Impact of Ineffective Internal Controls

This assignment examines the relationship between ineffective internal controls over financial reporting and a firm's operational efficiency, specifically focusing on inventory management. Students are expected to analyze relevant research papers and provide insights into the consequences of inadequate internal control systems on operations.

MANAGEMENT AND
OPERATION

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1 ...........................................................................................................................................1
P1. Differentiating the role of leader and function of manager..................................................1
P2. Application of role by leader and functions of manager in different situational contexts
with reference to M&S................................................................................................................2
P3. Applying different models and theories of approach including situational and systems
leadership affecting management operations in M&S................................................................4
TASK 2............................................................................................................................................5
P4. Key approaches towards operation management and role of leaders and managers at M&S
.....................................................................................................................................................5
P5. Importance and value of operations management to achieve business objectives of M&S
.....................................................................................................................................................6
P6. Factors within the M&S environment affecting the operational management and decision
making by leaders.......................................................................................................................7
Conclusion.......................................................................................................................................8
REFERENCES................................................................................................................................9
The Benefits of Situational Leadership®, 2012. [Online]. Available through:
<https://situational.com/the-cls-difference/situational-leadership-what-we-do/>. [Accessed On:
27th March 2017]...........................................................................................................................10

INTRODUCTION
In order to improve the efficiency in terms of production and developing products of high
quality the role played by leaders and managers is of very importance (Schönsleben, 2016). The
report has mainly taken into consideration the organization M&S. It is one of the major
multinational British retailers whose headquarters are located in the city of Westminster at
London. It is famous for its range of products in the field of luxury food items, home-products
and clothings. It was founded in the year of 1884 by Thomas Spencer in Leeds. It basically has a
total of 852 stores spread across UK. The main competitors of M&S are Aldi, ASDA, Tesco
which have established themselves in the retail industry as well.
The report also throws light upon the role of leaders manager's functions involved in
getting a task done from the employees. Furthermore, the importance of operational management
has been analysed (Oriola and Alabi, 2014). The various theories in association with
management and leadership have also been discussed.
TASK 1
P1. Differentiating the role of leader and function of manager
 Role of leader: In order to get work done from employees leaders are responsible.
All this is done in order for accomplishment of goals set by cited company.
Motivation of employees by leaders is an important role played by a leader.
Employees are motivated by the communication and leadership skills of leaders
for inheriting in them the vision envisioned by cited organization. They are made
to work in a certain manner for achievement of objectives. Influencing and
inspiring the employees in order for enhancing their efficiency & productivity
within organization is the major responsibility of leader.
 Function of managers: The designing and managing of work within an
organization in the direction of pre-determined goals & objectives of cited
company is the key responsibility of manager. In order for accomplishment of the
objectives of company, the managers develop a set of strategies and policies as
well. Different departments of organization have managers to manage the tasks in
a systematic way (McShane, 2013). Also, the regular appraisal employees is also
the duty of a manager in order to analyse the employee performance.
1

 Differentiating the role of leader and manager's function: Overall the roles that
are assigned to managers and leader can not be interchanged but there is a certain
difference that occurs between both entities. However, both of them work in order
to work for the accomplishment of goals & objectives of company.
More than just being a leader, manager has wider areas of organization to handle.
However, it is not necessary that leader has to do the role of manager. Their work area is
narrowed.
Fitting well in an organized structure is an important skill of manager. However informal
groups involve leader. Different functions of management are exercised by manager for
accomplishment of goals set by cited organization. Hence, the performance of a manager is
carried out in a more holistic manner in accordance with the management of tasks. Influence
over the people for achieving the group goals in a voluntary manner is done by leader. Only one
aspect of the various functions of management that accounts to be directing employees, is
performed by leader.
The top management is responsible for assigning the authority to manager. On the basis
of skills, knowledge and abilities possessed within a leader, authority is provided accordingly.
For achievement of success manager needs to be effective leader (Marshall, Metters and Pagell,
2016).There is no need to serve as manager by leader. Employees are directed to work by
managers. On the other hand employees are provided motivation to carry out their work by a
leader.
P2. Application of role by leader and functions of manager in different situational contexts with
reference to M&S
Management functions along with various style of leadership can be applied within the
environment of M&S in order to bring out the changes among policies and strategies. This is
done in order to make the required improvements in operations with reference to company and
reducing costs of manufacturing as well.
The organization is able to work in a desired direction for accomplishment of their
objectives set by them by effective functioning of manager and leader. Different functions of
management and numerous traits in the field of leadership help in functioning of the organization
in a proper manner. M&S is currently facing the issue of the fake use of their imitating products
2

