Summary Introduction to Business Management Chapter 10 Complete

Chapter 10 (Controlling the management process)
 Assessment of actual performance against planned performance initiates a new cycle of planning, organising, leading and
control Any organisation needs control process because even the best laid plan may go wrong, the control process helps
align the company’s goals and actual performance.
 Ensure that organisation’s goals & objectives are met, and resources are used as productively & effectively as possible.
 Process of establishing & implementing mechanisms to ensure that the objectives of the organisation are achieved


 The control process is thus important due to the following reasons:
 Linked with planning, organising and leading, without control planning is pointless
 Helps companies adapt to environmental change & cope with uncertainty
 Helps limit the accumulation of error due to poor decision making
 Helps companies cope with increasing organisational size and complexity (new employees, products, equipment
 Helps minimise costs & increases output


The control process




 Step 1: Setting standards
 Establishing performance standards at strategic points is the first step
 Performance standards should be relevant, realistic, attainable, and measurable
 Performance or control standard is a planned target against which the actual performance will be compared

 Appropriate performance standards:
 Profit standards (indicate how much profit the business expects to make over a given period)
 Market-share standards (indicate what share of the total market the business is aiming to
conquer)
 Productivity standards (expressing inputs and outputs in relation to each other in relation to
productivity)
 Staff-development standards (indicate the effectiveness of training programmes for staff)

,  Step 2: Measure actual performance
 Collection of information and reporting on actual performance are continuous activities
 Continuous activities need to be measurable, for valid comparison
 Reliable reports are crucial for measuring actual achievements
 Effective control minimizes costs
 Control by exception only important differences reported to top management in large
organisations

 Step 3: Evaluate deviations
 Determine the performance gap between the performance standard and actual performance
 Important to know why a standard has only been matched, and not exceeded
 Essential to ensure that the disparities are genuine
 Determine whether the deviations are large enough to justify further investigation
 All reasons for the deviations and the relevant activities should be identified


 Step 4: Take corrective action
 Corrective actions need to be taken to ensure that deviations do not recur
 If actual achievements match standards then no corrective action is needed
 If actual achievements do not match standards, three possible actions exist:
 Actual performance can be improved to reach the standards
 Strategies can be revised to accomplish the standards
 Performance standards can be lowered or raised to make them more realistic

Types of control
 Organisations control activities and processes at various levels
 Organisations use control procedures to ensure progress towards goals and proper use of resources
 The four key areas of control include the following:
 Physical resources- inventory, quality control
 Human resources- selection and placement of employees, training / development / performance of personnel
 Information sources- market and economic prediction, environmental scanning
 Financial resources