NCERT Textbook - Controlling Commerce Notes | EduRev

Business Studies (BST) Class 12

Created by: Nipuns Institute

Commerce : NCERT Textbook - Controlling Commerce Notes | EduRev

 Page 1


CONTROLLING CONTROLLING
CHAPTER
L E A R N I N G 
OBJECTIVES
8
After studying 
this chapter, you 
should be able to:
n Explain the 
meaning of 
controlling;
n State the 
importance of 
controlling;
n Describe the 
relationship 
between 
planning and 
controlling;
n Explain the steps 
in the process of 
controlling; and
n Describe the 
techniques of 
controlling.
Sterling Courier Systems based in Hendon, Virginia is a 
provider of same-day-delivery services. Although Sterling 
may do everything right to meet its delivery commitments, 
it relies on commercial airlines to transport its parcels, and 
occasionally fails to meet its deadlines. Delays are usually a 
result of packages being misplaced in airlines’ tracking systems. 
Such incidents are beyond Sterling’s control. But from the 
customer’s vantage point, the failure is Sterling’s problem.
T o control the damage created by such delays, Sterling had 
to take some corrective measures. For example, for several 
months in late 1990 and early 1991 several Sterling deliveries 
disappeared in transit. The packages turned up later, but the 
customers had already suffered financial losses. Yet because 
the packages were eventually recovered, neither insurance 
nor the airlines was liable. The decision for president Glenn 
Smoak was whether to compensate the customers for their 
losses or simply not to charge them for the shipments. 
Smoak concluded that not charging for the shipment was an 
inadequate response, given the suffered downtime. But paying 
the $30,000 in losses would push the then-five-year-old $5 
million company into a loss for the quarter. Smoak’s decision 
was to pay out the $30,000 in gratis service, the customer 
stayed, and Sterling continues to grow.
Source: Stoner, A.F . James,  
R. Edward Freeman and Daniel  
R. Gilbert, Jr., Management,  
Prentice-Hall of India Pvt. Ltd., 1998
Damage Control at Sterling Courier
The example of Sterling Courier 
brings out clearly how an adverse 
business situation may intelligently 
be controlled by a manager. It is 
quite clear from the example that a 
manager needs to take some sort of 
Damage Control at Sterling Courier
2015-16(21/01/2015)
Page 2


CONTROLLING CONTROLLING
CHAPTER
L E A R N I N G 
OBJECTIVES
8
After studying 
this chapter, you 
should be able to:
n Explain the 
meaning of 
controlling;
n State the 
importance of 
controlling;
n Describe the 
relationship 
between 
planning and 
controlling;
n Explain the steps 
in the process of 
controlling; and
n Describe the 
techniques of 
controlling.
Sterling Courier Systems based in Hendon, Virginia is a 
provider of same-day-delivery services. Although Sterling 
may do everything right to meet its delivery commitments, 
it relies on commercial airlines to transport its parcels, and 
occasionally fails to meet its deadlines. Delays are usually a 
result of packages being misplaced in airlines’ tracking systems. 
Such incidents are beyond Sterling’s control. But from the 
customer’s vantage point, the failure is Sterling’s problem.
T o control the damage created by such delays, Sterling had 
to take some corrective measures. For example, for several 
months in late 1990 and early 1991 several Sterling deliveries 
disappeared in transit. The packages turned up later, but the 
customers had already suffered financial losses. Yet because 
the packages were eventually recovered, neither insurance 
nor the airlines was liable. The decision for president Glenn 
Smoak was whether to compensate the customers for their 
losses or simply not to charge them for the shipments. 
Smoak concluded that not charging for the shipment was an 
inadequate response, given the suffered downtime. But paying 
the $30,000 in losses would push the then-five-year-old $5 
million company into a loss for the quarter. Smoak’s decision 
was to pay out the $30,000 in gratis service, the customer 
stayed, and Sterling continues to grow.