an also the increase in prices material and equipment have made it essential that effective
implementation of management functions and leadership skills have to be applied. To overcome
such issues strategies have to be build up for handling the costs of manufactures and also ban use
of fake imitating products.
There are various theories of leadership and management available that can be utilised by
company for growth of its operations (Langabeer II and Helton, 2015). So in order to reduce
manufacturing costs of retail products the centre of attraction is the theories of management. This
is handled by the operational department of M&S.
In order to deal with the raised costs of purchasing and production-costs, the
contemporary theory of management is best suited to be applied by M&S. The suppliers who
will be providing products at lower costs to M&S are chosen based over the strategies planned
by managers of cited organization. Also, the employees are motivated in order to adopt the
advanced technologies currently in trend. This leads to enhancement of the cited organization's
performance. This is achieved by creating a trustworthy environment with aid of effective
communication skills.
In order for enhancement of the productivity of M&S products, policies and strategies are
being developed by managers with aid of classical management theory. The KAIZEN Theory
developed b y managers of M&S focusses upon the continuous efforts that are made by
managers to improve the production related activities. The participation by both managers and
workers can be involved in order for improvement of production and decreasing the costs as
well.
The capabilities and skills of employees are evaluated by managers with help of
behavioural theory of management at M&S (Krajewski, Ritzman and Malhotra, 2013). Workers
are effectively communicated with the policies and strategies planned by leaders in effective
manner.
Making up of a strategy based on a situational change is regarded under contingency
theory. Employees are influenced in order to bring out change in the operations for meeting
challenge prevailing in market. Efforts are made in order to low down the prices of products to
give a tough competition to other competitors.
Case study : Role of manager Richard Nicolosi
3

Mr Nicolosi became the associate general manager of Procter & Gamble paper product's
division in 1984. At this time, the position of the organization was very weak as compared to the
1970's status. The increased competitive pressure had put down the brand image of P&G which
led to company shares of disposable dipers falling from 75% (1970) to 52% (1984).
Keeping this situation in mind, Nicolosi majorly focussed upon needs & requirements of
division. His newly formulated strategy focussed upon building of groups that is teams in order
to achieve a task by effective management. And in context to this, weekly meetings were
organized. As per the Nahavandi's concept, self-managed teams encourage themselves for
making their own decisions. Each member of the team is regarded as leader. Nicolosi strictly
stays abide by Nahavandi's principles, to keep the teams focussed upon particular tasks, decision-
making facilitation and making interference whenever needed.
As a result, Nicolosi was found out to be emerging as successful leader in such situation.
He not at all pushed the employees in just the right direction but motivated them by satisfying all
their human needs. In a successful manner he managed to attain articulate the organization's
vision focusing mainly upon values. This way the market share of company gradually enhanced
thereby reducing employee turnover rate as well.
So M&S needs to employ managers like Richard Nicolosi. He set an example for all
other managers that in order to achieve the organizational goals, a manager needs to focus upon
the needs & requirements of employees in order to motivate them to work efficiently so that the
positioning of company within the market could be enhanced.
P3. Applying different models and theories of approach including situational and systems
leadership affecting management operations in M&S
Situational Leadership: The leaders of M&S are equipped with tools for a necessary &
skill-full navigation of increasingly diversified workforce and evolving in the marketplace
globally as well. So, executing it with simplicity and flexibility comes under the situational
leadership. Leaders are prepared in order to face the most challenging situation. The operation
management at M&S is usually affected by such an approach of leadership. Based upon the
variety of situations different leadership styles are adopted.
Systems Leadership: The success of a multi-level company needs standards of excellence
across organizations. Working across sectors and welding of teams altogether from organizations
that are diversified has to be done (Karlsson, 2016). The working style of employees is totally
4

controlled by leaders. They are effectively communicated about the current situation of M&S.
And in accordance with that, employees are made to work. So M&S need to fulfil the KAIZEN
strategy by making changes in their operations so that employee of operational department
introduce some improvements in their activities. These activities are related to the reduction of
manufacturing costs and improvement of production process.
Furthermore, the operational issues are sorted by the objectives set by the management of
cited organization. This is achieved by sharing of the process of decision making with workers.
The expertise which is assigned for the accomplishment of task consists of both managers and
employees. With the aid of object approach, motivation can be provided to employees. This
gives a sense of being valued in organization by the employees working at M&S. This type of
leadership is referred to as adaptive. In this category, the linkages and interactions that exist
between the different components associated with the cited organization. All sorts of
improvement related activities are considered along with development based activities as well.
Moreover, psychology and techniques of management development & organizational-
development are combined with the permission of this systematic approach. The aim of this
category of leadership is very much focussed about improving the performance of workers. Also,
efficiency is brought in the working way of employees (Jennings and Stadler, 2015). If the
organization with help of effective leaders is able to improve and enhance the overall
performance of employees then, the overall sales of M&S will also increase and this way they
could serve a tough competition its other competitors.
Another theory is available under which focus is entirely given to ongoing or prevailing
market scenario known as the chaos-theory. Here an immediate response is given from the side
of leaders and managers in order for making the organization work in that direction.
TASK 2
P4. Key approaches towards operation management and role of leaders and managers at M&S
A very important p[art of organization accounts to be the operation management. The
reason behind this importance is that the administration of activities in accordance with
organization and also improvement in quality of production is achieved with such an approach.
The resources that an organization possess within its environment are effectively utilised to the
fullest with aid of operational management. The main motto behind the functioning of
operational management is enhancement of the production with respect to the cited company by
5

