Chapter controlling: Controlling Case Study Questions | business studies Class 12 CBSE

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Chapter controlling: Controlling Case Study Questions | business studies Class 12 CBSE | ByteNotes.in

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Case Set 1

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Ramesh is the production manager at SteelCraft Ltd., a medium-sized manufacturing company. The company had set a production target of 500 units per week with a defect rate not exceeding 2%. At the end of the first week, Ramesh discovered that only 430 units were produced and the defect rate stood at 5%. He immediately called a meeting with supervisors to find the root cause. It was found that two machines were malfunctioning and workers lacked training on the new process. Ramesh arranged emergency machine repairs, organised a training session for workers, and revised the weekly schedule to compensate for lost output. He also installed daily checkpoint reviews to catch deviations early in the following weeks.

Question 1: What is the first step Ramesh performed as part of the controlling process at SteelCraft Ltd.?

Setting performance standards is the first step of controlling.
Ramesh had set standards of 500 units per week and a maximum 2% defect rate, which served as benchmarks for measuring actual performance.

Question 2: Which step of the controlling process involves comparing the 430 units produced against the 500-unit target?

This is Step 3: Comparing Actual Performance with Standards.
Such comparison reveals the deviation (70 units short and 3% excess defect rate) between actual and desired results, making the need for corrective action clear.

Question 3: Explain how Ramesh's actions demonstrate the importance of controlling for SteelCraft Ltd. Discuss any three points.

Accomplishing organisational goals: By identifying and correcting the deviation (machine malfunction and lack of training), Ramesh ensured the company stayed on track toward its production targets.
Making efficient use of resources: Corrective measures like machine repair and worker training eliminated wastage caused by defective production, ensuring resources were used optimally.
Ensuring order and discipline: Installing daily checkpoint reviews created a structured monitoring mechanism, ensuring future performance aligns with standards and reducing recurrence of deviations.

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Case Set 2

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Priya Fashions Ltd. is a garment export company. The marketing manager, Ms. Priya, set a sales target of ₹50 lakh per month and an advertising budget of ₹2 lakh. After two months, the sales stood at ₹38 lakh and advertising expenditure had crossed ₹3.5 lakh. The CEO reviewed the performance report and noted these deviations. On investigation, it was found that a new competitor had entered the market and the advertising agency had run unapproved campaigns. The CEO decided to renegotiate terms with the advertising agency, cut non-essential promotions, and launched a customer loyalty programme to boost sales. He also set up weekly reporting to closely monitor the situation going forward.

Question 1: Identify the type of standards set by Ms. Priya for evaluating the marketing department's performance.

Ms. Priya set quantitative standards — sales target of ₹50 lakh and advertising budget of ₹2 lakh.
These are measurable financial standards used to gauge the performance of the marketing department, as listed under 'sales volume' and 'advertising expenditures' in the functional area standards.

Question 2: The CEO found that one cause of deviation was beyond the company's control. Identify this limitation of the controlling system.

The entry of a new competitor is an external factor beyond the organisation's control.
This reflects the limitation: 'Little control on external factors' — organisations generally cannot control factors such as competition, government policies, or technological changes.

Question 3: How does the controlling process followed by the CEO of Priya Fashions Ltd. help improve future planning? Explain with reference to the relationship between planning and controlling.

Controlling provides information derived from past experience that improves future planning — the CEO's review revealed competitor entry and budget overruns, which will guide revised marketing plans.
Controlling completes one management cycle and feeds back into planning — insights from the deviation analysis (e.g., unapproved campaigns) will lead to tighter approval processes in future plans.
Planning and controlling reinforce each other: the standards (plan) provided a basis for control, and the corrective action taken will become inputs for more realistic targets in the next planning cycle.

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Case Set 3

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TechServe BPO Ltd. manages customer support operations for international clients. The operations head, Mr. Kapoor, set service standards including average call handling time of 5 minutes and customer satisfaction score of 85%. After a quarterly review, the actual average handling time was 7.5 minutes and customer satisfaction dropped to 70%. Mr. Kapoor analysed reports and found that two teams consistently underperformed while three teams met targets. He decided to apply the principle of management by exception — he focused only on the two underperforming teams, arranged additional coaching for their agents, and reallocated experienced staff to assist them. The high-performing teams were allowed to continue independently.

Question 1: Identify the principle of managerial control that Mr. Kapoor applied while handling team performance.

Mr. Kapoor applied the principle of Management by Exception.
Under this principle, only significant deviations that go beyond permissible limits are brought to the notice of management, while routine performance by high-performing teams is left to continue without interference.

Question 2: What does the customer satisfaction score of 85% represent in the controlling process at TechServe BPO Ltd.?

The customer satisfaction score of 85% is a qualitative standard set for performance measurement.
It serves as a benchmark in Step 1 of the controlling process (Setting Performance Standards), used to compare actual performance (70%) and identify deviations.

Question 3: State any three advantages of the principle used by Mr. Kapoor, as applicable to TechServe BPO Ltd.

It saves the time and efforts of managers: Mr. Kapoor could focus his energy only on the two underperforming teams rather than reviewing all five, making his efforts more productive.
It focuses managerial attention on important areas: By concentrating on the significant deviations (teams missing targets), there was better utilisation of Mr. Kapoor's managerial talent.
It identifies critical problems which need timely action: Pinpointing the underperforming teams enabled prompt corrective measures (coaching and staff reallocation), keeping the organisation on the right track.

