Test Your Knowledge Case Studies: HOTS/Evaluation Questions - Controlling Commerce Notes | EduRev

Crash Course of Business Studies(BST)- Class 12

Commerce : Test Your Knowledge Case Studies: HOTS/Evaluation Questions - Controlling Commerce Notes | EduRev

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CASELECT 1: Harik Crankshafts Ltd. produces hydraulic brakes used in tractors. The company's policy is that at most 1% of the daily production could be defective. Over the two months period, it has been observed that 5-6% of the production is defective. The cause of deviation found is defective machinery.

What corrective action should be taken by the management? (1 Mark)

Solution : Replacement of machinery should be the corrective action to be taken by the

management.


CASELECT 2: Mr. Peter the store supervisor wishes to establish standards of production for workers along with standard time required to complete the job.

Identify the function of management performed by Mr. Peter? (1 Mark)

Solution : Controlling is the function of management performed by Mr. Peter.


CASELECT 3: Jeep Ltd. could not achieve the target production of 45,000 Jeeps p.a. It could produce only 34,129 Jeeps. While analysing the reasons for deviations, it was found that workers were not efficient. Training programmes were organised and next year, company was able to produce 45,000 units. Production Manager is of the opinion that the management cycle terminates at controlling function.

Do you agree? Give reason to support your answer. (3 Marks)

Solution : Production Manager is wrong in his opinion that the management cycle terminates at controlling function. Control brings the management cycle back to planning. Control should not be viewed as the last function. In fact it is connected to planning.

Controlling involves:

(i) Comparing actual performance with standards.

(ii) Finding out deviations.

(iii) Taking corrective action so that deviation don't reoccur in future.

Control provides the guidelines on the basis of which future planning is done. Thus, controlling not only completes one cycle of management process and also helps to improve planning in the next cycle.


CASELECT 4: There are two managers Mr. Tom and Mr. Harris. They both have different point of views Mr. Tom says that "Controlling is backward looking" while Mr. Harris contradicts by saying that "Controlling is forward looking".

Who do you think is right? Give reason to support our answer. (3 Marks)

Solution : Both managers Mr. Tom and Mr. Harris are partially correct in their view point because Controlling is both forward looking as well backward looking function. Controlling is backward looking because we look back to compare performance with the plans. However this is not completely correct. Controlling is not only done with a view to do a post mortem but also with a view to improve future performance. So controlling is also forward looking.


CASELECT 5: Sometimes while shipping perishables an unexpected delay happens. Whether it's inclement weather or a clearance delay, the customer should feel confident that his temperature sensitive shipment is protected. FedEx has covered the uncertainity with the FedEx Cold Chain Centres. If a contingency occurs while a shipment is in transit, the shipment may be routed to this state-of-the-art facility and stored at the temperature it requires. Ideal for perishable or healthcare shipments, this facility will give peace of mind to the customers and guides FedEx towards its organisational goal.

On the basis of the given information about "FedEx Cold Chain Centres." answer the following questions:

(a) Identify the management function highlighted in above situation.

(b) State the importance of managerial function adopted by FedEx. (5 Marks)

Solution :

(a) Controlling is the management function required to rectify the above situation.

(b) The importance of managerial function of control adopted by FedEx are:

(i) Helps in accomplishing goals Control ensures achievement of organisational objectives by identifying deviations and indicating corrective action. Controlling ensures that all activities in the organisation take place according to the plans.

(ii) Helps in judging accuracy of standards: Control enables management to verify whether the standards set are accurate, achievable and objective. An efficient control system reviews and revises standards from time to time to match them with organisational and environmental changes.

(iii) Helps in making efficient use of resources: Control reduces wastages and spoilage of

resources. When each activity is performed according to the predetermined standards and

norms it ensures that work is done in the most efficient and effective manner.

(iv) Helps to improve employee motivation: The 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. These reports become the basis for giving promotions, increments etc. to the employees. This motivates them to give a good performance.


CASELECT 6: Suzlon Energy is a potential turnaround story in the emerging wind power sector in India. From a position of strength, Suzlon has gone through multiple crises over the past five years due to debt default, machinary failure and demand supply mismatch. However, company has taken corrective steps to substantially repair its balance sheet by selling off its German offshore wind arm, repower.

On the basis of above information about Suzlon Energy, answer the following questions:

(a) Identify the management function highlighted in above case.

(b) Briefly state the significance of the function to be followed so that the actual production may come up to the targeted level. (5 Marks)

Solution :

(a) Controlling is the management function adopted by the company to rectify the above

situation.

(b) The importance of managerial function of control adopted by Fedex are:

(i) Helps in accomplishing goals: Control ensures achievement of organisational objectives by identifying deviations and indicating corrective action.Controlling ensures that all activities in the organisation take place according to the plans.

(ii) Helps in judging accuracy of standards: Control enables management to verify whether the standards set are accurate, achievable and objective. An efficient control system reviews and revises standards from time to time to match them with organisational and environmental changes.

(iii) Helps in making efficient use of resources: Control reduces wastages and spoilage of resources. When each activity is performed according to the predetermined standards and norms it ensures that work is done in the most efficient and effective manner.

