MGMT: 200 BUSINESS MANAGEMENT

Definition of Business
1.The activity of producing, buying, or selling goods or services. 2. The work that you do as
your job to earn money. 3. A person’s regular occupation, profession or trade.
Management Process
“Management is the process involving planning, organizing, staffing, directing and
controlling human efforts to achieve stated objectives in an organization.
Definition of Management
The effective motivation of men and the efficient use of other resources in order to get things
done.
Effective: Skill, qualify – can do something achievement
Efficient: Less expense/ can manage with low cost
Management
Man – a manager is a human being
 Personal Qualities – Self-confidence, Self-denial, hardworking, and honesty, integrity
 Business Qualities
 Communication Qualities
 Relationship Qualities
Age- stable emotions, tolerance,
Ment - He knows the job. He provides clear direction, goals and standards for people.
Business management: The activities associated with running a company, such as
controlling, leading, monitoring, organizing, and planning.
Resources of manager
1. Men - workers, employees
2. Money – Budget, Investment, Finance
3. Machine – tools equipment, land, building, facilities, furniture
4. Method – Technology, processes, systems
5. Materials – Raw materials, supplies
6. Minutes – time
7. Market – customers, competitors
8. Message – information
9. Many friends – networks and relationship
Tactics of a Manager
1. Never wound the king
 The king is the boss- 1 Thess.5:12/ 1per 2:17
 The boss has the right to be obeyed (1Pet 2:13)

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  In case where you do not agree with him, don’t hurt him- just follow (1 pet. 2:18)
 “A good follower is a good leader.”
 Wait for your turn then that is the time for you to do what you think is right.
2. Fait accompli
Do your work faithfully and seriously! A faithfully man will be richly blessed
Proverb 28:20
3. Sandbagging
Follow or do what is required of you
4. Avoid battle
Be a peacemaker (Ephesian 4:26)
5. Frontal attack
Be frank and don’t backbit
6. Choose your battle ground
Show respect to anyone by talking to them in the right place
7. Be present on the battlefield
Never be absent when you have appointments with anyone unless it is between life
and death.

Chapter (1) Introduction

OBJECTIVES OF BUSINESS
The objectives of business are two-fold: economic and social
(I) Economic objectives include:
(a) Ensuring a satisfactory return on investment (ROI)
(b) Growth of business through diversification, merger, or acquisition.
(c) Product innovation on a continuous basis. (upgrade of existing technologies, services
and Products)
(d) Ensuring profitability by gaining strong market position.

(II) Social objective includes:

(a) Prevention of environment pollution and ecological imbalance.
(b) Overall development of the locality where the business is situated.
(c) Development of backward areas.
(d) Promotion of ancillary and small scale industries.
How can profitability ratios increase?
(a) Remove unprofitable products and services.
(b) Find new customers. New customers can help grow your business.
(c) Increase your conversion Rate
(d) Reduce your inventory.
(e) Expand your market
(f) Boost productivity
(g) Manage your costs.
ESSENTIAL OF GOOD BUSINESS

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 (a) A business must have well defined and attainable objectives.
(b) It should follow a proper planning procedure based on up-to-date, reliable, and
adequate information.
(c) It should have a proper layout and location so as to ensure minimization of costs and
maximization of profits.
(d) A business should have a responsive and adaptive management.
(e) It should have a sound organization structure ensuring effectiveness.
(f) A business should have a customer-focused marketing system.
(g) A business should also have sound personnel policies.
Concept of Management
1. Old Concept: Manager getting things done through workers (Orders)
2. New Concept: Manager getting things done with workers.
Management process
(1) Management is the process of planning, organizing, coordinating, leading, motivating
and controlling the resources (including human resources) of an organization in the
efficient and effective pursuit of specified organizational goal.
(2) A manager is a person who plans, organize, leads, and controls human, financial,
physical, and information resources in the efficient and effective pursuit of specified
organizational goals.
(3) Planning is the management function of developing a futuristic frame of reference
from which to identify opportunities and threats that lie in the future and to take
immediate action to exploit the opportunities and counter threats.
(4) Organizing: Organizing is the management function of assigning duties, grouping
tasks, establishing authority, and allocating resources required to carry out a specific
plan.
(5) Staffing is the management function of recruitment, selection, placement, approval,
and development of people to occupy the roles in the organization structure.
(6) Leading is the management function of influencing, motivating, and directing human
resources towards the achievement of organizational goals.
(7) Controlling is the management function of monitoring organizational performance
towards the attainment of organizational goals.
Management Skills
Three basic kinds of skills- Technical, human, and conceptual are needed for a
manager. Technical skill is the ability to use the procedures, techniques, and
knowledge of a specialized field. For example, surgeons, engineers, and accountant
all have technical skills in their respective fields. Human skill is the ability to work
with, understand, and motivate other people as individuals or in groups. Conceptual
(skill is the ability to coordinate and integrate the organization’s goals and activities.
Have a good idea for the future of organization.
Management Levels
There are generally three levels of management namely: (1) top-level management (2) middle
management (3) lower-level or first line management

