Chapter 4

Administrative Theory of Management/Principles of Management

topics
* Administrative theory of Management
* Principles of Management
* Nature of Management Principles
* Characteristics of Management Principles

Q.1. Describe in brief the administrative theory of Management?

OR
Briefly explain the Fayol's general principles of Management.
OR
To arrange is to forecast and plan, to organize, to command, to coordinate and to control, Discuss
OR
Discuss the contribution of Fayol to the science of Management.
Henri Fayol - Father of Management
Fayol was a French mining engineer in his early thirties, but after that he switched over to general management ans
was Managing Director from 1888 to 1918. He wrote his book General and Industrial Management in 1916 in
French, which was translated in English in 1949, only when American Management writers came to know about his
ideas.
Fayol is known as the father of management or the founder of the classical management. Not because he was first
to investigate managerial behavior, but because he was the first to systematize it. He was contemporary to Taylor.
Taylor was basically concerned with organizational functions, whereas Fayol was interested in
the total organization. It may be noted that Taylor is known as the father of scientific management, i.e. supervisory
or lower management, while Fayol is recognized as the father of management, i.e. the higher management or the
general management.
Division of Business Activities
According to Fayol, business activities in any organization consist of six interdependent operations as follows:
1. Technical - activities concerning production.
2. Commercial - activities concerning buying, selling and exchange.
3. Financial - activities concerning optimum use of capital.
4. Security - activities concerning protection of property.
5. Accounting - activities concerning final accounts, costs and statistics. And
6. Managerial - activities concerning planning, organizing, commanding, coordinating and controlling.
According to him, the first five activities were well known and as such to devoted his attention to the description
and explanation of the managerial activities. Also he analyzed the nature of such activities and skill requirements,
which were so far given little scattered attention by thinkers.
Universality of Management: (Elements of Management)

Fayol considered the process of management to be of universal application and distinguished between five
elements of the process. He regarded these elements of management as the function of management, which were
being performed by all managers universally and at all the levels of organization. He divided management
functions into five parts as follows:

Forecasting and planning

Organizing
Command
Coordination
Control

Thus, according to Fayol, management means to forecast and plan, to organize, to command, to co-ordinate and to
control. The management was defined as the process of performing these functions. It may be noted that the present
pattern of management functions follows broadly the lines set by Fayol.
Fayol emphasized that management involved the application of certain skills, which could be acquired by persons on
the basis of systematic instructions and training. Once acquired the skills could be applied to all kinds of institutions
including church, schools, political as well as industrial organization.
Q.2. Describe the basic principles of management?
Principles of Management
Fayol made a distinction between "elements of management" and "general principles of management". Besides a
systematic analysis of the management process and management functions, Fayol formulated a set of fourteen
principles as guidelines for implementing the process of management.
These principles may be listed as follows:
1. Division of Work
In any organized situation, work should be divided into compact jobs to be assigned to individuals. This applies to
managerial work and non-managerial work. Division of labour facilities specialization and improves efficiency, if it is
done within reasonable limits.
2. Authorities and Responsibility
The authority is the official right to a manager to manage people and things. Authority of a manager goes hand in
hand with the responsibility for effective results. In other words, there should be parity or balance between authority
and responsibiliy vested in a managerial position.
3. Discipline
Discipline is defined as observance of diligence and respect for seniors and rules and regulations. Managers as
leaders of their work groups should enforce discipline throughout the organization. Fayol declares that discipline
requires good superiors at all levels. He emphasized the need of discipline among the personnel for the smooth
running of organization. He advocated penalties to prevent in violation.
4. Unity of Command
It means that a subordinate in an organization should be under direct supervision of a single from whom he should get
instructions and to whom be should be accountable. In other words, every employee should have only one boss. If a
subordinate has more than one boss, to that case conflict and condition in authority and instructions of general bosses
would result.

5. Unity of Direction
Fayol advocates one head, one plan for a group of activities having same objective. In other words, a set of activities
having the same objective should be under the direction of a single manager. Similarly, there should be one plan of
action for such a set of activities because the objective is the same. This principle promotes smooth coordination of
activities, efforts and resources.
6. Subordination of Individual Interest to Group Interest
The collective good and common interest of the organization should prevail over the narrow, sectional and selfinterest of its members of an organization for the welfare of both the organization and the members.
7. Remuneration of Personnel
Remuneration as well the methods of payment in an organization should be fair so as to afford maximum satisfaction
both to the organization and its employees.
8. Centralization
According to Fayol, every thing which reduces the importance of subordinates role is centralization and that which
increases it, is decentralization. In his opinion, the question of centralization and optimum degree in particular case.
There should be a proper combination and decentralization in an organization based on a consideration of several
internal and external factors.
9. Scalar Chain
Fayol defines the scalar chain as the chain of superiors ranging from the ultimate authority (i.e. top authority) to the
lowest ranks. It is also known as hierarchy of management. Every communication should follow the prescribed route,
i.e. the proper channel. Authority relationships are said to be scalar when subordinates report to their immediate
superiors and when their superiors, in turn, directly report as subordinates, to their superiors.
10. Order
Order relates to both persons and things. It means a systematic arrangement of materials and systematic placement of
people in the organization. In material order, everything should be in its proper place and there should be a place for
everything. For social order there should be a place assigned to each employee, and each employee should be in the
place assigned. The right man in the right place is the ideal here.
11. Equity
Equity means combination of fairness, kindliness and justice. Equity motivates the workers to perform their duties.
Besides, it promotes a friendly atmosphere between superiors and subordinates.
12. Stability of Tenure of Personnel
Management should strive to minimize employee turnover (i.e. changes in staff). In other words efforts should be
made to achieve relative stability and continuity of tenure of the personnel. This could be achieved by attractive
remuneration and honourable treatment of personnel. Stability and continuity of personnel promote teamwork, loyalty
and economy.
13. Initiative
It refers to the freedom to propose a plan and execute it. Management should encourage subordinates to take desirable
initiative in thinking out plans and executing them. Entending opportunities and freedom to contribute their best
could do this.
14. Esprit de corps
Esprit de corps means the spirit of loyalty and devotion, which unites the members of a group or society. It is a sense
of respect and belongingness to one's organisation. This principle stresses the need for team spirit, cordial relations,
and co-operations among the personnel.
It is to be noted that Fayol made is clear that he had no intention to close the list of principles or make them

inflexible.
Critical Evaluation
Fayol's administrative or process or functional theory of management may be evaluated as follows:
(A) Contribution of Fayol's Work
Fayol's major contribution was to identify management as a separate set of skill or functions performed by managers
in the organizations. The skills and abilities required for effective management were stated to be dependent on the
manager's positions at different levels of organization. Fayol pointed out that administrative or managerial skills were
more essential for higher-level manager, whereas technical skills and abilities were required more of the lower levels.
Fayol was the first thinker who emphasized, for the first time the necessity of formal education and training in
management. He was the person who provided a set of means (i.e. planning, organizing, commanding, coordinating
and controlling) for understanding the management process. He also provided principles for implementing this
process.
He provided conceptual framework for analyzing the management process and emphasized that management was a
separate, distinct activity.
Management as a body of knowledge gained immediately from Fayol's analysis of management skills of universal
relevance and the analysis of the principles of general management.
(B) Limitations or Weaknesses
Fayol's administrative theory of management is criticized on the following grounds.
1. It is too formal as Fayol divides "business activities" into six categories, and their management into five functions
and the implementation of these functions with the help of fourteen principles.
2. Some critics call this theory as inconsistent, vague and inadequate.
3. It does not pay adequate attention to workers. It has pro-management bias.
4. Jernert Simon calls Fayol's principles as proverbs, comparable to folklore and folk wisdom.
Conclusion
Inspite of several criticisms of Fayol's work, his theory of managerial functions still exerts considerable influence on
the practice of management as well as the teaching of this subject world over.
It may be also noted that when combined together the scientific management approach and the functional approach
are called classical school or classical theory of management or classical approach to management.
Q.3. What are Management Principles? Explain the nature of Management Principles.
OR
Why Management Principles are needed? What are their limitations?
Meaning of Management Principles
Management principles may be defined as fundamental truths of general validity. They are helpful in predicting and
understanding the results of managerial actions. The principles have been derived from the experience of managers in
different fields of activity. Primarily members of the classical management school have developed them.
Management principles are intended to improve the practice of management by providing guidelines for managerial
actions in the management process. They become the basis of scientific process of management.

Flexibility of Management Principles (Nature)

As indicated above, management principles are not rigid, absolute truths like rules and laws. In fact, they are flexible
guides to managerial actions. Hence, while applying these principles, due attention must be given to varied and
changing, circumstances because human beings who are subject of such principles are different and changeable and
moreover other concerned factors are also not stable. At times it has been found in practice that the same principles is
seldom applied twice in exactly the same way.
Like other social sciences, management science is also not very exact and rigid. Certain kind of flexibility is always
necessary to accommodate new thinking, new demands and newly emerging circumstance. Hence the management
principles are flexible and can should be adopted to meet the speciality of every situation. However as a precaution
management principles should be guarded against unnecessary frequent modifications and alterations based on pure
whims and frezies of individual user so that they are not distorted unwarrantedly.
In sum, it may be said that the nature of the principles of management suggests that they should be applied with fair
judgement and interpretation of the available facts in a given situation.
Q.4. Describe the characteristics of management principles also explain it needs & importance?
Characteristics of Management Principles
The characteristics of management principles may be examined as follows:
1. Management principles are derived from analysis of management functions and processes.
2. There are two types of principles:
Descriptive which attempt to explain and predict the behaviour of organizational members and managerial decisions
and their relationships.
Normative which attempts to prescribe and evaluate the bahaviour of organizational members including the
managers. They prescribed what ought to be, what is good, right and desireable.
3. The principles known today have their origin in the works of classical writers and thinkers like Taylor, Fayol and
Mooney and Reiley.
4. They are universal in the sense that they are valid for most organizational under most circumstances.
5. They are flexible in nature and change with the changes in the environment in which an organization exists. It is to
be noted that nothing is permanent is the landslide of management, because of the complex and unpredictable nature
of human behaviour.
Need and Importance of Management Principles
Proper use of management principles will probably improve organizational performance. According to George R.
Terry, Principles of management are to a manager as a table of strengths of materials is to a civil engineer. The value
of the principles lies in the foundation they provide for efficient conduct of management practice. By means of
principles, a manager can avoid fundamental mistakes in his job and foretell the results of his actions with
confidence.
Principles help in several ways - increasing the managerial efficiency, increasing the productivity of workers,
enhancing managerial knowledge and thinking, improving research in management, serving as aid to training
enhancing social welfare by helping in improving the quality of life of people and community resources to best
advantage of organizational members, etc.
The main purpose of management principles is to make available useful elements of a systematic theory of
management, so as to improve the management practice. They provide a means of organizing knowledge and
experience in management.
The above discussion clearly brings out that it is due to all the above facts that management principles have become a
permanent need in today's management world.
Various Management Principles
A number of management thinkers have formulated various management principles. Taylor and Fayol has enunciated the most
important principles.

Chapter number 5:
Chapter 5 - Human Relational Approach & Behavioural Approach
* Human relations approach to Management
* Behavioural approach to Management
* Human relations & Behavioral approaches
* Management science approached to Management
Q.1. What is human relations approach to Management? Critically evaluate its contribution to Management theory.
OR
Discuss the impact of Hawthorne Experiments on Management thought.
Human Relations Approach Historical Perspective
Scientific management remained concerned tithe the efficiency and productivity of workmen at the shop floor.
Fayol's functional approach to management aimed as improving the managerial activities and performance at top
level in the organization. Between 1925, opinion of many experts was directed towards the human element or aspect
of the organization. They drew their attention from "work" emphasis to "worker" emphasis. It was clearly felt that
earlier approaches to management were incomplete and insufficient in that there was little recognition of the
importance of workers as human beings, their attitudes, feelings, needs and requirements. In fact, the technical
approach to work methods in scientific management did not produce durable and desirable results in all cases.
Individual and group relationships in the work place often prevented maximum benefits to be derived from planning
and standardization of work or monetary rewards offered for efficiency. Elton Mayo is the founder of this theory.
Hawthorne Experiments
The human relations approach to management developed as a result of a series of experiences (in all four) conducted
by Elton Mayo and his associates F.J. Reothlisherger and W.J. Dickson at the Hawthrone plant of the Western Electric
Company at Chicago in United States. The Hawthrone studies were aimed at finding out what factors really
influenced the productivity and work performance of workers. These experiments were made with respect to different levels of illumination in the work place changing in working conditions like hours of work, lunches, test
periods and how group norms affect group effort and output.
Human Relations Concepts: Findings of Hawthorne Studies
The main findings of Hawthrone studies were as follows:
1. Physical environment at work place (i.e., working conditions) do not have any material effect on the efficiency of
work.
2. Social or human relationship influenced productivity more directly than changes in working conditions.
3. Favourable attitudes of workers and work-teams towards their work were more important factors determining
efficiency.
4. Fulfillment of workers social and psychological needs have a beneficial effect on the morale and efficiency of
workers.
5. Employee groups formed on the basis of social interactions and common interest exercised a strong influence on
workers, performance. In other words, informal organization controlled the norms established by the groups in

respect of each member's output.

6. Workers cannot be motivated solely by economic reward. More important motivators are job security, recognition
by superiors and freedom to take initiative and to express their individual opinions as matters of their own concern.
Q.2. Write a comprehensive note on Behavioural approach to management.
OR
Explain the significance of the Behavioural approach in management. What are its main features? Discuss.
Behavioural Or Social Science Approach
Historical Perspective
The Behavioral or social science approach developed as a corollary to the human relations approach.
Social scientists and organization theorists are of the opinion that best results can be obtained by building theories of
management and organization based on findings of the Behavioural sciences, such as psychology, sociology,
psychiatry, economics, cultural anthropology and philosophy.
Behavioural approach reflects the findings of intensive carried out by Behavioural scientists like Chester I Bernard,
Douglas McGregor, Chris Argyris, A.H. Maslow, Herzberg, Rensis Likert etc. many of the conclusions of the
Hawthorne studies have been reaffirmed by subsequent research studies. Moreover, certain ideas have been refined,
extended and these behaviour scientists have highlighted other important ideas. These scientists have tried to
eliminate the exaggeration of the importance of informal relations. The focal point of management action is the
behaviour of human being in the organization - management as a technical process only, was given up.
Behavioural scientists conduct research to answer the question. "Why a person or a group of persons behaves or acts
in a particular manner? They try in answer in any problems faced by the managers by explaining the behaviour of
the people".
Elements Or Concepts or Features Of Behavioural Approach
The Behavioural approach concerns itself with the social and psychological aspects of human behaviour in
organization. The behaviour of members of an organization clearly affects both its structure and its functioning as
well as the principles on which it can be managed. Behavioural researches have provided sufficient evidence that
human element is the key factor in the success are failure of an organization. In several experiments, it has been
observed that people prefer to be consulted rather than receive order or information. Less reliance on the use of
authority is preferred.
Some of the more important elements or concepts of Behavioural approach may be outlined as follows:
1. Individual Behaviour
Individual behaviour is closely linked with the behaviour of the group to which he belongs. The group dictates
changes in his behaviour. Individuals observe those work standards which are prescribed by the group.
2. Informal Leadership
Informal leadership, rather than formal authority of managers is more important for setting and enforcing group
standards of performance. A a leader, a manager may be more effective and acceptable to subordinates, if he adopts
the democratic style of leadership.
3. Participation
If the subordinates are encouraged and allowed to participate in establishing goals, there will be positive effect on
their attitude towards work. If employees are involved in planning, designing the jobs and decision-making, there will
be least resistance to changes effected in technology and work methods.
4. Motivation by Self-Control and Self-Development
Behavioural scientists maintain that by nature most people enjoy work and are motivated by self-control and selfdevelopment. Managers should try to identity and provide necessary conditions conducive to the proper and sufficient
use of human potential. The managers attitude towards human behaviour should positive. They should know that

average man is not lazy by nature. But he is ambition. Every man likes to work and prefers to assume responsibilities.
MacGregor maintains that employees favour self-direction and self-control. Behaviouralists believe that in place of
the concept of social man the concept of self-actualizing man would be more appropriate to explain human
motivations.
Chester I Bernard pointed out that material reward is of crucial signification only upto a definite point. The incentives
of status, power, good physical conditions opportunities of participation and good social (i.e., cultural
interrelationships) are very important.
5. Informal Organization
Behaviouralists particularly Bernard, consider informer organization as an essential part of the formal organization.
Informer organization must always be taken into account while determining managerial behaviour.
6. General Supervision Not Close One
As regards supervision of subordinates, Behaviouralists particularly Likert, are not in favour of close supervision.
They advocate general supervision, which tends to be associated with high productivity.
Basic Assumptions (Are Propositions) Of Behavioural Scientists
The Behavioural science approach is based on certain assumptions about man and organization, which my be looked
upon as their prepositions (statements of opinion or judgement) also. Those may be outlined as follows
1. Organization is socio-technical system involving people and technology as their primary components.
2. The behaviour of the members of an organization clearly affect both its structure and its functioning, as well as the
principles on which it can be managed.
3. Individual's behaviour is closely linked with a greatly influenced by the behaviour of the group to which he
belongs.
4. A wide range of factors influences work and interpersonal behaviour of people in the organization.
5. Congruence (agreement) between organizational goals and individual goals organizations members would be
established.
6. Several individual differences in perceptions, aspirations, needs, feelings, abilities and values of people excite in
the organization, such difference along with their changing nature over periods of time have to be recognized.
7. Informal leadership rather than the formal authority of supervisors is more important for increase in employee
performance.
8. Democratic leadership style and participative managerial style encourage positive attitude of employee towards
work and faster's high moral and initiative among them.
9. By nature most people enjoy work and are motivated by self-direction, self-control and self-development.
10. Conflict in organization may to some extent to inevitable and at times even desirable for development, innovation
and creativity in certain cases. Conflicts and cooperation coexist in organizations. Conflicts are not to be suppressed,
but are to be resolved and that too not always. Coordinated in vital for achievement of organizational goals.
The above preposition are important elements of Behavioural science thinking. Thus the Behavioural approach
represents a significant advance over the human relations approach.
The major areas of research and analysis by the Behavioural scientists are interaction between organizational
structure, work performance and employees behaviour, consequences of traditional, coercive controls on humans,
influence of technological advances and changes on group behaviour, human needs and aspirations, theories of
motivation and leadership, developmental aspects of human resources, organizational behaviour aspects, group
dynamics, patterns of communication and their importance in the organization, managerial styles and their impact on
employee behaviour, organizational climate, culture and politics, organizational development, change and conflict,
organizational rules and status, and so on.
Q.3. Distinguish between Human Relations and Behavioural approaches?
Distinction Between Human Relations and Behavioural Approaches

As indicated earlier, Behavioural science approach is an improvement over the human relations thinking. This may be
explained in the following ways.
1. Areas of Study
The human relations movement kept it limited to the study of psychological needs of people, supervision styles,
working conditions, interpersonal relations, communication etc. On the other hand Behavioural scientists have gone
very far and wide in the study of organizational and managerial aspects covering the areas as mentioned in the
previous paragraph.
2. Human Nature Assumptions
Human relation theorists have made some general, unverifiable assumption about human nature holding "social
man" view. In contrast, Behavioural scientists have understood the factual nature of individuals and of their
behaviour-holding "self-actualizing man" model.
3. Human Needs
Human relations thinkers presume that people have only social needs, whereas the Behavioural scientists regard
individuals as different from one another and dynamic with respect to their needs and attitudes and emphasize both
social and psychological needs.
4. Organization Nature
Human relations approach believes organizations to be purely social systems, while Behavioural science approach
views organizations as socio-technical systems which are required to accomplish a set of individual, social and
corporate (economic) goals.
5. Employee Satisfaction
Human relations theorists advocate that employees satisfaction is achieve through economic and other incentives and
then it automatically leads to higher employee productivity. On the other hand, Behavioural scientists assert that
employee satisfaction is a matter of a set of factors including fulfillment of social and self-actualization needs and
high morale is also necessary for achieving higher employee productivity, which is a composite thing made by
different factors including participative management.
6. Conflict Treatment
Human relation thinkers proposed that conflict, competition and disagreement is to be avoided or should always be
resolved, whereas Behavioural scientists concede that conflict is not always bad, it may be constructive too, it is
inevitable and may not always be resolved.
7. Manager's Role
Under human relations model, manager's traditional role of controller is modified to include responsibility for
maintenance of the human system. On the other hand, under the behavioural science model, the manager's basic role
is rather dramatically redefined and he is no longer viewed as a controller but rather as a developer and facilitator of
the performance of the socio-technical system to which he is assigned.
8. Nature of Approaches
Human relations approach is criticized for being unscientific (i.e. vague and simplistic and for patting forth broad
conclusions having personal bias. On the other hand, behavioural scientists have made their propositions based on
extensive researches and its sub discipline organizational behaviour also has a strong research orientation.
Contribution
The contribution of behavioural science to management thought and practice consists primarily of creating new

insights rather than new techniques. It has developed a useful way of thinking about the role of a manager, the nature
of organizations and the behaviour of individuals with organziations.

Q.4. What is management science approach to management? Critically examine it.

