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CO-
ORDI
NATI
ON

MEANI
NG

Co-or
dinat
ionistheunif
icat
ion,i
ntegrat
ion,sy
nchroni
zat
ionoft
heef
for
tsofgroup
memberssoast oprovi
deunityofactioninthepursui
tofcommongoals.I
tisahidden
f
orcewhichbindsall
theotherf
unctionsofmanagement .
 

DEFI
NITI
ON

Accordi
ngto Char
lesWorth,“Co-
ordi
nati
oni sthei
ntegr
ati
onofsev
eralpar
tsi
ntoan
order
lyhol
etoachiev
ethepurposeofunderst
andi
ng”
.

NEEDFORCO-
ORDI
NATI
ON

Co-ordinat
ionisanabst r
actofmanagement.Thepurposeofcoor di
nati
oni st
o
synchr
onizet hefunct
ionsofv ari
oussect
ionsforachi
evi
ngor gani
zat
ionalgoalswit
h
minimum effort
.Iti
sanor der
lymanagementofgroupef
for
ttopr ovi
deunit
yofactioni
n
thepursui
tofcommonpur pose.

1.Inever
yorgani
zati
on,t
henatureofwor ki
ssuchthatitrequir
estobedivi
dedinto
homogeneousandspeci
ali
zedsub-t
asksandthenwi
thoutI
ntegrat
ionandco-
ordi
nat
ion
theout
putoft
heorgani
zat
ionwi
llbenil
.

2.Co-
ordinat
ionappli
estogroupef
fortrat
herthantoindi
vi
dualef
for
t.I
tgi
vesimpor
tance
toaunityofef f
ortandunit
edacti
on.Theout comeofcoor di
nat
edgroupeff
ort
swillbe
muchbetterthanthesum r
esult
sofvari
ousindiv
idual
s.

3.Coordinat
ionmot i
vatestheempl
oy eestoconsi dertheirworkfrom thepointofvi
ewof
busi
nessand so t heempl oy
eeswi l
lwil
lingl
ycont ri
butet owar
dst hesuccessoft he
concer
n.Ther ef
ore,coordi
nati
oni
st heheartbeatofor ganizati
onwhichbringsint
egrat
ion
ofeff
ortsandactionamongempl oyeesintheor ganizat
ion.

4.Coordi
nati
onensurescommi
tmentont
hepar
tofdi
vi
sions,gr
oups,i
ndi
vi
dual
stowar
d
organi
zat
ionalgoal
s.

5.Coor
dinati
onensur
esef
fi
ciencyandeconomyi
ntheorgani
zation,ent
erpr
iset
oensure
smoothworking.I
tal
sohel
psi nsavi
ngti
mebybr i
ngi
ngeffi
ciencyandeconomytot he
ent
erpr
ise.

6.Theremayarisecert
aincir
cumst
ancesthatmaydemandthesacr
if
iceofanobject
iveof
onedepartmentinthewelfareoft
heenterpr
iseasawhol
e.Insuchasituat
ion,t
heneed
forcoordi
nat
ionari
ses.

7.Coor
dinat
ion i
sdirected t
owardschannel izi
ng t
heef forts,ski
ll
s,energi
esofwork
gr
oups al
ong organi
zati
onal
lyest abl
ished li
nes.I
ft he coor di
nat
ion i
s absent
,gr
oup
membersmaybepul l
edindiff
erentdir
ectionsandworkatcr osspurposes.
 TYPESOFCO-
ORDI
NATI
ON

 Ver
ti
cal
co-
ordi
nat
ion

 Hor
izont
alco-
ordi
nat
ion

 I
nter
nal
co-
ordi
nat
ion

 Ext
ernal
co-
ordi
nat
ion

i
.Ver
ticalCoordi
nati
on:
Verti
cal coordi
nati
on is t he coor
dinat
ion between dif
fer
ent l
evel
s of the
or
ganizat
ion to ensuret hat alllev
els of organi
zati
on arein harmony wit
ht he
or
ganizat
ionalpol
ici
esandpr ogrammes.Thisisachievedthr
oughdel
egati
onofauthor
it
y
bydi
recti
ngandbycont rol
l
ing.

i
i.Hori
zont
alCoordination:
Hori
zontalcoordinati
onisthecoordi
nat
ionbetweendepartmentsonthesamel evel
ofmanageri
alhierarchy.Coordi
nati
onbetweenproducti
onandmar keti
ngdepartmentsat
thesamelevelororganizat
ionalhi
erar
chyisanexampleofhori
zontalcoor
dinat
ion.Thi
sis
achi
evedbyformingcr oss-
functi
onalt
eamsandself-
managedt eams.

i
ii.I
nternalCoordinat
ion:
Verti
calandhor iz
ontalt
ypesofcoordi
nat
ion,i
fcarr
iedoutwit
hinanorganizati
on,
are called i
nternalcoordi
nati
on.Int
ernalcoor
dinat
ion i
s achi
eved t
hrough f
ollowi
ng
techniques:

Coor di
nationthr oughEf f
ecti
veSupervision:
Super vi
sionensur esharmoniousandr eci
procalperformanceofsubordinat
es.It
alsosy nchronizesandcoor dinat
essubor dinat
es’eff
ort
sbot hamongthemselvesandi n
relat
iont oothergr oups.Suchcollaborativ
eeffort
sofi ndivi
dualsandgroupst
oachi eve
organizati
onalobj ect
ivesarepossibl
et hroughcoordi
nation,whichagai
nisbestachieved
throughsuper vision.

