Controlling Class 12 Business Studies: Process, Planning Link and Board Answers

What Controlling is about

Weightage: This chapter shares 20 of the 80 theory marks with Staffing and Directing.Source: CBSE Business Studies (054) syllabus 2026-27, course structure (marks are printed once per group of units)

In real board papers: asked in 2 of the 2 board papers we hold (2026 to 2026), on average 4 marks per paper. See the questions

Key concepts

Meaning and nature of controlling

NCERT section Introduction

Controlling ensures that work goes according to plan and that resources are used effectively and efficiently to reach goals.

• Goal-oriented: it aims at achieving the organisation's predetermined goals.
• Pervasive: managers at all levels (top, middle, lower) control activities in their areas, and it is needed in every kind of organisation.
• Primary function of every manager.
• Not just the last function: by finding deviations and their causes, controlling feeds information back into future planning, completing one management cycle and improving the next.
• It is both backward looking (checks past performance) and forward looking (corrective action improves future performance).

Worked example

Suppose a school principal, a hospital administrator and a factory manager all compare actual results with targets and correct shortfalls. Which feature of controlling does this show? (1 mark)

Try it first, then show the solutionSolution

1. Controlling is needed in all kinds of organisations and at all levels.

Answer: Controlling is a pervasive function.

Importance of controlling

NCERT section Importance of Controlling

1. Accomplishing organisational goals: it measures progress and brings deviations to light so the organisation stays on track.
2. Judging the accuracy of standards: a good control system shows whether standards are realistic, and helps revise them in light of changes.
3. Making efficient use of resources: activities follow pre-set standards, so waste and spoilage of resources are reduced.
4. Improving employee motivation: employees know in advance what is expected and how they will be appraised, which motivates them.
5. Ensuring order and discipline: close check on activities reduces dishonest behaviour and creates discipline.
6. Facilitating coordination in action: each department and employee works to pre-set standards, so their efforts are coordinated towards the overall objectives.

Worked example

Suppose a financial services firm uses biometric attendance and monitors employees' activities closely, which reduces cases of misuse of client data. Which point of importance of controlling is shown? Explain. (3 marks)

Try it first, then show the solutionSolution

1. Point: controlling ensures order and discipline. (1)
2. Explanation: a close check on activities reduces dishonest behaviour of employees. (1)
3. Link: biometric attendance and close monitoring reduced misuse of client data. (1)

Answer: Ensuring order and discipline.

Relationship between planning and controlling

NCERT section Relationship between Planning and Controlling

Planning and controlling are inseparable twins of management.

• Planning provides the standards; controlling checks performance against them. So planning without controlling is meaningless, and controlling without planning is blind (with no standards, there is nothing to control).
• Planning is prescriptive (what should be done); controlling is evaluative (whether it was done).
• Both look backward and forward: planning is forward looking (based on forecasts) but is guided by past experience; controlling looks back at past performance, but its corrective action aims to improve future performance.
• They reinforce each other: planning based on facts makes controlling easier and more effective; controlling improves future planning with information from past experience.

Worked example

Explain how planning and controlling are both backward looking and forward looking. (4 marks)

Try it first, then show the solutionSolution

1. Planning is forward looking: plans are made for the future, based on forecasts. (1)
2. Planning is also backward looking: it is guided by past experience and by the results of earlier control. (1)
3. Controlling is backward looking: like a post-mortem, it compares past performance with standards. (1)
4. Controlling is also forward looking: corrective action aims to improve future performance and future plans. (1)

Answer: Each draws on the past and aims at the future, so both are backward and forward looking.

Controlling process: steps 1 to 3

NCERT section Controlling Process

1. Setting performance standards: standards are the criteria for measuring actual performance. They may be quantitative (cost, output, sales, profit, time) or qualitative (goodwill, motivation); qualitative goals should be translated into measurable terms where possible. Standards should be flexible enough to be revised.
2. Measurement of actual performance: performance is measured objectively and reliably, through personal observation, sample checking, performance reports and so on. It should be measured in the same units as the standards, and if possible during the work, not only at the end.
3. Comparing actual performance with standards: this step reveals the deviation between actual and desired results. Comparison is easy when standards are quantitative.

