Business StudiesCBSE Class 12 · Controlling

Controlling: Concept and Importance (Class 12)

Updated 15 October 2026 · Fact-checked

Controlling means ensuring that activities in an organisation are performed as per plans and that resources are used effectively and efficiently. It is important because it helps accomplish goals, judge the accuracy of standards, use resources efficiently, improve employee motivation, ensure order and discipline and facilitate coordination in action.

Notice that one function, controlling, leads to six separate benefits for the organisation.

Illustration drawn for QuestionBuddy.

Understand Importance of Controlling

Concept. Controlling means ensuring that activities in an organisation are performed as per the plans, and that resources are used effectively and efficiently for predetermined goals. Koontz and O'Donnell describe managerial control as measuring accomplishment against the standard and correcting deviations to ensure objectives are attained according to plans.

Nature.

Goal-oriented: it exists to achieve predetermined goals.
Pervasive: needed at all levels (top, middle, lower) and in every organisation (school, hospital, army, club, business).
Primary function of every manager.
Not the last function: it finds deviations, analyses causes and takes corrective action, which feeds into better planning in the next cycle. It completes one cycle of the management process and improves the next.

Six points of importance.

1. Accomplishing organisational goals: measures progress, brings deviations to light and indicates corrective action, so the organisation stays on the right track.
2. Judging accuracy of standards: checks whether standards are accurate and objective, and helps review and revise them as the organisation and environment change.
3. Making efficient use of resources: reduces wastage and spoilage; each activity follows predetermined standards and norms.
4. Improving employee motivation: employees know in advance what is expected and the standards on which they will be appraised.
5. Ensuring order and discipline: a close check on activities minimises dishonest behaviour.
6. Facilitating coordination in action: every department and employee works to predetermined standards that are coordinated with one another.

Four limitations.

1. Difficulty in setting quantitative standards: areas such as morale, job satisfaction and human behaviour are hard to measure.
2. Little control on external factors: government policy, technological change, competition.
3. Resistance from employees: they see control (e.g. CCTVs) as a restriction on freedom.
4. Costly affair: expenditure, time and effort; a small firm may not afford an expensive system. The cost should not exceed the benefits.

Case cues. 'targets reviewed every week and the team is back on track' (accomplishing goals); 'the target of 500 units a day was found unrealistic and cut to 450' (judging accuracy of standards); 'scrap fell by 30%' (efficient use of resources); 'workers knew exactly how their work would be appraised' (motivation); 'cash pilferage stopped after daily cash checks' (order and discipline); 'sales, production and purchase all worked to the same monthly standards' (coordination).

Importance of Controlling: key facts

Controlling: Ensuring activities are performed as per plans; resources used effectively and efficiently; Goal-oriented and pervasive.
Importance (6): Goals; accuracy of standards; efficient use of resources; motivation; order and discipline; coordination; Mnemonic: 'Good Accountants Earn More Over Commerce' (G-A-E-M-O-C).
Limitations (4): Quantitative standards difficult; little control on external factors; employee resistance; costly; Mnemonic: 'QERC' ('Quick Errors Raise Costs').
Place in the cycle: 1.Controlling
2.information
3.better planning; Not the last function.

How to answer Importance of Controlling questions

Importance of controlling appears as 1-mark identification, 3- or 4-mark cases (quote the line, name the point) and occasionally a limitation question.

1Ask what changed because of control: goals reached, standards revised, waste cut, staff motivated, dishonesty checked, or departments in step.
2Name the point exactly as NCERT does (e.g. 'judging accuracy of standards').
3Quote the case line and add one line of explanation.
4If the case shows a problem with control (unmeasurable morale, CCTV protests, high cost, competitor action), it is a limitation, not importance.
5For 'controlling is the last function' statements, explain that it feeds back into planning.

Importance of Controlling in real life

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

Judging accuracy of standards

Suppose a coaching centre sets every student a target of solving 100 maths problems a day. After two weeks of checking, the teachers find that even the best students manage only 60 with accuracy, and many are copying answers.

Which point of importance of controlling does this show?

Try it first, then show the solutionSolution

Checking actual work against the target revealed the target was unrealistic.
The standard can now be revised, say to 60 problems a day.

Answer: Judging accuracy of standards: control helped verify whether the standard was accurate and objective, so it can be revised to a realistic level.

