Biyani's Think Tank

Concept based notes

Business and Management

(BBA Part-I)

Ms. Prachi Sraivastava

Deptt. of Commerce & Management Biyani Girls College, Jaipur

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Published by :

Think Tanks Biyani Group of Colleges

Concept & Copyright :

Biyani Shikshan Samiti

Sector-3, Vidhyadhar Nagar, Jaipur-302 023 (Rajasthan) Ph : 0141-2338371, 2338591-95 Fax : 0141-2338007 E-mail : [email protected] Website :www.gurukpo.com; www.biyanicolleges.org

First Edition : 2009

While every effort is taken to avoid errors or omissions in this Publication, any mistake or omission that may have crept in is not intentional. It may be taken note of that neither the publisher nor the author will be responsible for any damage or loss of any kind arising to anyone in any manner on account of such errors and omissions.

Leaser Type Setting by : Biyani College Printing Department

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Preface

am glad to present this book, especially designed to serve the needs of the

students. The book has been written keeping in mind the general weakness in understanding the fundamental concepts of the topics. The book is self-explanatory and adopts the Teach Yourself style. It is based on question-answer pattern. The language of book is quite easy and understandable based on scientific approach. This book covers basic concepts related to the microbial understandings about diversity, structure, economic aspects, bacterial and viral reproduction etc. Any further improvement in the contents of the book by making corrections, omission and inclusion is keen to be achieved based on suggestions from the readers for which the author shall be obliged. I acknowledge special thanks to Mr. Rajeev Biyani, Chairman & Dr. Sanjay Biyani, Director (Acad.) Biyani Group of Colleges, who are the backbones and main concept provider and also have been constant source of motivation throughout this Endeavour. They played an active role in coordinating the various stages of this Endeavour and spearheaded the publishing work. I look forward to receiving valuable suggestions from professors of various educational institutions, other faculty members and students for improvement of the quality of the book. The reader may feel free to send in their comments and suggestions to the under mentioned address. Author

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Syllabus
B.B.A. Part-I

Business and Management

The pattern of question paper shall be as under : There shall be 7 questions in all. Question No. 1 and 2 will be compulsory. Question No. 120 marks : 10 very short answer type questions of 2 marks each. (upto 50words). Question No. 220 marks : 5 short answer type questions of 4 marks each. (upto 100 words). There shall be 5 essay type/numerical questions. Candidates shall be required to attempt any 3 questions. Each question shall be of 20marks. Case study related questions may be asked wherever necessary. Business & Management : Features and Scope of Business. Elementary knowledge of Trade, Industry and Commerce, Types of Industries, Forms of ownershipSole trading, Partnership, Company, Cooperatives, Joint Sector, Public Enterprises. Concept of management, nature and scope of management. Management Functions, Functional areas of Management (elementary knowledge only), Principles of Management, Schools of Management Thought. Planning : Nature and components of planning. Types of plans, Process of planning, Effective planning, MBO. Decision-making : Process and Techniques of decision-making. Organisation :Definition, Principles of organisation, forms of structure, Formaland informal Organisation, Delegation of authority. Leadership : Functions and Theories of Leadership, Leadership Styles. Coordination : Principles and Techniques of coordination, Effective coordination. Motivation : Human needs, Techniques of motivation, Sound motivation system, Theories of motivation (suggested by Maslow, Herzberg, McGregor, Victor Vroom). Control : Nature and process of control, Techniques of control elementary knowledge only, Effective control system.

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Content
S. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. Business Management Planning Decision Making Leadership Organisation Coordination Motivation Controlling Name of Topic Page No. 7-16 17-27 28-33 34-37 38-42 43-47 48-51 52-58 59-62

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Chapter-1

Business
Q.1 Discuss the different concepts of Business that have emerged so far in World. Also distinguish between the Traditional and Modern Concept of Business?

Ans.: Business activity has been conceptualized by many business persons, business managers and academicians in the field of business management ever since business emerged as an organised activity. Therefore the concept of business has changed over the years of history of business. So far the following concept of business has emerged :(i) (ii) (iii) Profit Oriented Concept of Business Customer Oriented Concept of Business Social or Modern Eclectic Concept of Business

Profit Oriented Concept of Business : In the early age of the business, it was conceived to be a wealthy producing or profit making economic activity. Any human activity directed towards the acquisition of wealth or earning profit through production or exchange of goods was treated to be a business. The profit oriented concept is also known as traditional concept of business. When people started doing business by forming organisation, than business used to be conceived as an organisation organised and operated to produce and provide goods and services to society under the incentive of private gain or profit. Assumptions : (i) (ii) (iii) The sole objective of the business is to earn profits by production and/or distribution of goods. Customers will buy the products that are available in the market at the most competitive rates. There is hardly any need to think for customer service and satisfaction for running a business.

