Electronics manufacturer, Electro Ltd. reports 37% decline in its profits in the 4th quarter, ended 31st march, 2022, which is beyond the acceptable range i.e. 20% decided by the company. This was due to wastage of resources and high electricity usage. Name the step of controlling discussed above.

Analyzing deviations Setting performance standards Taking corrective action Measurement of actual performance

Analyzing deviations

After identifying the deviations that demand managerial attention, these deviations need to be analysed for their causes. Deviations may have multiple causes for their origin. These include unrealistic standards, defective process, inadequacy of resources, structural drawbacks, organisational constraints and environmental factors beyond the control of the organisation. It is necessary to identify the exact cause(s) of deviations, failing which, an appropriate corrective action might not be possible. The deviations and their causes are then reported and corrective action taken at appropriate level.