Control techniques141
Download as PPT, PDF7 likes2,082 views
The document discusses various organizational control techniques used by managers. It describes control methods such as budgeting, non-budgetary devices, benchmarking, financial ratio analysis, linear programming, Gantt charts, critical path method, program evaluation and review technique, management by exception, and information technology. Each technique is explained along with its advantages and limitations for organizational control.
Control techniques141
- 2. TRADITIONAL NONBUDGETARY CONTROL BALANCED DEVICES SCORECARD BENCHMARKING BUDGETING INFORMATION TECHNOLOGY LINEAR PROGRAMMING COST CONTROL TECHNIQUES CONTROL MANAGEMENT BY EXCEPTION FINANCIAL PERT RATIO ANALYSIS CRITICAL GANTT PATH CHART METHOD June 27, 2012 2
- 3. WE HAVE FOLLOWING COMMONLY KNOWN ORGANISATIONAL CONTROL TECHNIQUES BUDGET AS CONTROL TECHNIQUE TRADITIONAL NONBUDGETARY CONTROL DEVICES BALANCED SCORECARD BENCHMARKING FINANCIAL RATIO ANALYSIS June 27, 2012 3
- 4. LINEAR PROGRAMMING GANTT CHART CRITICAL PATH METHOD(CPM) PROGRAM EVALUATION & REVIEW TECHNIQUE(PERT) MANAGEMENT BY EXCEPTION AS CONTROL DEVICE INFORMATION TECHNOLOGY June 27, 2012 4
- 5. BUDGETING BUDGETING: THE FORMULATION OF PLANS FOR A GIVEN FUTURE PERIOD IN NUMERICAL TERMS SOME BUDGET DEVELOPMENT METHODS ARE AS FOLLOWS: TOP-DOWN BUDGETING BOTTOM-UP BUDGETING ZERO-BASED BUDGETING FLEXIBLE BUDGETING June 27, 2012 5
- 6. ADVANTAGE OF BUDGETING 1. BUDGET IS AN INSTRUMENT WHEREBY MANAGEMENT DETERMINES THE FUTURE COURSE OF ACTION. 2. BUDGET IS ALWAYS RELATED TO A SPECIFIED PERIOD. 3. BUDGET IS EXPRESSED IN QUANTITATIVE TERMS. 4. BUDGET IS ONLY AN ESTIMATED PLAN OF ACTION. 5. BUDGET PROVIDES STANDARD TO BE ACHIEVED. June 27, 2012 6
- 7. LIMITATIONS OF BUDGETING 1. PROVES DANGEROUS WHEN IT IS BASED ON WRONG ESTIMATES. 2. SOMETIMES BUGETARY CONTROL BECOMES COMBERSOME. 3. BUDGET OFTEN CONTROL WRONG THINGS. June 27, 2012 7
- 8. TRADITIONAL NONBUDGETARY CONTROL DEVICES THE ARE SEVERAL TRADITIONAL NON BUDGETARY CONTROL DEVICES SUCH AS USE OF; STATISTICAL DATA OF MANY ASPECTS OF THE OPERATION SPECIAL REPORTS AND ANALYSIS OF SPECIFIC AREAS THE OPERATIONAL AUDIT AND INDEPENDENT APPRIASAL BY A STAFF OF INTERNAL OR EXTERNAL AUDITORS PERSONAL OBSERVATION SUCH AS BY WALKING AROUND June 27, 2012 8
- 9. FINANCIAL RATIO ANALYSIS- EXAMINES THE RELATIONSHIP BETWEEN SPECIFIC FIGURES ON THE FINANCIAL STATEMENTS AND HELPS TO EXPLAIN THE SIGNIFICANCE OF THESE FIGURES. LIQUIDITY RATIOS PROFITABILITY RATIOS DEBT RATIOS ACTIVITY RATIOS June 27, 2012 9
