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Planning and control in a complex and uncertain world

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Accounting for Management Control


This chapter argues that as companies grow to avoid environmental uncertainty, they subsequently become more complex to manage. By diversifying, the enlarged company encounters the combined problem of operating in an increased number of distinct, dynamic product and geographical markets where top management ability to identify and monitor constantly changing factors which effect success is limited. Hence the judgement, intuition and skill of lower level managers is required.

We concentrate on the multidivisional structure because it is most likely that divisional managers will undertake non-programmed decision making. While control loss associated with communication and coordination may be diminished by adoption of this structure, the problem of opportunistic behaviour may become more pronounced. Decentralization implies a greater involvement of divisional general managers in setting plans and participation but there is also a greater emphasis on performance measurement of the distinct and separate divisions. The accounting information system should promote behaviour congruence by not encouraging managers to abuse participation by intentionally over- or under-estimating forecasts. In the complexity of the multidivisional structure, results, actions and personnel controls may not always give consistent recommendations for a behaviour congruent accounting information system.

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© 1990 Clive Emmanuel, David Otley and Kenneth Merchant

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Emmanuel, C., Otley, D., Merchant, K. (1990). Planning and control in a complex and uncertain world. In: Accounting for Management Control. Springer, Boston, MA.

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  • Publisher Name: Springer, Boston, MA

  • Print ISBN: 978-0-412-37480-7

  • Online ISBN: 978-1-4899-6952-1

  • eBook Packages: Springer Book Archive

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