Controlling Class 12 Business Studies Exam Questions

Please refer to Controlling Class 12 Business Studies Exam Questions provided below. These questions and answers for Class 12 Business Studies ave been designed based on the past trend of questions and important topics in your class 12 Business Studies books. You should go through all Class 12 Business Studies Exam Questions provided by our teachers which will help you to get more marks in upcoming exams.

Class 12 Business Studies Exam Questions Controlling

Class 12 Business Studies students should read and understand the important questions and answers provided below for Controlling to understand all important and difficult topics.

Short Answer Type Questions :

Question. Timely Ltd. is a manufacturer of premium wall clocks. The company has been doing extremely well and has been able to carve a niche in the market. The company recently decided to go global. To achieve the above objective, the company decided to increase its production to 30,000 units per month. But, after two months, the management observed that only 45,000 units were manufactured. Company is opting for a good control system in order to achieve the targets on time. In context to this, give some of the advantages of controlling.
Ans. Some advantages of good control system are as follows
(i) Motivation to the Employees It is a source of motivation to the employees, who knows the standards against which their performance will be evaluated.
(ii) Optimum Utilisation of Resources By allocating the resources according to the requirements of the different departments, it helps in optimum utilisation of resources.
(iii) Facilitating Co-ordination in Action It provides direction to all activities and each department and employee is governed by predetermined standards, which helps in establishing co-ordination among them.

Question. ‘AS Ltd’ is a large company engaged in assembly of air-conditioners. Recently, the company had conducted the ‘time’ and ‘motion’ study and concluded that on an average a worker can assemble ten air-conditioners in a day. The target volume of the company in a day is assembling of 1,000 units of air-conditioners. The company is providing attractive allowances to reduce labour turnover and absenteeism. All the workers are happy. Even then the assembly of air-conditioners per day is 800 units only.
To find out the reason, the company compared actual performance of each worker and observed through CCTV that some of the workers were busy in gossiping.
(i) Identify the function of management discussed above.
(ii) State those steps in the process of the function identified which are discussed in the above paragraph.
Ans. (i) Controlling function
(ii) Steps in the process of control discussed above are as follows
Step 1 Setting Performance Standards Through ‘time’ and ‘motion’ study, an average worker can assemble 10 air-conditioners in a day. On this basis, target volume of 1,000 units per day is set.
Step 2 Measurement of Actual Performance Assembly per day is 800 units.
Step 3 Comparison of Actual Performance with Standards The company compared actual performance of each worker.
Step 4 Analysing Deviations Observed through CCTV that some of the workers were busy in gossiping.

Question. In KCF Ltd, a food joint, it is being observed that sales are declining day-by-day as the company is not able to produce products as per the satisfaction of customers. Suggest, if the company imposes a control system, it would be effective or not.
Ans. As per the limitations of controlling, there are many areas in business where measurable standards cannot be set. Such areas are employees morale, job satisfaction and
customer satisfaction. Thus, from this aspect, it is difficult to measure customer satisfaction.
Even if a manager imposes a control system, it will depend more on his capabilities. He can initiate customer feedback and get information on quality of food, waiting time, service quality, attitude of waiters, etc. This information might be quite useful in finding the problem areas and thus the company can work towards improvement in customers’ satisfaction.

Question. ‘‘Control implies taking action.’’ Explain.
Ans. The purpose of control is not only to detect errors and defects in performance of work, but also to adopt remedial measures. Without taking corrective actions, control has no meaning. The base of controlling process is taking actions in order to ensure that the actual activities conform to the planned activities. For example, if actual output falls short of standard output, we take several actions like checking the raw material, checking the production activities, corrective actions may be taken analysis of standards, reassignment of duties, bringing change in the style of production etc.

Question. ‘‘An ideal control technique is the one that checks every bit of performance.’’ Comment.
Ans. This statement is not true. An ideal control system should concentrate on key aspects of performance. There are several activities to be controlled. In practice, it is not possible for management to control each and every activity due to limited time. Moreover, minor deviations from plans and targets are insignificant for success. Therefore, an attempt to control everything is likely to be a futile exercise. Control system should focus attention on exceptional and key factors only. This will help to save time, efforts and money.
On the other hand, controlling each and every activity results in delays, increased cost and neglect of key items. The control system should be designed in such a manner that only significant deviations from the standards are reported to the higher level managers.

