Control Management in Business: Case Study Analysis of Woolworth's

This report provides a comprehensive overview of control management, emphasizing its importance in organizational success. It defines control management, explores its components (setting standards, measuring performance, and taking corrective action), and highlights its role in achi...Read More

Running Head: Control Management 1
Control Management

Control management
Executive summary:
The term control states different explanations which actually depend on the situation in
which such term is used. In case of manufacturing company, term control refers to Device or
mechanism which is installed for the purpose of regulating the activities of the apparatus,
machine, person, or system. In other cases, control refers to controlling interest and in
management as an authority for managing the working of the organization. Control is
management process which mainly aims in achieving the defined goals of the organization
within the period of established timetable. Generally, control includes three components, and
these components are setting standards, measuring actual performance, and taking correct action.
Management control is considered as system by which the actions of the individuals and
groups working in the organization are constrained to perform certain actions in an effort to
achieve the organizational goals. Management control falls into two types of categories that are
regulative control and normative control, but these categories have several types. This paper
defines the control management system with the help of the case study.

Control management
Contents
Executive summary:....................................................................................................................................2
Introduction:...............................................................................................................................................4
Control management:.................................................................................................................................5
Case study:..............................................................................................................................................7
Conclusion:................................................................................................................................................13
References:................................................................................................................................................14

Control management
Introduction:
Control and controlling is considered as one of the most important managerial function
like planning, organizing, staffing, and directing. This function is important because this function
helps the management in checking errors and takes actions to rectify those errors for the purpose
of minimizing the deviation from standards, and for achieving the stated goals of the
organization. As per the modern concept, control is considered as foreseeing action but earlier
this function is only used when errors were detected. The main function of controlling is to
measure performance and conduct actions for ensuring desired results in the organization. it also
helps the organization in ensuring that objectives of the organization are consistent with the
accomplishments of the organization. It also helps in ensuring that organization is complied with
all the rules and policies adopted by the organization. Therefore, it is very important for the
organization to ensure that effective control system is implemented in the organization
(Banerjee, n.d.).
In the present era, control in management means setting the standards, measuring the
actual performance of the organization, and take corrective action in this regard. Robert J.
Meckler stated the definition of management control, and as per Robert, control in management
is defined as systematic effort conducted by the management of the business for the purpose of
comparing the performance with predetermined standards, plans, objectives for the purpose of
determine whether performance is in line with these standards or not. If performance does not
meet the predetermined standards then control management help in taking remedial action for the
purpose of ensuring that both human and corporate resources are used in the most effective and
efficient manner for achieving the corporate objectives.

Control management
Management control system is a system which collects and uses the information for the
purpose of evaluating the performance of various resources of organization such as human,
physical, financial and also the whole organization in context of strategies of the organization.
This system also influence of the organization resources behavior for implementing the strategies
of the organization. Management control system can be both formal and informal in nature. It is
used as tool which helps the management for directing the organization towards the strategic
objectives and also in getting the competitive advantage to the organization. Management control
is the only tool which is used by the managers in implementing the desired strategies (Guenther,
2011).
This paper defines the meaning and important of control management system with the
help of the case study, and for this purpose case study is Woolworth’s Limited (Retail chain).
This paper explains the detailed meaning and elements of control management in the
Woolworth’s Limited, and lastly paper is concluded with brief conclusion.
Control management:
An effective organization is the organization where mangers has understanding of
managing and controlling. The main purpose of control is to help the management in motivating
and directing the employees in their roles. Understanding the managerial control process and
systems is necessary for the purpose of ensuring long term effectiveness in the organization.
Without exercising enough control in an organization there is always threat of confusion and
chaos. However, in case control system choking in an organization then organization will suffer
from erosion of innovation and entrepreneurship. There are number of managers who use
number of methods for the purpose of controlling their organization. These executives generally
initiate with the mission statement of the corporation for the purpose of communicating the

Control management
primary objectives of the company to the employee of the company (carpenter & Bauyer, n.d.).
Some objectives of the organization include other factors such as finding new markets for their
products or maximize the earnings for primary shareholders of the organization. Top managers
of the organization work towards the objectives of the organization by assigning the specific
duties to direct reports. Subsequently, direct reports assign tasks to the employees within their
department. Top managers then take various key steps for the purpose of controlling the
progress of their goals (Jordan & Portis, 2014).
Management control system is considered as business tool which provides the idea of
how well an organization is performing in accordance with the objectives stated by organization.
A management control system is considered as:
 A way through which mangers can frame the objectives of the organization.
 A way through which mangers can frame the strategies and policies of the organization.
 A way through which mangers can assess the performance of internal corporate processes
 A way through manger show performances in relation to declared objectives and policies
(Libraries, n.d.; Devos, Buelens & Bouckenooghe, 2007).).
This system provides the knowledge to the managers for taking decisions and
corrective actions whenever necessary in the organization and this translates to the management
control. Following are the ways through which top managers can control their organization:
 Establishing the performance standards- top managers can exercise control in their
organization by establishing certain performance standards, and these standards are
mainly described in way of clear objectives. This can be understood through example,
president of the company desired to increase the stake of the company in the market and

