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Question
“Measurement of a company’s progress may involve calculation of certain ratios like gross profit ratio, net profit ratio, and return on investment etc. at periodic intervals”. Identify the function of management involved in the above context. Also briefly explain the step in the process of the identified function discussed above.
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Solution
- Controlling
- Measurement of actual performance
Once performance standards are set, the next step is a measurement of actual performance. Performance should be measured in an objective and reliable manner. There are several techniques for the measurement of performance. These include personal observation, sample checking, performance reports, etc.
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Controlling function of an organisation is
Which of the following are the features of Controlling?
Assertion (A): Controlling ensures that resources are used in the most effective and efficient manner.
Reason (R): In controlling, each activity is performed in accordance with predetermined standards and norms.
Assertion (A): A small enterprise cannot afford to install an expensive control system.
Reason (R): Control system loses some of its effectiveness when standards cannot be defined in quantitative terms.
Controlling means ensuring that activities in an organisation are performed as per the ______.
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Match the FUNCTIONAL AREA in Column I with their respective STANDARDS set to gauge performance in Column II, as a part of the controlling function.
| Column I | Column II | |
| (i) | Marketing | Flow of capital |
| (ii) | Production | Sales-person's performance |
| (iii) | Human Resource Management | Labour turnover |
| (iv) | Finance and Accounting | Quantity |
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