What Are The Modern Control Techniques In Business?
“The return on investment is computed by dividing the operating net profit by the capital employed in concern. ROI is used to measure the general competence of a concern. ”
Profits are the measure of the general efficiency of a trade. Earning earned in relation to the capital employed in a business is an important control device. If the rate of return on investment is quite acceptable, it will be taken as a benchmark of good performance.The return on investment can be compared over a period of time as well as with that of other similar concerns. This contrast will show the current performance in relation to earlier periods and also the level of achievement of the concern in relationship to other concerns.
The return on investment is computed by dividing the operating net profit by the capital employed in concern. ROI is used to measure the general competence of a concern. It reveals how well the resources of a concern are used, greater the return healthier the results.
A key shortcoming of this process is the determination of capital employed in a concern, as this concept is open to contradictory interpretations. Generally, capital employed includes equity share capital, preference share capital, free reserve and long-standing loans. It means that the entire assets minus the existing liabilities will form the capital employed.
2nd broad category is PERT, a Program Evaluation and Review Technique. PERT was first developed as a management tool for synchronization and early accomplishment of Polaris Missile Project in USA resulting in a reduction of 30 % time in project implementation. PERT uses network as the fundamental tool of project management and is helpful in completing a project on schedule..
A contemporary of PERT is CPM (Critical Path Method) and was developed in connection with maintenance and construction work. PERT is useful at quite a lot of stages of project management starting from earl planning stages when various alternative program are being considered to the scheduling phase, when time and resources agendas are laid out.
After this the final stage in operation is reached, when CPM is used as a control tool to determine real versus intended progress.
Author - DeeKay
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