CHAPTER 9 PRODUCTIVITY THROUGH MANAGEMENT AND QUALITY CONTROL SYSTEMS

True/False Questions
1. 2. 3. 4. 5. 6. 7. 8. 9. The systematic process of making organizational activities to make them consistent with standards and goals is called organizational control. Feedforward control is sometimes called preliminary or preventive quality control. Concurrent control is a unique form of control because it assesses future work activities. Concurrent control focuses on the organization's outputs. The final step of the feedback control model is either to do nothing if performance is adequate or to take corrective action if performance is inadequate. Even though contingency factors that influence organizational performance change, performance standards should never be altered. In most companies, managers rely exclusively on quantitative measures. The fundamental unit of analysis for a budget control system is called a responsibility center. A process in which lower level managers anticipate their departments resource needs and pass them up to top management for approval is called bottom-up budgeting. Centralized control relies on social values, traditions, shared beliefs, and trust to foster compliance with organizational goals. Decentralized control represents the absence of control because visible rules, supervision, and procedures are absent. Total factor productivity is the ratio of total outputs to a major category of inputs. A group of from six to twelve volunteer employees who meet regularly to discuss and solve problems affecting their common work activities is called a quality team. Continuous improvement is the implementation of a large number of small,

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Chapter 15 Productivity Through Management and Quality Control Systems

incremental improvements in all areas of the organization on an ongoing basis. 15. *16. *17. 18. *19. Quality programs have a greater chance for success if the corporate culture stresses big dramatic improvements rather than continuous improvement. ISO 9000 was created as a result of the increasing significance of the global economy. Economic value-added is a control system that measures performance in terms of after-tax profits minus the cost of capital invested in tangible assets. Open-book management ties employee rewards to the company's overall success. A balanced scorecard contains four major perspectives. They are customer service, external business processes, financial performances, and the organizations capacity for learning and growth. Corporate governance is a system of controlling an organization in which the external stakeholders have a vote.

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Organizational ______ is defined as the systematic process through which managers regulate organizational activities to make them consistent with expectations established in plans, targets, and standards of work performance. a. control b. planning c. staffing d. directing e. organizing The three types of control are: a. feedforward, concurrent, and feedback. b. performance, quality, and quantity. c. quality, performance, and feedback. d. feedforward, quality, and feedback. e. feedforward, concurrent, and quality. _____ control focuses on human, material, and financial resources that flow into the organization. a. Concurrent b. Feedback c. Feedforward d. Clan e. Bureaucratic _____ control is also referred to as preventive or preliminary control.

Multiple Choice Questions

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Chapter 15 Productivity Through Management and Quality Control Systems

a. b. c. d. e. *5.

Concurrent Feedback Feedforward Clan Bureaucratic

_____ controls deals with active anticipation of problems. a. Feedforward b. Concurrent c. Feedback d. Post-action e. Output Thrush Aircraft Inc. manufactures airplanes used for crop-dusting. Each plane the company produces must pass through extensive tests before being certified for delivery to a customer. These tests are an example of _____ controls. a. feedback control. b. feedforward control. c. characteristics control d. concurrent e. participative Preventive quality control is also known as: a. concurrent control. b. feedback control. c. output control. d. preliminary control. e. subjective control. Which of the following is an example of a feedforward control? a. a manager observing a new employee to see how he is performing b. the performance appraisal interview c. an examination of an employee's work records d. inspection of raw materials to ensure that they meet quality standards before they are forwarded to the assembly line e. an examination of how well a product was structured after it has been in an accident When a manufacturer of pesticides conducts a psychological exam of all employees who will have access to the deadly chemicals used in manufacturing the pesticides, it is an example of a _____ control. a. concurrent control. b. feedback control. c. output control. d. feedforward control. e. subjective control.

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10.

The manager overseeing the canning of soft drink likes to grab a can off the filler line occasionally to make sure that the can contains the stated number of ounces This is an example of a: a. feedback control. b. concurrent control. c. feedforward control. d. behavioral control. e. non-trusting control. _______ control monitors ongoing employee activities to ensure that they are consistent with quality standards. a. Concurrent b. Feedback c. Feedforward d. Clan e. Bureaucratic Managers working at the headquarters of Zara, the European retailer, have immediate access to sales figures of a particular dress style at a given moment on any day. By the end of the day, they know if they need to reorder a dress or consider putting a dress on the sales rack. Zara's inventory control system is an example of a: a. feedback control. b. feedforward control. c. concurrent control. d. situational control. e. technological control. Feedback control is sometimes called: a. output control. b. concurrent control. c. preventive quality control. d. preliminary control. e. precaution control. _____ control focuses on the organization's outputs. a. Feedback b. Output c. Postaction d. All of these. e. a and c only. A crop-dusting airplane takes a lot of abuse. It does a lot of landings and take-offs at maximum capacity. Thrush, the manufacturer of this type of aircraft, likes to get a chance to repair one of its planes so they can examine how well its construction reacted under rigorous use. In this example, Thrush would be using: a. a concurrent control.

