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Chapter 19--Managing Quality and Performance

Student: ___________________________________________________________________________

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The systematic process of regulating organizational activities to make them consistent ith the e!pectations in plans" targets" and standards of performance refers to organizational control. True #alse

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%ffectively controlling an organization re&uires information a'out product standards and actual products" as ell as actions to correct any deviations from the standards. True #alse

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)lthough ork processes can 'e controlled and regulated" it is impossi'le to control and regulate employee 'ehavior. True #alse

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Managers are increasingly recognizing the need to measure intangi'le aspects of performance such as customer service. True #alse

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Customer service" e!ternal 'usiness processes" financial performances" and the organization,s capacity for learning and gro th are the four ma-or perspectives of the 'alanced scorecard. True #alse

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The feed'ack control model is a comprehensive management control system that 'alances traditional financial measures ith measures of customer service" internal 'usiness processes" and the organization,s capacity for learning and gro th. True #alse

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0enchmark control focuses on the &uantity of an end product or service. True #alse

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Managers focus on the various elements of the scorecard to set targets" evaluate performance" and guide discussion a'out hat further actions need to 'e taken. True #alse

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) standard for performance is included in an organization,s overall strategic plan to compare organizational activities against. True #alse

12 The final step of the feed'ack control model is to do nothing if performance is ade&uate or to take . corrective action if performance is inade&uate. True #alse 11 3n most companies" managers rely e!clusively on &ualitative measures to measure actual performance. . True #alse 1$ The fourth step in the control process is comparing actual activities to performance standards. . True #alse 1( %ffective management control involves su'-ective -udgment and employee discussions" as ell as . o'-ective analysis of performance data. True #alse 1* )n e!pense 'udget lists forecasted and actual revenues of the organization. . True #alse 1+ The level of funds flo ing through the organization and the nature of cash dis'ursements is sho n . through the capital 'udget. True #alse 1. ) cash 'udget estimates receipts and e!penditures of money on a daily or eekly 'asis.. . True #alse 1/ 4ithin the 'alanced scorecard" customer service indicators measure things such as employee retention . and satisfaction. True #alse 11 )n e!pense 'udget lists forecasted and actual revenues of the organization. . True #alse 19 The capital 'udget lists planned investments in ma-or assets such as 'uildings" heavy machinery" or . comple! information technology systems. True #alse $2 5ero-'ased 'udgeting re&uires a complete -ustification for every line item in a 'udget. . True #alse $1 ) 'alance sheet 'udget is a 'udget that plans and reports investments in ma-or assets to 'e depreciated . over several years. True #alse $

$$ 0ottom-up 'udgeting is a process in hich lo er level managers anticipate their department,s resource . needs and pass them up to top management for approval. True #alse $( The 'alance sheet sho s the firm,s financial position ith respect to e!penses and credits at a specific . point in time. True #alse $* 6ia'ilities are the firm,s de'ts" 'oth current and long-term. . True #alse $+ The income statement sho s revenues coming into the organization from all sources and su'tracts all . e!penses. True #alse $. ) responsi'ility center involves the coordination of mulitple managers from various departments to . carry out an activity. True #alse $/ The system of governing an organization so that the interests of corporate o ners are protected refers . to corporate governance. True #alse $1 #re&uently calculated ratios typically pertain to activity" passivity" and profita'ility. . True #alse $9 The li&uidity ratio sho s the company,s a'ility to meet its current de't o'ligations and a measurement . of the firm,s margin of safety. True #alse (2 )n activity ratio that measures ho many times the inventory is turned over to meet the total sales . figure is called the inventory turnover. True #alse (1 The return on total assets 789): is an activity ratio that is the percentage returned to investors on total . assets. True #alse ($ ;nder hierarchical control" employees are actively engaged and committed to their ork. . True #alse