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Top level management consists of a small group of people and is responsible for the overall
management of and organization. These people are called executives. The various functions
performed by the top management are as follows;
1. Laying down the objectives of the enterprise.
2. Preparing strategic plans and policies for the enterprise.
3. Issuing necessary instructions for the preparation of department budgets, schedules,
procedures and so on.
4. Appointing executives for the middle level.
5. Coordinating the activities of all departments with the help of reports, memoranda,
and so on.
6. Maintaining public relations.

Top level
Middle level
First Level

The management pyramid

Middle level of management
1. Middle level management gives recommendation (advice) to the top level
management.
2. It executes (implement) the policies and plans which are made by the top level
management
3. It co-coordinate the activities of all the department.
4. They also have to communicate with the top level management and the lower level
management.
5. They spend more time in coordinating and communicating.
Lower level of Management
1. Lower level management directs the workers/ employees
2. It maintains a link between workers and the middle level management.
Areas of management
1. General
2. Marketing
3. Production/ operation
4. Personnel/ Human Resources
5. Strategic Management
6. Financial
7. Information System
Scientific management

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It is the systematic study of relationship between people and tasks for the purpose of
redesigning the work process to increase efficiency.
Management as a science
 In the past, only those with inborn tendencies can be good managers.
 But, Frederick Taylor said: “management can be learned (Duet 5:1, Proverb 1:5)
 Managers can be made
Concepts of Scientific Management
1. The concept of piece-rate-pay is an approach to compensate workers for each units of
work completed.
2. This is a form of incentive to a diligent worker.
3. The more he works, the more he earns. The more he produces the more pay he gets.
4. In 2 Corinthians 9:6 It says, “he who sows sparingly will also reap sparingly, and he
who sows bountifully will also reap bountifully.
The bonus system
1. This is an incentive for the worker to work harder in the organization.
2. Mark 4:25 Says “the measure you give is the measure you will get and still more will
be given you.
3. When the organization earns more, more bonuses could be shared among employees.
4. Some companies give quarterly bonus, some semi-annual bonus, some annual bonus.

The important functions of a supervisor include the following.

1. To plan and organize the activities of the group.
2. To arrange for necessary materials, machines, tools, etc. for workers and to provide
them with the necessary working environment.
3. To provide training to the workers.
4. To supervise and guide the subordinate.

Managerial Objectives
1. Efficient use of resources: The factors of production are utilized in a way that effort
energy and waste of time are minimized. The focus is on higher productivity.
2. Customer satisfaction: Customer satisfaction is important for the survival and
growth of business.
3. Adequate return on capital: The company must achieve a reasonable rate of return
on the amount invested and the risk taken by the owners of business.
4. Satisfied workforce: Satisfied workers are assets to a company. They contribute
effectively to the goals of the organization.
5. Improved work conditions: Fair wages for the work, security of employment, and
good working conditions for the workforce will result in higher standard for living for
the working conditions for workforce will result in higher standard for living for the
employees.
6. Building supplier relationship: Management should seek to achieve good relations
with the suppliers, of raw material and capital so at to continue to be in the market.

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 7. Contribution to national goal: Careful use scare resources will lead to improvement
of the locality where the company is located.
Capital
Almost every kind of organization needs capital- for machinery, buildings, inventories of
goods, office equipment, tools of all kinds and cash.
Customers
Without the customers, the business cannot exist. But to capture customers, a business must
try to find out what people want and are willing to buy.
1. What are the objectives of a business? What are the essentials of a good business?
2. Explain the three basic skills required for a manager.
3. Discuss Managerial objectives.
4. What are the functions of top level management?
5. What are the functions of a supervisor?
6. What is business management meaning?
Managerial Ethics
Managerial ethics are the standard of behavior that guide individual managers in their work.
These ethics guide the thinking and decision making with respect to what is good and what is
bad. There are three basic areas of concern, namely, the relationship of the firm to the
employee, employee to the firm, and the firm to other economic agents.

