MP CHAPTER 5 PPTS.pptx
- 1. Controlling UNIT 5 Meaning and steps in controlling - Essentials of a sound control system - Methods of establishing control (in brief).
- 2. Controlling Definition: Control is a primary goal-oriented function of management in an organisation. It is a process of comparing the actual performance with the set standards of the company to ensure that activities are performed according to the plans and if not then taking corrective action. It’s the process of monitoring, comparing and correcting work performance.
- 3. Process of controlling Control process involves the following steps as shown in the figure:
- 4. Process of controlling • Establishing standards: This means setting up of the target which needs to be achieved to meet organisational goals eventually. Standards indicate the criteria of performance. Control standards are categorized as quantitative and qualitative standards. Quantitative standards are expressed in terms of money. Qualitative standards, on the other hand, includes intangible items. • Measurement of actual performance: The actual performance of the employee is measured against the target. With the increasing levels of management, the measurement of performance becomes difficult. • Comparison of actual performance with the standard: This compares the degree of difference between the actual performance and the standard. • Taking corrective actions: It is initiated by the manager who corrects any defects in actual performance. Controlling process thus regulates companies’ activities so that actual performance conforms to the standard plan. An effective control system enables managers to avoid circumstances which cause the company’s loss.
- 5. Essentials of sound control system • 1. Reflecting Organizational Needs • 2. Prompt in reporting Deviations • 3. Forward looking controls • 4. It should be objective • 5. Flexible control • 6. It should be economical. • 7. Focus on strategic points. • 8. Simple and understandable • 9. Corrective action • 10. Acceptable to organization members • 11. Reveal exceptions at strategic points • 12. Motivate people to high performance • 13. other requirements
- 6. Need for control 1. To measure progress 2. To uncover deviation and 3. To indicate corrective action
- 7. Factors Determining Good Control 1. Simplicity 2. Adaptability 3. Cost 4. Versatile 5. Quick action 6. Progressive feature 7. Need Based system 8. Identify the sensitive Areas 9. Purposeful 10. Scope for corrective action
- 9. Advantages of control 1. It prevents faulty operations and creates a good base for future faultless operations and help in taking sound decisions. 2. Control systems help taking corrective measures in case the plan activity is deviated from original designs and also assist in adopting follow-up actions. 3. Control systems provide a good opportunity for decentralisation of authority. 4. Control brings about co-ordination in planning activity. 5. Workforce in the organisation will be disciplined by adopting good control system and brings about operational efficiency.
- 10. Limitations of control • Difficulty in setting quantitative standards: ... • No control on external factors: ... • Resistance from employees: ... • Costly affair:
- 11. Methods of Controlling Business concerns have been using a number of devices for the purpose of controlling. Broadly, all the devices of control can be classified in: a) Budgetary control b) Non- budgetary control devices
- 12. Budgetary control techniques • A budget may be expressed in terms money or quantity or both. Budgetary control defined as the establishment of budgets relating to the responsibilities of the executives to the requirements of a policy and the continuous comparison of actual with budget results. • Classification of budgets: cash budget, capital budget, sales budget, production budget, master budget, labour budget etc.
- 13. Budgetary control techniques • Budgeting is the formulation of plans for a given future period in numerical terms. • Organizations may establish budgets for units, departments, divisions, or the whole organization. • The usual time period for a budget is one year and is generally expressed in financial terms. Budgets are the foundation of most control systems. • They provide yardsticks for measuring performance and facilitate comparisons across divisions, between levels in the organization, and from one time period to another.
- 14. Classification of budgets Types of budgetary controlling techniques 1. Cash budget 2. Capital budget 3. Sales budget 4. selling and distribution budget 5. Production Budget 6. Production cost budget 7. Labour budget 8. Raw material budget 9. Production overhead budget. 10. Master budget.
- 15. Advantages and Disadvantages Advantages and disadvantages of budgeting As a matter of fact, budgets offer a number of advantages. Strengths 1.Budgets facilitate effective control. 2.Budgets facilitate coordination and communication. 3.Budgets facilitate record keeping. 4.Budgets are a natural complement to planning. Weaknesses ; They have potential drawbacks as well. 1.Budgets may be used too rigidly. 2.Budgets may be time-consuming. 3.Budgets may limit innovation and change. 4.However; Budgets hampers development, change, the flexibility of plan.
- 16. Non-Budgetory Control Devices 1. Cost control :- a) Cost Accounting, b) Standard Costing , C) Break even point 2. Managerial statistics 3. Internal Audit 4. Production Control 5. Personal Observation 6. External Audit Control 7. Standing Orders, Limitations etc. 8. Inventory control . 9. Reports 10 . PERT AND CPM 11. Marketing control 12. Quality control etc.,
- 18. ALL THE BEST