Bài giảng Management - Unit 10 Controlling

CONTROLLING Ngô Quý Nhâm, MBA Đại học Ngoại Thương Tel: (04)8356805 – 0904063835 Email: quynham@gmail.com NGO QUY NHAM, MBA Lecture outline  Control as a management function  The control process  Types of control  Assessing control systems NGO QUY NHAM, MBA Control as a management function Controlling: Process of regulating organisational activities so that actual performance conforms to expected organisational standards and goals. NGO QUY NHAM, MBA The Importance Of Control Controls help Managers  Coping with uncertainty  monitor specific activities and react quickly to significant changes in the environment more efficiently.  Detecting undesirable irregularities,  such as product defects, cost overruns or rising personnel turnover  Identifying possible future opportunities.  Handling complex situations  keep track of various major elements to be sure that they are well synchronized. NGO QUY NHAM, MBA Control as a management function Levels of control Strategic planning Strategic control Tactical planning Tactical control Operational planning Operational control NGO QUY NHAM, MBA The control process Steps in the control process: Determine areas to control Establish standards Measure performance Compare performance Recognise positive performance Control process steps Take corrective action Adjust standards NGO QUY NHAM, MBA Types of control Types by timing: Input Transformationprocesses Outputs Feed-forward control. Anticipating problems Concurrent control. Attending to problems as they occur Feedback control. Correcting problems after product/ service is produced NGO QUY NHAM, MBA The Principles Of Effective Control 1. Future-Oriented 2. Multi-dimensional 3. Acceptable to Organization Members  tailored to the culture 4. Simple 5. Cost Effective  the controls installed should not cost more than they will save. 6. Accurate NGO QUY NHAM, MBA The Principles Of Effective Control 7. Realistic  Control systems should incorporate realistic expectations about what can be accomplished. 8. Timely  be designed to provide data on the state of a given production cycle or process so that corrective action is taken promptly and consistently. 9. Monitorable  be monitorable to ensure they are performing as expected. 10.Flexible  be flexible enough to respond rapidly to changing environments, to meet new or revised requirements. NGO QUY NHAM, MBA Budgetary Control  Budgets are formal quantitative statements of the resources set aside for carrying out planned activities over given periods of time.  They are the most widely used means for planning and controlling activities NGO QUY NHAM, MBA Purposes Of Budgets  To Compel Planning  Budgeting force management to look ahead, setting targets, anticipating problems and giving the Organization purpose and direction.  To Communicate Ideas & Plans to Everyone Affected by Them  A formal system is necessary to ensure that each person is aware of what he or she is supposed to be doing.  To Co-ordinate the Activities of Different Departments  This concept of co-ordination implies, for example, that the purchasing department should base its budget on production requirements and that the production budget should in turn be based on sales expectations.  To Establish A System of Control  By having a plan against which actual results can progressively compared.  To Motivate Employees to Improve Their Performance  Two levels of attainment could be set, a minimum expectations budget, and a “desired standards” budget, which provides some sort of challenge to employees. NGO QUY NHAM, MBA Advantages Of Budgetary Control  They ensure that serious consideration is given before expenditure is indulged instead of afterwards.  Close examine tend to impose restraints on unrealistic ambitions and emphasize the need for practical and attainable goals.  Positive effect on co-ordination: Related departments must work together in order that their budgets may be compatible.  Managers and others responsible for budgets are disposed to try to ensure that the budget figures are adhered.  is the non-compliance with budgeted performance is brought to management’s attention at an early stage so that remedial action can be taken with the minimum of delay.  Monitoring may also reveal that the original budgets have been unrealistic and that the figures may have to be adjusted in the light of internal or external conditions.  Managers are responsible for their own budget figures they have an incentive to keep within the limits set, and to ensure that their staff comply with the constraints put upon the department. NGO QUY NHAM, MBA Disadvantages Of Budgetary Control  A budget is a monitoring aid, it is not a regulator.  If expenditure is necessary outside the scope of the budget to ensure efficient operation, this additional cost must be argued for and in many cases, not approved by Management.  When a budget surplus is available, departments tend to have the “must be used up” attitude.  It may be highly desirable that any surplus from one budget will not be passed over to a budget likely to be in deficit.  In times of fluctuating prices, budgeting becomes difficult and when high rates of inflation occur, budgets become out-of-date very quickly.  Budget planning and meeting is time consuming