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Daft Ch. 19 Control

Daft ch 19 control

Organizational Control Definition The systematic process through which managers regulate organizational activities to make them consistent with expectations established in plans, targets, and standards of performance
Organizational Control notes requires info aobut performance standards and actual performance actions taken to correct any deviations from the standars managers must decide what info is essential, how obtain info, how respond to it
Control focus: Before, during, or after Feedforward Concurrent Feedback
Feedforward Control Control that focuses on human material and financial resources flowing into the organization also called *preliminary or *preventative controls hiring employees, raw materials QA, forecasting trends or market/economy
Concurrent Control Consists of monitoring ongoing activities to ensure that they are consistent with standards. manuf meet quality standards, prvent employee theft in real time,
Feedback Control Postaction or output control. Intensive final inspection. final measurement on numbers/profit.
Steps of Feedback Control 1 Establish Standards 2 Measure actual performance 3 Compare Performance to standards -IF needed Take corrective action -Or Do nothing or provide reincorment Provide Feedback--> Establish new goals again
Measure actual performance 2nd step Formal reports of quantitiative performance measurements that managers review dailym, weekly or monthly. Related to standards set up in step 1.
Establish Standards of Performance 1s step Define goals for org departments in specific, operational terms that include a standard of performance against which to compare
Compare Performance Standards 3rd step: compare actual to performance. Computer reports, walk through the plant, identify wheter actual performance meets, exceeds, or falls short of standards. Joseph K.
Take Corrective Action Determine what changes (if any) are needed. Top down-Force change. Participation control approach-collaborae with employees. (Contingency factors may force standards to be too low or high)
Budgetary Control Setting targets for an org's expenditures, monitoring results and comparing them to the budget...make changes as needed. List variance between planned and actual.
Expense Budget anticipated and actual expenses for each responsiblity center and for the total org. When actual expense exceeds budgeted, differnce signals need "for further investigation"
Revenue Budget Lists forecasted and actual revenue. REV below signals a need to investigate. REV about signal need to ensure resources are there to fill higher anticipated demand.
Cash Budget Estimates receipts and expenditures of money. Ensure org has sufficient cash to meet its obligatons. More-> Invest. Low--> arrange to borrow
Capital Budget Lists planned investments (buliding, machinery) in major assets with expenditures usually over a year. Investments designed to enhance profits. Plans impact on cash flow and profitablity. Controlling is evaluting assumptions on ROI
Top Down Budgeting middle and lower level managers set departmental budget targets in accorance with overall company revenues and expenditures specfied by top managment.
Bottom Up Budgeting lower level managers anticipate and then budget their department's resource needs and pass them up to top management for approval. (*Moving towards this bottom down, employee set--empowerment mvmnt)
Financial Control Balance Sheet-Assets and liabilities Income Statement-summarizes firm's performance for a given interval/aka P&L
Liquidity Ratio org's ability to meet it's current debt obligations. current ratio
Activity Ratio measures internal performance with respect to key activities defined. (ie. Inventory Turnover, conversion ratio)
Responsibility Center any organizational department or unit under the supervision of a single person repsonsible for activity.
Profitability Ratios Ratio that describes the firm's profits in terms of a source of profits: profit margin on sales, total sales,gross margin Return on assets.
Leverage Ratio funding activities with borrowed money. Debt ratio.
Bureaucratic Control Use of rules, policies, hierarchy of authority, reward systems, and other formal devices to influence employee behavior & assess performance. Quality with QA not w/ indiv worker. Extrinsic rewards given. Wages, benefits, promotions. Power by position.
Decentralized Control Values and assumptions. Opp bureaucratic control. Organizational culture, group norms, and a focus on goals, rather than rules for compliance to org's goals. "self discipline, self control->workers performing.Power based on knowledge. Intrinsic rewards
Extrinsic Rewards Intrinsic Rewards Ex-Wages, benefits, promotions. IN-meaningful work, opportunity to learn and grow.
Total Quality Managment TQM Continuous Improvement (decentralize control)
Quality Circles Group of 6-12 volunteer employees who meet regularly to discuss and solve problems affecting quality of their work
Benchmarking Continuous process of measuring products, services, practices against major competitors or industry leaders.
Six Sigma 3.4 defects per million parts
ABC Activity Based Costing A control system that identifies the various activities needed to provide a product and allocates costs accordingly. (allocates costs accross business units for more accurate costing) Helps to know where to add or reduce value adding activities.
Open Book Managment Sharing financial information and results with all employees in the organization. Goal is to get every employee thinking and acting like a business owner.
Created by: lorenkaiser1
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