Worked example

Suppose 'DF Telecom' set a target of 30,000 phones for December. Its quality team then counted the phones actually produced each week and found that only 27,000 were made in the month. Identify the steps of controlling followed. (3 marks)

Try it first, then show the solutionSolution

1. Target of 30,000 phones: setting performance standards. (1)
2. Counting the phones produced each week: measurement of actual performance. (1)
3. Finding that only 27,000 were made against 30,000: comparing actual performance with standards, which revealed a deviation of 3,000. (1)

Answer: Setting standards, measuring actual performance, comparing with standards.

Analysing deviations: critical point control and management by exception

NCERT section Analysing Deviations

Some deviation is normal; managers fix an acceptable range and attend urgently to deviations in key areas. Two principles help:

Critical point control: it is neither economical nor easy to check every activity, so control should focus on key result areas (KRAs), the critical points that decide the organisation's success. E.g. in a factory a 5 per cent rise in labour cost may matter more than a 15 per cent rise in postal charges.

Management by exception (control by exception): 'an attempt to control everything results in controlling nothing'. Only significant deviations beyond the permissible limit are brought to management's notice. E.g. if a 2 per cent rise in labour cost is acceptable, only a rise above 2 per cent is reported; a major deviation (say 5 per cent) gets immediate priority action.

Advantages of both:
1. Save managers' time and effort, as they deal only with significant deviations.
2. Focus attention on important areas, making better use of managerial talent.
3. Routine problems are left to subordinates, which facilitates delegation and raises morale.
4. Identify critical problems that need timely action.

Then the causes of deviations are found: unrealistic standards, defective process, inadequate resources, structural drawbacks, organisational constraints, or environmental factors beyond the firm's control.

Worked example

Suppose the chairman of 'HK Metals' receives only those monthly reports where output, defect rate or operating cost has crossed the permissible limits; small variations are handled by plant managers. Name the principle and state two advantages. (3 marks)

Try it first, then show the solutionSolution

1. Principle: management by exception. (1)
2. Advantage 1: saves the chairman's time and effort, as he deals only with significant deviations. (1)
3. Advantage 2: routine problems are left to subordinates, which facilitates delegation and raises their morale (or focuses attention on important areas). (1)

Answer: Management by exception; saves time and facilitates delegation.

Taking corrective action

NCERT section Taking Corrective Action

The final step. No action is needed if deviations are within acceptable limits. If they go beyond the range, especially in important areas, the manager acts immediately so that deviations do not recur and standards are met.

Examples of corrective action by cause:

• Production target missed because workers lack skill → training of employees.
• Project behind schedule → additional workers and equipment, overtime.
• Defective materials → change the quality specification or supplier.
• Defective machinery → repair or replace it.
• Obsolete process → upgrade it.
• If the deviation cannot be corrected by managerial action → revise the standards (e.g. if they were unrealistic).

Worked example

Suppose a garment unit found that output fell short because workers could not operate a new embroidery machine. What corrective action should it take, and when would revising the standard be right instead?

Try it first, then show the solutionSolution

1. Corrective action: train the workers to operate the new machine. (1)
2. Revise the standard if the shortfall cannot be removed by managerial action, e.g. if the standard was unrealistic. (1)

Answer: Train the workers; revise standards only if they were unrealistic.

Controlling in real life

Each concept, met in an everyday situation. Read the situation, answer the question in your own words, then compare with the model answer. The one-line hook is what to remember.

Topics in this chapter

• Importance of Controlling
• Relationship between Planning and Controlling
• Process of Controlling

Controlling: key facts

Controlling process (5 steps)

1. 1.Set standards
2. 2.Measure actual performance
3. 3.Compare with standards
4. 4.Analyse deviations
5. 5.Take corrective action

Step 3 reveals the deviation; step 4 finds its causes.

Importance (6)

Goals accomplished, Accuracy of standards, Efficient use of resources, Employee motivation, Order and discipline, Coordination in action

Mnemonic 'GAEMOC'.

Planning and controlling

Planning without controlling is meaningless; controlling without planning is blind

Planning is prescriptive; controlling is evaluative; both look backward and forward.

Critical point control

Control focuses on key result areas (KRAs)

E.g. 5% rise in labour cost matters more than 15% rise in postage.

Management by exception

Report only significant deviations beyond the permissible limit

'Trying to control everything controls nothing.'

How the board asks Controlling

The question patterns to expect, and the method that works for each.

Tricks to remember Controlling

Short memory aids. Say each one aloud once, then use it on a question the same day.

