2nd PUC Business Studies Important Questions Chapter 8 Controlling

Karnataka 2nd PUC Business Studies Important Questions Chapter 8 Controlling

Question 1.
Which function of management ensures that actual activities confirm to planed activities?
Or
Name the function which reviews the operations in a business unit.
Answer:
Controlling

Question 2.
There are two managers Prakash and Pankaj. Prakash is saying that ‘controlling is forward looking’ whereas according to Pankaj ‘controlling is looking back’. Who is correct? Explain why.
Answer:
Both managers Prakash and Pankaj are correct and explain controlling as forward looking and looking back

Question 3.
Employees know well in advance what they are expected to do and what are the standards of performance on the basis of which they will be appraised, which in turn help them to give better performance. Which importance of controlling is highlighted here?
Answer:
Improves employees motivation.

Question 4.
Which function of management ensures work accomplishment according to plan? Name and explain the importance of the fiinction.
Answer:
Controlling is the function of management which ensures work accomplishment according to plans? And explain the importance of the controlling.

Question 5.
Controlling provides direction to all activities and efforts for achieving organizational goals. Which importance of controlling is referred here? Also explain two more of its importance.
Answer:
Facilitating coordination in action. Explain two more importance of controlling.

Question 6.
“There is close and reciprocal relationship between planning and controlling”. Explain the statement through an example.
Answer:
Yes, “there is close and reciprocal relationship between planning and controlling”. Without planning, there is no basis for controlling activities and without controlling planned activities cannot be implemented properly and there cannot be improvement in future plans.

Question 7.
“Controlling is a systematic process involving a series of steps.
Answer:
“Explain the process/steps of controlling.

Question 8.
Name the concept which suggests that only significant deviations which go beyond the permissible limit should brought to the notice of management
Answer:
Management by exception.

Question 9.
Which technique of control is concerned with the contribution of actual and planed expenditure.
Answer:
Budgetary control

Question 10.
“In ideal control system is the one that checks every bit of performance”. Do you agree with this statement? Give reasons to support your answer.
Answer:
No, I do not agree with this statement. Because a manager should focus on key points only and should not waste his energy in checking every bit.

Question 11.
Abhyuday ltd. is manufacturing auto spare parts on large scale. The company policy is that 3 % of the daily production could be defective, answer last two months it is observed that about 1012% of production is defective. Which function of management is reinsured to correct the above case? State the procedure to be followed to correct the things.
Answer:
The management function reinsured to correct the above case is controlling. The procedure to be followed is:

1. Find out the causes of deviation of defective percentage from 3 to 12.
2. Take corrective measures to control things.

Question 12.
“Comparing the actual performance with the laid standards, finding out the deviations and taking corrective action is an important function of a function of management”. Name the function and explain the process.
Answer:
Name of the function is controlling and explain the process of controlling.

I. One Mark Questions and Answers

Question 1.
What do you mean Controlling?
Answer:
It means power to order or restrain.

Question 1.
What completes the whole sequence of management process?
Answer:
Controlling.

Question 2.
What is control?
Answer:
Control means the power or authority to direct, order or restrain.

Question 3.
What do you mean by standard in controlling?
Answer:
The standard is a yardstick consisting of a specific set of actions, relating to a particular job on which the actual results are to be evaluated.

Question 4.
Give the meaning of deviation in controlling?
Answer:
Deviation means variation from the standards set as per plan.

Question 5.
How the variation is ascertained in controlling?
Answer:
When standards are developed and actual performance is measured accurately, a comparison of the two will ascertain any variation

Question 6.
State any one importance of Controlling?
Answer:
It helps in measuring actual performance.

Question 7.
State any one process of Controlling?
Answer:
Setting performance standards.

Question 8.
What is the need for Controlling?
Answer:
To ensure proper and timely accomplishment of organisational objectives.

Question 9.
What is the basis for Controlling?
Answer:
Planning is the basis for Controlling.

