lecture 14 Flashcards
managerial control
Any process that directs the activities of individuals toward the achievement of organizational goals
control
Lax top management Absence of policies Lack of agreed-upon standards “Shoot the messenger” management Lack of periodic reviews Bad information systems Lack of ethics in the culture
Signs that a company lacks control
The use of rules, regulations, and authority to guide performance
Bureaucratic control
Control based on the use of pricing mechanisms and economic information to regulate activities within organizations
Market control
Control based on the norms, values, shared goals, and trust among group members
Clan control
- Expected performance for a given goal: a target that establishes a desired performance level, motivates performance, and serves as a benchmark against which actual performance is assessed
standard
A managerial principle stating that control is enhanced by concentrating on the exceptions to or significant deviations from the expected result or standard
Principle of exception
why is control needed
- to adapt to change
- to discover irregularities
- to reduce cost, increase productivity or add value
- to detect opportunities to increase innovation
- to provide performance feed back
- to decentralize decision making and facilitate teamwork
takes place before operations begin and includes policies, procedures, and rules designed to ensure that planned activities are carried out properly.
examples include inspection of raw materials and proper selection and training of employees
feedforward control
takes place while plans are being carried out
it includes directing monitoring and fine tuning activities as they occur
concurrent control
focuses on the use of information about results to correct deviations from the acceptable standard after they arise
feedback control
, a process is producing fewer than 3.4 defects per million, which means it is operating at a 99.99966 percent level of accuracy
six sigma level
Investigates other organizations for possible merger or acquisition.
Determines the soundness of a company that will be used as a major supplier.
Discovers the strengths and weaknesses of a competitor to maintain or better exploit competitive advantage
external audit
Assesses what the company has done for itself
What it has done for its customers or other recipients of its goods or services
internal audit
The process of investigating what is being done and comparing the results with the corresponding budget data to verify accomplishments or remedy differences
budgeting
Sales Production Cost Cash Capital Master
Frequently Used Budget Types
A report that shows the financial picture of a company at a given time and itemizes assets, liabilities, and stockholders’ equity
balance sheet
The amounts a corporation owes to various creditors
stockholders equity
The values of the various items the corporation owns
assets
The amount accruing to the corporation’s owners
Liabilities
A liquidity ratio that indicates the extent to which short term assets can decline and still be adequate to pay short-term liabilities
current ratio
A leverage ratio that indicates the company’s ability to meet its long-term financial obligations
debt-equity ratio
A ratio of profit to capital used, or a rate of return from capital
Return on investment (ROI)
Rigid bureaucratic behavior
Tactical behavior
Resistance to control
downsides of Bureaucratic Control