Customer Oriented Concept of Business : This concept has came into existence around 1950s and gained momentum during the 1960s and 1970s. The business organisation began to think that business should earn profits through service and satisfaction of the customers. Organisation were forced to regard customer as the king of the market. For more detail: - http://www.gurukpo.com

Assumption : (i) (ii) (iii) Business organisations should produce and provide the goods/ services that are needed by the customers. The products and services provided by the business should satisfy the needs of the customers. The business should earn the profits through the service and satisfaction of the customer. Basis of Distinction Meaning Traditional Concept Business is the production and distribution of products for personal gain. Profit-oriented. Modern Concept Business organisation should determine the needs of the customers and deliver them the desired products. Customer oriented. and society

Distinction between Traditional and Modern Concept : S. No. 1.

2. 3.

Orientation Origin

Ned of the producer to Competitive market sell his excess conditions, legal frameproduction to earn work of business, consuTraditional Concept profits. Modern Concept merism and mentalism. environ-

S. No.

Basis of Distinction

4. 5.

Consumer Preference Assumption

No role. Customer will buy those products which are cheaper rates in the market.

This is the basis of modern concept. Business will survive only when product/services satisfy the customer needs as well as products the societys interest.

6.

Ownership and Management

Business is managed Business is widely held by by the family members public and is managed by friends and relatives. professional managers.

7.

Geographical Limited to the local Extent to the global area. Scope area.

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Q.2

What do you mean by Business. Explain clearly the role of Business in the Modern World.

Ans.: The literal meaning of the term business is the state of being busy or business. But when the term is used in relation to the business world, it means much more specific. All the definition to business may be classified under the following three categories. Traditional Definitions : Traditionally, business was regarded as the institution organised for production and /or distribution of goods/ services for earning profit. Customer Oriented Definitions : Businessmen began to think about earning profits through customer service and satisfactions. Hence the academicians and professional the term business accordingly. Hopkins, Duff et.cl Business is the organised activities designed to satisfy peoples wants for goods and services. Urwick and Hunt Business is any enterprise which makes, distributes or provides any article or service which other members of the community head and are able and willing to pay. Social Definitions/ Modern Eclectic Definitions : A few such modern definitions from social point of view are reproduced as follows:Buskirk, Green and Rodgers - Business is a system created to satisfy societies, need and desires. Keith Davis and Blomstorm - The term business refers to both private and public institutions which develop and process economic values in a society. Significance/ Role of Business : The role or significance may be properly discussed under the following heads : (i) (ii) (iii) (iv) (i) Significance for Business Persons/ Institutions Significance for Consumers Significance for the Society Significance for the Economy Significance for Business Persons : It helps in accomplishing their objectives. It helps in acquiring the knowledge and letter skills.

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 (ii) (iii) (iv)

Business persons may go for expansion and diversification of business. Get knowledge and feed back information from the middleman & customers. They may by more emphasis on customer satisfaction. Create and maintain better relation with wholesalers, dealers, retailers, and other merchantile intermediaries. Easily innovate and develop new product. More responsible to the society. Optimum utilization of resources in the most effective and efficient way. Enjoy a very high societal status. Helps them to get right the product. It ensures satisfaction of the needs of consumers. It ensures better facilities, better deal and after sale services. Customers also get benefits under loyal customer schemes. Customer gets better products and services at lower costs. Customer also gets the joy of larger choice. Members of society get better products and services at reasonable rates. Employment Opportunities. Better standard of living and quality of life. Security and welfare of their old age and raising days. Eradicate poverty, disease, ignorance, social evils through social welfare programmes. Planned development in the economy. Efficient and effective utilization of national resources. Ensures regular process of production and distribution of goods and services. For more detail: - http://www.gurukpo.com

Significance for Customers :

Significance for the Society :

Significance for the Economy :

 Q.3

Increasing national productivity. Balanced Regional Development. Increase and provide employment opportunities. Foreign exchange reserves by way of exports of goods and services.

What are the forms of Business Ownership? State the main features of all of them.

Ans.: Different forms of ownership of business organisation available to each sector they are as follows :(1) Private Sector : In private sector, ownership/organisation are available: (a) (b) (c) (d) (e) (2) Sole Proprietorship Partnership Joint Hindu Family Business firm Company Cooperative Society the following forms of

Public Sector : In public sector, the following are the main forms of ownership of business organisation :(a) (b) (c) Departmental Organisation Corporations Government Company

Private Sector : (i) Sole Proprietorship : Sole proprietorship is a form of business organisation which is established, owned controlled and usually operated by an individual and that individual also assumes all the risks of the business and entitled to all the profits made from it. Characteristics : The oldest form Sale ownership Unlimited liability Entitled to all profits No separate existence of the business Free from legal formalities For more detail: - http://www.gurukpo.com

 (ii)

Sole decisions and control Limited scope of operations

Partnership : A partnership is an association of two or more persons who agree to carry on business for earning and sharing profit among them. Characteristics : At least two persons Maximum number of partners (Banking sector 10 persons, Any other sector 20 persons) Agreement Business Sharing of profit Mutual agency Unlimited liability Jointly and several liability Mutual trust and confidence Business in firms name No separate existence of the firms Registration not compulsory Unanimous decisions Contribution of capital

(iii)