(iv) Helps to improve employee motivation: The 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. These reports become the basis for giving promotions, increments etc. to the employees. This motivates them to give a good performance.


CASELECT 7: K & K Company Ltd. is engaged in manufacturing machine components. The target production is 200 units daily. The company had been successfully attaining this target until two months ago. Over the last few months it has been observed that daily production varies between 150-170 units.

Identify the possible causes for the decline in production and the steps to be taken to achieve the desired targets. (5 Marks)

Solution : The possible causes for decline in production with remedial actions are as follows:

Causes of Deviation                     Corrective Action

1. Defective Materials                        Change the quality specification for the materials used.

2. Defective Machinery                      Repair the existing machine .

3. Obsolete Machinery                       Undertake technological upgradation of machinery.

4. Defective Process                            Modify the existing process

5. Defective Physical                           Improve the physical conditions of work Conditions of                                                                 Work.


CASELECT 8: Welspun India, one of the world's largest textile manufacturers was adversly effected after*Target Corp said it.was terminating ties with the company over a cotton supply dispute.

Target Corp said that after an extensive investigation it had confirmed that Welspun, which uses Egyptian cotton standard raw material to make bedsheets and pillowcases sold by the retailer, Substituted another type of non-Egyptian cotton the lower grade raw material to make these sheets between August 2014 and July 2016. After this investigation. Target has pulled all the remaining products from its stores and on its website target.com.

On the basis of above information about Welspin India, answer the following questions:

(a) Identify the function of management neglected by Welspun India quoting the lines from above case.

(b) List the benefits which the company will be deprived off by not practising this important function of management. (5 Marks)

Solution :

(a) The function of management neglected by Welspun India is Controlling.

"Welspun India, which uses Egyptian cotton standard raw material to make bedsheets and

pillowcases sold by the retailer, substituted another type of non-Egyptian cotton the lower

grade raw material to make these sheets between August 2014 and July 2016."

(b) The benefits which the company will be deprieved off by not practising controlling function of management are:

(i) Accomplishment of organisational goals.

(ii) Judging accuracy of standards.

(iii) Making efficient use of resources.

(iv) Improving employee motivation.

(v) Ensuring order and discipline.

(vi) Facilitating coordination in action.


CASELECT 9: Engineer India Ltd. is engaged in manufacturing machine components. The standard output established on the basis of work study conducted Dy superintendent is 300 units per day. The company had been successfully attaining this target during the first quarter of the financial year 2018. Over the last three months, it has been observed that daily production varies between 220 and 250 units.

On the basis of the given information about "Engineer India Ltd." answer the following questions:

(a) Identify the management function to rectify the above situation.

(b) Briefly state the procedure followed so that the actual production may come up to the target production. (5 Marks)

Solution :

(a) Controlling is the management function required to rectify the above situation.

(b) The procedure to be followed so that the actual production may come up to the target

production includes various steps: '

1. Setting performance standards: A standard is a criterion against which actual performance is compared. Managers fix standards in the light of organisational goals. As they serve as the basis of control, they should be set carefully. Standards should satisfy the following requirements:

(i) Standards should be simple and easy to understand both for short and for long term.

(ii) Standards should be achievable (not too high).

(iii) Standards should be set in precise quantitative terms so that it makes.

(iv) Standards should be flexible enough to be modified when the need arises, in view of the changes taking place both in the internal as well as external business environments.

2. Measurement of actual performance: The performance should be measured in the same units in which standards are set as this would make the comparison easier. The measurement of performance should be objective and reliable. The measurement of performance can be done:

(i) After the task is completed.

(ii) During the performance wherever it is possible.

3. Comparing actual performance with standards: Such comparison will reveal the deviation between actual and desired results. If there is a match between them then controlling ends there only. But if there is a mismatch or deviation then the manager finds out the extent of such deviation.

4. Analysing deviations: All deviations need not be brought to the notice of top management. Deviations in key areas of business need to be attended more urgently as compared to deviations in certain insignificant areas. Deviations can be analysed in two ways:

(i) Critical point control: It is neither economical nor easy to keep a check on every activity in an organisation. Control should focus on key result areas (KRA's) which are critical to the success of an organisation. This is bee a us-, anything goes wrong at the critical points, the entire organisation suffers, e.^ In a manufacturing organisation, an increase of 5% in labour cost may be more alarming than a 15% increase in postal charges.

(ii) Management by exception: This principle of management control emphasizes that a manager who tries to control everything may end up controlling nothing. So he should make a priority list and bring to the notice of top management only significant deviations which go beyond the permissible limits.

5. Taking corrective action: When the deviations are within acceptable limits, no corrective action is required. However when deviations go beyond the acceptable range, it demands immediate managerial attention so that deviations do not occur again and standards are accomplished.

Corrective action may involve:

(i) Training of employees if targets could not be met/assigning additional employees or

equipments to the project and permission for overtime work etc.

(ii) Where deviations cannot be corrected through managerial action, it means that plans are unrealistic. So plans need to be re-framed if they are over stated (when performance can't be improved further) or under stated (when performance is higher than the standards.)

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