Business management control is an indispensable activity for any business to evaluate and improve its performance.
What is corporate management control? What are its functions? In this article we discuss why management control is important, its functions and steps, and the tools for managing it effectively.
Management control: what it is and why it is important
First, let's see what business management control is. A business intelligence activity, it is essential for any company, which needs to plan and control the performance of its business.
In fact, by monitoring resources, it enables their better use, which is functional to the achievement of objectives and proper strategy development.
It is thus a process of collecting, analyzing and disseminating useful information to better direct an enterprise . Management control provides feedback, guides and directs the management of the company, helping to govern it effectively and efficiently.
Why it is important
Management control is important because it is an activity for analyzing economic resources and inputs and figuring out how to use them most appropriately to achieve operational objectives.
It helps to collect and analyze data coming from different business sources in order to make win-win decisions for the business.
Corporate management control gives some advantages:
- Optimization of the company's economic resources by defining concrete and attainable goals at the market level; it also allows the company to draw up the forecast plan each year, in order to effectively use its available resources.
- Evaluating business performance and planning operational goals, with termly analysis (e.g., quarterly due dates), which allow you to check the effectiveness of your resources and draft new goals based on the assessments made;
- Highlighting the role of each production unit, providing a measure of the performance of the various areas. This makes it possible to identify the best performing departments and to understand how to improve the organization of less profitable business areas.
The functions of corporate management control
Having seen what it is and why it is important, let us understand together what corporate management control does. It is a multifunctional activity that has several functions, including:
- Optimization and analysis: helps in defining the goals to be achieved as well as those already achieved, giving a clear and analytical picture of the effectiveness of corporate azionali
- Monitoring: determines the cost of production of the individual good/service through cost accounting and also the performance of each productive activity (with positive and negative margins) and identifies the most productive and weakest parts in the business setup;
- Evaluation: monitors the exact flow of various resources, allowing the performance of managers and individual business units to be identified, making reports that emphasize the link between the goal and the result to make the evaluation flawless;
- Make or Buy evaluation: through business management control it is possible to know the costs for a service, a technology and compare them with other solutions, identifying the most cost-effective one. Thus, for example, one can evaluate whether to give an assignment to an external company or to proceed internally.
The stages of management control in the company
There are three basic moments of corporate management control:
- Planning: development of both short-term and long-term business strategies (often in the form of budgets);
- Execution: practical implementation of strategies, with mobilization of corporate resources to achieve set goals;
- Evaluation: comparison of plans with results achieved.
Corporate management control is constant monitoring that takes place in multiple time steps:
- First phase: Antecedent control. Also called budgeting, since it focuses on the budget. The budget is prepared, allowing measurable operational objectives to be set; in fact, indicators and targets are outlined.
- Phase Two: Concurrent Monitoring. In this phase, indicators and direct and indirect costs are measured consistently to achieve results. This also makes it possible to correct any anomalies, dispersion of resources, additional costs and unforeseen events;
- Third stage: Subsequent monitoring. This is the phase in which the final measurement of indicators is evaluated and the relationship between budget and achieved objectives is compared. Feedback and analysis are carried out, which is why it is also referred to as the reporting phase.
Management control tools
Corporate management control performs fundamental reporting for business operations and therefore needs appropriate tools and skills.
It is necessary, in fact, for data to be transmitted rapidly in order to have a constant and immediate picture of business performance. Thus it is possible to reduce waste, amortize costs, avoid dispersion of capital, and really direct the company toward its goals.
Equip yourself with a enterprise management control software is the solution, as it allows you to manage the company in a mathematical and measured way.
In addition, it is good to remember that each reality is different from the others, so software is only truly effective if it is tailored to the needs of the company and fully integrated into its processes .
Many functions are explicated by enterprise control software, including:
- Accounting tracking, data collection and recording;
- Monitoring turnover, profits, as well as accurate scanning of customers;
- Monitoring the profitability of customers, services and business segments;
- Checking the efficiency of each worker by comparing hours and work activities.
By controlling activities through appropriate software, it will be easier to strategize, plan, and decide on investments.
Streamlining decision-making processes results in better organization, maximization and efficiency for your business.
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