OR
Define management science approach and explain the characteristics of the situation in which management science
applications are usually made.
Management Science Or Operations Research Or Approach
Quantitative Approach
A quantitative approach to management thought is known as management science or operations approach.
"C.West Churchman. Russell Adoff and E.Leonard Arnoff" define the management science or operations research OR
approach as an application of the scientific method to problems arising in the operation of a system and a solving of
these problems by the solving of mathematical equations representing the system. (Introduction to Operations
Research. New York Willey. 1957).
The management science approach suggests that managers can best improve their organisation by using the scientific
method and mathematical techniques to solve operational problems.
The Beginning of the Management Science Approach
During the World War II, in Great Britain and in America, some mathematicians, physicists and other scientists were
called to help solve complex, operational problems that existing in the military. They were able to achieve significant
technological and tactical breakthroughs. The scientists were organized into teams that eventually became known as
operations research or groups. When the war was over the applicability of or to problems industry gradually became
apparent, particularly in the wake of new industrial technologies being put into use or specialists were called to help
managers come up with answers to the new problems. With the invention of electronic computer system or
procedures were formalized into what is now called "management science school" or "quantitative school".
The early or groups typically included physicists and other "hard" scientists, who used the problem solving method
known as scientific method which involves.
(i) Observing the problem system.
(ii) Constructing a model, i.e. a generalized framework from which consequences of changing the system can be
predicted.
(iii) Deducting (inferring) from the model how the system will behave it changes were made in existing conditions.
(iv) Testing the model by performing an experiment on the actual system to see whether the effects of changes
predicted using the model, actually occur when the changes are made.

The Operations Research groups were very successful in using the scientific method to solve their operational
problems.
Now, the management science approach is being used in many companies in India and other countries and applied to
many diverse management problems, such as production scheduling, plant location product packaging etc.
Characteristics of Management Science Applications
Four primary characteristics are usually present in situations in which management science techniques are applied.
These are as follows:
1. Large Number of Variables
The management problems studied is so complicated that managers need help in analyzing a large number of
variables.
2. Use of Mathematical Model
The use of mathematical models the investigate the decision situation in typical in management science applications.
Models are constructed to represent reality and then used to determine how the real world situation might be
improved.
3. Use of a Computer
A management science application makes use of computers. There are two factors that make computers extremely
valuable to the management science analyst.
Today, managers are using such management science tools as inventory control methods, network models and
probability models as aid in decision making process. Since management science thought is still evolving, more and
more sophisticated analytical techniques can be expected.
Critical Evaluation of Management Science Approach
Management science team presents management with an objective basis for making a decision. Management science
techniques increase the effectiveness of the managers decision making. They are best suited analyzing quantifiable
factors, such as expenses, sales and units of production. They are used in such activities as capital budgeting
management, cash flow management, production scheduling, development of product strategies, planning for human
resource development programmes, maintenance of optional inventory levels and aircraft scheduling.
However, is special widespread use for many problems, management science of today has not developed to a point
where it can effectively deal with an important aspect of the organization, that is the human side of an enterprise. But
no doubt that it has marvelously contributed to the solving of planning and control problems and to the progress in
the areas of organizing, staffing and the leading the organisation. Anyhow some managers complain about the
complicated nature of the concepts, language and techniques of management science, which are not readily
understandable and not easily implemental. Some other managers indicate about the drawback of management
science in that if fails to address to the psychological and Behavioural components of workplace activities because
the managers are not sufficiently involved with management scientists at the initial level of developing decision

making techniques and as a result the later implementation of these techniques remain often unsuccessful. There exits
a lack of awareness among the management scientist regarding the problems and constraints actually faced by the
managers in orgnanization, particularly because of their remoteness from the
Chpater 6:
Chapter 6 - Growth & Development of Management Thought
* Evolution of Management

Q.1. Briefly describe the evolution of management thought from early days to moder times.
OR
Examine the evolution of management thought from the early pioneers to modern thinkers.
OR
Describe briefly various schools or management thought prevalent from time to time.
Growth and Development of Management Thought
The management thought has grown and developed gradually in the following stages:
1. Early Era
The is known as pre-scientific management era. During this era the management finally came into being as a separate
field of study and research.
2. Scientific Management Era
During this era some principles of scientific management were developed. This era saw great advances in
management practice by application of empirical studies to determine faster and better methods of production.
3. Processes or Functional or Administrative Era
During this era, a clear distinction was made between technical activities and managerial activities. Planning,
organizing, command, coordination and control were recognized as managerial activities. The organisation was
recognized as a rational-legal structure.
4. Human Relations Era
During this era, special emphasis was laid on "worker" aspect of the organisation. It was pleaded that workers should
be cared as human assets of the enterprise.

5. Behavioural Or Social Sciences Era

During this era, the individual, the work groups and the participative management aspects were emphasized.
6. Management Science Or Quantitative Era
This era saw the scholars to lay emphasis on rational decision-making and use of mathematical techniques for
managing the organisations.
7. Modern Era
During this era, emphasis is being laid on treating the organisation as a system composed of interrelated and
interdependent parts, working in its specific environment. Moreover, it has been experienced and advocated that there
is no one best way of dealing with a situation. The manager has to find a best way in each specific situation
depending on the different circumstances of the individual case.
Chapter 7 - Functional Areas Or Scope of Management
* Production Management
* Nature & Importance of Production Management
* Advantages of Production Planning & Control
* Basic Functions of Marketing
* Stages or Steps in Marketing Research Process
Q.1. Define Production Management. Explain production planning and control. Discuss briefly the various techniques
of production control.
OR
What is Production Management? Discuss the functions of production, planning and control.
OR
Define Production, Planning and Control. What are its main steps or elements? Discuss in brief.
Or
What are Production, Planning and Control? What are its objects and advantages? Outline the requirement of
effective production control system.
Definition of Production Management
In modern competitive world, if an enterprise and master its production and marketing, it will be able to acquire and
maintain a considerable market share.

Production may be define as the conversation of the raw material into finished goods are services through
transforming process for purposes of supplying them into the market. Thus, it is process of creation of goods and
services. The terms "production and manufacturing" are generally used as synonyms. Production activities are vital
for the survival, growth and development of every enterprise.
Production to be successful has to be managed. Hence production management assumed great importance in every
organisation.
Some important definition of production management may be given as follows:
Elwood Buffa
Production management deals with decision-making related to production process so that the resulting goods and
services are produced according to the specifications in the amounts and by the schedule demanded and at minimum
cost.
A.W.Field
Production management is the process of planning and regulating the operations of that part of enterprise which is
responsible for actual transformation of materials into finished products.
Major Activities of Production Management
Production management deals with manpower and physical resources and facilities for transforming inputs into
outputs. Production Management involves three major activities or fucntions:
1. Planning of Production Inputs
It includes determining of necessary inputs including raw materials, labour, electrical power, machines and
equipments, facilities etc., required for production work.
2. Installation of the Necessary Inputs
It includes taking decisions with regard to designing of the plant, choice of the best machines and arrangement of
other necessary facilities so that the production work can be started.
3. Co-Ordination and Control of the Production Process
An effective production system involves co-ordination among the various activities and affairs within the production
department itself and also integration of its activities and decisions with other departments of the enterprise, such as
finance, marketing, purchases, personnel, according and research and development. It also includes determining the
necessary sequence of operations, preparing work schedules and assigning work to specific employees, so as to
ensure smooth production operations. Control includes ensuring that the actual production performance meets the
predetermined production plans and goals and also providing for proper feedback for taking corrective action.

Q.2. Describe the nature & importance of production management?

Nature and Importance of Production Management
Production management has become an important now a day that it is treated to be a separate, independent functional
area of management.
Production management has assumed its importance because of the following reason:
1. It is the foundation for earning profits - by producing goods or services and selling them into the market.
2. It ensures that produced goods or services are of desired quality, in required quantity and according to timeschedules.
3. It facilitates optimum inventory level.
4. It ensures proper co-ordination and necessary control, which are required for adequate, time and cost-conscious
production.
5. It ensures coping with the changes in demands in the market and maintains stability in the production department.
Production Planning and Control
Production Planning, Planning is deciding in advance what to do, how to do it, when to do it, who is to do it. Then,
production planning involves decision making in various production aspects, such as designing of production plans,
programmes and goals, selection of production process, plant layout, provision of physical facilities (like material,
tools, machines, equipments etc.) and preparation of time-schedules.
"Lawrence Bethel Observes" Production planning takes a given product or line of products and organizes in advance
the manpower materials, machines and money required for a predetermined output in a given period of time. It starts
with a product concept capable of being manufactured, a general idea of the process by which it can be made and a
sales forecast for the descernible future.
Production Control
Control means ensuring that actual performance meets the predetermined standards. Then, "production control" refers
to a set of steps for verifying whether production operations occur in conformity with the production plan adopted. It
guides and directs the flow of production so that the goods of desired quality are manufactured at the right time and it
maximum possible economic manner. It may be noted that "production control" is frequently used synonymously
with "production planning and control" with planning being implied.
Spriegel and Lansburgh define production control as
the process of planning production in advance of operations, establishing the exact route of each individual item, part
or assembly, setting, starting and finishing dates for each important item, assembly, and the finished products and
releasing the necessary orders as well as initiating the required follow-up to effective the smooth functioning of the
enterprise.

James Lundy says

Basically, the production control function involves the co-ordination and integration of the factors of production for
optimum efficiency. The principal objective of production control is to facilitate the task of manufacturing and see
that everything is being done strictly in accordance with the plan. It co-ordinates and integrates the factors of
production for optimism and directs and checks the course and progress of work.
Q.3. Describe the advantages of production planning & control?
Advantages of Production Planning and Control
Production planning and control yields the following main advantages,
1. Avoidance of Rush Orders
Production is well planned and its time aspects are well controlled. Therefore, production control reduces the number
of risk-orders and overtime work on plant.
2. Avoidance of Bottlenecks
The incomplete work does not get accumulated because production control maintains an even flow of work.
3. Cost Reduction
Production control programmes minimizes the idleness of men and machines, keeps in process inventories at a
satisfactory level, leads to a better control of raw materials inventory, reduces costs of storage and materials handling,
helps in maintaining quality and containing rejection and thus reduces unit cost of production.
4. Effective Utilization of Resources
It reduces the loss of time by the workers waiting for materials and makes most effective use of equipments.
5. Co-Ordination
It serves to co-ordinate the activities of plant and results in a concerted effort by workmen.
6. Benefits to Workers
Adequate wages, stable employment, job Security, improved working conditions, increased personal satisfaction,
high morale.
7. Efficient Service to Customers
It ensures better service to the customers by enabling production to be conducted in accordance with the time

schedules and therefore deliveries are made on promised dates.

Q.4. What are the Basic functions of Marketing?

Basic Functions of Marketing
The marketing process performs certain activities as the goods or services move from producer to consumer. Every
firm does not perform all these activities or jobs. However, any company that wants to operate its marketing system
successfully must carry them out. The following marketing tasks have been recognized for a long time.
1. Selling
It is core of marketing. It is concerned with the persuasion of prospective buyers to actually complete the purchase of
an article. Setting pays an important part in realizing the ultimate aim of earning profit. Selling is enhanced by means
of personal selling, advertising, publicity and sales promotion.
2. Buying
It involves what to buy, what quality, how much, from whom, when and at, what price. People in business buy to
increase sales or to decrease costs. Purchasing agents are much influenced by quality, service and price. The products
that the retailers buy for resale are determined by the need and preferences of their customers.
3. Transportation
Transport is the physical means whereby goods are moved from the places where they are produced to those they are
needed for consumption. Transportation is essential from the procurement of raw materials to the delivery of finished
products to the customers places. Marketing relies mainly on railroads, tracks, waterways, pipelines and air transport.
The type of transportation is chosen on several consideration such as suitability, speed and cost.
4. Storage
It involves the holding of goods in proper condition from the time they are produced until they are needed by
consumers (in case of finished products) or by the production department (in case of raw materials and stores).

Storing protects the goods from deterioration and helps in carrying over surplus for feature consumption or use in
production. Goods may be stored in various warehouses situated at different places. Storing assumes greater
importance when production is seasonal or consumption may be seasonal. Retail firms are called "stores".
5. Standardization and Grading
The other activities that facilitate marketing are standardization and grading. Standardization means establishment of
certain standards or specifications for products based on intrinsic physical qualities of any commodity. This may
involved quantity (weight or size) or it may involve quality (colour, shape, appearance, material, taste, sweetness etc).
Government may also set some standards e.g., in case of agricultural products. A standard conveys a uniformity of the
products.
"Grading means classification of standardized products into certain well-defined classes or groups." It involves the
division of products into clauses made up of unit processing similar characteristics of size and quality. Grading is
very important for "raw material" (such as fruits and cerials), mining products" (such as coal, iron-ore and
mangenese) and "forest products" (such as timber). Branded consumer products may bear grade levels, - A B C.
6. Financing
It involves the use of capital to meet financial requirements of the agencies dealing with various activities of
marketing. The services of providing the credit and money needed to meet the cost of getting merchandise into the
hands of the final user is commonly referred to as finance, function in marketing. In marketing, finances are needed
for working capital and fixed capital, which may be secured from three sources - onward capital, bank loans and
advances, and trade credit (provided by the manufactures to wholesaler and by the wholesaler to the retailers).
7. Risk Taking
Risk means lose due to some unforeseen circumstances in future. Risk-bearing in marketing refers to the financial
risk inherent in the ownership of goods held for an anticipated demand, including the possible losses due to a fall in
price and the losses from spoilage, depreciation, obsolescence, fire and floods or any other loss that may occur with
the passage of time. From production of goods to its selling stage, many risks are involved due to changes in marker
conditions, natural causes and human factors. Changes in fashions or interventions also cause risks. Legislative
measures of the government may also cause risks.
8. Market Information
The only sound foundation, on which marketing decisions may be based, is correct and timely market information.
Right facts and information reduce the aforesaid risks and thereby result in cost reduction. Business firms collect,
analyze and interpret facts and information from internal sources, such as records, sales people and findings of the
market research department. They also seek facts and information from external sources, such as business
publications, government reports and commercial research firms. Retailers need to know about sources of supply and
also about customers buying motives and buying habits. Manufacturers need to know about retailers and about
advertising media. Firms in both these groups need information about competitors activities and about their markets.
Even ultimate consumers need market information about availability of products, their quality standards, their prices,
and also about the after-sale service facility Common sources for consumers are sales people, media advertisements,
colleagues etc.
It may be noted that in addition to the mentioned jobs, the marketing manager is also involved in product planning,

pricing of products, selection of distribution channels, framing of marketing objectives, environmental scanning,
target market selection, market programming and developing marketing strategy.
Q.4. Describe the various stages or steps in marketing research process.
Stages or Steps in Marketing Research Process
Marketing research exercise may take many forms but systematic enquiry is a feature common to all such forms.
Being a systematic process. Though it is not necessary that all research processes would invariably follow a given
sequence, yet marketing research aften follows a generalized pattern, which can be broken down and studied as
sequential stages stages. The various stages or steps in the marketing research process may be discussed as follows:
1. Identification and Defining of the Problem
The market research process begins with the identification of a problem faced by the company. The clear cut
statement of problem may not be possible at the very outset of research process because often only the symptoms of
the problems are apparent at that stage. Then, after some explanatory research, clear definition of the problem is of
crucial importance in marketing research because such research is a costly process involving time, energy and money.
Clear definition of the problem helps the researcher in all subsequent research efforts including setting of proper
research objectives, the determination of the techniques to be used and the extent of information to be collected. It
may be noted that the methods of explanatory research popularly in use are : survey of secondary data, experience
survey or pilot studies i.e. studies of a small initial sample. All this is also known as preliminary investigation.
2. Statement of Research Objectives
After identifying and defining the problem with or without explanatory research, the researcher must make a formal
statement of researcher objectives. Such objectives may be stated in qualitative or quantitative terms and expressed as
research questions, statement or hypothesis. For example, the research objective. "To find out the extent to which
sales promotion schemes affected the sales volume" is a research objective expressed as a statement. On the other
hand, a hypothesis is a statement that can be refuted or supported by empirical findings. The same research objective
could be stated, "To test the proposition that sales are positively affected by the sales promotion schemes undertaken
this winter." Example of another hypothesis may be. "The new packaging pattern has resulted in increase in sales and
profit." Once the objective or the hypothesis are developed, the researcher is ready to choose the research design.
3. Planning the Research Design or Designing the Research Study
After defining the research problem and deciding the objectives, the research design must be developed. A research
design is a master plan specifying the procedure for collecting and analyzing the needed information. It represents a
framework for the research plan of action. The objectives of the study are included in the research design to ensure
that data collected are relevant to the objectives. At this stage, the researcher should also determine the type of
sources of information needed, the data collection method (e.g. survey or interview), the sampling methodology and
the timing and possible costs of research.
4. Planning the Sample
Sampling involves procedures that use a small number of items or parts of the population (total items) to take
conclusion regarding the population. Important questions in this regard are; who is to be sampled as a rightly
representative lot? Which is the target - population? What should be the sample size - how large or how small? How
to select the various units to make up the sample?

5. Data Collection
The collection of data relates to the gathering of facts to be used in solving the problem. Hence, methods of
marketing research are essentially methods of data collection. Data can be secondary, i.e. collected from concerned
reports, magazines and other periodicals, especially written articles, government publications, company publications,
books etc. Data can be primary i.e. collected from the original base through empirical research by means of various
tools. There can be broadly two types of sources - (i) Internal sources - existing within the firm itself, such as
accounting data, salesmen's reports etc. (ii) External sources - outside the firm.
6. Data Processing and Analysis
Once data have been collected these have to be converted into a format that will suggest answer to the initially
identified and defined problem. Data processing begins with the editing of data and its coding. Editing involves
inspecting the data collection - forms for omission, legibility and consistency in classification. Before tabulation,
responses need to be classified into meaningful categories. The rules for categorizing, recording and transferring the
data to "date storage media" are called codes. This coding process facilities the manual or computer tabulation. If
computer analysis is being used the data can be key-product and verified.
7. Formulating Conclusions, Preparing and Processing the Report
The final stage in the marketing research process is that of interpreting the information and drawing conclusion for
use in managerial decision. The research report should clearly and effectively communicate the research findings and
need not include complicated statement about the technical aspect of the study and research methods. Often the
management is not interested in details of research design and statistical analysis but instead in the concrete findings
of the research. If need to the researcher may bring out his appropriate recommendation or suggestions in the matter.
Researchers must make the presentation technically accurate, understandable and useful.
Chapter 8:
Chapter 8 - Management By Objectives
* Management by Objectives
* Benefits of Management by Objectives
* Limitation of Management by Objectives
* Steps for improving the prospects of Management by Objectives
Q.1. What do you mean by Management by Objectives? Explain the goal-setting process through Management by
Objectives?
OR
Discuss the strengths and weakness of Management by Objectives. What are the minimum requirements of a
Management by Objectives programme?

OR
Define Management by Objectives. Explain the Management by Objectives Cycle.
Meaning and Definition of Management by Objectives (MBO)
Management by Objectives (MBO) has become a widely used slogan. It is a basic mentality that a high-performance
manager brings to the job of managing. Peter Drucker coined the term "Management by Objectives" in 1954. He
profounded Management by Objectives concept and emphasized it and than it developed as a management
philosophy. Some authors has used the term "management by results" interchangeable with Management by
Objectives.
Management by Objectives is an overall philosophy of management that concentrates on goals and end results.
Management by Objectives is based on the presumption that people perform better when they know what is expected
of them and can relate their personal goals to organisation goals. It also assumes that people are interested in the goal
setting process and in evaluating their performances against the target.
Some important definitions of Management by Objectives may be given as follows:
George S. Odiorne
The system of management by objectives can be described as a process whereby the superior and subordinate
managers of an organisation jointly identify its common goals, define each individual's major ares of responsibility in
terms of the results expected of him and use these measures as guides for operating the unit and assessing the
contribution of each of its members.
Peter Drucker
He says that management by objectives and self-control is a philosophy of management, resting on a concept of
human action, human behaviour and human motivation. Management by objectives applies to every manager at any
level and to all business enterprises whether large or small. He says the Management by Objectives "ensures
performance by converting objective needs into personal goals"
Heinz Weihrich and Harold Koontz
"Management by objectives is a comprehensive managerial system that integrates many key managerial activities in a
systematic manner and that is consciously directed toward the effective and efficient achievement of organizational
and individual objectives."
Essential Characteristics of Features of Management by Objectives
A careful study of the above definitions bring out the following features of Management by Objectives:
1. Management by Objectives is a philosophy or a system and not merely a technique.
2. It emphasizes participative goal setting.

3.It clearly defines each individual's responsibilities in terms of results.

