BUSINESS STUDIES XII

CHAPTER – 8 CONTROLLING
ONE MARK QUESTIONS WITH ANSWERS

Q.1 Give the meaning of ‘Critical Point Control’.

Ans. ‘Critical Point Control’ means focusing on key result areas which are critical to the
success of an organisation.

Q.2 What is meant by ‘Management by Exception’ in the process of controlling?

Ans. Management by Exception in the process of controlling means that only significant
deviations which go beyond the permissible limit should be brought to the notice the
management.

Q.3 Name the function of management which is concerned with monitoring organisational
performance towards the attainment of organisational goals.
Ans. Controlling

Q.4 Name the function of management which reviews the operations in a business unit.
Ans. Controlling

Q.5 Which two aspects of performance are compared in controlling?

Ans. In controlling, actual performance is compared with standard performance to find out
deviations, if any.

Q.6 Give meaning of the term ‘Deviation’ as used the control function of management.
Ans. In controlling, ‘Deviation’ means the difference between actual performance and
standard performance.

Q.7 Which principle of management control is based on the belief that an attempt to control
everything results in controlling nothing?
Ans. Control by exception/Management by exception

Q.8 What do you mean by ‘key result areas (KRAs)’ in the context of controlling?
Ans. KRAs are the critical points which are critical to the success of an organisation.

Q.9 In controlling why is actual performance compared with standards?

Ans. To find out the deviations, if any.

Q.10 Give two examples of qualitative standards which are set in controlling function of
management.
Ans. (i) Improving customer satisfaction in McDonald’s by setting maximum standard
waiting time, say, 10 minutes.

Presented by Raman Sachdeva

1 B.Com (H), M.Com, MBA, M.Phil, AMT, NET
17/2 (LGF) Jangpura Road, Bhogal
01124377255, 9811957255, 9210461650
www.solutionsacademy.co.in
 BUSINESS STUDIES XII

(ii) Improving performance of employees by setting standard time to perform a task,

say, 2 hours.

Q.11 Name any two techniques for measurement of performance in controlling.

Ans. (i) Personal observation (ii) Sample checking

Q.12 “Measurement of performance should be done after the task is completed. “Do you
agree?
Ans. No, measurement of performance should be done continuously during the performance.
For example, in case of computer assembling, each part product should be checked before
assembling.

Q.13 What is ‘Sample Checking’ in the context of management control?

Ans. In a large organisation, it may not be possible to check each and every piece produced.
So, certain pieces are checked at random for quality. This is called sample checking.

Q.14 What is important while analysing deviations in controlling?

Ans. while analysing deviations, it is important to determine the acceptable range of
deviations/Key result areas.

Q.15 When is there no need to take corrective action?

Ans. No corrective action is required when the deviations are within acceptable limits.

Q.16 What should be the ‘focus point’ for a manager while controlling, as controlling at each
and every step is not possible?
Ans. Key Result Areas (KRAs)

Q.17 Standards are set in quantitative as well as in qualitative terms. Identify the type of
standards when it is set in terms of ‘Cost to be incurred’.
Ans. Quantitative standards

Q.18 Why is it said that controlling is blind without planning?

Ans. Controlling is blind without planning because if the standards are not set in advance,
managers have no basis of controlling.

Q.19 Why is controlling called a backward looking function?

Ans. Controlling is like a post-mortem of past activities to find out deviations forms the
standards. In that sense, controlling is a backward-looking function.

Q.20 Why is it said that planning without controlling is meaningless?

Ans. Planning without controlling is meaningless because once a plan becomes operational,
controlling is necessary to monitor the progress, measure it, identify and analyse deviations
and initiate corrective action to ensure that events conform to plans.

Presented by Raman Sachdeva

2 B.Com (H), M.Com, MBA, M.Phil, AMT, NET
17/2 (LGF) Jangpura Road, Bhogal
01124377255, 9811957255, 9210461650
www.solutionsacademy.co.in
 BUSINESS STUDIES XII

Q.21 How is controlling a forward-looking functions?

Ans. Controlling is a forward-looking function because the corrective action initiated by it
aims to improve future performance.

Q.22 Why is controlling a goal-oriented function?

Ans. Controlling is a goal-oriented function because it measures the progress towards the
goals, finding deviations, if any and taking corrective action.

Q.23 Why is controlling called a continuous process?

Ans. Controlling is a continuous process because it involves a constant review of actual
performance for taking corrective action, if any.

Q.24 Is controlling the last function of management?

Ans. No, controlling is not the last function of management because it brings the
management cycle back to planning function.

Q25 Give two examples of quantitative standards which are set in controlling function of
management.
Ans. (i) Reduction of defects from 20 in every 1000 pieces produced to 10 in every 1000
pieces produced by the end of the month.
(ii) Target sales volume of Rs. 10 lakh per month.

Q.26 What should be done in case the deviation cannot be corrected trough managerial
action?
Ans. The standards may have to be revised.

Q.27 Why is controlling a pervasive function?

