back control and the need for a predictive model. However, with the use of the example of a football activity, it was derived that the model is useful in the activity of planning, performance management and decision making by comparing objectives and outcome. The need for further consideration, however, lies on the inaccuracy and weaknesses of the predictive models. It was further stated that the complexity of organisations, cultural differences and the need for information coordination has made it necessary for them to have controls in different part of their work. Four types of cultures were mentioned as club, task, role and existential with examples and were classified into strategic planning, operational, management and social control respectively. ...read more.

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