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Suresh manages the finance department of GreenBuild Constructions Pvt. Ltd. The company relies on a budgetary control system to manage its capital expenditure. For the current financial year, the capital expenditure budget was set at ₹80 lakh. By September, the department had already spent ₹65 lakh. The finance head reviewed the spending pattern and discovered that ₹10 lakh had been spent on non-priority equipment purchases. He flagged this deviation to the board and proposed an expenditure freeze on all non-essential items for the remaining months. He also recommended setting monthly spending sub-limits to prevent similar overruns. The board approved both recommendations immediately.

Question 1: Name the traditional technique of managerial control being used by the finance department of GreenBuild Constructions.

The traditional technique being used is Budgetary Control.
Budgetary control involves setting budgets (here ₹80 lakh capital expenditure) as standards and comparing actual expenditure against them to identify deviations and take corrective action.

Question 2: Which step of the controlling process is reflected when Suresh flags the ₹10 lakh deviation to the board?

This reflects Step 4: Analysing Deviations.
Suresh identified the cause (non-priority equipment purchases) and reported the deviation to management for attention, which is the analytical and reporting part of the controlling process.

Question 3: Explain how the controlling function at GreenBuild Constructions helps improve planning and also helps in making efficient use of resources. Provide two points for each.

Improving planning: (i) The deviation report provides data (non-priority spending) that will help set more realistic and item-wise budget allocations in future plans. (ii) The new sub-limit recommendations will feed back into a more detailed and controlled planning framework for the next fiscal year.
Efficient use of resources: (i) The expenditure freeze on non-essential items prevents further wastage of financial resources. (ii) By identifying that ₹10 lakh was spent on non-priority items, the control system ensures future funds are directed toward productive use.

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Case Set 5

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Ananya is the HR manager at MedCure Hospitals. She has set certain performance standards for the HR department: employee absenteeism not to exceed 3%, labour turnover not to exceed 10% annually, and all vacancies to be filled within 30 days. After the annual review, absenteeism stood at 6%, labour turnover was 8%, and the average vacancy filling time was 45 days. Ananya studied each metric carefully. She found that high absenteeism was linked to poor work environment and long shifts. She recommended restructuring shifts, adding break facilities, and setting up an employee grievance redressal cell. She chose to focus corrective action mainly on absenteeism since it crossed acceptable limits by the widest margin.

Question 1: Name any two HR department standards that Ananya set as part of the controlling process.

Employee absenteeism not to exceed 3% is one performance standard set for the HR department.
Labour turnover not to exceed 10% annually is another standard used to gauge human resource performance.

Question 2: Why did Ananya focus her corrective action primarily on absenteeism rather than all three deviations equally?

Ananya applied the principle of Critical Point Control — she focused on the area where the deviation was most severe (absenteeism at 6% vs. standard of 3%, a 100% excess).
Management by exception also guided her to prioritise the most significant deviation requiring immediate managerial attention rather than treating all deviations equally.

Question 3: Discuss how the controlling function at MedCure Hospitals helps in improving employee motivation and ensuring order and discipline. Give two points each.

Improving employee motivation: (i) The HR standards inform employees in advance about what is expected of them (e.g., absenteeism limits), motivating them to meet those expectations. (ii) Ananya's corrective action (restructuring shifts and grievance cell) signals that the management is attentive to employee concerns, further boosting morale and performance.
Ensuring order and discipline: (i) Setting clear benchmarks for absenteeism and turnover creates a structured environment where employees know consequences of lapses. (ii) The grievance redressal cell helps minimise employee unrest systematically, maintaining orderly conduct in the organisation.

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Chapter sections

Chapter controlling: Controlling | Case Study Questions

Passage

Question 1: What is the first step Ramesh performed as part of the controlling process at SteelCraft Ltd.?

Question 2: Which step of the controlling process involves comparing the 430 units produced against the 500-unit target?

Question 3: Explain how Ramesh's actions demonstrate the importance of controlling for SteelCraft Ltd. Discuss any three points.

Passage

Question 1: Identify the type of standards set by Ms. Priya for evaluating the marketing department's performance.

Question 2: The CEO found that one cause of deviation was beyond the company's control. Identify this limitation of the controlling system.

Question 3: How does the controlling process followed by the CEO of Priya Fashions Ltd. help improve future planning? Explain with reference to the relationship between planning and controlling.

Passage

Question 1: Identify the principle of managerial control that Mr. Kapoor applied while handling team performance.

Question 2: What does the customer satisfaction score of 85% represent in the controlling process at TechServe BPO Ltd.?

Question 3: State any three advantages of the principle used by Mr. Kapoor, as applicable to TechServe BPO Ltd.

Passage

Question 1: Name the traditional technique of managerial control being used by the finance department of GreenBuild Constructions.

Question 2: Which step of the controlling process is reflected when Suresh flags the ₹10 lakh deviation to the board?

Question 3: Explain how the controlling function at GreenBuild Constructions helps improve planning and also helps in making efficient use of resources. Provide two points for each.

Passage

Question 1: Name any two HR department standards that Ananya set as part of the controlling process.

Question 2: Why did Ananya focus her corrective action primarily on absenteeism rather than all three deviations equally?

Question 3: Discuss how the controlling function at MedCure Hospitals helps in improving employee motivation and ensuring order and discipline. Give two points each.

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