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SYMBOL
A-1
DECISION- MAKING
STYLE
AUTOCRATIC LEADER
Leader solves the problem or makes the
decision
himself
using
available
information.
A-2
DEGREE OF
SUBORDINATE
PARTICIPATION
None
Low
CONSULTATIVE LEADER
Leader approaches subordinates
Moderate
C-2
Moderate
High
GROUP DIRECTED
Leader shares the problem with
subordinates as a group. Lets the group
generate and evaluate alternative
solutions and then collectively decides.
CONTROLLING
WHAT IS CONTROLLING?
Controlling 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
completes the cycle of management functions. Objectives and goals that are set
at the planning stage are verified as to achievement or completion at any given
point in the organizing and implementing stages. When expectations are not met
at scheduled dates, corrective measures are usually undertaken.
IMPORTANCE OF CONTROLLING
When controlling is properly implemented, it will help the organization
achieved its goal the most efficient and effective manner possible. Deviation,
mistakes, and shortcomings happen inevitably. When they occur in daily
operations, they contribute to unnecessary expenditures which increase the cost
of producing goods and services. Proper control measures minimize the ill effects
of such negative occurrences. An effective inventory control system, for instance,
minimize if not totally eliminates losses in inventory. The importance of
controlling maybe illustrated as it is applied in a typical factory. If the required
standards daily output for individual works is 100 pieces, all workers who do not
produce the requirement are given sufficient time to improve; if no improvements
are forthcoming, they are asked to resign. This action will help the company keep
its overhead another costs at expected levels. If no such control is made, the
company will be faced with escalating production costs, which will place the
viability of the firm in jeopardy.
TYPES OF CONTROL
Control consists of three distinct types, namely:
1. Feed Forward Control
2. Concurrent Control, and
3. Feedback Control.
Feed Forward Control
When management anticipates problems and prevents their occurrence,
the type of control measure undertaken is called feed forward control. This type
of control provides the assurance that the required human and nonhuman
resources are in place before operations begin. An example is provided as
follow: The manager of a chemical manufacturing firm makes sure that the best
people are selected and hired to fill jobs. Materials required in the production
process are carefully checked to detect defects. The foregoing control measures
are designed to prevent wasting valuable resources. If these measures are not
undertaken, the likelihood that problems will occur is always present.
Concurrent Control
When operations are already ongoing and activities to detect variances
are made, concurrent control is said to be undertaken. It is always possible that
deviations from standards will happen the production process. When such
deviations occur, adjustments are made to ensure compliance with requirements.
Information on the adjustments is also necessary inputs in there-operational
phase. Examples of activities using concurrent control are as follows: The
manager of a construction firm constantly monitors the progress of the
companys projects. When construction is behind schedule, corrective measures
like the hiring of additional manpower are made. In a firm engaged in the
production and distribution of water, the chemical composition of the water
procured from various sources is checked thoroughly before they are distributed
to the consumers. The production manager of an electronics manufacturing firm
inspects regularly the outputs consisting of various electronics products coming
out of production line.
Feedback control
When information is gathered about a completed activity, and in order that
evaluation and steps for improvement are derived, feedback control is
undertaken. Corrective actions aimed at improving future activities are features
of feedback control. Feedback control validates objectives and standards. If
accomplishments consist only of percentage of standards requirements, the
standard may be too high or inappropriate. An example of feedback control is the
supervisor who discovers that continuous overtime work for factory workers
lowers the quality of output. The feedback information obtained leads to some
adjustments in the overtime schedule.
modified or expanded. These corrective measures are made possible with the
adoption of strategic plans.
The Long-Range Financial Plan
The planning horizon differs from company to company. Most firms will be
satisfied with one year. Engineering firms, however, will require longer term
financial plans. This is because of the long lead times needed for capital projects.
An example is the engineering firm assigned to construct the Light Rail Transit
(LRT) within three years. As such, the three-year financial plan will be very
useful. The financial plan recommends a direction for financial activities. If the
goal does not appear to be where the firm is headed, the control mechanism
should be made to work.
The Operating Budget
An operating budget indicates the expenditures, revenues, or profits
planned for some future period regarding operations. The figures appearing in
the budget are used as standard measurements for performance.
Performance Appraisals
Performance appraisal measures employee performance. As such, it
provides employees with a guide on how to do their jobs better in the future.
Performance appraisals also function as effective checks on new policies and
programs. For example, if a new equipment has been acquired for the use of an
employee, it would be useful to find out if it had a positive effect on his
performance.
Statistical Reports
Statistical reports pertain to those that contain data on various
developments within the firm. Among the information which may be found in
a statistical report pertains to the following:
1. labor efficiency rates
2. quality control rejects
3. accounts receivable
4. accounts payable
5. sales reports
6. accident reports
7. power consumption report
Policies and procedures
Policies 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 situation. An example of policy is as follow: Whenever two or
more activities compete for the companys attention, the client takes priority. An
example of a procedure is as follows: Procedure in the purchase of equipment:
Financial Analysis
The success of most organizations depends heavily on its financial
performance. It is just fitting those certain measurements of financial
performance to be made so that whatever deviations from standards are found
out, corrective actions may be introduced.
Financial Ratio Analysis
Financial ratio analysis is a more elaborate approach used in controlling
activities. Under this method, one account appearing in the financial statement is
paired with another to constitute oration. The result will be compared with a
required norm which is usually related to what other companies in the industry
has achieved, or what the company has achieved in the past. When deviations
occur, explanations are sought in preparation for whatever action is necessary.
Financial ratios may be categorized into the following types:
1. liquidity
2. efficiency
3. financial leverage
4. profitability
Liquidity Ratios
These ratios assess the ability of a company to meet its current
obligations. The following ratios are important indicators of liquidity
1. Current ratio this shows the extent to which current assets of the
company can cover its current liabilities. The formula for computing
current ratio is as follows: Current ratio = current assets/current liabilities
2. Acid-test ratio this is a measure of the firms ability to payoff short-term
obligations with the use of current assets and without relying on sale of
inventories. Acid-test ratio = current assets inventories/current liabilities
Efficiency Ratios
The ratios show how effectively certain assets or liabilities are being used
in the production of goods and services.
1. Inventory turnover ratio this ratio measures the number of times an
inventory is turned over (or sold) each year. This is computed as follows:
Inventory turnover ratio = cost of goods sold/inventory
2. Fixed asset turnover this ratio is used to measure utilization of the
companys investment in its fixed assets, such as its plant and equipment.
Fixed asset turnover = net sales/net fixed assets
Return on equity ratio this ratio measures the returns on the owners
investment. It may be arrived at by using the following formula: Return on equity
ratio = net income/equity
OPERATION MANAGEMENT
It is an area of management concerned with overseeing, designing, and
controlling the process of production and redesigning business operations in the
production of goods or services. It involves the responsibility of ensuring
that business operations are efficient in terms of using as few resources as
needed, and effective in terms of meeting customer requirements.
Sector
Business involved in
Primary
Secondary
Tertiary
Inputs
It includes men, materials, machines, instructions, drawings, and paper work and
instructions.
Conversion process
Output
Includes good and services (e.g. products, parts, paper work, served customers
etc.)