Question 1

What is the meaning of controlling in management?

Accepted Answer

Controlling is the process of ensuring that actual activities conform to planned activities. For example, checking if production targets are met as per the plan. — Controlling involves monitoring activities to ensure they are performed as planned and taking corrective action if deviations occur. It helps in achieving organisational goals by aligning actual performance with standards.

Question 2

Which principle should a manager consider while dealing with deviations effectively?

Accepted Answer

Management by Exception — Management by Exception is the principle where managers focus only on significant deviations that exceed permissible limits, saving time and effort by not addressing minor deviations.

Question 3

State one situation in which an organisation's control system loses its effectiveness.

Accepted Answer

An organisation's control system loses effectiveness when it cannot set quantitative standards of performance. For example, in creative industries where output is qualitative, controlling becomes difficult. — Without clear, measurable standards, it is hard to compare actual performance and take corrective action, reducing the effectiveness of control.

Question 4

Which term is used to indicate the difference between standard performance and actual performance?

Accepted Answer

Deviation — Deviation refers to the difference between the standard performance expected and the actual performance achieved.

Question 5

Give any two standards that can be used by a company to evaluate the performance of its Finance & Accounting department.

Accepted Answer

Two standards to evaluate Finance & Accounting are budget adherence and accuracy of financial reports. For example, comparing actual expenses with budgeted expenses helps assess performance. — Standards provide measurable benchmarks like budgets and report accuracy to evaluate department effectiveness and efficiency.

Question 6

'Planning is looking ahead and controlling is looking back.' Comment on this statement.

Accepted Answer

Planning involves setting future goals and deciding actions to achieve them, while controlling involves monitoring past and current activities to ensure they conform to plans. For example, planning sets sales targets and controlling checks actual sales against targets. — Planning is proactive, setting directions for future activities. Controlling is reactive, ensuring those activities are on track by comparing actual results with plans.

Question 7

Explain why 'An effort to control everything may end up in controlling nothing.'

Accepted Answer

Trying to control every minor detail can overwhelm managers and dilute focus on important issues. For example, excessive control over routine tasks may reduce efficiency and delay decision-making. — Management by exception suggests focusing on significant deviations to use managerial time effectively and delegate routine matters.

Question 8

How does management audit serve as an effective technique of controlling?

Accepted Answer

Management audit evaluates the efficiency and effectiveness of management functions. For example, it reviews policies and procedures to ensure organisational objectives are met. — Management audit identifies strengths and weaknesses in management practices, helping in corrective action and improving control.

Question 9

Mr. Arfaaz wants to terminate a worker for falling short of production targets. Ms Vasundhara, the CEO, considers the principle of management control before deciding. Which principle should she apply and why?

Accepted Answer

She should apply the principle of management by exception, which focuses on significant deviations only. Since the worker fell short by 10 units for two days, it may not be a significant deviation requiring termination. — Management by exception avoids unnecessary action on minor deviations, saving managerial effort and maintaining employee morale.

Question 10

Explain the various steps involved in the process of control.

Accepted Answer

The process of control involves the following steps:
(a) Setting Performance Standards: Establishing benchmarks or targets for performance.
(b) Measuring Actual Performance: Collecting data on current performance.
(c) Comparing Actual Performance with Standards: Identifying deviations.
(d) Analyzing Deviations: Determining causes of deviations, such as unrealistic standards or resource inadequacy.
(e) Taking Corrective Action: Implementing measures like training or revising standards to rectify deviations.
These steps ensure activities conform to plans and organisational goals are achieved. — Control is a systematic process starting with setting standards and ending with corrective action. Each step is crucial to maintain organisational effectiveness and efficiency.

Question 11

Explain the techniques of managerial control.

Accepted Answer

Managerial control techniques include:
(a) Traditional Techniques: Personal observation, statistical reports, breakeven analysis, and budgetary control.
(b) Modern Techniques: Return on investment, ratio analysis, responsibility accounting, management audit, PERT and CPM, and Management Information Systems.
These techniques help managers monitor performance, identify deviations, and take corrective actions effectively. — Traditional techniques focus on basic monitoring and financial analysis, while modern techniques use advanced tools and systems for comprehensive control.

Question 12

Explain the importance of controlling in an organisation. What problems are faced in implementing an effective control system?

Accepted Answer

Importance of Controlling:
(a) Helps accomplish organisational goals.
(b) Ensures efficient utilisation of resources.
(c) Boosts employee morale.
(d) Creates order and discipline.
(e) Coordinates activities towards common objectives.
Problems in Implementation:
(a) No control over external factors.
(b) Resistance from employees.
(c) Costly for small organisations.
(d) Difficulty in setting quantitative standards.
Controlling is essential but faces challenges that must be managed for effectiveness. — Controlling aligns activities with plans and improves organisational performance but must overcome internal and external obstacles.

Question 13

Discuss the relationship between planning and controlling.

Accepted Answer

Planning and controlling are inseparable twins of management.
(a) Planning initiates management by setting objectives and deciding actions.
(b) Controlling completes management by ensuring activities conform to plans.
(c) Plans provide standards for control.
(d) Without controlling, plans may go astray.
(e) Controlling provides feedback for improving planning.
Thus, planning and controlling work together to achieve organisational goals effectively. — Planning sets the direction, and controlling ensures that the direction is followed, making them interdependent functions.

Question 14

A company 'M' limited is facing problems in sales and customer satisfaction due to increased competition and outdated controlling systems.

(a) Identify the benefits the company will derive from a good control system.
(b) How can the company relate its planning with control to ensure plans are implemented and targets attained?
(c) What steps in the control process should the company follow to remove its problems?

Accepted Answer

(a) Benefits include timely identification of deviations, better resource utilisation, improved employee morale, and achieving organisational goals.
(b) The company should use planning to set clear standards and control to monitor actual performance, compare with standards, and take corrective action.
(c) Steps: setting performance standards, measuring actual performance, comparing with standards, analysing deviations, and taking corrective action.
This integrated approach will help the company address its problems effectively. — A good control system helps in monitoring and correcting deviations, ensuring plans are followed and targets met, which is crucial in competitive markets.

Question 15

Mr Shantanu instructs the production manager to keep a constant and continuous check on departmental activities and employee performance.

(a) Describe any two features of controlling highlighted here.
(b) Explain any four points on the importance of controlling.

Accepted Answer

(a) Two features are:
- Continuous: Control is an ongoing process.
- Pervasive: Control applies to all levels and departments.
(b) Importance of controlling:
1. Goal Oriented: Ensures organisational goals are achieved.
2. Efficient Resource Use: Helps utilise resources optimally.
3. Boosts Employee Morale: By clarifying expectations.
4. Coordination: Harmonises activities across departments.
Controlling thus ensures effective and efficient organisational functioning. — Continuous and pervasive nature of control helps in timely detection and correction of deviations, supporting organisational success.

L E A R N I N G A Departure Control System (DCS)

L E A R N I N G A Departure Control System (DCS) — Study Notes

CONTROLLING

MEANING OF CONTROLLING

Importance of Controlling

Practice Questions — L E A R N I N G A Departure Control System (DCS)

All 8 Chapters in Business Studies-I