Question. Blue Pharmacy is a company engaged in the production of life-saving drugs. The company has no internal system of performance appraisal and for the past two years, it has not declared any incentives or bonus to its employees, inspite of enormous profits. One of its employee, Mr. Sangeet has discovered a new medication for dengue during in-house research. The company has got patent on it in its own name and no reward or compensation was given to Sangeet. All these factors have de-motivated the eomployees and the company is started facing the problem of high employee turnover ratio, increased absenteeism, falling levels of productivity, etc. Due to a combined result of all these factors, Blue Pharmacy was not able to meet its organisational objectives. Design a control plan, suggesting measures to Blue Pharmacy to be able to achieve its objectives.
Ans. Under such circumstances, Blue Pharmacy should implement a control plan covering following points
(i) Performance based appraisal system should be introduced.
(ii) Employees like Mr. Sangeet should be given due acknowledgement for their achievements.
(iii) Proper communication of tasks should be made and feedback should be collected from time-to-time.

Question. Explain how controlling helps in
(i) accomplishing organisational goals.
(ii) judging accuracy of standards. 
Ans. (i) Accomplishing Organisational Goals The controlling function measures the accomplishment against the standards and corrects deviations. This helps in ensuring that organisation is moving on the right track to achieve organisational goals.
(ii) Judging Accuracy of Standards A sound controlling system helps the management to verify whether the standards set are accurate and relevant or not. It keeps a careful check on the changes, which are taking place in the organisation.

Question. XYZ Ltd. is a leading manufacturer of bone China cups. Recently, the company had conducted a comparative analysis, concluded that on an average, workers could produce 120 units per day. However, it has been noticed that they were producing only 80-90 units per day, due to lack of resources and obsolescence of machinery.
(i) What steps will you suggest to ensure that the actual performance is in accordance with the planned targets?
(ii) Who is responsible for the non-completion of work?
Ans. (i) Following steps should be taken
(a) Provide resources in advance.
(b) Resources should be of standard quality.
(c) Establishing modern machinery.
(d) Provide incentives to workers so that they will be motivated to perform well.
(ii) Company is responsible as it is not providing resources on time. Secondly, the work is conducted on obsolete or out dated machinery.

Question. ILT Ltd. is a small enterprise. Suggest whether this company can afford to install an expensive control system or not.
Ans. Controlling is an expensive and time taking process. Considerable time and huge expenditure is required to install a control system. Thus, it is suggestive that small enterprises should not install it, as it may not justify the expenses involved. Personal observation method can be adopted for this purpose, since it is a less expensive way to monitor the progress of tasks and behaviour of employees.

Question. Vikas was the chief operation officer of ‘Yalet Ltd’. a company providing advanced software solutions of Indian Defence Services. They had been carrying on business successfully for the last twelve years and earning enough profits. But from the last one year, they realised that though the business is getting big orders which are being fulfilled in time, even then the revenues kept on decreasing. Vikas was not able to find out where the problem was. He started keeping a close check on the progress of activities as he could sense that something was wrong. He wanted to take some action before any major damage could be done to the business. Vikas appointed a cyber security expert who monitored the company’s processes and found out that the computer operator was deleting the entries from the computers and pocketing the revenues. He was caught and handed over to the police. This created an atmosphere of order and discipline in the organisation and helped in minimising dishonest behaviour on the part of the employees.
(i) Identify the function of management highlighted in the above paragraph.
(ii) Explain any three other ways in which this function of management may help the organisation. 
Ans. (i) The function of management highlighted here is controlling.
(ii) Controlling help the organisation in following ways 
(a) Accomplishing Organisational Goals It measures progress towards the organisational goals and find out deviations. In the absence of control system, activities may not be carried out according to plans. Thus, we can say, it guides the organisation and keeps it on the right track, so that it can attain its goals.
(b) Judging Accuracy of Standards Through an effective control system, managers can easily judge the accuracy of standards. It also keeps a careful check on the changes taking place in the organisation and in the environment, which facilitates the review of standards, in the light of such changes.
(c) Making Efficient Use of Resources By exercising control, a manager seeks to reduce wastage and spoilage of resources. Each activity is performed in accordance with predetermined standards and norms, which helps in effective and efficient utilisation of resources.

Question. ‘‘An effort to control everything may end up in controlling nothing.’’ Explain.
Ans. It is true that an effort to control everything may end up in controlling nothing. To make control effective and economical, one must focus attention on factors critical to performance. e.g. In a large organisation, keeping a close check on each and every activity will be very time consuming and expensive. Therefore, managers should pay serious attention to only such cases, which are critical to success, i.e., KRAs.

