CONTROLLING

CHAPTER – 8

CONTROLLING
Controlling (iv) Controlling is Both Backward Looking as well as
It can be defined as comparison of actual performance with Forward Looking Function: Controlling is like post-
the planned performance. mortem of past activities to find out deviations from the
standards. Therefore, Controlling is forward looking
According to Ricky W Griffin, “Controlling function leads to
also because the corrective action initiated by control
goal achievement, an organisation without effective control
function aims to improve future performance.
is not likely to reach its goals.”
Features/Nature of Controlling
(i) Goal Oriented: Controlling is a goal-oriented function
as it ensure that resources are used effectively and
efficiently for the accomplishment of goals.
(ii) Pervasive Function: Controlling is an essential
function of every manager. It is applied at all levels of Importance of Controlling
management and in all organisations (business and (i) Helps in achieving organisational goals: Controlling
non-business). The nature and extent of control may is goal-oriented process. It is through controlling that
vary according to the levels of management. managers ensure the execution of plans and the
(iii) Continuous Process: Controlling is a continuous pr attainment of goals. In the absence of control, activities
never-ending process. It continues throughout the life may not be carried out according to plans and the
time of organisation. The cycle of appraisal of work, targets may be missed. Controlling keeps constant
watch over performance so that mistakes are easily
comparing with established standards, detecting
detected and corrected.
deviations and taking corrective actions goes on.
(ii) Judging accuracy of standards: Controlling helps in
Controlling should be misunderstood as the last
judging accuracy of standards by keeping a careful
function of management. It brings the management check on the changes taking place in the organisation
cycle back to planning action because the corrective and reviewing and revising the standards in the light of
action in controlling is taken to prevent the recurrence these changes.
of the deviations in future. It seeks to improve the (iii) Making efficient use of resources: Controlling
future performance on the basis of past experience. In secures best possible use of resources. It ensures that
other words, controlling helps in better planning in work is performed in accordance with pre-determined
future. That is why, controlling is an ongoing process till standards in terms of quantity, quality and cost.
the organisation is in existence. (iv) Improving employee motivation: Controlling
provides performance standards for all the employees
 in the organisation. So, employees know well in Conclusion
advance what they are expected to do and what are the Planning and Controlling are both backward looking as well
standards of the performance on the basis of which as forward looking functions.
performance will be judged. It motivates them and Controlling Process
helps them to give better performance and earn the (i) Setting up of standards- The first step of Controlling
rewards. is to establish the standards of performance. Standards
(v) Ensures order and discipline: Controlling ensures are the target against which actual performance is
order and discipline in the organisation. It keeps a close evaluated. Standards can be set in both quantitative and
and continuous check on the activities of the employees qualitative terms. Whenever qualitative standards are
to minimise undesirable activities such as dishonesty, set, an effort must be made to define them in the
theft, fraud, corruption etc. manner that would make their measurement easier.
(vi) Facilitate co-ordination in action: Controlling function Standards should be flexible enough to be modified as
lays down performance standards for each and every per changes taking place in business environment.
department and employees employee which are well- (ii) Measuring of Actual performance- Once standards of
coordinated with one another, thereby helping in performance are fixed, the next step is the
achieving better coordination in the organisation. measurement of actual performance. It means
evaluation of work actually done and the results
accomplished. Performance should be measure in an
objective and reliable manner. The various techniques
for measuring are personal observation, sample
checking, performance reports etc. Performance must
be measured in the same units in which standards are
established. Generally, performance is measured after
the task, but whenever possible, measurement of work
Relationship Between Planning and Controlling should be during the performance.
(a) Controlling is Blind or Aimless without Planning: (iii) Compare performance against standard
Planning is essential for controlling. It provides the performance- This step involves comparison of actual
basis for Controlling. Controlling involves comparison performance with the standards or planned targets.
of actual performance with certain standards which are Such comparison will reveal the deviations between
provided by planning. So, when there is no plan, there actual and desired results. Deviations means gap or
is no basis for controlling. Thus, Controlling is blind or difference between actual performance and standard
aimless without planning. performance. Comparison is easy when standard are
(b) Planning is meaningless without controlling: fixed in quantitative terms. It must be noted that if
Controlling is performed to ensure that the events actual performance matches the standards, then there
conform to the plans. Once a plan is implemented, is no need for further action as everything is under
controlling is necessary to monitor the progress, control.
