The control cycle

The control cycle is the iterative process of planning, monitoring outcomes, assessing results, and making revisions. The control cycle is commonly applied to the ongoing revision of corporate budgets and process flows.

When applying the control cycle to budgeting, the expectation is that each successive version of the budget will be improved, based on the information gleaned when the initial budget is compared to actual results. This approach works well in an environment where the level of competition is relaxed and few new products are released. The results are more problematic in a fast-paced environment, since business models may be radically revised on a regular basis, so there is little time to gain the benefits of an iterative feedback loop.

The control cycle works best for process flows, since they tend to change less than business models - that is, there will still be a need to pay suppliers, issue invoices, ship goods, and so forth, irrespective of changes in the business model. Given the higher stability level of processes, one can continually work through the steps in the control cycle to makes processes more efficient, while also more closely monitoring risks.

Related Courses

Capital Budgeting