Management Test 4, Chapter 14 MNGT, Chapter 14 Foundations of Control, Management Exam 4
Lean is a system of non-financial controls used to improve product/service quality and decrease waste. Which of the following statements is TRUE about lean?
under lean, value must be defined and specified from the customer's perspective
Management Information System (MIS)
used to provide management w/ needed information on regular basis.
Assets
what the business owns--items of value(current, fixed, intangible)
Management by Walking Around (MBWA)
when a manager is out in the work area, interacting directly with employees, and exchanging information about whats going on
The __________ is a snapshot of the business's financial position at a specific point in time. It identifies what the business owns and what it owes.
balance sheet
A key financial control, ______ generally refers to summarizing all planned expenses and revenues. This can include creating a monthly or quarterly projection of what the balance sheet and income statement will look like in the future.
budgeting
Controls can help managers determine if their strategy is achieving the desired results. What is a major reason why managers would NOT implement all of the controls that are available?
The costs of some controls outweigh their benefits
Controls can help managers determine if their strategy is achieving the desired results. What is a major reason why managers would not implement all of the controls that are available?
The costs of some controls outweigh their benefits
Cash Flow Statement
The detail of cash received and cash expended for each month of the year. -Most immediate indicator of an impeding problem. Composed of: 1.Beginning cash on hand 2.Cash receipts/deposits for the month 3. Cash paid out for the month 4. Ending cash position
Operational Control
concerned with executing the strategy and includes measuring return on investment, net profit, cost, and product quality. -->Contributes to successful execution of the current strategy -->EX: make sure that the ship is in good condition before, during, and after voyage.
Strategic control
concerned with tracking the strategy as it is being implemented, detecting any problem areas, and making any necessary adjustments --->Help manager know whether a chosen strategy is working --->Ex: make sure that your ship is going in the right direction
Gross Profit
The difference between what you sold the product or service for and what the product or service cost you
reliability
The extent to which a measure is consistent and free from error
Improved quality control
contributes to: cost control(fewer defects, less waste), customer satisfaction, and greater sales
Financial Costs
direct and indirect costs ->example of direct financial cost of control:paying an accounting firm to perform an audit
True or false: winning the war for talent means attracting the best available workers who will be enthusiastic about their work.
True
Lean is a system of non-financial controls used to improve product/service quality and decrease waste. Which of the following statements is true about lean?
Under lean, value must be defined and specified from the customer's perspective.
Cost of:Damage to culture and/or reputation
The intangible costs associated with control: strictly monitoring employee behavior can lead to undesirable culture consequences
What talent management principle relates to training some people and hiring others from the external marketplace to meet specific human capital needs for the company?
"Make or buy" decision
Put the four steps of organizational control in order:
*(1) establish standards, (2) measure performance, (3) compare performance to standards, and then (4) take corrective action as needed. (KNOW STEP 3)
Which of the following is an example of situational interviewing?
*Asking what the job applicant did when they were assigned a challenging group project.
__________ are a way for banks, investors, and other key stakeholders to understand the firm's financial health.
*Audits
The __________ is a snapshot of the business's financial position as a specific point in time. It identifies what the business owns and what it owes.
*Balance sheet
The objective of Six Sigma is extremely high quality. Which of the following statements is the best reason why a company would want to aim for such a high goal?
*Doing something right the first time, every time reduces overall costs.
Compensation can include monetary and non-monetary items. Examples of non-monetary benefits include which of the following?
*Flexible work hours
Overproduction (waste)
*MOST DANGEROUS WASTE* -the production of goods before they are actually required
__________ allow managers to monitor and adjust the processes, answering the questions "are we properly executing our strategy?"
*Operational Controls
Which of the following is not part of strategic human resource management (SHRM)?
*Reducing costs by replacing workers when their work experience would result in higher wage rates.
Controls can help managers determine if their strategy is achieving the desired results. What is a major reason why managers would not implement all of the controls that are available?
*The costs of some controls outweigh their benefits.
Which of the following is not a reason employers should testapplicants as part of the selection process?
