Mastering Physics HW 4 Ch 18, 19: Refrigerator Prototypes Ranking Task, ± PSS 19.1 Heat-Engine Problems, An Air Conditioner: Refrigerator or Heat Pump?, Heat Pumps and Refrigerators, Six New Heat E...
CAPÍTULO 19: MEDICIÓN DEL PIB. ENFOQUE INGRESO Y ENFOQUE GASTO. ANA GRAUEDescripción completa
விலகிச்செல்வது ஏனோ..??-19
Full description
tema 19 auxilio judicialDescripción completa
sheet musicFull description
calse 19Descripción completa
bbdmFull description
19..Descripción completa
Descripción completa
Tema 19 OPOSICIONES
Descripción: astrology
Call Handbook Base Defense
135
Chapter 19
CHAPTER 19 MANAGING QUALITY AND PERFORMANCE CHAPTER OUTLINE I. II.
III.
I. I.
.
I. I.
II. II.
Improvement Improvement Attitude Attitude The Meaning of Control Feed Feedba back ck Cont Contro roll Model odel A. Four Step Stepss of Feedba Feedback ck Contro Controll B. The Balanc Balanced ed Scoreca Scorecard rd The Changing Philosophy of Control A. Hierarchic Hierarchical al ersus ersus !ecentrali !ecentrali"ed "ed Approaches Approaches B. #pen$Book Manage%ent New Manager Manager Self-T Self-Test: est: What Is Your Attitude Attitude Towar Toward d Organization Organizational al egulation egulation and !ontrol" Total &uality Manage%ent Manag e%ent A. T&M T&M Tec Techn hni' i'ue uess B. T&M T&M Succ Succes esss Fact Factor orss Budgetary Co Control A. () ()pen pense se Budge Budgett B. *e+e *e+enu nuee Budg Budget et C. Cash Cash Budg Budget et !. Capi Capita tall Budge Budgett (. ,ero ,ero$B $Bas ased ed Budge Budgett Fina Financ nciial Con Conttrol A. Financi Financial al State% State%ent entss B. Financial Financial AnalysisAnalysis- Interp Interpreti reting ng the u%bers u%bers Trends rends in in &ual &ualit ity y and Fin Financ ancia iall Cont Contro roll A. Internatio International nal &uality &uality Standards Standards B. Corpo Corpora rate te /o+er /o+erna nance nce
ANNOTATED LEARNING OBJECTIVES After studying this chapter0 students should be able to1. #efine organizatio organizational nal $ontrol $ontrol and e%plain e%plain wh& it is a 'e& management management fun$tion( fun$tion( #rgani"ational control is defined as the syste%atic process through 2hich %anagers regulate organi"ational acti+ities to %ake the% consistent 2ith the e)pectations established in plans0 targets0 and standards of perfor%ance. Control0 especially 'uality control0 control0 is an issue facing facing e+ery %anager in e+ery organi"ation today.
3415 Cengage 6earning. All *ights *eser+ed. May not be scanned0 copied or duplicated0 or posted to a publicly accessible 2ebsite0 in 2hole or in part. 0 e)cept foruse as per%itted in a license distributed 2ith a certain product or ser+ice or other2ise on a pass2ord$protected pass2ord$protected 2ebsite for classroo% use. .
13=
Chapter 19
Control is a key %anage%ent function because b ecause it is the %echanis% %anagers use to steer the organi"ation to2ard its ob7ecti+es. #rgani"ational control is is a process of ensuring ensuring that ob7ecti+es are %et and that resources are allocated in the best 2ay to achie+e those ob7ecti+es. steps in the $ontrol $ontrol pro$e pro$ess( ss( 3. )%plain the four steps
Based on our definition of organi"ational control0 a 2ell$designed control syste% consists of the follo2ing four key steps(stablish standards of perfor%ance. Managers define goals for organi"ational depart%ents in specific0 operational ter%s that co%prise a standard of perfor%ance against 2hich to co%pare organi"ational acti+ities. Measure actual perfor%ance. Managers de+elop 'uantitati+e %easure%ents of perfor%ance perfor%ance that can be re+ie2ed on a daily0 2eekly0 2eekly0 or %onthly basis. Co%pare perfor%ance to standards. This is an e)plicit co%parison of actual acti+ities acti+ities to perfor%ance standards. Feedback. Correcti+e action is a change in 2ork acti+ities to bring the% back to acceptable perfor%ance standards.
8. #es$ri*e the the *enefits *enefits of using the the *alan$ed *alan$ed s$ore$ar s$ore$ard d to tra$' the the performan$e performan$e and $ontr $ontrol ol of the organization( The balanced scorecard is a co%prehensi+e %anage%ent control syste% that balances traditional financial %easures 2ith operational %easures relating relating to a co%pany9s critical critical success factors. A balanced scorecard contains four %a7or perspecti+es- financial perfor%ance0 custo%er ser+ice0 internal business processes0 and the organi"ation9s organi"ation9s capacity for learning and gro2th. :. !ontrast the hierar$hi$al and de$entralized methods of $ontrol( An organi"ation9s organi"ation9s approaches to 'uality are based on its basic philosophy of control. ;ith ;ith %any organi"ations %o+ing to2ard participation and e%ployee e%po2er%ent0 a choice %ust be %ade bet2een hierarchical and decentrali"ed approaches. Hierarchical control in+ol+es %onitoring and influencing e%ployee beha+ior through rules0 policies0 hierarchy of authority0 2ritten 2ritten docu%entation0 and re2ard syste%s. Hierarchical %ethods define e)plicit e)plicit rules0 policies0 and procedures for e%ployee beha+ior. Control relies on centrali"ed authority0 authority0 the for%al hierarchy0 hierarchy0 and close personal super+ision. *esponsibility for 'uality 'uality control rests 2ith 2ith 'uality control inspectors and super+isors rather than 2ith e%ployees. Hierarchical control techni'ues can enhance organi"ational efficiency and effecti+eness. !ecentrali"ed control represents cultural +alues al%ost the opposite of bureaucratic co ntrol. !ecentrali"ed control relies on social +alues0 traditions0 shared beliefs0 and trust to foster co%pliance 2ith organi"ational organi"ational goals. (%ployees are trusted0 trusted0 and %anagers belie+e belie+e e%ployees are 2illing to perfor% perfor% correctly 2ithout e)tensi+e rules rules or super+ision. !ecentrali"ed control is i%ple%ented through the corporate culture0 peer groups0 self$control0 and e%ployee selection and sociali"ation. <. Identif& the the *enefits *enefits of open-*oo' open-*oo' management( management( 3415 Cengage 6earning. All *ights *eser+ed. May not be scanned0 copied or duplicated0 or posted to a publicly accessible 2ebsite0 in 2hole or in part. 0
e)cept foruse as per%itted in a license distributed 2ith a certain product or ser+ice or other2ise on a pass2ord$protected pass2ord$protected 2ebsite for classroo% use. .
Maa!"! Q#a$"t% a& Per'(r)a*e
13
#pen$Book Manage%ent allo2s e%ployees to see for the%sel+es > through charts0 co%puter printouts0 %eetings0 and so forth > the financial condition of the co%pany. co%pany. #pen$book %anage%ent also sho2s the indi+idual e%ployee ho2 his or her 7ob fits into the big picture and affects the financial future of the organi"ation. 5. #es$ri*e the the $on$ept $on$ept of total +ualit& +ualit& management management ,TM. ,TM. and ma/or ma/or TM te$hni+ues0 te$hni+ues0 su$h as +ualit& $ir$les0 *en$hmar'ing0 Si% Sigma prin$iples0 +ualit& partnering0 and $ontinuous improvement( Total 'uality %anage%ent ?T&M@ is a philosophy of organi"ation$2ide co%%it%ent to continuous i%pro+e%ent0 2ith the focus on tea%2ork0 increasing custo%er satisfaction0 and lo2ering costs. T&M 2orks through hori"ontal collaboration across functions and depart%ents and e)tends to include custo%ers and suppliers. Tea%s of 2orkers are trained and e%po2ered to %ake decisions that help the organi"ation achie+e high standards of 'uality. 'uality. This is a re+olution in %anage%ent thinking because 'uality 'u ality control depart%ents and for%al control syste%s no longer ha+e pri%ary control responsibility responsibility.. &uality control thus beco%es part of the day$to$day business of e+ery e%ployee. A 'uality 'uality circle is a group of si) to 13 +olunteer e%ployees 2ho %eet regularly to discuss and sol+e proble%s affecting the 'uality of their 2ork. 2ork. They %eet during 2ork hours to identify proble%s and find solutions. The reason for using 'uality circles is to push decision %aking to a le+el at 2hich reco%%endations can be %ade by those 2ho do the 7ob. Bench%arking is the continuous process of %easuring products0 ser+ices0 and practices against the toughest co%petitors or those co%panies recogni"ed as industry leaders. leaders. The key to successful bench%arking lies in analysis. A co%pany %ust honestly analy"e its current current procedures and deter%ine areas for i%pro+e%ent. A co%pany carefully carefully selects co%petitors 2orthy of copying and e%ulates their internal processes and procedures. Si) Sig%a is a highly a%bitious 'uality standard that specifies a goal of no %ore than 8.: defects per %illion parts. Si) Sig%a has beco%e a generic ter% for a 'uality control approach that takes nothing for granted and e%phasi"es higher 'uality and lo2er costs. The discipline is based on !MAIC ?!efine0 Measure0 Analy"e0 I%pro+e0 and Control@. This %ethodology pro+ides a structured 2ay for sol+ing sol+ing proble%s. (ffecti+ely i%ple%enting i%ple%enting Si) Sig%a re'uires a %a7or %a7or co%%it%ent fro% top %anage%ent because 2idespread change is re'uired. Cycle ti%e refers to the steps taken to co%plete a co%pany process0 such as teaching a class0 publishing a te)tbook0 or designing a ne2 car. The focus is on i%pro+ed responsi+eness and acceleration of acti+ities into into a shorter ti%e. *eduction in cycle ti%e i%pro+es i%pro+es o+erall co%pany perfor%ance as 2ell as 'uality. 'uality. Continuous i%pro+e%ent is the i%ple%entation of a large nu%ber of s%all0 incre%ental i%pro+e%ents in all areas of the organi"ation organi"ation on an on$going basis. All e%ployees are e)pected to contribute by initiating initiating changes in their o2n 7ob acti+ities. acti+ities. There is no end to the process. process. Inno+ations can start si%ply0 si%ply0 and e%ployees can build on their success. 3415 Cengage 6earning. All *ights *eser+ed. May not be scanned0 copied or duplicated0 or posted to a publicly accessible 2ebsite0 in 2hole or in part.
