Very Short Answer Type
1. Explain the meaning of controlling.
Answer: Controlling is the practice of monitoring the work of the subordinates in order to obtain the planned results from the subordinates. The rule assesses the extent to which the actual performance deviates from the prescribed standards, analyses the reasons for the deviation and takes action to correct it.
Controlling is performed at the lower, middle and upper levels of the management.
2.’Planning is looking ahead and controlling is looking back.’ Comment.
Answer: Looking forward to planning and looking back to control. This statement is partially true. Planning is a mental process of ‘thinking about what to do’ and ‘how to do it’ and making decisions in advance. It is a mental activity in which goals are set and the tasks through which they are performed are performed. Thus, it is said that looking forward to the plan as it involves predicting the future. Control, on the other hand, involves evaluation of previous performance and their evaluation against set values. In this sense, the control is called the retrograde function. However, these two statements are only partially true. Although planning is a future concept, it is based on past actions and experiences. The future cannot be planned without looking at the past. Similarly, while control involves an evaluation of past performance, it aims to improve future effectiveness by taking the necessary corrective measures.
3.’An effort to control everything may end up in controlling nothing.’ Explain.
Answer: The speed at which the control effort is initiated or the speed at which it is initiated must be applied consistently. Proper control accelerates each task and achieves specific goals. But this control tool should be one-sided and stable. Attempts to force workers to work under excessive control
This can be reversed. As a result, the employees become distracted and fail to complete the tasks properly.
According to this policy, instead of controlling each deviation in performance, an acceptable limit of deviation in various activities should be set and exceeding the acceptable limit should be brought to the notice of the managers only to control the deviation. In other words, only major deviations that exceed the permitted limits should be accepted.
4.Write a short note on budgetary control as a technique of managerial control.
Answer: Budgetary control is a strategy of management control where all actions are pre-planned with the size of the budget and the actual results are compared with the quality of the budget. This comparison reveals the steps needed to accomplish organisational objectives.
A budget is a quantitative statement aimed at achieving a certain amount of time in a particular future period. This is a statement indicating the policy of a period. This will include forecast data in both time and volume. However, the effectiveness of the budget depends on how accurate the estimates for the future were. A flexible budget should be prepared that differs in terms of forecasting for the future, especially in the case of changes in environmental energy, when adopted.
5.Explain how management audit serves as an effective technique of controlling.
Answer: Management audit refers to the systematic evaluation of an organisation's overall performance. Its purpose is to review management efficiency and effectiveness and to improve its effectiveness in the future. It helps to identify deficiencies in the performance of management tasks. The effectiveness of management monitoring for control can be judged by the following factors:
It helps to find current and potential deficiencies in management performance.
It helps to improve the control system of an organisation by constantly monitoring the effectiveness of management.
It enhances coordination in the activities of different departments so that they work together effectively in achieving organisational objectives.
It ensures updating of existing administrative policies and strategies in the light of environmental change.
Long answer type question
1. Explain the various steps involved in the process of control.
Answer: (i) Setting Performance Standards: Standards are the criteria against which actual performance will be measured. These serve as the criteria against which an organisation tries to act.
The first step in the control process is to establish the values against which the actual results are evaluated. The values are set qualitatively as well as qualitatively. However, managers should try to determine the value in quantitative terms, which can be easily measured and compared later. If the values are set qualitatively, one should try to clearly define them for easy measurement. Due to changes in the internal and external environment, the values need to be corrected regularly.
(ii) Measurement of actual performance: Once the benchmark is set, the next step is to measure the actual performance. Typically, it is conducted by managers to analyse the overall skill level of employees. Performance measurement time, purpose and reliable methods should be used, such as sample testing, report making, personal observation, etc.
Measurements should be made after the work is finished. However, sometimes performance time can be measured to ensure regular control over activities. Typically, in larger firms some pieces are tested randomly instead of testing the whole lot. This is called sample checking.
(iii) Comparison of actual performance with standard: This step involves comparing actual performance with standard. Such comparisons help to reveal deviations between the actual and desired results. Comparison is easier when the values are set in moderation.
(iv) Deviation Analysis: Under this measure, deviations in key areas of business need to be addressed on an urgent basis as compared to deviations in some unimportant areas. In all managed cases the deviation needs to be set within acceptable limits. The following points should be kept in mind while analysing the deviation:
Critical Point Control: According to this theory, the control system should first focus on the key results area (KRA) which is important for the success of the organisation. This is because it is not possible to monitor all the activities of the enterprise. Therefore, immediate action should be taken if anything goes wrong in critical points or key areas.
Management by Exception: This suggests that if the director tries to control everything, he may not be in control of anything.
