Perspective management.pptx

7/27/2019 Perspective management.pptx

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Control

Dipen Kadam

Roll No.15


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Techniques Of Control


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Types of Techniques Of Control

Techniques OfControl

Traditional

Techniques

ModernTechniques


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Traditional Techniques

Personal Observation

Good Organized Structures

Unity Of Objectives, policies, procedures and methods

Statistical reports and analysis

Break-even analysis

Budgetary control


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Modern Techniques

Management Audit

Return on investment (ROI)

Responsibility accounting

PERT and CPM


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Personal Observation

The most effective

The oldest The most direct and undistorted

Face to face contact

Psychological impact

Corrective measures on thespot

Can not be completely replaced

Time consuming

Not possible all the time Negative impact in certain

cases

Self motivated and enlightenedemployees hate supervision orinterference

Personal bias


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Good organization structures

An definite idea aboutthe role andresponsibility

Improves productivity

Removes obstacles inperformance

Not actual way of control Still aid of the other

control system is neededor else misdirection canoccur

Objectives lose in daily

schedule


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Unity of plans

Unity of objectives, policies,procedures and methodswill make controllingeffective.

work can be done inpredetermined manner

Serves as operational giudeof daily routine

Can not be measures inquantitative terms


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Statistical reports and analysis

Different values like averages,

ratios, correlation, etc arehelpful for in control ofproduction, quality, inventory,etc.

Quick interpretation thus swiftdecision making

Trends can be found out. Monitoring

Lengthy and tedious

Sometimes consumes lot oftime to preparereports(especially whenprevious data is not very easyto fetch)


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Break-even analysis

Also known

Inter relationship between cost of production, volume

of production and profits.

Also known as Cost volume analysis

Cost is broken in two categories fixed and variable.

Break even point


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Break-even analysis

Determines the minimum volume

of sales at which costs are fully

recovered

Control over variable costs

It can be applied to estimate

profits at different levels of activity

Estimate turnover for desired

profits

Categorizing cost into fixed or

variable is very difficult Fixed cost are not constant

throughout

Cost line and revenue line arenot linear always

Factor prices, technology and

product mix are dynamic


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Budgetary control

Financial/quantitative statement prepared prior to a definite

period of time of the policy to be pursued during that periodfor obtaining a given purpose.

Future plan of action

Expressed in monitory or in physical units

Provides standard by which performance can be evaluated

and corrective actions can be taken Highly useful in periodical controlling

Budget making- planning and administration of budget-controlling


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Sales Budget

Production Budget

Materials Budget

Labor Budget

Overhead Budget

Cash Budget

Capital Expenditure Budget

Master Budget


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Flexible Budgeting

Performance Budgeting

Zero Base Budgeting (ZBB)


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Fixed budgeting doesnt show

changes in costs according tolevel of activity

Flexible budget copes withfuture changes.

It gives budgeted costaccording to level of activity

Realistic and practical (asaccurate values of sales andproduction can not be stated)

FlexibleBudgeting


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Input/output or costs/resultsbudget

Steps:

Identify the goals

Prepare a schedule

Link all expenses

Develop measure of performance

Highlights the end results to beachieved than money to be spent

PerformanceBudgeting


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Correlates financial andphysical aspects

Improve budget formulation,review and decision making

Effective performance audit

Annual budgets anddevelopment plans becomesynchronous

Difficulty in setting goals interms of performance

Requires structural changesin organization


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Traditional system relies too much on past experience

Stifles innovation and creativity

In ZBB, comprehensive analysis andreview of budget is made

Steps:

Activities are divided in decision packages

All activities are evaluated and ranked Resource allocation according to priority

Zero-base

Budgeting(ZBB)


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Constraints ofbudgetary andorganizational goal

Freedom and flexibility

Objective evaluation

Low priority activitiescan be eliminated

Time consuming Traumatic for budget

makers

Extensive security maydiscourage innovation*


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Budgetary Control

Is establishment of budget relating to responsibilties of executivesto requirements of policy, and continous comparision of actual

with budget Steps : Preparation of budgets

Measurement and continous comparion

Corrective actions

Revision and modification in budgets

Obejective in controlling :

Provides standard for performance To detect shortcomings and avoid waste of resources


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Clarity in planning Means of coordination

Control by exception

Fixing responsibility

Optimum resourcesutilization

Inflexibility Inaccuracy

Distortion of goals

Exenditure

Hiding inefficiencies

No substitute formanagement


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Management audit

Quality of management isvery important; it decidessuccess or failure of anorganization

Scientific and overall appraisal ofquality of management

Locates deficiencies

Constructive and comprehensivereview of management of team oforganization

Scope of management audit:

Organizational structure Executive appraisal

Functioning of management board

Soundness of earnings

Economic functioning

Service to stockholders

Research and development

Fiscal policy

Production efficiency

Sales vigor


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Total and systems view ofmanagement process toanalyze deficiencies inmanagement

Continuous improvement

Improvised coordination

and performanceevaluation

No standard techniques

No well defined

Can create complexity inauthority relationships


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Return on investment

Return capital on capital employed The essence of this technique is profit is

taken not as an absolute figure but isconsidered in relation to the invested capital


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Focuses on the basis objectives ofbusiness-profit earning and relates itto capital invested

Takes account of utilization ofresources

Alert to wastage and inefficiency

Comparison with other firms and withover the years is possible anddifferent divisions/ departments

Discusses about allocation of capital

Too much emphasis on financialfactors and ignorance towards otherfactors like PR, executive skills, R&D,etc.

Too much calculations andcontinuous recording expensiveand time consuming

As valuation of assets changes withtime it is difficult to find out standard

rate of return Discourages risk taking


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Responsibility accounting

It is a system of accounting in whereby

the performance is judged by assessingthe achievement of every individual.

Types:

Cost Centre

Profit Centre

Investment Centre


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PERT and CPM

Perspective management.pptx

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