Chapter Name Controlling

We will learn about : Meaning of Controlling Steps involved in Controlling Advantages Disadvantages/Barriers Techniques of Controlling

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Meaning of Controlling
Controlling means ensuring that activities in an organization are performed as per the plans. Controlling ensures that resources are used effectively and efficiently.

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Steps in the Controlling Process

1. Setting Performance Standards : Standards are targets against which actual performance against standards can be measured and deviations can be found. 2. Measurement of actual performance : This step involves measuring actual performance of various individuals and groups for comparing it with the standards. 3. Comparing Actual performance with standards : After measuring the performance, the next step is to compare actual performance with the standard performance.

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4. Analysing Deviations : The deviations from the standards are assessed and analysed to identify the causes of deviations. if the deviations are within reasonable limits they may be ignored and only significant deviations should be reported to the management. 5. Taking Corrective Action : The final step in the controlling process is taking corrective action. No corrective action is required when the deviations are within the acceptable limits.

Importance of Controlling
3 Helps in Achieving organisational goals 3 Helps in Judging Accuracy of standards 3 Helps in making efficient use of resources 3 Helps in improving employee motivation 3 Ensures orders and Discipline 3 Facilitates coordination in action

Barriers or Limitations/Disadvantages
1. Difficulties in Setting standards : Control System loses its effectiveness when standards can not be defined in quantitative terms. This makes measurement of performance and their comparison with standards a difficult task. 2. No Control on external factors : An enterprise cannot control external factors such as government politics, technological changes, competition, etc. 3. Costly Affair : Control is a costly affair as it involves a lot of expenditure, time and effort. A small enterprise cannot afford to install an expensive control system.

Techniques of Controlling
Traditional Techniques
Budgetary Control Statistical reports Break even analysis Personal observation

Modern Techniques
Return on investment Ratio Analysis Responsibility accounting Management audit MIS (Management information system)

Why?

The End
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