BUSİNESS MANAGEMENT - Deneme Sınavı - 7

Internal control consists of a set of rules, procedures and organizational structures which aim to:

• Protect the company’s assets against waste,fraud, and inefficiency.

• Ensure the reliability and integrity ofaccounting and operating data.

• Promote operational efficiency.

• Ensure that operations comply with allexisting rules and regulations.

Internal auditing is an essential part of internal control. The internal control system is designed by companies for the purpose of efficient and effective business processes, reliable financial reporting, and compliance with rules and regulations are assessed through internal audit activities. The internal audit examines the adequacy and effectiveness of internal controls and makes recommendations where control improvements are needed. Internal auditors are company employees who continuously evaluate the effectiveness of a company’s internal control systems. Internal auditors play a significant role in the verification that management has met its responsibility. Internal audits are internal but independent assurance functions.

The first and the third statements are quantifiable. It is possible to measure them. However, in the second statement, there is an ambiguity.  To what extent improving the quality of goods is not clear.

Types of Control                 Transformation phases

I- Concurrent control          B- Processes

II- Feedforward control       A- Input

III- Feedback control          C- Output

Strategic control is a specialized form of management control. Strategic control systems are designed to determine how well those types of objectives and goals are being met. Strategic control is concerned with tracking the strategy as it is being implemented, detecting any problems or potential problem areas, and making any necessary adjustments.

 Tactical control focuses on implementing a strategy. Thus, this level of control forms the heart of an organization’s total set of controls. Tactical control involves the fundamental control arrangements of the organization, those with which its members have to live day to day.

Operational control regulates the day- to-day output relative to schedules, specifications, and costs because the term operational generally indicates short-term goals.

The financial perspective reflects a concern that the organization’s activities contribute to improving short and long-term financial performance.

The customer perspective helps managers evaluate the question, “How do customers see us?”

The internal business processes perspective helps managers address the question, “At what business processes must we excel to satisfy customer and financial objectives?”

The organization’s potential for learning and growth perspective helps managers assess the question, “How can we continue to improve and create value?” The learning and growth perspective focuses on three factors: “employee capabilities”, “information system capabilities”, and “the company’s climate for action".

The operating budget is a set of budgets that forecast revenues and expenses such as sales revenue, cost of goods sold, and operating expenses. The first and perhaps most crucial component of an operating budget is the sales budget, because sales affect most other components of a master budget. After projecting sales revenue, the following must be prepared: a projected cost of goods sold budget, an inventory and purchasing budget, and a budget for operating expenses must be prepared.

A Just-in-Time (JIT) system is an inventory management and control system that ensures timely delivery of a product or service and related inputs. The objective is to produce a product or service only as needed with only the necessary materials, equipment, and employee time that will add value to the product or service. JIT emphasizes maintaining organizational operations by using only the resources that are absolutely necessary to meet customer demand.

Another popular approach based on a decentralized control philosophy is Total Quality Management (TQM). TQM is an organization-wide effort to integrate quality into every activity in a company through continuous improvement of products and processes. TQM emphasizes the importance of each person in the company and requires a commitment from employees

at all levels. In traditional quality control, a separate team of experts inspect products or services for defects or errors after completion. But TQM emphasizes “quality at the source,” that is, quality inspection in all processes and at all stages of production or service output. Therefore, some quantitative techniques, such as statistical process control, and nonquantitative techniques, such as employee empowerment should be used.

Leadership is a blend of factors shaped by the environmental impact. Components of Leadership are as follows:

As also understood from the information given, the answer is E.

Let’s remember the definition for management: “Achieving goals through planning, organizing, leading, motivating, and controlling”. These processes have similarities but they are also much apart from one another.

Management and leadership are similar in terms of:

The management and leadership roles, which are critical dimensions of the world of business, have distinguishing characteristics:

As also understood from the information given, the answer is E. All of the statements related to the management and leadership in the options are correct.

