management control systems in japan

8/12/2019 Management Control Systems in Japan

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Management Contro

Systems in JapanMatsushita Electric Industrial, Ltd.


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Presented By

Patrick Kanny Sarkar (801)

Md. Awlad Hossain (815)

Rayhan Ahmed (820)

Md. Nafeesur Rahman Khan (821)

Md. Shakhawat Ullah (825)


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What is Management Control

An abbreviated phrase for management planning and cont

A Mechanism for managers to control their subordinate manachieving organizational goal.

A process supported by many systems but management accprimary one.


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Management Control at Matsus

Divisionalized system first launched in May 1933

The system invented in USA but Matsushita invented the systethe same time.

The system was created from the notion of Optimally scaled

Basically a decentralized system.


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Management Control at Matsus

The company has many kinds of management control or ma

accounting system, they can be classified in two ways,

TopManagement

(President)

Divisional

managers

Departmentalmanagers

Control tools

Control tools

1. Divisional

2. Internal c

3. Monthly a

1. Budget sys

(Departmen

2. Monthly a


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Divisional Planning System

Each division prepares its own plan

Corporate plan of the whole company is prepared form the

One year plan

Outputs of the plan,

Production Plan

Sales Plan

Budgeted income statement

Capital Expenditure Plan

Budgeted Fund Statement

Budgeted Balance Sheet

Working Capital Sheet


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Divisional Planning System There some steps in divisional planning process,

Announcement ofbasic corporate

policy

Instruction ofdivisional planning

guideline

Preparation of eacdepartmental plan

Preparation ofproposed

departmental

budget

Preparation ofproposed divisional

budget

Authorized divisionalplan

(budget)

Authorizeddepartmental plan

(budget)

Checking anddetermining

divisional plan

Handing over thedivisional plan

outline

(king sealed doc.)

Instruction ofdivisional planning

policy


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Divisional Planning System Accounting Staff for Centralized Management

Number of staffs is about 1500 (only 100 work for central accoun

the rest work for divisions and profit centers).

Monthly evaluation system

Staffs from corporate level and divisional level collaborate to ma

to measure monthly results of the division.

Supports various departments within a division by providing nece

prepare departmental plan.


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Divisional Planning System

Damlike Management and Nondebt Policy

Independent Business

Has no bank loans

A company should have buffer in every aspect of business (humantechnology, inventory)

Excess liability can may cause poor performance

Profit management and fund management

Increase of profit

Management of A/R, A/P


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Internal Capital Internal capital for a division is some of fixed assets and working

the division.

To measure working capital (current asset, current liability) a staapplied against which actual amount is compared and judgedCapital=Standard working capital + fixed assetsreserves.

Internal capital is given by central office to the divisions

Rules of internal capital system,

1. Structure of internal capital

2. 1% interest charge for internal capital to central office in each mon


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Internal Capital

3. 3% of sales must be paid to central office by divisions to cover e

should be 10% of sales after the payment.

4. 60% of net profit should be deposed of as dividends and taxes a

earned surplus. Dividends and taxes should be paid to central o

5. Additional investment for the fixed assets and working capital shdivisional own fund

6. If the fund is insufficient division can borrow from central office.


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Evaluating Division ManagerPerformance

Annual Accounting Settlement

Divisional Managers performance is evaluated in terms of profit relative to

There are four ranks (Rank A not less than 9%, Rank B not less than 6%, Ran

4% Rank D less than 4%)

If Rank D persists for 2 years at a division the manager is transferred.

Monthly Accounting Settlement

Calculated almost in the same way as the annual settlement

Calculated for each division on the twentieth of the month

Comparison of budgeted plan and actual plan

It is used by top management to measure the performance of divisions and

to measure the performance of the respective departments.

Performance is compared with that of prior three years and projected three


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Evaluating Division ManagerPerformance

Monthly Accounting Settlement

Has two purposes (1. Profit Management, 2. Invigorating the divis

managerial consciousness in each responsible person in the bud

Steps to achieve this goals are,

Measuring results

Finding Problems

Sharing problems with the concrened managers

Resolving the problems

Examining the results of the improvements


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Performance Check Meeting

Participative approach.

Responsible persons from all budget units meet a meeting whperformance is checked.

Identifies the reason for the inefficiency (except human recomachine factors)

Dialy analysis of results and corrective actions.


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Budget system for cost control

Departmental budget for each division.

Subsystem of overall divisional system

Cost control from input side Cost control from output side

Labor or Machine rate


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Budget system for cost control Procedure for preparing the divisional plan using the budget system are a


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management control systems in japan

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