Mtp Controlling

CONTROLLING

Anuj Tagra (25) Shweta Singh (22) Anuja Deora (28) Vikash Bairoliya (04)

Controlling 

A process of monitoring performance and taking action to ensure desired results.

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Any process that directs the activities of individuals toward the achievement of organizational goals.

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It sees to it that the right things happen, in the right ways , in the right time.

Characteristics/ Strategies Of Controls System control

Features and requirements

Bureaucratic control Uses formal rules, standards, hierarchy, legitimate authority. Works best where tasks are certain and workers are independent.

Market control Uses prices, competition, profit centers, exchange relationships. Works best where tangible output ca be identified and market can be established betwe parties.

Clan control Involves culture, shared values, beliefs, expectation and trust. Works best where there is “no one best way” to do a job and where employees are empowered to make decisions.

The Control Process Set performance standards

Measure performance

Take corrective action

Compare

Determine deviation

Standards

Within limits

No

Yes

Continue work progress

Bureaucratic Control Systems Approaches to bureaucratic control Feedforward control - control process used before operations begin future oriented  prevent problems before they occur  includes policies, procedures, and rules 

Concurrent control - control process used while plans are being carried out

the heart of any control system  directing, monitoring, and fine-tuning activities as they are occur  advances in information technology have created powerful concurrent controls 

Bureaucratic Control Systems Feedback control Control that focuses on the use of information about previous results to correct deviations from the acceptable standard 

  

Implies that performance data were gathered and analyzed Results used to make corrections Timing is an important aspect of feedback control Some feedback processes are under real-time (concurrent) control

Six Sigma    

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A type of feedback control. Most important quality control tool. Developed by Motorola in the late 1980’s. GE Commercial introduced it in financial services domain. Six sigma achieves 99.99966 percent level of accuracy.

Relationship Between Sigma Level And Defects/Million Opportunities Sigma level DPMO

Examples of four sigma quality

2σ

308,537

3σ

66,807

4σ

6,210

5σ

233

5,000 incorrect surgical operations per week

6σ

3.4

200,000 wrong prescriptions each year

20,000 lost articles of mail per hour Unsafe drinking water 15 minutes per day

No electricity for 7 hours each month

Dabbawallas 

Dabbawala Association is Six sigma certified.

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Employee strength of 5000.

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Deliver 2 lacs dabbas everyday.

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They rely on low capital .

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Groups work independently and network.

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Meet once a month where all the groups gather and thrash out issues.

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No retirement age. People work as long as they want to.

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Involves a lot of physical exercise, so they rarely suffer from illnesses.

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Dabbawallas have a credit society which gets them through money crunches.

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Being ‘annadattas’ they are automatically treated with respect

How Is The Dabba Delivered 

The first dabbawalla picks up the tiffin from home and takes it to the nearest railway station.

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The second dabbawalla sorts out the dabbas at the railway station according to destination and puts them in the luggage carriage.

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The third one travels with the dabbas to the railway stations nearest to the destinations.

Scope of Competition

Working of Dabbawallas

Bureaucratic Control 

Management Audits • Evaluation of the effectiveness and efficiency of various systems within an organization.

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External Audit • Evaluation conducted by one organization, such as a CPA firm, on another.

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Internal Audit • Periodic assessment of a company’s own planning, organizing, leading, and controlling processes.

