Learning Objectives
- Explain the meaning of controlling.
- State the importance of controlling.
- Describe the relationship between planning and controlling.
- Explain the steps in the process of controlling.
- Describe the techniques of controlling.
Controlling
Study Action Plan (Sorted by Difficulty)
Learning Objectives
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Revision Notes & Summary
TopControlling in Management
Key Terms
- Controlling: The process of ensuring that actual activities conform to planned activities.
- Critical Point Control: Focuses on key result areas critical to success.
- Management by Exception: Only significant deviations beyond permissible limits are addressed.
- Breakeven Analysis: A technique to determine when an investment will start to generate a positive return.
- Budgetary Control: Monitoring and controlling expenses against budgeted amounts.
- Return on Investment (ROI): A measure used to evaluate the efficiency of an investment.
- Ratio Analysis: A quantitative analysis of information in a company's financial statements.
- Responsibility Accounting: A system of accounting that segments financial data by responsibility centers.
- Management Audit: A systematic evaluation of the effectiveness of management practices.
- PERT and CPM: Project management techniques for scheduling project tasks.
- Management Information System: A system for managing and analyzing data to support decision-making.
Importance of Controlling
- Accomplishing Organisational Goals: Measures progress and indicates corrective actions.
- Judging Accuracy of Standards: Verifies if standards are accurate and objective.
- Making Efficient Use of Resources: Reduces wastage and ensures effective resource use.
- Improving Employee Motivation: Clarifies expectations and performance standards.
- Ensuring Order and Discipline: Minimizes dishonest behavior and creates a disciplined environment.
- Facilitating Coordination in Action: Ensures all activities are aligned with organizational goals.
Steps in the Controlling Process
- Setting Performance Standards: Establish criteria for measuring performance.
- Measurement of Actual Performance: Assess performance against standards using techniques like observation and reports.
- Comparison of Actual Performance with Standards: Identify deviations between actual and desired results.
- Analysing Deviations: Determine causes of deviations and their significance.
- Taking Corrective Action: Implement changes to address deviations and improve performance.
Limitations of Controlling
- Difficulty in Setting Quantitative Standards: Challenges in defining measurable standards.
- Little Control on External Factors: Organizations cannot control external influences like government policies.
- Resistance from Employees: Employees may view control as restrictive.
- Costly Affair: Implementing control systems can be expensive, especially for small organizations.
Relationship between Planning and Controlling
- Interdependence: Planning provides the standards for controlling, while controlling ensures that plans are executed effectively.
- Feedback Loop: Controlling helps refine future planning based on past performance and deviations.
Techniques of Managerial Control
- Traditional Techniques: Personal observation, statistical reports, breakeven analysis, budgetary control.
- Modern Techniques: ROI, ratio analysis, responsibility accounting, management audit, PERT and CPM, Management Information System.
Practice Test – MCQs, True/False
TopMultiple Choice Questions
A.
Ignore the increase as it is within acceptable limits.
B.
Investigate the cause of the deviation and take corrective action.
C.
Increase the production targets to offset the cost.
D.
Reduce the workforce to control costs.
Correct Answer: B
Solution:
Since the increase in labor cost exceeds the planned deviation, it should be investigated and corrective measures should be taken according to the principle of Management by Exception.
Chapter Concept:
Management by Exception
A.
Ensuring efficient utilization of resources.
B.
Boosting employee morale.
C.
Eliminating the need for planning.
D.
Facilitating coordination in action.
Correct Answer: C
Solution:
A good control system does not eliminate the need for planning; rather, it ensures that plans are effectively implemented.
Chapter Concept:
Relationship between Planning and Controlling
A.
Setting new sales targets based on market analysis and monitoring performance against these targets.
B.
Increasing production without revisiting the sales strategy.
C.
Implementing a new advertising campaign without evaluating its effectiveness.
D.
Reducing costs by cutting down on quality control measures.
Correct Answer: A
Solution:
Option A demonstrates the relationship between planning and controlling by setting new targets (planning) and monitoring performance (controlling) to ensure that the company's strategic goals are met.
Chapter Concept:
Relationship between Planning and Controlling
A.
Managing in-flight services
B.
Automating airport management operations like check-in and boarding
C.
Handling airline marketing strategies
D.
