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MGT 330 Week 5 Learning Team Assignment Control Mechanisms Paper

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Control Mechanisms 1
Control Mechanisms
University of Phoenix
MGT/330
22 February 2010

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Control Mechanisms 2
Control Mechanisms
Business control systems, although sometimes complex in practice, are quite
straightforward in concept. Control systems are designed and implemented as a means to
control resources and to ensure that employees act in a manner that is beneficial to their
organization. Effective managers can use control systems as a tool to make sure activities are
carrying on as planned. Our restaurant for this topic is Yard House, a small restaurant chain
known for its excellent food and large selection of draft beers. The Yard House implements
control functions like budgetary, financial, market, and clan.
Budgetary control is a common control and in general, can be implemented into any
organization including the Yard House. “Budgetary control is the process of finding out what’s
being done and comparing the results with the corresponding budget data to verify
accomplishments or remedy differences. Budgetary control commonly is called budgeting
(Thomas S. Bateman, 2009).” It is important for a small business like a restaurant to establish a
budget in order to track progress and measure financial health. A sales expense budget sheet
provides expected sales, estimated expenses, and a profit estimate. This is a common document
associated with budgetary control. Financial controls are similar to budget controls in that both
controls help an organization assess financial heath and track progress. The Yard House uses
financial control balance sheets as well as profit and loss statements to measure organizational
performance.
The previous two control elements are examples of Bureaucratic control mechanisms
that guide an organization via a mechanical viewpoint. Although formal bureaucratic control
systems are perhaps the most pervasive in organizations (and the most talked about in
management textbooks), they are not always the most effective. Market controls and clan
controls may both represent more flexible, though no less potent, approaches to regulating
performance (Thomas S. Bateman, 2009).”
“Market controls involve the use of economic forces—and the pricing mechanisms that
accompany them—to regulate performance. The system works like this: in cases where output
from an individual, department, or business unit has value to other people, a price can be
negotiated for its exchange (Thomas S. Bateman, 2009).” In short, when the Yard House
utilized market control they looked at the price of a good, employee compensation, and
company performance, all measured by the analysis of the economy.
Clan control affects an organization positively when employees are empowered, and a
culture that upholds high standards and established integrity. Clan control involves creating

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Control Mechanisms 3
relationships built on mutual respect and encouraging each individual to take responsibility for
his or her actions. Employees work within a guiding framework of values, and they are
expected to use good judgment (Thomas S. Bateman, 2009).”
Effectiveness
Budgetary and Financial controls have positive effectiveness on the every day running
of The Yard House. Before the doors were open, before the first employee was hired, the
budget gave them the opportunity to open the business realistically. The budget helped set
goals and evaluate the effectiveness of how they can run their business. The visible signs of a
problem will show up when the analyzing the budget. If there is a problem that goes unnoticed,
it could compromise the financial stability of continuing the restaurant.
The budget forecasting, the expected income, expenses and profits, will lay out the
years expected performance expectations. The Yard House can use these expectations and look
back at any time during the year to gauge how the restaurant is doing and if more controls need
to be set in the budget.
The effectiveness of market control determines such things as wage/salary for managers
and employees. Yard House’ owners can use the market controls, like profitability to determine
the performance of the restaurant. Market controls are effective in determining the cost of food
supplies and in turn relates to what they can charge. In addition, the market can determine
what the average wages are for their employees.
The yard House uses clan control in the restaurant to regulate their employee’s behavior
and facilitate reaching their organizational goals. They have a trust within their organization;
therefore, their employees require minimal direction and standards. Their employees perform
well and they participate in setting the standards of the company.
Yard House uses market control for price competition to evaluate the output of the
restaurant. The managers compare the profits and prices to determine the efficiency of the
restaurant. Using market control, it allows the restaurant to have a reasonable level of
competition in the services that they provide.
The Yard House organization uses budget control to think about future planning and to
set detail plans for the business. This also helps to promote coordination and communication
within the restaurant. Using a budget it allows management to measure performance against

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