Management Control System in Manufacturing Companies: A Case of BGI Ethiopia

Abstract

In general, business environment is becoming more complex and competitive in nature. Companies in different industries are upcoming with a number of differentiated products and characterized by high quality with the level best required level of innovative skills. These all devotions and efforts are aimed of existing successfully in the industry they belong. Walsh et al, (2005) argue that, appropriate design and use of Management Control System (MCS) elements have a direct relationship with the success of the organization in competitive market environment.  This paper is aimed at assessing BGI Ethiopia on three selected elements of management control system specifically, result control group, evaluating the practice through identifying and relying on theoretical propositions derived from the literature and  finally, to recommend on how to improve these elements in their organization.In this research, an exploratory case study approach along a qualitative research method for collecting and analyzing the data are used. The case chosen in this study is BGI Ethiopia which is one of the brewery companies in the country. The empirical findings were analyzed through identifying themes from the data, by relying on theoretical propositions derived from the literature. The results show the following facts: Strategy Planning:: the strategic planning practice being used by BGI Ethiopia is in line with the theoretical propositions derived from the literature and control by using goals is highly emphasized.Performance Measurement and Evaluation: The new performance measurement literature indicates, performance measurement system should in corporate any financial and non-financial measure that provides incremental information on managerial efforts. However, BGI Ethiopia’s approach to performance measurement is supplementing extensive traditional financial measure less mix of non – financial measures. The reward and incentive are not used very significantly. The system in use extensively consists of monetary rewards; both short term and long term incentives and do not use non-monetary incentives in greater extent to motivate its employees and the system seems incapable of achieving result control, since they influence employees’ actions by taking rewards to desired results.

Keywords: Management Control System, Performance Measurement and Evaluation, Strategic Planning, financial incentives, non – financial incentives