StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Managerial Control Systems - Statoil Company - Case Study Example

Cite this document
Summary
The paper 'Managerial Control Systems - Statoil Company " is a good example of a management case study. Since time immemorial, the business fraternity faces a myriad of challenges when seeking to manage their enterprises. This is because of the fact that there are numerous elements that require attention and have a notable magnitude on an organization's performance…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER97.4% of users find it useful

Extract of sample "Managerial Control Systems - Statoil Company"

MANAGERIAL CONTROL SYSTEMS by (Name) The Name of the Class (Course) Professor (Tutor) The Name of the School (University) The City and State where it is located The Date Managerial Control Systems Since time immemorial, the business fraternity faces a myriad of challenges when seeking to manage their enterprises. This is because of the fact that there are numerous elements that require attention and have a notable magnitude on an organization's performance. With the prevalent technological advancements, management duties are now easier to undertake. Technological advancements reduce the management’s involvement in operations but call for aggressive monitoring. For instance, modern antics foster downsizing abilities as companies are mechanized requiring compressed work forces. With mechanization, organizations have slimmer human resource department yet require routine monitoring and control (Tricker & Boland, 2005). The difference emanates from the fact that, mechanization is prone to collapse or other drawbacks that would severely interfere with an organization’s operation levels. Scholars and other experts in the field of academia seek to elaborate and define workable techniques to handle the management gridlock. Management control system is one of the many managerial concepts enacted in modern times. The Management control system seeks to gather and utilize information used to appraise the performance of resources at the disposal of an organization. The Management control system works hand in hand with the organizational strategies to shape the organizational culture and behavior. Through the Management control system, leaders at the helm of affairs in an organization get a platform to influence organization behavior towards the desired culture. The organization's management has the mandate to formulate strategies that will deliver competitive advantage, desired outcome and enhance performance. Management control system is a tool used by managers to entrench the formulated strategies. This system is complex and encompasses the entire organizational fraternity. It is increasingly difficult to monitor organizational policies and procedures (Merchant & Stede, 2006). The management has the mandate to implement formulated policies and avail feedback to the relevant stakeholders. Given the expansive organizations currently thriving in the global market, managerial practices are increasingly becoming difficult. Mechanization and other technological advancements aggravate the managerial tasks. To monitor strategy implementation and appraise and organizational element, managers have a dire need for the implementation of a feasible control system that will deliver timely results as desires. The control system has to coordinate, motivate, mobilize and allocate resources in an efficient and effective manner. Additionally, the control system has the mandate to appraise performance of organizational elements in seeking to ensure that desired goals are attained. Management control system is not a distinct concept as it varies from organization to organization. Modern organizations vary on numerous factors including size, industry, nature of business, and objectives. To fit these requirements, there is a wide range of Management control systems seeking to fulfill organizational requirements. They include; total quality management, Kaizen’s continuous improvement, target costing, balanced scorecard, just in time manufacturing, capital budgeting, budgeting and benchmarking. According to the above illustration, accounting techniques are more often than not interpreted as a management control systems (Maciariello, 2007). To determine organizations efficiency and productivity, it is imperative to breakdown the accounting figures into financial and managerial accounts. Financial accounting deals with profitability and internal variables that influence an organization’s performance levels. Management accounting emphasizes on clarity and impartiality on financial reporting. This implies availing significant information to all stakeholders aiding to appropriate decision making. Management control systems seal, all loopholes within an organization’s environment harnessing better performance. Statoil Statoil is a Norwegian multinational corporation headquartered in Stavanger Norway dealing in oil and gas. Statoil is a fully integrated petroleum company with established operations in 36 countries. According to a recent survey, Statoil ranks 26 in terms of profit and 11th in terms of revenue. Currently, the company has an elaborate human resource team totaling to around 23000 employees. Statoil is a product of a merger deal in 2007 between Norsk Hydro and Statoil. The Norway government is the largest shareholder in Statoil amassing over 67 percent while the public holds the remaining portion. Initially, Statoil