TUTORIAL BOULEVARD

COMMERCE CASE STUDIES CLASS XII(Ch : CONTROLLING)

Question 1.
Gagan is trying to apply a function of management in his department. First he lets his team perform according to
their best potential. Then in a meeting he calls ody and asks his team to check what they have performed. One day
it was found that the total number of units produced were 20 less than the set target. It was decided that no worker
will go home unless and until this gap of 20 units is overcome.
1. Which function of management is being performed by Gagan and his team?
2. What is ’20’ in the above case?
3. At which stage of management do you think the target was set? What is its significance now?
Answer:
1. In the above case the function performed by Gagan and his team is controlling.
2. ’20’ in the above case is deviation. Gap between actual performance and set standards.
3. The target was set at the planning stage of management. The significance of planning is that it sets standards
in the form of targets so that controlling could be done by minimizing deviations.
Question 2.
Saurabh is working in an MNC. He has created an atmosphere of proper controlling in his department. In order to do
so he keeps himself aware about any dishonest behaviour and takes a stern action immediately. Recently he has
installed CCTV cameras to keep vigil on the employees.
1. In the above case which importance of controlling has been implemented by Saurabh?
2. Name one more importance of controlling other than the above highlighted.
Answer:
1. The importance of controlling implemented in the above case by Saurabh is:
Controlling ensures proper order and discipline in the organisation.
2. One more importance of controlling. Controlling helps in making efficient use of resources.
Question 3.
Parasmani Ship Builders is a renowned ship manufacturing company. The company is doing well but the employees
keep on complaining as they say there are no standards to judge the state of mind of the employees, their
motivation and job satisfaction levels. The HR department is trying to see to the problems which have recently
occurred with the employees. In other areas however company has set some standards and is trying to effect the
control mechanism but the company finds all such efforts expensive. All this has not been so easy. Employees in
other departments like manufacturing, purchase, marketing, etc. have time and again resisted to the installation of
computer monitoring systems and CCTVs. They say that it is against their freedom. Despite all these great efforts
made by the company it had to face losses last year. Even though all the control mechanisms are in place there is
an entry of competitors with better technology. This has given some bad time to the company despite its alertness in
putting proper controlling in execution.
1. Which concept of management has been highlighted in the above case?
2. Identify the different types of this concept of management highlighted in. the above case.
Answer:
1. The concept of management which is highlighted in the above case is ‘limitations of controlling’.
2. The different limitations of controlling highlighted in the above case are:
o It is difficult to set quantitative standards.
o Controlling is costly
o Controlling has to face resistance from employees.
o An organisation has little control on external factors.
Question 4.
Identify the step of controlling process applicable in the following cases:
1. Esha is keenly observing the quantity of capsules produced in a pharmaceutical company. She realises that
there is no need for any action to be taken as the deviations are within the acceptable limits. A day later when
she comes to work she finds the situation opposite to that of the previous day. This lime the deviation wa’S
beyond the acceptable range and needed immediate action. She called her subordinates and told them that
this should not happen again.
2. Mahesh who is the owner of a company has decided to focus only on a few activities of his business. He
considers that the rest of all activities are not critical to the performance of his company. One such area he
finds is of labour. The labour cost recently went up by 4% sending signals of coming danger. Now he will put
his efforts to control this variation by arranging labour at a cheaper rate.
3. In a company a manager is trying to find out the deviation between the actual number of fans produced and
the desired number. He already knows about the standard as the company has assigned him a definite
quantity of fans to be produced.
 TUTORIAL BOULEVARD
COMMERCE CASE STUDIES CLASS XII(Ch : CONTROLLING)
4. Manoj Khanna a senior experience manager is concerned about the 2% rise in the raw materials. However he
knows that this is an acceptable range. He tells his staff that if this rise goes beyond 2% it should be brought
into the notice of management. Then he sets a limit of 5% when the management should give it the priority
over other activities.
5. Virendra wants to ran his company in a different manner. He wants to set standards to be achieved in both
qualitative as well as quantitative terms. He wants to judge the motivation, skill levels and satisfaction of the
employees. Ail these things will require qualitative standards. On the other hand the company will have to set
quantitative standards for the number of units produced.
6. Some employees have been assigned the job of judging the output of production in a neutral and reliable way.
They are applying different techniques for achieving this aim. Some of these are personal observation, sample
checking, etc. They are also keeping the units of measurement same to that of the units of set standards.
Answer:
The different steps of the controlling process applicable in the above cases are:
1. Taking corrective action.
2. Analysing deviations. Critical point control is the technique used.
3. Comparing actual and standard performance.
4. Analysing deviations. Management by exception is the technique used.
5. Setting standards.
6. Measurement of actual performance.
Question 5.
Hina Sweets is a renowned name for quality sweets since 1935. Harsh the owner of Hina Sweets was worried as the
sales had declined during the last three months. When he enquired from the Sales Manager, the Sales Manager
reported that there were some complaints about the quality of sweets. Therefore Harsh ordered for sample checking
of sweets.
Identify the step taken by Harsh that is related to one of the functions of management
Answer:
Sample checking is a technique of Measurement of actual performance (Controlling).
Question 6.
Peter is a production manager in a tyre manufacturing company. Recently he noticed that his team could not
achieve the target production of 80 units per day. Instead on an average the production touched the target of only 65
units. On thorough analysis he found out that the deviation between standard production and actual production is far
beyond acceptable range, on overall analysis he also found out that there has been a marginal increase in office
stationery expenses. Moreover, he detected that the machine installed for the purpose of manufacturing was not
able to perform at its best Being a management expert suggest Peter how he should deal with the existing problem.
Answer:
Peter should follow the following principles of managerial control while analysing deviations:
1. Critical point control. According to this principle of managerial control a manager should focus on Key Result
Areas (KRAs) that are critical to the success of an organisation. A manager should not waste his precious time
on checking each and every activity in the organisation. He should focus on those areas which are critical to
the success of the enterprise. In the above case Peter should focus on improving the performance of the
machinery either by repairing it or by replacing it with the new one. Marginal increase in stationery expenses
can be dealt later by him.
2. Management/Control by Exception. As per this principle of managerial control a manager trying to control
everything may end up controlling nothing. Therefore, only significant deviations that go beyond the
permissible limit should be brought to the notice of management. In the above case poor performance of
machinery needs immediate managerial attention.