Principles of Management


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Principles of Management

  1. 1. Control Process The process of measuring actual performance, comparing it against a standard, and taking managerial action to correct deviation or inadequate standard
  2. 2. <ul><li>Expected performance </li></ul><ul><li>Measuring actual performance </li></ul><ul><li>Corrective action </li></ul>
  3. 3. <ul><li>Control Process-Steps </li></ul><ul><li>Establish Standards </li></ul><ul><li>- Standard: criteria of performance </li></ul><ul><li>Comparing Actual Performance </li></ul><ul><li>-Range of variation </li></ul><ul><li>Taking Managerial Action </li></ul><ul><ul><li>-Immediate corrective action </li></ul></ul><ul><ul><li>-Basic corrective action </li></ul></ul><ul><li>Revise the standards </li></ul><ul><ul><li>-Unrealistic standard </li></ul></ul><ul><ul><li>-Goal too high </li></ul></ul>
  4. 4. <ul><li>Types of control </li></ul><ul><li>Feedforward </li></ul><ul><li>- Most desirable </li></ul><ul><li>Concurrent </li></ul><ul><ul><li> -Direct supervision </li></ul></ul><ul><li>Feedback </li></ul><ul><li> - Most popular </li></ul>
  5. 5. Feed forward control <ul><li>Control that focuses on human, material, and financial resources flowing into the organization also called pre-action or preventive control </li></ul>
  6. 6. Feed back Control <ul><li>Control that focuses on the organization’s output also called post-action or output control </li></ul>
  7. 7. Concurrent Control <ul><li>Control that consists of monitoring ongoing employee activities to ensure their consistency with established standards </li></ul>
  8. 8. <ul><li>Approaches to control </li></ul><ul><li>Market </li></ul><ul><li>Bureaucratic </li></ul><ul><li>Clan </li></ul><ul><li>Organizational </li></ul>
  9. 9. <ul><li>Market control </li></ul><ul><li>Control systems that emphasize the use of external market mechanisms to establish the standards used for controlling </li></ul>
  10. 10. Bureaucratic Control <ul><li>The use of rules, policies-hierarchy of authority, rewards systems, and other formal devices to influence employee behavior and assess performance </li></ul>
  11. 11. Clan Control <ul><li>The use of social values, traditions, common beliefs, and trust to generate compliance with organization standards </li></ul>
  12. 12. Organizational Control The systematic process through which managers regulate organizational activities to make them consistent with expectations established in plans, targets and standard of performance.
  13. 13. Standards <ul><li>Standards are yardsticks against which actual or expected performance in measured </li></ul>
  14. 14. Types of Standards <ul><li>Physical </li></ul><ul><li>Capital </li></ul><ul><li>Cost </li></ul><ul><li>Revenue </li></ul><ul><li>Intangible </li></ul><ul><li>Goals </li></ul><ul><li>Strategic </li></ul>
  15. 15. Physical Standards <ul><li>They reflect quantities such as labour hours per unit of production, units of production per machine-hour, durability of a fabric, fastness of colour, rate of climb of an airplane etc </li></ul>
  16. 16. Cost Standards <ul><li>Cost Standards are monetary measurements such as cost per unit produced, labour cost per hour, material cost per unit, machine operating cost per hour, cost of per foot of of well drilled etc. </li></ul>
  17. 17. Capital Standards <ul><li>Reflect Capital invested in the factory rather than operating costs and reflect ratios of current assets to current Liabilities, debt to net worth, cash & receivables to payables, the size and turnover of inventous. </li></ul>
  18. 18. Revenue Standards <ul><li>Revenue standards reflect monetary values of sales, such as revenue per passenger-mile, average sale per customer, sales per capital in given market area. </li></ul>
  19. 19. Intangible Standard <ul><li>Standards not expressed in either physical or monetary measurements such as competence of sales manager, effectiveness of advertising campaign, success of public relations department, morale of employees etc </li></ul>
  20. 20. Goal Standards <ul><li>Reflects performance or output (production) against targets such as production of cars against a target of 300 cars per month, actual production of cloth against a target of 15,000 yards per month, actual visits to clients by sales people against a target of 10 per week etc </li></ul>
  21. 21. Strategic Standards <ul><li>Comprises of comparison of actual performances & results against overall objectives of an organization over a period of time (usually one year), such as annual profits, growth, market share, stock value, etc </li></ul>
  22. 22. Requirements of Effective Control <ul><li>Tailoring controls to plans and position </li></ul><ul><li>Tailoring controls to individual Managers </li></ul><ul><li>Provisions for exceptions </li></ul><ul><li>Seeking objectivity </li></ul><ul><li>Ensuring flexibility </li></ul><ul><li>Matching with Organizational Culture </li></ul><ul><li>Achieving economy </li></ul>
  23. 23. Qualities of Effective Control System <ul><li>Accuracy </li></ul><ul><li>Reasonable Criteria </li></ul><ul><li>Timeliness </li></ul><ul><li>Economy </li></ul><ul><li>Flexibility </li></ul><ul><li>Understandability </li></ul><ul><li>Emphasis on Exception </li></ul><ul><li>Multiple Criteria </li></ul><ul><li>Corrective action </li></ul>
  24. 24. Dysfunctional Control <ul><li>Regulation Fixation </li></ul><ul><li>System Imperfections </li></ul><ul><li>Emphasis of Procedures </li></ul><ul><li>Rigid Control Techniques </li></ul>
  25. 25. Control Tools & Techniques <ul><li>Information Tools </li></ul><ul><li>Financial Tools </li></ul><ul><li>Analytical Tools </li></ul><ul><li>Traditional Tools </li></ul>
  26. 26. Information Tools <ul><li>Organizational Communication </li></ul><ul><li>MIS </li></ul>
  27. 27. Financial Tools <ul><li>Budget </li></ul><ul><li>Ratio analyses </li></ul>
  28. 28. Analytical Tools <ul><li>Gnatt Chart </li></ul><ul><li>PERT </li></ul><ul><li>Milestone budgeting </li></ul>
  29. 29. Traditional Tools <ul><li>Statistical data </li></ul><ul><li>Special reports & analysis </li></ul><ul><li>Operational data </li></ul><ul><li>Personal observations </li></ul>
  30. 30. Budget <ul><li>A numerical plan for allocating resources to specific activities </li></ul>
  31. 31. Types of Budgets <ul><li>Revenue </li></ul><ul><li>Expense </li></ul><ul><li>Time, space, material & product </li></ul><ul><li>Capital expenditure </li></ul><ul><li>Cash </li></ul>
  32. 32. Popular Financial Ratios <ul><li>Objective Ratio Calculation </li></ul><ul><li>Liquidity Test Current Ration Current Assets </li></ul><ul><li>Current Liabilities </li></ul><ul><li> Acid Test Current assets less inventories </li></ul><ul><li>Current Liabilities </li></ul><ul><li>Operation Test Inventory turnover Sales </li></ul><ul><li>Inventory </li></ul><ul><li> Total asset turnover Sales </li></ul><ul><li>Total assets </li></ul><ul><li>Profitability Profit margin Net profit after Taxes </li></ul><ul><li>Total Sales </li></ul><ul><li> Return on Investment Net profit after taxes </li></ul><ul><li>Total assets </li></ul>