Chapter 19--Managing Quality and Performance

Chapter 19--Managing Quality and PerformanceStudent: ___________________________________________________________________________1.The systematic process of regulating organizational activities to make them consistent with the expectations in plans, targets, and standards of performance refers to organizational control.TrueFalse2.Effectively controlling an organization requires information about product standards and actual products, as well as actions to correct any deviations from the standards.TrueFalse3.Although work processes can be controlled and regulated, it is impossible to control and regulate employee behavior.TrueFalse4.Managers are increasingly recognizing the need to measure intangible aspects of performance such as customer service.TrueFalse5.Customer service, external business processes, financial performances, and the organization's capacity for learning and growth are the four major perspectives of the balanced scorecard.TrueFalse6.The feedback control model is a comprehensive management control system that balances traditional financial measures with measures of customer service, internal business processes, and the organization's capacity for learning and growth.TrueFalse7.Benchmark control focuses on the quantity of an end product or service.TrueFalse8.Managers focus on the various elements of the scorecard to set targets, evaluate performance, and guide discussion about what further actions need to be taken.TrueFalse9.A standard for performance is included in an organization's overall strategic plan to compare organizational activities against.TrueFalse10.The final step of the feedback control model is to do nothing if performance is adequate or to take corrective action if performance is inadequate.TrueFalse11.In most companies, managers rely exclusively on qualitative measures to measure actual performance.TrueFalse12.The fourth step in the control process is comparing actual activities to performance standards.TrueFalse13.Effective management control involves subjective judgment and employee discussions, as well as objective analysis of performance data.TrueFalse14.An expense budget lists forecasted and actual revenues of the organization.TrueFalse15.The level of funds flowing through the organization and the nature of cash disbursements is shown through the capital budget.TrueFalse16.A cash budget estimates receipts and expenditures of money on a daily or weekly basis..TrueFalse17.Within the balanced scorecard, customer service indicators measure things such as employee retention and satisfaction.TrueFalse18.An expense budget lists forecasted and actual revenues of the organization.TrueFalse19.The capital budget lists planned investments in major assets such as buildings, heavy machinery, or complex information technology systems.TrueFalse20.Zero-based budgeting requires a complete justification for every line item in a budget.TrueFalse21.A balance sheet budget is a budget that plans and reports investments in major assets to be depreciated over several years.TrueFalse22.Bottom-up budgeting is a process in which lower level managers anticipate their department's resource needs and pass them up to top management for approval.TrueFalse23.The balance sheet shows the firm's financial position with respect to expenses and credits at a specific point in time.TrueFalse24.Liabilities are the firm's debts, both current and long-term.TrueFalse25.The income statement shows revenues coming into the organization from all sources and subtracts all expenses.TrueFalse26.A responsibility center involves the coordination of mulitple managers from various departments to carry out an activity.TrueFalse27.The system of governing an organization so that the interests of corporate owners are protected refers to corporate governance.TrueFalse28.Frequently calculated ratios typically pertain to activity, passivity, and profitability.TrueFalse29.The liquidity ratio shows the company's ability to meet its current debt obligations and a measurement of the firm's margin of safety.TrueFalse30.An activity ratio that measures how many times the inventory is turned over to meet the total sales figure is called the inventory turnover.TrueFalse31.The return on total assets (ROA) is an activity ratio that is the percentage returned to investors on total assets.TrueFalse32.Under hierarchical control, employees are actively engaged and committed to their work.TrueFalse33.The use of cultural values, traditions, shared beliefs and trust to increase compliance with goals refers to decentralized control.TrueFalse34.Companies today are increasingly shifting from a hierarchical control process to one that is more decentralized.TrueFalse35.A process in which lower level managers anticipate their department's resource needs and pass them to top management for approval is called top-down budgeting.TrueFalse36.Open-book management ties employee rewards to the company's overall success.TrueFalse37.The goal of open-book management is to get every employee thinking and acting like a business owner.TrueFalse38.Closed-book management helps employees appreciate why efficiency is important to the organization's success as well as their own.TrueFalse39.The Six Sigma approach is a comprehensive management control system that balances traditional financial measures with operational measures relating to a companys critical success factors.TrueFalse40.A Six Sigma process will typically result in one defective package of product for every three truckloads shipped.TrueFalse41.TQM tends to be most successful when it enriches jobs and improves employee motivation.TrueFalse42.An organization-wide