- 10. COST CONTROL COST CONTROL- COST CONTROL IS APPLIED MAINLY BY BIG MANUFACTURING COMPANY, HOTELS ETC TO HAVE STRICT CONTROL OVER COST AND REDUCE PER UNIT COST. THE OTHER OBJECTIVES OF THE COST CONTROL INCLUDE: 2. ACCURATELY ASSERTING PER UNIT, PER PROCESS AND PER DEPARTMENT COST. 3. DETERMINING SOURCES OF WASTAGE RELATING TO LABOUR AND MATERIALS. 4. ON THE BASIS OF STANDARD COST FIGURES, ESTIMATING THE COST OF PROPOSED PRODUCTION LOT TO QUOTE COPETITIVE TENDER PRICE. June 27, 2012 10
- 11. 1. PREPARING COMPARATIVE COST FIGURES OF REPLACEABLE MATERIALS, MACHINES OR LABOUR. 2. COMPARING FINANCIAL FIGURES WITH COST FIGURES. June 27, 2012 11
- 12. BENCHMARKING BENCHMARKING- THE SEARCH FOR THE BEST PRACTICES AMONG COMPETITORS OR NONCOMPETITIVES THAT LEAD TO THEIR SUPERIOR PERFORMANCE. BENCHMARK- THE STANDARD OF EXCELLENCE AGAINST WHICH TO MEASURE AND COMPARE. THE METHODOLOGY ADOPTED IS AS UNDER: IDENTIFY THE PROBLEM AREAS. IDENTIFY OTHER INDUSTRIES. June 27, 2012 12
- 13. 1. IDENTIFY ORGANISATIONS THAT ARE LEADERS IN THESE AREAS. 2. SURVEY COMPANIES FOR MEASURES AND PRACTICES. 3. VISIT THE “BEST PRACTICE” COMPANIES TO IDENTIFY LEADING EDGE PRACTICES. 4. IMPLEMENT NEW AND IMPROVED BUSINESS PRACTICES. June 27, 2012 13
- 14. COST OF BENCHMARKING BENCHMARKING IS MODERATELY EXPENSIVE PROCESS, BUT MOST ORGANISATIONS FIND IT MORE THAN PAYS FOR ITSELF. THREE MAIN TYPES OF COSTS ARE: • VISIT COSTS • TIME COSTS • BENCHMARKING DATABASE COSTS June 27, 2012 14
- 15. BALANCED SCORECARD BALANCED SCORECARD- A PERFORMANCE MEASUREMENT TO THAT LOOKS AT FOUR AREAS- FINANCIAL, CUSTOMER, INTERNAL PROCESSES, AND PEOPLE/INNOVATION/GROWTH ASSETS-THAT CONTRIBUTES TO A COMPANY’S PERFORMANCE. THE FOUR GENERAL PERSPECTIVES WHICH HAVE BEEN PROPOSED BY BALANCE SCORECARD ARE AS UNDER: • FINANCIAL PERSPECTIVE • CUSTOMER PERSPECTIVE June 27, 2012 15
- 16. • INTERNAL PROCESS PERSPECTIVE • INNOVATION AND LEARNING PERSPECTIVE LIMITATIONS • SCORES ARE NOT BASED ON ANY PROVEN ECONOMIC OR FINANCIAL THEORY. • BALANCED SCORECARD DOES NOT PROVIDE A BOTTOMLINE SCORE. June 27, 2012 16
- 17. LINEAR PROGRAMMING ACCORDING TO WILLIAM M. FOX “LINEAR PROGRAMMING IS A PLANNING TECHNIQUE THAT PERMITS SOME OBJECTIVE FUNCTION TO BE MINIMISED OR MAXIMISED WITHIN THE FRAMEWORK OF GIVEN SITUATIONAL RESTRICTIONS.” REPRESENTATION- AX1+BX2≤Z REQUIREMENTS- 6. OBJECTIVE FUNCTION. 7. CONSTRAINTS. 8. LINEARITY. 9. NONEGATIVITY 10. FINITENESS. June 27, 2012 17
- 18. ADVANTAGES 1. FACILITATES LOGICAL THINKING AND STUDY OF DATA. 2. ONE CAN EVALUATE THE COSTS AND BENEFITS OF DIFFERENT ALTERNATIVES. 3. HELPFUL IN MAKING ADJUSTMENTS IN THE PLAN. 4. CAN BE APPLIED TO A VARIETY OF MULTIDIMENSIONAL PROBLEMS. June 27, 2012 18
- 19. LIMITATIONS • SOLVES PROBLEM OF LINEAR NATURE. • CANNOT PROVIDE SOLUTIONS TO PROBLEMS WHICH INVOLVE VARIABLES NOT CAPABLE OF BEING EXPRESSED QUANTITATIVELY. • UNCERTAINTIES ARE NOT CONSIDERED. • RESULT UNDER THIS TECHNIQUE ARE NOT NECESSARILY TO BE IN WHOLE NUMBERS. June 27, 2012 19
