Chapter 16 Control – Flashcards
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1. Begins with the establishment of clear standards of performance. 2. Involves a comparison of performance to those standards 3. Takes correct action, If needed, to repair performance deficiencies. 4. Is a dynamic, cybernetic process. 5. Consists of three basic methods: feedback control, concurrent control, and feed forward control.
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Name the basic control process:
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Yes
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Is preventive measure a form of control?
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1). It must enable goal achievement
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How do managers set standards?
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A regulatory process of establishing standards to achieve organizational goals, comparing actural performance against the standards, and taking corrective action when necessary.
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Control
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a basic of comparison for measuring the extent to which various kinds of organizational performance are satisfactory or unsatisfactory
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Standards
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the process of identifying outstanding practices, processes, and standards in other companies and adapting them to your company
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Benchmarking
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The process of steering or keeping on course (derives from the Greek word kubernetes, meaning steerman)
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Cybernetic
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a mechanism for gathering information about performance deficiencies after they occur. This information is then used to correct or prevent performance deficiencies
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Feedback control
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Individual and organizational
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Study after study has clearly shown that feedback improves both _________ and _________ performance
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It's that feedback always comes after the fact
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If feedback has a downside, what is it?
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a mechanism for gathering information about performance deficiencies as they occur, thereby eliminating or shortening the delay between performance and feedback
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Concurrent control
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a mechanism for monitoring performance inputs rather than outputs to prevent or minimize performance deficiencies before they occur.
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Feedforward control
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the situation in which behavior and work procedures do not conform to standards
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Control loss
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the costs associated with implementing or maintaining control
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Regulation costs
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the extent to which it is possible to implement each step in the control process
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Cybernetic feasibility
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the use of hierarchical authority to influence employee behavior by rewarding or punishing employees by rewarding or punishing employees for compliance or noncompliance with organizational policies, rules, and procedures
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Bureaucratic control
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the use of observable measures of worker behavior or outputs to assess performance and influence behavior
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Objective control
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the regulation of the behaviors and actions that workers perform on the job
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Behavior control
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the regulation of workers' results or outputs through rewards and incentives
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Output control
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the regulation of workers' behavior and decisions through widely shared organizational values of beliefs
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Normative control
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the regulation of workers' behavior and decisions through work group values and beliefs
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Concertive control
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a control system in which managers and workers control their own behavior by setting their own goals, monitoring their own progress, and rewarding themselves for goal achievement
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Self-control (self-management)
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Measurement of organizational performance in four equally important areas: finances, customers, internal operations, and innovation and learning
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Balanced scorecard
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performance improvement in one part of an organization at the expense of decreased performance in another part
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Suboptimization
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a type of analysis that predicts how changes in a business will affect its ability to take in more cash than it pays out
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Cash flow analysis
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Accounting statements that provide a snapshot of a company's financial position at a particular time
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Balance sheets
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accounting statements, also called profit-and-loss statements, that show what has happened to an organization's income, expenses, and net profit over a period of time.
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Income statements (profit and loss statements)
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calculations typically used to track a business's liquidity (cash), efficiency, and profitability over time compared to other businesses in its industry
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Financial ratios
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Quantitative plans through which managers decide how to allocate available money to best accomplish company goals
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Budgets
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the amount by which company profits (revenues, minus expenses, minus taxes) exceed the cost of capital in a given year
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Economic value added (EVA)
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a performance assessment in which companies identify which customers are leaving and measure the rate at which they are leaving
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Customer defections
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Customer perception that the product quality is excellent for the price offered
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Value
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Behavior and Output
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What are the two kinds of objective control:
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Bureaucratic, objective, normative, concertive and self control
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Managers can use five different methods to achieve control in their organization, what are they?
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1. Financial perspective (budgets, cash flows, and economic value added) 2. Customer perspective (customer defections) 3. Internal perspective (total quality management) 4. Innovation & Learning perspective (waste & pollution)
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Ways in which companies are controlling the 4 basic parts of the Balance Score Card's
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1. Group members learn to work with each other, supervise each others work 2. Beliefs and values developed in phase one develops into more objective rules as new members join teams.
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2 phases in the development of concertive control
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A performance assessment in which companies identify with customers are leaving and measure the rate at which they are leaving.
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Customer Defections
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• Begins by setting standards • Measuring performance • And then comparing performance to the standards (compare with standards) • Identify Deviations • Analyze deviations • Develop and Implement Program for Corrective Action
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Cybernetic Control Process
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1) Calculate net operating profit after taxes (NOPAT) 2) Identify how much capital the company has invested (i.e., spent) 3) Determine the cost (i.e., rate) paid for capital (usually between 5 percent and 13 percent) 4) Multiply capital used (Step 2) times cost of capital (Step 3) 5) Subtract the total dollar cost of capital from net profit after taxes.
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Calculating Economic Value Added (EVA)
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