Control techniques141

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Control techniques141

  1. 1. CONTROLTECHNIQUES
  2. 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 METHODJune 27, 2012 2
  3. 3. WE HAVE FOLLOWING COMMONLY KNOWN ORGANISATIONAL CONTROL TECHNIQUES BUDGET AS CONTROL TECHNIQUE TRADITIONAL NONBUDGETARY CONTROL DEVICES BALANCED SCORECARD BENCHMARKING FINANCIAL RATIO ANALYSISJune 27, 2012 3
  4. 4.  LINEAR PROGRAMMING GANTT CHART CRITICAL PATH METHOD(CPM) PROGRAM EVALUATION & REVIEW TECHNIQUE(PERT) MANAGEMENT BY EXCEPTION AS CONTROL DEVICE INFORMATION TECHNOLOGYJune 27, 2012 4
  5. 5. BUDGETINGBUDGETING: THE FORMULATION OF PLANS FOR A GIVEN FUTURE PERIOD IN NUMERICAL TERMSSOME BUDGET DEVELOPMENT METHODS ARE AS FOLLOWS: TOP-DOWN BUDGETING BOTTOM-UP BUDGETING ZERO-BASED BUDGETING FLEXIBLE BUDGETINGJune 27, 2012 5
  6. 6. ADVANTAGE OF BUDGETING1. 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. 7. LIMITATIONS OF BUDGETING1. 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. 8. TRADITIONAL NONBUDGETARYCONTROL 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 AROUNDJune 27, 2012 8
  9. 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 RATIOSJune 27, 2012 9
  10. 10. COST CONTROLCOST 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. 11. 1. PREPARING COMPARATIVE COST FIGURES OF REPLACEABLE MATERIALS, MACHINES OR LABOUR.2. COMPARING FINANCIAL FIGURES WITH COST FIGURES.June 27, 2012 11
  12. 12. BENCHMARKINGBENCHMARKING- 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. 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. 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 COSTSJune 27, 2012 14
  15. 15. BALANCED SCORECARDBALANCED 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 PERSPECTIVEJune 27, 2012 15
  16. 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. 17. LINEAR PROGRAMMINGACCORDING 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≤ZREQUIREMENTS-6. OBJECTIVE FUNCTION.7. CONSTRAINTS.8. LINEARITY.9. NONEGATIVITY10. FINITENESS.June 27, 2012 17
  18. 18. ADVANTAGES1. 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. 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. 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. 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. 22. CPM NETWORK DIAGRAM 4 9 6 4 1 2 2 3 3 6 1 5 2 7 8 5 7 10June 27, 2012 22
  23. 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. 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. 25. I GANTT CHARTABCD EJune 27, 2012 25
  26. 26. II GANTT WITH MILE STONEA 1 2 3 4B 5 6 7 8C 9 10 11 12D 13 14 E 15 16 17 18 19June 27, 2012 26 A
  27. 27. III GANTT WITH MILE STONES AND NETWORK OF MILESTONESA 1 2 3 4B 5 6 7 8C 9 10 11 12D 13 14 E 15 16 17 18 19June 27, 2012 27 JAN FEB MAR APRIL MAY JUNE JUL AUG SEP
  28. 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. 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 5June 27, 2012 29
  30. 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. 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. 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. 33. HOW MIS IS USED1. 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. 34. LIMITATIONS OF INFORMATION TECHNOLOGY CONTROL1. PERFORMANCE LIMITATIONS2. BEHAVIOURAL LIMITATIONS3. HEALTH RISKSJune 27, 2012 34
  35. 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. 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. 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. 38. ANY QUERY ?
  39. 39. THANK YOU

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