MGMNT B.N. CH. 16

(1)___ : only one set of expenses; the budget does not allow for adjustment over time. (2)____ :can be adjusted over time to accommodate pertinent changes in the environment.

1. Static budget 2. Flexible Budget

> (1)____: the Greek letter that statisticians use to define a standard deviation. The higher the sigma, the fewer the deviations from the norm—that is, the fewer the defects. (2)___ sigma: reduce variation in your company's business and make customer-focused, data-driven decisions. (3)____ sigma: which focuses on problem solving and performance improvement—speed with excellence—of a well-defined project. (More recent companies using this approach) both data-oriented, tangible way to approach problem solving.

1 Sigma 2. Six 3. Lean six sigma

> Balance Sheet: (1)____:are the resources that an organization controls; they consist of current assets and fixed assets. (2)____: are cash and other assets that are readily convertible to cash within 1 year's time. Examples are inventory, sales for which payment has not been received (accounts receivable), and U.S. Treasury bills or money market mutual funds. (3)____: are property, buildings, equipment, and the like that have a useful life that exceeds year but are usually harder to convert to cash. (4)____: are claims, or debts, by suppliers, lenders, and other nonowners of the organization against a company's assets.

1. Assets 2. Current Assets 3. Fixed Assets 4. Liabilities

> (1)____: besides verifying the accuracy and fairness of financial statements it also is intended to be a tool for management decision making (2)_____ Audits: auditors are certified public accountants (CPAs) who work for an accounting firm (such as PricewaterhouseCoopers) that is independent of the organization being audited. Their task is to verify that the organization, in preparing its financial statements and in determining its assets and liabilities, followed generally accepted accounting principles. (3)_____ Audits: Their jobs are the same as those of outside experts—to verify the accuracy of the organization's records and operating activities. Internal audits also help uncover inefficiencies and thus help managers evaluate the performance of their control systems.

1. Audits 2. External 2. Internal

(1)______: depicts the organization's overall financial worth at a specific point in time. (2)_____: assets resulting from the sale of goods and services. (3)_____: are the costs required to produce those goods and services. The difference between revenues and expenses, called the (4)_____, represents the profits or losses incurred over the specified period of time

1. Balance Sheet 2. Revenues 3. Expenses 4. bottom line

> (1)______: is a process by which a company compares its performance with the best practices of high-performing organizations. > (2)_____: subcontracting of services and operations to an outside vendor. Usually this is done because the subcontractor vendor can do the job better or cheaper. also being done by many state and local governments, which, under the banner known as privatization, have subcontracted traditional government services such as fire protection, correctional services, and medical services.

1. Benchmarking 2. Outsourcing

> Six areas of control: -structural area: (1)____ control: control attempts to elicit employee compliance, using strict rules, a rigid hierarchy, well-defined job descriptions, and administrative mechanisms such as budgets, performance appraisals, and compensation schemes (external rewards to get results). The foremost example of use of bureaucratic control is perhaps the traditional military organization. works well in organizations in which the tasks are explicit and certain. While rigid, it can be an effective means of ensuring that performance standards are being met. However, it may not be effective if people are looking for ways to stay out of trouble by simply following the rules, or if they try to beat the system by manipulating performance reports, or if they try to actively resist bureaucratic constraints. (2)____ control: form of control aims to get increased employee commitment, using the corporate culture, group norms, and workers taking responsibility for their performance. Decentralized control is found in companies with a relatively flat organization.

1. Bureaucratic 2. Decentralized

> Why control is important: Lack of (1)___mechanisms can lead to problems for both managers and companies. needed to adapt to change and uncertainty. Discover (2)______&____ Cost overruns, manufacturing defects, employee turnover, bookkeeping errors, and customer dissatisfaction are all matters that may be tolerable in the short run. But in the long run, they can bring about even the downfall of an organization. reduce costs, increase (3)___ or add value: controls can help add value to a product so that customers will be more inclined to choose it over rival products. Controls allow top management to decision making at lower levels within the organization and to encourage employees to work together in teams.

