These Controlling Class 12 Notes compress Chapter 8 of the NCERT Business Studies I textbook into revision form. You get the meaning of controlling, its importance and limitations, the planning–controlling link, the five-step control process, and the traditional and modern techniques — each tagged with its textbook page so you can jump back for detail.
The notes follow the 2026-27 session and the rationalised NCERT book. Use the jump links below to move between sections, and finish with the one-page recap near the end when you revise the night before a test.
What the Controlling Chapter Covers
The chapter builds five learning objectives, listed on its opening page (NCERT, p. 201). Every topic you will be expected to explain is one of these five, so treat the list as a checklist:
| Learning objective | Textbook pages | Where it is covered here |
|---|---|---|
| Explain the meaning of controlling | pp. 201–202 | Meaning of Controlling |
| State the importance of controlling | pp. 202–203 | Importance and Limitations |
| Describe the relationship between planning and controlling | p. 205 | Planning and Controlling |
| Explain the steps in the process of controlling | pp. 205–209 | The Controlling Process |
| Describe the techniques of controlling | p. 210 | Techniques of Controlling |
The chapter opens with an airline Departure Control System (DCS) as a real-world hook — software that automates check-in, boarding-pass printing, baggage acceptance, boarding load control and aircraft checks (NCERT, p. 201). You do not need to memorise the system; just carry its lesson: managers must check progress and take corrective action before damage is done.
In the Class 12 Business Studies sequence, the directing notes come just before this chapter. Both belong to the Class 12 Business Studies hub, and the main CBSE notes library holds notes for other subjects.
If you want the full discussion of any topic here, open the official NCERT textbook on the NCERT portal and turn to the page cited in the table.
Meaning of Controlling: Goal-Oriented, Pervasive, and Cyclical
Controlling is the management function that ensures activities in an organisation are performed as per the plans. It also ensures that resources are used effectively and efficiently for the achievement of predetermined goals (NCERT, p. 202). Effective means doing the right things that lead to goals; efficient means achieving output with minimum wastage of resources.
The textbook carries the formal definition given by management theorists Koontz and O’Donnel: “Managerial Control implies the measurement of accomplishment against the standard and the correction of deviations to assure attainment of objectives according to plans” (NCERT, p. 202). Three words carry that definition: measure against the standard, correct deviations, attain objectives.
Three nature points are most useful in answers:
- Goal-oriented: control exists only to push the organisation towards its predetermined goals.
- Pervasive: controlling is a primary function of every manager at top, middle, and lower levels. It is as necessary in an educational institution, military, hospital, or club as in a business organisation (NCERT, p. 202).
- Not the last function of management: controlling completes one cycle of the management process and brings the cycle back to planning (NCERT, p. 202).
The third point surprises most students. The management process is not a straight line that ends at controlling — it is a cycle. Controlling finds how far actual performance deviates from standards, analyses the causes, and uses that learning to improve planning in the next period.
Key Controlling Terms at a Glance
These are the terms you must be able to define in your own words. Learn the meaning, then attach the textbook’s example.