Control management
also the profit by 5 to 10%.he also wants that his marketing vice president introduce
almost 10 new products within the year in the market. Generally, top manager has power
to hold various managers accountable for completing the goals of the organization in
form of job description. Job description is the summary of the primary job responsibilities
of the employee, and it is necessary that these job descriptions must be clearly defined by
both executives and human resources when direct reports are hired by top management.
 Measuring the improvement in the performance- Executives track the goals of the
organization on monthly or quarterly basis, and through this way they determine whether
their managers are on path to meet the goals of the organization. These organizations may
have periodic reviews for communicating the managers who is falling short in achieving
the goals of the organization. However, the most important tool used by top managers for
controlling the performance is the performance appraisal (Suttle, n.d.; Objective Control,
n.d.).

Control management
Case study:
There are number of organization which set strategies and goals for the purpose of
leading the organization towards the success and growth. Generally, organization is consists of
resources that are human resources and non-human resources which help the organization in its
production activities and rendering other services. Various organization set control system which
mainly assess the performance of the available resources in context of predetermined strategies
and goals set by the organization. It can be said that management control system mainly helps
the organization in achieving its objectives (Burke, 2013; Eddy, 2005).
Woolworths is the retail organization which is engaged in selling food, liquor, and
petroleum. This company is also engaged in home improvement also, and it is considered as the
biggest retail chain in the Australia. Organizational structure of this company includes the board
of directors, management board, and brands. The board of directors of the Woolworth has
responsibility to evaluate and oversee the operations of the organization. Some major brands of
Woolworth are BIG W, home improvement, supermarket and petrol, hotels, and liquor group.
For the purpose of managing the number of operations and ensures efficiency,
management of the Woolworths is involved in the management control system. Management
board of the Woolworths includes number of individuals at different positions such as CEO,
CFO, and managing director (Grabner & Moers, 2013). All of these managers are specialist in
their working areas, and they work in their areas for the purpose of collect, analyze and report
information related to the performance of these areas. In includes the study of the organization
strategy and also make the comparison between the predetermined strategies with the
performance of the specific unit of a group within an organization. This system helps the
Woolworths in achieving its predetermined objectives. This can be understood through example

Control management
(Jagd, 2010); performance measurement in Woolworth can be done in these areas that are home
improvements, hotels, and others. This performance measurement of the Woolworths includes
the detailed report on the units listed above. Performance measurement is done for the purpose of
assisting the board of directors of the company on how to allocate the resources and how to
evaluate the performance of these units. Generally, performance of these units is measured on the
basis of number of factors such as income earned by the units before interest, tax, and individual
relevant items. While conducting the performance measurement, organization not only reviews
the report but also considers and reviews other factors such as revenue, expenses and financial
cost of the group.
Revenue of the organization is based on the fact that organization is able to be
recognized, and expenses are depreciation and aromatization, employee benefits, and leases.
Depreciation and aromatization are done by estimating the useful life of an asset in the
organization, and this assessment helps the organization in determines by how much and after
what period asset should depreciate. Employee benefit actually considered as liability to the
company. These factors help the management in assessing the performance of the company.
After ensuring control management system, organization can ensures effective growth in the
sales which automatically increase the earnings of the organization. This can be understood
through diagram sated below:

Control management
Source: The Company, Bloomerg
It must be noted that each and every organization has its own culture, and this
culture identifies the by the organization itself. This culture includes the values which govern the
people in the organization and state how to behave and carry out themselves in the organization.
Another option to check whether organization strategies are met by using the control system is to
ensure that the employees behave as per the standards of the organization (Otley & Emmanuel,
2013). This section of the control management control system includes the communication,
coordination and motivation. It must be noted that, management control system includes various
components such as action, result, and personnel controls. Component related to action ensures
that employees must behave in such way that would benefit the organization. Component related
to results ensures that outcomes related to any particular performance in an organization are as
per the predetermined strategies. Personal control in the control management system ensures that
the type of employees work in the organization is experienced and possesses required
qualification, more than educational qualifications. This component also ensures that employees
of the organization are loyal towards the organization and hardworking.