applying the least amount of resources. The converting of raw materials into finished products is
also achieved by the involvement of this process. Operation management is of utter importance
because resources are effectively utilised in an efficient manner. New products and services are
developed with improved and enhanced quality. Conversion towards the finished products is
carried out at low costs. Also, the organization is provided the aid of eliminating its waste
materials generated (Hitt, Carnes and Xu, 2016).
The importance of team efforts for accomplishing tasks is signified by a type of
methodology known as six sigma. Team efforts ensure that the task is carried out in an effective
manner and that too within time. In order to develop a strategy for developing business at global
level, role of managers has been justified. This the resources can be utilised more effectively. So
at M&S the managers could effectively make benefits from the six sigma approach for effective
production and exclusion of waste. In order to apply the six sigma methodology, a leader's
responsibility is to make an implementation of efforts by a team. This has to be done in order to
enhance the performance of an organization.
Efficiency is brought in the production of company by the method of total quality
management. In order to improve the quality of products continuous efforts are made
by the approach of total quality management. In order to do so the needs and demands of
customers are kept in mind. Applying of strategies such as KAIZEN in M&S is the sole duty of
manager in consideration of total quality management. Here, the focus of management is
improving the production change. Leaders have to offer motivation to employees on regular time
intervals for working as a team (Galindo and Batta, 2013). This way the resistance of employees
towards adoption of any change can be improved.
Just In Time is the methodology of ordering the raw materials from suppliers at the time
of requirement whenever production is carried. Efficiency faces enhancement and inventory
waste generation is reduced to a great extent. Suggestions for improving the services & products
along with systems and processes account to be taken under consideration of continuous
improvement process. The betterment of an organization is guaranteed with help of this
approach. The inventory is kept under control by the department of operation and production
directed by the managers. Production needs to be improved on a regular basis.
P5. Importance and value of operations management to achieve business objectives of M&S
 Objectives of M&S:
6

1.Orienting the employees so that they could contribute more towards the organization.
2.Need for the successive management.
3.Retaining, motivating and attracting a higher calibre workforce in order to provide assistance
in transforming the business.
4.Regain the leadership in sector of speciality food items and clothing sector. So in order to do
this improvements in qualities and value of the products has to be done.
5.Providing plenty of room for improvement of sales. Transformational leadership: In this approach focus comes mainly upon the changes
that have to be implemented within the organization. These changes are an outcome of
the challenges that come in the way of M&S in the market. So facing the challenges gives
an opportunity of gaining competitive advantage over other rivalries. Subordinates are
provided the aid of working along with leaders through this style of leadership. This way
change that has to implemented can be executed. As a result, M&S is successful in
creation of position which is superior to the competitors.
 Achieving ethical business with the role of corporate governance: The companies are
provided information which showcase the importance that ethical standards of business
holds within a marketplace. The interests of stakeholders are kept in mind along with
environmental factors as well (Feng, McVay and Skaife, 2014). Also, maintenance of
sustainability is achieved. This as a whole accounts to be the working principle for
corporate governance. M&S can be provided help with principles of operational
management along with corporate governance for the fulfilment of the objectives that the
company has set to be achieved. Moreover, a certain level of customer satisfaction has to
be maintained as well. The success of every organization depends upon the amount of
customers who take their services or products. The more number of customers a company
is able to satisfy, higher is the sales or profits earned by cited company (Brown, Bessant
and Lamming, 2013). So customer is an important factor in deciding the success of an
organization. In order to achieve this corporate governance is effectively utilised so that
the services and products produced are able to meet the standards of expectations from
customers. This way customer satisfaction plays a key role towards taking organization to
newer heights.
7