commitment to infusing quality into every activity through continuous improvement defines Six Sigma.TrueFalse43.A group of six to twelve volunteer employees who meet regularly to discuss and solve problems affecting their common work activities refers to a quality team.TrueFalse44.The implementation of total quality management involves the use of many techniques such as quality circles, benchmarking, Six Sigma principles, reduced cycle time, and continuous improvement.TrueFalse45.Benchmarking is the age-old practice of allowing the artisan to sign his name to the finished product.TrueFalse46.Outsourcing is the continuous process of measuring products, services, and practices against the toughest competitors or the industry leaders.TrueFalse47.Continuous improvement is the implementation of a large number of small, incremental improvements in all areas of the organization on an ongoing basis.TrueFalse48.Six Sigma is most beneficial when employees have challenging jobs.TrueFalse49.Very high expectations from senior management and a desire to share authority by middle managers are two of the positive factors leading to success of TQM.TrueFalse50.The certification based on a set of international standards for quality management, setting uniform guidelines for processes to ensure that products conform to customer requirements is the ISO certification.TrueFalse51.Which of the following is the systematic process through which managers regulate organizational activities?A.Strategic planningB.Organizational controlC.Organizational goal settingD.Strategic regulationE.Organizational leading52.Ophelia, the new CEO at Odyssey Inc., plans to implement a highly effective systematic process of regulating organizational activities to make them consistent with the expectations that are established by managers within the company. This is referred to as _____ control.A.organizational B.feedback C.budgetary D.systems E.quality 53.For control, this type of measure is an important part of achieving higher performance.A.StatisticalB.TheoriticalC.EmotionalD.Employee conflictE.Market54.According to MANAGER'S SHOPTALK in Chapter 19, the interest in self-awareness is part of a growing discipline called _____.A.employee self promotionB.emotional developmentC.self-leadershipD.emotional hueristicsE.auto-analytics55.Zachary, a manager at ExecuComp, receives quarterly reports, which track his department's production statistics. However, these reports lack key information regarding reject rates. Which of the following components of the control model need improvement?A.Measuring actual performanceB.The planning and setting of performance standardsC.SWOT analysisD.The ability to take corrective action when necessaryE.All of these56.Which of the following is a control system that measures performance in terms of after-tax profits minus the cost of capital invested in tangible assets?A.Open-book managementB.Economic value-added systemC.Activity-based costingD.Inappropriate control systemE.None of these57.All of the following are key steps of setting up feedback control systems EXCEPT:A.comparing performance to standards.B.establishing standards.C.getting employee opinions.D.measuring performance.E.making necessary corrections.58.Which of the following is a comprehensive management control system that balances traditional financial measures with operational measures relating to a company's critical success factors?A.Economic value-added systemB.Activity-based costing systemC.Market value-added systemD.Balanced scorecardE.Open-book management system59._____ indicators focus on production and operating statistics.A.Financial performanceB.Business processC.Critical successD.Potential for learning and growthE.Performance measurement60.All of the following are major perspectives of the Balanced Scorecard EXCEPT _____.A.competitorsB.customersC.learning and growthD.financialE.internal business processes61.Mistletoe Corporation has a detailed set of organizational goals and management information system that delivers timely and accurate information. Mistletoe still has control problems, however, because its managers refuse to act on the information they receive. Mistletoe's control process has flaws in which of the following areas?A.Its performance standardsB.Its management information systemsC.Its ability to take corrective action when necessaryD.Its measurement systemsE.None of these62.Your department has absenteeism standards, a way to measure absenteeism, and, based on your investigation, you have concluded that your department has an excessive absenteeism rate. What should your next step be?A.Set new absenteeism standards.B.Develop new measures of absenteeism.C.Terminate three employees for excessive absenteeism.D.All of these would be good examples of taking corrective action.E.None of these63.Kyle's work group consistently exceeds the goals the members set for themselves some months ago. In an attempt to better motivate the group, Kyle thought it would be a good idea to set new goals. This is an example of Kyle exercising control by:A.comparing performance to standards.B.developing adequate measures of performance.C.taking corrective action.D.all of these.E.comparing performance to standards and developing adequate measures of performance only.64.In the process of implementing the balanced scorecard approach at his company, operations manager Seth Howard wonders whether internal activities and processes add value for customers and shareholders. This involves which dimension of the balanced scorecard? A.CustomersB.Learning and growthC.FinancialsD.External business processesE.Internal business processes65.In a TQM program, what is benchmarking?

