Chapter 10 controlling

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Chapter 10 controlling

  1. 1. CONTROLLING DEFINITIONKOONZ AND O’DONNELL “ Control is measurement andcorrection of the performance of activities of subordinates inorder to make sure those enterprise objectives and plansdevised to attain them are being accomplished.”ERNEST DALE “ Control is a system, which not only providesa historical record of what has happened to the business as awhole, but also pinpoints the reasons why it has happenedand provides the data that enable the chief executive or thedepartmental head to take corrective steps if he is on thewrong track.”
  2. 2. Limitations1. Control cannot be exercised over external factors.2. Employees may resist intensive control measures.3. Control may not function on untrained and unqualified employees.4. Control may be resisted as it interferes with individual freedom, thinking and action.5. Difficult to establish for intangible activities.
  3. 3. ELEMENTS OF CONTROL1. AUTHORITY2. KNOWLEDGE3. GUIDANCE4. DIRECTION5. CONSTRAINT6. RESTRAINTAll elements above are necessary for effective control.
  4. 4. ESSENTIALS OF GOOD CONTROLM SYSTEM1. Suitability2. Prompt reporting3. Forward-looking4. Focus on strategic points5. Flexible6. Objective7. Economical8. Understandable9. Remedial action10. Human Factor
  5. 5. FUNCTIONS OF A CONTROLLER1. Establish, coordinate and administer2. Compare actual performance with original standards3. Consult all dept.’s and mgt. segments reg. objectives.4. Administer policies and objectives.5. Coordinate and supervise preparation of reports to govt. agencies.6. Fiscal protection to assets and properties.7. Continuously apprise of economic and social forces.
  6. 6. TECHNIQUES OF CONTROL1.BUDGETARY CONTROLS2.NON-BUDGETARY CONTROLS
  7. 7. BUDGETARY CONTROL - BENEFITS1. Brings efficiency and economy2. Determination of periodical objectives.3. Precision, discipline and direction to routine activities of enterprise.4. Coordinates and integrates the operations of different dept.’s5. Standards against actual performance can be measured.6. Motivates subordinates.7. Democratic or participative management.8. Helps in looking forward to a planned future.
  8. 8. Limitations1. Spending entire Budget amount may be a problem.2. Budgets may create rigid financial structure and managers may have very little choice over funds.3. Budgets may be used to judge results of a manager.4. They may become expensive, meaningless and cumbersome.5. Danger of over-budgeting.
  9. 9. NON-BUDGETARY CONTROL1. Statistical Data and Charts2. Internal Audit3. Special Reports4. Confidential Reports5. Break-Even Analysis6. Information Control7. Personal Observation8. Network Analysis – CPM & PERT
  10. 10. Characteristics of Effective Control System1. Accurate2. Timely3. Objective and Comprehensible4. Focused on Strategic Control Points5. Economically realistic6. Organizationally realistic7. Coordinated with the organisation’s work flow8. Flexible9. Perspective and operational10.Accepted by the organisation’s members
  11. 11. MANAGEMENT INFORMATION SYSTEM (MIS)1. TIMELINESS2. ACCURACY3. RELEVANCE

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