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b. c. d. e. *16.

a feedback control. a feedforward control. preliminary control. preventive control.

The request cards on the tables of many fast-food restaurants ask for the patrons' opinion of the food and service. Responses to this card are an example of a(n): a. concurrent control. b. feedback control. c. feedforward control. d. preventive control. e. participative control. Have you ever been in the restroom of a convenience store and noticed the sign on the back of most doors that reads, "We appreciate your business. Please tell an employee if this restroom is not up to your standards."? While the words may differ, the message is the same in this form of: a. concurrent control. b. feedback control. c. feedforward control. d. preliminary control. e. damage control. What are the key steps in designing a well-designed control system? a. Find out what data you need, collect the data, and write the report. b. Establish standards of performance, measure actual performance, compare performance to standards, and take corrective action. c. Plan, organize, control, and staff. d. Appoint a good leader, develop a mission, communicate the mission, step aside, and wait for line personnel to achieve the mission. e. Establish the standards, communicate the standards, and compare the actual with the standard. According to the feedback control model, after establishing standards of performance, the manager should: a. compare performance to standards. b. get the standards approved by the supervisors and subordinates. c. measure actual performance. d. take corrective action. e. provide feedback. The manager of Johnny's, a car-themed restaurant chain, sends monthly reports to the company's headquarters. His reports include information on sales, profits, food and labor costs as well as maintenance issues. He does not include any customer complaints nor does he mention the fact that often customers leave the restaurant before they receive their order. Which of the following components of the control model need improvement? a. measurement of actual performance

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b. c. d. e. 21.

the planning and setting of performance standards SWOT analysis the ability to take corrective action when necessary all of these

The first step in the control system is to: a. establish strategic objectives. b. establish standards of performance. c. take corrective action. d. compare performance to standard. e. measure previous performance. The manager of Dinner Dreams, a catering company, holds quarterly meetings with its staff to set revenue goals, new-customer goals, and customer service goals. Their quarterly meetings are similar to which component of the control model? a. taking corrective action when necessary b. an information system c. establishing performance standards d. engaging strategic analysis e. taking corrective action In most organizations, managers must rely on quantitative measures and _____ in order to exert effective control. a. numerical Indicators b. profits c. their own judgment d. goal achievement e. employees' norms The owner of Kofola, a Czech cola, has developed detailed production directions, control measures, and distribution strategies that should allow the drink to sell well in the European market. The cola has not come close to reaching its predicted sales because the plant manager still manages like he did when it was a communist country. He wants his employees to make all the decisions even though he has been repeatedly told that he is responsible for making sure that production, quality, and distribution goals are met. The control process at the Kofola plant has flaws in which of the following areas? a. its performance standards b. its management information systems c. its ability to take corrective action when necessary d. its measurement systems e. its autonomous controls Which of the following would not be a standard of performance? a. reducing the reject rate from 15 to 3 percent b. increasing the corporation's rate of return on investment to 7 percent c. reducing the number of accident-related sick days from 1000 to 100

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d. e. *26.

getting into the aerospace industry at some point reducing customer complaints from 1 in 4 sales to 1 in 100 sales