measure it, identify and analyse deviations and take (iv) Analysing deviation- Some deviations in performance
corrective action to ensure that planned results are is expected in all activities. So, the next step in the
achieved. Therefore Planning is meaningless without process of control is to analyse the deviations. The
Controlling. deviations from the standards are analysed to identify
(c) Planning and Controlling both are Forward their causes. While analysing deviations, it is important
Looking: Planning is looking ahead because plans are to determine the acceptable/permissible range of
prepared for future and are based on forecasts about deviation and key result areas. Minor deviations should
future conditions. Controlling is forward looking be ignored. Deviations which are beyond the
because the corrective action in controlling is taken to permissible limit should be reported to the
prevent the deviations in future. It seeks to improve the management. In this regard, managers use ‘Critical
future performance. In other words, controlling helps Point Control’ and ‘Management by Exception’.
in better planning in future. (a) Critical point control- It is neither economical nor
(d) Planning and Controlling Both are Backward easy to keep a check on each and every activity in an
Looking: Planning is looking back because new organisation. Therefore, control should focus on Key
planning is guided by the problems identified in the Result Areas (KRAs) which are critical to the success of
past. Controlling is looking back as it compare the an organisation. When anything goes wrong in these
actual performance with the standards. This involves areas the entire organisation suffers. Therefore
srutinising the events after they have taken place. It is deviations in key areas of business need to be attended
like post-mortem of past activities to find out deviations more urgently. For example 10% increase in raw
from the standards. material is more harmful than 30% increase in
telephone charges.
(b) Management by exception: There is a saying ‘If you standards cannot be corrected through managerial
control everything you may end up controlling nothing’. actions, the standards may have to be revised.
Therefore only significant deviations which cross the (vi) Feedback in Controlling: The controlling function
permissible limit should be brought to he notice of the does not end by taking corrective action as it is a
management. Deviations within the permissible range continuous process. After suggesting the corrective
(i.e minor deviations) should be ignored because some measure a feedback report is prepared. Feedback refers
deviations is performance is expected in all activities. to list of reasons for deviations of plans or for
Advantages of Critical Point Control and Management by inefficiency in overall working of organisation; along
Exception with reasons the corrective measures are also specified
(a) It saves time and efforts of managers as they deal with in the feedback report and feedback acts as a base to
only exceptional deviations. establish the standard for next year and controlling
(b) It ensures better use of managerial talent as attention is process again starts from 1st step.
focussed on important areas.
(c) It facilitates delegation of authority by permitting the
subordinates to deal with routine problems and
insignificant deviations.
(d) It identifies critical problems which need timely action
to keep the organisation on the right task.
(v) Taking Corrective measure: No corrective action is
required when the deviations are within the acceptable
range/permissible limit. When the deviations go
beyond the acceptable limit, especially in key result
areas, immediate managerial actions is required. If the
 QUESTIONS FOR PRACTICE
(a) Coordination (b) Controlling
MCQ (c) Directing (d) Planning
Q8. Which of the following is an advantage of critical point
Q1. An efficient control system helps to
control and management by exception?
(a) judge accuracy of standards
(b) boost employee morale (a) Saves time
(c) Both (a) and (b) (b) Better utilisation of managerial talent
(d) None of the above (c) Facilitates delegation of authority
(d) All of the above
Q2. Bajaj, the operation manager set a limit of 5% Q9. ……………. is often referred to as control by exception.
deviation in production and decided to take corrective (a) Deviation
action only if deviations occurred beyond 5%. Name (b) Management by exception
the concept applicable here. (c) Feedback
(a) Coordination (d) Critical point
(b) Management principles
(c) Management by exception Q10. Which of the following is the technique of
(d) Critical point control measurement of performance?
(a) Personal observation (b) Sample checking
Q3. Himesh is a senior manager in a software consultancy
(c) Performance reports (d) All of the above
firm. He regularly prepares performance reports of his
subordinates as part of appraisal. The step of Q11. Which standard(s) is/are used in production?
controlling process highlighted here is ……… . (a) Quality Standards (b) Quantity Standards
(a) measuring performance (c) Cost Standards (d) All of these
(b) compare performance against standard
(c) analysing deviation Q12. In controlling process, while setting performance
(d) taking corrective action standards, standards can be set
(a) in quantitative terms only
Q4. With which concept is the saying “If you try to control
(b) in qualitative terms only
everything you may end up controlling nothing”
(c) Both (a) and (b)
associated?
