Question 1

State the meaning of controlling.

Accepted Answer

Controlling is a management function that involves measuring and correcting the performance of activities to ensure that the enterprise's objectives and plans are accomplished. It helps in ensuring that everything occurs in conformity with the plans adopted, the instructions issued, and the principles established. — Controlling involves setting performance standards, measuring actual performance, comparing it with standards, and taking corrective actions if necessary. This ensures that organizational goals are achieved efficiently and effectively.

Question 2

Name the principle that a manager should consider while dealing with deviations effectively. State any one situation in which an organisation's control system loses its effectiveness.

Accepted Answer

The principle is 'Management by Exception.' It suggests that managers should focus their attention on significant deviations from the standard and not on minor deviations.

One situation where an organisation's control system loses its effectiveness is when there is lack of proper communication of standards and policies to employees, leading to confusion and non-compliance. — Management by Exception helps managers to focus on important deviations that require corrective action, thus saving time and effort. Control systems lose effectiveness when standards are unclear, unrealistic, or when employees are not motivated or trained to meet them.

Question 3

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

Accepted Answer

An organisation's control system loses its effectiveness when there is resistance from employees due to fear of punishment or lack of participation in setting standards. — Control systems require cooperation from employees. If employees resist control measures or are not involved in the control process, the system cannot function effectively.

Question 4

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

Accepted Answer

Two standards that can be used are:
1. Accuracy and timeliness of financial reports.
2. Compliance with legal and regulatory requirements. — Standards help in measuring performance. For Finance & Accounting, accuracy and timeliness ensure reliable financial information, while compliance ensures that the company adheres to laws and regulations.

Question 5

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

Accepted Answer

The term used is 'Deviation.' — Deviation refers to the difference between the actual performance and the standard or expected performance. It helps in identifying areas where corrective action is needed.

Question 6

'Planning is looking ahead and controlling is looking back.' Comment.

Accepted Answer

Planning involves setting objectives and deciding in advance the actions needed to achieve them, which is essentially looking ahead. Controlling, on the other hand, involves monitoring and evaluating the progress of activities after they have been performed, which is looking back. Thus, controlling ensures that plans are being followed and corrective actions are taken if deviations occur. — Planning sets the direction for future activities, while controlling checks past and current performance against the plan. Both functions are interrelated and essential for effective management.

Question 7

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

Accepted Answer

Trying to control every minor detail can overwhelm managers and dilute their focus, leading to inefficiency. It is important to prioritize and focus on significant deviations or critical areas. This selective control ensures effective use of resources and timely corrective actions. — Management by exception supports this idea by suggesting that managers should concentrate on important deviations rather than trivial ones, thus avoiding unnecessary control efforts.

Question 8

Explain how management audit serves as an effective technique of controlling.

Accepted Answer

Management audit is a comprehensive and systematic evaluation of the overall management process. It assesses the efficiency and effectiveness of management functions and identifies areas for improvement. By providing feedback on managerial performance, it helps in ensuring that management policies and procedures are properly implemented and objectives are achieved. — Management audit acts as a control technique by reviewing managerial activities, detecting deviations, and recommending corrective measures to improve organizational performance.

Question 9

Mr. Arfaaz had been heading the production department of Writewell Products Ltd., a firm manufacturing stationary items. The firm secured an export order that had to be completed on a priority basis and production targets were defined for all the employees. One of the workers, Mr. Bhanu Prasad, fell short of his daily production target by 10 units for two days consecutively. Mr. Arfaaz approached Ms Vasundhara, the CEO of the Company, to file a complaint against Mr Bhanu Prasad and requested her to terminate his services. Explain the principle of management control that Ms Vasundhara should consider while taking her decision. (Hint: Management by exception).

Accepted Answer

Ms Vasundhara should consider the principle of 'Management by Exception,' which means that only significant deviations from standards require managerial attention. Since Mr. Bhanu Prasad fell short by 10 units for two days, which may be a minor deviation, immediate termination may not be justified. Instead, the CEO should investigate the reasons for the shortfall and take corrective actions such as training or motivation before considering termination. — Management by Exception helps managers focus on important issues rather than minor deviations. It promotes efficient use of managerial time and fair treatment of employees.

Question 10

Explain the various steps involved in the process of control.

Accepted Answer

The process of control involves the following steps:
1. Establishment of Standards: Setting clear, measurable performance standards or benchmarks.
2. Measurement of Actual Performance: Collecting data on actual performance through reports, observations, or audits.
3. Comparison of Actual Performance with Standards: Comparing the measured performance against the set standards to identify deviations.
4. Analysis of Deviations: Determining the causes of deviations to understand whether they are significant and require corrective action.
5. Taking Corrective Action: Implementing measures to correct deviations and bring performance back on track.
6. Feedback: Using the information gained to improve future planning and control processes. — Control is a continuous process that ensures organizational activities are aligned with plans. Each step is crucial for effective control and helps in timely detection and correction of errors.

Question 11

Explain the techniques of managerial control.

