Embed Size (px)
Citation preview
1
Unit 5
CONTROLLING Control is checking performance against predetermined standards contained in the plans with a view to
ensure adequate progress and satisfactory performance.
Control Systems
Formal, target-setting, monitoring, evaluation and feedback systems to provide managers with
information to determine if strategy and structure are working effectively and efficiently.
A good control system should:
Be flexible so managers can respond as needed.
Provide accurate information about the organization.
Provide information in a timely manner.
Three Types of Control
1. Feed forward: use in the input stage of the process.
a. Managers anticipate problems before they arise.
b. Managers can give rigorous specifications to suppliers to avoid quality
2. Concurrent: gives immediate feedback on how inputs are converted into outputs.
a. Allows managers to correct problems as they arise.
b. Managers can see that a machine is becoming out of alignment and fix it.
3. Feedback: provides after the fact information managers can use in the future.
a. Customer reactions to products are used to take corrective action in the future.
2
Steps in Control Process
1. Establish standards, goals, or targets against which performance is to be evaluated.
Standards must be consistent with strategy, for a low cost strategy, standards should
focus closely on cost.
Managers at each level need to set their own standards.
2. Measure actual performance: managers can measure outputs resulting from worker behavior or they
can measure the behavior themselves.
The more non-routine the task, the harder to measure.
Managers then measure the behavior (come to work on time) not the output.
3. Compare actual performance against chosen standards.
Managers must decide if performance actually deviates.
Often, several problems combine creating low performance.
4. Evaluate result and take corrective action.
Perhaps the standards have been set too high.
Workers may need additional training, or equipment.
This step is often hard since the environment is constantly changing.
3
Importance of Control 1. Facilitate Decision Making 2. Checks on Delegated Authority 3. Basis for future action 4. Improves employees Morale 5. Promotes efficiency in operations 6. Basic of Co-ordination 7. Exerts Psychological pressure
Limitations of Control 1. Absence of Proper Standards 2. Limitations of corrective action 3. Human Reaction 4. Coat of control
Pre-requisites of Control 1. Plan 2. Proper Organization Structure 3. Suitability 4. Promptness 5. Forward looking 6. Flexibility 7. Objectivity 8. Economical 9. Simple 10. Acceptable
3 Organizational Control Systems
4
Output Control Systems
Financial Controls are objective and allow comparison to other firms.
1) Profit ratios--measures how efficiently managers convert resources into profits.
i) Return on Investment (ROI) is the most common.
2) Liquidity ratios -- measure how well managers protect resources to meet short term debt.
i) Current & quick ratios.
3) Leverage ratios -- show how much debt is used to finance operations.
i) Debt-to-asset & times-covered ratios.
4) Activity ratios -- measures how managers create value from assets.
i) Inventory turnover, day’s sales outstanding.
5) Organizational Goals: after corporate financial goals are set, each division is given specific goals that
must be met to attain the overall goals.
i) Goals and thus output controls will be set for each area of the firm.
ii) Goals are specific & difficult (not impossible) to achieve.
iii) Goal setting is a management skill developed over time.
6) Operating budgets: a blueprint showing how managers can use resources.
i) Managers are evaluated by how well they meet goals and stay in budget.
ii) Each division is often evaluated on its own budgets for cost, revenue or profit.
Behavior Control Systems
Managers must motivate and shape employee behavior to meet organizational goals.
1) Direct Supervision: managers who directly manage workers and can teach, reward, and correct.
i) Very expensive since only a few workers can be managed by 1 manager.
ii) Can demotivate workers who desire more autonomy.
iii) Hard to do in complex job settings.
Bureaucratic Control Control through a system of rules and standard operating procedures (SOPs) that shape the behavior of divisions, functions, and individuals.
Rules and SOPs tell the worker what to do.
Standardized actions so outcomes are predictable.
Still need output control to correct mistakes.
Problems of Bureaucratic Control:
Rules easier to make than delete. Leads to “red tape”
Firm can become too standardized and not flexible.
