CBSE Class 12 Business Studies Controlling Worksheet Set A

1. Meaning of controlling: Comparing actual performance with standards and finding deviations if any and taking corrective action.

Actual Performance = Standards = No deviation

Importance of controlling-

1. Maximum utilization of resources.

2. Improve efficiency and effectiveness.

3. Helpful to take corrective action.

4. Helpful to attain organizational objectives.

2. Process of Controlling:

1. Setting performance standards: Standards are the Criteria against which actual performance would be measured. Standards serve as bench marks. They can be set in both quantitative as well as qualitative.

2. Measurement of actual performance: Performance should be measured in an objective and reliable manner.

3. Comparing actual performance with standards:

4. Analyzing deviations: Major deviation or minor deviation and analyzing the causes of deviation.

a) Critical point control: Focus only on Key Result Areas (KRAs).

b) Management by Exception: Concentrate only on major deviations only.

5. Taking corrective action: When 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.

Relationship between Planning and Controlling:

Planning and controlling are inseparable twins of management. Planning initiates the process of management and controlling completes the process. Plans are the basis of control and without control the best laid plans may go astray. Planning is clearly a prerequisite for controlling. It is utterly foolish to think that controlling could be accomplished without planning. 

Very short answer questions

Question. Which two standards will you suggest for production department?
Answer: (i) Quality (ii ) Quantity .

Question. Why is it said that ‘planning is meaningless without controlling?
Answer: Because in the absence of controlling nobody will take it seriously to work according to the plans and hence, the plans will fail.

Question. In which situation the need of taking corrective action arises?
Answer: In case of negative deviation.

Question. Name the two situations in which corrective action is not required.
Answer: (i) Zero deviation (ii) positive deviation.

Question. What should be the ‘focus point’ for a manager while controlling as controlling at each and every step is not possible?
Answer: Focus point for a manager While Controlling should be the ‘key result areas’.

Question. In controlling process standards were set according to the efficiency of the average employee which value has been kept in mind while setting the standards?
Answer: (i) Increase in the morale of the employees.
(ii) Improving the quality of production.

Question. In a company, employees achieved quantitative standard but could not attain qualitative standards which values have been ignored here?
Answer: i) Production of inferior quality goods.
ii) Exploitation of consumers.

Question. States any one advantage of ‘critical-point control ‘and ‘management by exception’.
Answer: By taking care of important deviations both time and efforts are saved.

Question. Give meaning of the term ‘deviation’ as used in the control function of management?
Answer: Deviation refers to the difference between actual performance and standard work.

Question. Which two steps in the process of control are concerned with compelling events to conform to plan?
Answer: (i) Setting performance standards and
(ii) Taking corrective action.

Short answer Question

Question. Explain the principal of ‘critical-point control’ and ‘principal of management by exception’?
Answer: (i) principal of critical-point control: it refers to that concept of management which holds instead of all activities the management should focus its attention on only important activities.
(i) Principal of management by exception: it refer to that principal of organizational control which holds that only significant deviations (i.e., exceptions) should be brought to the top management attentions.

Question. Explain two causes of deviations and corrective action to be taken?
Answer: Cause of deviations-
(i) Human causes: The efficiency of the employees is the chief cause among the human cause.
(ii) Uncertain events: It includes strikes lockouts, shortage of raw material, entry of many competitors in the market, etc.
Corrective Action
(i) Corrective action should be taken only after a careful inquiry into the causes of deviations.
(ii) If the wrong standards had been determined, they should be modified.

Question. After setting the performance standards the next step in the controlling process is the ‘measurement of actual performance’. Explain this step in the process of controlling?
Answer: The second step in the process of controlling is the measurement of actual performance.
The measurements of actual performance is done on the basis of predetermined standards .The measurement of actual performance tells the manager whether the work has been done according to the plan or not.
Performance should be measured in an objective and reliable manner which includes personal observation, sample checking. Performance should be measured in same terms
in which standards have been established, this will facilitate comparison.