| Term | Meaning | Example |
|---|---|---|
| Controlling | Ensuring actual activities conform to planned activities and resources are used effectively and efficiently for predetermined goals (p. 202). | A manager checks weekly output against the production plan. |
| Standards | The criteria, or benchmarks, against which actual performance is measured (p. 206). | “Reduce defects from 10 in every 1,000 pieces produced to 5 in every 1,000 pieces by the end of the quarter” (p. 206). |
| Deviation | The difference between standard performance and actual performance, revealed by comparison (p. 207). | Standard 500 units; actual 460 units → deviation of 40 units. |
| Critical point control | Focusing control on key result areas that are critical to the organisation’s success (p. 208). | A 5% rise in labour cost can be more serious than a 15% rise in postal charges. |
| Management by exception | Reporting only significant deviations that go beyond the permissible limit to management (p. 208). | If plans allow a 2% labour-cost increase, only increases beyond 2% reach management. |
| Corrective action | The final step that fixes the cause of deviation, or revises the standard if managerial correction is not possible (p. 209). | Training employees, adding workers and equipment, or allowing overtime. |
Why Controlling Matters: Importance and Limitations
Importance of Controlling
A good control system helps in six ways (NCERT, pp. 202–203):
| Point | What it means |
|---|---|
| Accomplishing organisational goals | Measures progress towards goals, brings deviations to light, and guides corrective action. |
| Judging accuracy of standards | Verifies whether the standards set are accurate and objective, and helps revise them as the environment changes. |
| Making efficient use of resources | Reduces wastage and spoilage; each activity follows predetermined standards. |
| Improving employee motivation | Employees know in advance what is expected and on what standards they will be appraised. |
| Ensuring order and discipline | A close check on activities minimises dishonest behaviour and builds an orderly atmosphere. |
| Facilitating coordination in action | All departments work against well-coordinated standards, so overall objectives are met. |
Limitations of Controlling
Controlling also has four drawbacks (NCERT, pp. 203–204):
- Difficulty in setting quantitative standards: areas such as employee morale, job satisfaction, and human behaviour are hard to define in numbers, which weakens measurement and comparison.
- Little control over external factors: government policies, technological changes, and competition are beyond an enterprise’s control.
- Resistance from employees: workers often see control as a restriction on freedom — for instance, when they are kept under a strict watch with Closed Circuit Televisions (CCTVs).
- Costly affair: a control system costs money, time, and effort. A small enterprise may not be able to afford an expensive system, so the benefits must exceed the costs.
Planning and Controlling: The Inseparable Twins
Planning and controlling are called the inseparable twins of management (NCERT, p. 205). Neither can work without the other: planning supplies the standards control measures against, and control supplies feedback that improves future planning.
| Basis of comparison | Planning | Controlling |
|---|---|---|
| Role in the management cycle | Initiates the process; sets objectives and the course of action. | Completes one cycle and checks whether decisions were translated into action. |
| Nature | Prescriptive — it prescribes what should be done. | Evaluative — it judges what has actually been done. |
| Looking ahead / looking back | Forward-looking because plans rest on forecasts of future conditions; also guided by past experience. | Backward-looking because it examines past performance; also forward-looking because corrective action improves future performance. |
| Dependency | Provides the standards that controlling measures against. | Has no basis without planned standards; with no plan there is nothing to control. |
So the statement “planning is looking ahead and controlling is looking back” is only partially correct (NCERT, p. 205). Planning uses past experience as its input, and corrective action initiated by control aims to improve future performance — both functions look both ways.
Two reinforcing points hold the twins together:
- Planning based on facts makes controlling easier and effective.
- Controlling improves future planning by providing information derived from past experience (NCERT, p. 205).
To see where standards originate before they reach the control step, read the planning notes first.
The Five Steps of the Controlling Process
Controlling is a systematic process of five steps (NCERT, pp. 205–209):
- Setting performance standards. Standards are the benchmarks against which actual performance is measured. They can be quantitative (cost, revenue, units produced and sold, time) or qualitative (goodwill, motivation). A quantitative standard on p. 206: “reduce defects from 10 in every 1,000 pieces produced to 5 in every 1,000 pieces produced by the end of the quarter.” Qualitative standards must be defined so they can be measured — for a self-service fast food chain, customer satisfaction can be judged by the time a customer waits for a table, the time to place an order, and the time to collect it. Standards should be flexible enough to be modified as the internal or external environment changes.
- Measurement of actual performance. Performance is measured in an objective and reliable manner, in the same units as the standards so comparison is easier. Wherever possible, measure during the performance, not only after the task — on an assembly line, each part is checked before assembling (NCERT, p. 207). In small organisations every piece can be checked; in large organisations pieces are checked at random, which is sample checking. Measurement techniques include personal observation, sample checking, and performance reports.
