MGMT 301 Quiz 5

Steps in the Master Budgeting Process (531-534)

*Covers a one year period, broken down by month* Step 1: Develop Revenue and Expenditure Operating Budgets -Requires more planning than math skills (can use Excel to enter data) -Use the prior years budget as a guide that needs updated -Operating Budget=The revenue and expense budgets. -Revenue budget is a forecast of total income for the year from all departments -Expense budget is a forecast of total operating spending for the year (payroll, equipment) -Need revenues to be more than expenses to make a profit! Step 2: Capital Expenditures Budget=A projection of all planned major asset investments -You have to spend money to make money -Assets are what enable a firm to make a profit (need to buy and invest in assets for a business to be profitable) Ex: Land, buildings, equipment Step 3: Financial Budgeted Cash Flow, Income Statement, and Balance Sheet -Controller forecasts what each statement will be at year end -Needs the operating and capital expenditure budgets to create a financial budget (may need to revise the two if expectations are not met) -Pro Forma Statement=Budget that projects future results -Financial Statement=Income statement, balance sheet, and statement of cash flows that evaluate a firms' performance (are they poor or rich?) -Income Statement shows revenues and expenses (profits or losses) for the stated time period. Covers one year, but can develop monthly and quarterly IS for concurrent control -Balance Sheet shows assets, liabilities, and owner's equity (must equal/balance) -Statement of cash flows shows cash receipts and payments from that period (operating, investing, and financial activities). Covers one year and quarters

Operations and Products (pg. 561)

*Operations manager is called the COO (Chief Operations Officer) and works close with CEO Operations: The function concerned with transforming resource inputs into product outputs -Primarily focus on performance -Must effectively use resources to deliver products Product: A good or service, or a combination of the two

Constant Controls (pg. 528)

-Are in continuous use 1. Self-Control: Will employees do their work without supervision? Must be able to self-regulate themselves and do work on their own. 2. Clan/Group Control: A form of HR where the organization relies on its culture and norms to ensure specific behaviors through peer pressure. -Companies using teams rely on clan control when they see wrongdoing and enforce group norms 3. Standing Plans: Policies, procedures, and rules are made to control employee behavior in predictable situations. Every company needs written rules on how to conduct business

Handling Complaints (pg. 544)

-Cannot avoid complaints -Complaint=An expression of dissatisfaction with a situation often paired with a request for change. -Need to use damage control (don't dismiss it) -Create an open-door policy for employees to confront managers about complaints -Customer satisfaction is key, so handling their complaints correctly is crucial Steps for Addressing Employee Complaints: 1.) Listen to complaint and paraphrase it 2.) Ask complainer to recommend a solution 3.) Schedule time to get all the facts and make a decision 4.) Develop a plan for addressing the complaint 5.) Implement the plan and follow up Steps for Addressing Customer Complaints: 1.) Admit the mistake and apologize 2.) Ask for and agree on a solution 3.) Implement the solution quickly 4.) Prevent future complaints

Counseling (pg. 540)

-Deal with problem employees who are not performing to standards -Problem employees do low-quality work and have negative attitudes -Manager must confront employee about their problems to resolve them and get better work done Management Counseling: Process of giving employees feedback so they realize a problem is affecting their job performance and referring employees with problems to the employee assistance program. -Help employees realize how their personal problems affect their work (do not help them solve their life issues, but help them get on track with their work) EAP (Employee Assistance Program): A benefit program staffed by people who help employees get professional assistance in solving their problems. -Are an investment because they help employees perform better in their work

How Productivity Affects Wages and Standard of Living (pg. 582-583)

-Employee must work more to get paid more or else the company will lose money -Cannot raise the minimum wage without increasing productivity due to inflation -Prices we pay for products will be lower if productivity is increased

Functional Area/Department Control Systems (pg. 522-523)

-Employees use the systems process within each department -Can have one person work on a part and send it down the line to be the next person's input -Have multiple departments working on inputs and sending their outputs to other departments and circulate feedback among themselves

Personal Finance (pg. 535)

-Manage credit wisely and save for retirement -Use credit cards to build credit to get better interest rates (pay off in full, on time) -Put the max amount into your 401(k) and an IRA for your own savings

Resistance to Control (pg. 527)

