INDIAN INSTITUTE OF MODERN MANAGEMENT (IIMM)

Registration No. : IIMM/DH/1/2007/5516

ASSIGNMENT:-PRINCIPLES & PRACTICES OF MANAGEMENT (PPM)

Question 1.(a) Describe the functions of a manager as applicable to an Industry, also amplify
coordination as a task of the manager.

(b)Henry Fayol is regarded as “Father of modern management theory.” What are various
groups, in which Industrial activities can be divided, support your answer be the figure
diagram.

Answer 1. (a) The Functions of Managers

Planning

Planning involves selecting missions and objectives and the actions to achieve
them, it requires decision makin, that is, choosing future courses of action from
among alternatives. No real plan exists until a decision-a commitment of human or
material resources or reputation has been made.

Organizing

Organizing involves establishing an intentional structure of roles for people to

fill in an organization. It is intentional in the sense of making sure that all the tasks
necessary to accomplish goals are assigned and, it is hoped, assigned to people who
can do them best.

Staffing

Staffing involves filling and keeping filled the positions in the organization
structure. This is done by identifying work- force requirements; inventorying the
people available; and recruiting, selecting, placing, promoting, appraising, planning
the careers of, compensating, and training or otherwise developing both candidates
and current job holders so that tasks are accomplished effectively and efficiently.

Leading

Leading is influencing people so that they will contribute to organization and

group goals; it has to do predominantly with the interpersonal aspect of managing.
Leading involves motivation, leadership styles and approaches, and communication.

Controlling

Controlling is measuring and correcting individuals and organizational

performance to ensure that events conform to plans. It involves measuring
performance against goals and plans, showing where deviations from standards exist,
and helping to correct them.

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Coordination

Coordination is the essence of manager ship, for it achieves harmony among

individual efforts toward the accomplishment of group goals. Each of the managerial
functions is an exercise contributing to coordination.

Coordination as a task of the Manager

Individual often interpret similar interests in different ways, and their efforts
towards mutual goals do not automatically mesh with the efforts of others. It thus
becomes the central task of the manager to reconcile differences in approach, timing,
effort, or interest and to harmonize individual goals to contribute to organization
goals.

Coordination is the orderly synchronization or fitting together of the

interdependent efforts of the interdependent efforts of individuals in order to attain a
common goal. Coordination is an essential part of all the managerial functions of
planning, organizing, leading and controlling.

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Answer 1. (b) Henri Fayol, referred to as “The Father of modern management theory”, published his
observations on the principles of general management in 1916 in French under the
title “Administration Industrielle at Ge’ne’rale”.

Fayol found that activities of an industrial undertaking could be divided into six
groups, as shown in Fig. These groups are :

1.Technical (Production),
2.Commercial (buying, selling and exchanging),
3.Financial (Search for and optimum use of capital),
4.Security (Protection of property and persons),
5.Accounting (including statistics) and
6.Managerial (Planning, Organization, command, Coordination and Control).

Financial

Security
Convencial

Manager’s
Activities

Technical
Accounting

Managerial

- Planning
- Organizing
- Command
- Coordination
- Control

Fayol listed fourteen principles of Management based on his experience. These are:

1.Division of work

This is the specialization that economists consider necessary for efficiency in

the use of labour.

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2.Authority and responsibility

The two are related, with responsibility arising from authority.

3. Discipline

Discipline is seen as a “respect for agreements which are directed at achieving

obedience, application, energy and the outward marks of respect, “requiring
good supervisors at all levels.

4. Unity of Command

This means that employees should receive orders from one superior only.

5.Unity of Direction

According to this principle, each group of activities with the same objective
must have one head and one plan.

6.Subordination

Subordination of individual to general interest. When the two are different,

management must reconcile them.

7. Remuneration

Remuneration and methods of payment should be fair and afford the

maximum possible satisfaction to employees and employer.

8. Centralization

This principle refers to the extent to which authority is concentrated or

dispersed.

9.Scalar Chain

This “Chain of Superiors” from the highest to the lowest ranks should be
short circuited only when, to follow, it would be detrimental to the interest of
the organization.

10.Order

This is essentially a principle of organization in the arrangement of things and

people.

11.Equity

Managers should apply a combination of kindness and justice when dealing

with subordinates so as to elicit loyalty and devotion from personnel.

12.Stability of tenure

For higher motivation and morale there should be job security. Unnecessary
turnover is both the cause and effect of bad management.