- 20. GANTT CHART • THIS CHART SYSTEM WAS DEVELOPED BY HENRY L. GANTT. • GANTT CHART- A BAR CHART THAT SHOWS THE TIME RELATIONSHIPS BETWEEN THE “EVENTS” OF A PRODUCTION PROGRAM. • MILESTONE BUDGETING OR MILEPOST- ADVANCED TECHNIQUE OF GANTT CHART MILESTONE BREAKS A PROJECT DOWN INTO CONTROLLABLE PIECES. June 27, 2012 20
- 21. CRITICAL PATH METHOD(CPM) • DEVELOPED BY M.R. WALKER OF USA IN 1956. • IT IS USED FOR OPTIMISING RESOURCE ALLOCATION AND MINIMISING OVERALL COST FOR A GIVEN PROJECT. • PROCEDURE- 4. BREAK DOWN THE PROJECT INTO VARIOUS ACTIVITIES SYSTEMATICALLY. 5. NUMBER ALL THE EVENTS AND ACTIVITIES. 6. CALCULATE THE EARLIEST START TIME, EARLIER FINISH TIME, LATEST START TIME AND LATEST FINISH TIME. 7. DETERMINE TOTAL FLOAT TIME. 8. IDENTIFY THE CRITICAL ACTIVITIES AND CONNECT THEM WITH DOUBLE LINE ARROW. 9. CALCULATE TOTAL DURATION OF PROJECT. June 27, 2012 21
- 22. CPM NETWORK DIAGRAM 4 9 6 4 1 2 2 3 3 6 1 5 2 7 8 5 7 10 June 27, 2012 22
- 23. ADVANTAGES • HIGHLIGHTS THE CRITICAL ACTIVITIES. • PROVIDES A TECHNIQUE OF PLANNING AND SCHEDULING. • GIVES COMPLETE INFORMATION OF ACTIVITY. • HELPS TO IDENTIFY POTENTIAL BOTTLENECKS. June 27, 2012 23
- 24. LIMITATIONS • OPERATES ON ASSUMPTION OF PRECISE TIME. • DOES NOT INCORPORATE STATISTICAL ANALYSIS IN DETERMINIG TIME ESTIMATES. • FOR EVERY CHANGE INTRODUCED ENTIRE PROJECT EVALUATION HAS TO BE REPEATED. • NOT SUITABLE FOR A SITUATION WHICH DOES NOT HAVE DEFINITE START AND FINISH TIME. June 27, 2012 24
- 25. I GANTT CHART A B C D E June 27, 2012 25
- 26. II GANTT WITH MILE STONE A 1 2 3 4 B 5 6 7 8 C 9 10 11 12 D 13 14 E 15 16 17 18 19 June 27, 2012 26 A
- 27. III GANTT WITH MILE STONES AND NETWORK OF MILESTONES A 1 2 3 4 B 5 6 7 8 C 9 10 11 12 D 13 14 E 15 16 17 18 19 June 27, 2012 27 JAN FEB MAR APRIL MAY JUNE JUL AUG SEP
- 28. PROGRAM EVALUATION AND REVIEW TECHNIQUE(PERT) • PERT- A TIME EVENT NETWORK ANALYSIS SYSTEM IN WHICH THE VARIOUS EVENTS IN A PROJECT OR PROGRAM ARE IDENTIFIED WITH A PLANNED TIME ESTABLISHED FOR EACH. METHODOLOGY • PREPARATION OF THE NETWORK . • NETWORK ANALYSIS. • SCHEDULING. • TIME COST TRADE OFFS. • RESOURCE ALLOCATION. • PROJECT CONTROL. June 27, 2012 28
- 29. PERT FLOWCHART EVENTS(MAJOR MILESTONES OF PROGRESS) IN THE MAJOR ASSEMBLY OF AN AIRPLANE (1)ORDER PROGRAM GO AHEAD (2)INITIATE ENGINE PROCUREMENT(3)COMPLETE PLANS AND SPECIFICATIONS (4)COMPLETE FUSELAGE DRAWINGS (5)SUBMIT GFAE*REQUIREMENTS (6)AWARD TAIL ASSEMBLY SUBCONTRACT (7)AWARD WINGS SUBCONTRACT (8)COMPLETE MANUFACTURE OF FUSELAGE (9)COMPLETE ASSEMBLY OF FUSELAGE ENGINE (10)RECEIVE WINGS FROM SUBCONTRACTORS (11)RECEIVE TAIL ASSEMBLY FROM SUBCONTRACTOR (12)RECEIVE GFAE (13)COMPLETE AIRCRAFT *GFAE:GOVERNMENT FURNISHED AIRPLANE EQUIPMENT 102.1 2 9 17.3 10.0 17.3 56.0 4 8 12.3 10.3 40.0 1 3 8.0 13 7 10 12.0 8.6 40.6 8.6 11 18.6 6 52.0 12 5 June 27, 2012 29