0 e)cept foruse as per%itted in a license distributed 2ith a certain product or ser+ice or other2ise on a pass2ord$protected pass2ord$protected 2ebsite for classroo% use.
13
Chapter 19
=. #is$uss the the use of finan$ial finan$ial statements0 statements0 finan$ial finan$ial anal&sis0 anal&sis0 and *udgeting *udgeting as as management management $ontrols( Budget and financial controls tell 2hether the organi"ation is on sound financial footing and they can be useful indicators of others kinds of perfor%ance perfor%ance proble%s. Managers need to be able to e+aluate financial reports that co%pare their organi"ation9s perfor%ance 2ith earlier data or industry nor%s. The %ost co%%on financial analysis focuses on ratios. ratios. 6i'uidity ratios0 acti+ity ratios0 profitability profitability ratios0 and le+erage ratios are a%ong the %ost co%%on ratios. ratios. Budgets are a useful tool for planning planning an organi"ation9s organi"ation9s e)penditures. ()a%ples of types of budgets %anagers %anagers use are e)pense budgets0 re+enue budgets0 cash budgets0 and capital budgets. $urrentt trends trends in +ualit& +ualit& and finan$ial finan$ial $ontrol $ontrol00 in$luding ISO ISO 1222 and and $orporate $orporate . Identif& $urren governan$e0 governan$e0 and dis$uss dis$uss their impa$t impa$t on organizati organizations( ons(
International &uality Standards $ Many countries ha+e endorsed a uni+ersal fra%e2ork for 'uality assurance called IS# 4440 a set of international standards for 'uality %anage%ent adopted in the late 14s by %ore than <4 nations0 including the nited nited States. These standards set unifor% guidelines defining 2hat %anufacturing and ser+ice organi"ations should do to ensure their products confor% to high$'uality re'uire%ents. (cono%ic alue alue Added ?(A@ ?(A@ Syste%s $ Hundreds of co%panies co %panies ha+e set up econo%ic +alue added ?(A@ ?(A@ %easure%ent syste%s as a ne2 2ay to gauge financial perfor%ance. (A (A is defined as a co%pany9s net ?after$ta)@ operating profit %inus the cost of capital in+ested in the co%pany9s tangible assets. Measuring perfor%ance in ter%s of (A (A is intended to capture all the things a co%pany can do d o to add +alue fro% its acti+ities. Market alue alue Added ?MA@ ?MA@ Syste%s adds another di%ension because it %easures the stock %arket9s %arket9s esti%ate of the +alue of a co%pany9s past and pro7ected capital in+est%ent pro7ects. A positi+e MA MA usually usually goes hand$in$hand 2ith a high (A (A %easure%ent. %easure%ent. Acti+ity$Based Costing ?ABC@ $ Identifies +arious acti+ities needed to pro+ide a product and deter%ines the cost of each of those acti+ities. ABC allocates costs across business processesD processesD it pro+ides a %ore accurate picture of the cost of +arious products and ser+ices. In addition0 it enables %anagers to e+aluate 2hether %ore costs go to acti+ities that add +alue or o r to acti+ities that do not add +alue. Corporate go+ernance refers to the syste% of go+erning an organi"ation so that the interests of corporate shareholders are protected. protected. The financial reporting syste%s syste%s and the roles of boards of directors are being scrutini"ed in organi"ations around the 2orld to ensure that top leaders are keeping a close eye on the acti+ities of lo2er$le+el %anagers and e%ployees.
LECTURE OUTLINE
3415 Cengage 6earning. All *ights *eser+ed. May not be scanned0 copied or duplicated0 or posted to a publicly accessible 2ebsite0 in 2hole or in part. 0
e)cept foruse as per%itted in a license distributed 2ith a certain product or ser+ice or other2ise on a pass2ord$protected pass2ord$protected 2ebsite for classroo% use. .
Maa!"! Q#a$"t% a& Per'(r)a*e
184
IM3O4)M)NT IM3O4)M)NT AT ATTIT5#) TIT5#) In organi"ations0 continuous i%pro+e%ent in 'uality so%eti%es co%petes 2ith %anagerial desires for production efficiency. (fficiency can be %a)i%i"ed by eli%inating changes and 'uality i%pro+e%ents. Continuous i%pro+e%ent0 ho2e+er0 is an attitude that producti+ity can al2ays get better0 and each e%ployee can take responsibility to i%pro+e it. This attitude is appropriate for 'uality$conscious %anagers. Introducing fre'uent s%all changes that %ay te%porarily reduce efficiency is the best path to continuous i%pro+e%ent.
I. TH( TH( M(A M(AI I/ / #F C#T C#T*# *#6 6 Control0 including 'uality control0 co ntrol0 also in+ol+es office producti+ity0 such as i%pro+ed custo%er ser+ice0 eli%ination of bottlenecks0 and reduction in paper2ork %istakes. %istakes. 6ack of effecti+e control can seriously da%age an organi"ation9s health and threaten its future. Or!a"+at"(a$ *(tr($ is the syste%atic process through 2hich %anagers regulate organi"ational acti+ities to %ake the% consistent 2ith the e)pectations established in plans0 targets0 and standards of perfor%ance. To effecti+ely control an organi"ation0 %anagers ?or 2orkers@ re'uire infor%ation about perfor%ance standards0 actual perfor%ance0 and actions to correct de+iations fro% the standards. Most organi"ations organi"ations %easure and control perfor%ance using 'uantitati+e financial %easures. !iscussion &uestion E3- You6re a manager who emplo&s a parti$ipative $ontrol approa$h( You6ve $on$luded that $orre$tive a$tion is ne$essar& to improve $ustomer satisfa$tion0 *ut first &ou need to to $onvin$e $onvin$e &our emplo&ees emplo&ees that that the pro*lem pro*lem e%ists( e%ists( What 'ind 'ind of eviden$e eviden$e do &ou thin' thin' emplo&ees will find more $ompelling: +uantitative measurements or ane$dotes from &our intera$tions with $ustomers" )%plain &our answer( #T(S II. F( F((!BACG C#T*#6 M#!(6
()hibit 1.1
A. Four Steps Steps of Feed Feedback back Cont Control rol 1. (stabl (stablish ish Stan Standar dards ds of Perfor Perfor%an %ance ce a. ;ithin ;ithin the organi"at organi"ation9 ion9ss o+erall o+erall strategic strategic plan0 %anagers %anagers define define goals for for organi"ational depart%ents in specific0 operational ter%s. These include standards standards of performan$e performan$e against 2hich to co%pare organi"ational acti+ities. b. To effecti+ely e+aluate and re2ard e%ployees for the achie+e%ent of standards0 %anagers need clear standards that reflect acti+ities that contribute to the organi"ation9s organi"ation9s strategy. strategy. Standards should be defined clearly and precisely so e%ployees kno2 2hat they need to do and can deter%ine 2hether their acti+ities are on target. 3. Meas Measur uree Actua Actuall Perf Perfor or%a %anc ncee 3415 Cengage 6earning. All *ights *eser+ed. May not be scanned0 copied or duplicated0 or posted to a publicly accessible 2ebsite0 in 2hole or in part.