A manager uses legal authority for attaining goals, whereas a leader possesses power, ability to lead, for accomplishing organizational goals through followers’ needs and expectations. Leaders and managers may have different personalities in an organization. Some tend to possess characteristics close to that of a manager. Some stand as a sole leader. As managerial and leadership atttitudes and skills converge, same person is a manager and a leader which we see as an ideal situation. Managerial orientation for leader, manager, and leader manager is as follows:

Managerial Orientation for Leader, Manager, and Leader Manager

Leader

Manager

Leader Manager

Tool is her/his power

Tool is her/his legal authority

Leading skills outperform positional authority

Does what is essential

Does things right

Generates and coaches the achievement process

Creates new targets

Does the planned and required

Inspires and enpowers to get things accomplished

Seeks followers’ involvement

Complies with rules and regulations

Primary concern is the subordinates’ acceptance and involvement

Elected, accepted, and informal

Assigned, formal, and impersonal

Elected or assigned

Leads teams

Manages hierarchy

Uses leading skills first

Invisible in the formal structure

Visible in the organization chart

Formally positioned also perceived as a leader

As also understood from the table given, the answer is E.

TRADITIONAL APPROACHES TO LEADERSHIP

It is not difficult to argue that first leaders emerged when people started living in groups. However, we prefer to focus on scientific studies that examine the leadership process in organizational as well as formal settings. Thus, early leadership studies point out to traits and behaviors of leaders.

Early research on leader traits introduced characterisctics possessed by powerful leaders, which is called Great Man theory. Traits approach focused on identifying innate qualities and characteristics possessed by great social, political, and military leaders in history. The logic is to analyze what such leaders did to achieve highly challenging, at times impossible tasks. Atatürk, Lincoln, Napoleon, and Gandhi are examples of such traits.

Leadership traits, as mentioned above, are sought for distingusihing leaders from non-leaders. However, as circumstances changed especially for business, leadership traits were developed and enhanced. It has been acknowledged that not one person can possess all positive traits. It has become more complicated to determine one set of traits for successfuly leading in all types of envrironments.

A focus solely on traits was not sufficient for separating leaders from others. Neither was it for analyzing the leadership process. This led to searching for the behavorial side of leadership characteristics

As also understood from the information given, the answer is C. “Task-oriented behaviors” and “People-oriented behaviors” were identified by The Michigan Studies.

The results of this group of research were akin to Michigan studies. The researchers from Ohio State University introduced two basic leader behaviors or styles: initiating structure behavior and consideration behavior. Initiating structure is parallel to the task oriented behavior and shows the emphasis on formal processes such as designing roles and responsibilities. Consideration behavior is a form of people orientation and indicates the extent of concern for the relationships with subordinates and their feelings.

As also understood from the information given, the answer is E. All of the statements related to The Ohio State studies in the options are correct.

The managerial grid is a useful tool for managers to observe which category in the grid their leadership style fits. It is also a model that can be used during training programs for organizational development. This approach has been criticized for simplifying the behaviorial styles to only two dimensions. Also, the factors that shape the leadership behaviors are not solidly considered. As also understood from the information given, the answer is E. All of the statements related to the managerial grid in the options are correct.

Fiedler’s Contingency Model: This model examines the match between the leadership style and the situation. The difference from the situational model is that Fiedler’s model adds organizational aspects to the situational variables. The focus of the Fiedler’s contingency model is to detect the leadership style and the situation correctly, so the most effective match can be decided. If this match is the right one then the group is most likely to be successful; if the match is not appropriate the group performance will be relatively low. Let’s examine how the leadership style and the situation is detected.

Leadership styles in Fiedler’s contingency model are people (relationship) oriented and task oriented styles, similar to the situational model. What is different is that Fiedler suggests that leadership styles are pretty much fixed. Therefore, the leader matches her/his style with the situation that is most suitable for her/his effectiveness. Fiedler’s model includes the Least Prefered Co-Worker (LPC) scale for measuring leader styles. If a leader scores someone s/he least prefers high, it means that s/he is willing to develop good relationships and it is considered a relationship oriented style. If this score is low, it means the leader pays more attention on achieving the task and it is considered a task oriented style. According to Fiedler’s contingency model: leaders with high LPC are people oriented; leaders with low LPC are task oriented.

As also understood from the information given, the answer is E. All of the statements related to Fiedler’s contingency model in the options are correct.

After the leadership style is determined as whether people or task oriented, the stuation must be examined. By this token, the situational variables of Fiedler’s contingency model are: the quality of leader-member relations; the degree of task structure, and the position power.

The combination of the variables above shows the favorability of the leadership situation. A situation is considered highly favorable if: the leader-member relations are based on trust and respect; the task structure is highly structured; and the leader has strong power over her/his subordinates. On the other hand, a situation is mentioned as highly unfavorable if: the leadermember relations are poor; the task and roles are not clearly defined and standardized; and the leader has little authority for directing subordinates and issuing orders.

