Principles of Management unit 5

PRINCIPLES OF MANAGEMENT
MG8591
POM - Unit II
Prepared By,
Mrs.S.SRIDEVI

Functions of
Management
Planning
activities to
achieve the
organization's
objectives
Organizing
resources and
activities to
achieve the
organization’s
objectives
Staffing
the
organization
with qualified
people
Directing
employees’
activities
toward
achievement
of objectives
Controlling
the
organization’s
activities
to keep it
on course
4:32 AM

PRINCIPLES OF MANAGEMENT
UNIT V CONTROLLING
System and process of controlling –
budgetary and non-budgetary control
techniques – use of computers and IT in
Management control – Productivity
problems and management – control and
performance – direct and preventive
control – reporting.

Control
Managerial process
Process which guides the activities
towards goals
Planning and control are twins
Planning – deciding of goals and
objectives and means of achieving it
Controlling-helps managers to identify if
organisation is on track for goal
achievement
Well developed plan provides
benchmarks used in control process
4:32 AM POM - Unit 1

Control
Measurement of actual performance and
taking corrective action
Serves other roles
Cope uncertainty
Detecting irregularities
Identifying opportunities
Handling complex situations
Decentralising authority
Controlling is the process of regulating
organisational activities so that actual
performance conforms to expected
organisational goals and standards

Controlling
Measures the deviation of actual
performance from standard
performance and discovers the
causes of such deviations and helps in
taking corrective actions
Purpose
Determine whether people and parts of
org are on target
Achieve progress towards planned
objectives

Definitions
Controlling is a systematic exercise which is
called process of checking actual
performance against the standards or plans
with a view to ensure an adequate progress
and satisfactory performance -
E.F.L.Brench
Just as a navigator continually takes reading
to ensure whether he is relative ro a planned
action, so should a business manager
continually take reading to assure himself
that his enterprise is on right course –
Donnell
Controlling is the measurement and
correction of performance in order to make
sure that enterprise objectives and the plans
devised to attain them are accomplished –

Characteristics
1. Controlling process is universal
2. Controlling is a continuous process
3. Action based
4. Forward looking
5. Closely related to planning
6. Pervasive function

Need of Control
1.

Importance of Controlling
1. Policy verification
2. Adjustments in operations
3. Phycological pressure
4. Coordination
5. Employee morale
6. Efficiency and Effectiveness

Various Managerial Controls
4:32 AM POM - Unit III
1. Financial controls
2. Budget controls
3. Marketing controls
4. Human resource controls
5. Computers and Information control

Limitations of Controlling
1.

Controlling Process
i. Establishment of standards
ii. Measurement of performance
iii. Comparing actual performance with
standards
iv. Finding deviations
v. Taking corrective actions

Controlling Process

Critical Control Points and
Standards
 Points selected for control process are called critical points
 Attention to factors critical to evaluate the performance
against plans
Types of critical point standards
i. Physical standards
ii. Cost standards
iii. Capital standards
iv. Revenue standards
v. Program
vi. Intangible
vii. Goals as standards
viii. Strategic control

Interrelationship between
Planning and Control

Types of Control
1. Feedback or historical control
2. Concurrent control
3. Feed forward control
4. Strategic control
5. Tactical control
6. Operational control

Types of Control
1. Feedback or historical control
– post action control
- examines what has happened in the past
- process of adjusting future action on the
basis of information about the past performance
-eg. Disciplinary action, budgetary results and
quality inspections
-used to plan the future with the aid of past errors or
success
2. Concurrent control
- real time control
- provides measure for taking corrective action or doing
adjustments while the programme meets any
obstacle
- eg. Chart in organizational control
3. Feed forward control
-involves evaluation of inputs and taking corrective action
before a particular operation is completed
-preventive in nature
- Allows action taken in advance of problem
- eg. Cash budget 4:32 AM POM - Unit III

Comparison of feedback and
feed forward systems

Types of Control
 On the basis of control responsibilities that
differ with respect to managerial level
4. Strategic control
-involves monitoring critical environmental
factors that affects viability of strategic plans
-assessing the effects organisational
strategic actions
-ensures plan implementation
-domain of top level mgr who must insure
core competencies are developed and
maintained
-long time frames involved and short ones
in turbulent environment

Types of Control
5. Tactical control
- focuses on assessing the
implementation of tactical plans at
departmental levels, monitoring
associated periodic results and taking
corrective action
-under direction of middle mgrs.
-periodical time frames(weekly or
monthly reporting)
-involves departmental level
objectives programs and budgets

