• What are some useful organizational control tools and techniques?... • Control measures actual performance• Control compares results with objectives and standards.. CONTROL Control Pro
Trang 1Chapter 6
Controls and
Control Systems
EXPLORING MANAGEMENT
Trang 2• What are some useful organizational
control tools and techniques?
Trang 3• Control measures actual performance
• Control compares results with objectives and standards
• Control takes corrective action as needed
Trang 4CONTROL
Control as a Management Function
• Controlling is the process of measuring performance and taking action to ensure desired results
Trang 5CONTROL
Control Process
Step 1:
Control starts with
objectives and standards
– Output standards
measure results in terms
of quantity, quality, cost
or time
– Input standards measure the work efforts that go into the performance task
Trang 6measurement
Trang 9How Managers Use Control
• Managers use feedforward, concurrent and feedback controls
• Managers use both internal and external controls
• Management by objectives is a way of integrating planning and controlling
Trang 10HOW MANAGERS USE CONTROL
Types of Controls
• Organizations are open systems that interact with environment with input, throughput and output controls
Trang 11HOW MANAGERS USE CONTROL
Types of Controls
Trang 12HOW MANAGERS USE CONTROL
Internal and External Controls
Trang 13HOW MANAGERS USE CONTROL
Internal and External Controls
External Control
•i nvo lve
s po lice
s, p roce dur
es, bu dg ets havi be ence flu in n to sio rvi upe d s an
or
•i nvo lve
s po lice
s, p roce dur
es, bu dg ets havi be ence flu in n to sio rvi upe d s an
or
Bureaucratic control
Bureaucratic control
•u ses
the or ga niza tio n’s cu ltu
re
to re ltu cu n’s tio or niza avi ga eh or ce b the en flu ses in •u
to or avi eh ce b en flu in
Clan control
Clan control
•i nflu en
ce th
at m arke
t co mpe
titi
on ha
s as such ns sio eci l d na tio iza gan or on
pri
ce, p rod uct m od ifica tio
n a
nd n io ans exp
•i nflu en
ce th
at m arke
t co mpe
titi
on ha
s as such ns sio eci l d na tio iza gan or on
pri
ce, p rod uct m od ifica tio
n a
nd n io ans exp
Market control Market control
Trang 14HOW MANAGERS USE CONTROL
Objectives
Management By Objectives (MBO)
• Superior and subordinate jointly plan objectives
Trang 15HOW MANAGERS USE CONTROL
Objectives
• Types of objectives
– Improvement objectives state goals for
improvement in measurable terms
Trang 16Control Systems and Techniques
• Quality control is a foundation of modern
management
• Gantt charts and CPM/PERT are used in
project management and control
• Inventory controls help save costs
• Breakeven analysis shows where revenues will equal costs
• Financial ratios and balanced scorecards
strengthen organizational controls
Trang 17CONTROL SYSTEMS AND TECHNIQUES
Trang 18CONTROL SYSTEMS AND TECHNIQUES
Project Management
Project Management
• Responsibility for planning and control
of projects
Trang 19CONTROL SYSTEMS AND TECHNIQUES
Trang 20CONTROL SYSTEMS AND TECHNIQUES
Inventory Control
• Inventory controls reduce inventory costs
– Economic order quantity
• Pre-determined amount of inventory is ordered when current inventory reaches a certain level
– Just-in-time scheduling
• Inventory arrives exactly when needed for production or sale
Trang 21CONTROL SYSTEMS AND TECHNIQUES
How to Calculate a Breakeven Point
Breakeven Point = Fixed Costs / (Price - Variable Costs)
Trang 22CONTROL SYSTEMS AND TECHNIQUES
Breakeven Analysis
Trang 23Liquidity—measures ability to meet short-term obligations.
• Current Ratio =Current Assets/Current Liabilities
• Quick Ratio =Current Assets-Inventory/Current Liabilities
Higher is better: You want more assets and fewer liabilities
Leverage—measures use of debt.
• Debt Ratio = Total Debts/Total Assets
Lower is better: You want fewer debts and more assets.
Asset Management—measures asset and inventory efficiency.
• Asset Turnover = Sales/Total Assets
• Inventory Turnover = Sales/Average Inventory
Higher is better: You want more sales and fewer assets or lower inventory.
Profitability
• Net Margin = Net Profit after Taxes/Sales
• Return on Assets (RAO) = Net Profit after Taxes/Total Assets
• Return on Equity (ROE) = Net Income/Owner’s Equity
Higher is better: You want as much profit as possible for sales, assets, & equity.
Major Financial Ratios for Organizational Control
Trang 24CONTROL SYSTEMS AND TECHNIQUES
Balanced Scorecard
• Balanced Scorecards start with the
organizational mission and vision to build goals and performance measures for
– Financial performance
– Customer satisfaction
– Internal process improvement
– Innovation and learning