Chapter 16 - Control
The acceptable threshold for quality defects according to Six Sigma standards is 3.4 defects per ______ products or procedures.
1,000,000
Which level of management is typically responsible for operational control?
First-line managers
What are the components of total quality management (TQM)?
Get every employee involved. Make continuous improvement a priority. Listen to and learn from customers and employees. Use accurate standards to identify and eliminate problems.
Which of the following is an example of the informational area of control?
Production schedules
A successful control system is which of the following?
Realistic and positive
Which of the following best describes the cultural area of control?
Using organizational norms to influence performance
Historically, what are three budget-planning approaches that managers have used?
Zero base budgeting Incremental budgeting The planning programming budgeting system
A(n) ______ is a formal financial projection that states an organization's planned activities for a given period of time in quantitative terms.
budget
The point of a ________ is to provide a yardstick against which managers can judge how well they are controlling monetary expenditures.
budget
The focus of total quality management (TQM) is ______, training, and customer satisfaction.
continuous quality improvement
A(n) ______ in business management is a display of information, such as sales, orders, and costs, in easy-to-read graphics.
dashboard
The approach to organizational control that is characterized by informal and organic structural arrangements designed to increase employee commitment is ______ control.
decentralized
The ______ perspective of the balanced scorecard asks the question, "How do we look to our shareholders?"
financial
The perspective in the balanced scorecard approach that is concerned with the shareholders' view of organizational performance, such as market share, revenue growth, and stock price, is known as the ______ perspective.
financial
A summary of some aspect of an organization's financial status such as a balance sheet and an income statement is a ______.
financial statement
A(n) ______ budget is where resources are allocated on a single estimate of costs, also known as a static budget, and that budget amount cannot be adjusted over time.
fixed
A firm's ______ statement summarizes its financial results (revenues and expenses) over a specified period of time, such as a month, quarter or year.
income
The traditional form of budgeting that is currently the most commonly used approach is ______ budgeting.
incremental
The balanced scorecard perspective that assesses whether or not the organization encourages employees to make suggestions and question the status quo is known as the ______ perspective.
innovation and learning
Deming management proposed ideas for making organizations more responsive, more democratic, and ______.
less wasteful
The two core principles of TQM are ______ orientation and ______ orientation.
people; improvement
One principle of Deming management is that quality should be aimed at ______.
the needs of the consumer
At the end of the year, Kavita compares each employee's performance to the standards that were set at the beginning of the year. Which step of the organizational control process does this exemplify?
third
What is the first step of the control process?
Establish Performance Standards
Which of the following is a formal verification of an organization's financial and operational systems?
audit
The ______ approach gives upper management a quick but thorough view of the organization via four indicators: customer satisfaction, internal processes, innovation and improvement activities, and financial measures.
balanced scorecard
When managers control employee behavior by use of rules, regulations, and formal authority, they are exercising ______ control.
bureaucratic
A fixed budget, also known as a static budget, has resources allocated on a single estimate of costs. That budget amount ______.
cannot be adjusted over time
The purpose of ______ is to monitor performance and take corrective action as needed to ensure that objectives are met.
controlling
Like an instrument panel in a vehicle, a(n) ______ is a managerial report that displays easy-to-read graphics on critical information, such as sales, orders, costs, and shipments.
dashboard
The opposite of bureaucratic control is ______ control.
decentralized
True or false: The quality-control procedures outlined by ISO 9000 certification are based on the honor system that the company with the certification will carry out procedures as promised.
false; ISO 9000 certification consists of procedures that can be verified by independent quality-control experts.
Place the four steps of the control process in their typical order, from first (at the top) to last (at the bottom).
1. Establish Standards 2. Measure Performance 3. Compare Performance to Standards 4. Take Corrective Action, If Necessary
Place the steps in the PDCA cycle in order, with the first step at the top and the final step at the bottom.
