All companies have to follow certain steps to apply control. Give an illustration (diagram) of these steps in the control process. Also include relevant labels.

Question 3

3.1 All companies have to follow certain steps to apply control. Give an illustration (diagram) of these steps in the control process. Also include relevant labels.

The control process typically involves four main steps:

• Illustration (Diagram of the Control Process):

  +-----------------------+
  | 1. Establish Standards|
  |  (e.g., goals, targets)|
  +-----------+-----------+
              |
              v
  +-----------+-----------+
  | 2. Measure Performance|
  |  (e.g., actual results)|
  +-----------+-----------+
              |
              v
  +-----------+-----------+
  | 3. Compare Performance|
  |   to Standards        |
  +-----------+-----------+
              |
              v
  +-----------+-----------+
  |  Decision Point:      |
  |  Is performance       |
  |  meeting standards?   |
  +-----------+-----------+
      | Yes           | No
      v               v
  +-----------+   +-----------+
  | 4a. Continue  | 4b. Take    |
  |     Operations|     Corrective|
  |               |     Action  |
  +---------------+   +-----------+
  

  Copy
  • Labels:
    • 1. Establish Standards: Define clear objectives, targets, or benchmarks.
    • 2. Measure Performance: Collect data on actual results.
    • 3. Compare Performance to Standards: Evaluate actual results against the established standards.
    • Decision Point: Determine if there is a significant deviation.
    • 4a. Continue Operations: If performance meets standards, maintain current activities.
    • 4b. Take Corrective Action: If performance deviates, implement changes to bring it back on track or revise standards.

3.2 Give a brief description of the meaning of the first step in the control process, 'define the subsystem' and identify key characteristics of the subsystem. Provide relevant examples to show your understanding.

• Meaning of the first step ('Establish Standards'): The first step in the control process is to establish standards. This involves setting clear, specific, and measurable targets or benchmarks against which actual performance will be evaluated. These standards serve as the criteria for what constitutes acceptable or desired performance.

• Definition of 'subsystem': A subsystem is a component of a larger system that has its own defined boundaries, inputs, processes, and outputs, but it also interacts with and contributes to the overall functioning and objectives of the larger system.

• Key characteristics of a subsystem:

  • Interdependence: Subsystems rely on other subsystems and the larger system, and vice-versa, for inputs and outputs.
  • Defined Boundaries: Each subsystem has clear limits that distinguish it from its environment and other components.
  • Inputs and Outputs: It receives resources or information (inputs) and produces results or information (outputs).
  • Transformation Process: It performs specific functions or processes to convert its inputs into outputs.
  • Purpose/Goal: It contributes to the overall objective or mission of the larger system.

• Relevant examples:

  • In a manufacturing company: The production department is a subsystem. It takes raw materials (inputs), processes them into finished goods (transformation), and delivers products (outputs), contributing to the company's overall goal of selling goods.
  • In a university: The admissions office is a subsystem. It receives applications (inputs), evaluates them (transformation), and admits students (outputs), contributing to the university's mission of education.

3.3 Step 2 of the control process indicates to 'Set performance standards'. Give a brief description of the meaning and difference of qualitative and quantitative performance standards with relevant examples to show your understanding.

• Meaning of 'Set performance standards': As part of the control process, setting performance standards means defining the specific criteria or benchmarks that will be used to measure and evaluate the effectiveness and efficiency of an activity, process, or outcome. These standards provide a clear reference point for assessing whether performance is on track.

• Qualitative Performance Standards:

  • Meaning: These are subjective, descriptive, and non-numerical standards that focus on the quality, characteristics, or attributes of performance. They are often assessed through observation, feedback, or judgment.
  • Difference: They cannot be easily measured with numbers but describe the nature or excellence of an outcome.
  • Examples:
    • Customer service: "Customers report a friendly and helpful interaction with support staff."
    • Product design: "The product design is aesthetically pleasing and intuitive to use."
    • Employee morale: "Employees demonstrate a positive attitude and strong teamwork."

• Quantitative Performance Standards:

  • Meaning: These are objective, measurable, and numerical standards that can be expressed in terms of quantity, cost, time, or other numerical values.
  • Difference: They are easily quantifiable and allow for precise measurement and comparison against a specific number.
  • Examples:
    • Sales targets: "Increase sales revenue by 15% this quarter."
    • Production efficiency: "Reduce production defects to less than 0.5%."
    • Delivery time: "Deliver all orders within 3 business days."