Question. Michel john is a sole proprietor in Nicrobar. He has started trade after getting M.B.A degree .he is fully familiar of management .He starts his business with the planning function of management .He desires that all his activities should conform to planning .To this effect, he has adopted a system that keeps a constant watch on the business .Consequently, there is zero possibility of adverse results .It can, therefore, be said that this method is directly related to the results. Mr. John also believes that this method applies not only to any one level of management but to all the levels as well.
a) Identify the function of management referred to in the aforesaid paragraph.
b) Describe any two importances of the functions of management as identified under point (a) above.
Answer: (a) Controlling
(b) Two importance of controlling are as under:
(i) Controlling helps in achieving goals: Controlling helps to achieve the goals of the organization by actual work performance with the standards.
(ii) Controlling increases efficiency: Controlling increases efficiency through optimum utilization of all the resources, such as Man, Machine, Material and money.

Question. “Prakash limited” is a company manufacturing electrical goods Smt. Ruby is its managing director. By virtue of her wise directions, the company has achieved great heights . A management institute one day invited her for a lecture. There she got an opportunity to dialogue with the students of management studies .She narrated to them the story of her success .She told them two main things ,First: the employee should know that their work is being evaluated and progress report prepared . Second , optimum use of physical resources should be made possible.
a) Identify the above said function of the management.
b) On the basis of the aforesaid paragraph write two point regarding the importance of the function of management as identified in point (a) above.
Answer: (a) Controlling
(b)Two importance of controlling are as under:
(i) Controlling helps in achieving goals: Controlling helps to achieve the goals of the organization by actual work performance with the standards.
(ii) Controlling increases efficiency: Controlling increases efficiency through optimum utilization of all the resources, such as Man, Machine, Material and money.

Question. Mr Sidharth pandey is the marketing manager of ‘Swastik limited’. He is a loyal employee of the company .He makes all possible efforts to enhance the public image of company‘s products that is the sole reason of continuous rise in company‘s sales. Whatever sales target he determines, he realizes much more sales every time. It means that every time there occurs positive deviation .Mr. Pandey remains in constant rapport with production manager. he always endeavors that the products of the company should be of high quality .On account of maintaining high quality of the product, he is always ahead of his competitors .As a marketing manager, he also fixes price of company’s products .while fixing the prices he takes special care to ensure that prices should have no adverse impact on the consumer .His main aim is to present true image of the company and its products in advertisements.
(a) Which step of controlling process has referred to in the above paragraph? Clarify.
(b) Identify any two values directed to the society by Mr. Pandey.
Answer: (a) Third step of controlling process is actual performance with standards.
(b) Good health and Reasonable price.

Question. Love and kush are two friends .both are MBA (final year) students. One day, their professor called them to class stage for a surprise Test .He told that one of them will establish relationship between any two functions. Of management .then the other one, will establish reverse relationship between the same two functions .Both will have to give justification for the relationship explained by them .It was a test carrying 50marks. But the students were Intelligent and skillful .Love was the first to speak.
Love said that in his opinion of the functions of management selected by him one is always looking ahead (future) and the other is looking back (past).
No sooner did love express his opinion, than Kush identified the function selected by (love) .In his reply, Kush said that the one function stated by love to have been looking ahead was in his opinion , looking back and the other one stated by him (love) to have been looking back was looking ahead.
(a) Identify the functions of the management discussed in the above paragraph.
(b) Justify the contrary relations of management functions as viewed by love and Kush.
Answer: (a) Planning and controlling.
(b) Plans are prepared for future and involve looking ahead. On the contrary, controlling is like a postmortem of past activities to find out deviations from the standards. In that sense controlling is a backward looking function. However, it should be understood that planning is guided by past experiences and the corrective action initiated by control function.