1. Control 2. irregularities and errors. 3. productivity 4. decentralize

> balanced scorecard: (1)____ perspective : do with profitability, growth, and shareholder values. Financial measures such as quarterly sales have been criticized as being shortsighted and not reflecting contemporary value-creating activities. Moreover, critics say that traditional financial measures don't improve customer satisfaction, quality, or employee motivation. (2)_____ perspective: The balanced scorecard translates the mission of customer service into specific measures of concerns that really matter to customers—time between placing an order and taking delivery, quality in terms of defect level, satisfaction with products and service, and cost. (3)____ Business perspective: linked to measures of employee actions at the lower levels, such as time to process customer orders, get materials from suppliers, produce products, and deliver them to customers. Computer information systems can help. (4)_____ and learning perspective: Learning and growth of employees is the foundation for innovation and creativity. Thus, the organization must create a culture that encourages rank-and-file employees to make suggestions and question the status quo and it must provide employees with the environment and resources needed to do their jobs

1. Financial 2. Customer 3. Internal 4. Innovation

> ISO: (1)_______ : The goal is to reduce flaws in manufacturing and improve productivity. Companies must document the procedures and train their employees to use them. (2)______: documenting a company's management of pollution, efficient use of raw materials, and reduction of the firm's impact on the environment. > (3)_______ control: This is an ongoing human visual check for quality control. If quality is not acceptable, production is stopped to allow corrective measures. Technique that Mc Donald's uses.

1. ISO 9000 2. ISO 14000 3. Statistical Process Control

First, you need to consider the (1)___ of management at which you operate—top, middle, or first level. Second, you need to consider the (2)___ that you draw on for resources—physical, human, information, and/or financial. Finally, you need to consider the style or (3)___ philosophy—bureaucratic, market, or clan, as we will explain.

1. Level 2. areas 3. Control

> 4 barriers to effective management: *(1)_____ are fuzzy: operational areas but not in areas of customer satisfaction, employee performance, and rate of change. Managers need to work at making "soft" objectives measurable. *Managers put too much trust in (2)___ feedback systems. Managers tend to overrate feedback mechanisms such as customer complaints or sales-force criticisms about products. * Employees resist (3)_____ *companies focus too much on (4)_____ instead of results

1. Objectives 2. Informal 3. New measurement systems 4. Measuring activities

This means that you can increase(1)_____ by making substitutions or increasing the efficiency of any one element: labor, capital, materials, energy > Why productivity is important: the more goods and services that are produced and made easily available to us and for export, the higher our (2)____. Increasing the (3)____—the total dollar value of all the goods and services produced in the United States—depends on raising productivity, as well as on a growing workforce.

1. Overall productivity 2. standard of living 3. gross domestic product

>(1)_____ analysis: determine an organization's financial health. (2)___ ratios indicate how easily an organization's assets can be converted into cash (made liquid). (3)____ ratios: indicate the degree to which an organization can meet its long-term financial obligations (4)____ ratios: indicate how effectively an organization is managing its assets, such as whether it has obsolete or excess inventory on hand. (5)____: often called return on investment (ROI) or return on assets (ROA)—indicate how effective management is in generating a return, or profits, on its assets.

1. Ratio 2. Liquidity 3. Debt Management 4. Asset Management 5. Return ratios

> RATER Scale: (1)______—ability to perform the desired service dependably, accurately, and consistently. (2)____—employees' knowledge, courtesy, and ability to convey trust and confidence. (3)____—physical facilities, equipment, appearance of personnel. (4)____—provision of caring, individualized attention to customers. (5)___—willingness to provide prompt service and help customers.

1. Reliability 2. Assurance 3. Tangibles 4. Empathy 5. Responsiveness

> People Orientation (Cont): Teams may be (1)_____: with groups of workers given administrative oversight of activities such as planning, scheduling, monitoring, and staffing for their task domains. (2)_____ team: are often cross-functional, drawing on members from different departments.