(d) in subjective terms
(a) Critical point control
(b) Management by exception Q13. “Planning is guided by past experience and corrective
(c) Control by exception actions taken in the controlling process. Thus, it is
(d) Both (b) and (c) regarded as ……… .”
Q5. Mr. Nirbhay Kapoor, the CEO of Patna Ltd. analysed (a) backward-looking function
the variances to find out the causes of variances. (b) forward-looking function
Identify the step of controlling process being (c) pervasive function
performed. (d) None of the above
(a) Measurement of actual performance Q14. Match the following causes of deviation with
(b) Comparing actual performance with standards corrective options to be taken to correct them.
(c) Analysing deviations
(d) Taking corrective action Column I Column II
Q6. The manager of Rama Ltd calculated total sales and A. Defective material (i) Modify existing
revenue earned by each sales executive to conduct process
appraisals at the end of the year. Which step of B. Defective machinery (ii) Change the quality of
controlling is highlighted here? materials
(a) Setting performance standards C. Defective process (iii) Improve physical
(b) Measurement of actual performance
conditions of work
(c) Comparing actual performance with standards
(d) Analysing deviations D. Defective physical (iv) Repair/replace
conditions machine
Q7. Radhika Ltd is engaged in manufacturing machine
components. The target production is 350 units per
day. The company had been successfully attaining this A B C D
target until four months ago. Over the last four (a) (i) (iii) (ii) (iv)
months, it has been observed that daily production (b) (iv) (ii) (i) (iii)
varies between 250-270 units. Identify the (c) (ii) (iii) (i) (iv)
management function to rectify the above situation. (d) (ii) (iv) (i) (iii)
Q15. In the final step of controlling process, the managers (a) forward-looking
takes corrective measures to bring back everything on (b) backward-looking
track. Sometimes even after best efforts, if deviations (c) forward as well as backward-looking
cannot be corrected then what should be done? (d) None of the above
(a) Revise the standards (b) Fire the managers
(c) Shut the company (d) None of these SUBJECTIVE QUESTIONS
Q16. In controlling process, the next stage after setting
performance standards is Q1. Which two steps in the process of controlling are
(a) Measurement of actual performance concerned with compelling events to confirm to plan?
(b) Comparing actual performance with standards Q2. Is controlling backward looking?
(c) Analysing deviations
(d) Taking corrective action Q3. Why is planning an empty exercise without
controlling?
Q17. Controlling is a pervasive function because it is
performed Q4. What is compared with what in controlling?
(a) in all organisations whether profit making or non Q5. There are two managers Bhuvan and Rajiv. Bhuvan is
profit making saying ‘Controlling is forward looking’ but Rajiv is
(b) at all levels of management to ensure that the saying ‘Controlling is backward looking’. Who is
work at every stage is performed as planned correct? Explain why?
(c) goal oriented process
(d) Both (a) and (b) Q6. Which function of management ensures work
accomplishment according to plans?
Questions 18–19 contain two statements–– Assertion (A)
and Reason (R). Each question has FOUR choices (a), (b), (c), Q7. How does controlling help in “Judging accuracy of
(d), only one of which is correct. standards” and “Ensuring order and discipline.”
In the light of these statements, choose the most appropriate Q8. “If anything goes wrong with the performance of key
option: activities, the entire organisation suffers. Therefore,
(a) (A) is incorrect but (R) is correct. the organisation should focus on them.” Explain the
(b) (A) is correct but (R) is incorrect. statement with a suitable example.
(c) Both (A) and (R) are correct and (R) is the correct Q9. Ramesh Jha wishes to fix-standard production for
explanation of (A) worker along with standard time to complete the job.
(d) Both (A) and (R) are correct but (R) is not the correct Under which function of management, standards are
explanation of (A). fixed?
Q18. Assertion (A): Control is exercised at all levels of Q10. Mittal Ltd. could not achieve the target production of
management. 15,000 cars p.a. It could produce only 14,125 cars––
Reason (R): Controlling is all pervasive function. While analysing the reasons for deviations, it was
Q19. Assertion (A): Controlling aims to ensure that found that workers were not efficient. Training
resources are used effectively and efficiently to achieve programmes were organised and next year, company
predetermined goals. was able to produce 15,000 units. Production Manager
Reason (R): Controlling is both a backward-looking as well is of the opinion that with this, management ends at
as forward-looking function. controlling. Do you agree? Give reason to support your
answer.
