Republic of the Philippines

Department of Education
Region I
SCHOOLS DIVISION OF ILOCOS NORTE

ORGANIZATION
AND MANAGEMENT
Quarter II - Module 7:
Controlling

MELC: Apply the concept and nature of different

control methods and techniques in accounting and
marketing (ABM_AOM11-IIf-h-36-37)

Prepared by:

JEFFERSON V. BALOALOA
SHS Teacher I
Lanao National High School
Organization and Management - Grade 11
Alternative Delivery Mode
Quarter 2 – Module 7: Controlling
First Edition, 2020

Republic Act 8293, section 176 states that: No copyright shall

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publisher and authors do not represent nor claim ownership over them.

Published by the Department of Education

Secretary: Leonor Magtolis Briones
Undersecretary: Diosdado M. San Antonio

Development Team of the Module

Author: Jefferson V. Baloaloa
Editors:
Reviewer:
Layout Artist/ Illustrator:
Management Team:
Joann A. Corpuz

Joye D. Madalipay

Santiago L. Baoec

Jenetrix T. Tumaneng

Name of EPS In Charge: Archie Mateo Llaguno

Name of PSDS In Charge

Printed in the Philippines by: _____________________________________________

Schools Division of Ilocos Norte

Office Address: Brgy. 7B, Giron Street, Laoag City, Ilocos Norte
Telefax: (077) 771-0960
E-mail Address: ilocos.norte@deped.gov.ph
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ORGANIZATION
AND MANAGEMENT
Quarter II – Module 7:
Controlling

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Introductory Message
For the facilitator:

Welcome to the Organization and Management 11 Alternative Delivery Mode

(ADM) Module on Controlling!

This module was collaboratively designed, developed and reviewed by

educators both from public and private institutions to assist you, the teacher or
facilitator in helping the learners meet the standards set by the K to 12 Curriculum
while overcoming their personal, social, and economic constraints in schooling.

This learning resource hopes to engage the learners into guided and
independent learning activities at their own pace and time. Furthermore, this also
aims to help learners acquire the needed 21st century skills while taking into
consideration their needs and circumstances.

In addition to the material in the main text, you will also see this box in the
body of the module:

Note to the Teacher

This contains helpful tips or strategies that
will help you in guiding the learners.

As a facilitator, you are expected to orient the learners on how to use this
module. You also need to keep track of the learners' progress while allowing them to
manage their own learning. Furthermore, you are expected to encourage and assist
the learners as they do the tasks included in the module.

For the learner:

Welcome to the Organization and Management Alternative Delivery Mode

(ADM) Module on Controlling!

The hand is one of the most symbolized parts of the human body. It is often
used to depict skill, action and purpose. Through our hands we may learn, create
and accomplish. Hence, the hand in this learning resource signifies that you as a
learner is capable and empowered to successfully achieve the relevant competencies
and skills at your own pace and time. Your academic success lies in your own hands!

This module was designed to provide you with fun and meaningful
opportunities for guided and independent learning at your own pace and time. You
will be enabled to process the contents of the learning resource while being an active
learner.

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This module has the following parts with their corresponding icons:

What I Need to Know This will give you an idea of the skills or
competencies you are expected to learn in the
module.

What I Know This part includes an activity that aims to

check what you already know about the
lesson to take. If you get all the answers
correctly, you may decide to skip this module.

What’s In This is a brief drill or review to help you link

the current lesson with the previous one.

What’s New In this portion, the new lesson will be

introduced to you in various ways such as a
story, a song, a poem, a problem opener, an
activity or a situation.

What is It This section provides a brief discussion of the

lesson. This aims to help you discover and
understand new concepts and skills.

What’s More This comprises activities for independent

practice to strengthen your understanding
and skills of the topic. You may check the
answers in the exercises using the Answer
Key at the end of the module.

What I Have Learned This includes questions or open-ended

statements to be filled in to process what you
learned from the lesson.

What I Can Do This section provides an activity which will

help you transfer your new knowledge or skill
into real life situations.

