Operating in Saudi Arabia: The Role of Information Technology and Planning

Operating in Saudi Arabia: The Role of Information Technology and Planning

A firm’s competitive strategy is defined by its theme-based and weighted-value proposition, but the execution of the strategy cannot be mandated by management (Forgang, 2004). Instead, strategy-specific decisions make operational a firm’s value proposition, and the practice of strategy-specific decision-making occurs through ongoing management control systems. For this reason, management control processes are exceedingly important, both in the industrial sector and in other areas of business as well.

Following Anthony and Govindarajan (1995), management control can be defined as a process of motivating managers to perform actions and activities in line with the goals and strategies of the organization. According to this definition, an organization is ‘under control’ when its members do what the management wants them to do. Management control comprises various tasks, among which are (Anthony and Govindarajan, 1995):

  • Planning the future activities of the organization;

  • Coordinating the activities of the various members of the organization;

  • Communicating information;

  • Evaluating this information;

  • Deciding on the actions to be taken; and

  • Influencing people to adapt their behaviour according to the company goals.

From the definition above, it follows that management control plays a central role in managing the company’s performance and the implementation of its strategies. Therefore, it is of vital importance that management behaviour, which is stimulated by the management control system, is consistent with the strategy to be implemented (the so-called ‘intended strategy’).

Problem Statement

All management systems are dependent upon information, and information technology (IT) coordinates diverse parts of an organization by making information available. Accounting systems are one means through which data are collected and disseminated across an organization, and the timely access to information can be both management control and coordination and a vital element to implement a firm’s strategy. For example, a firm’s ability to gain a relative advantage based upon process quality may depend upon customer service reps having immediate access to client data. A firm’s information system (IS) is also a key ingredient in its ability to monitor the effectiveness of the execution of its strategy and to diagnose problems. The sets of measurements in sequence from interim performance measurements to outcome and feedback measurements are crucial to guide decision-making. However, having the ability to assemble this data in a timely manner is a result of the firm’s IS, and the ability to design and manage a strategy-specific IS is a source of competitive advantage (Forgang, 2004).

Additionally, the increasing importance of the service sector in all economies, the worldwide deregulation of previously regulated industries, and the integration of national economies and markets have all led to the rebirth of the marketplace. For this reason, the internally-oriented traditional control is increasingly irrelevant (Johnson, 1992). Instead, Kullvén and Mattsson (1994: 16) argue that “the prime task of management control becomes that of gauging the ambiguity emanating from intensive customer interactions.” This therefore means that more attention needs to be paid to a management control process that “make[s] visible the activities aimed at customer satisfaction” (Kullvén and Mattsson, 1994: 17), which means that more information needs to be gathered on the customer’s interaction with the firm.

Purpose of the Research

The purpose of this study is to examine the views of important stakeholders in the management control process, and will include managers, employees, and customers to gather this information. More specifically, the purpose of the study is examine the management control processes in three companies in Saudi Arabia with focus on information technology and planning: a local company, Saudi SABIC; and American company, American Halliburton; and Saudi Aramco, which uses a mix of American and Saudi management styles.

To shed light on this, this study will be guided by the following research questions:

  1. How are management control processes, strategic planning, and information technology interrelated in these different companies?

  2. What are the managers,’ employees,’ and customers’ roles in management control, risk management, and business continuity planning?

  3. What is the “lived experience” of managers, employees, and customers as it relates to each company’s management control within the technological context?

  4. How do managers, employees, and customers view information technology in each company?

  5. What are managers’, employees’, and customers’ recommendations for improving risk management and business continuity planning in each company?

Organizations develop management control processes in their information technology systems for the following reasons:

Due to the efficiency of information technology processes they reduce the time spent by the firm in its training of new and existing employees. Management control processes in Information technology ensure that the employees are trained efficiently within a short time. This move decreases the cost the firm would have incurred if it had not adopted the management control processes. A firm that utilizes its management control processes to its best level becomes more consistent compared to firms that do not have management control processes in their information technology systems. Another benefit that firms develop by adopting management control processes in their information technology systems is that the firms fulfill their requirements to comply with the laid down rules. A firm improves its communication channels by adopting management control processes. Management control processes enhance in the retention and transfer of knowledge in the firm. Management control processes are also useful to firms because firma are able to document any improvement or failure within the firm and hence implement measures to either maintain the improvement or to reduce the failure. The rate of errors in a firm is reduced when a firm adopts management control processes. A firm that uses management control processes simplifies the mode of access of information to its employees and the stakeholders. Management control processes ease the replication of the firm and hence it encourages growth of the firm.

