Control

Question 1

Control 1

Answer 1

ensures that a company is achieving what it set out to accomplish.

Question 2

Control 2

Answer 2

It compares
performance with desired results
and
provides the feedback necessary for management to evaluate results and take corrective action, as needed.

Question 3

Control 3

Answer 3

“IF YOU CAN’T MEASURE IT, YOU CAN’T CONTROL IT”

Question 4

Efficiency 1

Answer 4

“Doing things right

Getting the most output for the least input

Question 5

Efficiency 2

Answer 5

resource usage, low waste

Question 6

Effectiveness

Answer 6

“Doing the right things”
Attaining organizational goals
goal attainment with high degree

Question 7

PERFORMANCE

Answer 7

the end result of activity

Question 8

What Is Organizational Performance?

Answer 8

The accumulated end results of all of the organization’s work processes and activities
Coordinating the work of employees.
Designing strategies, work processes, and work activities.

Question 9

Evaluation and Control process

Answer 9

Determine what to measure
Establish the standards 
Measure
Compare with the standards
Take corrective action

Question 10

What to measure ?

Answer 10

To assess performance; what to measure?

…depends on the organizational unit to be appraised and the objectives to be achieved

Question 11

Evaluation and Control Information –

Answer 11

Sources of Information (How)
Control Criteria (What)

Question 12

Sources of Information (How)

Answer 12

Personal observation
(activity reports)
Statistical reports
(performance data)
Oral reports
Written reports

Question 13

Control Criteria (What)

Answer 13

-Employees
Satisfaction
Turnover
Absenteeism
-Budgets
Costs
Output
Sales

Question 14

Types of Controls

important

Answer 14

-Input controls
Resources – skills, abilities, values, motives
-Behavior controls
How something is done through policies, procedures, rules, SOP’s
-Output controls
What is to be accomplished; focus on end result through performance targets

Question 15

Feedforward Control (input)

Answer 15

A control that prevents anticipated problems before actual occurrences of the problem

Question 16

Feedforward Control (input) 2

Answer 16

Building in quality through design.
Requiring suppliers conform to ISO 9002.
Predictive maintenance

Question 17

Concurrent Control (behavior)

Answer 17

A control that takes place while the monitored activity is in progress.

Question 18

Concurrent Control (behavior) 2

Answer 18

Direct supervision: management by walking around.
Steering controls
Monitoring employee phone calls and PC’s

Question 19

Feedback Control (output)

Answer 19

A control that takes place after an activity is done.

Corrective action is after-the-fact, when the problem has already occurred.

Question 20

steering controls 1

Answer 20

they measure variables that influence future profitability

for example; inventory turnover ratio, customer satisfaction

Question 21

steering controls 2

Answer 21

Most of the performance measurements tell what happened after the fact – not what is happening or what will happen
A firm, therefore, needs to develop measures that predict likely profitability.

Question 22

Input controls

Answer 22

Input controls emphasize resources, such as knowledge, skills, abilities, values, and motives of employees.
Because it is “future” oriented it contains a factor of prediction and risk.
it is ignored consecuences might be unbearable.
Prevent the problem before it occurs. It is the cheapest way of dealing with it.

Question 23

Types of Controls

Answer 23

Activity-Based Costing (ABC) (concurrent control)
Enterprise Risk Management (ERM)
(feedforward control)
New position; Chief Risk Officer (CRO)-
Scenario analysis-
Value at risk (VAR); Effect of unlikely events in normal markets-
Stress Testing-
Earnings at risk (EAR)

Question 24

Activity-Based Costing (ABC) (concurrent control)

Answer 24

Allocation of indirect and fixed costs to individual products or product lines
Based on value-added activities
More accurate charge of costs

Question 25

Enterprise Risk Management (ERM)

feedforward control

Answer 25

Identify risks
Rank risks
Measure risks

Question 26

Evaluation and Control Information –

Answer 26

Performance data

Activity reports

Question 27

Primary Measures of Performance –

Answer 27

Traditional Financial Measures
Shareholder value 
Economic value added (EVA)
Market value added (MVA)
Balanced Scorecard Approach

Question 28

Traditional Financial Measures

Answer 28

Return on investment (ROI)
Earnings per share (EPS)
Return on equity (ROE)
Operating cash flow
Free cash flow

Question 29

Shareholder value

Answer 29

the present value of the anticipated cash flow + value if liquidated.

Question 30

Economic value added (EVA)

Answer 30

EVA = after-tax operating income – investment in assets X weighted average cost of capital.

Question 31

Market value added (MVA)

Answer 31

MVA = market value of a corp. – capital contributed by shareholders and lenders

Question 32

Balanced Scorecard Approach 1

important

Answer 32

Is a measurement tool that uses goals set by managers in four areas to measure a company’s performance,
Is intended to emphasize that all of these areas are important to an organization’s success and that there should be a balance among them

Question 33

Balanced Scorecard Approach 2

important

Answer 33

Financial
How do we appear to shareholders?
Customer
How do customers view us?
Internal processes (internal business perspective)
What we must excel et?
People / innovation and learning / growth assets
Can we continue to improve and create value?

Question 34

Using Benchmarking

Answer 34

Continual process of measuring products, service, and practices against the toughest competitors or those companies recognized as industry leaders
IT MAKES NO SENSE TO REINVENT SOMETHING THAT SOMEONE ELSE IS ALREADY USING

Question 35

Benchmark

Answer 35

The standard of excellence against which to measure and compare.

Question 36

Benchmarking

Answer 36

Is the search for the best practices among competitors or noncompetitors that lead to their superior performance.
Is a control tool for identifying and measuring specific performance gaps and areas for improvement.

Question 37

International Measurement Issues

important

Answer 37

• International transfer pricing (tax evading)
• Repatriation of profit (transferring profits through dividends, royalties, and management fees)
• piracy

Question 38

Problems in Measuring Performance

Answer 38

Workplace privacy versus workplace monitoring:
Employee theft
Workplace violence

Question 39

Workplace privacy versus workplace monitoring:

Answer 39

E-mail, telephone, computer, and Internet usage

Productivity, harassment, security, confidentiality, intellectual property protection.

Question 40

Employee theft

Answer 40

The unauthorized taking of company property by employees for their personal use.

Question 41

Workplace violence

Answer 41

Anger, rage, and violence in the workplace is affecting employee productivity.

Question 42

International Measurement Issues

Answer 42

• International transfer pricing (tax evading)
• Repatriation of profit (transferring profits through dividends, royalties, and management fees)
• piracy