Chapter 2 Planning
Planning is deciding in advance what to do, when to do and who is to do, planning bridges
the gap from where we are to where we want to go.
Planning Defined
Looking at the future and determining where you want your organization to be in that future
time frame.
Even God planned. In Isaiah 14:24 it says, “Surely, as I have planned, so it will be, and as I
have purposed, so it will stand.
Importance of planning
 Gives the manager direction of where, what, why, where, when, how and how much
to go about a certain activity.
 Helps the manager achieve his goal.
 Encourage the workers to suggest what they think is best. Proverb 20:15 says, “make
plans by seeking advice”.
In planning invite God through prayer to lead and help.
For He says in Jeremiah 29:11, “For I know the plans I have for you plans to prosper you and
not to harm you, plans to give you hope and a future.

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Types of Plans
1. Strategic
2. Tactical or intermediate
3. Operational plan
Usually, these plans are prepared by the differences levels of management:
1. Strategic plan: Top level – Long ranges (3-5 years or as far as 20 years)
2. Tactical plan: Middle level – medium range (1-3 years)
3. Operational plan: Front liners _short range- Generally cover up to one fiscal year
Activities involved in Tactical planning
 The tactical plan is often-times focused on the different functional areas of
management, such as
 Marketing plan
 Human Resource plan
 Production/operations plan
 Financial plan
The marketing plan should be directed on the following
 Product plan
 Pricing plan
 Promotion plan
 Place or the channel of Distribution plan
The human resource plan centers on the following
 Recruitment
 Selection
 Hiring
 Training and developing
 Evaluating their performance

The production and operations plans identify the following

 Best flow of operations
 Determining which, what, how many, how much equipment and facilities are needed.
 Purchase of materials
 Quality and quantity of production
 Building plant and layout
 Location of the business
 Waste disposal
The financial plan involves the following:
 Budgeting

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  Evaluation and analysis using rations and capital budgeting principles
The Strategic and tactical plans must consist
 Evaluation
 Reviews
 Follow-up
 Don’t forget to celebrate success

Characteristic of Planning
 Planning is closely associated with the goals of the organization.
 Planning is primarily concerned with the forecasting of future situation in which an
organization has to function. Accurate forecasting leads to correct decisions about
future course of action.
 Planning involves the selection or the best among several alternatives for achieving
the organizational objectives, all of them are not equally applicable and suitable to the
organization
 Planning is comprehensive and is required in every course of action in the
organization.
 Planning is flexible as it is based on future conditions which always dynamic. As
such, and adjustment is needed between the various factors and planning.
Importance of Planning
 To off-set uncertainty and change: Future is always full of uncertainties and
changes. The organization has to function in these uncertainties and changing
condition. However, some of the uncertainties and changes can be predicted on the
basis of forecast.
 To focus attention on objectives: Planning depends upon the objective of the
organization. All the activities are performed to achieve these objectives. However,
planning makes these objectives more concrete and tangible by focusing attention on
these.
 To help in coordination: It can be said that if coordination is the essence of
management, planning is the base for it.
 To gain economy in operation: Planning minimizes costs because of the emphasis
on efficient operation and consistency. In fact, planning involves the selection of most
profitable course of action that would lead to the best result at the least cost.
 To help in control: Control involves the measurement of accomplishment of events
against plans and the correction of deviation to assume attainment of objectives
according plans.
Strategies
Strategies are plans for bringing the organization from a given position to a desired position
in future.
Features of Strategic planning
1. Strategic planning emphasizes the basic mission and goal of the organization.

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 2. It determines the basic policy and programmed of the organization. It provides a
frame –work for operational planning on day to day decision making.
3. The time frame is larger than other types of planning.
4. It deals with uncertain environment by forecasting opportunities and threats therein.

