Deck 15: Organizational Control in a Complex Business Environment

Question 1

Organizational control is defined as the systematic process through which managers regulate organizational activities to make them consistent with the expectations established in plans and to help them achieve all predetermined standards of performance.

Answer 1

True

Question 2

The control process should begin with the measurement of actual performance.

Answer 2

False

Question 3

Whenever possible, the standards for performance should be set in a manner that allows them to be compared with actual performance.

Answer 3

True

Question 4

Qualitative performance measures require a subjective assessment to determine whether the standard is being met.

Question 5

The first two steps of the control process provide managers with the information that allows them to make comparisons between actual performance and standards.

Question 6

After comparing actual performance with standards, we can choose to either (1) take no corrective action, or (2) take corrective action.

Question 7

A control standard that states "defects rates should be kept low is preferable to a control standard that states "defects rates should be .02 % or lower."

Question 8

Variance refers to the number of activities, processes, or items that are measured or controlled.

Question 9

Designing an effective control system can be far more complex than simply performing the four steps in the control process.

Question 10

To maintain adequate control in any system, the control system must contain as much variety as the system being controlled. This is known as the law of compulsory variety.

Question 11

Requisite variety can be achieved by either (1) increasing the amount of variety in the control system, or (2) reducing the amount of variety in the system being controlled.

Question 12

Sensitivity refers to the precision with which a measurement can be made.

Question 13

Reliability refers to the precision with which the measurement can be made.

Question 14

Focusing on the elements that are not meeting the standards is called management by exception.

Question 15

When a control system is linked to organizational strategy, it recognizes strategic shifts and is flexible enough to measure what is important as indicated by the firm's strategy.

Question 16

To be effective, a control system must employee the majority, but not all, of the steps in the control process.

Question 17

The majority of systems lend themselves to the use of a single performance measure.

Question 18

Timeliness is the degree to which a control system provides information when it is needed.

Question 19

The key issue concerning timeliness is not whether feedback is provided quickly enough to permit a response to an unacceptable deviation, but how fast the feedback information is provided.

Question 20

It is highly likely that a control system will lend itself to the use of a single performance measure.

Question 21

To be effective, organizational controls must be enforced by management, regardless of whether they are accepted by employees.

Question 22

Two basic categories of costs need to be considered in control systems: (1) the costs associated with the information needed to perform the control process, and (2) the costs associated with undesirable deviations from standards.

Question 23

Capability refers to the probability that the object or process being controlled will consistently behave in an acceptable manner.

Question 24

As the level of control effort increases, undesirable deviations from performance standards will decrease.

Question 25

As the level of control effort increases, the information costs of the control system also increase.

Question 26

Reliability refers to the probability that the object or process being controlled will consistently behave in an acceptable manner.

Question 27

Control must focus on either the inputs or the outputs of the operating system, but not on both.

Question 28

Concurrent control focuses on the transformation process to ensure that it is functioning properly.

Question 29

Concurrent control focuses on detecting undesirable material, financial, or human resources that serve as inputs to the transformation process.

Question 30

Feedforward control is often referred to as preventive control.

Question 31

Feedback control focuses on the transformation process to ensure that it is functioning properly.

Question 32

Most organizations use only one control system.

Question 33

Organic control involves the use of rules, procedures, and written documents to influence behavior, assess performance, and correct unacceptable deviations from standards.

Question 34

Bureaucratic control relies heavily on formal quantitative tools such as budgets or financial reports.

Question 35

Organic control is often called clan control.

Question 36

Bureaucratic control relies upon social values, flexible authority, and trust to assess performance and correct unacceptable deviations.

Question 37

Organic control is a very appropriate style to use in conjunction with self-managed teams.

Question 38

With the organic method of control, standard operating procedures and policies prescribe acceptable employee behavior and standards for employee performance.

Question 39

The bureaucratic and organic approaches present two distinctly opposite control philosophies.

Question 40

If performance can be quantified and explicitly measured, then a bureaucratic control style will work well.

Question 41

The bureaucratic control style usually works better than the organic control style if task performance is difficult to measure.

Question 42

An income statement is a summary of an organization's financial position at a given point it time, showing assets, liabilities, and owner's equity.