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13.Initiative

Initiative is the thinking out and execution of a plan. Fayol exhorts managers
to “Sacrifice personnel vanity” in order to permit subordinates to exercise it.

14.Esprit de Corps

This is the Principle that “in union there is strength”. It emphasis the need for
teamwork and the importance of communication in obtaining it.

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Question 2. (a) Explain the modern management thoughts, also give out Mc Kinsey’s 7-S frame work
for management analysis.

(b) Planning in an Industry occupies an important place for all managers, write types of
Plans as applicable to various industries.

Answere. 2 (a)A Management theory Jungle

The variety of approaches to management analysis, the amount of research,

and the number of differing views have resulted in much confusion as to what
management is, what management theory and science is, and how managerial events
should be analyzed. Koontz has called this situation “The Management Theory
Jungle”.

Some approaches to management are discussed below:-

The systems Approach

The systems concepts have broad applicability. Organizations are open

systems i.e. systems have boundaries, but they also interact with the external
environment. This approach recognizes the importance of studying interrelatedness of
planning, organizing and controlling in an organization as well as the many
subsystems.

Contingency or Situational Approach

According to this approach, managerial practice depends on circumstances a

contingency or a situation. Contingency theory recognizes the influence of given
solutions or organizational behavior patterns. Managers have long realized that there
is no one best way to do things, but it can be very complex and difficult to determine
all relevant contingency factors and show their relationships.

Mc KINSEY’S 7-S FRAMEWORK

The 7-S framework for management analysis was developed by the consulting
firm of McKiniey + Company. The seven S’s are :

1. Strategy : Systematic action and allocation of resources to achieve

company aims.

2. Structure: organization structure and authority / responsibility

relationships.

3. Systems : Procedures and processes such as information systems,

manufacturing processes, budgeting and control processes.

4. Style : The way management behaves and collectively spends its time
to achieve organizational goals.

5. Staff : The people in the enterprise and their socialization into the
organizational culture.

Operational Approach

This approach draws together concepts, principles, techniques and

knowledge from other fields and managerial approaches and integrates these
approaches with science and theory that is practical.
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 It develops classification systems built around the managerial
functions of planning, organizing, staffing, leading and controlling.

The operational approach recognizes that there is a central core of

knowledge about managing that is pertinent only to the field of management.
Such matters as line and staff departments, managerial appraisal and various
managerial control techniques involve concepts and theories found only in
situations involving managers. In addition, this approach draws on and
absorbs knowledge from other fields, including systems theory, decision
theory, theories of motivation and leadership, individual and group behavior,
social systems and cooperation and communication as well as the application
of mathematical analysis and concepts.

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Answer.2. (b) The principle of efficiency of plans states “The efficiency of a plan is
measured by the amount it contributes to purpose and objectives as offset by the costs
required to formulate and operate it and by unsought consequences.”

Plans are efficient if they achieve their purpose at a reasonable cost, when
cost is measured not only in terms of time or money or production but also in the
degree of individual and group satisfaction.

Type of Plans

1. Missions or purpose

The mission, or purpose, identifies the basic function or task of an enterprise

or agency or any part of it.

2. Objectives or goals

Objectives or goals are the ends toward which activity is aimed. They
represent the end point toward which planning, organizing, staffing, leading
and controlling are aimed. While enterprise objectives are the basic plan of
the firm, a department may also have its own objectives. Its goals contribute
to the attainment of enterprise objectives, but the two sets of goals may be
entirely different.

3. Strategies

Strategy is defined as the determination of the basic long-term objectives of

an enterprise and the adoption of course of action and allocation of resources
necessary to achieve these goals. The purpose of strategies is to determine and
communicate, through a system of major objectives and policies, a picture of
the kind of enterprise that is envisioned. Strategies do not attempt to outline
exactly how the enterprise is to accomplish its objectives, but they furnish a
framework for guiding, thinking and action.

4. Policies

Policies define an area within which a decision is to be made and ensure that
the decision will be consistent with, and contribute to, and objective. Policies
help decide issues before they become problems, make it unnecessary to
analyze the same situation every time it comes up, and unify other plans, thus
permitting managers to delegate authority and still maintain control over what
their subordinates do.

5. Procedures

Procedures are plans that establish a required method of handling future

activities. They are chronological sequences of required action. They detail
the exact manner in which certain activities must be accomplished.

6. Rules

Rules spell out specific required actions or nonactions, allowing no discretion.

