NCERT Solutions Class 12 Business Studies Chapter 8 Controlling

NCERT Solutions for Class 12 Business Studies Chapter 8 Controlling Objective Type Questions

Question. An efficient control system helps to

1. Accomplishes organisational objectives.
2. Boosts employee morale.
3. Judges accuracy of standards.
4. All of the above.

Answer: (d) all of the above.

Question. Controlling function of an organisation is

1. Forward looking.
2. Backward looking.
3. Forward as well as backward looking.
4. None of the above.

Answer: (c) forward as well as backward looking.

Question. Management audit is a technique to keep a check on the performance of

1. Company
2. Management of the company.
3. Shareholders
4. Customers

Answer: (b) Management of the company.

Question. Budgetary control requires the preparation of

1. Training schedule.
2. budgets
3. Network diagram.
4. Responsibility centres.

Answer: (b) budgets.

Question. Which of the following is not applicable to responsibility accounting

1. Investment centre
2. Accounting centre
3. Profit centre
4. Cost centre

Answer: (b) Accounting centre

NCERT Solutions for Class 12 Business Studies Chapter 8 Controlling Short Answer Type Questions 

Question. Explain the meaning of controlling.
Answer: Controlling is the process of comparing the actual performance with the standards and taking corrective action, if required. It finds out deviations from the pre-determined standards, so it is called a backward looking function and provides standards to control without which controlling becomes aimless or baseless.

Question. ‘Planning is looking ahead and controlling is looking back.’ Comment.
Answer: Plans are framed for future and are based on forecasts about future events. Therefore, planning is regarded as a forward looking function. However, controlling also improves future planning by providing corrective action to the deviations from plans. Thus, controlling is also forward looking. Controlling analyses past activities to find out deviations from standards. Planning is also guided by past experiences and corrective action initiated by controlling, for improving future performance. Thus, both are backward looking.

Question. ‘An effort to control everything may end up in controlling nothing.’ Explain.
Answer: According to the concept of ‘Management by Exception’ if a manager wants to control everything than he may end up controlling nothing. According to this concept, the deviations which are beyond the specific range should only be handled by managers and minute or minor deviations can be ignored. Manager should not waste his time and energy in finding solutions for minor deviations, rather he should concentrate on removing deviations of high degree. For instance, if the cost of production of Rs 1500 and as per policy any deviations beyond 5% need to be controlled. In such a case, if the cost increases by Rs 10, then it can be ignored, since it is within 5%. However, if it increases by Rs 100, then the manager must find out the reasons for such increase. He then need to take corrective steps to correct this deviation.

Question. Write a short note on budgetary control as a technique of managerial control.
Answer: Budgetary control is a technique of 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 enables necessary action to be taken on time to improve the performance. A budget is quantitative statement for a definite period of time. It reflects the policy of that particular period.

Question. Explain how management audit serves as an effective technique of controlling.
Answer: It refers to the systematic appraisal of overall performance of management of an organization with the objective of reviewing efficiency and effectiveness of the management. Management audit serves as an effective technique of controlling as it offers following advantages:

1. It helps to locate the deficiencies in performance of management functions.
2. It helps to improve control system of an organization.
3. It improves coordination in the functioning of various departments.
4. It ensures updation of managerial policies and strategies for better results.

NCERT Solutions for Class 12 Business Studies Chapter 8 Controlling Long Answer Type Questions

Question. Explain the various steps involved in the process of control.
Answer: Steps in the controlling process are:

