Essay on AG 1

Submitted By charlenebing
Words: 7767
Pages: 32
Open Document
AG-l: Anthony, R.K. and Govindarajan,

Control Systems, lih edition,

V.

(2007) Management

McGraw-Hill Irwin (Chapter 2-

Understanding Strategies, pp. 53-97).

Chapter

Anthony, R.K. and Govindarajan, V. (2007) Management
Control Systems, lih edition, McGraw-Hill Irwin (Chapter 2Understanding Strategies, pp. 53-71).

Understanding
Strategies
Management control systems are tools to implement strategies. Strategies differ between org,}nizations, and controls should be tailored to the require­ ments of specific strategies. Different strategies require different task prior­ ities; different key success factors; and different skills, perspectives, and behaviors. Thus, a continuing concern in the design of control systems should be whether the behavior induced by the system is the one called for by the strategy. Strategies are plans to achieve organization goals. Therefore, in this chap­ ter we first describe some typical goals in organizations. Then we discuss strategies at two levels in an organization: the corporate level and the business unit level. Strategies provide the broad context within which one can evaluate the optimality of the elements of the management control systems discussed in
Chapters 4 through 12. In Chapter 13 we discuss how to vary the form and structure of control systems in accordance with variations in corporate and business unit strategies.

Goals
Although we often refer to the goals of a corporation, a corporation does not have goals; it is an artificial being with no mind or decision-making ability of its own. Corporate goals are determined by the chief executive officer (CEO) of the corporation, with the advice of other members' of senior management, and they are usually ratified by the board of directors. In many corporations, the goals originally set by the founder persist for generations. Examples are
Henry Ford, Ford Motor Company; Alfred P. Sloan, General Motors Corpora­ tion; Walt Disney, Walt Disney Company; George Eastman, Eastman Kodak; and Sam Walton, Wal-Mart.

S4

Part One The Management Control Environment

Profitability
In a business, profitability is usually the most important goal. Profitability is expressed, in the broadest and most conceptually sound sense, by an equation that is the product of two ratios:
Revenues - Expenses
Revenues

"

Revenues
Investment

=

Return on Investment

An example is

$10,000 - $9,500 $10,000
"
$4,000
$10,000

.
=

12.5%

The first ratio in this equation is the profit margin percentage:

($10,000 - $9,500)/$10,000

=

5%

The second ratio is the investment turnover:

$10,0001$4,000

=

2.5 times

The product of these two ratios is the return on investment: 5% " 2.5 times
12.5%. Return on investment can be found by simply dividing profit (i.e., rev­
=

enues minus expenses) by investment, but this method does not draw attention to the two principal components: profit margin and investment turnover.
In the basic form of this equation, "investment" refers to the shareholders' investment, which consists of proceeds from the issuance of stock, plus re­ tained earnings. On!,'of management's responsibilities is to arrive at the right balance between the two main sources of financing: debt and equity. The shareholders' investment (i.e., equity) is the amount of financing that was not obtained by debt, that is, by borrowing. For many purposes, the source of financing is not relevant; "investment" thus means the total of debt capital and equity capital.
"Profitability" refers to profits in the long run, rather than in the current quarter or year. Many current expenditures (e.g., amounts spent on advertis­ ing or research and development) reduce current profits but increase profits over time.
Some CEOs stress only part of the profitability equation. Jack Welch, former
CEO of General Electric Company, explicitly focused on revenue; he stated that General Electric should not be in any business in which its sales revenues were not the largest or the second largest
Show More

Related Documents: Essay on AG 1

Galvanic Cell and Zn Cu Zn Essay

vs. Ag 1.31 Zn Ag Zn vs. Cu 0.90 Zn Cu Zn vs. Fe 0.43 Zn Fe Zn vs. Mg 0.52 Zn Mg Zn vs. Pb 0.40 Zn Pb Predicted and Measured Cell Potentials Anode Cathode Equation for the Cell Reaction Predicted Potential from Experimental Data Measured Potential Mg Pb Mg + Pb2+ → Mg2+ + Pb 0.40 – 0.52 = -0.12 V - 0.88 V Cu Ag Cu + Ag2+ → Cu2+ + Ag 1.31 – 0.90 = 0.41 V 0.39 V Fe Cu Fe + Cu2+ → Fe2+ + Cu 0.90 – 0.43 = 0.47 V 0.47 V Fe Ag Fe + Ag2+ → Fe2+ + Ag 1.31…

Words 667 - Pages 3

Essay on Unit 1 Lecture 2 Isotopes and Atomic Mass 2

Isotopes and Average Atomic Mass Unit 1 Lecture 2 Subatomic Particles Charge (e)* Proton +1 Electron -1 Mass (amu) 1 0.0005 (relatively 0) *Note: The charges are being compared Neutron relative to0each other, they do have 1 specific values (C/g), see Thomson slides Honors… • A neutral atom has an equal amount of protons and electrons • Protons and neutrons have equal masses (they are actually a little bit different, but this is several decimal places out and using a very expensive measuring…