They are usually the simplest type of plan. Rules are unlike procedures in that
they guide action without specifying a time sequence. A procedure might be
looked upon as a sequence of rules. A rule, however, may or may not be part

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 of a procedure. The essence of a rule is that it reflects a managerial decision
that some certain action must, or must not, be taken.

7. Programs

Programs are a complex of goals, policies, procedures, rules, task

assignments, steps to be taken, resources to be employed and other elements
necessary to carry out a given course of action and are ordinarily supported by
budgets. A primary program may call for many supporting programs.

8. Budgets

A budget is a statement of expected results expressed in numerical terms. It

may be referred to as a “numberized” program. The major advantage of
budgeting is that it makes people plan; because a budget is in the form of
numbers, it forces precision in planning. A budget may be expressed in
financial terms; in terms of labour-hours, units of product, or machine-hours;
or in any other numerically measurable term. It may deal with operations; it
may reflect capital outlays, or it may show cash flow.

Budgets vary considerably in accuracy, detail and purpose. Some budgets

vary according to the organization’s level of output; these are called variable
or flexible budgets.

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Question 4. (a) Describe the major principles of Organizing.

(b) What do you understand by Matrix Organization, mention advantages and

disadvantages of Matrix Organization?

Answer 4. (a) Major Principles of Organizing

There is considerable agreement among management scholars and

practitioners about a number of principles underlying the science of organizing. These
principles are truths of general applicability and are more in the nature of essential
criteria for effective organizing. The most essential guiding principles of organizing
are summarized below:-

1. Principle of Unity of Objectives

An organization structure is effective is it enables individuals to contribute to

enterprise objectives.

2. Principle of Organizational Efficiency

An organization is efficient if it is structured to aid the accomplishment of

enterprise objectives with a minimum of unsought consequences or costs.

3. Span of Management Principle

In each managerial position, there is a limit to the number of persons an

individual can effectively manage, but the exact number will depend on the
impact of underlying variables.

4. Scalar Principle

The clearer the line of authority from the ultimate management position in an
enterprise to every subordinate position, the clearer will be the responsibility
for decision making and the more effective will be organizational
communication.

5. Principle of Delegation By Results Expected

Authority delegated to all individual managers should be adequate to ensure

their ability to accomplish results expected.

6. Principle of Absoluteness of Responsibility

The responsibility of subordinates to their superiors for performance is

absolute and superiors cannot escape responsibility for the organization
activities of their subordinates.

7. Principle of Parity of Authority and Responsibility

The responsibility for actions cannot be greater than that implied by the
authority delegated, nor should it be less.

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8. Principle of Unity of Command

The more complete an individual’s reporting relationships to a single superior,

the smaller the problem of conflicting instructions and the greater the feeling
of personal responsibility for results.

9. Authority Level Principle

Maintenance of intended delegation requires that decisions within the

authority of individual managers should be made by them and not be referred
upward in the organization structure.

10. Principle of Balance

The application of principles must be balanced to ensure the overall

effectiveness of the structure in meeting enterprise objectives.

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Answer 4. (b) In a matrix organization, the functional and project of product patterns of
departmentation are combined in the same organization structure.

This kind of organization occurs frequently in marketing (for example,

planning and executing an advertising campaign for a major new product) in the
installation of an electronic data processing system, etc.

Functional departments are permanent fixture of the matrix organization; they

retain authority for the overall operation of their respective units. Product departments
or project teams are created as the need arises for them, that is, when a specific
programme requires a high degree of technical skill in a concentrated period of time.
Members of a project team are assembled from the functional departments and are
placed under the direction of a project team are assembled from the functional
departments and are placed under the direction of a project manager. The manager for
each project is responsible and accountable for its success and has authority over the
other team members for the duration of the project. On the completion of the project,
the members of the team, including the project manager revert back to their respective
departments until the next assignment to a project.

Advantages:-The problem of coordination is minimized because the project manager

acts as an integrator to relate personnel from diverse disciplines.

1. There is a reservoir of specialists which ensures availability of

expertise to all projects on the basis of their need.

2. There is economy in the cost. Each project is assigned only the

number of people it needs, avoiding unnecessary surplus.

3. There is an effective information decision system which enables

members to respond quickly to the change in product needs.

4. Is oriented towards end results.

5. Professional identification ias maintained.

6. Pinpoints product – profit responsibility.

Disadvantages

1. A state of conflict exists between functional and project managers, as

both compete for limited resources.

