MODULE 7 – FUNDAMENTALS OF BUSINESS MANAGEMENT 102
MODULE 7 – CONTROLLING
INTRODUCTION
Controlling is the process of measuring and correcting activities (plans, organizations,
personnel, etc) of an organization. Controlling determines what is being tackled by
evaluating the performance and, if there is a deviation, by applying corrective measures
so that the activities take place according to plans. Controlling can be considered as the
activity for knowing and correcting important changes in the activities that are planned.
Normally, a business organization experiences some errors and negative performance
so that the function of controlling is necessary. However, it is important to keep in mind
that the objective of controlling is positive to achieve the goal within stated constraints,
or by means of the planned activities.
LEARNING OUTCOMES:
After reading this module, the learner should be able to:
1. Define controlling and its nature
2. Understand control process and characteristics of control
3. Identify the types of control
4. Control methods and systems
TIME:
The time allotted for this module is 3 hours.
LEARNER DESCRIPTION
The participants in this module are BSBA and BSA students.
FBM1- Fundamentals of Business Management
MODULE 7 – FUNDAMENTALS OF BUSINESS MANAGEMENT 103
MODULE CONTENTS:
LESSON 7.1: Nature of Controlling
In a situation where the other fundamental functions of management are performed
perfectly, controlling is still inevitable, for it is used to further effect some improvements.
The consequence of controlling these new management practices means big savings of
millions of pesos in operations.
Planning is related to controlling. Planning identifies the things to do for future
accomplishment. The failure of controlling would mean failure of planning, and success
of planning means success of controlling.
The manager can use this information to:
1. Prevent crises
2. Standardization outputs
3. Appraise employee performance
4. Update Plans
5. Protect and organization’s assets
THE BASIS FOR COST CONTROL
TYPES OF COST COMPONENTS
-Wages and salaries of workers engaged in
DIRECT LABOR the direct generation
-does not include wages and salaries of
support or office personnel
-Cost of tangible part of finished goods and
MATERIALS services
-Training new employees, safety training,
PRODUCTION OVERHEAD-VARIABLE supervision and clerical, overtime premium,
shift premium, payroll taxes, vacation and
holiday, retirement funds, group insurance,
supplies, travel, repairs and maintenance
-Travel, research, and development, fuel,
PRODUCTION OVERHEAD-FIXED electricity, water, repairs and maintenance,
rent, depreciation, real estate taxes,
insurance
FBM1- Fundamentals of Business Management
MODULE 7 – FUNDAMENTALS OF BUSINESS MANAGEMENT 104
Activity 7.1.1: To be uploaded in LMS
References:
Chapter 7- controlling (Management Filipinos, Principles and Practices by Conrado E.
Inigo, JR., Ph.D., DBE)
FBM1- Fundamentals of Business Management
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LESSON 7.2: THE CONTROL PROCESS
1. Establishing Standards. Standards are desired levels of performance and
constitute the foundation of the control process. These serve as the criteria
against which the performance is evaluated by the manager.
2. Measuring Performance against the established standards. It provides real
documented information which is subsequently compares with the established
standard.
1. MONITORING STAGE MEASUREMENT OF ACTUAL PERFORMANCE
2. REVIEWING STAGE COMPARISON OF ACTAUL AND PLANNED PERFORMANCE
3. CORRECTING STAGE TAKE CORRECTIVE ACTION
4. FOLLOW-UP STAGE
FOLLOW THROUGH ACTIONS
CHARACTERISTRICS OF CONTROL
- Attuned to the activity
- Deviations must be identified quickly
- Control must be forward-looking
- Controls must be strategically oriented
- Controls should be flexible
- Controls should be economical
- Control should be easy to understand
- Control should indicate corrective action
TYPES OF CONTROL
1. Controls used to standardize performance
2. Controls used to safeguard company assets
FBM1- Fundamentals of Business Management
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3. Controls used to standardize quality
4. Controls designed to set limits within which delegated authority can be
exercised without further top management approval
5. Controls used to measure job performance
6. Controls used for planning and programming operations
7. Controls necessary to allow top management to keep the firm’s varioys
plans and programs in balance
8. Controls designed to motivate individuals
Activity 7.2.1: TO BE UPLOADED IN LMS
References:
Chapter 7- controlling (Management Filipinos, Principles and Practices by Conrado E.
Inigo, JR., Ph.D., DBE)
FBM1- Fundamentals of Business Management
MODULE 7 – FUNDAMENTALS OF BUSINESS MANAGEMENT 107
LESSON 7.3: CONTROL METHODS AND SYSTEMS
TWO KINDS OF CONTROL METHODS
BEHAVIOR CONTROL. Based on direct, personal surveillance.
OUTPUT CONTROL. Based on measurement of outputs
WRITTEN REPORTS
Analytical Reports- interpret the facts they present
Informational Reports- only present the facts
AUDIT
External Audits- normally done by outside accounts and are limited to financial
matters
Internal Audits- performed by the organization’s own personnel.
Break-Even Charts- depict graphically the relationship of volume of operations
to profits.
Activity 7.3.1: to be uploaded in LMS
References:
Chapter 7- controlling (Management Filipinos, Principles and Practices by Conrado E.
Inigo, JR., Ph.D., DBE)
ONLINE READING MATERIALS:
Read Chapter 7 ppt uploaded in UBIAN LMS.
ONLINE VIDEO LINKS AND MATERIALS:
Watch the online video lecture of the course instructor uploaded at NEO LMS and to the
class shared Google drive (if applicable).
Live online class via Zoom or Googlemeet
TEST YOUR KNOWLEDGE:
MODULE REFERENCES:
Management Filipinos Principles and Application, 2015, Conrado E. Inigo, JR., Ph.D.,
DBE
FBM1- Fundamentals of Business Management
