Johnson Electronic: Management Control Report and Analysis

This report provides a detailed analysis of management control systems within Johnson Electronic, a motor provider company. It explores the evolution of control systems, organizational control for effective performance, the importance of accounting and budgeting in influencing human behavior, and the role of leadership as a control method. The report delves into core control systems, the relationship between planning and controlling, and the application of the contingency framework. Furthermore, it examines project management tools, the nature of control systems in small businesses, strategic core competence discovery, and an evaluation of management control system usage. The report emphasizes the significance of management control in monitoring activities, making informed decisions, and ensuring financial, physical, and human performance improvements. It highlights various control mechanisms, including management control, task control, organizational financial activity, and brand management, while also addressing the impact of budgeting and leadership on employee behavior and organizational success.

MANAGEMENT
CONTROL

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Evolution of the control system.............................................................................................1
1.2 Organisational control system for effective organisational performance..............................2
1.3 Importance of Accounting and Budgeting System to influence human behaviour...............3
1.4 Leadership as control method ...............................................................................................5
TASK 2............................................................................................................................................6
2.1 Core control system...............................................................................................................6
2.2 Relation between planning and controlling...........................................................................7
2.3 The contingency framework for the strategic planning.........................................................8
TASK 3............................................................................................................................................9
3.1 Explain the use of tools of project management in corporate organisation...........................9
3.2 Describe the nature of control system in the context of small businesses...........................10
3.3 Describe the process of discovering strategic core competence in a small businesses.......11
3.4 Evaluation of the use of management control system.........................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................15

INTRODUCTION
Johnson Electronic is a motor provider company which is based in Hong Kong. The
company is having manufacturing in around 18 counties. Johnson Electronic serves around
2500 customers. The firms having around 40000 employees. Around the globe the firm was able
to make sales of around 3.2 billion USD and net revenue of around 281 million USD. Johnson
Electronic is having its head office in Hong Kong and is listed in Hong Kong Stock Exchange.
Management control is the systematic efforts which are made by the management of the business
in order to do performance comparison on the basis of plans and standard which is done to take
actions which are remedial(Berry, Broadbent. and Otley, 2016). The process involves the
collection of the information carefully which can be about the person or a group of persons in
order to make decisions which are necessary for each and every individual. Here in the study
Evolution of the management control system, control system for the effective performance of the
organization, Importance of the accounting and the budgeting system in order to influence the
behavior of the human, methods of the leadership, a method to control, core system of the
organization, relationship which is in between planning and control, contingency framework, the
project management tools, small business control system, use of control system in management
these all topics are discussed in detail in the below topics.
TASK 1
1.1 Evolution of the control system
Control system manges, directs, commands, and also regulates the the other devices
behaviour by using the control loops. In which any type of quantity of the interest can get altered
at the level which is desired by changing the dynamics within the system. Evaluation of control
system is the idea in which the existing control system are developed in order to increase the
effectiveness of the Johnson Electric with the objective of achieving the goal of the company.
The control systems are used for the performance evaluation of the over all firm which include
the financial, physical as well as human performance(Horovitz. and Webb, 2015). Evolution in
control system has resulted in increase the financial performance, physical and human
performance of the company. The control system used by the company are as follows
Management control
Management control is a control system in which all the activities of the company are
observed and then deeply analysed. In management control first of all the information is gathered
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in a routine. Then it is checked how the activities are progressing. The positive side of this
control is it helps in making decision on the basis of data which help the Johnson Electric by
increasing its efficiency if data collected is reliable. Monitoring the controls helps in making plan
and also making budgets as per the performance. There is also negative aspect of monitoring as it
result in increasing the stress level of the employees and the employees feel more anxious about
their performance and also this can result in dissatisfaction among the employees. So the
Johnson Electronic must do management control by taking care of the employees.
Task control
Task is assigned by the organisation if the work is in bulk and it generally happen in the
project where there is a large task in which each team is assigned different task. Under this type
of control system the work is effectively managed by dividing the work, this is done by
considering the human resource available. Different types of department are set for the particular
task and then the task is assigned on that basis. The positive aspect of the task assignment is it
reduces the work load and it is assigned to particular department which ensures the speciality of
the work(Kerr, Rouse. and de Villiers, 2015). There is also a negative aspect of the task
assignment is it increases the stress level of the employees if there are multiple task assigned to
them. So the Johnson Electronic must take care of the task assigned and should not give multiple
task which increases the stress level of the employees.
1.2 Organisational control system for effective organisational performance
One of the aim of Johnson Electric organisation control to help their department for more
better work together, to improve the performance of the employees, organization control might
share the detail of the organisation chart to everyone so that they come to know who report to
whom.
