ACCG828: IHG Stakeholder Analysis - Management Control Systems Case

This case study provides an analysis of InterContinental Hotels Group (IHG) and its stakeholders, focusing on the application of management control systems (MCS). It identifies key stakeholders such as shareholders, colleagues, customers, and suppliers, and examines the control mechanisms IHG employs to manage these relationships. The analysis covers various control types, including results control, action control, personnel control, and cultural control, highlighting their advantages and disadvantages in the context of IHG's operations. The study also addresses potential issues like incomplete meeting records, employee dissatisfaction, and the need for cost control in supplier relationships, emphasizing the importance of aligning control systems with strategic objectives. It further examines the role of technology and innovation in MCS design, referencing relevant literature to support the analysis. The case study concludes by underscoring the necessity for IHG to continuously evaluate and refine its MCS to ensure optimal performance and stakeholder satisfaction.

Case Study Analysis
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1.4 The relevant stakeholders of IHG
IHG operates at the helm of the global hospitality industry with operations in every continent.
With such a massive scale of operation, there are several stakeholders in the company.
The first one is shareholder. Shareholders take part in the annual general meeting (AGM) and
receive the financial reporting in the meeting. What is more, shareholders obtain the
explanations about environmental and social issues from IHG governance. According to the
annual reports of the company, it was a result control that there was a high level of
shareholder satisfaction as 98% of them voted in favour of the resolutions proposed by the
company (IHG, 2017).
Besides, IHG works together with Hotel Owners Association to search for more interests for
stakeholders. The meetings and surveys between the two parties are helpful for IHG to
implement the brand development strategy. Under the MCS, the incomplete and inaccuracy
meeting records may be the problem that IHG has to face with (IHG, 2017). Action control
Action control can be included for the organization apart from results, personnel and cultural
controls. Action control included for IHG will allow it to overcoming challenges faced by the
organization. Action control will provide the organization with ample opportunities to
conduct meetings and surveys with two parties for developing strategy. Typology in
management control allows designing and evaluation of elements of MCS. A management
control package provides an organization with capabilities to have control over its various
work areas. Moreover, it allows making statement regarding the organization by means of
data collected for the same.
Another stakeholder is the colleagues, IHG would publish information through intranet, while
obtain feedback from employees by organizing internal activities, such as surveys and
conferences. Under result controls, IHG use employee engagement survey to collect the
feedback from the employees twice a year to ensure all the employees are having a job in a
good environment. According to the survey, IHG can understand employee’s thinking and
feeling about the company and the results of the survey would influence company’s actions or
decisions. Although there were 97% of individuals participate in the survey, which means the
results were accuracy, the scores changed from 88.7% in 2016 to 85% in 2017, which means
employees become unsatisfied with the policies. The scores depend on the participation rate
and the scores. However, it is difficult to find the participation rate in 2016, thus, it is less
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possible to judge whether 2017 is better than 2016 (IHG, 2017). action control adv. Disadv,
cost of control Through Action Control system, incomplete and inaccurate meeting records
can be dealt with as the Company’s stakeholders can take actions for designing appropriate
control mechanism for meetings. Disadvantages of action control include incorporating
inappropriate steps within this control type. Associated control includes delegating personnel
solely to cater to control mechanisms. Other control system costs includes making use of
systems that can allow designing of meetings and recording them.
Stakeholders also include customers, who are the downstream of the industry chain.
Customers who become the member of IHG Rewards Club would obtain points by booking
hotels and use points by enjoying redemption and discount. The IHG Reward Club is useful
for IHG to attract and retain customers. In addition, customers would participate in the
satisfaction survey to provide suggestions. Under result controls, according to the survey, the
customer satisfaction rate increased by 3% from 2014 to 2017, because IHG provided more
training to employees in order to increase the service quality in the personnel controls (IHG,
2017). personnel control, cost of control
Personnel control is essential for the organization to cater to its services in an unhindered
manner. Personnel of the organization will be able to cater to services to its customers in an
effective manner. Personnel control will be integrated by means of performance objectives
that will be set for them.
Cost control will have to be integrated such that the organization does not over-exceed its
cost structures in order to cater to strategic objectives for the organization. Cost control will
be conducted by setting an appropriate budget for the process of incorporating strategic
initiatives. Cost control will help stay within budget and cater to all objectives that has been
set by the organization.
The enhancement of a customer relationship management team would bring a large number
of problems. Firstly, whether the investment would bring the higher customer satisfaction and
the higher revenue should be measured under result control. Secondly, the problem is whether
the system could recruit the suitable employees for both improving the customer relationship
and maintaining the operation of the system. More importantly, IHG should monitor their
behaviors under action controls and improve their recognition under cultural controls (IHG,
2015). result control, action control, cultural control, cost of control
Results control will allow the organization to have a control over the outcomes that is
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generated by the organization. An organization need to have control over its results in order
to be successful and be able to attain objectives ascertained by the organization.
Action control will allow the organization to direct performance action of the Company
towards goals and objectives set.
Cultural control will help enhancing current organization culture prevalent to direct
employees towards goals and objectives.
Cost of control is an essential component for every organization which allows performing
within a budgetary guideline.
Compare with customers, suppliers, the upstream of the industry chain, are other type of
stakeholders. Quality, timely delivery of materials and services for the hotels are the major
criteria for IHG to choose appropriate suppliers. IHG upgraded its supplier database and
increased supplier expenses from $59 million in 2016 to $66 million in 2017 (IHG, 2017).
However, whether the increasing supplier expenses bring the higher profit margin and the
higher customer satisfaction may be the problem that IHG should take result controls into
consideration. result control, cost of control
Result control will help the organization tally its initiatives with the industry. There are
various outcomes that the organization is set to achieve through its suppliers, customers,
employees and other relevant internal stakeholders. The organization can ascertain KPI
scores along with other parameters in order to ascertain performance related outcomes.
Cost of control reveals that there has been cost overrun in the current organization especially
related to supplier’s costs. Through cost control initiatives, the organization will aim at
meeting its budgetary overrun. Meaning that the in the long run the organization will be able
to meet its objectives only if it takes into consideration
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