Controlling
Domain 8 - Controlling - tests the meaning and features of control, the five-step control process, its relationship with planning, and control techniques.
Meaning and features
Controlling ensures that activities conform to plans and that deviations are corrected. It is goal-oriented, pervasive, continuous, both backward-looking (judges past performance) and forward-looking (corrects future action), and dynamic.
Control process
- Set performance standards.
- Measure actual performance.
- Compare actual with standards.
- Analyse deviations - cause and significance.
- Take corrective action.
Planning–control relationship
Planning is prescriptive, controlling is evaluative. Planning provides the standards; control provides feedback that makes planning meaningful. Planning without controlling is meaningless; controlling without planning is blind.
Techniques
Budgetary control, standard costing and variance analysis, ratio analysis, break-even analysis, statistical reports, responsibility accounting, management audit.
Two shortcuts
- Critical point control - focus on key result areas rather than everything.
- Management by exception - attend only to deviations beyond an acceptable range; routine deviations are left to subordinates.
Worked example
Standard output is 500 units a day at ₹100 per unit; actual is 440 units at ₹110 per unit. Deviations: output −12% (unfavourable) and cost +10% (unfavourable). Analysis shows a machinery breakdown caused idle time and overtime. Corrective action: a preventive maintenance schedule and renegotiated overtime rates. Reasoning: measurement alone is not control - the process must end in corrective action, and the cause must be diagnosed first.
Traps
Answers that stop at "compare and report" lose the corrective-action marks. Management by exception is not the same as critical point control.