Controlling Class 12 Notes: CBSE Business Studies Chapter 8

Definition

“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. 

Meaning

Controlling is a process that entails comparing actual performance to the desired outcome, to ensure the achievement of objectives. Setting standards, measuring actual performance, and taking corrective action in case of deviations are all part of the managerial role of controlling function. 

Importance of Controlling

1. Achieving Organisational Goals: Tracks progress towards objectives and addresses deviations to ensure goals are met.

2. Judging Accuracy of Standards: Assesses the accuracy of standards by monitoring changes in the environment.

3. Making Efficient Use of Resources: Minimises resource waste through effective resource management.

4. Improving Employees’ Motivation: Clarifies expectations and performance requirements, motivating employees to perform better.

5. Ensuring Order and Discipline: Creates an orderly and disciplined work environment through careful monitoring.

6. Facilitating Coordination in Action: Ensures all departments and employees follow set standards and goals, promoting overall coordination.

Limitations of Controlling

• Difficulty in Setting Quantitative Standards: When standards are hard to measure, the effectiveness of the control system diminishes.

• Little Control on External Factors: Factors such as government regulations, technological changes, and competition are beyond the organisation's control.

• Resistance from Employees: Employees may resist being controlled or monitored, which can lead to decreased morale and conflicts.

• Costly Affair: Implementing and maintaining control systems can be expensive, requiring substantial financial, time, and resource investments.

Features of Controlling

1. Goal-Oriented: Helps to achieve defined goals or objectives, determining the success of management efforts.

2. Pervasive: Necessary in all organisations (profit, non-profit, business, or non-business) and at all management levels (top, middle, lower).

3. Continuous: Involves ongoing performance assessment and improvement to align and support staff development and success.

4. Reviews Staff Performance: Monitors performance, dedication, and issues within the staff through the controlling function.

5. forward-Looking: Helps in planning future actions if actual performance deviates from set standards.

6. Dependent on Planning: This relies on planning, as it compares actual performance against planned performance.

7. Action-Oriented: Focuses on effective coordination of resources to achieve organisational objectives through supervision and action by staff.

Relationship Between Planning and Controlling

• Planning Requires Control: Effective control is based on predefined standards set by planning. Without plans, control lacks direction.

• Control Validates Planning: Control ensures plans are effective by detecting deviations and implementing corrective measures.

• Control Assesses Planning Efficiency: By evaluating performance against plans, controlling helps refine and adjust plans and actions.

Controlling Process

1. Setting Performance Standards

• Standards are criteria used to measure actual performance and reflect organisational goals.

• They should be flexible to adjust to changes in the business environment.

• Standards can be qualitative, quantitative, time-bound, or cost-bound.

2. Measurement of Actual Performance

• Performance standards are first established, then actual performance is measured.

• Use personal observation and sample checking for objective and reliable measurement.

• Measure performance in the same terms as the standards to facilitate comparison.

• Performance can be checked during or after the completion of the work.

3. Comparing Actual Performance with Standard

• Compare actual performance to the established standards.

• Three possible scenarios:

1. Standards = Actual Performance

2. Standards > Actual Performance

3. Standards < Actual Performance

4. Analysing Deviations

• Determine permissible ranges of variation by assessing deviations from standards.

• Critical Point Control: Focus on key result areas (KRAs) crucial to success.

• Management by Exception: Focuses on significant deviations. for example, corrective action is taken when expenses exceed $10,000 or 20% of the budget.

5. Taking Corrective Action

• Implement remedial actions if deviations exceed acceptable bounds.

• No action is needed if variances are within acceptable limits.

• Corrective actions address significant deviations to align performance with standards.

Important Topics of Business Studies Class 12 Chapter 8 Controlling 

Learnings of Class 12 Chapter 8 of Business Studies

• Understanding the Concept of Controlling

• Importance and Role of Controlling in Management

• Process of Controlling: Setting Standards, Measuring Performance, and Correcting Deviations

• Benefits of Effective Controlling

• Limitations and Challenges of Controlling

Importance of Revision Notes for Class 12 (Business Studies) Chapter 8 Controlling

• Summarises Key Points: Condenses important concepts for quick review.

• Saves Time: Provides a fast way to revise before exams.

• Highlights Essentials: Focuses on crucial topics and definitions.

• Improves Memory: Helps in better retention of information.

• Enhances Exam Prep: Targets weak areas for more effective study.

• Clarifies Concepts: Simplifies complex ideas for easier understanding.

• Includes Visuals: Uses diagrams and charts for better grasp.

• Boosts Confidence: Prepares students thoroughly for exams.

Tips for Learning the BST Class 12 Chapter 8

1. Focus on core processes with illustrations and examples.

2. Draw and label diagrams for clarity.

3. Create summaries of each process.

4. Connect concepts to everyday examples.

5. Solve past exam questions to test understanding.

6. Explain concepts to others to reinforce learning.

7. Revisit material frequently to retain information.

8. Utilise platforms like Vedantu for additional support.

Conclusion

Chapter 8 on Controlling underscores the essential role of controlling in management. It illustrates how effective controlling helps achieve organisational goals, optimises resource use, and enhances employee performance. However, it also addresses the challenges such as setting quantitative standards, dealing with external factors, and overcoming employee resistance. By understanding both the benefits and limitations, managers can better implement control systems to guide their organisations toward success.

Related Study Materials for Class 12 Chapter 8 Controlling

Revision Notes Links for Class 12 Business Studies

Important Study Materials for Class 12 Business Studies