1. Setting up standards: The first step in the controlling process is setting up the standards. Standards mean the target against which the actual performance is measured. The standards are the basis of comparison. The standards should be achievable, measurable and should be set keeping in mind the availability of the resources. For example, an enterprise sets the standard of increasing its sales by 20 percent in the current year. The standards set should also specify the time limit. This means that it must specify the time limit within which they have to be achieved.
2. Measuring of performance: After setting up of standards the performance of the employees is measures by evaluating the actual performance done by the employees. Both the qualitative and quantitative aspects of performance are measured. Although it is difficult to evaluate the quality standards, yet certain quality parameters are fixed to measure the performance.
3. Comparing performance against standards: The next step is to compare the actual performance with the standards. If both are parallel to each other than the controlling process ends there only. But if there are any deviations then the manager tries to find out the reasons for the same. Deviations of minor nature can be ignored but if the deviations are major then timely action must be taken.
4. Analysing deviations: Only the deviations which have a significant impact on the organisation should be brought to the notice of the top management. Deviations must be divided in two categories; deviations which need to be attended urgently and the minor deviations. These two deviations must be controlled in the following way:
5. Critical point control: It means focusing on the key areas and in case of any deviation in these areas then it should be attended urgently.
6. Management by exception: A manager who tries controlling everything may end up controlling nothing. Therefore the deviations which are beyond the specific range should be handled by him and the minor deviations should be attended to by the lower or the middle level management.
7. Taking corrective measures: After comparing the actual performance with the standards and finding out the deviations, the manger is required to know the reasons for the deviations and taking corrective actions to remove the occurrence of such deviations in future.

Question. Explain the techniques of managerial control.
Answer: The techniques of managerial control be classified as traditional techniques and modern techniques.

Traditional techniques:

1. Personal Observation: Observation by supervisor continuously during performance of work. Most used in assembling industries, where each part is checked during assembling.
2. Statistical reports: Statistical analysis in the form of averages, percentages, ratios, correlation, etc., present useful information to the managers regarding performance of the organisation.
3. Breakeven analysis is a technique used by managers to study the relationship between costs, volume and profits.
4. Budgetary control is a technique of managerial control in which all operations are planned in advance in the form of budgets and actual results are compared with budgetary standards.

Modern Techniques:

1. Return on investment: It is used as yardstick for measuring that capital is used effectively for generating reasonable returns.
2. Ratio analysis: It refers to the analysis of financial statement through computation of ratios. Liquidity, solvency and turnover ratios are computed for such analysis.
3. Responsibility accounting: It is a system of accounting in which different section, divisions and departments are set up as responsibility centres.
4. Management audit: It refers to the systematic appraisal of overall performance of management of an organization with the objective of reviewing efficiency and effectiveness of the management.
5. PERT and CPM: These are important network techniques used in planning, scheduling and implementing time bound projects.
6. Management information system: It is a computer based information system that provides information and support for effective managerial decision making.

Question. Explain the importance of controlling in an organisation. What are the problems faced by the organisation in implementing an effective control system?
Answer: Controlling is an important function of management. It can be explained as follows:

1. Helps in accomplishing organizational goals: Controlling compares the actual targets with the planned targets and brings out the deviations and brings the corrective action and thereby helps the organisation in achieving the goals.
2. Helps in efficient use of resources: Control system helps the manager in reducing the wastage and spoilage of resources. Each activity is performed in accordance with the predetermined standards which ensure effective and efficient utilization of resources.
3. Helps in judging accuracy of standard: A control system checks the changes of the organisations and helps to review and revise the standards and verifies whether the standards are accurate and objectively based.
4. Facilitates coordination in action: Control helps to maintain equilibrium between means and ends. It means that proper direction is taken and all the departments are properly controlled according to the pre-determined standards which are well coordinated with one another. Controlling provides unity of direction.
5. Ensuring order and discipline: Controlling helps to minimise the dishonest behaviour on the part of the employees by keeping a close check on their activities.

The problems faced by the organisation in implementing an effective control system are:

1. External factors: Business environment keeps on changing and are not in control of the organization.
2. Difficulty in setting standards: It is difficult to set standards and these standards are less effective in qualitative terms.
3. Expensive: Controlling is the costly process both in terms of money and time.

Question. Discuss the relationship between planning and controlling.
Answer: Relationship between planning and controlling:

There is a deep relationship between planning and controlling. Planning is meaningless without controlling and controlling is useless without planning.