The manufacturer of golfing equipment has established a three percent defect rate for clubs that are substandard. The manager of the golf club division has recently discovered that the defect rate for her department is zero. What should the manager do to exercise effective control? a. She should order her workforce to work faster. b. She should contact the maintenance department to see if the machine is operating at too slow a rate. c. She should suspend the more efficient workers in her department. d. She should take corrective action to change performance standards. e. She should find new suppliers at once. The loan department at the Dover Bank has set standards for how often an employee can miss work. It has determined that if an employee leaves more than one hour early at the end of the day or arrives more than thirty minutes late either in the morning or after lunch, he or she will be marked absent for the whole day. Based on its standards, the loan department has an excessive absenteeism rate. What should be done? a. Create an "absenteeism police" to monitor employee behavior. b. Develop new standards for absenteeism. c. Require all employees to attend after workday seminars on time management. d. Let employees set their own standards for absenteeism. e. Set up an ad hoc team to discuss the problem. The painters on the graveyard shift at an automotive plant consistently exceed the goal the group of workers set for themselves a couple of months ago. Because they are able to paint more cars while maintaining rigorous quality standards, their supervisor is planning to discuss new goals with them. The supervisor is: a. comparing performance to standards. b. developing adequate measures of performance. c. taking corrective action. d. creating new ways to measure performance. e. eliminating problems caused by participative management. Managers may wish to provide positive reinforcement when performance _____ targets. a. does not meet or reach b. meets or exceeds c. equals or is short of d. is short of or equals e. equals or is very short of Though the top-down budgeting process has some advantages, many firms have adopted _____ due to the movement toward employee empowerment, participation and learning. a. bottom-up budgeting

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b. c. d. e. *31.

middle-up budgeting strategic budgeting subordinate budgeting rank-and-file budgeting

A Wendy's fast-food restaurant has a total of 42 employees and a State Farm insurance claims office has 5 employees. In both cases, the employees have a single supervisor. Both are examples of: a. activity centers. b. key control centers. c. responsibility centers. d. profit arenas. e. centers of control The fundamental unit of analysis for a budget control system is called a(n): a. activity center. b. key control center. c. responsibility center. d. profit arena. e. center of control The president of the company once said, "I let the four divisions of this company run themselves. They don't need me telling them what to do." If this is really how the president feels, then it is obvious the company would use: a. top-down budgeting. b. strategic budgeting. c. bureaucratic budgeting. d. bottom-up budgeting. e. administrative budgeting. _____ control relies on social values, traditions, shared beliefs, and trust to foster compliance with organizational goals. a. Bureaucratic b. Decentralized c. Peer group d. Scientific e. Self-directed _____ control is the use of rules, policies, hierarchy of authority, written documentation, reward systems, and other formal mechanisms that influence employee behaviors and enhance performance. a. Bureaucratic b. Decentralized c. Peer group d. Self-directed e. Clan

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A newspaper article on Vladimir Putin, president of the Russian federation, accused of him of using bureaucratic control to protect his power base. This would mean he: a. uses a shared-goal strategy to accomplish strategies. b. places a great emphasis on employee socialization. c. makes extensive use of rules, policies, and hierarchy of authority. d. has broad spans of management. e. relies on cultural traditions to foster compliance A newspaper article on Vladimir Putin, president of the Russian federation, accused of him of using bureaucratic control to protect his power base. If this description is true, then Putin would most likely be in favor of: a. top-down budgeting. b. strategic budgeting. c. bureaucratic budgeting. d. bottom-up budgeting. e. administrative budgeting. Since the Columbine High School tragedy, school principals throughout the U.S. have created rules and regulations governing what can and what cannot be brought into the school. There is zero-tolerance for a student who disobeys the rules. Teachers must also abide by these rules or face disciplinary measures themselves. They must report to the principal if a child brings a nail file to school or anything that "could be used as a weapon." Fear has led to the development of _____ control. a. bureaucratic b. decentralized c. peer group d. self-directed e. clan Which of the following types of control is implemented through formal control systems? a. clan control b. bureaucratic control c. participative control d. administrative control e. decentralized control An insurance company that relies heavily on telemarketing sales strictly regulates how sales are made, how long a sales call should be, and what kind of interaction the telemarketer has with the phone customer. Supervisors are allowed to monitor the calls on a random basis without the telemarketer knowing it. In addition, the company has a policy that prevents employees from discussing the work they do with people outside the company. This work environment is consistent with: a. clan control. b. bottom-up control.

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c. d. e. *41.

bureaucratic control. culture control. decentralized control.