*To screen out applicants who don't match the employer's desired demographics (race, color, sex, national origin, religion, disability, or age).
Lean is a system of non-financial controls used to improve product/service quality and decrease waste. Which of the following statements is true about lean?
*Under lean, value must be defined and specified from the customer's perspective.
If Mark wanted to follow the accomplishments of his financial goals, he could easily compare his actual spending to his __________.
*budget
Ken's Construction Company found that a drill bit could make approximately 100,000 holes within tolerance before the bit was so worn that the hole it drilled was too small. So, it changes the drill bits after 95,000 holes have been drilled. This is an example of a __________ control.
*feedforward
Chris met Ross for an interview about a job that Ross's business has now listed as open. At the meeting, Ross gave Chris a document that describes exactly what the employee would be expected to do, how they should do it, and why it's done that way. This document is typically called a __________.
*job description
Companies often conduct a __________ to determine the internal value of the job--the more vital the job to the company's success, the higher the pay level.
*job evaluation
In order to best support an organization's mission and goals, compensation systems should __________.
*reward behaviors that support the goals and discourage those that work against the goals
Lean Six Sigma
-Developed by Motorola in 1986 -Process where, statistically 99.99966% of products manufacturers are free from defects -less than 3.4 defects per million Goal is to: 1.improve workflow 2.reduce size of batches 3.increase flexibility and lower costs
Common mistakes with Non Financial Controls
-Failure to use non financial controls -Not linking control to strategy -Failing to Validate the links -Failing to set the appropriate performance targets -Measurement Failures
COSTS of controls
-Financial costs -Damage to culture and/or reputation -Decreased responsiveness -Failed implementation of projects
Benefits of Controls
-Improved cost and productivity control -Improved quality control -Opportunity recognition -Better ability to manage uncertainty/complexity -Better ability to decentralize decision making
Differences in organizational control systems of Global Organizations are primarily in:
-Measurement -Corrective action steps
What should managers control?
-Organizations FINANCES -Organizations INFORMATION -EMPLOYEE PERFORMANCE
Within the levels of Strategic and Operational Control, there are several TYPES of control, measured across two dimensions. Which are:
-Proactivity -Outcome vs. Behavior
Net Income
-The bottom line, and is a measure of a firm's ability to operate at a profit.
Put the four steps of organizational control in order:
1. Establish standards 2. Measure performance 3. Compare performance to standards 4. Take corrective action as needed
3 types of Financial controls called "The financials"
1.Balance Sheet 2.Income/Profit & Loss Statement 3. Cash Flow Statement
3 specific areas the VALUE of the control function is seen
1.Planning 2.Empowering Employees 3.Protecting the workplace
Balance Sheet
A snapshot that includes total assets and total liabilities
Lean Control
A system of nonfinancial controls used to: improve product and service quality -decrease waste -70% of manufacturing firms use this
Which of the following is an example of situational interviewing?
Asking what the job applicant did when they were assigned a challenging group project
Outcome controls
Assess measurable production/tangible results and often emphasize bottom line performance
___ are a way for banks, investors, and other key stakeholders to understand the firm's financial health.
Audits
Better ability to decentralize decision making
allows organizations to be more responsive by moving decision making to those closest to customers and areas of opportunity
Owner's equity
amount of money the owner has invested in the firm
The ___ is a snapshot of the business's financial position as a specific point in time. It identifies what the business owns and what it owes.
Balance sheet
If Mark wanted to follow the accomplishments of his financial goals, he could easily compare his actual spending to his ___.
Budget
A key financial control, ___ generally refers to summarizing all planned expenses and revenues. This can include creating a monthly or quarterly projection of what the balance sheet and income statement will look like in the future.
Budgeting
Improved cost and productivity control
ensures that the firm functions effectively and efficiently
Waiting (waste)
Can be workers waiting for resources or customers waiting for products
What key element of HR is related to the careful evaluation and payment of employees based on their contributions (results)?
Compensation and rewards
Strategic human resource management is an integral part of the ___ portion of the POLC framework.
