GROUP 6 NUR ADICTY MANDARINI SHINTA RACHMAWATI NGUYEN THI HUYEN TRANG ANGGUN YUDHANOVITA HASMAWATI CHU THI THU HA

W HAT IS FOUNDATION OF CONTROL AND W HY THAT ’ S IMPORTANT ?

D EFINITION OF C ONTROL  Control, is a process to monitoring activities to ensure that the planning are accomplished as planned, and make corrections for any mistaken happen,before to late

K INDS OF C ONTROL There are 3 kinds of Control system : Market Control Bureaucratic Control Clan Control

M ARKET C ONTROL  Market Control, is controlling an organizations, which have to deal with the external market mechanism, such like price competitions and market share, in term of organizations which are usually concentrate in profit.

B UREAUCRATIC C ONTROL  Bureaucratic Control,is an approach to control that focusing on the organization authority, rules, regulations, procedure and policies

C LAN C ONTROL  Clan Control is, an approach to control in which employee behavior is regulated by norms, traditions, ritual, beliefs and any other aspects of the organizations culture

 Control is a Final Link in the Managements Functions. It’s the only way to ensure that the Goals are being met, and if not, the reason why Why do we need to Control?

C ONTROLLING Controlling consists of three steps; 1. which include establishing performance standards. 2. comparing actual performance against standards. 3. taking corrective action when necessary.

GOALS Organizational Divisional Departmental Individual Measuring Actual Performance Comparing Actual Performance Against Standard Taking Managerial Action Step 1 Step 3 Step 2

C ONTROLLING The measurement of performance can be done in several ways

CONTROLLING The managerial function of controlling should not be confused with control in the behavioral or manipulative sense.

CONTROLLING Effective controlling requires the existence of plans, since planning provides the necessary performance standards or objectives

D EFINITION Henry FayolHenry Fayol, Control of an undertaking consists of seeing that everything is being carried out in accordance with the plan which has been adopted, the orders which have been given, and the principles which have been laid down. Its object is to point out mistakes in order that they may be rectified and prevented from recurring.Tang-ina.

In 1916, Henri Fayol formulated one of the first definitions of control as it pertains to management:Henri Fayol Control consists of verifying whether everything occurs in conformity with the plan adopted, the instructions issued, and principles established. It ['s] object [is] to point out weaknesses and errors in order to rectify [them] and prevent recurrence.

EFL Breach Control is checking current performance against pre-determined standards contained in the plans, with a view to ensure adequate progress and satisfactory performance.

Harold Koontz Controlling is the measurement and correction of performance in order to make sure that enterprise objectives and the plans devised to attain them are accomplished.

Stafford Beer Management is the profession of control.

Robert J. Mockler Management control can be defined as a systematic effort by business management to compare performance to predetermined standards, plans, or objectives in order to determine whether performance is in line with these standards and presumably in order to take any remedial action required to see that human and other corporate resources are being used in the most effective and efficient way possible in achieving corporate objectives.

"that function of the system that adjusts operations as needed to achieve the plan, or to maintain variations from system objectives within allowable limits

Characteristics of Control Control is a continuous process Control is a management process Control is embedded in each level of organizational hierarchy Control is forward looking Control is closely linked with planning Control is a tool for achieving organizational activities

C ONTROLLING FOR ORGANIZATIONAL PERFORMANCE Organizational performance : _ Performance : The end result of an activity.  Organizational performance : The accumulated end results of all the organization’s work activities.

Measures of organizational performance : _ Including : organizational productivity, organizational effectiveness and industry and company rankings. _ Organizational productivity : Productivity : the overall output of goods or services produced divided by the inputs needed to generate that output.  Organizational productivity becomes a measure of how efficiently employees do their work.

Organizational effectiveness : A measures of how appropriate organizational goals are and how well an organization is achieving those goals. Systems resource model The ability of the organization to exploit its environment in acquiring scarce and valued resources. The process model The efficiency of an organization’s transformation process in converting inputs to outputs. The multiple constituencies model The effectiveness of the organization in meeting each constituencies’ needs.

