Management Chapter 14 Key Points

Which of the following financial documents shows a listing of all the organization's assets and liabilities at a given point in time?

B/S

structural control second level

Concerned with how the elements of the organization's structure are serving their intended purpose - bureaucratic, decentralized

financial control - bottom level

Concerned with the organization's financial resources - budgets, fin stmts

Monitoring the administrative ratio to make sure staff expenses do not become excessive is an example of operations control.

F

strategic control top level

Focuses on how effectively the organization's strategies are succeeding in helping the organization meet its goals

operations control - bottom level

Focuses on the processes the organization uses to transform resources into products or services

Which financial statement is a summary of financial performance over a specific period of time (a year, a quarter, etc)?

I/S

Identify characteristics of effective control, why people resist control, and how managers can overcome this resistance.

One way to increase the effectiveness of control is to fully integrate planning and control. • The control system should also be as flexible, accurate, timely, and objective as possible. • Employees may resist organizational controls because of overcontrol, inappropriate focus, rewards for inefficiency, and a desire to avoid accountability. • Managers can overcome this resistance by improving the effectiveness of controls and by allowing employee participation and developing verification procedures.

5. Discuss the relationship between strategy and control.

Strategic control focuses on how effectively the organization's strategies are succeeding in helping the organization meet its goals. • The integration of strategy and control is gen- erally achieved through organization structure, leadership, technology, human resources, and information and operational control systems. • International strategic control is generally a question of balance between centralization and decentralization.

Control is an essential function of management in every organization.

T

purpose of control: provides ways to...

adapt to environmental change, limit the accumulation of error, cope with organizational complexity, and minimize costs

decentralized control

an approach to organizational control based on informal and organic structural arrangements

Which form of structural control has employee commitment as its primary goal?

decentralized control

The first step in the control process is:

establishing control standards.

In organizations, sales forecasting, economic forecasting, and environmental analysis are examples of the control of _____ resources.

information

resistance to control

occurs if they believe there is overcontrol, inappropriate focus of control, rewards for inefficiency, and too much accountability

A state university develops a budget that shows its projected income from sources that include government funding, tuition fees, alumni contributions, and research grants. This is an example of a(n) _____ budget.

revenue

_____ control is the form of operations control that tends to be used most often.

screening

budgetary control

the use of budgets to control operations, a plan in numerical terms

1. Explain the purpose of control, identify different • types of control, and describe the steps in the control process.

• Control is the regulation of organizational activities so that some targeted element of performance remains within acceptable limits. • Control provides ways to adapt to environ- mental change, to limit the accumulation of errors, to cope with organizational complexity, and to minimize costs. • Control can focus on financial, physical, information, and human resources and includes operations, financial, structural, and strategic levels. • Control is the function of managers, the con- troller, and, increasingly, operating employees. • Steps in the control process are • to establish standards of expected performance. • to measure actual performance. • to compare performance to the standards. • to evaluate the comparison and take appropriate action.

overcoming resistance to control

-encourage employee participation -develop verification procedures

characteristics of effective control

-integration with planning -flexibility -accuracy -timeliness -objectivity

4 steps in the control process

1. establish standards - measurable, align with goals, performance indicators 2. measure performance 3. compare performance to standards 4. determine need for corrective action - do nothing, correct deviation, or change standards

Which of the following is a weakness associated with budgeting?

Budgets can limit innovation and change.

Which of the following is true regarding the nature of organizational control?

Control can help an organization adapt to environmental change.

4. Identify and distinguish between two opposing forms of structural control.

Structural control addresses how well an orga- nization's structural elements serve their intended purpose. • Two basic forms of structural control are bureaucratic and decentralized control. • Bureaucratic control is relatively formal and mechanistic. • Decentralized control is informal and organic. Most organizations use a form of organizational control somewhere between total bureaucratic and total decentralized control

Following the accidental release of a batch of phones that failed screening control, a manufacturer of mobile phones replaces all such phones at no cost to the user—even taking care of shipping and delivery. Which step in the control process does this example represent?

Taking corrective action

ratio analysis (financial statements)

The calculation of one or more financial ratios to assess some aspect of the organization's financial health

control defintion

The regulation of organizational activities in such a way as to facilitate goal attainment, it compares where the organization is in terms of performance (financial, productive, or otherwise) to where it is supposed to be

bureaucratic control

a form of organizational control characterized by formal and mechanistic structural arrangements

3. Describe budgets and other tools for financial control.

• Financial control focuses on controlling the organization's financial resources. • The foundation of financial control is budgets, which are plans expressed in numerical terms. • Most organizations rely on financial, operating, and nonmonetary budgets. • Financial statements, various kinds of ratios, and external and internal audits are also important tools organizations use as part of financial control.

2. Identify and explain the three forms of operations control.

• Operations control focuses on the processes the organization uses to transform resources into products or services. • Preliminary control is concerned with the resources that serve as inputs to the system. Screening control is concerned with the trans- formation processes used by the organization. Postaction control is concerned with the outputs of the organization. Most organizations need multiple control systems because no one system can provide adequate control.