Controlling: Control Process, Techniques, Budgetary Control and Management by Objectives (MBO) Questions

Question 1

Define controlling.

Accepted Answer

Controlling is the process of comparing actual performance with standards, identifying deviations and taking corrective action to achieve organisational objectives.

Question 2

What is a standard (in control)?

Accepted Answer

A standard is the desired or expected level of performance (target) used as a benchmark for measuring actual performance.

Question 3

What is corrective action?

Accepted Answer

Corrective action means steps taken to remove the causes of deviations and bring performance back in line with standards.

Question 4

What is budgetary control?

Accepted Answer

Budgetary control is a control technique in which budgets are prepared and actual results are compared with budgeted figures to control performance.

Question 5

What is MBO?

Accepted Answer

MBO (Management by Objectives) is a system in which objectives are jointly set and performance is evaluated against those objectives.

Question 6

What is variance?

Accepted Answer

Variance is the difference between standard (budgeted) performance and actual performance.

Question 7

Explain the steps in the control process.

Accepted Answer

Steps in the **control process** are:

1) **Setting standards** (targets for quantity, quality, time, cost).
2) **Measuring actual performance** using reports/KPIs.
3) **Comparing** actual performance with standards.
4) **Analysing deviations** to find reasons.
5) **Corrective action** to remove causes and improve performance.

Flow (write/draw): Standards → Measurement → Comparison → Analysis → Corrective action → Feedback

Question 8

Differentiate between feedforward, concurrent and feedback control.

Accepted Answer

Types of control differ by timing:

| Basis | **Feedforward** | **Concurrent** | **Feedback** |
|---|---|---|---|
| When applied | Before work starts | During work | After work |
| Nature | Preventive | Real-time | Corrective/learning |
| Example | raw material inspection | supervision on line | sales report vs target |

Managers use all three to prevent deviations, monitor progress and learn for the future.

Question 9

State essentials of a good control system. (Any six points)

Accepted Answer

Essentials of a good control system (any six):

- **Simple** and understandable
- **Objective/measurable** standards
- **Timely** feedback
- **Economical** (benefit > cost)
- **Flexible** to change
- **Corrective** (focus on action)

These features make control practical and effective.

Question 10

Explain budgetary control and its steps.

Accepted Answer

**Budgetary control** means preparing budgets and comparing actual performance with budgets to control results.

Steps:
1) Prepare departmental budgets (sales, production, expenses).
2) Record actual performance.
3) Compare actual with budget and find **variances**.
4) Analyse reasons and take **corrective action**.

| Step | Output |
|---|---|
| Budget set | standards |
| Comparison | variance |

Thus, budgets act as standards for performance control.

Question 11

Explain MBO process (steps) and why it improves control.

Accepted Answer

In **MBO**, objectives are set jointly and performance is measured against them.

Steps:
- Set organisational objectives.
- Break into departmental/individual objectives (jointly).
- Action plans + periodic review.
- Performance appraisal and rewards.

MBO improves control because goals are **clear**, measurable and accepted by employees, so deviations are easier to identify and correct.

Question 12

Explain variance analysis and state its importance in controlling.

Accepted Answer

**Variance analysis** means comparing **standard/budgeted** performance with **actual** performance to find deviations (variances).

- **Favourable variance**: performance is better than standard (e.g., cost lower, output higher).
- **Unfavourable variance**: performance is worse than standard (e.g., cost higher, output lower).

| Step | Purpose |
|---|---|
| Compare standard vs actual | identify variance |
| Analyse causes | find reasons |

Importance: It helps managers detect problems early, identify causes, and take **corrective action** to keep performance on track.

Question 13

Explain the importance of controlling in an organisation.

Accepted Answer

Controlling is important because it ensures that the organisation achieves its objectives efficiently.

### Importance (exam-style points)
- **Goal achievement**: ensures work is performed as per plan and targets are met.
- **Reduction of wastage**: identifies deviations in cost/time/quality and corrects them.
- **Improves efficiency**: performance standards and KPIs improve productivity.
- **Better coordination**: aligns departmental results with organisational objectives.
- **Facilitates decision-making**: provides feedback reports for timely decisions.

| Control step | Benefit |
|---|---|
| Measurement + comparison | early detection of problems |
| Corrective action | prevents recurrence |

### Conclusion
Thus, controlling acts as a feedback mechanism that improves performance and supports continuous improvement.

Question 14

Explain the control process with a neat flowchart and give a suitable example.

Accepted Answer

The **control process** ensures actual performance matches standards.

### Flowchart (draw in exam)
Standards → Measurement → Comparison → Deviation analysis → Corrective action → Feedback

### Example
Suppose monthly sales standard is **100 units**, but actual sales are **80 units**.
- Manager compares results and identifies negative **variance** (20 units short).
- Analyses reasons: poor promotion, stock-outs, competitor offer.
- Takes corrective action: increase promotion, ensure inventory, train sales team.

### Conclusion
Control is not only finding faults; it is identifying reasons and taking corrective steps to achieve planned objectives.

Question 15

Explain MBO (Management by Objectives) and discuss its advantages and limitations.

Accepted Answer

MBO is a management approach where **objectives are set jointly** by managers and subordinates and performance is evaluated against these objectives.

### Advantages
- **Clarity of goals** and priorities.
- Improves **motivation** due to participation.
- Better **communication** and coordination.
- More objective performance appraisal.

### Limitations
- Time-consuming paperwork if poorly designed.
- Difficult to set measurable objectives for some jobs.
- Needs training and strong top management support.
- May promote short-term targets if not balanced.

| Side | Key points |
|---|---|
| Advantages | clarity, motivation, communication |
| Limitations | time, measurement issues |

### Conclusion
MBO is effective when objectives are realistic, measurable and regularly reviewed with feedback.

Controlling: Control Process, Techniques, Budgetary Control and Management by Objectives (MBO)

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