PRINCIPLES OF MANAGEMENT

MBA (EVENING), B.320

CHAPTER NO: 19

CONTROL TECHNIQUES AND

INFORMATION TECHNOLOGY
BY
Dr. Muhammad Azizullah Khan
Dated: 27-01-2021
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 OUTLINE OF CHAPTER NO: 19
 Budgeting and types of budgets.
 Zero budgeting.
 Non budgetary control devices.
 Time-event network analysis.
 Information technology.
 Importance of computers in IT.
 Digital economy, e-commerce and m-
commerce.
 Customer relationship management (CRM).
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 BUDGETING
 Budgeting:
 Budgeting is formulation of plan for a given future
periods in numerical terms.
 It is a device for accomplishing control.

 Budget:
 Budgets are statements of anticipated results:
 In financial terms (revenue & expense) or;
 In non financial terms (direct labor hour,
material, physical sales volumes, units of
productions).

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PURPOSE OF BUDGETING
BUDGET :
Correlates planning.
Allows delegation without loss of control.
Permits manager to see:
What capital will be spent by whom and
where, and;
What expenses, revenue, or units of
physical input or output, the plans will
involve.
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 DANGERS IN BUDGETING
 Detailed budgets, become cumbersome, meaningless,
and expensive.
 Cause inflexibility.
 Budgetary control may be used for wrong reasons.
 Budgets often control wrong things, they measure
inputs but ignore output (Product quality, Customers
satisfaction).
 Managers may make unwise decisions to meet the
budget.
 Managers may also not like to invest in R & D or other
activities that will eventually result in greater market
share.

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 ZERO BUDGETING
 Dividing enterprise programs into packages composed
of goals, activities and needed resources, and
calculating the cost of each package from base zero.
 Budgeters at time of zero budgeting calculate costs
afresh for each budget period; they avoid the tendency in
budgeting to look only at changes from a previous
period.
 This technique forces managers to plan each program
package afresh.
 This zero budgeting enables managers to review
established programs in their entirety, along with newer
programs and their costs.

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 TIME-EVENT NETWORK ANALYSES

Gantt Chart. A “Bar Chart” showing time

relationships between the events of a
production program.

Milestone Budgeting. Milestone or Milepost is

a further development on principles of Gantt
Chart.

Milestone or milepost budgeting breaks the

projects into Controllable pieces, and then
carefully follows them.
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 TRANSITION FROM GANTT TO PERT
Gantt Chart
A
Procurement

B
Task

C Training
Training
Manufacture
D

Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Shows scheduled time for task accomplishment (A—Procurement)
and related tasks (B—Manufacture of parts) 9
TIME-EVENT NETWORK ANALYSES: PERT

 PERT. It is another planning and control

technique, which is a time–event Network
Analysis called as Program Evaluation and
Review Technique (PERT).

 It is basically the system in which various

events in a program are identified, with
planned time established for each.

 These events are placed in a network showing

the relationship of each event to the other
event.
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…TIME-EVENT NETWORK ANALYSES: PERT

 In original PERT there are three time estimates as

follow:

 Optimistic estimate. When every thing goes

exceptionally well.
 Most likely estimates. When Engineers of the
project believe that such time is necessary.
 Pessimistic estimates. It is longer period, as it
takes in to account the bad luck as well.

 The next step is to compute the critical path, which is

the sequence of events that takes the longest time and
that has zero slack time.

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 HOUSE BUILDING PROJECT
Sr. NO Activity Duration (Weeks)

1. Procurement of materials 4
2. Foundation laying 11
3. Construction of Walls 22
4. Roofing 11
5. Flooring 19
6. Woodwork 6
7. Plumbing 6
8. Electrical Fittings 7
Plastering of Walls 19
9.
Painting 7
10.
Interior Decoration 5
11. 12
 HOUSE BUILDING PROJECT
7 7
8

10 5

11
19
9

7 House
4 11 6
complete
11 22

1 2 3 4 6

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5 13
STRENGTHS AND WEAKNESSES OF PERT
STRENGTHS OF PERT:
 It forces managers to plan.
 It forces planning down the line, as each subordinate
manager must plan the event for which he is
responsible.
 It pay attention to critical elements needing correction.
 It makes possible a kind of forward looking control.
 The network system with its subsystems enables
managers to aim reports and pressure for action at the
right spot and level in the organization structure.

WEAKNESSES OF PERT:
 The technique is not useful when reasonable ‘guess
times’ of schedule cannot be made.
 Its main emphasis in on time, ignoring the cost.
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 INFORMATION TECHNOLOGY (IT)
DATA:
 Data is raw facts that may not be useful until they
become information.

INFORMATION:
 When data is processed and become meaningful as well
as understandable by the receiver, is called information.