0 e)cept foruse as per%itted in a license distributed 2ith a certain product or ser+ice or other2ise on a pass2ord$protected pass2ord$protected 2ebsite for classroo% use.
181
Chapter 19
a. Most organi"at organi"ations ions prepare prepare for%al for%al reports reports of 'uantit 'uantitati+e ati+e perfor perfor%ance %ance %easure%ents that %anagers re+ie2 daily0 daily0 2eekly0 or %onthly. %onthly. These %easure%ents should be related to the standards set in the first step of the control process. Managers do not rely e)clusi+ely on 'uantitati+e %easure%ents. b. Managers obser+e for the%sel+es 2hether e%ployees are participating in decision %aking and ha+e opportunities to add to and share their kno2ledge. Managers also %onitor real$ti%e data that sho2 the popularity of certain products in specific deli+ery "ones and ti%e slots. 8. Co%par Co%paree Perfo Perfor%a r%ance nce to Standa Standards rds a. The third third step in the the control control process process co%pares co%pares actual actual acti+itie acti+itiess to perfor%anc perfor%ancee standards. ;hen perfor%ance de+iates fro% a standard0 %anagers %ust interpret interpret the de+iation. They %ust dig beneath the surface and find the cause of the proble%. b. (ffecti+e %anage%ent control in+ol+es sub7ecti+e 7udg%ent and e%ployee discussions0 as 2ell s ob7ecti+e analysis of perfor%ance data. :. Take ake Corre Correct cti+ i+ee Act Actio ion n a. Managers Managers also deter% deter%ine ine 2hat 2hat changes changes are necessar necessaryD yD %anagers %anagers %ay %ay encourage encourage e%ployees to 2ork harder0 redesign the production process0 or fire e%ployees. Managers in a participati+e control approach collaborate 2ith e%ployees to deter%ine the correcti+e action a ction necessary. b. Managers %ay take correcti+e action to change perfor%ance standards. Perfor%ance standards %ay need to be altered to %ake the% realistic and pro+ide %oti+ation. !iscussion &uestion E5- Thin' of a $lass that &ou6ve ta'en in the past( What standards of performan$e performan$e did &our &our professor professor esta*lish" esta*lish" 7ow was was &our a$tual a$tual performan$e performan$e measure measured" d" 7ow was &our performan$e $ompared to the standards" #o &ou thin' the standards standards and methods of measurement were were fair" Were the& appropriate to &our assigned wor'" Wh& or wh& not" #T(S B. The Balanced Scorecard
()hibit 1.3
1. The ,a$a*e& -*(re*ar& is a co%prehensi+e %anage%ent control syste% that balances traditional financial %easures 2ith operational %easures relating relating to a co%pany9s critical critical success factors. A balanced balanced scorecard contains four %a7or perspecti+es. 3415 Cengage 6earning. All *ights *eser+ed. May not be scanned0 copied or duplicated0 or posted to a publicly accessible 2ebsite0 in 2hole or in part. 0
e)cept foruse as per%itted in a license distributed 2ith a certain product or ser+ice or other2ise on a pass2ord$protected pass2ord$protected 2ebsite for classroo% use. .
Maa!"! Q#a$"t% a& Per'(r)a*e
183
finan$ial performan$e performan$e perspecti+e reflects a concern that the organi"ation9s a. The finan$ial organi"ation9s acti+ities contribute to i%pro+ing short$ and long$ter% financial perfor%ance.
b. !ustomer servi$e indicators %easure such things as ho2 custo%ers +ie2 the organi"ation0 as 2ell as custo%er retention and satisfaction. c. Internal *usiness *usiness pro$ess pro$ess indicators focus on production and operating statistics. d. 3otential 3otential for learning learning and growth growth indicators focus on ho2 2ell resources and hu%an capital are being %anaged for the co%pany9s future. 3. Managers Managers focus focus on +arious +arious ele%ents ele%ents of the the scorecard scorecard to set set targets0 targets0 e+aluate e+aluate perfor%ance0 and guide discussion about 2hat further actions to take. The balanced scorecard is not right right for e+ery organi"ation organi"ation in e+ery situation. The si%plicity of the the syste% causes %anagers to underesti%ate the ti%e and co%%it%ent needed. A key to successful i%ple%entation of the balanced scorecard approach is a perfor%ance %anage%ent orientation rather than a perfor%ance %easure%ent orientation. !iscussion &uestion E8- #es$ri*e #es$ri*e the advantages advantages of using using a *alan$ed *alan$ed s$ore$ar s$ore$ard d to measure measure and $ontrol organizational organizational performan$e( Suppose &ou $reated a *alan$ed s$ore$ard for Walmart( Walmart( What spe$ifi$ $ustomer servi$e measures would &ou in$lude" #T(S III. TH( CHA/I/ PHI6#S#PH #F C#T*#6 A. Hierarchic Hierarchical al +ersus !ecentrali !ecentrali"ed "ed Approaches Approaches
()hibit ()hibit 1.8
1. H"erar*h"*a$ *(tr($ in+ol+es %onitoring and influencing e%ployee beha+ior through rules0 policies0 hierarchy of authority0 2ritten docu%entation0 and re2ard syste%s. Hierarchical %ethods define e)plicit e)plicit rules0 policies0 and procedures for e%ployee beha+ior. Control relies on centrali"ed authority0 authority0 the for%al hierarchy0 hierarchy0 and close personal super+ision. *esponsibility for 'uality 'uality control rests 2ith 2ith 'uality control inspectors and super+isors super+isors rather than 2ith e%ployees. Hierarchical control techni'ues can enhance organi"ational efficiency and effecti+eness. 3. De*etra$"+e& *(tr($ relies on shared +alues and goals to control e%ployee beha+ior. beha+ior. Managers operate on the assu%ption that e%ployees are trust2orthy and 2illing to perfor% effecti+ely 2ithout e)tensi+e e)tensi+e rules and close super+ision. super+ision. The organi"ation places great e%phasis on the selection and sociali"ation of e%ployees to ensure that 2orkers ha+e the +alues needed to influence beha+ior 2hich %eets goals. ;ith ;ith decentrali"ed control0 the culture is adapti+e0 and %anagers recogni"e the i%portance of culture for uniting indi+idual0 tea%0 and organi"ational goals for greater o+erall control. 3415 Cengage 6earning. All *ights *eser+ed. May not be scanned0 copied or duplicated0 or posted to a publicly accessible 2ebsite0 in 2hole or in part.
0 e)cept foruse as per%itted in a license distributed 2ith a certain product or ser+ice or other2ise on a pass2ord$protected pass2ord$protected 2ebsite for classroo% use.
(nthusiastic ne2 %anagers %ay e)ercise too %uch of their ne2 control and get a negati+e backlash. Ho2e+er0 too little little control %ay %ean less accountability and producti+ity. producti+ity. The challenge for ne2 %anagers is to strike the right balance for the 7ob and people in+ol+ed. B. #pen$Book Manage%ent
()hibit 1.:
1. Ope.,((/ )aa!e)et allo2s e%ployees to see the financial condition of the co%pany for the%sel+es through charts0 co%puter printouts0 %eetings0 and so forth. #pen$book %anage%ent sho2s the indi+idual e%ployee ho2 his or her 7ob fits into the big picture and affects affects the financial future future of the organi"ation. In addition0 it ties e%ployee re2ards to the co%pany9s co%pany9s o+erall success. The goal of open$book %anage%ent is to get e+ery e%ployee thinking and acting like a business o2ner rather than like a hired hand. 3. In so%e so%e countries0 countries0 %anager %anagerss ha+e trouble trouble running running an open$book open$book co%pany co%pany because because the pre+ailing attitudes and standards standards foster confidentiality confidentiality and secrecy. secrecy. Many business people in countries like China0 *ussia0 and South Gorea are not accusto%ed to publicly disclosing financial details. de tails. 8. The #pacity #pacity Inde) indicat indicates es the degree degree to 2hich 2hich +arious +arious countries countries are open open regarding regarding econo%ic %atters. The higher the rating0 the %ore %ore opa'ue0 or hidden0 is the econo%y. econo%y. The .S. has an opacity rating of 330 2hich is fairly lo2. lo2. In countries 2ith higher ratings0 financial figures are typically closely guarded and %anag ers do not share infor%ation. /lobali"ation has an i%pact on econo%ic opacity by encouraging a con+ergence to2ard global accounting standards that support supp ort accurate collection0 recording0 and reporting of financial infor%ation. !iscussion &uesstion E1- You have *een hired to manage a <2-person staff for Nightlight Travels0 a travel agen$& in 9as 4egas( 4egas( or five &ears0 sales have *een hammered *& the glo*al re$ession0 and staff morale has plummeted as star emplo&ees have left for positions in more se$ure se$ure industries( industries( =e& $ustomer $ustomer relation relationships ships have *een *een damaged damaged *& the slopp& slopp& and unprofessional wor' ha*its of the remaining remaining staff mem*ers( Your first responsi*ilit& as new manager is to $reate $reate ne%t &ear6s *udget for all planned e%penditures( >ut first &ou must de$ide if &ou will adopt adopt a hierar$h hierar$hi$al i$al approa$h approa$h or a de$entrali de$entralized zed approa$h approa$h to $ontr $ontrol( ol( Whi$h one one would &ou $hoose0 and wh&" #T(S #T(S I. I. T#TA6 T#TA6 &A6IT MAA/(M(T ?T&M@
3415 Cengage 6earning. All *ights *eser+ed. May not be scanned0 copied or duplicated0 or posted to a publicly accessible 2ebsite0 in 2hole or in part. 0 e)cept foruse as per%itted in a license distributed 2ith a certain product or ser+ice or other2ise on a pass2ord$protected pass2ord$protected 2ebsite for classroo% use. .
