CHAPTER 8 CONTROLLING (CLASS 12)CBSE

QUESTIONS BASED ON CBSE SAMPLE PAPAER

1. Explain “Critical point control” with respect to Analyzing deviations, a step in the process of controlling. Give a suitable example.

It is neither economical nor easy to keep a check on each and every activity in an organisation. Control should, therefore, focus on key result areas (KRAs) which are critical to the success of an organisation. These KRAs are set as the critical points. If anything goes wrong at the critical points, the entire organisation suffers. For instance, in a manufacturing organisation, an increase of 5 per cent in the labour cost may be more troublesome than a 15 per cent increase in postal charges. 

When a manager sets critical points and focuses attention on significant deviations which cross the permissible limit, the following advantages accrue: 

It saves the time and efforts of managers as they deal with only significant deviations. 

It focuses managerial attention on important areas. Thus, there is better utilisation of managerial talent. 

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2. Explain “Management by exception” with respect to Analyzing deviations, a step in the process of controlling. Give a suitable example.

Management by exception, which is often referred to as control by exception, is an important principle of management control based on the belief that an attempt to control everything results in controlling nothing. Thus, only significant deviations which go beyond the permissible limit should be brought to the notice of management. Thus, if the plans lay down 2 per cent increase in labour cost as an acceptable range of deviation in a manufacturing organisation, only increase in labour cost beyond 2 per cent should be brought to the notice of the management. However, in case of major deviation from the standard (say, 5 per cent), the matter has to receive immediate action of management on a priority basis. 

The routine problems are left to the subordinates. Management by exception, thus, facilitates delegation of authority and increases morale of the employees. It identifies critical problems which need timely action to keep the organisation in right track.

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