Budgetary Control ost widely recognized and commonly used method of managerial control udgeting rocess of investigating what is being done and comparing the results with the corresponding budget data

Budgetary Control Fundamental Budgetary Considerations Budgetary control proceeds through several stages

Types Of Budgets

Budgetary Control 

Accounting Audits • Procedures used to verify accounting reports and statements • Performed by an outside firm of public accountants

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Activity-Based Costing (ABC) • Cost accounting method that identifies streams of activity • Employees break down what they do to define basic activities • Total amounts spread over the activities according to time spent on each • Provides an accurate picture of how costs should be charged • Highlights where wasted activities are occurring

Financial Controls Balance Sheet Report that shows the financial picture of a company at a given time 

Shows trends over time

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Gives managers insight into overall performance

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Identifies areas which require adjustments

Profit and loss statement Itemized financial statement of the income and expenses of a company’s operations 

Comparisons of profits and losses can identify trouble areas

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A common control for the enterprise as a whole

Financial Controls inancial Ratios ndicate possible strengths and weaknesses calculated from selected items on the Profit and Loss statement and the Balance Sheet

iquidity ratios everage ratios rofitability ratios

Downside of bureaucratic control 

Rigid bureaucratic behavior • Acting in ways that make one look good on the control system’s measure

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Tactical behavior • Behavior aimed at “beating the system

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Resistance to control • control system can change expertise and power structures • control system can change the social structure • control system may be perceived as an invasion of privacy

Markets Control 

Market control  involves

the use of economic forces - and the pricing mechanisms that accompany them - to regulate performance

 as a market for these transactions becomes established:  

price becomes an indicator of the value of the product or service price competition effectively controls performance

 market controls at the corporate level   

used to regulate independent business units business units treated as competing profit centers profit and loss data used to evaluate performance

Markets Control 

Market control (cont.) • market controls at the business unit level 

regulates exchange among departments and functions

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transfer price - price charged by one unit in the organization for a product or service that it supplies to another unit of the same organization • ideally, reflects the price that the receiving business unit would have to pay for that product or service in the marketplace

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provide natural incentives to keep costs down when organization has the option to outsource products and services to external partners

Example Of Market Control CEO uses market controls to evaluate performance of business unit heads

Business unit manager

Market rates determine the base wage/salary for managers and employees

CEO/ President

Business unit manager

Business unit manager

Managers use transfer pricing to establish values for internal transactions among units Business unit manager

Clan Control 

Clan control: the role of empowerment and culture • Bureaucratic and market controls are no longer sufficient because:  employees’ jobs have changed  the nature of management has changed  the employment relationship has changed • Empowerment - has become a necessary aspect of a manager’s repertoire of control  employees trusted to act in the best interests of the firm  does not mean giving up management control • Clan control - create relationships built on mutual respect  encourage each person to take responsibility for her/his actions

Clan Control 

Clan control • diagnosing culture - clues about culture • corporate mission statements and official goals • business practices • symbols, rites and ceremonies • the stories people tell 

cultures can be categorized according to whether they emphasize flexibility versus control and whether their focus is internal or external to the organization

Clan Control 

Clan control (cont.) • diagnosing culture (cont.) • general cultures can be categorized 

group culture • dominant attribute: cohesiveness, participation, teamwork, sense of family • leadership style: mentor, facilitator, parentfigure • bonding: loyalty, tradition, interpersonal cohesion • strategic emphasis: toward developing human resources, commitment, and morale

Competing Values Model Of Culture Flexible Processes

Group

Adhocracy External Positioning

Internal Maintenance Hierarchy

Rational

Control-Oriented Processes

Management Control In An Empowered Setting 1.Put control where the operation is 2.Use “real controls

time”

rather

than

after-the-fact

3.Rebuild the assumptions underlying management control to build on trust rather than distrust 4.Move to control based on peer norms 5.Rebuild the incentive systems responsiveness and teamwork

to

reinforce

DESIGNING EFFECTIVE CONTROL SYSTEMS 1. Establish valid performance standards 2. Tend to expressed in quantitative terms 3. Provide adequate information Relevant ,right amount, accesible, feedback 4. Ensure acceptability to employees 5. Useful but not over controlling standards 6. Maintain open communication 7. Use multiple approaches

Performance Metrics     

Customer Satisfaction Market Share Revenue Growth Expenses Earnings

TIME EVENT NETWORK ANALYSIS PERT

•Circle – event •Arrow – activity •Activity times -numbers beside the arrows