Worksheet Solutions: Controlling | Business Studies (BST) Class 12 - Commerce PDF Download

Multiple Choice Questions

Q1: What is the primary purpose of controlling in an organization?
(a) Planning
(b) Coordinating
(c) Monitoring
(d) Directing
Ans: c

Q2: Which type of control is concerned with preventing errors before they occur?
(a) Concurrent Control
(b) Feedforward Control
(c) Feedback Control
(d) Strategic Control
Ans: b

Q3: Which of the following is an example of a quantitative standard for measuring performance?
(a) Employee morale
(b) Market share
(c) Return on Investment (ROI)
(d) Customer satisfaction
Ans: (c)

Q4: Who is responsible for corrective action in the controlling process?
(a) Top management
(b) Middle management
(c) Frontline supervisors
(d) External auditors
Ans: (c)

Q5: Which of the following is a limitation of the controlling function?
(a) Enhances employee morale
(b) May lead to rigidity
(c) Improves communication
(d) Facilitates innovation
Ans: (b)

Very Short Answers

Q1: Define the term 'Controlling' in management.
Ans: Controlling involves monitoring, evaluating, and regulating activities to ensure they align with organizational goals.

Q2: List any three benefits of effective controlling in an organization.
Ans: Improved performance, goal achievement, resource optimization.

Q3: Differentiate between strategic control and operational control.
Ans: Strategic control focuses on long-term goals; operational control oversees day-to-day activities.

Q4: Explain the term 'Feedforward Control' with an example.
Ans: Anticipates issues before they occur; e.g., pre-flight safety checks.

Q5: Mention any two external factors affecting the control process.
Ans: Economic conditions, legal changes.

Short Answers

Q1: Discuss the importance of controlling in the management process.
Ans: Ensures goal attainment, resource optimization, adaptability to change.

Q2: Explain the concept of budgetary control and its significance in organizational control.
Ans: Involves planning and monitoring finances; ensures financial discipline.

Q3: Describe any three techniques of managerial control.
Ans: Bureaucratic control, market control, clan control.

Q4: What is the role of standards in the controlling process?
Ans: Sets benchmarks for performance; aids in evaluation and improvement.

Q5: Illustrate the difference between financial and non-financial controls.
Ans: Financial - monetary measures; Non-financial - quality, time.

Long Answers 

Q1: Elaborate on the steps involved in the controlling process.
Ans: The controlling process is a crucial function of management that ensures organizational goals are achieved. It involves several steps:
Establishing Standards: Standards are benchmarks against which actual performance is measured. They can be quantitative (such as sales targets or production quotas) or qualitative (like customer satisfaction levels).
Measuring Performance: This step involves collecting data on actual performance against the established standards. It may include financial statements, project reports, or other performance indicators.
Comparing Performance Against Standards: After measuring performance, a comparison is made between actual results and the predetermined standards. This helps identify any deviations and the extent to which goals are being met.
Identifying Deviations: Deviations are variations between actual performance and standards. These can be positive (better than expected) or negative (falling short of expectations). Identifying deviations is crucial for corrective action.
Analyzing Deviations: Managers need to understand the reasons behind deviations. This analysis helps in determining whether the variances are within acceptable limits or if corrective action is required.
Taking Corrective Action: If deviations are significant and detrimental to organizational objectives, corrective actions are taken. This might involve adjusting processes, reallocating resources, or revising plans to get performance back on track.
Follow-up: The final step involves monitoring the results of corrective actions and making further adjustments if necessary. It completes the control loop and ensures continuous improvement.

Q2: Discuss the challenges faced by managers in implementing an effective control system.
Ans: Implementing an effective control system is not without challenges. Some common challenges include:

• Resistance to Control: Employees may resist control measures feeling they infringe on autonomy. Managers need to communicate the benefits and the purpose of control to overcome this resistance.
• Setting Appropriate Standards: Establishing accurate and realistic standards is critical. If standards are too high, it may demoralize employees; if they are too low, they may not be challenging enough. Finding the right balance is a challenge.
• Dynamic Business Environment: Rapid changes in the business environment make it challenging to set and maintain standards. What worked yesterday may not be applicable today, requiring constant adaptation of control measures.
• Cultural Differences: In global organizations, differences in cultural norms and values can affect the implementation of control systems. What may be acceptable in one culture might be resisted in another.
• Technological Changes: Advances in technology may render existing control systems obsolete. Managers need to stay updated and invest in systems that align with technological advancements.
• Costs of Control: Implementing and maintaining control systems can be expensive. Balancing the costs of control with the benefits it provides is a constant challenge for managers.

