Discussion 7

Carefully review all of the learning material in chapter 16 before responding to this discussion, you are likely to score less than 50% if you do not use the learning input. View the video extract from the movie Blackhawk Down. The US military has a formal structure with advanced planning capabilities and centralized controls. However, the military of most other countries have strong autocratic controls. Against this backdrop, consider the need for control in achieving organizational objectives for a specific business or government department. Include objectives to create increased value, reduced risks, and reduced costs – thereby achieving optimal outcomes. The cases on pages 412 to 415 may provide ideas for students with limited work experience. Required:1. Provide an initial posting that describes your selected organization (in less than 30 words). Then describe the value and role of control to achieve optimal outcomes in a second posting of 150 to 225 words.2. Use formal writing. Errors will reduce your grade.3. Grading will only consider content relating to management concepts.


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Control Systems & Quality Management
Techniques for Enhancing Organizational
©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
Major Questions You Should Be Able to Answer
16.1 Why is control such an important managerial
16.2 How do successful companies implement
16.3 How can three techniques—a balanced
scorecard, strategy maps, and measurement
management—help me establish standards
and measure performance?
16.4 What are the financial tools I need to know
©McGraw-Hill Education.
Major Questions You Should Be Able to Answer
16.5 How do top companies improve the quality of
their products or services?
16.6 What are the keys to successful control, and
what are the barriers to control success?
16.7 How do managers influence productivity?
©McGraw-Hill Education.
Control: When Managers Monitor Performance
– Defined as monitoring performance, comparing it with
goals, and taking corrective action as needed
Figure 16.1 Controlling for effective performance
What you as a manager do to get things done, with controlling shown in relation to the three other
management functions. (These are not lockstep; all four functions happen concurrently.)
Jump to Appendix 1 for
©McGraw-Hill Education.
Why Is Control Needed?
1. To adapt to change and uncertainty
2. To discover irregularities and errors
3. To reduce costs, increase productivity, or add value
4. To detect opportunities
5. To deal with complexity
6. To decentralize decision making and facilitate
©McGraw-Hill Education.
Steps in the Control Process (1 of 4)
Figure 16.3
Jump to Appendix 2 for
©McGraw-Hill Education.
Steps in the Control Process (2 of 4)
1. Establish standards
– Performance standard: the desired performance level for a
given goal
– Best measured when they can be made quantifiable
2. Measure performance
– Usually obtained from written reports, oral reports, and
personal observations
©McGraw-Hill Education.
Steps in the Control Process (3 of 4)
3. Compare performance to standards
– Management by exception: control principle that says
managers should be informed of a situation only if data
show a significant deviation from standards
©McGraw-Hill Education.
Steps in the Control Process (4 of 4)
4. Take corrective action if necessary
– Make no changes.
– Recognize and reinforce positive performance.
– Take action to correct negative performance.
©McGraw-Hill Education.
A UPS driver fails to perform according to the standards
set for the route and traffic conditions. A supervisor
rides along and gives suggestions for improvement.
This is the ____________ stage of the control process.
A. compare performance to standards
B. establish standards
C. take corrective action
D. measure performance
©McGraw-Hill Education.
Levels of Control
• Strategic control
– Monitoring performance to ensure that strategic plans are
being implemented and taking corrective action as needed
• Tactical control
– Monitoring performance to ensure that tactical plans—
those at the divisional or departmental level—are being
©McGraw-Hill Education.
Levels of Control
Operational control
– Monitoring performance to ensure that operational plans
—day-to-day goals—are being implemented and then
taking corrective action as needed
©McGraw-Hill Education.
Six Areas of Control
Human Resources
©McGraw-Hill Education.
A drug test employed by an organization in its hiring
process is an example of a(n) _______ resource control.
A. physical
B. human
C. financial
D. informational
©McGraw-Hill Education.
Structural Area
• Bureaucratic control
– An approach to organizational control that is characterized
by use of rules, regulations, and formal authority to guide
• Decentralized control
– An approach to organizational control that is characterized
by informal and organic structural arrangements
©McGraw-Hill Education.
The Balanced Scoreboard
Balanced scoreboard
– Gives top managers a fast but comprehensive view of the
organization via four indicators
1. Customer satisfaction
2. Internal processes
3. Innovation and improvement activities
4. Financial measures
©McGraw-Hill Education.
The Balanced Scorecard: Four Perspectives (1 of 2)
Figure 16.5
Jump to Appendix 3 for
©McGraw-Hill Education.
The Balanced Scorecard: Four Perspectives (2 of 2)
• Financial
– Profitability, growth, shareholder values
• Customer
– Priority is taking care of the customer
• Internal business
– Quality, employee skills, and productivity
• Innovation and learning
– Learning and growth of employees
©McGraw-Hill Education.
The Visual Representation of a
Balanced Scorecard
Strategy map
– Visual representation of the four perspectives of the
balanced scorecard that enables managers to
communicate their goals so that everyone in the company
can understand how their jobs are linked to the overall
objectives of the organization