4. It focuses attention on what must be accomplished (goals), rather than on how it is to be accomplished (methods).
5. It converts objectives needs into personal goals at every level in the organisation.
6. It establishes standards or yardsticks (goals) as operating guides and also as basis of performance evaluation.
7. It is a system intentionally directed toward effective and efficient attainment of organizational and personal goals.
Management by Objectives Process
There are four important and essential steps or elements in the Management by Objectives process as follows:
1. Setting Objectives
Goal setting or objective-setting is a multistage process. It starts with the examining of the current state of affairs,
level of efficiency, threats and opportunities. Then the key result areas are identified, such as product markets,
improved services, lowered costs, work simplification, employee motivation, profitability, innovation and social
responsibility. The performance of these areas is critical for organisation in the sense that failure in these areas my
result in failure of the organisation and this is why they are known as "key" results areas. Peter Drucker says,
"Objectives are important in every area where performance and results directly affect the survival and prosperity of
business."
Therefore interacting or joint goal setting takes place. Subordinates are actively involved in formulating goals at
every level is the organisation. Such goals are finished with reference to the overall objectives of the organisation.
Care is to taken establish goals that are measurable and contribute to the accomplishment of corporate objectives.
Proper attention is given to "time" element also. Such goals may be long-range, medium-range or short-range.
Further, resources availability also becomes an important consideration in goal setting. There is always need to
decided priorities among the different objectives keeping in view the environment which business operates as well s
possible future changes in it.
2. Developing Action Plans
Set objectives must be translated into action plans. It requires assignment of specific responsibilities to different
departments, divisions and individuals. It also requires allocation of necessary resources needed to perform the
assigned responsibilities. Time dimensions are also to be decided in order that targets are reached without any
unwarranted delays.
3. Periodic Review Or Monitoring the Progress
After setting objectives and developing action plans, it is necessary to establish a proper monitoring system with a
view to regularly keeping the activities and efforts on a prescribed path leading to the ultimate objectives. The
progress is monitored without day-to-day interference in subordinates functioning. At agreed intervals, results are
measured in terms of quantity, quality, time and cost against the set objectives. It is ensured that the deviations found,
if any are thoroughly discussed and immediate corrective actions are taken to set them right on the course. Such a
regular monitoring and periodic review not only provide feedback, which is essential for completion of work in time,
but also motivates the managers accountable for performance. Periodic review and monitoring are done at
departmental levels generally.

4. Performance Appraisal
This is the last phase of Management by Objectives programme that evaluates performance annually. The annual
review or appraisal is comprehensive and is done at the organizational level. The actual annual results are evaluated
against the set objectives. Such assessment is also used for determining targets for next year for modification in
standards (goals) if needed and for taking corrective actions in order to avoid deviations from predetermined
objectives.
Management by Objectives Cycle and Recycling Objectives
When all the four steps or phases in the Management by Objectives as mentioned above are completed then one
Management by Objectives cycle is said to be over. The last phase or the fourth step in the Management by
Objectives cycle is used as an input for recycling objectives and other actions. Objectives are changed or modified in
the light of the environmental changes and the experiences gained over the year. Then, revised action plans are
developed as per needs, periodic review is done. And performance is gain evaluated. Thus goes on the recycling.
Q.2. Describe the benefits of Management by Objectives
Benefits of Management by Objectives
1. Balanced Stress on Objectives
Management by Objectives forces managers to set objectives with balanced stress on key result areas. Thus, crisis
conditions are avoided to take place in the organisation.
2. Better Managing
Management by Objectives forces managers to think about planning for results, rather than merely planning activities
or work. Managers are required to ensure that the targets are realistic and needed resources are made available to
subordinates to achieve the targets. Clearly set objectives for the subordinates serve as evaluation standards as well as
motivators for them. Thus, Management by Objectives results in improvement in managing.
3. Better Organizing
The positions in the enterprise can be built around the key result areas. Managers are required clarifying
organizational roles and structures. Hence better organizing.
4. Greater Employee Involvement and Commitment
If Management by Objectives programme is installed in an organization, people are not just doing work, following
instructions and waiting for guidance and decisions from "above" and the superiors do not dictate things. They are
now individuals with clearly defined goals, which have been formalized through their own participation in the
process. Moreover, they fully well understand the areas of their discretion - their authority. They are also confident of
getting needed help from their superiors. There is clarity of roles. These elements together make for a feeling of
greater personal commitment on the part of the subordinates. They become more enthusiastic in attaining the targets.
There is high motivation; there is high morale too.

5. Orderly Growth of Organization

Management by Objectives provides for the maintenance and orderly growth organization by means of predetermined
set of objectives for everyone involved. It is also provides in measurement of what is actually achieved. The progress
and even the tenure of all responsible managers are dependent upon their producing the results. Management by
Objectives emphasizes the ability, skill and achievement of managers rather than their personality. Thus, the orderly
growth and development of the organisation is ensured.
6. Development of Effective Controls
Management by Objectives not only sharpens the planning, but also develops effective controls. It specifically
provides for periodic reviews and annual performance appraisals serving as the needed feedback for further
streamlining the objectives or targets. It makes possible for a manager to control his own performance, high degree of
self-control resulting in stronger motivation. Control from "above" is substituted by control from "self" Management
by Objectives facilitates coordinated effort and teamwork.
7. Generating of an Ideal Atmosphere
Douglas McGregor says. "The motivation, the potential for development, the capacity for assuming responsibility, the
readiness to direct behaviour toward organisation goals are all present in people. Management does not put them
there. The essential task of management is to arrange organizational conditions and methods of operations so that
people can achieve their own goals best by directing their own efforts towards organizational objectives." This is an
ideal atmosphere suitable for better industrial relations and ensured success of the enterprise.
8. Objective Appraisal
Management by Objectives provides a scientific basis for evaluating a subordinate's performance, because goals
(standards) are jointly set by the superior and the subordinates
#15Hoorain, Jun 8, 2012
Q.3. Describe the limiatation of Management by Objectives.
Limitations of Management by Objectives
In spite of its many advantages, the Management by Objectives has some weaknesses as follows:
1. Unfavourable Attitude of Managers
Some managers have an attitude that the regular attention required of them by Management by Objectives system,
draws heavily on their busy time-schedule and is not consistent with their roles. They feel that it is not so effective a
way as some other approaches. Some managers view their roles as principally involving policy-making, budget
formulation etc.
2. Excessive Paper Work
Management by Objectives programme involves a huge amount of newsletters, instruction booklets, training
manuals, questionnaires, performance date, review and appraisal reports to be prepared by the superiors and

subordinates. Thus, Management by Objectives is said to have created one more "paper mill" in the organisation
added to the already existing large amount of paper work.
3. Problems about Goal Setting
Management by Objectives requires issuance of proper, exhaustive guidelines to goal-setters. However, managers
responsible for practicing Management by Objectives do not themselves understand and appreciate a good deal about
it, expecially about the concept of self-control and self-direction which is basic to Management by Objectives.
Similarly, there are several other difficulties in goal setting:
* Positive and active participation from subordinates is not easily forthcoming.
* Truly verifiable goals are not easy to formalize.
* Empahasis is put on short-range goals, where as long-range goals are avoided, though long-range goals are vital for
growth and development of the organisation.
* Goals remain inflexible and rigid. For example, changes desirable in annual budgets are not easily accepted in the
middle of the year.
* Over-use of quantitative goals jeopardizes the qualitative aspect which may even more important the quantification
is some case.
* Goals tend to take precedence or priority over the people who uses them. Any action is acceptable if it serves in the
attainment of goals, without caring of its impact on people. Thus, all these difficulties come in the way of making
management by objectives operational in an organisation. Further, managing involves more than goal setting.
4. Time-Consuming Nature of Management by Objectives
Management by Objectives system is time-consuming especially in the early phases of its introduction when
employees are unfamiliar with its process. Since managers also have to learn the necessary skills it is commonly
estimated that it takes 2 years to take an management by objectives programme working smoothly. A few
management by objectives programme working smoothly. A few management by objectives programmes have failed
because managers could not spare adequate time needed for its various phases.
5. Difficulties in Making Organizational Changes
Management by Objectives system requires to be integrated with other systems in the organisation, such as
budgeting, forecasting, communication, control etc. Sometimes current practices may have to be changed. Thus,
greater decentralization may become a necessity. Moreover, some systems may required to be changed, for example,
control system, data processing system etc. Managers feel such changes as time-consuming, distributing there "status
quo" (or as it is) facilities and difficult in different other ways.
6. Failure to Teach Management by Objectives Philosophy
Management by Objectives as a concept is simple but it is deceptively so. It is much easier to explain this principle
than to introduce it to an organsation, especially in a very dynamic and changing environment. Moreover,
management by objectives is still building toward achieving a fully institutionalized system of management to be

used by the entire key manager. Sometimes managers fail to use objectives as a constructive force, even with the full
participation and assistance of their superiors. In order to understand the philosophy of management by objectives,
managers have to make themselves professionals.

#16Hoorain, Jun 8, 2012

Q.4. Describe the steps for improving the prospects or effectiveness of Management by Objectives.
Steps for Improving the Prospects Or Effectiveness of Management by Objectives Application
1. Top Management Support and Commitment
Management by Objectives should be used by a strong power and authority structure, i.e. by the top management, so
that "planning for work" may be rightly shifted to "planning for goals or results". David Hampton says, "If you want
to make Management by Objectives work, you must integrate it into the real systems of work and influence."
Management by Objectives must be considered a way of managing and not to an addition to the managerial job.
Harold Koontz points out. "An effective programme of managing by objectives must be woven into an entire pattern
and style of managing. It cannot work as a separate technique standing alone." In this whole content, top management
support and commitment to management by objectives programme is essential and vital.
2. Other Important Steps
* Managers should be given adequate training in management by objectives philosophy and procedures before
installing the system. For this purpose, adequate time and resources are required and therefore be arranged.
* Necessary mechanism for making management by objectives programme a success should devised and for this
purpose the administrators of management by objectives programme must be endowed with sufficient authority to
punish and reward at their own levels.
* Feedback should be made effective the more specific timely the feedback the more positive the effect.
* Employee Participation should be made real and committed by properly motivating them.
* Management by Objectives must be carried all the way down to the first line or supervisory level.
* It should be seen that conflicting objectives are not set at any level and important non-quantifiable objectives are
not brushed aside.

* During the course of implementation of management by objectives the required redistribution of powers and status
should be seriously considered so as to avoid all kinds of unnecessary infighting and negative conflicts.
Most of the limitations or weaknesses of management by objectives are not of formidable (uncontrollable) nature.
Some minor adjustments in attitudes, initiative and determination on the part of the managers may overcome all the
difficulties and pitfalls, which come in the way of management by objectives programme. It appears from the
widespread discussions and adoption of management of objectives concept in private and public enterprises that it has
come to stay in the field of management.
Chapter 9:
Chapter 9 - Decision Making
* Decision Making
* Different Theories of Decision Making
* Policy
* Characteristics of Policy
* Classification of Policies
* Process of policy formulation
Q.1. "Decision making is the primary test of management." Discuss this statement and explain the process of
decision-making.
OR
Whatever a manager does, he does through decision making. Critically examine this statement.
OR
What is the significance of decision making? What procedure should be followed in arriving at a correct decision?
OR
Decision making is the vehicle for carrying managerial workload and discharging the managerial responsibilities.
Evaluate the statement and examine the significance of rational decision making in management.
OR
Decision making is at the care of planning. Discuss this statement and spell out the nature of decision-making.
OR
Decision making is at the care of planning. Discuss this statement and spell out the nature of decision-making.
OR
What is decision making? What are the important factors that influence decision making?

Meaning and Definition of Decision Making

Decision making may be reviewed as the process of selecting a course of action from among several alternatives in
order to accomplish a desired result. The purpose of decision making is to direct human behaviour and commitment
towards a future goal. If there are no alternatives, if no choice is to be made, if there is no other way-out, then there
would be not need for decision making. It involves committing the organisation and its resources to a particular
choice of course of action thought to be sufficient and capable of achieving some predetermined objective.
Managers at all level in the organisation make decision and solve problems. In fact, decision-making is the process of
reducing the gap between the existing situation and the desired situation through solving problems and making use of
opportunities. A decision is a course of action consciously selected from available alternatives, with a view to
achieving a desired goal. It is an outcome of the judgement and represents a choice and commitment to the same. It is
a final resolution of a conflict of needs, means or goals made are the face of uncertainty, complexity and multiplicity.
A decision is conclusion reached after consideration it occurs when one option is selected to the exclusion of others it is rendering of judgement.
Different management scholars have defined Decision making as follows:
George Terry
Decision making is the selection based on some criteria from two or more alternatives.
Heinz Weihrick and Harold Koontz
Decision making is defined as the selection of a course of action among alternatives, it is the care of planning.
Louis Allen
Decision making is the work a manager performs to arrive at conclusion and judgement.
Nature Or Characteristics of Decision Making
Decision making is globally thought to be selection from alternatives. It is deeply related with all the traditional
functions of a manager, such as planning, organizing, staffing, directing and controlling. When he performs these
functions, he makes decisions. However, the traditional management threorists did not pay much attention to decision
making. Infact, the meaningful analysis of decision making process was initiated by Chester Bernard (1938) who
commented, The process of decision are largely techniques for narrowing choice.
The nature of decision-making may be clearly understood by its following characteristics features:
1. Decision making is an intellectual process, which involves imagination, reasoning, evaluation and judgement.
2. It is a selection process in which best or most suitable course of action is finalized from among several available
alternatives. Such selected alternative provides utmost help in the achievement of organizational goals. The problems
for which there is only one selection are most decision problems.

3. Decision making is a goal oriented process. Decisions are made to attain certain goals. A decision is rated good to
be extent it helps in the accomplishment of objectives.
4. It is a focal point at which plans, policies, objectives, procedures, etc., are translated into concrete actions.
5. Decision making is a continuous process persuading all organizational activity, at all levels and in the whole
universe. It is a systematic process and an interactive activity.
6. Decision making involves commitment of resources, direction or reputation of the enterprise.
7. Decision making is always related to place, situation and time. It may be decision not act in the given
circumstances.
8. After decision making it is necessary and significant to communicate its results (decisions) for their successful
execution.
9. The effectiveness of decision-making process is enhanced by participation.
Elements of Decision Making
There are following elements in decision making.
* The decision maker.
* The decision problem or goal.
* Attitudes, values and personal goals of the decision maker.
* Assumption with regard to future events and things.
* The environment in which decision is to be made.
* Available known alternatives and their estimated or imagined outcomes.
* Analytical results in the whole perspective.
* The constraints.
* The act of selection or choice.
* Timing of decision.
* Proper communication of decision for its effective execution.
Q.2. Discuss in brief different theories of Decision-Making.
OR
What are the principles of Decision-Making? How and why the employee participation in Decision-Making process
should be introduced?
OR

Make out a case for employees participation in Decision-Making

Theories of Decision Making
The most common bases upon which decisions are made are, fact experience, intuition and authority. The decision
itself is concerned with the achievement of an objective. Bridging the gap between the basis for the decision and the
decision itself is the theory (or technique) used to arrive at the decision. Theories of decision making stem from the
manner in which decisions are made.
Ernest Dale has suggested a comprehensive list of theories of decision making as follows
1. Traditional Economic Theory
2. Psychological Theory
3. Mathematical Theory.
1. Traditional Economic Theory Or Marginal Theory
The simplest theory of business decision making is that the decision makers try to maximize profits and that key
consider all courses of action open to them in attempting to do. This is the theory held by traditional economists.
Although it may be partially true that the decision makers generally have the effect of profits on mind, they may not
always attempt to maximize profits. Marginal theory is based on the law of diminishing return. According to this law,
with the additional units of inputs (labour and capital), the marginal contribution of each unit is at a decreasing rate.
There comes a stage when the marginal return is zero. This is marginal point. A number of decisions in the area of
production, sales, marketing, advertising, recruitment, etc are taken by the management on the basis of marginal
theory.
2. Psychological Theory
This theory is designed to identify what actually goes on in the decision maker's mind when he makes a decision.
Several factors leave an impact on the mind of the decision maker, such as nature, size and purpose of the
organisation, manager's aspiration, attitude, habits, personally temperament, political learning's, social and
organizational status, technological skill, domestic life, education, experience, level of satisfaction and so on
Psychology of a manager has an important bearing on the quality of decisions he makes. As decision making is an
intellectual process, these psychological factors cannot be avoided altogether.
One of the best-known psychological theories is Herbert Simon's theory, which explain that the decision maker
attempts to satisfies rather maximize. In other words, a manager finds an answer that is good enough. What
consequences the manager considers good enough, will depend on what has been achieved in the past.
3. Mathematical Decision Theory
It is not designed to show how decisions are actually made. Rather, it is designed to help the decision maker who is
interested in maximizing profits in a given situation, to lay out the alternatives in such a way that he sees the risks and
the consequences more clearly. With the development of operations research and computers for handling complex
mathematical models, this approach is commonly used by large organizations where decision making problem is very

complex. The linear programming, venture analysis, game theory, queuing theory, probability theory, etc are some of
the examples of widely used Operations Research technique. Although these techniques provide a good deal of
analysis, yet the rational and psychological aspects of decision making cannot be ignored totally. The attitude,
intelligence and wisdom of the decision maker shall always have an important impact on the quality of decisions
made by him

Q.3. Policies are guide-posts for managerial action. Discuss this statement and give at least two examples of policies
in any area of business management.
OR
What is Policy? What characteristics do policies have? Also discusses various classifications of an industrial policy.
OR
What is Policy and What are the essentials of a sound policy?
Meaning and Definition of Policy
A policy is a general statement that guides thinking, action and decision making of managers for the successful
achievement or organizational objectives Policies define the limits within which decisions are to be made. This
ensures consistent and unified performance and exercise of discretion by managers.
The top managers generally frame the policies. However, a manager at any other level may low down policies within
the limits of his authority and also within boundaries set by policies of his seniors.
A policy is not static and may be modified or reviewed in the light of changes in the environment. A policy may be
verbal, written or implied.
A well defined policy help the manager to delegate authority without undue fear, because the policy lays down the
limits for decisions by the subordinates. Moreover, policies operationalise objectives, speed up decision making,
ensure coordination, help in training and orienting employees and ensure proper administrative control.
Different scholars have defined the term policy as follows:
Heinz Weihrich and Harold Kountz
Policies are plans in that they are general statement or understanding that guide or channel thinking in decision
making. Not all policies are statements they are often merely implied from the actions of managers.
F.T. Hanker
A policy is a statement, verbal, written or implied of those principles and rules but are set by managerial leadership as
guidelines and constraints for the organisation's thought and action.

E.F.I Brech
Policy is a patter of direction for the guidance of those who carry responsibility for the management of the activities
of the enterprise.
Dalton McFarland
Policies are planned expressions of the company's official attitudes towards the range of behaviour within which it
will permit or desire its employees to act.
George Terry
Policy is a verbal, written or implied overall guide setting up boundaries that supply the general limits and direction
in which managerial action will take place.
Q.4. Describe the characteristics or features of Policy.
Characteristics Or Features of Policy
Policy has the following important features:
1. A policy is a standing, repeat-use plan for answering the recurring problem of the similar nature.
2. It is a guide thinking in decision making. It is not an exact order in which things are done. It provides the
framework within which decisions should be taken. It unfolds the broad guidelines for achieving organizational
objectives.
3. It allows some amount of judgement or discretion on the part of the executives.
4. It prescribes the course of action selected to guide and determine present and future decisions.
5. It lays down the limits within which decisions are to be made. This ensures consistent and unified performance and
exercise of discretion on the part of the executives.
6. Policies are generally framed by top-level management, however, managers at other levels also can frame
necessary policies to deal with recurring problems of similar nature, such as departmental policies, divisional policies
- formulated at the level of department or division.
7. Departmental or divisional policies are formulated within the limits of the authority of hte respective in charge and
also within the limits set by the organizational policies.
8. A policy is not static. Policies are reviewed and modified from time to time as per requirements or demands of the
changing environment.
Q.5. Describe the Various types / Classification of Policies.
Classification of Policies
A number of policies are used in an enterprise in order to attain the organizational objectives. Policies may be
classified as follows:

(A) On the Basis of Source

According to their source, origin or emergence, policies may be of the following kinds:
1. Originated Policy
It is also known as formulated policy. It is a policy deliberately formulated by top management to guide decisionmaking at lower levels, board of directors, the chief executive, the executive committee of the board or heads of the
major departments or divisions. Such policies are broad in scope and affect usually the whole organisation or its
major segments. These policies are often written ones, typically in the form of a policy manual of the organisation
and flow down.
2. Appealed Policy
It is a policy formulated on the appeal or request of subordinates for filling the gaps left by originated policies. In
other words, when a subordinates refers an exceptional problem of recurring nature not covered by existing policies,
to his superior and appeals for a policy decision. When the superior makes decision in such a case, it becomes a
precedent (policy) for future action. Such policies may be formulated at any level and are in the nature of flowing
upward policies.
3. Imposed Policy
It is a policy, which an organisation is compelled to adopt due to some outside forces, such as the government and its
regulatory agencies, trade association, trade unions.
(B) On the Basis of Functions
Policies are needed in all areas of business of an enterprise. These may be classified on the basis of different
managerial functions as follows:
1. Production Policy
Raw material, purchase policy, repairs and maintenance policy, technology adoption and development policy, quality
control policy, inventory policy and research and development policy are some examples in the category. Indent for
the purchase of raw materials should be made at least a week in advance is an example of Raw Materials Purchase
Policy.
2. Human Resource Policy
Examples in this category are recruitment policy, training policy, employee career development policy, wages and
salary policy, placement policy, promotion policy and transfer policy, employee participation policy. Any vacancy
shall be filled first by promotion from within the organisation and then, if need be, from outside sources Is an
example of Recruitment Policy.
3. Marketing Policy
Capital structure policy, packaging policy, distribution policy, advertising policy, customer service policy, credit

policy, market research policy and important examples in this category. Customer's complaint must be responded
within the next day is an example of Customer Service Policy.
4. Finance Policy
Capital structure policy, fixed capital policy, working capital policy, investment policy, research policy, divident
policy are some examples in this category. Excess capital, if any should be invested for short term only, preferably in
limited company shares registered in stock exchange is an example of Investment Policy.
5. Accounting Policy
Inventory valuation policy, depreciation policy, provisions policy (for bad debts etc) deferred revenue expenditure
policy etc. are examples in this category. Deferred revenue expenditure (e.g., a huge amount spent on advertisment)
should be spread over the years of its benefit generation and written off every year accordingly, is an example of
Deferred Revenue Expenditure Policy.
Q.6. Describe the process of policy formulation.
Process of Policy Formulation
Policy formation is a creative and analytical phase of planning. It is based on the underlying objectives of the
organisation. Policy formulation process involves various steps or activities and their analysis in order arrive at a
decision. The important steps involved in policy formulation may be briefly described as follows:
1. Understanding of Corporate Objectives
Organizational objectives are the starting point for policy formulation. They are ultimate results, which an
organisation tries to achieve. They provide the foundation for policy formulation.
2. Analysis of the Environment
The basic purpose of policies is to integrate the organisation with its environment; hence the policy makers must
know the nature and other feature of the organisation environment. This requires a comprehensive analysis of the
environment - its opportunities and threats.
3. Internal Analysis
The policy makers should be fully conversant with the strengths and weaknesses of the organisation. They should
clearly identify the factors which are critical for the success of the organisation.
4. Definition of Policy Area
Policy makers should then specify clearly the areas, which require policies to be made.
5. Choice Or Selection of Policy
After evaluation of different policy alternatives, the most appropriate or suitable policy alternative is selected. This is
the stage where the manager arrives at the right policy in the concerned area.

