Here we are providing Class 12 Business Studies Important Extra Questions and Answers Chapter 8 Controlling. Business Studies Class 12 Important Questions are the best resource for students which helps in class 12 board exams.
Class 12 Business Studies Chapter 8 Important Extra Questions Controlling
Controlling Important Extra Questions Short Answer Type
Mention the important features of the control function of management.
Characteristics of Control: The Control function of management has the following features:
1. Controlling is a continuous Process: It involves continuous measurement and review of actual performance and results in corrective action based on this review. It may lead to changes in planning, staffing, organizing, etc.
2. Controlling is looking Back: Control leads to the appraisal of past activities. Thus, it is looking back. The shortcomings in the performance of various individuals and departments are revealed by the control process. This is known as feedback information. It will help in knowing the reasons for poor performance. Corrective action can be initiated on the basis of feedback information.
3. Control is forward-looking: Control is said to be forward-looking. It is related to the future as the past cannot be controlled. It is usually preventive as the preserve of the control system leads to minimizing wastages, losses, and deviations from standards. It should be noted that control does not curtail the rights of individuals. It simply keeps a check on the Performance of individuals.
4. Control is Action-Oriented: Control implies taking corrective measures, whenever required. Action is the essence of control. The purpose of control is achieved only when corrective action is taken on the basis of feedback information. If the control does not lead to any action, then a manager can’t ensure actual performance as per standards. A good system of control facilities timely action so that there is minimum wastage of resources, time, and energy.
5. Control is a Pervasive function: It is a basic function of every manger irrespective of his level of authority. It is a follow-up action to the other function of management. Every manager is responsible for controlling the activities of those working under him and taking necessary action whenever necessary.
Explain the term Management by Exception.
Management by exception: Effective control can be achieved if critical or key points are identified and close attention is directed to adjustment at these points. This is known as ‘control by exception’. According to this principle, only significant deviations from the standards require management’s attention as they constitute exceptions. An attempt to go through all deviations tends to increase the workload of the Manager and decrease attention on important problems.
For instance, if postal expenses mqt&ase by twenty percent, the deviation is too insignificant to require managerial attention. On the other hand, if labor costs rise by twenty percent, they should receive immediate managerial attention.
The Principle of Management by exception implies that minor deviations from the standards may be ignored or given less attention. This would conserve managerial time, effort, and energy which could be utilized on important matters. But whenever deviations from standards are higher than the accepted level, management must take corrective measures to deal with the situation.
Explain in brief the term Responsibility Accounting.
Responsibility Accounting is a system of control where responsibility is assigned for the control of costs. The persons are made responsible for the control of costs. Proper authority is given to the persons so that they are able to keep up their performance. In case the performance is not according to the predetermined standards then the persons who are assigned this duty will be personally responsible for it.
In responsibility accounting, the emphasis is on men rather than on systems e.g. if Mr. A, the manager of a department, prepares the cost budget of his department then he will be made responsible for keeping the budget under control. A will be supplied with full information of cost incurred by this department. In case the cost incurred is more than the budgeted costs, then A will try to find out reasons and take necessary corrective measures. A will be personally responsible for the performance of his department.
Explain in brief the term Zero base budgeting.
Zero Based Budgeting Whenever a budget is prepared, past records and experience are taken into consideration. The new budget is prepared on the basis of budgets of the previous period. This method is known as ‘Based Budgeting’. On the contrary, the concept of zero-base budgeting considers the future not a mere projection of the past. As the environment is changing fast, the need to forecast systematically future events arise. For the growth and survival of any business organization, these changes need to be adopted.
Zero-base budgeting is the latest technique and it is meant for a particular period of time. It doesn’t prepare an altogether new budget. Normally, the previous year’s performance is taken as a base for the current year’s budget in budgeting techniques. But in zero-base budgeting, every year is taken as a new year, and the previous year is not taken as a base.
