Management Principle and Application Unit 5 : Controlling Notes For 3rd Semester As per CBSE New syllabus - Guwahati University | The Treasure Notes

SHORT TYPE QUESTIONS & ANSWERS 1. What is control? Ans: Control can be defined as the process of evaluation of performance and the implementation of

Management Principle and Application Unit 5 : Controlling Notes For  3rd Semester As per CBSE New syllabus - Guwahati University | The Treasure Notes  ,
GU Management Principles Unit 5 

Gauhati University 3rd semester Management Principles and Applications 

Unit-5 Controlling

 Important Questions Answers 

  • Control: Concept, Process, Limitations, Principles of Effective Control, Major Techniques of control - Ratio Analysis, ROI, Budgetary Control, EVA, PERT/CPM.
  • Emerging issues in Management

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1. What is control?

Ans: Control can be defined as the process of evaluation of performance and the implementation of corrective actions to accomplish organizational objectives.

2. What is budgetary control?

Ans: Budgetary control is the process of determining various budgeted figures for the enterprise for the future period and comparing the budgeted figures with the actual performance for calculating variances, if any.

3. What is cost control?

Ans: Cost control is a control of all the costs of an enterprise in order to achieve cost effectiveness in business operations and thus boost the output of an organization.

4. What is management by exception?

Ans: It is an important principle of management control. According to this principle only significant deviations from the standards of performance should be brought to the management's notice. It is a technique of separating important and unimportant information.

5. What is social audit?

Ans: Social audit is a systematic, study and evaluation of the organization's social performance as distinguished from its economic performance.

6. What is management audit? 

Ans: Management audit is a modern technique of controlling, in which the aim is to examine the efficiency of the management philosophies, policies, techniques etc. in successfully running an enterprise.

7. What is zero base budgeting?

Ans: Zero base budgeting is a non-business budgeting based on system where each function is justified in its entirely and each time a new budget is formulated.

8. When and where the zero-base budgeting was use at the first time? 

Ans: In the year 1962 in America the zero-base budgeting was used for the first time.

9. Who was the person to use the zero-base budgeting for the first time?

Ans: The former president of America, Jimmy Carter used the zero base budgeting for the first time when he was the Governor of Georgia for controlling state expenditure.

10. What is inv control?

Ans: Inventory control implies controlling the kind, amount, location and timing of various commodities used in and produced by an enterprise.

11. What is break-even analysis? 

Ans: Break-even analysis is a technique of determining that level ofoperation where total revenues equal to total expenses. It is the point of no profits no loss situation.

12. What is MIS?

Ans: Management Information System (MIS) is a formal method of making available to management the accurate and timely information necessary to facilitate the decision-making process and enable the organizational planning, control and operational functions to be carried out effectively.

13. What is responsibility accounting?

Ans: Responsibility accountil. is a system of accounting under which each departmental head is ma responsible for the performance of his department?

14. What is the full meaning of PERT?

Ans: Full meaning of PERT is "Programme Evaluation and Reviewing Technique."

15. What is the full meaning of CPM? 

Ans: Full meaning of CPM is "Critical Path Method."

16. What is quality circle? 

Ans. Quality circle is a group of employees that meets regularly to solve problems affecting its work area.

17. What is safety stock related to?

Ans. Safety stock is related to inventory control

18. Define budget.

Ans. It is a monetary expression of business plans and policies to be pursued in the future period of time. According to Terry "A budget is an estimate of future needs, arranged according to an orderly basis, covering some or all of the activities of an enterprise for a definite period of time.

19. What is profit and loss control?

Ans. Profit and loss control is a simple and commonly used device to find out the immediate revenue or cost factors responsible for either the success or failure of an enterprise.

20. Mention five characteristics of control?

Ans: Five characteristics of control are as follows:

(i)It is the last function of management.

(ii) It is backward looking.

(iii) It is a continuous process.

(iv) It is related to planning.

(v) Essence of control is Action.

21. Mention the steps preparing steps of production budget? 

Ans: Following four are the important steps of production budget: 

(i) Production planning.

(ii)Consideration of plant capacity 

(iii)Stock quantity to be held

(IV) Sales budget figures

22.Write the five objectives of budgetary control? 

Ans: Objectives of budgetary control are:

(i)To ensure planning for future by setting up various budgets.

(ii) To coordinate the activities of different departments.

(iii) To operate various cost centres.

(iv) Elimination of wastes and increase in profitability. 

(v) To anticipate capital expenditure for future.

23. What are the assumptions of break-even analysis?

Ans: The break-even analysis is based on the following assumption 

(i) All elements of cost can be segregated into fixed and variable components.

