SwiftRoute Couriers sets a target of 95 percent next day deliveries, tracks actual deliveries every week and acts when performance falls short. This managerial function is:

Answer: B. Measuring performance against a standard and correcting deviations is controlling. Planning only sets the target, directing guides the people, and staffing fills the positions.

Arrange the steps of the controlling process in the correct order. (i) Taking corrective action (ii) Analysing deviations (iii) Setting performance standards (iv) Measurement of actual performance (v) Comparing actual performance with standards

Answer: D. Standards are set first, then actual performance is measured, then compared with standards. The gap is analysed, and finally corrective action is taken. Comparison cannot happen before measurement.

A courier firm decides to closely watch only its fuel cost and delivery time, which decide its success, and not routine items such as stationery. This is an application of:

Answer: A. Choosing the key result areas that are critical to success and focusing control on them is critical point control. Management by exception deals with reporting only large deviations.

Controlling — CUET Business Studies Notes & MCQs

📌 Snapshot

How managers catch problems before they grow: the five step controlling process explained with examples.
Why controlling is not the last function, and how planning and controlling depend on each other.
Six reasons controlling matters and four limits it runs into, each in a table.
Critical point control vs management by exception, and the trap questions built around them.

📖 Detailed Notes

Written and reviewed by Rohit Singh, Computer Science & Commerce faculty at UniDrill (MCA, Osmania University · 6 years teaching). Based on NCERT Business Studies Class XII, Chapter 8.

The company that learnt about its problem from its customers

SwiftRoute Couriers promises next day delivery. Its plan is clear: 95 out of every 100 parcels must reach the customer within 24 hours. Trucks are bought, staff are hired and drivers are briefed. Three months later, angry emails start arriving. When the owner checks, only 78 parcels in 100 are on time, and it has been that way for weeks. Nobody noticed, because nobody was measuring.

SwiftRoute had planned well but had no way of knowing whether the plan was working. That gap is what controlling fills.

What controlling is

Controlling means ensuring that activities in an organisation are performed as per plans, and that resources are used effectively and efficiently to achieve the predetermined goals. Koontz and O'Donnel define managerial control as the measurement of accomplishment against the standard and the correction of deviations, to make sure that objectives are attained according to plans.

Feature	What it means	SwiftRoute
Goal oriented	It exists to make sure goals are achieved	The goal is 95 percent on time delivery
Pervasive	Every manager at every level performs it, and every kind of organisation (business, school, hospital, club, army) needs it	The branch supervisor and the owner both control, at different levels
Not the last function	It does not close the management cycle; it feeds into planning again	Findings from this quarter shape next quarter's plan

Controlling is therefore a loop. It finds deviations, analyses their causes, takes corrective action and helps managers frame better plans for the future.

Why controlling matters

Importance	What it does	SwiftRoute
Accomplishing organisational goals	Measures progress, shows deviations and points out the corrective action	A weekly report shows delivery slipping from 95 to 90 percent
Judging the accuracy of standards	A good control system shows whether the standards were realistic, and helps revise them when conditions change	If everyone misses the target, perhaps 95 percent was too high for hill routes
Making efficient use of resources	Each activity is done to predetermined standards and norms, so wastage and spoilage fall	Fuel use per trip is tracked, so waste is cut
Improving employee motivation	Employees know in advance what is expected of them and how they will be appraised	Drivers know the on time target and bonus rule
Ensuring order and discipline	A close check on activities creates an atmosphere of order and reduces dishonest behaviour	Parcel scanning at every hub reduces pilferage
Facilitating coordination in action	Each department works to standards that fit with one another	Sorting, trucking and delivery all work to the same 24 hour clock

Where controlling struggles

Controlling is useful, but it is not magic. There are four limitations.

