Principles of Management (Chapter 14)

nonmonetary budget

A budget expressed in nonfinancial terms, such as units of output, hours of direct labor, machine hours, or square-foot allocations

financial budget

A budget that indicates where the organization expects to get its cash for the coming time period and how it plans to use it.

operating budget

A budget that outlines what quantities of products or services the organization intends to create ad what resources will be used to create them.

financial statement

A form of financial control, which is a profile of some aspect of an organization's financial circumstances (ex. balance sheet and income statement)

audits

A form of financial control, which is an independent appraisal of an organization's accounting, financial, and operational systems.

ratio analysis

A form of financial control, which is the calculation of one or more financial ratios to assess some aspect of the organization's financial health (ex. liquidity ratios, debt ratios, return ratios, coverage ratios, and operating ratios)

Preliminary control

A form of operations control which attempts to monitor the quality or quantity of financial, physical, human, and information resources before they actually become a part of the system (ex. PepsiCo only hires college graduates for their management programs, only if they pass several interviewers and selection criteria)

postaction control

A form of operations control which monitors the outputs or results of the organization after the transformation process is complete

screening control

A form of operations control which relies heavily on feedback processes during the transformation process (ex. Dell periodically checks its computer systems as each unit is being assembled)

decentralized control

A form of structural control that is characterized by an informal and organic structural arrangement (ex. Southwest Airlines)

bureaucratic control

A form of structural control that is characterized by formal and mechanistic structural arrangements, usually very tall (ex. NBC television)

controller

A position in organizations that helps line managers with their control activities

control standard

A target against which subsequent performance will be compared (ex. A minimum of 95% of all customers will be greeted within 3 minutes of their arrival.)

budget

An example of a financial control which is a plan expressed in numerical terms, which helps organizations coordinate resources, define standards for control, provide guidelines for the organization's resources, and enable the organization to evaluate the performance of managers

strategic control

Level of control within an organization that focuses on how effectively the organization's strategies are succeeding in helping the organization meet its goals

operations control

Level of control within an organization that focuses on the processes that the organization uses to transform resources into products or services (ex. quality control)

structural control

Level of control within an organization that is concerned with how the elements of the organization's structure are serving their intended purpose (ex. monitoring administrative ratio to make sure staff expenses do not become excessive)

financial control

Level of control within an organization that is concerned with the organization's financial resources (ex. monitoring receivables to make sure customers pay their bills on time)

income statement

One of the most common types of financial statements, which is a summary of financial performance over a period of time

balance sheet

One of the most common types of financial statements, which lists all assets and liabilities of an organization at a specific point in time

control

The regulation of organizational activities in such a way as to facilitate goal attainment

sales/marketing forecasting, environmental analysis, public relations, production scheduling, and economic forecasting

What are five examples of controls on information resources?

structure, leadership, technology, human resources, and information/operational control systems

What are the five aspects of organizations that strategic control focuses on?

integration with planning, flexibility, accuracy, timeliness, and objectivity

What are the five characteristics of effective control?

selection/placement, training/development, performance appraisal, and compensation

What are the four examples of controls on human resources?

ways to adapt to environmental change, limit error, cope with organizational complexity, and minimize costs

What are the four functions that control provides for an organization?

Establish standards, measure performance, compare performance against standards, and determine need for corrective action

What are the four fundamental steps in the control process?

overcontrol, inappropriate focus, rewards for inefficiency, and too much accountability

What are the four reasons for resistance of a control system?

inventory management (stocking neither too few nor too many units in inventory), quality control (maintaining appropriate levels of output quality), and equipment control (supplying the necessary facilities and machinery)

What are the three Examples of a control of physical resources?

They facilitate effective control, and coordination/communication between departments, and maintain records or organizational performance

What are the three advantages of budgeting?

preliminary, screening, and postaction

What are the three forms of operations control?

financial, operating, and nonmonetary

What are the three types of budgets?

Some managers apply budgets too rigidly and sometimes they may limit innovation and change

What are the two disadvantages of budgeting?

financial statements, ratio analysis, and financial audits

What are three other examples of financial controls within an organization?

bureaucratic control and decentralized control

What are two examples of structural control?

encourage employee participation and develop verification procedures

What are two ways organizations can overcome resistance to control systems?

Financial resources

What is considered to be the most important area of control in an organization?