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Organizational control

systematic process through which managers regulate organizational activities to make them consistent with expectations established in plans, targets. and standards of performance

feedforward control

focuses on human, material, and financial resources flowing into the organization - regulation of inputs to ensure that they meet the standards necessary for the transformation process

concurrent control

monitoring ongoing activities to ensure that they are consistent with standards - regulation of ongoing activities that are part of the transformation process to ensure that they conform to organizational standards - the heart of any control system

feedback control (post action or output)

focuses on the organization's outputs - regulation exercised after a product or service has been completed to ensure that the output meets organizational standards

Step 1:

Determine areas to control. are controls needed? are controls feasible?

Step 2

Establish standards of performance - should be linked to an individual or team that is responsible for achieving it


target that establishes a desired performance level, motivates performance, and serves as a benchmark against which actual performance is assessed

Step 3

Measure performance. performance data obtained from three sources. financial - administrative - production

Step 4

Compare performance against standards. evaluate the quality of the information. usefulness - accuracy - objectiveness

management by exception

control is enhanced by concentrating on the significant deviations from the standard

Bureaucratic control

use of rules, policies, hierarchy of authority, reward systems, and other formal devices to influence employee behavior and assess performance

Decentralized control

use of organizational culture, group norms, and a focus on goals rather than rules and procedures, to foster compliance with organizational goals

Total Quality Management

An organization-wide commitment to infusing quality into every

quality circle

group of 6 to 12 volunteer employees who meet regularly to discuss and solve problems affecting the quality of their work


continuous process of measuring products, services, and practices against major competitors or industry leaders

six sigma

quality control approach that emphasizes a relentless pursuit of higher quality and lower costs. 3.4 defects per million opportunities in any process

continuous improvement

implementation of a large number of small, incremental improvements in all areas of the organization on an ongoing basis

Worker testing

intermittent collection and analysis of data on work performance

Worker monitoring

continuous collection and analysis of data on work performance

steps of feedback control

establish standards of performance - measure actual performance - compare performance standards - take corrective action (if inadequate) - do nothing or provide reinforcement

budgetary control

the process of setting targets for an orgs exenditures, monitoring results and comparing them to the budget making changes as needed

responsibility center

an org unit under the supervision of a single person who is responsible for its activity

expense budget

a budget that outlines the anticipated and actual expenses for a responsibility structure

revenues budget

a budget that identifies the forecasted and actual revenues for an org

cash budget

budget that estimates and reports weekly or daily cash floyo ensure that the company has sufficient cash to meet its obligation

capital budget

a bduget that plans and reports investments in major assets to be depreciated over several years

top-down budgeting

a budgeting rocess in which middle and lower level managers set departmental budget targets in accordance with overall company revenues and expenditures specified by top management

bottom-up budgeting

a bugdeting process in which lower-level managers budget their departments resource needs and pass them up to top management for approval

balance sheet

a financial statement that shows the firms financial statement with respect to assets and liabilities at a specific point and time

income statement

a financial statement that summarizes a firms financial performance

liquidity ratio

ratio that determines the orgs ability to meet current debt obligations

activity ratio

a ratio that measures the orgs internal performance with respect to key activities defined by management

inventory turnover

sales/average inventory

current ration


profitability ratio

ratio that describes the firms profits in terms of a source of profits

cycle time

the steps take to complete a company process

iso certification

certification based on a set of international standards for quality management, setting uniform guidelines for processes to ensure that products conform to customer requirements

economic value added (EVA)

a control system that mesures performance in terms of after tx profits minus the cost of capital invested in tangible assets

market value-added (MVA)

control system that measures the stck markets estimate of the value of a company'es past and expected capital investment projects

activity based costing

a control system that identifies the various activities needed to provide a product and allocates costs accordingly

open book management

sharing financial info and results with all employees in an org

balanced scorecard

a comprehensive management control system that balances traditional financial measures with measures of customer service, internal business processes, and the orgs capacity for learning and growth

corporate governance

the system of governing an org so the interest of corporate owners are protected

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