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Summary From Chapter 3, Management Control System Twelfth Edition, Anthony & Govindarajan, 2007 BEHAVIOR IN ORGANIZATIONS Management control systems may be affected human behavior by ensuring that the action taken by individuals is in the purpose to achieve both personal and organizations goals , which known as the term goal congruence. In achieving the goal congruence informal forces and formal control system are taking a big role. Informal Forces External factors are norms of desirable behavior that exist in the society of which the organization is a part. The external factors are includes a set of attitude, work ethic, the employees spirit, diligence, and pride of doing a good job. Internal factors can be derived to culture, management style, informal organization, and perception and communication. Culture is defined as the organizations own culture, where management style is explained how the subordinates attitudes reflect what they perceive from their superiors attitude. Informal organization is the lines on an organization chart which depict the formal relationship. The last factor would be the perception and communication, meaning that a manager is expected to be perceived of the organizations goal and what actions are supposed to take to achieve it. Formal Control System Rules is all types of formal instructions and controls including standing instructions, job descriptions, standard operating procedures, manuals, and ethical guidelines. Some specific types of rules are: physical controls including the security guards, vaults, computer password, etc; manuals which considered to be guidelines than fiats, how much discretion should be allowed and a host of consideration; system safeguards to ensure that the information flowing through and to prevent the fraud; and task control system to ensure that specific tasks are carried out efficiently and effectively. Management Control System which giving a big picture how the system can be managed and controlled by the structure itself. Types of Organization The type of organization structure influences the design of the organizations control system. There are three types of organization structure: functional structure in which each manager is responsible for a specified function; business unit structure in which business unit managers are responsible for most of the activities of their particular unit and considered to be a semidependent part of the company; and matrix structure in which functional units have dual responsibilities.
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The controller of the system is definitely is taking an important part. The controller duty is to design and operating information and control system; preparing and analyzing the financial statements, financial report, and performance report; supervising internal audit and accounting control procedures; and developing personnel in the controller organization.

RENDELL COMPANY Case Problems The main problem of this case from my point of view is about the organizational status of Rendells controllers. Do they have to act under the corporate controller authority instead of to report under the division manager as the method suggested by Martex? Reasoning The issues become important because the division controllers role defined to be inefficient due their position now, which they reported to the division manager instead of the corporate controllers. Case Evidence Some case evidences to be considered are the slowing growth rate of the Rendell Company and it was budget bluffing detected in the division. Analysis The goal incongruence in an organization could lead to an ineffective way to achieve the organization goals. From the case it can be seen that corporate controllers goal is to minimize the budget allocation and maximize the use of funds. Otherwise, the division manager always wants bigger budget in order to make their job running well and effective. First we might define the role of both corporate controller and division controller. Corporate controllers task can be formulated as follows: Evaluate divisions performance by developing their personnel in each division Budget controlling, and establish the strategic plans Giving the division or management advices based on the information or report they received

While the division managers task, are: Implementing the strategies that already set by the corporate controller in each division Evaluates the division performance Provide assistance and suggestion to the division manager

There are two options that Rendells have now. First is continuing to run business with the current structure, or second is by changing the structure following the Martex method. Some loss and benefits might occur in these two options.

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The Current Structure Benefits : May solve the arising tactical issues easily in the division, because of the good relations between division controllers and division managers. Ease of budget approval, because in this system the proposal was directly justified by the top management. Loss : Empowerment of the division controller, because they act under the managers authority. The issues of hidden budget and biased information from the division controllers to the corporate controllers cannot be solved. This may impact to the time needed in decision-making and the possibility to take a wrong decision further. This culture also will give bad response to any new system installed in the organization in the future.

The Matrexs Structure Benefits : Solving the budget and biased information issues. The new method will make organizations culture become more flexible towards any new systems in the future. Loss : The conflict between division managers and division controller may arise. Unstable working condition may cause the inefficiency in some aspects.

The Matrexs Structure is adopted the functional structure, while the Rendells current structure is based on the business-unit structure. Conclusion and Recommendation In conclusion, I recommend Rendell to implement the Matrex Structure to its company. The slowing growth rate and the fat budgeting may lead Rendell into downturn. Structure refinement might be the solution of these issues. In a long run, the companys culture will be more flexible into the new systems, so that if someday another issues happened, it would be not difficult to implement additional system or solution in Rendell. However, implementing the new method isnt without any threats. The unstable condition and conflict that may happen in early stage of the new method implementation might threaten Rendells company performance. I propose Rendell to hold a supplementary briefing for the employees to retreat, revise, and sharing their goals. It is necessary for Rendell to do so, because if all the employees have the same vision and mission with the company, and also have high loyalty to the company, they will contribute their hard work to achieve the goals. In addition, by implementing the Matrex structure, Rendell will have the stabilization in financial, which usually a good sign for most of the companies. This financial stabilization might lead into a better working environment and working condition for the employee. It may also lead to a new culture in the company. Less unbiased information will fasten the making decision process. It also may prevent the errors in taking a decision because the clearer information that the executive can get and share.

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