Management Test 4, Chapter 14 MNGT, Chapter 14 Foundations of Control, Management Exam 4

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Management Information System (MIS)

used to provide management w/ needed information on regular basis.

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

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

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.

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

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

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

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

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.

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

Compensation can include monetary and non-monetary items. Examples of non-monetary benefits include which of the following?

Flexible work hours

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 ___ 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

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

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

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

___ 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

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

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

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.

3 specific areas the VALUE of the control function is seen

1.Planning 2.Empowering Employees 3.Protecting the workplace

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

Cost of: Decreased Responsiveness

Downtime between a decision and the actions required to implement it are due to compliance w/ controls

Operating Expenses

Fixed= do NOT vary with the level of sales Variable=Do vary with the level of sales(bonuses, wages)

Opportunity recognition

Helps managers identify and isolate the source of positive surprises

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

Proactivity

Monitoring problems in a way that provides their timely prevention --->Types of controls: -Feedforward control -Concurrent Control -Feedback Control

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

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

Muda

The 7 deadly wastes 1.Defects 2.Overproduction(most dangerous waste) 3.Transportation 4.Waiting 5.Inventory 6.Motion 7.Overprocessing

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

reliability

The extent to which a measure is consistent and free from error

Cost of:Damage to culture and/or reputation

The intangible costs associated with control: strictly monitoring employee behavior can lead to undesirable culture consequences

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

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 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

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

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

Assets

what the business owns--items of value(current, fixed, intangible)


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