• Process: 'Some Monkeys Can Always Climb'

  Set standards, Measure, Compare, Analyse deviations, Corrective action.

  Use it when: Five steps in order.

• Importance: 'GAME OC'

  Goals, Accuracy of standards, Motivation, Efficient use of resources, Order and discipline, Coordination.

  Use it when: Six points of importance.

• Twins

  Planning sets the target; controlling checks the score. A match with no target is aimless (no planning = blind control); a target with no scoring is pointless (no controlling = meaningless planning).

  Use it when: Relationship between planning and controlling.

Controlling: board-level solved questions

Ordered from board level to HOTS. Cover the solution, write your own, then compare step by step.

Case-study practice (Section E style)

Read the situation, then answer every part. In the board paper this is a 4-mark question split into 1 + 1 + 2 marks.

Where the marks are

How a typical answer is split into step marks. Show every step: a right final answer alone rarely earns full marks.

Where students lose marks in Controlling

The slips examiners see most often, and what to write instead.

• ✗Mistake: Writing 'analysing deviations' for the step that reveals the deviation

  Steps 3 and 4 both mention deviation.

  ✓Do this: Comparison (step 3) reveals the deviation; analysis (step 4) finds its significance and causes.

  Usually costs: 1 mark.

• ✗Mistake: Calling controlling only a backward-looking function

  It checks past performance.

  ✓Do this: Its corrective action improves the future, so it is both backward and forward looking.

  Usually costs: 1-2 marks in a 4-mark answer.

• ✗Mistake: Writing techniques of controlling (budgetary control, ratio analysis)

  Old guides include them.

  ✓Do this: Techniques of controlling are not in the 2026-27 syllabus.

  Usually costs: Time; no marks.

• ✗Mistake: Confusing critical point control with management by exception

  Both reduce what managers watch.

  ✓Do this: Critical point control chooses which areas (KRAs) to watch; management by exception decides which deviations (beyond the limit) to report.

  Usually costs: The identification mark.

• ✗Mistake: Saying controlling is the last function of management

  It is taught last.

  ✓Do this: Controlling completes one cycle and feeds back into planning for the next.

  Usually costs: 1 mark in an MCQ or statement question.

NCERT exercise guide: Controlling

What each exercise in the NCERT chapter tests, how to approach it, and a question of the same kind solved step by step. Questions here are written in our own words.

Controlling: previous year questions

• Asked in 2 of the 2 board papers we hold (2026 to 2026), on average 4 marks per paper; 4 questions in all, counting OR alternatives. In 4 of 4 sample papers.

Counted from the real papers on our previous year papers page, not estimated. Average marks are over every board paper we hold, with an OR pair counted once. Chapter tags are ours.

Solved board questions from Controlling

Real questions from recent papers. Try each one first, then open our step-by-step solution with marks per step.

Every Controlling question, by year

Practice questions on Controlling

Write each answer on paper first. Open the hint only if you are stuck, and the answer only when you have finished.

1. Q1 · 1 mark · MCQBoard level

   Which of the following is the final step in the controlling process?
   (a) Analysing deviations (b) Taking corrective action (c) Measuring performance (d) Setting standards

   Hint

   Fixing the problem.

   Answer

   (b) Taking corrective action

2. Q2 · 1 mark · Very short answerBoard level

   Which feature of controlling is shown when managers at the top, middle and lower levels all control activities in their areas?

   Hint

   Everywhere.

   Answer

   Controlling is a pervasive function.

3. Q3 · 1 mark · MCQHarder board level

   Choose the correct statement about controlling:
   (a) Controlling is the last function of management with no link to planning.
   (b) Controlling is only backward looking.
   (c) Controlling brings the management cycle back to planning.
   (d) Controlling is needed only in business organisations.

   Hint

   Cycle.

   Answer

   (c) Controlling brings the management cycle back to planning.

4. Q4 · 3 marks · Short answerBoard level

   Enumerate any three advantages of management by exception. (3 marks)

   Hint

   Time, focus, delegation.

   Answer

   Saves managers' time and effort, as they deal only with significant deviations; focuses attention on important areas, making better use of managerial talent; routine problems are left to subordinates, facilitating delegation and raising morale (also identifies critical problems needing timely action).

5. Q5 · 3 marks · Case-basedHarder board level

   Suppose a company finds that its sales targets are never met in any region although salespeople work hard and market conditions are normal. What does controlling suggest about the standards, and which importance of controlling does this show? (3 marks)

   Hint

   Maybe the target is the problem.