(( The use of cultural values" traditions" shared 'eliefs and trust to increase compliance ith goals refers . to decentralized control. True #alse (* Companies today are increasingly shifting from a hierarchical control process to one that is more . decentralized. True #alse (+ ) process in hich lo er level managers anticipate their department,s resource needs and pass them to . top management for approval is called top-do n 'udgeting. True #alse (. 9pen-'ook management ties employee re ards to the company,s overall success. . True #alse (/ The goal of open-'ook management is to get every employee thinking and acting like a 'usiness . o ner. True #alse (1 Closed-'ook management helps employees appreciate hy efficiency is important to the organization,s . success as ell as their o n. True #alse (9 The <i! <igma approach is a comprehensive management control system that 'alances traditional . financial measures ith operational measures relating to a company=s critical success factors. True #alse *2 ) <i! <igma process ill typically result in one defective package of product for every three . truckloads shipped. True #alse *1 TQM tends to 'e most successful hen it enriches -o's and improves employee motivation. . True #alse *$ )n organization- ide commitment to infusing &uality into every activity through continuous . improvement defines <i! <igma. True #alse *( ) group of si! to t elve volunteer employees ho meet regularly to discuss and solve pro'lems . affecting their common ork activities refers to a &uality team. True #alse *

** The implementation of total &uality management involves the use of many techni&ues such as &uality . circles" 'enchmarking" <i! <igma principles" reduced cycle time" and continuous improvement. True #alse *+ 0enchmarking is the age-old practice of allo ing the artisan to sign his name to the finished product. . True #alse *. 9utsourcing is the continuous process of measuring products" services" and practices against the . toughest competitors or the industry leaders. True #alse */ Continuous improvement is the implementation of a large num'er of small" incremental improvements . in all areas of the organization on an ongoing 'asis. True #alse *1 <i! <igma is most 'eneficial hen employees have challenging -o's. . True #alse *9 >ery high e!pectations from senior management and a desire to share authority 'y middle managers . are t o of the positive factors leading to success of TQM. True #alse +2 The certification 'ased on a set of international standards for &uality management" setting uniform . guidelines for processes to ensure that products conform to customer re&uirements is the 3<9 certification. True #alse +1. 4hich of the follo ing is the systematic process through hich managers regulate organizational activities? ). <trategic planning 9rganizational control 9rganizational goal setting <trategic regulation

0 . C . @ . % 9rganizational . leading

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9phelia" the ne C%9 at 9dyssey 3nc." plans to implement a highly effective systematic process of regulating organizational activities to make them consistent ith the e!pectations that are esta'lished 'y managers ithin the company. This is referred to as AAAAA control. ). or ga niz ati on al feed' ack 'udg etary syste ms &uali ty

0 . C . @ . % . +(.

#or control" this type of measure is an important part of achieving higher performance. ). <ta tist ica l 0 Theor . itical C %mot . ional @%mplo yee conflic t % Mark . et

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)ccording to M)B)C%8,< <D9PT)6E in Chapter 19" the interest in self-a areness is part of a gro ing discipline called AAAAA. ). emplo yee self promo tion 0 emotional . development C . @ . selfleadership emotional hueristics

% auto. analytics ++. 5achary" a manager at %!ecuComp" receives &uarterly reports" hich track his department,s production statistics. Do ever" these reports lack key information regarding re-ect rates. 4hich of the follo ing components of the control model need improvement? ). Meas uring actua l perfo rman ce

The planning and setting of performanc e standards C <49T . analysis The a'ility to take corrective action hen necessary % )ll of . these /

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4hich of the follo ing is a control system that measures performance in terms of after-ta! profits minus the cost of capital invested in tangi'le assets? ). 9pen'ook mana geme nt 0%conomic value-added system C )ctivity. 'ased costing @3nappropriate control system % Bone of . these

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)ll of the follo ing are key steps of setting up feed'ack control systems %FC%PTG ). 0 . C . @ . % . comparing performance to standards. esta'lishing standards. getting employee opinions. measuring performance. making necessary corrections.

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4hich of the follo ing is a comprehensive management control system that 'alances traditional financial measures ith operational measures relating to a company,s critical success factors? ). %conomic value-added system 0 )ctivity-'ased costing . system C Market value-added system . @. 0alanced scorecard % 9pen-'ook management . system 1

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AAAAA indicators focus on production and operating statistics. ). #inancial performance 0. 0usiness process C. Critical success @ Potential for learning . and gro th % Performance . measurement

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)ll of the follo ing are ma-or perspectives of the 0alanced <corecard %FC%PT AAAAA. ). competitors 0. customers C learning and gro th . @. financial % internal 'usiness . processes

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Mistletoe Corporation has a detailed set of organizational goals and management information system that delivers timely and accurate information. Mistletoe still has control pro'lems" ho ever" 'ecause its managers refuse to act on the information they receive. Mistletoe,s control process has fla s in hich of the follo ing areas? ). 3ts perfor mance standa rds