2. Role conflict, role ambiguity, and role overload may result in stress
for the functional and project managers as well as for the team
members.

3. An imbalance of authority and power, as well as horizontal and

vertical influence of the project and functional managers, can also
lead to problems in matrix organization.

4. Because of the potential conflicts, managers may want to protect

themselves against blame by putting everything in writing, which
increases administration cost.

5. Matrix organization requires many time consuming meetings.

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Question 5. (a) Enumerate broad categories of HRA models, What are the advantages of Human
Resources Accounting to an Organization.

(b) Define motivation, differentiate between motivation and satisfaction. What are the
special motivation techniques?

Answer 5. (a) HRA models fall into three broad categories, which are:

1. Historical cost models

Historical cost models are structured to collect and record

expenditures for acquiring, allocation, and developing people to perform tasks
within an organization. The cost outlays are then amortized over appropriate
periods. The methods parallel the traditional accounting methods of recording
information on the purchase and installation of equipment.

2. Present Value Models

Present value models, also known as economic value models, attempt

to discount the future contributions of employee to the earning of the firm at a
specified rate to arrive at a present value of “The Human element” of the
organization. The steps involved are:

(a) To estimate the future earnings stream of the firm.

(b) To determine what portion of that stream represents services

contributed by the employees.

(c) To select a specific discount rate-most commonly, the cost of capital.

(d) To calculate the present value of those futures contributions less the
cost of acquiring, developing, maintaining and utilizing human
resources.

(e) To devise a method of recording, reporting and utilizing the resulting

information in a manner that is useful and understandable to
management and possibly to external parties.

3. Human Organization Models

These models generally attempt to assess the attitudes, perceptions,

motivations, interrelationships and interaction capabilities of the employees in
the organization. They focus on an element of human value not found in other
models; they assess the value of an organization’s synergism where the total
output of the system is greater than the sum of its individual parts.

The foremost proponent of this method is Rensis Likert. He said that a

firm may predict shifts in performance (“end result”) variables by
approximately two years by measuring and analyzing “casual” and
“intervening” variables. Likert felt that a monetary value could be placed on
the human organization by developing predictive models over time, which
would measure the impact of changes in casual or intervening variables,
which are normally measured in monetary terms. Likert used the survey
feedback method, which employs extensive questionnaires to measure casual
and intervening variables.
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Benefits of Human Resource Accounting to Organizations

1. Enables the manager to better express the impact of human resources on the
performance of the company.

2. Aids in evaluating different corporate strategies like manpower changes,

expansion etc.

3. Develops a more complete and accurate capital budgeting system and

improves the quality of return on investment figures.

4. Alters the behavior and attitudes of managers especially if included in their

evaluation.

5. Enables the manager to better utilize the scarce resources of human services.

6. Allows top management to evaluate the custodianship of human resources by

managers.

7. With increasing pressure for social responsibility, serves as a vehicle for firms
to evaluate their performance in human resource management.

8. Tends to change the conceptual approach to the management of people by

highlighting their value to the organization in a regular and systematic
fashion.

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Answer 5. (b) Motivation is the need or drive within an individual that drives him or her towards
goal-oriented action. The extent of drive depends on the perceived level of
satisfaction that can be achieved by the goal.

According to Hellriegel and Slocum, Motivation is “a predisposition to act in a

specific goal directed manner.”

According to Gibson, Motivation may be defined as “the state of an individual’s

perspective which represents the strength of his or her propensity to exert effort
toward some particular behavior.”

These definitions have several common denominators to help us characterize the

motivation phenomenon:

1. An internal need energizes and activates behavior;

2. Drive is the inner force that propels behavior in a specific direction;

3. Goals are the incentives or payoffs that reinforce private satisfactions that in
turn reinforce the perpetuation of needs.

DIFFERENCE BETWEEN MOTIVATION AND SATISFACTION

Motivation refers to the drive and effort to satisfy a want or goal.

Satisfaction refers to the contentment experiences when a want is satisfied. In

other words, motivation implies a drive toward an outcome, and satisfaction is the
outcome already experienced.

Work and Motivation

Work itself is an extremely important consideration in motivation. Work is

regarded differently by different people. The vast majority perform it essentially for
what they believe they are getting from it; that is, doing the work is, in the ultimate,
related to the personal goals of the individual. A person tends to work, with zeal if the
satisfaction from the work is high and in keeping with what the person wants.

Over the long term, work cannot supply an instrumental act to acquire a
material possession. In the ultimate, a person wants work that is personally
meaningful; when this is lacking, motivational efforts are extremely difficult to attain.

