Foundations

of Control

Chapter 13

Learning Outcomes
Define control
Describe three approaches to control
Explain why control is important
Define the control process
Analyze the three types of control

Chapter 13

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

Chapter 13

Three Approaches
to Control Systems
Market
Control

Bureaucratic
Control

Chapter 13

Clan
Control

Managerial Decisions in the Control Process

Compare
Performance
to Standard
Objectives

Standard

Standard
Attained?

Do Nothing

No

Variance
Acceptable?
Measure
Performance

Yes

Yes

Do Nothing

No

Standard
Acceptable?

Yes

Identify
Causes

No

Revise
Standard

Chapter 13

Correct
Performance

Information

Operations

What Managers
Measure
Finances

People
Chapter 13

Defining an Acceptable Range of

Variation

Acceptable
Upper Limit
Acceptable
Range of
Variation

Standard
Acceptable
Lower Limit

t+1

t+2

t+3

t+4

Chapter 13

t+5

Mid-Western Distributors Sales for July

(in hundreds of cases)

Brand

Standard

Heineken

1,075

913

(162)

Molson

630

634

Becks

800

912

112

Moosehead

620

622

Labatts

540

672

132

Corona

160

140

(20)

Amstel Light

225

220

(5)

80

65

(15)

170

286

116

4,300

4,464

164

Dos Equis
Tecate
Total Cases

Actual

Chapter 13

Over (Under)

Do Nothing

Taking
Managerial
Action

Correct
Performance

Revise
the Standard

Chapter 13

Three
Three Types
Types of
of Control
Control
Input
Input

Processes
Processes

Output
Output

Feedforward
Feedforward
Control
Control

Concurrent
Concurrent
Control
Control

Feedback
Feedback
Control
Control

Anticipates
Anticipates
Problems
Problems

Corrects
CorrectsProblems
Problems
as
asThey
TheyHappen
Happen

Corrects
CorrectsProblems
Problems
after
afterThey
TheyOccur
Occur

Chapter 13

10

Qualities of an Effective
Control System
Accuracy
Timeliness
Economy
Flexibility
Understandability

Chapter 13

11

Qualities of an Effective
Control System
Reasonable criteria
Emphasis on exceptions
Strategic placement
Multiple criteria
Corrective action

Chapter 13

12

Contingency Factors in Control Systems

Contingency Variable
Organization Size

Position and Level

Degree of Decentralization

Organizational Culture

Importance of an Activity

Control Recommendations
Small

Informal, personal management

Large

Formal, personal management

High

Many complex criteria

Low

Few, easy-to-measure criteria

High

Increased number of controls

Low

Reduced number of controls

Open

Informal, self-control

Closed

Formal, external controls

High

Elaborate, comprehensive controls

Low

Loose, informal controls

Chapter 13

13

Adjusting Controls
for National
Differences
Distance
and the
Formality
of Controls

Technology
and the
Comparability
of Data
Chapter 13

14

Dysfunctional
Controls
Inflexible
Controls

Unreasonab
le
Standards
Chapter 13

15

Ethical Issues
and Control

Inform
Employees
Have a
Written Policy

Questions of Privacy

Monitor for
Business Reasons
Chapter 13

16