focused on exploration, production and development of petroleum products sometimes dealing in harsh environments. With the passage of time, the company diversified permeating other energy sectors like harnessing wind energy Andrews, M., & Hill, H. (2003).The strategy enacted by Statoil entailed amassing a sizeable oil and gas market share while gradually expanding the renewable energy production. This was because, with time the Norwegian oil reserves were slowly diminishing, and other aggressive corporations had successfully penetrated the market. For Statoil to maintain global competitiveness, it was crucial for the company’s management to device feasible strategies. The new era in the energy sector has momentously revolutionized business operations. The upcoming companies adapt cost savings strategy through the indoctrination of modern technology and management practices. In such instances, companies formed in the past fail to keep up with the competitive strategies leading to foreclosures. To avert these detrimental financial consequences, Statoil had to diversify and redevelop sound strategies to combat the compelling competitive forces in the modernized era. Question 1 Statoil managers claim that their company no longer prepares a budget. What is the meaning of the statement? Budgeting is an essential tool in any organization. This is because organizations deal in uncertain and unpredictable circumstances bearing different risk levels. Budgeting is a traditional financial principle that seeks to unearth any variation between predicted and actual financial figures. Corporation regardless of size undertake budgeting endeavors seeking to avert unexpected financial constraints. Statoil before 2005 engaged in aggressive activities to formulate a budget outline on an annual basis. With such a document, all stakeholders have an opportunity to air their financial requirements for the next fiscal year. A budget clearly outlines a financial target required of an organization acting a motivational tool. Many at times, corporations and governments alike prepare deficit budgets. This arises in the instance the financial outlay requirements surpass the available funds. In times of financial hardships, economies lack sufficient finances to fund viable projects. This replicates to deficit budgets where governments prepare negative budgets then device ways to finance the remaining funds. By indicating that Statoil no longer prepares a financial budget, the company management relays essential information. This is because a company cannot survive without financial projection. It is consequential for any institution organization or government to steer its operations without a detailed plan or way forward. In the same way, Statoil has to have in place an articulate projection model that avails futuristic results. The managers cannot survive in the harsh and dynamic economic environ without a sound plan seeking to combat future uncertainties. With the developments in the petroleum industry, it is prudent for companies to redesign their strategies seeking to gain competitive advantage over their competitors. The Statoil managers mean that the budget preparation process in some way curtails the attainment of desired objectives (Anthony, Dearden, & Bedford, 2004). By eradicating budget preparation, Statoil’s management team sought to device a new projection model that would deliver articulate results in an articulate manner. The budgeting process is a consequential process that cannot be eradicated in an organizational setting. The comments of the managers seek to elaborate that Statoil is a developed organization competent with petroleum corporations at the global level. With such levels of advancements, Statoil requires adequate strategic planning elements that have the ability to harness decision making. The statement seeks to affirm that, Statoil growth and development trend is beyond the confines of traditional budgeting. Budgeting is a traditional strategic planning tool. With the passage of time, organizations continue to dispose of traditional antics as they bear immense elements that derail progress. Statoil was among the first companies to embrace the post budgeting tools. This was through devising tailor made projection or strategic planning tools that would avail required results. The growth level attained by Statoil does not come easy. Conversely, such great companies have faced bankruptcy and foreclosures due to small errors in the financial systems. To avert such scenarios, Statoil management team had to enact a modernized strategic and analytical tool that would provide recent and up-to-date information. This affirms that, Statoil still engage in financial projection and strategic planning activities but no longer utilize the traditional budget to attain this desire. Question 2 Reasons Why Statoil Discarded the Use of the Budget Before May 9 of 2005, Statoil used the traditional budgeting techniques. At the point, the traditional budgeting method availed required results. It was during the same time that Europe and other modernized countries sought to enact the beyond budgeting principles. Compared to the beyond budgeting principles, the traditional budgeting principles had innumerable drawbacks. The setbacks revolved around the fact that the traditional budgeting tool encompassed three elements together. Traditional budgeting sought to adjoin target setting, forecasting and capital allocations in a single set of figures. The traditional