Question 43

The two financial statements that provide much of the information to calculate the ratios that are used to assess an organization's financial health are the balance sheet and the income statement.

Question 44

An income statement is a summary of an organization's financial performance over a given time interval, showing revenues, expenses, and bottom-line profit or loss.

Question 45

Profit margin on sales is calculated by dividing net income by total assets.

Question 46

Indicators of the relative effectiveness, or profitability, of the organization are called profitability ratios.

Question 47

Owner's equity ratios are indicators of a firm's ability to handle long-term debt.

Question 48

The total goods sold divided by the average inventory indicates how efficiently the firm is forecasting sales or ordering merchandise. This measure is an example of an activity ratio.

Question 49

Probable cause drug testing usually relies upon unannounced and unscheduled random employee drug examinations.

Question 50

Since it is conceivable that impaired motor skills may be the cause of an accident, a reasonable time for a drug test would be after an accident.

Question 51

One issue that surfaces in cases of undercover surveillance is the concern that management has a low regard for and little trust in its own employees.

Question 52

Computer monitoring is a form of undercover surveillance.

Question 53

Computer monitoring is more concerned with detecting illegal activities than with measuring employee performance.

Question 54

__________ is defined as the systematic process through which managers regulate organizational activities to make them consistent with the expectations established in plans and to help them achieve all predetermined standards of performance.

A) Organizational control
B) Directional engineering
C) Coordination
D) Just-in-time management
E) Structural design implementation

Question 55

Mary Holland is an executive vice president of Castle Entertainment. Mary's primary focus is to make sure that all of the planning, leading, and organizing that takes place at her company goes as it should. From this description, we know that Mary's primary focus is

A) planning.
B) directing.
C) control.
D) supervising.
E) organizing.

Question 56

After her promotion, Tricia Sharp was responsible for setting the standards of performance, measuring actual performance, comparing actual performance with standards, and responding to deviations. What managerial function is Tricia now responsible for?

A) controlling
B) directing
C) organizing
D) leading
E) planning

Question 57

The managerial function that helps to ensure that all other managerial functions are occurring as designed is called

A) planning.
B) organizing.
C) leading.
D) controlling.
E) directing.

Question 58

Which of the following is a form of control in an organization?

A) formal performance appraisal
B) goals
C) rules
D) All of the above could be a form of control.
E) Only choice B and C are correct.

Question 59

The process of control involves four steps: setting standards of performance, measuring actual performance, comparing actual performance with standards, and

A) anticipating problems.
B) responding to deviations.
C) communication.
D) employee empowerment.
E) statistical process control.

Question 60

Charles Hurwitz is the CEO of Maxxam Corporation. In his job, Mr. Hurwitz focuses on setting standards of performance, measuring actual performance, comparing actual performance with standards, and responding to deviations. Mr. Hurwitz focuses on

A) leading.
B) organizing.
C) directing.
D) planing.
E) controlling.

Question 61

The basic process of control involves all of the following steps except which one?

A) setting performance standards
B) measuring actual performance
C) developing organizational structure
D) comparing performance to standards
E) responding to deviations

Question 62

The first step in the process of control is

A) responding to deviations.
B) measuring actual performance.
C) developing organizational structure.
D) comparing performance to standards.
E) setting performance standards.

Question 63

Jerry Langley, the CEO of Minnesota Metals, is attempting to establish a process of control for his company. Mr. Langley should begin the process by

A) setting performance standards.
B) measuring actual performance.
C) developing organizational structure.
D) comparing performance to standards.
E) responding to deviations.

Question 64

Each November, the top management team of Oracle Corporation sets the standards of performance against which the company's activities will be compared during the coming year. Setting standards of performance is the first step in the process of

A) management.
B) controlling.
C) leading.
D) organizing.
E) planning.

Question 65

Which of the following is likely to be the most effective control standard?

A) Defect rates should be low.
B) Defect rates in 1998 should be lower than 1997.
C) Defect rates should be .02 percent or less.
D) Defect rates should be impressive.
E) Defect rates should not be a problem.

Question 66

Which of the following is a poorly articulated standard of performance?

A) Customer complaints should be low.
B) Customer complaints should be at least 10 percent lower than last year.
C) There should not be more than twenty customer complaints per month.
D) There should not be more than 240 customer complaints per year.
E) Customer complaints should be addressed in writing within three business days of the receipt of the complaint.

