Question

'If anything goes wrong with the performance of key activities, the entire organization suffers. Therefore, the organization should focus on them.' Explain the statement with a suitable example.

Answer 1

The statement refers to use of 'Critical Point Control', while analyzing deviations. It emphasizes that deviations in the key areas need to be attended more urgently as compared to deviations in certain insignificant areas. Control should, therefore focus on these key result areas which are critical to the success of an organization.

For example, in a manufacturing organization, an increase of 5 percent in the labour cost may be more troublesome than a 15 percent increase in postal charges.