Q20. Controlling function of an organisation is Explain any four importance of controlling.
 HOMEWORK QUESTIONS
(c) Both planned and actual performances are same
MCQ (d) None of the above
Q8. Mr. Sagar Sharma, the Finance director of Rama Ltd.
Q1. Which of the following is not an importance of
analysed the variances to find out causes of variances.
controlling function?
Identify the step of the controlling process being
(a) It ensures order and discipline.
performed by Mr. Sagar Sharma?
(b) It restricts co-ordination in action.
(a) Setting performance standards
(c) It helps in judging accuracy of standards.
(b) Analysing deviations
(d) It improves employee motivation.
(c) Comparison of actual performance with standards
Q2. Which of the following statements does not highlight (d) Taking corrective action
the relationship between planning and controlling?
Q9. Identify the correct sequence of the steps involved in
(a) Planning and controlling are separable twins of
the controlling process.
management.
(a) Measurement of actual performance, Taking
(b) Planning without controlling is meaningless,
corrective action, Setting performance standards,
controlling without planning is blind.
Comparison of actual performance with
(c) Planning is prescriptive, controlling is evaluative.
standards, Analysing deviations
(d) Planning and controlling are interrelated and
(b) Comparison of actual performance with standards,
interdependent.
Setting performance standards. Measurement of
Q3. Rajan has set up a small business unit for the actual performance, Analysing deviations, Taking
manufacturing of detergent. In order to market the corrective action
detergent in the local residential areas, he has (c) Setting performance standards, Measurement of
appointed a team of ten salesmen. Each salesman is actual performance, Comparison of actual
expected to sell at least 200 units of the detergent performance with standards, Analysing
within a week’s time. Identify the point of importance deviations, Taking corrective action
of controlling being highlighted in the above case. (d) Taking corrective action, Measurement of actual
(a) Controlling helps in judging accuracy of standards. performance, Comparison of actual performance
(b) It ensures efficient use of resources. with standards, Analysing deviations, Setting
(c) It helps in improving employee motivation. performance standards
(d) It facilitates co-ordination in action.
Q10. Which of the following is a technique used for
Q4. Mayank Ltd. informed its sales team that the T-Shirts measuring actual performance?
will be sold at a minimum selling price of Rs.800 each. (a) Random sampling (b) Personal observation
Identify the type of standard mentioned here. (c) Performance reports (d) All of the above
(a) Qualitative (b) Quantitative
Q11. The comparison of actual performance with the
(c) Either (a) or (b) (d) Can’t say
planned performance becomes easier if the standards
Q5. The controlling function is performed by are set in ___.
(a) Top level management (a) Qualitative terms
(b) Lower level management (b) Quantitative terms
(c) Middle level management (c) Either of the above
(d) All of the above (d) None of the above
Q6. Management of customer Satisfaction Ltd. replaces the Q12. This concept of Control Management is based on the
old machinery with new machinery to overcome belief that if you try to control everything, you may end
quality issues. Identify the step in the process of up controlling nothing.
controlling highlighted by this statement. (a) Critical point control
(a) Setting performance standards (b) Key result areas
(b) Measurement of actual performance (c) Management by exception
(c) Comparison of actual performance with standards (d) Deviations
(d) Taking corrective action
Q13. When the deviations between the actual performance
Q7. Deviations are said to be positive in nature when and the planned performance are within the limits
(a) Planned performance is more than the actual (a) A limited corrective action is required
performance (b) No corrective action is required
(b) Actual performance is more than the planned (c) A major corrective action is required
performance (d) None of the above
Q14. In an artificial plants manufacturing unit, the standard (a) Setting standards
output set for a worker is 50 units per day. Nirbhay (b) Measurement of actual performance
produces 48 units in one day. In the given case, the (c) Analysing deviations
value of deviation is (d) Comparing actual and standard performance
(a) -2 (b) + 2
Q22. Some personnel have been tasked with judging the
(c) 98 (d) None of the above
output of production in a fair and consistent manner.
Q15. The need for the controlling function is felt in They are employing a variety of methods to achieve
(a) Business organisations this goal. Personal observation, sample checking, and
(b) Political organisations so on are examples of this. They're also sticking to the
(c) Social organisations same measurement units as the established standards.
(d) All of the above Determine which phase of the controlling process
applies in the example.