Question. Explain any three feature of controlling?
Answer: (i) Controlling is a fundamental management function:
(ii) Pervasive function:
(iii) Controlling is a continuous activity:

Long Answer Questions

Question. Explain the various steps in the process of controlling?
Answer: Steps in the process of controlling
[1] Setting Performance Standards: Standards serve as criteria against which actual performance would be measured. It can be both in terms of quantitative and qualitative.
[2] Measurement of Actual Performance: Performance should be measured in an objective and reliable manner.
[3] Comparison of Actual Performance with Standards: in this steps actual performance are compared with standard such comparison reveals deviations.
[4] Analyzing deviations: This step compels events to conform to plans. Deviations are the errors or weakness which may occur in the process of achievement of goals and the manager has to rectify them. The acceptable range of deviations must be determined.
[5] Taking Corrective Action: It is necessary to identify the exact deviation to take corrective action. This step compels events to conform to plans.

Question. Explain the relationship between planning and controlling?
Answer: Relationship between Planning and Controlling: -
Planning and Controlling, both are major and interdependent functions of management.
On one hand, planning provides the base for controlling, on the other hand controlling ensures that plans are successfully converted into reality. The relationship between
planning and controlling can be analyzed in two parts: -
1) Interdependence
2) Difference
Interdependence: -
One of the famous management experts had said that, “Planning is meaningless without controlling and controlling is blind without planning.”
Planning provide the base for controlling. It means that planning sets the objectives, decide the future course of action for the firm. It provide the basic framework for all other activities of management including controlling.
In the same way controlling process cannot be performed, until and unless we have planned something in advance. If the standards are not determined, there is no justification left for controlling.
Difference: -
Planning and Controlling both are opposite looking functions because plans are always made for future, whereas controlling is a backward looking function in which at the completion of process, manager tries to find whether it has been done according to plan or not. Planning is the first function of management. All the other function follows it,
whereas controlling is the last function, which follows all the other functions of management.

Question. Mr. Jai Prakash Gupta is the general manager of “ Bhagwati Udyogpvt .Ltd.” With a view to running his business in a careful manner, he divided all the activities into seven departments. These Departments were: purchase, Marketing, production, personnel, finance, Accounting and Correspondence .Later on, he realized that accounting and correspondence department can be merged into finance department. Thus, all business activities were divided into five departments. Mr. Gupta is now thinking on the lines as to which are the department, out of these five that will have significant role in the success of the business, After complete analysis, he concluded that marketing, production and finance were the department on which success of the business depended, It meant that even of some shortcoming occurred in the departments of purchase and personnel, it would not affect much the success of the business, Thereafter, Mr. Gupta determined deviation tolerance limits of these three main departments. It meant that if deviation of these departments remains within this tolerance limit, then it will be looked after by the concerned manager. However, in case the deviation is beyond this limit that same will be brought to the notice of General Manager.
(a) Identify two function of the management referred in the above paragraph (b) Describe the relevant concepts of identified functions.
Answer: (a) Organizing and controlling
(b) (i) Concept related to organizing- Under it , second step of organizing process i.e., departmentalization is involved .
(ii) Concept related to Controlling-Following two concepts are related to controlling (a) Critical point control- it is the concept of management which holds instead of all activities the management should focus its attention on only important activities.
(b) Management by Exception- it refer to that principal of organizational control which holds that only significant deviations (i.e., exceptions) should be brought to the top management attentions.

Question. “Kitchen Saj limited” is a company manufacturing plastic goods. Mr. Shah is its marketing manager and Mr. Sahu, its production manager. Style of working of both the managers is entirely different .Mr. shah set such standards for different activities of his department as were quite easy to achieve. On the other hand, Mr. Sahu set standards for different activities of his department as were very difficult to achieve. As a result, marketing department achieved his target very easily. Mr. Shah and his team were very pleased with these result. But the situation prevailing in the production department was quite contrary to it. Mr. Sahu was far behind his target. Now he and his team were very much worried.
(a) Which step of controlling process has been discussed in the above paragraph?
(b) In your opinion, both the manager would have set standards for which activities of their respective departments? Write two standards each.
(c) Of the two managers, one set easily achievable standards whereas the other set such standards as could be achieved with great difficulty. In your opinion, what effect of situation would have on the employees?
(d) State in one word, what should be the type of standards?
Answer: (a) First step of the controlling process i.e., setting of performance standards, has been discussed.
(b) Main standards of marketing department.
* Sales volume * Sales expenses.
Main standards of production department
* Quality * Quantity
(c) Effect of easily achievable standards:
In this situation employees turn lazy (idle).
Effect of those standards which are achieved with difficulty:
In this situation employees are worried.
(d) Reasonable

