Deck 16: Managerial Control

Question 1

The last step in the control process is to compare performance with the standard.

Answer 1

False
Explanation: As Figure 16.1 shows, the last step in the control cycle is taking action to correct problems and reinforce successes.

Question 2

Market control is the use of rules, regulations, and formal authority to guide performance.

Answer 2

False
Explanation: Bureaucratic control is the use of rules, regulations, and formal authority to guide performance. Market control involves the use of pricing mechanisms to regulate activities in organizations as though they were economic transactions.

Question 3

Performance standards can be set with respect to quantity, quality, time, and effort.

Answer 3

False
Explanation: Performance standards can be set with respect to (1) quantity, (2) quality, (3) time used, and (4) cost.

Question 4

When supervisors monitor employee behavior, they are exercising feedback control.

Question 5

Control is one of the forces that keeps an organization heading in the right direction.

Question 6

According to the principle of exception, even the smallest of deviations from the standard require corrective action.

Question 7

Personal observation involves going to the area of activity and watching what is occurring.

Question 8

Control has been called one of the Siamese twins of management. The other twin is organizing.

Question 9

Standards are established in order to set performance expectations.

Question 10

Clan control is control based on the norms, values, shared goals, and trust among group members.

Question 11

A company cannot achieve control without agreed-upon standards.

Question 12

With bureaucratic control, business units are treated as profit centers, and managers of them are evaluated based on profit and loss.

Question 13

The three common sources of information for measuring performance are written reports, electronic observation, and personal observation.

Question 14

Market control is control based on the use of pricing mechanisms and economic information to regulate activities within organizations.

Question 15

An example of feedforward control is managers monitoring their distributors.

Question 16

Point-of-sale terminals in store checkout lines that send sales data back immediately to a retailer's headquarters are an example of how information technology has improved concurrent control.

Question 17

Control is defined as any process intended to correct problems that prevent the achievement of organizational goals.

Question 18

Concurrent control takes place while plans are being carried out.

Question 19

Clan control assumes that the interests of the organization and individuals naturally diverge.

Question 20

The typical control system has six major steps.

Question 21

Bureaucratic control has a negative connotation, which is unfortunate because it typically leads to the most flexibility for employee behaviors.

Question 22

ABC is a method of cost accounting designed to allocate costs across particular business processes according to the amount of time employees devote to particular activities.

Question 23

By definition, management audits are internal, not external.

Question 24

Liabilities are the amounts accruing to the corporation's owners.

Question 25

A control system cannot be effective without consideration of how people will react to it.

Question 26

The most common type of tactical behavior in control systems is to manipulate information or report false performance data.

Question 27

Using the six sigma approach to quality does not always lead to improvements in the bottom line.

Question 28

In today's complex organizations, the budget process is much more likely to be top-down.

Question 29

Liquidity ratios indicate a company's ability to meet its long-term financial obligations.

Question 30

As long as supervisors monitor behavior constantly, the feedback may be given at any point in time without consequence.

Question 31

Return on investment is a profitability ratio.

Question 32

Six sigma is usually overkill; a four sigma quality level eliminates nearly all defects and is suitable for almost every business operation.

Question 33

Because financial ratios usually are expressed in compressed time horizons, they often cause management myopia.

Question 34

A master budget includes every major activity of the business.

Question 35

The profit and loss statement is an itemized financial statement of the income and expenses of a company's operations.

Question 36

Budgeting information can only be expressed in monetary units.

Question 37

The balance sheet shows the financial picture of a company over time.

Question 38

Companies are moving away from traditional methods of accounting toward activity-based costing because the latter better supports a hierarchical and departmentalized organization.

Question 39

External audits are often used for feedback control but can also be useful to prevent problems.

Question 40

Three key categories of financial ratios are liquidity, leverage, and profitability.

Question 41

A transfer price is the price charged by one unit for a good or service provided to another unit within the organization.

