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Glossary of Essentials of Contemporary Management, Chapter 8

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Nokia Example Point?
the ways in which managers use organizational control and culture affects the way employees behave.
Purpose of organizational control:
to provide managers with a means to direct and motivate subordinates to work toward achieving org. goals and to provide managers with specific feedback on how weel and org and its members are performing.
controlling
the process whereby managers monitor an dregulate how efficiently and effectively an organizaton and its memebers are performing th eactivities nevessary to achieve organization goals.
control systems
formal target setting, monitoring, evlatioation and feedback systems that provide managers with info about how well the org's strategy and structure are working.
Effective control system characteristics:
1) flexible
2) accurate
3) timely
Three types of control
Input stage-conversion stage-output stage
feedforward control-concurrent control- feedback control
feedforward control
control that allows managers to anticipate problems beore they arise. (at input stage)
concurrent control
control that gives managers immediate feedback on how efficiently imnuts are being transformed into outputs so that managers can correct probelms as they arise. at concurrent stage
feedback control
control that gives managers information about customers reactions to goods and services so that corrective action can be taken if necessary, at the output stage
Control process step one
establish the standards of performace, goals or targets against which performance is to be evaluated.
Control process step two
measure actual performance: actual outputs and behaviors
Control Process Step Three
Compare actual performance against chosen standards of performance
Control Process Step Four
Evaluate th eresult an dinitiate corrective action if the standards is not being achieved.
Profit ratios
measure how efficiently manages are using the orgs resources to generate profits
Return on Investment
org's netincome before taxes divided by its total assets- financial performance measure
Gross profit margin
difference between the amount of revenue generated by a product and the resourcesused to produce the product
Liquidity ratios
measure how well managers have protected org resources to be able to meet short term obligations
current ratio:
current assets/current liabilities, tells managers whether they have the resources avail. to meet claims of short t erm creditors
quick ratio
tells wehtehr they can pay these claims w/out selling inventory
leverage ratios
measure the degree to which managers use debt or equity to finance ongoing operations
debt to assets ratio
total debt/total assets, to what extent have managers borrowed funds to finance invest?
times-covered ratio
profit before int. and taxes/total interest charge: measures how far profots can decline before managers cannot meet interest changes
activity ratios
measures of how well managers ar ecreating value from org. assets
inventory turnover
measures how efficiently managers are turning inv over so that excess inv is not carried. COGS/Inventory
Days sales outstanding
accounts recievable/total sales/300- provides info on how efficiently managers are collecting revenue from customers to pay expenses
The best goals are :
specific, difficult goals, that will challenge and stretch manager's ability but not out of reach, stretch goals
Operating Budget
a budge that states how managers intend t o use org resources to achieve org goals
cost/expense budget approach
given fixed budget, measured on amoutn of goods or services produced using those resources
revenue budget approach
maximize the revenues from the sales of goods and services produced
profit budget approach
difference betweem revenues generated by the sales of goods and services and the budgeted cost of makeing those goods and services
Gillette Example Point?
an unhappy outcome often results when orgs use the wrong set of goals to control and motivate their employees
Direct Supervision
form of behavior control. managers actively monitor and observe the behavior of their suborginates, teach sub orgs the behaviors that are appro. andinappro. and intervene to take corrective action as needed
Problems with direct supervision
expensive, can demotivate subordinates, subords may not take resposibility, not always feasible
management by objectives
a goal setting process in which a manager and his or her subordinates negotiate specific goals and objectives for the subordinate to achieve and then periodcally evaluate the extent to which the subordinate is achievingthose goals
Management by objective step one:
specific goals and objectives are establish at each level of the organization
management by objective step two:
managers and their subordinates together determine the subordinates goals
Management by objective step three:
managers and their subordinates periodically review the subordinates progress toward meeting goals
Cypress semiconductor's Example Point:
made a system that allowed him to exercise control over organzation without resorting to exp. layers of management hierarchy and direct supervision
Bereaucratic Control
control of behavior by means of a comprehensive system or rules and standard operativing procedures
standardized behavior
actions a re performed the same way time and time again, and the outcomes of work are predictable
siteROCK's example point:
using beaurcratic control with lots of written down ways for things to do for employees
problems with bureaucratic control:
establish rules is easier than discarding them, rules constrain people and people stop thinking for themselves
When output control and behavioral control are inappropriate:
managers cannot evaluate performance of doctors, etc on day to day basis, cannot respond to emergency situations or discovering new things, surgery doesnt need a time limit
Organizational culture
the set of values, normams, standards for behavior, and shared expectations tha tinfluence the way sin which individuals, groups and teams interact with each other and cooperate to achieve org. goals
clan control
the control exerted on individuals and groups in and organization by shared values, norms, standards for behavior and expectations
why is organizational culture important?
1) makes control possible when other methods arent possible
2)makes employees think about whats better for the org in the long run
Factors that create a strong organizational culture
values of the founder, ceremonies and rites, socialization, stories and language
Values of the Founder
founders set the scene for values and norms, org vision
Organizational socialization
the process by which newcomers learn an organizations value sand normas and acquire the work behaviors necessary to perform jobs effectively
Ceremonies and Rites
formal events that recognize incidents of importance to the org as a whole and to specific employees
Rites of passage
detemine how individuals enter, advance within or leave the org.
Rites of Integration
shared announcements of org successes, office parties, company cookouts
Rites of enhancement
awards dinners, newspaper releases, employee promotions
Stories and Language
can reveal the kinds of behaviors that are valued by the organization and the kinds of practices that are frowned upon.

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