‘Green Tech Solutions’, a renewable energy company, set a target of reducing its production cost by 15% in the current financial year. After a few months, the management reviews the progress and finds that the cost reduction measures implemented have not been as effective as planned. By reviewing the progress ‘Green Tech Solutions’ has completed one of the steps of controlling process.
Identify the step of controlling process from the following :
‘Green Tech Solutions’, a renewable energy company, set a target of reducing its production cost by 15% in the current financial year. After a few months, the management reviews the progress and finds that the cost reduction measures implemented have not been as effective as planned. By reviewing the progress ‘Green Tech Solutions’ has completed one of the steps of controlling process.
Identify the step of controlling process from the following :
Show Hint
- Setting performance standards
- Comparing actual performance with standards
- Analysing deviations
- Taking corrective actions
The Correct Option is B
Solution and Explanation
Green Tech Solutions fixed a target to cut production cost by 15%.
After a few months, the management reviews the progress and finds that the cost cutting is not as effective as planned.
We must name the step of the controlling process that this review shows.
Step 2: Recall the steps of controlling:
The five steps are: setting performance standards, measuring actual performance, comparing actual performance with standards, analysing deviations, and taking corrective action.
The company has already set its standard, which is the 15% cost cut.
Step 3: Find the step in the case:
The management looks at what has been achieved so far and sees that it falls short of the plan.
Seeing that the result is less than the target means actual performance is being set against the standard.
That is the step of comparing actual performance with standards.
Step 4: Why the other options are wrong:
(A) Setting performance standards is the first step. The target of 15% was already fixed before the review.
(C) Analysing deviations means finding the reasons for the gap, and the case does not describe this yet.
(D) Taking corrective actions means changing plans or methods to remove the gap, and the case does not show this either.
Final Answer:
The management reviewed progress against the target of 15%, so the step is comparing actual performance with standards. The correct option is (B).
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