1. Self- Managed 2. Special- purpose

> Steps in the control process: *Establish (1)____: Standards may be narrow or broad, and they can be set for almost anything, although they are best measured when they can be made quantifiable. (one technique to establish is to use the (2)_____ *(3)______: usually obtained from three sources: (1) written reports, including computerized printouts; (2) oral reports, as in a salesperson's weekly recitation of accomplishments to the sales manager; and (3) personal observation, *compare (4)______ to ____: The greater the difference between desired and actual performance, the greater the need for action. How much deviation is acceptable? That depends on the (5)____ built in to the standards in step 1. <-often incorporated in computer systems into a principle called management by exception * Take (6)_____ if necessary: three possibilities here: (1) Make no changes. (2) Recognize and reinforce positive performance. (3) Take action to correct negative performance. When performance falls significantly short of the standard, managers should carefully examine the reasons why and take the appropriate action. Sometimes it may turn out the standards themselves were unrealistic, owing to changing conditions, in which case the standards need to be altered.

1. Standards 2. Balanced scorecard 3. Measure performance 4. performance to standards 5. range of variation 6. corrective action

> Level of control: (1)____ control: mainly performed by top managers, those at the CEO and VP levels, who have an organization-wide perspective. (2)____ control: mainly by middle managers, those with such titles as "division head," "plant manager," and "branch sales manager." Reporting is done on a weekly or monthly basis. (3)____ control: done mainly by first-level managers, those with titles such as "department head," "team leader," or "supervisor." Reporting is done on a daily basis.

1. Strategic 2. Tactical 3. Operational

(1)____:show the cause-and-effect links by which specific improvements create desired outcomes," such as objectives for revenue growth, targeted customer markets, the role of excellence and innovation in products, and so on. (2)____: companies were those in which senior management reportedly agreed on measurable criteria for determining strategic success, and management updated and reviewed semiannual performance measures in three or more of six primary performance areas. The six areas were financial performance, operating efficiency, customer satisfaction, employee performance, innovation/change, and community/environment.

1. Strategy Map 2. Measurement managed

> Why Measurement-Managed Firms Succeed: (1)_____ agree on strategy. most of those in non-measurement-managed companies reported disagreement. Translating strategy into measurable objectives helps make them specific. (2)_____ is clear: characteristic of managed-measurement organizations and not of non-measurement-managed ones. Better focus and (3)_____ :Measurement-managed companies reported more frequently that unit (division or department) performance measures were linked to strategic company measures and that individual performance measures were linked to unit measures. The organizational culture emphasizes(4)_____and allows___. Managers in measurement-managed companies more frequently reported strong teamwork and cooperation among the management team and more willingness to take risks.

1. Top executives 2. Communication 3. alignments 4. Teamwork; risk taking

> Core (1)_______ principles: 1. Make continuous improvement a priority. 2.Get every employee involved. 3.Listen to and learn from customers and employees. 4.Use accurate standards to identify and eliminate problems.

1. Total Quality Management

> Incremental budgets: (1)______ : which forces each department to start from zero in projecting funding needs, is no longer favored. The other approach, the traditional form of a budget, which is mainly used now, is incremental budgeting. (2)_____ budgets: tend to lock departments into stable spending arrangements; they are not flexible in meeting environmental demands. Another difficulty is that a department may engage in many activities—some more important than others—but it's not easy to sort out how well managers performed at the various activities.

1. Zero based budgeting 2. Incremental

> Barriers to control success: (1) Too much ______: Allowing employees too little discretion for analysis and interpretation may lead to employee frustration Too little (2)_______: can enhance productivity. Involving employees in both the planning and execution of control systems can bring legitimacy to the process and heighten employee morale. (3)_____ on Means instead of Ends: means to eliminating problems. Too much emphasis on accountability for weekly production quotas. * overemphasis on (4)______: Undue emphasis on reports can lead to too much focus on quantification of results and even to falsification of data.

