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67 Cards in this Set

  • Front
  • Back
Enterprise resource planning (ERP) (509)
software systems, information systems for integrating virtually all aspects of a business, helping managers stay on top of the latest developments.
Controlling (510)
monitoring performance, comparing it with goals, and taking corrective action as needed.
6 reasons why control is needed:
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
4 control process steps (512)
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?"
control standard (512)
or performance standard or simply standard, is the desired performance level for a given goal.
Management by exception (513)
a control principle that states that managers should be informed of a situation only if data show a significant deviation from standards.
3 levels of control (515)
-Strategic, tactical, and operational
Strategic control (515)
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
Tactical control (515)
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
Operational control (515)
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
6 areas of control (515)
1.) physical
2.) human
3.) informational
4.) financial
5.) structural
6.) cultural
Physical area of control (515)
includes buildings, equipment, and tangible products.
-ex. computers, cars, and other machinery
Human resource area of control (515)
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.
Informational area of control (516)
production schedules. Sales forecast. Environmental impact statements. Analyses of competition. Public relations briefings. All these are controls on an organizations various information resources
Financial area of control (516)
Are bills being paid on time? How much money is owed by customers? How much money is owed by suppliers?
Structural area of control (516)
-2 examples
How is the organization arranged from a hierarchical or structural standpoint?
-Bureaucratic control and decentralized control
Bureaucratic control (516)
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
Decentralized control (516)
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.
Cultural area of control (516)
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
Dashboard (517)
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.
evidence based management
the use of real word data rather than fads and hunches in making management decisions.
Balanced scorecard (517)
-four indicators
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
Balaced scorecard (517)
-4 perspectives
scorecard establishes goals and performance measures according to 4 perspectives
1.) financial
2.) customer
3.) internal business
4.) innovation and learning
Financial perspective (518)
"How do we look to shareholders?"
-typical financial goals have to do with profitability, growth, and shareholder values.
Customer perspective (519)
"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.
Internal business perspective (519)
"At what must we excel?"
-decides what the company must do internally to meet its customers expectations.
-such as quality, employee skills, and productivity.
Innovation and learning perspective (519)
"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
Strategy map (519)
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.
4 mechanisms of success that make measurement-managed firms succeed:
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.
4 barriers to effective measurement:
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
Budget (522)
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.
Incremental budgeting (522)
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
Fixed budget (523)
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
Variable budget (523)
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.
Financial statement (524)
-2 basic types
a summary of some aspect of an orgainzations financial status.
-balance sheet and the income statement
balance sheet (524)
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
income statement (524)
summarizes an organizations financial results--revenues and expenses--over a specified period of time such as a quarter or a year.
ratio analysis (524)
the practice of evaluating financial ratios--to determine an organizations financial health
liquidity ratio
indicate how easily an organizations assets can be converted into cash (made liquid)
debt management ratio
indicate the degree to which an organization can meet its long term financial obligations
asset management ratio
indicate how effectively an organization is managing its assets such as whether it has obsolete or excess inventory on hand.
return ratios
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.
audits (525)
formal verifications of an organizations financial and operational systems
2 types of audits (525)
1.) external
2.) internal
external audit (525)
a formal verification of an organizations financial accounts and statements by outside experts.
internal audit (525)
a verification of an organizations financial accounts and statements by the organizations own professional staff
Deming management (526)
proposed ideas for making organizations more responsive, more democratic, and less wasteful.
Principles for deming management
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
PDCA cycle (527)
a plan-do-check-act cycle using observed data for continuous improvement of operations.
Total quality maagement (TQM) (528)
comprehensive approach--led by top management and supported throughout the organization--dedicated to continuous quality improvement, training, and customer satisfaction.
4 components to TQM
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
2 core principles of TQM (528)
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
people orientation
operates by delivering customer value (most important), people will focus on quality if given empowerment, and requires training, teamwork, and cross functional efforts
special purpose team (529)
meets to solve a special or one time problem
continuous improvement (529)
ongoing small, incremental improvements in all parts of an organization
RATER scale (530)
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.
meanings of the RATER dimensions
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
a process by which a company compares its performance with the best practices of high performing organizations.
-learning from the best
the subcontracting of services and operations to an outside vendor.
-let outsiders handle it
Reduced cycle time (533)
reduction in steps in a work process, such as fewer authorization steps required to grant a contract to a supplier.
ISO 9000 series (533)
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
ISO 14000 series (533)
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
Statistical process control (533)
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
Six Sigma (534)
a rigorous statistical analysis process that reduces defects in manufacturing and service related processes.
Lean six sigma (534)
focuses on problem solving and performance improvement--speed with excellence--of a well defined project
Keys to successful control systems (535)
-strategic and results oriented
-timely, accurate, and objective
-realistic, positive, and understandable and they encourage self control
Barriers to control success (536)
-too much control
-too little employee participation
-overemphasis on means instead of ends
-overemphasis on paperwork
-overemphasis on one instead of multiple approaches