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2014 | OriginalPaper | Buchkapitel

3. How Management Control Affects the Implementation of Strategies in a Decentralized Organization: Focus on Formal and Informal Control in the Case of Atlas Copco

verfasst von : Klas Sundberg

Erschienen in: Strategy, Control and Competitive Advantage

Verlag: Springer Berlin Heidelberg

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Abstract

This chapter studies how the control systems of Atlas Copco, a Swedish industrial company, have changed and how different systems interact to implement strategies and achieve financial targets. More specifically, the chapter treats how formal management control is supplemented by informal control in order to implement strategies and achieve success.

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Fußnoten
1
Since the outset of the 2000s, there have been a growing number of studies on informal control, primarily on why and how management control changes in organizations (e.g. Burns and Scapens 2000; Lukka 2007; Pitkänen and Lukka 2011).
 
2
A substantial part of the empirical data in the chapter is from a study presented in a licentiate thesis by Sundberg (2009).
 
3
The name “Copco” is a shortening of “Compagnie Pneumatique Commerciale”.
 
4
For example, in 2010 Ericsson, the supplier of telecommunications equipment, invested over 15 % of its sales in R&D, and Johnson & Johnson, the pharmaceuticals group, invested over 11 %. The corresponding share for Atlas Copco was just over 2 %.
 
5
In recent decades, however, the company has become less dependent on cyclical fluctuations, as will be shown later in this chapter.
 
6
The divisionalization was a process that last for decades but was finally completed 1992.
 
7
The budget was eliminated at the corporate level. Since the company is decentralized, operating managers can still use more detailed planning models, but in these cases local models are used since there is no longer any requirement from above to present “budgets”. Instead there are several “scorecards”. These scorecards, though, are not designed like the ones presented, for example, by Kaplan and Norton (1996) as Balanced Scorecards, but are concentrated on key numbers for investment, growth in company sales for different products and regions, development of income and cash flow, working capital etc. Although the financially oriented key numbers predominated, there are also HR-related key numbers such as the frequency of development dialogues, internal mobility, sickness absence etc. The numbers used in measuring are increasingly specific to the particular business the farther down you go in the operating organization.
 
8
The definition of ROA (Return of Asset) used here is: annual income/total assets.
 
9
In the twenty-first century, moreover, the management of the business area of Construction Technique have been stationed in China in order to come closer to the most expansive market for that business area.
 
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Metadaten
Titel
How Management Control Affects the Implementation of Strategies in a Decentralized Organization: Focus on Formal and Informal Control in the Case of Atlas Copco
verfasst von
Klas Sundberg
Copyright-Jahr
2014
Verlag
Springer Berlin Heidelberg
DOI
https://doi.org/10.1007/978-3-642-39134-7_3