Controlling in Management - Definition,Scope,Steps,Techniques

1. Controlling in Management –
Definition, Scope, Steps,
Techniques
1

2. Objectives
2
• Haveknowledgeabout Control
• Understand about features &need
• Knowabout advantages&disadvantagesof
control.
• Knowabout PERT-CPM
• earn about problems ofbudgetary control

3. Introduction
3
• Control isthe last function of management.
• Controlling function isunnecessaryto the
managementifother functions ofmanagement
are performed properly.
• Thedeviationare set right bycontrol function

4. Definition of Control
4
• KoontzandO’Donnel : Measurementof
accomplishment against standards &
Correction to deviationfrom standards
• Henry Fayo: control consistsin verifying
whether everythingoccurs in conformity.

5. Definition of Control
5
• Earnest Dale :controlling is Envisagesasystem,
whichpinpoints reasons
• BillyE.Goetz: Managementcontrol seeksto
compel eventsto confirmto plans.

6. Definition of Control
6
• J.K Rosen : Control is the presence in business
of that force which guides it to predetermined
value.
• GeorgeTerry: Controlling isdetermining what
isbeing accomplished

7. Scope of Control
7
• Policies
• Organization
• Production
• Wages&salary
• Environment
• Pubicrelations

8. Steps in controlprocess
8
• Establishing Standards
• Measuring Performance
• Comparison actualwith standards
• TakingCorrective action

9. Requirement of
effective control system
9
• Feedback
• Objective
• Suitability
• Prompt Reporting
• Forward looking

10. Requirement of
effective control system
10
• PointingOut expectations
• Flexible
• Economy
• Intelligible
• Suggestremedial action
• Motivation

11. Techniques of control
11
• Statistical Control reports
• Personal Observation
• CostAccounting
• BreakEvenAnalysis
• SpecialControl Report

12. Techniques of control
12
• ManagementAudit
• Standard Costing
• Return On Investment
• InternalAudit
• ResponsibilityAccounting

13. Techniques of control
13
• ManagerialStatistics
• PerformanceEvaluation&ReviewTechnique
• Critical Path Methods
• Gantt Milestone chart
• Production Control

14. Techniques of control
14
• ManagementInformation System
• ExternalAudit Control
• Zero-base Budgeting
• StandingOrders
• Budgetary Control

15. PERT ‐CPM
15
• PERTstandsfor Programme or Project
Evaluation&ReviewTechnique.
• CPMstandsfor Critical Path Methods.
• PERTwasdeveloped from Gantt chart by
Booze,Allenand Hamilton.
• PERTisusedasplanningaswell ascontrolling
tool

16. Suitability PERT ‐CPM
16
• PERTtechnique issuitable for the following
projects.
• Largeweapon system
• Shipbuilding
• Airport facilities building
• Launchingnew products

17. Advantages of PERT ‐
CPM
17
• Ensures planning
• Identification offavorable factors.
• Savingofcost and time
• Takingpreventing action
• Attention on critical activities
• Everythingat right

18. Advantages of PERT ‐
CPM
18
• MakingAwarenessof activities.
• Securing co-operation
• Facilitates decision making
• Improved communication
• Timelycompletion of project

19. Limitation of PERT ‐
CPM
19
• Error in estimation oftime &cost.
• Application: Canbe applied onlyone time for
non repetitive projects.
• Time consuming&expensive

20. Distinction between
PERT and CPM
20
• PERTgivesimportance to time.
• CPMgivesimportance to cost
• PERTisevent oriented
• CPMisactivity oriented.

