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Anthony, R. N. 1964. Framework for analysis. Management Services (March-April): 18-24. Reprinted in Rosen, L. S. 1974. Topics in Managerial Accounting, 2nd edition. McGraw-Hill Ryerson Limited: 31-42.

Summary by James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida

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The purpose of this paper is to suggest a classification for the various components (topics, species or subsystems) of planning and control systems and to suggest the characteristics of each component. According to Anthony these components or topics include the following:

Management Control: "...the process of assuring that resources are obtained and used effectively and efficiently in the accomplishment of the organization's objectives."

Strategic Planning: "...the process of deciding on changes in the objectives of the organization, in the resources that are to be used in attaining these objectives, and in the policies that are to govern the acquisition and use of these resources."

Technical Control: "...the process of assuring the efficient acquisition and use of resources, with respect to activities for which the optimum relationship between outputs and resources can be approximately determined."

Anthony compares strategic planning and management control in a table reproduced below.

Category Strategic Planning Management Control
Person primarily involved Staff and top management Line and top management
Number of persons Small Large
Mental activity Creative; analytical Administrative; persuasive
Variables Complex; much judgment Less complex
Time period Tends to be long Tends to be short
Periodicity Irregular, no set schedule rhythmic; set timetable
Procedures Unstructured; each problem different Prescribed procedure, regularly followed
Focus Tends to focus on one aspect at a time All encompassing
Source of information Relies more on external and future Relies more on internal and historical
Product Intangible; precedent setting More tangible; action within precedent
Communication problem Relatively simple Crucial and difficult
Appraisal of soundness Extremely difficult Much less difficult

Anthony defines "managed costs" in making a distinction between management control and technical control. Managed costs involve resources for which an objective decision as to the optimum quantity needed cannot be made, e.g., legal services. (Note: Managed costs are also referred to as discretionary costs in the accounting literature.)

Management control involves the whole organization and includes those parts of the organization where managed costs are significant. Technical control, on the other hand, involves only activities where there are no significant managed costs. Management control covers the whole organization, where technical control relates to subunits, or activities of subunits. Psychological considerations are dominant in management control systems, while logical rules apply to technical control systems. According to Anthony, a technical control system is analogous to a thermostat, while a management control system is highly dependent on the human behavior. Technical control can be programmed based on a set of objective rules. Management control requires subjective judgment. Therefore, failing to make the distinction between management control and technical control can create many problems within an organization. For example, attempts to substitute technical control (e.g., computers) for management control does not work.


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