Control and Coordination

Module 8

Mission Vision Core Values

Christ University is a nurturing ground for an Excellence and Service Faith in God | Moral Uprightness
individual’s holistic development to make effective Love of Fellow Beings | Social
contribution to the society in a dynamic environment Responsibility | Pursuit of Excellence
 Christ University

Topics

Co-ordination- Cooperation,
Techniques of Coordination-
Control-
Essentials of Control-
Control Techniques.

Excellence and
Service
 Christ University
Meaning
Co-ordination is the process which ensures smooth
interplay of the functions of management. Common
objectives are achieved without much wastage of time,
efforts and money with the help of co-ordination.

Co-ordination is balancing and keeping the teams

together by ensuring a suitable allocation of working
activities to the various members and seeing that these
are performed with due harmony among the members
themselves.
Excellence and
Service
 Christ University

Difference

Cooperation refers to the voluntary collective efforts of

various persons working together in an enterprise for
achieving common objectives. It is the result of voluntary
action on the part of individuals.

Coordination, on the contrary is the deliberate unity of

action in the pursuit of a common purpose.

Excellence and
Service
 Christ University

Need/ Importance of Coordination

• Unity in diversity
• Term work or unity of directions
• Functional differentiation
• Specialization
• Reconciliation of goals
• Large number of employees
• Congruity of flows or congruent flows
• Empire building
• Differential and integration
Excellence and
Service
 Christ University

TYPES OF COORDINATION

Internal Coordination: Coordination among the employees of

the same department or section, among workers and managers at
different levels, among branch offices, plants, departments and
sections is called internal coordination.

External Coordination: Coordination with customers, suppliers,

government and outsiders with whom the enterprise has business
connections is called external coordination.

Excellence and
Service
 Christ University

TYPES OF COORDINATION

Vertical Coordination: It is what exists within a

department where the departmental head is called
upon to coordinate the activities of all those placed
below him.

Horizontal Coordination: It takes place sideways.

It exists between different departments such as
production, sales, purchasing, finance, personnel,
etc.

Excellence and
Service
 Christ University

TYPES OF COORDINATION

Procedural Coordination: It is the specification of the

organisation itself—that is, the generalised description of the
behaviours and relationships of the members of the
organisation.
Substantive Coordination: It is concerned with the content of
the organisation’s activities.
 For instance, in an automobile plant an organisation chart is an
aspect of procedural co-ordination, while blueprints for the
engine block of the car being manufactured are an aspect of
substantive co-ordination.
Excellence and
Service
 Christ University

Techniques of co-ordination

Sound planning – The goals of the organisation and the

goals of its units must be clearly defined. 
Simplified organisation –The lines of authority and
responsibility from top to the bottom of the organisation
structure should be clearly defined.
Effective communication – Open and regular
communication is the key to co-ordination.  Effective
interchange of opinions and information helps in resolving
differences and in creating mutual understanding. 

Excellence and
Service
 Christ University
Techniques of co-ordination
Effective leadership and supervision – Effective
leadership ensures co-ordination both at the planning and
execution stage. Sound leadership can persuade
subordinates to have identity of interest and to adopt a
common outlook. 
Personal supervision is an important method of resolving
differences of opinion.
Chain of command – authority is the supreme co-
ordinating power in an organisation. Co-ordination between
interdependent units can be secured by putting them under
one boss.
Excellence and
Service
 Christ University

Techniques of co-ordination

Indoctrination and incentives – indoctrinating

organisational members with the goals and mission of the
organisation can transform a neutral body into a committed
body.  Similarly incentives may be used to create mutuality
of interest and to reduce conflicts.  For instance, profit-
sharing is helpful in promoting team-spirit and co-operation
between employers and workers.

Excellence and
Service
 Christ University

Techniques of co-ordination

Liaison departments – where frequent contacts between

different organisational units are necessary, liaison officers
may be employed. 
For instance, a liaison department may ensure that the
production department is meeting the delivery dates and
specifications promised by the sales department. 
Special co-ordinators may be appointed in certain cases. 
For instance, a project co-ordinator is appointed to co-
ordinate the activities of various functionaries in a project
which is to be completed within a specified period of time.
Excellence and
Service
 Christ University

Techniques of co-ordination

General staff – in large organisations, a centralised pool of

staff experts is used for co-ordination.
 A common staff group serves as the clearing house of
information and specialised advice to all department of the
enterprise. 
Such general staff is very helpful in achieving inter-
departmental or horizontal co-ordination.  Task forces and
projects teams are also useful in co-ordination.