-Overcontrol, inappropriate focus, rewards for inefficiency, too much accountability -Employees need to agree on a standard of work for things to be equal -When things are fair, people are less resistant

The Control Systems Process (pg. 524-526)

-Should be followed on an organizational level within each functional area -Has 4 Steps... Step 1: Set Objectives and Standards (preliminary) -Starting point for planning and controlling -Part of the input process that leads to planning (they are the ends and the plans are the means, and objective and standards are preliminary controls) -Standards=Measures of performance levels in the areas of quantity, quality, time, cost, and behavior (want high standards) 1. Quantity: Level of contribution expected from an employee. Number of units they should produce based on their pay/job position 2. Quality: How well a job should be done and how many errors are acceptable 3. Time: When a job should be completed 4. Cost: How much it should cost to do a job 5. Behavior: Things an employee should and should not do on the job (code of ethics) Step 2: Measure Performance (preliminary) -Necessary to know if objectives are being met -Critical Success Factors=Limited number of areas that satisfactory results will ensure successful performance, achieving the objective/standard (priorities) Ex: Maintaining right product mix in each grocery store, having products advertised, priced correctly, and on the shelves Step 3: Compare Performance Standards: -Compare the actual results to the objective/standard to know if you are on schedule to achieve your objective -Helps you keep score and conduct a performance evaluation Step 4: Correct or Reinforce -If you are not on track, fix the issue and take corrective action (use positive reinforcement for employees to act fast) -Analyze why standard was not met, develop preliminary control, and give feedback to take corrective action -Correct (concurrent), future correction (rework to develop preliminary and damage control may be needed), reinforce (correction not needed; standard was met)

Productivity Creates Jobs (pg. 583)

-Technology is a job creator -More productivity creates more jobs (jobs are created to make the technology and program and install it rather than having jobs in the actual store) -Need high level skills with new technology

Organizational Systems Control (pg. 521- 522)

-The control must fit the situation 4 Different Types of Control: 1.) Preliminary Control (Inputs): Action designed to anticipate and prevent possible problems. Instead of trying to solve a problem, prevent it from happening in the first place -Planning and organizing are key -Also called "Feedforward Control" Ex: Preventative maintenance by routinely tuning up equipment to prevent them from breaking. 2.) Concurrent Control (Transformation Process): Action taken to ensure that standards are met as inputs are transformed into outputs. -Reject faulty inputs rather than rejecting the final product (saves money) Ex: Employees spend time checking quality of inputs as they are being transformed. 3.) Rework Control (Outputs): Action taken to fix an output. -Necessary when preliminary and concurrent controls have failed -Not always possible or cost effective (outputs have to be accepted as is/faulty, discarded, or sold for salvage) Ex: Inspecting an output before it is sold to inspect for faulty products. 4.) Damage Control (Customer/Stakeholder Satisfaction): Action taken to minimize negative impacts on customers/stakeholders due to faulty outputs -Faulty outputs can reach the customer and they expect damage control like a warranty (must go back and fix the product or send them a new one) Ex: Facebook using damage control to improve controls in 3 other parts of its control process 5.) Feedback (Continuous Improvement): Continually increases customer satisfaction by getting their feedback and improving products Ex: Surveys, evaluation cards, reviews *Focus on preliminary and concurrent controls the most to save money

Periodic Controls (pg. 528)

-Used on a regular, fixed basis like once per hour, day, week, quarter, or year. 1. Regular Meetings and Reports: Can be oral or written reports and meetings are common in all companies and can be scheduled daily, weekly, or monthly. 2. Budgets: Most widely used control tool. Is reworked for the next year and can require damage control if overspending or changes occur 3. Audits: Two types (accounting and management). Accounting audit maintains the company's records and assets. Management Audit=Analysis of the company's planning, organizing, leading, and controlling functions to look for improvements -Focuses on the past, present, and future

Occasional Controls (pg. 529)

-Used on a sporadic basis 1. Observation: Managers talk to and observe employees as they work in person or through video 2. The Exception Principle: Control is left up to employees unless problems occur where they need a manager for help (corrective action) 3. Special Reports: When unexpected problems are identified, employees report it to management verbally or in writing and manager may request a special report to be compiled. 4. Project Controls: With nonrecurring and unique projects, the manager needs to develop a control system to ensure project is done on time.