Hindu Undivided Family : When a Joint Hindu Family carries on a business, it is called Joint Hindu Family Firm. The members of such firm are called co-parceners. Joint Hindu family consist of all persons lineally descended from a common ancestor and includes their wives and unmarried daughter. There are two schools of Hindu law namely Dayalhagya and Mitakshra. According to Dayalhagya school of Hindu law, each son acquires an interest in the ancestral property only after the death of his father. According to Mitakshra school a son acquires such interest by birth or by adoption. Company : Company is a voluntary association of persons formal and registered under the present Companies Act, or under any previous law. In the eyes of the law, it is an artificial persons having separate entity from its members, with perpetual succession and a common seal. The capital of the company is divided into transferable shares and shareholders are called members. For more detail: - http://www.gurukpo.com

(iv)

Characteristics : (v) Registered voluntary association At least seven persons in case of public company and two in case of a private company. Maximum number of member in a private company may be 50. No limit in case of public company Company is an artificial person Separate legal entity Perpetual succession Limited liabilities Minimum paid up capital of Rs. 5 lakh in case of public company and Rs. 1 lakh in case of private company Governance by majority Nationality It is not a citizen and has no fundamental rights Managed by board of directors Transferable shares

Cooperative Organisations : A co-operative society or organisation is one which has been voluntarily formed by some persons for the promotion of their common economic interest. Characteristics : Voluntary organisation/association Registered under the co-operative societies Legal existence Limited liabilities Perpetual existence Every member contributes in its capitals Non transferable shares. One member - one vote Democratic management Equitable distribution of profit Service motives For more detail: - http://www.gurukpo.com

Based on principles of equality, justice and mutual help

Public Enterprises : A public enterprise refers to an industrial, commercial or service enterprise which is owned and controlled by the government or by public authority/ government organisation for providing goods or services to the public. (i) Departmental Organisation : Departmental form of organisation is the oldest form of organising public enterprises. Under this form of organisation, an enterprise is put under the control of a department. Such department is leaded by the concerned minister. Example:- Railway Department. Characteristics : (ii) Managed by a department of the government. Minister-in-charge of the department has the direct control. Financed by annual appropriations. Wholly owned and financed by the government. Accountable to the Lok Sabha, Rajya Sabha & Vidhan Sabha Employees are civil servants.

Public or Statutory Corporation : A public or statutory corporation is a body corporate incorporated under a special Act of the Parliament or state legislature for the purpose of carrying on certain industrial or commercial activities or rendering specific type of services. Characteristics : Incorporated body under a statute enacted by a parliament or state legislature. Artificial person having all the rights of a person but not of a individual. Separate legal existence from the government. It can sue and be sued by the government. Wholly owned by the central and/ or state government. When ownership is shared by private entrepreneurs it is said to be a mixed corporations. It can enjoy independence in the matters of its financial management. Employees are not civil servants. Autonomy in its operation. Accountable to the parliament and/or state legislature. For more detail: - http://www.gurukpo.com

(iv)

Government Company : Government Company is one in which not less than 51% of the paid-up capital is held by the central or state government; and/or by the government company and/or by any public corporation, authorities. Characteristics : It is registered or an incorporated body under the Indian companies Act, but all the provisions of the act will not apply to it. Majority of shares are held by the central government on by the state government or by any public corporation/authority or government company.

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Chapter-2

Management
Q.1 Discuss the nature of Management. (1) Multidisciplinary : Management draws knowledge and concepts from various disciplines. It draws freely ideas and concepts from such disciplines as psychology, sociology, anthropology, economics, ecology, statistics, operation research, history etc. Management integrates the idea and present newer concepts which can be put into practice for managing the organisations. Dynamic Nature of Principles : Based on integration and supported by practical evidences. Management has framed certain principles. These principles are flexible in nature and change with the change in the environment in which an organisation exist. Relative, not Absolute Principles : A particular management principle has different strengths in different condition. Therefore principles of management should be applied in the light of prevailing conditions. Allowance must be made for different changing environment. Management - Science or Art : Management is both a science and an art. The process of scientific theory construction and confirmation is used in the process of management. And has to do with applying of knowledge. This is especially important in management because in many instances, much creativity and adroitness in applying the managerial efforts are necessary to achieve the desired results. Management as Projection : Management satisfies the requirement of a profession in the form of existence of knowledge. The concept of management is still evolving and continuously new principles are being developed. Universality of Management : Management is a universal phenomenon. Management principles are not universally applicable but are to be modified according to the needs of the situation. For more detail: - http://www.gurukpo.com

Ans.: The nature of management can be discussed as follows :-

(2)

(3)

(4)

(5)

(6)

Q.2

What do you mean by principles of Management? Discuss the important principles of Management.

Ans.: Management principles are those fundamental truths or statements of facts which serve as guide to managers in thinking and doing their job of managing. Management principles may be derived in any of the following ways :(i) (ii) By observation and analysis of managerial practices. By conducting studies through system enjury, collection and analysis and testing of facts.