1. Plan desired and important changes based on observed data 2. Implement the change or make a small-scale test 3. Observed what happened after the change or during the test 4. Act on lessons learned after studying results
Which of the following is an example of the financial area of control?
An assessment of money owed to suppliers
Which report summarizes the overall financial worth of an organization, such as assets and liabilities, at a specific point in time?
Balance sheet
What are basic types of financial statements?
Balance sheet Income statement
Who would be responsible for an external audit of a firm's financial accounts and statements?
Certified public accountants
What type of improvement is defined as ongoing small, incremental improvements in all parts of an organization?
Continuous
What is the name of the orientation of making ongoing, small, incremental improvements in all products, services, functional areas and work processes of an organization?
Continuous improvement
Which management function is involved with monitoring performance, comparing it with goals, and taking corrective action as needed?
Controlling
According to ______ management, managers should fix an organization's problems by improving its structure, culture, and work rules while treating employees well.
Deming
Which philosophy proposed ideas for making organizations more responsive, more democratic, and less wasteful?
Deming management
A web retailer has received several negative social media reviews over the past few weeks due to missed shipments of product. Which reason for why control is needed does this best demonstrate?
Discover irregularities and errors
Sonja is a barista. Her manager has been hearing reports that Sonja's lattes taste like the milk is burned. Her manager talks to Sonja about these reports and shows her some tricks for steaming the milk to the correct temperature. This is an example of which type of control?
Feedback
Match the type of control (on the left) with its definition (on the right).
Feedforward: Focuses on preventing future problems Concurrent: Focuses on collecting performance information in real time Feedback: Focuses on collecting performance information after a task or project is complete
Which of the following is a principle of Deming management?
Improved quality leads to increased market share, prospects, and employment.
Which type of budgeting allocates increased or decreased funds to a department by using the last budget period as a reference point?
Incremental
What are the indicators that make up the balanced scorecard?
Innovation and improvement activities Internal processes Customer satisfaction Financial measures
Which perspective in the balanced scorecard approach addresses how the organization can continue to improve?
Innovation and learning perspective
Which of the following statements concerning the ISO 14000 series is true?
It identifies standards for environmental performance.
Which of the following statements about the supply chain are true?
It is a significant cost for companies. It is an important component of business and can impact company finances.
What are assumptions made by continuous improvement orientation?
It is less expensive to do something right the first time. It is better to make small improvements all the time.
The "speed with excellence" quality improvement approach that focuses on problem solving and performance improvement is ______.
Lean Six Sigma
Which method focuses on problem solving and the performance improvement—speed with excellence—of a well-defined product?
Lean Six Sigma
Which of the following is the second step of the control process?
Measure performance
Which level of management is typically responsible for tactical control?
Middle managers
Which of the following is an example of a physical area of control?
Monitoring the use of the conference room
Which type of control involves monitoring performance to ensure that short-term plans and daily goals are being achieved and taking corrective action as needed?
Operational control
Which of the following is an example of the human resources area of control?
Performance appraisals
Which of the following represent potential actions that a manager may take in the fourth step of the control process? (Check all that apply.)
Recognize and reinforce positive performance Take action to correct negative performance Make no changes
Bureaucratic control is characterized by the use of which of the following to guide performance?
Regulations Formal authority Rules
Which of the following is a statistical analysis process that reduces defects in manufacturing and service-related processes and requires no more than 3.4 defects per million products or procedures?
Six Sigma
Match the step in the control process with its description.
Step 1: The desired performance level for a given goal is established. Step 2 :Actual performance is measured. Step 3: Measured performance is compared to established standards. Step 4: Corrective action is taken, if necessary.
Marci rewarded her team with a bonus when she found that their performance exceeded the standards she had set. Which step of the control process does giving the reward represent?
Step four
Which type of control involves monitoring performance to ensure that plans at the divisional and/or departmental level are being implemented and taking corrective action as needed?
Tactical control
Which balanced scorecard perspective asks the question, "How do customers see us?"