Ans. Controlling is a pervasive function because it is performed in all organisations and at all
levels of management.

LONG ANSWER QUESTIONS

Q.1 What is meant by controlling? Briefly explain any three points of importance of
controlling.
OR
“Controlling helps in achieving objective of the organisation and improving employees’
morale.” Explain this statement, in brief.
Ans. Meaning of Controlling: Controlling is the process through which managers assure
that the actual activities conform to the planned activities. It involves verifying whether
activities undertaken are in conformity with the plans adopted, instructions issued and results
expected. In the words of George R. Terry, “Controlling is determining what is being

Presented by Raman Sachdeva

3 B.Com (H), M.Com, MBA, M.Phil, AMT, NET
17/2 (LGF) Jangpura Road, Bhogal
01124377255, 9811957255, 9210461650
www.solutionsacademy.co.in
 BUSINESS STUDIES XII

accomplished, that is evaluating that performance and, if necessary, applying corrected

measures so that the performance takes place according to plan.”

Importance of Controlling

The Controlling function has vital importance in the management of organisation.

Controlling assure that the actual activities conform to the planned activities. The following
are some of the benefits.

i. Controlling helps in achieving the objectives: Controlling ensures that result of

operations conform as closely as possible to the predetermined objectives. It ensures
the use of human and material resource in the best possible manner. Controlling
ensures that results of operations conform as closely as possible to the predetermined
objectives.
ii. Facilitates decision-making: A manager should have the ability to identify and solve
problem before they become unmanageable. Controlling facilitates decision-making,
enabling managers to identify the gap between thinking and doing functions of
management. It helps in finding out the problems of work performance and take
appropriate decision aimed at rectifying the deficiencies.
iii. Controlling improves employees’ morale: Controlling creates an atmosphere of
order and discipline in the organisation. It improves employees morale. Evaluation of
performance against predetermined standards induces employees to do thing in a
proper manner.
iv. Helps in achieving better coordination: Controlling facilitates the work of
coordination. This is possible by keeping all activities and efforts directed towards
the achievement of goals in conformity with plan and programmes. Overlapping and
duplication of work are avoided and deviations, if any, promptly corrected.
v. Helps in better planning: Planning and controlling are important managerial
functions. The two are closely interrelated. Planning provides purpose and direction to
enterprise activities. Controlling provides useful information which makes the plans
more realistic. Controlling is the process of checking the current performance against
predetermined standards contained in the plans, with a view to ensuring satisfactory
performance.

Q.2 Explain briefly the various steps in the process of control.

Ans. Process of Control

Controlling is the process through which managers assure that the actual activities conform to
the planned activities. The process of control includes the following step:

Presented by Raman Sachdeva

4 B.Com (H), M.Com, MBA, M.Phil, AMT, NET
17/2 (LGF) Jangpura Road, Bhogal
01124377255, 9811957255, 9210461650
www.solutionsacademy.co.in
 BUSINESS STUDIES XII

i. Establishment of standards: The first step in control process is the setting of

standards of performance. Standards are the criteria for judging results. They are the
yardsticks of performance and specify what should be accomplished. It is, therefore,
necessary that standards should be set and stated in measurable terms, such as in
terms in physical units, caste time, etc. A company for example, may decide to
achieve a production target of 50,000 units per month at a cost of Rs. 10 per unit or to
achieve a sales target of 45,000 units at Rs. 12 per unit. If facilitates control if
standards are generally fixed by managers in the light of objectives set top
management.
ii. Measurement of actual performance: The second major step in the control process
in the measurement of performance. It means evaluation of the work actually done
and result achieved. Measurement is most useful if actual performance is expressed in
the same units as the planned targets or standards. Comparison of actual and planned
performance then becomes easier. Thus, performance in the case of production and
sales activities can be measured in terms of the number of units production and sales
activities can be measured in term of the number of units produced or sold, costs
incurred, etc. However, it may be difficult to express performance in quantitative, etc.
However, it may be difficult to express performance in quantitative terms in the case
of service departments or managerial activities at higher levels. The measurement of
performance is relatively more difficult at the higher levels.
iii. Comparison of actual performance with standards: Comparison of actual
performance with the planned target or standard. It involves finding the extent of
deviations. If performance matches the standards, managers may assume that
‘everything is under control’. If performance falls short of standards, managers must
find out the extent of deviation.
iv. Analysing deviations: After finding deviations, management has to analyse the
deviations to find the causes so that corrective action may be taken. Generally, minor
deviations do not require managerial attention. To save time, managers should
concentrate on major deviations only. A manager should use ‘Critical point control’
and ‘management by exception’ for analysis of deviation.
a. Control should force on key result areas, which are critical to the success of an
organisation.
b. Management by exception is based on the belief that an attempt to control
everything result in controlling noting, For example, if actual production on a
particular day is short target by a few units, it may be ignored. But if it
continues and monthly production is short of the target by a large quantity, it
must be regarded as a serious matter.