03ts management information systems C 3ts a'ility to take corrective action hen necessary @ 3ts measuremen t systems % Bone of . these 9

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Hour department has a'senteeism standards" a ay to measure a'senteeism" and" 'ased on your investigation" you have concluded that your department has an e!cessive a'senteeism rate. 4hat should your ne!t step 'e? ). <et ne a'sent eeism standa rds. 0@evelop ne measures of a'senteeism. Terminate three employees for e!cessive a'senteeism. )ll of these ould 'e good e!amples of taking corrective action. % Bone of . these

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Eyle,s ork group consistently e!ceeds the goals the mem'ers set for themselves some months ago. 3n an attempt to 'etter motivate the group" Eyle thought it ould 'e a good idea to set ne goals. This is an e!ample of Eyle e!ercising control 'yG

). comparing perfo 0. developing ade&uate measures of performance. C. taking corrective action. @. all of these. % comparing performance to standards and developing ade&uate . only.

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3n the process of implementing the 'alanced scorecard approach at his company" operations manager <eth Do ard onders hether internal activities and processes add value for customers and shareholders. This involves hich dimension of the 'alanced scorecard? ). 0 . C. @ . % . Customers 6earning and gro th #inancials %!ternal 'usiness processes 3nternal 'usiness processes

.+ 3n a TQM program" hat is 'enchmarking? .

.. @iscuss the positive and negative factors that can influence the success of a TQM program. .

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)ll ell-designed control systems involve the use of AAAAA to determine hether performance meets esta'lished standards. ). 0 . C . @ . opi nio ns advic e consult ants 'ench marks

% feed'a . ck .1. 4hat is the first step in the feed'ack control system? ). 0 . C. @ . % . .9. %sta'lishing strategic o'-ectives %sta'lishing standards of performance Taking corrective action Comparing performance to standard Measuring previous performance

Cy'erChasers Corporation sends a post-purchase &uestionnaire to all consumers ho 'uy their products. They are interested in gathering data on product &uality" customer service orientation" and customer satisfaction. This is an e!ample of aG ). 0 . C . @ . % . concurre nt control. feed'ack control. feedfor ard control. preliminary control. preventive control.

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Eendra is a manager at Ceorge,s Coodies. 9n a regular 'asis Eendra and her su'ordinates set individual and organizational goals. This process is similar to hich component of the control model? ). Takin g correc tive action hen necess ary

0 )n . information system C%sta'lishing performance standards @%ngaging strategic analysis % Bone of . these /1. )ccording to the control model" after esta'lishing standards of performance the manager shouldG ). compar e perform ance to standard s. get the standards approved 'y the supervisors and su'ordinates. C measure actual . performance. @ . % . take corrective action. provide feed'ack.

1(

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Tiffany recently discovered that the re-ect rate for her department has e!ceeded the standard for performance in this area. 4hat should Tiffany do to e!ercise effective control? ). <he shoul d order more trainin g for her orkf orce. <he should contact the maintenance department and have them come fi! her machinery. <he should suspend the poorer orkers in her department. <he should investigate and discover the cause of the pro'lem. % Bone of . these

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AAAAA is any organizational department or unit under the supervision of a single person ho is responsi'le for its activity. ). 3ndepen dent center 8esponsi'ility center )nalysis center Control center

0 . C . @ . % 0udgeting . center 1*

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AAAAA control is the process of setting targets for an organizations e!penditures. ). Quali ty 0. 3ncome C 0udgetary . @. <ystems % <upply . chain

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4hich of the follo ing includes anticipated and actual e!penses for a responsi'ility center? ). 8evenu e 'udget 0. Cash 'udget C Capital 'udget . @ %!pense . 'udget % 9perating . 'udget

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4hich of these is a financial 'udget that estimates cash flo s on a daily 'asis or eekly 'asis to ensure that the company can meet its o'ligations? ). Capit al e!pen diture 'udge t 0 0alance . sheet 'udget C Cash . 'udget @ 8evenue . 'udget % Profit . 'udget

1+

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Madison has 'een assigned to ork on the development of a 'udget that plans future investments in ma-or assets such as 'uildings and heavy machinery. Madison is orking on a7n: AAAAA 'udget. ). 0 . C . @ . % . cas h capit al reven ue operat ing e!pen se

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The AAAAA plans future investments in ma-or assets to 'e depreciated over several years. ). capita l 'udge t 0 'alance . sheet 'udget C cash . 'udget @ revenue . 'udget % profit . 'udget

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8on meets ith his company=s accountant to discuss the 'udget of anticipated and actual e!penses for each segment of the organization. This involves revie of hich type of 'udget? ). %!pense 'udget 8evenue 'udget

0 . C. Cash 'udget @ Capital 'udget . % Bonfinancial . 'udget

1.

