Group Members
Wasim Reza (1900102338)Yusuf (1900103218)
Ayan Ahmad (1900103742)Mohd. Owais Sheikh
Mohd. Umam (1900103075)
(1900103690) Prajwjal Gupta (1900102678)
Mohd. Sajid (1900101207)Mohd. Shariq (1900102145)
CONTROL TECHNIQUES
Control techniques provide managers with the
type and amount of information they need to
measure and monitor performance. The
information from various controls must be
tailored to a specific management level,
department, unit, or operation.
To ensure complete and consistent information,
organizations often use standardized documents such
as financial, status, and project reports. Each area
within an organization, however, uses its own specific
control techniques
1. Direct Supervision and Observation
'Direct Supervision and Observation' is the oldest technique of controlling. The
supervisor himself observes the employees and their work. This brings him in
direct contact with the workers. So, many problems are solved during
supervision. The supervisor gets first hand information, and he has better
understanding with the workers. This technique is most suitable for a small-
sized business.
2. Financial Statements
All business organisations prepare Profit and Loss Account. It gives a summary of the
income and expenses for a specified period. They also prepare Balance Sheet, which shows
the financial position of the organisation at the end of the specified period. Financial
statements are used to control the organisation. The figures of the current year can be
compared with the previous year's figures. They can also be compared with the figures of
other similar organisations.
Ratio analysis can be used to find out and analyse the financial statements. Ratio analysis
helps to understand the profitability, liquidity and solvency position of the business.
3. Budgetary Control
A budget is a planning and controlling device. Budgetary control is a technique
of managerial control through budgets. It is the essence of financial control.
Budgetary control is done for all aspects of a business such as income,
expenditure, production, capital and revenue. Budgetary control is done by the
budget committee.
4. Break Even Analysis
Break Even Analysis or Break Even Point is the point of
no profit, no loss. For e.g. When an organisation sells
50K cars it will break even. It means that, any sale below
this point will cause losses and any sale above this point
will earn profits. The Break-even analysis acts as a
control device. It helps to find out the company's
performance. So the company can take collective action
to improve its performance in the future. Break-even
analysis is a simple control tool.
5. Return on Investment (ROI)
Return on Investment (ROI) is a tool to improve financial performance. It helps the
business to compare its present performance with that of previous years'
performance. It helps to conduct inter-firm comparisons. It also shows the areas
where corrective actions are needed.Return on investment (ROI) is a ratio between
net profit and cost of investment.As a performance measure, ROI is used to
evaluate the efficiency of an investment or to compare the efficiencies of several
different investments.It is a tool to improve financial performance. It helps the
business to compare its present performance with that of previous years'
performance. It helps to conduct inter-firm comparisons. It also shows the areas
where corrective actions are needed.A large number of companies have adopted it
as their key measure of overall performance. This yardstick is the rate of return
that a company or a division can earn on the capital allocated to it. This tool,
therefore, regards profit not as an absolute but as a return on capital employed in
the business. The goal of a business is seen, accordingly, not necessarily as
optimizing profits but as optimizing returns from capital devoted to business
purposes.This standard recognizes the fundamental fact that capital is a critical
factor in almost any enterprise and, through its scarcity, limits progress. It also
emphasizes the fact that the job of managers is to make the best possible use of
assets entrusted to them.
6. Management by Objectives (MBO)
MBO facilitates planning and control. It must fulfill following
requirements :-
1.Objectives for individuals are jointly fixed by the superior and the
subordinate.
2.Periodic evaluation and regular feedback to evaluate individual
performance.
3.Achievement of objectives brings rewards to individuals.
7. Management Audit
Management Audit is an evaluation of the management as a whole. It critically
examines the full management process, i.e. planning, organising, directing, and
controlling. It finds out the efficiency of the management. To check the efficiency
of the management, the company's plans, objectives, policies, procedures,
personnel relations and systems of control are examined very carefully.
Management auditing is conducted by a team of experts. They collect data from
past records, members of management, clients and employees. The data is
analysed and conclusions are drawn about managerial performance and
efficiency.
8. Management Information System (MIS)
In order to control the organisation properly the management needs
accurate information. They need information about the internal working of
the organisation and also about the external environment. Information is
collected continuously to identify problems and find out
solutions. MIS collects data, processes it and provides it to the managers.
MIS may be manual or computerised. With MIS, managers can delegate
authority to subordinates without losing control.
9. PERT and CPM Techniques
Programme Evaluation and Review Technique (PERT) and Critical Path Method
(CPM) techniques were developed in USA in the late 50's. Any programme consists of
various activities and sub-activities. Successful completion of any activity depends
upon doing the work in a given sequence and in a given time.
CPM / PERT can be used to minimise the total time or the total cost
required to perform the total operations.
Importance is given to identifying the critical activities. Critical activities are those
which have to be completed on time otherwise the full project will be delayed.
So, in these techniques, the job is divided into various activities / sub-activities. From
these activities, the critical activities are identified. More importance is given to
completion of these critical activities. So, by controlling the time of the critical
activities, the total time and cost of the job are minimised.
10. Self-Control
Self-Control means self-directed control. A person is given
freedom to set his own targets, evaluate his own performance and
take corrective measures as and when required. Self-control is
especially required for top level managers because they do not
like external control.
The subordinates must be encouraged to use self-control
because it is not good for the superior to control each and
everything. However, self-control does not mean no control by the
superiors. The superiors must control the important activities of
the subordinates.