Controlling
Non financial Controls
Controls where nonfinancial performance outcomes are measured Very important because they are likely to affect long-term profits
Cost of Goods Sold/Cost of Sales
Cost of products purchased for retailer, or also direct labor costs
Transportation (waste)
Cost with no added value (each time a product is moved it is at risk)
why non financial controls are important
Customer satisfaction is BIG -things like culture and environment effect performance
True or false: A common mistake companies make regarding nonfinancial controls is clearly linking the controls to their strategy.
false
Behavior Controls
Dictate the actions of individuals and often emphasize rules and procedures
A significant control concern for management in global firms
Difficult comparing across countries
Validity
Does the test measure what its supposed to measure
The objective of Six Sigma is extremely high quality. Which of the following statements is the best reason why a company WOULD want to aim for such a high goal?
Doing something right the first time, every time reduces overall costs
The objective of six sigma is extremely high quality. Which of the following statements is the best reason why a company would want to aim for such a high goal?
Doing something right the first time, every time reduces overall costs.
Cost of: Decreased Responsiveness
Downtime between a decision and the actions required to implement it are due to compliance w/ controls
Steps in the control process
Establish Standards-->Measure Performance-->Compare performance to standards-->Take Corrective action
Balanced scorecard
Evaluates an organizations performance based on: financial, customer, internal processes, and people/innovation/growth assets
True/False: A common mistake companies make regarding non-financial controls is directly linking the controls to their strategy.
False
The control that permits managers to use information on past performance to bring future performance in line with planned objectives is referred to as ___.
Feedback control
The control that permits managers to use information on past performance to bring future performance in line with planned objectives is referred to as __________.
Feedback control
Ken's Construction Company found that a drill bit could make approximately 100,000 holes within tolerance before the bit was so worn that the whole it drilled was too small. So, it changes the drill bits after 95,000 holes have been drilled this is an example of ___.
Feedforward
Which type of controls involve the management of a firm's costs/expenses in order to control them in relation to budgeted amounts?
Financial Controls
Predominant forms of control
Financial and Non financial controls
Which type of controls involve the management of a firms costs/expenses in order to control them in relation to budgeted amounts?
Financial controls
Operating Expenses
Fixed= do NOT vary with the level of sales Variable=Do vary with the level of sales(bonuses, wages)
Compensation can include monetary and non-monetary items. Examples of non-monetary benefits include which of the following?
Flexible work hours
Opportunity recognition
Helps managers identify and isolate the source of positive surprises
Sales or Revenue
How much you sold -where retail price of the product is expressed in terms of dollar * the number of units sold
A company's ___ consists of the attributes, life experience, knowledge, inventiveness, energy, and enthusiasm that its people choose to invest in their work.
Human capital
The control that permits managers to use information on past performance to bring future performance in line with planned objectives is referred to as __________.
feedback control
The ___ summarizes all financial activity that occurred over a designated period of time.
Income statement
Why is Control important?
It's the only way that managers know whether organizational goals are being met, and if not, the reasons why.
Chris met Ross for an interview about a job that Ross's business has now listed as open. At the meeting, Ross gave Chris a document that describes exactly what the employee would be expected to do, how they should do it, and why it's done that way. This document is typically called a ___.
Job description
Companies often conduct a ___ to determine the internal value of the job the more vital job the company success, the higher the pay level.
Job evaluation
Better ability to manage uncertainty/complexity
Keeps organization focused on the strategy, and helps managers anticipate negative surprises
What is a challenge related to international managerial control
Lack of technology in some areas
When faced with a need to replace an employee who is leaving the organization, the decision to hire a new person or move/promote a current employee is known as ___.
Make or buy
When faced with a need to replace an employee who is leaving the organization, the decision to hire a new person or move/promote a current employee is known as __________.
Make or buy
Organizational Control
Management function that involves monitoring activities to ensure that they're being accomplished as planned and correcting any significant deviations
Two biggest nonfinancial control failures
Measurement and Validation failures. -Organizations should only use measures that are reliable and valid
Proactivity
Monitoring problems in a way that provides their timely prevention --->Types of controls: -Feedforward control -Concurrent Control -Feedback Control
Inventory (waste)
Not being actively processed to add value is actually waste
___ allow managers to monitor and adjust the processes, answering the questions "are we properly executing our strategy?"
