CBSE Class 12 Business Studies Chapter 8: Controlling NCERT Solutions

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This section provides detailed NCERT Solutions for Class 12 Business Studies, Chapter 8: Controlling. It covers the fundamental meaning of controlling, its relationship with planning, and the importance of focusing on key result areas. The solutions explain techniques like budgetary control and management audit, highlighting how they help in monitoring performance and ensuring organizational goals are met efficiently. It also elaborates on the systematic steps involved in the controlling process, from setting standards to taking corrective actions. These solutions are designed to help students grasp the core concepts of managerial control, understand its practical applications, and prepare effectively for their examinations by clarifying complex topics with clear, step-by-step explanations.

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BoardCBSE
ClassClass 12
SubjectBusiness Studies
Session2026
LanguageEnglish
TypeNCERT Solutions
Chapter8. Controlling (Revision Notes)

Chapter summary

Chapter 8 of the CBSE Class 12 Business Studies syllabus focuses on the Controlling function of management. These NCERT Solutions break down the concept of controlling, emphasizing its role in ensuring that organizational activities align with planned objectives. The solutions cover the relationship between planning and controlling, the importance of focusing on critical areas, and specific control techniques such as budgetary control and management audits. They also detail the systematic process of controlling, including setting standards, measuring performance, comparing results, analyzing deviations, and taking corrective actions, providing a thorough understanding for students.

Learning outcomes

  • Understand the meaning and importance of the controlling function in management.
  • Explain the relationship between planning and controlling.
  • Identify and explain key control techniques like budgetary control and management audit.
  • Describe the steps involved in the controlling process.
  • Analyze the significance of focusing on Key Result Areas (KRAs) in controlling.
  • Evaluate the effectiveness of different control mechanisms.

Topics covered

Paper topics

  • Meaning of Controlling
  • Relationship between Planning and Controlling
  • Focus on Key Result Areas (KRAs)
  • Techniques of Managerial Control
  • Budgetary Control
  • Management Audit
  • Steps in the Controlling Process
  • Setting Performance Standards
  • Measurement of Actual Performance
  • Comparison of Actual Performance with Standards
  • Analysis of Deviations
  • Taking Corrective Action

Important topics

  • Steps in the Controlling Process
  • Relationship between Planning and Controlling
  • Meaning and Importance of Controlling
  • Budgetary Control
  • Management Audit
  • Analysing Deviations and Taking Corrective Action

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Questions and Solutions

1. Explain the meaning of controlling.

Explain the meaning of controlling.
Solution: Controlling is a fundamental managerial function that ensures organizational activities are performed in accordance with the established plans. It involves monitoring performance, comparing it against set standards, and taking corrective actions when necessary. The primary aim is to ensure that the organization's resources are utilized effectively and efficiently to achieve its predetermined goals. Therefore, controlling is a goal-oriented process that is vital for the successful operation of any organization.

2. Planning is looking ahead and controlling is looking back comment.

Planning is looking ahead and controlling is looking back, comment on this statement.
Solution: The statement that 'Planning is looking ahead and controlling is looking back' is partially correct but incomplete. Planning is indeed a forward-looking function, as it involves setting objectives and deciding on the future course of action. Controlling, on the other hand, measures current performance against past standards and identifies deviations. In this sense, it looks back at what has happened. However, the ultimate purpose of controlling is to take corrective actions that will improve future performance and ensure future plans are met. Therefore, controlling also has a forward-looking aspect. Both functions are interdependent and cyclical; the insights gained from controlling inform and refine future planning.

3. 'An effort to control everything may end up in controlling nothing'. Explain.

Explain the statement: 'An effort to control everything may end up in controlling nothing'.
Solution: This statement highlights the principle of focusing control efforts on critical areas rather than attempting to monitor every single activity. Trying to control everything can lead to a diffusion of effort, making the process inefficient, uneconomical, and impractical. Effective control concentrates on Key Result Areas (KRAs) – those aspects of performance that are crucial for achieving organizational objectives. By identifying and monitoring these critical points, management can ensure that significant deviations are addressed promptly, leading to more effective overall control.

4. Write a short note on budgetary control as a technique of managerial control.

Write a short note on budgetary control as a technique of managerial control.
Solution: Budgetary control is a significant managerial control technique that involves establishing budgets for all organizational operations and then comparing the actual results with these budgeted figures. A budget is a detailed plan outlining expected revenues and costs for a specific future period. By comparing actual performance against the budget, management can identify variances (differences between planned and actual outcomes). This comparison helps in pinpointing areas where performance is not meeting expectations, allowing for timely corrective actions to ensure organizational objectives are met. Budgeting also aids in focusing on specific targets, motivating employees by providing performance benchmarks, ensuring optimal resource utilization, and assisting management in setting realistic standards.