Overall organizational control
Johnson Electric Organizational control includes in development of rules and regulation,
procedure, guidelines, limits, for better controlling the work and process of department and
employees. This control can be done by setting norms for financial transaction, employee
behaviour and it require specific practices for all department as well as employee. Control
mainly depend on individual employees, by following all the guidelines and action of the
organisation(Stark, 2015).
Organizational financial activity
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It is an common internal control where target is regulate financial process. It helps to
improve communication and allows the manager to identify whether their efforts are matching to
the annual goal or not and prevent from fraud activities. This control system require each
department to submit and monitor the annual budget and setting limits on write checks, and large
purchase is to be pre-approved by the management and by holding regular audit and regular
budget help to analyses various potential issues before they get out of control. Like this the
organisation keep control over the financial activities(Fitzgerald. and Barenboim Manage Inc,
2015).
Organizational Brand Management
Organization to maximize their sales to a target customer Organization has to send
information or message regard its products and services. This not include the communitating
brand through marketing message but also buy the price where it sell the products. Johnson
Electric Organisation control over all decision regarding the products, price, promotion and
distribution and send to the marketing department for prior approval. It help to prevent
inconsistent brand messages and hence the brand management control & manage the brand of the
organization in the market.
Increase productivity and efficiency
Johnson Electric Organizational control also helps the department to work together. And
it is possible by specific communication procedure and by keeping weekly inter department
meeting & regular management memos(Fitzgerald. and Barenboim Manage Inc, 2015). To
improve individual employees performance company has to share detail organisation chart to
each employee, so everyone knows who report to whom. It increases the efficiency and
productivity of the employees.
1.3 Importance of Accounting and Budgeting System to influence human behaviour
Accounting information is very important for the management or to make an decision for
the Johnson Electric organization, and to run the business company need data, report, accurate
information about assets , liability, profit and debt. So Accounting is one of the important part of
business activity. Whereas Budgeting refers to planning for various business activity before it
implement. While preparing the budget account is very important.
Accounting System
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Accounting Information helps the Johnson Electric organization for decision making by
providing the various choice or option for alternative source of action. Accounting role is very
important and it can't be underestimated, and it can be substantiated by seeing the reaction of the
investor for final statement of the organization. Reaction to an organization that shows the
financial statement by this it come to know that company doing its performance very well from
past five year so that it influence the employee to invest in it such Johnson Electric organization
which goes into capital market. On other hand if the financial statement of the organization
shows that the organization is not doing well then the employee are more likely to be unhappy
and feel that they invested money in such an organization(Relationship between Planning and
controlling, 2008). And also the news of the new salary package also bring excitement among
the employee which increases the productivity among the employees even in anticipation of new
package. By this it shows that accounting information create negative, positive or neutral
behaviour.
Budgeting System
Dysfunctional Behaviour
Budgeting bring the positive behaviour among the people when the individual goal of the
manager are found to be match with the Johnson Electric organization goal The manager who
participate in the process of budget making it may feel happy for making a fair budget for an
organizational objective or goal. Such budget may influence or motivate others to improve in the
performance. But when the improper implementation of the budget and unrealistic management
expectation, in that case the reaction of the subordinate manager are found negative which in turn
have alter impact on aching the organizational goal or objective(Schellin, 2018). Such negative
individual behaviour find difficult to perform well with the organizational goal.
Participative Budgeting
Participative Budgeting increase the employees performance and moral, this budgeting
helps to communicate sense of responsibility towards the subordinate manager. Such budgeting
process give the proper solution of the problems which the employees face and it provide the
better understanding of dilemmas that the top management deal with. Since it influence the
subordinate manager to feel the Johnson Electric organization goal has it personal goal(Harrison.
and Lock, 2017).
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1.4 Leadership as control method
It is true that the success and failure of the Johnson Electric organization is depend on its
leader. leader is an art of managing and influence the employees and extract best performance
out of it. Which is beneficial for the growth of the organization.
Encourage the employees
Good leadership encourage people, leader motivate the employees to perform well to
contribute effectively and to work with full potential for the success of the team as well as for the
growth of the organisation And continuously guiding and motivate the employees time to time so
that their performance remain constant for longer period of time(Kerzner, 2017). Likewise it
control over all employees of the organization.
Implementing changes
Good leadership helps in analysing requirement of changes so that leaders make changes
at workplace accordingly. The effective leadership also helps the employees to work together as
close coordination at their workplace and also motivate and force the employee to work hard to
complete the Johnson Electric organization task with in the stimulated time frame. Sometime the
job mismatch at the workplace due to politics or any other region in that case it demotivates the
employees it impact on the employees to work together in this situation the leader influence the
employee and bring employee back on right track. Hence leader has major role in the
organization. Their contribution helps in implementing changes and controlling over
modification significantly(Ahn, Open Invention Network, 2016).