Accepted Answer

Techniques of managerial control include:
1. Budgetary Control: Using budgets to monitor and control costs and revenues.
2. Financial Control: Analyzing financial statements and ratios to control financial resources.
3. Management Audit: Comprehensive evaluation of management functions.
4. Statistical Reports: Using statistical data to monitor performance.
5. Break-even Analysis: Determining the level of sales at which the company neither makes profit nor loss.
6. Internal Audit: Checking internal controls and compliance.
7. Quality Control: Ensuring products meet quality standards.
These techniques help managers to monitor performance and take corrective actions. — Each technique provides specific tools and methods to control different aspects of organizational activities, ensuring efficiency and effectiveness.

Question 12

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

Accepted Answer

Importance of Controlling:
1. Achievement of Organizational Goals: Ensures activities are aligned with objectives.
2. Ensures Order and Discipline: Helps maintain order by setting standards.
3. Reduces Costs and Wastage: Identifies inefficiencies and wastage.
4. Facilitates Coordination: Ensures different departments work harmoniously.
5. Improves Employee Motivation: Provides feedback and recognition.
6. Helps in Decentralization: Enables managers at different levels to control their areas.

Problems in Implementing Control:
1. Resistance from Employees: Fear of punishment or lack of trust.
2. Inadequate Planning: Without proper plans, control is ineffective.
3. Lack of Managerial Skills: Poor understanding of control techniques.
4. Dynamic and Complex Environment: Rapid changes make control difficult.
5. Costly Process: Control systems can be expensive to implement.
6. Too Much Paperwork: Excessive reports can overwhelm managers. — Controlling is essential for organizational success but faces challenges due to human and environmental factors. Effective control requires overcoming these problems through communication, training, and proper system design.

Question 13

Discuss the relationship between planning and controlling.

Accepted Answer

Planning and controlling are closely related functions of management. Planning sets the objectives and the course of action to achieve them, while controlling ensures that these plans are being followed. Controlling provides feedback on performance which helps in revising plans if necessary. Without planning, controlling has no standards to compare with, and without controlling, planning cannot be effectively implemented. Thus, controlling is a means to ensure that planning is realized. — The interdependence of planning and controlling ensures organizational efficiency and effectiveness. They form a continuous cycle of setting goals, monitoring progress, and making adjustments.

Question 14

A company 'M' limited is manufacturing mobile phones both for domestic Indian market as well as for export. It had enjoyed a substantial market share and also had a loyal customer following. But lately it has been experiencing problems because its targets have not been met with regard to sales and customer satisfaction. Also mobile market in India has grown tremendously and new players have come with better technology and pricing. This is causing problems for the company. It is planning to revamp its controlling system and take other steps necessary to rectify the problems it is facing.

a. Identify the benefits the company will derive from a good control system.
b. How can the company relate its planning with control in this line of business to ensure that its plans are actually implemented and targets attained.
c. Give the steps in the control process that the company should follow to remove the problems it is facing

Accepted Answer

a. Benefits of a good control system:
- Helps in achieving organizational goals by ensuring activities are on track.
- Identifies deviations and problems early for timely corrective action.
- Improves efficiency and reduces wastage.
- Enhances customer satisfaction by maintaining quality and service standards.
- Facilitates better coordination among departments.

b. Relation of planning with control:
- The company should set clear, measurable plans and standards for sales and customer satisfaction.
- Control mechanisms should monitor actual performance against these plans.
- Feedback from control helps in revising plans to adapt to market changes.
- This ensures that plans are implemented effectively and targets are met.

c. Steps in control process:
1. Establish standards related to sales targets, quality, and customer service.
2. Measure actual performance through sales data, customer feedback, and quality reports.
3. Compare actual performance with standards to identify deviations.
4. Analyze reasons for deviations such as competition, technology gaps, or pricing.
5. Take corrective actions like improving product features, training sales staff, or revising pricing.
6. Continuously monitor and adjust plans and controls as needed. — A good control system helps the company respond to competitive pressures and changing market conditions by ensuring that plans are followed and deviations corrected promptly. Integrating planning and control ensures dynamic adaptation and achievement of business objectives.

Question 15

Mr Shantanu is a chief manager of a reputed company that manufactures garments. He called the production manager and instructed him to keep a constant and continuous check on all the activities related to his department so that everything goes as per the set plan. He also suggested him to keep a track of the performance of all the employees in the organisation so that targets are achieved effectively and efficiently.

a. Describe any two features of Controlling highlighted in the above situation.(Goal Oriented, continuous and pervasive – any 2).
b. Explain any four points of importance of Controlling.

Accepted Answer

a. Two features of controlling highlighted:
- Goal Oriented: The control is aimed at ensuring that the department achieves its set targets.
- Continuous and Pervasive: The instruction to keep a constant and continuous check shows that controlling is an ongoing process that applies to all activities.

b. Four points of importance of controlling:
1. Helps in achieving organizational goals by ensuring activities are on track.
2. Facilitates coordination among different departments and employees.
3. Helps in reducing costs and wastage by identifying inefficiencies.
4. Motivates employees by providing feedback and recognizing good performance. — Controlling is essential for effective management as it ensures that plans are implemented properly and objectives are met. It is a continuous process that applies throughout the organization and helps in maintaining discipline and improving efficiency.

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