This page contains the NCERT Business Studies class 12 chapter 8 Controlling from Part 1 Principles and Functions of Management. You can find the solutions for the chapter 8 of NCERT class 12 Business Studies, for the Short Answer Questions, Long Answer Questions and Projects/Assignments Questions in this page. So is the case if you are looking for NCERT class 12 Business Studies related topic Controlling question and answers.
Very Short Answer Type.
1. State the meaning of controlling.
Controlling means ensuring that activities in an organisation are performed as per the plans. It also ensures that an organisation’s resources are being used effectively and efficiently for the achievement of predetermined goals.
2. Name the principle that a manager should consider while dealing with deviations effectively. State any one situation in which an organisation’s control system loses its effectiveness.
The principle a manager should consider while dealing with deviations effectively is “Management by Exception.”
An organisation’s control system loses its effectiveness when standards cannot be defined in quantitative terms, making the measurement of performance and their comparison with standards a difficult task.
3. State any one situation in which an organisation’s control system loses is effectiveness.
An organisation’s control system loses its effectiveness when standards cannot be defined in quantitative terms, making the measurement of performance and their comparison with standards a difficult task.
4. Give any two standards that can be used by a company to evaluate the performance of its Finance & Accounting department.
Two standards that can be used by a company to evaluate the performance of its Finance & Accounting department are “Capital expenditures” and “Liquidity.”
5. Which term is used to indicate the difference between standard performance and actual performance?
The term used to indicate the difference between standard performance and actual performance is “deviation.”
Short Answer Type
1. ‘Planning is looking ahead and controlling is looking back.’ Comment.
Planning is indeed a forward-looking function as it involves setting objectives and determining the means to achieve them in the future, based on forecasts about future conditions. On the other hand, controlling involves a postmortem of past activities to find out deviations from the set standards. However, it’s essential to understand that while controlling may seem backward-looking, its corrective actions aim to improve future performance, making it also a forward-looking function in that aspect.
2. ‘An effort to control everything may end up in controlling nothing.’ Explain.
This statement emphasizes the principle of “Management by Exception.” Trying to control every minor detail or deviation can spread a manager’s attention too thin, making it difficult to focus on significant issues that truly matter. Therefore, it’s more effective and efficient to focus on major deviations that exceed acceptable limits, ensuring that the most critical aspects of the operation are under control.
3. Explain how management audit serves as an effective technique of controlling.
A management audit is a systematic assessment of the effectiveness, efficiency, and efficacy of management processes in an organization. It helps in identifying inefficiencies, deviations, and areas of improvement. By evaluating the performance of managerial processes against set standards or best practices, it provides a clear picture of where corrective actions are needed, ensuring that the organization’s resources and efforts are directed towards achieving its objectives.
4. Mr.Arfaaz had been heading the production department of Writewell Products Ltd., a firm manufacturing stationary items. The firm secured an export order that had to be completed on a priority basis and production targets were defined for all the employees. One of the workers, Mr.Bhanu Prasad, fell short of his daily production target by 10 units for two days consecutively. Mr.Arfaaz approached Ms Vasundhara, the CEO of the Company, to file a complaint against MrBhanu Prasad and requested her to terminate his services. Explain the principle of management control that Ms Vasundhara should consider while taking her decision. (Hint: Management by exception).
Ms. Vasundhara should consider the principle of “Management by Exception” while making her decision. This principle suggests that management should focus on significant deviations that exceed acceptable limits rather than every minor deviation. Instead of taking drastic measures like termination based on a short-term shortfall, it would be more appropriate to analyze if Mr. Bhanu Prasad’s deviation is a consistent pattern or if it’s a one-time occurrence. If it’s a minor and infrequent deviation, it might not warrant severe action, and other corrective measures could be considered.
Long Answer Type
1. Explain the various steps involved in the process of control.
Step 1:
Setting Performance Standards: The controlling process begins with the establishment of performance standards. These standards serve as benchmarks or criteria against which actual performance is measured. They can be set in both quantitative terms, such as cost, revenue, or units produced, and qualitative terms, like improving goodwill or employee motivation.
Step 2:
Measurement of Actual Performance: After setting the standards, the actual performance of activities is measured. This measurement can be done through various techniques like personal observation, performance reports, or sample checking. Ideally, performance should be measured in the same units as the standards for easier comparison.
Step 3:
Comparing Actual Performance with Standards: This step involves assessing the actual performance against the set standards. By doing this comparison, deviations or differences between actual results and expectations can be identified.