6. Communication and Implementation of Policy

The selected policy is communicated in clear words to those who are supposed to implement it. Implementation of
policy is the operative aspect of policy whereby it is put into action. The concerned people apply the policy when
problematic situations arise or when they normally do their jobs.
7. Review and Modification of Policy
The correctness of a policy is perceived when it is put into practice. On the basis of feedback from the executors of
the policy, a periodical review is carried out and wherever necessary, desired modification are made in the policy
from time to time. Sometimes outdated or obsolete policies are reconstituted or reframed.
Chapter 10:
Chapter 10 - Leadership
* Leadership
* Various theories of leadership
* Different styles of leadership
Q.1. What leadership means? What are its important characteristics? Why is their need of leadership also discussing
its importance?
Meaning and Definition of Leadership
Simply stated, leadership is the process of influencing the behaviour of others towards the attainment of desired goal
or purpose in given circumstances. Leadership is a tool to get the desired work done through employees or
subordinates. Leadership is majorly explained on the basis of influence relationships and motivational considerations.
One method of solving the problem of motivation is the effort to provide inspiring and effective leadership to the
employees. The success of a manager is largely decided by the fact as to how much effective he is as a leader.
Leadership is the ability to make people act the way the manager or leader wants. It is the process of influencing
others to become what they are capable of becoming in the view of the leader. Leadership, in essence is carrying the
people with the leader by their consent.
Different scholars have defined leadership in the following ways:
Rober Tannenbaum
Leadership is interpersonal influence, exercised in situations and directed, through the communication process,
towards the attainment of goals.
George Terry
Leadership is the leadership in which one person or the leader influences others to work together willingly on related
tasks to attain that which the leader desires.

Theo Haimann
Leadership can be defined as the process by which an executive imaginatively directs, guides and influences the work
of others on choosing and attaining specified goals by medicating between the individual and the organisation in such
a manner that both will obtain maximum satisfaction.
E.B. Reuter
Leadership is an ability to persuade or direct men without use of the prestige or power of formal office or external
circumstances.
Weihrich and Koontz
Leadership is defined as influence that is the art or process of influencing people so that they will strive willingly and
enthusiastically inward the achievement of group goals.
Peter Drucker
Leadership is lifting of a man's vision to higher sights, the raising of a man's performance to a higher standard and the
building of a man's personality beyond its normal limitation.
Characteristics Or Features of Leadership (Nature)
The important characteristics of leadership, which indicate its nature, may be described as follows:
1. Leadership is an influence process stimulating group members.
2. It is a relational concept in which two sides are included, influencing agent and the persons influenced. The first
side is called leader the second side is called followers.
3. Leadership is a complex relationship which exists between the leader, the followers, the organisation, the social
values and the economic and political condition. Each of these ingredients or factors has its own peculiarities which
are the cause of the complexity of this relationship.
4. Leadership required aptitude and basic attitudes with regard to behaviour pattern, tolerance, human psychology and
achievement.
5. Leadership depends on the properties of the situation and the persons to be led. In other words, these two factors
especially affect the effectiveness of leadership. Generally, it is the function of the leader, the followers and other
situational variables.
6. The leader's role and the degree of its acceptance by the group members, condition the leadership. In other words
right person's right role proves him to be a good leader.
7. Th core of leadership is to motivate the employees by integrating their individual goals with those of the

organisation.
8. A leader leads he does not push. It means that a leader takes his followers and their achievements to such a height
where they do not believe to reach. When a leader leads, he serve also , i.e., he fully cars for the satisfaction of his
followers.
9. Leadership appears to be more of an emotional than an intellectual or rational process, because its direct concern is
with men whose both emotional and rational powers are to be stimulated or incited. Such powers can be had by
means of dedication not only by use of knowledge. Leadership is a rational to the extent that is is goal directed.
10. Persons capable of exercising effective leadership in organisations are in critically short supply in relation to their
tremendous demand.
11. Leadership is part of management, but not all for it.
12. Leadership is a nebulous, not fully clear accept even after so research done in this field. In other words, still there
is no simple answer to the riddle.
Q.2. Briefly describe various theories of leadership.
OR
Discuss different approaches to leadership.
OR
Explain the main theories of leadership.
OR
Differentiate between tratist and situationalist theories. Which of the two is near to the modern thinking?
OR
Enumerate the qualities of leadership.
Theories of Leadership
Leadership styles focus on the behaviour pattern exhibited by a leader during supervision of the subordinates. On the
other hand, who will emerge an effective leader? Or how effective a leadership style will be? such questions are
answered by leadership theories. Simply stated, theories focus on various approaches to successful leadership.
The theories of leadership may be classified into three categories, Trait theories, Behavioural theories and situational
theories.
1. Tratist Leadership Theory
In its early stage, this theory was called great man theory of leadership, which says that leaders are born and not
made. Ancient people thought that certain natural qualities of leadership exist in a person. Ultimately, the great man
theory gave way to a more real theory the Trait approach.
Trait theory views leadership as a conglomerate (or a large set) of different traits or qualities. The great man theory
believed that traits were inherited. Whereas, trait theory holds that traits are not always inborn but can be acquired
through education, training and experience. Trait theory holds that leadership is largely a matter of personality, a
function of specific traits. It suggests that there are certain unique qualities or traits clearly identifiable in leaders. The
greater the degree of such traits possessed by a person the better and more successful will be proved as a leader. It
further suggests that leaders differ from followers with respect to certain key traits and these traits remain unchanged
across time. The trait theory attempts to isolate the attributes of successful and unsuccessful leader and using such a
list of traits, it predicts the success of failure of persons as leaders. It is to be noted that these traits are not
measurable.
Various thinkers have differed on the package of traits. Many studies of traits have been made. Ralph Stogdill found

(1974) that various researchers have identified specific traits related to leadership ability as follows:
1. Physical Traits
Five in all, such as energy, appearance and height.
2. Intelligence and Ability Traits
Four in all, such as high level of intelligence and judgement.
3. Personality Traits
Sixteen in all, such adaptability, agressiveness, enthusiasm and self-confidence.
4. Task-Related Characteristics
Six in all, such as achievement drive, persistence and initiative
5. Social Characteristics
Nine in all, such as cooperativeness, interpersonal skills and administrative ability.
It may be noted that the discussion of the importance of traits still goes on. More recently (1991). Shelly Kirkpatrick
and Edwin Locke have identified the following key leadership traits.
1. Drive
Including achievement, motivation, energy, ambition, initiative and tenacity (i.e. firmness).
2. Leadership Motivation
The aspiration to lead but not to seek power as such.
3. Self-Confidence
Including motional stability.
4. Cognitive Ability
The ability of knowing, including consciousness of things and judgement about them.
5. An Understanding of the Business
According to them, less clear is the impact of creativity, flexibility and charisma (i.e. strong personal charm to attract
and influence) on the leadership effectiveness.
In general the study of leaders traits has not been a very fruitful approach to explaining effectiveness of leadership.
Not all leaders possess all the traits and many followers (non-leaders) may possess most or all of them. Further, the
trait theory does not indicate as to how much of any trait a person should have to be an effective leader. Also, most of
these so-called traits are really patterns of behaviour. Furthermore, the list of traits is not uniform. Effective
leadership is not a function of some traits only, situation also plays an important role in making someone a successful
leader.
2. Behavioural Theories of Leadership
Dissatisfaction with the results of the trait approach has caused a significant change in the emphasis of leadership
research and the focus shifted in the actual behaviour and actions of leaders from the traits or characteristics of
leaders. Thus, Behavioural theories attempt to describe leadership in terms of what leaders do rather than what they
are. According to Behavioural approach, leadership is the result of effective role behaviour. This approach hold that
an effective leader is one who performs these acts which help the group to attain its goals.
The most popular models of leadership based on the behavioural appraoch may briefly be discussed as follows:
Likert's for systems of management. Rensis Likert has studied the patterns and styles of leaders and manager for three
decades (1961). He has developed a continuum of our systems of management or leadership styles as follows:
1. System 1 Management

It is described as exploitative authoraitative. Its managers are higher autocratic have little trust in subordinates and
motivate people through fear and punishment and only occasionally reward. They engage in downward
communication and limit decision making to themselves.
2. System 2 Management
It is called benevolent - authoritative. Its managers have a patronizing confidence and trust in subordinates. They
motivate with rewards and some fear and punishment. They permit some upward communication and solicit some
ideas and opinions from subordinates. They allow some delegation of decision making but with close policy control.
3. System 3 Management
It is referred to as Consultative. Its managers have substantial but not complete confidence and trust in subordinates.
They usually try to make use of subordinates ideas and opinions. They use reward for motivation with occasional
punishment and some participation.
Q.3. Briefly discuss various leadership styles and also refer to their advantages, disadvantages and conditions of use.
Which is the best style in your opinion?
Leadership Styles
Simply stated, the term Leadership style refers to the pattern of behaviour, which a leader adopts in directing
behaviour of the followers towards the attainment of organizational goals. From another viewpoint, leadership style is
the position that a leader usually takes with regard to how much decision making freedom he allows to his followers
to have. Similarly, the behaviour exhibited by a leader during supervision of his followers is known as leadership
style. The nature and form of leadership style is affected by the following factors, existing circumstances, time
period, personality of the leader, his experience, attitude and orientation, nature of followers, external environmental
and so on. Most of the managers use several styles at one or the other point of time, but in which category a manager
falls, is decided by the style that is mostly used by him. Basically and broadly, there are three important leadership
styles as follows:
1. Autocratic Or Authoritarian Style
It is also known as directive style. It is basically treated as a traditional method of leadership. An autocratic leader
centralize power and decision making in him and exercise complete control over the subordinates. He dominates and
drives his group through coercion and command. He uses both positive and negative motivations, for example,
reward, praise, fear of criticism or punishment. When he uses positive motivations that is called benevolent
autocratic style and when he uses negative motivations that is known as dictatorial or oppressive autocratic style. The
autocratic leader likes, Theory X-undemocratic thinking, he emphasizes work only.
The autocratic leder himself decides all policies. He gives orders to the subordinates and expects them to follow such
orders completely without any grudge or question. Under this style, subordinate are thought to be inexperienced and
wisdom less and therefore they are given no freedom - the autocratic leader decides the technicalities and modalities
of the work and the course of action. Hence any one except the leader does not know the future action.
Autocratic style permits quick decision making provides strong motivation and satisfaction to the leader centralize
power and dictates terms, yields positive results when great speed is required and needs less competent subordinates
at lower levels. Its major disadvantages are, It leads to frustration, low morale and conflict among subordinates are
induced to avoid responsibility, initiative and innovative behaviour. Full potential of subordinates and their creative
ideas are not utilized. In the absence of the leader, organizational continuity is threatened because subordinate gets no
opportunity for development.
This style may be appropriately used where subordinates are uneducated, unskilled, unwise, inexperienced, where the
company endorses fear and punishment as accepted disciplinary techniques and where the leader prefers to be active
and dominate to decision making.
2. Democratic Or Participative Styles
The democratic leader decentralizes power. He involves subordinates in the decision making. Decision are made in

consultation and participation with the subordinates. The style emphasizes group-discussion and group decision
making. The democratic leader like Theory Y-fairness, equity and human relation. He emphasizes both work and
worker. The subordinates are encouraged to utilize their full talent potential and capacities and assume greater
responsibilities. The democratic leader shares power with subordinates, delegate adequate authority to them, keeps
them well informed about matters of their interest and concern and allow adequate freedom for thinking, discussing,
expressing and making suggestions. He has faith in the subordinates and their wisdom, skills and capacities. He holds
objective approach. Communication pattern is multi-dimensional.
The major advantages of this style are, It improves job satisfaction and moral, develops positive attitude, reduces
resistance to change, generates self-motivation due to participative decision making and freedom of thought and
impression, increases productivity and develops better subordinates.
The major disadvantages of this style are, It is time consuming and causes delays in decision making; may fail when
the communication pattern and skill are not strong enough is not workable where subordinates do not want to take
extra responsibility of sharing in decision making and becoming part of every decision decreases productivity in
some cases especially when decisions are diluted to appease or please everybody.
Democratic style is more appropriate where subordinates are educated, skilled, wise, creative and enthusiastic, where
the company endorses self-direction and self-control and rewards and involvement as prime means of motivation and
control and where leader desires to hear subordinates before making decisions and to develop a strong and capable
force of followers.
3. Free Rein Or Laissez-Faire Or Permissive Style
There are several forms of this style. For example, in some cases the subordinates are given a goal to achieve in their
own way, whereas in some other cases they themselves decide their group goals. Infact, there is almost complete
delegation of authority and the path leading to the goals is decided by the subordinates themselves. The leader
behaves primarily as a member of the group and plays the role of a member only. He give his opinion or suggestion
only when it is demanded from him. Under this style, the group members are educated and motivated by themselves,
the leader is not required to educate but he acts, as a link primarily for arranging adequate resources needed for
attaining the goals, for establishing contact between employees and the outside world, for collecting necessary
information from external sources and for establishing coordination. The concept of management by exception
promotes this type of style. Subordinates themselves plan, control, evaluate and decide.
The major advantages of this style are, It increases subordinates, freedom, develops their expression, compels them to
work as group members, increases job satisfaction and moral, utilities subordinates potential to the maximum
possible extent and promotes creativity or innovation.
The free-reign style is appropriate where subordinates themselves are well trained and highly knowledge about their
tasks and unheisitatingly ready to assume extra responsibility, where the company has a wide and effective
communication network acceptable to the subordinates and it endorses complete freedom and full involvement as
means of motivation and control and where the leader is ready to compromise with the status in the group and is
interested in delegating the whole authority to the subordinates. It is mostly used in circumstances where the leader
feels him in a position to leave the alternative or selection fully on the group's choice.
Choosing a Leadership Style
Which leadership style is best or which to choose? Different scholar makes different suggestions in this regard.
However, widely known for their effective management practices the Japanese favour participative leadership style.
In actual practice it is difficult to hold my one style, is the best leadership style. As discussed above, each style has
got its merits and demerits. Hence the choice of a style will depend upon several factors, such as suggested by
Tannenbaum and Schmidt.
1. Forces in the Manager
Manager's value system, confidence in subordinates, own leadership inclination and feeling of security in an
uncertain situation.

2. Forces in the Subordinates

Their need for independence, readiness to assume responsibility for decision making, tolerance, for ambiguity (or
strangeness), interest in problem at hand, understanding and identification with the goals of the organisation,
knowledge and experience to deal with the problem and learned expectatio of sharing in decision making process.
3. Forces in Situation
The type of organisation, group effectiveness, the complexity of the problem itself, pressure of time on the situation
etc.
Effective manager should be expert enough to adapt or modify their leadership style as per the need of the moment.
Sticking to one best considered style at all times in all situations with all people may not work well to be a good
leader. Most suitable leadership style is that which fits with the situation the followers and the leader.
Chapter 11:
Chapter 11 - Planning
* Planning
* Various Steps of Planning
* Various elements of good planning
* Environment
* Internal Environment
Q.1. Define Planning and discuss its main characteristics.
OR
Discuss the advantages, limitation and principles of Planning.
OR
What is planning? Outline the steps in planning process.
OR
What is the concept of planning as an element of Management process? Discuss its nature and role in a modern
business organisation.
Meaning and Definition of Planning
Planning is thinking in advance or before doing something. All kinds of organisation do planning. Planning helps us
in looking into the future. Planning establishes goals or objectives and identifies the ways to achieve them. A plan is a
predetermined course of action to be taken in future.
George Steiner
Planning is a process that begins with objectives, defines strategies, policies and detailed plans to achieve them.
Peter Drucker
Planning is the continuous process of making present entrepreneurial (risk taking) decisions systematically and with
best possible knowledge of their futurity.
Nature of Characteristics of Planning

There are a number of features or characteristics of planning that indicate towards its nature. These may be outlined
as follows:
1. Goal-Oriented
Planning is goal-oriented in the sense that plans are prepared and implemented to achieve certain objectives.
2. Basic to all Managerial Functions
Planning is a function that is the foundation of management process. Planning logically precedes all other function of
management, such as organizing, staffing etc because without plan there is nothing to organize nothing to control.
Every managerial action has to be properly planned.
3. Pervasive
Planning is a function of all managers, although the nature and extent of planning will vary with their authority and
level in the organisation hierarchy. Managers at higher levels spend more time and effort on planning than do lower
level managers.
4. Interdependent Process
Planning affects and is affected by the programmes of different departments in so far as these programmes constitute
an integrated effort.
5. Future Oriented
Planning is forward looking and it prepares an enterprise for future.
6. Forecasting Integral to Planning
These essence of planning is forecasting. Plans are synthesis of various forecasts. Thus, planning is inextricably
(inseparably bound up with planning).
7. Continuous Process
Planning is an ongoing process. Old plans have to be revised and new plans have to be prepared in case the
environment undergoes a change. It shows the dynamic nature of planning.
8. Intellectual Process
Planning is a mental or conceptual exercise. It therefore involves rational decision making, requires imagination,
foresight and sound judgement and involves thinking before doing thinking on the basis of facts and information.
9. Integrating Process
Planning is essential for the enterprise as a whole. Newman and others have drawn our attention towards this feature
of planning, without planning, an enterprise will soon disintegrate the pattern of its actions would be as random as
that made by leaves scampering (running quickly in short steps) before an autumn wind and its employees would be
as confused as ants in an upturned anthill. If there are no plans action will be a random activity in the organisation
instead there will be chaos.
10. Planning and Control are Inseparable
Unplanned action cannot be controlled, without controlled, planned actions cannot be executed. Plans furnish
standards of control, In fact Planning is meaningful without control and control is aimless without planning. Planning
is measuring rod of efficiency.
11. Choice among Alternative Courses of Action
The need for planning arises due to several ways available for an action. If there is only one way-out left, there is no
need for planning.

