1. Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 08 Control, Change, and Entrepreneurship

2. 8-2 Learning Objectives Define organizational control, and identify the main output and behavior controls managers use to coordinate and motivate employees Explain the role of clan control or organizational culture in creating an effective organizational architecture Discuss the relationship between organizational control and change, and explain why managing change is a vital management task Understand the role of entrepreneurship in the control and change process

3. 8-3 What is Organizational Control? Controlling: Managers monitor and evaluate whether the organization’s strategy and structure are working as intended, how they could be improved, and how they might be changed if they are not working Control systems: Formal, target-setting, monitoring, evaluation and feedback systems that provide managers with information about how well the organization’s strategy and structure are working

4. 8-4 Control Systems and IT New forms of IT have revolutionized control systems facilitating the flow of accurate and timely information Control and information systems are developed to measure performance at each stage in the process of transforming inputs into finished goods and services

5. 8-5 Figure 8.1 - Three Types of Control

6. 8-6 Figure 8.2 - Four Steps in Organizational Control

7. 8-7 Figure 8.3 - Three Organizational Control Systems

8. 8-8 Financial Measures of Performance Profit Ratios – Return on investment, Operating margin Liquidity Ratios – Current ratio, Quick ratio Leverage Ratios – Debt-to-assets ratio, Times- covered ratio Activity Ratios – Inventory turnover, Day sales outstanding

9. 8-9 Figure 8.4 – Organization wide Goal Setting

10. 8-10 Behavior Control Direct supervision: Allows managers to mentor subordinates and develop their management skills Management by objectives: Managers and subordinates negotiate specific goals and objectives for the subordinate to achieve and periodically evaluate the attainment of those goals Bureaucratic control: Control of behavior by means of a comprehensive system of rules and standard operating procedures

11. 8-11 Organizational Culture Clan control: Control exerted on individuals and groups in an organization by shared values, norms, standards of behavior, and expectations Adaptive cultures help an organization to build momentum and to grow and change as needed to be effective Inert cultures lead to values and norms that fail to motivate or inspire employees

12. 8-12 Figure 8.5 - Organizational Control and Change

13. 8-13 Figure 8.6 - Four Steps in the Organizational Change Process

14. 8-14 Entrepreneurship, Control, and Change Entrepreneurs: People who notice opportunities and take responsibility for mobilizing the resources necessary to produce new and improved goods and services Bring about change to companies and industries because they see new and improved ways to use resources to create products customers want