Art of Controlling - Principles of Management

1,650 views

Published on

Control is the last function of management. Success or failure of planning depends on the success or failure of controlling.

For more such innovative content on management studies, join WeSchool PGDM-DLP Program: http://bit.ly/ZEcPAc

Published in: Business, Education
0 Comments
3 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
1,650
On SlideShare
0
From Embeds
0
Number of Embeds
3
Actions
Shares
0
Downloads
184
Comments
0
Likes
3
Embeds 0
No embeds

No notes for slide

Art of Controlling - Principles of Management

  1. 1. Welingkar’s Distance Learning Division CHAPTER-17 CONTROLLING We Learn – A Continuous Learning Forum
  2. 2. Welingkar’s Distance Learning Division Introduction • Control is the last function of management. The controlling function will be unnecessary to the management if other functions of management are performed properly. Planning identifies the activities and controlling regulates the activities. Success or failure of planning depends upon the results of success or failure of controlling. We Learn – A Continuous Learning Forum
  3. 3. Welingkar’s Distance Learning Division We Learn – A Continuous Learning Forum
  4. 4. Welingkar’s Distance Learning Division Definition • “Control is any process that guides activity towards some pre-determined goal. The essence of the concept is in determining whether the activity is the achieving desire results” We Learn – A Continuous Learning Forum
  5. 5. Welingkar’s Distance Learning Division Areas or scope pf control • Control over the policies of the concern, organization, the personnel employed in an organization, capital available to the concern, capital expenditure, production, wages and salaries paid to the employed, the cost of production, public relation, research and development, tools and equipment and overall control. We Learn – A Continuous Learning Forum
  6. 6. Welingkar’s Distance Learning Division Steps in Control process Establishing Measuring standards performance Taking Corrective action Comparison of actual with standards We Learn – A Continuous Learning Forum
  7. 7. Welingkar’s Distance Learning Division Requirements of effective control system • Feedback • Objective • Suitability • Prompt reporting • Pointing out exceptions • Flexible • Economy • Indelible • Suggest remedial action • Motivation We Learn – A Continuous Learning Forum
  8. 8. Welingkar’s Distance Learning Division Techniques of Control We Learn – A Continuous Learning Forum CONTROL Critical path method Statistical control reports Personal observation Cost accounting and cost control Break-even analysis Special control reports Zero-based budgeting Production control Performance evaluation Managerial statistics Standard costing Gantt milestone chart Management information system Management audit Responsibility accounting Internal audit Return on investment
  9. 9. Welingkar’s Distance Learning Division Pert/Cpm Advantages of pert/cpm • Ensure planning: • identification of favorable factors: • Savings of cost and time: • Taking preventive or corrective actions: • Attention on critical activities: • Everything at right: We Learn – A Continuous Learning Forum
  10. 10. Welingkar’s Distance Learning Division Advantage of pert/cpm • Making awareness of responsibilities: • Securing co-operation: • Facilities decision-making: • Improved communication: • Simultaneous performance of works: • Advance control action: • Timely completion of a project: We Learn – A Continuous Learning Forum
  11. 11. Welingkar’s Distance Learning Division Limitations of pert/cpm • Error in estimation of time and cost • Application • Time consuming and expensive We Learn – A Continuous Learning Forum
  12. 12. Welingkar’s Distance Learning Division Distinction between pert and cpm We Learn – A Continuous Learning Forum PERT CPM Three times estimation done Three times estimation done It gives importance to time It gives importance to cost It is suitable where activity timings are not known It is suitable where activity timings are well known It is event oriented It is activity oriented
  13. 13. Welingkar’s Distance Learning Division Characteristics or features of control Controlling process An Essence of action Universal Influencing factor Forward looking Control involves management Dynamic process We Learn – A Continuous Learning Forum
  14. 14. Welingkar’s Distance Learning Division Need of control • Judging the accuracy of standards: • Minimize dishonest behavior: • Better performance: We Learn – A Continuous Learning Forum
  15. 15. Welingkar’s Distance Learning Division Advantages of control • Adjustments in operation • verification of policy • managerial accountability • Psychological pressure • Maintaining morality • Co-ordination • Efficiency We Learn – A Continuous Learning Forum
  16. 16. Welingkar’s Distance Learning Division Limitations of control • Absence of perfect standards • Uncontrollable factors • Difficulty in fixing responsibility • Expensive process We Learn – A Continuous Learning Forum
