Question

‘Riya Mart’ is a company manufacturing disposable crockery. They have been in business for the past five years, but were not earning good profits. Concerned about this, the Chief Executive Officer (CEO), Verma, ordered an internal audit. The audit uncovered several issues like inventory pilferage, employees coming late and their performance not upto the mark. To stop inventory pilferage, Verma, the CEO, introduced surprise stock checks and installed an automated inventory management system to track stock movements. A biometric attendance system was also setup to keep a check on employees coming late. In addition to this, to motivate employees for better performance, they were told in advance what they are expected to do and what are their standards of performance. As a result of these steps, the inventory pilferage reduced, employees became more punctual and their performance improved.

(i) Identify and state the function of management performed by Verma, the Chief Executive Officer of the company.

(ii) State any two points of importance of the function identified in (i) above, which are not discussed in the above para.

Hint:

Stock checks, a biometric system and known standards mean the function is controlling. Choose two importance points the case does not mention, such as goals and accuracy of standards.

Answer 1

Step 1: Understand the case:
The audit found inventory theft, late coming and weak performance.
Verma then set standards, checked stock, used a biometric system and measured results. This is a pattern of checking work against standards.

Step 2: Part (i): Function identified:
The function is Controlling.
Controlling means comparing actual performance with planned standards and correcting any deviation.
Clues in the case: surprise stock checks, an automated inventory system, a biometric attendance system and telling employees the standards of performance in advance.

Step 3: Part (ii): Two points of importance not given in the case:
Accomplishing organisational goals: Control keeps actual work in line with the plan. This pulls the firm towards its goals and helps it to remain on the path it has chosen.
Judging accuracy of standards: A good control system checks the standards from time to time. If many deviations occur, it shows that the standards may be wrong and need a revision.
Other valid points are facilitating coordination in action and making efficient use of resources.

Final Answer:
(i) Controlling. (ii) Accomplishing organisational goals and judging the accuracy of standards.