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Managing Quality and Performance
Chapter 19 Managing Quality and Performance
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Controlling Managers use a variety of measures to monitor performance:
Controlling work processes Regulating employee behavior Systems for financial resources Developing human resources Evaluating profitability
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The Meaning of Control Organizational control is the systematic process through which managers regulate organizational activities to make them consistent with expectations established in plans, targets, and standards of performance 3
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Feedback Control Model
Establish Standards of Performance Measure Actual Performance Compare Performance to Standards Take Corrective Action 4
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19.1 Feedback Control Model
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The Balanced Scorecard
Balanced perspective of company performance Integrates various areas of the organization Managers record, analyze, and discuss the metrics Serves as core management-control system 6
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19.2 The Balanced Scorecard
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Hierarchical versus Decentralized approaches
Hierarchical controls include the monitoring of behavior through rules, policies, reward systems, and written documentation Decentralized controls based on values and assumptions; rules are only used when necessary Culture is adaptive, uniting individuals and teams
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19.3 Hierarchical and Decentralized Methods of Control
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Open-Book Management Decentralized philosophy
Gets every employee thinking like an owner Information sharing and teamwork Allows employees to see the financial condition of company Sees how his/her job fits into organizational success
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19.4 Which Countries Have the Most Secretive Economies?
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Total Quality Management
Infuse quality into every aspect of the business, all day-to-day activities Became popular in the U.S. in the 1980s Focuses on: Teamwork Collaboration Identifying improvements The goal of TQM is zero defects
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TQM Techniques Quality Circles Benchmarking Six Sigma
Quality Partnering Continuous Improvement
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19.5 A Five-Step Benchmarking Process
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19.6 The Importance of Quality Improvement Programs
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19.7 Quality Program Success Factors
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Budgetary Control Setting targets and monitoring expenditures
Budgets list planned and actual expenditures Budgets are associated with a division or department The unit of analysis for budgeting is the responsibility center 17
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Budgets Managers Use Expense Budget Revenue Budget Cash Budget
Capital Budget Top-down Budgeting Bottom-up Budgeting Zero-Based Budget 18
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Financial Statements provide basic information for financial control
Balance Sheet shows firm’s financial position Income Statement profit-and-loss (P&L) statement highlights firm’s financial performance 19
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19.8 Balance Sheet
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19.9 Income Statement
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Interpreting the Numbers
Managers need to evaluate financial reports Comparing performance with other data and industry standards Financial Analysis: Ratios Statistics Review: Profits, assets, sales, and inventory
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19.10 Common Financial Ratios
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International Quality Standards
ISO 9000 standards – International Organization for Standardization Organization certification 157 Countries Organizations demonstrate a commitment to quality Europe leads in certifications but the United States has had the greatest number of new certifications in recent years
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Corporate Governance Goes beyond systems and rules from the top to safeguard shareholders Ensures accountability, fairness, and transparency in all its dealings U.S. Legal Requirements: Auditing reforms – internal and external Certification of financial reports by top leaders Enhanced public financial disclosure Justification of Board structure
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