Question 42

Formal bureaucratic control systems have always been the most pervasive and continue to be the most effective in organizations.

Question 43

Control based on the use of pricing mechanisms and economic information is referred to as

A) Clan control.
B) Feedback control.
C) Market control.
D) Feedforward control.
E) Bureaucratic control.

Question 44

Which of the following is the first major step in the formal control process?

A) Comparing performance with standards.
B) Setting standards.
C) Taking corrective action.
D) Developing values.
E) Measuring performance.
As Figure 16.1 shows, a typical control system has four major steps: setting performance standards, measuring performance, comparing performance against the standards and determining deviations, and taking action to correct problems and reinforce successes.

Question 45

Control has been called one of the Siamese twins of management. The other twin is

A) Planning.
B) Organizing.
C) Leading.
D) Directing.
E) Empowerment.

Question 46

Control based on the norms, values, shared goals, and trust among group members is referred to as

A) Clan control.
B) Feedback control.
C) Concurrent control.
D) Feedforward control.
E) Market control.

Question 47

In contrast to market controls, bureaucratic controls involve the use of economic forces to regulate performance.

Question 48

If managers create a strong culture of correct behavior, then clan control can be an effective tool.

Question 49

Which of the following is a symptom of an out-of-control company?

A) Strict top management.
B) Excessive policies.
C) Lack of periodic reviews.
D) Too much horizontal communication.
E) Lack of new employees.
Table 16.1 lists the symptoms of an out-of-control company, including a lack of periodic reviews.

Question 50

Using budgeting, statistical reports, and performance appraisals to regulate behavior and results is considered a component of

A) Clan control.
B) Market control.
C) Bureaucratic control.
D) Financial audits.
E) Management audits.

Question 51

Ideally, a transfer price should be less than the price that the receiving business unit would have to pay for that product or service in the marketplace.

Question 52

The use of rules, regulations, and authority to guide performance is referred to as

A) Clan control.
B) Bureaucratic control.
C) Market control.
D) Concurrent control.
E) Feedback control.

Question 53

A balanced scorecard is a control system combining four sets of performance measures: financial, customer, business process, and strategy.

Question 54

Bureaucratic control deals with

A) Rules and regulations.
B) Market forces.
C) Economic forces.
D) Pricing mechanisms.
E) Social norms.

Question 55

In large diversified companies, market controls are often used to regulate independent business units.

Question 56

If bureaucratic and market mechanisms are insufficient for directing a company's workforce in today's environment, it can turn to structural control.

Question 57

According to Michael Hammer, most of the problems with performance measurements can be eliminated by carefully selecting standards that look at entire business processes, identifying which actions make those processes succeed, and measuring specifically against those standards.

Question 58

If an employee believes his or her control system is overly controlling, that employee may exhibit dysfunctional behaviors.

Question 59

In an organization, whether or not a behavior is measured has little to do with the actual performance of it.

Question 60

Any process that directs the activities of individuals toward achieving organizational goals is

A) Planning.
B) Control.
C) Directing.
D) Budgeting.
E) Clan control.

Question 61

Managers conduct __________ audits of other companies and _________ audits of their own company.

A) financial; legal and ethical
B) external; internal
C) SWOT; six sigma
D) internal; external
E) customer; financial

Question 62

Which of the following statements about the concept of six sigma is true?

A) The system was developed by GE.
B) The lower the sigma number, the lower the level of defects.
C) It is designed to choose the correct organizational process for the job.
D) It indicates how often defects in a process are likely to occur.
E) Six sigma always improves the bottom line.

Question 63

An evaluation conducted by one organization of another organization is referred to as a(n)

A) External audit.
B) Competitive audit.
C) Internal audit.
D) Accounting audit.
E) Budget audit.

Question 64

A(n) ________ is the level of expected performance for a given goal; it is a target that establishes a desired performance level, motivates performance, and serves as a benchmark against which actual performance is assessed.

