Class 12 Business Studies - Chapter Controlling NCERT Solutions | Explain the techniques of managerial con
Explain the techniques of managerial control.
The various techniques of managerial control may be classified into two broad categories: traditional techniques and modern techniques.
Traditional Techniques: traditional techniques are those which have been used by the companies for a long time now. However, these techniques have not become obsolete and are still being used by companies. The following are traditional techniques of managerial control.
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Personal Observation: This is the most traditional method of control. Personal observation enables the manager to collect first hand information. It also creates a psychological pressure on the employees to perform well as they are aware that they are being observed personally on their job. However, it is a very time- consuming exercise and cannot effectively be used in all kinds of jobs.
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Statistical Reports: Statistical analysis in the form of averages, percentages, ratios, correlation, etc., present useful information to the managers regarding performance of the organisation in various areas. Such information when presented in the form of charts, graphs, tables, etc., enables the managers to read them more easily and allow a comparison to be made with performance in previous periods and also with the benchmarks.
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Breakeven Analysis: Breakeven analysis is a technique used by managers to study the relationship between costs, volume and profits. The sales volume at which there is no profit, no loss is known as breakeven point. It helps the manager in estimating profits at different levels of activities.
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Budgetary Control: Budgetary control is a technique or managerial control in which all operations are planned in advance in the form of budgets and actual results are compared with budgetary standards. This comparison reveals the necessary actions to be taken so that organisational objectives are accomplished.
Modern Techniques: Modern techniques of controlling are those which are of recent origin and are comparatively new in management literature. These techniques provide a refreshingly new thinking on the ways in which various aspects of an organisation can be controlled. Following are the modern techniques of managerial control.
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Return on investment: Return on Investment (ROI) is a useful technique which provides the basic yardstick for measuring whether or not invested capital has been used effectively for generating reasonable amount of return.
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Ratio Analysis: Ratio Analysis refers to analysis of financial statements through computation of ratios. The most commonly used ratios used by organisations can be classified into the following categories:
a. Liquidity Ratios
b. Solvency Ratios
c. Profitability Ratios
d. Turnover Ratios
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Responsibility Accounting: Responsibility accounting is a system of accounting in which different sections, divisions and departments of an organisation are set up as ‘Responsibility Centers’. The head of the centre is responsible for achieving the target set for his centre.
Responsibility centres may be of the following types:
a. Cost Centre
b. Revenue centre
c. Profit Centre
d. Investment Centre
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Management Audit: Management audit refers to systematic appraisal of the overall performance of the management of an organisation. The purpose is to review the efficiency and effectiveness of management and to improve its performance in future periods. It is helpful in identifying the deficiencies in the performance of management functions.
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PERT and CPM: PERT (Programme Evaluation and Review Technique) and CPM (Critical Path Method) are important network techniques useful in planning and controlling. These techniques deals with time scheduling and resource allocation for these activities and aims at effective execution of projects within given time schedule and structure of costs.
More Questions From Class 12 Business Studies - Chapter Controlling
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‘Planning is looking ahead and controlling is looking back.’ Comment.
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Write a short note on budgetary control as a technique of managerial control.
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Explain the various steps involved in the process of control.
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Mr Shantanu is a chief manager of a reputed company that manufactures garments. He called the production manager and instructed him to keep a constant and continuous check on all the activities related to his department so that everything goes as per the set plan. He also suggested him to keep a track of the performance of all the employees in the organisation so that targets are achieved effectively and efficiently.
a. Describe any two features of Controlling highlighted in the above situation.(Goal Oriented, continuous and pervasive – any 2).
b. Explain any four points of importance of Controlling. - Q:-
A company ‘M’ limited is manufacturing mobile phones both for domestic Indian market as well as for export. It had enjoyed a substantial market share and also had a loyal customer following. But lately it has been experiencing problems because its targets have not been met with regard to sales and customer satisfaction. Also mobile market in India has grown tremendously and new players have come with better technology and pricing. This is causing problems for the company. It is planning to revamp its controlling system and take other steps necessary to rectify the problems it is facing.
a. Identify the benefits the company will derive from a good control system.
b. How can the company relate its planning with control in this line of business to ensure that its plans are actually implemented and targets attained.
c. Give the steps in the control process that the company should follow to remove the problems it is facing. - Q:-
Mr.Arfaaz had been heading the production department of Writewell Products Ltd., a firm manufacturing stationary items. The firm secured an export order that had to be completed on a priority basis and production targets were defined for all the employees. One of the workers, Mr. Bhanu Prasad, fell short of his daily production target by 10 units for two days consecutively. Mr. Arfaaz approached MsVasundhara, the CEO of the Company, to file a complaint against MrBhanu Prasad and requested her to terminate his services. Explain the principle of management control that MsVasundhara should consider while taking her decision. (Hint: Management by exception).
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Discuss the relationship between planning and controlling.
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Give any two standards that can be used by a company to evaluate the performance of its Finance & Accounting department.
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Name the principle that a manager should consider while dealing with deviations effectively. State any one situation in which an organisation’s control system loses its effectiveness.
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‘An effort to control everything may end up in controlling nothing.’ Explain.
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