Control management
In the management control system of Woolworths, some factors which contribute
in the action control are administration, separation of duties, and those definitions of actions
which are acceptable. The administration of the Woolworths is the sole decision maker in
Woolworth’s. Board of directors and their role is also considered as important in the control
management, and it can easily identified that decisions taken by the board makes after
influencing the actions of the employees. Woolworth is the organization which is big in size and
had different number of units, and may not require same management to conduct all its function
effectively, which means it is necessary to separate the duties. This helps the management in
reducing their workload and it also help in easily identifying those who are accountable for their
particular actions. Definitions of acceptable actions includes the observing the actions of
employee, tracking their actions, and provide reward for good actions. One way through which
Woolworth rewards its employees is remuneration, and remuneration paid to the employees is
clearly depends on the performance of the employees. Rewarding the good performance of the
employees is considered very important because through this way employees get motivated and
perform their best for the purpose of performing the actions which mainly aims in achieving the
strategies of the organization. Instead of keeping the track of the good actions this activity also
tracks the undesired actions of the employees and ensures that such things does not happen again
(Dekker, 2004).
Current remuneration structure of Woolworths is comprised of two component
structures that are:
 Fixed remuneration which includes base salary, superannuation contributions, and if
appropriate then use of fully maintained motor vehicle.

Control management
 The variable or “at risk” component which is based on performance and also includes
cash based Short Term Incentive Plan (STIP) and a Long Term Incentive Plan (LTIP).
The complete package of remuneration related to all executives is designed for the
purpose of ensuring an appropriate mix of fixed remuneration which includes short term and
long term incentive opportunities. The relative weightage of fixed and varied components in
relation to target performance changes on the basis of role, level, and complexity. Generally,
proportion of remuneration risk increases on the basis of organization responsibility and also
accountability level. Woolworth’s requires significant proportion of senior executives under
which total potential reward is at risk for the purpose of awarding the performance in both the
short and long term. For the purpose of stating the relationship between the performance of the
company and individual, Woolworths mainly aims to position remuneration of all senior
executives at:
 The median of the relevant market for fixed remuneration.
 Third quartile of the relevant market for total remuneration for outstanding performance.
Target of Woolworth in terms of fixed and variable remuneration is as follows (PC, n.d.):
Percentage of total target remuneration
Fixed remuneration STIP LTIP
Directors report to CEO 40% 30% 30%
Other senior executives 60% 20% 20%
Generally, Woolworths makes sure that at the time when they are hiring the
employees for any post or position, then at that time they must set such conditions which result
in selection of deserving candidate. Woolworths also arrange some training programs for

Control management
providing training to their employees because training increase their knowledge related to the
particular job (Piltan, Mansoorzadeh, Akbari, Zare, & ShahryarZadeh, 2013; Grimshaw, n.d.).
There must be enough resources to facilitate the task done, which means Woolworths must
allocate its resources in fair manner and there must be enough resources to facilitate the task
done. This can be understood through example; director of human resource management must
ensure that allocation of human resources are must be done in such manner as it make jobs to be
done in efficient and effective way. Result of the action and performance control ensures that the
employees of the organization must perform such actions which can be put in place. These
dimensions generally differ from organization to organization (Cliff notes, n.d.). There is clear
example related to tight and loose controls, and dimension shows the criteria at which it is easy
to identify the impact of control system on the employees of the company. Tighter control
greatly influences the employees of the company such as when considering the tight actions
controls, then it can be easily seen that it has very high impact on the employees. They require
that employees of the Woolworths are accountable for each and every action they conduct in the
organization (Methner, Hamann & Nilsson, 2015).
They involve lot of constraints to the employees such as restrict the decision
making to the higher authorities and in the hand of top management only. It also includes the
determination of rules, procedures, and codes of conduct that must be followed by the employees
of the organization. Those actions which are not acceptable must be communicated to the
employees and organization must set some consequences for any such action. Woolworths can
also ensure tighter control if frequent and detailed reviews are done related to the performance of
the employees in the organization.

Control management
When there is lot of diversity in an organization, then cultural control in this regard
is generally loose or weak. Tight personnel control includes setting high qualifications for any
particular job. As compared to tight controls, loose control does not have high influence on the
employees of the organization. Loose controls have conditions and constraints. Lose control is
not specific on the regulation of the employees and thus it can cause confusion and ambiguity in
the working environment of the organization.
After considering the above facts it can be said that management control system is
very important aspect of the organization which involves large number of workers in the
organization, and it also helps in structuring the performance criteria of the organization. If
control management system of the organization is good then it can be said that performance of
the organization is good and this results in long term growth and success in the organization.
Conclusion:
This paper defines the control management system with the help of the case study of
Woolworths. Understanding the managerial control process and systems is necessary for the
purpose of ensuring long term effectiveness in the organization. Without exercising enough
control in an organization there is always threat of confusion and chaos. Control includes three
components, and these components are setting standards, measuring actual performance, and
taking correct action. In case of Woolworths, Woolworths, some factors which contribute in the
action control are administration, separation of duties, and those definitions of actions which are
acceptable.

Control management
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in Woolworths. In The Business of Social and Environmental Innovation (pp. 87-104).
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