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

Very Short Answer Type Questions

Q1: State the meaning of controlling.
Ans: Controlling is the process of ensuring that actual activities conform to planned activities. It involves setting performance standards, measuring actual performance, comparing it with the standards, and taking corrective actions to achieve organizational goals.

Q2: Name the principle that a manager should consider while dealing with deviations effectively. State any one situation in which an organization’s control system loses its effectiveness.
Ans:

• Principle: Management by Exception.
• Situation: The control system loses effectiveness when standards are not set in measurable terms, such as qualitative standards like employee morale or job satisfaction.

Q3: State any one situation in which an organization’s control system loses its effectiveness.
Ans: An organization’s control system loses effectiveness when external factors like changes in government policies or technological advancements impact performance, and the organization has no control over these factors.

Q4: Give any two standards that can be used by a company to evaluate the performance of its Finance & Accounting department.
Ans:

1. Liquidity Ratios: To assess the company's ability to meet short-term obligations.
2. Capital Expenditure: To evaluate how efficiently capital investments are being utilized.

Q5: Which term is used to indicate the difference between standard performance and actual performance?
Ans: The term is Deviation.

Short Answer Type Questions

Q1: ‘Planning is looking ahead and controlling is looking back.’ Comment.
Ans: The statement "Planning is looking ahead and controlling is looking back" succinctly encapsulates the fundamental roles of planning and controlling in the management process. Planning involves envisioning future objectives, strategies, and actions to achieve organizational goals. It focuses on forecasting and preparing for potential challenges and opportunities that lie ahead. Conversely, controlling entails assessing actual performance against predetermined standards, identifying deviations, and taking corrective measures. It primarily involves analyzing past outcomes to ensure alignment with planned activities and to enhance future decision-making. While planning directs attention towards future-oriented decision-making and goal-setting, controlling emphasizes the review and adjustment of past activities to optimize future performance. Together, these functions form a continuous cycle of management, wherein planning shapes future directions, and controlling ensures accountability and course correction, ultimately contributing to organizational effectiveness and success.

Q2: ‘An effort to control everything may end up in controlling nothing.’ Explain.
Ans: Attempting to control every aspect of a situation or organization can lead to ineffective management and loss of control altogether. By spreading resources and attention too thinly, critical issues may go unnoticed, and priorities may become unclear. It can also stifle innovation and autonomy among employees. Effective control requires focusing on key areas and allowing for flexibility and empowerment within the organization. Striking a balance between control and delegation ensures that efforts are directed where they are most needed, ultimately leading to better outcomes and sustainable performance.

Q3: Explain how management audit serves as an effective technique of controlling.
Ans: Management audit is a comprehensive evaluation of managerial processes, decision-making, and organizational effectiveness. It assesses managerial performance, resource utilization, and adherence to policies to identify strengths and weaknesses. The audit aims to promote accountability, transparency, and continuous improvement within the organization.  Management audit serves as an effective technique of controlling through:

• Comprehensive Evaluation: Systematically assessing managerial processes, decision-making, and organizational effectiveness to identify strengths and weaknesses.

• Detection of Deviations: Identifying discrepancies from planned activities and ensuring alignment with organizational goals.

• Insightful Analysis: Examining managerial efficiency, resource utilization, and adherence to policies to provide insights for corrective actions.

• Promoting Accountability: Fostering accountability and transparency within the organization, promoting continuous improvement.

Q4: Mr. Arfaaz had been heading the production department of Write well Products Ltd., a firm manufacturing stationary items. The firm secured an export order that had to be completed on a priority basis and production targets were defined for all the employees. One of the workers, Mr. Bhanu Prasad, fell short of his daily production target by 10 units for two days consecutively. Mr. Arfaaz approached Ms. Vasundhara, the CEO of the Company, to file a complaint against Mr. Bhanu Prasad and requested her to terminate his services. Explain the principle of management control that Ms. Vasundhara should consider while taking her decision. (Hint: Management by exception).
Ans: Ms. Vasundhara should consider the principle of management by exception while making her decision. This principle suggests that only significant deviations from the standards require management’s attention.
In this case:

1. A shortfall of 10 units for two consecutive days may not be a significant deviation to warrant termination, especially if Mr. Bhanu Prasad’s overall performance has been satisfactory.
2. Ms. Vasundhara should focus on critical deviations or patterns of poor performance that impact organizational goals, rather than minor issues.

