Chapter 19 – Quality and Productivity (Principles of Management 2e)

These flashcards review key concepts from Chapter 19 on control processes, financial and budgetary control, quality management, benchmarking, and productivity.

Why do organizations need a control system?

To measure performance against goals and keep key performance elements within acceptable limits.

What four broad purposes of control are shown in Exhibit 19.1?

Adapt to environmental change, limit the accumulation of error, cope with organizational complexity, and minimize cost.

Which four resource areas are commonly controlled in organizations?

Physical, human, information, and financial resources.

Give three examples of physical-resource controls.

Inventory control, quality control, and equipment/facilities control.

What are the four levels of control highlighted in Exhibit 19.2?

Strategic control, structural control, financial planning & control, and operational control.

Define strategic control.

Monitoring whether chosen strategies help match the organization’s internal environment with the external environment.

Define operational control.

Regulating day-to-day output relative to schedules, specifications, and costs to ensure quality and timely delivery.

Define structural control.

Assessing how well an organization’s structural elements serve their intended purpose.

What is the focus of financial planning and control?

Estimating the capital an organization needs and determining its composition (capital structure).

Who ultimately bears responsibility for control inside an organization?

All managers, although large firms may appoint a specialist called a controller.

List the four main steps in the control process.

1 Establish standards, 2 Measure performance, 3 Compare performance with standards, 4 Decide on and implement corrective action.

What is a control standard?

A measurable target against which subsequent performance is compared.

What key characteristic must performance measures possess to make controls effective?

They must be valid (accurately reflect the attribute being measured).

Define financial control.

Control of financial resources as they flow into, are held by, and flow out of an organization.

Provide CIMA’s definition of budgetary control.

Establishing budgets linked to executive responsibilities and continuously comparing actual with budgeted results to achieve policy objectives or revise them.

What is meant by “total quality” in an organization?

A culture, attitude, and organization-wide commitment to provide products and services that satisfy customer needs.

Define quality (as given in the notes).

The ability of a product or service to consistently meet or exceed customer expectations.

Name four consequences of poor quality.

Loss of business, liability for damages/injury, low productivity due to rework or scrap, and high failure costs.

Define Total Quality Management (TQM).

A philosophy that involves everyone in an organization in a continual effort to improve quality and achieve customer satisfaction.

List five approaches or tools associated with TQM mentioned in the lecture.

Quality circles, benchmarking, Six Sigma principles, quality partnering, and continuous improvement.

What is benchmarking?

A systematic method for continuously measuring an organization against best-in-class practices and improving accordingly.

What is a benchmark?

A reference point against which things are measured.

State the first three steps in the benchmarking process.

1 Identify a critical process to improve, 2 Identify an organization that excels at it, 3 (If needed) choose one even outside the same industry and contact it while maintaining confidentiality.

What are the final three steps (4-6) in the benchmarking process?

4 Collect and analyze the data, 5 Draw conclusions, 6 Implement improvements to the critical process.

Name the seven types of benchmarking listed in the notes.

Performance/operational, process/functional, strategic, functional (generic), internal, external, and international benchmarking.

Why might a firm engage in international benchmarking?

Because the best practitioners of a process are located in other countries.

Why is productivity crucial in today’s competitive environment?

A company must maintain high productivity to survive and prosper amid global competition.

Define productivity.

An index measuring output (goods or services) relative to the input (labour, materials, energy, etc.) used to produce it.

List at least six factors that can affect productivity.

Capital investment in technology/equipment/facilities, economies of scale, workforce knowledge and skill, work methods and procedures, product quality, process quality, legislation and regulation, general education levels, social environment, and geographic factors.