66.Discuss the positive and negative factors that can influence the success of a TQM program.

67.All well-designed control systems involve the use of _____ to determine whether performance meets established standards.A.opinionsB.adviceC.consultantsD.benchmarksE.feedback68.What is the first step in the feedback control system?A.Establishing strategic objectivesB.Establishing standards of performanceC.Taking corrective actionD.Comparing performance to standardE.Measuring previous performance69.CyberChasers Corporation sends a post-purchase questionnaire to all consumers who buy their products. They are interested in gathering data on product quality, customer service orientation, and customer satisfaction. This is an example of a:A.concurrent control.B.feedback control.C.feedforward control.D.preliminary control.E.preventive control.70.Kendra is a manager at George's Goodies. On a regular basis Kendra and her subordinates set individual and organizational goals. This process is similar to which component of the control model?A.Taking corrective action when necessaryB.An information systemC.Establishing performance standardsD.Engaging strategic analysisE.None of these71.According to the control model, after establishing standards of performance the manager should:A.compare performance to standards.B.get the standards approved by the supervisors and subordinates.C.measure actual performance.D.take corrective action.E.provide feedback.72.Tiffany recently discovered that the reject rate for her department has exceeded the standard for performance in this area. What should Tiffany do to exercise effective control?A.She should order more training for her workforce.B.She should contact the maintenance department and have them come fix her machinery.C.She should suspend the poorer workers in her department.D.She should investigate and discover the cause of the problem.E.None of these73._____ is any organizational department or unit under the supervision of a single person who is responsible for its activity.A.Independent centerB.Responsibility centerC.Analysis centerD.Control centerE.Budgeting center74._____ control is the process of setting targets for an organizations expenditures.A.Quality B.IncomeC.BudgetaryD.SystemsE.Supply chain75.Which of the following includes anticipated and actual expenses for a responsibility center?A.Revenue budgetB.Cash budgetC.Capital budgetD.Expense budgetE.Operating budget76.Which of these is a financial budget that estimates cash flows on a daily basis or weekly basis to ensure that the company can meet its obligations?A.Capital expenditure budgetB.Balance sheet budgetC.Cash budgetD.Revenue budgetE.Profit budget77.Madison has been assigned to work on the development of a budget that plans future investments in major assets such as buildings and heavy machinery. Madison is working on a(n) _____ budget.A.cash B.capital C.revenue D.operating E.expense78.The _____ plans future investments in major assets to be depreciated over several years.A.capital budgetB.balance sheet budgetC.cash budgetD.revenue budgetE.profit budget79.Ron meets with his companys accountant to discuss the budget of anticipated and actual expenses for each segment of the organization. This involves review of which type of budget? A.Expense budgetB.Revenue budgetC.Cash budgetD.Capital budgetE.Nonfinancial budget80.Stella, a systems manager for a large technology company, would like to get an understanding of her companys financial position with respect to assets and liabilities at the end of the fiscal year. Which financial statement should she refer to? A.Income statementB.Activity ratioC.TQM reportD.Balance sheetE.Balance scorecard81.Which financial control system measures the stock markets estimate of the value of a companys past and projected capital investment projects?A.Market value-addedB.Economic value-addedC.System governanceD.Activity-based costingE.Corporate governance82.Brad is a department manager at Home Theater, Inc. His sole role in the budget process is to implement the budget that is developed for him. This is an example of:A.strategic budgeting.B.operational budgeting.C.top-down budgeting.D.management by objectives.E.bottom-up budgeting.83.Pauline is an area manager at Ironman Gym. She anticipates her area's needs and formulates a proposed budget every quarter. She then sends this proposal to her manager. This is an example of:A.top-down budgeting.B.strategic budgeting.C.revenue budgeting.D.bottom-up budgeting.E.none of these.84.An advantage of the bottom-up budgeting process is:A.its emphasis on bureaucratic control.B.lower managers are more involved.C.top managers control the information flow.D.top managers are often not committed to achieving budget targets.E.all of these.85.The firm's financial position with respect to assets and liabilities at a specific point in time is shown by its:A.activity ratio.B.profitability ratio.C.income