Management Exam 4 Ch. 16

Front 1

Enterprise resource planning (ERP) (509)

Back 1

software systems, information systems for integrating virtually all aspects of a business, helping managers stay on top of the latest developments.

Front 2

Controlling (510)

Back 2

monitoring performance, comparing it with goals, and taking corrective action as needed.

Front 3

6 reasons why control is needed:

Back 3

1.) to adapt to change and uncertainty
2.) to discover irregularities and errors
3.) to reduce costs, increase productivity, or add value
4.) to detect opportunities
5.) to deal with complexity
6.) to decentralize decision making and facilitate teamwork

Front 4

4 control process steps (512)

Back 4

1.) establish standards: "What is the outcome we want?"
2.) Measure performance: "What is the actual outcome we got?"
3.) Compare performance to standards: "How do the desired and actual outcomes differ?"
4.) Take corrective action, if necessary: "What changes should we make to obtain desirable outcomes?"

Front 5

control standard (512)

Back 5

or performance standard or simply standard, is the desired performance level for a given goal.

Front 6

Management by exception (513)

Back 6

a control principle that states that managers should be informed of a situation only if data show a significant deviation from standards.

Front 7

3 levels of control (515)

Back 7

-Strategic, tactical, and operational

Front 8

Strategic control (515)

Back 8

monitoring performance to ensure that strategic plans are being implemented and taking corrective action as needed.
-mainly performed by top managers (CEO and VP levels)
-reports issued every 3, 6, 12 or more months

Front 9

Tactical control (515)

Back 9

monitoring performance to ensure that tactical plans-- those at the divisional or departmental level are being implemented and taking corrective action as needed.
-done mainly by middle managers (division head, plant manager, and branch sales managers)
-reports done on a weekly or monthly basis

Front 10

Operational control (515)

Back 10

monitoring performance to ensure that operational plans--day to day goals--are being implemented and taking corrective action as needed.
-done mainly by first level managers (department head, team leader, or supervisor."
-report is done on a daily basis

Front 11

6 areas of control (515)

Back 11

1.) physical
2.) human
3.) informational
4.) financial
5.) structural
6.) cultural

Front 12

Physical area of control (515)

Back 12

includes buildings, equipment, and tangible products.
-ex. computers, cars, and other machinery

Front 13

Human resource area of control (515)

Back 13

controls used to monitor employees include personality test and drug testing for hiring, performance test during training, performance evaluations to measure work productivity, and employee surveys to asses job satisfaction and leadership.

Front 14

Informational area of control (516)

Back 14

production schedules. Sales forecast. Environmental impact statements. Analyses of competition. Public relations briefings. All these are controls on an organizations various information resources

Front 15

Financial area of control (516)

Back 15

Are bills being paid on time? How much money is owed by customers? How much money is owed by suppliers?

Front 16

Structural area of control (516)
-2 examples

Back 16

How is the organization arranged from a hierarchical or structural standpoint?
-Bureaucratic control and decentralized control

Front 17

Bureaucratic control (516)

Back 17

an approach to organizational control that is characterized by use of rules, regulations, and formal authority to guide performance.
-attempts to elicit employee compliance, using strict rules, and rigid hierarchy.
-found in the military

Front 18

Decentralized control (516)

Back 18

an approach to organizational control that is characterized by informal and organic structural arrangements, the opposite of bureaucratic control.
-aims to get increased employee commitment, using corporate culture, group norms and workers taking responsibility for their performance.
-found in companies with a flat organization.

Front 19

Cultural area of control (516)

Back 19

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 constitue an organizations culture.
-ex. biotechnology company Genetech

Front 20

Dashboard (517)

Back 20

easy to read graphics that displays all the information on sales, orders, and the like assembled from data pulled in real time from corporate software.

Front 21

evidence based management

Back 21

the use of real word data rather than fads and hunches in making management decisions.