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<tella" a systems manager for a large technology company" ould like to get an understanding of her company=s financial position ith respect to assets and lia'ilities at the end of the fiscal year. 4hich financial statement should she refer to? ). 3ncome stateme nt )ctivity ratio

0 . C. TQM report @ 0alance sheet . % 0alance . scorecard 11.

4hich financial control system measures the stock market=s estimate of the value of a company=s past and pro-ected capital investment pro-ects? ). Market valueadded 0 %conomic value. added C <ystem governance . @ )ctivity-'ased . costing % Corporate . governance

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0rad is a department manager at Dome Theater" 3nc. Dis sole role in the 'udget process is to implement the 'udget that is developed for him. This is an e!ample ofG ). 0 . C . @ . strategic 'udgeting . operational 'udgeting. top-do n 'udgeting. management 'y o'-ectives.

% 'ottom-up . 'udgeting. 1/

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Pauline is an area manager at 3ronman Cym. <he anticipates her area,s needs and formulates a proposed 'udget every &uarter. <he then sends this proposal to her manager. This is an e!ample ofG ). topdo n 'udge ting. 0 strategic . 'udgeting. C revenue . 'udgeting. @ 'ottom-up . 'udgeting. % none of . these.

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)n advantage of the 'ottom-up 'udgeting process isG ). its emp hasis on 'ure aucra tic contr ol.

0lo er managers are more involved. C top managers control the information flo . top managers are often not committed to achieving 'udget targets. % all of . these. 1+. The firm,s financial position ith respect to assets and lia'ilities at a specific point in time is sho n 'y itsG ). 0 . C . @ . % . activit y ratio. profita'ility ratio. income statement. li&uidity ratio. 'alance sheet.

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AAAAA provide the 'asic information used for financial control of an organization. ). 9 n ers e& uit y 03ncome statem ents C#inanci al positio n @Missio n <tatem ents % 122. E,s

1/.

AAAAA refer7s: to the difference 'et een assets and lia'ilities and is the company,s net orth in stock and retained earnings. ). 0 . C . @ . )ss ets Current de't Bet profit 9 ners, e&uity

% 6ia'iliti . es

$2

11.

The AAAAA ratio refers to the a'ility of the organization to meet its current de't o'ligation. ). act ivi ty 0 li&ui . dity C profit . a'ilit y @ conve . rsion % gro . th

19.

The conversion ratio is considered to 'e a7n: AAAAA ratio. ) a . ct i v it y 0 li& . uid ity Cprof ita' ility @ lev . era ge % ca . sh

$1

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4hich of the follo ing is a ratio that measures the firm,s internal performance ith respect to key activities defined 'y management? ). 0 . C . @. % . ) li&uidity ratio )n activity ratio 8eturn on total assets ) current ratio Profit margin on sales

91.

The AAAAA is purchase orders divided 'y customer in&uiries. ). curre nt ratio 0 inventory turnover ratio C conversion . ratio @ profit . margin on sales % none of . these

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Tammy is a production manager at %agle,s Best" 3nc.. <he is concerned that too much money is 'eing asted on inventory that is sitting in the arehouse too long. <he should calculate a7n:G ). curren t ratio. 0 inventory turnover ratio. C conversion . ratio. @ profita'ility . ratio. % leverage . ratio.

$$

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Bet income divided 'y sales is the correct formula for calculatingG ). 0. C. @ . % . return on total assets. a current ratio. a li&uidity ratio. profit margin on sales. a corporate evaluation.

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4hich of the follo ing refers to funding activities ith 'orro ed money? ). 0 . C . @ . 89 ) 6ever age 6i&ui dity Profita 'ility

% )ctivi . ty 9+. AAAAA is a control system that identifies the various activities needed to produce a product and determines the cost of those activities. ). 9pen'ook mana geme nt 0)n economic value-added system C )ctivity. 'ased costing @)n inappropriate control system % Bone of . these

$(

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4hich of the follo ing is considered a leverage ratio? ). 0 . C . @ . % . @e't ratio 8eturn on total assets Profit margin on sales Conversion ratio 3nventory turnover

9/.