12. Flexible Process

The principle of navigational change (i.e. change according to changes in environment) applies to planning. In other
words, effective planning requires continual checking on events and forecasts and the redrawing of plans to maintain
a course towards desired goals. Thus, plans have to be adaptable to changing circumstances.
Q.2. Describe in detail the various steps of Planning.
Planning Process
The process of planning involves the following steps:
1. Analyzing Environment
At the outset, the internal and external environment is analyzed in order to identify company's strengths and
weaknesses (in internal environment) and opportunities and threats (existing int the external environment). This is
also known as SWOT (strengths, weaknesses, opportunities and threats) analysis.
2. Establishing Objectives Or Goals
In the light of the environmental scanning (study), clear or probable opportunities that can be availed are identified.
In order to avail them, objectives or goals are clearly defined in specific term along with priorities in all the key areas
of operations. Major problems associated with such objectives are also identified and defines, so that there may be
special emphasis on their planned solutions.
3. Seeking Necessary Information
All relevant facts and data are collected from internal and external sources. For example, availability of supplies,
physical and human resources of the company, finances at disposal, relevant government policy, general economic
conditions and relevant specific market situation. Then such investigated and collected information and factors are
analyzed. Such information analysis is used in two ways - first, to make necessary modifications in objectives or
goals and secondly to take help from them in premising (considering) assumptions.
4. Premising Or Establishing the Planning Premises
In order to develop consistent and coordinated plans, it is necessary that planning is based upon carefully considered
assumptions and predictions. Such assumptions and predictions are known as planning premises. The assumptions
under which plans are supposed to operate should be clearly brought out. Such presumptions and forecasts are
prepared for various areas, such as sales, prices, wages, taxes, changes in fashions and habits, purchasing power,
standards of living, population competitors and so on.
5. Identifying and Developing Alternative Courses of Action
After establishing objectives or goals and taking other related steps, feasible alternative programmes or courses of
action are seached out. Impossible or highly difficult propositions are left out.
6. Evaluating the Alternatives
Probable consequences of each alternative course of action in terms of its pros and cons (e.g. costs, benefits, risks,
etc) are assessed and than relative importance of each of them is found out by looking at their overall individual
strengths and limitations especially in the light of the present objectives and the environment of the company.
7. Choosing the Most Appropriate Alternative Or Course of Action
After weighing the pros and cons of each of the alternative courses of action and realizing their individual relative
importance, the most appropriate alternative in the light of the overall consideration is selected to be followed. In
other words, the alternative which appears to be most feasible and conducive to the accomplishment of company's
predetermined objectives, is chosen as a final plan of action - as strategy.
8. Preparing the Derivative Plans

Derivative plans involve short range, operating plans that are useful in day-to-day operation and provide a working
basis for such operations. Such plants are developed in the form of schedules, budgets, programmes, procedures,
methods, rules, policies etc. The derivative plans are prepared in different departments and their timing and sequence
are also specified. Such plans are prepared in concrete terms showing specific results to be attained within specified
time limit and by utilizing the allocated resources. An integrative mechanism has also to be provided for effecting
coordination between and among different derivative plans being executed by different departments.
Q.3. Discuss the various elements of good planning.
OR
Discuss briefly the various types of plans.
Elements of Good Planning
Managerial planning comprises various types of plans, which are also known as elements of good planning. Some of
the important types of plans may be discussed as follows, which must be included in a sound planning system.
1. Objectives
Objectives may be defined as the targets people seek to achieve over different time periods. Objectives gives
direction to human behaviour and effort. Hence, an essential task of management it to formulate, classify and
communicate organizational objectives. Managers are required to set both general and specific objectives. Survival,
growth and development are general objectives of a business enterprise. The specific objectives include the goals set
for various departments, divisions, groups and individuals. The general objectives are long term in nature, where as
the specific objectives are short range, though the short range objectives are and should be a part of long term
objectives. Departmental objectives must be consistent with the conductive to the overall, corporate objectives.
2. Policies
A policy is a general statement that guides thinking, action and decision making of managers for the successful
achievement of organizational objectives. Policies define the limits within which decision are to be made. This
ensures consistent and unified performance and exercise of discretion by managers. Top management generally
frames the policies. However, a manager at any other level may lay down policies within the limits of his authority
and also within boundaries set by policies of his seniors. A policy is not static and may be modified or reviewed in the
light of changes the environment. A policy may be verbal, written or implied. A well defined policy helps the
manager to delegate authority without undue fear, because the policy lays down the limits for decisions by the
subordinates.
3. Procedures
A procedure prescribes the sequence of steps that must be completed in order to achieve a specific purpose. A
procedure is a guide to action rather than to thinking. It details the exact manner in which a certain activity must be
accomplished. Its essence is chronological sequence of required actions or steps. A procedure is generally established
for repetitive activity so that same steps are followed each time when that activity is performed. The procedures do
not allow much latitude in managerial decision making because they lay down a definite way of doing certain things.
Procedures are designed to execute policies and achieve objectives. Procedures are used in all major functional areas.
Purchase procedure, materials issue procedure, costumer's order executing procedure, accounting procedure,
grievance handling procedure, etc, are some of the examples of usual procedures.
4. Rules
Like a procedure, a rule is a guide to action. But it does not lay down any sequence of steps as in the case of a
procedure. A role tells us whether a definite action will be taken or will not be taken in case of a given situation.
Examples of rules are: (i) Customer's complaint must be replied within one day (under customer satisfaction
policy), (ii) No smoking in the factory (under safety policy). Thus, a rule is prescribed course of action or conduct

that must be followed. As such, a rule does not leave any scope for discretion on the part of the subordinates. Rules
are definite and rigid because there must be no deviation from the stated action, except in very exceptional cases.
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5. Strategy
Strategy is a pattern or plan that involves matching organisation competences (i.e. internal resources and skills) with
the opportunities and risks created by environmental change, in ways that will be both effective and efficient over the
time such resources will be deployed. Effective formal strategies contain three elements: (i) the most important
goals, (ii) the most significant policies, (iii) the major programmes. Strategy deals with unpredictable and
unknowable. It is developed around a few key concepts and thrusts. A well-formulated strategy helps to marshal and
allocate and organisation's resources into a unique and viable posture in relation to the strengths and weaknesses of
the organisation, the anticipated changes in the environment and the contingent moves of the opponents. Generally
when we walk of organizational strategy, it refers organisation's top level strategy. However, strategies exist at other
levels also.
6. Programmes
A programme lays down the principal steps for accomplishing a mission and sets an approximate time for carrying
out each step. George Terry says, A programme can be defined as a comprehensive plan that includes future use of
different resources in an integrated pattern and establishes a sequence of required actions and time schedules for
each in order to achieve stated objectives. Programmes outline the actions to be taken by whom and where. A
programme is made up of objectives, policies, procedures, task assignment, budgets, schedules etc. Examples of
programmes are, building programme, expansion programme, moral improvement programme, acquisition of the new
line of business programme, training programme, development of a new product programme, advertising programme
and so on. Programmes may be measure or minor, primary or derivative and long-term, medium term or short term.
7. Projects
Often a single step in a programme is set up as a project. In fact a project is simply a cluster of activities that is
relatively separate and clear cut. Thus, projects have some features of a programme but are usually parts of some
programmes. Building a hospital, designing a new package, building a new plant, are some examples of projects. The
chief virtue of a project lies in identifying a nice, neat work package within a bewildering array of objectives,
alternatives and activities.
8. Budgets
A budget is a statement or a plan of expected results expressed in numerical terms, such as man hours, units of
production, machine hours, amount of expenditure or any other quantitatively measurable term. Then it may be
expressed in time, money, materials or other quantitative units. Budget is prepared prior to a definite period of time of
the policy to be pursued during that period for a purpose of a given objective. It introduces the idea of definiteness in
planning. A budget is an important control device also because it provides standards against which actual
performance may be measured. Examples of budgets are, production budget, sales budget, material budget, cash
budget, capital expenditure budget, expenses budget and so on.
9. Schedules
A schedule is an operational plan, timetable of work that specified time-periods (with beginning and completion time
points) within which activity or activities are to be accomplished. In order to keep the schedule realistic and flexible,
minimum and maximum time-periods may be specified. Three main elements are involved in planning a
schedules, (i) identification of activities or tasks, (ii) determination of their sequence, (iii) specification of starting and
finishing dates for each activity as well as for teh sequence as a whole. Scheduling is the process of establishing a
time sequence for the work to be done. Schedules translate programmes into actions. Scheduling is necessary in all
organisations with a view to providing for an even flow of operations and to ensure completing of each task at the
right time. While planning schedule, the avialability of resources, processing time and the delivery commitments
should be kept in view. Due allowance should be made for delays created by factors beyond the control of
management as well as for non-productive time.

10. Forecasts
Planning presupposes forecasting as the former is defined as deciding what is to be done in future. Henri Fayol has
described a plan as the synthesis of various forecasts - annual, long-term, short-term, special etc. The targets cannot
be fixed with any degree of precision unless forecasts are made. Forecasts are estimates of future events, providing
parameters to planning. Forecasts do not involve any kind of commitment of organizational resources. Planning
without forecasts is not possible. In fact, forecasts are predictions or estimates of the changes in the environment,
which may effect the business plans. A manager has to make forecasts keeping in view the planning premises. There
are various types of forecasts, such as economic, technological, political, social and so on. However, sales forecast is
the basis of most planning.
Q.4. What is environment? What is environment analysis and diagnosis? Explain the importance of environment
analysis and diagnosis.
OR
Explain the term "environment" and discuss why environment analysis and diagnosis is necessary in strategic
management.
Environment
Organisations are not island in themselves they function neither in isolation nor in vacuum. They are part of a society
and exist in association with their environment, i.e., certain facts surrounding various situations. Organisation's
profitability is not determined by what the products look like, nor whether it embodies high or low technology; it is
rather determined by the environment within which it operates. Thus, organisations are affected by environment. If an
organisation is to remain successful and prosperous, it must regularly adapt to its environment, which is uncertain and
changing. Failure adequately adapt to the environment may be a mojor cause of organisation's failure. However,
organisations also affect the environment.
Although William Starbuck has identified some 20 different uses of the work environment in order to perform an
efficient and effective environmental analysis the environment of an organisation is generally divided into two
distinct levels; external or general and internal or specific environment.
External or general environment is a set of those factor that affect and organisation from outside is boundaries. The
external environment contains elements that have broad and long-term implications for managing the organisation.
Such environment has both direct action and indirect action elements. Direct action element of external environment
include various stakeholders lie shareholders, customer, suppliers, competitors, employees, community (or society),
special interest groups, government and international issues. They are also designated as economic environment or
task environment. Indirect action elements of external environment include political-legal socio-cultural and
technological components.
Internal or specific or organizational environment is a set of those factors that affect an organisation from inside its
boundaries. It contains elements that exist within the organisation and normally have immediate and specific
implications for managing organisation. Broadly speaking, internal environment includes organizational objectives,
organizational resources, organizational structures, processes and techniques. Organizational resources include,
financial and physical or material resources and human technological capabilities. Organisation structures, processes
and techniques include; marketing, production, finance and accounting. From a more specifically management
viewpoint, internal environment includes planning, organizing, staffing, directing and controlling.

Environment Analysis
Organisations are open system of management that constantly interacts with their environment. Environmental
analysis is the study of organizational environment to identify and indicate those environmental factors that can
significantly influence organizational operations and managers strategic decision making. It is thinking about the
unthinkable, and it is seeing new insights rather than extrapolation. Environmental analysis is the discerning (seeing
and understanding well) of those aspects of the environment, which shall have the greatest influence on the
organisation's ability to achieve its objectives. Such a discerning is made within and with the help of a framework
provided by the knowledge of the organisation's goals and the existing strategy of the organisation.
Environment Diagnosis
Environment diagnosis is an exercise attempted to identify the factors of causes in the environment that affect the
function of an organisation and use such identification as a base for developing plans or strategic to improve or
maximize the dynamism and effectiveness of the organisation. Environment analysis is a tool of environmental
diagnosis.
Environmental Diagnosis Analysis and Diagnosis
The purpose of environment analysis and diagnosis is to identify the ways in which changes in various organizational
factors may directly and indirectly influence the organisation and management. Managers commonly perform
environment analysis in order to understand different activities and happenings inside and outside their organisation
and thereby increase the chances of framing sound and effective organisations and managerial strategies by coping
with the probable demands of the environment.
Environmental analysis is required due to its needs and importance for the following reasons:
1. Environmental factors are primary impact makers on corporate strategy of organisations.
2. Such analysis helps in anticipating opportunities and to plan alternative responses to those opportunities.
3. It helps in determining threats and developing an early warning system to prevent threats to the organisation or to
determine the risks that may be faced by organisation in its future operations.
4. It helps to identify those adjustments or adaptations, which are required for greater accomplishment of
organizational objectives.
5. It is sort of SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis which helps in deciding about the
rights course of action for managerial to successfully negotiate with the prevalent circumstances around the
organisation in order to ensure its survival, growth and development.
6. Environmental information strengthens the planning process and strategy formulation.
Environmental analysis is well accepted and recognized as an essential ingredients of strategic management. It may,
however be noted that the behaviour of the environment may be predictable, partially predictable or unpredictable.
Further, the predictable or partially predictable behaviour may be controllable, partially controllable or
uncontrollable. Moreover the environment may be homogeneous or diversified and stable or changing.

Environmental Influences on Organisation and Management

Environmental factors affect an organisation in two ways (i) they set the limits or constraints over its functioning, (ii)
they provide opportunity and challenges. The factors themselves act as limits, which are sometimes visisble and at
other moments, invisible. The environment provides opportunities by way of markets for new products, etc and
challenges in the form of competitors etc. We daily find in newspaper headlines about government's new regulations,
competitors, new schemes, consumer revolts, anti pollution activities of the community, trade union, strikes and so
on. To deal with these groups is an integral part of all manager's job. Such a job becomes more important the higher a
manager rises in managerial hierarchy.
Q.5. What is internal environment? How managers can match this internal environment with the external
environment of their organisation?
OR
Explain the important techniques by means of which proper organizational strategy may be systematically developed
to match the internal environment with the external environment.
OR
Explain the meaning of internal environment. What are the tools available to managers for matching the internal
environment with the external environment?
The Internal Environment
The part or level of an organisation's total environment that exists inside the organisation and usually has immediate
and specific implications for managing the organisation is called the internal environment. It consists of those factors
inside an organisation that affect the management of the organisation. In broad terms, the aspects included in the
internal environment are, objectives, resources and facilities (human and physical), informal organisation (or group),
other divisions or units of the organisation, unions, marketing and accounting. It may be notes that employees and
unions of an organisation have such a nature as they are to be included both in external and in internal environment.
From a more specifically management viewpoint, internal environment includes the state of planning, organizing,
staffing, directing and controlling with the organisation.
Matching the Internal Environment with the External Environment
It is clear from the above discussion that on organisation (internal environment) must be suited to its external
environment. The management develops its organizational strategies through an environment analysis. On the basis
of the results of such environmental analysis, proper organisational strategy may be systematically developed by
means of the following special tools and techniques.
1. Critical Questions Analysis (CQA)
Several contemporary management writers suggest that an appropriate organizational strategy is a process of
answering some critical or basic question as follows:
(a) What are the purposes and objectives or goals of the organisation?'
The answer to this question unfolds the desination where the organisation wants to go. Appropriate strategy must
reflect organizational purpose and objectives in order to minimize inconsistencies in strategy.
(b) Where is the organisation currently heading?
The answer to this question tell about the state of achievement of organizational goals and also whether the level of
present progress is satisfactory or not. Managers come to now the gaps in their performance. In fact, this question
focuses on where the organisation is actually going - whether on desired path or in wrong direction.
(c) What is the present environment in which the organisation exists and what changes are expected in it in relevant
future?
The answer to this question brings out the special features of the current environment and its future trends. However,

it may be noted that this question focuses on factors both inside and outside the organisation. For example, lack of
technically qualified personnel in the organisation and a sudden arrival of latest computerized technology in the
market are the factors that exist respectively in the internal and the external environment.
(d) What steps are essential to better accomplish the objective in future?
In fact, the answer to this question focuses on the requirements of the actual strategy of the organisation in order to
remove all inconsistencies and gaps in the currently adopted strategy. However, it may be noted that correct answer to
this question depends on the opportunity provided to the managers to reflect on he previous three questions.
Thus, managers can have appropriate strategy to match internal environment with external environment only if they
have a clear understanding of three things, (i) Where the organisation intends to go, (ii) Where the organisation is
currently going, (iii) What is the environment in which it exists and is expected to exist.
2. SWOT analysis
Strategic thinking tends to focus on analysis of the strengths and weaknesses of the firm and opportunities and threats
of the external environment. Only after completing a comprehensive appraisal of the internal and external situations
(strengths, weaknesses, opportunities and threats) of the firm, managers could consider the viable strategic options.
Such options could only be broadly classified as, for instance, growth (to increase the amount of business),
diversification (to reallocate resources to new attractive products in order to exploit new market segments), harvest
(to maximize the short term cash flow from the business), retrenchment (to strengthen or protect the amount of
business being currently generated) and divestiture (to eliminate an organisation segment, commonly known as
Strategic Business Unit (SBU), that is not generating a satisfactory amount of business and that has little hope of
doing so in the near future). Good strategic option (selected out of the aforesaid strategic options) should build on
strengths and exploit opportunities.
The logic of this analysis indicates that as each firm will be facing a differnet set of opportunities and threats (Os and
Ts), and each will have differing strength and weaknesses (Ss and Ws), the strategies that result will be unique to the
firm. However, a precaution has to be taken in selecting the managers who conduct the SWOT analysis, because if it
is given to inexperienced hands, then it may tend to generate long lists of points and the longer the list, the cloudier
will be the emerging strategic picture.
It may be noted that they may be two ways to superior performance of the organisation (i) either the organisation
should become the lowest-cost producer in its industry, (ii) it should differentiate its products or services in such
respects as are valued by the customers so high that they will pay a premium price to get and enjoy such edging
benefits. Thus, organizations can choose to apply either of these two general strategies.
3. Business Portfolio Analysis
Under this type of analysis, sound and unsound business activities are separately identified in relation to market share
of business and the growth of markets in which business exists. Sound activities are then continued, supported and
emphasized, while unsound activities are discarded, discontinued and de-emphasized.
4. Competitor Analysis
Managers should know quite a lot about their competitors because it is essential to stay in competition in order to
capture a lion's share of the market. Organisations should devote the time and effort required to gain a deep
understanding of their competitors. If they know their enemy, it will help them to anticipate the strategic moves that
the rivals might make. For purposes of making a systematic examination of the competitors and their strategies the
following steps are required to be taken:
(i). To examine the existing and potential (future) competitors by close scrutiny of the needs that organisation's
products or services are satisfying.
(ii). To examine the competitor's current activities, capabilities, drives, expected moves and vulnerabilities
(weaknesses).
(iii). To concentrate on four main areas with a view to establishing a comprehensive profile of the competitors their
future goals, assumptions, current strategy and capabilites.

Chapter 13:
* Control
* Characteristics of control
* Importance of control
* Effective control system
Q.1. Define Control. Discuss the importance of Control in organizational system also explain the elements of control.
Meaning and Definitions of Control
Control is necessary function to make all other managerial functions effective. Its ensures that the corporate goals are
achieved effectively and efficiently. Controlling is the process that the corporate goals are achieved effectively and
efficiently. Controlling is the process by which management regulates that work activities according to designed
plans, policies, procedures and programmes so as to ensure the accomplishment of the organizational resources and
people in a direction leading to organizational goals.
some important definitions of control may be given as follows:
Henri Fayol
Control consists in verifying whether everything occurs in confirmatory with the plan adopted, the instruction issued
and principles established. It has for object to point our weaknesses and errors in order to rectify them and prevent
recurrence. It operates on everything, things, people, action.
Theo Haimann and William Scott
Controlling is the process which check the performance against standards. It makes sure that organisation goals and
objectives are being met.
Robert Anthony
Management control is the process by which managers assure that resources are obtained and used effectively and
efficiently in the accomplishment of an organisation's objective.
Weihrich and Koontz
Controlling is the measurement and correction of performance in order to make sure that enterprise objectives and the
plans devised to attain them are being accomplished.
Q.2. Describe the characteristics, nature and feature of control.
Characteristic Or Features of Control
Controlling has the following important features, which clearly bring out its nature:
1. Control is a Continuous Process
Control is not a single step activity. Rather, it is a dynamic process that involves constant analysis of actual and

planned performance and the resultant deviations as well as the revision of objectives, plans, policies, procedures,
positions, incentives etc in the light of such deviations.
2. Purpose of Control is Positive
George Terry says, the function of controlling is positive - it is to make things happen, i.e. to achieve the goal within
stated constraints, or by means of the planned activities. Controlling should never be viewed as being negative in
character - as a hurdle in getting objectives won. Controlling is a managerial necessity and a help, not an impediment
or a hindrance.
3. Controlling is a exercise at all levels in the Management Hierarchy
Control is a function of every manager, from Chairman and Managing Director to a supervisor, though it may vary in
scope among managers. For example the top managers are concerned with administrative control, which is exercised
through broad policies, plans and other directives. The middle level managers are concerned with the executor control
for the purpose of getting the plans, policies, and programmes executed. At the lower level, supervisors exercise
operational control to ensure successful performing of actual operations or production activities by their close
monitoring.
4. Control Guides Behaviour of People and use of Resources and Facilities
Control guides the action and the behaviour of the people who are responsible for carrying out different activities or
operation, and also guide the use by them of different organizational resources and facilities in order to effectively
and efficient, contribute toward accomplishment objectives.
5. Control is mainly Forwarding Looking
Control mainly aims at the future because future is a head and past in gone. However, the experience about the
criterion for future standards, but it may be noted that control may also be past control and current control. Thus it is
not full correct to say that control is looking back.
6. Control Measures and Evaluate Performances
Controlling involves measurements of the actual results in order to facilitate other evaluation or comparison against
the planned results. It also suggests guidelines for future course of action.
7. Control Facilities Coping with Environment
Effective controlling system foresees the likely changes in consumer preferences and demands and therefore guides
the members of the organisation to modify the products or services to meet the anticipated needs and requirements of
the consumers in the future market.
8. Control Closely Related to Planning
Planning is the basis of controlling. Control implies the existence of certain standards or yardsticks against which

actual results are to be evaluated. Planning provides such standards, if there is no plan; it means that there is no basis
for control. Planning sets the course of action and controlling monitors the operation or activities to follow such
course of action. In fact, planning initiate the process of management and control completes this process. Without a
plan control is blind because it does not know where to go and weather it is going on a right path or not. Control
looks active in the company of a plan because then it seeks to compel events to confirm to the plan. Without a plan is
handicapped. H.G. Licks comments, Planning is clearly a pre-requisite for controlling, it is utterly foolish to think
that controlling could be accomplished without planning. Without planning there is no predetermined understanding
of the desired performance. In fact planning without corresponding control is likely to be a hollow hope.
On the other hand, planning without control is not a reality. In the absence of a control system, best designed plans
may go astray and thus will fail to reach their destination. Control ensures to the organizational activities and the
functions on the right track and aligned with plans and goals. Standards for evaluation of performance are the
beginning point of the control process. Controlling indicates the need for revision of plans in case the standards are
not achievable or if the environment has changed. The information collected by the control system is also useful for
planning in future. Without control planning will be a futile exercise remaining on the papers only. Control makes
plans meaningful and effective, similarly controlling is effective only when it is specially tailored to plans.
Thus, it is correct to comment that planning is manning less without control and control is aimless without planning.
Weihrich and Kortz comments, Planning and controlling may be viewed as the blades of a pair of scissors, the
scissors cannot work unless there are two blades. Without plans and objectives, control is not possible because
performance has to be measured against some established criteria. Similarly, without control, realization of plans is
not possible be guided on the right path leading to the accomplishment of plans. This is why that Weihrich and
Koontz has commented as follows. Planning and controlling are inseparable the Siamese twins of management. Any
attempt to control without plans is meaningless, since there is no way for people to tell whether they are going where
they want to go (the result of the tusk of control) unless they first know where they want to go (part of the task of
planning). Plans thus furnish the standards of control. Thus, there is complete interdependence between planning and
controlling.
Q.3. Describe the Importance of Control.
Importance of Control
The major benefits of a good control system may enlisted as follow:
1. Stimulates Action
A good control system stimulates action by spotting the significant deviations from the original plan and by
highlighting them for the people who set thing right i.e., who can take corrective action. Thus, it guides and keeps the
organization's operations on the right back.
2. Facilities Decentralization and Coordination
Control encourages top management to delegate authority to subordinates throughout the organisation without
completely losing their grip over it. In the context of predetermined goals, control keeps all activities and efforts
within their specified limits and makes the operations to move towards organizational goals through coordinated
efforts.
3. Facilities other Managerial Functions
Control and planning are closely related to each other. Control points out the deficiencies in plans and policies by
verifying their quality and correctness. It helps to review, revise and update the plans and policies in order to cope
with changes in the environment. By doing so, control also indicates the limitations and drawbacks of organizing
staffing, motivation, leadership and decision-making.