Assessment This is a task which aims to evaluate your

level of mastery in achieving the learning
competency.

Additional Activities In this portion, another activity will be given

to you to enrich your knowledge or skill of the
lesson learned. This also develops retention
of learned concepts.

Answer Key This contains answers to all activities in the

module.

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At the end of this module you will also find:

References This is a list of all sources used in developing

this module.

The following are some reminders in using this module:

1) Use the module with care. Do not put unnecessary mark/s on any part of the
module. Use a separate sheet of paper in answering the exercises.
2) Don’t forget to answer What I Know before moving on to the other activities
included in the module.
3) Read the instruction carefully before doing each task.
4) Observe honesty and integrity in doing the tasks and checking your answers.
5) Finish the task at hand before proceeding to the next.
6) Return this module to your teacher/facilitator once you are through with it.
If you encounter any difficulty in answering the tasks in this module, do not
hesitate to consult your teacher or facilitator. Always bear in mind that you are
not alone.
We hope that through this material, you will experience meaningful learning
and gain deep understanding of the relevant competencies. You can do it!

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 What I Need to Know

This module was designed and written with you in mind. It was
specifically developed and designed to provide you fun and meaningful
learning experience, with your own time and pace. This module shall serve to
give you a more in-depth knowledge about different controlling methods and
techniques and the important terms that may be associated with it. The scope
of this module permits it to be used in many different learning situations. The
lessons are arranged to follow the standard sequence of the course.

This module contains only one lesson, entitled:

• Lesson 1 – Concept and Nature of Control Techniques

After going through this module, you are expected to:

• Apply the concept and nature of different control methods and
techniques in accounting and marketing (ABM_AOM11-IIf-h-36-37)

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 Lesson
Concept and Nature of
1 Control Techniques

What’s In

A luxurious car without gasoline is similar to a viable business without

carefully managed funds. Who needs a nonrunning vehicle that is good for
display only? How can a business be successful without the well-managed
funds required for its operation and expansion? This is where controlling
comes in. Essentially, controlling is all about the acquisition of money and its
useful disbursement. It requires identification and reinforcement of the firm’s
priorities and understanding how its operations are going to ascertain where
improvement is needed.

What’s New

Controlling

Controlling is a management function involves in ensuring the work

performance of the organization’s members are aligned with the organization’s
values and standards through monitoring, comparing, and correcting their
actions.

In earlier times, controlling was associated with the concept of just

being a corrective action. Present-day management, however, applies it as a
foreseeing activity that sets standards in determining actual performance to
correct previous decisions or actions. Therefore, management must focus on
control methods and systems.

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Control Methods and Systems

Control methods are techniques used for measuring an organization’s

financial stability, efficiency, effectiveness, production output, and
organization members’ attitudes and morale. Managerial effectiveness must
be concerned with the maximizing of the above-mentioned factors that are
measured by the control methods. Therefore, the challenge for present-day
managers is to devise control methods and systems that are aligned and
consistent and will help attain these concerns.

A firm may apply control techniques or methods that are either

quantitative or nonquantitative.

Quantitative Methods

Quantitative methods make use of data and different quantitative

tools for monitoring and controlling production output. Budgets and audits
are among the most common quantitative tools.

The most widely recognized quantitative tool is the chart. Charts used
as control tools normally contrast time and performance. The visual impact
of a chart often provides the quickest method of relating data. A difference in
numbers is much more noticeable when displayed graphically.

Budgets. The budget remains the best-known control device. Budget

and control are, in fact, synonymous. An organization’s budget is an
expression in financial terms of a plan for meeting the organization’s goals for
a specific period. A budget is an instrument of planning, management, and
control.

Budgets are used in two ways: to establish facts that must be taken
into account during planning and to prepare a description and financial
information to be used by the chain of command to request for and manage
funds.