Excellence and
Service
 Christ University

Techniques of co-ordination

Voluntary co-ordination – when every organisational unit

appreciates the workings of related units and modifies its
own functioning to suit them, there is self-co-ordination.
Self-co-ordination or voluntary co-ordination is possible in a
climate of dedication and mutual co-operation. 
It results from mutual consultation and team-spirit among
the members of the organisation.  However, it cannot be a
substitute for the co-coordinative efforts of managers.

Excellence and
Service
 Christ University

Controlling

Controlling is the measurement and correction of

performance in order to make sure that enterprise objectives
and the plans devised to attain them are being accomplished

Planning and controlling are closely related

Excellence and
Service
 Christ University

Standards

• Standards are criteria of performance

• They are yardsticks against which actual or
expected performance is measured

Excellence and
Service
 Christ University

Strategic Control

Strategic control comprises systematic

monitoring at strategic control points as well as
modifying the organization's strategy on the
basis of this evaluation.

Excellence and
Service
 Christ University

Benchmarking

Benchmarking is an approach for setting goals

and productivity measures based on best-
industry practices.
Three types of benchmarking:
 Strategic
 Operational
 Management

Excellence and
Service
 Christ University

CONTROL AS A FEEDBACK SYSTEM

Management control is usually perceived as a

feedback system similar to that which operates
in the common household thermostat.

Excellence and
Service
 Christ University

BUREAUCRATIC AND CLAN CONTROL

 Bureaucratic Control-
Wide use of rules, regulations, policies,
procedures, and formal authority
 Clan Control-
Based on norms, shared values, expected
behavior and other cultural variables

Excellence and
Service
 Christ University

Characteristics of Control

1. Managerial Function
2. Forward Looking
3. Continuous activity
4. Control is related to Planning
5. Essence of Control is action

Excellence and
Service
 Christ University

Pre-requisites of Control system

1. Planning
2. Action
3. Delegation of authority
4. Prompt flow of information

Excellence and
Service
 Christ University

Basic Control Process

The basic control process involves three steps:

1. Establishing Standards
2. Measuring performance
3. Comparing actual and standard performance-
Management by Exception
4. Taking corrective action

Excellence and
Service
 Christ University

Requirements of a control system

1. Should be easily understandable

2. Reflect organization needs
3. Report deviations quickly
4. Must be appropriate and adequate
5. Forward looking
6. Must be flexible
7. Economical
8. Motivating

Excellence and
Service
 Christ University

Importance of Control

1. Basis for future action

2. Facilitates decision making
3. Facilitates decentralization
4. Facilitates coordination
5. Helps in improving efficiency
6. Psychological pressure

Excellence and
Service
 Christ University

CONTROL TECHNIQUES

Control techniques provide managers with the type and amount

of information they need to measure and monitor performance.

Two types of controlling techniques

1. Traditional/Financial Control
2. Modern Control Techniques

Excellence and
Service
 Christ University

Traditional Control Techniques

• Budgeting and Budgetary Control

• Cost control
• Production Planning and Control
• Inventory control
• Break Even Analysis
• Profit and Loss Control
• Statistical Data analysis

Excellence and
Service
Budgetary Control
Budget:
A budget is a financially expressed statement of
anticipated results during a designated time period
(usually 1 year).

Budgetary Control:
It is a system of controlling costs which includes the
preparation of budgets, coordinating the departments
and establishing responsibility, comparing the actual
performance with budgeted and acting upon results to
achieve maximum profitability.
Types of Budget
1. Sales Budgets: It is a sales programme and plan for
developing sales. It shows the sales potential in terms of
quantity, value, product etc. Sales forecasting is the basis
for preparing this budget.
2. Selling & distribution Budget: All expenses
concerned with sale of products to customer are included
in this budget.
3. Production Budget: It lays down the quantity of units
to be produced during the budget period. The main
purpose of this budget is to maintain an optimum balance
between sales, production and inventory position of a
firm.
4. Production Cost Budget: It lays down the estimated
cost of carrying out production plans. It is further divided
into:
Raw material budget
Labour budget
Production overhead budget

5. Capital Expenditure Budget: It outlines specifically,

capital expenditures for plant, machinery, inventories and
other items. It also points out the plans concerning
investment, expansion , growth etc.
6. Cash budget: It gives the estimate of cash
receipts and payments for the budget period. It
indicates the requirement of cash at various points
of time and helps management in planning and
arranging cash to meet the needs of business
concern.

