Quản trị kinh doanh - Chapter 19: Managerial and quality control

Managerial and Quality ControlChapter 191Managerial and Quality ControlControl is a critical issue facing every manager in every organization todayQuality control Office productivity Basic systemsallocating financial resources, developing human resources, analyzing financial performance, and evaluating overall productivityManager’s Challenge: Gateway2Managerial and Quality ControlBasic mechanisms for controlling organizationsBasic structure & objectives of control processControlling financial performanceChanging philosophy of control Today’s total quality managementRecent trendsControl systems for a turbulent environmentTopics Chapter 193Organizational ControlThe systematic process through which managers regulate organizational activities to make them consistent with expectations established inPlansTargetsStandards of performance4Organizational ControlEffective controlling requires information aboutPerformance standardsActual performanceActions taken to correct any deviations from the standards5Organizational ControlFeed forward Sometimes called preliminary or preventive controlConcurrentAssesses current work activities, relies on performance standardsIncludes rules and regulations for guiding employee tasks and behaviorsIntent to ensure that work activities produce the correct resultsFeedbackFocuses on the organization’s outputs; also called post-action or output controlThree types of control 6Organizational Control FocusFeedforward Control Anticipates ProblemsExamples • Pre-employment drug testing • Inspect raw materials • Hire only college graduatesFocus is onInputsConcurrent Control Solve Problems as They HappenExamples• Adaptive culture • Total quality management• Employee self-controlFocus is onOngoing ProcessesFeedback Control Solves Problems After They OccurExamples • Analyze sales per employee • Final quality inspection• Survey customersFocus is onOutputs7Feedforward ControlFocus is onHumanMaterialFinancial resources Attempts to identify and prevent deviationsSometimes called preliminary or preventive control8Concurrent ControlMonitors ongoing activities to ensure consistency with performance standardsAssessesCurrent work activitiesRelies on performance standardsIncludes rules and regulationsIncludes self-control on behavior – personal values & attitudes9Feedback ControlFocuses on organization’s outputsSometimes called postaction or output control10Feedback Control ModelIfInadequateIf AdequateAdjust StandardsAdjust PerformanceFeedbackEstablish Strategic Goals1. Establish standards of performance.2. Measure actual performance.3. Compare performance to standards.4. Take corrective action.4. Do nothing or provide reinforcement.11Budgetary ControlMost commonly used method of managerial controlProcess of setting targetsUsed to monitor results and compare to budget Experiential Exercise: Is Your Budget In Control?12Responsibility CenterOrganizational unit under the supervision of a single person who is responsible for its activity13Budgets Managers UseExpense = anticipated and actual expensesRevenue = identifies forecasted and actual revenuesCash = estimates and reports cash flowsCapital = plans and reports investments in major assets to be depreciated14Traditional Budgeting MethodsTop-down budgetingMiddle and lower-level managers set departmental budget targetsDone in accordance with overall company revenues and expenditures specified by top managementBottom-up budgetingLower-level managers budget their departments’ resource needsPass up to top management for approval15Financial StatementsProvide basic information for financial controlBalance sheet- shows firm’s financial position with respect to assets and liabilities at a specific point in timeIncome statement- summarizes the firms’ financial performance for a given time interval (profit-and-loss statement)16Financial StatementsBalance sheetAssets – what company owns – fixed & currentLiabilities – what company owes –current & long-termOwners’ equityDifference between assets and liabilities and Is the company’s net worth in stock and retained earningsFor specific point in time17Financial StatementsIncome statement- Shows revenues coming into the organization from all sourcesSubtracts all expenses, including cost of goods sold, interest, taxes, and depreciationBottom line indicates the net income (profit or loss)For given time interval – usually one year18Financial AnalysisManagers need to be able to evaluate financial reports that compare the organization’s performance with earlier data or industry normsLiquidity ratiosActivity ratiosProfitability ratiosLeverage ratios19Ratios How Determining Tells YouLiquidity Ratios Current ratioCurrent assets/Current liabilities1. Ability to meet its current debt obligations2. If there are sufficient assets to convert into cash to pay off debtsActivity Ratios Inventory turnover Conversation ratio Total sales/Average inventory Purchase orders/Customer inquiries1. Measures internal performance2. How many times the inventory is used up to meet the total sales figure3. Company’s effectiveness in converting inquiries into salesProfitability Ratios Profit margin on sales Gross margin Return on assets (ROA)Net income/Sales Gross income/Sales Net income/Total Assets1. Profits relative to a source, such as sales or assets2. What a company earned from its assets Leverage Ratios Debt ratioTotal debt/Total assets1. Funding activities with borrowed money2. A debt ratio above 1.0 to be a poor credit riskCommon Financial Ratios20Control PhilosophiesBureaucratic control influencing employee behavior and assess performance through rules policies hierarchy of authority reward systems written documentation Decentralized control relies oncultural valuestraditionsshared beliefstrust21Total Quality Management - TQMOrganizationwide commitment to infusing quality into every activity through continuous improvementQuality circlesBenchmarkingSix SigmaReduced cycle timeContinuous improvementBased on decentralized control philosophy22Quality Circle ProcessTeam Creates Quality Circle and Collects InformationTeam Selects Problems to Be SolvedTeam Gathers Data and Analyzes ProblemsTeam Recommends SolutionsDecision by Top ManagementFeedback from Mangers to Quality Circles23TQM Success FactorsTQM does not always workSix sigma principles might not be appropriate for all organizational problemsMany contingencies can influence the success of TQM programQuality circles = more beneficial when challenging jobsTQM more successful = enriches jobs + improves motivation24Trends in Quality and Financial ControlInternational Quality Standards – ISO 9000New Financial Control SystemsEconomic value added - EVAMarket value added - MVAActivity-based costing - ABC25Control Systems for Turbulent TimesOpen-Book Management = sharing financial information and results with all employees in the organizationBalanced scorecard = comprehensive management control system that balances traditional financial measures with measures of customer service, internal business processes, and the organization’s capacity for learning and growth Ethical Dilemma: Is Internet Monitoring the Way to Go?26The Balanced ScorecardFinancialInternal Business processesLearning and GrowthCustomersHow well do we serve our customers?Are we learning, changing, and improving?Do internal activities and processes add value for customers and shareholders?Do actions contribute to improving financial performance? Mission & Goals27