Question

(C) By giving an example of a company of your choice, identify and describe various methods (preventive and corrective) that the company uses to maintain control and explain why those controls are essential function in linking to company's performances.

Answer 1

Example of a company is Starbucks which uses various preventive and corrective methods that the company uses to maintain control. Starbucks uses preventive methods of controls like following of compliance standards in supply chain process of procurement and distribution. The company has quality measures and guidelines to be adhered by its suppliers for raw materials and equipments in manufacturing. The company uses audits and approvals for its financial processes as preventive control. In human resources functions, it has policies for hiring and compensation as per the industry norms and uses controls like reference checks and performance appraisals for maintaining control over its processes .

The corrective actions company takes is to employ measures for minimising any variations in its performance like reviewing its financial reports and taking steps like consolidation of the business by closing low performing stores, improving the efficiency of its processes, using cost control methods at various steps, updating its information systems, training procedures for improving performance and quality control procedures.

These control measures are essential in linking to company's performance so that it can control any risks and prevent any losses or variations from its strategy and defined goals. It helps to take actions in time to improve and correct any anomalies.