1. Planning can be successful only if there is proper controlling. If the process of controlling is not followed then no worker will take the plans seriously and so the plans will fail. Therefore if the process of controlling is not present then it is meaningless to have planning.
2. Controlling is useless without planning. Under the process of controlling actual performance is compared with the standards, and the standards are determined with the help of planning. In the absence of planning, no comparison can be made and so controlling will fail.

NCERT Solutions for Class 12 Business Studies Chapter 8 Controlling Application Type Questions

Question. Following are some behaviours that you and others might engage in on the job. For each item, choose the behaviour that management must keep a check to ensure an efficient control system.

1. Biased performance appraisals
2. Using company’s supplies for personal use
3. Asking a person to violate company’s rules
4. Calling office to take a day off when one is sick
5. Overlooking boss’s error to prove loyalty
6. Claiming credit for someone else’s work
7. Reporting a violation on noticing it
8. Falsifying quality reports
9. Taking longer than necessary to do the job
10. Setting standards in consultation with workers you are also required to suggest the management how the undesirable behaviour can be controlled.

Answer:

1. Biased performance appraisals: The standards shall be set and the performance should be compared to such standards.
2. Using company’s supplies for personal use: Proper records should be maintained by stores person and timely updation shall be made to the records.
3. Asking a person to violate company’s rules: There shall be written rules and regulations for employees to be followed. Also it shall be stated that breach of rules will attract penalty.
4. Calling office to take a day off when one is sick: The leave shall be approved before and team members shall be ready to share the work load.
5. Overlooking boss’s error to prove loyalty: The errors shall never be overlooked and shall be brought to the notice of concerned person.
6. Claiming credit for someone else’s work: Control is required on such activities and credit shall be given to employees for good work and their achievements.
7. Reporting a violation on noticing it: For this open and free flow of communication is required. Feedback and suggestions must be welcomed from the employees.
8. Falsifying quality reports: Misrepresentation and window dressing of reports shall be reported. This shall also attract penalty.
9. Taking longer than necessary to do the job: Time study shall be performed and standards that are set shall be adhered to.
10. Setting standards in consultation with workers: This is the best policy as real picture of organisation is clear to the workers. This encourages them to perform better.

Case study:

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.

Question. Identify benefits the company will derive from a good control system.
Answer: Benefits from a good control system are:

1. Helps in accomplishing organisational goals: Controlling compares the actual targets with the planned targets and brings out the deviations and brings the corrective action and thereby helps the organisation in achieving the goals.
2. Helps in efficient use of resources: Control system helps the manager in reducing the wastage and spoilage of resources.
3. Helps in judging accuracy of standard: A control system checks the changes of the organisations and helps to review and revise the standards and verifies whether the standards are accurate and objectively based.
4. Facilitates coordination in action: Control helps to maintain equilibrium between means and ends. Controlling provides unity of direction.
5. Ensuring order and discipline: Controlling helps to minimise the dishonest behaviour on the part of the employees by keeping a close check on their activities.

Question. 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.
Answer: Planning and controlling are interdependent and interlinked with each other. They are the inseparable twins of management.

1. Planning is a prerequisite for Controlling: Planning lays down standards of performance, which serve as the basis of controlling. However, once a plan becomes operational, controlling is necessary to monitor its progress to ensure that the activities are in accordance to planned ones. Thus, controlling helps in ensuring that events confirm to plans. For successful execution of both the functions, planning and controlling must support each other.
2. Prescriptive Vs Evaluative: Planning is the intellectual process of thinking and analysing to prescribe an appropriate course of action for achieving goals. Controlling, on the other hand, checks whether decisions have been converted into desired action. Thus, planning is prescriptive and controlling is evaluative.
3. Forward and backward Looking: Plans are framed for future and are based on forecasts about future events. Therefore, planning is regarded as a forward looking function. However, controlling also improves future planning by providing corrective action to the deviations from plans. Thus, controlling is also forward looking. Controlling analyses past activities to find out deviations from standards. Planning is also guided by past experiences and corrective action initiated by controlling, for improving future performance. Thus, both are backward looking.

