Definition of controlling

From CEOpedia | Management online

Controlling is co-ordinated and integrated system covering the entire enterprise. It is supported by information technology and used in the process of strategic and operational business management, coordination and planning. Short term goal of controlling is to maintain profitability, in the long term it is needed to preserve the existence and development of company.

Controlling is sometimes defined as a new management function, but it combines elements of other crucial management functions as: planning, directing, monitoring, analysis and reporting. Controlling is also intended to stimulate the creative thinking in management to make better, multi-faceted decision.

Controlling tasks

  • Searching and identification of strategic and operational objectives, assisting in formulating of objectives.
  • Searching and recognition of a distinguished road for the future development.
  • Finding and identification of the bottlenecks.
  • Introduction of a reliable calculation of costs and performance.
  • The creation of indicators and evaluation measures of company financial position.
  • Creation and continuous improvement of the structure of the financial planning system.
  • Creation of an appropriate information system.
  • Solving highly complex inter-relationships between the company and the environment.
  • Allows the creation of standards, which induces managers and their employees to follow the economic rationality and business interests.
  • Allows choosing of the most optimal methods and techniques to perform new tasks and analysis and creation of new management techniques (such as early warning systems).

Controlling objectives

Advantages of controlling

Controlling is a valuable system for businesses that can provide many advantages to help ensure the success and growth of the enterprise. Here are just a few of the advantages:

  • It helps to coordinate the activities of the whole business, including the strategic and operational management, coordination, and planning. This helps to ensure that all areas of the business are working together towards the same goals.
  • It allows for the collection and analysis of data from various sources in order to identify areas for improvement and to adjust operations accordingly. This helps to ensure that resources are used efficiently and that the business is running optimally.
  • It helps to monitor performance, allowing for the detection of any problems or issues before they become serious. This helps to reduce costs and maximize profits.
  • It helps to improve communication within the business, allowing for better decision-making and a more efficient use of resources.
  • It helps to develop and implement strategies for the long-term growth and development of the business. This helps to ensure that the business is able to remain competitive and profitable in the future.

Limitations of controlling

  • Controlling is limited by its reliance on the information provided by other departments and its inability to provide timely, comprehensive, and accurate information.
  • Controlling is limited by its inability to adjust quickly to changing business environments.
  • It is difficult to measure the effectiveness of controlling in the long run, since it is difficult to accurately measure the success of its strategies.
  • Controlling is limited by its reliance on human judgement and decision-making. It is difficult to predict the exact outcome of implementing a strategy and its effectiveness is hard to measure.
  • Controlling is limited by its focus on short-term objectives and strategies. It is difficult to plan for long-term growth and success.
  • Controlling is limited by its focus on financial and operational performance. It does not consider the effects of external factors on the business, such as the political, social, and economic environment.
  • Controlling is limited by its lack of flexibility and adaptability. It is difficult to adjust to changing market conditions or new opportunities.

Other approaches related to controlling

Controlling is an essential part of the management process, as it enables a company to monitor and adjust its processes and procedures in order to achieve its objectives. Here are some other approaches related to the definition of controlling:

  • Planning: Planning is the process of setting objectives and determining how to achieve them. It is the foundation of effective control in an organization. Control takes place when objectives are established and the necessary resources are allocated to achieve them.
  • Monitoring: Monitoring is the process of observing the activities of the organization and measuring progress towards the goals. This includes recording data and analysing trends in order to make sure that objectives are being met.
  • Evaluation: Evaluation is the process of assessing the performance of the organization against its objectives. This includes reviewing the results of monitoring and making sure that the organization is on track to reach its goals.
  • Feedback: Feedback is the process of providing information about the performance of the organization to the management. This includes providing suggestions for improvement and offering feedback on the success or failure of initiatives.

In summary, controlling is an integral part of the management process, as it involves setting objectives and determining how to achieve them, monitoring progress, evaluating performance, and providing feedback. It is important for an organization to have a clear understanding of the definition of controlling in order to ensure that the organization is meeting its goals.


Definition of controlling — recommended articles
Capability mapping — Strategic planning functions — Importance of strategic management — Organizational planning — Strategic control — Benefits of strategic management — Management functions — Strategic priorities — Strategy deployment

References

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