Question 67

A new faculty member at the college stated in his course syllabus that "students should be prepared for class. This statement was largely unenforceable during the course of the semester, and students largely ignored this rule. This course syllabus violated the __________ performance recommendation regarding setting standards of performance.

A) finite
B) structured
C) numeric
D) quantitative
E) qualitative

Question 68

The standard, "The integrated circuit boards should have no more than three defeats per 1,000,000 manufactured units is a __________ performance criterion.

A) qualitative
B) subjective
C) illusory
D) structured
E) quantitative

Question 69

What is the primary advantage of quantitative performance standards?

A) They are cheaper to administer than other standards.
B) They are easy to compare with actual performance.
C) They are highly subjective.
D) They are easier to agree on than other standards.
E) They typically do not involve numbers.

Question 70

The first two steps of the control process provide managers with the information needed to make comparisons between actual performance and standards. These two steps are

A) measuring actual performance and developing organizational structure.
B) developing organizational structure and responding to deviations.
C) responding to deviations and comparing performance to standards.
D) setting standards for performance and measuring actual performance.
E) setting standards for performance and responding to deviations.

Question 71

According to our textbook, what is the main difference between quantitative and qualitative performance measures?

A) Quantitative measures are objective, and qualitative measures are subjective.
B) Quantitative measures provide better information than qualitative measures.
C) Quantitative measures are cheaper to administer than qualitative measures.
D) Quantitative measures are more useful than qualitative measures.
E) Qualitative measures are more robust than quantitative measures.

Question 72

The Chicago Cutlery Company states that its knives "must be honed to a high degree of sharpness, and the wooden handles must be polished to a bright luster. These performance measures are __________ in nature.

A) quantitative
B) unbiased
C) impartial
D) objective
E) qualitative

Question 73

The final step in the control process, the step in which the decision-maker must decide whether to take corrective action or not, is referred to as

A) setting performance standards.
B) measuring actual performance.
C) responding to deviations.
D) comparing performance to standards.
E) developing organizational structure.

Question 74

Rebecca Jones is making a change to some of the behaviors, activities, and aspects of her organization in order to bring performance into line with standards. This step of the control process is called

A) setting performance standards.
B) measuring actual performance.
C) developing organizational structure.
D) comparing performance to standards.
E) responding to deviations.

Question 75

At Applied Materials, Inc., the managers routinely compare actual performance with performance standards and choose to either (1) take no corrective action, or (2) take corrective action based on the importance of the discrepancy. This is the final step in the process of

A) disposition.
B) directing.
C) organizing.
D) planning.
E) control.

Question 76

Which of the following statements regarding control systems is not accurate?

A) Requisite variety can be achieved by increasing the amount of variety in the control system.
B) Increasing variety in the control system can be achieved by increasing the number of performance standards and the number of items to be controlled.
C) Requisite variety can be achieved by increasing the amount of variety in the system being controlled.
D) To maintain adequate control in any system, the control system must contain as much variety as the system being controlled.
E) The law of requisite variety suggests that simple control systems may not have sufficient variety to cope with the complex systems they are trying to control.

Question 77

__________ refers to the number of activities, processes, or items that are measured and controlled.

A) Variety
B) Plurality
C) Breadth of control
D) Scope of control
E) Miscellany

Question 78

The top managers of Prodigy Communications put considerable thought into the number of activities, processes, and items that the company measures and controls. In other words, Prodigy's managers are concerned about the amount of __________ in their control system.

A) variety
B) divergence
C) specificity
D) variance
E) homogeneity

Question 79

To maintain adequate control in any system, the control system must contain as much variety as the system being controlled. This is known as the

A) law of needful variety.
B) law of requisite variety.
C) law of conditional plurality.
D) law of requisite miscellany.
E) law of conditional variety.

Question 80

The managers at Mitchell Home Builders recognize that, because so many materials and parts go into the construction of the homes, and these materials have so many sources, they must employ extensive control systems at all stages of construction in order to ensure that the finished homes meet their performance standards. Mitchell Home Builders is following the principles of the

A) law of needful variety.
B) law of requisite variety.
C) law of conditional plurality.
D) law of requisite miscellany.
E) law of conditional variety.