By applying this principle, she can ensure efficient use of managerial time and maintain fairness in decision-making.

Long Answer Type Questions

Q1: Explain the various steps involved in the process of control.
Ans: The control process involves a series of systematic steps aimed at ensuring organizational objectives are met effectively and efficiently, while maintaining performance standards and addressing any deviations.  Following steps are involved in controlling:

• Setting Performance Standards: The first step in the controlling process is setting up of performance standards. Standards are the criteria against which actual performance would be measured. Standards can be set In both quantitative as well as qualitative terms Some of the qualitative standards are cost to be Incurred, product units to be produced, time to be spent in performing a task etc. Improving goodwill and motivation level of employees are examples of qualitative standards. 
• Measurement of Actual Performance: Once performance standards are set, the next step is measurement of actual performance. Performance should be measured in an objective and reliable manner. Some of the techniques used for measuring the performance are personal observation. sample checking performance reports etc. 
• Comparing Actual Performance with Standards: This step involves comparison of actual performance with the standards. Such comparison will reveal the deviation between actual and desired results. Comparison becomes easier when standards are set in quantitative terms. For instance, performance of a worker In terms of units produced in a week can be easily measured against the standard output for the week. 
• Analysing Deviations: Some deviations in performance can be expected in all activities. It is therefore, important to determine the acceptable range of deviations. Also, deviations in key areas of business need to be attended more urgently as compared to deviations in certain insignificant areas. Critical point control and management by exception should be used by a manager in this regard. 
• Taking Corrective Action: The final step in the controlling process is taking corrective action. No corrective action is required when the deviations are within acceptable limits. However, when the 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. Incase the deviations cannot be corrected through managerial action. the standards may have to be revised.

Q2: Explain the techniques of managerial control.
Ans: The techniques of managerial control are divided into traditional and modern techniques:
Traditional Techniques:

• Personal Observation: Direct monitoring of activities to gather information.
• Statistical Reports: Use of charts, graphs, and reports to analyze performance.
• Break-even Analysis: Determines the relationship between costs, revenue, and profits.
• Budgetary Control: Comparing actual performance with budgeted figures to control costs.

Modern Techniques:

• Return on Investment (ROI): Measures profitability and efficiency of investments.
• Management Information System (MIS): Provides timely and relevant information for decision-making.
• Balanced Scorecard: Evaluates performance from financial, customer, internal processes, and innovation perspectives.
• Benchmarking: Comparing organizational practices with the best in the industry to improve efficiency.

Q3: Explain the importance of controlling in an organisation. What are the problems faced by the organisation in implementing an effective control system?
Ans: Control is an indispensable function of management Without control the best of plans can go away. A good control system helps an organisation in the following ways: 

• Accomplishing Organisational: Goals The controlling function measures progress towards the organisational goals and brings to light the deviations If any and indicates corrective action. It thus. gUides the organisation and keeps it on the right track so that organisational goals might be achieved 
• 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.
• 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 pre-determined standards and norms. This ensures that resources are used in the most efficient and effective manner. 
• 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 
• 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.
• Facilitating Co-ordination in Action: Controlling provides direction to ai’ activities and efforts for achieving organisational goals Each department implemented employee is governed by pre-determined standards which are well co-ordination with one another. This ensures that overall organisational objectives are accomplished. 

Although controlling is an important function of management. It suffers from the following limitations also :

• 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. 
• Little Control on External Factors: Generally an enterprise cannot control external factors such as government policies, technological changes competition etc.
• Resistance from Employees: Control is offer resisted by employees. 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). 
• 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.