Limitation	Why it limits control	SwiftRoute
Difficulty in setting quantitative standards	Control loses effectiveness when standards cannot be stated in numbers, as with morale, job satisfaction and human behaviour	How do you measure how friendly a driver is?
Little control on external factors	A firm cannot control government policy, technology changes or competition	A sudden fuel price rise or a new rival cannot be controlled
Resistance from employees	People see control as a restriction on their freedom	Drivers resent cameras watching every minute
Costly affair	Control needs money, time and effort, and the cost must not exceed the benefit	A tiny branch cannot afford a full tracking system

Beyond the textbook. For the exam: employee resistance is one of the four limitations, with the camera or computer monitoring example. In reality: people tend to push back most when control feels like distrust rather than help. Explaining why a standard exists and how the data will be used reduces resistance. Why it matters: a "which limitation is shown?" question usually describes employees feeling watched, so name resistance from employees, not cost.

Planning and controlling: inseparable twins

Planning decides what should happen. Controlling checks what did happen. Planning without controlling is meaningless, and controlling without planning is blind, because there would be no standard to compare against.

Basis	Planning	Controlling
Nature	Prescriptive: an intellectual process that says what to do	Evaluative: checks whether decisions were turned into action
Role	Provides the standards	Measures performance against those standards and corrects deviations
Time orientation	Looks ahead, but draws on past experience	Looks at past performance, like a postmortem, but its corrective action aims to improve the future
Dependence	Meaningless without controlling	Blind without planning

So both are forward looking and backward looking. Planning uses lessons from the past, and controlling feeds its findings into the next plan.

Pause and predict: a student says, "Controlling is the last function of management, because it comes after the results." Is that right?

Check your answer: No. Controlling brings the cycle back to planning. The deviations it finds and the lessons it draws become the starting point of the next plan.

The controlling process: five steps

The process in one line: set performance standards → measure actual performance → compare with standards → analyse deviations → take corrective action.

Step	What the manager does	SwiftRoute
1. Setting performance standards	Fixes the benchmarks against which performance will be judged	95 percent of parcels delivered in 24 hours
2. Measurement of actual performance	Measures results objectively and reliably, in the same units as the standard	The scan data show 88 percent delivered in 24 hours
3. Comparing actual performance with standards	Puts the two side by side to reveal the deviation	95 minus 88 gives a gap of 7 percentage points
4. Analysing deviations	Finds how big the gap is, whether it is within the acceptable range, and what caused it	The gap is beyond the 2 point range; two of three sorting machines are down
5. Taking corrective action	Acts to bring performance back to the standard	Repair the machines and add an overtime shift at the hub

Step 1: standards. Standards are the benchmarks. Quantitative standards are in numbers, such as cost, revenue, units produced and sold, and time spent. Qualitative standards are harder to count, such as improving goodwill or the motivation level of employees. Standards should be precise, quantitative wherever possible, and flexible enough to be changed when the environment changes. Each area of the business has its own typical standards.

Functional area	Typical standards
Production	Quantity, quality, cost, individual job performance
Marketing	Sales volume, sales expense, advertising expenditure, individual salesperson's performance
Human resource management	Labour relations, labour turnover, labour absenteeism
Finance and accounting	Capital expenditure, inventories, flow of capital, liquidity

Step 2: measurement. Performance should be measured objectively and reliably, in the same units as the standard. Techniques include personal observation, sample checking and performance reports. Measures can be profit ratios, units sold, market share or number of defective pieces. Measurement may take place during the work or after it.

Step 3: comparison. Comparison shows how much actual performance differs from the standard. It is easy when standards are quantitative, such as a worker's weekly output against the standard weekly output. For qualitative areas, the manager has to judge more carefully.

Step 4: analysing deviations. Not every deviation deserves attention, so the manager first decides the acceptable range. Two ideas help in focusing effort.

Concept	Idea	Example
Critical point control	Control should focus on key result areas (KRAs) that are critical to the success of the organisation, not on every activity	A 5 percent rise in labour cost may be more troublesome than a 15 percent rise in postal charges
Management by exception	Only significant deviations beyond the permissible limit are brought to the manager's notice. Trying to control everything controls nothing	Labour cost is reported only if it goes beyond the acceptable range of 2 percent

Critical point control tells you what to watch. Management by exception tells you when to be alerted. Together they save time and effort, focus attention on important areas, make delegation easier, raise the morale of subordinates (who handle routine matters) and identify the critical problems that need timely action.