- Comparison of actual performance with standards. This step reveals the deviation between actual and desired results. Comparison is easier when standards are quantitative — a worker’s weekly output can be measured directly against the standard output for the week (NCERT, p. 207).
- Analysis of deviations. Some deviation is expected in every activity, so managers decide an acceptable range of deviation. Two principles guide which deviations to act on: critical point control and management by exception. Deviations may have multiple causes — unrealistic standards, a defective process, inadequacy of resources, structural drawbacks, organisational constraints, or environmental factors beyond the organisation’s control (NCERT, pp. 207–209).
- Taking corrective action. When deviations stay within acceptable limits, no action is needed. When they cross the acceptable range, especially in important areas, immediate managerial attention is required. Corrective action may mean training employees, assigning additional workers and equipment, or permitting overtime. If the deviation cannot be corrected through managerial action, the standards may have to be revised (NCERT, p. 209).
Memory device for the five steps: “Some Managers Can Always Correct” = Set, Measure, Compare, Analyse, Correct. (This mnemonic is a memory aid, not from the textbook.)
When a question asks for performance standards, the textbook’s functional-areas table (NCERT, p. 207) gives the standard types used in each department:
| Production | Marketing | Human Resource Management | Finance and Accounting |
|---|---|---|---|
| Quantity | Sales volume | Labour relations | Capital expenditures |
| Quality | Sales expense | Labour turnover | Inventories |
| Cost | Advertising expenditures | Labour absenteeism | Flow of capital |
| Individual job performance | Individual sales-person’s performance | Liquidity |
Critical Point Control vs Management by Exception
Step 4 of the process uses two principles to decide which deviations deserve attention. The table contrasts them with the textbook’s own examples.
| Basis | Critical point control | Management by exception |
|---|---|---|
| What it focuses on | Key result areas (KRAs) critical to the organisation’s success. | Significant deviations that cross the permissible limit. |
| Textbook example | In manufacturing, a 5% rise in labour cost can be more troublesome than a 15% rise in postal charges (p. 208). | If plans allow a 2% rise in labour cost, only increases beyond 2% are reported to management; a major deviation such as 5% gets priority action (p. 208). |
| Guiding belief | Checking every activity is neither economical nor easy. | An attempt to control everything results in controlling nothing. |
| Effect on routine matters | Attention stays on critical points, not on every activity. | Routine problems are left to subordinates. |
Both principles share four advantages (NCERT, p. 208): they save managers’ time and effort; focus managerial attention on important areas for better use of talent; leave routine problems to subordinates, which facilitates delegation and raises morale; and identify critical problems that need timely action to keep the organisation on the right track.
Techniques of Controlling: Traditional and Modern
The chapter’s key-terms list (NCERT, p. 210) names ten techniques in two groups. Learn the groups first, then attach each technique’s plain-language role.
| Category | Technique | What it checks |
|---|---|---|
| Traditional | Personal observation | Managers observe work and workers directly on the spot. |
| Statistical reports | Data summaries and trends reveal how activities are progressing. | |
| Break-even analysis | The output level at which total revenue equals total cost. | |
| Budgetary control | Actual income and expenditure against the budgeted figures. | |
| Modern | Return on investment | Profit earned relative to the capital invested. |
| Ratio analysis | Financial ratios such as gross profit and net profit ratios used to judge performance. | |
| Responsibility accounting | Fixes the responsibility of each manager for a specific area’s performance. | |
| Management audit | Overall appraisal of the functioning of management. | |
| PERT and CPM | Network techniques for planning and controlling projects in time. | |
| Management information system | Computer-based flow of information that supports quick decisions. |
Quantitative Tools in Controlling: Break-even, ROI and Ratios
One honest clarification: the NCERT Controlling chapter introduces no algebraic formula. Break-even analysis, return on investment, and ratio analysis appear as quantitative control techniques (NCERT, p. 210), so you need to state what each tells a manager — not derive an equation.
| Tool | What it tells a manager |
|---|---|
| Break-even analysis | The output level at which total revenue equals total cost; profit begins beyond this point. |
| Return on investment (ROI) | How much profit the firm earns relative to the capital invested. |
| Ratio analysis | Calculating ratios such as gross profit ratio, net profit ratio, and return on investment at periodic intervals to judge a company’s performance (NCERT, p. 207). |
In this chapter, treat these three as concept-based techniques: define each in words and state what a manager learns from it.