Industry and company rankings : Having many different types of industry and company rankings, for example : + Fortune + Industry week + BusinessWeek + etc

T OOLS FOR C ONTROLLING O RGANIZATIONAL P ERFORMANCE There are three basic types of controls :  Feedforward Control  Concurrent Control  Feedback Control

F EEDFORWARD C ONTROL “ prevent anticipated problems since it take place before the actual activity.“  it’s future directed.  the key to feedforward controls is taking managerial action before a problem occurs.

C ONCURRENT C ONTROL “ monitoring while activity in progress. “ when control occurs while the work is being performed, management can correct problems before they come too costly. The best-known form of concurrent control is direct supervision.

F EEDBACK C ONTROL “ the control takes place after the activity is done.” the weakness from feedback control is that by the time manager has the information, the problems have already occurred- leading to waste or damage.

CONTROL HAVE TWO ADVANTAGES : % feedback control provides managers with meaningful information on how effective their planning efforts were. % feedback control can enchange employee motivation.

T YPES OF CONTROL InputOutput Feedforward Control Concurrent Control Feedback Control Processes Anticipates problems Corrects problems as they happen Corrects problems after they occur

FINANCIAL C ONTROLS  Traditional Financial Control Measures ratio analysis : budget analysis : - Liquidity ratios- quantitative standards - Leverage ratios- deviations - Activity ratios - Profitability ratios

R ATIO A NALYSIS Liquidity Ratio is measure an organization’s ability to meet its current debt obligation. Leverage Ratio is examine the organization’ use of debt to finance its assets and whether it’s able to meet interest payments on the debt. Activity Ratio is asses how efficiently the firm is using its assets. Profitability Ratio is measure how efficiently and effectively the firm using its assets to generate profits.

 O THER F INANCIAL C ONTROL M EASURE Economic Value Added (EVA) “ a tool for measuring corporate and divisional performance by calculating after tax operating profits minus the total annual cost of capital.” Market Value Added (MVA) “ adds a market dimension since it measures the stock market’s estimate of the value of a firm’s past and expected capital investment project.”

C ONTROLLING O RGANIZATIONAL P ERFORMANCE Balanced Scorecard A measurement tool that uses goals set by managers in four areas to measure a company’s performance: Financial Customer Internal processes People/innovation/growth assets

I NFORMATION C ONTROLS Management Information Systems (MIS) A system used to provide management with needed information on a regular basis  The system that used to give information needed manual computer  Have the organized data and can access information in the period.

B ENCHMARKING OF B EST P RACTICES Benchmarking The search for the best practices among competitors or noncompetitors that lead to their superior performance A control tool for identifying and measuring specific performance gaps and areas for improvement

I MPLEMENTING A B EST P RACTICES P ROGRAM Connect best practices to strategies and goals Identify best practices throughout the organization Develop best practices reward and recognition systems Communicate best practices throughout the organization Create best practices knowledge sharing system Nurture best practices on an ongoing basis

C ONTEMPORARY I SSUES IN C ONTROL Cross-cultural Issues The use of technology to increase direct corporate control of local operations Legal constraints on corrective actions in foreign countries Difficulty with the comparability of data collected from operations in different countries

C ONTEMPORARY I SSUES IN C ONTROL ( CONT ’ D ) Workplace Concerns Privacy versus monitoring: , telephone, computer, and Internet usage can all be monitored Employee theft The unauthorized taking of company property by employees for their personal use Violence Anger, rage, and violence in the workplace is affecting employee productivity

C ONTEMPORARY I SSUES IN C ONTROL Customer Interactions Corporate Government

C USTOMER I NTERACTIONS Service profit chain Is the service sequence from employees to customers to profit. Company’s strategy and service delivery system influences employees service customers. It includes their attitudes, behaviors, and service capability.

T HE S ERVICE P ROFIT C HAIN

C ORPORATE G OVERNMENT It’s the system which used to govern a corporation so that the interests of corporate owners are protected

Changes in the role of boards of directions The original purpose: -Have a group, independent from management -Look out for the interests of shareholders

Increased scrutiny of financial reporting Sarbanes Oxley Act of 2002) More disclosure and transparency of corporate financial information Certification of financial results by senior management