A-AS Level (CIE) Business Studies Paper-1: Specimen Questions with Answers 6 - 7 of 50

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Question 6


Write in Short

Short Answer▾

What are the difficulties faced by public limited companies?


Problems Faced by the Public Limited Company Are as Follows

  • As shares are transferred in the public limited company.
  • the original owners may lose their control over the ownership.
  • Due to large size of the companies the management and decision-making process becomes slow and various industrial relation problem arises.
  • Increased public scrutiny of the company՚s financial performance and activities.
  • The value of the company will be governed by the financial markets through trading of shares and market view of the company will be presented for company՚s performance.

Question 7


Describe in Detail


What do you mean by Management by Exception?


One of the most important ways of tailoring controls for efficiency and effectiveness is to make sure that they are designed to point out exception. In other words, by concentrating on exceptions from planned performance, controls based on the time-honored exception principle allow managers to detect those places where their attention is required and should be given. Management by exception is a system of identification and communication that steals the manager when his attention is needed. From this point of view, management by exception in be used in other management processes also though its primary focus revolves around controlling.

Management by exception has six basic ingredients: measurement, projection, selection, observation, comparison, and decision making.

  • Measurement assigns values to past and present performances. This is necessary because without measurement of some kind, its exception would be impossible to identify an exception
  • Projection analyses those measurements that are meaningful to organizational objectives and extends them into future expectations
  • Selection involves the criteria which management will use to follow progress towards organizational objectives.
  • Observation stage of management by exception involves performance so that managers are aware of the current situation in the measurement of current organization.
  • Comparison stage makes comparison of actual and planned performance and identifies the exceptions that require attention and reports the variances to management.
  • Decision making prescribes the action that must be taken in order to bring performance back into control, to adjust expectations to reflect changing conditions, or to exploit opportunity.

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