question_answer

ABC is a leading publication company of the country. The company's objective is to provide 'error-free' books for the students. But the company's production department is plagued with many shortcomings. The authors are not given accurate parameters, constant changes are made in the instructions given to the coordinators and last minute irrelevant additions are made in the text. All these leads to wastage of resources and the company's objective is also not achieved and the revenues are also falling. The company has recruited a new production manager, replacing the old one. The new production manager identified the need for that function of management in which actual performance is compared with planned performance.

(i) Identify the function of management discussed above.

(ii) State the steps necessary to install that function in the organisation.

Answer:

(i) Controlling is the function of management which compares actual performance with standard performance and suggests corrective actions in case of deviations. (ii) It is a systematic process involving a series of steps which are as follows: [a] Setting Performance Standards The first step in the controlling process is to set up the performance standards. Standards are those criteria, on which the actual performances are measured. These standards serve as a benchmark towards which an organisation strives to work. [b] Measurement of Actual Performance After the establishment of standards, the next step is measuring the actual performance with the set standards. This can be done with the help of several methods like personal observation, sample checking, performance reports, etc. [c] Comparison of Actual Performance with Standards In this step, the actual performances are compared with the established standards. Such comparisons reveal the deviation between planned and actual results. [d] Identifying and Analysing Deviations At this stage, acceptable and non-acceptable deviations are analysed while focusing on: Critical Point Control It means keeping focus on key result areas where deviations are not acceptable and it should be attended on priority basis. Management by Exception It means if a manager tries to control everything, he may end up in controlling nothing. Thus, he should first handle the significant deviations on priority basis. [e] Taking Corrective Action The most important step in the controlling process is taking corrective actions. After the deviations and their causes are analysed, the task is to remove the hurdles from the actual work plan. The purpose of this step is to bring the actual performance up to the level of expectations by adopting corrective measures. (i) Suhani should consider following factors while fixing the price of a product: