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POM > Controlling Performance > Flashcards

Controlling Performance Flashcards

1
Q

What are the types of control systems?

A

financial
budgetary
quality
inventory

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2
Q

Why do managers use financial control?

A

assess financial footing soundness

indicated of other performance problems

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3
Q

Which level of managers do financial controls?

A

top management

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4
Q

How does the top management do financial control?

A

defines a financial forecast for the org.
performs financial analysis
use financial audits

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5
Q

A financial analysis is performed based on ?

A

selected ratios

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6
Q

What does a financial analysis reveal ?

A

business performance

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7
Q

What are the 3 steps in financial control?

A

financial statements
financial analysis
financial audit

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8
Q

What level of information do financial statements provide

A

basic

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9
Q

What are the major types of financial statements

A

balance sheet

income statement

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10
Q

Income statement is also known as

A

profit and loss

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11
Q

What does the balance sheet show?

A

financial position

with respect to assets and liabilities at a certain point of time

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12
Q

What does the income statement show

A

financial performance

for a given time interval , usually a year

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13
Q

In the income statement, what are the items

A

revenues
expenses
bottom line

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14
Q

What is financial analysis all about?

A

interpreting the numbers

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15
Q

What is a financial ratio?

A

comparison of 2 financial numbers

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16
Q

What are examples of financial ratios?

A

liquidity
activity
profitability
leverage

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17
Q

What does the liquidity ratio indicate?

A

company’s ability to meet its current debt obligations

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18
Q

What is an example of liquidity ratio?

A

cuurent ratio . current assets/current liabilities

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19
Q

What does the current ratio tell?

A

company has sufficient assets to convert to cash to pay off its debts

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20
Q

What does the activity ratio measure?

A

internal performance with respect to key activities

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21
Q

What is an example of activity ratio?

A

inventory turnover. total sales/average inventory

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22
Q

What does the inventory turnover show?

A

how many times the inventory is turned to meet total sales figure

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23
Q

What does the profitability ratio describe?

A

firm’s profits relative to a source of profits such as assets or sales

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24
Q

What is an example of profitability ratio

A

return on total assets. ROA. net income/total assets

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25
Q

What does ROA measure?

A

company’s ability to generate earnings
with other investment opportunities

(if company earn less in using assets than investing in bank)

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26
Q

What does the leverage ratio refer to ?

A

funding activities with borrowed money

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27
Q

What is an example of leverage ratio?

A

debt ratio. total debt/total assets

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28
Q

What is the debt ratio effective in ensuring?

A

org. does not exceed level they consider acceptable

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29
Q

Which external party looks at the debt ratio

A

lenders

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30
Q

What do financial audits intend to do?

A

verify the numbers

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31
Q

What are financial audits?

A

independent appraisals

of the org. financial records

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32
Q

Where can audits be done?

A

internal

external

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33
Q

Who does internal audit?

A

experts in the organisation

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34
Q

Where do internal auditors evaluate?

A

departments, divisions throughout the organisation

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35
Q

What do internal auditors ensure?

A

operations are efficient

conducted according to prescribed company practices

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36
Q

Who does external audits?

A

experts outside the organisation

CPA

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37
Q

What does CPA stand for?

A

certified public accountants

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38
Q

What is the process for budgetary control?

A

setting targets for org. expenditure
monitoring results
comparing them to budget
making changes

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39
Q

What do budget reports list?

A

variance between
budgeted (planned)
actual amounts for each item

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40
Q

How is analysis for budget control system done?

A

according to responsibility centres

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41
Q

What is a responsibility centre?

A

org. department/unit
under supervision of a single person
who is responsible for the activity

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42
Q

How do top managers use budgets?

A

for the company as a whole

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43
Q

How do middle managers use budgets?

A

focus on budget performance for their department or division

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44
Q

What are the budgets used?

A

expense
revenue
cash
capital

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45
Q

What does an expense budget include?

A

anticipated and actual expenses for each responsibility centre and total organisation

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46
Q

How can expense budget be narrowed down?

A

according to particular categories

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47
Q

What happens if actual expenses exceed budgeted amounts?

A

mangers identify possible problems

take corrective actions

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48
Q

What does a revenue budget list?

A

forecasted and actual revenues

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49
Q

When actual revenues are below forecasted revenues, what needs to be done?

A

investigate how to improve revenue

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50
Q

What does a cash budget estimate?

A

receipts and expenditures of money on a daily or weekly basis

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51
Q

Why is a cash budget important?

A

To ensure the org. has sufficient cash to meet its obligations

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52
Q

What does the cash budget show?

A

level of funds flowing through the org.

nature of cash disbursements

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53
Q

What does the capital budget list?

A

planned investments in major assets

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54
Q

What kinds of major assets are in capital?

A

heavy machinery
buildings
complex IT systems

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55
Q

How do capitals have a large impact on organisation?

A

future expenses

investments designed to enhance profits

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56
Q

Who is involved in capital budgetting?

A

Top level mangers

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57
Q

What are the approaches to budgeting?

A

top down budgeting

bottom up budgeting

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58
Q

What kinds of companies use top-down budgeting?

A

traditional

59
Q

What is the implication of top-down budgeting?

A

budgeted amounts for year imposed on middle and lower level managers

mangers set departmental budget in accordance with overall company revenue and expenditures specified by top executives

60
Q

When is top-down budgeting effective?

A

economic crisis
unit managers have limited knowledge of the situation
close co-ordination among various units is necessary

61
Q

What does bottom-up budgeting promote?

A

employee empowerment
participation
learning

62
Q

What is the process in bottom-up budgeting?

A

lower-level managers anticipate department’s resource needs

pass up to top management for approval

63
Q

When is bottom up budgeting best used?

A

operating managers have specialised knowledge about environment and marketplace
innovation is important. lower-level mangers understand opportunities, alternative courses of action, resource needs
management want greater commitment from managers of the operating unit

64
Q

in reality what budgetary approach is used

A

a mix of both

65
Q

What are the advantages of budgetary control?

A

facilitate coordination across departments
improve communication among employees
resource requirement become a financial blueprint

specify resources, revenues, acitivities to carry out strategic plan
Improves resource allocation
provide a tool for corrective action through reallocations
strategic plans into departmental actions
record organisational activities

66
Q

What are the disadvantages of budgetary control?

A

mechanical
exercise for filling out paperwork
demotivate employees, lacks participation
perception of unfairness
competition for resources and politics
limit opportunities for innovation and adaptation

67
Q

What does a rigid budget structure make difficult?

A

obtain money for new ideas

reduce initiative and innovation at lower levels

68
Q

What is quality control?

A

process to ensure products and services have quality they were planned to have
competed against standards set
action taken to correct defects

69
Q

A company focusses on certain aspects of quality by choosing from

A

8 dimensions of quality

70
Q

What are the 8 dimensions of quality?

A 
performance 
feature
reliability
conformance
durability
serviceability
aesthetics
perceived quality
71
Q

What is a product’s performance?

A

primary operating characteristics

72
Q

What is a feature

A

supplements to basic functioning characterstici

73
Q

what is reliability?

A

probability of the product not working properly

breaking down

74
Q

Reliability is important for what kind of products?

A

home appliances

75
Q

What is conformance?

A

degree to which product’s design or operating characterstics conform to pre-established standards

76
Q

What is durability?

A

measure of how much a person gets from a product before it breaks down , replaced

77
Q

What is serviceability?

A

promptness
courtesy
proficiency
ease of repair

78
Q

What is aesthetics

A 
how good  a product looks
feels
sounds 
tastes
smells
79
Q

Aesthetics they are all highly

A

subjective.

highly dependent on personal judgement and preference

80
Q

What is perceived quality?

A

individual’s subjective assessments of product or service quality

81
Q

It is not possible for companies to compete on all 8 dimensions without

A

charging high prices

82
Q

What is TQM?

A

organisation-wide effort
infuse quality into every activity
through continuous improvement

83
Q

What does TQM require?

A

organisation-wide commitment

84
Q

What does TQM promote?

A

total participation
innovation and continuous improvement
employing incentives (rewards quality)

85
Q

What does TQM aim to do?

A

devoted to prevention rather than correction
quality measurement (feedback)
quality training at all levels
stresses problem identification and solution (using teams)
high performance standards with zero defects

86
Q

How do you implement TQM?

A 
quality circles
benchmarking
six sigma
reduced cycle time
continuous improvement
87
Q

What are quality circles?

A 
group of 6-12 volunteer employees
meet regularly
identify problems
discuss and solve problems 
affecting their workplace
88
Q

When do QC members meet?

A

set time during the workweek

89
Q

What is the implication of QC?

A

decision-making pushed to organisation level

recommendations made by people who do the job, and know it better than anyone else

90
Q

What is benchmarking?

A

continuous process of

measuring products, services and practices against the toughest competitors or industry leaders

91
Q

What is the key in benchmarking?

A

analysis

92
Q

How does a company start benchmarking?

A

start with own mission statement
analyse current procedures
determine areas for improvement

93
Q

What is the second step in benchmarking?

A

selects worthy competitors

94
Q

What is six sigma?

