the control function

8/18/2019 The Control Function

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The Control FunctionThe Control Function

• DefnitionDefnition

““ Management control is a systematic efort to set Management control is a systematic efort to set

perormance standards with planning objectives, to designperormance standards with planning objectives, to designinormation eedback systems, to compare actualinormation eedback systems, to compare actual

perormance with these predetermined standards, toperormance with these predetermined standards, to

determine whether there are any deviations and to measuredetermine whether there are any deviations and to measure

their signicance, and to take any action required to assuretheir signicance, and to take any action required to assure

that all corporate resources are being used in the mostthat all corporate resources are being used in the most

efective and eficient way possible in achieving corporateefective and eficient way possible in achieving corporate

objectives.objectives.

! "obert #! "obert #

Mockler Mockler


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ImportanceImportance

– Coping with UncertaintyCoping with Uncertainty

– Detecting internal irregularitiesDetecting internal irregularities

– Identiying opportunitiesIdentiying opportunities

– Handling complex situationsHandling complex situations

– Decentralising authorityDecentralising authority

– Minimising costsMinimising costs


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Basic Control ProcessBasic Control Process

• Determining Areas to controlDetermining Areas to control

• sta!lishing standardssta!lishing standards

• Measuring perormanceMeasuring perormance

• Comparing perormance against standardsComparing perormance against standards

• "ecognising good or positi#e perormance"ecognising good or positi#e perormance

• $a%ing correcti#e action when necessary$a%ing correcti#e action when necessary

• Ad&usting standards and Measures when necessary Ad&usting standards and Measures when necessary


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Types of ControlTypes of Control

• Controls !ased on $imingControls !ased on $iming

'tages o production'tages o production $ype o$ype o DescriptionDescription

ControlControl

CapitalCapital

"M"M Inputs are montioredInputs are montiored

Input –Input – M%t InoM%t Ino (eed orward(eed orward to ensure that theyto ensure that they

)uiptment)uiptment ControlControl meet the stds necessarymeet the stds necessary

oror transormation processtransormation process


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ControlControl

*lanning*lanning

+rganising+rganising "egulates"egulatesongoingongoing

$ransormation$ransormation acti#ities that are a partacti#ities that are a part

*rocess –*rocess – 'ta,ing'ta,ing ConcurrentConcurrent o theo the

trans process totrans process to ControlControl ensureensure

that they conorm tothat they conorm to

organisational stdsorganisational stds-eading-eading

ControllingControlling


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ControlControl

.oods.oods xercised ater a productxercised ater a product or ser#ice has !eenor ser#ice has !een

produced to ensure that theproduced to ensure that the

'er#ices'er#ices (eed!ac% (eed!ac% ControlControl fnal output meets )ualityfnal output meets )uality

standards and goalsstandards and goals

+utput+utput

*rofts*rofts

/aste materials/aste materials


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Cybernetic & Non-Cybernetic & Non-

Cybernetic ControlCybernetic Control• Degree o human discretion re)uiredDegree o human discretion re)uired

– Cy!ernetic control systemCy!ernetic control system

• 'tep 0 1 Defne precisely what characteristics are to !e controlled'tep 0 1 Defne precisely what characteristics are to !e controlled• 'tep 2 1 'tandards set or each characteristics'tep 2 1 'tandards set or each characteristics

• 'tep 3 1 'ensor !uilt to measure characteristics'tep 3 1 'ensor !uilt to measure characteristics

• 'tep 4 1 Measurements trnsormd to a signal to !e compared to std'tep 4 1 Measurements trnsormd to a signal to !e compared to std

• 'tep 5 1 Di,erence is sent to decision ma%er'tep 5 1 Di,erence is sent to decision ma%er

• 'tep 6 1 I di, is signifcant trnsmted to e,ector that causes system'tep 6 1 I di, is signifcant trnsmted to e,ector that causes system

to counteract de#iationto counteract de#iation• 'tep 7 1 +ten system may allow e,ector to ta%e one o many'tep 7 1 +ten system may allow e,ector to ta%e one o many

actionsactions


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• 8on9Cy!ernetic control 'ystem8on9Cy!ernetic control 'ystem


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Control TechniquesControl Techniques

• Ma&or Control 'ystemsMa&or Control 'ystems

– (inancial Control(inancial Control

– :udgetory Control:udgetory Control

– ;uality Control;uality Control

– In#entory ControlIn#entory Control

– +perations Management+perations Management

– Computer9!ased inormation systemsComputer9!ased inormation systems


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• Managerial le#els and ControlManagerial le#els and Control

'ystem'ystem


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Financial ControlFinancial Control

– -i)uidity-i)uidity

– .eneral fnancial conditions.eneral fnancial conditions

– *rofta!ility*rofta!ility


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• :alance sheets:alance sheets

–

• Income 'tatementIncome 'tatement

–


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• Cash –(und ow statementCash –(und ow statement

– were utilised=>


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• "atio Analysis"atio Analysis

– Current "atioCurrent "atio

– In#entory turno#er ratioIn#entory turno#er ratio

– De!t ratioDe!t ratio

– 8et proft ratio8et proft ratio

– "eturn on in#estment"eturn on in#estment


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Budgetory ControlBudgetory Control

• profts=>


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Quality ControlQuality Control

• ;uality Circles;uality Circles

• $;M$;M


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Inentory ControlInentory Control

• "aw material"aw material

• /or%9in9progress/or%9in9progress

• (inished products(inished products


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• Modern Control techni)uesModern Control techni)ues

– *"$*"$

– C*MC*M

– Human resources AccountingHuman resources Accounting


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• MI'MI'


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!equirements for e"ectie!equirements for e"ectie

controlscontrols

• Control should reect plansB positions and structuresControl should reect plansB positions and structures

• $hey should !e understanda!le$hey should !e understanda!le

• $hey should !e cost9e,ecti#e$hey should !e cost9e,ecti#e

• Controls should identiy only importantma&orControls should identiy only importantma&orexceptionsexceptions

• Control systems should !e exi!leControl systems should !e exi!le

• Control systems should pro#ide accurate inormationControl systems should pro#ide accurate inormation

the control function

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