Chapter controlling: Controlling Long Questions | business studies Class 12 CBSE

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

Long Answer

Medium difficulty • Structured explanation

Medium

Question 1

Long Form

Analyse the importance of controlling in an organisation and explain how it helps overcome managerial challenges.

Controlling measures progress toward organisational goals, highlights deviations and indicates corrective action, thereby keeping the organisation on the right track.
It helps in judging whether standards are accurate and objective, enabling management to revise them in response to environmental changes.
By enforcing predetermined norms, controlling reduces wastage and spoilage of resources, ensuring effective and efficient resource utilisation.
Informing employees about expected performance standards in advance motivates them, fosters discipline and creates an atmosphere of order within the organisation.
Controlling coordinates different departmental activities through common standards, ensuring all efforts are aligned toward achieving overall organisational objectives.

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Long Answer

Medium difficulty • Structured explanation

Medium

Question 2

Long Form

Describe the limitations of controlling and explain why these limitations do not make controlling redundant.

Setting quantitative standards is difficult for areas like employee morale and job satisfaction, reducing control system effectiveness in these domains.
Organisations cannot control external factors such as government policies, technological changes and competition, limiting the scope of the control system.
Employees often resist control measures, viewing them as restrictions on their freedom, which hampers the smooth implementation of control systems.
Control is a costly affair — it requires significant expenditure, time and effort, making it less feasible for small enterprises without proportionate benefits.
Despite these limitations, controlling remains indispensable because without it, even the best plans can go awry; limitations call for smarter design of control systems, not their elimination.

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Long Answer

Medium difficulty • Structured explanation

Medium

Question 3

Long Form

Explain the relationship between planning and controlling with reference to the statement that they are inseparable twins of management.

Planning provides the standards and targets against which actual performance is measured in controlling, making planning the foundation of any control system.
Controlling is blind without planning — with no preset standards, managers have nothing to compare actual performance against and cannot exercise control.
Planning is prescriptive and forward-looking (based on future forecasts), while controlling is evaluative, checking whether decisions have been translated into desired actions.
However, both functions are simultaneously backward-looking and forward-looking: planning draws from past experience and controlling's corrective actions aim to improve future performance.
Controlling improves future planning by providing information derived from past experience, and planning based on facts makes controlling easier — reinforcing each other in a continuous cycle.

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Long Answer

Medium difficulty • Structured explanation

Medium

Question 4

Long Form

Explain all the steps involved in the process of controlling.

Step 1 — Setting Performance Standards: Quantitative standards (cost, units, revenue) or qualitative standards (goodwill, motivation) are established as benchmarks for measuring performance.
Step 2 — Measurement of Actual Performance: Performance is measured objectively using personal observation, sample checking or performance reports, ideally in the same units as the standards.
Step 3 — Comparison of Actual Performance with Standards: Actual results are compared with set standards to reveal deviations between desired and actual outcomes.
Step 4 — Analysing Deviations: Using Critical Point Control and Management by Exception, significant deviations in Key Result Areas are identified and their causes — unrealistic standards, resource inadequacy or environmental factors — are examined.
Step 5 — Taking Corrective Action: When deviations exceed acceptable limits, corrective measures such as employee training, resource reallocation or standard revision are implemented to prevent recurrence.

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Long Answer

Hard difficulty • Structured explanation

Hard

Question 5

Long Form

Compare and contrast traditional and modern techniques of managerial control, highlighting their applications.

Traditional techniques include personal observation (direct supervision), statistical reports (data tables and graphs), breakeven analysis (profit-loss threshold) and budgetary control (plan vs. actual comparison) — all widely used for many decades.
Modern techniques include Return on Investment, Ratio Analysis, Responsibility Accounting, Management Audit, PERT and CPM, and Management Information System — developed to address the limitations of traditional techniques in complex organisations.
Traditional techniques are relatively simpler and suitable for smaller organisations; modern techniques are more sophisticated, data-driven and suited to large, complex enterprises with diverse operations.
PERT and CPM are specifically designed for project management and time control, while MIS provides real-time information to support faster and better managerial decision-making across all functions.
Both sets of techniques are complementary; effective control systems in large organisations typically integrate traditional techniques for routine monitoring with modern techniques for strategic and comprehensive performance evaluation.

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Long Answer

Hard difficulty • Structured explanation

Hard

Question 6

Long Form

Analyse the principles of Critical Point Control and Management by Exception and explain the advantages of using them together.

Critical Point Control directs managerial attention to Key Result Areas (KRAs) — those areas where failure would have the greatest negative impact on the entire organisation.
Management by Exception holds that only deviations that cross permissible limits should be reported to management; routine minor deviations are handled by subordinates without escalating them upward.
Used together, these principles save managers' time and effort by ensuring they focus only on significant problems in critical areas rather than monitoring every activity.
They facilitate better utilisation of managerial talent, promote delegation of authority and increase employee morale since subordinates handle routine matters independently.
They identify critical problems requiring timely management action, keeping the organisation on the right track and preventing small deviations from growing into major crises.

