Control Mechanism Essay

1910 words - 8 pages

Control Mechanism For Best Buy
Joanne Forde
March 7, 2011
Dorothy Galiger

Control Mechanism For Best Buy
An effective control system within any organization must provide detailed information that
is both valuable in its measure and consistent in its delivery. Such qualities of a control system are essential for management to harness it for the greater good of the organization. Control systems must be a fluid expansion of the control aspect of the organization’s strategic planning. Best Buy is a good example of a company that utilizes control systems to assist in company operations. These controls are not without their negative consequences, but for the most part, they ...view middle of the document...

Best Buy sales employees must scan items purchased while ringing a customer up. This allows the company’s managers to see which items are selling more than others and which are returned more. Managers can adjust prices, include a temporary sale on specific items, discontinue a product, increase management training, or improve customer service to save money and better please customers.
Financial Controls allow Best Buy the ability to view what are known as the Profit-Loss Statement and the Balance Sheet. The Balance sheet shows the company’s three major components. Best Buy’s assets are made up of the value of everything the company owns; including buildings and products. The second is company Liabilities that includes all loans and bills the company owes to sources outside of the company. The balance sheet shows the Stockholders’ Equity, which is the value of the stock of the company owners. The Profit-Loss Statement outlines the company’s income as well as its financial losses. Using these two data charts together, a company can make new financial goals and decide whether it should expand or cut some losses and plan for the future accordingly.
Best Buy also uses Market Control, which assesses the need of a product in a given area, determines the price to charge based on the need, and keeps pricing competitive with other similar companies. Market Control also allows the company to know whether or not its prices are helping or hurting productivity. Best Buy may not always have the lowest prices for a given item. However, the company conducts customer surveys to assess customer needs. Best Buy also compares its prices to those of neighboring companies and offers competitive prices exclusively available online and to customers who apply for various membership levels and credit cards.
Market control is the use of price competition to evaluate output (Barnat, 1998-2007). Managers discover how efficient their company is by comparing their profits to the price of items. Market control should be used if managers must have a reasonable level of competition in the goods or service area (Barnat, 1998-2007). The requirements must be stated clearly in the market control as well. However, market control is not effective for controlling functional departments. This mechanism is different from bureaucratic control because it uses pricing and price competition.
The second mechanism is bureaucratic control is the use of rules, policies, authority, and reward system (Barnat, 1998-2007). Unlike market control, bureaucratic control is put in place to influence employees’ behavior and their performances. Also unlike market control, bureaucratic control can be put in place to increase production through employees. Market control is more about the customers and is reflected. Bureaucratic control and concurrent control are similar because they both focus on increasing productivity for a company. Concurrent control focuses on the employee’s workload and ensures...

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