NCERT Solutions for Class 12 Business Studies Chapter 8 Controlling

Q. Explain the meaning of controlling.

OR

State the meaning of controlling

Ans. Controlling means ensuring that activities in an organisation are performed as per the plans. Controlling also ensures that an organisations resources are being used effectively and efficiently for the achievement of desired goals. Controlling is, thus a goal oriented function. Controlling is a very important managerial function because of this controlling manager is able to compare actual performance with the planned performance. In order to control the activities at all levels, manager needs to perform controlling function.

Q. Planning is looking ahead and controlling is looking back. Comment.

Ans. Planning and controlling are inseparable. Planning is the primary function of every organisation. It is the thinking process, which means looking ahead or making plans that how desired goal will be achieved in future. Thus it is known as forward looking function. On the other hand controlling is a systematic function which measures the actual performance with the planned performance. It compares and analyses the whole performance of an organisation and take correction actions. Thus, it is a backward looking function but the statement “Planning is looking ahead and controlling is looking back” is partially correct because it should be understood that planning is guided by past experiences and the corrective action initiated by control function aims to improve future performance. Thus, planning and controlling are both backward looking as well as a forward looking functions.

Q. Explain the various steps in the process of controlling.

OR

Explain the various steps involved in the process of control.

Ans. Controlling is a systematic approach of management, which helps in taking necessary measures or preventing actions for the achievement of organisational goals. Following are the steps involved in the controlling process:

  • (i) Setting standards: Setting up of standards involves developing the benchmarks against which the actual performance is to be measured. The standards can be set both in qualitative and quantitative terms. Qualitative benchmarks can be in the form of improving coordination in work, higher goodwill or increased motivation level of employees. For example, to improve the motivation level of employees, standards can be set in terms of number of initiatives taken. Quantitative benchmarks can be in the form of sales targets, units to be produced or time to be spent on a particular work.
  • (ii) Measuring actual performance: Once the standards are set, the next step is to measure the actual performance of the activities. This may be done through various techniques such as personal observation, sample checking, performance reports, etc. The checking should be done in an exact and reliable manner so that correct measurement is taken for comparison. Measurement can be done after the completion of an activity as well as while it is in progress. For example, while assembling small parts of a bigger machine, the parts can be checked before assembling. This would ensure the continuous monitoring of the small parts as well as the final machine.
  • (iii) Comparing the performances: Performances, once measured, are compared with the set standards. Such a comparison helps in assessing the deviations in the work. Thereby, it guides the managers in taking the necessary steps to improve the performance. These comparisons are easier when they are in quantitative terms. For example, efficiency in work in terms of cost incurred can be measured against the standard cost.
  • (iv) Analysing deviation: Every organisation faces deviations when comparing the actual performance with the pre-developed standards. Thus, it is important to find the deviations that are in the permissible range. It is said that deviations in key areas should be attended first. For analysing the deviations, the managers generally use Critical Point Control and Management by Exception.
    Once the deviations are recognised and reporting the same, it is necessary to acknowledge their cause. There can be a number of elements causing deviations in work such as infeasible standards, deficiencies in process, under utilisation of resources and changes in business environment. Thus, it becomes important for the management to take into consideration the causes for the concerned deviations and take necessary action.
  • (v) Corrective measures: When deviations go beyond the admissible limits then corrective action must be taken. This is the final step of controlling which aims at correcting the deficiencies of the organisation so that the errors do not occur again. For example, if the production target was not met daily, appropriate corrective actions such as training the workers or updating the machinery for working, etc. can be taken.