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Controlling in Management - Definition,Scope,Steps,Techniques

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Controlling in Management - Definition,Scope,Steps,Techniques

  1. 1. Controlling in Management – Definition, Scope, Steps, Techniques 1
  2. 2. Objectives 2 • Haveknowledgeabout Control • Understand about features &need • Knowabout advantages&disadvantagesof control. • Knowabout PERT-CPM • earn about problems ofbudgetary control
  3. 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. 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. 5. Definition of Control 5 • Earnest Dale :controlling is Envisagesasystem, whichpinpoints reasons • BillyE.Goetz: Managementcontrol seeksto compel eventsto confirmto plans.
  6. 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. 7. Scope of Control 7 • Policies • Organization • Production • Wages&salary • Environment • Pubicrelations
  8. 8. Steps in controlprocess 8 • Establishing Standards • Measuring Performance • Comparison actualwith standards • TakingCorrective action
  9. 9. Requirement of effective control system 9 • Feedback • Objective • Suitability • Prompt Reporting • Forward looking
  10. 10. Requirement of effective control system 10 • PointingOut expectations • Flexible • Economy • Intelligible • Suggestremedial action • Motivation
  11. 11. Techniques of control 11 • Statistical Control reports • Personal Observation • CostAccounting • BreakEvenAnalysis • SpecialControl Report
  12. 12. Techniques of control 12 • ManagementAudit • Standard Costing • Return On Investment • InternalAudit • ResponsibilityAccounting
  13. 13. Techniques of control 13 • ManagerialStatistics • PerformanceEvaluation&ReviewTechnique • Critical Path Methods • Gantt Milestone chart • Production Control
  14. 14. Techniques of control 14 • ManagementInformation System • ExternalAudit Control • Zero-base Budgeting • StandingOrders • Budgetary Control
  15. 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. 16. Suitability PERT ‐CPM 16 • PERTtechnique issuitable for the following projects. • Largeweapon system • Shipbuilding • Airport facilities building • Launchingnew products
  17. 17. Advantages of PERT ‐ CPM 17 • Ensures planning • Identification offavorable factors. • Savingofcost and time • Takingpreventing action • Attention on critical activities • Everythingat right
  18. 18. Advantages of PERT ‐ CPM 18 • MakingAwarenessof activities. • Securing co-operation • Facilitates decision making • Improved communication • Timelycompletion of project
  19. 19. Limitation of PERT ‐ CPM 19 • Error in estimation oftime &cost. • Application: Canbe applied onlyone time for non repetitive projects. • Time consuming&expensive
  20. 20. Distinction between PERT and CPM 20 • PERTgivesimportance to time. • CPMgivesimportance to cost • PERTisevent oriented • CPMisactivity oriented.
  21. 21. Features of Control 21 • Controlling process. • Universal • Forward looking • Dynamic process • AnEssenceofaction
  22. 22. Need ofControl 22 • Judgingthe accuracyof standards. • Minimizedishonest behavior. • Better performance
  23. 23. Advantages of Control 23 • Adjustment in operation • Verification of policy • Managerialaccountability • Psychologicalpressure
  24. 24. Advantages of Control 24 • Maintainingmorality • Co-ordination • Efficiency
  25. 25. Limitations of Control 25 • Absenceofperfect standards • Uncontrollable factors • Difficultyin fixing responsibility • Expensive process
  26. 26. Types of managerial Control 26 • Standardizing control • Preserving control • Delegation ofauthority control • Measurement control • Motivating control
  27. 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. 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. 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. 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. 31. Objectives of Budgetary control 31 • Fixationofincomeand expenditure • Defininggoalsfor astipulated period • Co-ordination ofwork ofvarious departments
  32. 32. Objectives of Budgetary control 32 • Assistingin terms ofdata, the top management for policy determination. • Forecastingfinancialposition of company • Centralizingmanagement control
  33. 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. 34. Advantages of Budgetary control 34 • Tool for planningthe activities. • Thinkingin advance. • Control of expenditure • Better utilization of resources
  35. 35. Advantages of Budgetary control 35 • Promotion of efficiency • Achievementof goals • Criteria ofself examination • Fixation of responsibilities • Encouragesexchangeof information
  36. 36. Disadvantages of Budgetary control 36 • Inaccuracy • Personal bias • Non availabilityof co-operation • Rigidity • Resultsare not attainable
  37. 37. Disadvantages of Budgetary control 37 • Consistency • Time consuming process • IneffectiveBudgetary control • Discouragethe initiative • More paperwork
  38. 38. Essentials of Effective Budgeting System 38 • Efficient organization • Preparing master budget • Preparing master budget • Quick response • Flexible • Appropriate authority
  39. 39. Types of Budgets 39 • Master budget • Salesbudget • Cashbudget • Production budget • Physicalproperty budget
  40. 40. Types of Budgets 40 • Time &materialbudget • Selling&distribution cost budget • Balancesheet budget • Suppliers budget • Production cost budget
  41. 41. Types of Budgets 41 • Production overheadcost budget • Research&development • Fixed budget • Flexible budget
  42. 42. Preparation of a Budget 42 • Sound forecasting • Developedaccounting system • Fixation ofresponsibility centers • Formationofbudget committee
  43. 43. Preparation of a Budget 43 • Clear definition ofbusiness policies • Statistical information • Support oftop management • Budget period
  44. 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

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