Some Important Principles of Management : F. W. Taylor, Henry Fayol, Mary Parkeer Follett, Urwick, Koontz O Donnel, George R. Terry etc. are the leading thinkers who have listed and described certain management principles :(1) Fayols Principles of Management : Henri Fayol, who is recognized as the father of modern theory of management formulated a set of 14 principles. (i) Division of Work : Division of work states that the total work should be subdivided into small components / parts and each part of the work should be allocated to the worker who specializes in that part of the work. Authority and Responsibility : Authority creates responsibility whenever a person exercises authority, responsibility arises. Responsibility is the essential counter part of authority. Discipline : According to Fayol, discipline is absolutely essential for the smooth running of business. Without it no business can prosper. Unity of Command : The principle of unity of command states that each subordinate should receive orders from only one boss or superior. Unity of Direction : The principle of unity of direction states that there should be one head and one plan for a group of similar activities having the same objective. In other words, the activities that have same objective should be directed by only one manager under one plan. Subordination of Individual Interest to General Interest : Interest of organisation as a whole must prevail over the individual interest wherever individual interest and the common interest differ, efforts must be made to reconcile them. Remuneration : Fayol stressed that the remuneration or compensation for work done should be fair to both employers and the firm. It should neither be low nor high. For more detail: - http://www.gurukpo.com

(ii)

(iii)

(iv)

(v)

(vi)

(vii)

(viii) Centralization : Decreasing the role of subordinates in decision making is centralization of authority and increasing their role in it is decentralization of authority. Fayol believed that managers should retain final responsibility but should at the same time give their subordinates enough authority to do their job properly. (ix) Scalar Chain or Hierarchy of Authority : Scalar chain or hierarchy of authority refers to the unbroken chain or line of authority running from the top management to the lowest levels of the organisation. Order : The principle of order states that there should be a place for every think and for every person. Material and people should be in the right place at the right time. People should be assigned the jobs that are best suited to them. Equity : According to this principle, the manager must install equity in the organisation. To ensure this, manager should be friendly, fair and kind in dealing with their subordinates. Stability of Personnel : This principle states that there should be reasonable stability of the tenure of personnel in the firm. No employee must be removed from his position within a short period of time.

(x)

(xi)

(xii)

(xiii) Initiative : This principle states that subordinates should be given the freedom to develop and carry out their plans. But managers should do so within the limits of authority and discipline. (xiv) Esprit de Corps : This principle states that managers should promote esprit crops or team spirit and a sense of unity among the employees. Other Important Principles : (xv) Principle of Objective : Koontz and ODonnel suggest that The organisation as a whole and every part of it must contribute to the attainment of enterprise objectives.

(xvi) Principle of Planning : The principle of planning states that good planning is a prerequisite for good management. Therefore managers should accurately plan the activities of their organisation keeping in view the environmental factors. (xvii) Principle of Span of Control : Span of control means the number of subordinates under the direct supervision of the superior. According to this principle, a superior should supervise only that number of subordinates which be can properly supervise directly under his control. For more detail: - http://www.gurukpo.com

(xviii) Principle of Balance : This principle states that different parts or units of an organisation should be in balance. This is essential in order to ensure proper development of business and its efficiency. (xix) Principle of Coordination : This principle states that human efforts and other resources should be co-ordinated in order to achieve organisational goals effectively. Principle of exception : The principle of exception states that every superior should set the objectives and plan for their subordinates and delegate them appropriate amount of authority to take all decisions to carry out the plans. Principle of Participation : This principle states that managers must encourage participation of their subordinates in taking decisions on matters directly affecting them.

(xx)

(xxi)

Q.3

Discuss the major functional area of Management. (i) Production : This area is normally kept under the control of a production manager who is responsible for the performance of entire related activities. This area may further be classified into major sub-activities : (ii) Purchasing Material Management Research and Development

Ans.: An acceptable and practical classification includes four broad functional areas :-

Marketing : This area involves the distribution of organisations product to the buyers. This can be divided into following subareas : Advertising Marketing Research Sales Management

(iii)

Finance and Accounting : This area deals with the record keeping of various transactions and management of financial resources : Financial Accounting Management Accounting Costing Investment Management Taxation For more detail: - http://www.gurukpo.com

(iv)

Personnel : This aspect deals with the management of human beings in the organisation. It includes following areas : Recruitment and Selection Training and Development Wage and Salary Administration Industrial Relations

Q.4

Discuss the major functions of management.