Types of Control
- involves overseeing the
implementation of operating plans,
monitoring day-to-day results, and
taking corrective action
- responsibility of lower-level mgr
-day-to-day control
-concern with schedules, budgets,
rules, and specific outputs of individuals

Requirements of Effective
Control
1. Suitability
2. Flexibility
3. Economical
4. Simple
5. Forward looking
6. Motivation
7. Objective
8. Controls should reflect the organization
structure and needs
9. Control should lead to corrective action
10. Less time

Budgetary Control Techniques
1. Budgetary control
Meaning of Budget :
-vital role of planning and controlling for future
activities
-estimate of future needs calculated
Budget is a statement of management policy expresses in
physical and monetary terms
J Fred Meston - A budget is the expression of firm’s plan in
financial form for a period of time in future
Brown and Howard – A budget is a pre-determined statement
of management policy during a given period which provides a
standard for comparison with the results actually achieved

Budgetary Control Techniques
The International Capital Market
Association (ICMA) – Budget is a financial
and quantitative statements, prepared and
approved prior to a defined period of time
of the policy to be pursued during that
period for the purpose of attaining a given
objective
The act of preparing budgets is called
budgeting

Meaning of budgetary control
Budgetary control is the process of
determining various budgets for the
business unit for future
System of controlling costs through
preparation of budgets(budgeting)
It refers to the principles , procedures and
practices of accomplishing given objectives
through budgets
Utilizes production budget, sales budget
Done with intention of minimizing wastage
and maximizing efficiency of various
departments

Objectives/ Importance of
budgetary control
1. Used to plan and control the income
and expenditure
2. Aim to maximize profits
3. Decides and control expenditure on
development and research
4. Adequate working capital
5. Coordinates activities in various units
6. Decentralizes responsibilities of
individuals
7. Motivates mgrs.
8. Used as a Performance evaluation

Advantages of budgetary
control

Limitations of budgetary control
1. Inflexibility
2. Inaccuracy
3. Distortion of goals
4. Hiding inefficiencies
5. Expenditure

Essential of Effective of
budgetary control
1. Definite objectives
2. Communication
3. Support of top management
4. Flexibility
5. Budget committee
6. Budget education
7. Good feedback
8. Participation
9. Reward and punishment
10. Proper recording of operations

Classification of Budget
1. Functional classification
2. Time classification
3. Rigidity

1. Functional classification
a. Sales budget
b. Production budget
c. Cost of production
d. Material requirement
e. Direct labour budget
f. Capital expenditure budget
g. Administration cost budget
h. Research and development budget
i. Time, space, material and product budget
j. Cash budget
k. Profit budget

2. Classification based on time
a. Long term
b. Short term
c. Current budget

3. Classification based on Rigidity
a. Fixed budget
b. Flexible budget
c. Alternative budget
d. Supplementary budget

Budget Control Techniques
Steps involved in the budgetary control
techniques:
1. Set the objectives clearly
2. Formulating the necessary plans to ensure that the desired
objective are achieved.
3. Translating the plans into budgets
4. Relating the responsibilities of executives to the budgets
5. Continuous comparison of the actual results with that of the
budget & the ascertainment of deviations.
6. Investigating into the deviations and establishing the
causes.
7. Presentation of information to the management relating the
variances to individual responsibilities.
8. Corrective action of the management to present recurrence
of variance.

Few Budget Control Techniques
1. Planning-programming budgetary systems (PPBS)
2. Zero-base budgeting
3. Variance analysis
4. Responsibility accounting
5. Adjustment of funds
6. Human resource accounting

Planning –Programme Budgetary
Systems (PPBS)
1. Analysing the basic objectives of policies of each activity in
the organization
2. Analysing the each activity of the programme in the
organization
3. Measuring the total costs of the programme.
4. Finding the best alternative
5. Implementing the systems in a preferred manner
6. Following-up the activities in the organization are important.

Zero-base budgeting (ZBB)
1. Steps in ZBB:
i. Decision package
ii. Ranking
iii. Allocation of resources
2. Significance of ZBB:
i. Forces the managers to plan each programme
ii. High priority of new programme can be funded totally or in
part by rejecting or reducing current activities.
iii. Elimination of duplication of effort
iv. Evaluations of operations, efficiency and cost effectiveness
done throughout the operating year.
v. ZBB is also an educational process that can promote the
development of the management team

Variance Analysis
1. Budgets of different departments are made with estimated
figures.
2. It is compared with actual accounting figures.
3. Find variances.
4. These variances may be favourable and
unfavourable/adverse.
5. This technique of budgetary control is helpful for reducing
the cost of business.

