Overall control and toward the future

through Preventive control

Control of overall performance:
Control devices have been developed for measuring the overall
performance of an enterprise or an integrated division or
project with in it- against total goals.
Reasons for overall control:
 Just as overall planning must apply to enterprise or major
division goals, so must overall controls be applied.
Decentralization of authority creates semi-independent units,
and these must be subjected to overall controls to avoid the
chaos of complete independence
Overall controls permit measuring an integrated area
manger’s total effort, rather than part of it.
Profit and loss Control
The income statement for an enterprise as a whole serves
important control purposes, mainly because it is useful for
determining the immediate revenue or cost factors that have
accounted for success or failure.
The nature and uses of profit & loss control
 The Survival of a business usually depends upon profits, as
they are the definite standards to measure success.
 It is true summary of the results of business operations.
 Limitations of profit and loss control
I t suffers from the cost of the accounting and paper
transactions involving intra company transfer of costs and
revenue.
Duplication accounting records, efforts involved in allocating
the many overhead costs, and the time and effort to calculate
intra company sales can make this control costly.
Is inadequate for overall performance

It does not provide a standard of desirable profits or policy

controls in the area of product-line development or in the other
matters of long term overall company concern.
 Control through Return on Investment
Is the rate of return that a company or a division can earn on
capital allocated to it. This tool, therefore, regards profit
not as an absolute but as a return on capital employed in
the business. The ultimate goal of business is not in
optimizing profit but on optimizing returns.
 Direct control
Development of standards to compare the actual output of good
and services- in terms of equity, quality, time, and cost-
with plans.
Causes of Negative Deviations from standards:
 Uncertainty
 Lack of knowledge, experience, or judgment on the part of
those who make the decision or take actions.
Questionable Assumptions underlying Direct Control
1. Performance can be measured
2. Personal responsibility exists
3. The time expenditure is warranted
4. Mistakes can be discovered in time
5. The person responsible will take action
 The principle of preventive control
The higher the quality of managers and their subordinates, the
less will be the need for direct controls
Assumptions of the principle of preventive control:
Qualified managers make minimum errors
Managerial performance can be measured, and management
concepts, principles, and techniques are useful diagnostic
standards in measuring managerial performance
The application of management fundamentals can be
evaluated
Advantages:
Grater accuracy is achieved in assigning responsibility
Encourages self control
Lighten the managerial burden
Grater psychological advantage
 Developing excellent managers
Instilling a willingness to learn
Accelerating management development

Planning for innovation

Measuring and rewarding management

Tailoring information

Expanding research and development

Developing more managerial inventions

Creating strong intellectual leadership

 The future of managing in the Information-Driven
Global environment
 More women in top management positions
 Customer will continue to demand quality of products and
services at reasonable price
 Company need to have effective operations and often
through global strategies and adjustments in org structure
 Learning should be life long process
 Develop team based management
 Articulate the vision and motivate the management teams
 Develop multiple language skill and cultural sensitivity
 Manager have to think globally and also act locally to the
specific needs of the customers