Ans.: A function is a group of similar activities. However what functions are undertaken by managers in organisations, there is a divergence of views. But the major management functions suggested by most of the authors are as follows :(i) Planning : Planning is the conscious determination of future course of action. This involves why an action, what action, how to taken action, and when to take action. Thus planning includes determination at specific objectives, determining projects and programmes, setting policies and strategies, setting rules and procedures and preparing budgets. Organising : Organising is a process of dividing work into convenient task or duties, grouping of such duties in the form of positions, grouping of various positions into department and sections, assigning duties to individual positions and delegating authority to each position so that the work is carried out as planned. Staffing : Staffing involves manning the various positions created by the organising process. It includes preparing inventory of personnel available and identifying the gap between manpower required and available, identifying the sources from where people will be selected, selecting people, training and development fixing financial compensation, appraising them periodically etc. Directing : Directing includes communicating, motivating and leading. When people are working in an organisation, they must know what they are expected to do in the organisation. Superior managers fulfill this requirement by communicating to subordinates about their expected behaviour. The superiors have a continuous responsibility of guiding and leading them for better work performance and motivating them to work with zeal and enthusiasm. Controlling : Controlling involves identification of actual results. Comparison of actual results with expected results as set by planning process, identification of deviation between the two, if any and taking of corrective action so that actual result match with expected results. For more detail: - http://www.gurukpo.com

(ii)

(iii)

(iv)

(v)

Q.5

Classify the various approaches of the Management thought along with the origination period and the major contributors.

Ans.: The various approaches to management can be divided into the following major schools :(A) The Classical Approach : (i) (ii) (iii) (B) Scientific Management : Time Period (1900 1930), Introduced by (F. W. Taylor). Administrative or Functional Approach : Henry Fayol (1916 1940). Organisational Theory Approach : Max Wabor, C. I. Bernard, H. A. Simon. Human Relation Approach : George Elton Mayo (1924 -1932). Behavioural Science Approach : Herzberg, Fred Fiedler, Mclellend, Likert etc. (1950 -1970) Quantitative or Management Science Approach : (1950 -1960). System Approach : Ludwig Von Bertalanffy (1960 onwards). Contingency Approach : Tosi and Hammer (1970 onwards).

Neo Classical Approach : (i) (ii)

(C)

Modern Approach : (i) (ii) (iii)

Q.6

Assess the contribution of Scientific Management to the development of Management thought.

Ans.: Scientific management approach is also known as the productivity or efficiency approach. The credit for pioneering and developing scientific management approach is primarily given to F. W. Taylor. He is recognised as the father of scientific management. The other individuals who contributed to this school of management thought are Frank Gilkreth, Lillian Gillreth, Henry Gantt and Harrington Emerson. Scientific management school concentrates on the process of finding one best way of doing a thing in order to achieve maximum production and efficiency. Philosophy and Principles of Taylor : Develop a science to replace rule of thumb Labour Management Cooperation For more detail: - http://www.gurukpo.com

Maximization of output or production Equal division of responsibility Job specialization Scientific selection, training and development of workers. Planning and scheduling of work Standardisation Wage incentives Mental Revolution

Mechanism of Scientific Management : In order to blend philosophy and principles of scientific management into practice, Taylor developed the following techniques or mechanism :(1) (2) Scientific Task Setting : The task of every worker for everyday should be determined through scientific investigation. Experimentation or Work Study : Work Study means organised systematic and objective analysis and assessment of the operational efficiency of all the elements connected with the work. The main areas of work study are as follows :(i) (ii) (iii) (iv) (3) (4) (5) (6) Method Study : Survey of production process. Motion Study : The study of movement of a worker or a machine in doing a job. Time Study : Find out a standard time for doing the job. Fatigue Study : Fatigue study is the study of the reduction of human energy in doing his job.

Planning : Planning function should be separated from the doing function. Scientific Selection and Training of Worker. Specialization : Allocate the task according to their specialization. Standardisation : Taylor advocated for standardization of material, tools equipment, method etc.. Efficient Costing System : To control cost of production and pricing. Incentive Wage Plan : Worker is to receive a bonus in addition to his wages if he completed his jobs before the standard fixed time. For more detail: - http://www.gurukpo.com

(7) (8)

(9)

Congenial Atmosphere of Work : The environment must also be cheerful and psychologically satisfactory. Functional Foremanship : General Manager

(10)

Workshop Manager

Assistant Workshop Manager (Planning)

Assistant Workshop Manager (In Shop Level)

Time & Cost Clerk Instruction Card Clerk

Displinarian

Gang Boss Speed Boss

Inspector

Route Clerk

Repair Boss

Individual Worker Q.7 Explain the various tasks conducted in the Hawthorne studies. Also discuss the contribution of Hawthorne Experiments in the development of Managerial thinking. Ans.: Harvard University research team conducted a series of studies. George Elton Mayo, F. I. Roethlisberger, W. J. Dicton and others were the members of the team. The studies were conducted at Hawthorne plant of the western electric company, Chicago (USA) between 1924 and 1932. Four studies were conducted at the Hawthorne Plant :(1) Illumination or Test Room Study : The illumination study was conducted to determine the relationship between light intensity and productivity of efficiency of workers. For this purpose, three different experiments were conducted in which researchers changed light intensity. They concluded that lighting was a minor factor affecting the productivity of workers. (2) The Relay Assembly Test Room Study : The relay assembly test room study was conducted to ascertain the factors other than the light intensity For more detail: - http://www.gurukpo.com

affecting the productivity. During the test researcher change working condition and they concluded that most likely cause of higher productivity was the change in social situation in the work group. (3) Mass Interviewing Study : The third study was the mass interviewing programme. Under this programme over 21,000 employees were interviewed. They have asked some direct question and on some indirect questions. And finally the researchers reached in the conclusion that work performance and the individual status in the organisation are determined not by the person himself but by the group members, peers and their personal problems also effect the feeling about his job. Bank Wiring Observation Room Study : In order to observe informal group behaviour more accurately, band wiring observation room study was undertaken. The following conclusions were drawn :(i) (ii) The group was restricting output by enforcing the norms or standards set by the group. There existed internal cliques or groups which are not formed on the basis of occupation.

