Chapter 19
Managing Quality and Performance
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The Meaning of Control
Organizational control is the systematic
process through which managers regulate
organizational activities to make them
consistent with expectations established in
plans, targets, and standards of performance
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Establish Standards of Performance
Measure Actual Performance
Compare Performance to Standards
Take Corrective Action
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19.2 The Balanced Scorecard
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Hierarchical versus
Decentralized approaches
Hierarchical controls include the monitoring of
behavior through rules, policies, reward
systems, and written documentation
Decentralized controls based on values and
assumptions; rules are only used when
necessary
Culture is adaptive, uniting individuals and teams
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19.3 Hierarchical and Decentralized Methods of
Control
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Decentralized philosophy
Gets every employee thinking like an owner
Information sharing and teamwork
Allows employees to see the financial
condition of company
Sees how his/her job fits into organizational
success
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19.4 Which Countries Have the Most
Secretive Economies?
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Infuse quality into every aspect of the business,
all day-to-day activities
Became popular in the U.S. in the 1980s
Focuses on:
Teamwork
Collaboration
Identifying improvements
The goal of TQM is zero defects
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Quality Circles
Benchmarking
Six Sigma
Quality Partnering
Continuous Improvement
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19.5 A Five-Step Benchmarking
Process
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Setting targets and monitoring expenditures
Budgets list planned and actual expenditures
Budgets are associated with a division or
department
The unit of analysis for budgeting is the
responsibility center
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Expense Budget
Revenue Budget
Cash Budget
Capital Budget
Top-down Budgeting
Bottom-up Budgeting
Zero-Based Budget
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Financial Control
Financial Statements provide basic information
for financial control
Balance Sheet
shows firm’s
financial position
Income Statement
profit-and-loss
(P&L) statement
highlights firm’s
financial
performance
19in part.
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Managers need to evaluate financial reports
Comparing performance with other data and
industry standards
Financial Analysis:
Ratios
Statistics
Review:
Profits, assets, sales, and inventory
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ISO 9000 standards – International
Organization for Standardization
Organization certification
157 Countries
Organizations demonstrate a commitment to
quality
Europe leads in certifications but the United
States has had the greatest number of new
certifications in recent years
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