Characteristic of a Good Procedure

Based on facts: A procedure should be based on adequate facts of the particular situation and
not guesses or wishes.
Procedure as a system: Procedures to be effective must be recognized as a system of
interrelated activities in a network.
Updating procedures: There should be a continuous review of the working of the procedures
so that their utility is ascertained.
Steps in Planning
1. Perception of opportunities: Any organization activity requires the help of
environment namely, social factors. Thus, before going through actual planning, one
must be aware that opportunities exist for its performance.
2. Establishing objectives: The first step in planning process is the determination of
organization objectives. The objective should be clearly specified and measureable as far
as possible.
3. Establishing planning premises: Premises are the various factors that affect planning.
These are political factors, ethical standards, government controls, fiscal policy, price,
demand and availability of various factors of production.
4. Determining alternative courses of action: The various available alternatives should
be examined in the light of planning premises, which helps to shortlist the number of
alternatives that can be evaluated for selection.
5. Selected the best course. After evaluating the various alternatives, the most suitable one
is selected. Sometimes, the evaluation shows that more than one alternative is equally
good. In such a case, a manager chooses a combination of these alternatives and put
them in action.
Limitations of Planning
 Lack of accurate information: Planning is concerned with future activity and hence,
its quality will be determined by the quality of forecast of future events. As no
manager can predict completely and accurately the events of future events.
 Problems of change: The problem of change is often complex in long-range
planning. Such factors as technology, consumer tastes and desires, business
conditions, and many other change rapidly and often unpredictably.
 Failure of people: Some of the major failures are lack of commitment to planning
failure to develop sound strategies, lack of clear and meaningful objectives.
 Internal inflexibilities: Internal inflexibilities emerges because of organizational
policies and procedures.
 External inflexibilities: These factors may be social, technological, legal, labor
union, geographical and economic.

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  Time and cost factors: Time is a limiting factor for every manager in the
organization, and if they are burying in preparing elaborate reports and instructions
beyond certain level, they are risking their effectiveness.
Barriers in Making Effect Plans
 Limited conceptual skills or lack of training in making plans.
 Lack of commitment to the planning process; fear of failure
 Improper insufficient, insufficient, out of date, or poor quality data with which to plan
 Too much reliance on the planning department.
 The underlying strategy is not clear
 The plan is over optimistic
 The plan is static

Aids in planning
1. Have more information
Gather quality and sufficient data within the limits of time and money (Isaiah 14:24,
Proverb 16:3). Write down the planning information and communication widely.
2. Avail of multiple sources of information.
3. Involve more people
The participation of workers in making plans encourage support in its implementation
(Proverb 20:18). Involve the right people in the planning process.
4. Brainstorming
5. Benchmarking
6. Build in Accountability
7. Evaluate the planning process and the plan

Importance of forecasting
Forecasting plays an important part in effective planning.
Features of strategic planning
 Strategic planning emphasizes the basic mission and goal of the organization.
 It determines the basic policy and programmers of the organization.

Chapter 3 Organizing
Organizing refers to the formal grouping of people and activities to facilitate achievement of
the firm’s objectives.
Organizing Defined
 Organizing follows after planning
 When the plan has been set, then the manager is ready to organize (1 Corinthians
12:18-19) in order to implement the plan in a fitting and orderly manner (1cor.14:40)

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Organization process
1. Deciding what work is necessary to achieve the plan;
2. Classifying and grouping related work into jobs;
3. Assigning responsibility and delegate appropriate authority
4. Designing hierarchy of relationships
After assigning responsibility in organizing and you discovered that you need more people to
implement the plan, then staffing follows but consider other alternatives like multi-tasking,
matrix, structuring using different approaches.

There are some common features for all organization structures.

 Division of labor: In a business organization, the work may be divided, say, according
to functions like production, marketing, finance and personnel.
 Coordination: Having divided up the work, it becomes necessary to link up or integrate
the various divisions, functions or activities so that all of them are unified in harmony.
 Accomplishment of goals or objectives: An organization structure has no meaning or
purpose unless it is built around certain clear-cut goals or objectives.
 Authority-responsibility structure: An organization structure consists of various
positions arranged in a hierarchy with a clear definition of the authority and
responsibility associated with each of these.
Process 0f Organizing
 Determination of objectives: Organizations are built around objectives. For example, a
business firm must decide whether it will publish books, manufacture cloth.
 Enumeration of activities: The first step in organizing group effort is the division of
the total job into essential. For example, the work of an industrial concern may be
divided into the following major functions: a. Production b. financing c. purchasing d.
sales e. personnel.
 Classification of activities: The various activities connected with production, for
example, may be grouped and classified as production department activities.
 Fitting individual to functions: Having determined the various activities of the job to
be done, the next step will be to fix suitable and well qualified persons into these
activities.
Principles of Organizing
1. Unity of objectives: Every part of the organization and the organization as a whole should
be geared to the basis objective determined for the enterprise.
2. Efficiency: The organization should be able to attain the predetermined goals and
objectives at the minimum cost.
3. Span of management: It is widely recognized that a manager can directly supervise only a
limited number of executives.
4. Division of work: A good organization should consist of departments established to reflect
the most efficient breakdown of enterprise activities.