Words 996 - Pages 4

Strategic Analysis of Adidas Ag Essay

Strategic Analysis of Adidas AG Table of Contents Sections | | Pages | Ⅰ. | Introduction | 3 | Ⅱ. | Suitability Evaluation | | | 1. Strategic Position | 3 | | 1.1 Competitive characteristic | 3 | | 1.11 Five Forces Framework | 3 | | 1.2 Strategic capabilities | 5 | | 1.21 Dynamic Capabilities | 5 | | 1.22 VRIN | 5 | | 1.3 Vertical Integration | 6 | | 2. Strategic options | 7 | | 2.1 Market development | 7 | | 2.11 Market Driver | 7 | | 2.12 Competitive…

Words 6709 - Pages 27

Enabling Full-Text Search For Business Objects In Mysap ERP

the SES methods and is then subject to the SES features, including simple full text and fuzzy search as well as advanced attribute search. The SES is part of the SAP NetWeaver Application Server (AS) ABAP. Created on: 07 Apr 2006 © 2006 SAP AG 1 Author Bios Karsten Hohage earned an MSc. in Germany in 1996 and his BSc. in Canada in 1992. From 1996 to 1998, he lent his talents to software journalism in Germany. He has been with SAP since 1999, and is now a Senior Product Specialist…

Words 2505 - Pages 11

A Brief Note On Operation Opment

Defining Activity Sources: Defining Asset Criticality Codes: Defining Work Request Types: Defining Work Priority Codes: Defining Maintained Groups: Item AREA AG CLASS AG TAG NO. Asset Group Department SERIAL NUMBER 00 EAM Asset Group Code SPARE 2 NONE Description Asset Group Description Template @Asset Group…

Words 925 - Pages 4

Redox and Oxidation Number Essay

Chem12 Oxidation and Reduction : Test 1a 40 1) Define : Oxidation 2)a) A piece of copper is placed in a silver nitrate solution. Write down the balanced net ionic equation (redox equation) for this reaction. b) Which species is the oxidizing agent? 3) Give the oxidation number of S in the species FSO3- ? 4) Is this a redox reaction : 2HCl + Na2S -> 2NaCl + H2S ? 5) In a redox reaction, the increase in the oxidation number of one species is accompanied by the decrease in the oxidation number of another…

Words 472 - Pages 2

Intercultural Business - Drug Tests in India Essay

abbreviations IV 1 Essential moral standards and norms 1 2 The practical value of economic ethics concepts 3 3 The RADAR concept 5 4 Business activity in India 8 5 Comparison of the cultures 9 6 Preperation for the NGO meeting 14 IV. Bibliography V Declaration II List of figures Figure 1: Overview of the different business ethics concepts 3 Figure 2: Points of the RADAR concept 5 Figure 3: Comparison of the differen cultural dimensions 9 IV List of abbreviations BVVB AG Bacteria and…

Words 4036 - Pages 17

SAP ERP Configuration Case

errors. At times, these must be fixed in order to move on. However, most of the time, they do not need to be fixed and you can simply enter through them. Green messages are obviously showing that nothing went wrong. © SAP AG Page 4 CASE STUDY Introduction Part I.1 – Enterprise Structure Learning Objective Configure the enterprise structure for Financial Accounting. Time XXX min Phase Scenario Within the first phase of this configuration project, the enterprise structure for…

Words 14973 - Pages 60

Essay on Lufthansa over the Last 90 Years

Early Beginnings Lufthansa is one of the oldest and most important airlines still in business. The company was founded as Deutsche Luft Hansa AG on 6 January 1926 when the Norddeutsche Lloyd, Junkers Luftverkehr AG and Deutsche Luft Hansa fused to become one company. This was initiated by the German government, because they were hoping to reduce the subvention they were paying to these indebted companies due to the ban on building found in the Treaty of Versailles. In December 1917 Hapag, Luftschiffbau…

Words 1986 - Pages 8

periodic table Essay

Havergal College SCH3U Oxidation number and IUPAC names of some polyatomic ions Oxidation number = +1 Name Ammonium Oxidation number = -1 Name Ion cyanide HSO4acetate H2PO3hypochlorite H2PO4chlorite MnO4chlorate NO2perchlorate NO3hydrogen carbonate OCNhydrogen oxalate OHhydrogen sulfite SCNOxidation number = -2 Name Ion carbonate HPO42oxalate O22chromate SO32dichromate SO42hydrogen phosphite S2O32Oxidation number = -3 Name Ion 3arsenite PO4 arsenate Ion NH4+…

Words 459 - Pages 2