Variance Analysis Example

Responsibility Accounting
• In this technique, we create cost centre, profit centre and
investment centre.
• All these centres are just like department of any organisation.
• Classify all employees work on the basis of their centres.
• Every employee’s responsibility is fixed on the basis of his
target or performance.
• Their performance is recorded manually and their
accountability is fixed.
• Through this budgetary control, we can take the decision of
promotion and demotion of our employees or find other
reasons if we do not obtain our targets.

Example

Human resource accounting
• It means to measure the cost and value of the people in the
organization.
• In every organization, the costs of recruiting and training
personnel are treated as operating expenses.
• Human resources attempt the accounting to significant costs
of recruitment and training.
• It helps managers regulate the quality of newly hired
personnel, as well as monitor current employee’s
developments and daily performances.
• Common control types include performance appraisals,
disciplinary programs, observations, and training and
development assessments.

Adjustment of Funds
• In this technique, the top management take the decision to
adjust fund from one project to other project.
• For example, when Govt. of India makes budget for allocation
of its total fund in different projects, at that time, it has to take
decision for adjustment of funds.
• For example, railway department needs money for specific
new project. If Govt. of India sees that project of IT has
excess money, then it can be utilized for railway budget.
• In adjustment of funds, we also use fund flow analysis. We
can also decrease misuse of funds by forecasting proper
amount.

Non-Budgetary Control
Techniques
a. Traditional techniques
 Statistical data and charts
 Personal observation
 Operational audits
 Break-even analysis
 Special reports
 Responsibility accounting
 Balanced scorecard.
b. Modern techniques
 Linear Programming
 Program Evaluation & Review Techniques (PERT)
 Critical Path Method (CPM)
 Gantt Chart
 Benchmarking

Statistical data and charts
• For effective management control, the various statistical data
and charts can be used in every organization.
• Statistical information of the past and data intended for the
future can be used for control.
• Tables, charts and graphs are examples.
• Charts are preferred as it is self-explanatory, attractive and
meaningful.

Personal Observation
• It is a direct tool of control.
• It is a time-consuming process.
• It helps the managers for their subordinates’ characters,
attitudes and skills to their job.
• Mistakes committed by the workers can be corrected by the
manager directly.

Operational Audits
• Audit is performed by the organization to
ensure that its assets are properly
safeguarded and its financial records are
reliably kept.
• It concentrates on the operations of the
organization. Hence the process is also
known as operational auditing.
• There are two types of audits
• Internal audit
• External audit

Break-even analysis
• Break even analysis is an analysis which is
used to determine the point at which revenue
received equals the costs associated with
receiving the revenue. It involves a chart which
represents the overall volume of sales
necessary to cover costs.

Break-even analysis –
Example for table business
Fixed cost (space and setup cost)= 50,000
Each table cost (material+labour) = 100
Sell each table =20
Must sell 334 tables before breaking even

Special Reports
• Executives can give special reports for certain projects of
non-repetitive situations.
• Such reports can also be given on the progress and
performance of individual departments.
• The prepared reports are submitted to the superiors and they
can analyse to control the process.

• It divides the organization into small units where
manager of each unit is responsible for achieving
the targets of his unit.
• These units are called responsibility centers and
head of each responsibility center is responsible for
controlling the activities of his centre.
• Four types:
• Control centre
• Revenue centre
• Profit centre
• Investment centre

Balanced Scorecard
• It is a performance measurement tool that looks at
four areas such as financial, customer, internal
processes and people/innovation/growth assets
that contributes to a company’s performance.
• The four general perspectives are:
• Financial perspective
• Customer perspective
• Internal processes perspective
• Innovation and learning perspective

Linear programming
• Linear programming is a planning technique that
permits some objective function to be minimized or
maximized within the framework of given situational
restrictions.
• LP is a popular tool for allocating the scarce resources
with an objective of making an optimal use of them.
• Purpose of LP in management:
• Deals the determination of optimal allocation of
limited resources to meet given objectives.
• The objective is usually maximizing the profit,
minimizing the total cost, and maximizing the utility
cost.
• LP is a powerful mathematical technique for finding
the best use of the limited resources of a concern

Linear programming

PERT
• PERT is one of the network analysis techniques.
• Network analysis is being used as a tool of management for
planning, monitoring and controlling.
• This technique helps a project to break into smaller activities.
• The activities are arranged in a sequence of activities.
• Finally the shortest time required is found to complete the
entire project.
• PERT chart is a graphic representation of a project’s
schedule, showing the sequence of tasks, which can be
performed simultaneously.
• PERT is developed as a R&D planning tool. PERT activity
cannot be estimated with accuracy.
• PERT is suitable for R&D project where the time period is
probable.