budgeting model compiles numerous aspects into a single realm of numerics. Many at times, if a single element is erroneous, the whole budget is wrong. Additionally, the traditional mode of budgeting does not harness adaptability. During the yesteryears when budgets were feasible, the business environment was less vibrant. Statoil had to discard the tradition business model because it neglects salient organizational strategies. The traditional model of business is not a management control system in itself. For the traditional budget to function there, is a need for management to devise an additional control system. This is a replication of tasks as an organization requires enacting minimal procedure and averting bureaucracy. Using the traditional budgeting method requires the enactment of a stringent and well functioning control system. The traditional budgeting method did not comply with some organizational strategies and hence curtailed the development and growth (Fjell, 2005). The traditional budgeting method was calendar driven as opposed to event driven. The traditional budgeting practice represents a calendar driven process where resources are allocated based on time and not necessity. The traditional budgeting antics works to the detriment of companies dealing in aggressive sectors like petroleum. For instance, if Statoil was to identify an exploration site in February having a January to December calendar year, there would be insufficient funds to undertake such a viable project. This implies that the traditional budgeting curtailed spontaneous investments as which resonates to higher income. The traditional budgeting technique confines itself to the strategic planning neglecting once off investment projects that occurs during the year. The traditional budgeting model follows hierarchy. This implies that each manager has a different title and different target. The traditional budgeting model sought to motivate employees through target setting where each employee has to attain a desired goal. This constricts the employees and other stakeholders to meet set targets and in turn innovation and creativity remains curtailed. The traditional budgeting policies offered fixed and outdated plans where each stakeholder had a defined mandate to meet stipulated targets. The problem is that the traditional budgeting principles served as a forecast and target at the same time. This was overly confusing as sales person cannot formulate a forecast then use the same figures to motivate target accomplishments. Statoil has to eradicate the use of the tradition budgets due to obsoleteness (Anthony, Dearden, & Bedford, 2004). Once the management prepared the budget, the assumptions underpinning the entire process became automatically obsolete. In essence, some managers though that everything stipulated in the budget had to be spent. This wayward mentality ultimately cost Statoil a fortune in wasted funds while other spontaneous ventures were left unexploited. Traditional budgeting sidelined a portion of highly qualified employees creating unnecessary tension between employees. With the traditional budgeting, a portion of the management would utilize precious time bargaining on budgetary elements. This would derail performance of other vital organizational aspects. Traditional budgeting seeks to assert that financial scarcity is the only constraint facing Statoil. This assumption is unfounded as Statoil faces numerous challenges including human resource management and material availability. With these and other reasons, Statoil had to search for a prudent projection tool that would deliver desired results. Questions 3 Describe the New Concept Adopted by Statoil. What are the Salient Advantages and Drawbacks allied to the New Forecasting? The initial step enacted by Statoil managers entailed separating the three fundamental elements encompassed in budgeting. The new forecasting model adopted by Statoil sought to segregate resource allocation, forecasting and target setting. The intent was to improve on quality as differentiating various tasks results to better concentration and ultimately attainment of desired results (Anthony, Dearden, & Bedford, 2004). Target setting was the first segment seeking to enhance performance by formulating ambitious and achievable targets. The targets intrinsically connect with the organizational objectives and are comparable to industrial benchmarks. The relative targets were more efficient as the managers have an opportunity to set personal targets. Since no one likes to be a laggard, the relative targets were highly set with each manager outlying ambitious relative targets. Secondly, the forecast were set to highlight any probable cause of alarm that might resonate into the future. This is because forecasts are not watertight and any eventuality might resonate into the future. To avert any detrimental consequences, it was prudent for Statoil managers to realistically outline the forecasts without any form of biased mindsets. Additionally, the time horizon, frequency and lead time of forecasts ceased to follow calendar timetable. The new model also known as Ambition-to-Action was event driven seeking to conform to arising investment opportunities. In the instance that the managers had impaired visibility of future events, the Ambition-to-Action model sought to incorporate a range of possible scenarios or outcomes (Ferris & Rankine, 2008). The local managers working for Statoil had the mandate to determine when to update