The 'asic philosophy of control at Butrients-#orHou" 3nc. is 'ased on the policies found in the employee hand'ook" as ell as a strict hierarchy of authority. This philosophy is consistent ithG ). clan control. 0 'ottom-up control. . C hierarchical . control. @ culture control. . % decentralized . control.

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)t 60E 3ndustries" responsi'ility for &uality control rests ith a team of &uality control inspectors and supervisors rather than ith employees. 60E uses hat type of organizational control? ). 0 . C . @ . % . Matri! control Dierarchical control @ecentralized control 0ottom-up control 0alanced control

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@ecentralized control is usually implemented in all of the follo ing areas %FC%PTG ). self-control. 0. peer group. C. corporate culture. @ employee selection and . socialization. % the &uality control . department.

122.

)t 843 @istilleries" rules and procedures are used only hen necessary. 3nstead" shared goals and values guide employee 'ehavior. 843 uses hat type of organizational control? ). 0 . C . @ . % . Centrali zed control Dierarchical control @ecentralized control Top-do n control 0alanced control

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4hich of the follo ing allo s employees to see for themselves the financial condition of the company? ). 9pen-'ook management 0 )n economic value-added . system C )ctivity-'ased costing . @ )n inappropriate control . system % Market value-added . system

$+

12$.

The control IsystemI at #resh#ood Corporation is 'ased on the culture of the organization and norms that develop in the individual ork teams. This is an e!ample ofG ). 'urea ucrati c contro l. 0 decentralize . d control. C organization . al control. @ . % . feed'ack control. none of these.

12(.

The goal of AAAAA is to get every employee thinking and acting like a 'usiness o ner. ). management'y- alking around 0 closed-'ook management . C. M09 @ open-'ook management . % -ust-in-time inventory . systems

12*.

<ilver n= Cold 3nc. recently introduced a ne control philosophy here all employees have access to the same information that o ners have" such as hat money is coming in and here it is going. This is an e!ample of hich control philosophy? ). 0. C . @ . % . $. 0alanced scorecard <i! <igma Continuous improvement Total &uality management 9pen-'ook management

12+.

Total &uality managementG ). is 'ased on the ideas of #reder ick Taylor .

gives managers total responsi'ility for achieving &uality goals. gives all employees the responsi'ility for achieving &uality goals. as first successfully implemented in the ;nited <tates. % is all of . these. 12.. 4hich of the follo ing is a philosophy of organization- ide commitment to continuous improvement" focusing on team ork" customer satisfaction" and lo ering costs? ). %ng inee ring 0Total &uality manage ment C 9utsou . rcing @ . % . Cultur e @iversi ty

$/

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Charlie" a manager at a te!tile company" is 'othered 'y a lack in &uality of products manufactured 'y his company. Charlie hopes to infuse &uality into the company through continuous improvement 'y involving everyone ho orks there. This descri'es hich control philosophy? ). 0. C . @ . % . 0alanced scorecard <i! <igma Continuous improvement Total &uality management 9pen-'ook management

121.

) &uality circle is a group of AAAAA volunteer employees. ). 0 . C . @ . % . $ to * . to 1$ 12 to $2 1+ to $+ (2 to +2

129.

) group of . to 1$ volunteer employees ho meet regularly to discuss and solve pro'lems affecting their common ork activities is a AAAAA. ). feedfo r ard contro l group ork team &uality circle committee pro'lem team

0 . C . @ . % .

$1

112.

Deather 'elongs to an informal group at ork that meets t ice a month to discuss common issues and pro'lems in the orkplace. 8ecently" this group has 'een focusing on ays to improve safety in the orkplace. This group is an e!ample ofG ). 0 . C . @ . % . a safety group. a &uality circle. an ad-hoc committee. a pro'lem team. none of these.

$9

111.

Quality circles are 'ased on the assumption7s: thatG ). the peop le ho do the -o' kno it 'ette r than anyo ne else. &uality can 'e increased 'y increasing the size of the organizatio n. &uality can 'e increased 'y talking more a'out it. the more employees talk" the more satisfied they ill 'e. % all of . these.

(2

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4hat is the key to successful 'enchmarking? ). )p plic atio n 0 3mplem . entation C . @ . % . )naly sis <trate gy Planni ng

11(.