Question 10.
Controlling is not possible in the absence of?
Answer:
Planning.

Question 11.
Why do organisations use Controlling?
Answer:
To measure the actual performance with standards.

Question 12.
In which level of organisation controlling is used?
Answer:
It is used in all levels of management of organisation

Question 13.
What is Deviation?
Answer:
It means variation from Standard.

Question 14.
What is Standard?
Answer:
A yardstick consisting of specific set of actions relating to a particular job.

II. Two Marks Question and Answers

Question 1.
Define Controlling?
Answer:
According to Koontz and O’Donnell ‘controlling is the measuring and correcting of activities of sub-ordinates to ensure that events conform to plan.

Question 2.
State any two importances of Controlling.
Answer:
(a) It helps in measuring the actual performance with standards.
(b) It helps in improving organisations efficiency.

Question 3.
State any two steps in controlling process.
Answer:
(a) Setting performance standards.
(b) Measurement of actual process.

Question 4.
State any two corrective actions when there is deviation.
Answer:
(a) Review and revision of goals and standards.
(b) Change in the assignment of tasks.

Question 5.
What is Controlling?
Answer:
Controlling is a process which analyses whether the actions are taken as planned are not. It evaluates the actions by comparing it with the standards.

Question 6.
Mention any fourareas of management where controlling is used.
Answer:
(a) Production
(b) Personnel
(c) Capital
(d) Expenditure

Question 7.
What is Deviation / Variation?
Answer:
Deviation means variation from the standard, it maybe negative, zero or positive.

Question 8.
How is the variation ascertained in Controlling.
(a) If the performance is less than standard it leads to negative variation.
(b) If the performance is equal to standard then there is a zero deviation.
(c) If the performance is more than standard it leads to positive variation.

III. Five Marks Questions and Answers

Question 1.
Explain the importance of Controlling.
Answer:
(a) Controlling helps for execution of plans: It is the only means to ensure that the plans are being properly implemented.
(b) It improves employee’s efficiency: A person is likely to put better efforts ifhe is aware that his performance will be evaluated
(c) It improves organisational efficiency Proper control and evaluation methods ensure organisational efficiency and effectiveness.
(d) It is a basis for future: Controlling provides feedback and reveals shortcoming in plans and helps in future decision making.
(e) It is a means of co-ordination: Controlling facilities co-ordination among all departments by giving unity of direction
(f) Delegation of authority: An effective system of control facilitates delegation of authority with the help of feedback.
(g) Control simplifies supervision: It helps in simplifying the task of supervision by pointing out significant deviation from standards.
(h) Management responsibility: This process starts at the top levels and goes to lower level, responsibility is created through assignments of activities. A person must exercise control over the performance of this subordinates.

Question 2.
What do you mean by standard in controlling? State the requirements of good standard.
Answer:
The standard is a yardstick consisting of a specific set of actions, relating to a particular job on which the actual results are to be evaluated.

The standards for control should satisfy the following requirements:
(a) Standards should be simple and easily understandable.
(b) Standards shuld be capable of achieving with reasonable effort and time.
(c) Standards should be flexibleand not rigid.
(d) It should be consistent with the overall objectives ofthe organisation.
(e) It should be set scientifically with the help of time and motion studies.
(f) It should be expressed in quantitative terms.
(g) If should be set in consultation with people who are responsible to achieve them.

Question 3.
Explain briefly the controlling process
Answer:
(a) Setting performance standards: Different types of standards are used for measuring the performance of individuals: control standards are derived directly from goals and objectives of the organisation.

Standards should satisfy the following requirements:

• Standards should be capable of achieving.
• It should be flexible not rigid.
• It should be expressed in quantitative terms.
• It should be set in consultation with people who are responsible to achieve them.

(b) Measurement of actual performance The next step is to measure the actual performance in terms of the same lines on which the standards are set.

(c) Comparing actual performance with standards
Control process is the comparison of actual performance with standards it involves.

