Module 6: Controlling

1
Module 6 Controlling
2
Learning objectives

• Understand the control process
• Review three approaches to control systems
• Be familiar with different control techniques
• Review qualities of an effective control system

3
Managerial Decisions in the Control Process
Standard Attained?
Do Nothing
Yes
Compare Performance to Standard
No
Variance Acceptable?
Do Nothing
Yes
Objectives
Measure Performance
No
Standard
Identify Causes
Standard Acceptable?
Yes
No
Correct Performance
Revise Standard
4
Three Approaches to Control Systems
Market Control (price Competition, Market share)
Clan Control (norms, Values, and Beliefs)
Bureaucratic Control (rules, Regulations, Policie
s)
5

• Quality Control
• This speaks a lot about the quality of Japanese
  products and their quality standards. They're
  still laughing about this at IBM. Apparently
  the computer giant decided to have some parts
  manufactured in Japan as a trial project. In the
  specifications, they set out that they will
  accept three defective parts per 10,000. When
  the delivery came in there was an accompanying
  letter. "We, Japanese people, had a hard time
  understanding North American business practices.
  But the three defective parts per 10,000 have
  been separately manufactured and have been
  included in the consignment. Hope this pleases
  you."

6
(No Transcript)
7
Defining an Acceptable Range of Variation
Acceptable Upper Limit
Acceptable Range of Variation
Standard
Acceptable Lower Limit
t t1 t2 t3 t4 t5
8
Do Nothing
Taking Managerial Action
Correct Performance
Revise the Standard
9
Three Types of Control
Input
Processes
Output
Feedforward Control Anticipates Problems
Concurrent Control Corrects Problems as They
Happen
Feedback Control Corrects Problems after They
Occur
10
Control techniques

• Budget the formulation of plans for a given
  future period in numerical terms, examples
  include
• Revenue and expense budgets
• Time, space, material, and product budgets
• Capital expenditure budgets
• Cash budgets
• Variable budgets
• Zero-based budgeting

11

• Nonbudgetary control devices
• Statistical data
• Special reports and analysis
• Operational audit
• Personal observation

12
Sample Gantt Chart
Oct.15
Dec.3
Activities
A. Decide topic B. Decide content C. Assign
work D. Finish the 1st draft E. Revise some
parts F. Finalize some parts G. Final revision
and submission
3 days
3 days
1
30 days
8 days
6 days
4 days
Reporting date
13
A PERT Network for completing the final project
for the course 472a
Start
B
E
D
G
A
C
F
Finish
14
Qualities of an Effective Control System

• Accuracy
• Timeliness
• Economy
• Flexibility
• Understandability

15
Qualities of an Effective Control System

• Reasonable criteria
• Emphasis on exceptions
• Strategic placement
• Multiple criteria
• Corrective action

16
Contingency Factors in Control Systems
Contingency Variable
Control Recommendations
Small
Informal, personal management
Organization Size
Large
Formal, personal management
High
Many complex criteria
Position and Level
Low
Few, easy-to-measure criteria
High
Increased number of controls
Degree of Decentralization
Low
Reduced number of controls
Open
Informal, self-control
Organizational Culture
Closed
Formal, external controls
High
Elaborate, comprehensive controls
Importance of an Activity
Low
Loose, informal controls
17
Summary

• Control is an essential component of management
  function. Organizational plans can not be
  achieved without an effective control system.
• Various control systems and techniques can be
  combined to build an effective control system.

18
Final project

• Deadline December 3, 2001
• Citation in text
• At the end of the project

19
Final project

• No excuse for the late submission
• Penalty for the late submission
• 0-30 minutes deduct 25 marks
• 30 minutes 1 hours deduct 50 marks
• 1 hours 1 hour 30 minutes deduct 75 marks
• 1 hour 30 minutes 2 hours deduct 100 marks

20
Final examination

• Definition question
• Define plan and strategy
• Explain theory
• Explain expectancy theory
• Use an example to explain a theory

21
Final examination (contd.)

• Apply a theory to the health care industry
  context
• Chapters will not be covered
• History module
• Managing in Todays world
• Quantitative module