Disciplining (pg. 541)

-Used when an employee is unwilling to change or behaving inappropriately -Fire nonperforming employees for not doing any work -Deviant behavior (rudeness, stealing, violence, vandalism, absence from work) violates norms and can cost the company money -Discipline=Corrective action to get employees to meet standards and standing plans. -> Objectives are to a) change behavior b) inform employee corrective action will be taken c) maintain authority when challenged by using coercive power Progressive Discipline (4 steps): 1. Oral warning 2. Written warning 3. Suspension 4. Dismissal (fired)

The Performance Success Cycle (pg. 527)

1. Think (The manager has clear expectations) 2. Talk (Manager discusses expectations with employee) 3. Coach (Manager checks in periodically to reinforce or redirect) 4. Assess (Manager conducts formal evaluations)

Planning Schedules and Project Management (pg. 572-574)

1.) Scheduling: Process of listing activities that must be performed to accomplish an objective (listed in sequence with the time needed to complete it) -Helps to plan -Routing=The path and sequence of the transformation of a product into an output (UPS uses routing to save miles and have shorter routes) -Priority Scheduling=The continuing evaluation and reordering of the sequence in which products will be produced. Use three different methods... 1. First come, first served (jobs are scheduled in the order in which they are received) 2. Earliest due date (job with earliest promised due date is scheduled first) 3. Shortest operating time (jobs that take the least amount of time are scheduled first) 2.) Planning Sheet: States an objective and lists the sequence of activities required to meet the objective, when each activity will begin/end, and who will complete each activity. -Common with simple, singular tasks to be done 3.) Gantt Chart: Uses bars to graphically illustrate a schedule and progress toward the objective over a period. -Used when independent sequential steps are needed to accomplish an objective -Can show multiple projects at once and some projects cannot start until another is complete 4.) Performance Evaluation and Review Technique (PERT): A network scheduling technique that illustrates the dependence of activities. -Multiple activities are independent when they can be performed simultaneously and are dependent when one must be completed before the next activity can begin -PERT (critical path) is useful for activities that are independent and dependent -Made for single-use program plans for a complex project -Uses the circles with critical paths (first lesson in SCM after the Gantt Charts) -Critical Path=The most time-consuming series of activities in a PERT network (longest path). Determines the length of time it takes to complete a project

Budget (pg. 530)

A planned quantitative allocation of resources for specific activities -Forecasts financial performance -Does not require money (all resources can be allocated)

Materials Requirement Planning (MRP) -pg. 576-577

A system that integrates operations and inventory control with complex ordering and scheduling. -Develop a process for ordering raw material and components at the right time and quantity so they arrive shortly before their scheduled transformation into outputs -JIT is part of inventory control and part of MRP -Used by firms with different delivery systems and lead times Enterprise Resource Planning (ERP): Collects, processes, and provides information about a firm's entire enterprise (anyone with access can check a company's inventory) -Uses JIT Economic Order Quantity (EOQ): The optimal quantity of a product to order determined on the basis of a mathematical model. -The more you order, the higher the ordering cost and using EOQ you can minimize holding and ordering costs

Management by Walking Around (MBWA) -pg. 539

A type of supervision in which the three major activities are listening, teaching, and facilitating. Ex: Walmart manager visiting stores to get feedback from customers and employees on how to improve the store, Michael Scott walking around the office to be accessible to employees and make sure they are working (before he calls a conference room meeting)

The Balanced Scorecard (BSC) and Dashboards (pg. 585-586)

Balanced Scorecard (BSC): Measures financial, customer service, and internal business performance, as well as learning and growth performance. -Results relate to one another (systems effect) -Is both a planning and control method Ex: Have to make a profit (financial), but without customers (customer service), you don't have a business, and without employee development (learning and growth) and continuously improving operations (internal) you will not be successful. 1. Financial Performance (How profitable are you and how do shareholders view your performance?) 2. Customer Service (Do we meet customer value and how do customers view our performance?) 3. Internal Business Performance (How effective are our operations and processes and can we increase productivity?) 4. Learning and Growth Performance (Are we continually developing employees and is the organizational culture working?) Dashboards: A visual progress report that measures key performance indicators of objective or processes and can be used to increase productivity -Shown on a webpage linked to a database -Can show customer satisfaction

Bonds vs. Stocks (pg. 535)

