Identifying the term which is based on the belief that "An attempt to control everything results in controlling nothing".

Management by Exception

The correct answer is option (2)- Management by Exception.

The term that is based on the belief that "An attempt to control everything results in controlling nothing" is "Management by Exception."

NCERT: Management by exception, which is often referred to as control by exception, is an important principle of management control based on the belief that an attempt to control everything results in controlling nothing. Thus, only significant deviations which go beyond the permissible limit should be brought to the notice of management. Thus, if the plans lay down 2 per cent increase in labour cost as an acceptable range of deviation in a manufacturing organisation, only increase in labour cost beyond 2 percent should be brought to the notice of the management. However, in case of major deviation from the standard (say, 5 percent), the matter has to receive immediate action of management on a priority basis.

OTHER OPTIONS

• Personal observation: Personal observation generally refers to the act of watching and noting the behaviors or characteristics of something. It is not specifically a technique used to study the relationship between costs, volume, and profits.

• Budgetary Control: Budgetary control involves the process of creating budgets, comparing actual results with the budgeted figures, and taking corrective actions as needed.

• Critical Point Control: It is neither economical nor easy to keep a check on each and every activity in an organisation. Control should, therefore, focus on key result areas (KRAs) which are critical to the success of an organisation. These KRAs are set as the critical points. If anything goes wrong at the critical points, the entire organisation suffers.