Controlling airline ticket pricing
Correct Answer: B
Solution:
A Departure Control System (DCS) automates processing an airline's airport management operations, including check-in, boarding, and baggage handling.
Chapter Concept:
Departure Control Systems (DCS)
A.
Because controlling provides the standards for planning.
B.
Because without controlling, there is no way to ensure that plans are being followed.
C.
Because planning is a reactive process.
D.
Because controlling can function independently of planning.
Correct Answer: B
Solution:
Planning without controlling is meaningless because controlling ensures that plans are being followed and deviations are corrected.
Chapter Concept:
Relationship between Planning and Controlling
A.
By reducing the need for manual check-in processes
B.
By eliminating the requirement for boarding passes
C.
By automating aircraft fueling
D.
By managing in-flight entertainment systems
Correct Answer: A
Solution:
A DCS enhances airport operations efficiency by automating check-in processes, thus reducing the need for manual intervention.
Chapter Concept:
Departure Control Systems (DCS)
A.
It only focuses on past performance.
B.
It ignores past performance and only sets future goals.
C.
It analyzes past performance to set future standards and corrective actions.
D.
It is only concerned with current performance.
Correct Answer: C
Solution:
Controlling is backward-looking as it involves analyzing past performance to find deviations, but it is also forward-looking as it aims to improve future performance.
Chapter Concept:
Relationship between Planning and Controlling
A.
By setting new goals.
B.
By providing information derived from past experiences.
C.
By eliminating the need for future planning.
D.
By focusing solely on current performance.
Correct Answer: B
Solution:
Controlling provides information derived from past experiences, which helps in better planning for future periods.
Chapter Concept:
Relationship between Planning and Controlling
A.
Measurement of actual performance
B.
Setting performance standards
C.
Analyzing deviations
D.
Taking corrective action
Correct Answer: B
Solution:
The first step in the controlling process is setting performance standards, which serve as benchmarks for measuring actual performance.
Chapter Concept:
Steps in the Controlling Process
A.
By setting new goals.
B.
By measuring progress and indicating corrective actions.
C.
By replacing planning.
D.
By eliminating the need for supervision.
Correct Answer: B
Solution:
Controlling measures progress towards goals and indicates corrective actions, thus guiding the organization to stay on track.
Chapter Concept:
Controlling Function in Management
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Controlling
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Locked • AI Weakness TrackerTrue or False
Correct Answer: True
Solution:
Critical point control emphasizes monitoring and controlling key result areas (KRAs) that are vital for organizational success. If these points are not managed properly, the entire organization may suffer.
Chapter Concept :
Critical Point Control
Correct Answer: True
Solution:
Planning and controlling are indeed interrelated. Planning sets the standards and objectives, while controlling ensures that these plans are followed and objectives are met.
Chapter Concept :
Relationship between Planning and Controlling
Correct Answer: True
Solution:
Management by exception is a principle where management focuses on significant deviations from standards, allowing routine issues to be handled by subordinates, thus saving time and resources.
Chapter Concept :
Management by Exception
Correct Answer: True
Solution:
DCS automates various airline airport management operations and interfaces with immigration control for managing passengers, as described in the excerpt.
Chapter Concept :
Departure Control Systems (DCS)
Correct Answer: False
Solution:
Controlling is not the last function of management; it completes the management cycle and influences future planning by providing insights into deviations and corrective actions.
Chapter Concept :
Controlling Function in Management
Correct Answer: False
Solution:
The controlling function is a pervasive function required at all levels of management, not just the top level.
Chapter Concept :
Controlling Function in Management
Correct Answer: True
Solution:
Planning provides the standards for controlling, and controlling ensures that these plans are implemented effectively, making them interdependent.
Chapter Concept :
Relationship between Planning and Controlling
Correct Answer: False
Solution:
In the controlling process, measuring actual performance is done before comparing it with standards.
Chapter Concept :
Steps in the Controlling Process
Correct Answer: True
Solution:
Analyzing deviations involves determining the acceptable range of deviations and identifying the causes of significant deviations.
Chapter Concept :
Steps in the Controlling Process
Correct Answer: False
Solution:
The first step in the controlling process is setting performance standards.
Chapter Concept :
Steps in the Controlling Process
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