Q16. Controlling is known as a backward-looking function
(a) Taking corrective action
because
(b) Analyzing deviations
(a) It relates to future course of action.
(c) Measurement of actual performance
(b) It is like a post-mortem of the past activities
(d) Comparing actual and standard performance
(c) To find out deviation, it aims at improving future
performance. Q23. There is one popular saying that Planning is
(d) All of the above looking_____ while controlling is looking _____.
(a) Back, Ahead
Q17. “It is making something happen the way it was
(b) Ahead, Back
planned to happen”. Name the function of
(c) Future, Present
management highlighted in above statement.
(d) None of the above
(a) Planning (b) Coordination
(c) Controlling (d) Directing Q24. Gagan is trying to apply a function of management in
his department. First he lets his team perform
Q18. Ritu runs a logistic company. The Tour Incharges of
according to their best potential. Then in a meeting he
each trip in the company are expected to submit a
calls ody and asks his team to check what they have
report to the Event Manager on the completion of
performed. One day it was found that the total number
every trip. Identify the step in the controlling process
of units produced were 20 less than the set target. It
being described in the above lines.
was decided that no worker will go home unless and
(a) Setting of standards
until this gap of 20 units is overcome.
(b) Measurement of actual performance
(a) Planning
(c) Taking corrective action
(b) Organising
(d) Analysing the deviations
(c) Controlling
Q19. In a marketing firm, the Financial Manager pays more (d) Directing
attention towards an increase of 3% in the marketing
Q25. ‘If anything goes wrong with performance of key
cost as compared to a 15% increase in the courier
activities, the entire organisation suffers. Therefore,
expenses. Identify the concept being used by the
the organisation should focus on them’. Identify the
manager.
concept highlighted here.
(a) Management by exception
(a) Critical point control
(b) Critical point control
(b) Management by exception
(c) Corrective action
(c) Planning
(d) None of the above
(d) None of these
Q20. “Planning is absence of controlling is meaningless”.
Q26. Rakesh is working in an MNC. He has created an
What does this statement indicate in respect of both ?
atmosphere of proper controlling in his department. In
(a) Only Planning is essential
order to do so he keeps himself aware about any
(b) Only Controlling is essential
dishonest behaviour and takes a stern action
(c) Both are essential
immediately. Recently he has installed CCTV cameras
(d) Both are unnecessary
to keep vigil on the employees. In the above case which
Q21. Determine which phase of the controlling process importance of controlling has been implemented by
applies in the following example. Management in a Rakesh?
company is attempting to determine the difference (a) helps in achievement of organisational goals
between the actual number of goods produced and the (b) helps in judging the accuracy of standards
desired quantity. He is already familiar with the (c) helps in maintaining order and discipline in the
standard because he has been assigned a specific organisation
number of goods to create by the corporation. (d) helps in efficient utilisation of resources
Q27. Radhika is keenly observing the quantity of capsules provided training to their employees by inviting an
produced in a pharmaceutical company. She realises expert who demonstrated the whole process of
that there is no need for any action to be taken as the manufacturing. The expert quoted that all deviations
deviations are within the acceptable limits. A day later cannot be controlled, so manager must know which
when she comes to work she finds the situation deviation in key areas must be attended urgently as
opposite to that of the previous day. This lime the compared to deviation in non-key area. He also
deviation was beyond the acceptable range and suggested that human beings are bound to brake
needed immediate action. She called her subordinates mistakes as manager should not take strict action on
and told them that this should not happen again. every minute mistake of workers, rather he can fix a
Identify the step of controlling process applicable in range of deviation and take action if deviation is above
the following case the specified large. Identify the functions of
(a) Setting standards management referred above.
(b) Taking corrective action (a) Planning and Controlling
(c) Measuring actual performance (b) Planning and Staffing
(d) Analysing deviations (c) Controlling and Staffing
(d) Planning and Directing
Q28. A critical point control (CPC) approach is followed by
McDonald in the cooking and handling process so that SUBJECTIVE QUESTIONS
any food safety threat can be prevented, eliminated, or
reduced to an acceptable level. Hence, continuous Q1. Suppose you are the manager of PQR Clothing Ltd. It
monitoring of activities are undertaken to ensure that comes to your knowledge that postal expenses have
the process is right at each critical point control. The increased by 15% over the standard price and cost of
main principle followed for cooking at McDonald is labour and raw materials has increased by 3%. Which
"less amount many time" which can ensure the high of the two situations is more critical according to you?
quality and high fresh level of the food. For instance, if
Q2. ‘Delta Ltd.’ a computer hardware manufacturing
your hamburgers have to be made, a worker cannot
company imported a new machinery for
cook all the four hamburgers at one time. The time
manufacturing latest technology based computer
figured out for making one hamburger is one hundred
systems. The human resource manager determined
and forty-five seconds. Moreover, nearly all foods in
that for operating the new machines, the company
the McDonald have the specific holding time, the required the necessary workers through placement
holding time for hamburgers is ten minutes and for agency.
