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12 Cards in this Set
- Front
- Back
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Productivity, why is it important |
Productivity is the ratio of outputs to inputs where: outputs are the goods and services produced, and inputs are labor, capital, materials and energy It is important to companies because it determines their profitability and survival. It is important to the nation because the higher productivity is, the more available goods and services are to us, and the higher our standard of living. |
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How managers can improve productivity |
Based on the definition, managers can raise productivity by making substitutions or increasing the efficiency of any resource. Managers can also establish base points, set goals and measure results + use of new technology or automating the processes to improve product quality or to reduce labour requirement + improve the match b/w employees and jobs + encourage employee involvement and innovation + redesign the work process to improve efficiency + upgrading of workers' skills through training |
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Controlling and why is it needed |
Defined as monitoring performance, comparing it with goals and taking corrective action as needed To adapt to change and uncertainty + to discover irregularities and errors + to reduce costs, increasing productivity or add value + to detect opportunities + to deal with complexity + to decentralize decision making and facilitate teamwork |
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Levels of control |
Strategic control - monitoring performance to ensure that strategic plans are being implemented and taking corrective action as needed Tactical control - monitoring performance to ensure that tactical plans - those at the divisional or departmental level - are being implemented Operational control - monitoring performance to ensure that operational plans - day-to-day goals - are being implemented and taking corrective action as needed |
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6 areas of control |
The six areas of organization control are physical, human, informational, financial, structural and cultural. The physical area includes buildings, equipment, inventory and tangible products. The human resources controls are those used to monitor employees performance, performance evaluations to measure work productivity and employee surveys to assess job satisfaction and leadership. The informational area includes production schedules, sales forecasts, analyses of competition, public relations briefings that are controls on an organization's various information resources. The financial area looks at the financial controls of the organization, including financial statements and financial performance indices, such as analysis of financial ratios, income and cash flow statements, balance sheet etc The structural area refers to how the organization is arranged from a hierarchical or structural standpoint such as bureaucratic and decentralized control. The cultural area is an informal method of control. It influences the work process and levels of performance through the set of norms that develop as a result of the values and beliefs that constitute an organization's culture. |
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Balanced scorecard |
A balanced scorecard gives top managers a fast but comprehensive view of the organization via four indicators: customer satisfaction, internal processes, innovation and improvement activities and financial measures. The financial perspective answers the question "How do we look to shareholders?" by using financial measures. (profitability,growth,shareholder values) The customer perspective answers the question "How do customers see us?" by translating the mission of customer service into specific measures of concerns that really matter to customers (priority is taking care of customer) The internal business perspective asks "What must we excel at? " and looks at quality, employee skills and productivity as internal things that must be done to meet its customers' expectations. Innovation and learning perspective: "Can we continue to improve and create value? " Because of global competition companies must make continual improvements to their existing products and introduce new products. |
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Total Quality Management (TQM) |
a comprehensive approach - led by top management and supported throughout the organization - dedicated to continuous quality improvement, training and customer satisfaction |
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Financial tools for control |
Budget - formal financial projection Incremental budgeting - allocates increased or decreased funds to a department by using the last budget period as a reference point + only incremental changes in the budget request are reviewed |
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Types of budgets |
Cash budget - forecasts all sources of cash income and cash expenditures for daily, weekly or monthly period Capital expenditures budget - anticipates investments in major assets such as land, buildings and major equipment Sales budget - projects future sales, often by month, sales area or product Expense - projects expenses for given activity for given period Financial - projects organization's source of cash and how it plans to spend it in the forthcoming period Operating - projects when an organization will create in goods or services, what financial resources are needed and what income is expected Nonmonetary - deals with units other than dollars, such as hours of labor or office square footage |
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Financial statement, balance sheet, income statement, ratio analysis |
Financial statement - a summary of some aspect of an organization's financial status Balance sheet - a summary of an organization's overall financial worth at a specific point in time Income statement - a summary of an organization's financial results over a specified period of time Ratio analysis - the practice of evaluating financial ratios such as: Liquidity ratio - how easily an organization's assets can be converted into cash Debt management ratio - how easily an organization can meet its long-term financial obligations Asset management ratio - how effectively an organization is managing its assets Return ratio - return on investment or return on equity, how effective management is generating a return or profits on its assets |
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Cash flow statement |
Describes how much cash comes in and goes out of a business over a period of time. Cash receipts - cash inflow such as cash sales, collections of account receivables and other inflow Cash disbursement - cash outflow such as cash purchases, payments of account payables, wags and salaries, rents, taxes, loan repayment |
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2 core principles of TQM |
The two core principles are people and improvement orientations. People orientation: Delivering customer value is most important. People will focus on quality if given empowerment and TQM requires training, teamwork and cross-functional efforts. Improvement orientation: it's less expensive to do it right the first time. It's better to do small improvements all the time, accurate standards must be followed to eliminate small variations and there must be strong commitment from top management |