• Finding out the extent of deviation.
• Identifying the causes of such deviations.

(d) Analysing deviations

• Deviation means variation from the standard. If the performance is less than standard it leads to negative variation.
• If the performance is equal to standard then there is a zero deviation.
• If the performance is more than standard it leads to positive variation.

(e) Taking Corrective Action Corrective action man involves:

• Review and revision of goals and standard.
• Change in assignment of tasks.
• Provision for additional resources or new facilities.
• Improvement in the selection of training of workers or reform in the techniques of direction.

IV. Ten Marks Questions and Answers

Question 1.
Define controlling. Explain the importance of controlling.
Answer:
According to Koontz and O’Donnell ‘controlling is the measuring and correcting of activities of sub-ordinates to ensure that events conform to plan.
(a) Controlling helps for execution of plans: It is the only means to ensure that the plans are being properly implemented.
(b) It improves employee’s efficiency: A person is likely to put better efforts ifhe is aware that his performance will be evaluated
(c) It improves organisational efficiency Proper control and evaluation methods ensure organisational efficiency and effectiveness.
(d) It is a basis for future: Controlling provides feedback and reveals shortcoming in plans and helps in future decision making.
(e) It is a means of co-ordination: Controlling facilities co-ordination among all departments by giving unity of direction
(f) Delegation of authority: An effective system of control facilitates delegation of authority with the help of feedback.
(g) Control simplifies supervision: It helps in simplifying the task of supervision by pointing out significant deviation from standards.
(h) Management responsibility: This process starts at the top levels and goes to lower level, responsibility is created through assignments of activities. A person must exercise control over the performance of this subordinates.

Question 2.
Explain the controlling process.
Answer:
(a) Setting performance standards: Different types of standards are used for measuring the performance of individuals: control standards are derived directly from goals and objectives of the organisation.

Standards should satisfy the following requirements:

• Standards should be capable of achieving.
• It should be flexible, not rigid.
• It should be expressed in quantitative terms.
• It should be set in consultation with people who are responsible to achieve them.

(b) Measurement of actual performance The next step is to measure the actual performance in terms of the same lines on which the standards are set.

(c) Comparing actual performance with standards
The control process is the comparison of actual performance with standards it involves.

• Finding out the extent of the deviation.
• Identifying the causes of such deviations.

(d) Analysing deviations

• Deviation means variation from the standard. If the performance is less than standard it leads to negative variation.
• If the performance is equal to standard then there is a zero deviation.
• If the performance is more than standard it leads to positive variation.

(e) Taking Corrective Action Corrective action man involves:

• Review and revision of goals and standards.
• Change in the assignment of tasks.
• Provision for additional resources or new facilities.
• Improvement in the selection of training of workers or reform in the techniques of direction.

Exercises

Short Answer Type Questions

Question 1.
Explain the meaning of controlling.
Answer:
Controlling means ensuring that activities In an organisation are performed as per the plans Controlling also ensures that an organisations resources are being used effectively and efficiently for the achievement of desired goals Controlling is, thus a goal oriented function. Controlling is a very important managerial function. Because of controlling manager is able to compare actual performance with the planned performance In order to control the activities at all levels manager needs to perform controlling function.

Question 2.
Planning is looking ahead and controlling is looking back comment.
Answer:
Planning and controlling are inseparable Planning is the primary function of every organisation it is the thinking process. Which means looking ahead or making plans that how desired goal is achieved in future thus it is called a formed looking function on the other hand controlling is a systematic function which measures the actual performance with the planned performance.

It compared and analysed the whole process of an organisation and take correcting actions. Thus, it is a backward looking function but the statement “Planning is looking ahead and controlling is looking back” is partially correct because it should be understood that planning is glided by past experiences and the corrective action initiated by control function which alms to Improve future performance Thus. Planning and controlling are both backward looking as well as a forward looking functions.

