Business Studies · Ch 8 — Controlling
Key Terms
Key Terms
- Controlling – The management function of comparing actual performance with predetermined standards and taking corrective action so that organisational goals are achieved.
- Critical Point Control – Focusing managerial attention on the key result areas (KRAs) most critical to an organisation's success, rather than trying to monitor every single activity equally.
- Management by Exception – The principle that only significant deviations beyond an acceptable limit should be brought to management's notice, since an attempt to control everything ends up controlling nothing.
- Breakeven Analysis – A traditional technique of managerial control that studies the relationship between costs, sales volume, and profit to identify the level of sales at which a business neither makes a profit nor a loss.
- Budgetary Control – A traditional technique in which budgets (quantified plans for a future period, such as a sales or production budget) are used as standards, and actual results are regularly compared against them.
- Return on Investment (ROI) – A modern technique that measures how efficiently the capital invested in a business is being used to generate profit.
- Ratio Analysis – A modern technique that evaluates a firm's financial performance — its liquidity, profitability, and solvency — through ratios calculated from its financial statements.
- Responsibility Accounting – A modern technique in which each responsibility centre (a department or manager) within an organisation is held accountable for the costs and/or revenues under its control.
- Management Audit – A modern technique involving a systematic appraisal of the overall performance of an organisation's management, to evaluate how efficiently it is functioning and suggest improvements. …