Controlling is an important economic discipline and a key function of management. It is also crucial for the organizational success, because the absence of adequate control would lead to random actions and individuals would turn their attention to different and irreconcilable directions.
With respect to the outstanding importance of controlling, the aim of the present work is to introduce various instruments of controlling which relate to both operational as well as strategic levels of a company. The instruments and techniques that are considered in more detail here are activity based costing, benchmarking, gross margin analysis and break-even analysis.
Table of Contents
1. Introduction
1.1 Problem statement
1.2 Methodology and structure of the work
2. Terminology and functions of controlling
2.1 Levels of controlling
2.2 Functions of controlling
3. Strategic Instruments of controlling
3.1 Activity based costing
4. Operative instruments of controlling
4.1 Gross margin accounting
4.2 Break-even analysis
5. Summary and conclusion
Research Objectives and Topics
This work aims to evaluate various strategic and operational controlling instruments and analyze how they support effective enterprise management and decision-making processes. The primary research question addresses the suitability of these specific instruments for controlling company performance and their practical assistance in guiding organizational development.
- Theoretical foundations of controlling and its organizational functions
- Strategic analysis via activity-based costing and benchmarking
- Operational performance monitoring using gross margin and break-even analysis
- Critical evaluation of the relationship between strategic planning and operational implementation
Excerpt from the Book
3.1 Activity based costing
Cost accounting is a key function of controlling, whose origin is rooted in the strategic level of a company. Nevertheless, controls that deal with costs are carried out on tactical and operational levels of a company, too. The traditional instruments of cost accounting are mostly based on volume-based instruments such as labor or machine hours, which are forwarded to the appropriate cost center as overhead-costs. As production in the past was labor-intensive, traditional methods of cost accounting, such as absorption costing, were very helpful in allocating costs. These techniques required little input and were very efficient, as far as they concerned the cost-benefit ratio.
Activity based costing is an approach of cost accounting, which is based on the assumption that specific activities have to be assigned to cost-objects on the basis of their estimated resource consumption. The technique involves the identification of so-called "drivers" that cause costs associated with these activities. Thus, activity based costing is an approach that is significantly more developed compared to the traditional instruments of cost accounting. Using this technique, it is possible to identify the cause of the costs and to link them to specific activities. This technique helps management to control the activities within the company and gives additional information on the business value.
Summary of Chapters
1. Introduction: Defines the role of controlling as a key management function and outlines the research objective of evaluating strategic and operational controlling instruments.
2. Terminology and functions of controlling: Discusses the theoretical framework, defining controlling as a systematic process of standard-setting, performance measurement, and corrective action.
3. Strategic Instruments of controlling: Explains advanced cost accounting methods like activity-based costing and benchmarking to assist in strategic decision-making.
4. Operative instruments of controlling: Analyzes practical tools for daily operational monitoring, specifically focusing on gross margin accounting and break-even analysis.
5. Summary and conclusion: Synthesizes the importance of both strategic and operational control, concluding that both levels are essential for the long-term success and competitiveness of an organization.
Keywords
Controlling, Strategic Management, Operational Control, Activity Based Costing, Benchmarking, Gross Margin Accounting, Break-even Analysis, Performance Measurement, Cost Drivers, Decision Making, Organizational Success, Management Accounting, Efficiency, Profitability, Business Strategy.
Frequently Asked Questions
What is the primary scope of this work?
This work examines the discipline of controlling and its essential role in management, focusing on both strategic and operational instruments used to ensure organizational success.
What are the core thematic areas covered?
The core themes include the definition and functions of control, strategic tools like activity-based costing and benchmarking, and operational tools such as break-even analysis and gross margin accounting.
What is the main research question of the document?
The study investigates how suitable strategic and operational controlling instruments are for effective control and how they assist in decision-making within an enterprise.
Which scientific methods are employed?
The research is based on a comprehensive review of existing scientific publications, including books, journals, and articles, combined with an analytical evaluation of specific management instruments.
What topics are discussed in the main part?
The main part covers the classification of control levels, the implementation of activity-based costing, benchmarking techniques, and the application of contribution margins and break-even analysis in business scenarios.
How would you describe the key characteristics of this research?
The work is characterized by its dual focus on strategic and operational levels, critical evaluation of cost-accounting tools, and the emphasis on continuous performance improvement.
Why is activity-based costing considered more advanced than traditional methods?
Unlike traditional volume-based methods, activity-based costing identifies specific "drivers" that cause costs, allowing for a more accurate allocation of overheads to products based on actual resource consumption.
How does the author view the importance of operational control compared to strategic control?
The author argues that while strategic control determines the direction of a company, operational control is equally important as it facilitates the practical implementation of plans and regulates daily performance to ensure long-term success.
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- Rima Hammoudeh (Autor), 2015, Decision making by using strategic and operational controlling instruments, Múnich, GRIN Verlag, https://www.grin.com/document/346475