Important Questions for NCERT Class 12 Business Studies Controlling 

Question  Controlling is-
a) Forward looking
b) Backward looking
c) Both forward and backward looking
d) Neither forward nor backward looking
Answer :  C

Question . Under controlling function, deviations can be analyzed by-
a) Setting performance standards
b) Measurement of actual performance
c) Critical Point Control
d) Taking corrective actions

Answer :  C

Question . Controlling is needed at ________ levels.
(a) Top level
(b) Middle level
(c) Lower level
(d) All

Answer :  D

Question . Controlling is related to ________ .
(a) Results
(b) Individuals
(c) Things
(d) Managers

Answer :  A

Question . Controlling function includes
(a) Measuring results against corporate objectives
(b) Explaining procedure to perform activities
(c) Setting Standards
(d) Assigning work
Answer :  A

Question . Controlling function of an organisation is
(a) Forward Looking
(b) Backward Looking
(c) Forward as well as backward looking
(d) none of the above
Answer :  C

Question . First step in the controlling process is ________ .
(a) Taking corrective action
(b) Analysing the deviations
(c) Determining standards
(d) Measurement of actual progress

Answer :  C

Question  . Cost at ™100 per unit is an example of ________ standard.
(a) Quantitative
(b) Qualitative
(c) Both the above
(d) None of the above

Answer :  A

Question  . Strike is ________ cause of deviation.
(a) Human
(b) Uncertain conditions
(c) Various hindrances
(d) Defective standards

Answer :  B

Question  . ‘Planning in the absence of controlling is meaningless’. What does this statement indicate in respects of both?
(a) Only planning is essential
(b) Only controlling is essential
(c) Both are essential
(d) Both are unnecessary

Answer :  C

Question. Which of the following is associated with the marketing standard?
(a) Sale expenses
(b) Capital expenses
(c) Quantity
(d) Dispute Rate

Answer :  A

Fill in the blanks

1. No corrective action is needed when deviation are withinacceptable limits.

2. Planning without controlling-is meaningless.

3. Controlling takes place onthebasis of standards developed by planning.

4. Amanager who try to control everything may end up controlling nothing.

5. Deviations refers to difference between actual performance and plan performance.

6. Feedback refers to communication regarding the reasons for mis match between actual and plan performance and corrective action.

7. Controlling evualates whether the desired cause of actionis followed or not.

8. There is close and reciprocal relationship between planning and controlling.

9. Controlling provides unity of direction.

10. Planning is perspective whereas controlling is evaluative

11. Controlling creates an atmosphere of order and discipline in the organization.

12. Controlling provides direction to all the activities and efforts for achieving organizational goals.

13. Controlling can be used to appraise the performance of employees.

14. Controlling measures the progress and bring out the deviations.

15. By controlling, manager seeks to reduce the wastage of resources.

True/False

Question. Controlling is a goal-oriented function.
Answer : True

Question. Controlling function of a manager is a pervasive function.
Answer : True

Question. Controlling is the last function of management.
Answer : False

Question. Controlling only completes are cycle of management process and improves planning in the next cycle.
Answer : True

Question. Controlling is looking back.
Answer : True

Question. Controlling is also a forward looking function.
Answer : True

Question. Measurement of performance should be done often the task is completed.
Answer : False

Question. In all organisation for effective controlling, each piece produced must be checked to ensure that it conforms to quality specifications laid down for the product.
Answer : False

Question. If there is any deviations from the standards, it demand immediate corrective action on the part of management.
Answer : False

Question. A control technique should keep a check on each and every activity in an organisation.
Answer : False

Question. Planning is prescriptive whereas, controlling is evaluative.
Answer : True

Key points to remember for Chapter 08 Controlling

• Nature/Features of Controlling :
(i) Goal Oriented : Ensures resources are used effectively.
(ii) Pervasive Function : Performed at all levels and in all types of organisations.
(iii) Continuous : Brings management cycle back to planning.
(iv) Both Backward and Forward Looking : Links past and future.

