Week 10: Chapter 16 Controlling for a Third Variable Multivariate Analyses.
10 Controlling
-
Upload
joeybernalesranera -
Category
Documents
-
view
213 -
download
0
description
Transcript of 10 Controlling
![Page 1: 10 Controlling](https://reader036.fdocuments.us/reader036/viewer/2022072010/55cf92b1550346f57b98c9ed/html5/thumbnails/1.jpg)
controllingLecture 10
![Page 2: 10 Controlling](https://reader036.fdocuments.us/reader036/viewer/2022072010/55cf92b1550346f57b98c9ed/html5/thumbnails/2.jpg)
What is CONTROLLING?Controlling refers to the “process of
ascertaining whether organizational objectives have been achieved; if not, why not; and determining what activities should then be taken to achieve objectives better in the future”.
![Page 3: 10 Controlling](https://reader036.fdocuments.us/reader036/viewer/2022072010/55cf92b1550346f57b98c9ed/html5/thumbnails/3.jpg)
Controlling compares the events or the accomplishments with the original plans and makes necessary corrections when the events differs from plans. It is the process by which management sees if what happened was what was supposed to happen.
![Page 4: 10 Controlling](https://reader036.fdocuments.us/reader036/viewer/2022072010/55cf92b1550346f57b98c9ed/html5/thumbnails/4.jpg)
CONTROL could mean:(1) To check or verify;(2) To regulate;(3) To compare with a given standard;(4) To exercise authority over someone or
group; and(5) To curb or restrain.
![Page 5: 10 Controlling](https://reader036.fdocuments.us/reader036/viewer/2022072010/55cf92b1550346f57b98c9ed/html5/thumbnails/5.jpg)
3 distinct definitions of CONTROL(1) Curbing or restraining(2) Directing or commanding(3) Checking or verifying
According to Fayol: “Control consists in verifying whether everything occurs in conformity with the plan adopted, the instructions issued and principles established. It has for its object to point out weaknesses and errors in order to rectify them and prevent recurrence”.
![Page 6: 10 Controlling](https://reader036.fdocuments.us/reader036/viewer/2022072010/55cf92b1550346f57b98c9ed/html5/thumbnails/6.jpg)
The control process1. Establishing standards or
targets2. Measuring actual performance3. Comparing performance against
standards4. Taking corrective action
![Page 7: 10 Controlling](https://reader036.fdocuments.us/reader036/viewer/2022072010/55cf92b1550346f57b98c9ed/html5/thumbnails/7.jpg)
Establishing standardsStandards are units of measurement
established by management to serve as benchmarks for comparing performance levels.
Forms:1. monetary terms2. units of production3. measures of acceptable quality
![Page 8: 10 Controlling](https://reader036.fdocuments.us/reader036/viewer/2022072010/55cf92b1550346f57b98c9ed/html5/thumbnails/8.jpg)
Types of standards
1. judgment2. statistical or historical data3. observation
Methods for setting standards
1. Performance standards2. Corollary standards3. Standards of conduct
![Page 9: 10 Controlling](https://reader036.fdocuments.us/reader036/viewer/2022072010/55cf92b1550346f57b98c9ed/html5/thumbnails/9.jpg)
Establish performance objectives and standards
Measure actual performance
Does actual performance
match the standards
Does corrective
actions
Yes
No
Do Nothing
STEPS IN THE CONTROL PROCESS
![Page 10: 10 Controlling](https://reader036.fdocuments.us/reader036/viewer/2022072010/55cf92b1550346f57b98c9ed/html5/thumbnails/10.jpg)
Measuring actual performancePay close attention to:1. The timeliness of the information2. The appropriateness of the units of
measurement3. The reliability of the information4. The validity of the information5. The channeling of the information to
the proper person
![Page 11: 10 Controlling](https://reader036.fdocuments.us/reader036/viewer/2022072010/55cf92b1550346f57b98c9ed/html5/thumbnails/11.jpg)
Comparing performance against standardsThe purpose of comparing past performance with a with planned performance is not only to determine
when an error has been made but also to predict future outcomes. A good control system, then, will
provide quick comparisons so the manager can detect possible trouble while the operation is still
under control. Comparisons of actual performance over time often will show trend that might be a danger signal. The manager cannot change the
past, but the knowledge of the past will help him or her make right decisions today that will affect
tomorrow.
![Page 12: 10 Controlling](https://reader036.fdocuments.us/reader036/viewer/2022072010/55cf92b1550346f57b98c9ed/html5/thumbnails/12.jpg)
The purpose of comparing actual performance against intended
performance is, of course, to determine if corrective action is needed. But a
manager cannot see the total activity and therefore must carefully avoid two types of errors: (1) taking corrective action when no
action is warranted, and (2) failing to take corrective action when I is clearly needed.
Taking corrective action
![Page 13: 10 Controlling](https://reader036.fdocuments.us/reader036/viewer/2022072010/55cf92b1550346f57b98c9ed/html5/thumbnails/13.jpg)
Types of control3 distinct types:1. Feedforward control2. Concurrent control3. Feedback control
![Page 14: 10 Controlling](https://reader036.fdocuments.us/reader036/viewer/2022072010/55cf92b1550346f57b98c9ed/html5/thumbnails/14.jpg)
Pre-operation
phase
Actual operations
phase
Post operations
phase
Feedforward Control
Concurrent Control
Feedback Control
![Page 15: 10 Controlling](https://reader036.fdocuments.us/reader036/viewer/2022072010/55cf92b1550346f57b98c9ed/html5/thumbnails/15.jpg)
Components of organizational control systems1. Strategic plan2. Long-range financial plan3. Operating budget4. Performance appraisals5. Statistical reports6. Policies and procedures
![Page 16: 10 Controlling](https://reader036.fdocuments.us/reader036/viewer/2022072010/55cf92b1550346f57b98c9ed/html5/thumbnails/16.jpg)
Strategic control systems1. Financial analysis2. Financial-ratio analysis
a. liquidityb. efficiencyc. financial leveraged. profitability
![Page 17: 10 Controlling](https://reader036.fdocuments.us/reader036/viewer/2022072010/55cf92b1550346f57b98c9ed/html5/thumbnails/17.jpg)
Identifying controls
3 approaches (by Kreitner):1. Executive reality check2. Comprehensive internal audit3. General checklist of symptoms
of inadequate control