Foundations of Control

1. Foundations of Control Chapter 13

2. Learning Outcomes • Define control • Describe three approaches to control • Explain why control is important • Define the control process • Analyze the three types of control Chapter 13

3. Learning Outcomes • Describe an effective control system • Identify contingency factors in the control process • Learn the dysfunctional side of controls • Describe how national differences affect the control process • Study ethical issues in employee monitoring Chapter 13

4. Three Approaches to Control Systems Market Control Bureaucratic Control Clan Control Chapter 13

5. 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 Chapter 13

6. Information Operations What Managers Measure Finances People Chapter 13

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 Chapter 13

8. Mid-Western Distributors’ Sales for July(in hundreds of cases) Standard Brand Actual Over (Under) Heineken Molson Beck’s Moosehead Labatt’s Corona Amstel Light Dos Equis Tecate Total 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 Chapter 13

9. Do Nothing Taking Managerial Action Correct Performance Revise the Standard Chapter 13

10. 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 Chapter 13

11. Qualities of an Effective Control System • Accuracy • Timeliness • Economy • Flexibility • Understandability Chapter 13

12. Qualities of an Effective Control System • Reasonable criteria • Emphasis on exceptions • Strategic placement • Multiple criteria • Corrective action Chapter 13

13. 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 Chapter 13

14. Adjusting Controlsfor National Differences Distance and the Formality of Controls Technology and the Comparability of Data Chapter 13

15. Dysfunctional Controls Inflexible Controls Unreasonable Standards Chapter 13

16. Inform Employees Ethical Issues and Control Questions of Privacy Have a Written Policy Monitor for Business Reasons Chapter 13