statement.D.liquidity ratio.E.balance sheet.86._____ provide the basic information used for financial control of an organization.A.Owners equityB.Income statementsC.Financial positionD.Mission StatementsE.100-K's87._____ refer(s) to the difference between assets and liabilities and is the company's net worth in stock and retained earnings.A.AssetsB.Current debtC.Net profitD.Owners' equityE.Liabilities88.The _____ ratio refers to the ability of the organization to meet its current debt obligation.A.activityB.liquidityC.profitabilityD.conversionE.growth89.The conversion ratio is considered to be a(n) _____ ratio.A.activity B.liquidity C.profitability D.leverageE.cash90.Which of the following is a ratio that measures the firm's internal performance with respect to key activities defined by management?A.A liquidity ratioB.An activity ratioC.Return on total assetsD.A current ratioE.Profit margin on sales91.The _____ is purchase orders divided by customer inquiries.A.current ratioB.inventory turnover ratioC.conversion ratioD.profit margin on salesE.none of these92.Tammy is a production manager at Eagle's Nest, Inc.. She is concerned that too much money is being wasted on inventory that is sitting in the warehouse too long. She should calculate a(n):A.current ratio.B.inventory turnover ratio.C.conversion ratio.D.profitability ratio.E.leverage ratio.93.Net income divided by sales is the correct formula for calculating:A.return on total assets.B.a current ratio.C.a liquidity ratio.D.profit margin on sales.E.a corporate evaluation.94.Which of the following refers to funding activities with borrowed money?A.ROAB.LeverageC.LiquidityD.ProfitabilityE.Activity95._____ is a control system that identifies the various activities needed to produce a product and determines the cost of those activities.A.Open-book managementB.An economic value-added systemC.Activity-based costingD.An inappropriate control systemE.None of these96.Which of the following is considered a leverage ratio?A.Debt ratioB.Return on total assetsC.Profit margin on salesD.Conversion ratioE.Inventory turnover97.The basic philosophy of control at Nutrients-For-You, Inc. is based on the policies found in the employee handbook, as well as a strict hierarchy of authority. This philosophy is consistent with:A.clan control.B.bottom-up control.C.hierarchical control.D.culture control.E.decentralized control.98.At LBK Industries, responsibility for quality control rests with a team of quality control inspectors and supervisors rather than with employees. LBK uses what type of organizational control?A.Matrix controlB.Hierarchical controlC.Decentralized controlD.Bottom-up controlE.Balanced control99.Decentralized control is usually implemented in all of the following areas EXCEPT:A.self-control.B.peer group.C.corporate culture.D.employee selection and socialization.E.the quality control department.100.At RWI Distilleries, rules and procedures are used only when necessary. Instead, shared goals and values guide employee behavior. RWI uses what type of organizational control?A.Centralized controlB.Hierarchical controlC.Decentralized controlD.Top-down controlE.Balanced control101.Which of the following allows employees to see for themselves the financial condition of the company?A.Open-book managementB.An economic value-added systemC.Activity-based costingD.An inappropriate control systemE.Market value-added system102.The control "system" at FreshFood Corporation is based on the culture of the organization and norms that develop in the individual work teams. This is an example of:A.bureaucratic control.B.decentralized control.C.organizational control.D.feedback control.E.none of these.103.The goal of _____ is to get every employee thinking and acting like a business owner.A.management-by-walking aroundB.closed-book managementC.MBOD.open-book managementE.just-in-time inventory systems104.Silver n Gold Inc. recently introduced a new control philosophy where all employees have access to the same information that owners have, such as what money is coming in and where it is going. This is an example of which control philosophy?A.Balanced scorecardB.Six SigmaC.Continuous improvementD.Total quality managementE.Open-book management105.Total quality management:A.is based on the ideas of Frederick Taylor.B.gives managers total responsibility for achieving quality goals.C.gives all employees the responsibility for achieving quality goals.D.was first successfully implemented in the United States.E.is all of these.106.Which of the following is a philosophy of organization-wide commitment to continuous improvement, focusing on teamwork, customer satisfaction, and lowering costs?A.EngineeringB.Total quality managementC.OutsourcingD.CultureE.Diversity107.Charlie, a manager at a textile company, is bothered by a lack in quality of products manufactured by his company. Charlie hopes to infuse quality into the company