When Robert Catlin founded Signature Monitor, he hired people he'd known for more than 20 years to work at the company. Several of the employees are his golfing buddies. Last year he took ten months of vacation because he trusted his employees to keep the organization operating efficiently, and they did just fine. The control system at Signature Monitor is apparently based on: a. bureaucratic control. b. decentralized control. c. organizational control. d. feedback control. e. cultural control. The best measure of how an organization is doing is: a. partial productivity. b. total factor productivity. c. productivity. d. materials requirement productivity. e. performance output. Cargill, Clorox, Coca Cola, General Motors, Emerson, GlaxoSmithKline, Johnson & Johnson, Merck, and Unilever are all companies that have benefited from the use of lean manufacturing. These companies have: a. eliminated employees and divisions for the sake of economy. b. responded to a green mandate and have reduced the amount of waste they produce by more than 50 percent. c. eliminated levels within their organizational structure. d. used highly trained employees to cut wastes during the production process. e. eliminated economies of scale for a more focused approach to manufacturing. Husky Injection Molding Systems Ltd. is a Canada-based provider of injection molding technology with world-wide sales. When Husky decided to diversify its operations and enter new markets five years ago, it streamlined its operations and reduced its costs to free up resources. After five years of _____, Husky has doubled its productivity with a staff of highly trained employees. a. lean manufacturing b. Baldrige production c. organizational-directed control d. downsized manufacturing e. bureaucratic control The two approaches to measuring productivity are: a. lean productivity and rich productivity. b. total factor productivity and partial productivity. c. productivity utilization and productivity factoring.

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d. e. *46

centralized productivity and decentralized productivity. resource-based productivity and situation-derived productivity.

_____ is the ratio of total outputs to a major category of inputs. a. Lean manufacturing b. Resource-based productivity c. Productivity utilization d. Partial productivity e. Total factor productivity Total quality management is most consistent with which type of control system? a. bureaucratic control b. systematic control c. decentralized control d. feedforward control e. centralized control _____ is a philosophy of organization-wide commitment to continuous improvement, focusing on teamwork, customer satisfaction, and lowering costs. a. Reengineering b. Total quality management c. Outsourcing d. The principle of zero-defects e. Everyday quality Tree Top, Inc. is an apple-growers' cooperative in Washington. In the early 1990s, it decided to infuse quality into every activity of the operation by: a. implementing continuous improvement. b. focusing on teamwork. c. increasing customer satisfaction. d. training employees to think in terms of prevention, not detection. e. doing all of the above. The TQM concept, which includes quality circles, spread to the United States from: a. Canada b. Germany c. Japan d. Australia e. India A ____ is a group of 6 to 12 volunteer employees who meet regularly to discuss and solve problems affecting the quality of their work. a. focus group b. benchmarking c. decision support group d. quality circle e. social committee

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The term _____ is defined as the continuous process of measuring products, services, and practices against the toughest competitors or those companies recognized as industry leaders. a. focus group b. benchmarking c. decision support group d. quality circle e. social committee Quality circles are based on the assumption that: a. the people who do the job know it better than anyone else. b. quality can be increased by increasing the size of the organization. c. quality can be increased by talking more about it. d. the more employees talk, the more satisfied they will be. e. scientific management is most efficient. Gorton, the company famous for its fish sticks, is concerned about quality. It wants to have small groups of employees from each production area meet periodically to discuss ways to improve quality and lower costs. Gorton uses a(n): a. safety group. b. quality circle. c. ad-hoc committee. d. problem team. e. virtual team. Anheuser-Busch wants to be error-free when manufacturing a can of beer or when calling on a customer. The company takes nothing for granted as it continues in its relentless drive for higher quality and lower costs. What quality control method is Anheuser-Busch using? a. ISO 9000 b. TQM c. Six Sigma d. quality circles e. quality utilization The key to successful benchmarking lies in: a. application. b. implementation. c. analysis. d. strategy. e. planning. To reduce the organization's cycle time is to reduce the number of: a. committees in the organization. b. layers of management. c. steps in an organizational process. d. staff employees in the organization. e. organizational goals

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The simplification of work cycles, including the dropping of barriers between work steps and between departments, and the removal of worthless steps in the process is called: a. reduced cycle time. b. benchmarking. c. decision support group. d. quality circle. e. continuous improvement. Reduction in cycled time: a. reduces the cost of the product. b. improves the overall company performance and improves quality. c. improves only quality. d. increases the cost of the product and reduces performance. e. never changes overall company performance. The process of _____ is the implementation of a large number of small incremental improvements in all areas of the organization on an ongoing basis. a. reduced cycled time b. benchmarking c. continuous improvement d. quality circle e. social committee It seems that once a year the managers of a large consumer-goods producer attempt a major organization intervention, such as management-by-objectives. They never seem to be satisfied with the performance of the company and, sure enough, 12 months later, along comes another major intervention. By implementing organizational change in this way, the company's management may well be violating the principle of: a. benchmarking. b. continuous improvement. c. unity of direction. d. top-down control. e. None of these. The basic philosophy of continuous improvement is that: a. improving some things some of the time sometimes has the highest probability for success. b. improving things a little at a time all the time has the highest probability for success. c. improving none of the things none of the time has the highest probability for success. d. improving things a great deal at a time all of the time has the highest probability for success. e. never changing anything has the greatest probability for success. Many countries have endorsed a universal framework for quality assurance called:

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a. b. c. d. e. 64.

the international quality standard. globalized standard of production. ISO 5000. ISO 9000. TQM standard of production.

