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
CBSE Learning Objectives – Key Concepts & Skills You Must Know
CBSE Revision Notes & Quick Summary for Last-Minute Study
Controlling 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.
CBSE Exam Tips, Important Questions & Common Mistakes to Avoid
Common Mistakes and Exam Tips in Controlling
Common Pitfalls
- Over-controlling: Managers may attempt to control every aspect of operations, leading to inefficiencies and a lack of focus on critical areas.
- Ignoring deviations: Failing to address significant deviations from performance standards can result in larger issues down the line.
- Setting unrealistic standards: Standards that are too ambitious can demotivate employees and lead to a culture of failure.
- Neglecting employee input: Not considering feedback from employees can lead to resistance against control measures and lower morale.
Tips for Effective Control
- Focus on Critical Points: Concentrate on key result areas (KRAs) that are critical to success rather than trying to monitor every activity.
- Management by Exception: Only significant deviations beyond acceptable limits should be reported to management, allowing them to focus on what truly matters.
- Set Flexible Standards: Ensure that performance standards can be adjusted as necessary to reflect changes in the business environment.
- Use Objective Measurement Techniques: Employ reliable methods for measuring performance to ensure accuracy and fairness in evaluations.
- Encourage Employee Involvement: Involve employees in the process of setting standards and controls to enhance buy-in and motivation.
CBSE Quiz & Practice Test – MCQs, True/False Questions with Solutions
Multiple Choice Questions
A.
Managing passenger name records (PNR)
B.
Providing in-flight entertainment
C.
Fuel management for aircraft
D.
Designing aircraft interiors
Correct Answer: A
Solution:
A Departure Control System (DCS) automates processing an airline's airport management operations, including managing passenger name records (PNR).
A.
Breakeven analysis
B.
Management audit
C.
Budgetary control
D.
Personal observation
Correct Answer: B
Solution:
Management audit is a modern technique that evaluates the overall performance of an organization to ensure alignment with its objectives.
A.
To create new products.
B.
To ensure that actual activities conform to planned activities.
C.
To hire new employees.
D.
To increase employee salaries.
Correct Answer: B
Solution:
Controlling is the process of ensuring that actual activities conform to planned activities.
A.
Personal observation
B.
Management Information System (MIS)
C.
Budgetary control
D.
Statistical reports
Correct Answer: B
Solution:
Management Information System (MIS) is a modern technique of managerial control that provides information necessary for effective decision-making and efficient resource utilization.
A.
Setting Performance Standards
B.
Measurement of Actual Performance
C.
Comparing Actual Performance with Standards
D.
Analyzing Deviations
Correct Answer: D
Solution:
Analyzing deviations involves determining the acceptable range of deviations and prioritizing corrective actions based on their significance.
A.
Planning and controlling are independent functions
B.
Planning is a prerequisite for controlling
C.
Controlling is more important than planning
D.
Planning and controlling are unrelated
Correct Answer: B
Solution:
Planning provides the standards for controlling, making it a prerequisite.
A.
A method to control every activity in an organization
B.
A focus on key result areas critical to the success of an organization
C.
A technique to increase employee salaries
D.
A strategy to eliminate all forms of control
Correct Answer: B
Solution:
Critical point control focuses on key result areas (KRAs) which are critical to the success of an organization.
A.
Budgetary Control
B.
Management Audit
C.
Breakeven Analysis
D.
Personal Observation
Correct Answer: B
Solution:
Management Audit is a modern technique of managerial control that evaluates the efficiency and effectiveness of management in achieving organizational objectives.
A.
It ensures that all employees are promoted regularly.
B.
It helps in accomplishing organizational goals.
C.
It guarantees a 100% increase in profits.
D.
It eliminates the need for planning.
Correct Answer: B
Solution:
A good control system helps in accomplishing organizational goals by measuring progress and indicating corrective actions.
A.
By reducing their workload
B.
By ensuring they know performance standards in advance
C.
By providing them with more vacation days
D.
By increasing their salaries
Correct Answer: B
Solution:
A good control system ensures that employees know well in advance what they are expected to do and the standards of performance, which motivates them.
A.
It is always cost-effective.
B.
It can face resistance from employees.
C.
It guarantees control over external factors.
D.
It eliminates the need for planning.
Correct Answer: B
Solution:
Controlling can face resistance from employees who may see it as a restriction on their freedom.
A.
Setting performance standards
B.
Hiring new employees
C.
Conducting market research
D.