  17. 17. Welingkar’s Distance Learning Division Types of managerial control • Standardizing control • preserving control • Delegation of authority control • Measurement control • Motivating control We Learn – A Continuous Learning Forum
  18. 18. Welingkar’s Distance Learning Division Budget & Definition of budget • Budget is derived from the French word ‘Budgette’ which means small leather bag. Budget is a financial and quantitative statement. • “Budget is a plan for income or outgo or both, of money, personal, purchased items, sales items, or any other entity about which the manager believes that determining the future course of action will assist in the managerial efforts” We Learn – A Continuous Learning Forum
  19. 19. Welingkar’s Distance Learning Division Budgetary control & Definition of budgetary control • “The term budgetary control is applied to a system of management and according control by which all operations and output are forecast as far ahead as possible and the actual results when known are compared with the budge t estimates.” We Learn – A Continuous Learning Forum
  20. 20. Welingkar’s Distance Learning Division Characteristics of budgetary control • The activities the organizations are presented department-wise or section-wise. • Budgets give the extent of expenditure though which cost control is achieved. • The co-ordination of various departmental activates helps to prepare the determined standards. • Clear-cut and specific requirement of the organization are expressed in quantitative terms. We Learn – A Continuous Learning Forum
  21. 21. Welingkar’s Distance Learning Division Characteristics of budgetary control • Determines the deviations by comparisons and causes of such deviations. • Recommends and implements the corrective actions when ever necessary. • The future is planned on the basis of past experience. • Recording the present performance for comparing purpose with the pre-determined standards. We Learn – A Continuous Learning Forum
  22. 22. Welingkar’s Distance Learning Division Advantages of budgetary control Promotion of Tool for planning efficiency The activities Better utilization of resources Thinking in advance Promoters balanced activit Co-ordination of Budgetary Efforts Achievements Criteria of Delegation of Control of of goals examination authority expenditure Encourages Fixation of Ensures proper Solving financial exchange of responsibility communication difficulties information We Learn – A Continuous Learning Forum
  23. 23. Welingkar’s Distance Learning Division Disadvantages, Limitations or problems of budgetary control • Inaccuracy • personal bias • Non-availability of Co-operation • Rigidity • Results are not attainable We Learn – A Continuous Learning Forum
  24. 24. Welingkar’s Distance Learning Division Disadvantages, Limitations or problems of budgetary control • Consistency • Time Consuming process • Ineffective budgetary control • Discourage the initiative • More paperwork We Learn – A Continuous Learning Forum
  25. 25. Welingkar’s Distance Learning Division Essentials of Effective budgeting system • Efficient organization • Preparing master budget • Quick reporting • Flexible We Learn – A Continuous Learning Forum
  26. 26. Welingkar’s Distance Learning Division Essentials of Effective budgeting system • Support of top management • Based on reasonable assumption • Reward and punishment • Appropriate authority We Learn – A Continuous Learning Forum
  27. 27. Welingkar’s Distance Learning Division Techniques of Control We Learn – A Continuous Learning Forum CONTROL Critical path method Statistical control reports Personal observation Cost accounting and cost control Break-even analysis Special control reports Zero-based budgeting Production control Performance evaluation Managerial statistics Standard costing Gantt milestone chart Management information system Management audit Responsibility accounting Internal audit Return on investment
  28. 28. Welingkar’s Distance Learning Division Types of Budgets We Learn – A Continuous Learning Forum Types of Budget Sales Budget Cash budget Time and material budget Physical property budget Research and development budget Production overhead budget Production cost budget Master budget Selling and distribution cost budget Supplies budget Balance sheet budget
  29. 29. Welingkar’s Distance Learning Division Budget can also be classified as • Fixed budget • Flexible budgets We Learn – A Continuous Learning Forum
  30. 30. Welingkar’s Distance Learning Division Preparation of a budget • Sound forecasting • Developed accounting system • Fixation of responsibility centers • Formation of budget committees We Learn – A Continuous Learning Forum
  31. 31. Welingkar’s Distance Learning Division Preparation of a budget • Clear definition of business policies • Statistical information • Support of top management • Budget period We Learn – A Continuous Learning Forum

×