Source: Stoner, A.F . James,  
R. Edward Freeman and Daniel  
R. Gilbert, Jr., Management,  
Prentice-Hall of India Pvt. Ltd., 1998
Damage Control at Sterling Courier
The example of Sterling Courier 
brings out clearly how an adverse 
business situation may intelligently 
be controlled by a manager. It is 
quite clear from the example that a 
manager needs to take some sort of 
Damage Control at Sterling Courier
2015-16(21/01/2015)
216 Business Studies
corrective action before any major 
damage is done to the business. 
Controlling function of management 
comes to the rescue of a manager 
here. It not only helps in keeping a 
track on the progress of activities but 
also ensures that activities conform to 
the standards set in advance so that 
organisational goals are achieved.
Meaning of Controlling Meaning of Controlling Controlling is one of the important 
functions of a manager. In order 
to seek planned results from the 
subordinates, a manager needs to 
exercise effective control over the 
activities of the subordinates. In other 
words, controlling means ensuring 
that activities in an organisation are 
performed as per the plans. Controlling 
also ensures that an organisation’s 
resources are being used effectively 
and efficiently for the achievement of 
predetermined goals. Controlling is, 
thus, a goal-oriented function.
Controlling function of a manager 
is a pervasive function. It is a primary 
function of every manager. Managers 
at all levels of management- top, 
middle and lower-need to perform 
controlling functions to keep a 
control over activities in their areas. 
Moreover, controlling is as much 
required in an educational institution, 
military, hospital, and a club as in 
any business organisation. 
Controlling should not be misunde-
rstood as the last function of manage-
ment. It is a function that brings 
back the management cycle back to 
the planning function. The controlling 
function finds out how far actual 
performance deviates from standards, 
analyses the causes of such deviations 
and attempts to take corrective actions 
based on the same. This process 
helps in formulation of future plans 
in the light of the problems that were 
identified and, thus, helps in better 
planning in the future periods. Thus, 
controlling only completes one cycle 
of management process and improves 
planning in the next cycle.
Importance of Controlling
Control is an indispensable function 
of management. Without control the 
best of plans can go awry. A good 
control system helps an organisation 
in the following ways:
 (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. 
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
2015-16(21/01/2015)
Page 3


CONTROLLING CONTROLLING
CHAPTER
L E A R N I N G 
OBJECTIVES
8
After studying 
this chapter, you 
should be able to:
n Explain the 
meaning of 
controlling;
n State the 
importance of 
controlling;
n Describe the 
relationship 
between 
planning and 
controlling;
n Explain the steps 
in the process of 
controlling; and
n Describe the 
techniques of 
controlling.
Sterling Courier Systems based in Hendon, Virginia is a 
provider of same-day-delivery services. Although Sterling 
may do everything right to meet its delivery commitments, 
it relies on commercial airlines to transport its parcels, and 
occasionally fails to meet its deadlines. Delays are usually a 
result of packages being misplaced in airlines’ tracking systems. 
Such incidents are beyond Sterling’s control. But from the 
customer’s vantage point, the failure is Sterling’s problem.
T o control the damage created by such delays, Sterling had 
to take some corrective measures. For example, for several 
months in late 1990 and early 1991 several Sterling deliveries 
disappeared in transit. The packages turned up later, but the 
customers had already suffered financial losses. Yet because 
the packages were eventually recovered, neither insurance 
nor the airlines was liable. The decision for president Glenn 
Smoak was whether to compensate the customers for their 
losses or simply not to charge them for the shipments. 
Smoak concluded that not charging for the shipment was an 
inadequate response, given the suffered downtime. But paying 
the $30,000 in losses would push the then-five-year-old $5 
million company into a loss for the quarter. Smoak’s decision 
was to pay out the $30,000 in gratis service, the customer 
stayed, and Sterling continues to grow.
Source: Stoner, A.F . James,  
R. Edward Freeman and Daniel  
R. Gilbert, Jr., Management,  
Prentice-Hall of India Pvt. Ltd., 1998
Damage Control at Sterling Courier
The example of Sterling Courier 
brings out clearly how an adverse 
business situation may intelligently 
be controlled by a manager. It is 
quite clear from the example that a 
manager needs to take some sort of 
Damage Control at Sterling Courier
2015-16(21/01/2015)
216 Business Studies
corrective action before any major 
damage is done to the business. 