Bonds: Must pay back the bond holder plus the rate of interest specified. No ownership in the company has been given, so bond holders get their money back plus interest (low-risk) Stocks: Company never has to pay back the stockholder because they had ownership in the company. Earn money when the company does well and pays dividends -Company only makes money when the announce an IPO

Measuring and Increasing Productivity (pg. 583-585)

Calculating Productivity: -Productivity=A performance measure relating outputs to inputs. Formula: Outputs / Inputs = Productivity -Inputs could be labor hours, machine hours, number of workers, cost of labor Calculating Productivity Percent Changes: Formula -> Current productivity rate = Base standard productivity rate - Change Productivity Versus Production: -Can increase production but decrease productivity (if you measure only output production, you can think you are doing a better job than you actually are) -Compare productivity rates to other companies Increasing Productivity: -Work smarter, not harder (do more with less) -3 ways to increase productivity... 1. Increase the value of outputs but maintain value of inputs 2. Maintain the value of the outputs but decrease the value of the inputs 3. Increase the value of outputs but decrease value of the inputs

Clarissa is a consultant, and she spends four out of five days a week traveling, on her own, for work. What is the primary frequency and method of control?

Constant; self-control

Byers' Choice Ltd., is a store that specializes in handcrafted Christmas carolers. The manager wants to see how orders for each collection of carolers are progressing. What is the most appropriate scheduling tool to use in this situation?

Gantt Chart

The conference planner wants a tool to schedule conference sessions and meeting rooms. What is the most appropriate scheduling tool to use in this situation?

Gantt chart

The Systems Process With Types of Controls (pg. 521)

Inputs -> Transformation Process -> Outputs -> Customer/Stakeholder Satisfaction are all part of a feedback loop where transformation process, outputs, and customer satisfaction give feedback and inputs receive feedback

Inventory Control (pg. 574-576)

Inventory: The stock of materials held for future use. -Resource needed to transform inputs into outputs Inventory Control: Process of managing raw materials, work in process, finished goods, and in-transit goods. 1. Raw Materials=Input materials that have been received but not yet transformed in any way (eggs at a restaurant) 2. Work in Process=Material that has had some transformation but is not yet an output (egg being cooked) 3. Finished Goods=Transformed outputs that have not yet been delivered to the customer (cooked egg sitting on a plate in the kitchen) 4. In-Transit (Pipeline) Goods=Goods that are finished and being delivered to the customer (eggs being carried to the table) Retail and Services Industry: -Retail includes purchasing=Finished goods for resale as is. -Deal with only finished-goods inventory Just-in-Time (JIT) Inventory and Lean Manufacturing: -Just in Time Inventory=Necessary parts and raw materials are delivered shortly before they are needed -Lean Manufacturing=Focuses on eliminating waste in systems without sacrificing productivity

Manufacturing and Service Operations (pg. 562-563)

Manufacturing: Transforms inputs into tangible (physical) output products -Is costly and used mainly by large businesses -Inshoring=Manufacturing comeback in U.S. Services: Use inputs to produce intangible (non-physical) output services -The U.S. is a service-oriented economy (64% of GDP) -Transformation process is more unclear

Nick is building a Shelby Cobra in his garage. He is building the frame, engine, transmission, and the list goes on and on. What is the most appropriate scheduling tool to use in this situation?

PERT network

The athletic director wants a tool for building a new sports complex. What is the most appropriate scheduling tool to use in this situation?

PERT network

The nonprofit organization gives donors a small thank you gift for their financial contributions. The office manager for the organization reviews the gift inventory on a monthly basis to determine if and when they need to order more gifts. What is the primary frequency and method of control?

Periodic; audits

The manager wants a tool to develop a new procedure for reporting vacation time. What is the most appropriate scheduling tool to use in this situation?

Planning sheet

The Coaching Model (pg. 538-539)

Step 1: Describe current performance (describe current behavior that needs to be changed and improve it) Step 2: Describe desired performance (tell employee exactly what the desired performance is in detail and how they benefit) Step 3: Get a commitment to the change (get a verbal agreement from the employee if they do not understand the task or are reluctant to do it. Ensure they have the motivation to do the task) Step 4: Follow up (make sure the employee is performing as desired and give feedback) Ex: All employees know each car needs a mat, but Keith did not put a mat in the car, so the employee who noticed no mat must address him.

