refers to the “process of ascertaining
whether organizational objectives have been achieved; if
not, why not; and determining what activities should then
be taken to achieve objectives better in the future
Controlling
STEPS IN THE CONTROL PROCESS
- establishing performance objectives and stan-
dards
2 measuring actual performance - comparing actual performance to objectives and
standards, and · - taking necessary action based on the results of
the comparisons.
Examples of such objectives and standards
are as follows:
- Sales targets- which are expressed in quantity
or monetary terms; - Production targets - which are expressed in
quantity or quality; - Worker attendance - which are expressed in
terms of rate of absences; - Safety record -which is expressed in number
of accidents for given periods; - Supplies used- which are expressed in quantity
or monetary terms for given periods.
TYPES OF CONTROL
1 . feedforward control
2. concurrent control, and
3. feedback control.
When management anticipates problems and pre-
vents their occurrence, the type of control measure
undertaken is called
feedforward control.
When operations are already ongoing and activities
to detect variances are made, _____ is said
to be undertaken.
concurrent control
When information is gathered about a completed
activity, and in order that evaluation and steps for improvement are derived, ____ is undertaken
feedback control
COMPONENTS OF ORGANIZATIONAL
CONTROL SYSTEMS
- strategic plan
- the long-range financial plan
- tbe operating budget
- performance appraisals
- statistical reports
- policies and procedures
provides
the basic control mechanism for the organization. When
there are indications that activities do not facilitate the
accomplishment of strategic goals, these activities are
either set aside, modified or expanded.
Strategic plan
indicates the expenditures, revenues, or profits planned for some future pertod
regarding operations.
Operating budget
pertain to those that contain data
on various developments within the firm.
Statistical reports
information which may be found in a statistical report
pertains to the following:
- labor efficiency rates
- quality control rejects
- accounts receivable
- accounts payable
- sales reports
- accident reporte
- power consumption report
refer to “the framework within which the
objectives must be pursued.”’ A procedure is a plan that
describes the exact series of actions to be taken in a given
situatioo.
Policies
STRATEGIC CONTROL SYSTEMS
- financial analysis
- financial ratio analysis
Financial ratios may be categorized into the following types:
- liquidity
- efficiency
- financial leverage
- profitability
These ratios assess the ability of
a company to meet its current obligations.
Liquidity ratio
This shows the extent to which
current assets of the company can cover its
current liabilities.
Current ratio
This is a measure of the firm’s
ability to pay off short-term obligations with the
use of current assets and without relying on the
sale of inventories
Acid-test ratio
These ratios show how effectively
certain assets or liabilities are being used in the produc-
tion of goods and services
Efficiency ratios
This is a group of ratios
designed to assess the balance of financing obtained
through debt and equity sources.
Financial leverage ratio
These ratios measure how much
operating income or net income a company is able to gen-
erate in relation to its assets, owner’s equity, and sales.
Profitability ratios
IDENTIFYING CONTROL PROBLEMS
- executive reality check
- comprehensive internal audit
- general checklist of symptoms of inadequate
control
Symptoms of Inadequate Control
- An unexplained decline in revenues and profits.
- A degradation of service (customer complaints).
- Employee dissatisfaction (complaints, grievances,
turnover}. - Cash shortages caused by bloated inventories
or delinquent accounts receivable. - Idle facilities or personnel.
- Disorganized operations (work flow bottlenecks, excessive paperwork).
- Excessive costs
- Evidence of waste and inefficiency (scrap,
rework).