Developing new products
Correct Answer: A
Solution:
Setting performance standards is the first step in the controlling process.
A.
Managing the information required for airport check-in
B.
Printing boarding passes
C.
Conducting in-flight safety demonstrations
D.
Updating passenger reservations as checked-in or boarded
Correct Answer: C
Solution:
A Departure Control System (DCS) automates processing an airline's airport management operations, including check-in, boarding passes, and updating reservations. Conducting in-flight safety demonstrations is not a function of a DCS.
A.
Breakeven analysis
B.
Budgetary control
C.
Management Information System
D.
Personal observation
Correct Answer: C
Solution:
Management Information System is a modern technique of managerial control.
A.
Managing passenger check-in information
B.
Printing boarding passes
C.
Handling in-flight entertainment systems
D.
Interfacing with immigration control
Correct Answer: C
Solution:
The Departure Control System (DCS) is designed to automate airport management operations such as check-in, boarding pass printing, and interfacing with immigration control. Handling in-flight entertainment systems is not part of its functions.
A.
Setting performance standards
B.
Measurement of actual performance
C.
Comparing actual performance with standards
D.
Taking corrective action
Correct Answer: C
Solution:
The step of comparing actual performance with standards involves identifying deviations between actual and desired results.
A.
Investigate all deviations in labor costs
B.
Focus on significant deviations only
C.
Ignore labor cost deviations as they are common
D.
Increase the labor budget to cover additional costs
Correct Answer: B
Solution:
Management by exception suggests that only significant deviations that exceed the permissible limits should be brought to the management's attention. This allows for efficient use of managerial resources.
A.
Difficulty in setting quantitative standards
B.
Resistance from employees
C.
High cost of control
D.
Lack of control over external factors
Correct Answer: A
Solution:
One limitation of controlling is the difficulty in setting quantitative standards, especially for areas like employee morale and job satisfaction, where qualitative measures are more prevalent.
A.
Return on investment
B.
Ratio analysis
C.
Management by exception
D.
Breakeven analysis
Correct Answer: D
Solution:
Breakeven analysis is a traditional technique of managerial control, whereas return on investment, ratio analysis, and management by exception are considered modern techniques.
A.
Critical Point Control
B.
Management by Exception
C.
Budgetary Control
D.
Ratio Analysis
Correct Answer: B
Solution:
Management by Exception focuses on significant deviations that exceed permissible limits.
A.
Planning and Organizing
B.
Leading and Controlling
C.
Planning and Controlling
D.
Organizing and Leading
Correct Answer: C
Solution:
The relationship between planning and controlling is demonstrated as planning sets the standards based on past experiences, which are then used in controlling to guide future actions.
A.
It ensures efficient utilization of resources
B.
It helps in achieving organizational goals
C.
It may face resistance from employees
D.
It boosts employee morale
Correct Answer: C
Solution:
Controlling can face resistance from employees as they may perceive it as a restriction on their freedom, which is one of its limitations.
A.
Checking every piece produced
B.
Sample checking
C.
Relying on employee self-assessment
D.
Ignoring minor defects
Correct Answer: B
Solution:
In large organizations, sample checking is an effective technique for monitoring quality. It involves checking a random sample of products to ensure they meet quality standards.
A.
Labor cost increase
B.
Postal charges increase
C.
Both equally
D.
Neither
Correct Answer: A
Solution:
In a manufacturing company, an increase in labor cost is more critical than an increase in postal charges because labor costs are usually a larger component of total expenses and more directly affect production costs.
A.
Setting performance standards
B.
Measurement of actual performance
C.
Analysing deviations
D.
Facilitating coordination in action
Correct Answer: C
Solution:
To address deviations in production targets, the company should focus on analysing deviations to understand their causes and take corrective action accordingly.
A.
Critical Point Control
B.
Management by Objectives
C.
Management by Exception
D.
Total Quality Management
Correct Answer: C
Solution:
Management by Exception is a principle that suggests focusing management attention on significant deviations from the standard, which allows for efficient use of managerial resources.
A.
Increase in postal charges by 15%
B.
Increase in labor cost by 5%
C.
Increase in office supply expenses by 10%
D.
Increase in travel expenses by 8%
Correct Answer: B
Solution:
In a manufacturing organization, an increase in labor cost by 5% is considered more critical than increases in other expenses, as labor costs are directly tied to production efficiency and profitability.
A.
Difficulty in setting quantitative standards
B.
Resistance from employees
C.
Ensuring efficient utilization of resources
D.