Maa!"! Q#a$"t% a& Per'(r)a*e
18:
#ne popular approach based on decentrali"ed control philosophy is t(ta$ 0#a$"t% 'uality into e+ery acti+ity in a co%pany through through )aa!e)et TQM2 . T&M infuses 'uality continuous i%pro+e%ent. The T&M philosophy focuses on tea%2ork0increasing tea%2ork0 increasing custo%er satisfaction0 and lo2ering costs. costs. #rgani"ations i%ple%ent T&M by encouraging %anagers and e%ployees to collaborate across ac ross functions and depart%ents0 as 2ell as 2ith custo%ers and suppliers0 to identify identify areas for i%pro+e%ent0 no %atter %atter ho2 s%all. (ach 'uality i%pro+e%ent is a step to2ard perfection and %eeting a goal of "ero effects. A. T&M T&M Tech Techni ni'ue 'uess 1. &ual &ualit ity y Circ Circle less a. A 0#a$"t% *"r*$e is a group of si) to 13 +olunteer e%ployees 2ho %eet regularly to discuss and sol+e proble%s proble%s affecting the 'uality 'uality of their 2ork. They %eet during 2ork hours to identify proble%s and find solutions. b. The reason for using 'uality circles is to push decision %aking to a le+el at 2hich reco%%endations can be %ade by those 2ho do the 7ob. 3. Benc Bench% h%ar arki king ng
()hi () hibi bitt 1.< 1.<
a. Be*h)ar/"! is the continuous process of %easuring products0 produc ts0 ser+ices0 and practices against the toughest co%petitors or those co%panies recogni"ed as industry leaders. The key to successful bench%arking lies in analysis. b. A co%pany %ust honestly analy"e its current current procedures and deter%ine areas for i%pro+e%ent. A co%pany carefully selects co%petitors 2orthy of copying and e%ulates their internal processes and procedures. 8. Si) Sig%a
()hibit 1.5
a. S"3 S"!)a is a highly a%bitious 'uality standard that specifies a goal of no %ore than 8.: defects per %illion %illion parts. That %eans being defect$free .= percent of the ti%e. Si) Sig%a has beco%e a generic ter% ter% for a 'uality control approach that takes nothing for granted and e%phasi"es higher 'uality and lo2er costs. b. The discipline is based on !MAIC ?!efine0 Measure0 Analy"e0 I%pro+e0 and Control@. This %ethodology pro+ides a structured structured 2ay for sol+ing proble%s. proble%s. (ffecti+ely i%ple%enting Si) Sig%a re'uires a %a7or co%%it%ent fro% top %anage%ent because 2idespread change is re'uired. !iscussion &uestion E=- Some $riti$s argue that Si% Sigma is a $olle$tion of superfi$ial $hanges that often result in doing a super* /o* of *uilding the wrong produ$t or offering the wrong servi$e( #o &ou agree agree or or disagree" disagree" )%plain( )%plain( #T(S #T(S 3415 Cengage 6earning. All *ights *eser+ed. May not be scanned0 copied or duplicated0 or posted to a publicly accessible 2ebsite0 in 2hole or in part.
0 e)cept foruse as per%itted in a license distributed 2ith a certain product or ser+ice or other2ise on a pass2ord$protected pass2ord$protected 2ebsite for classroo% use.
18<
Chapter 19
:. &ual &ualit ity y partn partner erin ing g a. Q#a$"t% parter"! in+ol+es assigning dedicated personnel 2ith a particular functional area of the business. In this approach0 the 'uality 'uality control personnel 2ork alongside others 2ithin a functional area identifying opportunities for 'uality i%pro+e%ents throughout the 2ork process. b. This integrated0 partnering approach to 'uality %akes it possible to detect and address defects early in the product life cycle0 2hen they can be corrected %ost easily. <. Contin Continuous uous I%pro+ I%pro+e%e e%ent nt
()hibi ()hibitt 1.=
a. C(t"#(#- ")pr(4e)et is the i%ple%entation of a large nu%ber of s%all0 incre%ental i%pro+e%ents in all areas of the organi"ation on an on$going basis. b. All e%ployees are e)pected to contribute by initiating changes in their o2n 7ob acti+ities. There is no end to the process. process. Inno+ations can start si%ply0 si%ply0 and e%ployees can build on their success. B. T&M T&M Succ Succes esss Fact Factor orss 1. Many organi"a organi"ational tional contin contingency gency factors factors influence influence the the success success of a T&M progra progra%. %. 3. So%e So%e of these these factor factorss incl include ude-a. &uality &uality circles circles are are %ost beneficial beneficial 2hen 2hen e%ployees e%ployees ha+e ha+e challenging challenging 7obs. 7obs. b. T&M is %ost successful 2hen it enriches 7obs and i%pro+es e%ployee %oti+ation. c. ;hen participati participation on i%pro+es e%ployees e%ployees99 proble% proble%$sol+ $sol+ing ing skills0 skills0 producti+it producti+ity y is likely to increase. d. &uality &uality progra%s progra%s ha+e the the greatest greatest chance chance of success success in corporat corporatee cultures cultures that +alue 'uality and stress continuous i%pro+e%ent as a 2ay of life. !iscussion &uestion E- Wh& is *en$hmar'ing an important $omponent of TM programs" #o &ou *elieve *elieve a $ompan& $ompan& $ould have have a su$$essful su$$essful TM program program without without using *en$hmar *en$hmar'ing" 'ing" #T(S . B!/(T B!/(TA* A* C#T*# C#T*#6 6 3415 Cengage 6earning. All *ights *eser+ed. May not be scanned0 copied or duplicated0 or posted to a publicly accessible 2ebsite0 in 2hole or in part. 0
e)cept foruse as per%itted in a license distributed 2ith a certain product or ser+ice or other2ise on a pass2ord$protected pass2ord$protected 2ebsite for classroo% use. .
Maa!"! Q#a$"t% a& Per'(r)a*e
185
>udgetar& >udgetar& $ontrol $ontrol sets sets targets for an organi"ation9s organi"ation9s e)penditures0 %onitors results0 co%pare co %pare the% to the budget0 and %akes changes as needed. As a control de+ice0 budgets are reports that list planned and actual e)penditures for cash0 assets0 ra2 %aterials0 salaries0 and other resources. Budget reports usually list list the +ariance bet2een the budgeted and actual a%ounts for each ite%. A budget is is created for e+ery di+ision or depart%ent 2ithin an organi"ation so long as it perfor%s a distinct pro7ect0 progra%0 progra%0 or function. The funda%ental unit of analysis analysis for a budget control syste% is called a responsibility center. center. A re-p(-","$"t% *eter is any organi"ational depart%ent or unit under the super+ision of a single person 2ho is responsible for its acti+ity. acti+ity. Types of budgets %anagers use include e)pense budgets0 re+enue budgets0 and capital budgets.
A. ()pe ()pens nsee budge budget. t. An e3pe-e ,#&!et includes anticipated and actual e)penses for each responsibility center and for the total organi"ation. organi"ation. It %ay sho2 all e)penses or focus on a particular category0 category0 such as %aterials or research and de+elop%ent e)penses. ;hen actual e)penses e)ceed budgeted a%ounts0 the difference signals the need for %anagers to identify 2hether a proble% e)ists and if so0 take action. B. *e+e *e+enue nue bud budge get. t. A re4e#e ,#&!et lists forecasted and actual re+enues of the organi"ation. *e+enues belo2 the budgeted a%ount signal a need to in+estigate in+estigate the proble% to see 2hether the organi"ation can i%pro+e re+enues. *e+enues abo+e the budget re'uire deter%ining 2hether the organi"ation can obtain the resources to %eet the higher de%and for products. C. Cash Cash budg budget et.. A *a-h ,#&!et esti%ates receipts and e)penditures of %oney on a daily or 2eekly basis to ensure that an organi"ation has sufficient sufficient cash to %eet its obligations. It sho2s the le+el of funds flo2ing through the organi"ation and the nature of cash disburse%ents. If the cash budget sho2s that the fir% has %ore cash than necessary to %eet its short$ter% short$ter% needs0 the co%pany can in+est the e)cess funds. If the cash budget sho2s a payroll e)pense that e)ceeds the a%ount of %oney in the bank0 the organi"ation %ust borro2 cash to %eet the payroll. !.