Elements of PERT – Activity, Event & path
• Activity – represented by arrow – is an operation
required to reach the system objectives
• Event – represented by circle – show the sequence
in which the events must occur
• The series of activities and events through the
network is called “the path”.
• Characteristics of PERT:
• Optimistic time
• Pessimistic time
• Most likely time

PERT
 Program Evaluation and Review Technique
(PERT)
 A flow chart diagram that depicts the sequence of
activities needed to complete a project and the time or
costs associated with each activity.
 Various parameters in developing a PERT
 Events: Endpoints for completion of major activities
 Activities: time or resources required for each activity
 Slack time: The time that a completed activity waits
for another activity to finish so that they can begin
jointly on another activity
 Critical path: the longest path of activities that allows
all tasks to be completed,

PERT-Creating a website

Critical Path Method (CPM)
• CPM is a mathematically based algorithm for
scheduling a set of project activities.
• CPM is based on the perfect time estimation. It is
used for optimizing resource allocation and
minimizing overall cost for a given project.
• CPM can reduce the time for completion of project.
CPM is applicable to both large and small projects.
• In CPM, two time estimates are made: normal time
(N) and expedited time (E). Expedited time is also
known as crash time.
• It is an important tool for effective project
management commonly used with all forms of
projects.

CPM Procedure
4:32 AM POM - Unit V

Comparison of PERT and CPM
4:32 AM

Uses of PERT and CPM

Gantt Chart

Benchmarking

Benchmarking Process

Benchmarking

Benchmarking
 Example :
◦ Toyota Motor Corporation’s following the
footsteps of Ford Motor Corporation
◦ Adaptation of the Ford’s Just-in-case
system into Toyota’s Just-in-time system

Use of computer in Management Control
a. Sales forecast and control
b. Payroll
c. Business management
d. Accounting
e. Personnel management information
f. Cost accounting
g. Manufacturing information control
h. Banking and credit

IT in Management Control
 Management Information System (MIS) is the IT which is
explored for its maximum usage in management activities
such as planning, organizing, and controlling.
 MIS is used for decision making in the various functional
areas of business. MIS is a new technique which has brought
with increased accuracy and speed to the management.
 MIS is defined as “a system of obtaining, abstracting, storing
and analyzing data to produce effective information for the
use in planning, controlling and decision making process”.
 The man machine combination helps to solve the complex
business and industrial problems quickly.

Characteristics of good MIS
1. Information must be clear and conciseness
2. The information should ne relevant to the business
organization
3. MIS must be simple and easy to understand
4. It must help the process in decision-making and corrective
actions
5. It should help in solving the complicated problems
effectively.

Need or importance of MIS
1. Internal factors
1. Resources
2. Planning and control information
3. Operational information
4. Production function
5. Marketing function
2. External information needs
1. Political and government
2. Economic condition
3. Technology

Resources of MIS
MIS consists of following 4 major
resources
1.Computer hardware
2.Software
3.Data
4.People

Implementation of MIS
1.Input data collection
2.Information storage and retrieval
3.Analysis
4.Output
5.Decision making
6.Action

Objectives of MIS
1. To provide long term plans
2. To find out new opportunities
3. To allocate resources
4. To provide planning and control
5. To provides sales forecasting
6. To help management decision about
quality, quantity, and market price etc
7. To provide government policy and
regulation
8. To provide effective managerial
activities

Important Devices for Information
System
1. Speech recognition devices
2. Network
Applications of MIS:
1. Marketing – sales planning, analysis &
forecasting
2. Manufacturing – production planning & cost
control analysis
3. Logistics – Planning & control
4. Finance and accounting – cost analysis &
planning, income measurement
5. Top management – Strategic planning and policy,
resource allocation

MIS for different management levels
2. Middle Management
3. Top-level strategic planning