Front 22

Balanced scorecard (517)
-four indicators

Back 22

this gives top managers a fast but comprehensive view of the organization via four indicators:
1.) customer satisfaction
2.) internal processes
3.) innovation and improvement activities
4.) financial measures

Front 23

Balaced scorecard (517)
-4 perspectives

Back 23

scorecard establishes goals and performance measures according to 4 perspectives
1.) financial
2.) customer
3.) internal business
4.) innovation and learning

Front 24

Financial perspective (518)

Back 24

"How do we look to shareholders?"
-typical financial goals have to do with profitability, growth, and shareholder values.

Front 25

Customer perspective (519)

Back 25

"How do customers see us?"
-high priority in many organizations
-time between placing an order and taking delivery, quality in terms of defect level, satisfaction with products and service and cost.

Front 26

Internal business perspective (519)

Back 26

"At what must we excel?"
-decides what the company must do internally to meet its customers expectations.
-such as quality, employee skills, and productivity.

Front 27

Innovation and learning perspective (519)

Back 27

"Can we continue to improve and create value?"
-learning and growth of employees is the foundation of innovation and creativity
-must provide employees with resources needed to do their jobs

Front 28

Strategy map (519)

Back 28

a visual representation of the four perspectives of the balanced scorecard that enables managers to communicate their goals so that everyone in the company can understand how their jobs are linked to the overall objectives of the organization.
-show the cause and effect links.

Front 29

4 mechanisms of success that make measurement-managed firms succeed:

Back 29

1.) top executives agree on strategy
2.) communication is clear
3.) there is better focus and alignment
4.) the organizational culture emphasizes teamwork and allows risk taking.

Front 30

4 barriers to effective measurement:

Back 30

1.) objectives are fuzzy
2.) managers put too much trust in informal feedback systems.
3.) employees resist new measurement systems
4.) companies focus too much on measuring activities instead of results

Front 31

Budget (522)

Back 31

a formal financial projection
-states an organizations planned activities for a given period of time in quantitative terms, such as dollars, hours, or number of products.

Front 32

Incremental budgeting (522)

Back 32

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.
-tend to lock departments into stable spending arrangements; not flexible

Front 33

Fixed budget (523)

Back 33

allocates resources on the basis of a single estimate of costs.
-aka static budget
-ex. you may have a budget of 50,000 for buying equipment in a year-- no matter how much you may need equipment exceeding that amount

Front 34

Variable budget (523)

Back 34

allows the allocation of resources to bay in proportion with various levels of activity.
-budget can be adjusted over time
-ex. you may have a budget that allows you to hire temporary workers or lease temporary equipment if production exceeds certain levels.

Front 35

Financial statement (524)
-2 basic types

Back 35

a summary of some aspect of an orgainzations financial status.
-balance sheet and the income statement

Front 36

balance sheet (524)

Back 36

summarizes an organizations overall financial worth--that is, assets and liabilities--at a specific point in time.
-current assets are cash and other assets that are readily convertible to cash within 1 year.
-fixed assets are property, buildings, equipment, and the like that have a useful life that exceeds 1 year but are usually harder to convert to cash
-liabilities are claims, or debts by supliers, lenders, and other nonowners

Front 37

income statement (524)

Back 37

summarizes an organizations financial results--revenues and expenses--over a specified period of time such as a quarter or a year.

Front 38

ratio analysis (524)

Back 38

the practice of evaluating financial ratios--to determine an organizations financial health

Front 39

liquidity ratio

Back 39

indicate how easily an organizations assets can be converted into cash (made liquid)

Front 40

debt management ratio

Back 40

indicate the degree to which an organization can meet its long term financial obligations

Front 41

asset management ratio

Back 41

indicate how effectively an organization is managing its assets such as whether it has obsolete or excess inventory on hand.

Front 42

return ratios

Back 42

often called return on investment (ROI) or return on assets (ROA)--indicate how effective management is in generating a return or profits on its assets.