Coor di
nati
onthroughOr ganizati
onalProcess:
Suitabl
eorganizati
onal pr
ocessachievescoor
dinat
ion.Propergr
oupingofact
ivi
ti
es,
assignmentofj obt othesubor dinat
es,properaut
hori
tydelegati
on,et
c.,arepar
tsofthe
organizat
ionalprocess,whichhelpsinachievi
ngcoordi
nati
on.

Coordinati
onthr oughPer sonalCont act:
Anotherimpor tanttechniqueofachi evi
ngcoor di
nati
onist hr
oughper sonalcontact.
Personalcontactr eciprocal
l
yr elatesonef uncti
on with anotherand t hi
sisachi eved
thr
ought hedev el
opmentofi nt
er personalandhor i
zont
alrelati
onshipsofpeopl eworking
i
nt he organization.Thi s promot es cooper at
ion and collaborati
on due to mut ual
understandi
ng; hence, coordi
nationthroughpersonalcontactissignif
icantforr
eali
zingthe
obj
ectivesofanor ganizati
on.
Coordinat i
onthroughEff
ect i
veCommuni cation:
Tr anspar
encythr
oughcommuni cati
onachi ev escoordinati
on.Keepingpeopleinthe
organi
zat ioninf
ormedtimet ot i
meaboutt hei nt
ernalandext ernalchangesisessenti
alto
maket hem under st
andt hechangedsi tuationar idcoordinatet hei
reffort
stoachi eve
i
ntendedgoal s.Communi cationcanbemadet hroughletters,document edprocedures,
report
s, bull
eti
nsandalsot hroughper
sonal behav i
ourofmanager s.

Communi cat
iondoestheimport
anttaskofdovetai
li
nginf
or mati
onforthebenefi
tofthe
organi
zat
ion.Peopler eacttot he communicati
on quickl
y,pr ov
ided i
tis properl
y
coordi
nat
ed.Thisi swhyef f
ecti
vecommuni cati
on isconsider
ed to bean import
ant
techni
queofcoordi
nat
ion.

Coordinati
onbyGr oupMeet i
ngs:
Henr yFay olpointed outt hatlackofcoor dinati
on ismorev i
sibl
e when each
departmentknowsnot hi
ngaboutot hersorfail
st or elat
ethem totheorganizationasa
whole.Thi sispr i
mar i
l
yfort heexistenceofwat ertightcompartmentsforthet radit
ional
hi
erarchicalst r
ucture,wher e peoplel ack i
nit
iat
ive and loyal
ty.To el
iminate such a
si
tuati
on, coordinati
onisessentialwhichcanbebestachi evedbyperi
odi
cgr oupmeet i
ngs
andconf erencesofdepar t
ment alheads.Groupmeet i
ngshelppeoplet
ounder standthe
organizati
onalneedsbet t
er.

Ithelps t
hem to exchange ideas,know aboutplans and acti
vi
ti
es oft hei
r
depart
mentandsoal sotheorganizati
onasawhol e.Propercoordi
nat
ion,ther
efore,i
s
bestachi
evedthr
oughgroupmeet i
ngs,andthi
siswhygroupmeet i
ngsareconsideredto
beanimportantt
echni
queofcoordi
nation.

Coordi
nat
ionthroughLi ai
sonOf f
icers:
Par
ticul
arlyforlargeorganizati
ons,di
rectpersonalcontactofmanager
sofv ari
ous
unit
sandfuncti
onsmaynotbev eryf r
equent
.Suchgapi softenfi
ll
edbytheorgani
zati
ons
thr
oughli
aisonof f
icers.Therefore,alsobyappoi nti
ngl i
aisonoffi
cer
s,anor gani
zati
on
seekst
oachievecoor dinat
ion.

i
v.ExternalCoordi
nati
on:
Successorf ai
l
ureofanorganizati
onalsodependsonnumberofext er
nalforces.
Noor ganizati
oncanoper at
einisolati
on,ithastocontinuousl
yinter
actwit
hdy nami c
envi
ronment alf
orcesanddevi
sei
tsst r
ategi
estorespondt
osuchf or
cestosurv
ive.

Ext
ernalcoordi
nat
ionfaci
li
tatessuchprocessbyintegr
atingt
heorganizat
ionwi
th
thedy namicexter
nalfor
ces.Foref fect
iveext
ernalcoor
dinat
ion,anor
ganizati
onatthe
outsethastoknowwhatt hepert
inentexter
nalf
orcesare.

TECHNI
QUESOFCO-
ORDI
NATI
ON

Themai
ntechni
quesofef
fect
iveco-
ordi
nat
ionar
easf
oll
ows.
1.Soundplanning 
Unit
yofpur posei sthefirstessentialcondi
ti
onofco- ordi
nati
on.
 Therefore,the
goalsoft heor
ganizat
ionandt hegoalsofi tsuni
tsmustbecl ear
lydefi
ned.
 Planningis
theidealstageforco-ordi
nat
ion. Clear-
cutobject
ives,har
monizedpoli
ciesanduni f
ied
proceduresandrulesensureunifor
mi t
yofact i
on.