Productivity
• Productivity is a measure of how much input required to
produce a given output. i.e. the ratio output to input is
called productivity.
• Factors affecting productivity:
1. Technology
2. Human resources
3. Government policy
4. Machinery & equipment design
5. Skill of the workers
6. Capital
7. Research and development
8. Trade unions
9. Raw materials & Production Processes
10. Plant and job layout
11. Land and buildings
12. The size of the plant

Typical Productivity measures
• Physical Productivity
• Ratio of the amount of product to the
resources consumed
• Functional Productivity
• Ratio of the amount of the functionality
delivered to the resources consumed
• Economic Productivity
• Ratio of the value of the product produced
to the cost of the resources used to
produce it.

Role of Productivity
• For management
1. To get high profit
2. To improve the resources
3. To increase the sales
• For workers
1. Job satisfaction and job security
2. Promotion
3. Higher salary
4. Better working conditions
• For customers
1. To get quality products
2. Reduced prices
3. Easily available

Deming’s 14 points for improving productivity
1. Plan for the long-term future
2. Never be complacent concerning the quality of
your product.
3. Establish statistical control over your production
processes and require your suppliers to do so as
well
4. Deal with the best and fewest numbers of
suppliers
5. Find out whether the problems are confined to
particular parts of the production process or stem
from the overall process itself.
6. Train workers for the job that you are asking them
to perform
7. Raise the quality of your line supervisors.

Continuation…….
8. Drive out fear
9. Encourage departments to work closely together
rather than to concentrate on departmental or
divisional distinctions
10. Do not adopt strictly numerical goals
11. Require your workers to do quality work
12. Train your employees to understand statistical
methods
13. Train your employees in new skills as the need
arises.
14. Make top managers responsible for implementing
these principles

Production & Operations Management

Objectives of Operations Management
1. Right quality of product
2. Right quantity of product
3. Less manufacturing cost
4. Manufacturing schedule

Product Analysis

Product Design and development procedure
1. Create ideas
2. Screening the alternatives
3. Selection
4. Prepare preliminary design
5. Final decision
6. Select the process

CONTROL & PERFORMANCE
1. Amount of control in an organization
2. Inventory control or purchase control
3. Maintenance control
4. Quality control
5. Cost control

Amount of control in an organization
4:32 AM
 The total amount of control exercised in a group or
organization can increase and the various
participants can acquire a share of this augmented
power.
 It may decrease and all may share the loss.

Inventory or Purchase Control
 Inventory consists of stores of goods and other
stocks.
 The inventory control or purchase control is an
element of material control.
 Material procurement is known as the purchase
function.
 Importance of inventory control:
1. Efficient utilization of resources
2. Useful in minimizing loss
3. Economically benefit for purchasing
4. It increases coordination with other
departments
5. It provides and maintains the best consumer
service.

Inventory Costs
 5 types of inventory costs
1. Item cost
2. Ordering cost
3. Cost of carrying inventory
4. Shortage cost
5. Fixed overhead costs

Economic order Quantity
 EOQ represents the optimum order which
minimizes the total cost of inventory management.

Just In Time (JIT) System

Maintenance Control
Maintenance department has to exercise effective
cost control to carry out the maintenance functions in
a pre-specified budget, which is possible only
through the following measures:
1. Line supervisors must of appraised of the cost
information of the various materials
2. A monthly review of the budget provisions and
expenditures actually incurred in respect of each
center / shop will provide guidelines to the
departmental head to exercise better cost control.
3. The controllable elements of cost such as
manpower cost and material cost can be
discussed with the concerned personnel.
4. Proper handling of the equipment by the
operators also reduces the frequency of repair.

Quality Control
 It refers to the technical process that gathers,
examines, analyses and report the progress
of the project & conformance with the
performance requirements
 Steps in QC process
1. Determine parameter to be controlled
2. Establish its criticality and whether to be
controlled before, during or after results are
produced
3. Establish specifications for parameters which
provides limits of acceptability and units of
measure
4. Produce plans for control which specify means
by which characteristics will be achieved and
variation detected and removed

Quality Control
 Steps in QC process
5. Organise resources to implement the plans
for quality control
6. Install sensor at appropriate point to sense
variance from spec
7. Collect and transmit data to a place for
analysis
8. Verify the results and diagnose the cause of
variance
9. Propose remedies and decide on the action
needed to restore the process to previous
position
10.Take the agreed action and check that the
variance has been corrected

