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Management control is critical for the effective survival of organizations .It provides directions to achieve ultimate objectives of the organization. This study mainly focuses to investigate the role of enterprise systems in implementing management controls and its impact over performance. This research has been developed as a case study and the unit of analysis is Vodafone PLC. Vodafone PLC is a one of leading company in the telecommunication industry in UK and also it is a listed company in the London stock exchange. Vodafone PLC is also a key player in the Internet service provision market with high internet speeds at low cost. There is a range of Management Control Systems[MCS] used by Vodafone PLC, such as Balance Scorecard, Just-in-Time (JIT), Total Quality Management (TQM), Target Costing, and Benchmarking are being practiced by the Vodafone PLC. In addition, they apply some MCS which are unique to the telecommunication industry such as SAP (Enterprise Resource Planning) System, Enterprise Risk Management (ERM) and Quality improvement terms (QIT). Author found that even though there are series of MCS, significant weight is given to commonly used MCS like Balanced Scorecard and TQM. On the other hand author found that the MCS lead to increased revenue, employee productivity, employee satisfaction, and customer base. They were also found to improve flexibility and efficiency of functions, and the quality of decision making of the Vodafone PLC. MCS also found to be effective in reducing employee turnover, mitigating organizational Risk, and time savings
1.0 Research Background
In today's time of rapid technological change in telecommunication industry, through global and domestic competition, Management control techniques are central to sustained corporate profitability and competitiveness. Thus, management control system has become a vital in telecommunication industry.
Management Control Systems (MCS) is process which influences the behavior of organizational resources to implement organizational strategies. According to Anthony (2007), defined Management Control as the process by which managers influences other members of the organization to implement the organization's strategies. Management controls are only one of the tools which managers use in implementing desired strategies. However strategies get implemented through management controls, organizational structure, human resources.
This research developed as a case study. The unit of analysis is Vodafone PLC which is a one of leading company in the telecommunication industry in UK and also it is a listed company in the London stock exchange. Vodafone PLC is also a key player in the Internet service provision market with high internet speeds at low cost. Vodafone is the world's largest mobile telecommunication network company, based on revenue, and has a market value of about Â£71.2 billion (November 2009). In 31 countries Vodafone PLC is being operated and further 40 countries.
The present study captured Management Control Systems in Vodafone PLC & identifies relationship between management Control System & their Impact to Organizational performances.
1.1 Research Problem
The research problem being addressed to identify Management Control Systems (MCS) and its association with performance, Case Study evidence from the leading company in telecommunication industry, with reference to the introduction to this chapter. This research is in favours of the following issues.
1. What are management control systems in Vodafone PLC?
2. What is relationship between management control system and organization performances?
1.2 Research Objectives
Author expected to achieve the following objectives through the proposed research as described in the above research issues.
1. To analyze and review the practice management control system telecommunication industry. Case study based on Vodafone PLC
2. To observe that the degree of which applicability of theoretical management control techniques in practical. That is Reconciliation management control techniques theory with practical applicability.
3. Identify Significant of commonly used Management Control Systems over latest Management Control Systems
4. To observe the relationship between management control system and their impact to organization Performances.
1.3 Ethical Issues
Some ethical issues might be involved when carry out this research. These issues are related to the characteristics of qualitative or field methodology which usually include long-term and close personal involvement, interviewing and participant observation. It can be due to Truthfulness, openness, confidentiality and fidelity. It can be further demonstrated as follows:
* Informed and Voluntary Consent: Researchers are expected to obtain informed consent from participants. Participants are not coerced into participation and have access to relevant information prior to the consent. This requires informing participants about the overall purpose of the research and its main features, as well as of the risks and benefits of participation. Consent may be given in written format, verbally and audio-taped, or videotaped.
* Able to exercise free power of choice without the Intervention of force, fraud, coercion
* The investigators' responsibility to the participants includes issues such as ensuring confidentiality, avoidance of harm, reciprocity and feedback of results.
* Full disclosure on the purpose of the research
* Potential risks and benefits of participation
* Less of Confidentiality of Information Shared and Anonymity of Research
Literature Review pertains about the theoretical aspect of Management Control Systems (MCS) and past studies of management control systems based on various research articles.