Procedures of a firm are directly related to the management control processes of the firm because the procedures of any firm are meant to decrease the level of variability within the firm. As a firm decreases the variability of its processes it also increases the control of its process. The management of every firm wants to be in control of the whole firm and so it aims at controlling the internal and external procedures of the firm. The policies and the procedures within a firm provide the foundation of the control of the firm and therefore the firm needs to formulate policies and procedures that will allow management control processes to be effective in the firm. Currently the importance of management control has increased because of the fact that corporate governance is receiving a lot of attention and internal control is a very important sector of this. Management control processes are needed for a company to comply with the ISO 9000 Quality. There are three types of processes that have been known to show different levels of control and these are: those processes within a firm that are adaptive, those that are ballistic and those that are controlled from within the firm. In most of the firms the ballistic control process is the most common. A ballistic control process is encountered within an organization any time the organization lacks means to correct a certain problem that it is encountering at the moment. Within an organization a management process is quite different from management procedure because a process comprises of one or more procedures but in the simplest form a process will only comprise of one procedure.

Organizations develop management control processes in their information technology systems for the following reasons:

Due to the efficiency of information technology processes they reduce the time spent by the firm in its training of new and existing employees. Management control processes in Information technology ensure that the employees are trained efficiently within a short time. This move decreases the cost the firm would have incurred if it had not adopted the management control processes. A firm that utilizes its management control processes to its best level becomes more consistent compared to firms that do not have management control processes in their information technology systems. Another benefit that firms develop by adopting management control processes in their information technology systems is that the firms fulfill their requirements to comply with the laid down rules. A firm improves its communication channels by adopting management control processes. Management control processes enhance in the retention and transfer of knowledge in the firm. Management control processes are also useful to firms because firma are able to document any improvement or failure within the firm and hence implement measures to either maintain the improvement or to reduce the failure. The rate of errors in a firm is reduced when a firm adopts management control processes. A firm that uses management control processes simplifies the mode of access of information to its employees and the stakeholders. Management control processes ease the replication of the firm and hence it encourages growth of the firm.

Procedures of a firm are directly related to the management control processes of the firm because the procedures of any firm are meant to decrease the level of variability within the firm. As a firm decreases the variability of its processes it also increases the control of its process. The management of every firm wants to be in control of the whole firm and so it aims at controlling the internal and external procedures of the firm. The policies and the procedures within a firm provide the foundation of the control of the firm and therefore the firm needs to formulate policies and procedures that will allow management control processes to be effective in the firm. Currently the importance of management control has increased because of the fact that corporate governance is receiving a lot of attention and internal control is a very important sector of this. Management control processes are needed for a company to comply with the ISO 9000 Quality. There are three types of processes that have been known to show different levels of control and these are: those processes within a firm that are adaptive, those that are ballistic and those that are controlled from within the firm. In most of the firms the ballistic control process is the most common. A ballistic control process is encountered within an organization any time the organization lacks means to correct a certain problem that it is encountering at the moment. Within an organization a management process is quite different from management procedure because a process comprises of one or more procedures but in the simplest form a process will only comprise of one procedure.

Significance of the Study

This study has a great deal of significance for business owners across the world, and it may also have significance for customers and employees as well. Generally, however, it also has the strongest amount of significance for managers of plastic, metal, oil, gas, or petroleum companies throughout Saudi Arabia; especially those that are interested in upgrading their technology and becoming better managers for the employees that work for them. All individuals that are involved in commerce in some way could ultimately be affected by this type of study because almost all of them utilize information technology to some degree. Some individuals use it in their businesses more than others but all businesses in today’s modern society must use information technology to some degree or they will not be able to compete with others that are selling the same products or offering the same services, and therefore they will have little chance in the marketplace.

LITERATURE REVIEW

Introduction

The purpose of this section is to describe how management control systems can be used to effectively manage company and business performance. First, the scope of management control is defined and the link with organizational strategy is defined. Next, the three elements of the management control system are briefly explored: (1) the management control structure; (2) the control process; and (3) the management control culture (beliefs systems). Management control processes is the area being researched and so this element is described in detail and an overview of the findings in mainstream contingency research studying the effectiveness of management control processes in various environmental and organizational contexts is given.