French fries is seven minutes. If it is not sold within
that time it is thrown away. Also, the temperature of After 3 months, it was reported by the production
the milk sent by the supplier must be under 40 °C, manager that the workers were not able to meet the
otherwise, it will be returned. In context of the above target production. The General Manager got annoyed
case: Name the steps involved in the controlling and ordered inquiry for the same. It was reported that
process which is being discussed in the above lines. the newly recruited workers possessed the necessary
(a) Analysing Deviation, Taking corrective action skills and abilities but lacked the willingness to do
(b) Setting standards, Measurement of Actual work.
performance (i) Name the functions of management involved
(c) Analysing Deviations, Measurement of Actual above.
(ii) Name the relevant concept of functions identified
performance
in (i).
(d) None of the above
(iii) Which concept of management will help the
Q29. Virendra wants to ran his company in a different company in meeting the target production?
manner. He wants to set standards to be achieved in
Q3. Fisher Ltd. is a firm manufacturing paper bags in
both qualitative as well as quantitative terms. He Odisha. It has employed female workers in the
wants to judge the motivation, skill levels and company and manufactures paper bags from recycle
satisfaction of the employees. All these things will paper and thereafter sells them to various firms at
require qualitative standards. On the other hand the economic rates.
company will have to set quantitative standards for Since last 1 month, its customers (firms) are reporting
the number of units produced. of complaints received from the users that these paper
(a) Measuring actual performance bags are unable to manage heavy weight and get torn
(b) Analysing deviations easily.
(c) Setting standards 1. Which function of management has been ignored
(d) Taking corrective action above?
Q30. Alpha Ltd. was manufacturing Auto spare parts. To 2. Discuss the steps to be undertaken in respect of
improve the efficiency of employees the company the ignored function to pacify the situation.
Q4. Mr Gill worked as a manager in a company is observed that about 10-12% of production is
manufacturing stationery items for 10 years. Later he defective. Which function of management is required
thought of starting his own business as he acquired the to correct the above case? State the procedure to be
skills and expertise in past years. He started his own followed to correct the things.
venture. He divided the organisation into six major
Q8. Which principle of management control is based on
departments––Production, Purchase, Marketing,
the belief “an attempt to control everything may end
Legal, Human resource and Finance. After a month, he
up by controlling nothing”?
called upon the meeting of all the departmental heads
in his office and told the production marketing and Q9. Engineer India Ltd. is engaged in manufacturing
finance department managers to be very vigilant as machine components the target production is 300
their departments are critical to the success of the units per day. The company had been successfully
business. Shortcomings in Purchase, Personnel or attaining the target three months ago. Over the last
Legal department would not affect much the success of three months, it has been observed that daily
business. Therefore, Mr Gill determined deviation production varies between 220 and 250 units. Identify
tolerance limits for the critical departments. the management function to rectify the above
1. Identify the two functions of management situation.
referred above.
Q10. A company ‘M’ Ltd. is manufacturing mobile phones
2. Describe the relevant concept of the identified
functions. both for domestic Indian market as well as for export.
It had enjoyed a substantial market share and also had
Q5. One day, the management instructor of BBA classes a loyal customer following. But lately it has been
organised a "Panel Discussion" on important topics of experiencing problems because its targets have not
management. The students were given the following been met with regard to sales and customer
clues for discussion. Each student was given 3 minutes satisfaction. Also mobile market in India has grown
for elaborating on the clues given below: tremendously and new player have come with better
Clue 1: They are inseparable twins. technology and pricing. This is causing problems for
Clue 2: They are inter-dependent, inter-related and the company. It is planning to revamp its controlling
reinforce each other. system and take other steps necessary to rectify the
Clue 3: They both are forward as well as backward problems it is facing.
looking. (a) Identify the benefits the company will derive from
Identify the functions of management written in clues a good control system.
above. (b) How can the company relate its planning with
control in this line of business to ensure that its
Q6. What do you mean by key result area in the context of
plans are actually implemented and targets
controlling?
attained?