their performance targets and forecasts. To begin with, there was a gradual change where strategic planning was used hand in hand with the Ambition-to-Action model. This was a form of slow change from the calendar driven traditional budgeting approach to a modern management control system. Any major changes or event required a formal decision from the top management team where the minor changes traversed the organization as mere information. The essence of the Ambition-to-Action model was to ensure that organizational change occurs independently as opposed to forced calendar events. With the Ambition-to-Action model, Statoil managers appreciated their targets as they right more often. This was because the targets were spontaneous and sought to capture upcoming events. There was a difference between targets and forecasts. Forecasts were prediction and not performance commitments. Similarly, cost forecasts did not comprise resource allocation. Thirdly, the Ambition-to-Action harnessed allocation for resources. The managers had the responsibility to commit unlimited funds to viable projects defined by the scope. As opposed to the traditional model, the Ambition-to-Action approach redefined the resource limits. Resource allocation was one vehement limitation emanating from the traditional budgeting approach. To avoid this limitation, it was prudent to incorporate a spontaneous system that allocates resources throughout the year. These motivated managers to search for viable implementation projects leading to immense growth and development. Additionally, Statoil negated the rush to look for funds to finance an exorbitant financial budget. Since projects were allotted funds depending on urgency, viability and feasibility, Statoil managers stopped making irrational decisions. All financial decisions were dynamic inculcated when need arose as opposed to far in advance. At no point in Statoil would a viable project lack funding. The new resource allocation strategy facilitated a mindset change into the right direction. Question 4 is the Ambition-to-Action model a routine beyond budgeting approach or does it have additional features The Ambition-to-Action model was over and above the mere beyond budgeting agenda. This is because the new model availed numerous additional features surpassing the beyond budgeting approach. The beyond budgeting approach was a framework indicating that the traditional budgeting approach was long overdue. The Ambition-to-Action model was a solution to the beyond budgeting approach. This indicates that it offered salient solutions on sentimental problems facing Statoil. The Ambition-to-Action model complied with all stipulations enacted through the beyond budgeting model. In essence, the Ambition-to-Action model was a customized solution to the beyond budgeting era. Through the Ambition-to-Action to action model, the Statoil management team revolutionized the organizational culture and orientation inculcating a modern mindset capable of dealing with dynamic problems. The Ambition-to-Action to action model comprised of additional features that aided in the attainment of desired results. For instance, the Ambition-to-Action model documented evaluation reviews. Through these review platforms managers would self evaluate their achievements and criticize their failures. One of the managers responsible for drilling failed to attain performance targets as earlier stipulated (Bruining, 2004). Through five self evaluation question availed through the Ambition-to-Action model, Statoil managers sought to implement sustainable development measures. Some of the organizations though adopting the beyond budgeting approach did not use the Ambition-to-Action model. Since the companies were capable of benchmarking others results, it was evident that the model used shared similar principles fostering comparability. Through the Ambition-to-Action model, individual employees had self performance evaluations. The evaluations sought to determine how in terms of behavior and what in terms of performance delivery. There were day-to-day self evaluations seeking to determine the management and employees behavior discerning those that did not live up to their own expectations. Statoil adopted a 360-180-90 degree behavior appraisal technique. Similarly, performance delivery was on a 1-5 scale used to determine salary bonuses, increments and promotion priorities. This evidences that, the Ambition-to-Action model assumed all underpinning criteria for the beyond budgeting approach. Further, the Ambition-to-Action model offered additional features that would steer the attainment of better results into the future. Question 5 Why Beyond Budgeting Approach Is Still Relatively Rare Outside Europe Beyond budgeting, is an influential system reinvigorating management accounting contribution in modern business fraternity. The beyond budgeting model was created to overcome the traditional budgeting barriers seeking to create a flexible well adaptable organization. Through the beyond budgeting model current managers bear self-confidence and freedom, to think differently (Waal, 2005). The beyond budgeting approach sought to give organizations an outline for a more flexible strategy management process geared towards value creation and addition. The traditional budgeting approach was time consuming and impassive to the external changes. With the indoctrination of the traditional budgeting approach in a corporation, it was increasingly difficult for such organization