Question. Give the steps in the control process that the company should follow to remove the problems it is facing.
Answer: Steps in the controlling process are:

1. Setting up standards: The first step in the controlling process is setting up the standards. Standards mean the target against which the actual performance is measured. The standards are the basis of comparison. The standards should be achievable, measurable and should be set keeping in mind the availability of the resources.
2. Measuring of performance: After setting up of standards the performance of the employees is measures by evaluating the actual performance done by the employees. Both the qualitative and quantitative aspects of performance are measured.
3. Comparing performance against standards: The next step is to compare the actual performance with the standards. If both are parallel to each other than the controlling process ends there only. But if there are any deviations then the manager tries to find out the reasons for the same.
4. Analysing deviations: Only the deviations which have a significant impact on the organisation should be brought to the notice of the top management. Deviations must be divided in two categories; deviations which need to be attended urgently and the minor deviations.
5. Taking corrective measures: After comparing the actual performance with the standards and finding out the deviations, the manger is required to know the reasons for the deviations and taking corrective actions to remove the occurrence of such deviations in future.

Question. What techniques of control can the company use? In all the answers keep in mind the sector of business the company is in.
Answer: The Company can use the following techniques of control:
Critical point control: It means focusing on the key areas and in case of any deviation in these areas then it should be attended urgently.
Management by exception: A manager who tries controlling everything may end up controlling nothing.
Therefore the deviations which are beyond the specific range should be handled by him and the minor deviations should be attended to by the lower or the middle level management.

NCERT Solutions for Class 12 Business Studies Chapter 8 Controlling Objective Type Questions

Question. Controlling means ensuring that activities in an organisation are performed as per the _____________
(a) Plans
(b) Goals
(c) Resources
(d) None of these 
Answer: A

Question. Which of the following is the limitation of controlling
(a) Little control on external factors
(b) Resistance from employees
(c) Difficulty in setting quantitative standards
(d) All of the above 
Answer: D

Question. Which of the following statement establishes a relationship between planning and controlling.
(a) Planning and controlling are inseparable twins of management
(b) Planning is clearly a prerequisite for controlling
(c) Planning is looking ahead while controlling is looking back.
(d) All of the above 
Answer: D

Question. Planning means to look ahead while controlling means to :
(a) Look straight
(b) Look back
(c) Look side
(d) None of the above.
Answer: B

Question. Which of the following step in the controlling process states that comparison becomes easier when standards are set in quantitative terms.
(a) Analysing Deviations
(b) Measurement of Actual Performance
(c) Comparing Actual Performance with Standards
(d) Setting Performance Standards 
Answer: C

Question. Which of the following statement is false with respect to management by exception
(a) referred to as control by exception
(b) is an important principle of management control
(c) facilitates delegation of authority and increases morale of the employees
(d) none of these 
Answer: D

NCERT Solutions for Class 12 Business Studies Chapter 8 Controlling One Word Answer Type Questions :

Question. Hina Sweets is a renowned name for quality sweets since 1935. Harsh, the owner of Hina Sweets, was worried as the sales had declined during the last three months. When he enquired from the Sales Manager, the Sales Manager reported that there were some complaints about the quality of sweets. Therefore, Harsh ordered for sample checking of sweets. Identify the step taken by Harsh that is related to one of the functions of management.
OR
Isha Machines was a renowned name for quality sewing machines since 1960. Mr Suresh, the owner of Isha Machines, was worried as the production had declined during the last three months. He directed the production manager to find out the reason. The production manager ordered the different supervisors to prepare a performance report of the workers working under them. Identify the step taken by the production manager that is related to one of the functions of management. 
Answer: Measurement of actual performance.

Question. What should be done while ‘taking corrective actions’ in the process of controlling, especially in the important areas where deviations go beyond the acceptable range?
Answer: Immediate attention.

Question. Standards are set in quantitative as well as qualitative terms. Identify the types of standards that are set in terms of time to be spent. |
Answer: Time Standards in quantitative terms.

