Controlling Processes in Business PDF

CONTROLLING (1) NATURE OF CONTROLLING Developed based on the existing goals Refers to the process by which an and strategies to establish specific organization influences its subunits and objectives in the context o...

CONTROLLING (1) NATURE OF CONTROLLING Developed based on the existing goals Refers to the process by which an and strategies to establish specific organization influences its subunits and objectives in the context of an overall members to behave in ways that lead to strategic plan. the attainment of organizational objectives Consists of verifying whether everything Strategy / Strategic Management occurs in conformities with the plans level of managerial activity below setting adopted, instructions issued and principles goals and above tactics established Provides overall direction to an enterprise Ensures that there is effective and efficient Strategy formulation utilization of organizational resources so Strategic assessment involves: as to achieve the planned goals ○ situation analysis, self-evaluation, Measures the deviation of actual and performance from the standard ○ competitor analysis performance, discovers the causes of ○ internal and external such deviations and helps in taking ○ micro-environmental and corrective actions macro-environmental Objectives According to Brech ○ Determined by the results of the “Controlling is a systematic exercise which is strategic assessment called as a process of checking actual ○ Should run parallel on a timeline, performance against the standards or plans with some short-term and others a view to ensure adequate progress and also long-term recording such experience as is gained as a ○ Should suggest a strategic plan contribution to possible future needs.” that provides details for achieving these objectives According to Donnell Tactics “Just as a navigator continually takes reading to ○ Involves the actual steps needed ensure whether he is relative to a planned action, to achieve that vision. so should a business manager continually take ○ A method intended to fulfill a reading to assure himself that his enterprise is on specific objective of an overall right course.” plan. ○ Tactics are practical steps for Robert J. Mockler implementing strategy. Definition of control points out the essential elements of the control process: Condition/Characteristic Sensor CONTROLLING Comparison with Standard Implementor (1) OPERATIONAL CONTROL Regulates the day-to-day output relative to (2) COMPONENTS OF CONTROL schedules, specifications, and costs - Organizations Requires substantial overhead for - Build with the goal of profitability through management, data collection, and processes in mind operational improvement Streamlining the process to minimize Organizational Control Approach costs and work as quickly and efficiently Incorporates goals and strategy used to as possible reach them Essentially a benchmark, moving the Features of Controlling Function company toward optimal levels of 1. Controlling is an end function. operation. 2. Controlling is a pervasive function. Consists primarily of reviewing and 3. Controlling is forward looking. evaluation overall performance against the 4. Controlling is a dynamic process. strategies, tactics, and operations used to 5. Controlling is related to Planning. define the organization itself Strategies and Tactics Developed with the foresight of specific operational objectives. (2) PROCESSES OF CONTROL Taking Remedial Actions Establishment of Standards The manager has to detect those errors and take Plans the targets which have to be remedial measures. achieved in the course of business 1. Take corrective measures for deviations which function have occurred. they can also be called as the criterions 2. If the actual performance is not in conformity for judging the performance with plans, the manager can revise the targets. Classification of Standard Planning and Controlling 1. MEASURABLE/ TANGIBLE: Cost, Without the basis of planning, controlling output, expenditure, time, profit, activities become baseless. etc. Without controlling, planning becomes a 2. NON-MEASURABLE / meaningless exercise. INTANGIBLE: Performance of a manager, deviation of workers, Accdg. To Billy Goetz their attitudes towards a concern Planning precedes controlling and controlling succeeds planning. Measurement of Performance Planning and controlling are inseparable Finding out deviations becomes easy functions of management. through measuring the actual Activities are put on rails by planning and performance. they are kept at right place through Sometimes done through various reports controlling. Performance levels are sometimes easy to The process of planning and controlling measure and sometimes difficult. works on Systems Approach Measurement of tangible standards is Planning and controlling are integral parts easy as it can be expressed in units, cost, of an organization as both are important money terms, etc. for smooth running of an enterprise. Quantitative measurement becomes difficult when performance of a manager has to be measured. Performance of a manager can be measured only by: ○ Attitude of the workers ○ Their morale to work ○ The development in the attitudes regarding the physical environment ○ Their communication with the superiors Comparison of Actual and Standard Performance Deviation can be defined as the gap between actual performance and the planned targets. The manager has to find out: 1) extent of deviation, and 2) cause of deviation. Extent of Deviation Find out whether the deviation is positive or negative or whether the actual performance is in conformity with the planned performance Find out those deviations which are critical and important for business Minor and Major Deviation Cause of Deviation Think about various causes which have led to a deviation