P6. Factors within the M&S environment affecting the operational management and decision
making by leaders
Since customers play a key role in determining the success of an organization, focus is
being paid over maintenance of values, ethics and sustainability within the cited firm. Every
business that exists within a market involves some set of ethical rules and standards with respects
to a particular company. These have to be followed by every organization if they want to
establish themselves within the market place (Choe, 2015). All this is carried to maintain a
proper relationship with customers and also to provide them the level of satisfaction through
their quality services & products. This is achieved by following the ethical standards that have
been established within a business environment in accordance with operations of a company. In
order to give tough competition to other competitors in market and gain a superior position,
concept of development of sustainable business is adopted.
The corporate social responsibility within a company is influenced the relationship
between various traits of leadership and management functions. Strategies are made by managers
on the basis of policies that are adopted by them which can affect the overall social responsibility
of cited firm towards society (Slack, 2015). These policies which have been adopted are to be
effectively communicated to the whole organization. This effective communication is the
responsibility of the managers and working according to those policies have to looked by them
as well. At M&S the leaders make sure that such policies are effectively communicated to all
levels of the organization. Moreover, the employees are inspired and influenced to carry out their
performances in accordance with the planned strategies. The responsibility of a leader is to
allocate the resources to the employees and accordingly provide the necessary training for
achievement of their tasks (Smith, Maull and CL, 2014).
The factors that that affect the business environment of M&S accounts to be the
employee efficiency, depending upon which leadership decisions are taken. So the success of
operational management is dependent over the way in which employees of cited firm perform.
All these are accounted under the approaches of six sigma and total quality management. The
other factors which could affect the operational management of the cited organization are the
available resources (The Benefits of Situational Leadership®, 2012.). Availability of resources
will decide that whether the organization is able to implement changes as per planned strategy or
not.
8

Conclusion
Management and leadership are different from each other. In a much similar way, the role
played by leader and functioning of manager also differ from each other. But there exists some
similarity as well. Both of them work in same direction that is accomplishing the goals and
objectives set by a company. The report has taken into consideration the decision making process
with main reference to leaders and managers of M&S who are continuously making efforts to
improve production process and enhancing the product & service quality as well. This is
achieved by the application of various theories of management and leadership styles. If the
manufacturing costs are reduced then, the overall costs of the product will be able to satisfy the
customers. If customer satisfaction is achieved effectively then, the cited organization will
observe an enhancement of sales and profits. Moreover, with the aid of organization
management, the company will be able to gain competitive advantage over other competitors in
market.
9

REFERENCES
BOOKS AND JOURNALS
Brown, S., Bessant, J.R. and Lamming, R., 2013. Strategic operations management. Routledge.
Choe, J. M., 2015. The Influence Factors on the Activation of Environmental Innovations in
Manufacturing Firms. Korean Management Science Review. 32(3). pp.71-89.
Feng, M., Li, C., McVay, S. E. and Skaife, H., 2014. Does ineffective internal control over
financial reporting affect a firm's operations? Evidence from firms' inventory
management. The Accounting Review. 90(2). pp.529-557.
Galindo, G. and Batta, R., 2013. Review of recent developments in OR/MS research in disaster
operations management. European Journal of Operational Research. 230(2). pp.201-211.
Hitt, M. A., Carnes, C. M. and Xu, K., 2016. A current view of resource based theory in
operations management: A response to Bromiley and Rau. Journal of Operations
Management. 41(10). p.7e109.
Jennings, B. and Stadler, R., 2015. Resource management in clouds: Survey and research
challenges. Journal of Network and Systems Management. 23(3). pp.567-619.
Karlsson, C. ed., 2016. Research Methods for Operations Management. Routledge.
Krajewski, L. J., Ritzman, L. P. and Malhotra, M. K., 2013. Operations management: Processes
and supply chains (Vol. 1). New York: Pearson.
Langabeer II, J. R. and Helton, J., 2015. Health care operations management. Jones & Bartlett
Publishers.
Marshall, D., Metters, R. and Pagell, M., 2016. Changing a Leopard's Spots: A New Research
Direction for Organizational Culture in the Operations Management Field. Production and
Operations Management. 25(9). pp.1506-1512.
McShane, M. ed., 2013. An Introduction to Criminological Theory. Routledge.
Patterson, C., 2015. Sustainable tourism: Business development, operations and
management. Human Kinetics.
Oriola, E. O. and Alabi, M. O., 2014. Assessing river basin system potentials to enhance
sustainable irrigation farming operations and management in Nigeria. Journal of
Environmental Research and Development. 8(3). p.515.
Schönsleben, P., 2016. Integral logistics management: operations and supply chain management
within and across companies. CRC Press.
10

Slack, N., 2015. Operations strategy. John Wiley & Sons, Ltd.
Smith, L., Maull, R. and CL, I., 2014. Servitization and operations management: a service
dominant-logic approach. International Journal of Operations & Production Management.
34(2). pp.242-269.
ONLINE
The Benefits of Situational Leadership®, 2012. [Online]. Available through:
<https://situational.com/the-cls-difference/situational-leadership-what-we-do/>. [Accessed
On: 27th March 2017].
11