Management Control System Evaluation of Oporto Restaurant NSW

This report provides an in-depth analysis of the management control system at Oporto, a fast-food restaurant chain based in New South Wales, Australia. It begins by introducing the organization's strategy, objectives, and business model, followed by a detailed examination of the existing management control system, based on data collected through interviews. The report identifies potential and observed problems within the system and suggests key actions to address these issues. A critical evaluation of the observed management control system is presented, along with practical recommendations for improvement, aimed at enhancing the restaurant's future competencies. The report concludes with a summary of the findings and recommendations, and the interview information is included in the appendix.

Running Head: MANAGEMENT CONTROL SYSTEM
Management Control System
Name of the Student
Name of the University
Author Note

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Executive Summary
The aim of the report is to explore and analyze the management control system in the Oporto –
fast food restaurant based in New South Wales (Australia). The report proceeds with the
introduction of the organizational, strategy, objectives and business model of the restaurant. In
the next step the report provides the existing management control system in the restaurant. The
entire report is based on the data collected through interviews. The report demonstrates the
strategy and objectives of the firm. The potential and observed problems are identified properly
along with the key actions to address the issues. The information regarding the interview is
attached in the appendix section. The report critically evaluates the observed management
control system and provides suitable practical suggestions on the improvement of the current
systems. After following the recommendations, the Oporto-fast food company can increase its
competencies in future. The report concludes by giving recommendations and an overview of
the entire report.

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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Overview of the Organization.................................................................................................3
The organizational strategy and objectives..............................................................................4
The Business Model................................................................................................................4
The potential and observed problems......................................................................................5
Probable key actions................................................................................................................6
Oporto Restaurant’s Management Control System.................................................................7
The action /result / personnel controls.....................................................................................9
Different dimensions of management control systems..........................................................10
The critical evaluation of the observed management control system....................................11
Improvement in the management control system (Practical suggestions).............................11
Conclusion.....................................................................................................................................13
Reference.......................................................................................................................................14
Appendix........................................................................................................................................15

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Introduction
The appropriate management control system helps and organization to make the right
business decisions and decrease the business risk for failure in future. Hence, it is mandatory to
review the management control system and make necessary amendments where necessary. The
purpose of this paper is to evaluate and assess the management control systems in Oporto –fast
food company especially the central station branch. The report will also make suggestions for
enhancements and improvements for better outcomes. Oporto is a famous fast food company
based on the Australian continent. It is mainly a restaurant franchise with a Portuguese theme.
The fast food restaurant specializes in the Portuguese style Chicken and variety of burgers
(Oporto.com 2019). The report will start with evaluating the current management control system
applied in the central station branch of the restaurant. The organizational strategy of the firm, the
objectives along with the business model will be demonstrated. Next, it will provide an overview
of the management control system in the case company and the information is collected through
the interviews. The interview questions will be attached in the appendix section. Notably, the
report will also holistically and critically analyze the observed management control system.
Lastly, the report will provide practical suggestions in order to improve the current system and
controls.
Discussion
Overview of the Organization
The Oporto-fast food restaurant is an Australia based well known fast food restaurant
specialized in Portuguese Style chicken and burgers too. The original store was founded in the
year 1986 and in the year 1995, the first franchise store was opened. The main headquarter of

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the company is situated in New South Wales with Craig Tozer as the acting CEO. The restaurant
primarily deals in products like burgers, salads, wraps, desserts and all kind of chicken products.
The restaurant has acquired its name from “Porto” that is the second largest city in Portugal. As
per the reports, the Oporto restaurant is considered to be among the fastest growing franchise in
Australia(Oporto.com 2019). The company opened 100 stores by the year 2007. In the same
year, Oporto became purchased by Craveable brands which also owns Red Rooster and Chicken
Treat. In the year 2013, the first restaurant in the Western Australia was opened for the first time
specifically in the South Perth.
The organizational strategy and objectives
The Oporto restaurant considers their customers to be the most important members of the
restaurant family. They are aimed at providing the best service to the customers by offering high
quality food that worth their money. Along with the high quality food at reasonable price, they
are also promised to the maintenance of their external and internal environment. The ‘feel good’
factor is taken seriously by the restaurant and above all they want to deliver an exotic experience
to the visitors(Oporto.com 2019). The organization also has a well –structured reward and
growth plan for the people because they are the founding bricks of the success of this franchisee.
The cost leadership strategy employed by the restaurant helps to stay preferable to the customers
(Xie and Chou 2017). The best quality food is obtained in this restaurant in reasonable price
which is lower than the market competitors such as Red Rooster and Chicken Treat. However,
the primary aim of the company remains being sustainable in the market by winning over the
hearts of the customers through the exceptional quality of food they serve.

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The Business Model
The business model of a company is a structured plan for the successful operations
having recognized the source of the revenues, the customer base, the products and the financing
details. The business models comprise of three intrinsic parts such as designing and
manufacturing of the product, selling the product tor the rights customers and the customer
payments or the money making strategy of the company (Roy 2015). There are different types of
business models such as the manufacturer, distributor, aggregator, retailer, franchisee and many
others. The Oporto - fast food restaurant has the franchisee type business model. The restaurant
is dedicated at the delivery of constant quality products as desired by the customers.
image – Types of business model
Source - (Dash and Bajpai 2015)

