Controlling

Question 1

What is controlling?

Answer 1

Control in the management process is concerned with guiding and regulating the activities of an organisation, or any constituent parts of the organisation, by means of management judgement, decision, and action, for the purpose of attaining agreed objectives

Question 2

The Planning Process

Answer 2

Formulate plans –> Implement plans –> Compare outcomes with set targets –> Evaluate and take corrective action

Question 3

Manager vs controller

Answer 3

Manager: Responsible for
the results and
strategic
success factors
§ plans
§ organizes
§ controls
§ leads.

Controller: Responsible for transparency, assists to achieve the result with
§ informational,
§ decision-making,
§ and co-ordinational
service
as well as the moderator of planning

Question 4

The purposes of control

Answer 4

Minimizing costs, Adapting to environmental change, Limiting the accumulation of error, Coping with organizational complexity

Question 5

Complex and turbulent business environment

Answer 5

Complex and turbulent business environment: between the time a goal is
established and the time it is reached, many things can happen in the organization and its environment to disrupt movement toward the goal—or even to change the goal itself.
* A properly designed control system can help managers anticipate, monitor, and respond to changing circumstances.
* An improperly designed system can result in organizational performance
that falls far below acceptable levels

Question 6

Limiting the accumulation of error

Answer 6

Small mistakes and errors do not often seriously damage the financial health of an organization. Over time, however, small errors may accumulate and become very serious.

Question 7

Strategic and operational control

Answer 7

Strategic control: Attempts to steer the company over an extended period of time (5+ years)

Operational control: Provides post-action evaluation and control over short periods – 1 month to a year

Question 8

Premise control

Answer 8

• Every strategy is based on certain planning premises—assumptions or predictions.
• Premise control checks systematically and continuously whether the
  premises on which the strategy is based are still valid.
• Premises are concerned with: Environmental factors (economic trends, technology, interest rates, regulations, etc.) and Industry factors (competition, markets, customers, etc.)
• Key questions: Which premises should be monitored? How are premise controls enacted?

Question 9

Implementation control

Answer 9

• Implementation control is designed to assess whether the overall strategy should be changed in light of the results.
• Measurable targets need to be set to assess whether or not the strategy is working and the key milestones set to ensure that appropriate progress is being made.

Two types:
* Monitoring strategic thrusts: projects that need to be done if the strategy is accomplished and information on the strategy’s progress
* Milestone review: critical events and resource allocations through time, ans full-scale assessment to scrutinize the strategy

Question 10

Strategic surveillance

Answer 10

• Strategic surveillance is designed to monitor a broad range of events inside and outside the firm that are likely to affect the course of its strategy.
• Important yet unanticipated information may be uncovered by a
  general monitoring of multiple information sources such as trade magazines, industry conferences, business bulletins, online sources, etc.

Question 11

Special alert control

Answer 11

A special alert control is the thorough, and often rapid
reconsideration of the firm’s strategy because of a sudden,
unexpected event. E.g.:
* natural disaster,
* terrorism
* criminality
* incompetence

Question 12

Budgets

Answer 12

• The budgetary process was the forerunner of strategic
  planning.
• A budget is a resource allocation plan that helps managers coordinate operations and facilitates managerial control of performance

Question 13

Scheduling

Answer 13

• Time is a key factor in the success of a strategy.
• Scheduling considerations in allocating time-constrained
  resources and sequencing interdependent activities often determine the success of strategy implementation.
• Scheduling offers a mechanism with which to plan for, monitor, and control these dependencies.

Question 14

Identifying critical success factors

Answer 14

Factors
* that identify the performance areas that are of greatest importance in implementing the company’s strategies;
* must receive continuous management attention.
Must have measurable performance indicators!

Question 15

(Reasons for) Resistance to Control

Answer 15

• Overcontrol—too many things are controlled
• Inappropriate focus—too narrow or too wide
• Rewards for inefficiency
• Too much accountability—People who do not want to be answerable for their mistakes