There are various definitions on Management Control Systems (MCS) by various scholars. Anthony, R.N, Govindarajan, V. Gupta, A.K. Grant, R.F Maciariello et al, Smith, Anthony & Young, Chenhall Horngren et al, Teemu Malmi David A. Brown and few of definitions are as follows:
Methodology and Research Design
3.0 Research Methodology
The research methodology is the philosophy or the general principal which guide to research. Research methodologies deferent from research method .Research method are the tools that use to gather data such as questionnaire, interviews, focus Group, Observation, Experiences, and Schedules etc. The research methodology can be categorized based on quantitative research and Qualitative research.
The research methodology is used for this study is case study research methodology. Case studies emphasize detailed contextual analysis of a limited number of events or conditions and their relationships.
The unit of analysis is Vodafone PLC, one of leading company in the telecommunication industry in UK. Participants of the research unit were employees Group Internal Audit Division, Group Financial Accounting and Reporting Division, Group Business Control & Compliance Assurance, Enterprise Contact Management Division, Service Delivery & Enterprise Contact Management Division, Human Resources & Revenue Operations Division and so forth.
The data gathered, based on Semi Structured questionnaire and over the phone interview as a primary data collection methods and Author used Archival documentation as a secondary Data collections Method. The data analysis is done based on statistical and systematic approaches. Data presented using pie chart, tables, scatted diagram, Column charts, bar charts and so forth.
3.1 Data Collection Method
Data collection method based on primary data collection method and secondary data collection method. Primary Data Consists of information gathered for some specific purposes, such as direct observation, interviews while secondary data is consists of information that already exists and collected for some purposes. Such as magazines, research articles and so forth. For research purpose Author selected both primary & secondary Data collection methods
3.1.1 Over the Phone Interview
One of The primary data collection methods is semi-structured interviews conducted through over the phone. The interviews were carried with Senior Internal Auditor, Unit Manager Corporate Finance Group of Internal Audit Division Risk management Controller of Group of Vodafone PLC. The interviews were specially designing to get clear understanding on key aspects of Management control systems and their relationship to performances in Vodafone
The over the phone Interviews were carried out with Senior Internal Auditor, Unit Manager Corporate Finance Group and Risk Management Controller those who having experience in the industry and the sound theoretical background of Management control systems. In addition to that an interview guide (Appendix:2)was developed and e mail to the participants before conducting interviews was to provide the participants with an insight into the nature of the subject matter that were to be dealt with during interview. All the interviews were recorded.
Additional sources of the primary data collection a method was Questionnaires .Questionnaires was distributed based on two ways. Through e mail and by hand To Group Internal Audit Division, Group Financial Accounting and Reporting Division, Group Finance & Revenue Operations Division. During August 2010 & September 2010.
Two type of questionnaires were developed .Namely Questionnaire A and Questionnaire B (Appendix 1),Questionnaire A was distributed among Enterprise Contact Management Division, focusing to identified management control systems practice by Vodafone PLC Questionnaire B was distributed other Divisions.
The Questionnaires were email to approximately 38 Participants with and exactly 22 replies were returned.5 Questionnaires were handed over and 5 replies were returned. Successful Rate of respond approximately around 80% achieved.
3.1.3 Documentation Reviews
Other data collection method was Archival documentation. It's a part of secondary data collection method .Archival data was obtained mainly referring quarterly Reports, annual reports of last 7 years. Other documentation included organizational charts, training manuals, policy and procedure documents, Press Releases, Dow John Analysis, and Web Site of Vodafone PLC and Initial Public Offers.
Data Analysis & Discussion
This section demonstrates different Management Control systems practices by Vodafone PLC based on the data gathered by the over the phone interviews and self-completing unstructured questionnaires which already discussed under Chapter 3 and Relationship between management control system and their impact over organization Performances explained under different basis.
4.1 Management Control systems practices by Vodafone PLC
Based on over the phone interview held with different Managers, there are approximately eighty Management control systems (MCS) of Vodafone PLC. In Vodafone PLC perspective Management control systems (MCS) are the back born of the company. it gives competitive advantages over other organizations. Unique management control systems practices by Vodafone PLC are SAP Enterprise Resource Planning (ERP) System, COSO model, Enterprise Risk Management (ERM), SMART, Quality improvement terms (QIT), Customer Service Quality Standard (CSQS), code of business ethics (CBE) and a nondisclosure agreement (NDA) as well as they comply with traditional management controls systems (MCS) like Balanced Scorecard, extensive planning process, Benchmarking, Quality circles, Total Quality Management (TQM)
4.2 Relationship between management control system and their impact to organization Performances.
Practices of MCS affect organizational different section's performances. According to the over the phone interviews and gathered data from questionnaires, in a nut shell we can MCS affect to increase the revenue of the Vodafone PLC, increase Employee Productivity and employees retention, Reduce employee Turnover, increase Employee Satisfaction, increase Customers Base as well as Customer Satisfaction, mitigate organizational Risk, Time savings, Improve the flexibility and efficiency of the functions, Improve the Quality of decision making and so forth. Those facts are deeply discussed under these sections.