(v) Corrective action: This is the final stage where the manager takes corrective action to get everything back on track in the organisation - as planned, KRA's need to be improved, which is the key to success. , Or, where the deviation exceeds the allowable limit in
Corrective measures may include training of employees, hiring staff for overtime, replacement of equipment, etc. Sometimes, values can be corrected if deviations cannot be corrected despite the best efforts of managers.
2. Explain the techniques of managerial control.
Answer: Management is dynamic and so can its functions. The task of controlling management in this context has evolved over time.
A large number of strategies are available to enable managers to effectively control organisational activities. A manager should know these strategies and in what situations it should be applied and how it should be applied to achieve maximum effort.
Management control strategies are broadly classified into two categories:
(I) Traditional strategy
(Ii) Modern strategy
Traditional strategy - Managerial Control Strategies
Traditional strategy are strategies that have been used by business organisations since ancient times and continue to be used. These did not become obsolete due to effective strategies and timely changes.
Personal observation : The most traditional tactical strategy is the personal observation of employees or subordinates by managers or superiors. It provides first hand, raw and original information. Managers need to talk to the person whose work is being controlled and monitor their actual activity. This creates a positive pressure on employees to perform well in the tasks assigned to them because they know that their activities are being mentioned. This enabled the managers to establish discipline in the organisation. The manager is empowered to ensure coordination and take necessary action when needed.
However this strategy is time consuming and it can reflect the effects of personal bias towards employees. This can be negative for an employee who is not regularly evaluated. So, how efficient he / she is in collecting information through this strategy depends on the manager.
However this strategy is time consuming and it can reflect the effects of personal bias towards employees. This can be negative for an employee who is not regularly evaluated. So, how efficient he / she is in collecting information through this strategy depends on the manager.
Statistics report : The reason behind the source of statistics is that it makes it easier to understand the ideas and conclusions. This enables you to suggest solutions in a relatively short time. Statistical data preparation enables comparisons over time with employee performance and set standards for top-level management.
Break and analyse : It is also called ‘custom volume profit analysis.’ It analyses the relationship between production costs, production volume, sales volume and profit. Here the total cost is divided into two parts, fixed cost and variable cost. Fixed cost is the cost that does not change with the amount of production. The cost of conversion varies according to the amount of production. This analysis helps to determine the total expenditure equal to the amount of production or
sales and income: Profit is defined as the excess of total revenue over total expenditure. The point where revenue equals total expenditure is known as 'Break Ever Point' (BEP). In other words, the break-even point is a point where there is no profit or loss for the organisation.
Break-on point analysis helps control management in a variety of ways.
Break and analyse : It is also called ‘custom volume profit analysis.’ It analyses the relationship between production costs, production volume, sales volume and profit. Here the total cost is divided into two parts, fixed cost and variable cost. Fixed cost is the cost that does not change with the amount of production. The cost of conversion varies according to the amount of production. This analysis helps to determine the total expenditure equal to the amount of production or
sales and income: Profit is defined as the excess of total revenue over total expenditure. The point where revenue equals total expenditure is known as 'Break Ever Point' (BEP). In other words, the break-even point is a point where there is no profit or loss for the organisation.
Break-on point analysis helps control management in a variety of ways.
Budget control: Budgetary control is a strategy for planning future activities in the form of budgeting. Here, 'budget' refers to a quantitative or qualitative statement that presents the goals to be achieved in a given period. These budgets are then used as standards to measure actual performance. It also gives the principle of time limit to be used to achieve the goals. It focuses on activities that deviate significantly from the budget set aside to facilitate management. However, to ensure the effectiveness of the technology, predictions about the future must be as accurate as possible. Also, the budget should be flexible to adapt to changes in the business environment.
Modern Strategies: As the name suggests the modern technologies are the most modern and up-to-date. These provide new ideas for better management based on the new thinking of the managers. Modern techniques of control are highlighted.
investment return: In the case of investments, return refers to the return on investment. It is an effective strategy to measure whether invested capital is being used effectively and whether these investments are returning a reasonable amount. Managers may choose this strategy when comparing the performance of different departments or divisions or when comparing current operations to previous year's performance.
Ratio Analysis: This technique involves calculating various ratios in financial statement analysis. These ratios are used as a tool for effective control. The following are the most commonly used ratios for control.
(a) Liquidity ratio to determine the short-term solubility of a business.
(b) Solvency ratio to determine the long-term solubility of the business.
(c) Profit Ratio to determine the profitable position of a business.
(d) Turnover ratio to determine the efficiency of operations based on resource utilisation.
(iii) Accountability of Responsibilities: Under this system, various departments of an organisation are established as centres of responsibility. The head of each centre is responsible for the goals and responsibilities related to his centre. Below are some of the responsibility centres that can be set up below.