• Importance of Controlling :
(i) Helps in accomplishing the organisational goals.
(ii) Helps in judging accuracy of standards.
(iii) Helps in making the efficient use of resources.
(iv) Helps in improving the employee motivation.
(v) Helps in ensuring order and discipline.
(vi) Helps in facilitating the co-ordination in action.

• Relationship between Planning and Controlling :
(i) Both are interrelated and interdependent :
(a) Controlling is based on planning as planning sets standards for controlling.
(b) Planning without controlling is useless as controlling compels events to confirm with the plans.
(ii) Planning is prescriptive and controlling is evaluative : Planning prescribes appropriate action while controlling evaluates performance.
(iii) Both are backward looking as well as forward looking :
(a) Planning is based on the past experiences and done for future.
(b) Controlling evaluates past activities and improves the future performance.

• Controlling Process :
(i) Setting performance standards : Against which actual performance will be measured.
(ii) Measurement of actual performance : Through personal observation, sample checking, etc.
(iii) Comparing actual performance with standards : To reveal deviations from the set standards.
(iv) Analysing deviations : By using critical point control and management by the exception techniques.
(v) Taking corrective action : Involves training of employees, replacement of machinery, etc.

CONCEPT AND DEFINITION:
Controlling means ensuring that activities in an organisation are performed as per the needs.
Controlling function can be defined as comparison of actual performance with the planned performance. If there is any difference or deviation then finding the reasons for such difference and taking corrective measures or action to stop those reasons so that in future there is match between actual and planned performance.

“Managerial Control implies the measurement of accomplishment against the standard and the correction of deviations to assure attainment of objectives according to plans” - Koontz and O’ Donnel

IMPORTANCE OF CONTROLLING:

1. Accomplishing organisational goals: The controlling function measures progress towards the organisational goals and brings to light the deviations if any and indicate corrective action

2. Judging accuracy of standards: A good control system enables management to verify whether the standard set are accurate and objective. An efficient control system checks changes taking place in the organisation and in the environment and helps to review and revise the standards.

3. Making efficient use of resources: In controlling, each activity is performed in accordance with predetermined norms. It acts like a traffic signal and guides the organisation and keeps it on the righttrack. As a result, wastage and spoilage of resources will be reduced so that effective and efficient use of resources can be ensured.

4. Improving employee motivation: A good control system ensures that employees know well in advance what they are expected to do as well as the basis against which their performance will be appraised. Thus, it motivates them to give better performance.

5. Ensuring order and discipline: Control creates an atmosphere or order and discipline in organisation. It keeps the employees under check and helps to minimize dishonest and fraud behavior of employees.

6. Facilitates coordination in action: The activities of each department and employee are governed and controlled by predetermined standards which are well coordinated with one another.

RELATIONSHIP BETWEEN PLANNING AND CONTROLLING
Planning without controlling is meaningless similarly controlling is blind without planning if the standards are not set in advanced managers have nothing to control when there is no plan no basis of controlling.
Planning is clearly a prerequisite for controlling. controlling could not be accomplished without planning.
Planning is basically and intellectual process involving thinking and 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 perspective where as controlling is evaluative.

Planning involves looking ahead and is called forward looking function on contrary controlling is like a post mortem of past activities to find out deviations from the standards in that sense controlling is backward looking function. planning and controlling are said to be both backward looking as well as forward looking function.
Planning and controlling are interrelated.