(ii) Variable cost remains constant per unit of output and directly in proportion to changes in the volume of output.

(iii) Fixed cost remains constant at all volumes of output.

(iv) Volume of productivity is the only factor that influences cost.

(v) There is synchronization between production and costs.

24. Mention five objectives of management audit. 

Ans: Five objectives of management audit are mentioned below :

(i) To see whether the work at all level is undertaken efficiently or not. 

(ii) If the management is not done effectively then suitable recommendations are made to tone it up.

(iii) Whether the plans and programmes are executed properly or not? 

(iv) Suggesting ways and means of increasing managerial efficiency.

(v) It also aims to help management at all levels in the effective and efficient discharge of duties and responsibilities.

25. Write the various areas covered by management audit.

Ans: The various areas covered by management audit are:

(i) Appraisal of managers. 

(ii)Economic functioning of the enterprise.

(iii) Fulfillment of major social responsibilities. 

(iv) Functioning of the Board of Directors.

(v) Soundness of organizational structure. (vi) Intensity of sales promotional efforts.

(vii) Emphasis on research and development etc.

Also Read

Unit - 1 Introduction 

Unit - 2 Planing 

Unit - 3 Organising 

Unit - 4 Staffing and Leading 

Unit - 5 Controlling


1: Describe the characteristics of controlling

Ans: Following are the characteristics or nature of controlling: 

(a) Managerial function: Control is a managerial function. It is the task of every line manager. A non-manager is not required to perform control functions.

(b) Pervasive function: Controlling is all pervasive function. Controlling exists at every management level. (Terry) Every manager has to exercise control over the activities and behavior of his subordinates. However, the scope of control varies by level of managers.

(C) Universal process: The elements and nature of control process are universal. The control process remains the same regardless of the activity involved or its location in the organization. (G. Dessler) Every control process involves four steps or elements - (i) Fixing standards, (ii) Measuring actual performance, (iii) Comparing performance with standards and detecting deviation and (iv) Taking corrective action if required. All these steps are involved in every control process.

(d) Continuous process: Control is a continuous and never ending process. As long as organization exists, managerial control continues to exist. It is a continuous process of setting standards, evaluating the actual performance and correcting the performance if it deviates from the standards.

(e) Dynamic process: Control is a dynamic process. It is not static. It involves continuous review of standards in the light of changing situations and ensuring performance in conformity with the standards. Thus, this process is subject to change with the change in the situations.

(f) Positive and constructive process: Controlling is a positive and constructive process. The purpose of controlling is positive because it aims at making things happen as desired. Terry and Franklin have rightly alarmed that, "controlling should never be viewed as negative in character. It is a managerial necessity and not an impediment or a hindrance."

(g)Goal-oriented function: Control is a goal-oriented function. Objective of controlling is to assure that actions contribute to the goal accomplishment (Robert Abbanese). Thus, control is not an end in itself. It is a means to achieve desired results.

(h) Action oriented: Control is an action-oriented function. It implies taking some corrective action to achieve desired performance. Mere evaluation of actual performance is not control. Taking suitable action for correcting the deviation from desired performance is the essence of control. Thus it helps in determining whether the activity is a achieving the desired results (Haynes and Massie).

(i) It is forward looking: Control is forward looking. It aims at future. It not only aims at improving the current performance but also provides standards forfeiture performance.

(j) Controlling and planning are twins: Control is one function of management and its twin is planning. In other words, controlling and planning are closely related. They can be said as two sides of a coin. These functions cannot be separated. Without objectives and plans, control is not possible. (Weihrich and Koontz).

2. Discuss the need of control. 

Ans: The needs of control is described in the following sub heads:

(a) Smooth functioning of the enterprise: According Peter F. Drucker, Control maintains the equilibrium between ends and means, output and efforts". When there is such equilibrium, enterprise functions smoothly. In other words sound control system ensure smooth functioning of the enterprise. It ensures achievement of long term and short term goals by maintaining equilibrium between ends and means and output and efforts.

(b) Managing large organization: Modern large organization use vast geographical market area and use complex distribution network. Thus their working is influenced by many factors simultaneously. In such a situation uniformity of action and behavior in entire organization can be ensured only through effective control system.

(c) Maintaining competitiveness: To become competitive is one thing. But to remain competitive over a long period of time is a big challenge. Maintaining comprehensiveness requires effective control. Through effective control, managers may use their available resources judiciously and remain competitive.

(d) Attainment of goals: Control is essential in order to attain organizational goals, An effective control system ensures that activities are completed in ways that lead to the attainment of organization goals (Robbins and Coulter)

(e) Ensures success of planning: Control is the function intended to ensure that everything occur in conformity with plans. Thus, control is the essential to the success of planning. 