4. Enhances Employee Morale

Control is vital to the strength and moral of company employees because it prevents the individuals form going astray
from plans and thus prevents anarchy to develop. Employees do not like a situation that goes out control because in
that case they may become victims to any within and cannot predict what will happen to them. Thus without control
their morale may be lowered. The tremendous complexity of modern organisation and certain psychological
dependencies of the employees on order and stability, make the control system a necessity.
5. Creates Psychological Pressure to Work
If there exists a sound control system in an organisation, employees have psychological pressure to work hard and
perform well. Efficient control system provides order and discipline in activities and helps to minimize dishonest
behaviour on the part of employees. Employees remain alert in their efforts.
6. Other Benefits
Several other benefits from good control system may be as follow:

Control is necessary for the optimum use of organisation's scarce resources.

It helps in organisation's growth and change
It helps in forecasting and thus provides basis for future action.
Control techniques like rules, procedures, budgets etc stand as effective guides to managers.
In the absence of control, the plans will remain but mere pipedreams.
Control helps in judging the accuracy of standards.
In the area of their responsibility, if managers do not control events, they will be at the mercy of the
events.

Q.4. Discuss the requirements of an effective control system.

Requirements of Effective Control System
A control system is a deliberate creation, not an automatic phenomenon. Through different organisations may design
their control systems according to their unique and special characteristics or conditions, yet in designing a good and
effective control system the following basic requirements must be kept in mind:
1. Focus on Objectives and Needs
The effective control system should emphasis attainment of organizational objectives and therefore it should be
designed in accordance with practical needs of the enterprise. For example, the marketing department may use precontrols for introduction of new products into the market, and current control for specific advertisements. Similarly,
more sophisticated and broad ranging controls may be developed for production managers than for a shop floor
supervisor. Thus, controls should be tailored to plans and positions.
2. Prompt Indicator
An ideal control system could detect and report significant deviation as promptly as possible so that necessary
corrective action may be taken adequately in time. This needs an efficient system of appraisal and flow of
information. Rapid reporting of variations of the core of control.
3. Forward Looking
Control should be future-oriented, marketing valuable forecasts to the managers so that they become aware of the
problems likely to confront them in the future.
4. Understandable and Economical
Control tools and techniques adopted should be such as are clearly understandable by the managers. They must know
all the details and critical points in the control device as well as its usefulness. If developed and complex statistical

and mathematical techniques are adopted, then proper training should be imparted to the persons who are supposed to
execute such control system. Besides the control system should be worth its costs. Expensive and elaborate control
system will not suit, for example to small enterprise.
5. Control by Functions and Factor
Control should emphasis function, such as production, marketing, finance, human resources, etc it should also focus
on four factors, quality, quantity, time use and costs. Not one but multiple controls should be adopted.
6. Strategic Points Control
Every detail or thing is not be controlled in order to save time, cost and effort. Certain strategic or vital points in the
functioning of an enterprise must be identified and appropriate control devices should be designed and imposed at
those stages. Thus, only critical, major deviations should be attended to and control should concentrate on exceptional
problems only. Control should be selective and concentrate on key result areas of the company.
7. Flexible
It means that the control system should be able to accommodate such modifications or revisions as are made
necessary in the wake of rapidly changing and complex organizational environment. Control must not become ends in
themselves. They must be suited to the environment in which an organisation finds itself. Flexibility in control system
is generally achieved by the use of alternative plans or flexible budgets.
8. Objective
To the maximum possible extent, controls, i.e., standards of performance should be objective (unbiased) and specific.
For this purpose control measures should be verifiable or quantified. Standards should be determined based on facts
and participation.
9. Indicative as well as Suggestive
Controls should not only be able to point to the deviations, but they should also suggest corrective action that is
supposed to check the recurrence of variations or problems in future.
10. Correct Action at Correct Time
A significant test of the effectiveness of a control system is whether correct action is taken at correct time.
11. Attention to Human Factor or Emphasis on Self-Control Aspect
It is said that excess control causes corruption. Control system should be designed is such a way, as it does not arouse
negative reactions among organizational people. Good controls are designed to develop positive feelings in the
members by focusing on work and not on worker. It facilities creative action within properly laid down limits. The
aim of control should be to create self-control among members. For this purpose, the tendency over the years has
been toward such techniques as participative budgeting and human resources accounting.
Chapter 14:
Chapter 14 - Motivation & Morale
* Motivation
* Characteristics of Motivation
* Moslow's theory of motivation
* Salient features of Maslow's Needs Model
Q.1. How would you define motivation? Set out the importance of motivation in an organisation.
OR
What is motivation? Explain the term motivation. What does motivate people in an organisation?

Meaning and Definition of Motivation

Success at work is not a matter of only technical expertise but also dependent on the interest of the worker. Creating
interest in people to give their best to the work and the workplace is the key to motivation. For this purpose, the
managers should know why people act as they do and what will make them to give their best on their jobs.
Some important definitions of motivation may be given as follows:
Carroll Strartle
Motivation is a reported urge or tension to move in a given direction or to achieve a certain goal.
Micheal Jucius
Motivation is the art of stimulating someone or oneself to set a desired course of action or push the right button to
get the desired action.
E.F.I. Brech
Motivation is a general inspirational process which gets the members of the team to pull their weight effectively, to
give their loyalty to the group, to carry out properly the tasks that they have accepted and generally to play an
effective to play an effective part in the job that the group has undertaken.
Weihrich and Koontz
Motivation is a general term applying to the entire class of drives, desires, needs, wishes and similar forces. To say
that managers motivate their subordinates is to say that they do those things which key hope will satisfy these drives
and desires and induce the subordinates to act in a desired manner.
In sum, motivation is a psychological process which is related to human side and through which the desires, needs or
tensions of the employees are understood and they are inspired in such a way that they proceed in a desired direction,
provide maximum help in the achievement of specified goals, keep on the drive to work, continue to cooperate with
each other, develop and maintain the sense of belongingness towards the enterprise, feel satisfied and their morale
remains high. Thus, motivations are the process of steering a person's inner drives and actions towards certain goals
and committing his energies to achieve these goals.
Q.2. Describe the characteristics, nature and features of motivation.
Characteristics Or Features of Motivation
Some important features of motivation may be brought out as follows:
1. Personal and Internal Feeling
Motivation is a psychological phenomenon, which is generated within an individual in the form of an energetic force
that drives him to behave or not to behave in certain ways. These are some environmental and other forces that trigger
these drives.
2. Art of Stimulating Someone Or Oneself
A manager can use motivation to inspire not only his subordinates, but to motivate himself also. For self-motivation,
he has to take following steps

He should set a goal for himself and should not close sight of it.
He should supplement his long term objectives with short-term goals.
He should learn a challenging task every year.
He should make his job a different one with a view to improving objectives for his position and
increasing his productivity.
He should develop an area of expertise by building on his strengths and developing his weaknesses
into strengths.
He should give himself the feedback and reward himself by celebrating his accomplishment.

3. Produces Goal - Directed Behaviour

Motivation is closely intertwined with behaviour. As a Behavioural concept, it directs human behaviour toward
certain goals.
4. Motivation can be either Positive or Negative
Positive motivation is also known as Carrot Approach and includes use of additional pays, incentives, praise
possibility of becoming a permanent employee etc. Negative motivation is also called Stick Approach and implies
punishment, such as reprimands, threat of demotion, threat of termination, etc.
5. The Central Problem of Motivation is HOW
Motivation is necessary for successful achievement of goals. However, it is a complex process because different
employees have different needs, their motives are varied and needs and motivates change from time to time.
Moreover, motivation is partly logical and partly emotional. Further, people satisfy their needs in many different
ways. Hence, the central problem of motivation is how to inspire such a typical group of individuals towards
attainment of goals in a concerned manner.
6. Motivation is System Oriented
Motivation is the result of interplay among three sets of different factors:

Influences operating within an individual, for example, his needs, tensions, motives, values, goals etc.
Influences operating within the organisation for example, its structure, technology, physical facilities,
various processes, the nature of job, advancement avenues etc.
Forces operating in the external environment, for example, society is culture, norms, values, customs,
government policy regarding the business of the enterprise etc.

7. Motivation is a Sort of Bargaining

Inducements from the side of the enterprise and contributions from the side of the employees.
8. Motivation is different from Satisfaction
Motivation refers to the drive and effort to satisfy a want or goal. Satisfaction refers to the contentment experienced
when a want is fulfilled. In other words, motivation implies a drive toward an outcome and satisfaction is the
outcome already experienced.
Q.3. Describe the Maslow's theory of Motivation.
Theories of Motivation
Different management scholars to explain how behaviour is energized, gets started, sustained, directed or stopped
have propounded several theories.
Maslow's Needs Hierarchy Theory
Maslow's need priority model is one of the most widely referred to theories of motivation. Abraham Maslow, a
clinical psychologist, thought (1943) that a person's motivational needs could be arranged in a hierarchical manner,
starting in an ascending order from the lowest to the highest needs and concluded that once a given level of needs (set
of needs) was satisfied, if ceased to be a motivator. The next higher level of need to be motivated in order to motivate
the individual. Although the hierarchical aspects of Maslow's theory are subject to question and often not accepted,
his identification of basic needs has been fairly popular.
The five categories of needs may be described as follows:

1. Physiological Needs
These are the basic needs for sustaining human life itself: needs for food, drink, shelter, clothing, sleep, sex etc. Man
can live on bread alone, if there is no bread. But once these basic needs are satisfied, they no longer motivate.
2. Safety Needs
Safety or securing needs are concerned with freedom from physical or psychological (mental) harm, danger,
deprivation or threat, such as loss of jobs, property, food, clothing or shelter.
3. Social Or Affiliation Or Acceptance Needs
These are belongingness needs emanating from human instinct of affiliation or association with others. These include
owners, love and affection, needs of mutual relations, identification with some group etc. These are the needs more of
mind and spirit than of physique.
4. Esteem Needs
This set of needs represents higher level needs. These needs represent needs for self-respect, respect of others a
general feeling of being worthwhile, competence, achievement, knowledge, independence, reputation, status and
recognition.
5. Self-Actualization Needs
This set of higher order needs concerns with reaching one's potential as a total human being. It is the desire to become
what one is capable of becoming, i.e. to maximum one's capacity and abilities in order to accomplish something
appreciable and self-fulfilling. It is a need for being creative or innovative, for transforming self into reality.
Q.4. Describe the salient features of Maslow's needs model.
Salient features of Maslow's Needs Model
1. The urge to fulfill needs is a prime factor in motivation of people at work. Human beings strive to fulfill a wide
range of needs. Human needs are multiple, complex and interrelated.
2. Human needs form a particular hierarchy or priority structure in order of importance.
3. Lower-live needs must be at least partially satisfied before higher-level need emergy. In other words, a higher-level
need does not become an active motivating force until the preceding lower-order needs are satisfied. All needs are not
felt at the same time.
4. As soon as one need is satisfied, the individual discovers another need which is still unfulfilled.
5. A satisfied need ceases to be a motivator, i.e., does not influence human behaviour. Unsatisfied needs are
motivators, i.e., they influence human behaviour.
6. Various need levels are independent and overlapping. Each higher-level need emerges before the lower-level need
is completely satisfied.
7. All people to a greater or lesser extent; have the identified needs.
Critical Evaluation of Maslow's Model
1. Human needs cannot be classified into clear and only specified categories, i.e. their hierarchy cannot be definitely
specified. The determination of higher and lower levels is dependent on people's cultural values, personalities and
desires. For example, the higher-level need of an Indian worker may be the lower-level need of an American worker.
2. It is not necessary that a time only one need be satisfied. In other words, needs of more than one levels may be
fulfilled jointly, for example: physical and esteem needs, Maslow's model does not explain this multi-motivation fact.
3. Some of the assumptions of Maslow's theory are not always found in practice.
4. It has been found by some scholars like Lawler and Suttle that physical and safety needs may be probably satisfied,
but high-level needs do not appear to be rather satisfiable.
Though Maslow may not be the final answer in motivation, yet his model does make a significant contribution in
terms of making management aware of the diverse needs of human beings at work, their diverse motives. Needs may
not be the only determinants of human behaviour but they are definitely important for understanding such behaviour.

Chapter15:
Chapter 15 - Business Communication
* Communication and its elements
* Objectives of Communication
* Advantages and Disadvantages of Communication
* Various types of Communication
Q.1. Define Communication & its elements.
Communication Defined
The term communication has been derived from the Latin work communis which means commons. It refers to the
serial of contact process. Communication is a continuous process of telling, ordering, commanding, listening,
questioning and answering.
Communication is one of the Fundamental Functions of Management
Communication is the conveying of information from one person to another. It is two-way exchange of ideas and
information that leads to a common understanding. In other words, communication means perfect identity of mind.
Though the communication underlies all functions of management, it assumes greater importance in the function of
directing. For the successful leadership and manager ship, communication is a must. Communication means and
includes every device that may be used to convey meaning from one person to another. A few definitions of
communications are given below.
Allen
Communication is the sum of all things one person does when he wants to create understanding in the mind of
another. It involves a systematic and continuous process of telling, listening and understanding.
Haimann
Communication means the process of passing information from one person to another. It is the process of importing
ideas and making oneself understood by others.
Newman and Summer
An exchange of facts, ideas, opinion or emotions by two or more persons.
To sum up, communication is the process of passing and understanding information from one person to another.
Elements of Communication
A communication passes through the following five processes:
1. Preparing the message, i.e., any fact, idea, order, complaint, etc.
2. Sending the message by the sender.
3. Receiving the message by the receiver.
4. Channelizing the communication.
5. Symbolising the communication or encoding.

Communication is an all-pervading field of human contact, exchange of views. It can well be summed up through
these lines. Communication is generally understood as spoken or written words. But in reality, it is more than that, it
is the sum total of feelings, actions, gestures and tones. Even silence is an effective form of communication. A twist in
the face is often a more expressive disapproval than hundreds of words put together.
Q.2. Define the Objectives of Communication.
Objectives of Communication
1. Information Sharing
The main purpose of communication is to transmit information form a source to target individuals or groups. Various
types of information's are transmitted in the organisation-policies and rules and changes and development in the
organisation etc.
2. Feedback
There is a need to give good feedback to the employees on their achievements, to the departments on their
performance and to the higher management of the fulfillment of goals and difficulties encountered.
3. Control
The management information system is well known as a control mechanism. Information is transmitted to ensure that
the plans are being carried out according to the original design. Communication helps in ensuring such control, a
monitoring mechanism.
4. Influence
Information is power and one purpose of communication is to influence people. The manager communicates to create
a good climate, right attitude and congenial working relationship.
5. Problem Solving
In many cases, communication aims at solving problems. Communication between management and the union on
some issues (negotiation) is aimed at finding a solution. Many group meetings are held to discuss alternative
solutions for a problem and to evolve a solution.
6. Decision Making
For arriving at a decision several kinds of communication are needed, e.g., exchange of information, views available,
alternatives, favorable points to each alternative, Communication helps a great deal in decision making.
7. Facilitating Change
The effectiveness of a change introduced in an organisation depends to a large extent on the clarity and spontaneity of
the communication. Communication between the consultants and the managers between the managers and the

employees and amongst the employees help in knowing the difficulties in the planned change and in taking corrective
action.
8. Group Building
Communication helps to build linkages of the organisation with the outside world. The organisation can use its
environment to increase its effectiveness. It can also influence the environment itself the government, client system,
the resource system etc. Communication plays a critical role in this respect.
Q.3. Discuss the Advantages and Disadvantages of Verbal and Written Communication.
Verbal Communication
When a message is communicated verbally and not is writing by exchanging the words in face communication or
through telephone or through the other visual aids, etc., it is called Verbal Communication. It may take place at
meetings, interviews, etc.
Advantages of Verbal Communication
Verbal Communication has the following advantages:
1. Saving of Time
The greatest advantages of verbal communication, is saving of time. Under this system of communication the
messages are communicated immediately without consuming any time. Verbal communication is the only way out
during urgent condition and when immediate action is necessary.
2. Saving of Money
As there is no formal method of communicating the message, no help of any particular media of communication is
taken, this type of communication saves a lot of money.
3. More Effective
As there is direct touch of the sender of message with the receiver of message these messages prove to be more
effective. The sender of message can also exercise his personal influence over the receiver of message.
4. Knowledge of Reaction of Message
An important advantage of verbal communication is that under this method of communication, the sender of message
can judge the reaction of the message on its receiver. He comes to know whether the receiver of the message will
follow it or not.
5. Clear Doubts

Verbal Communication is also better form the point of view that the doubts regarding the message, if any, between the
sender and the receiver of message can immediately be cleared and the receiver of the message can immediately get
the explanations regarding any point or the message.
6. Increase in Productivity and Efficiency
Verbal communication is more effective. It increases the productivity and efficiency of workers because they clearly
understand it and follow it.
Disadvantages of Verbal Communication
Verbal communication has the following disadvantages:
1. Lack of Proof of Message
The greatest disadvantages of verbal communication is that there is no proof of the message communicated.
2. Not Suitable for Future Reference
As there is nothing in writing supporting the messages communicated under this method, it is not suitable for future
reference. If there is any dispute on any point of the message, it cannot be helped in any way.
3. Not Suitable in Case of Distance
If the receiver and the sender of the message are living at a distance from each other, this method of communication
is not suitable because it will increase the cost of communication, it will no be effective because of lack of personal
touch and it may not be clear and explanatory.
Written Communication
When a message is communicated in writing, it is called Written Communication. Written Communication takes
place in the form of letters, circular, reports, magazines, notice board, handbook, notice etc. Written Communication
is generally, used for communicating a message from the top management to the subordinates. Written message must
be clear and understandable. It must be brief and self-explanatory and must be prepared in a simple language. The
language must be polite and sweet so that the receiver of the message may easily accept it. If possible, it must be in
the printed form.
Advantages of Written Communication
1. No need of Personal Contact
In written communication there is no need of personal contact:
2. Economical

If the receiver and sender of the message are at a distance, it is economical to communicate the message in writing
because communicating by post is cheap and quite economical.
3. Written Proof
A great advantage of written communication is that it provides a proof for future reference. If there is any dispute on
any point in this regard, the message may be referred.
4. Clear and Explanatory
Written messages are very clear and self-explanatory. The receiver of the message can easily follow it and understand
it.
Disadvantages of Written Communication
Written communication has the following disadvantages:
1. Delay
The greatest disadvantage of written communication is the delay in communication. The message is writing is
communicated after a certain process is completed. It is prepared, verified and order by the concerned officer.
Consequently, the message is delayed.
2. Lack of Secrecy
Another great disadvantage of written communication is that secrecy cannot be maintained because these messages
can be read by anyone.
3. Costly
A written communication involves heavily expenditure. If the receiver and sender of message are near to each other,
it is fairly costly to communicate in writing.

Q.4. Explain the various types of Communication.

Types of Communication
These are as explained below:
According to the Organizational Structure

1. Formal Communication
Such communication is associated with the formal organisation structure. Communication travels through the formal
channel we very other hear the phrase through proper channel; it explains the essence of formal channel. This is a
deliberate attempt to regulate the flow of organizational communication so as to make it orderly and thereby to ensure
that information flows smoothly, accurately and timely. This formal channel is the path of line authority linking the
position to its line superior. It is also known as Channel of Command. Its implications is that all communication to
and from a position should flow through the line superior or subordinate only, i.e., through the scalar chain. This type
of formal communication is known as single-path communication. There may be multiple channel communication
which improves communication through more than one path at a time.
Advantages of Formal Communication
1. It helps maintain the authority of line officers that control the subordinates and fixes the responsibility for the
activities done.
2. An immediate superior has a direct contact with his subordinates. It helps understand the attitude and behaviour of
each other well.
3. Since an officer knows better about the organisation and his subordinates, solutions of problems become easy.
Disadvantages of Formal Communication
1. It increases the workload of the line superior because all communications are transmitted through them. It leaves
no time to perform other functions well.
2. It enables the chances of more transmission errors and reduces accuracy of the message.
3. It is not good for upward communication because officers overlook the interest of their subordinates. It implies
delay tactics and red-tapism.
4. It has generally happened that the contact of distinct subordinates with the topmost superior is far and remote. They
do not even recognize each other. It adversely affects the relationship.
Informal Communication
Such communication is free from all formalities because they are based on the informal relationship because the
parties. Such communication includes comments, suggestions or any other informal reactions. Such types of
communication are also called grapevine communication. They may be conveyed by a simple glance, gesture, nod,
smile or silence too. It is not the result of any official action but of the operation of personal, social and group
relations of the people. Informal communication is unplanned but may follow a predictable pattern.
Advantages of Informal Communication
1. Communication is always transmitted at a greater speed and is more flexible.
2. It is dynamic and reacts quickly to its changing environment.