4hich of the follo ing is the process of measuring your organizational process against the 'est in the industry? ). 0 . C . @. % . 9utsourcing Continuous improvement %nvironmental analysis 0enchmarking Competitive measurement

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4hich of the follo ing is a &uality control approach that emphasizes a relentless pursuit of higher &uality and lo er costs? ). Contin uous impro vemen t Cycle time Quality circles <i! <igma 0enchmarki ng

0 . C . @ . % .

(1

11+.

4hich &uality control techni&ue uses a five-step methodology to define" measure" analyze" improve" and control processes" other ise referred to as @M)3C? ). Quality circles 0. <i! <igma C. 0enchmarking @ 0alanced scorecard . % Continuous . improvement

11..

To reduce the organization,s cycle time is to reduce the num'er ofG ). of comm ittees in the organi zation . 0 layers of . management . Csteps in an organizationa l process. @staff employees in the organization. % none of . these.

($

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AAAAA refers to the steps taken to complete a company process. ). Contin uous impro vemen t Cycle time Quality circles <i! sigma 0enchmarki ng

0 . C . @. % . 111.

3t seems that once a year the managers of <tone Construction" 3nc. attempt a ma-or organization intervention" such as management-'y-o'-ectives. They never seem to 'e satisfied ith the performance of <tone Construction and" sure enough" 1$ months later" along comes another ma-or intervention. 0y implementing organizational change in this ay" <tone Construction,s management may ell 'e violating the principle ofG ). 'ench marki ng. 0 continuous improvement . C unity of . direction. @ top-do n . control. % none of . these.

119.

AAAAA is7are: most 'eneficial hen employees have challenging -o's. ). 0 . C. @. % . (( <i! <igma Total Quality Management Eaizen Quality circles Continuous improvement

1$2.

Contingency factors that can influence the success of a TQM program in a positive ay include all of the follo ing %FC%PTG ). tasks make high skill demands on employees. 0 TQM serves to enrich -o's and motivate . employees. C pro'lem-solving skills are improved for all . employees. @ participation and team ork are used to . tackle significant pro'lems. % managers ait for 'ig" dramatic . innovations.

1$1.

AAAAA standards represent an international standard for &uality management. ). 3<9 9222 0. <i! <igma C. TQM @. Eiazan % #oreign %conomy . 3nde!

1$$.

) contingency factor that can influence the success of a TQM program in a negative ay is thatG ). continuous improvement is a ay of life. 0 TQM serves to enrich -o's and motivate . employees. C pro'lem-solving skills are improved for all . employees. @ participation and team ork are used to . tackle significant pro'lems. % union leaders are left out of QC . discussions.

(*

1$(.

Contingency factors that can influence the success of a TQM program in a negative ay include all of the follo ing %FC%PTG ). 0 . C . tasks make high skill demands on employees. management e!pectations are unrealistically high. middle managers are dissatisfied a'out loss of authority.

@ orkers are dissatisfied ith other aspects . of organizational life. % managers ait for 'ig" dramatic . innovations. 1$*. 4hich of these is 'ased on a set of international standards for &uality? ). 0 . C . @ . Quality circle Corporate governance 3<9 certification 9pen-'ook management

% 0alance . scorecard 1$+. 4hich of the follo ing refers to the system of governing an organization so that the interests of corporate o ners are protected? ). 0 . C . @ . Quality circle Corporate governance 3<9 certification 9pen-'ook management

% 0alance . scorecard

(+

1$..

3n today=s tough economy" companies are predominantly looking for employees ith hat types of skills? ). )ccountin g skills Conceptual skills

0 . C 8esearching skills . @ Technical skills . % ) diverse set of . skills 1$/.

Scenario - Katrina Aldridge The yearly auditing revie of Pilgrim 3ndustries is scheduled for ne!t month. Eatrina )ldridge is preparing for that audit and is also preparing her 'udget for the coming year. 4hich of these 'udgets ill provide Eatrina information a'out planned investments in ma-or assets like 'uildings and heavy machinery?
a. '. c. d. e. Cash 'udget 8evenue 'udget Capital 'udget %!pense 0udget 0alance-<heet 'udget

(.

1$1.