through continuous improvement by involving everyone who works there. This describes which control philosophy?A.Balanced scorecardB.Six SigmaC.Continuous improvementD.Total quality managementE.Open-book management108.A quality circle is a group of _____ volunteer employees.A.2 to 4B.6 to 12C.10 to 20D.15 to 25E.30 to 50109.A group of 6 to 12 volunteer employees who meet regularly to discuss and solve problems affecting their common work activities is a _____.A.feedforward control groupB.work teamC.quality circleD.committeeE.problem team110.Heather belongs to an informal group at work that meets twice a month to discuss common issues and problems in the workplace. Recently, this group has been focusing on ways to improve safety in the workplace. This group is an example of:A.a safety group.B.a quality circle.C.an ad-hoc committee.D.a problem team.E.none of these.111.Quality circles are based on the assumption(s) that:A.the people who do the job know it better than anyone else.B.quality can be increased by increasing the size of the organization.C.quality can be increased by talking more about it.D.the more employees talk, the more satisfied they will be.E.all of these.112.What is the key to successful benchmarking?A.ApplicationB.ImplementationC.AnalysisD.StrategyE.Planning113.Which of the following is the process of measuring your organizational process against the best in the industry?A.OutsourcingB.Continuous improvementC.Environmental analysisD.BenchmarkingE.Competitive measurement114.Which of the following is a quality control approach that emphasizes a relentless pursuit of higher quality and lower costs?A.Continuous improvementB.Cycle timeC.Quality circlesD.Six SigmaE.Benchmarking115.Which quality control technique uses a five-step methodology to define, measure, analyze, improve, and control processes, otherwise referred to as DMAIC?A.Quality circlesB.Six SigmaC.BenchmarkingD.Balanced scorecardE.Continuous improvement116.To reduce the organization's cycle time is to reduce the number of:A.of committees in the organization.B.layers of management.C.steps in an organizational process.D.staff employees in the organization.E.none of these.117._____ refers to the steps taken to complete a company process.A.Continuous improvementB.Cycle timeC.Quality circlesD.Six sigmaE.Benchmarking118.It seems that once a year the managers of Stone Construction, Inc. attempt a major organization intervention, such as management-by-objectives. They never seem to be satisfied with the performance of Stone Construction and, sure enough, 12 months later, along comes another major intervention. By implementing organizational change in this way, Stone Construction's management may well be violating the principle of:A.benchmarking.B.continuous improvement.C.unity of direction.D.top-down control.E.none of these.119._____ is(are) most beneficial when employees have challenging jobs.A.Six SigmaB.Total Quality ManagementC.KaizenD.Quality circlesE.Continuous improvement120.Contingency factors that can influence the success of a TQM program in a positive way include all of the following EXCEPT:A.tasks make high skill demands on employees.B.TQM serves to enrich jobs and motivate employees.C.problem-solving skills are improved for all employees.D.participation and teamwork are used to tackle significant problems.E.managers wait for big, dramatic innovations.121._____ standards represent an international standard for quality management.A.ISO 9000B.Six SigmaC.TQMD.KiazanE.Foreign Economy Index122.A contingency factor that can influence the success of a TQM program in a negative way is that:A.continuous improvement is a way of life.B.TQM serves to enrich jobs and motivate employees.C.problem-solving skills are improved for all employees.D.participation and teamwork are used to tackle significant problems.E.union leaders are left out of QC discussions.123.Contingency factors that can influence the success of a TQM program in a negative way include all of the following EXCEPT:A.tasks make high skill demands on employees.B.management expectations are unrealistically high.C.middle managers are dissatisfied about loss of authority.D.workers are dissatisfied with other aspects of organizational life.E.managers wait for big, dramatic innovations.124.Which of these is based on a set of international standards for quality?A.Quality circleB.Corporate governanceC.ISO certificationD.Open-book managementE.Balance scorecard125.Which of the following refers to the system of governing an organization so that the interests of corporate owners are protected?A.Quality circleB.Corporate governanceC.ISO certificationD.Open-book managementE.Balance scorecard126.In todays tough economy, companies are predominantly looking for employees with what types of skills?A.Accounting skillsB.Conceptual skillsC.Researching skillsD.Technical skillsE.A diverse set of skills127.Scenario - Katrina Aldridge