CONTROLLING PROCESS
1. Setting performance standards
2. Measurement of actual performance
3. Comparison of actual performance with standards
4. Analyzing deviations
5. Taking corrective action.
The above steps in the process of controlling have been discussed below:

1. Setting performance standards: Standards are the criteria against which actual performance would be measured the standard serves as a benchmark towards which an organisation strives to work. standards can be set in both qualitative and quantitative terms Standard must be set up keeping in mind the resources of the organisation and must be achievable Standards should be flexible enough to be modified due to changes taking place in internal and external environment.

2. Measurement of actual performance: In second step, the actual performance should be measured through personal observation, sample checking, performance reports, calculation of ratios, etc. The Measurement should be objective and reliable. Further, while measuring performance, the quantitative and qualitative aspect should be kept in mind.

3. Comparing actual performance with standard: The comparison of actual with the standard will reveal the deviation if any. If there is match in both, then the controlling function ends there only. But, if there is mismatch, then the manager tries to find out the extent of deviation. If the deviation is minor, it should be ignored. But, if the deviation more, then timely action must be taken.

4. Analyzing deviation: Deviation should be divided in two categories as Deviations need to be attended urgently. Minor or insignificant deviations Below mentioned two ways are to be applied during the analyzing of deviations.
(a) Critical point control: It means keeping focus on some Key Result Areas (KRAs) which are critical to the success of an organisation. If anything goes wrong in these critical points, then it must be attended urgently.
(b) Management by exception: It means a manager who tries to control everything may end up controlling nothing. Thus, only significant deviations which go beyond permissible limit should be brought to the management. Managers should not waste time and energy in finding solutions for minor deviations.

5. Taking corrective action: The final step in controlling function is to find out the reasons for deviations which need immediate attention and trying to remove deviation in future. Taking corrective measures may involve training of employees, assigning of additional workers and equipment, change in the quality of materials, repair or replace the machinery, improving physical conditions of work.

Short Questions 

Question. “Controlling is a pervasive function.” Explain.
Answer: The controlling is a pervasive function of the management as it is performed in all organizations (business and non-business) and at all managerial levels. It is that function of management under which every manager at every level assures that the actual progress is in conformity with the plans..

Question. “An effort to control every thing may end up controlling nothing”. Comment.
Answer: This statement is absolutely right. Here the ‘principle of critical point control’ is applicable. According to this principle, those points or activities should be determined in the very outset which have an important role to play in ensuring the actual work progress in accordance with the plans. These are known as Key Result Areas- KRAs. It means that the managers should not be involved in small insignificant activities but should pay more attention to those activities where unfavourable results can cause heavy loss to the enterprise.

Question. Differentiate between the ‘Principle of Critical – point control’ and Principle of Management by exception’.
Answer: Under the principle of critical point, it is sought to be understood on which points or activities control will be profitable, while in the principle of exception deviation is taken care of in respect of the pre-determined critical points and in case of especially good or especially good or especially bad deviation in respect of some particular critical point corrective action is taken.

Question. Explain any three types of Budgets.
Answer: (i) Sales Budget: Sales budget is a detailed plan of sales which gives the details about the estimated sales within a definite period of time. It shows as four things in connection with the sales: Goods, Quantity, Price and Period of time.
(ii) Production Budget: this budget is based on the sales budget. This budget determines the quantity of different products to be produced and their time of production.
(iii) Cash Budget: When all the expenditure budgets have been prepared, the cash budget is prepared last of all. This budget gives an estimate of the cash receipts and payments.

Question. What are the Limitations of controlling?
Answer:  (i) Difficulty in setting quantitative standards: Control system loses some of its effectiveness when standards cannot be defined in quantitative terms. Employee morale, job satisfaction and human behaviors are such areas where this problem might arise.
(ii) Little control on external factors: Generally an enterprise cannot control external factors such as government policies, technological changes, competition etc.
(iii) Resistance from employees: Control is often resisted by employees. They see it as restriction on their freedom.
(iv) Costly affairs: Control is a costly affair as it involves a lot of expenditure, time and efforts.