Scenario - Katrina Aldridge The yearly auditing revie of Pilgrim 3ndustries is scheduled for ne!t month. Eatrina )ldridge is preparing for that audit and is also preparing her 'udget for the coming year. 3n planning and 'udgeting for the ne!t 1$ months" Eatrina is participating in a 'udgeting process in hich lo er-level manager,s 'udget their department,s resource needs and pass them up to top management for approval. This 'udget process is an e!ample ofG
a. '. c. d. e. 'ottom-up 'udgeting. top-do n 'udgeting. 'alance sheet 'udgeting. none of these.

zero-'ased 'udg

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1$9.

Scenario - Katrina Aldridge The yearly auditing revie of Pilgrim 3ndustries is scheduled for ne!t month. Eatrina )ldridge is preparing for that audit and is also preparing her 'udget for the coming year. Eatrina has also re&uested that the financial ratios 'e calculated and analyzed for her. 4hich of the follo ing ratios ill give her the 'est information for evaluating li&uidity?
a. '. c. d. e. Current ratio Conversion ratio 8eturn on assets Bone of these.

Profit margin on

1( The systematic process through hich managers regulate organizational activities is kno n as AAAAA. 2. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 1( AAAAA focuses on hether performance meets esta'lished standards. 1. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 1( 4hen AAAAA deviates from a7n: AAAAA" managers must interpret the deviation. $. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 1( )7n: AAAAA is defined as any organizational department or unit under the supervision of a single person (. ho is responsi'le for its activity. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 1( )7n: AAAAA includes anticipated and actual e!penses for each responsi'ility center and for the total *. organization. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 1( )7n: AAAAA lists forecasted and actual revenues of the organization. +. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA (1

1( The AAAAA estimates receipts and e!penditures of money on a daily or eekly 'asis to ensure that an .. organization has sufficient cash to meet its o'ligations. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 1( The AAAAA lists planned investments in ma-or assets such as 'uildings" trucks" and heavy machinery" /. often involving e!penditures over more than a year. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 1( 3n a traditional AAAAA approach" 'udgeted amounts for the coming year are imposed on middle- and 1. lo er-level managers. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 1( ) 'udgeting process in hich middle and lo er-level managers set departmental 'udget targets in 9. accordance ith overall company revenues and e!penditures specified 'y top management is called AAAAA 'udgeting. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 1* ) 'udgeting process in hich lo er-level managers 'udget their departments, resource needs and pass 2. them up to top management for approval is called AAAAA 'udgeting. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 1* The AAAAA provides three types of informationG assets" lia'ilities" and o ners, e&uity. 1. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 1* The firm,s financial performance for a given time period is sho n on the AAAAA. $. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 1* )7n: AAAAA ratio indicates an organization,s a'ility to meet its current de't o'ligations. (. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 1* )7n: AAAAA ratio measures internal performance ith respect to key activities defined 'y management. *. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 1* The percentage representing hat a company earned from its assets is called AAAAA. +. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 1* ) control system that identifies the various activities needed to provide a product and determines the .. cost of those activities is called AAAAA. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA

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1* AAAAA involves monitoring and influencing employee 'ehavior through e!tensive use of rules" policies" /. hierarchy of authority" ritten documentation" re ard systems" and other formal mechanisms. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 1* AAAAA control uses cultural values" traditions" shared 'eliefs" and trust to generate compliance ith 1. organizational goals. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 1* ) control system that measures performance in terms of after-ta! profits minus the cost of capital 9. invested in tangi'le assets is called the AAAAA. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 1+ <haring financial information and results ith all employees in the organization is called AAAAA 2. management. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 1+ )n organization ide commitment to infusing &uality into every activity through continuous 1. improvement is called AAAAA. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 1+ ) group of . to 1$ volunteer employees ho meet regularly to discuss and solve pro'lems affecting $. their common ork activities is kno n as a7n: AAAAA. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 1+ The continuous process of measuring products" services" and practices against ma-or competitors or (. industry leaders is called AAAAA. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 1+ AAAAA refers to the num'er of steps taken to complete a company process. *. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 1+ The implementation of a large num'er of small" incremental improvements in all areas of the +. organization on an ongoing 'asis is referred to as AAAAA. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 1+ AAAAA refers to the system of governing an organization so that the interests of corporate o ners are .. protected. AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA

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1+ 6ist the four steps in the feed'ack control model. /.

1+ 6ist the four ma-or perspectives of a 'alanced scorecard. 1.

1+ 3dentify and 'riefly descri'e the four steps of the feed'ack control model. 9.