The yearly auditing review of Pilgrim Industries is scheduled for next month. Katrina Aldridge is preparing for that audit and is also preparing her budget for the coming year.

Which of these budgets will provide Katrina information about planned investments in major assets like buildings and heavy machinery?a.Cash budgetb.Revenue budgetc.Capital budgetd.Expense Budgete.Balance-Sheet budget

128.Scenario - Katrina Aldridge

The yearly auditing review of Pilgrim Industries is scheduled for next month. Katrina Aldridge is preparing for that audit and is also preparing her budget for the coming year.

In planning and budgeting for the next 12 months, Katrina is participating in a budgeting process in which lower-level manager's budget their department's resource needs and pass them up to top management for approval. This budget process is an example of:a.zero-based budgeting.b.bottom-up budgeting.c.top-down budgeting.d.balance sheet budgeting.e.none of these.

129.Scenario - Katrina Aldridge

The yearly auditing review of Pilgrim Industries is scheduled for next month. Katrina Aldridge is preparing for that audit and is also preparing her budget for the coming year.

Katrina has also requested that the financial ratios be calculated and analyzed for her. Which of the following ratios will give her the best information for evaluating liquidity?a.Profit margin on salesb.Current ratioc.Conversion ratiod.Return on assetse.None of these.

130.The systematic process through which managers regulate organizational activities is known as _____.________________________________________131._____ focuses on whether performance meets established standards.________________________________________132.When _____ deviates from a(n) _____, managers must interpret the deviation.________________________________________133.A(n) _____ is defined as any organizational department or unit under the supervision of a single person who is responsible for its activity.________________________________________134.A(n) _____ includes anticipated and actual expenses for each responsibility center and for the total organization.________________________________________135.A(n) _____ lists forecasted and actual revenues of the organization.________________________________________136.The _____ estimates receipts and expenditures of money on a daily or weekly basis to ensure that an organization has sufficient cash to meet its obligations.________________________________________137.The _____ lists planned investments in major assets such as buildings, trucks, and heavy machinery, often involving expenditures over more than a year.________________________________________138.In a traditional _____ approach, budgeted amounts for the coming year are imposed on middle- and lower-level managers.________________________________________139.A budgeting process in which middle and lower-level managers set departmental budget targets in accordance with overall company revenues and expenditures specified by top management is called _____ budgeting.________________________________________140.A budgeting process in which lower-level managers budget their departments' resource needs and pass them up to top management for approval is called _____ budgeting.________________________________________141.The _____ provides three types of information: assets, liabilities, and owners' equity.________________________________________142.The firm's financial performance for a given time period is shown on the _____.________________________________________143.A(n) _____ ratio indicates an organization's ability to meet its current debt obligations.________________________________________144.A(n) _____ ratio measures internal performance with respect to key activities defined by management.________________________________________145.The percentage representing what a company earned from its assets is called _____.________________________________________146.A control system that identifies the various activities needed to provide a product and determines the cost of those activities is called _____.________________________________________147._____ involves monitoring and influencing employee behavior through extensive use of rules, policies, hierarchy of authority, written documentation, reward systems, and other formal mechanisms.________________________________________148._____ control uses cultural values, traditions, shared beliefs, and trust to generate compliance with organizational goals.________________________________________149.A control system that measures performance in terms of after-tax profits minus the cost of capital invested in tangible assets is called the _____.________________________________________150.Sharing financial information and results with all employees in the organization is called _____ management.________________________________________151.An organization wide commitment to infusing quality into every activity through continuous improvement is called _____.________________________________________152.A group of 6 to 12 volunteer employees who meet regularly to discuss and solve problems affecting their common work activities is known as a(n) _____.________________________________________153.The continuous process of measuring products, services, and practices against major competitors or industry leaders is called _____.________________________________________154._____ refers to the number of steps taken to complete a company process.________________________________________155.The implementation of a large number of small, incremental improvements in all areas of the organization on an ongoing basis is referred to as _____.________________________________________156._____ refers to the system of governing an organization so that the interests of corporate owners are protected.________________________________________157.List the four steps in the feedback control model.

158.List the four major perspectives of a balanced scorecard.

159.Identify and briefly describe the four steps of the feedback control model.

160.Discuss the evolution of the balanced scorecard from a system that places equal emphasis on performance management categories to one that emphasizes cause and effect.

161.Describe the difference between a balance sheet and an income statement.

162.Identify and briefly describe each of the common financial ratios addressed in your text.