Question. Standards are set in quantitative as well as qualitative terms. Identify the type of standards that are set in terms of ‘cost to be incurred’.
Answer: Monetary standards in quantitative terms.

Question. What should be the ‘focus point’ for a manager while controlling, as controlling at each and every step is not possible? 
Answer: “Key Result Areas”.

NCERT Solutions for Class 12 Business Studies Chapter 8 Controlling Short Answer Type Questions

Question. Explain how management by exception helps in the controlling process.
Answer: Management by exception : It is a technique of analysing deviations based on the belief that an attempt to control everything results in controlling nothing. Thus, only significant deviations which go beyond the permissible limit should be brought to the notice of the managers and minor or insignificant deviations can be ignored. Thus, it saves time and energy of the managers so that managers can focus attention on significant matters.

Question. Explain any four points of importance of controlling.
OR
Explain any four points of importance of ‘controlling’ function of management. 
OR
Explain any four points of importance of the controlling function of management.
Answer: Importance of controlling :
(i) Accomplishing organisational goals.
(ii) Making efficient use of resources.
(iii) Ensuring order and discipline.
(iv) Improving employee motivation.
(v) Judging accuracy of standards.
(vi) Facilitating co-ordination in action.

Question. “Planning and controlling are interrelated.” Explain.
Answer: Relationship between planning and controlling :
(i) Controlling takes place on the basis of standards developed by planning;
(ii) Planning without controlling is meaningless as controlling ensures that the events conform to the plans.
(iii) Planning prescribes an appropriate course of action for achieving objectives whereas controlling evaluates whether decisions have been translated into desired actions.
(iv) Planning and controlling both are forward looking and looking back.

Question. Explain how Critical Point Method helps in the controlling process.
Answer: Critical Point Method helps a lot in controlling process. Control cannot be exercised at all points of an activity as it may be time consuming and very expensive. Managers should identify the important or critical points i.e., Key Result Areas (KRAs) and deviations should be corrected at the earliest. The KRAs are those areas which can affect the success of an organisation. If anything goes wrong at the critical points, the deviations should be immediately analysed and corrective actions should be taken. 

Question. Explain ‘Critical Point Control’ and ‘Management by Exception’ used by managers while analysing deviations in the process of controlling. 
Answer:
(i) Critical Point Control Critical Point Control helps in controlling process by focusing on key result areas which are critical to the success of an organisation. The key result areas are set as critical points since it is neither economical nor easy to keep a check on each and every activity of the organisation.
(ii) Management by Exception Management by Exception helps in the controlling process by identifying only significant deviations which go beyond the permissible limit and bringing them to the notice of the management. It is based on the belief that an attempt to control everything results in controlling nothing.

Question. After setting performance standards, the next step in the controlling process is measurement of actual performance. Explain this step in the process of controlling.
Answer: The next step is measuring the performance : It is necessary to measure performance in all key areas of business periodically and at such intervals, the defects should be discovered before much damage has been done. Measurement of performance must be done in simple, clear, rational, reliable and relevant manner according to the nature of activities. For example, the performance of sales department may be measured by accounting ratios, gross profit ratio, etc.

Question. Explain the steps to be followed in the process of controlling function of management after ‘Setting Standards’. 
Answer: Steps to be followed in the process of controlling function of management after ‘Setting Standards’:
(i) Measuring actual performance
(ii) Comparing actual performance with standards
(iii) Analysing deviations
(i) Critical Point Control
(ii) Management by Exception
(iv) Taking corrective action

Question. The last step in the process of controlling is ‘taking corrective actions’. Briefly explain the steps in chronological order that are taken in the process of controlling before this step.
OR
Explain the steps in the process of controlling.
Answer: Steps in the process of controlling before taking corrective action are :
(i) Setting performance standards
(ii) Measuring actual performance and comparing with standards
(iii) Analysing deviations
(a) Critical Point Control
(b) Management by Exception

NCERT Solutions for Class 12 Business Studies Chapter 8 Controlling Long Answer Type Questions