Worked Example: Applying the Control Process to a Courier Shift
Method: the five-step controlling process. Scenario: a courier company’s sorting hub sets a standard of 500 parcels sorted per shift. Actual output on Tuesday was 460 parcels. The acceptable deviation in the hub’s plan is 5 per cent.
- Set performance standards: 500 parcels per shift (unit: parcels per shift).
- Measure actual performance: 460 parcels per shift.
- Compare with standards: deviation = \(500 – 460 = 40\) parcels, which is \(\frac{40}{500} \times 100 = 8\%\) below the standard. Acceptable deviation = \(5\%\) of 500 = 25 parcels. Since 40 parcels exceeds 25 parcels, the deviation is outside the acceptable range and needs attention.
- Analyse the deviation: the sorting machine was down for 90 minutes and two sorters were absent — both are internal, correctable causes.
- Take corrective action: repair or replace the machine; assign temporary staff during peak hours; and review the shift target to confirm it is realistic before the next shift.
A complete answer states the unit at every step (parcels per shift, per cent), decides whether the deviation is inside or outside the acceptable range, names the causes, and ends with concrete corrective action.
Using the Control Cycle to Plan Your Revision
The textbook says controlling is as necessary in an educational institution as in a business organisation (NCERT, p. 202). The same five steps work on your own study plan — a practical application the textbook does not develop.
- Set: finish 10 topics in one week.
- Measure: at the end of the week you have covered 7 topics.
- Compare: \(\frac{3}{10} \times 100 = 30\%\) below target — outside your acceptable buffer.
- Analyse: phone distractions and no time-blocking are the causes.
- Correct: use 45-minute focused study blocks, keep the phone in another room, and set a realistic target for the next week.
Try labelling your own week with the five step labels: Set, Measure, Compare, Analyse, Correct.
Common Mistakes Students Make in Controlling
| Mistake | Correction | Why |
|---|---|---|
| “Controlling is the last function of management.” | Controlling completes one cycle of the management process and brings the cycle back to planning. | The management process is cyclical, not a straight line; controlling improves the next round of planning (p. 202). |
| “Planning is only forward-looking; controlling is only backward-looking.” | Both functions are both. | Planning is guided by past experience, and corrective action improves future performance (p. 205). |
| “Every deviation must be reported to management.” | Only significant deviations beyond the permissible limit are reported. | That is management by exception; an attempt to control everything results in controlling nothing (p. 208). |
| “Managers should check each and every activity.” | Control should focus on critical points or key result areas. | It is neither economical nor easy to check every activity (p. 208). |
| “Standards can only be quantitative.” | Qualitative standards count too (goodwill, motivation), but must be defined so they can be measured. | Comparison with actual performance is impossible otherwise (p. 206). |
| “Performance is measured only after the task is completed.” | Measure during performance wherever possible. | Checking parts before assembly is better than reworking a finished product (p. 207). |
How to Write Answers on Controlling
This is study strategy for the textbook’s own exercises at the end of the chapter (pp. 211–212), not model answers.
- Definition questions (for example, “state the meaning of controlling”): open with a one-line meaning — ensuring actual activities conform to planned activities — then add one supporting point, such as goal-oriented or pervasive. Two to three sentences is enough.
- Comment questions on “planning is looking ahead and controlling is looking back”: say the statement is only partially correct, then give the forward side (plans are based on forecasts of future conditions), the backward side (controlling examines past performance), and the resolution (planning uses past experience; corrective action improves future performance — so both are both).
