This document provides an in depth and thorough summary of chapter 10 of Introduction to Business Management 11th edition (Erasmus et. al.). It is ready for exam and tests. Everything is laid out as it is in the textbook. All needed information is provided in short. It is written in an easy to stud...
Chapter 10 (Controlling the management process)
Assessment of actual performance against planned performance initiates a new cycle of planning, organising, leading and
control Any organisation needs control process because even the best laid plan may go wrong, the control process helps
align the company’s goals and actual performance.
Ensure that organisation’s goals & objectives are met, and resources are used as productively & effectively as possible.
Process of establishing & implementing mechanisms to ensure that the objectives of the organisation are achieved
The control process is thus important due to the following reasons:
Linked with planning, organising and leading, without control planning is pointless
Helps companies adapt to environmental change & cope with uncertainty
Helps limit the accumulation of error due to poor decision making
Helps companies cope with increasing organisational size and complexity (new employees, products, equipment
Helps minimise costs & increases output
The control process
Step 1: Setting standards
Establishing performance standards at strategic points is the first step
Performance standards should be relevant, realistic, attainable, and measurable
Performance or control standard is a planned target against which the actual performance will be compared
Appropriate performance standards:
Profit standards (indicate how much profit the business expects to make over a given period)
Market-share standards (indicate what share of the total market the business is aiming to
conquer)
Productivity standards (expressing inputs and outputs in relation to each other in relation to
productivity)
Staff-development standards (indicate the effectiveness of training programmes for staff)
, Step 2: Measure actual performance
Collection of information and reporting on actual performance are continuous activities
Continuous activities need to be measurable, for valid comparison
Reliable reports are crucial for measuring actual achievements
Effective control minimizes costs
Control by exception only important differences reported to top management in large
organisations
Step 3: Evaluate deviations
Determine the performance gap between the performance standard and actual performance
Important to know why a standard has only been matched, and not exceeded
Essential to ensure that the disparities are genuine
Determine whether the deviations are large enough to justify further investigation
All reasons for the deviations and the relevant activities should be identified
Step 4: Take corrective action
Corrective actions need to be taken to ensure that deviations do not recur
If actual achievements match standards then no corrective action is needed
If actual achievements do not match standards, three possible actions exist:
Actual performance can be improved to reach the standards
Strategies can be revised to accomplish the standards
Performance standards can be lowered or raised to make them more realistic
Types of control
Organisations control activities and processes at various levels
Organisations use control procedures to ensure progress towards goals and proper use of resources
The four key areas of control include the following:
Physical resources- inventory, quality control
Human resources- selection and placement of employees, training / development / performance of personnel
Information sources- market and economic prediction, environmental scanning
Financial resources
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