Principles of Management – Chpt 17 : Controlling

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

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Principles of Management – Chpt 17 : Controlling

  1. 1. CHAPTER 17 CONTROLLING
  2. 2. 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.
  3. 3. PLANNING
  4. 4. 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”
  5. 5. 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.
  6. 6. Steps in Control process Establishing Measuring standards performance Taking corrective action Comparison of actual with standards
  7. 7. Requirements of effective control system Feedback Objective Suitability Prompt reporting Pointing out exceptions Flexible Economy Indelible Suggest remedial action Motivation
  8. 8. Techniques of controlStatistical Management Gantt Critical path control information milestone method reports system chartpersonal Zero-based observation budgetingCost accounting and Production cost control control ControlBreak –even Performance analysis evaluation Special control Managerial repots statisticsmanagement Standard return on Responsibility audit costing Internal Audit investments Accounting
  9. 9. Pert/CpmAdvantage 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:
  10. 10. 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:
  11. 11. Limitations of pert/cpm Error in estimation of time and cost application Time consuming and expensive
  12. 12. Distinction between pert and cpmPERT CPMThree times estimation done Three times estimation doneIt gives importance to time It gives importance to costIt is suitable where activity It is suitable where activity timings are not known timings are well knownIt is event oriented It is activity oriented
  13. 13. Characteristics or features of controlControlling process An Essence of action Universal Influencing factor Forward Control involves looking management Dynamic process
  14. 14. Need of control Judging the accuracy of standards: Minimize dishonest behavior: Better performance:
  15. 15. Advantages of control Adjustments in operation verification of policy managerial accountability Psychological pressure Maintaining morality Co-ordination Efficiency
  16. 16. Limitations of control Absence of perfect standards Uncontrollable factors Difficulty in fixing responsibility Expensive process
  17. 17. Types of managerial control Standardizing control preserving control Delegation of authority control Measurement control Motivating control
  18. 18. 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”
  19. 19. Budgetary control & Definitionof 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.”
  20. 20. 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.
  21. 21. 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.
  22. 22. Advantages of budgetary control promotion ofTool for planning efficiency the activities Better utilizationThinking in advance of resources Promoters balanced activitiesCo-ordination of efforts Budgetary Achievement Criteria of self- of goals examination Delegation of Control of authority expenditure Encourages Fixation of Ensures proper Solving financial exchange of responsibility communication difficulties information
  23. 23. Disadvantages, Limitations orproblems of budgetary control Inaccuracy personal bias Non-availability of Co- operation Rigidity Results are not attainable
  24. 24. Disadvantages, Limitations orproblems of budgetary control Consistency Time Consuming process Ineffective budgetary control Discourage the initiative More paperwork
  25. 25. Essentials of Effective budgeting system Efficient organization Preparing master budget Quick reporting Flexible
  26. 26. Essentials of Effective budgeting system Support of top management Based on reasonable assumption Reward and punishment Appropriate authority
  27. 27. Techniques of controlStatistical Management Gantt Critical path control information milestone method reports system chartpersonal Zero-based observation budgetingCost accounting and Production cost control control ControlBreak –even Performance analysis evaluation Special control Managerial repots statisticsmanagement Standard return on Responsibility audit costing Internal Audit investments Accounting
  28. 28. Types of budgets Master Physical property Sales budget budget budgetCash budget Research and developmentProduction budget budget Types of Production Time and budgets overhead material budget budget Production Selling and cost budget distribution Balance cost budget sheet budget Supplies budget
  29. 29. Budget can also be classified as Fixed budget Flexible budgets
  30. 30. Preparation of a budget Sound forecasting Developed accounting system Fixation of responsibility centers Formation of budget committees
  31. 31. Preparation of a budget Clear definition of business policies Statistical information Support of top management Budget period

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