The Discipline Model (pg. 542-543)

Step 1: Refer to past feedback (remind the employee of previous discipline or actions that were already taken in the past) Step 2: Ask why the undesired behavior was used (give them a chance to give you all the facts before you discipline them and ask why behavior did not change) Step 3: Give the discipline (Unless there is a good reason not to, give the discipline like a warning) Step 4: Get a commitment to change and develop a plan (get an agreement from the employee that they will change behavior. If they will not agree, give them a warning or develop a new plan) Step 5: Summarize and state the follow up (give them the actions they are to take and document the discipline given. Can also end in firing)

Supply Chain Management (SCM) -pg. 577-578

The process of coordinating all the activities involved in producing a product and delivering it to the customer. -Rely on good customer and supplier relationships -Use forecasting, planning, managing, scheduling, and controlling Value Chain Management: Takes an external approach to create value for customers (what makes the product useful for customers?) -Customer determines value of product by buying it (if they don't buy it, it has no value) Ex: Combining vegetables to sell a salad rather than individual vegetables Supply Chain Management Services: -Deliveries are becoming valuable making it important for companies to have delivery/online ordering services Ex: FedEx delivering for multiple companies (provide a service) Strategic Cloud Supply Chains: -Cloud-based third-parties logistic suppliers (3PLS) puts customers, supplier, and distributors into one platform Radio-Frequency Identification (RFID) Technology: An automatic identification method that stores data in RFID tags. -Stick tags on things so you can track it (inventory tracking or shipping)

Quality Control (pg. 578-582)

The process of ensuring that all types of inventory meet standards. -Overlaps with inventory control -Need your products to have good quality, so you must check them throughout the process to ensure top quality W. Edwards Deming: -Went to Japan to teach quality and was known for giving Japan economic world power. Won the "Deming Prize" -Stated improving quality would automatically improve productivity and customer value -Quality is not due to employees, but the poor systems The 80-20 Rule: 20% of the reasons for out of control performance cause 80% of quality problems (Pareto Principle). -When performance is out of control, look at the usual/vital few (20%) reasons, and 80% of the time they will have a standing plan solution. Troubleshoot! Quality Assurance: Requires "building in" quality and you cannot "inspect it in." -Quality should be a preliminary or concurrent control (not damage or rework) -Do it right the first time and have zero defects The High Cost of Poor Quality and Errors: -Errors are very expensive, so businesses need to prevent quality problems. -Saving money by skipping quality repairs is not worth it (will lose more in the long-run) -Can kill people if quality is not ensured -Prevent it in the first place!!! You Get What You Reward: -If you want people to do quality jobs, you must develop a system that works and rewards employees -If employees are rewarded, they will do a better job Customer Quality Service Control: 1. Put people before things 2. Always be nice (no matter how busy you are) 3. Take your time with people 4. Be polite (say please, thank you, and you're welcome) 5. Don't discriminate with your service (treat everyone well) Total Quality Management (TQM) and Kaizen: -4 Major TQM principles are... 1. Focus on delivering customer value 2. Continually improve systems and processes 3. Focus on managing processes rather than people 4. Use teams to continually improve -Improve all functions and employees in the company -It is everyone's job to improve quality!!! The International Organization for Standardization (ISO): Certifies firms that meet set quality standards. -Companies that meet standards receive a certification (ISO 9000) American Society for Quality (ASQ): The global voice for quality; a community of people passionate about quality that use their ideas to make the world better. -Certifies individuals as quality professionals (like ISO) Six Sigma: Used to eliminate defects/errors. -A concurrent control with the goal of having 99.99966% of deviations corrected before they become defects in the final product -3.4 defects per million operations are allowed -Can reduce costs, rejects, lead times, and capital spending Statistical Quality Control: A management science technique that uses a variety of statistical tests based on probability to improve the quality of decision making. -Statistical Process Control (SPC)=Aids in determining if quality is within an acceptable standard range.

Coaching (pg. 536-538)

The process of giving motivational feedback to maintain and improve performance. -Getting employees to respond to self-improvement -Use positive feedback on employees to let them know you are in their best interest and trying to help improve their performance -Use performance formula to help coach an underperforming employee -Use intensity, integrity, and initmacy

Control Frequency (pg. 527)

The rate of repetition (constant), periodic, or occasional (of measures taken to control performance). -The greater an employee's capability, the less you need to control!