Controlling function of management 
comes to the rescue of a manager 
here. It not only helps in keeping a 
track on the progress of activities but 
also ensures that activities conform to 
the standards set in advance so that 
organisational goals are achieved.
Meaning of Controlling Meaning of Controlling Controlling is one of the important 
functions of a manager. In order 
to seek planned results from the 
subordinates, a manager needs to 
exercise effective control over the 
activities of the subordinates. In other 
words, controlling means ensuring 
that activities in an organisation are 
performed as per the plans. Controlling 
also ensures that an organisation’s 
resources are being used effectively 
and efficiently for the achievement of 
predetermined goals. Controlling is, 
thus, a goal-oriented function.
Controlling function of a manager 
is a pervasive function. It is a primary 
function of every manager. Managers 
at all levels of management- top, 
middle and lower-need to perform 
controlling functions to keep a 
control over activities in their areas. 
Moreover, controlling is as much 
required in an educational institution, 
military, hospital, and a club as in 
any business organisation. 
Controlling should not be misunde-
rstood as the last function of manage-
ment. It is a function that brings 
back the management cycle back to 
the planning function. The controlling 
function finds out how far actual 
performance deviates from standards, 
analyses the causes of such deviations 
and attempts to take corrective actions 
based on the same. This process 
helps in formulation of future plans 
in the light of the problems that were 
identified and, thus, helps in better 
planning in the future periods. Thus, 
controlling only completes one cycle 
of management process and improves 
planning in the next cycle.
Importance of Controlling
Control is an indispensable function 
of management. Without control the 
best of plans can go awry. A good 
control system helps an organisation 
in the following ways:
 (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. 
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
2015-16(21/01/2015)
Controlling 217
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 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 give 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. 
The box explains how an import-
export company was able to track 
dishonest employees by using 
computer monitoring as a part 
of their control system.
 (vi) Facilitating coordination in 
action: Controlling provides 
direction to all activities and  
Managers at a New York City import-export company suspected that two employees were 
robbing it. Corporate Defense Strategies (CDS) of Maywood, New Jersey, advised the firm 
to install a software program that could secretly log every single stroke of the suspects’ 
computer keys and send an encrypted e-mail report to CDS. Investigators revealed that 
the two employees were deleting orders from the corporate books after processing them, 
pocketing the revenues, and building their own company from within. The programme 
picked up on their plan to return to the office late one night to steal a large shipment of 
electronics. Police hid in the rafters of the firm’s warehouse, and when the suspects entered, 
they were arrested. The pair was charged with embezzling $3 million over two and a half 
years, a sizable amount of revenue for a $25 million-a-year firm.
Source: Hellriegel Don, Susan E. Jackson and John W. Slocum Jr., Management:  
A Competency-based Approach, Thompson, 2002, chap.19, p.526
Control Through Computer Monitoring Control Through Computer Monitoring
2015-16(21/01/2015)
Page 4


CONTROLLING CONTROLLING
CHAPTER
L E A R N I N G 
OBJECTIVES
8
After studying 
this chapter, you 
should be able to:
n Explain the 
meaning of 
controlling;
n State the 
importance of 
controlling;
n Describe the 
relationship 
between 
planning and 
controlling;
n Explain the steps 
in the process of 
controlling; and
n Describe the 
techniques of 
controlling.
Sterling Courier Systems based in Hendon, Virginia is a 
provider of same-day-delivery services. Although Sterling 
may do everything right to meet its delivery commitments, 
it relies on commercial airlines to transport its parcels, and 
occasionally fails to meet its deadlines. Delays are usually a 
result of packages being misplaced in airlines’ tracking systems. 
Such incidents are beyond Sterling’s control. But from the 
customer’s vantage point, the failure is Sterling’s problem.
T o control the damage created by such delays, Sterling had 
to take some corrective measures. For example, for several 
months in late 1990 and early 1991 several Sterling deliveries 
disappeared in transit. The packages turned up later, but the 
customers had already suffered financial losses. Yet because 
the packages were eventually recovered, neither insurance 
nor the airlines was liable. The decision for president Glenn 
Smoak was whether to compensate the customers for their 
losses or simply not to charge them for the shipments. 
