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Controlling Process and Types of Control | BBA Notes

Study material and explanations for Unit 5

Controlling Process and Types of Control

1. The Step-by-Step Controlling Process

Managerial controlling operates through a universal 4-step systematic sequence:

The Four Steps of the Controlling Process
1. Standards Establish target benchmarks
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2. Measurement Measure actual performance
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3. Comparison Identify & analyze deviations
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4. Correction Execute corrective action

Detailed Stages:

  1. Step 1: Establishing Performance Standards:
    • Standards are the benchmarks against which actual accomplishments are judged.
    • Quantitative Standards: Measurable in numerical units (e.g., produce 500 units per shift, maintain rejection rate under 0.5%, generate 15% ROI).
    • Qualitative Standards: Intangible traits (e.g., employee morale, customer brand goodwill, corporate ethical compliance).
  2. Step 2: Measurement of Actual Performance:
    • Gathering accurate operational data through performance logs, personal observation, sample checking, and computerized accounting reports.
    • Measurement should be objective, reliable, and conducted in the same units as the standards.
  3. Step 3: Comparing Actual Performance with Standards:
    • Calculates the Deviation (Deviation = Actual Performance - Standard Performance).
    • Minor random variations are normal; managers focus on significant deviations that threaten corporate objectives.
  4. Step 4: Taking Corrective Action:
    • If deviations are acceptable, no action is needed.
    • If deviations are significant, managers identify root causes and intervene: retrain employees, recalibrate machinery, replace defective raw materials, or revise unrealistic standards.

2. Advanced Principles: Critical Point Control & Management by Exception

To avoid micromanaging every trivial detail, modern managers apply two essential control philosophies:

Strategic Filtering: CPC vs. MBE

1. Critical Point Control (CPC)

It is neither economical nor possible to monitor every single activity in a large enterprise. Managers must focus attention on Key Result Areas (KRAs) that make or break organizational success.

Example: In manufacturing, a 5% increase in labor cost requires urgent investigation, whereas a 15% increase in postal postage costs can be handled routinely.

2. Management by Exception (MBE)

Propounded on the maxim: "An attempt to control everything may end up in controlling nothing." Only extraordinary or exceptional deviations beyond an acceptable tolerance range are escalated to top management.

Example: If production cost deviates by ±2%, supervisors handle it locally; if deviation exceeds 8%, it is escalated to the General Manager.

3. Types of Control: Time-Based Classification

Control mechanisms are categorized based on when the managerial intervention occurs relative to the operational work cycle:

Three Types of Managerial Control Across Time
Feedforward
Feedforward (Preliminary / Preventive) Control

Takes place before an activity begins. Inspects incoming inputs, raw material quality, and machine readiness to prevent defects before they occur. Example: Pre-flight safety checklist by airline pilots.

Concurrent
Concurrent (Real-Time / Steering) Control

Takes place while an activity is in progress. Direct supervision, automated assembly line sensors, and live dashboard monitoring that permit immediate correction. Example: Live GPS tracking of delivery vans.

Feedback
Feedback (Post-Action / Historical) Control

Takes place after an activity is completed. Measures finished output, customer returns, quarterly balance sheets, and audit reports to improve future planning. Example: End-of-year financial audits.

4. Master Comparison: Types of Control

Dimension Feedforward Control Concurrent Control Feedback Control
Timing Before activity starts (Input stage). During activity execution (Process stage). After activity completion (Output stage).
Primary Focus Anticipating & preventing defects. Real-time monitoring & steering. Evaluating final results against goals.
Cost of Correction Lowest; prevents waste before it occurs. Moderate; stops defective batch mid-process. Highest; defective goods already manufactured.
Managerial Action Strict supplier vetting, pre-training. Live supervision, automated alerts. Quality audits, warranty claim analysis.

5. DAVV Exam Preparation: Short & Long FAQs

Q1. What is “Management by Exception” (MBE)? (3 Marks)

Answer: Management by Exception is an executive control principle asserting that top management should be burdened only with significant, exceptional deviations from preset standards. Routine minor variations within an acceptable tolerance range should be resolved independently by lower-level supervisors.

Q2. Distinguish between Feedforward and Feedback control. (5 Marks)

Answer:

  • Feedforward Control: Preventive in nature; acts on inputs before production starts (e.g., screening raw milk quality in a dairy plant before processing).
  • Feedback Control: Reactive in nature; measures finished goods after production is complete (e.g., testing packaged butter from store shelves).

Q3. Explain the comprehensive controlling process step-by-step with a diagram. (10 Marks)

Answer: Structure the answer with:

  1. Concept and definition of managerial controlling.
  2. The 4-step sequence diagram (Standards → Measurement → Comparison/Deviation Analysis → Corrective Action).
  3. The vital roles of Critical Point Control (CPC) and Management by Exception (MBE).
  4. Analysis of time-based control types: Feedforward, Concurrent, and Feedback.
  5. Practical industrial case examples (e.g., automotive assembly line quality control).