MHR 301 Chapter 11

Four steps of the control process

(1) Establish the standards of performance, goals, or targets against which performance is to be evaluated. (2) Measure actual performance. (3) Compare actual performance against chosen standards of performance. (4) Evaluate the result and initiate corrective action (that is, make changes) if the standard is not being achieved.

Operating Budget

A budget that states how managers intend to use organizational; resources to achieve organizational goals.

Top-down Change

A fast, revolutionary approach to change in which top managers identify what needs to be changed and then move quickly to implement the changes throughout the organization.

Management by Objectives (MBO)

A goal setting process in which a manager and each of his or her subordinates negotiate specific goals and objectives for the subordinate to achieve and then periodically evaluate the extent to which the subordinate is achieving those goals.

Bottom-Up Change

A gradual or evolutionary approach to change in which managers at all levels work together to develop a detailed plan for change.

Which of the following is the final step in the control process? A. Evaluate the result and initiate corrective actions. B. Measure actual performance. C. Establish the standards of performance. D. Compare actual performance to the standards. E. Establish the targets against which performance is to be evaluated.

A. Evaluate the result and initiate corrective action.

Bureaucratic control is control by means of a comprehensive system of rules and standard operating procedures. A. True B. False

A. True

Control is concerned with keeping employees motivated, focused on the important problems confronting the organization, and working together to make the changes that will help an organization improve its performance over time. A. True B. False

A. True

The final step in the control process is to evaluate the results and bring about change as appropriate. A. True B. False

A. True

The objectivity of financial measures of performance is the main reason why managers use these ratios to measure the efficiency and effectiveness of their organizations. A. True B. False

A. True

The operating margin is calculated by dividing a company's operating profit by sales revenues. A. True B. False

A. True

When an organization and its members perform non-routine activities, it is more challenging for managers to measure outputs or behavior. A. True B. False

A. True

Behaviors are typically easier to measure than outputs because they are more tangible and objective. A. True B. False

B. False

Control is not concerned with keeping employees focused on the important problems confronting the organization but with reacting to events after they have occurred. A. True B. False

B. False

Direct supervision by managers who actively monitor and observe the behavior of their subordinates is an ineffective form of behavior control. A. True B. False

B. False

Evolutionary change is rapid, dramatic, and broadly focused. A. True B. False

B. False

The times-covered ratio, which measures the degree to which managers use debt or equity to finance ongoing operations, is a type of _______. A. Current ratio B. Liquidity ratio C. Leverage ratio D. Activity ratio E. Profit ratio

C. Leverage ratio

Evolutionary Change

Change that is gradual, incremental, and narrowly focused.

Revolutionary Change

Change that is rapid, dramatic, and broadly focused.

Bureaucratic Control

Control of behavior by means of a comprehensive system of rules and standard operating procedures.

Feedforward control

Control that allows managers to anticipate problems before they arise.

Concurrent Control

Control that gives managers immediate feedback on how efficiently inputs are being transformed into outputs so managers can correct problems as they arise.

Feedback Control

Control that gives managers information about customers' reactions to goods and services so corrective action can be taken if necessary.

Which of the following is the first step managers must take to manage change effectively? A. Evaluate the change B. Decide on the change to make C. Implement the change D. Assess the need for change E. Identify obstacles to change

D. Assess the need for change

________ is the process whereby managers monitor and regulate how efficiently and effectively an organization and its members are performing the activities necessary to achieve organizational goals. A. Planning B. Organizing C. Leading D. Controlling E. Coordinating

D. Controlling

Which of the following steps of the control process involves goal setting? A. Measuring actual performance B. Comparing actual performance against chosen standards C. Evaluating the results of comparison. D. Establishing the standards of performance. E. Initiating corrective action.

D. Establishing the standards of performance

Which of the following allows managers at all levels to become personally involved with their subordinates and allows them to mentor subordinates and develop their management skills? A. Clan control B. MBO systems C. Market control D. Output control E. Direct supervision

E. Direct supervision

Why is return on investment (ROI) the most commonly used financial performance measure? A. It measures how far profits can decline before managers cannot meet interest changes. B. It measures how efficiently managers are collecting revenues from customers to pay expenses. C. It shows whether organizations can pay claims of short-term creditors without selling inventory. D. It measures how efficiently managers are turning inventory over. E. It allows managers of one organization to compare performance with that of other organizations.

E. It allows managers of one organization to compare performance with that of other organizations.

Which of the following is the most commonly used financial performance measure when evaluating an organization's performance? A. Gross profit margin B. Debt-to-equity ratio C. Days sales outstanding ratio D. Inventory turnover ratio E. Return on investment

E. Return on investment

Control Systems

Formal target-setting, monitoring, evaluation, and feedback systems that provide managers with information about how well the organization's strategy and structure are working.

Control

Keeping employees motivated, focused on the important problems confronting the organization, and working together to make the changes that will help an organization improve its performance over time.

Profit Ratios

Measure how efficiently managers are using the organization's resources to generate profits.

Liquidity ratios

Measure how well managers have protected organizational resources to be able to meet short-term obligations.

Leverage ratios

Such as the debt-to-assets ratio and the times-covered ratio, measure the degree to which managers use debt or equity.

Clan Control

The control exerted on individuals and groups in an organization by shared values, norms, standards of behavior, and expectations.

Organizational Change

The movement of an organization away from its present state and toward some preferred future state to increase its efficiency and effectiveness.

Benchmarking

The process of comparing one company's performance on specific dimensions with the performance of other high performing organizations.

Organizational Control

When managers choose how to influence, shape, and regulate the activities of organizational divisions, function, and employees to achieve the organization's mission and goals, they establish the second foundation of organizational architecture.

Controlling

is the process whereby managers monitor and regulate how efficiently and effectively an organization and its members are performing the activities necessary to achieve organizational goals.

Activity ratios

shows how well managers are creating value from organizational assets, inventory turnover measures how efficiently managers are turning inventory over so excess inventory is not carried.