Zero is taken as a base and all budget proposals are considered in the light of present conditions. In zero-based budgeting, the amount to be spent on various activities will depend upon justification given by the manager.
Hence, zero-based budgeting provides flexibility and freedom in allocating the resources and the chances of repletion of weaknesses of the previous year are reduced.
Explain the Modern technique of control by the management information system (MIS) a computer-based technique.
Management information system: A management information system (MIS) is a computer-based information system that provides information and support for effective managerial decision-making. A decision-maker requires up to date, accurate and timely information. MIS provides the required information to the managers by systematically Processing massive data generated in an organization. Thus, MIS is an important communication tool for managers.
MIS also serves as an important control technique. It provides data and information to the managers at the right time so that appropriate corrective action may be taken in case of deviations from standards.
MIS offers the following advantages to Managers:
- It facilitates the collection, management, and dissemination of information at different levels of Management and across different departments of the Organisation.
- It supports planning, decision making, and controlling at all levels.
- It improves the quality of information with which a manager works.
- It ensures cost-effectiveness in managing information.
- It reduces information overload on the managers as only relevant information is provided to them.
Distinguish between Planning and Control.
A comparison of Planning and Control:
|1. Planning emphasizes more on non-personal, abstract long-range problems.||1. Control emphasizes more and long-range problems.|
|2. Planning is based on estimates||2. Control is based on estimates.|
|3. Planning is done by top-level executives.||3. Control is done by top-level executives.|
|4. Under Planning, the evaluation of results is very difficult.||4. Under Control, the evaluation of results is very difficult.|
|5. Determination of results takes a very long time.||5. Determination of results takes a very long time.|
What are the advantages of Management audit?
The main advantages of Management audit are as follows.
- It helps to locate present and potential deficiencies in the performance of management functions.
- It helps to Improve the Control system to an Organisation by continuously monitoring the performance of Management.
- It Improves Coordination in the functioning of various departments so that they work together effectively towards the achievement of organizational objectives.
- It ensures updating of existing managerial .policies and strategies in the light of environmental changes.
Conducting a management audit may sometimes pose a problem as there are no standard techniques of management audit. Also, management audit is not compulsory under any law. Enlightened managers, however, understand its usefulness in improving the overall performance of the organization.
Controlling Important Extra Questions Long Answer Type
Explain the essential features of a sound control system. (Imp. Q)
Essential features of a sound control system:
A good control system has the following essential features:
1. Clear out objectives: Before Planning a control system, it is essential to know clearly the objectives it will tend to achieve. The standards of performance should be based on these objectives. Thus, the control system should be directed towards the detection of early deviations from the standards to permit effective corrective action. If the standards are arbitrary or subjective in nature, they will not be able to measure deviations properly. Thus, the purpose of control will be lost.
2. Suitability: Control techniques should be appropriately designed to suit the nature of the activities being controlled. This means that different types of activities need different types of control techniques. The control technique should be tailored to reflect the performance of all types of operations, say, production or sales.
It is also essential that the overall control system should be appropriate for the organization. A control system that is good for a small organization may be inadequate for a big organization.
3. Simplicity: A good system of control should be simple and easy to understand. The employees must know what is expected of them and how their performance will be evaluated. If the employees don’t understand the standards of performance properly, the actual performance might turn out to be very poor.
4. Economy: The system of control must be worth its costs. It must justify the expenses involved. A control system is justifiable if the savings anticipated from it exceed the costs of its working. Small enterprises cannot afford elaborate control systems which are very costly. As far as possible, unnecessary paperwork and reports should be avoided.
5. Flexibility: A good control system must keep pace with the continuously changing environment. It must be responsive to changing conditions. It should be adaptable to new developments such as the introduction of new methods, materials, and changes in the requirements of the customers. If there is a change in any plan, the control system should be capable of absorbing such change.