Question 3.
‘An effort to control everything may end up in controlling nothing’. Explain.
Answer:
It’s a well-known fact that “Jack of all master of none” when we start controlling everything It results In control of nothing because It is not possible at one time to control various activities as this process may neither be economical nor easy Control thus focus on KRAs (Key Result Areas). It means Instead of controlling all activities, control where the critical points goes wrong and by which organisation suffers Thus, KRAs are set as critical points and one should be aware that he has to control what.

Question 4.
Write a short note on budgetary control as a technique of managerial control.
Answer:
Budgetary control is a technique of managerial control In which all operations are planned and this will help us in knowing how much we have to spend in order to achieve the future result. It compared the actual result with budgetary standards. This comparison reveals the necessary actions to be taken so that the organisational objectives are accomplished.

Budgeting offers the following advantages

1. Budgeting focuses on specific and time bound targets.
2. Budgeting standards is a source of motivation to the employees they set the against which their performance will be appraised and thus, enables them to perform better
3. Budgeting helps in optimum utilisation of resources by allocating them according to the requirements of different departments.
4. It helps the management in setting standards.
5. Explain how management audit serves as an effective technique of controlling. Management audit is a technique which

Long Answer Type Questions

Question 1.
Explain the various steps involved in the process of control.
Answer:
Controlling is a systematic process involving following steps
1. Setting Performance Standards: The first step in the controlling process is setting up of performance standards. Standards are the criteria against which actual performance would be measured. Standards can be set In both quantitative as well as qualitative terms. Some of the qualitative standards are cost to be Incurred, product units to be produced, time to be spent in performing a task etc. Improving goodwill and motivation level of employees are examples of qualitative standards.

2. Measurement of Actual Performance: Once performance standards are set, the next step is measurement of actual performance. Performance should be measured in an objective and reliable manner. Some of the techniques used for measuring the performance are personal observation. Sample checking performance reports etc.

3. Comparing Actual Performance with Standards: This step involves comparison of actual performance with the standards. Such comparison will reveal the deviation between actual and desired results. Comparison becomes easier when standards are set in quantitative terms. For instance, performance of a worker In terms of units produced in a week can be easily measured against the standard output for the week.

4. Analysing Deviations: Some deviations in performance can be expected in all activities. It is therefore, important to determine the acceptable range of deviations. Also, deviations in key areas of business need to be attended more urgently as compared to deviations in certain insignificant areas. Critical point control and management by exception should be used by a manager in this regard.

5. Taking Corrective Action: The final step in the controlling process is taking corrective action. No corrective action is required when the deviations are within acceptable limits. However, when the deviations go beyond the acceptable range, especially in the important areas. It demands immediate managerial attention so that deviations do not occur again and standards are accomplished. In case the deviations cannot be corrected through managerial action. The standards may have to be revised.

Question 2.
Explain the techniques of managerial control.
Answer:
The various techniques of managerial control may be classified into broad categories
1. Traditional Techniques: Those techniques which have been used by the companies for a long time now are traditional techniques. However. These have not become obsolete and are still being used by companies.
(a) Personal Observation:
Personal observation enables the manager to collect first-hand information. It also creates a psychological pressure on the employees to perform well as they are aware that they are being observed personally in their job.

(b) Statistical Reports:
Statistical analysis in the form of averages, percentages, ratios, correlation etc. Present useful information to the managers regarding performance of the organisation in various areas. Such information when presented in the form of charts. Graphs. Tables etc. enables the managers to read them more easily and allow a comparison to be made with performance in previous periods and also with the benchmarks.

(c) Break-even Analysis:
It is a technique used by managers to study the relationship between costs, volume and profits. It determines the probable profits and losses at different levels of activity. The sales volume at which there is no profit, no loss is known as break-even point. It is a useful technique for the managers as it helps in estimating profits at different levels of activities.