3. It meets the social needs of people, which are not met by formal communication.
4. It provides a means for exchange of mutually beneficial information between people who are not linked through
formal channels.
Disadvantages of Informal Communication
1. It is less orderly and less static, any action taken on the basis of such communication may be erratic and may lead
the organisation in difficulty.
2. It very often carries half-truth, rumours and distorted information and it is difficult to fix the responsibility of such
erratic information.
According to Direction of Communication
According to direction of communication, the communication may be of following three types:
1. Downward Communication
Communication which flow forms the superiors to subordinates with the help of scalar chain, is known as downward
communication. They include orders, instruction, rules, policies, programmes and directions etc. There nature is
directive.
2. Upward Communication
Upward communications are just reverse of the downward communications. Feedback to the higher authorities by the
lower level is an upward communication. It flow form the subordinates to their superiors through the line. Such
communication includes suggestions, opinion, reactions, complaints and grievance, etc. Generally the superior
ignores this type of communication but in modern times it is regarded as the main source of motivation in employees.
3. Horizontal Communication
It refers to transmission of information among positions of the same level, i.e., when communication takes place
between two or more persons of the same level under the same superior, it is known as horizontal communication.
Such communication is to coordinates the efforts of the person working under various departments. It removes
duplication of work and thus minimizes the wastage of time, money and labour.
According to Way of Expressions
On the basis of their expression communication may be divided in two categories oral and written.
Oral Communication
Transmission with the help of spoken words is a common system of communication. In oral communication both
parties in the process exchange their ideas through oral words either face-to-face or through any mechanical device

such as telephone, etc. Meetings, lectures, conferences are some other media of such communication.
Advantages of Oral Communication
1. It saves time and money.
2. It is more effective, Gesture, tones and facial expression make the communication effective and efficient.
3. The communicator knows the reaction of communicate. They may even clear the doubts, if any in the minds of
other party.
4. It is the only way out during emergencies.
5. It is more convenient to measure the effect of communication. The communicator can easily guess whether the
recipient is following him or not.

chapter16:
Chapter 16 - Group
* Group
* Group cohesiveness
Q.1. Define Group, why they are formed?
Group Defined
From times immemorial, man has lived in a social system (a large group), and the family (a small group) is an
integral part of it. On this earth, there are groups, large or small, which influence our social system, social relations
and communication.
Group exists in every organisation and they effect the behaviour of their members and also other groups. They have
also impact on the whole organisation. If one wants to study and organisation, one will have to understand the groups
existing in that organisation and their functioning. There are so many small groups existing in that organisation. Such
groups are formed by the organisation by dividing its ultimate task into small tasks, which are assigned to various
subunits known as departments, sections units etc. Besides there are many other groups, which are created
automatically (may be called informal groups) because of the operation of socio-pychological factors at the work
place.
The social process by which people interact fact to face in small groups in called group dynamics. Interaction in small
groups is not always governed by rules, regulations and conventions though well established.
The word dynamics is originally a Greek word implying force. Thus, group dynamics means the study of forces
operating within a group in social interaction. It concerns the interactions and forces between group's members in a
social situation. When the concept of group dynamics of members of formal and informal groups in the organisation.
The term group dynamics has been interpreted in many ways. One view is that it deals with how the groups are
formed and function. The other view is that groups dynamics is a state of techniques such as role playing, brain

storming, leaderless groups, group dynamics, thus should be viewed in terms of the internal nature of groups, their
information, structure and processes and the way they affect individual members, other groups and the organisation.
This view is more prevalent.
Behaviour in Groups
Social variables influence the manner perception and judgement particularly in a group setting. Focus should be on
the individual. But the group itself should be studied as a whole because the product of groups, interaction cannot be
indicative of the performance of the individual outside the group. Both the composition and the behavioural history of
a group are determinants of its stimuli for the individual members. The groups also determines the nature and patterns
of reinforcement, the members receive in the course of their interaction with another. The group influences the
behaviour of individuals in many ways such as in the form of conformity to group forms, group cohesiveness, group
participation, group competition and group problem solving. These characteristics are found in both formal and
informal groups.
Conformity to Group Norms
There are certain forms of the groups, which the group members are to follow: they are expected to behave in the
same manner. This normative behaviour of the members helps the managers of the organisation to understand how
and why an individual will behave in accordance with the group norms. Group norms perform two main functions.
First, norms help the group to achieve its goals: they bring uniformity of action towards the goals. Second, norms
help the group maintain itself a group; these ensure that divisive forces in the group may be put under pressure
against their behaviour.
People conform to group forms also for their own benefit. But the degree of conformity differs from member to
member. Researches on this aspect of group's dynamics present the following conclusion.
1. The degree of conformity to group forms depends upon the status of the group and its members. Within a group, it
has been observed that the higher the rank of a person, the more nearly his activities conform to group norms.
2. Seniority also influences the degree of the conformity. A new person may be expected to adhere more closely to
norms than a senior person.
3. Pressure of conformity increases with the increase in the number of persons agreeing to the norms.
4. On applying rigid standards to evaluate the forms, non-conformity as likely to increase.
Group Cohesiveness
Group cohesiveness is a situation in which all members of the group together for a common goal, or where everyone
is ready to take responsibility for group chores. The greater the group cohesiveness, the greater will be its influence
on the behaviour of members. Group cohesion brings low absenteeism and high personal adjustments. Many factors
bring cohesion in the group such as degree of dependency on the group, size of the group, homogeneity and stable
membership, composition and outside pressure.
Participation

The effectiveness of the group is determined by the degree of participation of its members in its functioning. The
more the participation, the more effective is it's functioning. Better participation results in high morale and better
labor-management relationships, in addition to increased
1.

Q.2. What is group cohesiveness? Also describe the factors influencing cohesiveness.
Group Cohesiveness
The termcohesiveness implies solidarity. Group cohesiveness may be characterized by the situation in which all
members of the group work together to achieve a common goal or where every one takes responsibility to work for
the group goals. Groups cohesiveness may be described as the force, which keeps the members of the group
together. The main aim of the groups is to satisfy its members needs. The more needs are satisfies, the more
attractive it becomes for the members of the group. Cohesion is essential not only for the existence of the group but
also for the achievement of the group's objective. If group cohesion is high, the interaction between members will
high.
Cohesiveness has a direct bearing on group behaviour. The greater the group cohesiveness, the greater will be its
influence on the member's behaviour. A cohesive group is able to act as one body to achieve its goals. In a
cohesiveness group, group members are apt to conform to group norms. Conformity to group norms is essential for
the effective functioning of the group. Thus, conformity and cohesiveness are interrelated and are reinforcing
factors. According to Shaw, members of highly cohesive groups are more energetic in group activities, are less
likely to be absent from group meetings and are happy when the group succeeds and sad when it fails, where as
members are not dedicated to the group and its purposes their loyalty and support are mediocre or variable.
Factors Influencing Cohesiveness
There are several forces that bring cohesion in the group:
1. Degree of Dependency on the Group
Members join the group because it satisfies certain needs. The more highly dependent a person is on the group for
his need satisfaction the greater will be the group attractiveness and consequently greater is its cohesiveness.
2. Size of the Group
Size of the affects interaction among group members in inverse direction and also affects group cohesiveness. The
larger the group size, the lesser the cohesiveness, due to problems of interaction among members of the groups,
lack of appreciation of each other's problem. Difficulty arises is achieving the common goals if the group. It is one
of the reasons why informal group are smaller in size.
3. Homogeneity and Stable Membership
Groups whose members have diverse interests and different and also affects group cohesiveness. The larger the
group size the lesser the cohesiveness due to problems of interaction among members of the group, lack of
appreciation of each other's problems Difficulty arises in achieving the common goals if the group is large. Hence
the entire group dynamics revolves round the small group. It is one of the reasons why informal group are smaller
in size.

4. Inter and Intra Group Competition

Competition among groups (inter-group) and competition among members of the groups (intro-group) have
different effects on group get united and the group sets solidified. The solidarity continues among members of the
winning group whereas the losing group gets weakend. Success resulting from inter-group competition increases
cohesion further. The member of the losing group, if they have no hope of revival of prestige of the group,
gradually leaves the group.
The picture is different when competition is among the members within the group. If the rivalry is healthy,
members stand to gain. But, generally, intra-group rivalry among members takes the form of jealousy that results in
the weakening to group cohesiveness. There may be three possible causes of intra group competition:
* When members or sub-groups within the group adopt different methods to accomplish the same goal
* When there are differences regarding the goal or goals of the group among members
* When goals of individual members clash with group goals.
5. Outside Pressure
When there is outside pressure or threat to group survival, the group members sink all their differences and join
hands together to meet the challenges to the group. Hence, outside pressure or threat is a cementing force and
increase group cohesiveness.
6. Customs and Traditions
If members share the same customs and traditions, they become familiar with one another in no time and also they
are benefited from one another knowledge and experience. This commonness prevents the entry of any other
person who does not follow the same traditions. This develops a feeling among members that they are distinct from
others. This increases interpersonal relationships among members.
7. Location
People who work at the same geographical location tend to be close to one another and have numerous
opportunities to interact and exchange ideas, resulting in cohesiveness of the group. But groups are not cohesive
when their members do not work within the same geographical limits.
Group Cohesiveness and Productivity
Group cohesiveness and productivity do not seem to be related. Highly cohesive groups need not necessarily be
highly productive or vice versa. Researches also could not establish any relationship, positive or negative, between
these two variables. However it has usually been observed that a cohesive group is more productive than a less
cohesive group, the group's attitude favors the goals of the organisation. As the members of the group they follow
the guidelines prepared by the group.
If the group supports the organizational goals, the members will tend to produce more. On the other hand, where

cohesiveness is high but the group does not favor the organizational goals, productivity of the member's declines.
Where the group norms are not supportive of performance, cohesive groups are less productive. When resistance to
organizational changes is greater and where proper leadership is not provided, such groups can affect productivity
severly. If management wishes to minimize productivity, it must build cohesiveness, which does not directly
influence productivity but only indirectly depending upon the alignment of group goals with the organizational
goals.

Chapter17:
Chapter 17 - Organisation
* Organisation
* Importance of Organisation
* Organisation Charts
* Decentralization of Authority
Q.1. Explain the term organisation. Why is it regarded as the foundation upon which the whole structure of
management is built?
OR
Define organizing. Explain the nature and process.
Meaning and Definition of Organisation
We live in the age of organisations. Modern civilization requires large aggressions of people working together to
produce the goods and services efficiently. Organisations are grand strategies created to bring order out of chaos
when works together. The structure resulting from three things is known organisation. (i) identifying and grouping of
work, (ii)defining and delegating authority and responsibility, and (iii) establishing relationships among those who
are engaged in performing group activities. Without defined relationships, there will be no organisation. Peter
Drucker rightly says, An institution (organisation) is like a tune it is not constituted by individual sounds but by the
relating between them. Organisation is a dynamic tool for interweaning six M's, Men, Money, Machines, Materials,
Methods and Markets. People work for organisation's objectives and manage its affairs for achieving them effectively
and efficiently.
Some important definitions of organisation may be given as follows:
Hodge and Johnson
An organisation can be thought of as a complex relationships among human and physical resources and work,
cemented together into a network of system.
James Mooney
Organisation is the form of every human association for attainment of a common purpose.
J.L. Massie
Organisation is the structure and process by which a cooperative group of human beings allocates its tasks among its
members, identifies relationship and integrates its activities towards common objectives.
George Terry

Organizing is the establishing of effective Behavioural relationships among persons so that they may work together
efficiency and gain personal satisfaction in doing selected tasks under given environmental conditions for the
purpose of achieving some goal or objectives.
Organisation Concepts
Every scholar has defined organisation from his own perception. But in all, there are three concepts of organisation as
follows:
1. Structure
2. Process
3. System
1. Organisation as a Structure
Weihrich and Koontz point out, Organisation implies a formalized intentional structure of roles or
positions. Organisation structure may be defined as the established pattern of relationships among the component
parts of an enterprise. In this sense, organisation structure refers to the network of relationships among individuals
and positions in an enterprise. It is the network of horizontal and vertical relationships among the members of group
designed to accomplish some common objectives. This network governs the activities of people in the form of a
social group. The horizontal dimension shows differentiation of job into departments, divisions or sections. The
vertical dimension reflects what is known as hierarchy or chain of command, of authority. The organisation structure
is the skeleton framework of business enterprise. Thus, the organisation structure implies the following things.
(a). Division of labour into group activities under departments, divisions or sections and also into various positions.
(b). Assignment of tasks and activities to different persons and departments.
(c). The formal relationships with well-defined responsibilities.
(d). The hierarchical relationships with allocation of authority between superior and subordinates - delegation and
decentralization of authority.
(e). Span of control with defined number of subordinates under a superior.
(f). Coordination among different departments and people.
(g). A set of policies, procedures, standards (goals) and methods of evaluation of performance, all formulated to guide
the people and their activities.
However, the actual operations and behaviour of people are not always governed by the formal structure of relations.
Hence, the formal structural arrangements are affected and modified by social and psychological forces combined
known as informal organisation.
2. Organisation as a System
Organisation as a system implies the component parts, each of which has its unique properties, capabilities and
natural relationships and thus all are interrelated and interdependent. Hence, system implies an arrangement and set of
relationships among multiple parts operating as a whole, each part being called a sub-system. Every sub-system is
itself a system composed of smaller interrelated parts of sub-system. The system produce synergic effect which
means that the sum of all the parts is greater then the whole i.e., 2 + 2 = more than 4. Organisation as a system also
implies that it is an open system, which means that it interacts with its environment for its survival, growth and
development. An organisation as a socio-technological system consists of the following components or elements:
(a). Inputs
The system takes certain inputs from its environment. These inputs are human resources, physical resources and
facilities, energy, supplies, technology and information.
(b). Processing or Transformation
Processing or transformation involves the utilization of the inputs through some specified technique to convert them
into outputs. A number of sub-systems are created for processing or transformations purpose, such as production,
finance, personnel and research and development. Interrelatedness and interdependence of all these sub-systems is

kept in mind.
(c). Output
The processing or transformation technique results in output that may be intended and unintended. Intended outputs
are usually called objectives or goals. For example, high productivity and efficiency we intended objectives. The
output may consist of goods and services. An unintended output may be informal relation among the group members.
(d). Distribution
For distributing the output to the target market or consumers, several sub-systems may be created, such as sales,
marketing, advertising, etc. Distribution may be done directly or through intermediaries known as wholesalers, semiwholesalers and retailers.
(e). Management
The management component of the organisation system is concerned with the determination and implementation of
processing and distribution activities in order to achieve system's goals. It involves planning, organizing, staffing,
directing and controlling.
(f). Feedback
For effective managing, feedback of information with regard to the quality, quantity, cost and time of system outputs
is necessary. It also helps in establishing and enforcing standards for desired results. It facilities corrective action
wherever needed in the system.
(g). Environment
The management components helps in coping with the environment, which is complex and fast changing in the
modern world. Management takes adequate steps needed for availing the opportunities and averting the threats in the
environment. If the organisation system intends to survive, grow and develops, it has to interact properly and
successfully with its environment.
3. Organisation as a Process
Organisation as a process is known as organizing. Weihrich and Koontz point out, Organizing is (1) the identification
and classification of required activities, (2) the grouping of activities of activities necessary to attain objectives, (3)
the assignment of each grouping to a manager with the authority (dilatation) necessary for coordination horizontally
(on the same or a similar organizational level) and vertically (for example, corporate, headquarters, division, and
department) in the organization structure.'

Q.2. What is the importance of Organisation?

Organisation is needed in order to avert the havoc of disorganisation. It may be briefly illustrated as follows: A short
sentence is disorganized like this,riirggnagesnoiztlsuse. In this form it is nonsense. If we reorganize it substantially, it
will look like this: Organizinggetsresults Now it is workable, but difficult. By a slight change, it reads: Organizing
gets results. Hence organization become important for management by results - for accomplishing our goals.
A sound organization contributes greatly to continuity, growth and development of an enterprise in the following
ways:
1. Facilities Administration
A properly designed organization facilitates both management and operation of the enterprise by helping in its smooth
functioning through various factors, such as well-defined areas of work for employees; effective delegation and
decentralization of authority; clear mutual relationships; good communication network; coordination of the activities
of individuals, groups and units, adequate and control.
2. Facilitates growth, expansion and diversification
A sound organization structure is flexible enough to accommodate future changes with regard to growth expansion
and diversification of enterprise's activities. Besides, certain organization practices are developed which lead the
business enterprise to expand and diversify.
3. Permits Optimum Utilization of Resources

Sound organisation permits optimum use of technological improvements and human resources and efforts (right
persons being placed in right positions on the basis of their skills, knowledge and experience). It develops competent
people through the facility of appropriate effective training and promotion opportunities.
4. Stimulates Creativity
Specialization provides individuals with well-defined duties, clear lines of authority and clearly defined
responsibilities. Delegation and decentralization makes it possible for superiors to assign routine and repetitive jobs
to their subordinates and to concentrate themselves on important issues in order to better exploit their own potential
and encourage the creative thinking and innovative skills of the people.
Q.3. What are Organization Charts? Discuss their advantages and limitations.
Organisation Charts
Organisation structure is represented primarily by means of a graphic illustration called an organisation chart. An
organisation chart is a diagram depiciting organisation's formal positions and formal lines of authority. In fact, it is
structural skeleton of an enterprise's heirarchy of management. Organisation charts are a means of avoiding conflict
by clarification. With their familiar pattern of boxes and connecting lines, these charts are used as a management tool
for deploying human resources.
An organization chart shows two dimensions of the structure: (a) the vertical authority structure, such as official
positions, span of management, heirarchy of command, etc and (b) the horizontal differentiation of work activities
such as work units or departments. It reflects the pattern of authority flow from top management to the lower levels.
It also shows managers, ranks and jurisdications, types of authority relationships, line, staff or functional communication lines throughout the organization, the number of levels in the managerial hierarchy, the span of
management and the relative status of different managerial positions and departments. Organisation charts also help
in reflecting as to who reports to whom - who is superior and who is subordinate, how many subordinates are
accountable to a superior and what are the avenue, open for advancement of a manager holding a particular position
in the chart.
The organisation structure can be diagrammed into an organization chart in three different ways:
(a). The traditional or conventional vertical chart shows the position of the chief executive at the top of a pyramid
form, from where the authority flows downward. The managers towards the top of the pyramid have more authority
than those who are towards the bottom.
(b). The horizontal chart originates from its left and proceeds to the right, depicting the chief executive's position at
the extreme left and placing the successively lower managerial positions towards the right end.
(c). The circular or concentric chart places and shows the chief executives position at its center and other middle and
lower level managerial position radiate from the center in concentric circles, the lowest managerial positions being
placed on the outermost circle.
The horizontal and circular charts represents a healthy departure to the extent that they de-emphasize the hierarchical,
i.e., bureaucratic nature of organisation structure. However, vertical charts are still common in practice. Normally, the
greater the height of a vertical chart, the smaller the span of management and the lower the height, the greater the
span of management. Organisation charts with little height are usually referred to as flat and those with much height
as tall.
Advantages of Organisation Charts
They are useful in several ways as follows:

Organisation chart is a means to indicate graphically how the managerial positions fit into the total
organisation and how they relate to each other.
It shows at a glance the lines of authority and reporting pattern.

It provides a conceptional background to identify inconsistencies and deficiencies and thereby helps in
deciding for further improving modifications to cope with future demands of the changing environment.
It serves as a reliable blueprint for newly recruited personnel who may understood the structure of the
organisation and the interrelationships among its various work units.
It provides a framework of personnel classification and evaluation systems.

Limitations of Organisation Charts

Organisation chart depicts only a static view of the organisation, while the organization is a dynamic
concept.
It shows only the formal relationships and fails to describe informal relationships in the organisation,
though informal relationships are equally important and significantly affect the functioning of the
organization.
It does not show the quality and content of the managerial relationships that actually exist in the
organization, but shows only the 'supposed relationships'. Thus, it fails to tell about the effectiveness of
various elements, processes, and other structural dimensions within the organization.
Organization charts become quickly outdated because they fail to incorporate into them the frequent
changes or alternations taking place in the organization structure and in the patters of authority and activity
relationships.

Q.4. What is meant by Decentralization of Authority?