4.2.1 Customer Base
Vodafone PLC uses different Management Control systems (MCS) in serving its customers. Few are Vodafone Enterprise Contact Management (BPO) Business Process Outsourcing (BPO) as well as The Enterprise Solutions (ES) Unit. Based on the documentation review, The Company also commands approximately 60% of the revenue share in the country's mobile category, despite the aggressive competition in the market.
As far as customer base of Vodafone PLC is considered it has increased during last seven years with aggressive competitions .The customer base has increased at decreased growth rate. Most likely as a result of reduced consumer spending power, heightened cost of living and competing pressures on the consumer wallet. Inelastic consumption and mitigation of revenue growth is demonstrated through the micro-measures.
During last 7 years Vodafone PLC customer base expanded by over 5 billion. Figure:4.2.1. This was primarily due to affordable pricing, strong distribution, radio network coverage achieved through aggressive investments on network infrastructure and backup by strengthen management control systems.
Table 4.2.1 Customer Base & Customer Growth Rate of GSM/3G
Figure: 5.2. 1 Customer Base of Vodafone PLC
The organization revenue is the main indicator of practices of sound internal management control system. Figure: 4.2.2 and table 4.2.2 Organization revenue has increase during last 5 years at a decreasing rate. In addition to that forecasted revenue for 2011 [Table 4.2.3] also presented with competitors.
The company was able to continue its growth momentum in all dimensions of business ranging from market and financial performance to Network expansion and product innovation even with the tumultuous global economy with the financial crisis in the United States .
Table: 4.2.2 Revenue
Figure: 4.4.2: Revenue Growth
Table 126.96.36.199: Estimated retail revenues generated (m)
4.2.3 Operational Cost
Theoretically, Sound management control systems (MCS) leads to reduction of the cost of organizations. During Last 7 years organizational operational cost has increased. It mainly due to some other factors. Figure 4.2.3
The company's operational cost has increased due to harsh external environments with respect to borrowing costs and foreign exchange exposure; challenges arising from the domestic economy were exacerbated by downstream impacts of the global financial crisis putting pressure on foreign capital inflows.
Table 4.2.3: Operational Cost
Figure 4.2.3 Operational Cost
4.2.4 Human Resources
The sound human resources management control systems of the organization can be measured in terms of employee productivity, employee retention, staff growth and staff strength. Vodafone is by far the mobile sector's largest employer accounting for over 70% of mobile sector employment. Over the past decade direct employees of the company in supporting the nation's largest telecommunications network.
The Group's dynamic and youthful workforce is the key to its continued success in adapting to the rapidly changing technology and competitive environments. Vodafone continues to contribute to the country's employment market.
When analyzing last 6 years the staff strengthen and staff retention in a high level, this is mainly due to robust management control systems practice by Vodafone PLC -Figure 4.2.4 &4.2.4,such as Few of the human resources management control systems (MCS) apply for employee are code of business ethics (CBE) and nondisclosure agreement (NDA), Employee Share Option Scheme (ESO), Human Resource Information System (HRIS) and The Employee Performances Review Process (PRR).
Table 4.2.4 Staff Retention, Staff strength, Staff Growth, Staff Productivity
Figure 4.2.4 Staff Retention & Staff Growth
The data is analyzed base on facts proving by the discussions had Unit Manager Corporate Finance, Senior Internal Auditor of Group Internal Audit Division and data gathered from questionnaires and documentation reviews, They stated that organization has various management control systems. They committed that most of the management control systems are aggregately affect the organizational performances. But some management control systems are there to control various activities which do not have direct impact over organizational performances.
5.0 Summary & Conclusion
The purpose of this study was to investigate the practice of management control system Telecommunication industry. Management control of the organization is the main key determinate factor of organizational success. But there are no research carries out to investigate to practice of management control systems in UK telecommunications industry. The above back ground motivated to author to carry out this research.