Capital budget. A *ap"ta$ ,#&!et lists planned in+est%ents in %a7or assets such as buildings0 trucks0 and hea+y %achinery0 often in+ol+ing e)penditures o+er %ore than a year. A capital budget is necessary to to plan the i%pact of these e)penditures on cash flo2 and profitability.
(. ,ero$Based budget. A +er(.,a-e& ,#&!et"! is an approach to planning and decision %aking that re'uires a co%plete 7ustification for e+ery line$ite% in the budget0 instead of carrying for2ard a prior budget and applying percentage change. A "ero$based budget begins 2ith a starting point of 40 and e+ery dollar added to the budget is reflected by an actual0 docu%ented need. F. Budgeting Budgeting as part of of organi"a organi"ational tional planning planning and contro control. l. 1
Many Many trad tradit itio iona nall co%p co%pan anie iess use use t(p.&(5 ,#&!et"! 0 %eaning that the budgeted a%ounts for the co%ing year are i%posed on %iddle$ and lo2er$le+el %anagers.
3415 Cengage 6earning. All *ights *eser+ed. May not be scanned0 copied or duplicated0 or posted to a publicly accessible 2ebsite0 in 2hole or in part.
0 e)cept foruse as per%itted in a license distributed 2ith a certain product or ser+ice or other2ise on a pass2ord$protected pass2ord$protected 2ebsite for classroo% use.
18=
Chapter 19
3.
#the #thers rs are are beg begin inni ning ng to to ado adopt pt ,(tt().#p ,#&!et"! 0 in 2hich lo2er$le+el %anagers anticipate their depart%ents9 resource needs and pass the% up to top %anage%ent for appro+al.
!iscussion &uestion E:- In zero-*ased *udgeting0 ever& a$$ount starts at ?20 and ever& dollar added to the *udget is refle$ted refle$ted *& an a$tual0 do$umented need( Identif& the possi*le advantages of *ottom-up *udgeting #T(S #T(S I. I. FIA FIAC CIA IA6 6 C#T C#T*# *#6 6 A. Financial Financial State%ents State%ents
()hibit ()hibit 1.
1. Financial Financial state%ents state%ents pro+ide pro+ide the basic basic infor%ati infor%ation on used for financial financial control control of an organi"ation. 3. T2o %a7or financia financiall state%entsJ state%entsJthe the balance sheet sheet and the inco%e inco%e state%entJ state%entJare are the starting points for financial control. a. The ,a$a*e -heet sho2s the fir%9s financial position 2ith respect to assets and liabilities at a specific specific point in ti%e. It pro+ides three types types of infor%ation- assets J2hat the co%pany o2nsJincludes $urrent assets and fi%ed assets assetsD lia*ilities J the fir%9s debtsJincludes both $urrent de*t and and long-term de*t D and owners6 e+uit& Jthe difference bet2een assets and liabilitiesJis liabilitiesJis the co%pany9s co%pany9s net 2orth in stock and retained earnings. ()hibit 1. b. The "*()e -tate)et 0 also called a profit$and$loss state%ent or KP L 60 su%%ari"es the fir%9s financial perfor%ance for a gi+en ti%e inter+al0 usually one year. The *ottom line indicates the net inco%eJprofit or lossJfor the gi+en ti%e period. !iscussion &uestion E- What t&pes of anal&sis $an managers perform to help them diagnose a $ompan&6s $ompan&6s finan$ial $ondition" 7ow might a review review of finan$ial statements help managers diagnose other 'inds of performan$e pro*lems as well" #T(S B. Financial Analysis- Interpreting the u%bers
()hibit 1.14
3415 Cengage 6earning. All *ights *eser+ed. May not be scanned0 copied or duplicated0 or posted to a publicly accessible 2ebsite0 in 2hole or in part. 0
e)cept foruse as per%itted in a license distributed 2ith a certain product or ser+ice or other2ise on a pass2ord$protected pass2ord$protected 2ebsite for classroo% use. .
Maa!"! Q#a$"t% a& Per'(r)a*e
18
1. Financial Financial analysis analysis allo2s allo2s %anagers %anagers to to be able to e+aluat e+aluatee financial financial reports reports that co%pare their organi"ation9s perfor%ance 2ith earlier data or industry nor%s. 3. The %ost %ost co%%on co%%on financial financial analysi analysiss focuses focuses on ratios ratios00 2hich e)pres e)presss the relationships bet2een perfor%ance indicators such as profits and assets0 sales0 and in+entory. in+entory. Managers decide 2hich ratios re+eal the %ost i%portant relationships relationships for their businesses. a. A $"0#"&"t% rat"( indicates an organi"ation9s organi"ation9s ability to %eet its current debt obligations. The $urrent ratio ?current assets di+ided by current liabilities@ tells 2hether there are sufficient assets to con+ert into cash to pay off debts0 if needed. Another li'uidity ratio is the +ui$' ratio0 2hich is typically e)pressed as cash plus accounts recei+able di+ided by current liabilities. b. An a*t"4"t% rat"( %easures internal perfor%ance 2ith respect to key acti+ities defined by %anage%ent. Inventor& turnover is is calculated by di+iding the total sales by a+erage in+entoryD this tells ho2 %any ti%es the in+entory is used to %eet the the sales figure. The $onversion ratio is purchase orders di+ided by custo%er in'uiriesD this ration indicates effecti+eness in con+erting in'uiries into sales. c. A pr('"ta,"$"t% rat"( states profits relati+e to a source of profits0 such as sales or assets. The profit profit margin margin on sales sales is calculated as net inco%e di+ided by total sales. The gross gross margin margin is the gross ?before$ta)@ profit di+ided by total sales.
Another profitability %easure is return on assets ,OA.0 a percentage representing co%pany earnings fro% assets0 co%puted as net inco%e di+ided by total assets. *#A is is a +aluable yardstick for co%paring a co%pany9s ability to generate earnings 2ith 2ith other in+est%ent opportunities. opportunities. A co%pany should earn %ore by using its assets than it could by putting its in+est%ent in the bank.
d. Le4era!e rat"(6 9everage refers to funding acti+ities 2ith borro2ed %oney. %oney. A co%pany uses le+erage to %ake its assets produce %ore than they could on their o2n. Too %uch borro2ing can put the organi"ation at risk such that it 2ill be unable to keep up 2ith 2ith repay%ent of its debt. Managers track the de*t ratio0 or total debt di+ided by total assets0 to %ake sure that it does not e)ceed a le+el they consider acceptable. II. T*(!S T*(!S I &A6IT &A6IT A! FIACI FIACIA6 A6 C#T*#6 C#T*#6 A. Internatio International nal &uality &uality Standards Standards 1. The increasin increasing g significance significance of the the global econo%y econo%y pro+ides pro+ides one one i%petus i%petus for total total 'uality %anage%ent in the nited States. ISO 9777 -ta&ar&- are based on a set of international standards for 'uality %anage%ent syste%s established by the International Standards #rgani"ation #rgani"ation ?IS#@ in in /ene+a0 S2it"erland. Hundreds of 3415 Cengage 6earning. All *ights *eser+ed. May not be scanned0 copied or duplicated0 or posted to a publicly accessible 2ebsite0 in 2hole or in part.
0 e)cept foruse as per%itted in a license distributed 2ith a certain product or ser+ice or other2ise on a pass2ord$protected pass2ord$protected 2ebsite for classroo% use.
