Control is the last function of management. Success or failure of planning depends on the success or failure of controlling.
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2. Welingkar’s Distance Learning Division
Introduction
• Control is the last function of management.
The controlling function will be unnecessary
to the management if other functions of
management are performed properly.
Planning identifies the activities and
controlling regulates the activities. Success or
failure of planning depends upon the results
of success or failure of controlling.
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4. Welingkar’s Distance Learning Division
Definition
• “Control is any process that guides activity
towards some pre-determined goal. The
essence of the concept is in determining
whether the activity is the achieving desire
results”
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5. Welingkar’s Distance Learning Division
Areas or scope pf control
• Control over the policies of the concern,
organization, the personnel employed in an
organization, capital available to the concern,
capital expenditure, production, wages and
salaries paid to the employed, the cost of
production, public relation, research and
development, tools and equipment and
overall control.
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6. Welingkar’s Distance Learning Division
Steps in Control process
Establishing Measuring
standards performance
Taking
Corrective action
Comparison
of
actual with
standards
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7. Welingkar’s Distance Learning Division
Requirements of effective control system
• Feedback
• Objective
• Suitability
• Prompt reporting
• Pointing out exceptions
• Flexible
• Economy
• Indelible
• Suggest remedial action
• Motivation
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8. Welingkar’s Distance Learning Division
Techniques of Control
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CONTROL
Critical path
method
Statistical control
reports
Personal
observation
Cost accounting
and cost control
Break-even
analysis
Special control
reports
Zero-based
budgeting
Production
control
Performance
evaluation
Managerial
statistics
Standard
costing
Gantt
milestone
chart
Management
information
system
Management
audit
Responsibility
accounting
Internal
audit
Return on
investment
9. Welingkar’s Distance Learning Division
Pert/Cpm
Advantages of pert/cpm
• Ensure planning:
• identification of favorable factors:
• Savings of cost and time:
• Taking preventive or corrective actions:
• Attention on critical activities:
• Everything at right:
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10. Welingkar’s Distance Learning Division
Advantage of pert/cpm
• Making awareness of responsibilities:
• Securing co-operation:
• Facilities decision-making:
• Improved communication:
• Simultaneous performance of works:
• Advance control action:
• Timely completion of a project:
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11. Welingkar’s Distance Learning Division
Limitations of pert/cpm
• Error in estimation of time and cost
• Application
• Time consuming and expensive
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12. Welingkar’s Distance Learning Division
Distinction between pert and cpm
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PERT CPM
Three times estimation done Three times estimation done
It gives importance to time It gives importance to cost
It is suitable where activity
timings are not known
It is suitable where activity
timings are well known
It is event oriented It is activity oriented
13. Welingkar’s Distance Learning Division
Characteristics or features of control
Controlling process An Essence of
action
Universal Influencing factor
Forward looking Control involves
management
Dynamic
process
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14. Welingkar’s Distance Learning Division
Need of control
• Judging the accuracy of standards:
• Minimize dishonest behavior:
• Better performance:
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15. Welingkar’s Distance Learning Division
Advantages of control
• Adjustments in operation
• verification of policy
• managerial accountability
• Psychological pressure
• Maintaining morality
• Co-ordination
• Efficiency
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16. Welingkar’s Distance Learning Division
Limitations of control
• Absence of perfect standards
• Uncontrollable factors
• Difficulty in fixing responsibility
• Expensive process
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17. Welingkar’s Distance Learning Division
Types of managerial control
• Standardizing control
• preserving control
• Delegation of authority control
• Measurement control
• Motivating control
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18. Welingkar’s Distance Learning Division
Budget & Definition of budget
• Budget is derived from the French word
‘Budgette’ which means small leather bag.
Budget is a financial and quantitative statement.
• “Budget is a plan for income or outgo or both, of
money, personal, purchased items, sales items,
or any other entity about which the manager
believes that determining the future course of
action will assist in the managerial efforts”
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19. Welingkar’s Distance Learning Division
Budgetary control &
Definition of budgetary control
• “The term budgetary control is applied to a
system of management and according control
by which all operations and output are
forecast as far ahead as possible and the
actual results when known are compared
with the budge t estimates.”
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20. Welingkar’s Distance Learning Division
Characteristics of budgetary control
• The activities the organizations are presented
department-wise or section-wise.
• Budgets give the extent of expenditure though
which cost control is achieved.
• The co-ordination of various departmental
activates helps to prepare the determined
standards.
• Clear-cut and specific requirement of the
organization are expressed in quantitative terms.
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21. Welingkar’s Distance Learning Division
Characteristics of budgetary control
• Determines the deviations by comparisons and
causes of such deviations.
• Recommends and implements the corrective
actions when ever necessary.
• The future is planned on the basis of past
experience.
• Recording the present performance for
comparing purpose with the pre-determined
standards.
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22. Welingkar’s Distance Learning Division
Advantages of budgetary control
Promotion of
Tool for planning efficiency
The activities Better utilization of
resources
Thinking in advance Promoters
balanced activit
Co-ordination of Budgetary
Efforts
Achievements Criteria of Delegation of
Control of of goals examination authority
expenditure
Encourages Fixation of Ensures proper Solving financial
exchange of responsibility communication difficulties
information
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23. Welingkar’s Distance Learning Division
Disadvantages, Limitations or problems of
budgetary control
• Inaccuracy
• personal bias
• Non-availability of Co-operation
• Rigidity
• Results are not attainable
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24. Welingkar’s Distance Learning Division
Disadvantages, Limitations or
problems of budgetary control
• Consistency
• Time Consuming process
• Ineffective budgetary control
• Discourage the initiative
• More paperwork
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25. Welingkar’s Distance Learning Division
Essentials of Effective budgeting system
• Efficient organization
• Preparing master budget
• Quick reporting
• Flexible
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26. Welingkar’s Distance Learning Division
Essentials of Effective budgeting system
• Support of top management
• Based on reasonable assumption
• Reward and punishment
• Appropriate authority
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27. Welingkar’s Distance Learning Division
Techniques of Control
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CONTROL
Critical path
method
Statistical control
reports
Personal
observation
Cost accounting
and cost control
Break-even
analysis
Special control
reports
Zero-based
budgeting
Production
control
Performance
evaluation
Managerial
statistics
Standard
costing
Gantt
milestone
chart
Management
information
system
Management
audit
Responsibility
accounting
Internal
audit
Return on
investment
28. Welingkar’s Distance Learning Division
Types of Budgets
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Types of
Budget
Sales Budget
Cash budget
Time and
material
budget
Physical
property budget
Research and
development
budget
Production
overhead budget
Production cost
budget
Master
budget
Selling and
distribution
cost budget Supplies budget
Balance sheet
budget
29. Welingkar’s Distance Learning Division
Budget can also be classified as
• Fixed budget
• Flexible budgets
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30. Welingkar’s Distance Learning Division
Preparation of a budget
• Sound forecasting
• Developed accounting system
• Fixation of responsibility centers
• Formation of budget committees
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31. Welingkar’s Distance Learning Division
Preparation of a budget
• Clear definition of business policies
• Statistical information
• Support of top management
• Budget period
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