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Unit 1 Basic Concepts of Management Control: by Akshay

Management control involves comparing actual performance to plans and standards to determine if objectives are being met. It is a systematic process used by managers to ensure resources are being efficiently used. Control involves establishing performance measures, monitoring performance, comparing to standards, and taking corrective actions. The goal is to guide performance towards planned targets and continuously improve operations.

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26 views

Unit 1 Basic Concepts of Management Control: by Akshay

Management control involves comparing actual performance to plans and standards to determine if objectives are being met. It is a systematic process used by managers to ensure resources are being efficiently used. Control involves establishing performance measures, monitoring performance, comparing to standards, and taking corrective actions. The goal is to guide performance towards planned targets and continuously improve operations.

Uploaded by

sathish
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Unit 1

Basic Concepts of
Management Control
By
Akshay
Definition Of Management
Management control can be defined as a
systematic effort by business management to
compare performance to predetermined
standards, 'plans, or objectives in order to
determine whether performance is in line with
these standards and presumably in order to
take any remedial action required to see that
human and other corporate resources are being
used in the most effective and efficient way
possible in achieving corporate objectives.
DEFINITION OF CONTROL
Controlling is seeing that actual performance is
guided towards expected performance. It is an
important function of management and is
related to all other management functions. All
other management functions cannot be
completed effectively without performance of
the control.
'Control' is
 Knowing exactly what work is to be done as to (a)
quantity; (b). quality; and (c) time available.
 Knowing what resources are available for doing the
work as to (a) personnel; (b) materials; and (c) other
facilities.
 Knowing that the work has been done or ,is being
done (a) with the resources available; (b) within the
time available; (c) at a reasonable cost; and (d) in
accordance with the required standard of quality.
 Knowing immediately of any delays, hold-ups or
variations as to (a) what happened; (b) its cause; and
(c) remedy
Elements of Control
 Control is a function of management
 Control is a dynamic process
 Control is a continuous activity
 Control is forward looking
 Planning and Controlling are'closely related

with each other


Significance of Control

 The significance of control emerges from the


need to maximize the use of scarce resources.
and also to attain an orderly, systematic. and
purposeful behaviour of an organisation and its
members.
 Control consists in verifying whether everything
occurs in conformity with the plans adopted, the
instructions issued and principals established. It.
has for object to point out weaknesses and errors
in order to rectify them and prevent recurrence. It
operates on everything, things, people, action".
Scope of Control
 The scope of control is very wide. It virtually
covers all the areas of business, namely,
policies, procedures, men, money, .machines
and equipment, public relations, human
relations, research and development and so
on. Generally, Control is exercised by
concentration on key areas of business on
which the success of the business depends. It
is known as 'Key-point Control'. The key
points vary-from enterprise to enterprise
NATURE OF MANAGEMENT
CONTROL SYSTEMS
 Planning the future course of action
 Coordinating and communicating the various

activities of the organization to different


departments
 Evaluating information and deciding the

various activities; and finally,


 Influencing people to work in accordance with

the goals of the organization.


IMPORTANT FEATURES OF MANAGEMENT CONTROL
SYSTEMS

 Nature of decisions
 Decisions are systematic and rhythmic
 Strategy implementation tool
 Framework for Strategy Implementation
Process Followed in Solving
Control Problems
 Diagnose the situation and review all of the facts in
order to find and define the problem..
 Examine the problem and review the facts in order
to find the key factors affecting the problem and its
solution. This step is sometimes referred to as
premising.
 Develop alternative solutions to the problem.
 Test and evaluate the alternatives to determine the
best solution.
 Construct a clear statement of the solution selected,
and Convert the decision into a plan of action.
Characteristics of a Good
Management Control System
 Future-oriented
 Clear Objects
 Minimum control losses
 Phases of Management Control System
 Programming
 Budgeting
 Operating and Accounting
 Reporting and Analysis
Basic Steps Of Management
Control Systems
 The classification of organization into Responsibility
Centers.
 Fixing up responsibility in accordance with the firm's

objectives and deciding critical variables/key factors


for each Responsibility Centre.
 Developing information system which facilitates real

time information regarding operations which deviate


from the desired results. specifically critical variables
and relate results to individual accountability. .
 Performance reporting to management for remedial

measures.
 Real time control action by Management.
Standards of Performance
 standard should be capable of achievement with
reasonable amount of effort and time.
 Standards should concentrate at results and not

the procedures.
 Standards should not be rigid. They should be

capable of being changed whenever the need


arises.
 As far as possible standard should be expressed

in quantitative terms and should be . based on


the result of work measurement carried with the
help of time and motion studies.
Types of Standards
 Physical Standards
 Cost Standards
 Revenue Standards
 Capital Standards
 Intangible Standards
STEPS IN THE CONTROL PROCESS
 Establishing standards
 Appraising performance
 Comparison
 Taking corrective action
Phases Of Corrective Action
The Operative Phase
 Prompt investigation of the causes of the

deviation.
 Decision concerning the required corrective

action.
 Prompt direction for correcting the situation

in accordance with the decision.


 Close supervision of the corrective action to

ensure that it is taking place according to the


instructions and is effective
Contd…
The Administrative Phase
 Further investigation of recurring difficulties

to determine the basic factors, either human


or physical, that are responsible.
 Disciplinary action, either positive or

negative, as the situation requires.


 Creative planning to prevent a recurrence of

the situation
Recognition of the situation and the
introduction of the planned measures
 Follow-Through : Recommending corrective
actions also is not sufficient and the manager
shouldn't assume that his responsibility is
over with this action.
 Feedback in Control: in the control process

performance is measured and reported back


to the manager. Performance information
thus measured and- channeled back to
management is known as Feedback. It tells
what kind of job is being done.

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