LONG QUESTIONS

Question. What is meant by ‘Controlling’? Discuss the importance of controlling.
Answer:  Control is an indispensable function of management. Without control the best of plAnswer: can go awry.
A good control system helps an organization in the following ways:
(i) Accomplishing organizational goals: the controlling function measures progress towards the organizational goals and brings to light the deviations, if any, and indicates corrective action.
(ii) Judging accuracy of standards: a good control system enables management to verify whether the standards set are accurate or not. An efficient control system keeps a careful check on the changes taking place in the organization 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. 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 appreciated.
(v) Ensuring order and discipline: Controlling creates an atmosphere of order and discipline in the organization. It helps to minimize dishonest behaviors on the part of the employees by keeping a close check on their activities.
(vi) Facilitating coordination in action: Controlling provides direction to all activities and efforts for achieving organizational goals.

Question. Explain the relationship between planning and controlling.
Answer: The relationship between planning and controlling can be divided into the following two parts.
(i) Interdependence between Planning and Controlling.
(ii) Difference between Planning and Controlling.
(i) Interdependence between Planning and Controlling. Planning is meaningless without controlling and controlling is blind without Planning. Both the aspects of the interdependence of planning and control have been discussed below:
(a) Planning is meaningless without Controlling: if the process of controlling is taken away from management no person working in the enterprise will take it seriously to work according to the plans and consequently, the plans will fail.
(b) Controlling is blind without Planning: Under the system of controlling actual work performance is compared with the standards. Hence, if the standards are not determined there is no justification left for control and the standards are determined under planning.
(ii) Difference between Planning and Controlling
Yes, planning and controlling are incomplete and ineffective without each other but it doesn’t mean that both are not independent. Reasons are:
(a) Planning is looking Ahead whereas Controlling is Looking Back: Plans are always formulated for future and determined the future course of action for the achievement of objectives laid down.
On the contrary, controlling is looking back because under it a manager tries to find out, after the work is completed, whether it has been done according to the standards or not.
(b) Planning is the first function and Controlling is the last function of Managerial Process: the managerial process moves in a definite sequence- like planning, organizing, staffing, directing and controlling happens to be the last step.

Question. Explain briefly the various steps in the process of control.
Answer: Following are the steps of controlling process:
(i) Setting Performance Standards: the first step of controlling is to set performance standards.
Standards are those criteria s on the basis of which the actual performance is measured.
Thus, standards serve as benchmarks towards which an organization strives to work.
Standards can be set in both quantitative as well as qualitative terms.
(ii) Measurement of Actual Performance: the second step in the controlling process is the measurement of actual performance. The measurement of actual performance is done on the basis of pre-determined standards. The measurement of actual performance tells the manager whether the work has been done according to the plan or not.
(iii) Comparison of Actual Performance with Standards: At this step, actual performance is compared with the standards and deviations are found out.
(iv) Analyzing Deviations: Deviations are examined the light of pre-determined Deviation Tolerance Limits. If the deviations are within limits they can be avoided. But if they cross the limits, they should be reported to the higher level managers without any delay. There are two important principles regarding this:
(a) Principle of Critical Point Control: According to this principle, those activities should be determined in the very outset which have an important role to play in ensuring the actual work progress in accordance with the plAnswer: These are known as Key Result Areas – KRAs. It means that the managers should not be involved in small insignificant activities but should pay more attention to those activities where unfavourable results can cause heavy loss to the enterprise.
(b) Management by Exception; Management by exception, is an important principle of management control 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 management.
(v) Taking Corrective Action: The last but the most important step in the controlling process is taking corrective action. By now the deviations and their causes become known. Now is the turn of removing the hurdles in the actual work progress. The purpose of corrective action is to bring the actual work progress to the level of expected progress.