(f)Facilitates decision-making: It has been rightly said that executive decisions are primarily control decisions. Control system finds deviations in actual performance from the standard. Managers have to decide how to correct the deviations. Thus, control system facilitates managers to decide about follow up actions.

(g) Delegation and decentralization: Control system is essential for the success of delegation and decentralization of authority. No delegation or decentralization of authority can produce desired results without proper control system.

(h) Effective direction: According to Peter F. Drucker, "The synonymous to control is direction". It means, effective process management can ensure that actions are efficiently and effectively directed towards objectives of the organization. 

(i) Promotes co-ordination: Effective control system ensures unity of direction. This, is turn, ensures unity and uniformity of actions and behaviour. These develop spirit of co-operation among the employees. This ultimately promotes co-ordination of efforts among all employees and departments.

(j) Enhances motivation and morale: An effective control system is vital to the employee motivation and morale. Controlling helps employees to do their work better to win respect. It serves as challenge and opportunity to improve performance. Effective control system ensures judicious evaluation of the employees' efforts and adequate rewards. It safeguards them against raw deal. Consequently it enhances employees' motivation and morale.

(k) Ensures discipline and honesty: Effective control system causes every organization member to comply the norms.

3. Explain the process of Control. 

Ans: Control is a continuous or ongoing dynamic process. It may involve many steps. Usually control process consists of the following steps -

(a) Establishment of Standards.

(b) Measurement of Performance. 

(c) Comparison of Performance with Standards.

(d) Taking Corrective action.

(a) Establishment of Standards: The first step in the process of control is the establishment of standards of performance. It may be noted that standards are the objectives or plans against which actual performance can be measured.

Standards may be in several forms but they should be tangible, verifiable and measurable. More specifically standards should be qualitative as well as in quantitative terms. The performance standards are generally classified into four categories.

(i) Productivity Standards: These standards state the amount/ number of product or service to be produced during a given time period. 

(ii) Time Standards: These standards state the length of time to be allowed to make a certain product or perform a certain service. 

(iii) Cost Standards: These standards state the cost associated with producing a product or service. 

(iv) Quality Standards: These standards set the level of perfection desired. 

(v) Behavioral Standards: These standards prescribe the desired type of behavior of employees in an organization. Standards to be effective, should satisfy the following conditions 

(i) Standards should be fixed in all the key areas of business.

(ii) They should be consistent with the goals and policies of the organization.

(iii) They should be as far as possible, expressed in quantitative terms. Such standards can reduce subjectivity.

(iv) They should be precise and tangible so that everyone can understand them easily.

(v) They should focus on achievement of results and not on procedures. 

(vi) They should be capable of achieving with reasonable effort, cost and time.

(vii) They should be flexible and capable of being adapted to changing circumstances.

(b) Measurement of performance: The next step in the control process is the measurement of actual performance. Actual performance may be measured through personal observation, samples, report, accounting statements etc. But managers should carefully select the methods and time measurement. Measurement methods may be quantitative as well as qualitative or a combination of both.

(c) Comparison of performance against standards: The third step in the control process is the comparison of actual performance with the standards. At this step, manager finds out the degree of variation or deviation between actual performance and the standards. Where manager finds no deviation, no further action is required. Then the control process is deemed to have completed.

When deviation is found in the performance, manager has to find out the extent of deviation. If the deviation is within the tolerance limits, manager need not bother. However, if the deviation exceeds the tolerance limits, the manager's attention is needed. In such a case manager has to take some corrective action.

(d) Taking corrective action: The fourth and final step in the control process is to take corrective action. At this point, manager should find out the cause of deviation. If the cause is beyond the control, manager can do nothing. If the cause is controllable, manager may either, (a) correct actual performance, or (b) revise the standards. Manager may correct actual performance by (i) providing training, (ii) revising compensation plan, (iii) redesigning job, (iv) changing the strategy, (v) changing the organizational structure and so on. Where the deviation has been the result of faulty and under realistic standard, manager should revise the standard. The above stated four steps constitute an effective control process. This control process is basic and universal. It essentially remains the same regardless of the activity involved at all the level of manager.

4. What are the principles of control?

Ans: ate professors Koontz and O'bonnell and many other experts have laid down certain principles of control. Some of the basic principles of control are summarized as follows

(a) Principle of standards: This principle requires that for ensuring effective control, accurate and objective standards should be specific and capable of being measured. The workers being measured will generally accept good standards as fair and reasonable.

(b) Principle of Objectives: This principle states that control must contribute to the achievement of objectives. In other words, control must facilitate the accomplishment of organizational objectives.