18
Chapter 19
thousands of organi"ations in 1<= countries ha+e been certified to de%onstrate their co%%it%ent to 'uality. 'uality. 3. IS# certifi certificatio cation n has beco%e beco%e the recogni"ed recogni"ed standard standard for for e+aluating e+aluating and co%pari co%paring ng co%panies on a global basis0 b asis0 and %ore .S. co%panies are feeling the pressure to participate in order to re%ain co%petiti+e in international %arkets. %arkets. Many countries and co%panies re'uire IS# certification before they 2ill do business 2ith an organi"ation. B. Corp Corpor orat atee /o+e /o+ern rnan ance ce 1. C(rp(rate !(4era*e refers to the syste% of go+erning an organi"ation so that the interests of corporate corporate shareholders are protected. The financial reporting syste%s syste%s and the roles of boards of directors are being scrutini"ed in organi"ations around the 2orld to ensure that top leaders are keeping keep ing a close eye on the acti+ities of lo2er$ le+el %anagers and e%ployees. 3. So%e So%e corpora corporate te failur failures es can be attri attribute buted d to under$ontrol because because top %anagers did not keep personal tabs on e+erything in in a large0 global organi"ation. organi"ation. The Sarbanes$ #)ley Act of 3443 re'uires se+eral types of refor%s0 including better internal %onitoring to reduce the risk of fraud0 certification of financial reports by top leaders0 i%pro+ed %easures for e)ternal auditing0 and enhanced public financial disclosure. So%e critics argue that Sarbanes$#)ley is creating a culture of over$ontrol that that is stifling inno+ation and gro2th. !iscussion &uestion E14- What is ISO $ertifi$ation" Wh& would a glo*al $ompan& li'e 8) want ISO $ertifi$ation" #T(S
A-5er- t( E&.('.Chapter E&.('.Chapter D"-*#--"( Q#e-t"(1. You have *een hired to manage a <2-person staff for Nightlight Travels0 a travel agen$& in 9as 4egas( 4egas( or five &ears0 &ears0 sales have have *een hammer hammered ed *& the glo*al glo*al re$essio re$ession0 n0 and staff morale has plummeted as star emplo&ees have left for positions in more se$ure industries( =e& $ustomer $ustomer relationsh relationships ips have *een *een damaged damaged *& the slopp& slopp& and unpro unprofessional fessional wor' ha*its of the remaining staff mem*ers( Your first responsi*ilit& as new manager is to $reate ne%t &ear6s *udget for all planned e%penditures( >ut first &ou must must de$ide if &ou will adopt a hierar$hi$al approa$h or a de$entralized approa$h to $ontrol( Whi$h one would &ou $hoose0 and wh&"
3415 Cengage 6earning. All *ights *eser+ed. May not be scanned0 copied or duplicated0 or posted to a publicly accessible 2ebsite0 in 2hole or in part. 0
e)cept foruse as per%itted in a license distributed 2ith a certain product or ser+ice or other2ise on a pass2ord$protected pass2ord$protected 2ebsite for classroo% use. .
Maa!"! Q#a$"t% a& Per'(r)a*e
1:4
A decentrali"ed approach to control see%s fa+orable for the abo+e scenario. !ecentrali"ed control relies on shared +alues and goals to control e%ployee beha+ior. Managers operate on the assu%ption that e%ployees are trust2orthy and 2illing to perfor% effecti+ely 2ithout e)tensi+e rules and close super+ision. The organi"ation places great e%phasis on the selection and sociali"ation of e%ployees to ensure that 2orkers ha+e the +alues needed to influence beha+ior 2hich %eets goals. Self$discipline and self$control are 2hat keep 2orkers perfor%ing their 7obs up to e)pected standards. (%po2er%ent of e%ployees0 effecti+e effecti+e sociali"ation0 and training can contribute to internal standards that pro+ide self$control. ;ith a decentrali"ed approach0 po2er 2ill be dispersed and based on kno2ledge and e)perience as %uch as position. p osition. The organi"ation structure is flat and hori"ontal 2ith fle)ible authority0 authority0 and tea%s of 2orkers sol+ing proble%s and %aking i%pro+e%ents. This 2ill be a great 2ay to i%pro+e the sloppy and unprofessional 2ork habits of the re%aining staff %e%bers0 as e+eryone 2ill be in+ol+ed in the 'uality control on an ongoing basis. Managers can not only %ake use of e)trinsic re2ards0 but also intrinsic re2ards for %eaningful 2ork and the opportunity to learn and gro2. ;ith ;ith decentrali"ed control0 the culture c ulture is adapti+e0 and %anagers recogni"e the i%portance of o f culture for uniting indi+idual0 tea%0 and organi"ational goals for greater o+erall control. 3. You6re a manager who emplo&s a parti$ipative $ontrol approa$h( You6ve $on$luded that $orre$tive a$tion is ne$essar& to improve $ustomer satisfa$tion0 *ut first &ou need to $onvin$e &our emplo&ees that the pro*lem e%ists( What 'ind of eviden$e do &ou thin' emplo&ees will find more $ompelling: +uantitative measurements or ane$dotes from &our intera$tions with $ustomers" )%plain &our answer( answer( Students %ay suggest that so%e e%ployees 2ill be %ore con+inced by 'uantitati+e 'u antitati+e %easure%ents because they consider the% to be ob7ecti+e and factual rather than sub7ecti+e and story bound. Indeed0 a fe2 e%ployees %ay be %ore con+inced by 'uantitati+e e+idenceD ho2e+er0 recall fro% the discussion in Chapter 1= that presenting hard facts an d figures rarely has the sa%e po2er as storytelling. Stories dra2 on people9s people9s i%aginations and e%otions0 2hich help %anagers %ake sense of a fast$changing en+iron%ent in 2ays that people can understand and share. Managers 2ho use sy%bols0 %etaphors0 and stories to deli+er their %essages ha+e an easier easier ti%e influencing and persuading others. others. (+idence of the co%patibility of stories 2ith hu%an thinking 2as de%onstrated by a study at Stanford Business School in 2hich students presented 2ith a +i+id story alone ?as opposed to a story and 'uantitati+e data or 'uantitati+e data alone@ 2ere %ost con+inced that the co%pany truly practiced a policy of a+oiding layoffs. the advantages advantages of using using a *alan$ed *alan$ed s$ore$ar s$ore$ard d to measure measure and and $ontrol $ontrol 8. #es$ri*e the organizational performan$e( Suppose &ou $reated a *alan$ed s$ore$ard s$ore$ard for Walmart( What spe$ifi$ $ustomer $ustomer servi$e servi$e measure measuress would &ou &ou in$lude" in$lude"
The balanced scorecard is a co%prehensi+e %anage%ent control syste% that balances traditional financial %easures 2ith operational %easures relating to a co%pany9s critical critical success factors. A balanced balanced scorecard contains four %a7or perspecti+es- financial perfor%ance0 custo%er ser+ice0 internal business processes0 and the organi"ation9 organi"ation9ss capacity for learning and gro2th. ;ithin ;ithin these four areas0 %anagers identify key perfor%ance %etrics 3415 Cengage 6earning. All *ights *eser+ed. May not be scanned0 copied or duplicated0 or posted to a publicly accessible 2ebsite0 in 2hole or in part.
0 e)cept foruse as per%itted in a license distributed 2ith a certain product or ser+ice or other2ise on a pass2ord$protected pass2ord$protected 2ebsite for classroo% use.
1:1
Chapter 19
the organi"ation 2ill track. The financial perspecti+e reflects reflects a concern that the organi"ation9s organi"ation9s acti+ities contribute to i%pro+ing short$ and long$ter% financial perfor%ance. It includes traditional %easures %easures such as net inco%e and return return on in+est%ent. Custo%er ser+ice indicators %easure such things as ho2 custo%ers +ie2 the organi"ation0 as 2ell as custo%er retention and satisfaction. satisfaction. Business process indicators indicators focus on production and operating statistics0 such as order fulfill%ent fulfill%ent or cost per order. order. The final co%ponent looks at the organi"ation9s potential for learning and gro2th0 focusing on ho2 2ell resources and hu%an capital are being %anaged for the co%pany9s co%pany9s future. Metrics %ay include such things things as e%ployee retention0 business process i%pro+e%ents0 and the introduction of ne2 products. The co%ponents of the scorecard are designed designed in an integrati+e %anner. %anner. The balanced scorecard helps %anagers focus on key ke y perfor%ance %easures and co%%unicate the% clearly c learly throughout the organi"ation. It has beco%e a core %anage%ent control syste% for %any organi"ations today0 today0 and can be applied to %ost any business. #b+iously0 #b+iously0 the %agnitude of this type of control syste% 2ill be %uch less in a s%all0 locali"ed storefront business than in a large corporation0 2ith a si%ilar contrast in the benefit to be deri+ed fro% i%ple%enting such a syste%. So%e specific custo%er ser+ice %easures students9 %ight %ention in relation to ;al%art ;al%art include length of 2ait in cashier lines0 ease of finding desired products0 a+ailability of desired products0 store cleanliness0 and in$store ser+ices such as eye$care centers0 banking facilities0 facilities0 fast food franchises0 etc. :. In zero-*ased zero-*ased *udgeting *udgeting00 ever& a$$ount a$$ount starts at at ?20 and ever& ever& dollar dollar added to the the *udget is refle$ted *& an a$tual0 do$umented need( Identif& the possi*le advantages of *ottom-up *udgeting( In botto%$up budgeting0 lo2er$le+el %anagers anticipate their depart%ents9 resource needs and pass the% up to top %anage%ent for appro+al. Co%panies of all kinds are in+ol+ing line %anagers in the budgeting process. This can help in redirecting resources as needed to achie+e goals 2ithin budget constraints. con straints. $ompanies have have poli$ies poli$ies that regulate regulate emplo&ees emplo&ees66 personal use use of wor' $ompute $omputers rs <. Most $ompanies during wor' hours( Some even monitor emplo&ee e-mails and tra$' the We* We* sites that have *een visited( #o &ou $onsider this t&pe of surveillan$e an invasion of priva$&" What are are the advantages of restri$ting emplo&ee use of the Internet and e-mail at wor'"
Co%puters used for Internet and e$%ail at 2ork belong to the e%ployer0 not the e%ployee0 2hich gi+es the e%ployer the right right to %onitor ho2 its co%puters are used. *estricting use of the Internet and e$%ail pre+ent e%ployees fro% engaging in inappropriate ?i.e.0 not 2ork related@ Internet surfing and personal e$%ail co%%unication. Moreo+er0 such restrictions keep e%ployees %ore focused on 2ork by pre+enting the% fro% abusing ?i.e.0 2asting@ co%pany ti%e surfing the Internet or readingN2riting personal e$%ails. 5. Thin' of a $lass &ou6ve ta'en in the past( What standards of performan$e did &our professor esta*lish" 7ow was was &our a$tual performan$e measured" measured" 7ow was &our performan$e $ompared to the standards" standards" #o &ou thin' the standards and methods of measurement measurement were fair" Were the& the& appropriate appropriate to &our assigned assigned wor'" Wh& or wh& wh& not" 3415 Cengage 6earning. All *ights *eser+ed. May not be scanned0 copied or duplicated0 or posted to a publicly accessible 2ebsite0 in 2hole or in part. 0
e)cept foruse as per%itted in a license distributed 2ith a certain product or ser+ice or other2ise on a pass2ord$protected pass2ord$protected 2ebsite for classroo% use. .