Important Questions for NCERT Class 12 Business Studies Controlling 

Question. Which of the following is related to the finance and accounting standard?
(a) Sale expenses
(b) Capital expenditure
(c) Quantity
(d) Dispute late

Answer :  B

Question. Which of the following is associated with the Personnel Management?
(a) Individual production
(b) Target of sales persons
(c) Absenteeism Rate
(d) Flow of capital

Answer :  C

Question. Which of the following qualities the standards should have?
(a) Achievable
(b) Measurable
(c) Flexible
(d) All the above

Answer :  D

Question Which one of the following is not an importance of controlling-
a) Judging accuracy of standard
b) Facilitates coordination in action
c) Ensuring order and discipline
d) Clarity in working relationship

Answer :  D

Question  Which one of the following is not a step of controlling process-
a) Measurement of actual performance
b) Analysing deviations
c) Evaluating alternative course of action
d) Taking corrective action

Answer :  C

Question . Which of the following types a deviation can be?
(a) Negative
(b) Positive
(c) None (Nil)
(d) All the above

Answer :  D

Question . Which deviation is the most important?
(a) Negative
(b) Positive
(c) None (Nil)
(d) All the above

Answer :  A

Question .Deviations may have multiple origins. In case of production, it may be________
a) Unrealistic target of sales
b) More discounts were given.

Answer :  B

Question. Controlling function aims to-
a) Find out how far actual performance deviates from standards.
b) Find out how far standards deviate from actual performance.
c) Initiate action by people in the organization
d) Improve job satisfaction and morale of the employee

Answer :  A

Question . ________ is not included in the controlling process.
(a) Measurement of actual performance.
(b) Comparison of actual performance with standards.
(c) Doing work of financial management.
(d) Analysing deviations.

Answer :  C

Fill in the blanks

1. A good control enables the management to verify whether the standards set are accurate and objective.
2. Each and every activity of the organization is governed by pre- determined standards and norms.
3. After analysing deviations, corrective actions are taken in controlling function.
4. Controlling helps in minimizing the dishonest behaviour of the employees
5. A good control system helps to judge accuracy of standard.
6. Controlling ensures that an organization’s resources are being used effectively and efficiently for the achievement of pre-determined goals.
7. Controlling function is to be performed at all level of management, to keep a control over activities in their areas.
8. Controlling function brings the management cycle back to planning function.
9. To seek planned results from the subordinates, a manager needs to exercise effective control over the activities of the subordinates.
11. Planning is prescriptive whereas controlling is evaluative.
12. Controlling is like a post mortem of past activities to find out deviations from the standards.
13. Controlling checks whether decisions have been translated into desired action.
14. Controlling ensures that activities in an organization are performed as per the plans.
15. Controlling function of management helps in formulation of future plans in the light of the problems that were identified in the past.
16. Planning and controlling are interrelated and, in fact, reinforce each other.

Question. Suppose you are a manager in a car manufacturing company. It is reported that postal expenses have increased by 10% and cost of raw material is increased by 2%. Which of the two deviations is more critical to you? It is related to which concept of controlling?
Answer : (i) Rise in cost of raw-material @ 2% is more important. (ii) It is related to “Critical Point Control”.

Question. Why is it said that controlling is “looking back’? State.
Answer : Controlling is a backward-looking function as it measures and compares actual performance with standards fixed in the past.

Question. What do you mean by ‘Deviation’? Explain with the help of an example.
Answer : Deviation refers to difference between actual performance and plan performance. For example, if plan is to producing 100 units and actually only 80 units are produced, then deviation = 100-80=20 units. The deviation may be a positive or a negative deviation.

Question. State any four importance of controlling.
Answer : (a) Controlling helps in achieving organisational goals
(b) Controlling judge accuracy of standards
(c) Controlling makes efficient use of resources
(d) It improves employee’s motivation.

Question. State the points of controlling process.
Answer : 1.Setting up Standards: The standards of performance are set which serve as the criteria against which actual performance will be measured.
2. Measuring Performance: The measurement of actual performance is done on the basis of pre-determined standards. It tells the manager whether the work has been done according to the plan or not.
3. Comparing Performance against standard: The measuring of actual performance is compared with the standards to find out the deviations.
4. Analyzing Deviations: Deviations are analysed for their causes through Critical Point Control and Management by Exception.
5. Taking Corrective Measures: Corrective action is taken if deviations go beyond the acceptable limits.
6. Feedback : After and taking corrective measures a feedback report is prepared.