1. @iscuss the evolution of the 'alanced scorecard from a system that places e&ual emphasis on 2. performance management categories to one that emphasizes cause and effect.

1. @escri'e the difference 'et een a 'alance sheet and an income statement. 1.

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1. 3dentify and 'riefly descri'e each of the common financial ratios addressed in your te!t. $.

1. Compare hierarchical control ith decentralized control. (.

1. @iscuss open-'ook management and the 'alanced scorecard. *.

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Chapter 19--Managing Quality and Performance Eey


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.+. 0enchmarking is the continuous process of measuring products" services" and practices against the toughest competitors or the industry leaders. The key to 'enchmarking lies in analysis and in the selection of the comparison company. ... 8efer to %!hi'it 19.9 in the te!t for positive and negative factors associated ith TQM. ./. % .1. 0 .9. 0 /2. C /1. C /$. @ /(. 0 /*. C /+. @ /.. C //. 0 /1. ) /9. ) 12. @ 11. ) 1$. C 1(. @ 1*. 0 1+. % 1.. 0 1/. @ 11. 0 19. ) 92. 0 91. C 9$. 0 9(. @ 9*. 0 9+. C 9.. ) 9/. C

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1($. performanceJ standard 1((. responsi'ility center 1(*. e!pense 'udget 1(+. revenue 'udget 1(.. cash 'udget 1(/. capital 'udget 1(1. top-do n 'udgeting 1(9. top-do n 1*2. 'ottom-up 1*1. 'alance sheet 1*$. income statement 1*(. li&uidity 1**. activity 1*+. return on assets or 89) 1*.. activity-'ased costing or )0C 1*/. Dierarchical control 1*1. @ecentralized 1*9. economic value added system or %>) system 1+2. open-'ook 1+1. total &uality management or TQM 1+$. &uality circle 1+(. 'enchmarking 1+*. Cycle time 1++. continuous improvement 1+.. Corporate governance 1+/. The four steps are 71: esta'lish standards of performance" 7$: measure actual performance" 7(: compare performance to standards" and 7*: take corrective action. 1+1. 71: #inancial performance" 7$: customer service" 7(: internal 'usiness processes" and 7*: the organization,s capacity for learning and gro th. 1+9. The four steps are 1: esta'lish standards of performance" $: measure actual performance" (: compare performance to standards" and *: take corrective action. Please refer to e!hi'it 19.$ in the te!t. 1.2. This process is illustrated in %!hi'it 19.1 on page +*+. This adapted approach to the scorecard indicates that financial results are the final outcome of other processes ithin the company. The foundation of high financial performance is learning and gro th" hich reflects that it is an organization,s people and culture that cause e!cellent 'usiness processes. %!cellent 'usiness processes in turn cause customers to 'e satisfied. )nd happy customers lead to financial success. Thus" the components of the scorecard can 'e organized into a pyramid" indicating that each level reinforces the level a'ove it. Thus" high financial performance is an outgro th of success in other areas" starting ith a firm commitment to developing human capital and internal 'usiness processes.

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1.1. ) 'alance sheet sho s the firm,s financial position ith respect to assets and lia'ilities at a specific point in time. 3t provides three types of informationG assets" lia'ilities" and o ners, e&uity. )n income statement is different from a 'alance sheet in the sense that it sho s revenues coming into the organization from all sources and su'tracts all e!penses" indicating the firm,s net income. 1.$. The ma-or categories addressed in the te!t are li&uidity ratios" activity ratios" profita'ility ratios" and leverage ratios. Please refer to %!hi'it 19.+ in the te!t. 1.(. 0ureaucratic control uses rules" policies" hierarchy of authority" re ard systems" and other formal devices to influence employee 'ehavior and assess performance. 3n contrast" decentralized control uses cultural values" traditions" shared 'eliefs" and trust to generate compliance ith organizational goals. 0ureaucratic control generates employee compliance ith rules hile decentralized control generates employee commitment to &uality. 1.*. 9pen-'ook management allo s employees to see for themselves the financial condition of the company" ho each individual,s -o' fits into the 'ig picture and the company,s financial future" and it ties employee re ards to the company,s overall success. The 'alanced scorecard is a comprehensive management control system that 'alances traditional financial measures ith operational measures relating to a company,s critical success factors. 3t contains four perspectivesG financial performance" customer service" internal 'usiness processes" and the organization,s capacity for learning and gro th.

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