1. control 2. Employee participation 3. Overemphasis 4. paperwork

> Key to successful control systems: (1)___ systems: systems support strategic plans and are concentrated on significant activities that will make a real difference to the organization. *(2)____- meaning when needed. delivered at an appropriate or specific time, such as every week or every month. And it certainly should be often enough to allow employees and managers to take corrective action for any deviations. *(3)____ -meaning correct: paramount, if decision mistakes are to be avoided. Inaccurate sales figures may lead managers to mistakenly cut or increase sales promotion budgets. Inaccurate production costs may lead to faulty pricing of a product. (4)____ - meaning impartial : means control systems are impartial and fair. Although information can be inaccurate for all kinds of reasons (faulty communication, unknown data, and so on), information that is not objective is inaccurate for a special reason: It is biased or prejudiced. Control systems need to be considered unbiased for everyone involved so that they will be respected for their fundamental purpose—enhancing performance.

1. control 2. timely 3. accurate 4. objective

>(1)____: making something happen the way it was planned to happen. its purpose is plain: to make sure that performance meets objectives. > Controlling for productivty: *(2)____ is setting goals and deciding how to achieve them. *(3)___is arranging tasks, people, and other resources to accomplish the work. *(4)___ is motivating people to work hard to achieve the organization's goals. *(5)___is concerned with seeing that the right things happen at the right time in the right way.

1. control. 2. Planning 3. Organizing 4.Leading 5. Controlling

>Structural area (cont): (1)____ area: informal method of control. It influences the work process and levels of performance through the set of norms that develop as a result of the values and beliefs that constitute an organization's culture. (2)____: the use of real-world data rather than fads and hunches in making management decisions.

1. cultural area 2. Evidence based management

> 2 TQM Principles: *Delivering (1)___ is most important: The purpose of TQM is to focus people, resources, and work processes to deliver products or services that create value for customers. People will focus on quality if given (2)____ :TQM assumes that employees (and often suppliers and customers) will concentrate on making quality improvements if given the decision-making power to do so. (3)____ requires training, teamwork, and cross-functional efforts. Employees and suppliers need to be well trained, and they must work in teams. (4)____ is considered important because many quality problems are spread across functional areas.

1. customer value 2. empowerment 3. TQM 4. Teamwork

(1)_____: defined by the formula of outputs divided by inputs for a specified period of time (2)_____: are all the goods and services produced. (3)____ are not only labor but also capital, materials, and energy.

1. productivity 2. Outputs 3. inputs

two strategies for ensuring quality are (1)_____, the strategy for minimizing errors by managing each stage of production, and (2)____, focusing on the performance of workers and urging them to strive for "zero defects." - (3)____ quality: produce less waste, fewer delays, and are more efficient. Lower prices and (4)____ quality lead to greater market share, which in turn leads to improved business prospects and consequently increased employment.

1. quality control 2. quality assurance 3. Improved 4. Superior

> Key to successful control systems (cont): have to focus on working for the people who will have to live with them. * be (1)____: If employees feel performance results are too difficult, they are apt to ignore or sabotage the performance system. * Be positive be (2)_____ : They should fit the people involved, be kept as simple as possible, and present data in understandable terms. * Encourage (3)______: should encourage good communication and mutual participation. They should not be the basis for creating distrust between employees and managers. * they are (4)____: Control systems must leave room for individual judgment, so that they can be modified when necessary to meet new requirements.

1. realistic 2. understandable 3. self-control 4. Flexible

> Applying TQM to services: customers are much more involved in the delivery of (1)___ than they are in the delivery of manufactured products.

1. services

> Improvement Orientation: the lesson of the quality movement from overseas is that the way to success is through continuous (1)_____. Following assumptions: *Less (2)_____ to do it right the first time: training, equipment, and tools, for example. * better to do (3)____ all the time. This is the assumption that continuous improvement must be an everyday matter, that no improvement is too small, that there must be an ongoing effort to make things better a little bit at a time all the time. *(4)_____ must be followed to eliminate small variations. stresses the use of accurate standards (such as benchmarking, as we discuss) to evaluate progress and eliminate small variations

1. small improvements. 2. Expensive 3. Small improvements 4. Accurate Standards