(d) Budgetary Control
It is a technique of managerial control in which all operations are planned in advance in the form of budgets and actual results are compared with budgetary standards. This comparison reveals the necessary actions to be taken so that organisational goals are accomplished. A budget is a quantitative statement for a definite future period of time for the purpose of obtaining a given objective. It is also a statement which reflects the policy of that particular period. It will contain figures of forecasts both in terms of time and quantities.

2. Modern Techniques: Modem techniques of controlling are those which are of recent origin and are comparatively new in management literature. They provide a new thinking on the ways In which various aspects of an organisation can be controlled
(a) Return on Investment:
Return on Investment (ROI) is a useful technique which provides the basic yardstick for measuring whether or not invested capital has been used effectively for generating reasonable amount of return. It can be calculated as under
Net income Sales
ROI = \(\frac{\text { Net income }}{\text { Sales }} \times \frac{\text { Sales }}{\text { Totalinvestment }}\)

ROI provides top management an effective means of control for measuring and comparing performance of different departments. It also permits departmental managers to find out the problem which affects ROI in an adverse manner.

(b) Ratio Analysis:
It refers to analysis of financial statements through computation of ratios. The most commonly used ratios are

• Ratios Liquidity ratios are calculated to determinedly short term solvency of business.
• Ratios which are calculated to determine the long term solvency of business are known as Solvency ratios.
• Ratios These ratios are calculated to analyse the profitability position of a business.
• Ratios they are calculated to determine the efficiency of operations based on effective utilisation of resources.

3. Responsibility Accounting
Responsibility’ accounting is a system of accounting in which different sections, divisions and departments of an organisation are set up as ‘responsibility centres’. The head of the centre is responsible for achieving the target set for his centre.

Responsibility centres may be of the following types
(a) Cost Centre: A cost or expense centre Is a segment of an organisation which managers are held responsible for the cost Incurred in the centre but not for the revenues e.g., production department
(b) Revenue Centre: A revenue centre is held responsible for generating revenue e.g. Marketing department.
(c) Profit Centre: A profit centre is responsible for both cost and revenue e.g., repair and maintenance department
(d) Investment Centre: An investment centre is responsible not only for profits but also for investments made in the centre in the form of assets.

4. Management Audit: Management audit refers to systematic appraisal of the overall performance of the management of an organisation. The purpose is to review the efficiency and effectiveness of management and to improve its performance in future periods. It is helpful in identifying the deficiencies in the performance of management functions

The main advantages are
(a) Helps to locate weaknesses.
(b) It helps to improve the control system.
(c) Ensures updating of existing managerial policies and strategies in the light of environmental changes.

5. PERT and CPM Programme evaluation and review technique and critical path method are important network techniques useful n planning and controlling

These techniques are especially useful in planning, scheduling and Implementing time bound projects Involving performance of a variety of complex, diverse and inter-related activities These techniques deal with time scheduling and resource allocation for these activities and aims at effective execution ofprojects within given lime schedule and structure of costs.

6. Management Information System MIS: It is a computer based Information system that provides information and support for effective managerial decision-making A decision maker requires up-to-date accurate and timely information. MIS provides the required information to the managers by systematically processing massive data generated in an organisation Thus, MIS IS an important communication tool for managers

Question 3.
Explain the importance of controlling in an organisation. What are the problems faced by the organisation in implementing an effective control system?
Answer:
Control is an indispensable function of management without control the best of plans can go away. A good control system helps an organisation in the following way
1. Accomplishing Organisational Goals: The controlling function measures progress towards the organisational goals and brings to light the deviations If any and indicates corrective action. It thus. Guides the organisation and keeps it on the right track so that organisational goals might be achieved

2. Judging Accuracy of Standards a good control system enables management to verify whether the standards set are accurate and objective an efficient control system keeps a careful check on the changes taking place in the organisation and in the environment and helps to review and revise the standards in light of such changes.

3. Making Efficient Use of Resources by exercising control a manager seeks to reduce wastage and spoilage of resources. Each activity is performed in accordance with predetermined standards and norms. This ensures that resources are used in the most efficient and effective manner.