2.Simpli
fi
edorgani
zation 
Asimpleandsoundor ganizati
onisanimpor t
antmeansofco- or di
nation. Theli
nes
ofauthori
tyandr esponsibil
ityfrom toptot hebot t
om oft heor ganizationst r
uct
ure
shouldbeclear
lydefined.
 Cl ear-
cutauthor
it
yr el
ati
onshi
pshel ptor educeconf li
ctsand
to hol
d peopleresponsible. Related act
ivi
ti
es should be grouped toget herin one
depart
mentoruni t.
 Toomuchspeci ali
zati
onshoul dbeav oidedasi tt endst omake
everyuni
tanendinitself.

3.Eff
ectivecommuni cati
on 
Openandr egularcommuni cationisthekeyt oco-or
dinati
on.
 Eff
ectiveint
erchange
ofopi ni
onsand i nfor
mation helpsi nr esolvi
ng di
ff
erencesand in creati
ng mut ual
understandi
ng. Personalandf ace-to-
facecont act
sar ethemostef fecti
vemeansof
communi cati
onandco- ordinat
ion. Commi t
teeshelptopr omoteuni
tyofpur poseand
uni
formi t
yofacti
onamongdi ff
erentdepar t
ment s.

4.Effect
iveleadershipandsuper vi
sion 
Eff
ect i
vel eadershi
p ensuresco- ordi
nation both atthe planni
ng and execution
stage.
 Agoodl eadercangui detheact i
vi
tiesofhissubor dinat
esintherightdirect
ion
andcani nspi
ret hem topulltogetherfortheaccompl ishmentofcommonobj ecti
ves.
 
Soundl eadershipcanper suadesubor di
natest ohaveidenti
tyofinter
estandtoadopta
commonout l
ook. Personalsupervisi
onisani mportantmet hodofresol
vi
ngdi f
ferences
ofopinion.

5.Chainofcommand 
Aut
hori
tyisthesupremeco-coor
dinati
ngpoweri nanorganizati
on.
 Exerci
seof
authorit
ythroughthechainofcommandorhi er
archyisthet
radi
tionalmeansofco-
ordinati
on.
 Co-or
dinat
ionbet
weenint
erdependentunit
scanbesecuredbyputti
ngthem
underoneboss.

6.Indoctri
nati
onandi ncentiv
es 
Indoctr
inati
ng or gani
zati
onalmember s wi
tht he goals and mi ssi
on of t he
organizati
oncant ransform aneutr
albodyi nt
oacommi t t
edbody.
 Si mi
larl
yincent
ives
maybeusedt ocreatemut ual
it
yofint
erestandtoreduceconfl
i
cts. Fori
nstance,pr
ofit
-
shari
ngi shel pf
ulinpr omot i
ngteam-spir
itandco-operati
onbetweenempl oy
ersand
workers.

7.Li
aisondepar
tment
s 
 Wheref r
equentcont actsbetween diff
erentorgani zati
onalunit
sar enecessar y
,
l
i
aisonof fi
cersmaybeempl oyed. Forinst
ance,aliaisondepar tmentmayensur ethat
t
hepr oducti
ondepartmentismeet ingthedeli
verydatesandspeci fi
cati
onspromisedby
t
hesal esdepart
ment. Specialco-
coordinat
orsmaybeappoi ntedincertai
ncases. For
i
nstance,apr oj
ectco-coordi
natorisappointedtoco- ordinat
et heacti
viti
esofvarious
f
unctionari
esinaprojectwhichistobecompl etedwithinaspeci f
iedperi
odofti
me.

8.Generalst
aff 
Inlargeorgani zations,acentrali
zedpoolofst af
fexpertsisusedforco-or
dinat
ion.
 
Acommonst affgr oupser v
esast hecl
eari
nghouseofi nfor
mat i
onandspeci al
ized
advi
cetoalldepar tmentoft heent erpri
se.
 Suchgeneralst
affisveryhelpf
uli
nachieving
i
nter
-depart
ment alorhor i
zontalco-ordi
nati
on. Taskfor
cesandpr oject
steamsar ealso
usef
ul i
nco-ordination.

9.Volunt
aryco- ordi
nation
When ev eryor ganizationalunitappreciat
est he wor ki
ngsofr elat
ed unitsand
modifi
esitsownf unct i
oningt osuitthem,thereisself-
co-ordi
nati
on.Sel f
-co-
ordi
nation
orv ol
untaryco- ordinati
on i s possi
blein a climate ofdedi cat
ion and mut ualco-
operat
ion.
 I tresul
tsf r
om mut ualconsult
ati
onandt eam-spiri
tamongt hemember sof
theorganization.
 Howev er,itcannotbeasubst it
utef ortheco-coordinati
veeffort
sof
managers.

CONTROLLI
NG
MEANING
Iti
mpli
esmeasur ementofaccomplishmentagai nstt
hest andar
dsandcorrect
ionof
devi
ati
onifanytoensureachievementoforganizat
ionalgoals.Thepurposeofcontr
oll
ing
i
stoensurethatever
ythingoccursi
nconformi t
ieswiththestandards.Aneff
ici
entsyst
em
ofcont
rolhel
pstopredictdevi
ati
onsbefor
et heyactuall
yoccur.

