Financial vs Strategic Control

Companies ensure efficiency using either strategic or financial control system.

The strategic control relies on cooperation, sharing, coordination and close working relationships. It requires a vision, direction and execution of business strategy but it is a very expensive system to manage.

The financial control leverages the internal competition to reach efficiency by turning parts of the business into profit centres or entities whose performance is measured with financial methods. It is an inexpensive system but its internal pressures and competition can be counterproductive.

Which should you choose?

Unfortunately, the hybrid control system is not a good choice either because the strategic and the financial control systems are not compatible with each other. (Bergh, 2006)