Chapter 16: Controlling And Such Flashcards
Controlling
Monitoring performance, comparing it with goals, and taking corrective action when needed
Six reasons why control is needed
1) to adapt to change and uncertainty
2) to discover irregularities and errors
3) to reduce costs, increase productivity, or add value
4) to detect opportunities or increase innovation
5) to provide performance feedback
6) to decentralize decision making, and facilitate teamwork
Control process steps
(4 steps)
1) establish standards
2) measure performance
3) compare performance to standards
4) take corrective action if needed
Control standard
The first step in control process
The desired performance level for a given goal
Control charts
Visual statistical tool used for quality control purposes
Management by exception
Control principle that states managers should be informed of a situation only if data show a significant deviation from standards
Feedforward control
Focussed on preventing future problems
Concurrent Control
Entails collecting performance information in real time
Feedback control
Amounts to collecting performance information after a task or project is done
3 levels of control
Strategic control by top managers
Tactical control by middle managers
Operational control by first line managers
Strategic control
Monitoring performance to ensure that strategic plans are being implemented and taking corrective action when needed
Tactical control
Motiniroing performance to ensure that tactical plans - those at the divisional or department level - are being implemented and taking corrective action as needed
Operational control
Monitoring performance to ensure that operational plans - day to day goals - are being implemented and taking corrective action wheh needed
Six areas of control
Physical Human Informational Financial Structural Cultural
Physical area
Includes buildings, equipment, and tangible products
Human resource area
Monitor employees personality tests l, drugs tests, performance tests, job satisfication
Informational area
Production schedules
Sales forecasts
Analyses of competition
Public briefings
Financial area
What’s the advertising budget, how much is owed, is there enough cash on hand
Structural area
Who reports to who
2 types: beaurocratic and decentralized
Bureaucratic control
The use of rules, regulations, formal authority to guide performance
Decentralized control
An approach to organizational control that is characterized by informal and organic structural arrangements, opposite of bureaucratic control
Supply chain
Sequence of suppliers that contribute to creating and delivering a product, from raw materials to production to final buyers
Budget
Formal financial projection
Incremental budgeting
Allocating increased productivity decreased funds to a department by using the last budget period as a reference point; only incremental changes in the budget request are reviewed
Fixed budget
Allocation of resources on the basis of a single estimate of costs for
Variable budget
Allowing the allocation of resources to vary in proportion with various levels of activity
Financial statement
Summary of some aspect of an organizations financial status
Balence sheet
Summary of an organizations overall financial worth - assets and liabilities - at a specific point in time
Income statement
Summary of an organizations financial results - revenues and expenses - over a specified period of time
Audits
Formal certifications of an organizations financial and operational systems
External audit
Formal verification by outside experts of an organization’s financial accounts and statements
Internal audit
A verification of an organizations financial accounts and statements by the organizations own professional staff
Deming management
Ideas proposed by W. Edwards for making organizations more responsive, more democratic, and less wasteful
PDCA cycle
Plan-do-check-act cycle using observed data for continuous improvement of operations
Total quality management (TQM)
A comprehensive apporach - led by top management and supported throughout the organization - dedicated to continuous quality improvements , training, and customer satisfaction
Two core principles of TQM
1) people orientation: everyone involved with the organization should focus on delivering value to customers
2) improvement orientation: everyone should work on continuously improving the work processes
Continuous improvement
Ongoing, small, incremental improvements in all parts of an organization
Kaizen
Japanese philosophy of small continuous improvements that seek to involve everyone at every level of the organization
Outsourcing
Using suppliers outside the company to provide goods and services
Reduced cycle time
The reduction of steps in the work process
Statistical process control
Periodic random samples from production runs to see if quality of being maintained within a range of acceptability
Six sigma
Rigorous statistical analysis process that reduces defects in manufacturing and service related industries
3.4 defects per million
Lean six sigma
Quality control approach that focussed on problem solving and performance improvements - speed with excellence - of a well defined project
ISO 9000 series
Quality control process companies must install - from purchasing to manufacturing to inventory shipping - that can be audited by independent quality control experts
ISO 14000
Set of quality control procedure that extends the concept of ISO 9000 series, identifying standards of environmental performance