The customer perspective
Who is generally responsible for an internal audit of the organization's financial accounts and statements?
The firm's own professional staff
Which balanced scorecard perspective asks the question, "At what must we excel?"
The internal business perspective
What are characteristics of the production-run samples used for statistical process control?
They are chosen randomly. They are taken periodically.
Which of the following are reasons why control is needed in an organization?
To adapt to change and uncertainty To detect opportunities To reduce costs and increase productivity To discover errors and irregularities To decentralize decision making and facilitate teamwork
Which level of management is typically responsible for strategic control?
Top managers
Which approach is a comprehensive approach, led by top management and supported throughout the organization, and dedicated to continuous quality improvement, training, and customer satisfaction?
Total quality management
True or false: PDCA stands for the plan, do, check, and act cycle for using observed data for continuous improvement of operations.
True
The balance sheet summarizes a firm's:
assets liabilities
When Jensen asked his boss, "How many books do we want to sell by November?" he was trying to establish a(n) ______.
control standard
A company that values innovation and creativity establishes a reward system based on suggestions for improvement and patents. This is an example of a control in the ______ area.
cultural
The ______ perspective on the balanced scorecard approach focuses on the analysis of different types of customers, their level of satisfaction, and the processes used to deliver products and services to customers.
customer
The two types of audits are ______.
external and internal
A(n) ______ is a formal verification of an organization's financial accounts and statements made by outside experts who are certified public accountants (CPAs).
external audit
True or false: Improvement orientation is based on the belief that performance gains are best achieved by replacing existing procedures.
false; improvement orientation assumes that it is better to make small improvements all the time.
A property manager for an office park is required to submit a monthly statement of income and expenses to the board of directors and report its performance to budget. This is an example of control in the ______ area.
financial
A company institutes a policy requiring all employees involved in a workplace accident to submit to a mandatory drug test. This is an example of a control in the ______ area.
human resources
The two core principles of TQM are people orientation and ______ orientation.
improvement
A(n) ______ summarizes an organization's financial results (revenues and expenses) over a specified period of time, such as a quarter or a year.
income statement
Using the previous budget as a starting point and making adjustments to the funds allocated to each expense category is the budgeting approach known as ______ budgeting.
incremental
Press releases and environmental impact reports are examples of controls in the ______ area.
informational
Verification of a firm's financial accounts and statements by the organization's own professional staff is a(n) ______.
internal audit
The ______ perspective of the balanced scorecard approach examines areas and activities in which the firm currently excels, what it must do to excel in the future, and the processes in which the firm must concentrate its efforts in order to continue to satisfy customers and shareholders.
internal business
Within the third step of the control process, ______ is a principle that states that managers should be informed of a situation only if data show a significant deviation from standards.
management by exception
Samira receives a written report every six months detailing the production outputs of the warehouse. These reports demonstrate which step in the control process?
measure performance
Since service industries do not produce a tangible product, often customer satisfaction may be a matter of ______.
perception
Statistical process control is a statistical technique that uses ______ from production runs to see if quality is being maintained within a standard range of acceptability.
periodic random samples
An office park installs security cameras in the parking lot to better ensure the safety of tenants and visitors. This is an example of the ______ area of control.
physical
The level of control in which top managers monitor performance to ensure that plans are being implemented and take necessary corrective action is known as ______ control.
strategic
The sequence of suppliers that contribute to creating and delivering a product is known as the ______.
supply chain
The four components of ______ are to make continuous improvement a priority, get every employee involved, listen to and learn from customers and employees, and use accurate standards to identify and eliminate problems.
total quality management
True or false: In the service industry, customer satisfaction is often based on perception.
true; since services are intangible, satisfaction can be merely a perception.
A ________ budget can be adjusted over time to accommodate pertinent changes in the environment.
variable
A budget in which the allocation of resources fluctuates in proportion to different levels of activity during the budget period is known as a(n) ______ budget.
variable