7. Master budget: It gives the summary of all the

budgets and how they affect the business as a
whole. It provides detailed particulars regarding
production, sales, cash assets etc.
Zero Based Budgeting
The idea behind this technique is to divide enterprise
programs into "packages" composed of goals, activities,
and needed resources and then to calculate costs for
each package from the ground up.
By starting the budget of each package from base
zero, budgeters calculate costs afresh for each budget
period; thus they avoid the common tendency in
budgeting of looking only at changes from a previous
period.
Advantages
• The different functional budgets clearly indicate the
limits for the expenses and also the result to be
achieved in a given period.
• Co-ordinates the work of entire organization.
• It leads to cautious utilization of resources.
• Through budgetary control deviations from the
predetermined standards are found out.
• The budget system helps people learn from past
experience.
• It brings together the activities of various department.
Disadvantages
• Inaccurate estimates: Budgets are based on
forecasts, hence the success depends on the
accuracy of the forecast.

• Inflexibility: Budgets do not respond to internal

or external environmental changes.

• Human limitation: The co-operation of

employee is needed to make budgetary control
successful. But it is not possible to have co-
operation all the time.
 Christ University

Cost Control

To achieve cost effectiveness in business operations

Costs - Fixed , Semi-variable and Variable
• Costs are recorded
• Cost standards are set in each system.
• Any deviation is measured and corrective measures are
taken.

Excellence and
Service
 Christ University

Production Planning and Control

Production Manager – Production process is properly

decided in advance and is carried out as per plan.
• Production planning
• Production control
• Techniques
1. Routing
2. Scheduling
3. Dispatching (Implementing)
4. Follow up and expediting
5. Inspection
Excellence and
Service
 Christ University

Inventory Control

Adequate supply of correct material at the lowest cost.

Exercised at three stages :
1. Purchasing of materials
2. Storing
3. Issuing
Methods of inventory control:
• Stock levels
• Economic order quantity
• Just-in-time scheduling

Excellence and
Service
 Christ University

Break Even analysis

 Breakeven point shows that level of production and sales

where the business suffer neither loss or profit. It is a specific
method presenting the inter-relationships between costs, sales
volume and profits.
 The areas where it can be used for making decisions are:
1. Identifying the minimum sales volume necessary to prevent a
loss.
2. Providing information helpful in making decisions on whether
to raise or lower the price.
3. Providing data helpful in making decisions to add or drop
product lines.
Excellence and
Service
 Christ University

Profit and Loss Control

The sales, expenses and profit of different departments or

for different products are compared with that of other
departments (cost centre)
Historical comparison can also be done

Excellence and
Service
 Christ University

Statistical Data Analysis

Statistical analysis in the form of

averages,percentages,ratios,trends..etc of different periods

Data can be used for diagramatic representations like

histograms, pie chart, bar graphs..etc.

Excellence and
Service
 Christ University

Modern Control Techniques

• Return on Investment Control

• Programme Evaluation and Review Technique (PERT)
• Management Information System (MIS)
• Management Audit

Excellence and
Service
 Christ University

Return on Investment Control

• Measuring both the absolute and the relative success of a

company or a company unit by the ratio of earnings to
investment of capital. 
• This yardstick is the rate of return that a company or a
division can earn on the capital allocated to it.

Excellence and
Service
 Christ University

Programme Evaluation and Review Technique

(PERT and CPM )

Project management technique that shows the time taken by

each component of a project, and the total time required for
its completion.
PERT breaks down the project into events and activities, and
lays down their proper sequence, relationships, and duration
in the form of a network.
Lines connecting the events are called paths, and the longest
path resulting from connecting all events is called the
critical path. 
Excellence and
Service
 Christ University

Excellence and
Service
 Christ University

Management Information System (MIS)

MIS is the use of information technology, people, and

business processes to record, store and process data to
produce information that decision makers can use to make
day to day decisions.

MIS is a collection of systems, hardware, procedures and

people that all work together to process, store, and produce
information that is useful to the organization. 

Excellence and
Service
 Christ University

Management Audit

Analysis and assessment of competencies and capabilities of

a company's management in order to evaluate their
effectiveness, especially with regard to the strategic
objectives and policies of the business.
The objective of a management audit is not to appraise
individual executive performance, but to evaluate the
management team in relation to their competition

Excellence and
Service