Front 43

audits (525)

Back 43

formal verifications of an organizations financial and operational systems

Front 44

2 types of audits (525)

Back 44

1.) external
2.) internal

Front 45

external audit (525)

Back 45

a formal verification of an organizations financial accounts and statements by outside experts.

Front 46

internal audit (525)

Back 46

a verification of an organizations financial accounts and statements by the organizations own professional staff

Front 47

Deming management (526)

Back 47

proposed ideas for making organizations more responsive, more democratic, and less wasteful.

Front 48

Principles for deming management

Back 48

1.) quality should be aimed at the needs of the consumer
2.) companies should aim at improving the system, not blaming workers
3.) improved quality leads to increased market share, increased company prospects, and increased employment
4.) quality can be improved on the basis of hard data, using the PDCA cycle

Front 49

PDCA cycle (527)

Back 49

a plan-do-check-act cycle using observed data for continuous improvement of operations.

Front 50

Total quality maagement (TQM) (528)

Back 50

comprehensive approach--led by top management and supported throughout the organization--dedicated to continuous quality improvement, training, and customer satisfaction.

Front 51

4 components to TQM

Back 51

1.) make continuous improvement a priority
2.) get every employee involved
3.) listen to and learn from customers and employees
4.) use accurate standards to identify and eliminate problems

Front 52

2 core principles of TQM (528)

Back 52

1.) people orientation-everyone involved with the organization should focus on delivering value to customers
2.) improvement orientation--everyone should work on continuously improving the work processes

Front 53

people orientation

Back 53

operates by delivering customer value (most important), people will focus on quality if given empowerment, and requires training, teamwork, and cross functional efforts

Front 54

special purpose team (529)

Back 54

meets to solve a special or one time problem

Front 55

continuous improvement (529)

Back 55

ongoing small, incremental improvements in all parts of an organization

Front 56

RATER scale (530)

Back 56

enables customers to rate the quality of a service along five dimensions--reliability, assurance, tangibles, empathy, and responsivness (RATER)--each on a scale from 1 to 10.

Front 57

meanings of the RATER dimensions

Back 57

Reliability-ability to perform the desired service dependably, accurately, and consistently
Assurance-employees knowledge, courtesy, and ability to convey trust and confidence
Tangibles-physical facilities, equipment, appearance, of personnel
Empathy-provision of caring, individualized attention to customers
Responsiveness- willingness to provide prompt service and help customers

Front 58

benchmarking

Back 58

a process by which a company compares its performance with the best practices of high performing organizations.
-learning from the best

Front 59

Outsourcing

Back 59

the subcontracting of services and operations to an outside vendor.
-let outsiders handle it

Front 60

Reduced cycle time (533)

Back 60

reduction in steps in a work process, such as fewer authorization steps required to grant a contract to a supplier.

Front 61

ISO 9000 series (533)

Back 61

consists of quality control procedures companies must install--from purchasing to manufacturing to inventory to shipping--that can be audited by independent quality control experts or "registrars"
-goal is to reduce flaws in manufacturing and improve productivity

Front 62

ISO 14000 series (533)

Back 62

extends the concept, identifying standards for environmental performance
-dictates standards for documenting a companys management of pollution, efficient use of raw materials, and reduction of the firms impact on the environment

Front 63

Statistical process control (533)

Back 63

a statistical technique that uses periodic random samples from production runs to see if quality is being maintained within a standard range of acceptability.
-if quality is not acceptable, production is stopped to allow corrective measures

Front 64

Six Sigma (534)

Back 64

a rigorous statistical analysis process that reduces defects in manufacturing and service related processes.

Front 65

Lean six sigma (534)

Back 65

focuses on problem solving and performance improvement--speed with excellence--of a well defined project

Front 66

Keys to successful control systems (535)

Back 66

-strategic and results oriented
-timely, accurate, and objective
-realistic, positive, and understandable and they encourage self control
-flexible

Front 67

Barriers to control success (536)

Back 67

-too much control
-too little employee participation
-overemphasis on means instead of ends
-overemphasis on paperwork
-overemphasis on one instead of multiple approaches