Conflict reduction
Under the best guidance of the leadership the employee stick over a long periods of time
in the Johnson Electric organization. As employees want that someone guide them properly and
correct employees whenever they are on wrong path, and a good leader always with the
employees and help them in assignment and keep on motivate to deliver good result every time.
It reduces the conflict between the employees and it influence the employee work with full
potential. It shows that leader have good control over the employee of the organization.
Long way in strengthening the bond
Effective leader goes long way in encouraging the relation like an agreement among the
employees and keep on motivate them to employee even in toughest time with a smile. In the
current scenario leaders are more mentor or speaker rather than being a strict boss(Schell. and
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Haggerty, Apple Inc, 2015). It is essential to more entrant with the employees and find out what
they expect from the Johnson Electric organization and take it initiative to help them by think out
of the box.
TASK 2
2.1 Core control system
The core management system controls of the Johnson Electronic contains the strategic
plans, budgets for the operations, Management information system, forecast of the financials,
etc. which all together monitor as well as direct the activities of the Johnson Electronic.
Benchmarking
Benchmarking is a control system in which the service and the products which are best in
the industry are ranked or benchmarked at the top position, the measuring of the performance is
done on the basis of the service or product which is best in the industry. The Benchmark lays
down the opportunities which are internal for the improvement(Benchmarking, 2019). For
example the Johnson Electronic have ranked its Electronic product Standard DC as per the
benchmarking system.
Strategic Plans
In strategic plan the strategies are set for the plan, in which the main things are given
priority. Here for the Johnson Electronic the strategic plan is all about selling its manufactured
engineering products as much as the company can(Sadgrove, 2016). For example if the Johnson
Electric have to achieve double sales by the next year ten the company must focus on the
methods by which the company must do marketing, the methods for marketing can be using
social media, email marketing etc.
Management information system (MIS)
MIS is also considered as the backbone of the operations. The MIS gathers the
information online, then do analysis of the information and at last use the analysed information
for making the management decision. MIS is a reporting, and it ensure the transparency of the
data. Johnson Electronic must make ensure that the software is always updated in order to
achieve maximum performance.
The company must make an appropriate budget for MIS in order avoid deviation. Budget
made by the Johnson Electronic must not be too much high or too much small. Budget for the
MIS takes into account materials, labour and overhead. For the fluent and efficient operation the
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actual performance must match the MIS budget. The Johnson Electronic in order to achieve great
result must make budget considering factors such as expense identification of the month, what
should be the production of the month, diving whatever may be the expenses by the production,
determining what is the revenue, and at last subtracting whatever the cost is per unit from the
revenue which is per unit.
It is the estimate of the financial outcomes of the future. There are various factors which
are taken into account in the financial forecast such as Financial modelling, Capital budgeting,
guidance for earning etc(Altieri. and Nicholls, 2018). For the financial forecast financial ratios,
future fixed and future variable cost area analysed and then on the basis of which discounted
cash flows are made in the MIS reports. The Johnson Electronic must focus on hiring sound
financial professional in order to achieve high performance in the form of sound financial
forecast in the MIS reports
2.2 Relation between planning and controlling
Panning and controlling are the two function which are separate in management but even
they are separate they share relationship with each other. Without planing the controlling activity
is baseless and without controlling the planning activities are meaningless. Accordingly the two
activities reinforce with each other. This is explained in the below points:
Planning is succeed by the controlling
First the plan is made and on the basis of the plan the controlling is done. The controlling
is preceded by the planning in which actual actions are taken based on the plan in order to
achieve the goal of the Johnson Electronic(Fleming. and Koppelman, 2016). So it is must by the
Johnson Electronic to make effective plan and must ensure that it coordinates with the
controlling.
Controlling forms sound basis for planning
As controlling takes into account the actual action this helps the planning to give an idea
how to plan considering the actual problems faced by the Johnson Electronic employees in
achieving the goal of the company. Via controlling it is known what should be the time to
complete the work and how can be the work completed. Controlling also helps in setting
appropriate budgets, because if the budgets are set too high then it can result in underachieving
of the goal as per the budget and if the budget is set too much small then can result in
overachieving of the activity, hence both of them are not fair(Hoye, 2018). So the Johnson
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Electronic must do Planning by taking into account the controlling activities which will result in
effectively and efficiently achieving the target of the company.
Controlling reduce the time and cost in planning.
Controlling can reduce the time in planning and will also save cost. As the controlling is
the result of practical things faced by the employees, controlling can save lots of time which will
be required in planning by research and doing analysis of the factors to consider and factors not
to consider. There is also a lot of cost involved in research in planning, report generation,
analysis, salary and wages, advertisement cost etc(Carver, 2015). which can be saved via
controlling activities.