   Answer

   The standards may be unrealistic and should be revised (1.5). This shows that controlling helps in judging the accuracy of standards, keeping a check on whether they suit the organisation and its environment (1.5).

6. Q6 · 4 marks · Short answerHarder board level

   Explain 'analysing deviations' as a step in controlling, with the help of critical point control. (4 marks)

   Hint

   Acceptable range, KRAs, causes.

   Answer

   Some deviation is normal, so an acceptable range is fixed and deviations in key areas get urgent attention (1). Critical point control: it is neither economical nor easy to check everything, so control focuses on key result areas critical to success (1); e.g. a small rise in labour cost may matter more than a big rise in postal charges (1). The causes of significant deviations (unrealistic standards, defective process, inadequate resources, environmental factors) are then identified so the right corrective action can be taken (1).

7. Q7 · 3 marks · Case-basedHarder board level

   Suppose a project manager finds a bridge project is three weeks behind schedule because of a shortage of workers and equipment. Suggest the corrective action and explain why corrective action is necessary only beyond acceptable limits. (3 marks)

   Hint

   More resources, overtime.

   Answer

   Assign additional workers and equipment and allow overtime (1.5). Small deviations within the acceptable range are normal and do not need managerial action; acting on every minor deviation would waste managers' time (1.5).

8. Q8 · 6 marks · Long answerHOTS / competency

   'Controlling is a post-mortem of past activities.' Do you agree? Explain with reference to the relationship between planning and controlling. (6 marks)

   Hint

   Only partly true.

   Answer

   Partly true (1). Controlling compares past performance with standards, so in that sense it is backward looking, like a post-mortem (1). But its corrective action aims to improve future performance, so it is also forward looking (1). Planning is forward looking because plans are for the future, yet it is guided by past experience and information from control (1). Hence both are backward and forward looking (1). They reinforce each other: fact-based planning makes control effective, and control improves future planning (1).

9. Q9 · 3 marks · Case-basedHarder board level

   Suppose employees at a hotel always know the service standards (check-in within 5 minutes, room ready by noon) and how they will be rated each month. Name the point of importance of controlling shown, explain it with reference to the case and add one more. (3 marks)

   Hint

   Clear expectations.

   Answer

   Improving employee motivation: employees know what is expected and how they will be appraised (1). Here the staff know the check-in and room-ready standards and the monthly rating in advance, so they work towards them and perform better (1). Another: ensuring order and discipline (or coordination in action) (1).

Test your recall

Answer in your head or on paper first, then open the card. Pulling an answer out of memory makes it stick far better than re-reading.

1. 1.Define controlling.Show answer

   Ensuring that activities in an organisation are performed according to plans.

2. 2.Five steps of the controlling process?Show answer

   Setting standards, measuring actual performance, comparing, analysing deviations, taking corrective action.

3. 3.Which step reveals deviations?Show answer

   Comparing actual performance with standards.

4. 4.Six points of importance of controlling?Show answer

   Goals, accuracy of standards, efficient use of resources, motivation, order and discipline, coordination.

5. 5.What is critical point control?Show answer

   Focusing control on key result areas critical to success.

6. 6.What is management by exception?Show answer

   Bringing only significant deviations beyond the permissible limit to management's notice.

7. 7.Complete: planning without controlling is ___; controlling without planning is ___.Show answer

   Meaningless; blind.

8. 8.Is planning prescriptive or evaluative?Show answer

   Prescriptive; controlling is evaluative.

9. 9.Name three causes of deviations.Show answer

   Unrealistic standards, defective process, inadequate resources (also structural drawbacks, organisational constraints, environmental factors).

10. 10.Are techniques of controlling in the 2026-27 syllabus?Show answer

    No.

Quick revision checklist

The night before the exam: can you do each of these without looking?

• ☐Can you define controlling and state its nature?
• ☐Can you list the six points of importance?
• ☐Can you explain 'planning without controlling is meaningless; controlling without planning is blind'?
• ☐Can you explain why both planning and controlling look backward and forward?
• ☐Can you write the five steps of controlling in order and spot them in a case?
• ☐Can you tell critical point control from management by exception and give four advantages?
• ☐Can you suggest a corrective action for a given cause of deviation?

Controlling: frequently asked questions