DEFI
NITI
ON
Accor
dingtoKoont z&O’Donnel
l,
”Contr
oll
i
ngisthemeasur
ement&correcti
onof
per
for
manceact i
vi
tiesofsubor
dinat
esi
nordertomakesuret
hatt
heent
erpr
iseobject
ives
andpl
ansdesiredtoobtai
nthem asbei
ngaccompli
shed”
.

NATUREOFCONTROLLI NG
1.Contr
olisaFunct
ionofManagement :
Actual
lycontroli
saf ollow-up acti
on tothe ot
herfunct
ions ofmanagement
perf
ormedbymanager st
ocontroltheacti
vi
tiesassi
gnedt
othem i
ntheorgani
zat
ion.

2.Controli
sBasedonPl anning:
Contr
oli s desi
gned t o evaluate act
ualperf
ormance agai
nst predetermi
ned
standardsset-
upintheorganizat
ion.Plansserv
easthestandar
dsofdesi
redperformance.
Planni
ngset sthecourseint heorganizati
onandcont
rolensur
esacti
onaccordingtothe
chosencourseofactionintheorganization.
3.Cont
roli
saDy namicProcess:
I
tinvol
vesconti
nuousrevi
ewofst andardsofper
for
manceandresul
tsi
ncor
rect
iveact
ion,
whichmayleadtochangesinotherfuncti
onsofmanagement
.

4.Informati
onist heGuidetoControl:
Controldependsupont heinformati
onregardi
ngactualperformance.Accurat
eand
ti
mel yavail
abil
it
yoff eedbackisessenti
alforeff
ecti
vecontrolacti
on.Aneffi
cientsyst
em
ofr eport
ingisrequiredforasoundcont rolsystem.Thi
sr equir
escontinui
ngmoni tor
ing
andr evi
ewofoper at
ions.

5.TheEssenceofControli
sAct
ion:
Theper for
manceofcont
roli
sachievedonlywhencor
rect
iveact
ionistakenonthe
basis of feedback i
nfor
mati
on.Iti s only act
ion,whi
ch adjust per
formance to
predet
erminedstandar
dswheneverdevi
ati
onsoccur.Agoodsystem ofcontrolf
aci
l
iti
es
ti
melyacti
onsot hatt
herei
sminimum wast
eoftimeandenergy.

6.Iti
saCont i
nuousActi
vi
ty:
Cont
rolisnotaone-stepprocessbutacont
inuouspr
ocess.I
tinvol
vesconst
ant
revi
sionandanal y
sisofstandardsresul
ti
ngfr
om t hedevi
ati
onsbetweenactualand
plannedper
formance.

7.Delegati
onisthekeytoCont rol:
Anexecutivecantakecor r
ecti
veactiononlywhenhehasbeendel egat
ednecessary
authori
tyforit
.Aper sonhasaut horit
yt ocontr
olthesefuncti
onsforwhichhei sdi
rectl
y
accountable.Moreover
,controlbecomesnecessar ywhenaut hori
tyi
sdelegatedbecause
thedelegatorremainsresponsibl
ef ortheduty.Contr
olstandardshel
pamangerexpand
hisspanofmanagement .

8.Contr
olAimsatFutur
e:
Controli
nvol
vesthecompari
sonbet
weenact
ualandst
andar
ds.Cor
rect
iveact
ioni
s
thusdesi
gnedtoimproveperf
ormancei
nfutur
e.

9.Controli
saUni versal FunctionofManagement :
Contr
olisabasi corpr i
maryf unct
ionofmanagement .Ev erymanagerhast o
exerci
secont r
olov ert hesubor di
nates’perfor
mance,nomanagercangett hingsdone
withouttheprocessofcont roll
i
ng.Onceapl anbecomesoper
ational,fol
low-upacti
onis
requir
edtomeasur epr ogr ess,touncoverdefici
enci
esandt
otakecor recti
veacti
ons.

10.Control
li
ngisPosit
ive:
Thefuncti
onofcontroll
ingisposi
ti
ve.I
tistomakethi
ngshappeni
.e.t
oachi
evet
he
goalwi t
hinsteadconstrai
nts,orbymeansoft hepl
annedacti
vi
ti
es.Contr
oll
i
ngshoul
d
neverbev i
ewedasbeingnegat iv
eincharact
er.

PROCESSOFCONTROLLI
NG
1.Setti
ngPer formanceSt andards:
Thef i
rststepint heprocessofcont rol
li
ngi sconcer nedwithset t
ingper formance
standards.Thesest andardsar et hebasisf ormeasur i
ngtheact ualperfor mance.Thus,
standardsactasal ighthouset hatwar ns&gui dest heshipsatsea.St andardsar et he
benchmar kst owardswhi chef f
ortsofent i
reor gani zati
onar edir
ect ed.Thesest andards
canbeexpr essedbot hi nquant i
t at
iveandqual i
tat i
vet er
ms.Inor dertof aci
li
tateeasy
compar i
sonofact ualper f
ormancewi ththestandar ds,amanagershoul dt r
yt osett hese
standards in quanti
tati
vet erms as f aras possi ble.Howev er,in case ofqual i
tati
ve
standards,ef
fortshouldbemadet odefinethesest andar dsinsuchawayt hatcompar ison
becomeseasi lyunderstandable.