Little control over external factors
Correct Answer: C
Solution:
Ensuring efficient utilization of resources is a benefit of controlling, not a limitation.
A.
Difficulty in setting quantitative standards
B.
Improved employee motivation
C.
Efficient use of resources
D.
Facilitating coordination in action
Correct Answer: A
Solution:
Setting quantitative standards can be difficult for certain performance areas, which can reduce the effectiveness of a control system. This is a known limitation of controlling.
A.
Management by exception
B.
Critical point control
C.
Budgetary control
D.
Ratio analysis
Correct Answer: B
Solution:
Critical point control focuses on key result areas which are critical to the success of an organization. The labor cost is a critical point in this scenario.
A.
Ignore the deviation as it is not significant.
B.
Immediately bring it to the attention of top management.
C.
Conduct a routine review at the end of the fiscal year.
D.
Delegate the issue to lower-level management.
Correct Answer: B
Solution:
According to the principle of management by exception, significant deviations beyond the acceptable limit should be brought to the attention of top management for immediate action.
A.
Critical Point Control
B.
Management by Exception
C.
Budgetary Control
D.
Personal Observation
Correct Answer: A
Solution:
Critical Point Control focuses on key result areas that are crucial to the success of the organization. It ensures that significant deviations in these areas are promptly addressed.
A.
Setting performance standards
B.
Measurement of actual performance
C.
Comparison of actual performance with standards
D.
Taking corrective action
Correct Answer: C
Solution:
The step described is the comparison of actual performance with standards, where actual sales are compared with planned sales to identify deviations.
A.
Setting performance standards
B.
Measurement of actual performance
C.
Comparing actual performance with standards
D.
Taking corrective action
Correct Answer: B
Solution:
Measurement of actual performance involves preparing reports to evaluate employee efficiency against set standards.
A.
By increasing employee salaries
B.
By keeping a close check on employee activities
C.
By reducing working hours
D.
By offering flexible work schedules
Correct Answer: B
Solution:
Controlling helps ensure order and discipline by keeping a close check on employee activities, minimizing dishonest behavior.
A.
To increase employee salaries
B.
To provide a basis for measuring actual performance
C.
To eliminate the need for management
D.
To ensure all employees are promoted
Correct Answer: B
Solution:
Setting performance standards provides a basis for measuring actual performance, which is essential for effective control.
A.
It eliminates the need for planning.
B.
It ensures resources are used effectively and efficiently.
C.
It allows employees to work without supervision.
D.
It guarantees that all external factors are controlled.
Correct Answer: B
Solution:
Controlling ensures that an organization's resources are used effectively and efficiently for achieving predetermined goals.
A.
Increased employee motivation
B.
Resistance from employees
C.
Improved resource utilization
D.
Enhanced coordination in action
Correct Answer: B
Solution:
Resistance from employees is a common consequence when they perceive control systems as restrictive. This can lead to decreased morale and cooperation.
A.
Focusing on all deviations from standards.
B.
Focusing only on significant deviations that exceed permissible limits.
C.
Focusing on minor deviations to ensure precision.
D.
Focusing on deviations in financial performance only.
Correct Answer: B
Solution:
Management by Exception involves focusing only on significant deviations that exceed permissible limits, allowing managers to concentrate on the most critical issues.
A.
Measuring employee satisfaction
B.
Establishing benchmarks for performance
C.
Hiring new employees
D.
Developing new products
Correct Answer: B
Solution:
Setting performance standards involves establishing benchmarks against which actual performance can be measured.
A.
Automating the check-in process and managing boarding passes
B.
Controlling air traffic
C.
Managing airline reservations
D.
Handling cargo logistics
Correct Answer: A
Solution:
A Departure Control System (DCS) automates processing an airline's airport management operations, including check-in and boarding pass management.
A.
Difficulty in setting quantitative standards
B.
Resistance from employees
C.
Costly affair
D.
Little control on external factors
Correct Answer: A
Solution:
The difficulty in setting quantitative standards is a limitation of controlling, especially in areas like employee morale, job satisfaction, and human behavior.
A.
To control every single activity in detail.
B.
To focus on significant deviations only.
C.
To eliminate the need for planning.
D.
To ensure all employees work overtime.
Correct Answer: B
Solution:
Management by Exception focuses on significant deviations which go beyond the permissible limit, allowing managers to concentrate on important areas.
A.
Breakeven Analysis
B.
Ratio Analysis
C.
Management Audit
D.
