Ch. 8: Control, Change and Entrepreneurship Flashcards
What are control systems?
Formal target-setting, monitoring, evaluation, and feedback systems that provide managers with information about how well the organization’s strategy and structure are working.
What is feedforward control?
Control that allows managers to anticipate problems before they arise.
What is concurrent control?
Controlthat gives managers immediate feedback on how efficiently inputs are being transformed into outputs so managers can correct problems as they arise.
What is feedback control?
Control that gives managers information about customers’ reactions to goods and services so corrective action can be taken if necessary.
What are the 3 stages of control?
Input stage: Feedforward control, anticipate problems before they occur Conversion stage: Concurrent control, manage problems as they occur Output stage: Feedback control, manage problems after they have arisen
What are the 4 steps in the organizational control process?
What are the three organizational control systems?
What is the return on investment?
The net profit of sales before taxes divided by total assets. Measures how well managers are using the organization’s resources to generate profits.
What is the operating margin?
The total operating profit divided by the sales revenue.
A measure of how much percentage profit a company is earning on sales; the higher the percentage, the better a company is using its resources to make and sell the product.
What are the liquidity ratios?
The current ratio is the current assets divided by the current liabilities. Do managers have resources available to meet claims of short-term creditors?
The quick ratio is the current assets minus the inventory divided by the current liabilities. Can managers pay off claims of short-term creditors without selling inventory?
What are the leverage ratios?
Debt-to-assets ratio: Total debt divided by total assets.
To what extent have managers used borrowed funds to finance investments?
Times-covered ratio: Profit before interests and taxes divided by total interest charges.
Measures how far profits can decline before managers cannot meet interest charges. If this ratio declines to less than 1, the organization is technically insolvent.
What are the activity ratios?
Inventory turnover: Cost of goods sold divided by inventory.
Measures how efficiently managers are turning inventory over so that excess inventory is not carried.
Days sales outstanding: Current accounts receivable divided by sales for period divided by days in period.
Measures how efficiently managers are collecting revenues from customers to pay expenses.
What is an operating budget?
A budget that states how managers intend to use organizational resources to achieve organizational goals.
How does organizational goal setting work?
What is management by objectives (MBO)
A goal-setting process in which a manager
and each of his or her subordinates negotiate specific goals and objectives for the subordinate to achieve and then periodically evaluate the extent to which the subordinate is achieving those goals.
Who is responsible for balancing organizational control and change?
What are the four steps in the organizational change process?