©McGraw-Hill Education.
The Strategy Map
Figure 16.6
Jump to Appendix 4 for
©McGraw-Hill Education.
Jeff’s sales goal was to “improve sales.” Which barrier
to measurement is this?
A. Objectives are fuzzy.
B. Managers put too much trust in informal feedback systems.
C. Employees resist new measurement systems.
D. Companies focus too much on measuring activities.
©McGraw-Hill Education.
Budgets: Formal Financial Projections
• Budget
– Formal financial projection
• Incremental budgeting
– Allocates increased or decreased funds to a department by
using the last budget period as a reference point
– Only incremental changes in the budget request are
©McGraw-Hill Education.
Types of Budgets
Table 16.1
Cash or cashflow budget
Forecasts all sources of cash income and cash expenditures for
daily, weekly, or monthly period
Capital expenditures budget
Anticipates investments in major assets such as land, buildings, and
major equipment
Sales or revenue budget
Projects future sales, often by month, sales area, or product
Expense budget
Projects expenses (costs) for given activity for given period
Financial budget
Projects organization’s source of cash and how it plans to spend it in
the forthcoming period
Operating budget
Projects what an organization will create in goods or services, what
financial resources are needed, and what income is expected
Nonmonetary budget
Deals with units other than dollars, such as hours of labor or office
square footage
©McGraw-Hill Education.
Fixed Versus Variable Budgets
• Fixed budgets
– Allocates resources on the basis of a single estimate of
• Variable budgets
– Allows the allocation of resources to vary in proportion
with various levels of activity
©McGraw-Hill Education.
Financial Statements
• Balanced sheet
– Summarizes an organization’s overall financial worth—
assets and liabilities—at a specific point in time
• Income statement
– Summarizes an organization’s financial results—revenues
and expenses—over specified period of time
©McGraw-Hill Education.
Ratio Analysis
• Liquidity ratios
– Indicate how easily a firm’s assets can be converted to cash
• Debt management ratios
– Degree to which a firm can meet it’s long-term financial
• Return ratios
– How effective management is generating a return or profit
©McGraw-Hill Education.
• Audit – formal verification of an organization’s
financial and operational systems
• External – performed by outside experts
• Internal – performed by organization’s own
professional staff
©McGraw-Hill Education.
Deming Management
1. Quality should be aimed at the needs of the
2. Companies should aim at improving the system, not
blaming workers.
3. Improved quality leads to increased market share,
increased company prospects, and increased
4. Quality can be improved on the basis of hard data,
using the PDCA cycle.
©McGraw-Hill Education.
The PDCA Cycle
Figure 16.7
Jump to Appendix 5 for
©McGraw-Hill Education.
Total Quality Management
Total quality management (TQM)
– A comprehensive approach—led by top management and
supported throughout the organization—dedicated to
continuous quality improvement, training, and customer
©McGraw-Hill Education.
Two Core Principles of TQM
1. People orientation
– Everyone involved in the organization should focus on
delivering value to customers.
2. Improvement orientation
– Everyone should work on continuously improving work
©McGraw-Hill Education.
People Orientation
• Delivering customer value is most important.
• People will focus on quality if they feel empowered.
• TQM requires training, teamwork, and crossfunctional efforts.
©McGraw-Hill Education.
Improvement Orientation
• It’s less expensive to do it right the first time.
• It’s better to do small improvements all the time.
• Accurate standards must be followed to eliminate
small variations.
• There must be strong commitment from top
©McGraw-Hill Education.
Applying TQM to Services
RATER scale
Enables customers to rate the quality of a service along five
1. Reliability
2. Assurance
3. Tangibles
4. Empathy
5. Responsiveness
©McGraw-Hill Education.
Some TQM Techniques
Reduced cycle time
ISO 9000 and 14000 Series
Statistical process control
Six Sigma & Lean Six Sigma
©McGraw-Hill Education.
In Harvey’s job, he takes random samples of production
runs to ascertain quality. His job involves
A. benchmarking.
B. statistical process control.
C. reduced cycle time.
D. feedforward control.
©McGraw-Hill Education.
The Keys to Successful Control Systems
1. They are strategic and results oriented.
2. They are timely, accurate, and objective.
3. They are realistic, positive, and understandable and
encourage self-control.
4. They are flexible.
©McGraw-Hill Education.
Barriers to Control Success
1. Too much control
2. Too little employee participation
3. Overemphasis on means instead of ends
4. Overemphasis on paperwork
5. Overemphasis on one instead of multiple
©McGraw-Hill Education.
Managing for Productivity
– Outputs divided by inputs where:
• Outputs are the goods and services produced.
• Inputs are labor, capital, materials, and energy.
©McGraw-Hill Education.
Managing for Productivity and Results
Figure 16.8
Jump to Appendix 6 for
©McGraw-Hill Education.
The Role of Information Technology
Enterprise resource planning (ERP)
– Software systems, information systems for integrating
virtually all aspects of a business, helping managers stay on
top of the latest developments
©McGraw-Hill Education.
Keys to Your Managerial Success (1 of 2)
• Find your passion and follow it.
• Encourage self-discovery, and be realistic.
• Every situation is different, so be flexible.
• Fine-tune your people skills.
©McGraw-Hill Education.
Keys to Your Managerial Success (2 of 2)
• Learn how to develop leadership skills.
• Treat people as if they matter, because they do.
• Draw employees and peers into your management
• Be flexible, keep your cool, and take yourself lightly.
©McGraw-Hill Education.

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