Maa!"! Q#a$"t% a& Per'(r)a*e
1:3
Perfor%ance standards are nor%ally set forth by the professor in deter%ining the grading procedure of a course. An e)a%ple could be 4$144 A9 A9s0 4$ B9s0 B9s0 =4$= C9s0 etc. etc. The actual perfor%ance is deter%ined through student test grades0 case %ethod analysis0 research papers0 participation in class0 and other assess%ent %ethods. The teacher can co%pare perfor%ance against the standards 2hen these assess%ent %easures are e+aluated. ;hen these results are gi+en back to students0 correcti+e action can be forthco%ing based on the perfor%ance 2hen co%pared against the standard. Perfor%ance standards and %easure%ent %ethods should be ad%inistered in a %anner consistent 2ith the syllabus and the general practices of the uni+ersity0 uni+ersity0 and should be directly related to stated e)pectations of perfor%ance. =. Some $riti$s argue that Si% Sigma is a $olle$tion of superfi$ial $hanges that often result in doing a super* /o* of *uilding the wrong wrong produ$t or offering the wrong wrong servi$e( #o &ou agree or disagree" )%plain( Based on the /reek letter sigma0 2hich statisticians use to %easure ho2 far so%ething de+iates fro% perfection0 Si) Sig%a is a highly a%bitious 'uality standard that specifies a goal of no %ore than 8.: defects per %illion parts. In recent years0 Si) Sig%a has de+iated fro% this precise definition to beco%e a generic ter% for a 'uality$control approach that takes nothing for granted and e%phasi"es a disciplined and relentless pursuit of higher 'uality and lo2er costs. The discipline is based on a fi+e$step %ethodology that pro+ides a structured 2ay for organi"ations to approach and sol+e proble%s. ;hile sa+ing ti%e and %oney and an d reducing defects is an ad%irable and an d certainly 2orth2hile pursuit0 Si) Sig%a does nothing to deter%ine 2hether the organi"ation is sa+ing ti%e and %oney and reducing defects 2ith regard to the right products or ser+ices. Thus0 one can %ake a +alid argu%ent that it is rather superficial and useless if the co%pany is producing goods or offering ser+ices ser+ices 2ith little little de%and. #n the other hand0 Si) Sig%a 2as not intended to be a business strategy i%pro+e%ent %odelD it assu%es the strategy and productNser+ice %i) are correct at the outset and is ai%ed at cost reduction and i%pro+e%ent of productNser+ice 'uality. 'uality. . What t&pes of anal&sis $an managers perform to help them diagnose a $ompan&6s finan$ial $ondition" 7ow $an a review of finan$ial statements help managers diagnose other 'inds of performan$e performan$e pro*lems pro*lems as well" well" Managers can perfor% a financial analysis of an inco%e state%ent and balance sheet of a co%pany to ascertain its strengths and 2eaknesses. The balance sheet sho2s the fir%9s fir%9s financial position 2ith respect to assets and liabilities liabilities at a specific point in ti%e. The balance sheet pro+ides three types of infor%ation- assets0 liabilities0 and o2ners9 e'uity. e'uity. Assets are 2hat the co%pany o2ns0 and they include current assets ?those that can be con+erted into cash in a short ti%e period@ and fi)ed assets ?such as buildings and e'uip%ent that are long ter% in nature.@ 6iabilities are the fir%9s fir%9s debts0 including both current debt ?obligations that 2ill be paid by the co%pany in the near future@ and long$ter% debt ?obligations payable o+er a long period.@ #2ners9 e'uity is the difference bet2een assets and liabilities liabilities and is the co%pany9s net 2orth in stock and retained earnings. 3415 Cengage 6earning. All *ights *eser+ed. May not be scanned0 copied or duplicated0 or posted to a publicly accessible 2ebsite0 in 2hole or in part.
0 e)cept foruse as per%itted in a license distributed 2ith a certain product or ser+ice or other2ise on a pass2ord$protected pass2ord$protected 2ebsite for classroo% use.
1:8
Chapter 19
The inco%e state%ent0 so%eti%es called a profit$and$loss state%ent or KPL6 for short0 su%%ari"es the fir%9s fir%9s financial perfor%ance for a gi+en ti%e inter+al0 usually one year. year. The inco%e state%ent sho2s re+enues co%ing into the organi"ation fro% all sources and subtracts all e)penses0 including cost of goods sold0 interest0 interest0 ta)es0 and depreciation. The botto% line indicates the net inco%eJprofit or lossJfor the gi+en ti%e period. Financial state%ents are indicators of perfor%ance proble%s. For e)a%ple0 a sales decline %any signal signal proble%s 2ith products0 custo%er ser+ice0 or sales for effecti+eness. effecti+eness. Managers need to be able to e+aluate financial reports that co%pare their organi"ation9s perfor%ance 2ith earlier data or industry nor%s. These co%parisons enable the% to see 2hether the organi"ation is i%pro+ing and 2hether it is co%petiti+e 2ith others in the industry. . Wh& is *en$hmar'ing an important $omponent of TM programs" #o &ou *elieve a $ompan& $ould have a su$$essful TM program without using *en$hmar'ing" Bench%arking is an i%portant co%ponent of total 'uality %anage%ent because it is defined d efined as Kthe continuous process of %easuring products0 ser+ices0 and practices against the toughest co%petitors or those co%panies recogni"ed recogni"ed as industry leaders. Bench%arking is a %a7or T&M co%ponent and 2ithout it the progra% is not going to be successful. The key to successful bench%arking lies in analysis. analysis. Starting 2ith its o2n %ission state%ent0 state%ent0 a co%pany should honestly analy"e its current procedures and deter%ine areas for i%pro+e%ent. As a second step0 a co%pany carefully carefully selects co%petitors 2orthy 2orthy of copying. Co%panies can e%ulate internal processes and procedures of co%petitors0 but %ust take care to select co%panies 2hose %ethods are are co%patible. #nce a strong0 co%patible progra% is is found and analy"ed0 the bench%arking co%pany can then de+ise a strategy for i%ple%enting a ne2 progra%. 14. What is ISO $ertifi$ation" Wh& would a glo*al $ompan& li'e 8eneral )le$tri$ want ISO $ertifi$ation" IS# certification refers refers to International &uality Standards. Standards. Many countries ha+e endorsed a uni+ersal fra%e2ork for 'uality assurance called IS# 4440 a set of international standards for 'uality %anage%ent adopted in the late 14s by %ore than <4 nations0 including the nited States. These standards set unifor% unifor% guidelines defining 2hat %anufacturing %anufacturing and ser+ice organi"ations should do to ensure their products confor% to high$'uality re'uire%ents. Many co%panies around the 2orld 2ill not do business 2ith other co%panies that are not IS# certified. (+en a global co%pany like /eneral (lectric (lectric 2ants IS# certification certification so that it 2ill not be deterred fro% doing business 2ith other co%panies.
App$% Y(#r S/"$$-8 E3per"et"a$ E3er*"-e
3415 Cengage 6earning. All *ights *eser+ed. May not be scanned0 copied or duplicated0 or posted to a publicly accessible 2ebsite0 in 2hole or in part. 0
e)cept foruse as per%itted in a license distributed 2ith a certain product or ser+ice or other2ise on a pass2ord$protected pass2ord$protected 2ebsite for classroo% use. .
