Chapter 9 - Controlling Flashcards Preview

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Flashcards in Chapter 9 - Controlling Deck (17):

List the 6 Reasons why Controlling is Important

  1. Adapt to Change & Uncertainty
  2. Discover Irregularities & Errors
  3. Reduce Costs, Increase Productivity
  4. Detect Opportunities
  5. Deal with Complexity
  6. Decentralise Decision-Making & Facilitate Teamwork


How does Controlling let an organisation 'Adapt to Change & Uncertainty'?

  • Help managers to anticipate, monitor and react to changes
  • Examples include Changes in Taste of Customers, Changes in Government Regulations


How does Controlling let an organisation 'Discover Irregularities & Errors'?

  • Helps managers to identify areas where they need to investigate to find out the causes of irregularities and errors


How does Controlling let an organisation 'Reduce Costs & Increase Productivity'?

  • Help managers to identify areas where they can be more attractive to customers
  • Examples include lower labour cost and higher output


How does Controlling let an organisation 'Detect Opportunities'?

  • Control systems can alert managers to opportunities that may otherwise go unnoticed
  • Examples include what products are in demand and new markets overseas


How does Controlling let an organisation 'Deal with Complexity'?

  • Help managers to coordinate better as their organisation becomes larger and more complex
  • Organisations get larger when they merge and there is a need to track what every department is doing, create many product lines and understand different policies, customers, employees etc.


How does Controlling let an organisation 'Decentralise Decision-Making & Facilitate Teamwork'?

  • Allow top managers to decentralise decision making to lower levels within the organisation
  • Encourage employees to work together in team


What are the 4 Steps of the Control Process?

  • Establish Standards
  • Measure Performance
  • Compare Performance to Standards
  • Take Corrective Actions, if necessary
    • If no, continue work progress and recognise success
    • If yes, take corrective action perhaps revise standards


Describe the Flow of the Control Process

Establish Standards

  • "What is the outcome we want?"
  • Best measured when they can be quantifiable
  • Performance standard is the desired performance level for a given goal

Measure Performance

  • "What is the actual outcome we got?"
  • Obtained from written reports, oral reports and personal observations

Compare Performance to Standards

  • "How do the desired amd actual outcomes differ?"
  • Management by exception: managers should be in informed of a situation only if data shows significant deviation from standard

Take Corrective Actions

  • "What changes to make to get the desired outcome?"
  • Recognise and reinforce positive performance
  • Take action to correct negative performances


What are the 3 Types of Control Methods? Define them

Feedback Control

  • Gathering of information about performance deficiencies after they occur
  • Used to correct performance deficiencies and/or prevent it from recurring

Concurrent Control

  • Gathering information about performance deficiencies as they occur
  • Eliminates/shorten the delay between performance and feedback

Feedforward Control

  • Prevent/minimise performance deficiencies before they occur
  • Monitoring performance inputs rather than outputs


What are the 3 Levels of Control? Define them

Strategic Control

  • Monitor performance to ensure that strategic plans are implement take corrective action as needed
  • Performed by Top Managers
  • Report through formal reports quarterly/annually

Tactical Control

  • Monitor performance to ensure that tactical plans are implemented
  • Performed by Middle Managers
  • Reports done weekly/monthly

Operational Control

  • Monitor performance to ensure that operational plans are implemented
  • Performed by First-Level Managers
  • Reports done weekly/daily


What are the 6 Areas of Control? What does each area consist of?

Physical Area

  • Buildings, equipments, products
  • Keeping track of stock in the warehouse

Human Resources Area

  • Skills development
  • Performance evaluation
  • Measuring productivity
  • Employee satisfaction survey
  • Staff turnover

Informational Area

  • Production schedules
  • Sales forecasts
  • Analyses of competition

Financial Area

  • Are suppliers being paid?
  • Is money collected promptly from customers?
  • Is allocated budget properly used?

Structural Area

  • Centralised/decentralised control
  • Formal/informal hierachy

Cultural Area

  • Values and beliefs of an organisation


What are the 4 Characteristics of Successful Control Systems?

  1. Strategic & Results-Oriented
  2. Timely, Accurate, & Objective
  3. Realistic, Positive, Understandable & Encourage Self Control
  4. Flexible


Define the Characteristic 'Strategic & Results-Oriented'

  • Support of strategic plans and showing of significant results


Define the Characteristic 'Timely, Accurate & Objective'

  • Timely: Information should be delivered at an appropriate and specific time
  • Accurate: Errors such as inaccurate figures must be avoided at all costs
  • Objective: Information must not be biased so that everyone involved can enhance their performance


Define the Characteristic 'Realistic, Positive, Understandable & Encourage Self-Control'

  • Be Realistic: Incorporate realistic expectations
  • Be Positive: Emphasize on improvement
  • Be Understandable: Kept as simple as possible and data is presented in understandable terms


Define the Characteristic 'Flexible'

  • Leave room for individual judgement so that they can be modified to meet new requirements