2. 
MeasurementofAct ualPer
formance:
Oncethestandardshavebeendet ermined,thenextstepist
omeasur et
heactual
perfor
mance.Thev arioustechniquesf
ormeasur i
ngaresampl echecki
ng,per
for
mance
report
s,personalobservat
ionetc.Howev er
,inor dertofacil
it
ateeasycompari
son,t
he
perfor
manceshouldbemeasur edonsamebasi sthatthestandar
dshave.

3.
 Compar
ingAct
ualPerfor
mancewi t
hSt andards:
Thi
sstepinv
olvescomparingtheact ualper
formancewithstandar
dslai
ddownin
or
dertofi
ndthedevi
ati
ons.Forexample,performanceofasalesmanintermsofuni
tsol
d
i
naweekcanbeeasi l
ymeasuredagainstthestandardoutputf
ortheweek.

4.Anal
ysi
ngDev i
ati
ons:
Somedev iat
ionsarepossibleinal lt
heact i
vit
ies.Howev er,thedevi
ati
oni nt
he
i
mpor t
antareas ofbusiness needs to be cor
rected more urgentlyas compared t
o
devi
ati
on i
ni nsi
gnifi
cantareas.Managementshoul d use cr
iticalpoi
ntcont r
oland
managementbyexceptioninsuchareas.

5.Taki
ngCor
rect
iveAct
ion:
 Thelastst
epint heprocessofcont roll
i
ngi nvol
vestakingcorr
ectiveacti
on.Ift
he
devi
ati
onsarewit
hinacceptabl
el i
mi t
s,nocor r
ecti
vemeasur eisrequi
red.Howev er
,ift
he
devi
ati
onsexceedacceptabl
elimits,theyshouldbei mmediatelybr
oughtt othenoti
ceof
themanagementfort
akingcorrect
ivemeasur es,especi
all
yintheimportantar
eas.

TECHNI
QUESOFCONTROLLI
NG

Tr
adi
ti
onal
Techni
ques

Tradi
ti
onaltechni
quesref
ertothet
echni
questhathav
ebeenusedbybusi
ness
or
gani
zat
ionforl
ongerperi
odoft
imeandar
esti
ll
inuse.

a.PersonalObserv
at ion
b.Stati
sti
calReports.
c.BreakevenAnalysis.
d.BudgetaryContr
ol .

(a)PersonalObservati
on:
`Thi
si sthemostt radi
ti
onaltechniqueofcontrol
.Ithelpsamanagert ocoll
ectfir
st
handi nfor
mat i
onaboutt heperformanceoft heemployees.Italsocreat
espsychologi
cal
pressureont heempl oyeestoimprov etheirperf
ormanceast heyar
eawar ethatt
heyar e
beingobservedpersonal l
ybythemanager .However,
thi
st echniquei
snott obeeff
ectiv
ely
usedinal l
kindsofjobsasi ti
sv er
ytimeconsumi ng.

(b) 
Stati
sti
cal Report
s:
Stati
sti
calanalysi
sint hef orm ofper cent
ages,rat
ios,av
erageset c.i ndiff
erent
areas provides usefuli
nformation regardi
ng per f
ormance ofan or ganizati
on toi ts
manager s.Whensuchi nfor
mat i
oni spresentedinthefor
m oftabl
es,graphs, chart
setc.,i
t
faci
lit
atescompar i
sonofperformancewi t
ht hestandar
dsl ai
dandwi t
hpr ev i
ousyears’
performance.

(c)BreakevenAnal ysis:
Thet echniqueusedbymanager st
ostudytherelat
ionshipbetweensalesvol
ume,
costsandpr ofi
tisknownasBr eakev
enAnalysi
s.Thistechniquehelpsthemanagersin
esti
mat i
ngpr ofi
tsatdi ff
erentl
ev el
sofacti
vi
ti
es.Throughbreakev enanal
ysi
s,afi
rm can
keepacheckoni t
sv ari
ablecostandcanalsodeterminethel evelofact
ivi
tyatwhi
chit
canear nit
spr ofi
ttarget.

(d) 
Budgetar
yControl:
Underthi
stechnique,di
fferentbudget
sarepr eparedfordi
ffer
entoper at
ionsi
nan
organi
zati
oninadv ance.Thesebudget sactasstandardsforcomparingthem wi t
hact
ual
perfor
manceandt akingnecessaryacti
onsforatt
aini
ngor gani
zat
ionalgoals.

Abudgetcanbedef
inedasaquant
it
ati
vest
atementofexpect
edr
esul
t,pr
epar
ed
forafutur
eperiodoftime.Thebudgetshoul
dbef l
exi
blesothatnecessar
ychanges,if
need be,can be easi
l
ymade lateraccordi
ng t
ot he r
equi
rements ofthe pr
evai
li
ng
envi
ronment.

TypesofBudget s:
(
i)SalesBudget :Expectedsalesintermsofquanti
tyaswel l
asv olume.
(i
i)Product i
onBudget :Expectedproduct
ioninthebudgetedperi
od.
(i
ii
)Mat eri
al Budget:Expectedquantit
yandcostofmat eri
alr
equiredforproduct
ion.
(i
v)CashBudget :Expectedinflowandoutfl
owofcashf orthebudgetedper i
od.
(v)CapitalBudget:Estimatedspendingonf i
xedassets.
(vi
)Resear ch and Dev elopmentBudget :Expected spending on research and
devel
opmentwor k.

