Approaches to

Maintaining Control

Prepared By:Tribeni Gogoi

Shreyash PatelNimesh Soni

Traditional Control process The traditional control

process includes:

• Establishing a standard, goal, or target; measure actual performance against standard; and taking corrective action.

• It also involves analyzing reasons for deviations, reviewing alternative courses of action, and choosing/implementing the most promising solutions.

Traditional Control System

Controlling

Traditional control systems involve setting standards and then monitoring performance.

There are three types of traditional controls: Diagnostic controls Boundary controls, and Interactive controls.

Diagnostic Control Systems and Budgetary Systems Diagnostic control systems aim to ensure

that the firm’s targets and goals are being met and that any discrepancies can be diagnosed and explained.

Budgets

Budgets (e.g., income statement, balance sheet, etc.) are probably the most widely used control device.

They are formal financial expressions of a manager’s plans. The first step in budgeting is to develop a sales forecast and sales budget.

Count…..

Managers also use financial ratio analysis to monitor performance and maintain control.

Financial ratios compare one financial measure on a financial statement to another. Analyzing these rations helps managers understand their firm’s performance.

Boundary Control Systems

Boundary control systems establish the rules or boundaries and identify actions and pitfalls that must be avoided. Examples of boundary controls include ethics standards, codes of conduct, and strategic policies.

Personal/Interactive Control Systems Interactive strategic control is a real-

time, usually face-to-face method of monitoring both a strategy’s effectiveness and the underlying assumptions on which the strategy was built.

This approach can be very useful for managing change because managers can get a better feel for the importance of information through face-to-face communication.

The Commitment-Based Control Process Commitment-based

control relies on employees’ self-control to keep things under control.

Commitment-based control systems rely on getting the employees themselves to want to do things right—they emphasize self-control.

Examples: Target Setting by Employees itself

Self Discipline code generated by mutual understanding.

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