Management Chapter 14: Managerial Control Flashcards

Control

• Refers to processes guiding individuals towards achieving organizational goals.

Signs of Lack of Control

• Lax Top Management: Senior managers undervalue the necessity of controls or set poor examples.
• Absence of Policies: Expectations are not documented, leading to ambiguity.
• Lack of Agreed Standards: Members are unclear about organizational objectives, resulting in ineffective efforts.
• "Shoot the Messenger" Management: Employees fear career repercussions for reporting unfavorable information.
• Lack of Periodic Review: Insufficient performance assessments prevent timely adjustments.
• Bad Information Systems: Poor data management leads to delays and inaccessibility of critical information.
• Lack of Ethics in Culture: Integrity is not prioritized among organization members.

The Control Process

• Consists of setting performance standards, measuring performance, comparing results to standards, and taking corrective actions.

Managerial Control Types

• Bureaucratic Control: Utilizes rules and authority for performance guidance.
• Market Control: Employs pricing and economic metrics for regulating organizational activities.
• Clan Control: Based on shared values and trust among group members.

Steps in Control Systems

• Establish performance standards.
• Measure actual performance.
• Compare performance to standards and identify variances.
• Take corrective measures and recognize achievements.

Performance Standards

• Standards serve as benchmarks for assessing performance in terms of quality, quantity, cost, and time.

Principle of Exception

• Focus on significant deviations from expected results enhances managerial control.

Types of Control

• Feed-forward Control: Implemented prior to operations to ensure proper execution of plans.
• Concurrent Control: Monitors ongoing activities, allowing real-time adjustments.
• Feedback Control: Analyzes past results to correct future deviations from standards.

Six Sigma

• A process achieving less than 3.4 defects per million opportunities, indicating high accuracy and efficiency.
• Results in lower production costs and improved customer satisfaction.

Audits

• Management Audit: Evaluates the effectiveness and efficiency of organizational systems.
• External Audit: Investigates potential mergers, assesses suppliers, and evaluates competitors.
• Internal Audit: Reviews organizational performance regarding its services and customer satisfaction.

Budgeting

• A process for comparing actual results against budgeted data to assess and rectify discrepancies.

Financial Assessments

• Balance Sheet: Snapshot of a company's assets, liabilities, and equity at a specific time.
• Assets: Corporate-owned items; essential for financial health.
• Liabilities: Outstanding obligations to creditors.
• Stockholder Equity: Residual value accruing to the company's owners.

Profit & Loss Statement

• Comprehensive report detailing income and expenses from company operations.

Financial Ratios

• Current Ratio: Indicates short-term asset sufficiency against liabilities.
• Debt-Equity Ratio: Assesses leverage and ability to meet short-term obligations.
• Return on Investment (ROI): Ratio that measures profit relative to capital used.

Management Myopia

• Focused on short-term profits, often neglecting long-term strategic goals.

Balanced Scorecard

• Integrated performance measurement system encompassing financial, customer, business process, and learning and growth metrics.

Test your knowledge on key concepts from Chapter 14 of Management, focusing on 'Managerial Control'. This quiz features flashcards that define important terms and identify signs of lack of control within organizations. Perfect for students looking to reinforce their understanding of managerial practices.