Smoak concluded that not charging for the shipment was an 
inadequate response, given the suffered downtime. But paying 
the $30,000 in losses would push the then-five-year-old $5 
million company into a loss for the quarter. Smoak’s decision 
was to pay out the $30,000 in gratis service, the customer 
stayed, and Sterling continues to grow.
Source: Stoner, A.F . James,  
R. Edward Freeman and Daniel  
R. Gilbert, Jr., Management,  
Prentice-Hall of India Pvt. Ltd., 1998
Damage Control at Sterling Courier
The example of Sterling Courier 
brings out clearly how an adverse 
business situation may intelligently 
be controlled by a manager. It is 
quite clear from the example that a 
manager needs to take some sort of 
Damage Control at Sterling Courier
2015-16(21/01/2015)
216 Business Studies
corrective action before any major 
damage is done to the business. 
Controlling function of management 
comes to the rescue of a manager 
here. It not only helps in keeping a 
track on the progress of activities but 
also ensures that activities conform to 
the standards set in advance so that 
organisational goals are achieved.
Meaning of Controlling Meaning of Controlling Controlling is one of the important 
functions of a manager. In order 
to seek planned results from the 
subordinates, a manager needs to 
exercise effective control over the 
activities of the subordinates. In other 
words, controlling means ensuring 
that activities in an organisation are 
performed as per the plans. Controlling 
also ensures that an organisation’s 
resources are being used effectively 
and efficiently for the achievement of 
predetermined goals. Controlling is, 
thus, a goal-oriented function.
Controlling function of a manager 
is a pervasive function. It is a primary 
function of every manager. Managers 
at all levels of management- top, 
middle and lower-need to perform 
controlling functions to keep a 
control over activities in their areas. 
Moreover, controlling is as much 
required in an educational institution, 
military, hospital, and a club as in 
any business organisation. 
Controlling should not be misunde-
rstood as the last function of manage-
ment. It is a function that brings 
back the management cycle back to 
the planning function. The controlling 
function finds out how far actual 
performance deviates from standards, 
analyses the causes of such deviations 
and attempts to take corrective actions 
based on the same. This process 
helps in formulation of future plans 
in the light of the problems that were 
identified and, thus, helps in better 
planning in the future periods. Thus, 
controlling only completes one cycle 
of management process and improves 
planning in the next cycle.
Importance of Controlling
Control is an indispensable function 
of management. Without control the 
best of plans can go awry. A good 
control system helps an organisation 
in the following ways:
 (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. 
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
2015-16(21/01/2015)
Controlling 217
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 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 give 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. 
The box explains how an import-
export company was able to track 
dishonest employees by using 
computer monitoring as a part 
of their control system.
 (vi) Facilitating coordination in 
action: Controlling provides 
direction to all activities and  
Managers at a New York City import-export company suspected that two employees were 
robbing it. Corporate Defense Strategies (CDS) of Maywood, New Jersey, advised the firm 
to install a software program that could secretly log every single stroke of the suspects’ 
computer keys and send an encrypted e-mail report to CDS. Investigators revealed that 
the two employees were deleting orders from the corporate books after processing them, 
pocketing the revenues, and building their own company from within. The programme 
picked up on their plan to return to the office late one night to steal a large shipment of 
electronics. Police hid in the rafters of the firm’s warehouse, and when the suspects entered, 
they were arrested. The pair was charged with embezzling $3 million over two and a half 
years, a sizable amount of revenue for a $25 million-a-year firm.
Source: Hellriegel Don, Susan E. Jackson and John W. Slocum Jr., Management:  
A Competency-based Approach, Thompson, 2002, chap.19, p.526
Control Through Computer Monitoring Control Through Computer Monitoring
2015-16(21/01/2015)
218 Business Studies
efforts for achieving organisational 
goals. Each department and 
employee is governed by pre-
determined standards which 
are well coordinated with one 
another. This ensures that overall 
organisational objectives are 
accomplished.
Limitations of Controlling
Although controlling is an important 
function of management, it suffers 
from the following limitations.