to modernize and thrive amid the prevalent economic challenges. The traditional budgeting method relied on precedent information, which in turn had negative knock effects. Compared to the beyond budget model, traditional budgeting was allied to numerous drawbacks. For instance, since the method relied on once off information, it was impossible to incorporate upcoming events. Additionally, the traditional budgeting model confined to the calendar denying an organization the flexibility to adapt to upcoming events. Despite the reasoning behind these limitations, the traditional budgeting method is still widely practiced in Europe (Andrews & Hill, 2003). This predominance and continued allegiance to the traditional budgeting model emanates from a number of reasons. First, organizational cultures revolve around budgeting formation. Many organizations like those in the United States have an entrenched organizational culture that dictates the needs for a working budget prepared on traditional principles. Through these traditional principles governing many organizations throughout the world and across Europe it is increasingly difficult to eradicate the use of traditional budgeting. These organizations believe that a budget is a prerequisite for success. Despite the vehement campaigns on the innumerable drawbacks emanating from budgeting, many institutions clinch on the traditional budget seeking to attain a competitive edge over competitors. These organizations have a conviction that the annual budget is still usable. Many organizational principles face stiff challenges when on the verge of eradication. This is because of the fact that, organizations resist changing to adapt to an entirely new ideology. According to Player, (2003) the traditional budgeting method is an outdated business practice that adds inconsequential value to the organizations still utilizing it. With the prevalent modernizing streak, it is apparent that the traditional budgeting method does not live up to current expectations. Opponents to the new beyond budgeting model opine that, the model suits ultra modern organizations with over 1000 employees and large capital outlays. Making the smaller firms impose strict budgets to follow, this is more likely because of style and the ability to train the staff with the unfamiliar concept. Wall (2005) has it that before implementing the beyond budgeting model, it necessary to establish the loopholes emanating from the current system. Outside Europe, the traditional method is still efficient and providing growth in organizations. Despite the Beyond budgeting model having numerous advantages, the non-European countries believe that having no budget creates an array of challenges. These countries or corporation have a set believe that a drastic culture change can leave employees feeling disappointed and decentralize the prevailing structures. The opponent to the enactment of the beyond budgeting model argues that the model is still in infancy and practical implementations a required before a real breakthrough. Unlike the developed countries in Europe, most developing countries outside Europe face severe resource constraints. The developing nations face financial challenges an issue aggravated by the lack of working management structures. The resource constraints tend to openly dictate the budgeting practices in their organizations. With inadequate managerial skills and innumerable resource deficiencies, the developing nations continue to grapple in mass poverty denying corporations the opportunity to grow and develop. There is an increasing belief among these countries that the beyond budgeting model does not resolve the prevailing challenges but only contribute to their addition. To avert the prevailing drawbacks emanating from the traditional budgeting model, these organizations result in devising short-term solutions to their problems. This affirms that the belief system entrenched in developing countries is questionable resulting to more problems. Most of these nations introduce initiatives to improve the management reforms in the public and the private sector. The reforms focused on improving and enhancing the effectiveness and efficiency the traditional budgeting model. With time, such countries will realize the inadequacies emanating from enacting the traditional budgeting model instead of procuring and implementing the modernized model that seeks to cope with the modern challenges. The beyond budgeting model is among the most efficient business models in modern times. The model averts the limitations emanating from the traditional system (Andrews & Hill, 2003). Traditional system has lost its relevance in the modern society and is no longer satisfying the needs of the managers. According to recent research studies the beyond budgeting model is a source of immense benefit to organizations that spearheaded its implementation. With the current trend, the beyond budgeting model might not garner worthy admiration from current management teams. The passage of time might influence decision-making fostering the implementation of the beyond budgeting model across the globe. Question 6 Why where Statoil Managers Displeased with the Traditional Budgeting Process Traditional budgeting is an instrument of corporate management aiding in decision-making. With the passage of time, traditional budgeting continues to deteriorate conflicting with the aspirations envisioned by a company’s management team. This is because there is a highly dynamic