6. Forward-looking: The system of control should be forward-looking in the sense that it should detect and report deviations promptly. Timeless is the essence of control. Ideally, deviations should be anticipated and preventive action should be taken. More realistically information on deviations should be monitored and feedback to the system immediately so that corrections are effected with minimum cost and inconvenience.
7. Suggesting Corrective Action: Merely pointing out deviations is not sufficient in a good control system. It must lead to taking corrective action to achieve the desired objectives. It may result in taking suitable action against the employees, giving them training, ensuring effective supervision, improving communication, revising standards, etc.
8. Concentration on exceptions: This is also known as ‘Control significant deviations from standards require management’s attention as they constitute exceptions. An attempt.to go through all deviation tends to increase unnecessary efforts and to decrease attention on important problems.
9. Strategic Point Control: Small deviations in certain cases may have greater significance than larger ones in other cases, for example, deviation of ten percent in budgeted labor cost may be more troublesome to a manager than a deviation of twenty-five percent in budgeted postal charges. The Principle of strategic point control states that effective control can be achieved if critical, key, or strategic points can be identified and close attention directed to adjustment at those points. In fact, strategic point control is an extension of control by exception.
Explain the relationship of the controlling the function of management with other functions of management.
Relationship of control with other Function of Management: We know that control is the last function of management because its need arises only after performing the functioning of planning, organizing, and directing. But being the last function does not lower down its importance as compared to other functions. Control is very must linked to other functions of management. In fact, the success of all other functions depends upon effective control,
The relation of Control with other managerial functions is explained below:
1. Relationship of Control with Planning: There is a close relationship between the Control and Planning functions of Management. Planning is the basis of Control, The control process involves determining the standards, comparison of the deviations, and taking corrective action to remove such deviations. In this process, planning provides such standards against which the progress of the actual performance is compared.
Thus where there is no plan there can be no basis for control. HG Hick has rightly said that “Planning is clearly a prerequisite for controlling. It is utterly foolish to think that controlling could be accomplished without planning there is no predetermined understanding of the desired performance.
On the other hand, plans will also prove mere imaginations in the absence of control. Because in such a case there will be no one to check whether or not everything is being done according to plans. Also in the absence of control, there will be no corrective action to direct the actual progress towards the accomplishment of plans.
Thus planning is meaningless without control, and control is aimless without planning.
2. Relationship of control with the organization: Control can be meaningful only when the person responsible for deviations is identified and is held responsible. This is possible only because of the organization because it is only in an organization that the authority and responsibility of each one are defined. In the absence of organization, neither the person responsible for committing the mistakes will be identified nor any action can be taken against him. Hence, the same mistakes will be repeated time and again. As such, effective organization is essential for effective control.
Similarly, Organisation is also dependent upon control because organizing is to assign work to individuals and give them authority and fix responsibility in case of mistakes. Since fixing of responsibility’ is possible only through Control, therefore effective control is essential for effective organization.
3. Relationship of control with Direction: Direction removes the difficulties in the way of various functions even before they are reviewed in order to control their progress. Direction makes the employee more capable and enthusiastic towards their work and provides them with adequate guidance training and supervision. Thus direction and control are interlinked with each other.
4. Relationship of control with other functions of Management: Control has deep relations with other functions of management as well. Communication helps in comparison of actual results with the standards by providing timely information of actual results with the standards by providing timely information of actual progress. Decision-making helps in determining the way to remove the deviations and the type of corrective actions to be undertaken.
Motivation helps in encouraging people to work towards the achievement of organizational objectives. Under control performance of each person is evaluated and efficient persons are motivated by providing them financial and non-financial incentives whereas inefficient employees are provided training to remove their deficiencies. Thus, it is clear that all the functions of management are inter-linked.
The relationship of various managerial functions is depicted through the following diagram:
From the above diagram, it is clear that the relationship between control and other managerial function is so deep that it is impossible to think of them separately. Every function affects the control and gets affected by it.