Skip to content

CMA Foundation · Fundamentals of Business Economics and Management · Introduction to Management

A company's annual plan expects sales of 40,000 units. Actual sales come to 34,000 units, and the manager finds the shortfall arose because the plan assumed a market growth that never occurred. Which statement best reflects the relationship between the functions involved?

Controlling revealed a 15% sales shortfall (6,000 of 40,000 units), and since the cause was an unrealistic market-growth assumption, the plan itself needs revision. Planning and controlling are interdependent: control gives feedback that corrects planning premises, so the deviation should not be blamed on staffing or ignored.

  1. AControlling revealed a deviation, and the cause lies in a planning premise, so feedback should lead to revising the planCorrect
  2. BControlling is unrelated to planning, so the deviation concerns only staffing
  3. CThe 15% shortfall shows organizing has failed, because plans cannot be faulty
  4. DPlanning ends once targets are set, so the deviation must be ignored until next year

Explanation

Shortfall is 6,000 units, i.e. 6,000/40,000 = 15%. Controlling detects deviations and feeds back to planning; here the faulty planning premise (market growth) is the cause. Plans can be flawed, and planning and controlling are interlinked, so the other statements are wrong.

Did you get it right without looking?

One question tells you little. A timed set on Introduction to Management shows your real accuracy, how long you take and where you lose marks.

Practise Introduction to ManagementFree diagnostic mock

More Introduction to Management questions