Management Control and Organizational Strategy

Anthony and Govindarajan (1995) distinguish between management control, which ultimately is about implementing planning and control, for strategic planning and task control. They define management control as a process of motivating managers to perform actions and activities in line with the goals and strategies of the organization. On the other hand, strategic planning and control is the process of determining and evaluating the goals of the organization, and formulating or reformulating the broad strategies to be used in attaining these goals. Strategic control refers to the maintenance of the environmental conditions of strategies. Strategic control is used to evaluate the background of existing strategies and the environmental assumptions on which the strategies were formulated. It can also involve the reformulation of strategies. Finally, task control is the process of ensuring that specific tasks are carried out effectively and efficiently. For example, internal audit and internal control are often associated with task control.

It is clear that management control is important for strategy implementation and for performance management. As noted, a management control system consists of three basic elements: (1) the management control structure; (2) the management control process; and (3) the management control culture (Bruggeman, 2004). The first element, the management control structure, deals with the division of the organization into ‘responsibility centres.’ A distinction needs to be made among the various types of responsibility centre, such as ‘revenue centres’, ‘expense centres’, ‘profit centres’, and ‘investment centres’. Determining the optimal structure is part of the task of management control. The second element in a management control system, the management control process, comprises the cycle of: planning for the expected input and output; measuring the results; comparing plan to reality; and, finally, adjusting if necessary. The third element is the management control culture or the beliefs systems. This is the combination of communal values and behavioural norms, which determine the behaviour of managers and staff. The remainder of this section goes into more detail of the management control processes.

Management Control Processes

The starting points of the management control process are the mission, the vision and the strategies of the organization. The mission of an organization is a description in general terms of the role of the company towards its stakeholders. It describes the reasons for the company’s existence, its strategic focus and values, as well as how the long-term goals should be realized. The goals are descriptions of the long-term desired future of the company. The mission and goals translate into strategies, which specify the way in which the vision aspired to should be reached. The strategy in turn is translated into concrete performance objectives or targets. This is usually done through formalized action plans (Bruggeman, 2004).

Most organizations engage in strategic planning, though formality, sophistication, scope of participation, and ongoing commitment to the process vary widely. Strategic planning involves more than a vision of the firm’s future. Effective planning is action-oriented and directs the implementation of the firm’s competitive strategy. The focus on execution of the firm’s strategy implies four criteria for evaluating an organization’s strategic plan: (a) a clear mission statement, corporate strategy, and line of business strategies, (b) a clearly stated value proposition for each narrow group of products, performance measurements, and target values, (c) operational guidelines for each functional area, and (d) time-specific action plans.

The strategic choice that a company uses is very important as well. This is the examination of strategic alternatives that might be used by the company as well as the selection of an alternative or alternatives (Parsatharthy and Booke, 2006). Implementing a strategy is often much more difficult than it would seem at first, because there are many areas of the company that must be well-coordinated for the strategy to be effective (Parsatharthy and Booke, 2006). Strategic control is another vital area to the issue of strategic management, and it is most likely the most important area in many respects. This is due to the fact that everything that has been undertaken by a particular business must generally be studied and changed quite often in order to ensure that it is reaching the maximum level of effectiveness (Parsatharthy and Booke, 2006).

The management control process can best be represented by a closed loop control cycle. The process starts from the strategy of the company, from which the action programmes are derived. Once the programmes are set up and approved, their financial implications for the coming year can be expressed in a budget. At the end of the budget period, the actual performance is measured and compared to the budget. The results of this analysis are then reported to top management and used in the evaluation of the efficiency and effectiveness of the responsibility centres concerned and their managers. The management control process thus starts from strategic planning and target setting and consists of the following five phases:

  • Planning action programmes (programming);

  • Preparing the budget;

  • Executing the plan;

  • Measuring performance, following up the budget and reporting; and

  • Evaluating and rewarding.

A management control process (and more specifically, the budgeting process) is effective when it motivates managers on the various levels of the organization to perform actions in line with the organizational goals and strategies. From contingency research on management control, evidence suggests links between strategy and the characteristics of the management control process.

Defenders, and companies with conservative, cost leadership strategies, find cost control and specific operating goals and budgets more appropriate than entrepreneurs, prospectors and companies with product differentiation strategies (Chenhall and Morris, 1995, Dent, 1990, Simons, 1987). Chenhall and Morris (1995) have found that tight control is suitable for conservative strategies; they also found tight control in entrepreneurial situations but, importantly, operating together with organic decision styles and communications. Some research has been focused on the relationship between the chosen competitive strategy and the management control process.