environment for companies to expand and the traditional budgeting model becomes the stumbling block. Today’s knowledge and service economy results are dominating the role of soft success factors. Firms have been looking for opportunities on the macro-economic level to create new revenue avenues to finance modern investments. Activities in the organizational setting continue to replicate and increasing difficult for employees to handle. This calls for additional training to handle mechanization requirements (Barton, 2007). Statoil managers were aware on the salient limitations emanating from the traditional budgeting model hence bestowed immense resentment on the application of the same model in their company. The company management was dissatisfied with the traditional budget system along with its negative implications. This was because the traditional budgeting approach denied the company the ability to thrive amid stiff competition. The managers believed that there was a dire need for the formulation and implementation of a new approach on finance management. The new tools that Statoil was trying to develop and implement were not fully working. For instance, the Ambition-to-Action sought to enable manager’s map and illustrate their strategy. With the budgeting system and culture entrenched in the organization, it was difficult to overhaul the entire process. This is because the budgeting system influenced the behavior of managers and employees in a counterproductive way. The traditional budgeting model curtailed active innovation and rethinking. This was because Statoil managers were confined to the resources availed through the traditional budget on an annual basis. Sporadic investments were not possible as the financial outlines covered the whole year. This was to the detriment of the organization stirring immense dissatisfaction among the managers and the entire workforce. This was the reason as to why many projects in Statoil were failing. According to the managers, the budgeting system was a barrier to the implementation of change. Numerous well-planned changes and attempts to alter the entrenched organizational culture from the traditional budgeting model to the new desired principle continue to flop. This is because all stakeholders are adherent to conforming to the ancient models as they still generate average results. Statoil managers believe that the traditional budgeting model is insufficient to handle the stiff competition in the petroleum industry. A new model is that can handle the pressure emanating from the business fraternity and the prevalent dynamics in the petroleum industry remained a prerequisite. Statoil managers desired a finance management theorem that could handle the limitations emanating from the traditional budgeting model. The organization heads had the mandate to create a model that would harness trust among the organization’s stakeholders. Statoil is an expansive organization that required an elaborate principle to handle its vast operations. Other organizations in the industry ceased to apply the traditional budgeting theorem. This was another cause of discomfort as the company heads desired to compete with archrival companies dealing in the same industry (Barton, 2007). At the same time, Statoil was facing stern challenges given the full utilization of the available raw materials. The competing firms had developed tailor made beyond budgeting models that fostered the attainment of better results. Additionally, using the traditional budgeting model, Statoil managers would not compare their performance to rival companies thriving in the same industry (Libby & Lindsay, 2010). It was this dissatisfaction and de-motivation that paved way to the enactment of the Ambition-to-Action model. Compared to the traditional method the Ambition-To-Action model was more adaptive harnessing decentralized management. The company managers believed that the traditional budgeting model would not cope with the modern dynamics prevalent in the business fraternity. The managers argued that a budget was too static locking the organization into the past; into something they thought the previous year was right. According to the managers, another management model was a prerequisite to handle the macroeconomic environment with irregular market conditions and agile competitors (Neely, Bourne & Adams, 2003). Statoil needed to adjust and put its recourses where it could build value for shareholders and customers. To achieve this Statoil needed to implement a feasible management control system such as the Ambition-To-Action model. The introduction of new management control system (Ambition-To-Action) sought to align the organization with corporate strategic objectives and focus on the fundamental elements (Libby & Lindsay, 2010). Through the implementation of the ultra modern management control system, the organization would snap faster to shifting market conditions, as opposed to using the traditional budgeting method. The managers vehemently objected to the continued indoctrination of the traditional budgeting model as they were aware of its limitations. The managers also indicated that other companies in the same industry gradually discarded the model formulating and implementing management control systems. Question 7 The Major Differences between the Traditional Budgeting Process and the Ambition-To-Action Process Traditional budgeting is known to top-down command and control approach with the authority stared at the executive