Basic Elements of Control Copyright © Houghton Mifflin Company. All rights reserved.20–1.

Download Basic Elements of Control Copyright © Houghton Mifflin Company. All rights reserved.20–1.

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<ul><li><p>Basic Elements of ControlCopyright Houghton Mifflin Company. All rights reserved.20*</p><p>Copyright Houghton Mifflin Company. All rights reserved.</p></li><li><p>Copyright Houghton Mifflin Company. All rights reserved.20*ControllingProcess of evaluating and regulating ongoing activities to ensure goals are achieved.</p><p>Copyright Houghton Mifflin Company. All rights reserved.</p></li><li><p>Copyright Houghton Mifflin Company. All rights reserved.20*Functions of ManagementPlan Organize Direct ControlReview and ModifyControl links us back to Planning function where we set our goals.</p><p>Copyright Houghton Mifflin Company. All rights reserved.</p></li><li><p> 2010 South-Western, Cengage Learning, Inc. All rights reserved.20*20.1The Purpose of Control </p><p> 2010 South-Western, Cengage Learning, Inc. All rights reserved.</p></li><li><p>Copyright Houghton Mifflin Company. All rights reserved.20*Areas of ControlPhysical resourcesinventory management, quality control, and equipment control.Human resourcesselection and placement, training and development, performance appraisal, and compensation.Information resourcessales and marketing forecasts, environmental analysis, public relations, production scheduling, and economic forecasting.Financial resourcesmanaging capital funds and cash flow, collection and payment of debts.</p><p>Copyright Houghton Mifflin Company. All rights reserved.</p></li><li><p>Copyright Houghton Mifflin Company. All rights reserved.20*The Control Function1. Set standards2. Monitor actual performance3. Compare actual performance against standard4. Take corrective actionFrom planning function</p><p>Copyright Houghton Mifflin Company. All rights reserved.</p></li><li><p>Copyright Houghton Mifflin Company. All rights reserved.20*-Establish standardsControl standarda target against which subsequent performance will be compared. Set during the Planning function. Should be expressed in measurable terms and consistent with organizational goals.-Measure performancePerformance measurement is a constant, ongoing process.Performance measures must be valid indicators (e.g., sales, costs, units produced) of performance.-Compare performance against standardsDefine the permissible deviation from the performance standard.-Consider corrective actionMaintain the status quo (do nothing).Correct the deviation to bring operations into compliance with the standard.Change the standard if it was set too high or too low.</p><p>Copyright Houghton Mifflin Company. All rights reserved.</p></li><li><p>Copyright Houghton Mifflin Company. All rights reserved.20*Forms of Operations Control</p><p>Copyright Houghton Mifflin Company. All rights reserved.</p></li><li><p>Copyright Houghton Mifflin Company. All rights reserved.20*Financial ControlControl of financial resources as they:Flow into the organization revenues Are held by the organization as working capital, retained earningsFlow out of the organization as payment of expenses</p><p>Copyright Houghton Mifflin Company. All rights reserved.</p></li><li><p>Copyright Houghton Mifflin Company. All rights reserved.20*Budgetary ControlBudgetsMay be established at any organizational level.Are typically for one year or less.May be expressed in financial terms, units of output, or other quantifiable factors.Purposes of budgetsHelp managers coordinate resources and projects.Help define the established standards for control.Provide guidelines about the organizations resources and expectations.Enable the organization to evaluate the performance of managers and organizational units.</p><p>Copyright Houghton Mifflin Company. All rights reserved.</p></li><li><p>Copyright Houghton Mifflin Company. All rights reserved.20*</p><p>Copyright Houghton Mifflin Company. All rights reserved.</p></li><li><p>Copyright Houghton Mifflin Company. All rights reserved.20*Financial Statements Financial statementA profile of some aspect of an organizations financial circumstances.Balance sheetA listing of assets (current and fixed), liabilities (short- and long-term), and stockholders equity at a specific point in time (typically, year-ending) that summarizes the financial condition of the organization.Income statementSummary of financial performancerevenues less expenses as net income (i.e., profit or loss)over a period of time, usually one year.Other Tools for Financial Control</p><p>Copyright Houghton Mifflin Company. All rights reserved.</p></li><li><p>Copyright Houghton Mifflin Company. All rights reserved.20*Ratio AnalysisThe calculation of one or more financial ratios to assess some aspect of the organizations financial health.Liquidity ratiosDebt ratiosOperating ratiosFinancial AuditAn independent appraisal of an organizations accounting, financial, and operational systems.External auditsInternal auditsOther Tools for Financial Control</p><p>Copyright Houghton Mifflin Company. All rights reserved.</p></li><li><p>Copyright Houghton Mifflin Company. All rights reserved.20*Integration with planningFlexibilityAccuracyTimelinessObjectivityCharacteristics of Effective Control</p><p>Copyright Houghton Mifflin Company. All rights reserved.</p></li><li><p>Copyright Houghton Mifflin Company. All rights reserved.20*OvercontrolInappropriate FocusRewards for InefficiencyToo much accountabilityWhy Resistance to Control?</p><p>Copyright Houghton Mifflin Company. All rights reserved.</p><p>***</p></li></ul>

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