Step 4:
Analysing Deviations: Not all deviations are critical. It’s essential to determine which deviations are significant and need managerial intervention. This is where principles like Critical Point Control and Management by Exception come into play. Critical Point Control focuses on key result areas (KRAs) that are vital for the organization’s success. Management by Exception, on the other hand, emphasizes that only significant deviations that cross acceptable limits should be addressed by management.
Step 5:
Taking Corrective Action: The final step is to take corrective measures. If the deviations are within acceptable limits, no action might be required. However, if they exceed the permissible range, especially in crucial areas, corrective actions are necessary. These actions could range from training employees to revising the standards or even changing the processes.
2. Explain the techniques of managerial control.
The following are the two key techniques of managerial control are detailed:
Critical Point Control:
Focuses on Key Result Areas (KRAs), which are vital for the success of an organisation.
KRAs are set as the critical points.
If any issue arises at these critical points, the whole organisation might be affected.
For example, a small increase in labour costs might be more impactful than a substantial increase in postal charges in a manufacturing organisation.
Management by Exception:
This is often referred to as control by exception.
It is based on the idea that attempting to control everything may lead to controlling nothing.
Only significant deviations, those which exceed the permissible limit, are brought to management’s attention.
For instance, if a 2% increase in labour cost is the acceptable deviation in a manufacturing organisation, only a rise beyond this would be highlighted to the management.
Major deviations demand immediate action.
Advantages of Critical Point Control and Management by Exception:
Efficiency: It saves the time and efforts of managers as they only deal with significant deviations.
Focus: Enables managers to concentrate on critical areas, ensuring optimal use of managerial resources.
Delegation: Routine matters are left to subordinates, facilitating delegation of authority and boosting employee morale.
Timely Intervention: Helps in identifying and addressing crucial problems in a timely manner, ensuring the organisation stays on the right track.
3. Explain the importance of controlling in an organisation. What are the problems faced by the organisation in implementing an effective control system?
Importance of Controlling in an Organisation:
Controlling plays a significant role in management and ensures that an organisation runs efficiently and effectively. Based on the provided passage, the importance of controlling can be summarised as:
Ensuring Events Conform to Plans:
Once a plan becomes operational, controlling monitors its progress to ensure that events align with the planned objectives.
Controlling discovers deviations from set standards and initiates corrective measures.
Basis for Future Planning:
The feedback from the controlling process offers valuable insights from past experiences.
This information plays a vital role in refining and improving future planning.
Guidance for Action:
Controlling checks if decisions have been translated into desired action.
It’s an evaluative function that assesses if actions taken are in line with the planned objectives.
Setting Standards:
Controlling presupposes the existence of certain performance standards.
These standards, derived from planning, serve as the foundation for the controlling process.
From the above details, the importance of controlling is evident. Without controlling, planning would be meaningless. Controlling ensures that the actions of an organisation are aligned with its objectives and helps in rectifying deviations, making it a crucial function in management.
Problems Faced by Organisations in Implementing an Effective Control System:
Unrealistic Standards: If the standards set are too high or too low, they might not accurately reflect the organisation’s capabilities, leading to frequent deviations.
Defective Processes: If the methods or processes in place are inherently flawed, it can result in consistent deviations from the standards.
Inadequacy of Resources: Insufficient resources can hinder the successful implementation of plans, making controlling challenging.
Structural Drawbacks: Organisational structure might not be conducive for effective control, causing communication barriers or overlaps in responsibilities.
Environmental Factors: External factors beyond the organisation’s control, such as market fluctuations or regulatory changes, can impact the control process.
4. Discuss the relationship between planning and controlling.
Relationship between Planning and Controlling:
Inseparable Twins of Management: Planning and controlling are often referred to as the inseparable twins of management. They are closely intertwined and are dependent on each other for effective management.
Basis for Controlling: A control system is based on certain standards of performance. These standards, which are crucial for controlling, are derived from planning. In the absence of a plan, there would be no foundation for controlling.
Operational Monitoring: As soon as a plan becomes operational, controlling steps in to monitor the progress. It measures the performance, identifies deviations from the plan, and takes corrective measures, ensuring events conform to the plan.
Interdependence: Planning without controlling is considered pointless. Similarly, controlling lacks direction without planning. If standards aren’t set in advance through planning, managers will have nothing to control, making planning a prerequisite for controlling.
Nature of Functions: Planning is primarily an intellectual activity that entails thinking, articulation, and analysis to identify the best course of action for reaching objectives. Conversely, controlling evaluates whether decisions have materialized into the desired actions. Thus, planning is prescriptive, while controlling is evaluative.