Operational controls
Controls differ depending on what is being monitored
Outcomes or Behaviors
___ ties pay directly to an individual's contributions toward meeting specific business goals or objectives.
Pay for performance
__________ ties pay directly to an individual's contributions toward meeting specific business goals or objectives.
Pay for performance
When are standards established
Planning Function
Feedforward Control
Proactiviley address what can be done ahead of time to help a plan succeed -Hardest to use, but most proactive
Financial Controls
Provide the basis for sound management and allow managers to establish guidlines/ policies that enable the business to succeed and grow Ex:controlling costs/expenses to maintain a budget
Ken's Construction Company found that a drill bit could make approximately 100,000 holes within tolerance before the bit was so worn that the hole it drilled was too small. So, it changes the drill bits after 95,000 holes have been drilled. This is an example of a __________ control.
feedforward
Which of the following is not part of strategic human resource management?
Reducing costs by replacing workers when they are work experience would result in higher wage rates.
In order to best support and organizations mission and goals, compensation systems should __
Reward behaviors that support the goals and discourage those that work against the goals.
5 major categories of Profit and Loss Statement
Sales or Revenue Cost of Goods Sols/Cost of sales Gross Profit Operating Expenses Net Income
Profit and Loss Statement
Shows the relation of income and expenses for a specific time interval (usually a month) -expressed in cumulative monthly formats -New records start at the beginning of each 12-month fiscal year -5 major categories
2 levels of control
Strategic control and Operational control
___ allow managers to step back and look at the big picture and make sure all the pieces of the picture are correctly aligned, evaluating if we are using the best strategy.
Strategic controls
__________ allow managers to step back and look at the big picture and make sure all the pieces of the picture are correctly aligned, evaluating if we are using the best strategy.
Strategic controls
___ is a process whereby an organization ensures that employees are recruited and developed to fill each key role within the company.
Succession planning
The four steps of organizational control are: establish standards, measure performance, compare performance to standards (expectations), and ___.
Take corrective action
Muda
The 7 deadly wastes 1.Defects 2.Overproduction(most dangerous waste) 3.Transportation 4.Waiting 5.Inventory 6.Motion 7.Overprocessing
Which type of controls involve the management of a firm's costs/expenses in order to control them in relation to budgeted amounts?
financial controls
Which of the following is not a reason employers should test applicants as part of the selection process?
To screen out applicants who don't match the employers desire demographics (race, color, sex, national origin, religion, disability, or age)
Liabilities
What the business owes, usually done at the end of each month. --Used to make future budgets/monitor progress
A company's __________ consists of the attributes, life experience, knowledge, inventiveness, energy, and enthusiasm that its people choose to invest in their work.
human capital
The __________ summarizes all financial activity that occurred over a designated period of time.
income statement
Concurrent Control
involve the real-time process of monitoring and adjusting ongoing activities and processes. -Prevent problems from becoming worse
Feedback Control
involves the gathering of information about a completed activity, evaluating that information, and taking steps to improve the similar activities in the future. -Most popular type of control -Least proactive
__________ allow managers to monitor and adjust the processes, answering the question "are we properly executing our strategy?"
operational controls
Defects (waste)
prevent the customer from accepting the product that was produced
Motion (waste)
refers to the actions performed by the producer, worker, or equipment (Taylorism)
Overprocessing (waste)
refers to using more expensive resources than are needed for the task.
Cost of: Failed Implementation of projects
sometimes controls are just poorly understood
__________ allow managers to step back and look at the big picture and make sure all the pieces of the picture are correctly aligned, evaluating if we are using the best strategy.
strategic controls
__________ is a process whereby an organization ensures that employees are recruited and developed to fill each key rolewithin the company.
succession planning
Final step in the control process
take corrective action
The four steps of ORGANIZATIONAL CONTROL are: establish standards, measure performance, compare performance to standards (expectations), and __________.
take corrective action