(4)

Conclusions / Contribution of Hawthorne Studies : (i) Work is a group activity. (ii) Workers form internal informal group. (iii) Social groups influence the productivity. (iv) Social groups determines informal norms. (v) Group cooperation is planned. (vi) Worker is not only rational economic being. (vii) Supervisor behaviour affect the behaviour of worker. (viii) Free flows of communication affects the attitude of workers towards work. (ix) Complaints may not be statement of facts. (x) Birth of human relation movements.

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Chapter-3

Planning
Q.1 What do you meant by Planning? Discuss its nature.

Ans.: Simply stated, planning means deciding future course of action i.e. making plans for attaining organisations objectives. Planning is the process of determination of organisations objectives and selecting the course of action i.e. plans for attaining them. According to Weihrich and Koontz Planning involves selecting mission and objectives and actions to achieve them. If requires decision making i.e. choosing from among alternative future course of action. According to Robert Albanese, Planning is the process or activity of determining in advance specifically what should be done in order to achieve particular goals, how it should be done, when or where it should be done and who should do it. Nature of Planning : (1) (2) (3) (4) (5) (6) (7) (8) (9) Primary or Basic Function : It is a primary function because it is the foundation on which all other managerial function rest. Pervasive Function : Each and every manager has to perform this function regardless of his level and area of specialization. Purposeful : Planning begins with some goals or objective that an organisation wishes to achieve. Interdependent Activity : Planning in one development is dependent on the planning of other department. A Process : Planning is a process in which managers anticipate future by analysing environmental factors, set goals or objectives. Planning is a Path Finder Process : It is the process by which answers to questions like where, when, how etc. It is a continuous and never ending process. It is a dynamic process. It is an intellectual process because it requires managers to think intelligently and rationally before doing. For more detail: - http://www.gurukpo.com

(10) (11) (12) (13)

Futuristic : Every plan is prepared to face and win over the future challenges and threats. Time Bound : It is always time bound. It may be of short range or medium range or long range. Planning involves Decision Making : It is a process of selecting one best course of action out of the available alternatives. Planning and Action are Twins : Planning alone cannot serve any purpose. Planning presupposes necessary action for its implementation. Both must go hand in hand. Planning and Controlling are Inseparable : Plans furnished the standards against which actual performance is measured and controlled. Forecasting is the Basis of Planning : Future course of action are decided on the basis of information and knowledge provided by forecasting.

(14) (15)

Q.2

What are the essential elements of Planning? (1) (2) Objectives : Objectives are the desired results that an organisation wants to achieve within a specified time period. Strategies : Strategy means the long range approach for dealing with the organisations competitive environment with a view to win over competitors in business. Policies : Policies are the guidelines set to provide direction in decision making. These set the boundaries around which decisions are made. Procedures : Procedures are the chronological sequence of steps or actions to be taken to accomplish a specific test or job. Method : A method is a prescribed way of completing a step in a procedure. Rules : Rules are guiding statements that direct action or behaviour of individuals in a given situation. Standards : Standard is a measure against which the level of performance is measured or evaluated. Programmes : A programme is a sequence of action steps arranged in the priority necessary to accomplish an objective. Schedules : A Schedule is a plan which indicate the time of (i) commencement of task. For more detail: - http://www.gurukpo.com

Ans.: The main components or elements of planning are as follows :-

(3) (4) (5) (6) (7) (8) (9)

(ii) (iii) (10) (11)

passing through the different stages or processes. Finalizing the task.

Budgets : A budget is a numerical plan containing expected results in quantitative or numerical terms. Projects : A project is a programme with less significant objectives, generally a shorter period of time and usually less detail.

Q.3

What are the steps involved in the Planning pPocess? (i) (ii) (iii) (iv) (v) (vi) (vii) (ix) (x) Environment Scanning Setting Objectives Establishing Planning Promises Searching Alternatives Evaluating the Alternatives Selecting the Most Appropriate Alternative or Plan Formulating Derivative Plans Implementing the Plans Follow-up Action

Ans.: Steps in Planning :

(viii) Budgeting i.e. Committing Resources

Q.4

Write the essentials of an Effective Planning.

Ans.: Planning or a plan can be more effective if the following factors are taken into consideration :(i) (ii) (iii) (iv) (v) (vi) (vii) (ix) Well Defined Objectives Simple and Easy to Understand Comprehensive (Cover each and every aspect) Flexible (Capable of being modified) Balanced (Balance between objectives and resources) Economical Stable Unity (Operate under one overall plan) For more detail: - http://www.gurukpo.com

(viii) Continuity

(x) (xi) (xii)

Consistency Written Practicable

(xiii) Logical and Rational (xiv) Accountability for Implementation Q.5 What is MBO? Explain its characteristics and objectives.