Differentiation strategies are associated with a de-emphasis on budgetary goals for performance evaluation (Govindarajan, 1988). Govindarajan and Fisher (1990) found that product differentiation with high sharing of resources (between functional departments) and a reliance on behavioural control was associated with enhanced effectiveness. Bruggeman and Van der Stede (1993) found that business units implementing differentiation strategies based on a make-to-order strategy preferred loose control in budgeting, while business units with a cost leader strategy or a differentiation strategy based on standard products found tight budget control more suitable. They also found that bottom-up budgeting and a commitment to budget targets was considered optimal for all competitive strategies. Overall, Van der Stede (2000) has shown that product differentiation strategies are associated with less rigid budgetary control, but this is also associated with increased budgetary slack. It has also been suggested that bonus systems must be suited to the strategy. Anthony and Govindarajan (1995) suggest that formula-based bonus determination approaches should be used with a harvest strategy and that subjective bonus determination is optimal for build strategies.

Contingency research has also found relationships between characteristics of the management control process and the level of uncertainty in the environment. Companies operating in an environment of unpredictable change require an appropriate set of control process characteristics. Uncertainty has been related to performance evaluation characterized by a more subjective evaluation style (Moores and Sharma, 1998, Govindarajan, 1984), less reliance on incentive-based pay (Bloom, 1998), non-accounting style of performance evaluation (Ross, 1995), and participative budgeting (Govindarajan, 1986). As environmental uncertainty increases, using more participative budgeting increases performance. In contrast, when environmental uncertainty is low, participative budgeting decreases performance. In situations where environments are stable and predictable, there is little informational benefit from participation because superiors have sufficient information to develop budgets.

Business Continuity Planning

Business continuity plans are often developed by companies as a way of having system redundancy and to avoid disasters or continue to operate if disasters strike. Business continuity/disaster recovery planning helps businesses prepare for disruptive events. The range of events which normally threaten business functionality include: major fires, electricity cuts, gas leaks or explosions, terrorist attacks, abrupt flooding, and transport accidents (Callan, 2002). Callan (2002) goes on to note that, while there are innumerable possible incidents, they all have factors in common: exclusion from operational premises or facilities; exclusion from data or records; a reduction or cessation of productive capability; and a likely loss of staff.

Like total quality management, if business continuity/disaster recovery planning is not done systemically, then it is not being done well (Mitroff and Anagnos, 2002). These plans should include information on how employees will communicate, where they will go and how they will keep doing their jobs. In addition, it is absolutely necessary that firms establish and practice a contingency plan that includes a succession plan for their CEO.

Information Systems

In general, IT and IS are considered important support functions in an organization. This is a domain that is well documented in the management literature. One of the main considerations is to demonstrate how IT and IS can contribute to strategy implementation, and thus increase the image of IT within the organization (Deschoolmeester and Braet, 2004). To understand the potential impact of ICT (information communication technology) and IT on organizational performance, it is necessary to look at IT holistically (i.e., in relation to the organization and its processes) rather than to consider IT as a function separate from other organizational processes. Almost 40 years ago, Harold Leavitt (1965) emphasized that an organization’s structure, the tasks or processes at hand, the people and its technology are intimately intertwined.

Everybody agrees about the critical role of information and knowledge in our current (business) society. Knowledge is information that can be used in all types of managerial decision-making and action-taking. Most of the information and knowledge that an organization needs is drawn from inside (business processes, structure and culture) as well as from outside the organization (i.e., the competitive environment in which the organization operates). Collecting information about markets, market trends, competitors’ actions, general economic trends and legislation is a critical step in every strategic analysis. Information systems that fail to provide access to internal or external sources of information and knowledge can diminish the performance of an organization.

There are three management control processes experienced by firms, these are: ballistic processes, controlled processes and adaptive processes.

Ballistic control processes

A ballistic control process within a firm is characterized by the motion of the objects within the firm that are driven by their own momentum. When the term ballistic process is used to describe a procedure within a firm it is means that the process only focuses at accomplishing its own task and that the process is not interested in the output of the firm. This kind of process is seen to be less beneficial to most firms as compared to the other processes.

Controlled process

Controlled processes in a firm are said to come from the systems theory of the firm meaning that the inputs of the system are modified so as to realize a targeted output of the firm. The most important task in this form of management process is monitoring the inputs and outputs of the firm and make any changes to the process so as to enable the firm achieve its target output or the modification of its inputs. A controlled process makes changes to the whole process so as to make sure that the firm attains its target whereas a ballistic process would require a firm to adjust its procedures by itself. Comparing a ballistic process with a controlled process shows that a ballistic process is easier to create in a firm and at the same time it is easier to use in the firm and it requires less work from the management while a controlled process is difficult to create it requires a lot of work from the management to ensure that the target of the firm is achieved. A controlled management process tries to understand what the system really needs for it to perform at its level best. This means that a controlled management process requires data from previous performances of the firm so as to determine the cause of the problem in the firm and develop new ways to solve the problem.

