intro to management 2 (copy)

control

consists of monitoring performance, comparing it with goals, and taking corrective action as needed

what is the purpose of control?

to make sure that performing meets objectives

what are the four steps of the control process?

1. establish standards

2. measure performance

3. compare performance to standards

4. take corrective action if necessary

control standard

desired performance level of a given goal

control charts

a visual statistical tool used for quality control purpose

management by exception

control principle that states that managers should be informed of a situation only if data show a significant deviation from standards

concurrent control

entails collecting performance information in real time; helps managers to determine if employees and processes conform to standards and regulations

feedback control

amounts to collecting performance information after a task or project is done; the information can be used to correct or improve future performance of the existing task or process

feedforward control

focuses on preventing future problems; collects performance information about past performance and then uses this information to help plan new future tasks or new processes

the balanced scorecard

a form of control; it provides top managers a fast but comprehensive view of the organization via 4 indicators

1. financial metrics (revenue or profit growth, return on equity)

2. customer metrics (how do customers see us?)

3. internal business process metrics

4. innovation and learning metrics

budget

formal financial projection; the projection, or forecast, becomes the standard against which actual performance is compared

fixed budget

a projection in which resources are allocated on a single estimate of costs; does not allow for adjustment over time

variable budget

allocates resources in proportion with various levels of activity; the budget can be adjusted over time to accommodate relevant changes in the environment

financial statement

summary of some aspect of an organizations financial status

balance sheet

summarizes an organization overall financial worth, that is, assets and liabilities - at a specific point in time

income statement

summarizes an organization financial results - revenues and expenses - over a period of time, such as a year

financial ratios

indicators determined from a company’s financial information and used for comparison purposes

customer satisfaction

measure of how products or services provided by a firm meet customer expectations

customer retention

refers to the actions companies take to reduce customer defections

T/F: it costs less in marketing expenses to retain an existing customer than to acquire a new customer

T - maximizing customer satisfaction and customer retention can lead to greater profitability

benchmarking

a process by which a company compares its performance to others; typically used to help create control standards

best practices

refers to a set of guidelines, ethics, or ideas that have been shown to produce optimal results

productivity

defined by the formula of outputs divided by inputs for a specified period of time

outputs

all goods and services produced

inputs

includes labor, capital, materials, and energy

effectiveness

measures typically look at the outputs of a business process; can measure either quality or quantity; can only be measured in relation to your goals (focuses on outcomes)

efficiency

minimizing the time, cost, and resources associated with achieving our goals; minimizes the waste of time, effort, or resources (focuses on inputs)

innovation and learning perspective

necessary for businesses to maximize the quality of their human capital and to anticipate, and respond to, changing market conditions

total quality management (TQM)

defined as comprehensive approach - led by top management and supported throughout the organization - dedicated to continuous quality improvement, training, and customer satisfaction

what are the two core principles of TQM

people orientation & improvement orientation

people orientation

everyone involved with the organization should focus on delivering value to customers

improvement orientation

everyone should work on continuously improving the work processes

quality

refers to the total ability of a product or service to meet customer needs

quality control

the strategy for minimizing errors by managing each stage of production

quality assurance

focuses on the performance of workers, urging employees to strive for “zero defects”

What are the key Deming principles

1. quality should be aimed at the needs of the consumer

2. companies should aim at improving the system, not blaming workers

3. improved quality leads to increased market share, increased company prospects, and increased employment

4. quality can be improved on the basis of hard data, using the PDCA cycle

PDCA cycle

plan - do - check - act

continuous improvement

ongoing, small, incremental improvements in all parts of an organization

kaizen

Japanese philosophy of small continuous improvements that seek to involve everyone at every level of the organization in the process of identifying opportunities and implementing and testing solutions

outsourcing

subcontracting of services and operations to an outside vendor

reduced cycle time

a reduction in the number steps in a work process; Cycle time is measured by the time that elapses between the start and completion of a process

statistical process control

a statistical technique that uses periodic random samples from production runs to see if quality is being maintained within a standard range of acceptability

six sigma

rigorous statistical analysis process that reduces defects in manufacturing and service-related processes

lean six sigma

focuses on problem solving and performance improvement on a well-defined project; focused on both speed and excellence

Who created the set of quality standards known as the 9000 series?

the international organization for standardization (ISO)

ISO 9000 series

consists of quality-control procedures companies must install - from purchasing to manufacturing to inventory to shipping - that can be audited by independent quality-control experts (goal is to reduce flaws in manufacturing and improve productivity by adopting eight basic principles)