As also undersood from the information given, the answer is C. “Quality of leader-member relations”, “Task structure” and “Position power” are the situational variables of Fiedler’s contingency model. “Inspirational motivation” and “Individualized consideration” are related to transformational leadership. Transformational leadership is explained in four I’s: charisma or idealized influence; inspirational motivation; intellectual stimulation; and individualized consideration.

Leader-Member Exchange Theory (LMX)

Take a moment to think about your direct or indirect experiences in any organization or a work place. Do you observe leaders, managers, or administrators being in close work relations with some but not as much with others, and even almost ignoring a number of people? Do you happen to be one of your manager’s favorite co-workers or have you ever or any of your peers felt left out?

The answers to the questions above describes leader-member exchange theory (LMX). LMX suggests that leaders create in-groups and outgroups that they decide at the beginning of their relationship with their subordinates or followers. The leader then trusts the in-group members more than the others, consults and works closely with them, brings them to certain authority and responsibility positions, and also may reward them more in the form of their appraisals and promotions. In-groups can be formal or informal. In other words, they can take place in organizational charts or not. Business partners, top administration teams, heads of departments, board of directors, different committee members, or invisible in-group members are examples of LMX types of structures depending on the type and size of the enterprise, whether a business company or an informal social organization. As also understood from the information given, the answer is E.

Transformational leadership is discussed compared to transactional leadership for a better analysis. Transactional leadership is employed where the accomplishment of organizational goals is the primary focus and the leader is fixed on the results. We may as well mention that transactional leaders are devoted managers who aim to accomplish organizational goals in an efficient way. Transactional leaders also attach importance to issues such as communication, developing human resources, and motivation. A division manager, a CEO, a rector, or a supervisor may perform as transactional managers.

Transformational and transactional leadership are different in the ways they approach motivating individuals or employees. For the transactional leader the motive is the achievement of the organizational goals; for the transformational leader it is getting the individuals to reach their fullest potential through inspiration and individual consideration.

As also understood from the information given, the answer is E. All of the statements related to transformational leadership and transactional leadership in the options are correct?

The charm of the global competition cause businesses strive to go beyond their national borders and grow in international markets. Going international is a milestone for a business to get involved in cultures different from home. Culture encompasses values, beliefs, and norms that shape the way of living and thinking in a society. Culture strongly affects individuals and organizations within a society; thus we consider it the national  culture of a country. The cultural conditioning process happens under the influence of values shaped by authority figures and environmental surroundings. The concept of multiculturalism emphasizes diversity in terms of cultural differences. Hence, multiculturalism refers to differences in values, beliefs, attittudes, customs, and norms that are held by people from different cultures.46 Note that, different regions or different communities in a country also may possess distinctive cultural characteristics as language, folklore, or traditions such as the Black Sea region in Turkey, the Quebecois region of Canada, or the aboriginal people of Australia.

Considering the description of culture by Hofstede as “mental conditioning” for individuals such conditioning recurs in different settings throughout life: family culture; national culture; Professional culture; and organizational culture. Organizational culture is shared values that lead the way of operating towards the goal accomplishment. Organizations are sub-cultures of a national culture, embracing common values with national cultures.

Managers in a multicultural work environment should possess a behavioral pattern such as ethnorelativism which is the opposite of ethnocentrism. Ethnorelativism is the approach that cultures are equal as well as being able to think from the perspectives of others. This type of thinking allows managers to create the best harmony utilizing the richness of the work force instead of unfairly judging others with different values. Ethnocentrism is the belief that one’s own culture is superior to others which creates barriers between members of a group or a work team.

The fact that companies- namely international, multinational, or global- operating in foreign countries work with a diversified group of people, makes cultural encounters critical. Hence behaviors such as cultural awareness and cultural sensitivity then become bridging attitudes for employees of all levels from around the world towards unified goals.

Managers in the global markets apply varying techniques and tools for successfully leading a diversified and multicultural workplace. On the other hand, factors such as technology, education, and industralization bring economies, cultures, and organizations closer. Cultural convergence is one of the results of such rapprochement. Cultural convergence is a process that eliminates the differences in values between nations, groups, or organizations.

As also undertood from the information given, the answer is E. All of the definitions above related to leading across cultures in the options are correct.