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Module 6: Controlling

This module provides an understanding of the control process, reviews different approaches to control systems, and highlights the qualities of an effective control system. It also covers various control techniques such as budgeting and nonbudgetary control devices.

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Module 6: Controlling

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  1. Module 6: Controlling

  2. Learning objectives • Understand the control process • Review three approaches to control systems • Be familiar with different control techniques • Review qualities of an effective control system

  3. Managerial Decisions in the Control Process Standard Attained? Do Nothing Yes Compare Performance to Standard No Variance Acceptable? Do Nothing Yes Objectives Measure Performance No Standard Standard Acceptable? Identify Causes Yes No Revise Standard Correct Performance

  4. Three Approaches to Control Systems Market Control (price Competition, Market share) Bureaucratic Control (rules, Regulations, Policies) Clan Control (norms, Values, and Beliefs)

  5. Quality Control This speaks a lot about the quality of Japanese products and their quality standards. They're still laughing about this at IBM. Apparently the computer giant decided to have some parts manufactured in Japan as a trial project. In the specifications, they set out that they will accept three defective parts per 10,000. When the delivery came in there was an accompanying letter. "We, Japanese people, had a hard time understanding North American business practices. But the three defective parts per 10,000 have been separately manufactured and have been included in the consignment. Hope this pleases you."

  6. Information Operations What Managers Measure Finances People

  7. Defining an Acceptable Range of Variation Acceptable Upper Limit Acceptable Range of Variation Standard Acceptable Lower Limit t t+1 t+2 t+3 t+4 t+5

  8. Do Nothing Taking Managerial Action Correct Performance Revise the Standard

  9. Three Types of Control Input Processes Output Feedforward Control Anticipates Problems Concurrent Control Corrects Problems as They Happen Feedback Control Corrects Problems after They Occur

  10. Control techniques • Budget: the formulation of plans for a given future period in numerical terms, examples include: • Revenue and expense budgets • Time, space, material, and product budgets • Capital expenditure budgets • Cash budgets • Variable budgets • Zero-based budgeting

  11. Nonbudgetary control devices • Statistical data • Special reports and analysis • Operational audit • Personal observation

  12. Sample Gantt Chart Oct.15 Dec.3 Activities A. Decide topic B. Decide content C. Assign work D. Finish the 1st draft E. Revise some parts F. Finalize some parts G. Final revision and submission 3 days 3 days 1 30 days 8 days 6 days 4 days Reporting date

  13. A PERT Network for completing the final project for the course 472a Start B E D G A C F Finish

  14. Qualities of an Effective Control System • Accuracy • Timeliness • Economy • Flexibility • Understandability

  15. Qualities of an Effective Control System • Reasonable criteria • Emphasis on exceptions • Strategic placement • Multiple criteria • Corrective action

  16. Contingency Factors in Control Systems Contingency Variable Control Recommendations Small Informal, personal management Organization Size Large Formal, personal management High Many complex criteria Position and Level Few, easy-to-measure criteria Low High Increased number of controls Degree of Decentralization Low Reduced number of controls Open Informal, self-control Organizational Culture Closed Formal, external controls High Elaborate, comprehensive controls Importance of an Activity Low Loose, informal controls

  17. Summary • Control is an essential component of management function. Organizational plans can not be achieved without an effective control system. • Various control systems and techniques can be combined to build an effective control system.

  18. Final project • Deadline: December 3, 2001 • Citation: in text At the end of the project

  19. Final project • No excuse for the late submission • Penalty for the late submission • 0-30 minutes deduct 25 marks • 30 minutes – 1 hours deduct 50 marks • 1 hours – 1 hour 30 minutes deduct 75 marks • 1 hour 30 minutes – 2 hours deduct 100 marks

  20. Final examination • Definition question Define plan and strategy • Explain theory Explain expectancy theory Use an example to explain a theory

  21. Final examination (contd.) • Apply a theory to the health care industry context • Chapters will not be covered History module Managing in Today’s world Quantitative module

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