PERT and CPM
Correct Answer: B
Solution:
Ratio analysis is a technique of managerial control that focuses on analyzing the efficiency of resource utilization by comparing actual performance with standards.
A.
It ensures efficient utilization of resources.
B.
It boosts employee morale.
C.
It cannot control external factors.
D.
It facilitates coordination in action.
Correct Answer: C
Solution:
One limitation of controlling is that it cannot control external factors such as government policies, technological changes, and competition.
A.
Set performance standards
B.
Measure actual performance
C.
Compare actual performance with standards
D.
Take corrective action
Correct Answer: A
Solution:
The first step in the controlling process is to set performance standards. These standards serve as the benchmarks against which actual performance is measured.
A.
Planning is independent of controlling.
B.
Controlling is independent of planning.
C.
Planning and controlling are inseparable twins of management.
D.
Controlling is the first step before planning.
Correct Answer: C
Solution:
Planning and controlling are inseparable twins of management. Planning provides the standards for controlling, and controlling ensures that the plans are being followed and objectives are met.
A.
Management by objectives
B.
Critical point control
C.
Management by exception
D.
Total quality management
Correct Answer: C
Solution:
Management by exception is a principle that focuses on significant deviations that exceed permissible limits.
A.
By allowing departments to set their own goals
B.
By ensuring all activities are aligned with organizational goals
C.
By eliminating the need for communication between departments
D.
By focusing only on financial performance
Correct Answer: B
Solution:
Controlling provides direction to all activities, ensuring they are aligned with organizational goals.
A.
Planning is a prerequisite for controlling.
B.
Controlling is independent of planning.
C.
Planning and controlling are unrelated processes.
D.
Controlling precedes planning in the management cycle.
Correct Answer: A
Solution:
Planning provides the standards for controlling. Without planning, controlling has no benchmarks to measure against, making planning a prerequisite for controlling.
A.
Management by Objectives
B.
Critical Point Control
C.
Total Quality Management
D.
Statistical Process Control
Correct Answer: B
Solution:
Critical Point Control focuses on key result areas (KRAs) which are critical to the success of an organization. By concentrating on these points, the management can ensure that the most important aspects of the business are under control.
A.
Setting Performance Standards
B.
Measurement of Actual Performance
C.
Comparing Actual Performance with Standards
D.
Taking Corrective Action
Correct Answer: C
Solution:
The step of comparing actual performance with standards involves checking the actual results against the planned targets to identify any deviations.
A.
To increase the workload of employees
B.
To provide a basis for comparing actual performance
C.
To ensure employees follow orders without question
D.
To reduce the need for management oversight
Correct Answer: B
Solution:
Setting performance standards is crucial for providing a benchmark against which actual performance can be compared, allowing for the identification of deviations and necessary corrective actions.
A.
By setting new organizational goals
B.
By ensuring that actual activities conform to planned activities
C.
By eliminating the need for planning
D.
By focusing solely on employee motivation
Correct Answer: B
Solution:
The controlling function ensures that actual activities conform to planned activities, thereby assisting in the effective implementation of plans.
A.
It can lead to increased employee motivation.
B.
It is always cost-effective.
C.
It may face resistance from employees.
D.
It guarantees the achievement of all organizational goals.
Correct Answer: C
Solution:
Controlling may face resistance from employees as they see it as a restriction on their freedom.
A.
A manager reviews all employee performances daily.
B.
A manager only intervenes when production costs exceed the budget by more than 5%.
C.
A manager continuously monitors every aspect of the production process.
D.
A manager conducts weekly meetings to discuss every minor deviation from the plan.
Correct Answer: B
Solution:
Management by Exception involves focusing on significant deviations from the norm, such as when costs exceed the budget by a certain percentage, rather than monitoring every detail.
A.
Planning is a backward-looking function, while controlling is forward-looking.
B.
Controlling is a prerequisite for planning.
C.
Planning and controlling are independent functions.
D.
Planning provides the standards for controlling.
Correct Answer: D
Solution:
Planning provides the standards for controlling, as it sets the objectives and benchmarks against which actual performance is measured.
A.
Printing boarding passes
B.
Managing passenger reservations
C.
Controlling in-flight entertainment systems
D.
Interfacing with immigration control
Correct Answer: C
Solution:
A Departure Control System (DCS) automates airport management operations such as check-in, boarding pass printing, baggage handling, and interfacing with immigration control. It does not manage in-flight entertainment systems.
A.
Budgetary Control
B.
