This document discusses the process of controlling in a business context. It begins by defining controlling and its importance in achieving organizational goals and ensuring standards are met. It then outlines key aspects of the controlling process: setting standards, measuring performance, comparing actual performance to standards, analyzing any deviations, and taking corrective measures. The document also notes some limitations of controlling, such as its inability to control external factors and difficulty in setting quantitative standards. It provides examples throughout to illustrate controlling concepts.

1. BUSINESS STUDIES
PROJECT
MADE BY
ANANT AGARWAL
XI E

2. • INTRODUCTION AND MEANING
•IMPORTANCE OF CONTROLLING
•LIMITATIONS OF CONTROLLING
•PROCESS OF CONTROLLING

3. Controlling is a very important managerial function. It is concerned with
taking necessary measures or preventive actions(i.e., setting up standards;
measuring of performance,etc) to ensure achievement of organisational goal
It is a comparison of actual performance with the planned performance. If
there is any difference or deviation then finding the reasons for such deviation
and corrective measures are taken to prevent or stop the reasons in future to
reduce the deviation and improve the performance.

4. IMPROVING
EMPLOYEE
MOTIVATION
ENSURE ORDER AND
DISCIPLINE
MAKING EFFICIENT USE
OF RESOURCES
FACILITATE
COORDINATION IN
ACTION
JUDGING OF ACUURACY
OF STANDARDS
HELPS IN IMPROVING
THE PERFORMANCE
HELPS IN ACHIEVING
ORGANISATION GOAL
IMPORTANCE
OF
CONTROLLING
HELPS IN
MINIMISING
ERRORS

5. • Helps in achieving organisational goals:
When the plans are made in the organisation these are directed towards achievement of
organisational goal and the controlling function ensures that all activities in the organisation
take place according to plan and if there is any deviation, timely action is taken to bring back
the activities on the path of planning. When all the activities are going according to plan then
automatically these will direct towards achievement of organisational goal.
• Judging accuracy of standards:
Through strategic controlling we can easily judge whether the standard or target set are
accurate or not. An accurate control system revises standards from time to time to match
them with the environmental changes.

6. • Making efficient use of resources:
Each activity is performed according to predetermined standards. As a result there is most
and effective use of resources.
• Improving employee motivation:
An effective control system communicates the goals and standards of appraisal for
employees to subordinates well in advance.
A good control system also guides employees to come out from their problems. This free
communication and care motives the employees to give better performance.
• Ensures order and discipline:
Control creates and atmosphere of order and discipline in the organisation. Effective
controlling system keeps the subordibates under check over dishonesty and fraud of
employees.

7. • Facilitate coordination in action:
Control helps to maintain equilibrium between means and ends. All the departments are
controlled according to predetermined standards which are well coordinated with one
another. Control provides unity of direction.
• Controlling helps in improving the performance of the employees:
Controlling insists on continuous check on the employees and control helps in creating an
atmosphere of order and discipline.
There are two measures which can be exercised on employees’ performance:
a) Self appraisal report.
b) Performance appraisal report by supervisors.

8. NO CONTROL ON
EXTERNAL FACTORS
RESISTANCE
FROM EMPLOYEES
Eg: government
policy , technological
changes
DIFFICULTY IN SETTING
QUANTITATIVE
STANDARDS
Eg: human behavior,
job satisfaction
COSTLY
AFFAIR
LIMITATIONS OF
CONROLLING

10. • Setting up standards:
Standards means target or the yardstick against which the actual performance is measured.
The standards are the basis for comparing performance and hence, must be achievable
and should be set up keeping in mind the resources of organisation and must be
numerical or in measurable terms.
• Measuring of performance:
 After setting up of standards the performance of the employees is measured by
evaluating the actual work done by the employees.
 When the performance can be measured numerically then it is very convenient to
measure the performance.

11.  While measuring the performance the quantitative as well as qualitative aspect of
performance is kept in mind.
 Sometimes employees achieve the quantitative standards by ignoring qualitative
standards.
 Generally the performance of the managers is measured by looking at the overall
efficiency level of the organisation.
Eg: the performance of research and development department is measured by change in
technology and updation of production department. The performance should be meaured
periodically in short period of time.
• Compare performance against standards:
After measuring of performance the manager compares the actual performance with the
planned performance and standard.

12.  If there is match in both then the controlling function end there only. But if there is
mismatch or deviation then the manager tries to find out the extent of deviation.
 If the deviation is minor then it should be ignored otherwise timely actions must be taken.
• Analysing deviations:
All deviations need not to be brought to the notice of top management. A range of deviations
should be established and only cases beyond this range should be brought to the
knowledge of top level mangament.
 These deviations should be classified as one’s which are to be attended urgently and the
others which can be ignored or are not to significant.
 Two ways to control these are:
1. Critical point control
2. Management by exception

13. CONTROLLING
DEVATIONS
CRITICAL POINT
CONTROL
MANAGEMENT
BY EXCEPTION

14. 1.
Critical point control:
It means keeping focus on some key areas and if there is any deviation in these key areas,
then it must be attended urgently. Key areas are those which have impact on whole
organisation.
Eg: if there is increase in production cost by Rs. 5 per unit and there is increase in postal
cost by Rs. 20, then more focus should be to find out reasons for increase in cost of
production as it will affect the profit and future revenue of organisation whereas postal
cost is incurred rarely and managers have no control over postal cost.
2.
Management by exception:
It means the manager who tries to control every thing may end up controlling nothing. The
deviations which are beyond the specific range should only be handled by managers
and minor deviations can be ignored. Manager should not waste his time and energy in
finding solutions for minor deviations rather he should concentrate on removing
deviations of high degree.

15.  Advantages of Management by exception are:
I.
It saves time and efforts of managers.
II.
It focuses attention of managers on significant matters.
III. No wastage of time and energy of managers to solve routine problems. These are
solved by subordinates.
IV. It differentiates between critical and simple problems.

16. •
Taking corrective measures:
On comparing the actual performance with the planned performance, the managers will
come to know about the deviations between the plan and actual performance.
The next step is to remove these deviations and bring back things on track i.e., according to
plan.
 Taking corrective measures involves:
I.
Let the situation remain same if the deviations are minor.
II.
Redesign the plans if these are overstated or not matching with the present day
business environment.
III.
Taking corrective measures to improve the performance so that in the future it
matches with the plan.