Question. XYZ Ltd. is a manufacturer of wall clocks and the company is opting a good control system in order to achieve the targets on time. In context of this, give some of the advantages of controlling.
Ans. A good control system enables a manager to verify whether standards set are accurate or not.
Following are the advantages of controlling
(i) A good control system helps in improving the quality of the product which in result, increases the goodwill of the company.
(ii) It helps in minimising the wastage of resources. 
(iii) It facilitates the fixation of responsibility and one knows upto what level he/she has to perform.
(iv) It also facilitates the coordination and thus, work flows smoothly in the organisation and finishes in time.

Question. You are the manager of a tyre manufacturing company. If it is reported to you that postal expenses have increased by 20% and cost of raw materials by 2%, which of the two deviations is more critical to you. Give reason.
Ans. A 2% increase in the cost of raw material is more critical, as the deviation which is occurring in Key Result Areas (KRAs) should be corrected first. A 2% increase in cost of
raw material will have an impact on the profitability, thus it is a KRA. Whereas, 20% increase in postal cost will not have much of the impact on profitability of the company.

Question. How does controlling help in decision-making?
Illustrate your answer with a suitable example.
Ans. Controlling involves taking corrective actions whenever required. In an organisation, first, the manager plans in advance, what is to be done, then through controlling, he measures the progress and keeps checking that everything is in accordance with plan or not and if there is any deviation, he takes preventive measures to correct that deviation.
In this way, it facilitates decision-making. e.g. Suppose in XYZ Ltd. production is delayed due to lack of resources, then through the controlling function, manager takes decision to provide resources on time.

Question. The manager of production department of Allistar Pvt. Ltd. engaged in manufacturing of pens, is of the opinion that even the minutest deviation should be emphasised upon and corrective action should be taken immediately.
(i) Do you agree with his opinion.
(ii) Explain the advantages of using critical point control.
Ans. (i) No, I do not agree with the opinion of production manager.
(ii) The following are the advantages of critical point control
(a) It saves time and effort of the managers as they deal with major deviations only.
(b) There is better utilisation of managerial talent.
(c) It facilitates delegation of authority and increases morale, when routine problems are left to the subordinates.
(d) Timely action helps to keep the organisation on the right track.

Long Answer Type Questions :

Question. Ram Rahim is the sales head of Good Fortune Ltd. His team includes three people. Each of the three team members are supposed to sell 20 electric mixers in a month. At the end of the month of March, he checked the reports of sales persons. 2 members sold less than 20 mixers, whereas one member sold more than 20 mixers. He decided to hear the reasons of non- accomplishment of target. The reasons they disclosed was the inadequate supply of mixers which lead to less sales. Ram Rahim directed the production department to ensure timely supply of mixers in future.
(i) Name the function of management discussed above.
(ii) State the steps of function identified in part (i)
by quoting the lines.
Ans. (i) Controlling
(ii) Steps of Controlling are
(a) Setting Performance Standards “Each of the three team members are supposed to sell 20 electric mixers in a month.
(b) Measurement of Actual Performance “At the end of the month of March, he checked the reports of sales persons.”
(c) Comparing Actual Performance with Standards “2 members sold less than 20 mixers, whereas one member sold more than 20 mixers.”
(d) Analysing Deviations “He decided to hear the reasons of non-accomplishment of target. The reasons they disclosed was the inadequate supply of mixers which lead to less sales.”
(e) Taking Corrective Actions “Ram Rahim directed the production department to ensure timely supply of mixers in future.”

Question. Briefly explain the nature of controlling.
Ans. Nature of controlling can be described through the points mentioned below
(i) Goal-oriented Process Since, controlling ensures that an organisation’s resources are effectively and efficiently utilised for achievement of goals, it is regarded as a goal-oriented process.
(ii) Pervasive At the same time, controlling is performed by all managers, i.e. top, middle and lower managers, to keep a check on the activities of their subordinates. It is equally required in a hospital, a club, an educational institution, etc. Therefore, it is regarded as a pervasive function.
(iii) Continuous Control should not be misunderstood as the last function of the management process. By analysing deviations and taking corrective action, it helps in formulating better plans for the future. Thus, it is a function that brings the management cycle back to planning and is regarded as a continuous function.
(iv) Both a Backward Looking as well as a Forward Looking Function Controlling is backward looking process because it is like a postmortem of past activities to find out deviations from standard plans and it is also a forward looking process, as it seeks to improve future results by taking corrective action.