Adv
ant
agesofBudget
aryCont
rol

1.
 Hel
psinCoor di
nati
on:
It hel
ps in establi
shi
ng coordi
nati
on and i nt
erdependence among v ar
ious
depar
tments.Forexample,pur
chasebudgetcannotbepreparedwithoutknowi
ngquanti
ty
ofmateri
alsrequi
redandthati
nformat
ioncomesi nfr
om producti
onbudget.Lat
teri
nturn
i
sbasedonsal esbudget
.

2. 
Opti
mum Util
i
zati
onofResour
ces:
Budget
ing ensur
es f
ull
eruti
li
zati
on ofresour
ces by al
l
ocat
ing t
he r
esour
ces
accor
dingt
otheneedsofvari
ousdepar
tments.

3.
 Moti
vati
ngEmployees:
Budgeti
nghel
psi nmot i
vat
ingtheempl
oyeestoperf
orm bet
terast
heyknow t
he
st
andardsagai
nstwhichthei
rperf
ormancewi
ll
bejudged.

4.
 Hel
psinAt t
aini
ngTarget
s:
Budgeti
ngensuresattai
nmentofor
gani
zat
ionalgoal
sbyf
ocusi
ngonspeci
fi
cand
ti
meboundt arget
s.

5.
 Faci
l
itat
esManagementbyExcept
ion:
Bystressi
ngont
heoperat
ionswhi chdevi
atef
rom budget
edst
andar
ds,
itf
aci
l
itat
es
managementbyexcept
ioni
ntheorganizati
on.

Li
mit
ati
onsofBudget
arycont
rol

1.Ri
gidi
ty:
Budgetsareoftentoorigi
d&restr
ict
iveandsupervi
sor
saregiv
enl i
tt
lef
reedom i
n
managingtheirr
esources.Thebudgetsmayei therbechangedtoooftenornotatall,
maki
ngi tdi
ff
icul
tforemployeestomeetper
formancelev
elexpect
edofthem.
2. 
LackofActi
on:
Onlyprepar
ingbudgetscannotl
eadtosuccessunless&unt i
lthesear
enotputi
nto
acti
on.Ther
eisaneedt otr
anslat
ethesebudgetf
igur
esintoresul
ts.

3.
 Ti
meconsuming:
Pr
epar
ingdif
fer
entki
ndofbudget
sisnotaneasyt
hingasi
tinv
olv
esal
otoft
ime,
moneyandeff
ort
s.

4.
 Esti
mate:
General
l
y,Budgetsarepreparedonthebasi
softhepr i
celevelprevai
li
ngata
parti
cul
art i
me peri
od butthese esti
mat
es maybecome usel
ess dur
ing subsequent
i
nflat
ionordepressi
oninthemarket
.

Moder
nTechni
ques

Modem t echni
quesar
ethoset
echni
queswhi char
ever
ynewinmanagementworl
d.
These techni
ques provi
de v
ari
ous new aspect
sf orcont
rol
l
ing t
he act
ivi
ti
es ofan
organi
zati
on.

(a)Ret
urnonInvestment.
(
b)Rati
oAnalysi
s.
(
c)Responsi
bil
it
yAccounting.
(
d)ManagementAudi t.
(
e)PERTandCPM.
(
f)ManagementInformati
onSyst
em.

(a) Ret
urnonI nvestment:
Ret
urnoni nvestmentisv eryusefultechniquefordetermini
ngwhet herthecapital
i
nvest
edint hebusi nesshasbeenef fecti
velyusedornotf orgener ati
ngreasonable
amountofr eturn.ReturnonI nv estment=( NetIncome/Tot alInvest
ment )X 100Net
I
ncomebef oreoraf t
ertaxcanbeusedf orcalculat
ingROI .Totalinv
estmenti ncl
udes
i
nvest
mentinf ixedAssetsaswel laswor kingcapital
.Itactsasanef f
ecti
vecontroldevi
ce
i
nmeasur i
ngandcompar ingt heper formanceofdi ff
erentdepartments.Italsohelps
depar
tment
al manager stofindoutt heproblemswhi chadv er
sel
yaffectROI.

(b)
 Rat
ioAnaly
sis:
Rat
ioAnal
ysi
sisat echniqueofanaly
zingthefinanci
alst
atement
sofabusi
ness
f
ir
m bycomputi
ngdi
ffer
entrati
os.

Themostcommonl yusedr
atioshavebeengr oupedunderfol
l
owi ngcategori
es:
(i
)Li
quidit
yRat i
os:
Liquidi
tyrat
iosar
ecalcul
atedtoknowshor ttermfi
nancialposi
ti
onofbusinessand
i
tsabi
li
tytopayshor tt
ermli
abil
it
ies.I
tincl
udescurrentr
ati
oandqui ckrati
o.

(
ii
) 
Sol
vencyRati
os:
Solvencyrat
iosar
ecal
cul
atedt
oknowl
ongt
erm sol
vencyoft
hebusi
nessandi
ts
abi
l
itytopayit
slongt
erm debt
s.I
tincl
udesdebtequi
tyr
ati
o,pr
opr
iet
aryr
ati
o,i
nter
est
cov
eragerat
ioet
c.

(ii
i
)Pr of
itabi
li
tyRati
os:
Profi
tabi
li
tyrati
osli
kegrosspr
ofi
trati
o,netpr
ofi
trat
io,oper
ati
ngr
ati
o,et
c.hel
pto
analy
zethepr ofi
tabil
i
typosi
ti
onofabusiness.