Q7. MNO Ltd. is manufacturing auto spare parts on large (c) Give the steps in the control process that the
scale. The company policy is that 3% of the daily company should follow to remove the problems it
production could be defective. Over last two months it is facing.
 SOLUTION FOR PRACTICE QUESTIONS
S5. In my viewpoint, both are partially correct
SOLUTION FOR MCQ QUESTIONS because controlling is both forward looking as
well as backward looking. Controlling is backward
looking because like a post-mortem of past
S1. (c) activities the manager looks back to previous
S2. (c) year’s performance to find out its deviation from
S3. (a) standard planning.
S4. (d)
S5. (c) Controlling is also forward looking because
S6. (b) controlling does not end only by comparing past
S7. (b) performance with standard. It involves finding the
S8. (d) reasons for deviations and suggests the measures
S9. (b) so that these deviations do not occur in future. So,
S10. (d) this statement that planning is forward looking
S11. (d) and controlling is backward looking is only
S12. (c) partially correct as planning and controlling are
S13. (a) both forward looking as well as backward looking.
S14. (d) S6. The controlling function of management ensures
S15. (a) the work accomplishment according to plan.
S16. (a)
S17. (d) S7. [For explanation refer to page nos. 116 and 117]
S18. (c) S8. The statement refers to the use of ‘Critical Point
S19. (d) Control’, while analysing deviations. It emphasises
S20. (c) that deviations in the key areas need to be
attended more urgently as compared to
SUBJECTIVE QUESTIONS deviations in certain insignificant areas. Control
should, therefore focus on these key result areas
S1. (i) Comparison of actual performance with which are critical to the success of an organisation.
standards. For example, in a manufacturing organisation, an
(ii) Taking corrective actions. increase of 5 per cent in the labour cost may be
S2. No, controlling does not mean backward looking more troublesome than a 15 per cent increase in
because it means taking actions and suggesting postal charges.
measures to ensure job accomplishment
according to plan in future. S9. Controlling.
S3. Planning is an empty exercise without controlling S10. No, because controlling brings the management
because implementation of plans and monitoring cycle back to planning function because the
of plan depend upon controlling. corrective action in controlling is taken to prevent
S4. In controlling actual performance is compared the recurrence of the deviations in the future.
with standard performance. Refer to Importance of Controlling page no. 115-
16
 SOLUTION FOR HOMEWORK QUESTION
24. (c)
SOLUTION FOR MCQ 25. (a)
QUESTIONS 26. (c)
27. (b)
1. (b) 28. (a)
2. (a) 29. (c)
3. (c) 30. (c)
4. (b)
5. (d) SUBJECTIVE QUESTIONS
6. (d)
7. (b) S1. Increase in cost of labour and raw materials.
8. (b)
S2. (i) Staffing, Controlling
9. (c)
(ii) Recruitment, Controlling process
10. (d)
(a) Comparing actual performance.
11. (b)
(b) Analysing deviations.
12. (c)
(iii) Motivation.
13. (b)
14. (a) S3. 1. Controlling,
15. (d) 2. Taking corrective action,
16. (b)
S4. 1. Organising, Controlling
17. (c)
2. Departmentalisation, Critical Point Control.
18. (b)
19. (b) S5. Planning and controlling.
20. (c)
S6. These are the areas which are critical and very
21. (d)
important for success of the organisation.
22. (c)
23. (b)
S7. The management function required to correct the above case is “controlling”. The procedure to be followed is:
1. Find out the cause of deviation of defective percentage from 3 to 12.
2. Take corrective measures to control the thing.
Following can be the cause of deviation:
S. No. Causes Corrective Action
1. Lack of motivation of workers. Officer financial or non-financial incentives to motivate workers.
2. Power breakdown. Install a generator.
3. Fault in machinery. Get the machinery repaired or replace the machinery with new one.

S8. Principle of management by exception. implementing an effective controlling system and

following a controlling process.
S9. Function related to this is controlling.
S10. (a) Explain the importance of controlling, refer to (c) Explain steps in the process of controlling
page nos. 115 and 116 system, refer to page nos. 116 and 117.
(b) Company can relate its planning with control
in this line of business by following measure by