Controlling – CBSE Notes for Class 12 Business Studies

Controlling –  CBSE Notes for Class 12 Business Studies

1. Controlling It can be defined as comparison of actual performance with the planned performance.
According to Ricky W Griffin, “Controlling function leads to goal achievement, an organisation without effective control is not likely to reach its goals.”
2. Importance of Controlling
(i) Helps in achieving organisational goods
(ii) Judging accuracy of standards
(iii) Making efficient use of resources
(iv) Improving employee motivation
(v) Ensures order and discipline
(vi) Facilitate co-ordination in action
(vii) Controlling help in minimising the errors
3. Limitations of Controlling
(i) Difficulty in setting quantitative standards
(ii) No control on external factors
(iii) Resistance from employees
(iv) Costly affair
4. Relationship Between Planning and Controlling
(i) Planning and controlling are interdependent and interlinked activities.
(ii) Planning and controlling both are forward-looking function.
5. Controlling Process
(i) Setting up of standards
(ii) Measuring of performance
(iii) Compare performance against standard
(iv) Analysing deviation
(a) Critical point control
(b) Management by exception
(v) Taking Corrective measure
6. Deviation It refers to difference between actual performance and standard performance.

7. Techniques of Managerial Control
There are two technique of managerial control
(i) Traditional techniques
(ii) Modern techniques
8. Traditional Techniques
(i) Personal observation
(ii) Statistical reports
(iii) Break-even analysis
(iv) Budgetary control
9. Modern Techniques
(i) Return on investment
(ii) Ratio Analysis
(a) Liquidity ratio
(b) Solvency ratio
(c) Profitability ratio
(d) Turnover ratio
(iii) Responsibility Accounting
(a) Cost or expenses centre
(b) Revenue centre
(c) Profit centre
(d) Investment centre
(iv) Management Audit
(v) Network Techniques (PERT and CPM)

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