(c) Principle of strategic point of control: This principle states that for effective control manager's focus should be on strategic or key points of performance. Effective and efficient control requires focus on those crucial activities or operations where variation from standards would cause greatest harm.

(d) Principle of efficiency of control: This principle states that control system should be able to detect deviations quickly and to take corrective action immediately with minimum of cost. The results of the control should be worth their cost, both in monetary and human term.

(e)Principle of control of responsibility: This principle holds that control should be exercised only by the manager responsible for the execution of the particular plan.

(f) Principle of future-directed control: This principle states that effective control system should aim at preventing present as well as future deviations from the standards.

(g) Principle of direct control: This principle states that control system should be designed to maintain direct contact between the controller and the controlled. Such a control system will ensure high quality of managerial actions and behavior.

(h) Principle of reflection of plans: This principle requires that control system must be so designed to reflect the character and structure of plans. It will help in implementing the plans effectively.

(i) Principle of Organization suitability: This principle states that controls should be tailored to fit the organization structure, Responsibility for execution of plans and for correction of deviations should clearly be pointed out in the organizational structure. (j) Principle of individuality of controls: This principle states that controls must be designed to meet the needs of the individual manager. More specifically, control system should be tailored to suit the personality, quality and authority of the manager.

5. What are the essentials of effective control system?

Ans: An effective control system should meet the following requirements: 

(a) Goal-oriented: A control system is effective only when it is goal oriented. Therefore, before formulating a control system, its goals should be and properly understood by all concerned. Moreover, everyone should be made known what is his role and what is expected of him to contribute to the system.

(b) Accurate: A control system should be accurate. It must generate accurate and reliable information. Inaccurate information from a control system may cause the managers to take inappropriate action or no action.

(c) Timeliness: Control system should be able to provide timely information. The best information has little value if it is delayed. Hence, control system should be able to receive and evaluate information quickly  nd timely for timely corrective action.

(d) Objective: An effective control system should be as objective as possible and not biased. It should therefore be reasonable to those about whom information is being received and evaluated.

(e) Understandable: A control system may fail if it cannot be understood by the users i.e. employees. The employees may ignore difficult system and very purpose of the system may be defeated. Hence, a control system should be easy to understand.

(f) Flexible and forward looking: The modern organization operates in a dynamic environment where change is inevitable. Hence, control system should be flexible and forward looking.

(g) Economical: A control system must be economical to operate. The cost of control system should not exceed the value of its benefits, but the economy need not be exercised at the cost of effectiveness of the system.

(h) Reasonable standards: A control system should use reasonable and attainable control standards. If they are too high or unrealistic they will not be achieved and hence will not motivate employees. Therefore,the control system should enforce the standards that challenge and induce people to reach higher performance levels.

(k) Strategic Point Control: Management cannot control everything that happens in an organization. Hence, managers should focus on those points or factors that are strategic or key to the organizations performance They should operate where variation from standards would cause the greatest harm. (Robbins Coulter)

(j) Consistent to organization structure: A control system should be consistent with the organizational structure. It should be consistent with organization activity relationship as well as with the authority relationship. In other words, flow of information for control system should . correspond with the organizational relationships.

6. Explain the limitations of control. 

Ans: Though control is essential for better performance and maintenance of good standards, there are certain limitations also. Some of the limitations are discussed below 

(a) Difficulty in setting standards: There are many areas in the context of a business where measurable standards of performance just cannot be set. Important among such areas are employee morale, customer reaction, and research and development. In the absence of these control function becomes less effective.

(b) Difficulty in qualification: Sometimes standards cannot be fixed in terms of quantity. Hence, control becomes even more difficult.

(c) Influence of external factors: There may be an effective control system but external factors, which are not in the ambit of management, may have adverse effect on the working. These factors may be government policy, technological changes, change in fashion etc. The influence of these factors cannot be checked by the control system in the organization

(d) Expensive: The control system involves huge expenditure on its exercise. The performance of each and every person in the organization will have to be measured and reported to higher authorities. This requires a number of persons to be employed for this purpose. If the performance cannot be quantitatively measured then the superiors will observe it. The exercise of control requires both time and effort.

(e) Opposition from subordinates: The effectiveness of control process will depend upon its acceptability by subordinates. Since control interferes with the individual actions and thinking of subordinates they will oppose it. It may also increase the pressure of work on subordinates because their performance is regularly monitored and evaluated. The factors are responsible for the opposition of controls by subordinates.

(f) Difficulty in pinpointing responsibility: Control process is concerned with damnifying the factors responsible for deviations. But, in modern times, it is difficult to do so, because number of persons are concerned with the performance of a single job.