A) goal
B) measurement
C) standard
D) control process
E) audit

Question 65

Control that focuses on the use of information about previous results to correct deviations from the acceptable standard is referred to as

A) Feedforward control.
B) Quality control.
C) Feedback control.
D) Audit control.
E) Performance control.

Question 66

External audits can be used for which of the following?

A) Evaluating financial stability.
B) Evaluating production efficiency.
C) Evaluating sales effectiveness.
D) Indentifying possible targets for mergers or acquisitions.
E) Identifying earnings potential.

Question 67

Performance standards can be set with respect to which of the following?

A) Quantity, quality, and temperament.
B) Quality, temperament, and cost.
C) Cost, quality, and satisfaction.
D) Quality, time used, and quantity.
E) Time used, quality, and satisfaction.

Question 68

Advances in information technology have created powerful

A) Feedback controls.
B) Auditing capabilities.
C) Market controls.
D) Concurrent controls.
E) Organization links.

Question 69

Which type of control is future oriented?

A) Feedback control.
B) Proactive control.
C) Feedforward control.
D) Operator control.
E) Concurrent control.

Question 70

At Performance Instruments, all assembly workers must wear specialized gear to reduce minute particles in the manufacturing environment. Products are then assembled in a controlled environment. This requirement reflects _______ control.

A) feedback
B) specialist
C) feedforward
D) operator
E) concurrent

Question 71

Which type of control takes place before operations begin?

A) Feedback control.
B) Specialist control.
C) Initial control.
D) Feedforward control.
E) Concurrent control.

Question 72

The final step in the control process is

A) Taking corrective action.
B) Setting performance standards.
C) Measuring performance.
D) Comparing performance with standards.
E) Determining deviations.
As Figure 16.1 shows, a typical control system has four major steps: setting performance standards, measuring performance, comparing performance against the standards and determining deviations, and taking action to correct problems and reinforce successes.

Question 73

Jeremy is in charge of production at Renton Farm Equipment. Part of his job is to ensure few defects in the parts the factory produces. However, he has advised his crew to alert him to problems in production only when defects exceed 200 per million, which he considers a serious deviation from standards. Jeremy is using

A) Relaxed control.
B) The principle of deviation.
C) Clan control.
D) The principle of exception.
E) Behavioral standards.

Question 74

A managerial principle stating that control is enhanced by concentrating on the exceptions or significant deviations from the expected result or standard is referred to as

A) The principle of control.
B) A management audit.
C) Management myopia.
D) The principle of exception.
E) Control stages.

Question 75

An evaluation of the effectiveness and efficiency of various systems within an organization is called a(n)

A) Internal audit.
B) Management audit.
C) External audit.
D) Budget audit.
E) Six sigma analysis.

Question 76

The six sigma approach is based on __________ analyses that contribute to __________.

A) statistical; increased customer base
B) budgetary; customer satisfaction
C) strategic; customer satisfaction
D) statistical; customer satisfaction
E) strategic; increased customer base

Question 77

________ is in effect when supervisors watch employees to ensure that they work efficiently and avoid mistakes.

A) Organizational modification
B) Concurrent control
C) Management adjustment
D) Feedback control
E) Feedforward control

Question 78

The control process used while plans are being carried out, including directing, monitoring, and fine-tuning activities as they are performed, is referred to as

A) Feedforward control.
B) Concurrent control.
C) Feedback control.
D) Budgeting.
E) Market control.

Question 79

Electronic monitoring of telemarketers' conversations with potential clients is an example of _______ control.

A) operator
B) concurrent
C) preliminary
D) technological
E) feedback

Question 80

Where are performance data commonly obtained?

A) Competitors, written reports, and personal observation.
B) Top, middle, and lower management.
C) Oral and written reports and personal observation.
D) Competitors, oral reports, and upper management.
E) Technical analysts from outside the company.