1. ©Prentice Hall, 2001Chapter 131 Foundations of Control

2. ©Prentice Hall, 2001Chapter 132 Learning Outcomes Define control Describe three approaches to control Explain why control is important Define the control process Analyze the three types of control

3. ©Prentice Hall, 2001Chapter 133 Learning Outcomes Describe an effective control system Identify contingency factors in the control process Learn the dysfunctional side of controls Describe how national differences affect the control process Study ethical issues in employee monitoring

4. ©Prentice Hall, 2001Chapter 134 Three Approaches to Control Systems MarketControlMarketControlClanControlClanControlBureaucraticControlBureaucraticControl

5. ©Prentice Hall, 2001Chapter 135 Managerial Decisions in the Control Process Identify Causes Identify Causes Correct Performance Correct Performance Variance Acceptable? Variance Acceptable? Revise Standard Revise Standard Attained? Standard Attained? Standard Acceptable? Standard Acceptable? Yes No Compare Performance to Standard Compare Performance to Standard Measure Performance Measure Performance Objectives Standard Do Nothing

6. ©Prentice Hall, 2001Chapter 136InformationPeopleFinancesOperations What Managers Measure

7. ©Prentice Hall, 2001Chapter 137 Defining an Acceptable Range of Variation Acceptable Upper Limit Standard Acceptable Lower Limit Acceptable Range of Variation t t+1 t+2 t+3 t+4 t+5

8. ©Prentice Hall, 2001Chapter 138 Mid-Western Distributors’ Sales for July (in hundreds of cases) Heineken Molson Beck’s Moosehead Labatt’s Corona Amstel Light Dos Equis Tecate Total Cases 1,075 630 800 620 540 160 225 80 170 4,300 913 634 912 622 672 140 220 65 286 4,464 (162) 4 112 2 132 (20) (5) (15) 116 164 Brand Standard ActualOver (Under)

9. ©Prentice Hall, 2001Chapter 139 Do Nothing TakingManagerialActionTakingManagerialAction CorrectPerformanceCorrectPerformance Revise the Standard Revise

10. ©Prentice Hall, 2001Chapter 1310 InputInputProcessesProcessesOutputOutput FeedforwardControlAnticipatesProblemsFeedforwardControlAnticipatesProblemsConcurrentControl Corrects Problems as They Happen ConcurrentControl Corrects Problems as They Happen FeedbackControl Corrects Problems after They Occur FeedbackControl Corrects Problems after They Occur Three Types of Control

11. ©Prentice Hall, 2001Chapter 1311 Qualities of an Effective Control System Accuracy Timeliness Economy Flexibility Understandability

12. ©Prentice Hall, 2001Chapter 1312 Qualities of an Effective Control System Reasonable criteria Emphasis on exceptions Strategic placement Multiple criteria Corrective action

13. ©Prentice Hall, 2001Chapter 1313 Contingency Factors in Control Systems Organization Size Position and Level Degree of Decentralization Organizational Culture Importance of an Activity Small Large Informal, personal management Formal, personal management High Low High Low Open Closed High Low Contingency Variable Control Recommendations Many complex criteria Few, easy-to-measure criteria Increased number of controls Reduced number of controls Informal, self-control Formal, external controls Elaborate, comprehensive controls Loose, informal controls

14. ©Prentice Hall, 2001Chapter 1314 Adjusting Controls for National Differences Technology and the Comparability of Data Distance and the Formality of Controls

15. ©Prentice Hall, 2001Chapter 1315 Dysfunctional Controls Inflexible Controls Inflexible Controls Unreasonable Standards Unreasonable Standards

16. ©Prentice Hall, 2001Chapter 1316 InformEmployees Have a Written Policy Monitor for Business Reasons Ethical Issues and Control Questions of Privacy