Memory hook: Control checks the ruler, not just the work.

Costly affair (limitation)

Imagine a two-person tea stall owner is told by a consultant to install CCTVs, billing software and a daily stock audit costing ₹1.5 lakh a year, while the stall earns ₹2 lakh a year.

Should he install the system? Which limitation applies?

Try it first, then show the solutionSolution

Cost of control (₹1.5 lakh) is very high compared with the business's earnings.
Control should not cost more than the benefit it gives.

Answer: No. Control is a costly affair; a small enterprise cannot justify an expensive control system whose cost is out of proportion to the benefits.

Memory hook: Don't buy a ₹1,000 lock for a ₹100 box.

Tricks to remember Importance of Controlling

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

G-A-E-M-O-C
'Good Accountants Earn More Over Commerce': Goals, Accuracy of standards, Efficient resources, Motivation, Order and discipline, Coordination.
Use it when: Six points of importance.
QERC
Quantitative standards hard, External factors, Resistance, Costly.
Use it when: Four limitations.
Control is a loop, not a full stop
Plan → do → control → better plan.
Use it when: Answering 'controlling is the last function'.

Importance of Controlling: solved examples

Ordered from board level to HOTS. Try each one before you open the solution.

Example 1: Wastage and spoilage · 1 mark · MCQBoard level

Which point of importance of controlling is shown when wastage and spoilage of materials are reduced?
(a) Ensuring order and discipline
(b) Making efficient use of resources
(c) Judging accuracy of standards
(d) Improving employee motivation

Try it first, then show the solutionSolution

Activities follow standards and norms, so waste falls (1 mark).

Answer: (b) Making efficient use of resources

Example 2: Three points of importance · 3 marks · Short answerBoard level

Explain any three points of importance of controlling. (3 marks)

Try it first, then show the solutionSolution

One mark per point with a line.

Answer: Any three: (1) Accomplishing organisational goals: measures progress, reveals deviations and indicates corrective action. (2) Judging accuracy of standards: verifies whether standards are accurate and helps revise them. (3) Efficient use of resources: reduces wastage and spoilage. (4) Improving employee motivation: employees know the standards of appraisal in advance. (5) Ensuring order and discipline: close checks minimise dishonest behaviour. (6) Facilitating coordination: all departments work to coordinated standards.

Example 3: Points from a case · 4 marks · Short answerHarder board level

At 'Lakshya Garments', the production manager introduced daily checks of output and fabric use. Within two months, fabric waste fell sharply, and an employee who had been secretly selling leftover fabric was caught. Identify two points of importance of controlling, quoting the lines. (4 marks)

Try it first, then show the solutionSolution

'fabric waste fell sharply': making efficient use of resources (1 + 1 marks).
'an employee who had been secretly selling leftover fabric was caught': ensuring order and discipline (1 + 1 marks).

Answer: (1) Making efficient use of resources ('fabric waste fell sharply'): control reduces wastage and spoilage. (2) Ensuring order and discipline ('an employee secretly selling leftover fabric was caught'): close checks minimise dishonest behaviour.

Example 4: Not the last function · 3 marks · Short answerHarder board level

'Controlling is the last function of management.' Do you agree? Give reasons. (3 marks)

Try it first, then show the solutionSolution

Disagree (1 mark).
Controlling finds deviations and causes and takes corrective action (1 mark).
This information helps formulate future plans; it brings the cycle back to planning (1 mark).

Answer: No. Controlling is not merely the last function. It measures how far actual performance deviates from standards, analyses the causes and takes corrective action. The problems it identifies help formulate better plans in the next period, so it brings the management cycle back to planning; it completes one cycle and improves the next.

Example 5: Importance or limitation? · 4 marks · Short answerHOTS / competency

Suppose 'Aarav Software' installs keystroke-tracking software on every employee's computer. Productivity rises at first, but many programmers protest that they are being treated like suspects, and the company also finds it cannot measure 'creativity' through the software. Identify the two limitations of controlling and one point of importance shown. (4 marks)

Try it first, then show the solutionSolution

'protest that they are being treated like suspects': resistance from employees (1 + ½ marks).
'cannot measure creativity': difficulty in setting quantitative standards (1 + ½ marks).
'Productivity rises at first': efficient use of resources / accomplishing goals (1 mark).