Question. State any five points that highlight the importance of ‘controlling’ function of management.
OR
State any five points that highlight the importance of controlling.
OR
Explain any five points which highlight the importance of controlling function of management.
OR
State any five points that highlight the importance of controlling.
OR
‘Controlling is an indispensable function of management.’ Explain this statement with the help of any five points. 
OR
Explain any five points of importance of controlling. 
Answer:
(i) Accomplishing organisational goals : The controlling function measures progress towards the organisational goals and brings to light the deviations, if any, and indicates corrective action. It, thus, guides the organisation and keeps it on the right track so that organisational goals might be achieved.
(ii) Judging accuracy of standards : A good control system enables management to verify whether the standards set are accurate and objective. An efficient control system keeps a careful check on the changes taking place in the organisation and in the environment and helps to review and revise the standards in light of such changes. (iii) Making efficient use of resources : By exercising control, a manager seeks to reduce wastage and spoilage of resources. Each activity is performed in accordance with the predetermined standards and
norms. This ensures that resources are used in the most effective and efficient manner.
(iv) Improving employee motivation : A good control system ensures that employees know well in advance what they are expected to do and what are the standards of performance on the basis of which they will be appraised. It, thus, motivates them and helps them to deliver better performance.
(v) Ensuring order and discipline : Controlling creates an atmosphere of order and discipline in the organisation. It helps to minimise dishonest behaviour on the part of the employees by keeping a close check on their activities.
(vi) Facilitating co-ordination in action : Controlling provides direction to all activities and efforts for achieving organisational goals. Each department and employee is governed by the predetermined standards which are well co-ordinated with one another. This ensures that overall organisational objectives are accomplished.

Question. Textile manufacturer Super textiles reported 43% fall in its profits in the fourth quarter ended 31 March 2017, which is beyond the acceptable range of 25% decided by the company. This was due to higher fuel cost and lower yield on account of demonetisation. The company aims to implement cost saving measures by restructuring contracts and its business processes to meet its targets in the future.
(i) Name the function of management discussed above.
(ii) Also identify and explain the steps of the function of management discussed above.
Answer:
(i) Controlling.
(ii) The steps of controlling discussed above are :
(a) Analysing deviations : Some deviation in performance is expected in all activities. It is therefore, important to determine the acceptable range of deviations.
Also, deviations in key areas of business need to be attended more urgently as compared to deviations in certain insignificant areas. Critical point control and management by exception should be used by the manager in this regard. After identifying the deviations that demand managerial attention these deviations need to be analysed for their causes. (b) Taking Corrective Action : The final step in the controlling process is taking corrective action. No corrective action is required when the deviations are within acceptable limits. However, when the deviations go beyond the acceptable range, especially in the important areas, it demands immediate managerial attention so that deviations do not occur again and standards are accomplished.

Question. State the steps in the process of controlling.
OR
Explain the steps in the controlling process.
OR
State the steps in the controlling process.
OR
Explain the steps in the process of controlling. ptt.
OR
Explain the various steps in the process of controlling.
OR
“Controlling is a systematic process involving a series of steps.” Briefly explain these steps.
Answer: (i) Setting Performance Standards : The first step in the controlling process is setting up of performance standards. Standards are the criteria against which actual performance would be measured. Standards can be set in both quantitative as well as qualitative terms. For instance, standards set in terms of cost to be incurred, revenue to be earned, product units to be produced and sold, time to be spent in performing a task, all represent quantitative standards. Sometimes, standards may also be set in qualitative terms. For example Improving goodwill and motivation level of employees are examples of qualitative standards.
(ii) Measurement of Actual Performance : The next step is measurement of actual performance. Performance should be measured in an objective and reliable manner. There are several techniques for measurement of performance. For example personal observation, sample checking, performance reports, etc. As far as possible, performance should be measured in the same units in which standards are set as this would make their comparison easier.
(iii) Comparing Actual Performance with Standards : This step involves comparison of actual performance with the standard. Such comparison will reveal
the deviation between actual and desired results. Comparison becomes easier when standards are set in quantitative terms. For instance, performance of a worker in terms of units produced in a week can be easily measured against the standard output for the week.
(iv) Analysing Deviations : Some deviation in performance can be expected in all activities. It is, therefore, important to determine the acceptable range of deviations. Also, deviations in key areas of business need to be attended more urgently as compared to deviations in certain insignificant areas. Critical point control and management by exception should be used by a manager in this regard.
(v) Taking Corrective Action : The final step in the controlling process is taking corrective action. No corrective action is required when the deviations are within acceptable limits. However, when the deviations go beyond the acceptable range, especially in the important areas, it demands immediate managerial attention so that deviations do not occur again and standards are accomplished.