Causes of deviations include unrealistic standards, a defective process, inadequate resources, structural drawbacks, organisational constraints and environmental factors beyond the firm's control.

Step 5: corrective action. If the deviation is within the acceptable limits, no action is needed. If it goes beyond them, it needs immediate managerial attention, particularly in the key areas. If production targets are missed, the manager may train the employees. If a project is behind schedule, extra workers, equipment or overtime may be arranged. If the deviation cannot be corrected through managerial action, the standards themselves may be revised.

Pause and predict: SwiftRoute's fuel bill rises 5 percent, and its office stationery bill rises 15 percent. Under critical point control, which one needs attention first?

Check your answer: The fuel bill. Fuel is a key result area for a courier firm, so even a small rise matters, while a larger rise in stationery costs hardly affects the business.

Beyond the textbook. For the exam: management by exception means only deviations beyond the permissible limit are reported. In reality: many firms now build this into software dashboards that stay quiet when figures are in range and send alerts when a figure crosses a limit. Why it matters: the idea is the same as the exam definition. The tool is new but the principle is not.

Beyond the textbook. For the exam: standards are benchmarks against which actual performance is measured. In reality: standards also shape behaviour. If a call centre is judged only on how short its calls are, agents may rush customers, and the number looks good while service gets worse. Why it matters: this is why the chapter says standards must be reviewed, and why qualitative standards such as goodwill matter alongside the numbers.

Putting the process to work: one month at SwiftRoute

Item	Figure	What the manager concludes
Standard	95 percent of parcels delivered in 24 hours	Step 1 is done
Acceptable range	93 to 97 percent	Within this, no action
Actual performance	88 percent	Step 2 is done
Deviation	95 minus 88, which is 7 percentage points	Beyond the range, so it needs attention
Cause found	Two of the three hub sorting machines are down	Resource inadequacy
Corrective action	Repair the machines and add an overtime shift	Performance expected back in range
Fuel cost up 5 percent, stationery up 15 percent	Fuel is a KRA, stationery is not	Fuel gets attention first

Exam traps

The trap	Why it is tempting	The truth
"Controlling is the last function of management."	It comes after the work is done	It brings the cycle back to planning and helps frame future plans
"Only quantitative standards can be set."	Numbers are easier to compare	Qualitative standards such as goodwill and motivation are also standards
"Critical point control and management by exception are the same."	Both save time	Critical point control selects what to watch (KRAs). Management by exception reports only deviations beyond the limit
"Controlling works only in business firms."	The examples are about companies	It is pervasive: schools, hospitals, clubs and armies also need it
"A firm can fully control external factors."	A good system feels all powerful	Government policy, technology and competition are largely beyond its control
"Controlling looks only at the past."	The word postmortem suggests it	Corrective action improves the future, and its findings feed next period's plans
"Every deviation needs managerial action."	A gap looks like a problem	Deviations within the acceptable range need no action
"Controlling is the same as planning in reverse."	They are linked	Planning is prescriptive. Controlling is evaluative

60-second revision

Topic	Lock this in
Controlling	Ensures activities follow plans; measures accomplishment against standards and corrects deviations
Nature	Goal oriented, pervasive, not the last function
Six importance points	Accomplishing goals · judging accuracy of standards · efficient use of resources · employee motivation · order and discipline · coordination in action
Four limitations	Hard to set quantitative standards · little control on external factors · employee resistance · costly
Planning vs controlling	Prescriptive vs evaluative; each is blind or meaningless without the other
Five steps	Set standards → measure performance → compare → analyse deviations → corrective action
Standards	Quantitative (cost, revenue, units, time) and qualitative (goodwill, motivation)
Measurement techniques	Personal observation · sample checking · performance reports
Critical point control	Watch the key result areas
Management by exception	Report only deviations beyond the permissible limit
Corrective action	None within limits; train, add resources, or revise standards if needed

Where this chapter connects

Previous: Directing guides and motivates the effort that controlling then measures.
Back to the start: Planning supplies the standards, and controlling returns its findings to the next plan.
Related: Nature and Significance of Management places controlling as one of the functions of management.

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