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Controlling
Unit 8
Introduction to Business Management

• Explain the purpose of control

• Identify and explain the steps in the

control process

Unit 8: Controlling • Differentiate between the various types of

Learning Outcomes control

• Discuss the characteristics of an effective

control system

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The Purpose of Control

• The employees of modern businesses do not merely work on their own, with their
own individual goals and objectives. They also work in groups and teams.

• To achieve the goals of the business, managers need to lead and motivate groups
and teams.

• Businesses use control procedures to ensure that they are progressing toward
business goals and that resources are being used properly and productively.

The Control Process

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Types of Control

01 02 03 04
The control The control The Control The control
of Physical of Financial of of Human
Resources Resources Informationa Resources
l Resources

Control of Physical Resources

TQM means that

quality is the
Control systems for responsibility of
Physical resources of these resources everyone in the
a business are its involve usage business, from the
tangible assets, such procedures, periodic chairman of the
as buildings, office inspections, and board of directors
equipment, and stocktaking, which down to clerks,
furniture, vehicles often fall within the purchasing
etc.. field of the internal managers, engineers,
audit. and the selling and
manufacturing
personnel.

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Control of Financial Resources

• Financial resources and abilities are vital to the success of the business and are at
the heart of the control process.

• Financial control is concerned with the following aspects: resources as they flow
into the organisation (for example, returns on investments), and financial
resources that are held by the business (for example, working capital and cash).

• Financial resources flowing out of the business (for example, the payment of
salaries and other expenses).

• Each of these categories is controlled so that revenues are sufficient to cover

expenses and show a profit.

Control of Informational Resources

• All the functions of management (planning, organising, leading, and controlling)

are dependent on supporting information to function effectively.

• The relevant and timely information that is made available to management

during the management process is vital for monitoring how well the goals are
accomplished.

• The faster management receives feedback on what is going smoothly or badly in

the course of the management process, the more effectively the organisation’s
control systems function.

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Control of Human Resources

The main instrument used to This entails evaluating Actual performance can be
control an organisation’s employees and managers measured against these
human resources is in the performance of their standards for feedback and
performance management. duties. action by management.

Characteristics of an Effective Control

System

Integration Flexibility Accuracy

Timeliness Simplicity

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Integration

When the controls are consistent with corporate values and culture, they work in
harmony with organizational policies and hence are easier to enforce. These controls
become an integrated part of the organizational environment and thus become
effective.

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Flexibility

The business and economic environment is highly dynamic in nature. Technological

changes occur very fast. A rigid control system would not be suitable for a changing
environment. These changes highlight the need for flexibility in planning as well as in
control.

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Accuracy

Effective controls generate accurate data and information. Accurate information is

essential for effective managerial decisions. Inaccurate controls would divert
management efforts and energies on problems that do not exist or have a low priority
and would fail to alert managers to serious problems that do require attention.

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Timeliness

There are many problems that require immediate attention. If information about such
problems does not reach management in a timely manner, then such information may
become useless and damage may occur. Accordingly controls must ensure that
information reaches the decision makers when they need it so that a meaningful
response can follow.

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Simplicity

The control system must be easy to use and understand. Because they fail to explain
the significance of their control data to the people who must utilize them, overly
elaborate and complex control systems are proven to be ineffective.

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That’s it for now

Enjoy your studies

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