- “An effort to control everything may end up in controlling nothing”: answer with management by exception — only significant deviations beyond the permissible limit are reported, so attention stays on what matters.
- Long answers on the control process: name all five steps in order, explain each in one or two lines with a small example, and end by noting how corrective action feeds back into the next planning cycle.
- Performance standards questions: draw on the functional-areas table (NCERT, p. 207) — quantity, quality, cost, and individual job performance for production; sales volume, sales expense, and advertising expenditures for marketing; labour relations, labour turnover, and labour absenteeism for human resources; capital expenditures, inventories, flow of capital, and liquidity for finance. Do not invent standards the textbook does not give.
- Case-based questions: read the case twice, label the feature, importance point, or process step you see, and support every label with one fact from the case. For example, a manager who keeps a constant check on all departmental activities to make sure things go as per plan illustrates the pervasive and continuous nature of controlling.
Controlling in One Page: Revision Recap
Definition: controlling ensures actual activities conform to planned activities and that resources are used effectively and efficiently for predetermined goals (NCERT, p. 202).
- Three nature points: goal-oriented; pervasive (every manager, every level, every organisation); not the last function — it completes one cycle and returns to planning (p. 202).
- Importance in one line: accomplishes goals, judges accuracy of standards, makes efficient use of resources, improves employee motivation, ensures order and discipline, and facilitates coordination in action (pp. 202–203).
- Four limitations: difficulty in setting quantitative standards, little control over external factors, resistance from employees, and costly affair (pp. 203–204).
- Planning–controlling link: inseparable twins; planning provides the standards for control, control gives feedback that improves future planning (p. 205).
- Process — five steps: Set performance standards, Measure actual performance, Compare with standards, Analyse deviations, Take corrective action. Mnemonic: Some Managers Can Always Correct (pp. 205–209).
- Traditional techniques: personal observation, statistical reports, break-even analysis, budgetary control.
- Modern techniques: return on investment, ratio analysis, responsibility accounting, management audit, PERT and CPM, management information system (p. 210).
Quick Answers: Controlling Doubts Class 12 Students Ask
Is controlling the last function of management?
No. Controlling completes one cycle of the management process and brings the cycle back to the planning function. It finds how far actual performance deviates from standards, analyses the causes, and uses corrective action to improve planning in the next cycle (NCERT, p. 202).
What is the difference between critical point control and management by exception?
Critical point control focuses attention on key result areas critical to the organisation’s success; management by exception reports only significant deviations that cross the permissible limit.
The textbook’s example: a 5% rise in labour cost can be more troublesome than a 15% rise in postal charges (critical point), while if plans allow a 2% labour-cost rise, only increases beyond 2% reach management (by exception) (NCERT, p. 208).
Why are planning and controlling called inseparable twins?
Because neither can work without the other. Planning provides the standards that controlling measures performance against; without a plan there is nothing to control. Controlling, in turn, monitors progress, measures it, and takes corrective action, giving information that improves future planning (NCERT, p. 205).
What are the five steps of the controlling process?
(1) Setting performance standards, (2) measurement of actual performance, (3) comparison of actual performance with standards, (4) analysis of deviations, and (5) taking corrective action (NCERT, pp. 205–209). A memory aid: Some Managers Can Always Correct.
What are the traditional and modern techniques of controlling?
Traditional: personal observation, statistical reports, break-even analysis, and budgetary control. Modern: return on investment, ratio analysis, responsibility accounting, management audit, PERT and CPM, and management information system (NCERT, p. 210).
When should standards be revised instead of taking corrective action?
When the deviation cannot be corrected through managerial action. If training, additional workers and equipment, or overtime still cannot bring performance back to standard, the standards themselves may have to be revised (NCERT, p. 209).
Reference: NCERT Class 12 Business Studies textbook, chapter Controlling.
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