 (i) Difficulty in setting quantitative 
standards: Control system loses 
some of its effectiveness when 
standards cannot be defined in 
quantitative terms. This makes 
measurement of performance and 
their comparison with standards  
a difficult task. Employee morale, 
job satisfaction and human 
behaviour 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 empl-
oyees. They see it as a restriction 
on their freedom. For instance, 
employees might object when 
they are kept under a strict watch 
with the help of Closed Circuit 
Televisions (CCTVs).
Remain level headed  
even when things go wrong
2015-16(21/01/2015)
Page 5


CONTROLLING CONTROLLING
CHAPTER
L E A R N I N G 
OBJECTIVES
8
After studying 
this chapter, you 
should be able to:
n Explain the 
meaning of 
controlling;
n State the 
importance of 
controlling;
n Describe the 
relationship 
between 
planning and 
controlling;
n Explain the steps 
in the process of 
controlling; and
n Describe the 
techniques of 
controlling.
Sterling Courier Systems based in Hendon, Virginia is a 
provider of same-day-delivery services. Although Sterling 
may do everything right to meet its delivery commitments, 
it relies on commercial airlines to transport its parcels, and 
occasionally fails to meet its deadlines. Delays are usually a 
result of packages being misplaced in airlines’ tracking systems. 
Such incidents are beyond Sterling’s control. But from the 
customer’s vantage point, the failure is Sterling’s problem.
T o control the damage created by such delays, Sterling had 
to take some corrective measures. For example, for several 
months in late 1990 and early 1991 several Sterling deliveries 
disappeared in transit. The packages turned up later, but the 
customers had already suffered financial losses. Yet because 
the packages were eventually recovered, neither insurance 
nor the airlines was liable. The decision for president Glenn 
Smoak was whether to compensate the customers for their 
losses or simply not to charge them for the shipments. 
Smoak concluded that not charging for the shipment was an 
inadequate response, given the suffered downtime. But paying 
the $30,000 in losses would push the then-five-year-old $5 
million company into a loss for the quarter. Smoak’s decision 
was to pay out the $30,000 in gratis service, the customer 
stayed, and Sterling continues to grow.
Source: Stoner, A.F . James,  
R. Edward Freeman and Daniel  
R. Gilbert, Jr., Management,  
Prentice-Hall of India Pvt. Ltd., 1998
Damage Control at Sterling Courier
The example of Sterling Courier 
brings out clearly how an adverse 
business situation may intelligently 
be controlled by a manager. It is 
quite clear from the example that a 
manager needs to take some sort of 
Damage Control at Sterling Courier
2015-16(21/01/2015)
216 Business Studies
corrective action before any major 
damage is done to the business. 
Controlling function of management 
comes to the rescue of a manager 
here. It not only helps in keeping a 
track on the progress of activities but 
also ensures that activities conform to 
the standards set in advance so that 
organisational goals are achieved.
Meaning of Controlling Meaning of Controlling Controlling is one of the important 
functions of a manager. In order 
to seek planned results from the 
subordinates, a manager needs to 
exercise effective control over the 
activities of the subordinates. In other 
words, controlling means ensuring 
that activities in an organisation are 
performed as per the plans. Controlling 
also ensures that an organisation’s 
resources are being used effectively 
and efficiently for the achievement of 
predetermined goals. Controlling is, 
thus, a goal-oriented function.
Controlling function of a manager 
is a pervasive function. It is a primary 
function of every manager. Managers 
at all levels of management- top, 
middle and lower-need to perform 
controlling functions to keep a 
control over activities in their areas. 
Moreover, controlling is as much 
required in an educational institution, 
military, hospital, and a club as in 
any business organisation. 
Controlling should not be misunde-
rstood as the last function of manage-
ment. It is a function that brings 
back the management cycle back to 
the planning function. The controlling 
function finds out how far actual 
performance deviates from standards, 
analyses the causes of such deviations 
and attempts to take corrective actions 
based on the same. This process 
helps in formulation of future plans 
in the light of the problems that were 
identified and, thus, helps in better 
planning in the future periods. Thus, 
controlling only completes one cycle 
of management process and improves 
planning in the next cycle.
Importance of Controlling
Control is an indispensable function 
of management. Without control the 
best of plans can go awry. A good 
control system helps an organisation 
in the following ways:
 (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. 