level. The executive panel intends to translate the stipulated objectives into goals. Conversely, the Ambition-To-Action Process focuses on empowering, training and developing the human resource (Andrews & Hill, 2003). The Ambition-to-Action policy resonates in a grounded organizational structure where employees interact freely with their managers. The intent is to ensure that employees own the process and use to the advantage of the organization. Power is delegated into different teams who are trusted by the organization in the execution of their duties. The executive is only involved in the significant decision-making. In the traditional budget power and authority rests at the epicenter of the executive serving individual interests as opposed to organizational interest (Player, 2003). Gradually, the organization implementing the traditional budgeting approach losses on investment opportunities as managers seek to accomplish vested interests. The Ambition-to-Action model decentralizes power through adequate delegation. Through adequate delegation, Statoil or any other company creates consumer loyalty. The traditional business model was calendar driven. This implies that the traditional budgeting model was only applicable during the planning periods mostly once in a year. Contrary, the Ambition-to-Action policy was an event driven concept. The Ambition-to-Action policy essentially does not revolve around planning on how to utilize resources (Wampener, 2007). The policy sought to address a serious question as to how sporadic investments would be handled. Through such a policy, Statoil encouraged managers to rethink on workable developments that would foster growth and development. Additionally, the enactment of the Ambition-to-Action policy spearheaded employee motivation and availed competitive advantage (Barton, 2007). The traditional budget confines a company negating any impromptu investments along the year. Instead of focusing on control systems, the traditional budget in itself requires appropriate and feasible controls. The Ambition to Action theorem is a once of policy that eases managerial responsibilities by availing desired results. While both processes seek to improve performance and the shareholder’s value, the policies use different routes. The traditional budgeting model focuses on strategic planning confining the organization into the stipulated objectives. The prevalent dynamics in the business fraternity continue to derail the success of the traditional business model to avert any further detrimental consequences, Statoil and other corporations enacted the beyond budgeting model. This is a management control system that delivers desired results. It harnesses the attainment of strategic plans while availing maximum flexibility for the corporation to align its affairs in accordance to upcoming events. With time, the beyond budgeting policy will amass worldwide admiration as companies discard the traditional budgeting policy. Bibliography Anthony, R. N., Dearden, J., & Bedford, N. M. (2004). Management control systems (5th ed.). Homewood, Ill.: R.D. Irwin. Bruining, H. (2004). Management Control Systems and Strategy Change in Buyouts. Management Accounting Research, 15(2), 155-177. Ferris, K. R., & Rankine, G. W. (2008). Statoil ASA: Global Energy Company. Issues in Accounting Education, 23(3), 467-480. Fjell, O. (2005). Corporate Citizenship: Statoil. NEW SOLUTIONS: A Journal of Environmental and Occupational Health Policy , 13(1), 43-48. Maciariello, J. A. (2007). Management control systems. Englewood Cliffs, N.J.: Prentice-Hall. Merchant, K. A., & Stede, W. A. (2006). Management control systems: performance measurement, evaluation, and incentives. Harlow, England: FT Prentice Hall. Tricker, R. I., & Boland, R. (2005). Management information and control systems (2nd ed.). Chichester [West Sussex: Wiley. Neely, A., Bourne, M., & Adams, C. (2003). Better Budgeting or Beyond Budgeting? Measuring Business Excellence, 7(3), 22-28. Waal, A. A. (2005). Is Your Organization Ready For Beyond Budgeting?. Measuring Business Excellence, 9(2), 56-67. Andrews, M., & Hill, H. (2003). The Impact Of Traditional Budgeting Systems On The Effectiveness Of Performance‐Based Budgeting: A Different Viewpoint On Recent Findings. International Journal of Public Administration, 26(2), 135-155. Barton, A. (2007). Accrual Accounting and Budgeting Systems Issues In Australian Governments. Australian Accounting Review , 17(41), 38-50. Libby, T., & Lindsay, R. M. (2010). Beyond Budgeting or Budgeting Reconsidered? A Survey of North-American Budgeting Practice. Management Accounting Research, 21(1), 56-75. Player, S. (2003). Why Some Organizations Go ?beyond Budgeting?. Journal of Corporate Accounting & Finance, 14(3), 3-9. Wampener, A. (2007). ZP-Stitchwort: Beyond Budgeting. Zeitschrift für Planung & Unternehmenssteuerung, 17(4), 455-460. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(Managerial Control Systems - Statoil Company Case Study, n.d.)
Managerial Control Systems - Statoil Company Case Study. https://studentshare.org/management/2041035-managerial-control-systems-take-home-exam
(Managerial Control Systems - Statoil Company Case Study)
Managerial Control Systems - Statoil Company Case Study. https://studentshare.org/management/2041035-managerial-control-systems-take-home-exam.
“Managerial Control Systems - Statoil Company Case Study”. https://studentshare.org/management/2041035-managerial-control-systems-take-home-exam.
  • Cited: 0 times