(i
v)TurnoverRatios:
Thev ari
oust urnoverrati
osli
keInvent
oryt ur
noverrat
io,debt
orstur
nov errati
o,f
ixed
assetst ur
noverr ati
oet c.helpinknowingwhet hertheresour
cesar eeff
ectivel
yusedf or
i
ncreasingt heeffici
encyofoper at
ionsofbusinessornot.Highertur
noverindicatesbett
er
uti
li
zationofresour ces.

(c)Responsi
bil
it
yAccounti
ng:
Underthi
ssy st
em ofaccounti
ng,vari
oussecti
ons,depar
tmentsordi
vi
sionsofan
organizati
on ar
e setup as‘Responsibi
li
tyCenters’
.Each centr
e hasa head thati
s
responsibl
eforatt
aini
ngt
hetargetofhiscentr
e.

(d)ManagementAudit
:
ManagementAudi ti s a process ofjudging t
he overallperf
ormance oft he
managementofanor ganizat
ion.Itaimsatrevi
ewingtheeffi
ciencyandef f
ect
ivenessof
managementandimpr ovingitsfutureperf
ormance.It
sbasicpur poseistoidenti
fythe
def
ici
enci
esintheper f
ormanceofmanagementf uncti
ons.I
tal soensuresupdatingof
exi
sti
ngmanageri
alpoli
cies.

(e) 
PERTandCPM:
PERT and CPM ar et echniques ofpr oj
ectmanagementusef ulint he basic
manager ialfuncti
onsofpl anni ng,schedulingandcont r
ol.PERTst andsfor“Progr
amme
Eval
uation&Rev iewTechni que”andCPM ar etheabbreviati
onf or“Cri
ti
calPathMethod”.
Theseday stheprojectsundertakenbybusi nesshousesar ev er
ylargeandtakeanumber
ofyearsbef orecommer ci
alproduct ioncanst art.
Thetechni quesofPERTandCPM hel pgreatlyincompleti
ngt hev ar
iousjobsonschedule.
Theymi nimi seproductiondelay s,interr
uptionsandconf lict
s.Theset echni
quesarev ery
hel
pfulincoor dinatingvari
ousj obsoft hetot alproj
ectandt herebyexpedit
eandachi ev
e
completionofpr ojectontime.

Thev ari
ousstepsi nvol
vedi nusi
ngt hesetechni quesareasf ol
lows:
(i
)Thepr ojectisf ir
stdividedintov ar
iousact i
vi
ti
esandt hent heseactiv
iti
esar e
arr
angedi nalogicalsequence.
(i
i)Anetwor kdiagram i
spr eparedshowi ngt hesequenceofactivi
ti
es.
(i
ii
)Ti
meest imatesar el aid down foreach act i
vi
ty.PERT preparest hreet i
me
esti
mat es-
(i
)Opt imisti
c( short
estt i
me)( ii
)Mostl i
kel
yt i
me&( ii
i)Pessimi
sti
c( l
ongest
ti
me).InCPM, onlyonet imeest i
mat eisprepared.Al ongwiththis,
CPM alsolaysdownt he
costesti
matesf orcompletingt
heproj
ect.
(
iv)Themostcr it
icalpat
hinthenetwor
kisthelongestpath.Longestpat
hconsi
sts
ofthoseactivi
ti
eswhi char ecri
ti
calf
orcomplet
ingtheprojectont i
me;hencethename
CPM.
(
v)Ifrequir
ed,necessarychangesaremadeint heplanforcompl et
ingt
heproj
ect
ontime.

AdvantagesofPERT:
1.I tcompelsmanagerst oplantheirproject
scr i
ti
cal
lyandanalyseal lfact
ors
af
fecti
ngt heprogr
essoftheplan.Theprocessoft henetworkanal
ysisr
equiresthatthe
pr
ojectplanni
ngbeconductedonconsider
abledetailf
rom t
hestar
ttothefi
nish.

2.I
tprov
idesthemanagementat oolforf or
ecasti
ng thei mpactofschedul
e
changesandbeprepar
edtocor
rectsuchsituat
ions.Thelikelytr
oublespotsar
elocat
ed
earl
yenoughsoastoappl
ysomeprevent
ivemeasur esorcorrect
iveacti
ons.

3.alotofdatacanbepresentedinahi ghlyor
deredfashion.Thetaskrel
ati
onshi
ps
aregraphical
l
yr epr
esent
edforeasiereval
uati
onandi ndivi
dualsindiff
erentl
ocati
onscan
easi
lydeterminethei
rrol
eint
hetotaltaskrequirement
s.

4.ThePERT ti
me( Te)isbasedupon3-wayesti
mat eandhencei sthemost
obj
ecti
vetimei
nthel
i
ghtofuncer
tai
nti
esandr
esul
tsi
ngreaterdegr
eeofaccur
acyint
ime
for
ecast
ing.

5.Itr
esult
sinimprovedcommuni cati
on;thenet wor
kprovi
desacommongr ound
forvari
ousparti
essuchasdesigner
s,contr
actors,pr
ojectmanager
setc.andt
heymustal
l
understandeachother
’sr
oleandcontr
ibuti
ons.

Li
mit
ationsofPERT:
1.Uncert
ainl
yaboutt
heest
imat
eofti
meandr esour
ces.Thesemustbeassumed
andt
her esul
tscanonl
ybeasgoodast
heassumpt
ions.

