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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
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
Goal congruence is met when
employees work in their own best interests, and make decisions to help meet the goals of the company
what accompanies goal congruence
what is a key sucess factor and give an example
a factor that MUST be achieved to reach goals; timliness
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
What are measures of: Financial Strength
- Product profitability
- Earnings Before
- Interest and Taxes
What are measures of: Customer Satisfaction
Market Share, Survey Scores, Complaints
What are measures of: Business Process Improvement
Cycle time, Defects, Activity Costs
What are measures of: Organizational Learning
Training time, Staff Turnover, Staff satisfaction score
what are controllable costs
costs that managers decisions can influence
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
What are the different classifications of responsibility centers.
cost centers, profit centers, investment centers
What is quality control?
the effort to maintain the highest quality of a product or service.
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)
What is total quality management (TQM)
an approach to quality management that focuses on minimizing defects
What is cycle time?
the time taken to complete a product or service
What is productivity?
Outputs / Inputs
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.
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)
what is a reason that it is harder for nonprofit organizations to measure success
no profit to measure