Adaptive process

This is a kind of a management control process that is able to change with time so as to improve the effectiveness of the firm. The idea behind this process is that it reviews all the changes that are being made in the firm so as to improve the efficiency of the firm and hence compensate for the weaknesses in the firm. This process is best put into use by firms by asking the following questions regarding the activities of the firm: are the right changes being made in the firm? Are the changes made enough?, and How has the environment within the firm changed since the changes were initiated? This kind of process looks at the current weaknesses of the firm; maybe the firm uses old information technology systems. The process then recommends the best changes that could be made to the firm and after sometime with required data input and enough changes in the processes the firm gets to a limit of its effectiveness. The changes in the firm become so incremental and so this process provides a chance for the firm to evolve to a new state instead of making the enormous changes. This kind of process has been seen by most managers as the hardest process to create within an organization (Gary, 2001).

The organizational control structure

According to Geert, Werner and Anne (2002), the organizational control process involves the collection of information about a certain system so as to make necessary decisions with the system. According to the research carried out in 2002 by Geert, Werner and Anne, managers develop control systems that consist of the following four steps: The first step is to develop standards that will be used to measure the performance of the firm: Within the general strategic plan of the organization managers develop goals that departments should attain. The managers also come up with operational terms to be compared with the activities of the organization. The second step is to measure the actual performance of the firm: In most firms formal reports are used to measure the performance and these reports are reviewed by the mangers regularly. The measurements to be measured here should be related to the standards that had been established in the first step. An example of this is if a firm has a target of increasing its sales, then the firm should develop means of collecting and reporting the sales information. The second step involves comparison of the performance of the firm with the set standards: This step involves comparing of actual activities of the firm to the set performance standards. When the managers of the firm go through their reports or observe activities in the firm they aim at assessing if the actual performance of the firm is above, at level or below the set standards. The performance reports that had been developed in the earlier stage help in simplifying the comparison by placing the actual performance standards for a certain period against the set performance for the same period. The reports also help the managers of the firm to compute the variance so as to determine the level of the actual standards as compared to the set standards (Cliffnotes). The fourth step is to take corrective measures: when the performance of the firm deviates from the set standards the managers have to develop corrective measures for the firm. In a firm that is driven by the productivity and quality the workers are supposed to assess their work and come up with corrective measures. After the management has determined the causes of the deviation it may take measures that are guided by the policies of the firm. The best corrective measure is when the management leaves the workers and the managers of departments to come up with their own initiatives to correct their errors (Anne, Werner and Geert, 2002). In every economic firm, managers have the responsibility of equally allocating the scarce resources in the firm (Young and O’Byrne, 2001). The current social and economic conditions characterized by very many changes and evolutions provide those who are responsible for management control with new challenges. The challenges encountered do not only show the inefficiencies of the firm’s control processes but they also indicate that there is a need to develop new management tools in the firm. In the management control processes companies are looking for a management process that will at the end be able to serve as many purposes as possible. The value based management processes are assumed not to consider almost all the other types of performance measures used by firms at the corporate and strategic departmental levels (Ottosen and Weissenrieder, 1996). The same scholars stress on the need for other measurement systems that can be applicable for internal and external communication within the firm. Currently managers of firms have embarked on improving the operational processes within the firm; some of these processes include sales, marketing, supply chain and the manufacturing sector. A research conducted by Eisenhardt in 1989 indicated that large management processes in most firms do not achieve their expected results because they lack a very important component of the management process. This component is the lack of adhering to those changes that take place in the firm’s management processes and also in the culture of the organization (Eisenhardt, 1989).