Looking Ahead vs. Looking Back: Planning is a forward-looking function, as it prepares for the future based on forecasts. Controlling, on the other hand, reviews past activities to discern deviations from standards, making it a backward-looking function. However, planning also learns from past experiences, and corrective actions from controlling aim to enhance future outcomes. Hence, both functions are both backward and forward-looking.
Reinforcement of Each Other: The two functions reinforce each other:
Planning that is rooted in facts simplifies and makes controlling more effective.
Information gleaned from past experiences through controlling can refine future planning.
So, it’s evident that planning and controlling are two sides of the same coin. While planning charts the path for an organisation’s actions, controlling ensures that the journey adheres to this path. Together, they form a cyclical process of setting objectives, monitoring progress, and making necessary adjustments to achieve the set goals.
5. 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 to rectify the problems it is facing.
Identify the benefits the company will derive from a good control system.
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.
Give the steps in the control process that the company should follow to remove the problems it is facing
a. Identify the benefits the company will derive from a good control system.
The benefits the company will derive from a good control system are:
Focus on Significant Areas: By using principles like critical point control and management by exception, the company can direct its attention to key result areas that are critical for its success.
Saves Time and Effort: The management doesn’t have to monitor every detail; they can concentrate on deviations that are significant, thus saving time and efforts.
Better Utilisation of Managerial Talent: By focusing on important areas, managerial talent is utilized more effectively.
Facilitates Delegation of Authority: Routine problems are left to subordinates, which aids in delegation and boosts employee morale.
Timely Identification of Problems: The control system will enable timely identification of issues, allowing for quick action to get the company back on track.
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.
To relate planning with control for ensuring successful implementation and target attainment, the company can:
Set Clear Standards: Planning provides the standards of performance which serve as the basis for controlling. So, the company should set clear, quantifiable standards for sales and customer satisfaction.
Monitor and Measure Performance: Regularly monitor the market trends, sales, and customer feedback to measure performance.
Analyze and Learn from Past Experience: Controlling will involve looking back at past actions, and learning from them will aid in better planning.
Corrective Actions for Future: The corrective actions taken based on the control function will improve future planning and performance.
Continuous Review: The planning process should be reviewed continuously based on feedback from the controlling process.
c. Give the steps in the control process that the company should follow to remove the problems it is facing.
The control process that the company ‘M’ limited should follow includes:
Setting Performance Standards: Establish clear, quantifiable benchmarks for sales, customer satisfaction, product quality, etc.
Measurement of Actual Performance: Objectively and reliably measure the actual performance using techniques like personal observation, performance reports, and sample checking.
Comparing Actual Performance with Standards: Evaluate the measured performance against the set benchmarks to identify deviations.
Analysing Deviations: Focus on significant deviations, especially in key areas of business, using principles like critical point control and management by exception. Determine the causes of these deviations.
Taking Corrective Action: Based on the analysis, take necessary actions to correct the deviations. This may include employee training, resource reallocation, revising the standards, or any other relevant action.
6. Mr Shantanu is a chief manager of a reputed company that manufactures garments. He called the production manager and instructed him to keep a constant and continuous check on all the activities related to his department so that everything goes as per the set plan. He also suggested him to keep a track of the performance of all the employees in the organisation so that targets are achieved effectively and efficiently.
Describe any two features of Controlling highlighted in the above situation.(Goal Oriented, continuous and pervasive – any 2).
Explain any four points of importance of Controlling.
a. Describe any two features of Controlling highlighted in the above situation.
Continuous and Pervasive: Mr Shantanu instructs the production manager to maintain a constant and continuous check on all departmental activities. This emphasizes that controlling is a ceaseless process that applies throughout the organization.
Goal Oriented: The intention behind keeping a track of all activities and employee performance is to ensure that everything aligns with the set plan and targets are achieved. This highlights that controlling is always directed towards achieving organizational goals.
b. Explain any four points of importance of Controlling.
Ensures Events Conform to Plans: Controlling is essential to monitor progress, measure it, find deviations, and initiate corrective measures. This ensures that actual events conform to the planned events, making it crucial for achieving objectives.
Provides Standards for Performance: A control system presupposes the existence of certain standards. These standards are derived from planning and serve as the basis for assessing actual performance and making necessary adjustments.
Corrects Deviations: Controlling acts like a postmortem of past activities, helping in identifying deviations from the standards. Once deviations are spotted, corrective actions can be initiated, ensuring the system remains on the right track.
Reinforces Each Other with Planning: Planning and controlling are interrelated and reinforce each other. Information derived from past experiences in the control process can improve future planning, making it a cyclical and reinforcing process.