(g) Time consuming: There are cases when control becomes time consuming exercise. It is due to the nature of techniques used and the work itself.

(h) Limits of corrective action: Sometimes deviations are found but no corrective action is possible. Sometimes, corrective action cannot be taken quickly and damages cannot be controlled.

7. Explain the traditional techniques of control? 

Ans: The traditional techniques of control are discuss below: 

(a) Personal Observation: Personal observation technique is the oldest and most important technique of control. Under this technique, managers occasionally visit personally the subordinates at work place and observe their performance. If they find any deviation, they give instructions on the spot.

(b) Setting examples: It is the old saying that "example is better than perceptions". Some managers follow this saying and put good examples of performance before subordinates and expect the same from them. Examples set by managers become the norm of behavior for the subordinates.

(c) Plans and policies: Organizational plans include strategies, policies, procedures, methods, rules, programmes etc. These all are important tools that guide and control the actions of all the organization members. These prevent deviations in actions and behavior and ensure uniformity of actions and decisions. Thus, they play crucial role in controlling activities.

(d) Organization charts and manuals: Organizational charts and manuals are the document that provides a clear picture of relationship, duties and responsibilities of organization members. These can be used to compare performance of the members. Thus, these can serve as important control techniques.

(e) Disciplinary system: Disciplinary system provides for reprimand, ensures criticism, disciplinary action, punishment etc. Thus, it is a negative technique of control for minor but regular lapses on the part of an employee reprimand is issued. Where employee constantly makes mistakes or where mistakes are grave, strict disciplinary action is taken.

(f)Written instructions: Written instructions are issued from time to time to the organization members. These provide latest information and instructions in the light of changing rules and conditions. These may provide additional knowledge and even remove misconceptions of the members.

(g) Statistical data: Statistical data are important source of control statistical data are collected and presented in the form of tables, charts and graphs. They are analyzed in numerous ways such as mean, mode, standard deviations, regression and correlation. These data serve as an important role in the areas of production control, quality control, inventory control and so on.of production department. The requirement of materials is determined productwise. The rate of consumption of raw materials is also determined. The number of units to be produced multiplied by the rate of consumption will give the figure of materials required. The stocks of materials required in hand at any time are added to the materials required for production. The opening stock of materials is deducted from the figures determined above. In this way, the requirements of materials in units will be determined. The units of materials required multiplied by the rate per unit of raw materials will give us a figure of material cost. The raw materials budget will serve the following purpose:

(a) The purchase department will be able to plan the purchase of raw materials at different times.(b) It will enable the fixation of minimum stock level, maximum stock level and re-ordering level.(c) The raw materials purchase budget will be determined. (d) The budgeted cost of raw materials will be determined.

(h) Direct Labor Budget: The labor required for production may be classified into direct and indirect labor. The labor required for manufacturing the product is known as direct labor. The labor, which cannot be specific with production, is called indirect labor. Though two budgets may be prepared for direct and indirect labor but from costing point of view only direct labor budget is prepared because indirect labor is made a part of manufacturing overheads.

Labor budget is useful for anticipating labor time required for production. It also helps in determining the finances required for labor. The personnel department is also able to make arrangements for recruitment of workers etc.

(i) Manufacturing overhead cost budget: The manufacturing overheads cost is that part of works cost which arises from indirect labors, indirect materials, overheads and other factory expenses. Manufacturing cost is excluded from direct m rials and direct labor. A manufacturing overheads cost may be classified into fixed cost, variable cost and semi variable cost.

10. Discuss the various advantages of budgetary control. 

Ans: The budgetary control system helps in fixing the goals for the organization as a whole and concerted efforts are made for its achievements. It enables economies in the enterprise. Some of the advantages of budgetary control are -

(a) Maximization of profits: The budgetary control aims at the maximization of profits of the enterprise. To achieve this aim, a proper planning and co-ordination of different functions are undertaken. There is a proper control over various capital and revenue expenditures. The resources are put to the best possible use.

(b) Co-ordination: The working of different departments and sectors is properly co-ordinated. The budgets of different department have a bearing on one another. The co-ordination of various executives and subordinates is necessary for achieving budgeted targets.

(c) Specific Aims: The top management decides the plans, policies and goals. All efforts are put together to reach the common goal of the organization. Every department is given a target to be achieved. The efforts are directed towards achieving some specific aims. If there is no definite aim then the efforts will be wasted in pursuing different aims.

(d) Tool for measuring performance: By providing targets to various departments, budgetary control provides a tool for measuring managerial performance. The budgeted targets are compared to actual results and deviations are determined. The performance of each department is reported to the top management. This system enables the introduction of management by exception.

