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What is a management Control system
a logical integration of techniques for gathering and using information to make planning and control decisions, for motivating employee behavior, and for evaluating performance
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What should an effective management control system have?
- -defined goals of the organization
- -ensure that everyone knows how to attain the goals
- -communicates results
- -motivates people to achieve the goals
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Goal congruence is met when
employees work in their own best interests, and make decisions to help meet the goals of the company
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what accompanies goal congruence
managerial effort
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what is a key sucess factor and give an example
a factor that MUST be achieved to reach goals; timliness
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What characteristics to effective performance measures have:
- 1. Reflect key activities that relate to the goals of the company
- 2. are affected by all employees
- 3. are understandable
- 4. are easily measured
- 5. are used regularly and often in evaluation of employees
- 6. balance long term and short term concerns
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What are measures of: Financial Strength
- Product profitability
- Earnings Before
- Interest and Taxes
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What are measures of: Customer Satisfaction
Market Share, Survey Scores, Complaints
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What are measures of: Business Process Improvement
Cycle time, Defects, Activity Costs
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What are measures of: Organizational Learning
Training time, Staff Turnover, Staff satisfaction score
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what are controllable costs
costs that managers decisions can influence
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What are responsibility centers?
activities and resources assigned to employees and managers. the group is responsible for each resource: e.g. A set of machines
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What are the different classifications of responsibility centers.
cost centers, profit centers, investment centers
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What is quality control?
the effort to maintain the highest quality of a product or service.
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What are the four categories of quality costs?:
- 1. Prevention - prevent defects
- 2. Appraisal - identify if there are defects
- 3. Internal failure - costs of defects that are remade (screwups in the factory)
- 4. External failure - costs of defects delivered (field repair, returns)
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What is total quality management (TQM)
an approach to quality management that focuses on minimizing defects
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What is cycle time?
the time taken to complete a product or service
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What is productivity?
Outputs / Inputs
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What is a Balanced Scorecard?
a control system that implements both financial and nonfinancial measurements for a company. It focuses attention on all aspects needed to achieve a goal.
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What are the four parts (measures) of a balanced scorecard?
- 1. financial (Working capital, income from operations, economic profit realized)
- 2. customers (rank in customer surveys, market share, complaints, repeat order rate)
- 3. internal business process (reduction in cycle time, order response time, capacity utilitization)
- 4. innovation and learning (training, leadership competence)
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what is a reason that it is harder for nonprofit organizations to measure success
no profit to measure
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