Free Business Studies - Class 12th (CBSE) - Revision Notes - N8 - Controlling

Students who are studying in class 12th need to learn the concepts of Controlling as mentioned in their CBSE Business Studies book.

So, the time has come to read free revision notes for CBSE class 12th, mainly focused on Chapter 09: Controlling.

These exclusive revision notes are built by expert CBSE teachers to increase your knowledge level to score higher in your upcoming board exams.

Here are the quick details:

Revision Notes for CBSE Class 12th - Business Studies

The comparison of actual performance with the planned performance.
If there is any difference (deviation) then finding the reasons for such difference and taking corrective measures (action) to stop those reasons so that in future there is match between actual and planned performance.
Controlling means ensuring that activities in an organization are performed as per the plans.

Learn the below content it in a fun way: MARGO (Motivation, Accuracy, Use, Goals, Order)

Improving Employees Motivation- An effective control system communicates the goals and standards of appraisal for employee in advance. It thus, motivates them and helps them to give better performance.
Judging Accuracy of Standards- Through controlling we can easily judge whether the standard or target set are accurate or not.
Making Efficient Use of Resources- Like traffic signal, the controls guides the organization and keeps it on the right track. Each activity is performed according to predetermined standards. As a result, there is the most effective use of resources.
Helps in Achieving Organizational Goals - When the plans are made in the organization these are directed towards the achievement of organizational goals. The controlling function ensures that all the activities in the organization take place according to plan.
Ensures Order And Discipline- Control keeps the subordinates under check and makes sure they perform their functions efficiently. It can check over dishonesty and fraud of employees by keeping a close check on their activities.

Planning and controlling are inseparable twins of management.

Planning is the basic function of every enterprise as in planning we decide what is to be done, how it is to be done when it is to be done and by whom it must be done.
Controlling means keeping a check that everything is under the plan and if there is any deviation, taking preventive measures to stop that deviation.
Planning and controlling functions always exist together as one function depends on the other.
The controlling function compares actual performance with the planned performance and if there is no planned performance then controlling cant take place.
The planning function is also dependent on controlling function as plans are not made only on papers but these have to be followed and implemented in the organization. The controlling functions make sure that everyone follows the plan strictly.

Planning and Controlling both are Backward and Forward Looking

Planning is forward looking because plans are prepared for future.
Planning is also backward looking because planning is guided by past experiences and feedbacks.
Controlling is also forward-looking because controlling does not end only by comparing past performance with standard. It involves finding the reasons for deviations and suggests the measures so that these deviations do not occur in future.
Controlling is backward looking because like a postmortem of past activities, the managers look back to the previous year's performance to find out its deviation from the standard.

Steps in the Controlling Process

Here is the explanation:

Standards are the criteria against which actual performance would be measured. Thus, standards serve as benchmarks towards which an organization strives to work. Standards can be set in both quantitative as well as qualitative terms. Standards should be flexible enough to be modified whenever required.

Measurement of performance of an employee may require preparation of performance report by his superior. Measurement of a company's performance may involve calculation of certain ratios like gross profit ratio, return on investment etc. Progress of work in certain operating areas like marketing may be measured by considering the number of units sold, increase in market share etc.

The manager compares the actual performance with the planned performance and standard. If there is a match in both then the controlling functions end there only. But if there is a mismatch or deviation then the manager tries to find out the extent of the deviation. If the deviation is minor then it should be ignored. But if the deviation is more, then timely actions must be taken.

All deviations need not be brought to the notice of top management. A range of deviations should be established and only cases beyond this range should be brought to the knowledge of top level management.

Critical Point Control : It means keeping a focus on some key areas (KRAs) and if there is any deviation in these key areas, then it must be attended urgently. Key areas are those which have an impact on whole organization. For example: In a manufacturing organization, an increase of 5% in the labor cost may be more troublesome than a 15% increase in postal charges.
Management By Exception : It means a manager who tries to control everything may end up controlling nothing. The deviations which are beyond the specific range should only be handled by managers and minute or minor deviations can be ignored. For example: If production cost increases by Rs 20, it can be ignored but if it increases more than Rs 20, then managers must try to find out the reasons for deviations which need immediate attention.

On comparing the actual performance with the planned performance, then the next step is to know the reasons for such deviations and try to remove deviations in future. The managers take measures to bring back everything on track, i.e. according to plan.

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