(e) Economy: The planning of expenditure will be systematic and there will be economy on spending. The finances will be put to optimum use. The benefits derived for the concern will ultimately extend to industry and then to national economy. The national resources will be used economically and wastage will be eliminated.

(f)Determining weakness: The deviations in budgeted and actual performance will enable the determination of weak points. Efforts are concentrated on those aspects where performance is less than the stipulated.

(g) Corrective Action: The management will be able to take corrective measures wherever there is a discrepancy in performance. The deviations will be regularly reported so than necessary action is taken at the earliest. In the absence of a budgetary control system the deviations can be determined only at the end of the financial period.

(h) Consciousness: It creates budget consciousness among the employees. By fixing targets for the employees, they are made conscious of their responsibility. Everybody knows what he is expected to do and he continues with his work uninterrupted.

(i) Reduces costs: In the present day competitive world budgetary control has a significant role to play. Every businessman tries to reduce the cost of production for increasing sales. He tries to have those combinations of products where profitability is more.

(j) Introduction of Incentive schemes: Budgetary control system also enables the introduction of incentive schemes of remuneration. The comparison of budgeted and actual performance will enable the use of such schemes.

11.Explain the limitations of budgetary control.

Ans: Despite of many good points of budgetary control there are some limitations of this system. Some of the limitations are discussed as follows:

(a) Uncertain Future: The budgets are prepared for the future period. Despite best estimates made for the future, the predictions may not always come true. The future is always uncertain and the situation, which is presumed to prevail in future, may change. The change in future conditions upsets the budgets assumption. The future uncertainties reduce the utility of budgetary control system.

(b) Budgetary Revision Required: Budgets are prepared on the assumptions the certain conditions will prevail. Because of future uncertainties, assumed conditions may not prevail necessitating the revision of budgetary targets. The frequent revision of targets will reduce the value of budgets and revisions involve huge expenditures too.

(c) Discourage efficient persons: Under budgetary control system the targets are given to every person in the organization. The common tendency of people is to achieve the targets only. There may be some efficient persons who can exceed the targets but they will also feel contented by reaching the targets. So budgets may serve as constraints on managerial initiatives.

(d) Problem of Co-ordination: The success of budgetary control depends upon the co-ordination among different departments. The performance of one department affects the results of other departments. To overcome the problem of co-ordination Budgetary officer is needed. Every concern cannot afford to appoint a budget officer. The Lack of co ordination among different departments results in poor performance. 

(e) Conflict Among Different Departments: Budgetary control may lead to conflicts head functional departments. Every departmental head worries for his departmental goals without thinking of business goals. Every department tries to get maximum allocation of funds and this raise a conflict among different departments.

(f) Depends upon support of Top Management: Budgetary control system depends upon the support of top management. The management should be enthusiastic for the success of this system and should give full support for it. If at any time there is a lack of support from top management then this system will collapse.

12. Discuss in details the Emerging Issues and Challenges in Management. 

Ans:-(a) Globalization: Globalization phenomenon is getting popular these days. Globalization of business refers to the free flow of goods service, technology, labor, capital information, across the national boundary; it is closer economic integration among different countries in terms of flow of good service, capital labor and technology. Globalization is the tendency of expanding business in different countries. Managers have to work in boundary less world. There is no territory or barrier in export and import business. Globalization invites global competition. Organizations which were competing locally with local competitors now they have to compete with global competitors. It is very difficult to organization to survive and develop in such situation. Organizations should increase quality of product and reduce cost which is a challenge for manager. Many organizations are becoming global these days. They are running their business in different countries with different culture, climate, and geography, political and economic system. It is a challenging work for managers to prepare executives officers who can run business in such countries.

(b) Ethics and Social responsibility: The decision made by managers in organizations have a broad reach both inside and outside the organizations. Thus, managers must be concerned with ethics, and social responsibility. Many organizations today are taking step to enhance the ethical standards of their managers and to avoid legal or public sentiment problems.

(c) Workforce diversity: Modern organizations are characterized by workforce diversity. Diversified workforce is the reality of business these days. Organizations are becoming heterogeneous in terms of ethnicity, gender, nationality, age group, etc. People having different religions, different nationality works together under one roof. Different people have different nature and they show different behavior because they come from different background. How to manage such diversified workforce is a great challenge for managers. If such diversified workforce is managed properly, organization will be highly benefited because they also bring diversified skill and knowledge. But, if they are not managed properly, they create serious problem.