ISO 14000 series

extends the concept, identifying standards for environmental performance

control process steps

The four steps in the process of controlling: (1) establish standards; (2) measure performance; (3) compare performance to standards; and (4) take corrective action, if necessary

deming management

Ideas proposed by W. Edwards Deming for making organizations more responsive, more democratic, and less wasteful

incremental budgeting

Allocating increased or decreased funds to a department by using the last budget period as a reference point; only incremental changes in the budget request are reviewed

supply chain

The sequence of suppliers that contribute to creating and delivering a product, from raw materials to production to final buyers

reactive change

making changes in response to problems or opportunities as they arise

proactive change

involves making carefully-thought-out changes in anticipation of possible or expected problems or opportunities

adaptive change

the least threatening; reintroduction of a familiar practice

innovative change

somewhat threatening; introduction of a practice that is new to the organization

radically innovative change

very threatening; involves introducing a practice that is new to the industry

lewin’s change model

unfreezing → changing → refreezing

what does the system model of change consist of

1. analyzing inputs

2. targeting elements of change

3. determining outputs

readiness for change

the beliefs, attitudes, and intentions of the organizations staff regarding the extent of changes needed and how willing and able they are to implement them

force field analysis

technique to determine which forces could facilitate proposed change and which forces could act against it

organizational development (OD)

set of techniques for implementing planned change to make people and organizations more effective (used for: managing conflict, adapting to mergers, & revitalizing organizations)

change agent

consultant with a background in behavioral sciences who can be a catalyst in helping organizations deal with old problems in new ways

process of organizational development

diagnosis → intervention → evaluation → feedback

resistance to change

an emotional/behavioral response to real or imagined threat to an established work routine

invention

the creation of a novel and useful idea

innovation

the act of introducing novel and useful ideas into value-creating new products, new services, or new processes

commercialize

manage in such a way as to achieve a profit

priorities for product development

1. maximizing fit with customer requirements

2. minimize development cycle time

3. control development costs and achieve high ROIC

ROIC on innovation (return on invested capital)

a common measure used to control development because it relates profts to required investments and expenditures

stage gate process

inset decision points into the process in order to determine whether the development has been successful up to that point and whether to allow the development to continue into the next stage

sequential process

which each step must be completed before the next step is started

parallel process

which many steps are performed simultaneously

partly parallel process

process in which there is some degree of overlap; the steps are performed in sequence, but a new step will start before completion of the prior step

innovation strategy

Grows market share or profits by innovating improvements in products or services

innovation system

A set of mutually reinforcing structures, processes, and practices that drive an organization’s choices around innovation and its ability to innovate successfully

intervention

interference in an attempt to correct a problem

process innovation

A change in the way a product or service is conceived, manufactured, or disseminated

product innovation

A change in the appearance or the performance of a product or a service or the creation of a new one

economies of scale

defined as the reduction in unit costs that result from being able to spread fixed costs over a greater volume of sales

market power

ability to influence the market level of prices charged to customers, or market priced paid to suppliers

diseconomies of scale

an increase in unit costs associated with greater revenue

penetration strategies

intended to encourage current customers to buy more of a firms existing products; highly dependent upon marketing

product development strategies

developing and selling new products to current customers; benefits from other investments already made in the existing market, such as distribution systems

market development strategies

selling the firms existing products to new groups of customers; can be new geographic markets, demographic markets, or new product uses

diversification strategies

selling new products to new groups of customers; rely on a firms capabilities in both new product development and marketing

related diversification

an expansion into new markets or products capabilities similar to the firms current core business

unrelated diversification

refers to expansion into dissimilar markets or products

resource

productive input or competitive asset that is owned or controlled by the firm

capability

capacity of a firm to perform some internal activity competently

organic growth

grow a business by increasing its output, by developing new products or by developing new markets using its own resources without resorting to acquiring other firms; sometimes lack adequate resources or capabilities

cooperative strategy

firms collaborate for the purpose of working together to achieve a shared objective

strategic alliance

which firms combine some of their resources and capabilities for the purpose of creating a competitive advantage

equity strategic alliance

an alliance in which two or more forms own different percentages of the company they have formed by combining some of their resources and capabilities for the purpose of creating a competitive advantage

non-equity strategic alliance

alliance in which two or more firms develop a contractual relationship to share some of their resources and capabilities for the purpose of creating a competitive advantage; do not establish a separate independent company

franchising

strategy in which a firm uses a contractual relationship to describe and control the sharing of its resources and capabilities with its partners

franchise

contractual agreement between two legally independent entities whereby the franchisor grants the right to the franchisee to sell the franchisor’s product or do business under its trademarks in a given location for a specified period of time

advantages of franchising

the franchisee bears most of the costs and risks of establishing new locations the franchisor has to expend only the resources to recruit, train, support, and monitor franchisees

disadvantages of franchising

the franchisor faces the challenge of maintaining quality control (esp for foreign franchisees)

cost minimization

the firm develops contracts with its partners, the contract specifies how the cooperative strategy is to be monitored and how partner behavior is to be controlled; goal is to minimize costs and prevent opportunistic behavior by the partner

opportunity maximization

intended to maximize value-creating opportunities by sharing the ideas and resources, less formal contracts and fewer constraints on partners behaviors