CHECK THESE SAMPLES OF Managerial Control Systems - Statoil Company

Flexible Budget Management

A budget is drawn up for each functional area of the company or organization.... or the manufacturing company, it might need to prepare a flexible budget that adjusts for budgeted production units to actual production units, budgeted sales units to actual sales units, budgeted selling price to actual sales price.... For a distribution company it will have to adjust for budgeted purchase price to actual purchase price per unit, budgeted sales to actual sales....
10 Pages (2500 words) Assignment

Monetary Carbon Accounting and Physical Carbon Accounting

It has profound effects upon short-term and long-term company decisions.... To achieve a reduction of emissions, a company needs to set reduction targets, establish action plans for specific reduction initiatives, identify company hotpots and consider carbon offsets as part of its overall carbon management strategy.... An example is the capital expenditure used to install and maintain carbon reduction technology within a company....
9 Pages (2250 words) Assignment

Management Principles

Defining staffing requirements Often, an organization's requirements in terms of staffing, qualifications, and roles change with seasons and as the company grows.... Planning on the other hand basically is deciding on various control structures and each affects the overall output in the organization.... Based on the Indian case study of CV inaccuracies, this research will also bring out the control measures that need to be put in place, the strategies that will best optimize the staffing process, and the follow-up control measures in relation to management....
7 Pages (1750 words) Case Study

Planning Execution and Control of Projects

NKA-D is a joint venture of Nzuzo Khumalo associates of South Africa and Dangote constructions a Nigerian company.... … The paper 'Planning Execution and control of Projects' is a wonderful example of a Management Case Study.... The paper 'Planning Execution and control of Projects' is a wonderful example of a Management Case Study....
12 Pages (3000 words) Case Study

How Organisations and Management Have Continued to Progress since the Beginning of 20th Century

Taking into account that those organisations operate under open systems, it certainly receives inputs from the immediate environment and acts on them to generate outputs that relate to either products or services (Scott, 2004).... The perspective also perceives organisations as being social systems composed of firms for which both people and production processes are organised (Scott, 2004)....
10 Pages (2500 words) Coursework

The Role of Workplace for both the Employees and the Managers

One of the corporation's arms is a company owned by a UK slaughterhouse.... One of the corporation's arms is a company owned by a UK slaughterhouse.... However, over the recent past, the company has acquired a foreboding and strange reputation within the wider organization.... As a result, the slaughterhouse has become a place that is highly criticized within the corporation as a place where not only livestock are killed but also the managerial futures....
11 Pages (2750 words) Case Study

The Advantages and Challenges of Telecommuting

Another issue of control is that managers fail to recognize efforts made by their teleworkers in good performance reviews.... … The paper “The Advantages and Challenges of Telecommuting” is a thoughtful variant of literature review on human resources.... Telecommuting refers to carrying out organizational tasks and duties from a substitute worksite, for instance working from home....
5 Pages (1250 words) Literature review

Understanding and Facilitating Organization Change in the 21st Century

Examples of change are withdrawal or abrupt resignation of chief executive officer of a company, an organization's investment facing a natural calamity like earthquake leading to loss of equipment and facilities.... The demand for change is even higher when a company is dealing in a business line that is already occupied globally (Adrianna 52)....
11 Pages (2750 words) Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us