- 30. ADVANTAGES • FORCES MANAGER TO PLAN. • FORCES PLANNING ALL THE WAY DOWN THE LINE. • CONCENTRATES ATTENTION ON CRITICAL ELEMENT THAT MAY NEED CORRECTION. • MAKES POSSIBLE A KIND OF FORWARD LOOKING CONTROL. • ENABLES MANAGERS TO AIM REPORTS AND PRESSURE FOR ACTION AT THE RIGHT SPOT AND LEVEL IN THE ORGANISATION STRUCTURE AT THE RIGHT TIME. June 27, 2012 30
- 31. LIMITATIONS • TECHNIQUE IS NOT USEFUL WHEN THE PROGRAM IS NEBULOUS AND NO REASONABLE ESTIMATES OF SCHEDULE CAN BE MADE. • PERT HAS ITS EMPHASIS ONLY ON TIME AND NOT COST. • NOT PRACTICABLE FOR ROUTINE PLANNING OF RECURRING ACTIVITIES. June 27, 2012 31
- 32. INFORMATION TECHNOLOGY THE DEVELOPMENTS IN INFORMATION TECHNOLOGY GREATLY FACILITATES ORGANISATIONAL CONTROL AT A RELATIVELY LOW COST. INFORMATION TECHNOLOGY HAS PROMOTED THE DEVELOPMENT OF MANAGEMENT INFORMATION SYSTEM. MANAGEMENT INFORMATION SYSTEM- A FORMAL SYSTEM OF GATHERING, PROCESSING AND DISPERSING INFORMATION INTERNAL AND EXTERNAL TO THE ENTERPRISE IN A TIMELY, EFFECTIVE, AND EFFICIENT MANNER TO SUPPORT MANAGERS IN THEIR JOBS. June 27, 2012 32
- 33. HOW MIS IS USED 1. MANAGERS NEED INFORMATION TO MONITOR ORGANISATIONAL PERFORMANCE AND TO CONTROL ORGANISATIONAL ACTIVITIES. 2. COMPUTERS ARE BEING USED TO COLLECT AND STORE INFORMATION FOR CONTROL PURPOSES. 3. USE TO MONITOR EACH EMPLOYEE’S COMPUTER USAGE TO MEASURE EMPLOYEE PERFORMANCE. June 27, 2012 33
- 34. LIMITATIONS OF INFORMATION TECHNOLOGY CONTROL 1. PERFORMANCE LIMITATIONS 2. BEHAVIOURAL LIMITATIONS 3. HEALTH RISKS June 27, 2012 34
- 35. MANAGEMENT BY EXCEPTION • CONCEPT OR POLICY BY WHICH MANAGEMENT DEVOTES ITS TIME TO INVESTIGATING ONLY THOSE SITUATIONS IN WHICH ACTUAL RESULTS DIFFER SIGNIFICANTLY FROM PLANNED RESULTS. • ATTENTION IS GIVEN ONLY TO THOSE MATERIAL DEVIATIONS REQUIRING INVESTIGATION. • THE TOOLS THAT FACILITATES THIS CONCEPT INCLUDE DECISION SUPPORT SYSTEM, PERFORMANCE REPORT ETC. June 27, 2012 35
- 36. CONCLUSION PLANNING IS SUICIDAL WITHOUT CONTROL AND VICEVERSA. ORGANISATIONS USE VARIOUS TOOLS FOR CONTROLLING. HOWEVER APPLICATION OF THESE CONTROL TECHNIQUES DEPEND ON SITUATION AND REQUIREMENTS OF THE ORGANISATION. June 27, 2012 36
- 37. REFERENCES • MANAGEMENT- HEINZ WEIHRICH, MARK V. CANNICE, HAROLD KOONTZ. • MANAGEMENT- STEPHEN P. ROBBINS, MARY COULTER • MANAGEMENT- STONER, FREEMAN, AND GILBERT. • PRINCIPLES AND FUNCTIONS OF MANAGEMENT- J.K.JAIN. • WWW.WIKIPEDIA.ORG. • WWW.ASK.COM. • WWW.GOOGLE.COM. June 27, 2012 37
- 38. ANY QUERY ?
- 39. THANK YOU