4. Improving Employee Motivation A good control system ensures that employees know well in advance what they are expected to do and what are the standards of performance on the basis of which they will be appraised. It thus motivates them and helps them to give better performance

5. Ensuring Order and Discipline Controlling creates an atmosphere of order and discipline In the organisation It helps to minimise dishonest behaviour on the part of the employees by keeping a close check on their activities ‘

6. Facilitating Co-ordination in Action Controlling provides direction to all activities and efforts for achieving organisational goals each department implemented employee is governed by predetermined standards which are well coordination with one another this ensures that overall organisational objectives are accomplished. Although controlling is an important function of management.

It suffers from the following limitations also
1. Difficulty in Setting Quantitative Standards: Control system loses some of its effectiveness when standards cannot be defined in quantitative terms. This makes measurement of performance and their comparison with standards a difficult task. Employee morale, job satisfaction and human behaviour are such areas where this problem might arise.

2. Little Control on External Factors: Generally an enterprise cannot control external factors such as government policies, technological changes competition etc.

3. Resistance from Employees: Control is offer resisted by employees. They see it as a restriction on their freedom. For instance, employees might object when they are kept under a strict watch with the help of Closed Circuit Televisions (CCTVs).

4. Costly Affair: Control is a costly affair as It Involves a lot of expenditure. Time and effort. A small enterprise cannot afford to install an expensive control system. It cannot justify the expenses involved. Managers must ensure that the costs of installing and operating a control system should not exceed the benefits derived from it.

Question 4.
Discuss the relationship between planning and controlling.
Answer:
Planning and controlling are inseparable, they are twins of management. A system of control pre-supposes the existence of certain standards. These standards of performance which serve as the basis of controlling are provided by planning. Once a plan becomes operational controlling is necessary to monitor the progress, measure it, discover deviations and initiate corrective measures to ensure that events conform to plans. Planning is clearly a prerequisite for controlling.

Controlling cannot be accomplished with planning. With planning there is no pre-determined understanding of the desired performance, planning seeks consistent, integrated and articulated programmes while controlling seeks to compel events to conform to plans.

Following are some behaviour that you and others might engage in on the job. For each item, choose the behaviour that management must keep a check to ensure an efficient control system.

Question 5.
Biased performance appraisals.
Answer:
To avoid biased appraisal, a performance appraisal should be taken by a committee of experts.

Question 6.
Using company’s supplies for personal use.
Answer:
The statement is not so expensive, so it can be ignored.

Question 7.
Asking a person to violate company’s rules.
Answer:
Strict and Immediate disciplinary action should be taken.

Question 8.
Calling the office to take a day off when one is sick.
Answer:
Mass bunking should not be allowed.

Question 9.
Overlooking boss’s error to prove loyalty.
Answer:
Secret suggestion box can be used to collect feedback about the boss for appraisal.

Question 10.
Claiming credit for someone else’s mom
Answer:
Performance records of employees to be maintained.

Question 11.
Reporting a violation on noticing it.
Answer:
If minor can be over looked

Question 12.
Falsifying quality reports.
Answer:
Strict quality control techniques should be used.

Question 13.
Takinglongerthannecessaiytodothejob.
Answer:
Time and motion study should be used to fix standard.

Question 14.
Setting standards in consultation with workers.
Answer:
The use of scientific techniques can help in fixing the most feasible and optimum standards.

Multiple Choice Questions

Question 1.
An efficient control system helps to
(a) accomplishes organisational objectives
(b) boosts employee morals
(c) judges accuracy of standards
(d) All of the above
Answer:
(d) Efficient control system helps to accomplish objectives. boosts employee morals, judges accuracy of standards, analyse deviations.

Question 2.
Controlling function of an organisation is
(a) forward looking
(b) back moral looking
(c) forward as well as backward looking
(d) None of the above
Answer:
(c) Controlling is forward looking because it does not end only by comparing past performance with standards. Controlling is backward looking because It postmortems all past activities to set future standards. Thus, controlling is both forward as well as backward looking.