21. Features of Control
21
• Controlling process.
• Universal
• Forward looking
• Dynamic process
• AnEssenceofaction

22. Need ofControl
22
• Judgingthe accuracyof standards.
• Minimizedishonest behavior.
• Better performance

23. Advantages of Control
23
• Adjustment in operation
• Verification of policy
• Managerialaccountability
• Psychologicalpressure

24. Advantages of Control
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• Maintainingmorality
• Co-ordination
• Efficiency

25. Limitations of Control
25
• Absenceofperfect standards
• Uncontrollable factors
• Difficultyin fixing responsibility
• Expensive process

26. Types of managerial
Control
26
• Standardizing control
• Preserving control
• Delegation ofauthority control
• Measurement control
• Motivating control

27. Budget
27
• Theterm Budgetisderived from the French
word ‘Budgette’whichmeanssmalllather bag
• Budgetisafinancialandaquantitative
statement ,prepared prior to definedperiod of
time
• HaryL.Wlise: Budgetsare finished products
•

28. Budget
28
• Accordingto G.R Terry Budgetisplanfor
income or outgo or both
• Landers:Theessenceofabudget isadetailed
planofoperations for somespecifiedfuture
period followedbyasystemofrecords which
will be served asacheckupon theplan.
• ClearanceL.VonSickle:Thebudget isan
estimate prepared in advanceofthe period to
whichit applies.

29. Budgetary control
29
• Budgetarycontrol isatool usedby management
to obtain the objectives expressed asin the
form of budget.
• Accordingto J. Betty Budgetarycontrol isa
systemwhichusesbudget asameansof
planning.
• Accordingto R.C. DavisBudgetarycontrol is
animportant meansofestablishing
accountability.

30. Budgetary control
30
• Institute ofCost &ManagementAccountant,
LondonBudgetarycontrol isthe establishment
ofabudget relating to the responsibilitiesof
executivesto the requirements of policy.
• Accordingto Walter W.Bigg“Budgetary
control isapplied to managementand
accounting control bywhichalloperations&
output are forecast

31. Objectives of
Budgetary control
31
• Fixationofincomeand expenditure
• Defininggoalsfor astipulated period
• Co-ordination ofwork ofvarious departments

32. Objectives of
Budgetary control
32
• Assistingin terms ofdata, the top management
for policy determination.
• Forecastingfinancialposition of company
• Centralizingmanagement control

33. Characteristics of
Budgetary control
33
• Theactivitiesoforganizationare presented
department wise or section wise.
• The future isplannedon the basisofpast
experience.
• Recommends andimplementsthe corrective
actionwhenever necessary.

34. Advantages of
Budgetary control
34
• Tool for planningthe activities.
• Thinkingin advance.
• Control of expenditure
• Better utilization of resources

35. Advantages of
Budgetary control
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• Promotion of efficiency
• Achievementof goals
• Criteria ofself examination
• Fixation of responsibilities
• Encouragesexchangeof information

36. Disadvantages of
Budgetary control
36
• Inaccuracy
• Personal bias
• Non availabilityof co-operation
• Rigidity
• Resultsare not attainable

37. Disadvantages of
Budgetary control
37
• Consistency
• Time consuming process
• IneffectiveBudgetary control
• Discouragethe initiative
• More paperwork

38. Essentials of Effective
Budgeting System
38
• Efficient organization
• Preparing master budget
• Preparing master budget
• Quick response
• Flexible
• Appropriate authority

39. Types of Budgets
39
• Master budget
• Salesbudget
• Cashbudget
• Production budget
• Physicalproperty budget

40. Types of Budgets
40
• Time &materialbudget
• Selling&distribution cost budget
• Balancesheet budget
• Suppliers budget
• Production cost budget

41. Types of Budgets
41
• Production overheadcost budget
• Research&development
• Fixed budget
• Flexible budget

42. Preparation of a
Budget
42
• Sound forecasting
• Developedaccounting system
• Fixation ofresponsibility centers
• Formationofbudget committee

43. Preparation of a
Budget
43
• Clear definition ofbusiness policies
• Statistical information
• Support oftop management
• Budget period

44. Summary
44
• Control function islastfunction of management.
• Controlling function isunnecessaryto the management
ifother functionsofmanagement are performed
properly.
• Thedeviationfrom standardsisset bycontrol function
• PERT-CPMexpressestotal eventsandactivitiesand
there interrelationship.
• Budgetisafinancialandaquantitativestatement
,prepared prior to definedperiod of time