2.Thecostsmaybehigherthantheconv
entionalmethodsofpl anni
ngandcontr
ol.
Becauseoft henatureofnetworkingandnetwor kanalysis,itneedsahi ghdegr
eeof
pl
anningskillandgreat
eramountofdet ai
l
swhi chwouldi ncreasethecostintimeand
manpowerr esour
ces,

3.I
tisnotsui
tabl
ef orr
elat
ivel
ysimpl
eandr
epet
it
ivepr
ocessessuchasassembl
y
l
i
neworkwhichar
efi
xed-sequencejobs.

AdvantagesofCPM:
Theimpor t
antadv
antagesofCPM techni
queare:
1.Ithelps i
n ascer
tai
ning the t
ime schedul
e ofact
ivi
ti
es hav
ing sequent
ial
rel
ati
onship.

2.I
tmakescont
rol
easi
erf
ort
hemanagement
.
 3.Itident
if
iesthemostcr
it
icalelement
sint
hepr oj
ect
.Thus,themanagementi
s
keptal
ertandpreparedt
opaydueattent
iontot
hecr
it
ical
acti
vi
ti
esoftheproj
ect
.

4.I
tmakesbet
teranddet
ail
edpl
anni
ngpossi
ble.

Li
mitati
onofCPM:
1.CPM operat
esont heassumpt i
onthatt
her
eisapreci
seknownt
imet
hateach
act
ivi
tyint
heproj
ectwil
ltake.But
,itmaynotbetr
uei
nreal
pract
ice.

2.CPM t
imeest
imat
esar
enotbasedonst
ati
sti
cal
anal
ysi
s.

3.I
tcannotbeusedasacont rol
l
ingdev
iceforthesi
mpl er
easonthatanychange
i
ntroducedwillchangetheenti
restr
uctur
eofnetwork.Inotherwords,CPM cannotbe
usedasady namiccontr
oll
ingdevi
ce.

(f)ManagementI nformationSy st
em ( MI
S):
ManagementI nformat i
onSy stem (MI S)isacomput erbasedinf
ormationsystem
whichprovidesaccurate,t imel
yandup- to-dateinformat i
ont othemanager sfortaking
var
iousmanager i
aldeci sions.Thus,itisani mpor tantcommuni cati
ontoolaswel lasan
i
mpor t
antcontroltechnique.Itprovidest i
mel yinformationtothemanager ssot hatthey
cantakeappropri
atecor recti
vemeasur esincaseofdev i
ati
onsfrom st
andards.

MANAGEMENTBYEXCEPTI
ON

Itisasy stem ofidenti

ficat
ionandcommuni cat
ionthatsignalsthemanagerasto
whenandwher ehi sat
tentionisneeded.Themai nobj ectofthi
ssy st
em ist
oenablethe
managertoi dentif
yandisolatetheprobl
emst hatcallf
ordecisi
onandact i
on,
andav oi
dor
i
gnoreorpayl essatt
entiont olesscrit
icalproblemswhi chbet t
erbehandledbyhi s
subor
dinates.

Underthissyst
em themanagershouldrecei
veonlycondensed,summarizedand
i
nvariablecomparati
vereportscoveri
ngalltheelement
s,andheshoul dhaveallthe
exceptionst
ot hepastav
eragesorstandar
dspoint
edout,
boththespecial
lygoodandthe
special
lybadexcepti
ons.

Thisgiv
eshim af
ullvi
ewoftheprogressinafewmi nutesofti
me.Thusbyusing
theexper i
enceinasyst
ematicway(i.
e.,havi
ngt heknowledgeofpastatt
ainment
s),a
caref
ul anal
ysi
sismadewithr
efer
encet
oexi st
ingr
ecordsandstandar
dsofperfor
mances.

Adv
ant
agesofManagementbyExcept
ion:

1.I
tsavestime.Managerat
tendstorealpr
obl
emsatapar ticularpoi
ntoftime.
2.Concentr
atedef
fort
sarepossibl
e,asthi
ssystem enablest hemanagert odecide
whenandwher eheshouldpayhisatt
enti
on.I
tidenti
fi
escrisisandcr i
ti
calprobl
ems.
3.Lessernumberofdecisi
onsisrequir
edtobet aken,whichenabl esthemanager
 togoint
odet ai
l
.
4.Thi
senablestoincreasespanofcont rol
andincr
easet heacti
vi
tiesf
oramanager.
5.Useofpasttrends,
historyandav ail
abledatacanbemadef ul
ly
.
6.I
talar
mst hemanagementaboutt hegoodopportuni
tiesaswellasdiff
icul
ti
es.
7.Quali
tati
ve and quantit
ativ
ey ardsticks ar
e provi
ded forjudging t
he curr
ent
posi
ti
on.
8.I
tprevent
smanagementf rom overmanagi ng.

Li
mit
ati
onsofManagementbyExcept
ion:

1.I
trequi
resacompr ehensi
v eobser
vingandreporti
ngsystem.
2.I
tincr
easespaperwor k.
3.Thesystem i
ssil
entti
llt
hepr obl
em becomescr i
ti
cal
.
4.Someimpor t
antfact
ors,l
ikehumanbehav i
our,aredi
ffi
cultt
omeasur
e.