Chapter Seventeen Foundations of Controlling
Chapter Seventeen Foundations of Controlling
Learning Objectives Define control Describe the three approaches to control Explain why control is important Describe the control process Distinguish between the three types of control Describe the qualities of an efective control system Explain how controls can become dysfunctional Identify three current ethical issues in control
Learning Objectives Define control Describe the three approaches to control Explain why control is important Describe the control process Distinguish between the three types of control Describe the qualities of an effective control system Explain how controls can become dysfunctional Identify three current ethical issues in control
Characteristics of three Approaches to Control Systems Type of Control Characteristics Market Uses external market mechanisms, such as price com petition and relative market share, to establish stan dards used in system. Typically used by organizations whose products of services are clearly specified and distinct and how face considerable marketplace com petition Bureaucratic Emphasizes organizational authority. Relies on admin istrative and hierarchical mechanisms such as rules regulations, procedures, policies, standardization or activities, well-defined job descriptions, and budgets, to ensure that em ployees exhibit appropriate behaviors and meet performance standards Clan Regulates em ployee behavior by the shared values, norms, traditions, rituals, beliefs, and other aspects of the organization s culture. Often used by organizations where teams are common and where technology is changing rapidly
Characteristics of Three Approaches to Control Systems Type of Control Characteristics Market Uses external market mechanisms, such as price competition and relative market share, to establish standards used in system. Typically used by organizations whose products of services are clearly specified and distinct and how face considerable marketplace competition. Bureaucratic Emphasizes organizational authority. Relies on administrative and hierarchical mechanisms, such as rules, regulations, procedures, policies, standardization of activities, well-defined job descriptions, and budgets, to ensure that employees exhibit appropriate behaviors and meet performance standards. Clan Regulates employee behavior by the shared values, norms, traditions, rituals, beliefs, and other aspects of the organization’s culture. Often used by organizations where teams are common and where technology is changing rapidly. Figure 18-1
The Planning-Controlling Link Planning Goals Objectives Strategies Plans Controlling OrganIzing Standards Structure Measurements Human Comparisons resources Action management Leading Motivation Leadership Communication Individual and group behavior Figure 18-2
The Planning-Controlling Link Goals Objectives Strategies Plans Planning Structure Human resources management Organizing Motivation Leadership Communication Individual and group behavior Leading Standards Measurements Comparisons Action Controlling Figure 18-2
Defining the Acceptable Range of variation Acceptable o upper limit Acceptable Standard range of variation 5 Acceptable● E lower limit t2t+3t+4t+5 Fiqure 18-3
Defining the Acceptable Range of Variation Standard Acceptable upper limit Acceptable lower limit Measurement of Performance t t+1 t+2 t+3 t+4 t+5 Acceptable range of variation Figure 18-3
Sales Performance Figures for July, Eastern States Distributors HUNDREDS OF CASES BRAND STANDARD ACTUAL OVER (UNDER) Heineken 1,075 913 (162) Molson 630 634 Becks 800 912 112 Moosehead 620 622 2 Labatts 540 672 132 Corona 160 140 (20) Amset Light 225 220 (5) Dos Equis 80 65 (15) Tecate 170 286 16 Total cases 4,300 4.464 164 Table 18-1
Sales Performance Figures for July, Eastern States Distributors BRAND Heineken Molson Beck’s Moosehead Labatt’s Corona Amset Light Dos Equis Tecate Total Cases STANDARD ACTUAL OVER (UNDER) (HUNDREDS OF CASES) 1,075 630 800 620 540 160 225 80 170 4,300 913 634 912 622 672 140 220 65 286 4,464 (162) 4 112 2 132 (20) (5) (15) 116 164 Table 18-1
The control process s standard es Compare being Do nothing actual attained? performance No with standard variance es acceptable? Do nothing Objectives Measure actual No+ Standard performance s es standard Identify acceptable? cause of variation N Revise Correct standard performance Figure 18-4
The Control Process Measure actual performance Compare actual performance with standard Do nothing Do nothing Identify cause of variation Correct performance Objectives Standard Is standard being attained? Is variance acceptable? Is standard acceptable? Revise standard No No No Yes Yes Yes Figure 18-4
Types of Control Input Processes Output Feedforward Concurrent Feedback control control control Corrects Corrects Anticipates problems problems as problems after they happen they occur Figure 18-5
Types of Control Anticipates problems Corrects problems as they happen Corrects problems after they occur Feedforward control Concurrent control Feedback control Input Processes Output Figure 18-5
Qualities of an Effective Control System Corrective Accuracy action Multiple criteria Timeliness Effective Em phasis on Control Econom exceptions System Flexibility Strateqic placement Understandability Reasonable criteria Figure 18-6
Qualities of an Effective Control System Effective Control System Corrective action Accuracy Timeliness Economy Understandability Strategic placement Emphasis on exceptions Figure 18-6 Flexibility Multiple criteria Reasonable criteria