163.Compare hierarchical control with decentralized control.

164.Discuss open-book management and the balanced scorecard.

Chapter 19--Managing Quality and Performance Key1.TRUE2.FALSE3.FALSE4.TRUE5.FALSE6.FALSE7.FALSE8.TRUE9.TRUE10.TRUE11.FALSE12.FALSE13.TRUE14.FALSE15.FALSE16.TRUE17.FALSE18.FALSE19.TRUE20.TRUE21.FALSE22.TRUE23.FALSE24.TRUE25.TRUE26.FALSE27.TRUE28.FALSE29.TRUE30.TRUE31.FALSE32.FALSE33.TRUE34.TRUE35.FALSE36.TRUE37.TRUE38.FALSE39.FALSE40.FALSE41.TRUE42.FALSE43.FALSE44.TRUE45.FALSE46.FALSE47.TRUE48.FALSE49.FALSE50.TRUE51.B52.A53.A54.E55.A56.B57.C58.D59.B60.A61.C62.D63.C64.E65.Benchmarking is the continuous process of measuring products, services, and practices against the toughest competitors or the industry leaders. The key to benchmarking lies in analysis and in the selection of the comparison company.66.Refer to Exhibit 19.9 in the text for positive and negative factors associated with TQM.67.E68.B69.B70.C71.C72.D73.B74.C75.D76.C77.B78.A79.A80.D81.A82.C83.D84.B85.E86.B87.D88.B89.A90.B91.C92.B93.D94.B95.C96.A97.C98.B99.E100.C101.A102.B103.D104.E105.C106.B107.D108.B109.C110.B111.A112.C113.D114.D115.B116.C117.B118.B119.D120.E121.A122.E123.A124.C125.B126.E127.c128.b129.b130.organizational control131.Feedback control132.performance; standard133.responsibility center134.expense budget135.revenue budget136.cash budget137.capital budget138.top-down budgeting139.top-down140.bottom-up141.balance sheet142.income statement143.liquidity144.activity145.return on assetsorROA146.activity-based costingorABC147.Hierarchical control148.Decentralized149.economic value added systemorEVA system150.open-book151.total quality managementorTQM152.quality circle153.benchmarking154.Cycle time155.continuous improvement156.Corporate governance157.The four steps are (1) establish standards of performance, (2) measure actual performance, (3) compare performance to standards, and (4) take corrective action.158.(1) Financial performance, (2) customer service, (3) internal business processes, and (4) the organization's capacity for learning and growth.159.The four steps are 1) establish standards of performance, 2) measure actual performance, 3) compare performance to standards, and 4) take corrective action. Please refer to exhibit 19.2 in the text.160.This process is illustrated in Exhibit 19.1 on page 545. This adapted approach to the scorecard indicates that financial results are the final outcome of other processes within the company. The foundation of high financial performance is learning and growth, which reflects that it is an organization's people and culture that cause excellent business processes. Excellent business processes in turn cause customers to be satisfied. And happy customers lead to financial success. Thus, the components of the scorecard can be organized into a pyramid, indicating that each level reinforces the level above it. Thus, high financial performance is an outgrowth of success in other areas, starting with a firm commitment to developing human capital and internal business processes.161.A balance sheet shows the firm's financial position with respect to assets and liabilities at a specific point in time. It provides three types of information: assets, liabilities, and owners' equity. An income statement is different from a balance sheet in the sense that it shows revenues coming into the organization from all sources and subtracts all expenses, indicating the firm's net income.162.The major categories addressed in the text are liquidity ratios, activity ratios, profitability ratios, and leverage ratios. Please refer to Exhibit 19.5 in the text.163.Bureaucratic control uses rules, policies, hierarchy of authority, reward systems, and other formal devices to influence employee behavior and assess performance. In contrast, decentralized control uses cultural values, traditions, shared beliefs, and trust to generate compliance with organizational goals. Bureaucratic control generates employee compliance with rules while decentralized control generates employee commitment to quality.164.Open-book management allows employees to see for themselves the financial condition of the company, how each individual's job fits into the big picture and the company's financial future, and it ties employee rewards to the company's overall success. The balanced scorecard is a comprehensive management control system that balances traditional financial measures with operational measures relating to a company's critical success factors. It contains four perspectives: financial performance, customer service, internal business processes, and the organization's capacity for learning and growth.