Strategic Management Control in Farmlands Trading Society
Contingency theory states that an organisation’s management control systems should support its business strategy in order to be successful (Otley, 1980; Langfield- Smith, 1997). This research studied Farmlands Trading Society in terms of its business strategy, management control systems, and performance. Farmlands’ business strategy is described as a build mission, a breadth position and an analyser orientation. A number of innovative management control systems, such as participative strategic planning and zero-based budgeting, are employed to support their business strategy. Farmlands’ business model is successful as their financial performance, over a number of key financial ratios, is equal to or better than the industry average. While Farmlands employed management control systems that complemented their business strategy, it lacked support from an incentive compensation scheme. The lack of incentives, however, did not appear to diminish performance because of Farmlands’ organisational culture, strong leadership and co-operative ownership structure.