To meet the Research objectives of the study, the author selected Vodafone PLC as a case study of this research. Chapter 3 focused on the method that used to perform the case study. Participants of the research unit were staff of the various key divisions of Vodafone PLC. Data were gathered, based on interviews conducted over the phone and questionnaire as a primary data collection method and used Archival documentation as a secondary Data collection Method.
After collecting all the data ,Methodological triangulation was carried out The data analysis is done based on systematically and statistical approaches and data presented using pie chart, tables, scatted diagram, line chart, Column charts, bar charts and so forth.
Chapter Five includes the data analysis and discussion in line with the methodology discussed in Chapter there and in the light of past empirical research discussed under chapter two. Data analysis and discussion is key part of a case study research as it provides the ground for the conclusions. In this research it provides ground to assess whether the foresaid objectives achieved or not.
Chapter four demonstrated different Management Control systems practiced by Vodafone PLC. It explained comply with traditional management controls systems (MCS) like Balanced Scorecard, Quality circles and Total Quality management (TQM. In addition to that chapter four explained relationship between management control systems and its contribution towards customer base. , Revenue Operational Cost and so forth
5.1 Concluding Remarks
Conclusion of this research will be derived from the data analysis and discussion in the Chapter four . Conclusion will be carried out in line with the research objectives identified in the Chapter One.
Conclusions over first and second objectives will be discussed together. The two of objectives were to identify and review the practice management control system in Vodafone PLC and observe that the degree of which applicability of theoretical management control techniques in practical. Some of management control systems (MCS) unique to each organization within the industry. There are approximately eighty Management control systems (MCS) of Dilog Vodafone PLC.In Vodafone perspective Management control systems (MCS) are the back born of the company .it gives competitive advantages over other organizations. There are approximately eighty Management control systems (MCS) of Vodafone PLC Unique management control systems practices by dialog Vodafone PLC. are SAP Enterprise Resource Planning (ERP) System , COSO model, Enterprise Risk as well as they comply with traditional management controls systems (MCS) like Balanced Scorecard, extensive planning process, Benchmarking, Quality circles, Total Quality Management (TQM),Corporate Governance ,Comply with international standards and so forth. All those management control systems are practicing together. We cannot segregate any divisions which use only traditional management control systems as well unique management control .
According to the data gathered, Author remarked the combination of traditional management Common used management control Systems and Unique Management control Systems practices Vodafone PLC.As follows Table 5.1
Table: 5.1 Usages of Common MCS and Unique MCS
The final objective is to observe the relationship between management control system and their impact to organization Performances. Concluding final objective, There are lot management controls are in place in Vodafone PLC and they are inter related each other and where we are unable to isolate each management control system and distinguish their performance accordingly.
According to data gathered, They committed that most of the management control systems are aggregately affect the organizational performances. Where as some management control systems affected the organizational performances over other management control systems .As an example Balance Scorecard, Quality circles and SAP Enterprise Recourses and so on.
consistent with the data gathered from Semi structured interviews conducted by over the phone and Documentation reviews, backed up by data gathered from distributing Questionnaires .Author can conclude the relationship between of management Control Systems and impact over organizational performances .As follows Figure 5.2 and Table 5.2.based on the knowledge gathered from this case study.
Management Control systems
Table 5.2: Relationship between MCS and Organizational Performance
5.2 Future Research Directions
This study opens a number of opportunities for future research. Firstly methodological improvement may be made in a similar setting by increasing the length of study and the unit of analysis to investigate the management control techniques in telecommunication industry. Data could be collected at lower levels and more widely across the organization. to better understand the achievement of balanced objectives it would be interesting to also obtain the views and perceptions of a variety of customers regarding the effectiveness of Managements Control Systems (MCS) practices by the organizations.
A second approach to extending this study is to investigate the use of the Management Control Systems in specific strategic decisions .That is relationship of MCS and strategy decision makings in telecommunication industry.
Thirdly research can be conducted to whether management control can minimize the disruption caused by strategic change over time.
Finally research could also conduct to Exploration of the nature and extent to which the role and composition of MCS changes a company matures.
5.3 Action Plan
01 Sep 2010
01 Sep 2010
07 Sep 2010
07 Sep 2010
30 0ct 2010
5.4 Gantt chart
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