Decentralization of Authority
Decentralization of authority means dispersal of decision - making power to the lower levels of the organisation.
According to Allen, decentralization refers to the systematic effort to delegate to the lowest level all authority except
that which can only be exercised at central points. Thus decentralization means reservation of same authority (power
to plan, organize, direct and control) at the top level and delegation of authority to make decision at points as near as
possible to where action takes place.
Decentralization is not same thing as delegation. Delegation means entrustment of responsibility and authority from
one individual to another. But decentralization means scattering of authority through the organization. It is the
diffusion of authority with in the enterprise. Delegation can take place from one person to another and be a complete
process. But decentralization is complete only when the fullest possible delegation is made to all or most of the
people.
Decentralization is distinct from dispersion
Dispersion occurs when plants and offices are located at different place with physical distance between them.
Performance of work in dispersed plants and offices does not necessarily lead to decentralization. A company may be
highly centralized although its physical facilities and employees are widely dispersed and company may be highly
decentralized even through all physical facilities and employees are located in a single building.
Distinction Between Delegation and Decentralization
The points of distinction between and decentralization are given below:
1. Delegation is a process of devolution of authority where as decentralization.
2. Delegation take place between a superior and a subordinate and is a complete process. It may consist of certain
tasks alone. But decentralization involves spreading out the total decision - making power.
3. In delegation control rests entirely with the superior or delegator but in decentralization, the top management may

exercise control only in a general manager and delegate the authority for control to the departmental manager.
4. Delegation is a must for management. Subordinates must be given sufficient authority to perform their assignments
otherwise they will come to the superior time and again even for minor decisions. However, decentralization is
optional in the sense that the top management may or may not decide to disperse authority.
chapter 18:
Chapter 18 - Staffing
* Staffing
* Importance of Staffing
* Principles of Staffing
* Selection Process
* Types of Interviews
Q.1. What do you understand by Staffing?
OR
Define Staffing. Describe the need and importance of Staffing function is an enterprise.
Meaning and Scope of Staffing
Early definition of staffing focused narrowly on hiring people for vacant positions in an enterprise. Today, staffing is
termed as human resource management and defined more broadly. Staffing may be defined as a managerial function
of attracting, acquiring, developing and retaining human resources in order to provide the talent necessary for work
activities leading to accomplishment of organizational objectives. This definition emphasizes that people are vital and
valuable resources requiring proper care and attention. Thus, staffing involves: filling up various managerial and nonmanagerial positions created in the organisation structure with qualified persons, upgrading the quality and usefulness
of the members of organisation for its success and its retaining the members by providing adequately for their welfare
and career advancement.
The staffing process involves job analysis, human resource planning, recruitment, selection, placement, orientation,
training and development, compensation performance appraisal, career development, promotion, transfer and
separation. In many organisations most of the aforesaid activities are handled by the Personnel Department, now
popularly known as Human Resource Management Department. It may be noted that staffing decisions and initiatives
are the basic responsibility of line managers. However, the personnel management department provides necessary
specialist services as well as supportive and administrative services to line managers for effective management of
human resources
Staffing is a continuous function of management because human resources continue to be a significant factor in
organizational success and therefore the organisation always needs to acquire and retain in proper form its personnel.
Moreover, employee welfare and development, expansion and diversification, promotion and transfers, demotions
and separations, retirement and death, modernization and change etc are common events continually taking place in
an organisation, rendering staffing a never ending process. Managers have to keep a regular watch on the number and
composition of people required by the organisation. The continuous nature of staffing is self-evident, as employees
need regular care, balance and development to be effective for contribution towards achievement of expected results.
Establishing and maintaining congruence between organizational goals and employees, personal goals is also an

important regular aspect of organisation's working. To keep a proper working climate is an ongoing responsibility of
personnel department.
Q.2. Describe the needs and importance of Staffing.
Need and Importance of Staffing
Progressive and successful organizations treat all employees as valuable human resources. Productivity and the
resultant financial reward are dependent solely on the quality and skill of people. Some organizations make up for
their lack of natural resources by their dedication to the maximum possible development of their human resources. If
employees are put first, they help the enterprise to prosper. Staffing function provides proper mechanisms for efficient
handling of personnel matters, including workers, grievances. Filed research indicates that employees tend to return
the favour when they are treated with dignity and respect. Specially, it is reported that professional employees kept
higher organizational commitment when their employer's human resource practice were perceived to be fair and just.
Staffing is responsible for creating such practices.
Activities
Staffing activities, though all derived from organisation strategy and structure, in turn activate the strategic
management and the structure. Strategic orientation in staffing function increases the chances of organizational
success.
Process
Staffing process and policies play a considerable role in acquiring right people at right time on right positions.
Effective staffing function strives to establish cost-benefit relationship while manning the positions in the
organisation structure - people are acquired at lower outflows for providing greater efforts, optimal contribution and
higher commitment.
Relationship
Staffing is important in its relationship with other managerial functions, because without their human resources,
organizations would remain empty skeletons that cannot move to achieve their goals. The functions of planning,
organizing, directing and controlling become nonstarters without people n the organisation. It is clear that the
effectiveness of other managerial functions depends on the degree of efficiency with which the staffing function is
done. An organisation is healthy, strong and successful to the extent that its people are capable, skillful and
committed. Further, the attitudes, orientations and performance of people partly depend on how efficiently the
staffing function is handled by the enterprise and how much attention top management gives to it.
Need
Staffing function takes care of the need for building a sound organisation. In a sense, organisation widely differs in
their quality and competence due to large variations in their human resources.
Q.3. Explain the principles of Staffing.
Principles
Staffing not only helps in acquiring right talent, but also strives for nurturing. There are no universally accepted

staffing principles. However, Heinz Weihrich and Harold Koontz have identified certain useful major principles or
guidelines for understanding and performing more effective staffing function.
1. Principle of the Objective of Staffing
The objective of managerial staffing is to ensure that those qualified personnel who are able and wiling to occupy
them fill organisation roles. There is considerable evidence of failure to achieve results when these qualities are
lacking.
2. Principle of Staffing
The clearer the definition of organisation roles and their human requirements and the better the techniques of
manager appraisal and training employed, the higher the managerial quality. Those organisations that have no
established job definitions, no effective appraisals and no system for training and development, will have to rely on
coincidence or outside sources to fill positions with able managers. On the other hand organizations applying the
systems approach to staffing and human resource management, will utilize the potentials of individuals in the
enterprise more effectively and efficiently.
3. Principle of Job Definition
The more precisely the results expected of managers are identified, the more the dimensions of their positions can be
defined. Since organizational roles occupied by people with different needs, these roles must have many dimensions such as pay, status, power, direction and possibility of accomplishment - that induce managers to perform.
4. Principles of Managerial Appraisal
The more clearly variable objectives and required managerial activities are identified, the more precise can be the
appraisal of managers against these criteria. This principle suggests that performance should be measured both
against verifiable objectives (as in an appraisal approach based on management by objectives) and against standards
of performance as managers. The appraisal of managers as manager considers how well the key managerial activities
within the functions of planning; organizing, staffing, directing and controlling are carried out.
5. Principle of Open Competition
The more an enterprise is committed to the assurance of quality management, the more it will encourage open
competition among all candidates for management positions. Violation of this principles has led many firms to
appoint managers with inadequate abilities. Although social pressures strongly favour promotion from within the
enterprise, these forces should be resisted whenever better candidates can be brought in from the outside. At the same
time, the application of this principle obligates the enterprise to appraise its people accurately and to provide them
with opportunities for development.
6. Principle of Management Training and Development
The more management training and development are integrated with the management process and enterprise
objectives, the more effective the development programmes and activities will be. This principle suggests that in the
systems approach, training and development efforts are related to the managerial functions, the goals of the enterprise
and the professional needs of managers.
7. Principle of Training Objectives
The more precisely the training objectives are stated; the more likely are the chances of achieving them. The analysis
of training needs is the basis for training objectives that give direction to development and facilitate the measurement
of the effectiveness of training efforts. This principle brings into focus the contribution that training makes to the
purpose of the enterprise and the development of individuals.
8. Principles of Continuing Development
The more an enterprise is committed to managerial excellence, the more it requires that manager practice continuing
self-development. This principle suggests in a fast-changing and competitive environment, that managers cannot stop

learning. Instead, they have to update their managerial knowledge continuously, revaluate their approaches to
managing and improve their managerial skills and performance to achieve enterprise results.
Q.4. Explain in detail the process of Selection.
OR
Discuss the various steps or elements involved in the Selection Process.
Selection Process Or Elements of Selection Process
The major steps involved in the selection process may be discussed as follows:
1. Filling in Application Form
This may be regarded as the first step of selection process. Candidates are supposed to provide complete information
about them in a prescribed printed form. It may require information regarding a candidate's name, father's name,
address, nationality, sex, marital status, religion, education qualifications, work experience, fields of extra-curriculum
activities, references of two eminent persons and so on. The application of the candidates provides the basis for
further analysis of the candidature and examination of his suitability for employment. The specific type of
information required in an application blank may vary from firm to firm any by positions within the organisation.
However, there is high degree of similarity with regard to general information sought in the application blanks of
various organisations. If properly used application blanks can be an effective aid in selection. However, their
usefulness is largely dependent on the accuracy of data and information furnished by the candidates. In their
eagerness to obtain work, some applicants may be tempted to stretch the truth concerning matters such as past
experience, responsibilities, salary and reasons for bearing the previous job. For this reason, many human resource
managers make it a point to query applicants further regarding these matters during the employment interview.
2. Preliminary Screening
This refers to initial assessment of basic suitability of candidates for the job positions. The human resource manage
sees whether the applicants meet the basic academic and other minimum requirements as to age, work experience,
etc. Such screening may be done by going through the data and information supplied in the application blanks or by
holding preliminary screening interviews. The basic objectives of preliminary screening are (i) to eliminate the
unsuitable candidates at an early stage, (ii) to reduce the overall cost of selection.
3. Employment Tests
Candidates, who are filtered through the initial screening, submit themselves to certain tests, formal or informal. Test
is a means of evaluating candidates knowledge, skills, experience, attitudes, aptitudes, personality, interest, capacity,
physical characteristics, level of mental ability, likes and dislikes and soon. In some cases, such as typing and
shorthand, computer knowledge and efficiency, etc., tests are the only way to determine the suitability of candidates
for the job.
There are several types of tests, which are widely used for selection purposes. They include; intelligence tests,
aptitude tests, personality tests, performance tests and so on. Written tests are found to be most popular in many
cases.
Tests provide a more objective, authentic and consistent basis for selection of right candidates. They help the
organisation in arriving at a judgement on the likely work behaviour and performance of candidates. However, certain
conditions should be met if tests are to be used for employee selection. First, the tests should be reliable. In other
words, they should provide consistent results. Secondly, tests should be valid. In other words, they should measure
what they are designed to measure. If a test is designed to predict job performance, prospective employees who score
well on the test, should prove to be objective when different scorers interpreting the results of the same test, arrive at
similar interpretations. Finally, tests should be standardized. This requires them to be administered under standard
conditions to a large group of persons. The purpose of standardization is to obtain norms; therefore specific test
scores will be meaningful when compared to other scores in the group. If a test cannot indicate the ability to perform
the job, it must not be used.
Testing helps in achieving the most efficient matching of applicants with jobs. From a social standpoint, testing that is
job-related, serves the objective of equal employment opportunity, to which modern societies are increasingly

committed. Thus, it is vital that organisations have a thoughtful process for validating any selection tests they use. No
doubt, testing is a complex, time consuming and expensive process.
4. Employment Interview
Although employment tests provide a lot of valuation information and insight about the candidate, they do not
provide a complete set of information and knowledge required about a candidate. The interview helps in evaluating
information obtained from the application blank and tests. It provides an opportunity to the interviewer to integrate
different pieces of information through his personal impressions and observations of the interviewee so as to such a
decision regarding the suitability of the applicant for employment. Thus, the combination of tests and in view
provides better results in selection. It allows applicants to obtain additional information about the prospective
employer.
An employment interview is part of almost every selection process. It is the most important step in selection. This is
because an interview enables the selectors to get a first hand idea of the personality of the candidate, their gestures,
communication skills, general skills, mannerisms, reactions, presence of mind and confidence. Further more an
interview presents an opportunity for both the organisation and the job applicant to "sell" themselves to one another
and to establish their mutual expectations. However, for such expectations to be accurately established, it is essential
that employment interview he as realistic as possible. In order to prevent unrealistic expectations, disillusionment and
feelings of being misled in new employees, which may result in lack of job commitment and early turnover (leaving
the organisation), interviewees should be told negative as well as positive aspects of a position, so that the applicants
who view such negative aspects as unacceptable, can remove themselves from further consideration. Those who
remain will represent a recruitment pool with accurate job expectations. Research by John P. Wanous (1980) suggests
that such "realistic recruitment" contributes significantly to reducing employee turnover.

Q.5. Describe the various types of interviews.

Types of Interviews
In general, there are several types of interview's, which may be briefly discussed as follows:
1. Unstructured Or Non-Directive Or Informal Or Traditional Interview
In an unstructured interview, there are no predetermined questions or prearranged sequence of topics for discussion.
Consequently, by design unstructured interviews are highly flexible and informal - no fixed questions format or
systematic scoring procedure. Interviewers are free to probe into those areas seeming to deserve further investigation
and to adapt (alter) their approach to the prevailing situation, as well as to changing stream of job applicants.
Spontaneity characterizes this type of interview. Its direction is large determined by a job applicant's answers. To be
effective, an unstructured interview requires highly skilled and trained interviewers. Experience shows that, if
properly conducted, an unstructured interview can lend to significant job-related insights. However, such interview is
highly susceptible to distortion, bias, inconsistency and difficult verification of its results.
2. Structured Or Patterned Interview
Structured interviews are recommended as alternative to traditional unstructured or informal interview. A structured
interview may be defined as a series of job-related questions with standardized answers that are consistently applied
across all interviews for a particular job. In this interview standardized questions are asked from all applicants for
certain jobs and a standard form is used for recording responses. Standardization permits easy comparison of
candidates. It also helps in achieving and proving validity. Of Course, no interview can be completely unstructured or
nondirective and it is hard to conceive of an interview that is totally structured or patterned.
Generally, structured interviews are constructed, conducted and scored by a committee of three to six members so as
to try to eliminate bias. The structured interviews are more likely to provide consistent and reliable information from
the various interviewers. Furthermore, if the specific interview questions in a format are drawn from an accurate job
analysis, then structured interviews are also more likely to be valid. However, such interviewers have limited

flexibility. The unstructured interview format (form) restricts adaptation (alteration) to unusual circumstances or
unusual interviews. Such interviews do not afford the opportunity to the applicants to demonstrate their job
knowledge, communication skills, etc.
3. Stress Interview
Most interviews try to place interviewees at ease. However, the opposite is true in the stress interview. It is
specifically intended to determine a job applicant's interviewer purposefully attempts to create a climate of
intimidation (threat), criticism and ridicule (mockery or making some one appear foolish or worthless). The purpose
is to deserve the interviewee's reaction to stress and tension. This approach is based on the theory that certain
personal traits, for example, emotional stability, can be deserved only when an individual is placed in stressful
surroundings. Thus, an interviewer may deliberately interrupt an applicant in his mindsentence, cast aspersions on an
applicant's character, remain silent for protracted (longer) periods of time and adopt a hostile posture in an attempt to
create a pressurized situation.
The extent which stress interviews are useful is debatable. Some justify its use when the concerned job position is
particularly stressful, for example, law enforcement officer, airline pilot, sales representative, or fire fighter. However,
some critics contend that the kind of stress created in an interview is rarely similar to that found on a job. Moreover,
there are not very many positions in which the ability to cope with stress in a primary characteristics.
4. Group Interview
Interview also differs according to how many interviewers and applicants are involved. Normally, job applicants meet
with interviewers one-on-one, i.e., individually. However, in the group interview, several applicants questioned
together by one or more interviewers. A small group of fine or six candidates is observed and evaluated in group
discussions and interactions, by the selectors.
5. Series Interview
For certain types of jobs, especially managerial jobs candidates may be required to go through a series of interviews
of a progressively rigorous nature.
6. Board Interview
For important jobs, especially those of a political nature the board interview may be used. Here several interviewers,
often members of a government board or committee, quiz one or more candidates.
Chapter 12 - Span of Management
* Span of Management
* Modern view of Span of Management
Q.1. What do you understand by Span of Management? Explain the factors that determine the Span of Management.
What is the impact on Organization?
OR
The Span of Management is the corner stone concept in traditional Management theory. Do you agree?
Meaning of Span of Management
The term Span of Management is also known as Span of Control or Span of Authority or Span of Supervision. Simply
stated Span of Management means the number of subordinates that a manager can effectively manage. This concept
implies that the number of subordinates directly reporting to a superior should be limited so as to make supervision
and control effective, because executives have limited time and ability. It is an accepted proposition that the larger the
number of subordinates reporting directly to a manager, the more difficult it will be for him to supervise and
coordinate their activities effectively.

What is an Ideal Span?

It is sometimes suggested that the span of management should neither be too wide nor too narrow. Then, the question
arises as to how many persons a supervisor can manager effectively. Some experts tell that the ideal span is 4 at
higher levels and 8 to 12 at lower levels. But the number of subordinates cannot be easily determined because the
nature of jobs and capacity of individuals vary from organization to organization.
Classical View of Span of Management
The first person to draw attention to the principle of span of management was a British General, Sir Iaan Hamilton
(1920) who said that the average human brain can be effective in handling from 3 to 6 other brains. After a lengthy
study of military organisations, he concluded that the span should be smaller at the top of the organisation, where
thought processes were more complicated and that it should set progressively larger toward the lower levels, where
thought processes were less complicated and more routine.
V.A. Graicunas (1933) suggested that as the number of subordinates increases arithetically, the number of potential
relationships, between the superior and subordinates increases geometrically. For example, Graicunas indicates that if
a superior manages 2 subordinates, there are actively 6 different relationships. Thus, he pointed out that an increase in
the number of subordinates causes almost an explosive growth in the number of possible relationships. Hence, only
number of bodies in a span should not be counted, but the multifarious relationships generated by the numbers must
also be recognized while deciding for the span of individual manager.
Classical writers advocated a span of control ranging from 3 to 7 or 8 persons at the higher levels and a span of 20 to
30 persons at the lowest level.
Q.2. Describe the modern view of Span of Management.
Modern View of Span of Management
Contingency Or Situational Approach (Factors Determining Span of Management
The evidences indicate that spans of control cannot be stated in absolute terms as done by the classical scholars.
There is no correct span for all situations. The predominant current view is to look for the causes of limited span in
individual situations, rather than to assume that there is a given numerical limit generally applicable to all.
Pragmatically speaking, a really proper span of control is one that is not improper.
Modern Approach has shifted away from trying to find out a universal formula of span of management. Instead of
emphasizing absolute spans (specific numbers), the current view is that span is more flexible thing, and there is no
one correct span for all situations. The appropriate number of span of control for a particular manager is contingent
on several factors that may be discussed as follows:
1. The Capacity and Ability of the Superior
The personal abilities and influence of the superior (manager) play an important role in determining the number of
subordinates that can be effectively supervised by him. If the superior possesses qualities of leadership, decisionmaking ability, communication skill, motivating strength and time management expertise, in greater degree, that the
span of control may be wider. In other words, if the superior (executive) can comprehend problems quickly, can get
along well with people and can command loyalty and respect from the subordinates, then he can supervise a large
number of subordinates effectively.
2. The Capacity and Skill of Subordinate
In case the subordinates are competent, well trained, experienced and have good judgement, initiative and a sense of
obligation, then they seek less guidance from their superior and therefore the superior manager will be in a position to
supervise a large number of subordinates. On the other hand, if the manager has no confidence in the capacity and
caliber of his subordinates, then the span will be restricted to be narrow.'
3. Nature and Importance of Work Supervised

If the work is simple and repetitive, the span of management may be wider, because it does not require much
attention and time on the part of the superior. On the other hand where the subordinate's job is complex requiring
close supervision by the superior, then the number of persons under him should be narrow or small. Such
characteristics generally indicate whether jobs are easy or complicated, dissimilarity of jobs assigned the number of
new problems that may be encountered, the need for frequent consultations and communication, the physical
dispersal of jobs, geographically location of members, nature of decision making by the subordinates and so on. The
more a subordinate's job involves unpredictability, variety, discretion and responsibility, the smaller span is likely to
be.
4. Clarity of Plans and Responsibility
If the plans and policies are clear and easily understandable and if the functions and responsibilities are laid down in
as definite terms as possible, the the task of supervision is easier and the span of management can be wider because
the subordinates need not go to superior frequently for orders, instructions and guidance.
5. Degree of Decentralization
If there is proper delegation and decentralization of authority, then the superior can successfully supervise a large
number of subordinates, because in that case he has not to take any decisions himself and merely provides
encouragement and occasional direction. In case of centralization of authority, the span will be narrow.
6. Staff Assistants
When staff assistants (experts) are employed to advise and serve the superiors and the subordinates, then contract
between the superior and the subordinates may be reduced and the span be broadened.
The Impact of the Span of Organisation
The actual span of supervision affects the organisation in different ways. The structure of organisation produced by
the narrower span is called tall organisation, and the wider span produce what is known as flat organisation. The
narrow span requires multiple levels of supervision and hence longer time for communication. Tall organisation is
more expensive and complicates the process of communication and integration. A narrow span results in harassed
subordinates and frustrated superiors. However, a narrow span enables managers to exercise close supervision and
control and wherever these are needed, the narrow span is better suited.
Conversely, a wider span results in fewer levels of supervision. The flat organisation facilitates better communication
and coordination, but it permits only general supervision due to the limited availability of time. The wide span results
in harassed superiors and frustrated subordinates.
Robert House and John Miner (1969) have summarized the entire question of span of management as follows:
1. Under most circumstances the optional span is likely to be in the range of 5 to 10.
2. The larger spans (say 8 to 10) are most often appropriate at the highest policy making levels of an organisations.
3. The number of effective spans of first-line supervisors is contingent upon the technology of organisation.
4. Appropriate span for specific situations depends on a set of local factors (for example, task, interdependencies and
leadership skills).