CBSE Class 12 Business Studies, Controlling

NOTES

Chapter 8: Notes on Controlling

Controlling means ensuring that activities in an organization are performed as per the plans. It also ensures that organization resources are being used effectively and efficiently for the achievement of pre-determined goals.

Importance of Controlling

  1. Accomplishing organizational goals
  2. Judging accuracy of standards
  3. Making efficient use of resources
  4. Improving employee motivation
  5. Ensuring order & discipline

Relationship between Planning and Controlling

  1. Planning provides base for controlling
  2. Planning is theoretical whereas controlling is practical
  3. Planning is looking ahead and controlling is looking back.

Process of Controlling

  1. Setting performance standards: The first step in the controlling process is setting an performance standards which can be compared with actual performance
  2. Measurement of Actual performance: should be measured in an objective & reliable manner. These include sample checking performance reports, etc.
  3. Comparing Actual performance with standards: This is done to know the status of deviation for necessary action.
  4. Analyzing deviation: some deviations in performance can be expected in all activities therefore it is important to determine the acceptable range of deviations.
  5. Taking corrective action: Remedial actions are taken to prevent deviation in future and improve the performance.

Techniques of Managerial Control

Traditional Techniques Modern Techniques
  1. Personal Observation
  2. Statistical Reports
  3. Breakeven Analysis
  4. Budgetary Control
  1. Return on investment
  2. Ratio Analysis
  3. Responsibility Accounting
  4. Management Audit
  5. PERT & CPM

PERT & CPM: Program Evaluation and Review Technique and critical path method techniques help in execution of projects within given schedule structure of costs of planning , scheduling & implementing time bound projects.

Management Information System

It is defined as assembling of facilities and personnel for collecting, processing, storing, retrieving and transmitting information that is required by one or more managers in the performance of their functions. It provides information of different levels of management and across different departments of organization.

It supports planning, decision making and controlling.