Chapter 4 & 5: Control System Tightness and Costs

Question 1

• A high probability that the firm’s objectives will be achieved.
• A low probability that major unpleasant surprises will occur.

Answer 1

Good Control

Question 2

It provides a high degree of certainty that people will act as the organization wishes.

Answer 2

Tight Control

Question 3

1. Behavioral constraints
2. Preaction reviews
3. Action accountability

Answer 3

Tight Action Controls

Question 4

1. Precision (amount of noise)
2. Objectivity (freedom of bias)
3. Timeliness (lag between occurrence and measurement)
4. Understandability (meaningful, reasonable to affected educated users)

Answer 4

Tight Result Controls

Question 5

1. Overlapping personnel controls (selection and training)

2. Cultural controls (project teams and team-based rewards)

Answer 5

Tight People Controls

Question 6

People work hard and direct their energies to serve organization’s interests.

Answer 6

Control Benefits

Question 7

1. Direct out-of-pocket costs (bonuses, staff costs, opportunity costs)

Answer 7

Control Costs