2.3 The contingency framework for the strategic planning.
Contingency framework is based on the contingency theory in which nothing is
independent and there must be backup plan for each activity. As per this theory there is no best
way in which the Johnson Electronic can be organised. Hence the optimal course of action is
based on external as well as internal situations. The contingency framework takes into account
two variables such as decisions which are based on political factors and decision which are based
on complexity(Berry, Broadbent. and Otley, 2016). As per the strategic framework the strategies
decisions should be viewed as per the three models such as:
Decision making
The decision are made based on the contingency situation in which the situation may or
may not arise. Which can effect the strategic planning by gathering the information related to the
contingency, Identifying what are the alternatives apart from the one situation and changing the
plan by using the other situation, The evidence is weighed, review of the decision is done and
then at the last decision is taken in the strategic plan(Horovitz. and Webb, 2015). Johnson
Electronic must make decision on the basis of contingency framework. Which may result in
benefit of the company and also can result in loss of the company if the situation have not
emerged.
Complexity
The contingency framework is pretty complex in which the situation may or may not
arise. And the situation is also based on area like if the area is of rainy season then it is required
that action must be taken for the contingent plan. But the area is such where the prediction also
can not work what is going to be the weather then the situation becomes complex and to solve
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the issue complexity theory is used. So in contingency framework. So it is beneficial to make
contingency framework in order to prevent the company from the future losses which may arise
due to happening of unknowing situation(Schellin, 2018).
Political factor
Political factors can change anytime and they are external factors which can not be
negotiated. Political factors are the factors which are purely contingent so the Johnson Electric
must be make proper budget for the contingent situation due to political fluctuation which can be
by change in the government, change in the taxation laws, change in the economic conditions
due to the change in the government(Harrison. and Lock, 2017). If proper action is not taken in
advance to deal with the contingent political situations then it can result in losses to the Johnson
Electronic.
TASK 3
3.1 Explain the use of tools of project management in corporate organisation.
Projects management tools are used to solve the problems of choice of the way of
developing such systems or products by which the capacity of the organisations will enhanced.
To manage the projects of the organisation Johnson Electric the different tools could be applied.
Tools which applies on the organisation is depends on the size and the type of the organisations.
Johnson Electric could apply the following tools for its project management:-
Gantt Chart-
Gantt chart are generally used to track the progress of the task of the given project. This
tool of project management is come in use to show the working time of assignment in which the
project has to completed. The task is plotted graphically which further shows the planned time
for the completion of the task within the project. The time could be in days, weeks, or months.
The actual time taken to the completion of each task within the project is shown in Gantt chart,
graphically. If the company Johnson Electrics is planning to introduce a new project or an
activity then the company will use this tool of project management, for the scheduling of the
time for the completion of that project, we can say that, through this tool company will set a
standard time for the completion of the task. There are some benefits of Gantt chart is that it
makes understanding of scheduled tasks or activities easy. To develop the scenario of “what if”
also becomes easy because of Gantt chart(Altieri. and Nicholls, 2018). It also shows the
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difference in planned time and actual time taken for the completion of the assigned task or
projects.
PERT Chart-
Program Evaluation Review Technique (PERT) is a tool for planning and controlling,
which is generally used to define and control the task which is necessary for the completion of
the assigned projects. This chart can be produced either with available software which is for
project management or can be produced manually as well. In this chart management team of
Johnson electrics will ensures the parallel projects, which means the tasks within the projects
which can be completed at same time. The representation of task through PERT chart is known
as “Project Network”, which shows the interrelationships of the different elements of the project
and also show the sequence of performing the activities done by the management team of the
organisation Johnson Electrics. This tool of project management is used by the company Johnson
Electrics to monitor the path of the task which have to be followed for the completion of each
task in a project(Fleming. and Koppelman, 2016). If there is same path for different task then by
this tool Johnson Electrics will monitor that path, to complete the task at the same time, which
will further saves the time and task will completed in the set standard time. The benefits of PERT
chart is that the process of scheduling and planning of activities can be improved. It also saves
the time as it shows the projects which could be performed at same time.
3.2 Describe the nature of control system in the context of small businesses.
In the context of small businesses, the nature of management control system is as follow:-
A detector or sensor-
The management control system will detect the actual performance through the gathered
information, whether the process is going on in controlled manner or not. As it is the system
which has the feature of comparing the actual performance against the planned performance, it
will show the actual position of the management system.
An Assessor-
As we know every business set their goals according to the size and nature of the
business, but the actual achievement is far differ from the set objectives and goals. For example:
a firm set a goal to achieve the target to produce 100 units of the products in a week, but with the
available resources production of only 80 units is become possible which is not matched with the
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