Controlling – Class 12 Business Studies Chapter 8 Notes & NCERT PDF

Introduction: Departure Control Systems

The chapter opens with the Departure Control System (DCS) used by airlines. A DCS automates airport operations - check-in, printing boarding passes, baggage acceptance, boarding, load control and aircraft checks. Almost 98% of DCS manage e-tickets through kiosks, online check-in, mobile boarding passes and baggage handling. It captures reservations from the airline's passenger name record (PNR) and updates status such as checked-in, boarded and flown, and may interface with immigration control and no-fly watch lists.

The lesson: managers must track progress and take corrective action before any damage is done. That is the job of controlling.

Meaning of Controlling

Controlling means ensuring that activities in an organisation are performed as per the plans, and that resources are used effectively and efficiently for predetermined goals.

"Managerial control implies the measurement of accomplishment against the standard and the correction of deviations to assure attainment of objectives according to plans." (Koontz and O'Donnell)

Controlling is:

Importance of Controlling

Case: Control through computer monitoring

Managers at a New York import-export company suspected two employees. On advice from Corporate Defense Strategies, software logged their keystrokes. It revealed they were deleting orders after processing them and pocketing the revenue; police arrested them when they came to steal a large electronics shipment. They were charged with embezzling $3 million over two and a half years from a $25 million-a-year firm.

Limitations of Controlling

Relationship between Planning and Controlling

Planning and controlling are inseparable twins of management. Planning provides the standards; controlling monitors progress against them.

They reinforce each other: planning based on facts makes controlling easier, and controlling improves future planning with information from past experience.

The Controlling Process

Step 1 - Setting performance standards. Standards are benchmarks and may be:

Set them precisely where possible (reduce defects from 10 to 5 per 1,000 pieces by quarter-end) and keep them flexible.

NCERT's table of standards by functional area:

Step 2 - Measurement of actual performance. Measure objectively and reliably, in the same units as the standards, by personal observation, sample checking (random checks in large firms), performance reports and ratios (gross profit, net profit, return on investment). Measure during performance where possible, for example checking each part before assembly or monitoring gas levels in a plant.

Step 3 - Comparing actual performance with standards to find the deviation. This is easier with quantitative standards (a worker's weekly output against the standard output).

Step 4 - Analysing deviations. Fix an acceptable range and use two principles:

Advantages of these two: saves managers' time and effort; focuses attention on important areas; leaves routine problems to subordinates (aiding delegation and morale); identifies critical problems in time.

Deviations may come from unrealistic standards, defective process, inadequate resources, structural drawbacks, organisational constraints or environmental factors beyond control. The exact cause must be found.

Step 5 - Taking corrective action. None is needed within acceptable limits. Otherwise: training employees if production targets are missed; adding workers, equipment and overtime for a project running behind schedule; or revising standards if the deviation cannot be corrected.

Techniques (from the chapter summary)

Key-Facts Sheet

Board Exam Focus

Key Terms (Hindi)

Common Mistakes