Control processes in IT services management

The IT environment is a complex environment and therefore to manage it there is need for a standardized process that is based on a certain approach formulated by the firm. Most of the information technology firms are now using the IT Infrastructure Library (ITIL) so as to manage their practices effectively. All IT firms are looking for ways that would provide higher levels of their services and at the same time lower the costs. An organization with an optimum framework for managing its IT services will also be able to effectively support its end users, minimize the costs incurred in support services, resolve the issues arising from its system and comply with the set guidelines of the firm. Operations in the management of IT services should be capable of keeping the systems at an operational level, support the users of the system so as to increase the productivity of the firm and also work closely with other areas of the organization to make sure that reliability, safety and functionality of all the systems involved is put to its maximum level. For a firm to achieve its best results from its IT systems it needs to come up with a management process aimed at changing the software in the firm. The risks due to the operations and the compliance of the firm are greatly reduced by introducing changes to an IT system within a firm (Toshio, 1990). One change taken on the software of any company may cost the company a lot of money if the changes are not effected quickly and in the correct way. The following are the benefits that have been known top result from effective IT changes within a firm: IT processes management increases the business of the firm by enabling the firm to respond to its business users in a more effective manner and quickly. IT management control processes improve the efficiency of the firm due to the automation of its processes and business rules that reduce problems in the running of the firm. IT management control processes allow for any changes to take place within the firm so as to increase the output of the firm. IT management processes also streamline the operations of the firm and also free valuable resources due to the automation exercise that converts those operations that were manual and tedious to be easy and perfect. As a result of an integrated IT management there is an improvement of the quality of the products produced by the firm and therefore the firm increases its competitive advantage in the market. The information technology management processes improves the control of the business and also reduces the risks that may result due to the changes in the IT systems while at the same time reducing the time associated with the changes. IT control systems also reduce the risks of shutting down the system for a long time that would affect the operations of the firm. IT management control processes ensure that the level of flexibility within the firm meets the requirements and the business needs of the business (Ron and Emanuel, 1999).

Summary

This chapter has discussed the important role of management control for strategy implementation and for performance management. Developing an appropriate management control system is a prerequisite for effectively managing an organization. Do optimal choices exist? In order to answer this question, what makes a management control process optimal must be defined. The answer to this question can be found in the description of the task of management control: the objective of management control is to motivate managers maximally to realize the corporate goals and to implement the strategies. So, management control processes are optimal when they maximally stimulate the desired goal-oriented behaviour and minimally lead to undesired (or dysfunctional) behaviour. To be able to choose management control processes, one must predict what the effect of the choice will be on the management behaviour and whether the expected effect is desired or not (Bruggeman, 2004).

METHODOLOGY

Introduction

Research is a systematic inquiry that describes, explains, predicts and controls observable phenomenon and involves using various methodological approaches. When questions arise, different approaches to resolving them are available. These approaches can be generally classified as empirical and non-empirical. Empirical approaches involve a systematic process of data collection, analysis, and interpretation (Sechrest and Sidani, 1996). This research uses an empirical approach and this section is set out in four sections explaining this approach: research strategy, sampling design, data collection methods, and data analysis.

Research Strategy

The research design was structured within the perimeters of an inductive framework. An inductive research is a study in which theory is developed from the ‘observation’ of empirical reality, allowing general interferences are induced from particular instances (Gill and Johnson, 2002). The overall framework for this inductive methodology is generated by getting inside situations and involving oneself in the everyday flow of life, this is referred to as an ideographic method (Gill and Johnson, 2002). This is in line with the goal of a qualitative investigation, which is to understand the complex world of human experience and behaviour from the standpoint of those involved in the situation of interest. Therefore, the investigator is expected not to have an a priori, well-delineated conceptualisation of the phenomenon. Rather, this conceptualisation is expected to emerge from the interaction between participants and investigator. Flexibility in design, data collection, and analysis of research is strongly recommended to gain ‘deep’ understanding and valid representation of the participants’ viewpoints (Saunders et al., 2007).

As noted above, this research uses a qualitative methodology, which is undertaken using both semi-structured in-depth interviews and questionnaires (see Appendices A to D). The research was a cross-sectional study, meaning that the research takes place at a single point in time or over a short period.

The survey technique is a very popular since many different types of information can be collected, including attitudinal, motivational, behavioural and perceptive aspects, which cannot be collected by other means (such as observation). Survey research designs are quite flexible and can therefore appear in a variety of forms, but all are characterised by the collection of data using standard questionnaire forms administered by telephone or face to face, by postal pencil-and-paper questionnaires or increasingly by using web-based and e-mail forms (Saunders et al., 2007).

Questionnaires were formulated (Appendices B, C, and D) incorporating of open-ended and closed-ended questions. There will be three sets of questions asked, which will include gender, age group, marital status, length of time working for the company, and length of time work. The first set will be for managers (Appendix B), the second set will be for non-managers employees (Appendix C), and the third set will be for customers (Appendix D).

Data were collected via questionnaire for two main reasons:

  1. Responses can be gathered in a standardised way, making questionnaires more objective than interviews, for example, and

  2. Data is relatively quick to collect using a questionnaire.

Along with the advantages, there are several disadvantages of survey technique, including (Bryman and Bell, 2007):

  1. They depend on subjects’ motivation, honesty, memory, and ability to respond.

  2. Subjects may not be motivated to give accurate answers and may be motivated to give answers that present themselves in a favourable light.

