control ◦ any process that directs the activities of individuals toward the achievement of...
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Control◦ Any process that directs the activities of
individuals toward the achievement of organizational goals
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Table 16.1
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Figure 16.1
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Bureaucratic control ◦ The use of rules, regulations, and authority to
guide performance Market control
◦ Control based on the use of pricing mechanisms and economic information to regulate activities within organizations
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Clan control◦Control based on
the norms, values, shared goals, and trust among group members.
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Table 16.2
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1. Setting performance standards.2. Measuring performance.3. Comparing performance against the
standards and determining deviations.4. Taking action to correct problems and
reinforce successes.
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Standard ◦Expected performance for a given goal: a target that establishes a desired performance level, motivates performance, and serves as a benchmark against which actual performance is assessed.
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Principle of exception ◦A managerial principle stating that control is enhanced by concentrating on the exceptions to or significant deviations from the expected result or standard.
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Feedforward control◦The control process used before operations begin, including policies, procedures, and rules designed to ensure that planned activities are carried out properly.
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Concurrent control◦The control process used while plans are being carried out, including directing, monitoring, and fine-tuning activities as they are performed.
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Feedback control◦Control that focuses on the use of information about previous results to correct deviations from the acceptable standard.
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Management audit◦An evaluation of the effectiveness and efficiency of various systems within an organization
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External audit ◦An evaluation conducted by one organization, such as a CPA firm, on another.
Internal audit ◦A periodic assessment of a company’s own planning, organizing, leading, and controlling processes.
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1. Investigates other organizations for possible merger or acquisition
2. Determines the soundness of a company that will be used as a major supplier
3. Discovers the strengths and weaknesses of a competitor to maintain or better exploit the competitive advantage of the investigating organization
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1. Assesses what the company has done for itself
2. What it has done for its customers or other recipients of its goods or services.
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Budgeting ◦The process of investigating what is being done and comparing the results with the corresponding budget data to verify accomplishments or remedy differences
◦also called budgetary controlling.
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Table 16.4
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Accounting audits◦Procedures used to verify accounting reports and statements.
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ABC◦A method of cost accounting designed to identify streams of activity and then to allocate costs across particular business processes according to the amount of time employees devote to particular activities
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Balance sheet ◦A report that shows the financial picture of a company at a given time and itemizes assets, liabilities, and stockholders’ equity.
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Profit and loss statement◦An itemized financial statement of the income and expenses of a company’s operations Table 16.6
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Assets◦The values of the
various items the corporation owns.
Liabilities◦The amounts a
corporation owes to various creditors
Stockholders’ equity◦The amount
accruing to the corporation’s owners.
Assets = Liabilities + Stockholders’ equity
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Current ratio◦A liquidity ratio that indicates the extent to which short term assets can decline and still be adequate to pay short-term liabilities
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Debt-equity ratio◦A leverage ratio that indicates the company’s ability to meet its long-term financial obligations
Return on investment (ROI)◦A ratio of profit to capital used, or a rate of return from capital
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Management myopia◦Focusing on short-term earnings and profits at the expense of longer-term strategic obligations.
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1. Establish valid performance standards.
2. Provide adequate information to employees.
3. Ensure acceptability to employees.
4. Maintain open communication.5. Use multiple approaches.
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Balanced scorecard◦Control system combining four sets of performance measures: financial, customer, business process, and learning and growth
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Figure 16.3
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Table 16.7