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Sunday, July 6, 2014

Advantages and Disadvantages of Control Systems in Business Management

There are many advantages and disadvantages of control systems in business management. These control systems should be thoroughly examined and applied in order to be a successful manager and have a business run smoothly. The types of control systems are bureaucratic control, market control, and clan control.
Bureaucratic control uses "formal rules, standards, hierarchy, and legitimate authority", and this type of control system works well with specific tasks that are done by independent workers (Bateman & Snell, 2009, p.34). Many businesses utilize this form of a control system in management.
Market control uses "prices, competition, profit centers, and exchange relationships" to establish control, and it works well where "tangible output can be identified and market can be established between parties" (Bateman & Snell, 2009). This type of control system is unpopular because the constant fluctuation of the market causes complications with the security of this control system.
Clan control involves shared culture, beliefs, standards, and trust. This control system works best where no one is strictly the decision maker and employees are encouraged to provide input, make choices, and act independently. This is a new control system that is starting to become popular with the increased need for innovation.
Some advantages of bureaucratic control systems are lack of confusion about decision making and lack of confusion in expectation and standards required from employees. This type of control system has clear management rules and responsibilities are cut and dry. Disadvantages of this system are lack of employee morale and lack of room for change and innovation. Independent workers and strict guidelines can make employees feel undervalued, and this is a disadvantage for business and management.
An advantage of market control systems is a flexible system, but this is also a disadvantage because value is always changing and employees may suffer from companies being repeatedly bought and sold. Flexibility can be positive one day and detrimental another, and human capital is at risk with this type of control system.
A clan control system is advantageous because it provides a company with more possibilities of innovation and ideas, but it lacks a direct form of control or strict authority which can lead to confusion of responsibility. Lack of standard management can cause problems in business when using this control system because employees may slack, take advantage, or shrug responsibility with out guidelines. This control system is advantageous to business and management because it can also encourage employees to take initiative and increase knowledge and skills.
Control systems are valuable to management in business, and understanding the three basic control systems is important when implementing a control system in a business. The disadvantages and advantages of each control system must also be considered when choosing a system for business management.
Bateman, T. S., & Snell, S. A. (2009 ). Management: Leading & collaborating in a competitive world. Retrieved from 1-8b6b-4f7d-a5b1-59e8755f8099&assetpdfdataid=a5d9d898-620d-4975-b3af-1957bf8ee4bd.

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