Also, with self-administered questionnaires, there is no one present to help respondents if they are having difficulty answering a question and respondents cannot ask for clarification. This will be overcome by using a pilot test because pilot tests can detect possible weaknesses in questionnaire design and allow, for example, adjustments in wording to be made, ensuring that questions are not difficult to comprehend (Bryman and Bell, 2007). A panel will review the survey. The panel will consist of two managers, two non-manager employees, and two customers. Panel members will be selected because they represent the population being studied. The survey will be reviewed to establish current content validity. Panel members will fill in survey questions and be asked to review each question on the questionnaire and indicate whether the question should be included. Further, they will be asked if the questionnaire lacked any question that should be included in the study. Modifications and adjustments will be made to the instrument based on the responses of the panel.

Compared to surveys, which is the main way of collecting data in the areas of marketing and management, interviews have several advantages. Marshall and Rossman (1999) argue that the advantages of interviews include the allowance for large amounts of data to be collected quickly about a wide variety of categories, and it also allows for immediate follow-up for clarification. This is because the interviewer can probe for deeper answers, ask for elaboration and examples, discover new relationships, and modify questions as time goes on. However, interviews take time and may often be more costly than using questionnaires.

Semi-structured interviews will be used in this research (Appendix A) since they allow the exploration of specific topics, while allowing interviewees to tell the interviewer what they think is important. Semi-structured interviews are conducted with a fairly open framework which allow for focused, conversational, two-way communication. The researcher opted for semi-structured interviews as this gives an opportunity to cover a wider scope if undiscovered questions should arise. This view is supported by Robson (1999) who advises that the researcher should be prepared to modify or revise pre-structured instruments as necessary, either on a one-off or continual basis. Burns (2000) attributes this to an ongoing process of analytic induction, which requires that each interview supports the proposition being developed and a revision of the initial proposition otherwise. This constant development allows the researcher to construct, elaborate, and test propositions and hypotheses while the study is ongoing.

Semi-structured interviewing starts with more general questions or topics rather than the formulation of detailed questions ahead of time (Marshall and Rossman, 1999). Questions were constructed based on the research question framework with structured and unstructured questions. In this research, relevant topics, such as the manager’s role in management control, risk management, and business planning, were initially identified and the possible relationship between these topics and other issues were also identified.

Sampling Design

Generally in social science research, researchers are advocated to use random samples in which every combination of items from the sampling frame has a known probability of occurring. However, in applied social research there may be circumstances where it is not feasible, practical, or theoretically sensible to do random sampling (Saunders et al., 2002).

In this case, a convenience sampling method will be used, where the selection of units from the population is based on ease of availability and/or accessibility. The major disadvantage of this technique is that the researcher has no idea how representative the information collected about the sample is to the population as a whole (Bryman and Bell, 2007). In addition, with such ‘self-selection’ samples, individuals are allowed to identify their desire to be part of the sample and thus may be are biased because people with strong opinions, especially negative opinions, are most likely to respond (Saunders et al., 2007). But the information still provides fairly significant insights, and is a good source of data in exploratory research (Saunders et al., 2007).

In order to get an indication of the sample population, the researcher will contact the company for a list of managers and employees and a customer list. The researcher will then contact each of these managers, employees, and customers, via e-mail, regarding study participation. Those interested in participating will be asked to contact the researcher via e-mail.

Subjects for the survey portion of the study will include all managers and employees who volunteer and a convenience sample of approximately 20 customers. For this study, the criteria for participant selection will be the following: company managers, non-manager employees, and customers, ages 18 years and older, and interested in sharing their experience.

Data Collection

The basic rule is that the nature of data collection should depend on the kind of study that is being conducted (Robson, 1999). The conceptual framework, research questions, and sampling criteria adopted largely determine the approach to data collection.

A survey will be sent to each interested participant via e-mail or regular mail as requested to be filled out by the participant and returned to the researcher. If only a small number of people respond with interest in the study, a second e-mail will be sent to potential participants asking for their help in understanding current company management control issues and issues related to information technology and management control. The researcher will then randomly choose ten managers, employees, and customers and contact each participant about participating the interview portion of the study. All interviews will be semi-structured, lasting between 30 and 90 minutes each. All interviews will be tape recorded then transcribed to get the information organised and allow for call backs to interviewees to obtain additional clarification as necessary. If necessary, the interviews will be conducted in via email, to ensure convenience for the participant.