A

a highly ambitious quality standard
specifies goal
no more than 3.4 defects per million parts

95
Q

What discipline is six sigma based on?

A

five-step methodology

DmAIC, deifne , measure, analyse, improve control

96
Q

What does DMAIC provide?

A

a structure way for org. to approach and solve problems

97
Q

What is a cycle time?

A

steps taken to complete a company process

98
Q

How do reduce work cycle?

A

dropping barriers between work steps and departments

removing worthless steps in the process

99
Q

What benefits do reduced work cycle bring about?

A

increased company performance

better quality

100
Q

What is continuous improvement?

A

implementation of a large number of small incremental improvments
all areas of organisation
ongoing basis

101
Q

What is inventory

A

goods the organisation keeps on hand

for use in production process

102
Q

What are the 3 types of inventory

A

raw materials
work in process
finished goods

103
Q

What are raw materials?

A

basic input to org. production process

104
Q

What are work-in-process

A

materials moving through stages of production process

not completed

105
Q

What are finished goods?

A

items passed through entire production process

not sold

106
Q

What is the importance of inventory

A

deal with uncertainties in supply and demand
better customer service
more economic purchases of raw materials

107
Q

What costs do inventory incur?

A

ordering cost
carrying, holding cost
stock-out cost

108
Q

What are examples of ordering cost?

A

paperwork
postage
time

109
Q

What are examples of carrying cost?

A

storage
insurance
breakage

110
Q

Stock-out cost are incurred when

A

stock is running out

loss of customer goodwill and sales

111
Q

Why is there a need for inventory management?

A

too much stock ties up funds
stocks become obsolete
too little stock can result in stock-out cost of lost sales

112
Q

What are the 2 inventory control methods?

A

EOQL economic order quantity

JIT- just in time

113
Q

What is the procedure for EOQ

A

balance order costs and carrying costs

avoid stock-out costs

114
Q

What does economic order quantity require?

A

continuous monitoring of inventories

115
Q

What does EOQ help mangers in?

A

deciding how much to order

when to reorder

116
Q

What is usually done in EOQ?

A

org. keep extra inventory

unforeseen contingencies

117
Q

What is the approach for JIt control?

A

having materials arrive just in time, when they are needed for production

118
Q

What is kept to a minimum for JIT? WHy?

A

work in process

goods are produced only as needed to service next stage of production

119
Q

What is vital for products in JIT?

A

high quality

120
Q

What inventory system does JIT have

A

zero

121
Q

What is the role of finished goods in JIT?

A

match sales demand

122
Q

What is required for JIT to be successful?

A

production system, simple, well coordinated

excellent employee motivation, cooperation

123
Q

Which managerial level do financial control systems rest on?

A

top management

middle managers

124
Q

Which managerial level do budgetary control systems rest on?

A

middle
lower
higher

125
Q

Which managerial level do quality control systems rest on?

A

lower

126
Q

Which managerial level do inventory control systems rest on?

A

lower

middle

127
Q

Why is the top management in charge of financial system?

A

overall financial health of the organisation

128
Q

Why is the middle management in charge of financial system?

A

monitor financial matters

affecting specialised area

129
Q

Why is the middle and lower management in charge of budgetary system?

A

run org. activities

make sure various budgets are met

130
Q

Why is the top management in charge of budgetary system?

A

monitor overall budget performance

any major deviations from what is expected

131
Q

Why is the lower management in charge of quality system?

A

primarily work at operational level

product and service quality directly affected

132
Q

Middle and top managers are interest in quality, but they are less involved in

A

hands-on issues

133
Q

How is the top management responsible for inventory system?

A

use indexes to evaluate costs

134
Q

What timing do financial control systems follow? Why

A

feedback
data evaluated at the end of periods
plan changes for future periods (affecting org. performance)

135
Q

What timing do budgetary control systems follow? Why

A

concurrent

regulate ongoing activities to ensure planned budget levels are met

136
Q

What timing do quality control systems follow? Why

A

concurrent

checks are made during actual production or service, ensure quality standards are met

137
Q

When is the timing for quality feedback?

A

materials scrapped or rejected if they faulty

138
Q

When is the timing for budgetary feedback?

A

considered only at the end of particular periods

139
Q

When is the timing for budgetary concurrent?

A

budgets checked in expenditure decisions

140
Q

What timing do inventory controls follow?Why

A

feedforward

ensure materials and products will be available when needed

141
Q

Management control systems help achieve overall

A

company objectives

strategic plans

142
Q

When management control systems are improperly used , they can lead to

A

bankruptcy

143
Q

Magement control systems ensure that

A

operations progress satisfactorily
by identifying deviations
correcting problems
help respond to unforeseen developments

POM (16 decks)

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