Chapter Seventeen
Foundations of Controlling
Learning Objectives
? Define control
? Describe the three approaches to control
? Explain why control is important
? Describe the control process
? Distinguish between the three types of control
? Describe the qualities of an effective control
system
? Explain how controls can become dysfunctional
? Identify three current ethical issues in control
Characteristics of Three
Approaches to Control Systems
Type of Control Characteristics
Market Uses external market mechanisms,such as price com-
petition and relative market share,to establish stan-
dards used in system,Typically used by organizations
whose products of services are clearly specified and
distinct and how face considerable marketplace
competition,
Bureaucratic Emphasizes organizational authority,Relies on admin-
istrative and hierarchical mechanisms,such as rules,
regulations,procedures,policies,standardization of
activities,well-defined job descriptions,and budgets,
to ensure that employees exhibit appropriate behaviors
and meet performance standards,
Clan Regulates employee behavior by the shared values,
norms,traditions,rituals,beliefs,and other aspects of
the organization’s culture,Often used by organizations
where teams are common and where technology is
changing rapidly,Figure 18-1
The Planning-Controlling Link
Goals
Objectives
Strategies
Plans
Planning
Structure
Human
resources
management
Organizing
Motivation
Leadership
Communication
Individual and
group behavior
Leading
Standards
Measurements
Comparisons
Action
Controlling
Figure 18-2
Defining the Acceptable
Range of Variation
Standard
Acceptable
upper limit
Acceptable
lower limit
Measu
rem
en
t o
f Per
fo
rm
an
ce
t t+1 t+2 t+3 t+4 t+5
Acceptable
range of
variation
Figure 18-3
Sales Performance Figures for
July,Eastern States Distributors
BRAND
Heineken
Molson
Beck’s
Moosehead
Labatt’s
Corona
Amset Light
Dos Equis
Tecate
Total Cases
STANDARD ACTUAL OVER (UNDER)
(HUNDREDS OF 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
Table 18-1
The Control Process
Measure
actual
performance
Compare
actual
performance
with standard
Do nothing
Do nothing
Identify
cause of
variation
Correct
performance
Objectives
Standard
Is
standard
being
attained?
Is
variance
acceptable?
Is
standard
acceptable?
Revise
standard
No
No
No
Yes
Yes
Yes
Figure 18-4
Types of Control
Anticipates
problems
Corrects
problems as
they happen
Corrects
problems after
they occur
Feedforward
control
Concurrent
control
Feedback
control
Input Processes Output
Figure 18-5
Qualities of an Effective Control
System
Effective
Control
System
Corrective
action Accuracy
Timeliness
Economy
Understandability
Strategic
placement
Emphasis on
exceptions
Figure 18-6
Flexibility
Multiple
criteria
Reasonable
criteria
Foundations of Controlling
Learning Objectives
? Define control
? Describe the three approaches to control
? Explain why control is important
? Describe the control process
? Distinguish between the three types of control
? Describe the qualities of an effective control
system
? Explain how controls can become dysfunctional
? Identify three current ethical issues in control
Characteristics of Three
Approaches to Control Systems
Type of Control Characteristics
Market Uses external market mechanisms,such as price com-
petition and relative market share,to establish stan-
dards used in system,Typically used by organizations
whose products of services are clearly specified and
distinct and how face considerable marketplace
competition,
Bureaucratic Emphasizes organizational authority,Relies on admin-
istrative and hierarchical mechanisms,such as rules,
regulations,procedures,policies,standardization of
activities,well-defined job descriptions,and budgets,
to ensure that employees exhibit appropriate behaviors
and meet performance standards,
Clan Regulates employee behavior by the shared values,
norms,traditions,rituals,beliefs,and other aspects of
the organization’s culture,Often used by organizations
where teams are common and where technology is
changing rapidly,Figure 18-1
The Planning-Controlling Link
Goals
Objectives
Strategies
Plans
Planning
Structure
Human
resources
management
Organizing
Motivation
Leadership
Communication
Individual and
group behavior
Leading
Standards
Measurements
Comparisons
Action
Controlling
Figure 18-2
Defining the Acceptable
Range of Variation
Standard
Acceptable
upper limit
Acceptable
lower limit
Measu
rem
en
t o
f Per
fo
rm
an
ce
t t+1 t+2 t+3 t+4 t+5
Acceptable
range of
variation
Figure 18-3
Sales Performance Figures for
July,Eastern States Distributors
BRAND
Heineken
Molson
Beck’s
Moosehead
Labatt’s
Corona
Amset Light
Dos Equis
Tecate
Total Cases
STANDARD ACTUAL OVER (UNDER)
(HUNDREDS OF 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
Table 18-1
The Control Process
Measure
actual
performance
Compare
actual
performance
with standard
Do nothing
Do nothing
Identify
cause of
variation
Correct
performance
Objectives
Standard
Is
standard
being
attained?
Is
variance
acceptable?
Is
standard
acceptable?
Revise
standard
No
No
No
Yes
Yes
Yes
Figure 18-4
Types of Control
Anticipates
problems
Corrects
problems as
they happen
Corrects
problems after
they occur
Feedforward
control
Concurrent
control
Feedback
control
Input Processes Output
Figure 18-5
Qualities of an Effective Control
System
Effective
Control
System
Corrective
action Accuracy
Timeliness
Economy
Understandability
Strategic
placement
Emphasis on
exceptions
Figure 18-6
Flexibility
Multiple
criteria
Reasonable
criteria