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Long Answer

Medium difficulty • Structured explanation

Medium

Question 7

Long Form

Discuss how budgetary control and breakeven analysis serve as effective traditional techniques of managerial control.

Budgetary control involves preparing budgets that express organisational plans in numerical terms for a specific future period, covering areas like sales, production and costs.
Actual performance is then systematically compared with budgeted figures to identify variances, enabling management to take timely corrective action.
Breakeven analysis determines the level of sales at which total revenue exactly equals total costs, identifying the minimum output needed to avoid losses.
It helps managers set realistic sales targets, price products appropriately and evaluate the financial viability of new products or projects before implementation.
Both techniques are forward-looking in design yet backward-looking in review — budgetary control reviews past expenditure against plans, and breakeven analysis is used to plan future operations — making them complementary traditional control tools.

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Long Answer

Hard difficulty • Structured explanation

Hard

Question 8

Long Form

Explain how Ratio Analysis and Return on Investment function as modern techniques of managerial control.

Ratio Analysis involves interpreting financial statements by computing ratios such as liquidity ratios (current ratio), solvency ratios (debt-equity ratio), profitability ratios (gross profit ratio) and activity ratios (inventory turnover ratio).
These ratios enable management to assess the financial health of the organisation, compare performance across periods and benchmark against industry standards.
Return on Investment (ROI) measures overall profitability by relating net profit to capital invested, helping management evaluate how efficiently capital is being used.
ROI can be applied to compare the profitability of different divisions, product lines or investment proposals, aiding strategic resource allocation decisions.
Together, Ratio Analysis and ROI provide a comprehensive picture of organisational performance — Ratio Analysis offering multi-dimensional financial insights and ROI providing a single overarching profitability measure.

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Long Answer

Hard difficulty • Structured explanation

Hard

Question 9

Long Form

Explain Management Audit and Responsibility Accounting as modern techniques and analyse their role in improving organisational effectiveness.

Management Audit is a systematic and critical evaluation of the plans, processes and performance of management to assess how effectively managerial functions are being carried out.
It identifies gaps in managerial performance, outdated practices and areas of inefficiency, enabling top management to take corrective action to strengthen the management team.
Responsibility Accounting classifies the organisation into responsibility centres — cost centres (accountable for costs), profit centres (accountable for profits) and investment centres (accountable for returns on investment).
Each centre is headed by a manager who is responsible for its performance, making it easy to identify who is accountable for favourable or unfavourable variances.
Both techniques together promote accountability, transparency and performance-oriented culture — Management Audit evaluates the quality of management decisions while Responsibility Accounting ensures individual managers are accountable for outcomes in their areas.

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Long Answer

Hard difficulty • Structured explanation

Hard

Question 10

Long Form

Explain PERT and CPM as modern project control techniques and discuss how they help organisations manage time-sensitive projects.

PERT (Programme Evaluation and Review Technique) and CPM (Critical Path Method) are network-based techniques used for planning and controlling complex, time-bound projects by mapping all activities and their interdependencies.
PERT is suited to projects where activity times are uncertain (e.g., research and new product development) and uses probabilistic time estimates for planning.
CPM is used where activity durations are well-known and deterministic (e.g., construction projects) and focuses on identifying the critical path — the longest sequence of activities that determines project duration.
Both techniques help managers identify which activities are critical (any delay will delay the entire project) and which have slack time, enabling better allocation of resources to critical activities.
By providing a visual roadmap of the entire project, PERT and CPM enable proactive control — managers can identify potential delays early and take corrective action before the project schedule is jeopardised.

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Chapter controlling: Controlling | Long Questions

Analyse the importance of controlling in an organisation and explain how it helps overcome managerial challenges.

Describe the limitations of controlling and explain why these limitations do not make controlling redundant.

Explain the relationship between planning and controlling with reference to the statement that they are inseparable twins of management.

Explain all the steps involved in the process of controlling.

Compare and contrast traditional and modern techniques of managerial control, highlighting their applications.

Analyse the principles of Critical Point Control and Management by Exception and explain the advantages of using them together.

Discuss how budgetary control and breakeven analysis serve as effective traditional techniques of managerial control.

Explain how Ratio Analysis and Return on Investment function as modern techniques of managerial control.

Explain Management Audit and Responsibility Accounting as modern techniques and analyse their role in improving organisational effectiveness.

Explain PERT and CPM as modern project control techniques and discuss how they help organisations manage time-sensitive projects.

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