Ratio Analysis
C.
Management Audit
D.
PERT and CPM
Correct Answer: B
Solution:
Ratio Analysis is a modern technique of managerial control that involves the calculation of financial ratios to assess the company's performance and financial health.
True or False
Correct Answer: False
Solution:
Planning and controlling are closely related; planning sets the standards for control, and controlling ensures that plans are followed and objectives are achieved.
Correct Answer: True
Solution:
Controlling ensures that resources are used efficiently and effectively to achieve organizational goals.
Correct Answer: False
Solution:
A Departure Control System (DCS) automates processing of an airline's airport management operations, including check-in, boarding, and baggage handling, not in-flight services.
Correct Answer: True
Solution:
Controlling can be costly as it involves significant expenditure, time, and effort, making it less feasible for small organizations.
Correct Answer: False
Solution:
A Departure Control System (DCS) automates processing of an airline's airport management operations, including check-in, boarding pass printing, and baggage handling, not financial transactions.
Correct Answer: True
Solution:
DCS systems are increasingly interfacing with immigration control for visa, immigration, and passenger no-fly watch lists.
Correct Answer: False
Solution:
While quantitative standards are important, control systems can also be effective with qualitative standards, though they may pose challenges in measurement.
Correct Answer: False
Solution:
Planning and controlling are interrelated functions. Planning provides the basis for controlling, and controlling ensures that plans are being implemented.
Correct Answer: True
Solution:
The excerpt states that a DCS automates processing an airline's airport management operations, which includes managing information required for airport check-in and printing boarding passes.
Correct Answer: True
Solution:
A good control system ensures that employees know in advance what is expected of them, which helps in motivating them to perform better.
Correct Answer: True
Solution:
Controlling can be costly as it involves expenditure, time, and effort, which may not be justifiable for small enterprises.
Correct Answer: True
Solution:
Controlling is a pervasive function, meaning it is required at all levels of management and in different types of organizations, such as educational institutions, military, hospitals, and businesses.
Correct Answer: True
Solution:
A good control system ensures employees know what is expected of them, which motivates them to perform better.
Correct Answer: False
Solution:
Controlling is not only concerned with past activities but also helps in improving future planning by analyzing deviations and taking corrective actions.
Correct Answer: True
Solution:
Controlling can be costly as it involves expenditure, time, and effort, which small enterprises may find difficult to afford.
Correct Answer: True
Solution:
Controlling is considered a backward-looking function as it involves analyzing past activities to find deviations from standards.
Correct Answer: True
Solution:
A DCS updates reservations with statuses like checked-in, boarded, and flown, as mentioned in the excerpt.
Correct Answer: True
Solution:
A good control system enables management to verify whether the standards set are accurate and objective.
Correct Answer: False
Solution:
Controlling is a pervasive function that managers at all levels need to perform.
Correct Answer: False
Solution:
Controlling is a pervasive function required in various types of organizations including educational institutions, military, hospitals, and clubs, not just business organizations.
Correct Answer: True
Solution:
Controlling is a goal-oriented function that ensures resources are used effectively and efficiently to achieve predetermined goals.
Correct Answer: True
Solution:
Management by exception means only significant deviations, which exceed the permissible limit, are brought to the attention of management.
Correct Answer: False
Solution:
A Departure Control System (DCS) not only manages passenger reservations but also interfaces with immigration control for visa and passenger no-fly watch lists.
Correct Answer: True
Solution:
A good control system ensures that employees are aware of what is expected of them and the standards of performance, which can motivate them to perform better.
Correct Answer: True
Solution:
Management by exception is a principle where only significant deviations from the standard are brought to the attention of management for corrective action.
Correct Answer: False
Solution:
Controlling is a pervasive function required at all levels of management, including top, middle, and lower levels.
Correct Answer: True
Solution:
The controlling process includes setting performance standards, measuring actual performance, comparing it with standards, analyzing deviations, and taking corrective actions.
Correct Answer: False
Solution:
Controlling is a pervasive function necessary at all levels of management, including top, middle, and lower levels.
Correct Answer: False
Solution:
Planning and controlling are interrelated functions. Planning sets the standards for control, and controlling ensures that plans are being implemented correctly.
Correct Answer: False
Solution:
Controlling is not the last function of management; it completes the management cycle and influences future planning by identifying deviations and taking corrective actions.
Correct Answer: True
Solution:
Planning and controlling are described as inseparable twins of management, where planning sets the standards and controlling ensures adherence to them.