By our definition, part of the controlling function involves the application of corrective action when goals have not been met. Here are four examples of situations that may call for corrective action:
1.) A production schedule specifies that 800 units of a product must be completed each month, but actual production last month was only 725 units. Managers must determine the reason for the shortage. Were products rejected because quality wasn't controlled? If so, why? Is new equipment needed? Are employee' working method at fault?
2.) The purchasing department exceeded its budget for the month by 10 percent. Why? Can be situation be explained? Should the explanation be accepted, or is corrective action needed to ensure that this does not happen again?
3.) A company's current financial position reveals an acute shortage. How did this happen? Is it dangerous? What can be done to improved the situation and avoid problems within business circles? What financial resources are available to help?
4.) Sales volume represented only 22 percent of the total market, when the objective was set at 30 percent. Managers must determine why. Can the planned goal still be reached? How? Or should the goal be charged?
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