Question. Kapil and Kamal & Co. is a large manufacturing unit. Recently the company had conducted time and motion studies and concluded that on an average, a worker could produce 300 units per day. However, it has been noticed that the average daily production of a worker is in the range of 200-225 units.
(i) Name the function of management and identify the step in the process of this function which helped in finding out that the actual production of worker is less than the set target. (ii) To complete the process of the function identified in
(i) and to ensure the performance as per time and motion studies, explain what further steps a manager has to take. A
OR
Sita, Geeta and Babita Ltd. is engaged in manufacturing machine components. The target of production is 250 units per day per worker. The company had been successfully attaining this target until two months ago. Over the last two months, it has been observed that daily production varies between 200-210 units per worker.
(i) Name the function of management and identify the step in the process of this function which helped in finding out that the actual production of a worker is less than the set target.
(ii) To complete the process of the function identified in
(i) and to ensure the performance as per set targets, explain what further steps a manager has to take. 
Answer:
(i) The function of management is ‘controlling’. This is the third step of controlling process i.e., comparison of actual performance with established standards. This step involves finding deviations and their extent in identifying the causes of such deviations.
(ii) Taking corrective actions: This is the last step of controlling process. By comparing actual performance with established standards, deviations are revealed. The remedial or corrective action is to be taken to remove deficiencies. Here, it involves change in working methods, material, machines, policies and procedures. It may also require improvement in the motivation, supervision and modifications in the business plans.

Question. Rudrakshi Ltd. is engaged in manufacturing high end luxury pens. The target production is 700 units daily. The company had been successfully attaining this target until three months ago. Over the last few month, it has been observed that daily productions varies between 600-650 units.
(i) Identify the function of management, which has been highlighted in the above context.
(ii) Discuss the first four steps involved in the process of the function identified above. 
Answer:
(i) Controlling
(ii) Following are the first four steps involved in the controlling process :
(a) Setting Performance Standards : The first step in the controlling process is setting up of performance standards. Standards are the criteria against which actual performance
would be measured. Thus, standards serve as benchmarks towards which an organisation strives to work. Standards can be set in both quantitative as well as qualitative terms.
(b) Measurement of Actual Performance : Once performance standards are set, the next step is measurement of actual performance. Performance should be measured in an objective and reliable manner. There are several techniques for measurement of performance. These include personal observation, sample checking, performance reports, etc. As far as possible, performance should be measured in the same units in which standards are set as this would make their comparison easier.
(c) Comparing Actual Performance with Standards : This step involves comparison of actual performance with the standard. Such comparison will reveal the deviation between actual and desired results. Comparison becomes easier when standards are set in quantitative terms.
(d) Analysing Deviations : Some deviation in performance can be expected in all activities. It is, therefore, important to determine the acceptable range of deviations. Also, deviations in key areas of business need to be attended more urgently as compared to deviations in certain insignificant areas.

