Management control can be defined as a systematic effort by business management to compare performance to predetermined standards, plans, or objectives in order to determine whether performance is in line with these standards and presumably in order to take any remedial action required to see that human and other corporate resources are being used in the most effective and efficient way possible in achieving corporate objectives.
1. Setting performance standards.
Standards are the criteria against which actual performance will be measured. Standards are set in both quantitative and qualitative terms in order to design and accompany the management process of defining goals, planning and management control so that every decision maker can act in accordance with agreed objectives
2. Measurement of actual performance
Performance is measured in an objective and reliable manner. It should be checked in the same unit in which the standards are set in order to ensure the conscious preoccupation with the future and thus make it possible to take advantage of opportunities and manage risks.
3. Comparing actual performance with standards.
Develop and maintain all management control systems, ensuring the quality of data and provide decision-relevant information.
4. Analysis deviations.
Compare performance to predetermined standards, plans, or objectives in order to determine whether performance is in line with these standards.
5. Taking corrective measures.
Either identification and elimination of the causes of a problem, thus preventing their recurrence, or take action to eliminate or minimize the differences compares with the standards, or even change the business strategy in order to support better the main objectives.