The four major aspects of work that are important to an employee are:

1. The general nature of the work its challenge and the use it requires of one’s
talents.

2. Freedom to perform the work, to use personal ideas, to feel vital in the efforts
that bring about work accomplishment, and to make decisions about the work.

3. Opportunity to grow and to develop through training, and feedback on

performance, and to receive a reasonable variety of assignments.

4. Recognition of work achievement in a forthright, similar and timely manner.

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SPECIAL MOTIVATIONAL TECHNIQUES

1. Money :

Money is often more than monetary value; it can also mean status or power.
Money can never be overlooked as motivator, but managers must remember
several things before they can fully realize the potential of money as a
motivator.

2. Participation :

Participation can be formally defined a both mental and emotional

involvement of a person to make contributions to the discussion-making
process, especially on matters in which personal involvement of the person
exists, and to assume one responsibility for them. The motivational basis is
that people management action taken.

4. Results Management :

Results management, properly handled, is highly motivational. Each

employee actively engages in determining his or her own objectives. How the
person intends to achieve them, with final approval of the superior, and the
evaluation of the subordinates efforts based on results using the employee’s
subjective as the standard have tremendous built in motivational qualities. The
required self-appraisal of the person’s abilities helps that person to realize
where his or her strength or weakness lies and to behave accordingly.

5. Multiplier Manager :

A Manager who sees himself primarily as a multiplier of others promotes

motivation. A multiplier manager acts in the context of how his behavior
assists other in the work group to do a better and more effective job.

6. Effective criticism :

This can be a springboard for improving an employee’s behavior and

performance. Adopting a positive approach makes criticism less difficult as
well as more effective. The superior should examine his or her own motives
before criticizing. He or she should be sure to plan what is going to be said in
order to make the content and presentation the best possible. It also helps to
know whether a consistent behavior matters or merely a one-time occurrence
is being dealt with.

6. Zero Defects :

Zero defect (ZD) programme have been designed to motivate employees to

adhere consistently to high standards of work excellence. The goal is to make
the defects zero by avoiding mistakes, oversight, unreliable products, and
delivery delays. ZD programmes rely on recognition of the importance of the
human element and the self-will of personnel to want to do outstanding
quality work. It emphasizes self-motivation to acquire pride and workmanship
and to manufacture acceptable quality products.

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Question 6. Write Short Notes on Any Five :-

(a) Job Enrichment and Job Enlargement

(b) Leadership Behavior and Styles.

(c) Barriers to Good Communications.

(d) Requirements of Effective Controls.

(e) Programme Planning & Budgeting.

(f) Formal & Informal Organizations.

(g) Bonded rationality

Answer 6.

(a) Job Enrichment and Job Enlargement

Job enlargement attempts to make a job more varied by removing the dullness
associated with performing repetitive separations. It means enlarging the scope of the
job by adding similar tasks without enhancing responsibility.

LIMITATIONS OF JOB ENRICHMENT

1. Technology:

With specialized machinery and assembly line techniques, it may not

be possible to make all jobs very meaningful.

2. Costs:

Attempts to make the job challenging may not be cost effective.

3. Worker attitudes:

There is also some question as to whether workers really want job

enrichment, especially of the kind that changes the basic content of
their jobs. Various surveys of worker attitudes show that what they
seem to want above all is job security and pay. Workers are concerned
that changing the nature of tasks to increase productivity may mean a
loss of job.

4. Skill Levels required:

The limitations of job enrichment are applicable mainly to jobs

requiring low skill levels. The jobs of highly skilled professionals
already contain varying degrees of challenge and accomplishments.
These could be enriched considerable more than they were best by
modern management techniques such a managing by objectives,
utilizing more policy guidance with delegation of authority, and tying
bonuses and other rewards more closely to performance.

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PROBLEMS WITH JOB ENRICHMENT

1. A major problem is the tendency of top managers and personnel

specialists to apply their own scale of values for challenge and
accomplishment to other people’s personalities.

2. Job enrichment is usually imposed on people. They are told about it,
rather than being asked whether they would like it and how their jobs
could be made more interesting.

3. There has been little or no support of job enrichment by union leaders.

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Answer.6.

(c) Barriers to Good Communications

Barriers to effective organizational communication cause breakdowns in

information exchange. The astute manager must be aware of these hindrances and
seek to dissolve their influence in the daily operation of the firm. These barriers are
discussed below:

1. Lack of openness

Communication is between persons and is subjected to all the influences that

condition human behavior. Foremost is the openness in the relationship
between the persons communicating.