Audits. Internal auditing involves the independents review and

evaluation of the organization’s nontactical operations, such as accounting
and finances. As a management tool, the audit measures and evaluates the
effectiveness of management controls. Audit service provides an independent
audit of programs, activities, systems, and procedures. It also provides an
independent audit of other operations which involve the utilization of funds
and resources as well the fulfillment of management goals.

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Nonquantitative Methods

Nonquantitative methods refer to the overall control of performance

instead of only those of specific organizational processes. These methods use
tools such as inspections, reports, direct supervision, and on-the-spot
checking and performance evaluation or counseling to accomplish goals.

Other control methods include feedforward control, concurrent control,

feedback control, employee discipline, and project management control.

Feedforward control prevents problems because managerial action is

taken before the actual problem occurs.

Concurrent control takes place while work activity is happening. The

best example of this type of control is direct supervision or management by
walking around.

Feedback control is control that takes place after the occurrence of the
activity. It is disadvantageous because by the time the manager receives the
information, the problem had already occurred.

Employee discipline is a control challenge for managers. Enforcing

discipline in the workplace is not easy. Concerns regarding this include
workplace privacy, employee theft, and workplace violence, among others.

Project management control ensures that the task of getting a project’s

activities done on time, within the budget, and according to specifications, is
successfully carried out. Project managers need technical and interpersonal
skills to control the implementation of the project efficiently and effectively.

The Control Process

Control techniques used for controlling financial resources, office

management, quality assurance, and others are essentially the same. The
typical control process involves establishing standards, measuring and
reporting actual performance, and comparing it with standards, and taking
action.

Establishing standards means setting criteria for a performance.

Managers must identify priority activities that have to be controlled, followed
by determining how these activities must be properly sequence. In doing so,
managers will be able to set key performance standards that need to be
achieved.

Measuring and reporting actual performance and comparing it

with set standards is essentially the monitoring of performance. To be able

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to do this, managers must develop appropriate information systems which
will help them identify, collect, organize, and disseminate information.

Taking action involves the correction of deviations from set standards.

This activity clearly shows the control function of management. Managers
may rectify deviations by modifying their plans or goals, by improving the
training of employees, by firing inefficient subordinates, or by practicing more
effective leadership techniques.

What is It

Management Control

Management control in accounting and finance is the control that

makes use of the balance sheet, income statement, and cash flow statement
to analyze and examine financial statements in order to determine the
company’s financial soundness and viability, as well as financial ratios to
determine the company’s stability. On the other hand, management control
in marketing is the control that makes use of a projected sales or forecasts,
statistical models, econometric modeling, surveys, historical demand data,
and actual consumption of their products.

Sales is considered to be the lifeblood of the business. No matter how

good the product is, if it is not sold in the market, there is no way that a
business can survive. Thus, the projected sales often guide the sales manager
or the marketing head on how much the target or the quota must be. In a
way, this will also serve as a guide for the operations manager in determining
the number of units to be produced. Excess production may mean cost, and
unsold items may resort to inventory expenses or worse, the obsolescence or
degradation of the product. Indeed, sales forecast requires consideration.

The sales forecast may be derived either from a “top-down’ or “bottom-

up” approach. Smart (2013) stated that the top-down sales forecast relies
heavily on macroeconomic and industry forecasts with the use of statistical
models thru econometric modeling to achieve the firm’s growth target. The
bottom-up sales forecast begins by talking with customers in a form of
survey or traffic count; by assessing the demand in the coming periods. The
current practice blends these two approaches.

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 What’s More

Accounting/Financial Control Ratios

The goal of business is to gain profit. In order to achieve this, managers

need accounting/financial controls. Managers must also analyze the
organization’s financial condition, which is done with the help of the following
financial ratios.

Liquidity ratio – tests the organization’s ability to meet short term

obligations; it may also refer to acid tests done when inventories turn over
slowly or are difficult to sell. (Current ratio = Current assets ÷ Current
liabilities).

Leverage ratio – determines if the organization is technically insolvent,

meaning that the organization’s financing is mainly coming from borrowed
money or from the owners’ investments. (Debt-to-assets ratio = Total debt ÷
Total assets).