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Few of the most effective target customers of the company are the youngsters, the
businessman and the aged people with more family members too. They believe in the
collaboration of the employees, the suppliers and the franchisee which strengthens the possibility
of fulfilling the customer expectations. The achievement of the goals becomes easy by the
collaborative efforts of the internal and external members of the company (Hora, Bouwma-
Gearhart and Park 2017). The suppliers of the raw materials are supposed to provide the
materials in time and with highest safety. Since the employees of the restaurant are its main
resources and the cost –structure of the company comprises of the raw materials, the marketing
cost of the company and the raw material procurement. The revenues are generated from the
franchise restaurants of the company.
The potential and observed problems
The main issue with organizations for which they often fail to achieve the utmost
outcomes is the issue with the control, lack of proper direction, some personal limitations and
lack of motivation. Some of the potential and observed control problems in the restaurant are as
follows:
The lack of Motivation
It is true that money is one of the most effective factor for employee motivation. The
employees might feel demotivated when the company they work for is paying unfair wages to
them. As per the reports of the survey, it has been found that the employees have complaint
against the wages paid by the Oporto –fast food restaurant. It has also been found that there is a
lack of good coordination among the colleagues which might keep the customers frustrated. It is
possible that the employees do not feel that motivation to do such kind of jobs.

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Lack of Proper direction
The loss of direction in the employees might lead to failure in achieving the
organizational goals. When the vision and the mission of the company is not communicated
among the employees, it is futile to expect that they would accomplish what the company
expects from them. Hence, communication is an important factor which is less effective in the
Oporto-fast –food restaurant. The company is not much active in communicating the strategies
and policies among the members of the company. As per the statement of one staff, they extract
the necessary information from the news channels and intranet. Hence, the employees do not get
specific directions and not even know where they are going in their career.
The personal limitations
It has been also pointed out through the survey that few employees are there who feel
uncomfortable in mixing up with their colleagues. The misunderstanding and loss of good
communication happen quite often and not a rare case. The Oporto –fast –food restaurant is
trying to provide appropriate training programs in order to eradicate the cultural barrier and
improve the interpersonal skills. The root of the problem still exists.
Probable key actions
Hence, it can be said that the management control in essential in any business and
businesses might fail due to lack of it. The Oporto –fast food restaurant therefore, applies a range
of management control system such as the result control, the action control and the cultural
control. The action control is considered to be one of the most effective form of the entire
management control system. The next control method is the result control. In order to achieve
the best results, the company can set goals for the employees and announce rewards on the
achievement of the targets. It will enhance the motivation of the employees and they would strive

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to fulfill the target. The conversion of the organizational goal to the employee goal will bring in
the maximum service and production. As far as reward is concerned, the company can offer the
monetary and non-monetary rewards because different employees have different priorities. The
promotion in rank, appraisal, autonomy and job security are few of the attractive non-monetary
rewards.
Since the cultural aspect is necessary for the understanding of the vales of the
organization, more training programs must be conducted by an organization in order to help the
employee align their goals with the ultimate goals of the organization. The cultural control
management helps to reduce the negative effects on the performance of the organization and the
work environment. A written form of the code of ethics and values of the organization is likely to
modify the perception, action and behaviors of the employees.
Oporto Restaurant’s Management Control System
The organizational structure
The Oporto –fast food restaurant has employed a decentralized organizational structure.
The decentralized organizational structure is a type of structure where the daily operations are
observed and controlled by the top level management. They also observe the decision –making
responsibilities of the organization. The decentralized organizational structure is beneficial for
the business organizations in order to stay persistent in operating efficiently. The empowerment
of the lower level manager has leveraged the strength of teams in the organization. The
consequence is that, there is clearer and smoother flow of operations than before. The employees
when fund any difficulty in the customer service, can discuss about the issue with their team
manager and resolve it as soon as possible. They do not have to go the higher authorities for

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minor issues and wait for their response. The customers are also facilitated to experience better
service than they used to receive before.
Image -2 – Management control system
Source - (Rejikumar et al. 2018)
The responsibility centers
The restaurant has divided the responsibilities in different departments such as the
managerial responsibilities, the kitchen responsibilities and the customer service lobby and other
minor departments. The organizational performance is evaluated through the reports from the
responsibility centers. The restaurant has the window system, one for picking up the order and
another for making the payments for the orders. The entire process starting with the selection if
menu, making orders and ending with making the payments should be done in a disciplined
manner. Few trained staffs need to be there to assist the customers in everything they do
(Opresnik and Taisch 2015). The statement of the orders and the payment description pop up on
the screen and for ensuring the order twice. The Oporto employees are supposed to do their
expected job as fast as possible in order to clear the long queue of customers.

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The Kitchen responsibilities of the restaurant is also managed efficiently having multiple
and advanced cookers. They employ minimum four cookers in a busy day and two in other days.
The third cooker is used to cook the meat stuff and the first two are used to assemble the food.
As far as the managerial responsibilities are concerned, the first responsibility of the manager is
to organize the staffs ensuring that any staff is not missing. Another responsibility of the
manager is to help the customers when he has ay query or complaint. His duty also covers the
control of the customer rages and resolve their issues as soon as possible. The profit of the
company at the end of a busy day and safety of the operations are also supposed to be maintained
by the manager.
Another department is provided with the responsibility to handle the cash counter and the
cleaning up of the lobby where the customers usually sit and enjoy the food. Under this
department, the responsibility of the safe deposit of the payments of the customers also fall. On
the other hand, the sweeping, washing and wiping down of the tables are the concerns of the
cleaning department. The cleaning department is also responsible for the cleaning up of the
crockeries, the utensils and lids/cups in order to keep the front always pleasant and sorted out
(Rejikumar et al. 2018).
The Oporto-fast food restaurant has designed their differentiation strategy according to
the health consciousness of the people of the world. The fast food industry has found new ways
of differentiation and innovation as the trend of being ‘health-conscious’ has increased rapidly.
The company has utilized this trend and has initiated the trend of “low calorie” in its offerings.
This differentiation strategy has led the company to stand separate from the other market rivals
and gain the competitive advantage.