CONTROLLING

DEFINITION

TO ENSURE ACTUAL ACTIVITIES GO ACCORDING TO PLANNED ACTIVITIES

CONCEPT

1) THE FOURTH MANAGERIAL FUNCTION (PLAN, ORGANIZE, LEAD, CONTROL)

2) CONTINUOUS PROCESS
3) 2 TYPES OF CONTROL - OUTPUT (PERFORMANCE)
- BEHAVIOR (HUMAN ASPECTS)
IMPORTANCE OF CONTROL

1) TO ACCOMPLISH GOALS

2) EFFICIENT USE OF RESOURCES

3) ENSURE REALISTIC STANDARDS

4) IMPROVES MOTIVATION AND BEHAVIOUR

PROCESS OF CONTROLLING
A B C D
SET MEASURE COMPARE CORRECTIVE
STANDARDS PERFORMANCE A TO B ACTION
A) SETTING STANDARDS
1) CLEAR, PRECISE, ACCEPTED
2) NOT TOO HIGH, NOT TOO LOW
3) MEASURABLE AND FLEXIBLE

B) MEASURING PERFORMANCES
1) REGULARLY AND CONSISTENTLY

C) COMPARING (A) TO (B)

1) NO DEVIATION – PROCEED
2) DEVIATION OCCURRED – CORRECTIVE ACTIONS, INTERVENTION

D) CORRECTIVE ACTION
1) IDENTIFY THE CAUSE
2) TAKE IMMEDIATE ACTION
EFFECTIVE CONTROL
1) ACCURATE AND MEASURABLE
2) TIMELY
3) EASY TO UNDERSTAND
4) REALISTIC AND ACCEPTED
5) FLEXIBLE
6) ECONOMICAL
7) PRESCRIPTIVE
TYPES OF CONTROL
1) FEEDFORWARD CONTROL
- BEFORE ACTIVITIES
- POLICIES, RULES, REGULATIONS
- GETTING THE RIGHT PEOPLE, MACHINES, TOOLS

2) CONCURRENT CONTROL

- DURING ACTIVITIES
- MOST COMMONLY USED
- MONITORING PEOPLE, MACHINE, TOOLS

3) ‘YES / NO’ CONTROL

- AFTER ACTIVITIES
- ACCEPT OR REJECT
METHODS OF CONTROL
1) FINANCIAL CONTROLS
2) NON-FINANCIAL CONTROLS
A) TRADITIONAL
B) MODERN

FINANCIAL CONTROLS
1) FINANCIAL STATEMENTS
A) BREAK-EVEN ANALYSIS
B) CASHFLOW STATEMENT
C) RATIO ANALYSIS
D) BALANCE SHEET
FINANCIAL STATEMENTS

1) BREAK-EVEN ANALYSIS
- OVERALL REVENUE/SALES = OVERALL COST/EXPENSES
2) CASHFLOW STATEMENT
- ENOUGH CASH TO PAY DEBT AND MANAGE EXPENSES
3) RATIO ANALYSIS
- COMPARISONS IN % TO SHOW FINANCIAL STRENGHTS / WEAKNESSES
A) PROFITABILITY (PRODUCTIVITY OF ASSETS)
NET PROFIT
TOTAL ASSETS
B) LIQUIDITY (ABILITY TO PAY DEBTS)
CURRENT ASSETS
CURRENT LIABILITIES
4) BALANCE SHEET
- THE VALUE OF ASSETS, CASH, EQUITY AND LIABILITIES / DEBT
(THE CURRENT FINANCIAL SITUATION)

INTERNAL AND EXTERNAL AUDITS

- TO CHECK AND VERIFY THE OVERALL PERFORMANCE

BUDGET
- PRE-PLANNED FORMAL, QUANTITATIVE STATEMENT
- RESOURCES PUT ASIDE TO DO PLANNED ACTIVITIES WITHIN
SPECIFIED TIME
NON-FINANCIAL CONTROLS

1) TRADITIONAL APPROACH

A) STATISTICS

- ANALYSIS OF REPORTS AND DATA

- PRESENTED IN GRAPHS, CHARTS AND TABLES

B) INTERNAL AND EXTERNAL AUDITS

- FINANCIAL, SAFETY, QUALITY, ENVIRONMENT ETC

MODERN APPROACH

A) GANTT CHART
- TO VIEW AND MONITOR THE STARTING AND ENDING OF A PROJECT
- SHOWS TASKS TO BE COMPLETED AND RESPECTIVE DEADLINES
DAYS
TASK
1 2 3 4 5 6 7
A
B
C
D
E

DUE DATE 1 DUE DATE 2 FINAL DUE DATE

B) MILESTONE
- SHOWS ACCOMPLISHMENT TOWARDS FINAL GOAL

FEB 2016
(DEVELOP PRODUCT A)

JULY 2016
(LAUNCH PRODUCT A)

DEC 2016
(RM100,000 ACHIEVED)

MAR 2017
(RM250,000 ACHIEVED) SEPT 2017
(RM 1 MILLION)
C) BALANCED SCORECARD
- EVALUATES PERFORMANCE BASED ON FINANCE, CUSTOMER
INTERNAL PROCESS AND MANAGEMENT/EMPLOYEE

FINANCE CUSTOMER

PROCESS HUMAN FACTORS

D) BENCHMARKING
- MEASURING PERFORMANCE, PRODUCTS, SERVICES, PRACTICES
AGAINST COMPETITORS