Q4: Discuss the relationship between planning and controlling.
Ans: Planning and controlling are inseparable, they are twins of management. A system of control pre-supposes 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. Planning is clearly a pre-requisite for controlling. Controlling cannot be accomplished with planning. With planning there is no pre-determined understanding of the desired performance, planning seeks consistent, integrated and articulated programmes while controlling seeks to compel events to conform to plans.

Q5: A company ‘M’ limited is manufacturing mobile phones both for domestic Indian market as well as for export. It had enjoyed a substantial market share and also had a loyal customer following. But lately it has been experiencing problems because its targets have not been met with regard to sales and customer satisfaction. Also mobile market in India has grown tremendously and new players have come with better technology and pricing. This is causing problems for the company. It is planning to revamp its controlling system and take other steps necessary to rectify the problems it is facing. 
Questions:
(a) Identify the benefits the company will derive from a good control system.
(b) How can the company relate its planning with control in this line of business to ensure that its plans are actually implemented and targets attained. 
(c) Give the steps in the control process that the company should follow to remove the problems it is facing.
Answers:
(a) Identify the benefits the company will define from a good control system.
Ans: When company starts following a good control on operations. it leads to derive benefits which are

• Helps in achieving desired goals.
• Judging accuracy of operations.
• Making efficient and effective use of resources.
• Improving employee morale.
• Ensuring proper flow of orders and the whole system is in discipline.
• It facilitates the co-ordination and Improve the performance of every Individual.

(b) How can the company relate its planning with control in this line of business to ensure that its plans are actually implemented and targets attained?
Ans: Company relates Its planning with control in this line of business by implementing effective control system as this will help in two aspects planning makes controlling effective and efficient whereas controlling improves future planning because it is like a postmortem of past activities to find out deviations from the standards and in order to ensure that its plans are actually implemented and targets are  attained they will take the help from controlling process as it is a systematic process and it leads to following benefits

• Setting Up of Standards In this step. company set some targets against which the actual performance is measured.
• Measuring of Performance In this step, company is able to measure the performance and evaluating that what is actually done by the employees.
• Compare Performance After evaluating the actual result. company compares the actual performance with the planned one this helps in knowing that the desired goal is achieved or not.
• Analysing Deviations This refers to the difference between actual and desired performance. It helps in knowing to the company that the deviation is positive or negative. It needs focus on which part rather than analysing whole.
• Taking Corrective Measures Final step is to know the type of operation and trying to remove this deviation and in future it matches with the plans.

(c) Give the steps in the control process that the company should follow to remove the problems it is facing.
Ans: The company should follow these steps in a systematic manner

• Setting performance standards
• Measurement of actual performance
• Comparison of actual performance with standards
• Analysing deviations
• Taking corrective actions

Q6: Mr Shantanu is a chief manager of a reputed company that manufactures garments. He called the production manager and instructed him to keep a constant and continuous check on all the activities related to his department so that everything goes as per the set plan. He also suggested him to keep a track of the performance of all the employees in the organisation so that targets are achieved effectively and efficiently. 
Questions:
(a) Describe any two features of Controlling highlighted in the above situation.(Goal Oriented, continuous and pervasive – any 2). 
(b) Explain any four points of importance of Controlling.
Answers:
(a) Describe any two features of controlling highlighted in the above situation.
Ans:

1. Goal-Oriented: Controlling ensures that organizational goals, such as achieving production targets, are met.
2. Continuous: Controlling is an ongoing process where activities and performance are constantly monitored.

(b) Explain any four points of importance of controlling.
Ans:

1. Ensures Goal Achievement: Keeps activities aligned with organizational objectives.
2. Improves Resource Utilization: Reduces wastage and ensures efficient use of resources.
3. Facilitates Coordination: Synchronizes activities across departments.
4. Enables Corrective Action: Identifies deviations and helps implement solutions to improve performance.