Best used for routine problems.
5
Control Techniques/Tools of Control
1) Traditional Techniques
i) Budgetary control
ii) Non-Budgetary control
2) Modern Techniques
i) Management Audit
ii) Return on investment
iii) Responsibility accounting
iv) Network Techniques of control ( PERT/CPM)
v) Management by exception
vi) MIS
Budgetary Control
It is a quantitative statement of the plan for a specified period of time in future. It starts with the
preparation of budget.
Types of Budget
1) Functional Types
i) Sales Budget
ii) Production Budget
iii) Material Budget
iv) Labor Budget
v) Manufacturing Over Head Budget
vi) Administrative budget
vii) Cash budget
2) Transaction Budget
i) Operating Budget
ii) Capital
3) Activity Types
i) Flexible budget
ii) Fixed budget
iii) Master budget
4) Time Interval Budget
i) Continuous budget
ii) Periodical budget
Advantages of Budgeting
1) It makes management to think about the expected problems that may arise in due course. This
generates sense of caution and care.
6
2) It is a powerful tool available to management for the purpose of controlling the cost
3) Budget is a tool of periodical evaluation of performance of individuals and the department
4) Budgeting helps in directing capital and other resources into most profitable channels.
5) Budgeting helps in formulating future policies.
6) Budgeting provides stability in economy of organization.
7) It encourages cost-effective competitions among the employees.
Limitations in Budgeting
1) Over budgeting may cause unnecessary expenses
2) It is based on assumptions, so it may not be exactly correct.
3) It is time consuming process.
4) It is also used to hide the inefficiencies of the enterprise management.
Management Information System (MIS)
Information Systems & Technology
Information System: acquires, organizes, stores, manipulates and transmits information.
A Management Information System is the plan and design of an Information System to
provide managers with information.
Can be paper or computer-based.
Information technology: is the means for acquiring, organizing, storing, manipulating, and
transmitting information.
Information technology power has increased rapidly.
Information and Decisions: managing has to do with making decisions.
Good Information allows effective decision making.
Information and control: control allows managers to regulate the efficiency and
effectiveness of the organization.
Effective control requires good information.
Information technology in the form of computers allows managers quick access to
information.
Information and Coordination: managers must coordinate departmental actions to achieve
goals.
Information Systems provide information on suppliers, production schedules, and
orders to allow coordination.
Information Technology Revolution
Information Technology began with early computers.
Computers are called hardware and use digital 1’s and 0’s to represent data.
Modern computers use microprocessors such as the Pentium to access
information.
7
Computer cost has dropped dramatically while the power of computers has risen.
Computers cost less and do more than ever before.
Connecting one computer to another is also much easier and cheaper.
Computer Communications
Wireless communications: connects managers and computers together without wires.
Cellular has grown rapidly to over 20 million users.
Wireless modems connect one computer to another.
Networks: share information between computers.
Server Computer: powerful computer that relays information to client computers.
Servers and other computers are connected on a Local Area Network or LAN
Mainframe: large computers processing vast amounts of information .
Internet: a world wide network of computers.
3 Tier Information Systems
Software Developments
Operating system software: tells the computer how to run itself.
Applications software: provide for functions such as word processing, spreadsheets, and
graphics.
The new software provides far better access to information for managers.
Artificial Intelligence: behavior by a machine that can be called intelligent.
Computers evaluate problems & act on simple tasks.
Speech Recognition: allow a computer to hear and act on spoken commands.
Powerful programs are still being developed.
Types of Information Systems
1) Transaction Processing Systems (TPS): designed to handle large volumes of routine
transactions.
i) The first computer-based Information System.
ii) Billing, payroll, supplier payments are examples.
8
2) Operations Information Systems (OIS): gathers comprehensive data, organizes it and
summarizes it in a form valuable to managers.
i) Can help managers with non-routine decisions such as customer service and
productivity.
ii) Provides sales, inventory & performance oriented data.