As a result of _____ standards, an aircraft manufacturer in Georgia can buy landing gear from a Canadian manufacturer and know the product conforms to customer requirements. a. United States b. globalized standard of production c. ISO 5000 d. ISO 9000 e. TQM standard of production _____ can be defined as a company's net operating profit after taxes and after deducting the cost of capital invested in tangible assets. a. MBWA b. EVA c. ABC d. Top-down budgeting e. Bottom-up budgeting _____ is a control system that measures performance in terms of after-tax profits minus the cost of capital invested in tangible assets. a. Open-book management b. Economic value-added system c. Activity-based costing d. Employee-based costing system e. Contribution margin management North American Signs is one company that has benefited from creating an ownership culture. In other words, it has adopted: a. open-book management. b. an economic value-added system. c. activity-based costing. d. a contribution margin management system. e. employee-based costing. ______ allows employees to see for themselves the financial condition of the company. a. Open-book management b. An economic value-added system c. Activity-based costing d. An inappropriate control system e. Market value-added system

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A comprehensive management control system that balances traditional financial measures with operational measures relating to a companys critical success factors is called a(n): a. economic value-added system. b. activity-based costing system. c. market value-added system. d. balanced scorecard. e. open-book management system. A(n) _____ converts major perspectives such as customer service, internal business processes, the organizations capacity for learning and growth, and financial performance to a series of defined metrics. Companies record and analyze these metrics to help determine if they're achieving strategic goals. a. economic value-added system. b. activity-based costing system. c. market value-added system. d. balanced scorecard. e. open-book management system. _____ refers to the system of governing an organization so the interests of the corporate owners are protected. a. Executive protection b. Corporate governance c. The balanced scorecard d. Managerial protection e. Executive authority

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Short-Answer Questions

What management function focuses on events before, during, or after the process? Page: 565 3. Name the three types of control. Page: 565 *4. What is the focus of feedforward control? Page: 566 *5. What does concurrent control monitor? Page: 567 *6. Which type of control focuses on the organizations outputs? Page: 568

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7. List the four steps in the feedback control model. Page: 569 *8. What must a manager do when performance deviates from a standard? Page: 571 *9. What is a responsibility center? Page: 574 *10. Describe top-down budgeting. Page: 574 *11. Describe bottom-up budgeting. Page: 574 *12. How does decentralized control influence employee behavior? Page: 575 13. Describe bureaucratic control. Page: 574 *14. What is the organization's output of goods and services divided by its inputs? Page: 576 15. What is the ratio of total outputs to the inputs from labor, capital, materials, and energy? Page: 576 *16. What makes lean manufacturing so effective? Page: 576 *17. What is the ratio of total outputs to a major category of inputs? Pages: 576-577 *18. What is the name for an organization-wide commitment to infusing quality into every activity through continuous improvement? Page: 577 19. Describe a quality circle. Page: 577 *20. What does a company do when it is engaged in benchmarking? Pages: 577-578 21. What is Six Sigma? Page: 578

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*22. What is cycle time? Page: 579 *23. What is the term used when a company implements a large number of small, incremental improvements in all areas of the organization on an ongoing basis? Page: 579 24. What is ISO 9000? Page: 581 *25. What does the economic value-added (EVA) system measure? Page: 582 *26. What kind of management technique involves the sharing of financial information and results with all employees in the organization? Page: 582 27. What are the four areas of interest in the balanced scorecard? Page: 585

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In terms of time horizon, there are three options for organizational control focus. One is feedback control. Name the other two and briefly compare each of the three. Pages: 565-569

Essay Questions

2. Identify and briefly describe the four steps of the feedback control model. Pages: 568-571 3. Compare bureaucratic control with decentralized control. Pages: 574-575 4. In a TQM program, what is benchmarking? Pages: 577-578 5. What are the positive and negative contingency factors associated with TQM. Page: 580 *6. What is the function of quality circles? Page: 577