Q. 1. Explain the steps to be followed in the process of controlling function of management after ‘Setting Standards’. [Delhi Comptt. Set I, II, III 2018]
Ans. 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
Q. 2. Explain how management by exception helps in the controlling process.
Ans. 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.
Q. 3. Explain how Critical Point Method helps in the controlling process.
Ans. 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.
Q. 4. After setting performance standards, the next step in the controlling process is measurement of actual performance. Explain this step in the process of controlling.
Ans. 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.
Q. 5. “Planning and controlling are interrelated.” Explain. [Delhi Comptt. Set III 2017]
Ans. 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.
Q. 6. 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. [Delhi Comptt. Set I 2017]
Explain the steps in the process of controlling. [Outside Delhi Comptt. SetII 2017]
Ans. 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
Q. 7. Explain ‘Critical Point Control’ and ‘Management by Exception’ used by managers while analysing deviations in the process of controlling. [Outside Delhi Comptt. Set III 2017]
Ans. (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.