Quality Control
 Advantage of QC
◦ Better products
◦ Good reputation for company due o
service
◦ High revenue from satisfied customers
 Disadvantage of QC
◦ Needs more manpower/operations
◦ More time to the initial process

Cost Control
 It is the measure taken by management
to assure that the cost objectives set
down in the planning stage are attained
and to assure that all segments of the
organisation function in a manner
consistent with its policies
 Steps involved in designing process of
cost control system
1. Establishing norms
2. Appraisal
3. Corrective measures

Cost Control
 Financial statements
◦ One of the essential financial control technique for controlling financial
recouces
◦ Reflects financial health for a period
◦ Users : Shareholders, creditors, employees, trade unions,
managers,economists, MP, SEBI, Govt. dept., tax authorities, commercial bank
 Importance and advantages of financial statements
◦ 1. Management
◦ 2. Shareholders
◦ 3. Creditors
◦ 4. Labours
◦ 5. Public
 From financial statements people can analyse, compare and
comment on it
 Limitations
◦ 1. Data approximate
◦ 2. Current prices not updated
◦ 3. Non-monetary factors ignored
◦ 4. Info incomplete
◦ 5. Qualitative info ignored

Cost Control
 Contents of Financial statements
(i) Income statement
(ii) Balance sheet
(iii) Cash flow statement
Income statement:
 profit and loss account
Summarises revenues and expenses
Guides mgmt. to judge progress
Analyses business successes
Reports results of business activities and
indicates reason for profit or lack

Cost Control
 Balance Sheet
◦ Statement which sets out the financial
conditions of an org.
◦ Shows organisation assets, liabilities,
stockholders’ equity os the report date
◦ Analysis of BS with profit and loss
account gives financial

Cost Control
 Balance Sheet

Cost Control
(iii) Cash Flow Statement
shows the impact of transactions
on cash position of the firm and it
includes all transactions on cash
position of the company during
reporting period

Return on Investment (ROI)
• Broadest measure of overall
performance of a business
• Primary objective is to obtain
satisfactory ROI
• Used to measure efficiency

Return on Investment (ROI)

Direct and Preventive Control
 Managers use approaches to control
funds and resources and produce
maximum results
◦ Direct control
◦ Preventive control
 Direct Control :
◦ termed as detective controls is an attempt to
detect undesirable acts
◦ Involves comparing std or plans in terms of
specific parameters like time, cost, quantity,
quality
◦ Finding undesirable deviations and correcting
is direct control

Direct Control
◦ Factors influencing direct control
 Uncertainty
 Lack of knowledge experience
 Lack of communication
 Lack of coordination
 Steps for DC
1. Performance measurement
2. Effectively time utilization
3. Discovering the errors on time
4. Employee paricipation
5. Effective coordination

Preventive Control
It prevents undesirable acts occurrence
Proactive controls designed to prevent
loss, error or omission
Eg. separation of duties, proper
authorization, adequate documentation,
physical security over cash and other
assets
Prevents deviation from plan with focus on
following questions

Preventive Control
Assumptions underlying preventive control
systems
(i) The qualified managers make
minimum of errors
(ii) The management principles can be
used to measure performance
(iii) The application of management
principles can be evaluated

Reporting
 Management reporting is a part of
management control system which provides
various information to the management in the
form of report and statement at regular
interval
 Management reporting : A system of
communication, normally in the written form,
of facts which should be brought to the
attention of various levels of management
who use them to take suitable action
 Process of providing information to the
management

Objectives of Management
Reporting

Essential of Good Reporting System
(i) Proper form
(ii) Contents
(iii) Promptness
(iv) Accuracy
(v) Comparability
(vi) Consistency
(vii) Relevancy
(viii) Simplicity
(ix) Cost-Benefits analysis
(x) Principle of Exception
(xi) Flexibility
(xii) Controllability

Classification Reports
2 ways to report to management
1. Oral report
2. Written report
Written reports classified as
(i) According to Object or Purposes
(a) External reports
(b) Internal reports - meant for
top, middle, junior level mgmt.
(ii)According to Period
(a) Routine reports
(b) Special reports

Classification Reports
(ii)According to Functions
(a) Operating reports
1. Control reports
2. Information reports
3. Venture measurement
reports
(b) Financial reports
1. Static reports
2. Dynamic reports

THANK YOU ALL

Principles of Management unit 5

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