Management Foundations

Controlling Management FoundationsTHE management Process

Purpose and Importance of ControlMeaning : actual activities conform to Planned activitiesassures that the right things are being done in the right manner and at the right time.

Purpose: Helps merge long range goals with short term ones.

Brings consistency to the activities and accomplishments throughout the organization

Helps bring individual behaviors in line with organizational goals .Why is control needed?To create better qualityTo cope with change To create faster cyclesTo add valueTo facilitate delegation and team work .1 performance standards.2. Markets shift , competitors change , new products ,technologies come into play .3.Where u recognize a need and create a product speedy cycle time s are one way to get a competitive advantage .- to add value is another way ,-more often this is accomplished by creating above average qualitythrough exacting control procedures.4

4Areas of control Two perspectives Resource Focus 2. Level of focusResource focus can be control over Physical resourcesFinancial resources Information resourcesHuman resourcesImplemented through quality control, inventory control, employee recruitment performance appraisal, budgets. Areas of control Level of focus: strategic controlOperations controlThe control ProcessStep1: Establishing Standards A standard is defined as the end-state or target against which subsequent performance will be comparedStep 2 : Measuring Performance Deals with measurement of actual performance- the activity being controlled.Constant processFrequency of measurement depends on the activity being measured e.g. continuous measurements for safety standards etc.Personal observation, statistical reports, oral reports, and written reportsManagement by walking around (MBWA)

Step 3- performance may be higher lower or equal to the atandard7The control ProcessStep 3: Comparing measured performance against the standardsComparison to objective measures: budgets, standards, goalsRange of variation

Step 4: Evaluate performance and take actionRequires solid diagnostic skills on part of the manager.

The control ProcessThree AlternativesMaintain status quoCorrect the deviationChange the standardsTypes of control system

10Types of control systemConcurrent control/ real time information and controlE.g. supermarkets and departmental stores , airline ticketing countersInformation is received about what is happening while it is happening Is applied to operations during the transformation process- information about what is happening while it is happening .Can be applied at critical points in the transformation processReal time control is limited to the evaluation of performance analysis of causes of deviation ,development of correction programs may not be real time as these are time consuming .

Types of control systemFeedback control:It is the inspection of the output and the feedback of results .There can be a definitive time lag between the occurrence of the problem and corrective action .Can help managers plan for the future and serve to evaluate employee or process performance

Types of control systemFeedforward / preventive control systems:E.g. inventory planning , selection and screening of job applicants Monitors inputs into a certain process to ascertain if the inputs are as planned ; if not the inputs or the process is changed in order to obtain the desired results.Focuses on inputs to the transformation process .It is necessary to watch for disturbances or factors which have not been taken into account in the input model but which may have an impact on the desired result

Bankruptcy of a large supplier13Organizational ControlBureaucratic control: characterized by formal mechanistic arrangements Clan control : informal organic arrangements

Organizational ControlStrategic control:Directed at ensuring that the organization is in effective alignment with the external environment and that the organization is progressing towards strategic goals.To exercise effective control ,a manager continually need to reflect on strategic questions regarding managerial styles , culture structure appraisal systems Quality circles:A quality circle is a small group of workers who meet voluntarily once a week or two ,to identify, analyze and resolve problems in the work area .Creates greater employee satisfaction and improved performance and productivity

Budget ControlBudgeting may be defined as the process of expressing a set of planned activities for a future time period in numeric terms . Budgets serve four purposes primarily :Provide clear guidelines about organizational resources and expectations for their useTo help coordinate projects and resourcesTo help define control systems standardsTo help evaluate the performance of managers and work units

Budget ControlTypes of budgetsFinancial Budgets:Is used to show where the organization expects to get cash for the coming period and how that cash is to be used.Cash budgets an estimate of the cash flow on the daily or weekly basis and is designed to ensure that the organization will always have sufficient cash to meet its obligations.Capital expenditure budgets - represents a plan for future investments in major capital assets Balance sheet budget/master budget : sets the amount of assets and liabilities for the end of the planning period. It serves as an overall control device to ensure that all budgets integrate properly and yield profitable results.

Budget ControlOperating budgets :Is an expression of an organizations planned operations.Expressed in terms of products and services to be sold and the resources needed to produce and sell them Sales budget : identifies the sales/ revenues required by the organization and represents the firms expected income .Sales forecast helps establish the prices.

Expense Budget :Defines the anticipated expenses of the organization for the period.Fixed cost budgetsVariable cost budgets Discretionary cost budgetsBudget ControlNon-monetary budgets :not financial in nature expressed in terms of machine hours , units of output and man-hours .