Management Chapt 15

Front 1

control process

Back 1

set performance standards
measure standards
evaluate standards
make effective use of feedback and take corrective action when necessary

Front 2

control process

Back 2

sequential actions taken by management to establish performance standards, measure and evaluate performance, and take corrective action when indicated

Front 3

input controls

Back 3

corrective acftions tgaken during teh input phase of an organizations activities

also known as steering controls

Front 4

process controls

Back 4

control actions that impact the org's internal activities and serve to regulate and evaluate transformational activities

Front 5

output controls

Back 5

actions taken by management to regulate an org's output of goods or services or both

Front 6

feedback

Back 6

information about job or org performance derived fromt he work itself that is used ina corrective manner

Front 7

financial controls

Back 7

the formally stated financial objectives of an org, setting forth for a defined period of time, the financial parametrs within which it will operate, the conditions assumed to exist during that time, and performance standards against which financial performance can be judged

Front 8

behavioral controls

Back 8

actions taken by management htat seek to specify, evaluagte, and correct human performance within the org, including performance appraisal techniques and productiona dn operations planning

Front 9

3 major pints cocerning the importance of control

Back 9

1 Control is necessary to measure and evaluate org performance

2 control is a dynamic and ongoing process

3 control involves all facets of the org

Front 10

Several (4) major issues in creating effective performance standards

Back 10

1 What does management measure

2. How is it measured

3. When should it be measured

4. What is a fair performance standard

Front 11

create fair and equitable standards

Back 11

by examining past performance as well as the performance of others in the industry

Front 12

best data in the setting of realistic performance standards are

Back 12

past worker performance levels and the performance levels achieved by other workers in the industry

Front 13

measuring performance

Back 13

quantitative

qualitative

Front 14

evaluate the performance

Back 14

meets standards---feedback

doesn't meet standards---take corrective actions
re-examine performance standards (maybe the standards were'nt met because the standards were to demanding

Front 15

input control

Back 15

or steering control
occurs before the activity
may include:
budget
job design
scheduling of work activities

Front 16

process control

Back 16

happens as the work is b eing done and may include quality control checks

Front 17

output control

Back 17

operates after the business activity but before delivery to the end user
it may include quality control checks
and ex post facto (after the fact) audits

Front 18

financial controls

Back 18

budgets and audits

Front 19

budgets

Back 19

formalized statements of the goals of an org stated in financial terms

Front 20

budgets accomlish several important functions for managers

Back 20

1. they state future projections of revenues, expenses, and expected profits

2. can be used as financial performance standards

3. useful as managerial tools for planning

4. budgets reflect the limit of financial resources in an org

5. they furnish the framework and define the boundaries within which a the allocation of those funds must take place

Front 21

budgets and audits consstructed and performed according to generally accepted financial and accounting standards provide a

Back 21

universal evaluative framework

all businesses no matter of what size or nature can be compared based upon their level of achieved financial reults

Front 22

top down budgeting method
define
advantages
disadvantages

Back 22

budget prepared by top management and imposed on all other org levels

advantage: creates accountability
making a specifice individual responsible for budgeting
this person part of top management has big picture of finacial condition of the org

disadvantage:
budgets are not created by those who have to carry it out
budgets that make sense at the top corporate level may be wildly impractical at the lower org level where they have to be carried out

Front 23

bottom up budgeting method
define
advantages
disadvantages

Back 23

prepared by lower level management and submitted to top management for approval

advantages: it flows from those who have to execute the actual budget

disadvantages:
all managers will be in competition for the org resources, this approach may lead to manuevering and manipulative behaviors
it may also lead to inflation of a managers budget

Front 24

operating budgets (3)

Back 24

cost center
revenue center
profit center

Front 25

cost center approach budget

Back 25

a budget that projects all the anticipated costs for a business over a designated period

this approach views each business unit as a cost or expense center and sets levels of spending for each area

Front 26

revenue center approach
define
difficulties

Back 26

deals with profits produced by the business unit

it projects future profit goals for each separate business line and these goals serve as performance standards

it does not take costs into account it concentrates solely on projected profits

this leads to 2 major difficulties

1. by not taking costs into account it is difficult for management to know if the company is actually making a profit

2. It is often difficult to accurately project profits since they are influenced by external economic and market forces that can neither be anticipated or controlled by management

Front 27

profit center approach

Back 27

combines both statements of revenues and costs to produce a statement of profits

used by management at appropriate org level where there can be effective control over both costs and revenue.

If management does not have control over costs and revenues this system will not work.
When it does work it creates performance standards for management that involve meeting profitability targets.

Front 28

Financial Budgets (3)

Back 28

cash and capital expenditure budgets
material budgets
balance sheet budgets

Front 29

cash budgets

Back 29

future projections over a given period of time of the anticipated cash flow through a business org

Front 30

capital expenditure budget

Back 30

details capital investment in new org physical resources such as plants, land and machinery

Front 31

material budget

Back 31

input factors for production
materials must be acquired they include not only physical materials but also such things as labor
materials and labor which go directly into the final product are called direct cost factors.

the material budget concerns the direct cost factors and details how and in what amounts anorg will acquire its future material needs

Front 32

balance sheet budget

Back 32

combines all the other financial budgets into one org master budget

It shows the relationship beween an org's asset's, its leabilities, and its owners equity (what it has left)

If performance standards are not being met within one or more individual budgets, management can anticipate the probable effects upon the entire org and take appropriate corrective action

Front 33

example of fixed budgets (2)

Back 33

operating and financial budgets

Front 34

flexible budgets

Back 34

take into account potential environmental changes and their probable impact on an org's achievements

Front 35

Audits

Back 35

formal evaluations of an org's financial situation

Front 36

audits seek to answer (2)

Back 36

1. are the finacial statements correct, do they accurately reflect the financial condition of the company, have they been performed according to the accounting and audit standards

Does the actual financial performance of an org meet the perfomance standards contained in the budget projections

Front 37

management audit

Back 37

periodic examination of managerial effectiveness

examines the current content and condition of management's goals and the plans created to achieve these goals.

Front 38

internal management audit

Back 38

conducted by internal personnel

advantages:
internal personnel know the firm the best but may have personal stakes inthe outcome of the evaluation

Front 39

external management audit

Back 39

completed by a professional consultant

advantages: may be more objective
if bad feelings are created by unpopular but realistic recomendations, these feelings will be attached to the consultant, an outsider and will be somewhat mitigated by the fact that this indivdual will leave when his assignment is completed

but may be quite costly

Front 40

behavioral controls

Back 40

center upon the human side

Front 41

control of worker behavior

Back 41

reward and motivaitonal systems

use of coercive power and discipline of workers

performance appraisal systems leading to corrective action as the direct result of managerial evaluation