managing quality and performance

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managing quality and performance

  1. 1. Managing Quality and Performance CHAPTER 13 0
  2. 2. Learning Outcomes <ul><li>Define organizational control and explain why it is a key management function. </li></ul><ul><li>Explain the benefits of using the balance scorecard to track performance and control of the organization. </li></ul><ul><li>Explain the four steps in the control process . </li></ul><ul><li>Discuss the use of financial statements, financial analysis , and budgeting as management controls . </li></ul><ul><li>Contrast the hierarchical and decentralized methods of control. </li></ul><ul><li>Identify the benefits of open-book management . </li></ul><ul><li>Describe the concept of total quality management and major TQM techniques, such as quality circles , benchmarking , Six Sigma principles , reduced cycle time , and continuous improvement . </li></ul><ul><li>Identify current trends in quality and financial control, including ISO certification , economic value-added and market value-added systems , activity-based costing , and corporate governance , and discuss their impact on organizations. </li></ul>Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved. 0
  3. 3. What Is Your Attitude Toward Control? <ul><li>Managers must balance control with motivation and creativity </li></ul><ul><li>Managers control: </li></ul><ul><ul><li>Work processes </li></ul></ul><ul><ul><li>Employee behavior </li></ul></ul><ul><ul><li>Financial resources </li></ul></ul><ul><ul><li>Profitability </li></ul></ul>Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved. 0
  4. 4. The Meaning of Control <ul><li>The systematic process of regulating organizational activities to meet expectations </li></ul><ul><ul><li>Established plans </li></ul></ul><ul><ul><li>Targets </li></ul></ul><ul><ul><li>Standards </li></ul></ul>Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved. 0
  5. 5. Choosing Standards and Measures <ul><li>Common forms of control include financial performance </li></ul><ul><ul><li>Sales </li></ul></ul><ul><ul><li>Revenue </li></ul></ul><ul><ul><li>Profit </li></ul></ul><ul><li>There is a growing need to measure intangible aspects of performance </li></ul><ul><ul><li>Customer Service </li></ul></ul><ul><ul><li>Customer Retention </li></ul></ul>Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved. 0
  6. 6. The Balanced Scorecard <ul><li>Comprehensive management control system that balances traditional financial measures with: </li></ul><ul><ul><li>Customer Service </li></ul></ul><ul><ul><li>Internal Business Processes </li></ul></ul><ul><ul><li>Learning and Growth </li></ul></ul>Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved. 0
  7. 7. Review the Scorecard Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved. 0
  8. 8. Steps of Feedback Control <ul><li>Establish Standards of Performance </li></ul><ul><li>Measure Actual Performance </li></ul><ul><li>Compare Performance to Standards </li></ul><ul><li>Take Corrective Action </li></ul>Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved. 0
  9. 9. Feedback Control Model Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved. 0
  10. 10. Controlling and Budgeting <ul><li>Budgets are reports that list planned and actual expenditures </li></ul><ul><li>Budget reports highlight the variance between budgeted and actual amounts </li></ul><ul><li>Budgets are created for all departments and divisions in an organization </li></ul>Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved. 0
  11. 11. Types of Budgeting <ul><li>Expense Budget </li></ul><ul><li>Revenue Budget </li></ul><ul><li>Cash Budget </li></ul><ul><li>Capital Budget </li></ul>Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved. 0
  12. 12. Financial Control <ul><li>Review performance and highlight potential problems </li></ul><ul><li>Most common financial statements </li></ul><ul><ul><li>Balance Sheet </li></ul></ul><ul><ul><li>Income Statement or Profit & Loss Statement </li></ul></ul>Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved. 0
  13. 13. Sample Financial Statements Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved. Starting point for financial control 0
  14. 14. Financial Analysis: Interpreting the Numbers <ul><li>Managers need to be able to evaluate financial reports </li></ul><ul><li>Comparisons allow managers to see improvement and focus on competition </li></ul><ul><li>Ratios and statistics highlight relationships </li></ul><ul><li>Ratios are stated fractions or proportions </li></ul><ul><ul><li>Liquidity, activity, profitability and leverage </li></ul></ul>Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved. 0
  15. 15. Common Financial Ratios Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved. 0
  16. 16. The Changing Philosophy of Control <ul><li>Hierarchical versus Decentralized Approaches </li></ul><ul><li>Open Book Management </li></ul><ul><li>Total Quality Management (TQM) </li></ul>Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved. 0
  17. 17. Hierarchical and Decentralized Methods Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved. 0
  18. 18. Open-Book Management <ul><li>Information sharing </li></ul><ul><li>Teamwork </li></ul><ul><li>Encourage active participation </li></ul><ul><li>Commitment to goals </li></ul><ul><li>Open-book management allows employees to see for themselves—through charts, computer printouts, meetings, and so forth—the financial condition of the company </li></ul>Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved. 0
  19. 19. Total Quality Management <ul><li>Total Quality Management (TQM) is a decentralized control philosophy </li></ul><ul><li>Infuse quality into every activity in a company through continuous improvement </li></ul><ul><li>Toyota is a good example of the results of TQM </li></ul><ul><li>TQM became attractive in the 1980s because of its success in Japan </li></ul>Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved. 0
  20. 20. International Opacity Index Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved. 0
  21. 21. TQM Techniques <ul><li>Quality Circles </li></ul><ul><li>Benchmarking </li></ul><ul><li>Six Sigma </li></ul><ul><li>Reduced Cycle Time </li></ul><ul><li>Continuous Improvement </li></ul>Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved. 0
  22. 22. The Importance of Quality Improvement Programs Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved. 0
  23. 23. Quality Program Success Factors Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved. 0
  24. 24. Trends in Quality and Financial Control <ul><li>International Quality Standards </li></ul><ul><li>New Financial Control Systems </li></ul><ul><li>Economic Value-Added (EVA) </li></ul><ul><li>Market Value-Added (MVA) </li></ul><ul><li>Activity-Based Costing (ABC) </li></ul><ul><li>Corporate Governance </li></ul>Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved. 0

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