Vinber Ltd. Set up a Manufacturing Unit at Bhiwadi in Himachal Pradesh to Manufacture Electric Geysers and Supply Them to Dealers All Over the Country. - Business Studies

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Answer in Brief

Answer the following question.
Vinber Ltd. set up a manufacturing unit at Bhiwadi in Himachal Pradesh to manufacture electric geysers and supply them to dealers all over the country. Their production target was 500 geysers per week. It was decided by the management that variation in production up to 10 units would be acceptable. At the end of the first week, the production was 450 geysers. The next week, production increased to 470 geysers. A week later, production was 460 geysers. On investigation, it was found that fluctuation in production was due to the irregular supply of electricity.

(a) The above para discusses some of the steps in the process of one of the functions of management. Explain these steps.
(b) Also, state the step(s) that have not been discussed in the above para.

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Solution

(a) The steps in the controlling process that are being followed are as follows:

i) Setting standards:
The first step in the process of controlling is to develop the standards or benchmarks for performance as against which the actual performance would be measured. The standards can be set in both qualitative and quantitative terms.
Line: ‘Their production target was 500 geysers per week’

ii) Measuring actual performance:
Once the performance standards are set, the next step is to measure the actual performance. This may be done through various techniques such as personal observation and performance reports. Performance can be evaluated after the completion of activity as well as while it is in progress.
Line: ‘At the end of the first week, the production was 450 geysers and a week later, it was 470 geysers’

iii) Comparing the performances:
Performances once measured are then compared with the set standards. Such a comparison helps in assessing the deviations in performance. In regard to this, comparisons in quantitative terms are much easier than in qualitative terms.
Line: ‘On investigation, fluctuations was ...’

iv) Analysing deviations:
Every organisation faces deviations in the actual performance as against the pre-defined standards. It is important for managers to find the deviations that are beyond the permissible range. Once the deviations are recognised, it is necessary to identify the cause for it. There can be a number of factors causing deviations in performance such as infeasible standards, deficiencies in the process, under-utilisation of resources, and changes in the business environment.
Line: ‘On investigation, it was found that fluctuations in production was due to irregular supply of electricity’

(b) The step which was missing is: Taking Corrective measures. When deviations go beyond the admissible limits, there arises a need for the manager to take corrective actions. This is the final step in the controlling process which aims at correcting the deficiencies of the organisation so that such deviations do not occur again. Since nothing has been mentioned about the corrective actions so the missing step is the last step of corrective actions.

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