## Organisational Control

Control = regulating and checking ongoing activities against pre-established standards, analysing deviations, and making corrections.

### Elements of the Control Process

1. Objectives of the business system.

2. A mechanism for monitoring and measuring performance against standards.

3. A mechanism for:

Comparing actual results with standards.
Detecting deviations from standards.
Learning new insights about the standards themselves.

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### Three Types of Organisational Control

#### A. Operational Control

Focuses on individual tasks or transactions (not aggregated functions).
Requires a clear-cut, measurable relationship between inputs and outputs (predetermined with least uncertainty).
Regulates processes within certain tolerances, irrespective of external conditions.
Examples: stock control (maintaining stocks between set limits), production control.

#### B. Management Control

More inclusive and aggregative than operational control — embraces a complete department, division, or the entire organisation.
Basic purpose: achieving enterprise goals (short-range and long-range) effectively and efficiently.
Robert Anthony's definition: "The process by which managers assure that resources are obtained and used effectively and efficiently in the accomplishment of the organisation's objectives."

#### C. Strategic Control

Schendel and Hofer's definition: "Strategic control focuses on the dual questions of whether: (a) the strategy is being implemented as planned; and (b) the results produced by the strategy are those intended."
Recognises the time gap between strategy formulation and implementation.
Process of evaluating strategy as it is formulated and implemented — not just at the end.
Directed towards identifying problems, changes in premises, and making necessary adjustments.

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### Types of Strategic Control

#### 1. Premise Control

A strategy is formed on assumptions (premises) about the complex organisational environment.
Premise control = systematic and continuous monitoring of the environment to verify the validity and accuracy of those premises.

Monitors two types of factors:

(i) Environmental factors: economic, technological, social, legal-regulatory.
(ii) Industry factors: competitors, suppliers, substitutes.

Different premises may require different amounts of control depending on their criticality.

Worked example

### Example 1

A steel manufacturer uses Operational Control to ensure raw material inventory stays between 500 and 800 tonnes. If inventory drops below 500, an automatic purchase order is triggered — a clear input-output tolerance mechanism operating independent of external market conditions.

### Example 2

A retail chain's Management Control system tracks monthly sales, expenses, and profit by region, aggregating data from hundreds of stores. The regional P&L is reviewed quarterly against annual targets — a far more aggregative control than monitoring individual store stock levels.

### Example 3

A telecom company's 5-year growth strategy was premised on 4G remaining the dominant mobile technology for the decade. Premise Control detects that 5G adoption is accelerating 3× faster than assumed — triggering a strategic review and reformulation before the original implementation plan is even halfway complete.

⚠️ Common exam mistakes

Confusing operational control with management control — operational control focuses on individual tasks (tolerances); management control is aggregative (department/division/whole organisation).
Thinking strategic control only occurs at the end of implementation — it occurs DURING both formulation and implementation (time gap between the two is explicitly recognised).
Forgetting the two categories of premises monitored: (i) Environmental factors (economic, tech, social, legal) AND (ii) Industry factors (competitors, suppliers, substitutes) — both must be named in an exam answer.
Attributing the definition of management control to the wrong theorist — it is Robert Anthony; strategic control is defined by Schendel and Hofer.

Reference:

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Organisational Control — Types and Strategic Control

Worked example

⚠️ Common exam mistakes