Q3: Examine the relationship between planning and controlling in the management of an organization.
Ans: Planning and controlling are two interrelated functions in the management process:

• Integration of Objectives: Planning involves setting objectives and outlining the steps to achieve them. Controlling ensures that actual performance aligns with these planned objectives. The success of controlling depends on the effectiveness of planning.
• Feedback Loop: Planning provides the basis for establishing standards in the controlling process. As actual performance is measured against these standards, feedback is generated. This feedback is crucial for refining and improving future plans.
• Coordination: Both planning and controlling contribute to coordination within an organization. Planning coordinates activities by aligning them with organizational goals, and controlling ensures that these activities stay on course.
• Continuous Process: Planning and controlling are not one-time activities; they are continuous and iterative processes. As organizations operate, plans are executed, and controlling measures are applied, creating a dynamic loop of planning and control.
• Flexibility: Effective planning requires flexibility to adapt to changing circumstances. Controlling provides the mechanism to identify deviations from plans and allows for adjustments, ensuring flexibility in achieving objectives.

 
Q4: Describe the characteristics of an effective control system in a global business environment.
Ans: In a global business environment, an effective control system should possess certain characteristics:

• Adaptability: Global businesses operate in diverse cultural, economic, and legal environments. An effective control system must be adaptable to these variations, allowing for cultural nuances and compliance with diverse regulations.
• Real-time Monitoring: Due to the geographical dispersion of activities, real-time monitoring is crucial. Technology-enabled systems that provide instant access to data and performance metrics across different locations are essential for effective control.
• Standardization with Flexibility: While standardization is important for consistency and efficiency, a global control system should also allow for flexibility. Different regions may require variations in control measures to accommodate local conditions.
• Communication Infrastructure: A robust communication infrastructure is vital for transmitting information across global operations. This includes not only technology but also clear communication channels and protocols.
• Global Performance Metrics: Establishing uniform performance metrics that align with global objectives helps in comparing and evaluating the performance of different units or subsidiaries. This ensures consistency in control measures.
• Crisis Management Capability: Global businesses are exposed to a variety of risks, including political instability, economic downturns, and natural disasters. An effective control system should incorporate crisis management capabilities to mitigate unforeseen challenges.

Q5: Explain the concept of 'Management by Exception' and its application in organizational control.
Ans: Management by Exception (MBE) is a management principle that suggests that managers should only be involved in decision-making and intervention when there are significant deviations from planned or expected results. Here's how it works:

• Setting Tolerance Levels: In MBE, managers establish tolerance levels or acceptable ranges for performance indicators. These are the deviations from the planned or expected results that can be tolerated without managerial intervention.
• Routine Operations: For routine and expected activities that fall within the established tolerance levels, managers delegate authority to lower-level employees. This allows managers to focus on more critical and strategic issues.
• Intervention Triggered by Deviations: Managers only intervene when actual performance deviates significantly from the established standards or when there is an exception. This ensures that managerial attention is directed towards areas that truly need it.
• Focus on Strategic Issues: MBE enables managers to concentrate on strategic decision-making rather than getting involved in day-to-day operational details. This is particularly valuable in large organizations with numerous routine activities.
• Efficient Use of Resources: By concentrating efforts where they are most needed, MBE promotes the efficient use of managerial time and resources. Managers can prioritize their attention on issues that have the most significant impact on organizational goals.
• Enhances Responsiveness: MBE allows organizations to be more responsive to changes in the business environment. Managers can quickly address deviations and adapt to new circumstances without being bogged down by routine matters.

In summary, Management by Exception streamlines managerial involvement by focusing attention on significant deviations, thus promoting efficiency and strategic decision-making.