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
2015-16(21/01/2015)
Controlling 217
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 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 give 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. 
The box explains how an import-
export company was able to track 
dishonest employees by using 
computer monitoring as a part 
of their control system.
 (vi) Facilitating coordination in 
action: Controlling provides 
direction to all activities and  
Managers at a New York City import-export company suspected that two employees were 
robbing it. Corporate Defense Strategies (CDS) of Maywood, New Jersey, advised the firm 
to install a software program that could secretly log every single stroke of the suspects’ 
computer keys and send an encrypted e-mail report to CDS. Investigators revealed that 
the two employees were deleting orders from the corporate books after processing them, 
pocketing the revenues, and building their own company from within. The programme 
picked up on their plan to return to the office late one night to steal a large shipment of 
electronics. Police hid in the rafters of the firm’s warehouse, and when the suspects entered, 
they were arrested. The pair was charged with embezzling $3 million over two and a half 
years, a sizable amount of revenue for a $25 million-a-year firm.
Source: Hellriegel Don, Susan E. Jackson and John W. Slocum Jr., Management:  
A Competency-based Approach, Thompson, 2002, chap.19, p.526
Control Through Computer Monitoring Control Through Computer Monitoring
2015-16(21/01/2015)
218 Business Studies
efforts for achieving organisational 
goals. Each department and 
employee is governed by pre-
determined standards which 
are well coordinated with one 
another. This ensures that overall 
organisational objectives are 
accomplished.
Limitations of Controlling
Although controlling is an important 
function of management, it suffers 
from the following limitations.
 (i) Difficulty in setting quantitative 
standards: Control system loses 
some of its effectiveness when 
standards cannot be defined in 
quantitative terms. This makes 
measurement of performance and 
their comparison with standards  
a difficult task. Employee morale, 
job satisfaction and human 
behaviour 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 empl-
oyees. They see it as a restriction 
on their freedom. For instance, 
employees might object when 
they are kept under a strict watch 
with the help of Closed Circuit 
Televisions (CCTVs).
Remain level headed  
even when things go wrong
2015-16(21/01/2015)
Controlling 219
 (iv) Costly affair: Control is a 
costly affair as it involves a lot 
of expenditure, time and effort. 
A small enterprise cannot afford 
to install an expensive control 
system. It cannot justify the 
expenses involved. Managers 
must ensure that the costs of 
installing and operating a control 
system should not exceed the 
benefits derived from it.
The box on Control System at 
FedEx gives an overview of the control 
system used by FedEx and how it 
helped FedEx to increase its profits.
Relationship between Planning 
and Controlling
Planning and controlling are 
inseparable twins of management. 
A system of control presupposes the 
existence of certain standards. These 
standards of performance which 
serve as the basis of controlling are 
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 conform to plans. Thus,  
planning without controlling is 
meaningless. Similarly, 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. It is utterly foolish 
to think that controlling could be 
accomplished without planning. 
Without planning there is no 
FedEx operates an $18 billion delivery system from its eight U.S. and seven international 
hubs. It operates more than 630 airplanes, 42,500 vehicles, and 44,400 drop-off locations. It 
delivers more than three million express packages to customers in more than 200 countries.  
Effective control was one of the key to FedEx’s increased profits during the past decade. 
An important part of that control system was the ability to track customers’ parcels at 
each stage of collection, shipment and delivery. Also, at FedEx, its controls help identify 
which customers generate the greatest profits and which eventually end up costing the 
company. FedEx closes accounts that aren’t profitable to serve, such as those in small, widely 
scattered locations. 
The Internet has enabled FedEx to attract and hold new customers by providing them 
with crucial information as needed. Customers can log onto the Internet and follow the 
progress of their packages. By providing timely information about services and costs, along 
with parcel progress to its customers, FedEx has been able to expand rapidly its customer 
base. More than 2.5 million customers are connected electronically with FedEx.
Source: Hellriegel Don, Susan E. Jackson and John W. Slocum, Jr., Management: A 
Competency-based Approach, Thompson, 2002
Control System at FedEx Control System at FedEx
2015-16(21/01/2015)
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