Term
| Decentralized Organization |
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Definition
| decision-making authority is NOT confined to a few top execs but spread throughout organization |
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Term
| 1/5 Advantage of decentralization |
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Definition
| By delegating day-to-day problem solving to lower-level managers, top-level can focus on bigger issues |
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Term
| 2/5 Advantage of decentralization |
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Definition
| decision-making authority in hands of those who have most detailed up-to-date info with low-level management |
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Term
| 3/5 Advantage of decentralization |
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Definition
| by eliminating layers of approval, orgs can respond quickly to customers and environment |
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Term
| 4/5 Advantage of decentralization |
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Definition
| granting authority helps train lower-level managers for high-level positions |
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Term
| 5/5 Advantage of decentralization |
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Definition
| empowering low-level managers increases motivation |
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Term
| 1/4 Disadvantage of decentralization |
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Definition
| low-level managers make decisions without understanding company's strategy. |
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Term
| 2/4 Disadvantage of decentralization |
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Definition
| independent decision making may cause coordination to be lacking |
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Term
| 3/4 Disadvantage of decentralization |
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Definition
| low-level managers clash with organization, interested only increasing power and prestige |
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Term
| 4/4 Disadvantage of decentralization |
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Definition
| spreading ideas may be difficult in decentralized organization |
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Term
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Definition
| business segment whose managers has control over cost but has no control over revenue or investments |
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Term
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Definition
| business segment whose manager has control over cost and revenue but no control over investments |
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Term
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Definition
| business segment whose manager has control over cost, revenue, and investments |
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Term
| Return on investment (ROI) formula |
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Definition
net operating income /
average operating assets |
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Term
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Definition
| income before interest and income taxes have been deducted |
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Term
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Definition
| cash, accounts receivable, inventory, plant and equipment, and all other assets held for operating purposes |
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Term
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Definition
| net operating income divided by sales |
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Term
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Definition
| sales divided by average operating assets |
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Term
| 2nd ROI expression formula |
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Definition
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Term
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Definition
| net operating income/ sales |
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Term
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Definition
| Sales/ Average operating assets |
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Term
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Definition
| managers can cause many problems |
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Term
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Definition
| managers may have no control over costs |
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Term
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Definition
| may reject investment opportunities good for company but bad for manager performance |
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Term
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Definition
| net operation income that an investment center earns above minimum required return on its operating assets |
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Term
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Definition
| = net operating income - (avg operating assets X min required rate of return) |
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Term
| EVA objective performance |
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Definition
| the objective is to max the total amount of residual income not max ROI |
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Term
| Throughput time (Manufacturing Cycle) |
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Definition
| the elapsed time from when production is started until finished goods are shipped. |
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Term
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Definition
= Process time + Inspection time + Move time
+ Queue time |
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Term
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Definition
| amount of time work is actually done on the product |
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Term
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Definition
| amount of time spent insuring that the product is not defective |
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Term
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Definition
| the time required to move materials or partially completed products from workstation to workstation |
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Term
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Definition
| amount of time a product spends waiting to be worked on, to be moved, to be inspected, or to be shipped |
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Term
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Definition
| the elapsed time form when a customer order is received until the finished goods are shipped |
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Term
| Delivery cycle time formula |
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Definition
| = Wait time + Throughput time |
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Term
| Manufacturing Cycle Efficiency (MCE) |
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Definition
| Process (value-added) time as a percentage of throughput time. |
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Term
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Definition
| = value-added time (process time)/ Throughput (manufacturing cycle) time |
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Term
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Definition
| an integrated set of performance measures that are derived from and support the organization's strategy |
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Term
| 4 performance measures used in Balanced Scorecards: |
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Definition
- financial - customer
- internal business processes
- learning and growth |
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Term
| when a manager accepts a project for required rate of return because operating income exceeding min |
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Definition
| the investment was evaluated based on residual income |
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Term
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Definition
| the elapsed time from when a customer order is received until production of the order is started |
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