(d) Empowerment: Decision making is pushed down to the operating level. Workers are now being given the freedom to make choice about the schedule, procedures, and solving work-related problems. Earlier managers were encouraged to get their employees to participate in the work-related decision. Now managers allow employees full control of their work. Thus managers engaged in empowering employees. Similarly, the manager provides more information to employees to make them aware of the problem and the prospects of their organization.

(e) Information Technology: Today's managers must manage information technology(IT) and in e-business world. IT must be selected and implemented with the end user and work to be accomplished firmly in mined to be effective. The IT choices available to modern managers far exceed those that were available just a few years ago.

(f) Building a Competitive Advantage: Increasing Efficiency in Reducing the number of resources used to produce goods and services. Also, increasing Quality Introducing Total Quality Management (TQM) to improve quality. Similarly, to increasing Speed, Flexibility, and Innovation Adapting to bring new products to market faster. Increasing Responsiveness to Customers Empowering employees to deal with customers.

(g) Technological advancement:- How to utilize advanced and sophisticated technology has become another challenge for management.Technology has developed beyond the expectation of anybody in the world over last 100 years. Tremendous advancement has been made in production, distribution and information technology Managers must musnage all this technology with the development of computer, the face of information technology has absolutely changed. Introduction of internet, email and other electronic media, have benefitted organizations in the field of productions, distribution and other areas of business. Decision making have been facilitated by information technology Technological advancement has changed the nature of job. Most of the jobs which were performed by unskilled and semi-skilled labors previously, now they are performed by skilled labors. Number of white collar job is increasing and blue collar jobs are decreasing. Organization must train their employees about new technology. Only with new technology, Organization can compete with other competitors.

(h) Quality and productivity: Another area of interest to emerge in recent years has been quality, productivity and their interrelationships. As Japanese manufacturers began beating out U.S. competitors in quality comparisons, Western managers soon began taking a more serious look at Total Quality Management(TQM). Hence, managers have become more cautions to increase the productivity of their employees.

(i) Innovation and change: The innovation of new knowledge and change of expectation of stakeholders are emerging challenges to the present manager or management. Where facing the change is a critical challenge to the manager. It or change may occur in the attitude and behavior of stakeholders like competitors, customers, employees, suppliers, and lenders. Thus, it is an important responsibility of managers to handle such a change in a scientific and practical way.

(j) Employee Development: It is critical to make sure that employees keep a vested interest in the work. Employee burnout and a lack of enthusiasm about the work can often lead to slowed production and lower output. This is a recipe for disaster for managers that are trying to keep up production and quality. To make sure that your employees continue the same level of enthusiasm, be certain to give them plenty of opportunities for training. This will make them feel appreciated and valued as a part of the team. By investing in employees, you are investing with the company for its growth and development.

(k) Customer Satisfaction: Managers must always be aware of their level of customer satisfaction with their product or service. You must be certain to always keep your ear to the ground and stay connected with your customers. If you are a restaurant owner, for instance, you must speak directly to the customers and get their feedback. Managers often become very busy with work and often neglect to get up close to what is going on. Be certain to do frequent employee performance reviews to ensure quality control and customer satisfaction.

(l) Knowledge management: Employees are the primary source of knowledge. And as far as possible their ideas should be accumulated to prepare plans and policies. It is due to the expectation of society such as new ideas, new things and creativity in the product or service from any organization. And, on the basis of requirement, it is essential to hire new knowledge from outside.

(m) Multicultural effects: An innovation of modern communication and transportation system has tied the multi-cultured people together. They work together to meet their common and professional goals or objectives. In the present context, the involvement of cross-cultural professions in the organization is continuously increasing. Therefore, the involvement of multicultural people having different traditions, values, social attitudes, religious beliefs.

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13. Explain the Recent Trends in Management in details. 

Ans: Recent trends in management refer to the latest managerial practices that managers use to effectively manage their employees. As the market situation evolves, the managerial trends also evolve and change. These changes are subject to the market conditions of that time period. The most popular recent trends in management are Total Quality Management, Risk Management, Crisis Management etc. Let's understand in detail the following topics:

(i) Total Quality Management: Quality is one of the most important factors determining the success of a business. Customers always consider the quality of a business's goods and services while purchasing them. In fact, in some cases, quality gets prominence over price as well.

Good quality of products always gives every organization a strong edge over its competitors. It also rewards the business with customer patronage, word of mouth and goodwill. It is because of these benefits that total quality management has become so important. Reasons like these have lead to quality certification standards becoming so important these days. Companies often flaunt their ISO certification rankings in advertisements to earn goodwill and gain customers.

