Approaches to designing control systems and the control process

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CHRISTOPHER P. ZAMORA / Module 8

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1. Market Control Supervision or management of the

distribution of goods and services by a government or other entity. Market control is an attempt to achieve specified economic or political goals through the deliberate manipulation of factors such as supply, demand, pricing, transportation, or taxation.

it emphasizes the use of extensive market mechanisms.

Read more: http://www.businessdictionary.com/definition/market-control.html#ixzz30o41RQ7q

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Example of Market Control

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Characteristics of Market Control

Firm’s products or services are clearly specified

It is also distinct There must be considerable

marketplace competition

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Example of Market Control

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2. Bureaucratic Control Control of an organization and the individuals

that make up the organization through systems of standardized rules, methods, and verification procedures. Bureaucratic control is used to ensure efficient operation of large organizations, where face-to-face communication is not possible or practical and informal methods of enforcing compliance may not be sufficient.

Emphasizes organizational authority.

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Example of Bureaucratic Control

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Characteristics of Bureaucratic Control

1. There is a high degree of Division of Labor and Specialization.

2. There is a well defined Hierarchy of Authority.3. It follows the principle of Rationality, Objectively and

Consistency.4. Interpersonal relations are based on positions and

not on personalities.5. There are well defined Rules and Regulations. Rules

cover all the duties and rights of the employees. These rules must be strictly followed.

6. There are well defined Methods for all types of work.7. Selection and Promotion is based on Technical

qualifications.8. Only Bureaucratic or legal power is given importance.

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Sample Diagram of Bureaucratic Control

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Example of Bureaucratic Control

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3. Clan Control Control of the employees or members of an

organization through shared values, belief structures, and cultural norms, rather than through traditional bureaucratic control procedures. Organizations using a clan control strategy allow employees a high degree of operational latitude, relying on commonly-held goals and behavioral expectations to produce desired strategic outcomes.

Regulates employee behavior by shared values, norms, traditions, rituals, beliefs and other aspects of the organization’s culture.

Read more: http://www.businessdictionary.com/definition/clan-control.html#ixzz30o5oMEuU

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CHRISTOPHER P. ZAMORA / Module 813–13

Example of Clan Control

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CHRISTOPHER P. ZAMORA / Module 813–14

Example of Clan Control

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Is one that measures actual performance, compares it against a standard or objective, and takes managerial action to correct any deviations or gap in meeting the standards.

Steps in the Control Process

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Flow Chart

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How to measure actual performance? (step

no. 2)1. Personal observation.2. Statistical reports.3. Oral reports.4. Written reports.5. Management by walking around

(MBWA)1. A phrase used to describe when

a manager is out in the work area interacting with employees.

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WHY WE NEED TO COMPARE ACTUAL PERFORMANCE? (step

no. 3)This determines the degree of variation between actual performance and the standard.Range of variation

The acceptable parameters of variance between actual performance and the standard.

Deviations that exceed this range need the manager’s urgent attention.

Size and direction of variation may be taken into account.

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Defining an Acceptable Range of Variation

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TAKING MANEGERIAL ACTION (step no. 4)

Do nothing if all is working well.Immediate corrective action

Correcting a problem at once to get performance back on track

Basic corrective action Determining how and why performance has

deviated and then correcting the source of deviation

Revising the standard Adjusting the performance standard to reflect

current and predicted future performance capabilities

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Example: Mid-Western Distributors’ Sales Performance for July (hundreds of cases of

beer)

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BRAND STANDARD ACTUAL OVER (UNDER)

Heineken 1,075 913 (162)

Molson 630 634 4

Beck’s 800 912 112

Moosehead 620 622 2

Labatt’s 540 672 132

Corona 160 140 (20)

Amstel Light 225 220 (5)

Dos Equis 80 65 (15)

Tecate 170 286 116

Total cases 4,300 4,464 164

3 Types Of Control1. Feedforward control

Control that prevents anticipated problems

2. Concurrent control Control that takes place while an activity is in

progress (management by walking around [MBWA])

3. Feedback control Control that takes place after an action

Provides evidence of planning effectivenessProvides motivational information to employees

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Three Types of Control Diagram

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The Qualities Of An Effective Control Systems

AccuracyTimelinessEconomyFlexibilityUnderstandabilityReasonable criteria

Strategic placementFocus on the exception Multiple criteria Corrective action

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CHRISTOPHER P. ZAMORA CHRISTOPHER P. ZAMORA / Module 8

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Leadership & Management

Approaches to designing control systems and the control process