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State the Steps in the Process of Controlling. - Business Studies

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ConceptConcept of Controlling

Questions

State the steps in the process of controlling.

Describe briefly the steps in the process of controlling

Explain the various steps in the process of controlling.

Solution

Steps to be followed in the controlling process:

  • Setting Standards: The first step is setting standards against which the actual performance is evaluated. The standards can be in both qualitative terms (such as improved coordination, higher goodwill) and quantitative terms (such as sales targets, production targets). It must be kept in mind that the set standards should facilitate easy comparison.
  • Measuring Actual Performance: The next step in the controlling process is to measure the performance of the various activities. Techniques such as personal observation and performance reports can be used. This measurement should be exact and reliable such that it facilitates easy comparison with the set standards. Moreover, the measurement of performance can be at various stages in the activity or at the completion of the activity.
  • Comparing Performance: When the actual performance is measured, it is then compared with the pre-defined standards. This helps in assessing whether there are any deviations/deficiencies in performance. Accordingly, it helps in identifying the required corrective actions to be taken.
  • Analysing Deviation: With the comparison of the actual performance with the set standards, deviations in performance are identified. For analysing deviations, Critical Point Control or Management by Exception can be used. 
  • Corrective Measures: For deviations beyond the acceptable range, it becomes necessary to take corrective actions. It must be ensured that the deviations do not occur again.
  • Management by Exception: According to this technique, only significant deviations which are above an acceptable range should be controlled. An attempt must not be made to control everything.

Deviations should be identified and their causes must be recognised. Some causes for deviations can be infeasible standards, deficiencies in process and dynamic business environment

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Solution State the Steps in the Process of Controlling. Concept: Concept of Controlling.
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