2. Filtering

Employees often ten to refrain from communicating information that is

potentially threatening to them. As a result information is commonly distorted
as it ascends from the bottom to the top of an organization. Likewise, a
communication issued at the top management level may be considerable
altered by the time it reaches the bottom level.

3. Degree of motivating

When communicating, people have various motives to persuade, to tell, to

entertain, and to reinforce ideas. The enthusiasm displayed and the interest
shown definitely conditions the communication.

4. Assumptions

Another barrier is making and acting on unjustified assumptions. It is well to

be alert to the assumptions made, and the reader should not assume that the
receiver understands what she or he has been told. Mutual understanding must
not be taken for granted.

5. Fear

Fear is another consideration and plays as important part in communication

when emotionally loaded words like failure, strike, liar and defeat are used.
Fear can affect the translation of information.

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Answer.6.

(d) Requirements of Effective Controls

1. Tailoring control to plans and positions

All control techniques and systems should reflect the plans they are designed
to follow. In the same way, controls should be tailored to positions. Controls
should also reflect the organization structure. The more carefully controls are
designed to reflect the place in the organization where responsibility for
action lies, the more they will enable managers to correct deviations from
plans.

2. Tailoring controls to individual managers

Control system and information are intended to help individual managers

carry out their function of control, and therefore, must be tailored to
individual managers. People should get the information they need in a form
they will understand and use.

3. Seeking objectivity of controls

Effective control requires objective, accurate and suitable standards. A

manager’s personality must not influence judgment of performance and make
it less accurate.

4. Ensuring flexibility of controls

Controls should remain workable in the face of changed plans, unforeseen

circumstances, or outright failures.

5. Fitting the control system to the organizational culture.

To be most effective, any system or technique must fit the organizational

culture.

6. Achieving economy of controls

Controls must be worth their cost. Control techniques and approaches are
efficient when they bring to light actual or potential deviations from plans
with the minimum of costs.

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Answer.6.

(e) Programme Planning & Budgeting

Programme budgeting is basically a systematic method for allocating the

resources of an enterprise in ways that will most effectively help the enterprise to
meet its goals. But emphasizing goals and programmes to meet them, it overcomes
the ordinary weakness of all kinds on budgets of being too closely tied to the time
frames of accounting periods of months, quarters or years. By concentrating on goals
and programmes in light of available resources, it stresses the desirability of assessing
costs against benefits when selecting the best course towards accomplishing a
programme goal.

PPB is used primarily in government operations but is applicable to any kind

of enterprise. For most government agencies, programme budgeting has not been the
great tool in practice because of the following reasons:

(i) Many government executives, particularly in the middle and lower levels of
management, do not understand the philosophy and theory of the technique.

(ii) A major hurdle has been the lack of clearly defined goals.

(iii) Another difficulty is the lack of attention to planning premises.

(iv) Many government budgetary divisions are reluctant to make the change from
their practice and procedures of annual budgets to longer-range programme
budgets.

(v) Accounting data are often inconsistent with programme budgeting. There is
lack of information in many areas to make meaningful cost effectiveness
analysis.

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Answer.6.

(f) Formal & Informal Organizations

Formal Organization Informal Organization

1. It is a prescribed structure of roles and 1. It is a natural and spontaneous structure arising

relationships consciously coordinated towards a out of the social tendency of people to associate
common objective. and interact.

2. Its values, goals and tasks are predominantly 2. Its values, goals and tasks predominantly
oriented towards productivity, efficiency, growth center around individual and group satisfaction,
and so on. esteem, afficiation, etc.

3. It is well-defined in shape. Majority of formal 3. It is shapeless. There are a number of

organizations are pyramid shaped. Ranks of multidirectional, intricate relationships which
individuals are made clear by the use of titles. cannot be easily charted.
Communication is simple. One can easily chart
all relationships.

4. There is a prescribed, mostly written system of 4. There is an unwritten system of reward and
reward and punishment. Rewards can be both punishment. Rewards can be both monetary and
monetary and non-monetary. non-monetary like continuous membership,
social esteem, satisfaction, group leadership etc.
Punishments are isolation, censure, harassment
etc.

5. This organization is usually very enduring and 5. This organization is not very enduring, being
may grow to any size. dependent on the sentiments of members, which
often change. It also tends to remain small.

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