In collection of self-reported data during the research, mail surveys will be used because they are relatively low in cost. Although these kinds of surveys have a low cost they are relatively difficult to carry out because planning of the questionnaires to be used in the mail surveys is very difficult as compared to surveys that make use of interviews. During the surveys care will be taken to predict any issues that the respondents may have during the collection of the data so as to deal with these issues before the collection of the data commences. Mail surveys have been seen to work very well when they are directed to a specific group and therefore they will be appropriate in this study as it will gather information from different groups in the firms. Due to the fact that the manner in which self-reported data is collected has been changing from the mail the research will make use of fax machines to ensure that the respondents get the questionnaires on time and that the feedback is also received on time. Due to the rise in the use of internet in most of the organizations and homes the research will make use of this to ensure a fast means of data collection. With the increase in technology the research will also make use of touch tone applications where the respondents and the researcher talk directly but through the phone or the computer. The interviews in the research were selected because they offer more and unique advantages as compared to the self reported means of collecting information. Interviews will either be face to face or by the telephone. The researcher has noted that the presence of the interviewer during an interview can increase the cooperation of the respondent and therefore resulting to high quality data. This means that face to face method of interview will be preferred as compared to the telephone so as to gain cooperation of the respondent. A significant amount of time will be spent going through the questions to be used during the interview to ensure that the respondents will be free with all the questions asked during the interview. The interviewers will be required to show confidentiality so as to gain the required information from the respondents (Nancy, 2004).

Data Analysis

The researcher will compute quantitative portions of the surveys and use qualitative analysis to analyze the narrative portions of the survey. In qualitative research, the distinction between data collection and data analysis may not be clear-cut. Qualitative data analysis provides a method for categorising and organising the subtleties of everyday social phenomena in a meaningful way (Krauss, 2005). The construction of meaning is the task of qualitative research and reflects the specific methods used in the qualitative data analysis process.

Yin (2003) identifies three general strategies that can be used when analysing case evidence. Of the three, he identifies ‘relying on theoretical propositions’ as the most preferred. In many cases, a study is based on a particular set of theoretical propositions. This theoretical stance will have helped frame the research questions, and through them, the design of the study. This strategy can be a powerful aid in guiding the analysis, indicating where, and on what, attention should be focussed (Robson, 1999). The research propositions also help to organise the entire research (Yin, 2003).

A RESEARCH MODEL FOR COMPARISON OF THIS RESEARCH

So as to compare the results obtained by this research study a model will be developed to asses whether the results of the study are in line with the current status of the firms that have been studied during the study. The comparison model for this study will consist of three main elements. The first will be to develop a framework for that describes the objectives of the study. After the objectives of the study are identified they will be compared to the results obtained in the study. A level of variance will then be calculated between the expected results and the actual results of the study. The second element will involve comparing the methods used to collect the data during the study to other previous methods that have been used in similar studies in the past. At this moment the researcher will also assess the problems that were encountered during the study and develop possible solutions of solving the problems. The comparison model will also consist of a section to compare the type of literature that was reviewed during the study. The model will also compare the level at which the literature reviewed in the study was applicable to the study as a whole. The comparison model will also require the researcher to make follow up studies in the firms that were studied to verify if the recommendations adopted by the firm have had a positive impact on the firm. If the researcher finds out that the recommendations had positive impacts for the firms then other firms in the same industry may be advised to adopt the same recommendations. The model will also include another research to act as a control research study; in this study the firms will not adapt the recommendations of the first study. The control research study will assist in determining the importance of management control processes in different firms.

SUGGESTIONS TO IMPROVE THIS RESEARCH

It is hoped that at the end of this research the researcher will have achieved his goal as indicated in the purpose of carrying out the study. It is hoped that by the end of the study the researcher will have critically examined the management control processes in the three selected companies. Some of the problems that are likely to be encountered in the research include unanswered questionnaires as a result of uncooperative respondents. The researcher will therefore investigate the causes of lack of cooperation in some of the respondents and hence suggest ways of improving the cooperation between the researchers and the respondents. The information collected from the respondents should be treated with high levels of confidentiality and at the same time ensure the respondents that no one would be held responsible for the information given during the study. Another method of ensuring that the study is more successful is using other methods of data collection apart from the ones used in the study. This would allow the researcher to compare the data obtained by the two different methods and therefore decide which method of data collection would be the best to use. The results of the study would greatly improve if the data collected was analyzed both quantitatively and qualitatively and then graphs and charts derived from the data for a clear representation of the results.

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