With the emergence of newer ways of doing business, the importance of quality management has only increased. Its principles have seen tremendous change over time under modern service-oriented economies. Previously, only business entities took quality management seriously. These days, however, even governments and NGOs focus on quality management. This shows that apart from consumers, even common citizens can be the focus of quality management. Another thing one needs to understand is that quality management does not relate to just production-related functions. Other managerial activities like planning, organizing, controlling, etc. also require quality standards.

(ii) Crisis Management : One can never predict when a tragedy may strike. We can plan and try to prevent mishaps but they can still happen. Crisis management in such conditions is one of the most important functions of managers. They must always be able to rebuild their organization after a crisis occurs.

A crisis is basically any mishap, tragedy or ill event that carries negative effects. It causes damage to an organization, its members, its business or customers. It can even affect an organization's reputation and legal or financial position. As the expression suggests, crisis management is simply the act of handling a crisis effectively. It refers to the response of an organization to an incident that can affect it negatively.A business can anticipate crisis situations that may strike it but it can never completely prevent them. It is practically impossible to prohibit tragedies from occurring. Each kind of tragedy carries unique effects. Not all crisis situations have common features. Hence, managers have to understand each possible crisis and deal with it differently.

(iii) Risk Management: The concept of risk management originates from the business of insurance. It has assumed significance over the years as an important function of management. It basically consists of five processes that aim to mitigate business losses. No organization can completely eliminate risks but it is certainly possible to prepare for them. Risk management basically means the identification and mitigation of losses. It is a systematic process by which an organization identifies, analyzes, prepares and reduces losses.

Apart from that, it also focuses on helping a business find profitable opportunities. Every business organization faces an unavoidable influence from its external and internal environments.

Management of risks reduces the chances of such factors affecting an organization negatively. Managers can either avoid or reduce risk or even transfer it to another entity.

(iv) Resistance to Change: One of the most important tasks of managers is to facilitate changes smoothly. Change is always inevitable but so is resistance to change. It is basic human nature of people to try and keep their methods and customs constant. This is where change management comes into play. An organization always must strive to adapt to change if it wants to be successful.

Change is basically a variation in pre-existing methods, customs, and conventions. Since all organizations function in dynamic environments, they constantly have to change themselves to succeed. Change management contains several strategies that help in facilitating the smooth adoption of such changes. One of the most important facets of change management is resistance to change. It is simply human nature to counteract any changes and maintain the status quo.But since change is inevitable, instead of resisting changes the organization must try to implement them with minimum hassle.

(v) Change Through Management Hierarchy : It is usually the top level of a management hierarchy that makes the most important changes in any organization. The lower level only implements these changes. Such a hierarchy often misses out small and minute details of planning. Managers must, hence, understand how to plan for changes under such conditions.

The term management hierarchy basically refers to a structure of superior and subordinate rankings. Almost every small and large organization follows this structure. Under this hierarchy, members of an organization follow a fixed chain of command.

(vi) Concept of Change Management : Change is often said to be the only constant in one's life. This statement holds true for business organizations as well. External and internal factors almost always lead to changes in the way things happen. One of the most important tasks of managers is to implement these changes smoothly. We refer to this process as change management.

Changes in its external and internal environment constantly affect every business's activities. These changes can happen either at individual levels or at the organizational level. Furthermore, it affects employees as well as managers. It is also basic human nature to resist changes, especially drastic ones. Since an organization's success depends on how well it adapts to change, management of these situations is crucial. This is where change management comes into play.

(vii) Role of International Managers: There are some basic functions that every business manager has to perform routinely. These functions apply to international managers as well. Due to the peculiar nature of international business, however, international managers have to perform em a little differently.

International business basically refers to commercial transactions that involve more than one country. Globalization has made it possible for business organizations and nations to carry out such transactions.Business managers have to perform several important roles to earn profits and minimize losses. Since cross-border transactions require large-scale operations, management becomes very difficult. Due to this reason, international management has gained immense significance over the years.

(viii) International Business and Global Practices: With the advent of globalization, global business practices and international business have become common phenomena. Large companies and MNC's often operate in more than one country. Managing such cross-border operations requires a thorough understanding of local cultures, practices, laws and business environments. International managers, thus, have to play several important roles in their businesses.

International business basically means commercial transactions that involve two or more countries. These transactions can occur between private entities as well as government agencies. The only prerequisite of such transactions is that they should involve multiple nations.

International management refers to the practice of managing these kinds of international businesses and global practices. This field of management has gained a lot of prominence after globalization. Even small and medium sized companies these days transact with foreign entities.


Also Read

Unit - 1 Introduction 

Unit - 2 Planing 

Unit - 3 Organising 

Unit - 4 Staffing and Leading 

Unit - 5 Controlling

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