MANAGEMENT INFORMATION SYSTEM (MIS):

 A formal system of gathering, processing and
dispersing information internal and external to the
enterprise, in a timely effective and efficient manner to
support managers in their jobs.
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 …INFORMATION TECHNOLOGY (IT)
 IT facilitates organizations control at a low cost.
 IT encompasses a variety of technologies:
 Hardware:
Computers.
Printers.
 Soft ware:
Operating system.
Word or data processing.
 Computing and communication technologies:
 Telecommunication.
 Database management.
 Rapidly developing new technologies:
 Third generation (3G) of wireless technology.
 Expanding & enhancing capabilities of IT.
 Forth generation (4G) technology, and now 5G. 16
 THE BALANCED SCORECARD
 The balanced scorecard is a managerial tool
that helps ensure the alignment between a
company’s strategic objectives and operational
activities.
 It helps organization develop a comprehensive
view of their business and operational
measures of success that, if attained, will help
the firm achieve its strategic goals and desired
financial performance.
 These measures and views are both qualitative
and quantitative.

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 …THE BALANCED SCORECARD
 It essentially directs organizations to set targets for and
measure performance in organizational functions:
financial performance, customer perception, internal
processes, and organizational learning & innovation.

 The primary goal of the scorecard approach is to

provide attainable targets for front line managers that, if
properly set and met, lead to the attainment of higher
level organizational aims.

 To sum up scorecard approach focuses on attainment

of organizational learning & innovation, and efficient
internal processes, that if achieved lead to better
customer perception and improved financial results.

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 BALNCED SCORECARD APPROACH FOR
OPERATIONALIZING STRATEGIC OBJECTIVES
Perspective/Target Interim Target
Financial Performance Identification and contract
with lower cost/higher
quality suppliers
Customer Perception Decrease defects to 10%
below industry average
Internal Processes Decrease required
managerial approvals for
customer refunds by one
level
Organizational Learning Provide for creativity
training for all employees
Medium Term Target
5% lower unit cost than
competition with 10%
fewer defects
Increase customer positive
recommendations by 25%
Increase number of positive
employees contacts with
customers by 10%
Increase new products
introductions by 10%
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 EXPANSION OF DATA
 Managers recognize that traditional
accounting data is not enough.
 Managers need all kinds of non-accounting
information about external environment i.e.,
social, economic, political, and technical
development.
 They need non-accounting information
about internal operations.
 The information should be qualitative as well
as quantitative.

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 INFORMATION INDIGESTION AND
INTELLIGENCE SERVICE

 Managers who experience faster & better data

processing are always concerned about information
indigestion.

 Data originators and processors are turning out data

at frightening rate, although they are being
overloaded with variety of information.

 To solve this problem of data overload and

indigestion, mangers establish Intelligence Service
and development of new profession of Intelligence
Experts, who will provide to the managers as to what
information is exactly required, and at what time.
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 USE OF COMPUTER IN HANDLING
INFORMATION
 Computer can store, retrieve and process data
so that they become information.
 Kinds of computers:
 Mainframe – full scale computer, costing
millions, handling huge amount of data, most
powerful, called as Supercomputers.
 Mini-computer, less memory, smaller than
mainframe.
 Micro-computer, even smaller, a desktop
computer, personal computer etc.
 Today the difference between computers is
reducing because of networks.
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 OPPORTUNITIES AND
CHALLENGES CREATED BY IT
 Resistance to computer use.
 Speech recognition devices.
 Telecommuting.
 Computer networks.
 The internet.
 Twitter.
 Groupware.
 Information security
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 DIGITAL ECONOMY

 The newest innovation of IT have altered the

way of doing business.
 Today the E-business-business transection
on the web, has changed the word.
 Relationship with suppliers and customers
are changing.
 Telecommunication and IT have changed
everything.
 Today we have: e-mail, e-commerce, e-
business, e-money, e-shopping and so many.
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 …DIGITAL ECONOMY
 The internet today facilitates four kinds of transections:
 Business to consumer (B2C).
 Consumer to business (C2B).
 Consumer to consumer (C2C).
 Business to business (B2B).

 In Japan M-commerce and wireless application is

growing rapidly, which may include business
transections, provision of financial & travel
information, and community sites for chatting or
sending e-postcards.

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 CUSTOMER RELATIONSHIP
MANAGEMENT (CRM)

 Customers are the reasons for existence of

organizations.
 Therefore, to be useful, enterprises need to focus on
the need of their customers.
 Customer relationship management (CRM) addresses
this need of businesses.
 CRM means promoting the interaction between the
customer and organization by collecting, analyzing,
and using the information to better serve the client.
 CRM is traced back to Siebel System Inc. in 1993.

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 CUSTOMER RELATIONSHIP
MANAGEMENT (CRM)
 CRM is based on three pillars: technology,
organization and personnel, which are the
foundations of customer orientation, customer
satisfaction, customer retention, and customer
profitability.
 Certainly CRM is not a cure-all for solving all
problems or relationship between customers and
businesses but certain steps can help succeed the
system:
 Careful panning.
 People need to be prepared to adjust to culture.
 To keep costs in control, start should be taken from pilot
projects.
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THANK YOU
27-01-2021
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WISH YOU GOOD LUCK
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