5. Explain how management audit serves as an effective technique of controlling.

Explain how management audit serves as an effective technique of controlling.
Solution: A management audit is a comprehensive and systematic review of an organization's management functions, policies, and practices. It serves as an effective control technique by evaluating the efficiency and effectiveness of management itself. Key ways it aids controlling include:
  1. Identifying Deficiencies: It helps locate current and potential weaknesses or inefficiencies in how management functions are being performed.
  2. Improving Control Systems: By continuously monitoring management's performance, it helps in strengthening the overall control mechanisms within the organization.
  3. Updating Strategies: It ensures that existing managerial policies and strategies are reviewed and updated to align with changing environmental conditions, thereby enhancing future control.
Ultimately, a management audit provides insights that lead to improved decision-making and more effective control over organizational operations.

1. Explain the various steps involved in the process of control.

Explain the various steps involved in the process of control.
Solution: The controlling process is a systematic approach to ensuring that organizational activities align with plans. It involves the following key steps:
  1. Setting Performance Standards: The first step is to establish clear, measurable standards against which actual performance will be compared. These standards can be quantitative (e.g., units produced, cost incurred, time taken) or qualitative (e.g., employee morale, brand reputation).
  2. Measurement of Actual Performance: Once standards are set, the next step is to measure the actual performance achieved. This measurement should be done objectively using methods like personal observation, sample checking, or performance reports.
  3. Comparing Actual Performance with Standards: In this step, the actual performance is compared with the predetermined standards. This comparison helps to identify any deviations or variances between what was planned and what has actually been achieved.
  4. Analysing Deviations: Not all deviations require immediate action. This step involves analyzing the identified deviations to determine their significance. Management should identify an acceptable range of deviations and focus attention on those that exceed this range, especially in critical areas of the business. Techniques like critical point control and management by exception are useful here.
  5. Taking Corrective Action: The final step is to take appropriate corrective actions to address the deviations. If deviations are within the acceptable range, no action may be needed. However, if significant deviations occur, management must intervene to correct the course of action. In some cases, if the deviations cannot be corrected through managerial action, the standards themselves may need to be revised to be more realistic.

Common mistakes

  • Confusing controlling with just punishment or finding fault.
  • Believing controlling is only backward-looking, ignoring its forward-looking corrective aspect.
  • Attempting to control every single activity, leading to inefficiency.
  • Not setting clear, measurable performance standards.
  • Failing to analyze deviations effectively or take appropriate corrective actions.

Revision tips

  • Focus on understanding the step-by-step process of controlling.
  • Differentiate between planning and controlling, and understand their interdependence.
  • Memorize the key features and benefits of techniques like budgetary control and management audit.
  • Relate the concepts to real-world business scenarios to solidify understanding.
  • Practice explaining the 'An effort to control everything may end up in controlling nothing' concept with examples.

Practice MCQs

Q1. What is the primary goal of the controlling function in management?

Q2. Which statement best describes the relationship between planning and controlling?

Q3. The statement 'An effort to control everything may end up in controlling nothing' emphasizes the importance of:

Q4. Budgetary control is a technique that involves:

Q5. Which step in the controlling process involves determining the acceptable range of deviations?

Frequently asked questions

What is the core meaning of controlling in business management?

Controlling means ensuring that organizational activities are performed according to the plans and that resources are used effectively and efficiently to achieve the desired goals.

How are planning and controlling related?

Planning and controlling are inseparable. Planning sets the goals and outlines the path, while controlling monitors progress, compares actual performance with plans, and takes corrective actions to ensure goals are met. Feedback from controlling also informs future planning.

Why is it important to focus on Key Result Areas (KRAs) in controlling?

Focusing on KRAs is crucial because attempting to control every single activity can be uneconomical and inefficient. Controlling KRAs ensures that critical areas impacting organizational success receive the necessary attention.

What are the main steps involved in the controlling process?

The controlling process involves: 1. Setting performance standards, 2. Measuring actual performance, 3. Comparing actual performance with standards, 4. Analyzing deviations, and 5. Taking corrective action.

What is budgetary control?

Budgetary control is a technique where actual results are compared with budgeted figures to identify deviations and take corrective actions, ensuring financial objectives are met.

How does a management audit help in controlling?

A management audit reviews the efficiency and effectiveness of management functions, identifying deficiencies and suggesting improvements to enhance the overall control system and future performance.

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