Answer: Limitations: (1) resistance from employees, who see strict monitoring as a restriction on freedom; (2) difficulty in setting quantitative standards, since creativity, like morale and job satisfaction, cannot easily be measured. Importance shown: productivity rose, reflecting efficient use of resources (and progress towards goals). Control must be balanced so that its benefits are not lost to resistance.

Example 6: Case study: a city bus service · 4 marks · Case-basedHOTS / competency

'Metro Wheels', a city bus operator, set standards for each depot: 98% trips on time, fuel use of 3.5 km per litre and zero cash shortages. Weekly reports are reviewed. (i) Depots now plan maintenance, staffing and fuel purchase to the same weekly standards. (ii) Drivers know in advance that bonuses depend on on-time trips and fuel use, and many have improved. (iii) The 98% target was found impossible on routes under metro construction and was lowered for them.
Identify the point of importance of controlling in (i), (ii) and (iii) and explain why controlling is called pervasive. (4 marks)

Try it first, then show the solutionSolution

(i) facilitating coordination in action (1 mark).
(ii) improving employee motivation (1 mark).
(iii) judging accuracy of standards (1 mark).
Pervasive: needed at all levels and in all organisations, including a bus service (1 mark).

Answer: (i) Facilitating coordination in action: all depots and functions work to coordinated standards. (ii) Improving employee motivation: drivers know in advance the standards on which they will be appraised. (iii) Judging accuracy of standards: control showed the target was unrealistic on some routes, so it was revised. Controlling is pervasive because managers at all levels and in every kind of organisation (business, transport, school, hospital) need it.

Where students lose marks in Importance of Controlling

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

Mistake: Calling controlling the last function
It feeds back into planning.
Wrong working
Controlling ends the management process.
Right working
Controlling completes one cycle and improves planning for the next.
Do this: Loop, not full stop.
Usually costs: 1 to 2 marks.
Mistake: Mixing importance with limitations
Both appear in the same chapter.
Wrong working
Importance: employees resist CCTVs.
Right working
Resistance from employees is a limitation.
Do this: Benefit = importance; problem = limitation.
Usually costs: 1 mark.
Mistake: Vague headings
Board answers expect NCERT terms.
Wrong working
Control helps the company.
Right working
Judging accuracy of standards: verifies and revises standards.
Do this: Use exact headings.
Usually costs: ½ mark per point.
Mistake: Writing techniques of controlling
Techniques (budgetary control, ratio analysis, PERT) were dropped in 2022.
Wrong working
Explaining budgetary control in an importance answer.
Right working
Stick to concept, importance, relationship with planning and process.
Do this: Check the syllabus list.
Usually costs: Wasted time, no marks.

Exam tips

Importance of controlling was a 4-mark question in the 2025-26 sample paper (Q28) and a 3-mark question in the 2023-24 sample paper (Q22(a)) and the 2026 board paper 66/1/1 (Q21).
The syllabus has only three controlling topics: concept and importance, relationship with planning, and the process; techniques of controlling are out.
Learn the six NCERT headings word for word.
Staffing, Directing and Controlling together carry 20 of the 80 theory marks in 2026-27.