Presented by Raman Sachdeva

5 B.Com (H), M.Com, MBA, M.Phil, AMT, NET
17/2 (LGF) Jangpura Road, Bhogal
01124377255, 9811957255, 9210461650
www.solutionsacademy.co.in
 BUSINESS STUDIES XII

v. Taking corrective action: The purpose of control is not only to detect errors and
defects in performance of work but also to adopt remedial measures. Corrective
actions are, therefore, initiated on the basis of factors causing deviations between
standards and actual results. For example, actual performance may fall short of
standards due to outdated machines or absence of adequate incentives to workmen.
This can be rectified by installing up-to-date machinery or offering suitable incentives
to workers for better performance. Thus, a corrective action may involve physical
conditions of work, or changing the nature of supervision may also be necessary at
times. Where the deviations cannot be rectified through managerial action, the
standards may have to be revised.

Q.3 Explain the relationship between planning and controlling.

Ans. Relationship between planning and controlling:

i. Controlling taken place on the basis of standard developed by planning.
ii. Planning is meaningless without controlling as controlling ensures that the events
conform to plans.
iii. Planning prescribes an appropriate course of action for achieving objectives whereas
controlling evaluates whether decisions have been translated into desired actions.
iv. Planning and controlling both are forward looking.
v. Planning and controlling are both looking back.

CASE STUDY
Case 1
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 the problems it is facing.

Questions
1. Identify the benefits the company will derive from a good control system.
2. 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?
3. Give the steps in the control process that the company should follow to remove the
problems it is facing.
4. What techniques of control can the company use?

Presented by Raman Sachdeva

6 B.Com (H), M.Com, MBA, M.Phil, AMT, NET
17/2 (LGF) Jangpura Road, Bhogal
01124377255, 9811957255, 9210461650
www.solutionsacademy.co.in
 BUSINESS STUDIES XII

In all the answers keeps in mind the sector of business the company is in.

Case 2
Babita Ltd. is engaged in manufacturing machine components. The target production is 250
units per day per worker. The company had been successfully attaining this target until two
month ago. Over the last two months it has been observed that daily production varies
between 200-210 units per worker.

(a) Name the function of management and identify the step in the process of this function
which helped in finding out that the actual production of a worker is less than the set target.
(b) To complete the process of the function identified in (a) and to ensure the performance as
per set targets, explain what further steps a manager has to take.

Case 3
Rajeev and Sanjeev are managers in the same organisation having different units. while
discussing about the function of management, Rajeev says “ Planning is looking ahead
whereas controlling is looking back.” But Sanjeev says, “Planning is looking back whereas
controlling is looking ahead.” Both are giving reasons in favour of their statements.

Explain the possible reasons given by both and justify who is correct.

Case 4
D & D Ltd. is a large manufacturing unit. Recently, the company has conducted the ‘time’
and ‘motion’ studies and concluded that on an average a worker could produce 120 units per
day. However, it has been noticed that average daily production f a worker is in the range of
89-90 units.

Which function of management of management is needed to ensure that the actual

performance is in accordance with the performance as per ‘time’ and ‘motion’ studies? State
four features of this function of management.

Case 5
K & K Co. Ltd. is engaged in manufacturing machine components. The target production is
200 units daily. The company had been successfully attaining this target until two month ago.
over the last few months it has been observed that daily production varies between 150-170
units.
Identify the possible causes for the decline in production and the steps to be taken to achieve
the desired targets.

Case 6
Mr. Nath, a recently appointed production manager of Suntech Ltd. has decided to produce
jute bags instead of plastic bags as these are banned by the government. he set a target of
production 1000 jute bags days. It was reported that the employees were not able to achieve

Presented by Raman Sachdeva

7 B.Com (H), M.Com, MBA, M.Phil, AMT, NET
17/2 (LGF) Jangpura Road, Bhogal
01124377255, 9811957255, 9210461650
www.solutionsacademy.co.in
 BUSINESS STUDIES XII

the target. After analysis he found that employees were demotivated and not putting in their
best for achieving the target. Mr. Nath’s behavior is good towards the employees like:
- Installing award or certificate for best performance.
- Rewarding an employee for giving valuable suggestions.
- Congratulating the employees for good performance.

(a) Identify the functions of management highlighted in the above paragraph.

(b State the ‘incentive’ under which the employees are motivated.
(c) State any two values which the production manager wants to communicate to the society
by his work and behaviour.
Case 7

Airtech Ltd. 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 problem 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 step necessary to
rectify the problems it is facing. it also decides to offer its basic models of mobile phones at
50% discount to the poor people.

(a) State any two 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 that the company should follow to remove the problems it is facing.
(d) Identify any one value which the company wants to communicate to the society.

Presented by Raman Sachdeva

8 B.Com (H), M.Com, MBA, M.Phil, AMT, NET
17/2 (LGF) Jangpura Road, Bhogal
01124377255, 9811957255, 9210461650
www.solutionsacademy.co.in