Download - C 20 The Controlling Process
Adeyl Khan, Faculty, BBA, NSU
C 20The Controlling ProcessCompared to planning, developing org.
structure,developing strategies, goals and motivating
employees
Adeyl Khan, Faculty, BBA, NSU
Why Control?Controls help the
manager Control is a process to
regulate organizational activities to make them consistent with established: Plans Targets Standards
Physical• Inventory, QC
Human• Selection
Informational• Forecasting, PR
Financial• Manage Debt, Assets
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process of monitoring, comparing, and correcting work performance.
Effective? Need a change?
Acceptable level? Compare (Financial …)
FedEx- 99.8% On time Delivery
Types of control
Adeyl Khan, Faculty, BBA, NSU
What Is the Purpose of Control?It is one of the four basic management
functions and has four basic functions.Functions of control
Adapts to change. Limits accumulation of error. Helps coping with complexity. Helps minimize costs.
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Adeyl Khan, Faculty, BBA, NSU
Purpose- Control helps the organization Many things can happen
during the execution of a plan Anticipate, monitor, respond
(contingency) Rising quality standard at
Metalloy Accumulation creates a
huge problem! Defect rate rose 4% > 9% >
25% (100/250 People reworking)
100s of raw material, large market segments, complicated work design,
Calculation based on implementation of new wood-cutting technology
Adapt to environmental change
2. Limit the accumulation of error
3. Cope with organizational complexity
4. Minimize costs
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Adeyl Khan, Faculty, BBA, NSU
Levels of ControlOperational control:
Focuses on the processes used to transform resources into products or services. E.g. Quality Control
Financial control:
Concerned with financial resources. E.g. Accounts receivable
Structural control:
How the elements of structure are serving the intended purposes. E.g. Administrative ratio
Strategic control:
How effective are the functional strategies helping the organization meet its goals. E.g. Related diversification failed
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Adeyl Khan, Faculty, BBA, NSU
Figure 20.2: Levels of Control
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Adeyl Khan, Faculty, BBA, NSU
Who Is Responsible for Control?Control rests with
all managers.Large corporations
have a controller.What does a
controller do?Helps line
managers with their control activities.
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U-Form (Single)H-form (Multiple), M-form
(Multiple)
Adeyl Khan, Faculty, BBA, NSU
F20.3: Steps in the Control ProcessTaco Bell
95% greeted within 3 minutes Preheated chips- maximum 30 mins Tables Cleaned within 5 mins
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Consistent with organization goal
# Graduates/year…
….…..…..
……(Performance
Indicators)
Adeyl Khan, Faculty, BBA, NSU
F20.4: Forms of Operational Control
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Adeyl Khan, Faculty, BBA, NSU
What Does Preliminary Control Monitor?It attempts to monitor quality and quantity
of: Financial resources. Material resources. Human resources. Information resources.
Why? Before they become part of the system.
Ex: Employee Interview, Who can buy stocks
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Adeyl Khan, Faculty, BBA, NSU
Purpose of Screening ControlsThey focus on how inputs are being
transformed into outputs.They also rely heavily on feedback
processes during the transformation process.
Ex: LCD panel on TV- Check before installation
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Adeyl Khan, Faculty, BBA, NSU
Postaction Control- FocusFocus is on outputs
from the organizational system.
What do they monitor?They monitor the
output results of the organization after the transformation process is complete.
(see Figure 20.4 illustration)
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Adeyl Khan, Faculty, BBA, NSU
Financial Controls- Most commonThey control the financial resources as they
flow into the organization. Then they are held by the organization. Then they flow out of the organization.
Businesses must manage their finances so that revenues are sufficient to cover expenses and still return a profit.
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Adeyl Khan, Faculty, BBA, NSU
What Is a Budget?
It is a plan expressed in numerical terms.What is the time frame for a budget?
Usually a year, but sometimes broken down into quarters and months.Budgets are quantitative in nature and provide yardsticks for measuring performance and facilitating comparisons.
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Page 566Strength and Weaknesses of
Budget
Adeyl Khan, Faculty, BBA, NSU
Types of BudgetsTypes of budget:
FinancialOperatingNon-monetary
What the budget shows:Sources and use of
cash.Operations in
financial terms.Operations in non-
financial terms.
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Capital Budget at ExxonVs. Shell and Exxon-Mobil
Adeyl Khan, Faculty, BBA, NSU 20 - 16
Adeyl Khan, Faculty, BBA, NSU
F20.5: Developing Budgets in Organizations
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Adeyl Khan, Faculty, BBA, NSU
Other Tools for Financial ControlFinancial Statement: • A profile of some aspect of an
organization’s financial circumstances
Income Statement• A summary of financial
performance over a period of time, usually one year.
Balance Sheet• List of assets and liabilities of
an organization at a specific point in time, usually the last day of the fiscal year.
Ratio Analysis• The calculation of one or more
financial ratios to assess some aspect of the organization’s financial health.
Other Financial Control
Tools
20 - 18Audit: An independent appraisal of an organization’s accounting, financial, and operational system.
Adeyl Khan, Faculty, BBA, NSU
Structural ControlBureaucratic Control
A form of organizational control characterized by formal and mechanistic structural arrangements.
Decentralized control An approach to organizational control
characterized by informal and organic structural arrangements.
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Adeyl Khan, Faculty, BBA, NSU
Figure 20.6: Organizational Control
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Adeyl Khan, Faculty, BBA, NSU
What Is Meant by Strategic ControlControl aimed at
ensuring that the organization is maintaining an effective alignment with its environment and moving toward achieving its strategic goals
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Adeyl Khan, Faculty, BBA, NSU
Characteristics of Effective ControlIntegration with planFlexibilityAccuracyTimelinessObjectivity
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Adeyl Khan, Faculty, BBA, NSU
What Influences Resistance to Control?Over-controlInappropriate focusRewards for inefficiencyToo much accountability
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Adeyl Khan, Faculty, BBA, NSU
How Can Resistance to Control Be Overcome?When employees are involved with
planning and implementing the control system, they are less likely to resist.
Verification procedures need to be developed to provide checks and balances in order for managers to verify the accuracy of performance indicators.
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