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It is quite clear from the example the standards set in advance so that
that all managers need to manage organisational goals are achieved.
situations intelligently and take
corrective action before any damage Meaning of Controlling
is done to the business. Controlling Controlling is one of the important
function of management comes to functions of a manager. In order
the rescue of a manager here. It not to seek planned results from the
only helps in keeping a track on subordinates, a manager needs to
the progress of activities but also exercise effective control over the
ensures that activities conform to activities of the subordinates. In other
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Managerial Control implies the measurement of accomplishment against the standard and
the correction of deviations to assure attainment of objectives according to plans.
Koontz and O’ Donnel
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beyond the control of the organisation. occur again and standards are
It is necessary to identify the exact accomplished.
cause(s) of deviations, failing which, Corrective action might involve
training of employees if the production
an appropriate corrective action might
target could not be met. Similarly,
not be possible. The deviations and if an important project is running
their causes are then reported and behind schedule, corrective action
corrective action taken at appropriate might involve assigning of additional
level. workers and equipment to the
Step 5: Taking Corrective Action: project and permission for overtime
The final step in the controlling work. In case the deviation cannot
be corrected through managerial
process is taking corrective action.
action, the standards may have to be
No corrective action is required when revised. The table below cites some
the deviations are within acceptable of the causes of deviations and the
limits. However, when the deviations respective corrective action that
go beyond the acceptable range, might be taken by a manager.
especially in the important areas, The information in the box in next page
it demands immediate managerial gives an account of how Saco Defense
attention so that deviations do not was able to control a crisis situation.
Remedial Plan of Action:
Analysing deviations
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Breakeven Chart
Total Revenue
Total Cost
Profit
Cost and Revenue (Rs. Lakhs)
Breakeven Point
Variable Cost
Loss
Fixed Cost
25 50 75
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the starting point and the and support for effective managerial
termination point of the project. decision-making. A decision-maker
3. Time estimates are prepared requires up-to-date, accurate and
for each activity. PERT requires timely information. MIS provides the
the preparation of three time required information to the managers
estimates – optimistic (or shortest by systematically processing a massive
time), pessimistic (or longest data generated in an organisation.
time) and most likely time. In Thus, MIS is an important commun
CPM only one time estimate is ication tool for managers.
prepared. In addition, CPM also MIS also serves as an important
requires making cost estimates control technique. It provides data
for completion of project. and information to the managers at
4. The longest path in the network the right time so that appropriate
is identified as the critical path. It corrective action may be taken in
represents the sequence of those case of deviations from standards.
activities which are important MIS offers the following advantages
for timely completion of the to the managers:
project and where no delays can 1. It facilitates collection, manag-
be allowed without delaying the ement and dissemination of
entire project. information at different levels of
5. If required, the plan is modified management and across different
so that execution and timely departments of the organisation.
completion of project is under 2. It supports planning, decision-
control. making and controlling at all
PERT and CPM are used extensively levels.
in areas like ship-building, 3. It improves the quality of
construction projects, aircraft information with which a
manufacture, etc. manager works.
4. It ensures cost effectiveness in
Management Information managing information.
System 5. It reduces information overload
Management Information System on the managers as only
(MIS) is a computer-based informa relevant information is provided
tion system that provides information to them.
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Key Terms
Controlling Critical point control Management by exception
Summary
n Controlling is the process of ensuring that actual activities
conform to planned activities.
n The importance of managerial control lies in the fact that it helps
in accomplishing organisational goals. Controlling also helps in
judging accuracy of standards, ensuring efficient utilization of
resources, boosting employee morale, creating an atmosphere
of order and discipline in the organisation and coordinating
different activities so that they all work together in one direction
to meet targets.
n Controlling suffers from certain limitations also. An organisation
has no control over external factors. The control system of an
organisation may face resistance from its employees. Sometimes
controlling turns out to be a costly affair, especially in case of
small organisations. Moreover, it is not always possible for
the management to set quantitative standards of performance
in the absence of which controlling exercise loses some of its
effectiveness.
n The process of control involves setting performance standards,
measurement of actual performance, comparison of actual
performance with standards, analysis of deviations and taking
corrective action.
n Planning and controlling are inseparable twins of management.
Planning initiates the process of management and controlling
completes the process. Plans are the basis of control and without
control the best laid plans may go astray.
n Personal observation, statistical reports, breakeven analysis
and budgetary control are traditional techniques of managerial
control.
n Return on investment, ratio analysis, responsibility accounting,
management audit, PERT and CPM and Management Information
System are modern techniques of managerial control.
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Exercises
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