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 Controlling is the process by which a person, group, or organization consciously monitors performance and tracks corrective action. Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved 2

 Done well, it ensures that the overall directions of individuals and groups are consistent with short and long range plans.  It helps ensure that objectives and accomplishments are consistent with one another throughout an organization.

 Establish objectives and standards.  Measure actual performance.  Compare results with objectives and standards.  Take necessary action. 4

 1. Control minimizes wastage  2. Control ensures optimum utilization of resources  3. Control guides operations  4. Control increases efficiency  5. Control deals with complexity

 Pre-control  On-control  Post-control

 Pre-control Sometimes called the feedforward controls, they are accomplished before a work activity begins. They make sure that proper directions are set and that the right resources are available to accomplish them. 7

 On-control Focus on what happens during the work process. Sometimes called steering controls, they monitor ongoing operations and activities to make sure that things are being done correctly. 8

 Post-control Sometimes called feedback controls, they take place after an action is completed. They focus on end results, as opposed to inputs and activities. 9

Managers have two broad options with respect to control.  They can rely on people to exercise self- control (internal) over their own behavior.  Alternatively, managers can take direct action (external) to control the behavior of others. 10

 Internal Controls Allows motivated individuals to exercise self- control in fulfilling job expectations. The potential for self-control is enhanced when capable people have clear performance objectives and proper resource support. 11

 External Controls It occurs through personal supervision and the use of formal administrative systems.  Performance appraisal systems, compensation and benefit systems, employee discipline systems, and management-by-objectives. 12

 Break-even analysis  Budgeting  Financial ratios  Qualitative

 Break Even Analysis or Break Even Point is the point of no profit, no loss.  For e.g. When an organization 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.

 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.

 All business organizations 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 organization at the end of the specified period.  Financial statements are used to control the organization. The figures of the current year can be compared with the previous year's figures.

 Ratio analysis can be used to find out and analyze the financial statements. Ratio analysis helps to understand the profitability, liquidity and solvency position of the business.  Current ratio = Current assets/Current liabilities  Total debt ratio = Total debt/Total assets  Profit margin = Net income/Sales

 Inspection – checking the product through visual or testing examination, at the input stage, transformation stage or output stage, in terms of quality against standards.  Types of inspection:  100% inspection, Sample inspection

 In order to control the organization properly the management needs accurate information.  They need information about the internal working of the organization 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 computerized.  With MIS, managers can delegate authority to subordinates without losing control.

Features of MIS Timeliness Accuracy Relevance Concise Completeness Advantages of MIS Accurate information Relevant information Facilitates managerial functions Facilitates coordination

 Q: Explain how management information systems manage an organization through its components:  Information quantity  Information quality  Information relevancy  Information timeliness