Question 3.
Management audit is a technique to keep a check on the performance of
(a) company
(b) management of the company
(c) shareholders
(d) customers
Answer:
(b) The purpose of management audit is to review the efficiency and effectiveness of management of the company.

Question 4.
Budgetary control requires the preparation of
(a) training schedule
(b) budgets
(c) network diagram
(d) responsibility centres
Answer:
(b) Budgetary control is a technique in which all operations are planned in advance in the form of budgets.

Question 5.
Which of the following is not applicable to responsibility accounting?
(a) Investment centre
(b) Accounting centre
(c) Profit centre
(d) Cost centre.
Answer:
(b) Accounting centre is not applicable to responsibility accounting.

Case Problems:

A company M limited is manufacturing mobile phones both for domestic Indian market as well as for export. It had enjoyed a substantial market share and also had a loyal customer following. But lately it has been experiencing problems because its targets have not been met with regard to sales and customer satisfaction. Also mobile market in India has grown tremendously and new players have come with better technology and pricing. This is causing problems for the company. It is planning to revamp its controlling system and take other steps necessary to rectify the problems it is facing.
Question 1.
Identify the benefits the company will define from a good control system.
Answer:
When company starts following a good control on operations, it leads to derive benefits which are

1. Helps in achieving desired goals.
2. Judging accuracy of operations.
3. Making efficient and effective use of resources.
4. Improving employee morale.
5. Ensuring proper flow of orders and the whole system is in discipline.
6. It facilitates the co-ordination and Improve the performance of every Individual.

Question 2.
How can the company relate its planning with control in this line of business to ensure that its plans are actually implemented and targets attained?
Answer:
Company relates Its planning with control in this line of business by implementing effective control system as this will help in two aspects planning makes controlling effective and efficient whereas controlling improves future planning because it is like a post-mortem of past activities to find out deviations from the standards and in order to ensure that its plans are actually implemented and targets are attained they will take the help from controlling process as it is a systematic process and it leads to following benefits
1. Setting Up of Standards: In this step. Company set some targets against which the actual performance is measured.

2. Measuring of Performance: In this step, company is able to measure the Performance and evaluating that what is actually done by the employees?

3. Compare Performance: After evaluating the actual result. Company compares the actual performance with the planned one this helps in knowing that the desired goal is achieved or not.

4. Analysing Deviations: this refers to the difference between actual and desired performance. It helps in knowing to the company that the deviation is positive or negative. It needs focus on which part rather than analysing whole.

5. Taking Corrective Measures Final step is to know the type of operation and trying to remove this deviation and in future it matches with the plans.

Question 3.
Give the steps in the control process that the company should follow to remove the problems it is facing.
Answer:
The Company should follow these steps in a systematic manner

1. Setting performance standards
2. Measurement of actual performance
3. Comparison of actual performance with standards
4. Analysing deviations
5. Taking corrective actions

Question 4.
What techniques of control can the company use?
Answer:
The Company should follow the modem techniques to control the system
1. ROI (Return on Investment) It is a useful technique for controlling the overall performance of a company. It indicates how resources are being used. Facilitates balanced use effectively of capital employed. Focuses on profits and relates them to capital Invested.

2. Responsibility Accounting under this technique, the organisation is divided into centres that are responsible for the overall growth of various departments.

Responsibility centres in the organisation are:
(a) Cost Centre Under this. One can check the production and operational cost.
(b) Revenue Centre Sales or marketing departments come under this; it is responsible for generating revenue.
(c) Profit Centre Profit = Revenue – Cost. It ensures the actual profit derived from the business.
(d) Investment Centre This centre ensures the optimum use of assets and it makes use of return on investment.

3. MIS (Management Information System): it is a control technique which provides information and support for effective managerial decision making. It provides accurate information to the managers, helps in planning, controlling, provides oost effective information and many more.

2nd PUC Business Studies Important Questions