Question. ‘‘A.S. Ltd.’ is a large company engaged in assembly of air-conditioners. Recently the company had conducted the ‘Time’ and ‘Motion’ study and concluded that on an average, a worker can assemble ten air-conditioners in a day. The target volume of the company in a day is assembling of 1,000 units of air-conditioners. The company is providing attractive allowances to reduce labour turnover and absenteeism. All the workers are happy. Even then the assembly of air-conditioners per day is 800 units only. To find out the reason the company compared actual performance of each worker and observed through C.C.T.V. that some of the workers were busy in gossiping.
(i) Identify the function of Management discussed above.
(ii) State those steps in the process of the function identified which are discussed in the above paragraph.
Answer: (i) Controlling.
(ii) Steps discussed in the above paragraph are :
(a) Setting performance standards : ‘Recently the company had conducted the ‘Time’ and ‘Motion’ study and concluded that on an average, a worker can assemble ten air-conditioners in a day.’
OR ‘The target volume of the company in a day is assembling of 1,000 units of air-conditioners.’ Setting performance standards which are the criteria against which the actual performance would be measured.
(b) Measurement of actual performance : ‘Even then the assembly of air-conditioners per day is 800 units only.’ Measurement of actual performance with the standards in an objective and reliable manner.
(c) Comparing actual performance with the standards : ‘…the company compared actual performance of each worker.’ Comparing actual performance with the standards to find out the deviation, if any.
(d) Analyzing deviations : ‘Observed through C.C.T.V. that some of the workers were busy in gossiping.’ Analysing deviations for their causes.

Question. Describe briefly the relationship between controlling and planning.
OR
Explain briefly the relationship between controlling and planning.
OR
Explain the relationship between controlling and planning functions of management.
OR
State the relationship between planning and controlling functions of management. 
Answer:
(i) Planning and controlling are inseparable twins of management : A system of control presupposes the existence of certain standards provided by planning. Once a plan becomes operational, controlling is necessary to monitor the progress, measure it, discover deviations and initiate corrective measures to ensure that events confirm to the plans.Thus, planning without controlling is meaningless.
(ii) Controlling is blind without planning : If the standards are not set in advance, managers have nothing to control. When there is no plan, there is no basis of controlling. Planning is clearly a prerequisite for controlling. Without planning there is no predetermined understanding of the desired performance. Planning seeks consistent, integrated and articulated programmes while controlling seeks to compel events to confirm to plans.
(iii) Planning is prescriptive while controlling is evaluative : Planning is basically an intellectual process involving thinking, articulation and analysis to discover and prescribe an appropriate course of action for achieving objectives. Controlling, on the other hand, checks whether decisions have been translated into desired action. Planning is thus, prescriptive whereas, controlling is evaluative.
(iv) Planning and controlling are both backward and forward looking functions : Plans are prepared for future and are based on forecasts about future conditions. Therefore, planning involves looking ahead and is called a Forward Looking Function. On the contrary, controlling is like a postmortem of past activities to find out deviation from the standards. In that sense, controlling is a backward-looking function. Also, planning is guided by past experiences and the corrective action initiated by control function aims to improve future performance. This, planning and controlling are both Backward-Looking as well as Forward-Looking Functions. Thus, planning and controlling are interrelated and, in fact, reinforce each other in the sense that :
(a) Planning based on facts makes controlling easier and effective.
(b) Controlling improves future planning by providing information derived from the past experience.

Question. Describe the relationship between ‘Planning’ and ‘Controlling’.
OR
“There is a close and reciprocal relationship between planning and controlling”. Explain the statement. 
Answer: Planning and controlling are mutually interrelated and interdependent activities because :
(i) Controlling is based on planning : Planning provides standards used in controlling to compare with actual performance.
(ii) Planning without controlling is meaningless : Controlling ensures that commitments under the plans are fulfilled and events confirm to the plans.
(iii) Planning is prescriptive and controlling is evaluative : Planning prescribes the most appropriate course of action for achieving objectives while controlling evaluates whether decisions have been translated into desired actions.
(iv) Both are forward looking : Planning is looking ahead as it is based on forecast about future and prepared for future only. Controlling aims also to improve future performance, if found any deviations.
(v) Both are looking back : Controlling is looking back as it measures and compares actual performance with standards fixed in the past. Planning is also a backward looking function as plans are guided by the past experiences.