1. Control
• Controlling can be defined as that function of
management which helps to seek planned
results from the subordinates, managers and
at all levels of an organization. The controlling
function helps in measuring the progress
towards the organizational goals & brings any
deviations, & indicates corrective action.
2. • The control function can be viewed as a five-
step process: (1) establish standards, (2)
measure performance, (3) compare actual
performance with standards and identify any
deviations, (4) determine the reason for
deviations, and (5) take corrective action if
needed.
3. • The control process of management ensures
that every activity of a business is furthering
its goals. This process basically helps
managers in evaluating their organization’s
performance. By using it effectively, they can
decide whether to change their plans or
continue with them as they are.
4. • 1. Establishing goals and standards
• The task of fixing goals and standards takes
place while planning but it plays a big role in
controlling also. This is because the main aim
of controlling is to direct a business’s actions
towards its goals. If the members of an
organization know their goals clearly, they will
invest their entire focus in achieving them.
5. • It is very important for managers to
communicate their organization’s goals,
standards and objectives as clearly as possible.
There must never be ambiguities amongst
employees in this regard. If everybody works
towards common goals, it becomes easier for
an organization to flourish.
6. • Measuring actual performance against goals
and standards
• Once managers know what their goals are,
they should next measure their actual
performance and compare. This step basically
helps them in knowing whether their plans
are working as intended.
7. • After implementing a plan, managers have to
constantly monitor and evaluate them. They
must always be ready to take corrective
measures if things are not working properly.
In order to do this, they should keep
comparing their actual performance with their
ultimate goals.
8. • Taking corrective action
• In case there are discrepancies between actual
performances and goals, managers need to take
corrective actions immediately. Timely corrective
actions can reduce losses as well as prevent them
from arising in the future again.
• Sometimes, business organizations formulate
default corrective actions in the form of policies.
This, however, can be difficult to do when it
comes to complicated problems.
9. • Following up on corrective action
• Just taking corrective measures is not enough;
managers must also take them to their logical
conclusion. Even this step requires thorough
evaluations and comparisons.
• Managers should stick to the problem until they
solve it. If they refer it to a subordinate, they
must stay around and see to it that he completes
the task. They may even mentor him personally
so that he may be able to solve such problems by
himself later.
10. Types of Control
• Budgetary Control
• Budgeting simply means showcasing plans and
expected results using numerical information. As
a corollary to this, budgetary control means
controlling regular operations of
an organization for executing budgets.
• A budget basically helps in understanding and
expressing expected results of projects and tasks
in numerical form. For example, the amounts of
sales, production output, machine hours, etc. can
be seen in budgets.
11. • Standard Costing
• Standard costing is similar to budgeting in the
way that it relies on numerical figures. The
difference between the two, however, is that
standard costing relies on standard and
regular/recurring costs.
• Under this technique, managers record their
costs and expenses for every activity and
compare them with standard costs. This
controlling technique basically helps in realizing
which activity is profitable and which one is not.
12. • Financial Ratio Analysis
• Every business organization has to depict its financial
performances using reports like balance sheets and
profit & loss statements. Financial ratio analysis
basically compares these financial reports to show the
financial performance of a business in numerical terms.
• Comparative studies of financial statements
showcase standards like changes in assets, liabilities,
capital, profits, etc. Financial ratio analysis also helps in
understanding the liquidity and solvency status of a
business.
13. • Internal Audit
• Another popular traditional type of control
technique is internal auditing. This process
requires internal auditors to appraise themselves
of the operations of an organization.
• Generally, the scope of an internal audit is narrow
and it relates to financial and accounting
activities. In modern times, however, managers
use it to regulate several other tasks.
14. • Break-Even Analysis
• Break-even analysis shows the point at which
a business neither earns profits nor incurs
losses. This can be in the form of sale output,
production volume, the price of products, etc.
15. • Statistical Control
• The use of statistical tools is a great way to
understand an organization’s tasks effectively
and efficiently. They help in showing averages,
percentages, and ratios using
comprehensible graphs and charts.
