Controlling Techniques for Management .pptx

Explanation of all the controlling techniques of management for the students.

1. CONTROL TECHNIQUES

2. CONTROL TECHNIQUES Traditional Control Techniques Modern Control Techniques — Budgeting and Budgetary Control — Return on Investment Control — Cost Control — Programme Evaluation and Review Technique (PERT) — Production Planning and Control — Inventory Control — Management Information System (MIS) — Break Even Analysis — Management Audit — Profit and Loss Control     — Statistical Data Analysis    

3. A budget is the monetary or/and quantitative expansion of business plans and policies to be pursued in the future period of time. The term budgeting is used for preparing budgets and other procedures for planning, co-ordination and control of business enterprise. So a budget is a pre-determined statement of management policy during a given period which provides a standard for comparison with the results actually achieved. BUDGETING

4. Budgetary control is the process of determining various budgeted figures for the enterprise for the future period and then comparing the budgeted figures with the actual performance for calculating variances, if any. First of all, budgets are prepared and then actual results are recorded. The comparison of budgeted and actual figures will enable the management to find out discrepancies and take remedial measures at a proper time. The budgetary control is a continuous process which helps in planning and co-ordination. It provides a method of control too. A budget is a means and budgetary control is the end-result. BUDGETARY CONTROL 

5. Cost control is a control of all the costs of an enterprise in order to achieve cost effectiveness in business operations. Cost can be classified as : fixed cost, variable cost, semi-variable cost. There may be different methods of recording cost for various products. In each method, classification, recording and allocation of expenses may be done differently. In each method there will be a system where deviations in standard or budgeted costs and actual costs will be reported to the concerned officials for taking corrective measures. The cost standards are fixed for each product or acitivity and actual cost records are also sent to the incharge of the product or activity. In case of any deviation in cost, immediate remedial measures are taken up. The regular cost control system will help in keeping cost under check. COST CONTROL 

6. Production planning and control is an important task of production manager. It has to see that production process is properly decided in advance and is carried out as per plan . Production planning is the function of looking ahead, anticipating difficulties to be faced and the likely remedial steps to remove them. Production control , on the other hand, guides and directs flow of production so that products are manufactured in a best way and conform to a planned schedule and are of the right quality. Control facilitates the task of manufacturing and see that everything goes as per the plans. PRODUCTION PLANNING AND CONTROL 

7. Inventory control or materials management connotes controlling the kind, amount, location and timing of various commodities used in and produced by the industrial enterprises. It is the control of materials in such a manner that it ensures maximum return on working capital. Inventory control is necessary for the smooth and uninterrupted functioning of production department. It’s main purpose is to maintain an adequate supply of correct material at the lowest total cost. Inventory control is exercised at three stages. (i) purchasing of materials (ii) storing of materials (iii) issuing of materials. INVENTORY CONTROL 

8. The term break-even analysis is used in two senses -narrow sense and broad sense. In its broad sense , break-even analysis refers to the study of relationship between costs, volume and profit at different levels of sales or production. In its narrow sense , it refers to a technique of determining that level of operations where total revenues equal total expenses i.e. the point of no profit, no loss. BREAK EVEN ANALYSIS 

9. Profit and loss control is a simple and commonly used overall control device to find out the immediate revenue or cost factors responsible for either the success or failure of an enterprise. As a control device it is regarded very effective in certain respects because it enables the management to influence in advance revenues, expenses and consequently even profits. PROFIT AND LOSS CONTROL 

10. Statistical data analysis is an important control technique. This analysis is possible by means of comparison of ratios, percentages, averages, trends etc. of different periods with a view to pinpoint deviations and causes. This method of control is very useful in case of inventory control, production control and quality control. The minimum and maximum control limits are fixed and deviations within these limits are allowed but if variations go beyond prescribed parameters then immediate steps are taken to correct them. Statistical control charts are prepared with the help of collected data and permissible limits are plotted. STATISTICAL DATA ANALYSIS 

11. The return on investment is computed by dividing the operating net profit (before interest and tax) by the capital employed in the concern. The following formula is used for this purpose : ROI is used to measure the overall efficiency of a concern. It reveals how well the resources of a concern are used, higher the return better are the results. RETURN ON INVESTMENT CONTROL (ROI)

12. Programme evaluation and review technique (PERT) was first developed as a management tool for coordination and early completion of Polaris Ballistic Missile Project in USA resulting in a reduction of 30 per cent time in project execution. A contemporary of PERT is CPM (Critical Path Method) and was developed in connection with maintenance and construction work. PERT is useful at several stages of project management starting from early planning stages when various alternative programmes are being considered to the scheduling phase, when time and resources schedules are laid out, to final stage in operation, when used as control device to measure actual versus planned progress. PERT uses ‘network’ as the basic tool of project management and is helpful in completing a project on schedule by co-ordinating different jobs involved in its completion. PROGRAMME EVALUATION AND REVIEW TECHNIQUE (PERT)

13. Management information system (MIS) is an approach of providing timely, adequate and accurate information to the right person in the organisation which helps in taking right decisions. So MIS is a planned and organised approach to the transferring of intelligence within an organisation for better management. The information is furnished into useful quantums of knowledge in the form of reports. An effective system of MIS collects data from all possible sources. The information is properly processed and stored for use in future. MIS is of two types : ( i ) Management operating system meant for meeting the information needs of lower and middle level management. The information supplied generally relates to operations of the business. ( ii ) Management reporting system which supplies information to top level management for decision-making. The information is presented in a way which enables management to take quick decisions. MANAGEMENT INFORMATION SYSTEM (MIS)

14. Management audit is an investigation by an independent organisation to find out whether the management is carried out most effectively or not. In case there are drawbacks at any level then recommendations should be given to improve managerial efficiency. According to Leslie R. Howard “Management audit is an investigation of a business from the highest level downward in order to ascertain whether sound management prevails throughout, thus facilitating the most effective relationship with the outside world and the most efficient organisation and smooth running internally.” MANAGEMENT AUDIT