Read the following passage and answer the question.
Managers at a New York City import-export company suspected that two employees were robbing it. Corporate Defense Strategies (CDS) of Maywood, New Jersey, advised the firm to install a software program that could secretly log every single stroke of the suspects’ computer keys and send an encrypted e-mail report to CDS. Investigators revealed that the two employees were deleting orders from the corporate books after processing them, pocketing the revenues, and building their own company from within. The programme picked up on their plan to return to the office late one night to steal a large shipment of electronics. Police hid in the rafters of the firm’s warehouse, and when the suspects entered, they were arrested. The pair was charged with embezzling $3 million over two and a half years, a sizable amount of revenue for a $25 million-a-year firm.
After the arrest, the firm made a rule that no processed order can be removed from the corporate books without the approval of a senior manager. Which step of the controlling process is this?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Taking corrective action
Option (1) Setting performance standards — Incorrect. Standards are the criteria for measuring performance, fixed at the start. The new rule came after the problem was found, to stop it.
Option (2) Measurement of actual performance — Incorrect. Measurement records the work actually done. The secret logging did this job in the case.
Option (3) Comparing actual performance with standards — Incorrect. Comparing shows the gap between actual and desired results. Here the gap, the deleted orders, was already known.
Option (4) Taking corrective action — Correct. Corrective action is the final step. When a deviation is serious, the manager acts so that it does not occur again. The approval rule closes the gap that let orders be deleted.
NCERT (2026-27 Edition): “Step 5: Taking Corrective Action: The final step in the controlling process is taking corrective action. No corrective action is required when the deviations are within acceptable limits. However, when the deviations go beyond the acceptable range, especially in the important areas, it demands immediate managerial attention so that deviations do not occur again and standards are accomplished. Corrective action might involve training of employees if the production target could not be met. Similarly, if an important project is running behind schedule, corrective action might involve assigning of additional workers and equipment to the project and permission for overtime work. In case the deviation cannot be corrected through managerial action, the standards may have to be revised. …” |