Activity ratio – determines if the organization is carrying more

inventory than what it needs; the higher the ratio, the more efficiently
inventory assets are being used. (Inventory turnover = Costs of goods sold ÷
Average inventory).

Profitability ratio – determines the profits that are being generated;

(Net profit after taxes ÷ Total sales) or it measures the efficiency of assets to
generate profits (Return on investment ÷ Net profit after taxes ÷ Total assets).

In addition to the above ratios, asset management is also practiced to

achieve organizational goals. Asset management is the ability to use
resources efficiently and operate at minimum cost. (Inventory turnover = Sales
÷ Average inventory).

Strategic Control

Strategic control is a systematic monitoring at control points in

strategic plans that may tend to change in the organization’s strategies. As
mentioned earlier, planning and controlling are closely related. Control
provides a chance for comparing the plan’s intended goals with the actual
organizational performance. This becomes the basis for modifications in the
firm’s strategies.

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Benchmarking

Benchmarking is an approach or process of measuring a company’s

own services and practices against those of recognized leaders in the industry
in order to identify areas for improvement. It is widely used and well-accepted
approach because it helps organizations gather data and information against
which performance can be measured and controlled.

Weihrich and Koontz (2005) gave three types of benchmarking: a)

strategic benchmarking which compares various strategies and identifies the
key strategic elements of success; b) operational benchmarking which
compares relative costs or possibilities for product differentiation; and c)
management benchmarking which focuses on support functions such as
market planning and information systems, logistics, and human resource
management, among others.

The benchmarking process begins with determining which company

functions are to be benchmarked and the key performance indicators to be
measured. Then the best industry performers have to be identified. Data
gathering and analysis follows and these become the foundations for
performance goals. New programs are implemented, and during this step,
performance is measured at regular intervals.

What I have learned

Direction: Perform the task below. Do it in a sheet of paper.

Describe briefly the control techniques used by organizations. Which,

in your opinion, is the best control technique? Defend your opinion by
explaining your choice.

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 What I can do

Direction: Perform the task below. Do it in a sheet of paper.

Design a control system for measuring your progress in your school

work. Apply the activities involved in the control process discussed in this
lesson.

Assessment

Direction: Perform the tasks below. Do it in a sheet of paper.

1. Compute the liquidity ratio of a fast-food restaurant. Its current assets

amount to P3 million while its current liabilities are at P2 million.
Analyze and interpret your answer.

2. What is the return on investment if a jewelry store’s net profit after taxes
is P6 million and its total assets is P100 million. Analyze and interpret
your answer

Additional Activities

Directions: Perform the task below. Do it in a sheet of paper.

Prepare your personal budget for the present school year. Apply or use
Zero-Based Budgeting (ZBB) which starts from nothing and does not consider
past data.

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 Answer Key

What I have Learned

This vary. A point will be given for every correct answer.

What I Can Do

This vary. A point will be given for every correct answer.

Assessment

This vary. A point will be given for every correct answer.

Additional Activities

This vary. A point will be given for every correct answer.

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References:
Books

1. Cabrera, Helena M. F., Altarejos, A. & Benjamin, R. (2016).

Organization and Management. Quezon City, Philippines: Vibal Group,
Inc.

Other Sources:
1. K to 12 Senior High School ABM Specialized Subject – Organization and
Management December 2013
2. K to 12 Curriculum Implementation and Learning Management Matrix
3. Salvador, E. (2020). Module in Organization and Management.
Alternative Delivery Mode.

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For inquiries or feedback, please write or call:

Schools Division of Ilocos Norte – Curriculum Implementation Division

Learning Resource Management Section (SDOIN-CID LRMS)

Office Address: Brgy. 7B, Giron Street, Laoag City, Ilocos Norte
Telefax: (077) 771-0960
Telephone No.: (077) 770-5963, (077) 600-2605
E-mail Address: ilocos.norte@deped.gov.ph

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