Maa!"! Q#a$"t% a& Per'(r)a*e
1::
I- Y(#r Y(#r B#&!et " C(tr($
Students 2ill range fro% ha+ing the %ost disciplined budgeting habits0 to ade'uate budgeting habits0 to the poorest budgeting budgeting habits. Suggestions are %ade on ho2 to i%pro+e i%pro+e personal budgeting.
Students are asked to for% groups and assu%e one %e%ber has been assigned to 2rite a %a7or paper for 2hich each person in the group %ust do his or her part. Then0 they de+elop a list of rules and identify statistics by 2hich to control the beha+ior of group %e%bers0 as 2ell as conse'uences for breaking the rules. The students then discuss the i%portance of rules and the the ad+antages and disad+antages of ha+ing %any rules +ersus fe2 rules for a student group.
App$% Y(#r S/"$$-8 Eth"*a$ D"$e))a The :a!e- (' S"
Westwind6ss zero-toleran$e poli$& toward shoplifting( It6s It6s the right thing to do@and 1. !ontinue Westwind6 it will pa& off in the end in higher profita*ilit& *e$ause the $hain6s reputation for *eing tough on $rime will redu$e overall losses from theft(
Although this option upholds *oss9s father9s father9s lofty %oral ideals0 it isn9t particularly realistic gi+en the co%petition ;est2ind faces0 and the co%pany9s tough reputation 2ill probably not actually increase profitability in the long run any2ay. 3. Adopt !hris !hris #&'stra6 #&'stra6ss proposed proposed $hanges $hanges and show show more more lenien$& lenien$& to first-time first-time offenders( offenders( It is a more $ost-effe$tive approa$h to the pro*lem than the $urrent poli$&0 plus it sta&s $lose to &our father6s father6s original intent( intent( This is probably the best approach. As Chris noted0 by adopting this policy ;est2ind ;est2ind can reduce its costs of prosecuting shoplifters0 2hich 2ill help the% keep costs lo2er for custo%ers and co%pete %ore effecti+ely effecti+ely 2ith their co%petitors. co%petitors. Moral ideals aside0 it it doesn9t %ake good business sense to spend %ore %oney on prosecution of shoplifters than the cost of the ite%s being stolen. The 34 %ini%u% is relati+ely lo20 lo20 so the policy does stay so%e2hat close to the founder9s intent. !hris #&'stra6 #&'stra6ss proposed proposed $hanges $hanges with an even higher higher limit than than the proposed proposed ?<2 8. Adopt !hris amount ,sa&0 ?2 or ?B22.0 *ut whi$h is still less than the $ost of prose$ution( In addition0 ma'e sure the poli$& isn6t isn6t pu*li$ized( That wa& &ou6ll redu$e $osts even more and still *enefit from &our reputation for prose$uting all shoplifters(
This %ay be an option to consider if the 34 %ini%u% doesn9t achie+e the desired cost sa+ings fro% prosecutions. 3415 Cengage 6earning. All *ights *eser+ed. May not be scanned0 copied or duplicated0 or posted to a publicly accessible 2ebsite0 in 2hole or in part.
0 e)cept foruse as per%itted in a license distributed 2ith a certain product or ser+ice or other2ise on a pass2ord$protected pass2ord$protected 2ebsite for classroo% use.
1. What do &ou see as the ma/or strengths and flaws in the feed*a$' $ontrol s&stem used in the s$hools in this this s$enario" s$enario" What $hanges $hanges do &ou &ou re$ommen re$ommend d to over$ome over$ome the flaws" flaws" There are %a7or strengths and fla2s in the feedback control syste% used in the schools. The %a7or strengths being the fact that perfor%ance goal 2as set for each school district and for each teacher. Intensi+e training sessions 2ere conducted for principals and designated %aster teachers 2ho 2ould conduct the e+aluations based on four class obser+ations per teacher. teacher. Also0 officials used standardi"ed achie+e%ent tests to deri+e +alue$added scores that %easure student learning o+er the year. The %a7or fla2 being the fact that criteria +aried by state e+en though the syste% 2as under the guidance of the ational Council of Teacher Teacher &uality. The obser+ations %ade by the principal and %aster teacher 2ould be sub7ecti+e because there are personal factors that affect a true outco%e. In the upper$inco%e district0 the schools are o+erflo2ing 2ith children fro% 2ealthy fa%ilies0 2ho 2ill be applying to I+y 6eague schools. As no principal 2ill indicate that their students are recei+ing an education e ducation that is less than perfect0 the rankings are cra%%ed 2ith
grading s&stem *& prin$ipals prin$ipals and master master tea$hers tea$hers a valua*le valua*le part of a feed*a$' feed*a$' 3. Is B- grading $ontrol s&stem for tea$hers" Wh&"
The 1$< grading syste% by principals and %aster teachers does not see% to be a +aluable part of a feedback control co ntrol syste% for teachers as it is not an ob7ecti+e tool. Students9 responses %ay differ. might the state $ontr $ontrol ol the a$$ura$& a$$ura$& of prin$ipals prin$ipals who who are $ondu$ting $ondu$ting tea$her tea$her 8. 7ow might evaluations" )%plain(
3415 Cengage 6earning. All *ights *eser+ed. May not be scanned0 copied or duplicated0 or posted to a publicly accessible 2ebsite0 in 2hole or in part. 0
e)cept foruse as per%itted in a license distributed 2ith a certain product or ser+ice or other2ise on a pass2ord$protected pass2ord$protected 2ebsite for classroo% use. .
Maa!"! Q#a$"t% a& Per'(r)a*e
1:5
The state can %onitor and %ake it a strict rule for principals to %ake the nu%ber of %andatory school +isits that is re'uired. The principals9 area of e)pertise should also be taken into consideration 2hen e+aluating perfor%ance for a teacher fro% a certain course area.
1. Ho2 do %anagers at Barcelona control the co%pany9s financial perfor%anceO In the +ideo0 Barcelona uses %ultiple %ethods of controlling financial perfor%ance. First0 %anagers hold 2eekly %eetings during 2hich chefs and general %anagers re+ie2 financials. The e)changes get heated at ti%es as e+eryone re+ie2s PL6 nu%bers0 and o2ner Andy Pfor"hei%er puts %anagers on the spot if they don9t kno2 the costs of a suckling pig or o r are letting food costs rise abo+e 3< percent. pe rcent. Second0 each of Barcelona9s Barcelona9s se+en restaurants generates %onthly financial state%ents0 and %anagers of each restaurant track their o2n financial progress against the financials of the other restaurants. This friendly co%petition bet2een Barcelona restaurants %oti+ates %anagers to i%pro+e food and ser+ice 2hile %aintaining lo2 o+erhead costs. Third0 to incenti+i"e %anagers to gro2 the business0 Barcelona offers a 13 percent bonus on annual restaurant sales earned abo+e the co%pany9s base operating profit. The bonus %oney is significant and can be ad7usted up2ard or do2n2ard slightly to reflect the scores fro% the Secret Shopper Sho pper reports. 3. ;hat is the Kbalanced scorecard approach to %easuring corporate perfor%ance0 and in 2hat 2ays does Barcelona utili"e this approachO Traditionally0 Traditionally0 %ost businesses ha+e %easured and controlled con trolled their financial perfor%ance by by analy"ing sales0 re+enue0 and profit. The balanced scorecard approach e)pands the bases around 2hich a co%pany9s progress is %easured0 adding co%ponents such as custo%er ser+ice0 business process0 and learning and gro2th. These aspects of the business are then 'uantified and analy"ed to %easure gro2th and achie+e%ent. Barcelona *estaurant /roup %easures financial perfor%ance using traditional accounting %ethods0 but the co%pany also %easures its custo%er ser+ice perfor%ance 2ith the aid of fi+e Kfeedback loops that gather and assess custo%er feedback data. &uantifying custo%er ser+ice is especially i%portant for businesses in the restaurant industry0 industry0 2here custo%er satisfaction depends on intangible 'ualities such as pleasant ser+ers0 food preparation0 and short 2ait ti%es. 8. 6ist the four steps of the feedback control %odel and describe an instance 2here Barcelona follo2ed this process to i%pro+e its perfor%ance. The feedback control %odel consists of four key steps- establish standards0 %easure perfor%ance0 co%pare perfor%ance to standards0 and %ake corrections if perfor%ance fails to %eet standards. Student ans2ers 2ill +ary regarding situations 2here Barcelona follo2ed this process to %easure and control business perfor%ance.
3415 Cengage 6earning. All *ights *eser+ed. May not be scanned0 copied or duplicated0 or posted to a publicly accessible 2ebsite0 in 2hole or in part.
0 e)cept foruse as per%itted in a license distributed 2ith a certain product or ser+ice or other2ise on a pass2ord$protected pass2ord$protected 2ebsite for classroo% use.