Question. Give the meaning of ‘controlling’. Explain the steps in the process of controlling.
Ans. Controlling refers to the process of measurement of performance according to standards, measuring deviations and taking corrective action to achieve pre-determined goals. In order to seek results, manager must exercise effective control over the workers. 
Following are the steps in the controlling process
(i) Setting Performance Standards The first step in the process is the establishment of standards of performance. Standards are the criteria against which actual performance would be measured. Thus, standards serve as benchmarks or yardsticks towards which an organisation strives to work.
(ii) Measurement of Actual Performance Once the standards are fixed, the next step is to measure the actual performance. Generally, it is conducted by the managers to analyse the overall efficiency level of the employees. While measuring the performance, objective and reliable methods should be used, such as sample checking, preparing reports, personal observation, etc.
(iii) Comparing Actual Performance with Standards This step involves comparison of actual performance with the standard. Such comparison helps in revealing the deviations between actual and desired results. Comparison becomes easier when standards are set in quantitative terms.
(iv) Analysing Deviations Under this step, deviations in key areas of business need to be attended on urgent basis as compared to deviations in certain insignificant areas. There is a need to determine the acceptable range of deviations in all operational areas. Following points should be kept in mind, while analysing deviations
(a) Critical Point Control According to this principle, control system should first focus on Key Result Areas (KRAs) which are critical to the success of the organisation.
Therefore, if anything goes wrong at the critical points or key areas, immediate action should be taken.
(b) Management/Control by Exception It suggests that, if manager tries to control everything, he may end up in controlling nothing. Thus, he should first handle the significant deviations, which require his priority.
(v) Taking Corrective Action This is the final step in which manager takes corrective measures to bring back everything on track in the organisation. After the deviations and their causes are analysed, the task is to remove the hurdles from the actual work plan. The purpose of this step is to bring the actual peformance up to the level of expectations by taking corrective measures.

Question. Sawaj Ltd. is a manufacturer of wrist watches and the company is opting a good control system in order to achieve the targets on time. In context of this, give some points of importance of controlling.
Ans. Importance of controlling is as follows 
(i) Accomplishing Organisational Goals It measures the accomplishment of work against the standards and corrects deviations. This helps in ensuring that organisation is moving on right track to achieve the organisational goals.
(ii) Judging Accuracy of Standards A sound controlling system helps the management to verify whether the standards set are accurate and objective. It keeps a careful check on the changes, which are taking place in the organisation and in the environment, thereby helping to review and raise the standards in the light of such changes.
(iii) Making Efficient Use of Resources By exercising control, a manager seeks to reduce wastage and spoilage of resources. Each activity is performed in accordance with predetermined standards and norms, which helps in effective and efficient utilisation of resources.
(iv) Improving Employees Motivation It helps employees in realising, what they are expected to do and what are the standards of performance, on the basis of which they are appraised. This motivates them to perform better.
(v) Ensuring Order and Discipline By keeping a check on the activities of the workers, controlling creates an atmosphere of order and discipline among them. It also helps to keep a check on the dishonest behaviour of employees.
(vi) Facilitating Co-ordination in Action It provides direction to all activities and each department and employee is governed by predetermined standards, which helps in establishing co-ordination among them.

Question. Managers at a New York City import-export company suspected that two employees were robbing it. Corporate Defense Strategies (CDS) of Maywood, New Jersey, advised the firm to install a software program that could secretly log every single stroke of the suspects’ computer keys and send an encrypted e-mail report to CDS. Investigators revealed that the two employees were deleting orders from the corporate books after processing them, pocketing the revenues, and building their own company from within. The programme picked up on their plan to return to the office late one night to steal a large shipment of electronics. Police hid in the rafters of the firm’s warehouse, and when the suspects entered, they were arrested. The pair was charged with embezzling $3 million over two and a half years, a sizable amount of revenue for a $25 million-a-year firm.
(i) With reference to the above case, explain the concept of controlling. 
(ii) Explain why controlling sometimes become ineffective.
Ans. (i) Controlling refers to the process of measurement of performance according to standards, measuring deviations and taking corrective action to achieve predetermined goals.
(ii) Controlling sometimes become ineffective because of the following reasons
(a) Difficulty in Setting Quantitative Standards Control system is effective when standards are defined in quantitative terms. But in some cases, like employee morale, job satisfaction, etc, it is not possible to set quantitative standards. In the absence of these standards, measurement and comparison becomes difficult.
(b) Little Control on External Factors There are certain external factors like change in government policies, technological changes, competition, etc, which are beyond the control of
the organisation. Thus, controlling such factors becomes difficult.
(c) Resistance from Employees Employees often resist control as they consider it as restriction or boundation on their freedom. e.g. Employees might resist working under close supervision of CCTV’s and cameras.
(d) Costly Affair Control is a costly affair as it involves a lot of expenditure, time and effort. A small firm cannot afford to install an expensive control system. The cost of control system should not exceed the benefits derived from it.