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UT Arlington MANA 3319 - Managerial Control

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Managerial ControlSlide 2Symptoms of an Out-of-Control CompanyThe Control ProcessBureaucratic Control SystemsSlide 6Characteristics of ControlThe Control CycleSetting Performance StandardsComparing Performance with the StandardApproaches to Bureaucratic ControlSlide 12Slide 13Management AuditsSlide 15External AuditInternal AuditBudgetary ControlsTypes of BudgetsActivity-Based CostingFinancial ControlsThe Profit and Loss StatementSlide 23Financial RatiosSlide 25The Downside of Bureaucratic ControlDesigning Effective Control SystemsBalanced ScorecardDisciplinary ProceduresProgressive DisciplineManagerial Managerial ControlControlChapter 16Chapter 16Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinManagerial ControlManagerial ControlControlAny process that directs the activities of individuals toward the achievement of organizational goals16-2Symptoms of an Out-of-Control CompanySymptoms of an Out-of-Control Company16-3Table 16.1The Control ProcessThe Control Process16-4Figure 16.1Bureaucratic Control SystemsBureaucratic Control SystemsBureaucratic control The use of rules, regulations, and authority to guide performanceMarket controlControl based on the use of pricing mechanisms and economic information to regulate activities within organizations16-5Bureaucratic Control SystemsBureaucratic Control SystemsClan controlControl based on the norms, values, shared goals, and trust among group members.16-6Characteristics of ControlCharacteristics of Control16-7Table 16.2The Control CycleThe Control Cycle1. Setting performance standards.2. Measuring performance.3. Comparing performance against the standards and determining deviations.4. Taking action to correct problems and reinforce successes.16-8Setting Performance StandardsSetting Performance StandardsStandard Expected performance for a given goal: a target that establishes a desired performance level, motivates performance, and serves as a benchmark against which actual performance is assessed.16-9Comparing Performance with the StandardComparing Performance with the StandardPrinciple of exception A managerial principle stating that control is enhanced by concentrating on the exceptions to or significant deviations from the expected result or standard.16-10Approaches to Bureaucratic ControlApproaches to Bureaucratic ControlFeedforward controlThe control process used before operations begin, including policies, procedures, and rules designed to ensure that planned activities are carried out properly.16-11Approaches to Bureaucratic ControlApproaches to Bureaucratic ControlConcurrent controlThe control process used while plans are being carried out, including directing, monitoring, and fine-tuning activities as they are performed.16-12Approaches to Bureaucratic ControlApproaches to Bureaucratic ControlFeedback controlControl that focuses on the use of information about previous results to correct deviations from the acceptable standard.16-13Management AuditsManagement AuditsManagement auditAn evaluation of the effectiveness and efficiency of various systems within an organization16-14Management AuditsManagement AuditsExternal audit An evaluation conducted by one organization, such as a CPA firm, on another.Internal audit A periodic assessment of a company’s own planning, organizing, leading, and controlling processes.16-15External AuditExternal Audit1. Investigates other organizations for possible merger or acquisition2. Determines the soundness of a company that will be used as a major supplier3. Discovers the strengths and weaknesses of a competitor to maintain or better exploit the competitive advantage of the investigating organization16-16Internal AuditInternal Audit1. Assesses what the company has done for itself 2. What it has done for its customers or other recipients of its goods or services.16-17Budgetary ControlsBudgetary ControlsBudgeting The process of investigating what is being done and comparing the results with the corresponding budget data to verify accomplishments or remedy differencesalso called budgetary controlling.16-18Types of BudgetsTypes of BudgetsAccounting auditsProcedures used to verify accounting reports and statements.16-19Activity-Based CostingActivity-Based CostingActivity-based costing (ABC)A method of cost accounting designed to identify streams of activity and then to allocate costs across particular business processes according to the amount of time employees devote to particular activities16-20Financial ControlsFinancial ControlsBalance sheet A report that shows the financial picture of a company at a given time and itemizes assets, liabilities, and stockholders’ equity.16-21The Profit and Loss StatementThe Profit and Loss StatementProfit and loss statementAn itemized financial statement of the income and expenses of a company’s operations16-22Table 16.6Financial ControlsFinancial ControlsAssetsThe values of the various items the corporation owns.LiabilitiesThe amounts a corporation owes to various creditorsStockholders’ equityThe amount accruing to the corporation’s owners.16-23Assets = Liabilities + Stockholders’ equityFinancial RatiosFinancial RatiosCurrent ratioA liquidity ratio that indicates the extent to which short term assets can decline and still be adequate to pay short-term liabilities16-24Financial RatiosFinancial RatiosDebt-equity ratioA leverage ratio that indicates the company’s ability to meet its long-term financial obligationsReturn on investment (ROI)A ratio of profit to capital used, or a rate of return from capital16-25The Downside of Bureaucratic ControlThe Downside of Bureaucratic Control16-26Designing Effective Control SystemsDesigning Effective Control Systems1. Establish valid performance standards.2. Provide adequate information to employees.3. Ensure acceptability to employees.4. Maintain open communication.5. Use multiple approaches.16-27Balanced ScorecardBalanced ScorecardBalanced scorecardControl system combining four sets of performance measures: financial, customer, business process, and learning and growth16-28Disciplinary ProceduresPromptness – within a reasonable period of timeImpartiality – avoid favoritismNon-punitive – purpose is to prevent future problems, not get revengeFairness – degree of discipline related to offenseAdvance warning –


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UT Arlington MANA 3319 - Managerial Control

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