Practice questions on Importance of Controlling

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

Q1 · 1 mark · MCQBoard level
Controlling is a pervasive function because:
(a) it is performed only by top management
(b) it is needed at all levels and in all organisations
(c) it is the last function of management
(d) it is needed only in business firms
Hint
Every manager, every organisation.
Answer
(b) it is needed at all levels and in all organisations
Q2 · 1 mark · Short answerBoard level
Define controlling. (1 mark)
Hint
As per plans.
Answer
Controlling means ensuring that activities in an organisation are performed as per the plans and that resources are used effectively and efficiently to achieve predetermined goals.
Q3 · 6 marks · Long answerBoard level
Explain the importance of controlling. (6 marks)
Hint
G-A-E-M-O-C.
Answer
(1) Accomplishing organisational goals: measures progress and indicates corrective action. (2) Judging accuracy of standards: checks and revises standards in light of change. (3) Efficient use of resources: reduces wastage and spoilage. (4) Improving employee motivation: employees know expectations and appraisal standards in advance. (5) Ensuring order and discipline: minimises dishonest behaviour. (6) Facilitating coordination in action: all departments work to coordinated predetermined standards.
Q4 · 2 marks · Short answerHarder board level
State any two limitations of controlling. (2 marks)
Hint
QERC.
Answer
Any two: (1) difficulty in setting quantitative standards for areas such as morale and job satisfaction; (2) little control on external factors such as government policy, technology and competition; (3) resistance from employees who see control as a restriction on freedom; (4) costly affair, which small firms cannot afford.
Q5 · 2 marks · Short answerHarder board level
Why is controlling called a goal-oriented function? (2 marks)
Hint
Predetermined goals.
Answer
Because its purpose is to ensure that activities are performed as per plans and resources are used effectively and efficiently for the achievement of predetermined goals; it measures progress towards those goals and corrects deviations.
Q6 · 3 marks · Short answerHarder board level
'Without control, the best of plans can go awry.' Explain with two points of importance of controlling. (3 marks)
Hint
Goals and coordination.
Answer
A plan only states what should happen; control ensures it does. (1) Accomplishing goals: control measures progress, reveals deviations and indicates corrective action, keeping the plan on track. (2) Facilitating coordination: departments are governed by coordinated standards, so their efforts do not drift apart. Without these checks, deviations go unnoticed and the plan fails.
Q7 · 1 mark · Assertion-reasonHarder board level
Assertion (A): An enterprise can fully control all the factors affecting its performance.
Reason (R): Government policies, technological changes and competition are external factors.
(a) Both A and R are true and R is the correct explanation of A.
(b) Both A and R are true but R is not the correct explanation of A.
(c) A is true but R is false.
(d) A is false but R is true.
Hint
Little control on external factors.
Answer
(d) A is false but R is true.
Q8 · 2 marks · Short answerHarder board level
A school principal starts checking each teacher's syllabus completion every fortnight. Teachers now know exactly what is expected of them, and the three sections of Class 12 finish chapters at the same pace. Identify two points of importance of controlling. (2 marks)
Hint
Expectations; same pace.
Answer
(1) Improving employee motivation ('teachers now know exactly what is expected of them'). (2) Facilitating coordination in action ('three sections finish chapters at the same pace').
Q9 · 3 marks · Short answerHOTS / competency
Suppose a small home-bakery owner reads that big companies use detailed control systems and decides to buy an expensive ERP software. Advise her, using the limitations of controlling. (3 marks)
Hint
Cost vs benefit.
Answer
Controlling is a costly affair: an expensive system involves expenditure, time and effort that a small enterprise cannot justify. The cost of installing and running a control system should not exceed its benefits. She should use simple, low-cost controls, such as daily sales and stock records, personal observation and a standard recipe cost, and upgrade only when the business grows.
Q10 · 3 marks · Short answerHOTS / competency
A company finds that despite strict control, its sales fell because a competitor halved prices and the government raised a tax on its product. Does this mean the control system failed? Discuss. (3 marks)
Hint
External factors.
Answer
Not necessarily. This shows a limitation of controlling: an enterprise has little control on external factors such as competition and government policy. Control can still help: it reveals the deviation early, and analysing its causes lets management take corrective action (revising prices, costs or standards) and plan better for the next period.

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.Define controlling.Show answer
Ensuring that activities are performed as per plans and resources are used effectively and efficiently.
2.Name the six points of importance of controlling.Show answer
Accomplishing goals, judging accuracy of standards, efficient use of resources, employee motivation, order and discipline, coordination.
3.Why is controlling pervasive?Show answer
It is needed at all levels and in all organisations.
4.Name two limitations of controlling.Show answer
Any two: quantitative standards difficult, little control on external factors, resistance, costly.
5.Is controlling the last function of management?Show answer
No; it feeds back into planning.

Importance of Controlling: frequently asked questions

What is the importance of controlling in Class 12 Business Studies?

It helps accomplish organisational goals, judge the accuracy of standards, use resources efficiently, improve employee motivation, ensure order and discipline, and facilitate coordination in action.

What are the limitations of controlling?

Difficulty in setting quantitative standards, little control on external factors, resistance from employees and high cost.

Why is controlling called a goal-oriented function?

Because it exists to make sure that predetermined goals are achieved, by checking progress and correcting deviations.

Are techniques of controlling in the 2026-27 syllabus?

No. Traditional and modern techniques of controlling were dropped in 2022.