Ans.: MBO : The modern model of objective setting is known as the Management by Objectives or MBO. This model was first discussed by Peter Drucker in 1954 in his book The Practice of Management. Meaning and Definition of MBO : MBO is a process where by both superior and subordinate managers jointly identify their common goals or their work unit and define each employee major areas of responsibility and goals with his active participation. Carlisle Management by Objective is a process by which the members of a work unit individually meet with their superior to establish performance related goods. Boone and Koontz MBO is a prgramme designed to improve employees motivation by having them participate in setting their own goals, letting them know in advance precisely have they will be evaluated. Characteristics of MBO : A Philosophy of Management Goal Oriented Approach An Interactive Approach A Comprehensive Approach A System Approach Applies to Total Management System Aims at Optimum Results Simple Universal Approach Multiple Uses Participation and Involvement Common Objectives and Individual Goals Mutual understanding between superior and subordinate. For more detail: - http://www.gurukpo.com

Assumptions :

 (i) (ii) (iii) (iv) (v) (vi) (vii) (ix) (x)

Employees know their expected efforts and their contribution in overall performance. Employees participate in formulation of the plan. Employees know the results of their efforts. Employees want to be fairly rewarded for their performance. To set organisational units and individual goals by active participation of the all concerned. To set verifiable and measurable goals. To measure and judge performance. To relate individual performances to organisational goals. To clarify both the job to be done and the expectation of accomplishment. To foster the increasing competence and growth of subordinates. To enhance communications between superiors and subordinates. To stimulate the subordinates motivation. To serve as device for organisational control.

Objectives of MBO :

(viii) Serve as a basis for judgment about salary and promotion.

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Chapter-4

Decision Making
Q.1 Define Decision Making and give its characteristics.

Ans.: Decision making is the process of choosing or selecting any one option out of several options to achieve some objectives. Glueck Decision making is the process of thought and deliberation that leads to a decision. Allen Decision making is the work a manager performs to arrive at a conclusion or judgment. Thus decision is a process of selecting a course of action from among the available alternatives in order to achieve a desired goal in a given situation. Characteristics/Nature of Decision Making : (i) (ii) (iii) (iv) (v) (vi) (vii) (ix) (x) (xi) (xii) Decision making is a sequential process involves the searching, evaluative and choosing a course of action. It is an intellectual and logical process. This process will take place in the human mind. It is a human and social process. It is largely an intuitive process but can be formally structured. There is an existence of alternatives. Ascertainment of choice. Decision is directed to solve some problem. Decision making involves commitment. It is influenced by environmental conditions. Decision making is the essence of management.

(viii) It aims at attaining some objectives.

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Q.2

Discuss in brief the various techniques of Decision Making. (1) Experience or Judgment : In this technique, a manager makes decision on the basis of his knowledge and experience gained through working in a particular position over the years. Intution : Intution or hunch is a knowledge based on instant inner feelings or spiritual perception rather than reasoning. It is based on faith. Habbits : Established habits can be used as a technique of decision making. Managers try to solve repetitive and routine problems through their established habits. Standing Plans and Procedures : There are standing plans and procedures in every organisation such as policies, rules, procedures, methods etc. They all serve as a technique for decision making. Organisation Structure : Organisation structure make it clear who is responsible for what and to whom. Therefore it can be used as a decision making technique. Principles of Management : The principle of management can serve as a useful guide in making decisions. Economic and Financial Techniques : Marginal analysis, break even analysis, utility analysis etc are some of the most important economic techniques of decision making. Pay back analysis, inflow outflow analysis, ratio analysis are some of the financial techniques of decision making. (8) Linear Programming : It is a mathematical technique of limited resources. It helps in making decisions regarding allocation of limited resources among various competing demands in an optimum way. Game Theory : In this technique, one member chooses one such course of action that frustrates and defeats the action of the competing member and help him in wining the game. This technique used under competitive and conflicting situations. Waiting Line or Queuing Theory : This technique is used to decide problem of waiting line in an organisation with the help of the technique, manager decides optimum rate of flow through service points by For more detail: - http://www.gurukpo.com

Ans.: The important techniques of decision making are as follows :-

(2) (3)

(4)

(5)

(6) (7)

(9)

(10)

balancing the cost of making customers wait against the cost of servicing them more rapidly. (11) Simulation : Simulation is a technique for studying and analyzing behaviour of a system under several alternative conditions in an artificial setting. Network Techniques : PERT and CPM are the techniques that helps managers in deciding a logical sequence of activities required for completing a complex project. Heuristic Technique : It is an trial and error technique of finding solutions to a complex problem by breaking it into small components. Participative Techniques : It is a technique of making decisions with the participation of the employees. This technique encourages industrial democracy.