(a) The expenditure centre is responsible for the expenses of the organisation.
(b) Revenue centre responsible for earning from sales or marketing activities.
(c) The profit centre is responsible for profit in consideration of expenses and earnings.
(d) Investment Centre, it considers investments made as assets.
(iv) Management Audit: It refers to a systematic approach to analyse and evaluate the overall efficiency of management of an organisation. Its purpose is to review management efficiency and effectiveness to identify overall performance deficits. It acts as an important control system by continuously monitoring the work of the managers.
PERT and CPM : PERT (Program Evaluation and Review Technology) and CPM (Critical Path Methodology) are two important strategies that form an important aspect of effective planning and control. These techniques are used to calculate the expected time of the organisation to complete certain tasks and to identify the major activities that directly affect the activities of the organisation. These techniques are mainly used in construction projects, aircraft manufacturing, shipbuilding, automobile industry etc.
The steps involved in using these techniques are as follows:
(i) The project is first divided into different activities and then these activities are arranged in logical sequence.
(ii) A network diagram which is easy to explain, prepared by showing the sequence of activities.
(iii) Time estimates are set for each activity.
PERT provides three time estimates-
(A) Optimistic (shortest time)
(B) Probably time
(C) Pessimistic (longest time).
Only one time estimate is prepared in the CPM. The CPM also focuses on the cost of a particular project in a specific manner.
(iv) The most important approach to the network is the longest route. The longest project contains the activities that are important to complete the project on time; Hence the name CPM.
(v) If necessary, necessary changes are introduced in the pre determined plan to complete the project on time.
Thus, these strategies are so interconnected and it is necessary to determine the speed and efficiency of the organisation's activities. These strategies prepare the hands before managers with the necessary cost and time analysis to complete the process.
3. Explain the importance of controlling in an organisation.What are the problems faced by the organisation in implementing an effective control system?
Answer: An essential function of control management. The best plans can go unchecked. A good control system helps an organisation in the following ways
(i) Achieving organisational goals: The controlling function measures the progress towards organisational goals and highlights deviations. If any and indicates corrective action. It therefore guides the organisation and keeps it on track so that organisational goals can be achieved.
(ii) Assess the opportunity of the criteria: A good regulatory system is an efficient regulatory system that monitors and helps to review and correct changes in the organisation and the environment so that the set standards are correct and objective. Thus the value changes in light.
(iii) Effective use of resources: By using controls, a manager tries to reduce waste and resources. All activities are done according to predetermined standards and rules. This ensures that resources are used in the most efficient and effective way.
(iv) Improving employee motivation: A good control system ensures that employees know well in advance what they should do and that performance standards are evaluated on that basis. It motivates them that way and helps them perform better.
(v) Ensuring order and discipline: Creates an environment of order and discipline within the regulatory body. This helps to reduce dishonest behaviour by keeping a close eye on the activities of the employees. (vi) Measures to coordinate activities: Control led by Joe Al! Activities and efforts to achieve organisational goals. All departments and staff are governed by pre-determined standards that are integrated with each other. This ensures that the overall organisational goals are met. Even though controls are an important function of management. It also suffers from the following limitations
(i) Difficulty in determining quantitative values: Values cannot be defined in measurable definitions if the control system loses some of its effectiveness. This makes it a difficult task to measure performance and compare it with standards. Employee morale, job satisfaction and human behaviour are issues where this problem can occur.
(ii) Small control over external factors: Normally no company can control external factors like government policy, competition of technological change etc.
(iii) Resistance of employees: Resistance is given by employees. They see it as an obstacle to their freedom. For example, employees may object to being placed under strict surveillance with the help of closed-circuit television (CCTV).
(iv) Expensive: Control is an expensive business because it involves a lot of cost, time and effort. A small business cannot install expensive control systems. It can not mean the cost. Managers must ensure that the cost of installing and operating a control system does not exceed the benefits.
4. Discuss the relationship between planing and controlling.
Answer: Planning shows the way to control, regulation helps to improve the next plan, improved planning develops control. In this way mutual support and relationship is established between planning and regulation. the relationship between planing and controlling as follows
1. Planning identifies workspace and regulation ensures performance.
2. Planning sets organisational objectives and goals and regulation seeks to achieve the objectives and goals of the plan.
3. Planning looks to the future and control looks to the past.
Multiple Choice Questions
1. An efficient control system helps to -
(a) Accomplishes organisational objectives
(b) Boosts employee morale
(c) Judges accuracy of standards
(d) All of the above
2. Controlling function of an organisation is -
(a) Forward looking
(b) Backward looking
(c) Forward as well as backward looking
(d) None of the above
Answer: (c) Forward as well as backward looking