3) Decision Support Systems (DSS): provides interactive models to help managers make better
decisions.
i) Excellent for unusual, non-programmed decisions
ii) Analyzes investment potential, new product pricing.
iii) Often used by middle and upper managers.
4) Executive Support System (ESS): sophisticated version of a DSS to match top manager’s
needs.
i) Focus on user friendly features.
5) Expert Systems: employee’s human knowledge captured in a computer to solve problems
usually requiring human insight.
i) Use Artificial Intelligence to recognize, formulate, solve problems, and learn from
experience.
PRODUCTIVITY
Definition
The amount of output per unit of input (labor, equipment, and capital). There are many different ways
of measuring productivity. For example, in a factory productivity might be measured based on the
number of hours it takes to produce a good, while in the service sector productivity might be
measured based on the revenue generated by an employee divided by his/her salary.
Purpose of Productivity
1) To trace technical change
2) To increase efficiency
3) Real cost savings
4) Benchmarking production process
5) It is a key element towards assessing standards of living.
Factors affecting Productivity
1) External Factors
i) Government policies and regulations
ii) Strikes
iii) Environmental conditions
iv) Power cuts
2) Internal Factors
i) Less skilled labor force
9
ii) Less motivation
iii) Breakdowns
iv) Labor’s attitude
v) Less importance to R & D.
vi) Poor leadership
Tools and Techniques to improve productivity
1) Time study
2) Work study
3) Overall Equipment Efficiency analysis
4) Inventory planning and Control
5) Out sourcing
6) Implementation of TPM and TQM
7) Lean Engineering
PREVENTIVE CONTROL FEATURES
Dynamic workflows with conditions to prevent, allow with approvals, and allow with rules
Impact analyses of control changes prior to promoting them into a production environment
Real-time monitoring of key transactions and changes made to application setups and master data
stakeholders
legitimate transaction
ss provisioning with continuous monitoring
BENEFITS
Monitor and prevent unauthorized changes to critical application setup and data
Protect sensitive information from unauthorized viewers
Enforce policy changes at the granular applications level in real time
10
Liberalization
It refers to open market; they can take various forms namely, 1) Reduction of tariff and non-tariff barriers
2) Deregulation of domestic regulatory measures
3) Enhanced transparency of trade policies/regulations
4) Trade facilitation
Globalization
Globalization means the internationalization of trade.
Benefits of Globalization
1) Improves efficiency
2) Improve factor income
3) Improve finance
4) Gains from migrations
Globalization Factors
1) Pull Factors
i) Profit Advantage
ii) Growth Opportunity
2) Push Factors
i) Domestic Market constraints
ii) Competition
iii) Government policies and regulations
iv) Spin-off benefits
v) Strategic vision
Methods of Globalization
1) Exporting
2) Licensing and Franchising
3) Joint ventures
4) Fully owned manufacturing facilities
5) Assembly operations
6) Mergers and acquisitions
7) Strategic alliance
8) Contract Manufacturing
9) Management contracting
10) Counter trade
11
International Management
It is the process of planning, organizing, leading and controlling an organization engaged in international
business.
Multi National Corporations (MNC)
It is an organization that is engaged in production or services through its own association in several
countries.
Types of International Management
1) Ethnocentric – home country oriented
2) Polycentric – Foreign country oriented
3) Regiocentric – Region oriented
4) Geocentric – World oriented
14
Forms of International Business
1. Exportation
2. Licensing Agreement
3. Management Contracts
4. Joint Ventures
5. Subsidiaries
![[XLS]services.iriskf.orgservices.iriskf.org/FCKeditor/_samples/asp/excel/Niraj... · Web viewrspl_hub@rediffmail.com vwdip.bandyopadhyay@rediffmail.com nhemdev@indiatimes.com bajaj@hotpop.com](https://img.dokumen.tips/doc/110x75/5ab070417f8b9a6b308e7f75/xls-viewrsplhubrediffmailcom-vwdipbandyopadhyayrediffmailcom-nhemdevindiatimescom.jpg)