(12)

(13) (14)

Q.3 Ans.:

Draw a flow diagram of process of Decision Making. Identification of Problem Diagnosing the Problem Establishing Specific Objectives

Feedback

Identifying Limitations

Implementing the Decision

Selecting Appropriate Alternative Decision Making Process

Evaluating Alternatives

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Chapter-5

Leadership
Q.1 What do you understand by Leadership? Discuss the functions of Leadership.

Ans.: Keith Davis - Leadership is the ability to persuade others to seek defined objectives enthusiastically. It is the human factor which binds the group together and motivates it towards goal. Keys and Case Leadership is the process of influencing and supporting others to work enthusiastically towards achieving objectives. Weihrich and Koontz Leadership is the art or process of influencing people so that they will strive willingly and enthusiastically towards the achievement of group goals. Thus leadership is the process and the art influencing the behaviour, attitudes, activities of people to work willingly and enthusiastically towards the accomplishment of group goals. Functions of Leadership : Guides or Inspires or Motivates Boosts Morals Creates Confidence and Enthusiasm Develops Team Spirit Creates Vision and Initiative Transforms Potential into Reality Sincerity and Honesty Courage and Will Power Flexible and Dynamic Emotional Stability i.e. Maturity Sound Judgment Tact and Humour Education and Knowledge Conceptual Skills For more detail: - http://www.gurukpo.com

 Q.2

Administrative Skills Analytical Skills Human Relations Skills Technical Skills

Explain the various styles of Leadership.

Ans.: Leadership style is the general way or pattern of behaviour of a leader towards his followers in order to influence their behaviour to attain a goal. The main styles of leadership are as follows :(1) Autocratic and Authoritarian Leadership : An autocratic leader is one who centralizes power and make all the decisions himself. He tells his followers what to do and expects to be obeyed without questions. Thus, such a leader imposes his will on his followers. Autocratic leaders may be of two types :(i) Pure Autocratic or Negative Leader : He is a director and makes all decisions himself. He superimposes his decisions on his subordinates. He uses fear of punishment or penalty to carry out his decisions. Thus, it is a negative leadership. Benevolent Autocrat or Positive Leader : When an autocrat leader avoids negative coercive power and uses reward power to influence his subordinates, he is called a benevolent autocrat leader. Such a leader shows active concern for the feelings and welfare of his subordinates.

(ii)

(2)

Participative/Democrative Leadership : Participative leaders decentralize authority. Such leaders involve subordinates in decision making process. The leaders and their group members work as a social unit. They freely exchange their views and express opinions and suggestions. Free Rein or Laissez Faire Leadership Style : Such a leader completely delegates his authority to his subordinates and allow them to make their own plans, procedures and decisions. He simply aids his subordinates in performing their job. He exist as a contact person with the subordinates external environment. Free rein leadership style is permissive and leader least intervenes his subordinates. The leader remains passive observer but intervenes only For more detail: - http://www.gurukpo.com

(3)

during the crisis. Free rein leadership is suitable where subordinates are highly competent and duty conscious. (4) Paternalistic Leadership : A paternalistic leadership is authoritarian by nature. It is heavily work centred but has consideration after his subordinates the way father looks after his children. Such a leader helps, guide and encourages his subordinates to work together as member of a family. The subordinate in turn tend to remain submissive and faithful.

Q.3

Discuss the different theories of Leadership.

Ans.: Several theories of leadership have been developed by management theoreticians. These theories may be classified into three categories. (1) (2) (3) (1) Personality Theories Behavioural Theories Situational or Contingency Theories Personality Theories : Personality theories are theories that focus on the personal qualities or traits of leader. Such theories include the following :(i) Great Man Theory (i) (ii) Trait Theory

Great Man theory of Leadership : Great man theory of leadership claims that Leaders are born, not made. Leadership qualities are inherited or carried in genes. Leadership qualities cannot be acquired or developed through education or training. Trait Theory of Leadership : This theory states that there are certain unique traits or qualities essential for successful leader. Any person who wants to be a successful leader must posses those traits. This theory emphasizes that those traits need not necessarily be inborn but may be acquired through education, training and practice.

(ii)

(2)

Behavioural Theory of Leadership : Behavioural theory focuses on what the leaders do i.e. on the actual behaviour of the leader. Behavioural theory is based on the premise that effective leadership is the result of effective behaviour of the leader. Success of leadership depends on the behaviour of the leader and not on his traits.

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A particular behaviour pattern of a leader (functional behaviour) makes him a successful leader and its opposite (dysfunctional) would reject him as a leader. The functional dimensions include setting goals, motivating employees towards achievement of goals, making effective communication and interaction, building team spirit etc. The dysfunctional dimensions of leaders behaviour include in ability to accept subordinates ideas, poor communication and ineffective interaction, poor, human relations etc. (3) Situational / Contingency Approach: The situational approach of a leadership emphasise that emergence and success of a leader is largely determined by situational factors. This theory stresses that a leadership behaviour which is effective under the particular situation may be ineffective under the other. These are several different situational models of leadership have been developed. Fiedlers contingency model, path goal model, Blanchards model etc.

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