The management triangle

There are three levels of business activities carried out in operating a company.

The process performed to control the basic products or services produced by the company are indicated by the first level, i.e., operational control. In a bank, operational control includes the physical sorting, recording and posting of checks etc.

Management control, being at the second level indicates processes, functions or facilities that the management of those processes delegated to the operational control level.

The top level of the triangle represents strategic planning process, the processes that determine what products to produce or what to provide in the first place or, even more broadly what markets or businesses the company should be in currently or plan to be in the future.

Top management establishes the policies, plans and objectives of the company, as well as a general budget framework under which the various departments will operate. These factors are passed down to middle management, where they are translated into specific revenue, cost and profit goals. Once these are reviewed, analyzed and modified in accordance with the overall plans and policies, the middle management issues the specific schedules and measurement yardsticks to the operating management. The lowest level, operation control, has the job of producing goods and services required to meet the revenue and profit goals, which will enable the company to achieve its overall objectives.

Information, the second term in “Management Information System,� is recognized as an increasingly valuable commodity required by the management to plan and control business operations effectively. Information can be defined as a tangible or intangible entity which serves to reduce uncertainty about some future state or event.

Data must be distinguished from information. Data are facts and figures that are not currently being used in a decision process. An example of data would be: number of deposits and total number of accounts in a bank. On the other hand information is used for informative purpose or as a basis for forecasting or decision-making.