Lesson 11: Controlling Flashcards
____ refers to the process of ascertaining whether organizational objectives have been achieved
____ completes the cycle of management functions.
Controlling
Steps in the control process
Establishing performance ___________
Measuring _____ performance
Comparing actual performance to
___________
- objectives, standards
- actual
- objectives, standards
Establishing performance objectives and standards
- _____- which are expressed in quantity or monetary terms.
- _____ are expressed in quantity or quality.
- _____ - which is expressed in terms of the rate of absences.
- _____ - which is expressed in many accidents for given periods.
- _____ used are expressed in quantity or monetary terms for given periods.
- Sales targets
- Production targets
- Worker attendance
- Safety record
- Supplies
Measuring Actual Performance
There is a need to measure ____ performance so that when ____ occur, ____ can be made.
The ____ will differ from organization to organization, as each has its own unique objectives.
- actual, shortcomings, adjustments
- measuring tools
Comparing Actual Performance to Objectives and Standards
Once ____ performance has been determined, this will be ____ with what the organization seeks to ____ .
____ production output will be compared with the ____ output.
- actual, compared, achieve
- actual, target
The purpose of comparing actual performance with the desired result is to provide management with the opportunity to take ____ when necessary.
corrective action
Three types of Control
- Feedforward control
- Concurrent control
- Feedback control
When management anticipates problems and prevents their occurrence, the type of control
measure undertaken is called ?
This type of control provides the assurance that the required human and nonhuman resources are in place before operations begin.
Feedforward control
When operations are already ongoing and activities to detect variances are made, ____ is said to be undertaken. It is always possible that deviations from standards will happen in the production process.
When such deviations occur, ____ are made to ensure ____ with requirements. Information on the adjustments are also necessary inputs in the pre-operation phase.
- counter current control
- adjustments, compliance
When information is gathered about a completed activity, and in order that evaluation and steps for improvement are derived, _____ is undertaken.
_____ aimed at improving future activities are one of its features.
it validates ____ and _____. If accomplishments consist only of a percentage of standard requirements, the standard may be too high or inappropriate.
- feedback control
- corrective
- objectives and standards
Six Components of Organizational Control Systems
Strategic Plans
Long-Range Financial Plans
The Operating budget
Performance Appraisals
Statistical Reports
Policies and Procedures
provides the basic control mechanism for the organization.
strategic plan
the process of budgeting for operations and growth and renewal for buildings, infrastructure, and land.
long-range financial plan
indicates the expenditures, revenues, or profits planned for some future period regarding operations.
the operating budget
measures employee performance.
also function as effective checks on new policies and programs.
performance appraisals
pertain to those that contain data on various developments within the firm.
statistical reports
Among the information which may be found in a statistical report pertains to the following: (7)
- labour efficiency rates
- quality control rejects
- accounts receivable
- accounts payable
- sales reports
- accident reports
- power consumption report
____ refer to “the framework within which the objectives must be pursued.”
____ is “a plan that describes the exact series of actions to be taken in a given situation.”
policies
procedures
two strategic control systems
financial analysis
financial ratio analysis
The success of most organizations
depends heavily on its financial
performance. It is just fitting that certain measurements of financial performance be made so that whatever deviations from standards are found out, corrective actions may be introduced.
financial analysis
a more elaborate approach used in controlling activities. Under this method, one account appearing in the financial statement is paired with another to constitute a ratio.
financial ratio analysis
five types of financial ratios
liquidity ratios
efficiency ratios
financial leverage ratios
profitability ratios
return on equity ratios
These ratios assess the ability of a company to meet its current obligations.
liquidity ratios
The following ratios are important indicators of liquidity:
____ ratio- This shows the extent to which current assets of the company can cover its current liabilities. The formula
for computing current ratio is as follows:
____ ratio- This is a measure of the firm’s ability to pay off short-term obligations with the use of current assets
and without relying on the sale of inventories.
current ratio
acid-test ratio
-These ratios show how effectively certain assets or liabilities are being used in the production of goods and services.
efficiency ratios
Among the more common efficiency ratios are:
- This ratio measures the number of times an inventory is turned over (or sold) each year.
- This ratio is used to measure utilization of the company’s investment in its fixed assets, such as its plant and equipment.
- inventory turnover ratio
- fixed asset ratio
This is a group of ratios designed to assess the balance of financing obtained through debt and equity sources.
financial leverage ratios
sources. Some of the
more important leverage ratios are as follows:
- ____ - This ratio shows how much of the firm’s assets are financed by debt.
- ____ - This ratio measures the number of times earnings before interest and taxes cover or exceed the company’s interest expense.
- Debt to total assets ratio
- Times interest earned ratio
-These ratios measure how much operating income or net income a company is able to generate in relation to its assets, owner’s equity, and sales.
profitability ratios
Among the more notable profitability ratios are as follows:
- ____ - This ratio completes the net profit to the level of sales.
- ____ - This ratio shows how much income the company produces for every peso investment in assets.
- profit margin ratio
- return on assets ratio
This ratio measures the returns on the owner’s investment.
return on equity ratio
identifying control problems
3 approaches that kreitner mentioned
- Executive reality check
- Comprehensive internal audit
- Symptoms of inadequate control
Employees at the frontline often complain management imposes certain requirements that are not realistic.
executive reality check
An internal audit is one undertaken to determine the efficiency and effectiveness of the activities of an organization.
comprehensive internal audit
If a comprehensive internal audit cannot be availed of for some reason, this approach is utilize
symptoms of inadequate control
Symptoms of Inadequate control
Kreitner has listed some of the common symptoms as follows: (8)
- An unexplained decline in revenues and profits.
- A degradation of service
- Employee dissatisfaction
- Cash shortages caused by bloated inventories or delinquent accounts receivable.
- Idle facilities or personnel.
- Disorganized operations
- Excessive costs.
- Evidence of waste and inefficiency