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5. Functional definition: The duties and the authority relationship in a good organization
must be properly and clearly defined, so that there is no confusion and overlapping.
6. Unity of command: In a good organization, each subordinate should have one superior
whose command he has to obey.
7. Unity of direction: There must be only one plan for a group of activities directed towards
the same end.
8. Responsibility: In a good organization, the superior is responsible for the activities of his
subordinates and the subordinates must be held responsible to their superiors for the
performance of the tasks assigned to them.
9. Continuity: The organization must be so arranged as to provide for the continuity of the
enterprise.

Mistakes in Organization
 Failure to plan properly
 Failure to delegate authority
 Failure to balance delegation
 Misuse of functional authority
 Multiple subordination

Types of organization
 Military or Line system
 Functional system
 Line and staff system
 Matrix system
 Hybrid System

Military or line system

Under this system, authority flows from the person at the top to the lowest person, vertically.
In the departmental line organization, the general manager may be put in charge of the whole
organization. A departmental head may receive orders from the general manager and pass
them on to his immediate subordinates. The subordinates may similarly communicate the
order to the workers. The workers do not have the authority to approach higher officer except
through their immediate boss. In case, the manager of one department wishes to issue
guidance or directions to a subordinates in another department, he will go u the line and
convey the message to the top manager, who will then pass it down the line in the other
department.
General Manager

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 Manager Manager
S
South India Division South India Division
D
Manager Manager Manager Manager
M a
District 1 District 2 District 3 District 4
Figure 3.4 Military or Line Type of Organization
Merits
1. Simplicity: It is the easiest to establish and simple to explain to the employees.
2. Unified Control: It makes for unity of control thus conforming to the scalar principle
of organization.
3. Strong discipline: It ensure excellent discipline. This is because of unified control.
The subordinates have no doubt regarding the person from whom they receive
instructions.
4. Fixed responsibility: Everybody in this type of organization knows to whom he is
responsible, and who are responsible to him.
5. Prompt decision: The unification of authority and responsibility ensures quick and
prompt decisions.
6. Flexibility: Since each executive has sole responsibility of his position and sphere of
work, he can easily adjust the organization to changes in the business situation.
Demerits
1. Overloading: The chief disadvantage of the system is that too much is expected of
the person in authority. Since all work is done according to the wishes of one person
alone, the efficiency of the whole department will come to depend upon the qualities
of management displayed by the head of that department.
2. Lack of specialization: It suffers from lack of specialized skill of experts. For
example, it is not possible for a foreman alone to give full guidance on all matters
relating to use of materials, use of machines, methods, personnel practice etc.
3. Inadequacy of communication: There is usually no communication from the lower
ranks. Moreover, their suggestions cannot be utilized because generally the higher
officer look down upon the views of their subordinates.
4. Scope for favoritism: If an officer is partial he may judge people according to his
own notion, and therefore, it is possible that efficient people may be left behind and
inefficient people may get higher and better posts.
Functional Organization
Most of the business houses have separate department to look after production, sales, and the
general office. Each one of these departments world serves the rest of the organization.
However, vigil should be exercised to see: (1) that the entire work has been divided into
various departments, (2) there is no duplication, and (3) the work allotted to one department
consist of interrelated jobs.

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All related and similar work is placed in one department or division under one executive.
Thus, the marketing manager will be responsible for all marketing work of the company, of
all the plants and for all product lines.
Line and staff Organization
Line and staff organization refers to a pattern in which staff specialists advise line managers
is performing their duties. When the work of an executive increases, its performance requires
the services of specialists. The staff positions are of purely advisory in nature. They have the
right to recommend, but have no authority to enforce their preference on other departments.
In reality, it is difficult to determine which department are line or staff. The problem can
usually be solved by classifying activities within an organization in two ways.
Merits
1. Planned specialization: The line and staff structure is based upon the principle
specialization. The line managers are responsible for operations contributing directly
to achievement of organizational objective, whereas staff people are there to provide
expert advice on the matters of their concerns.
2. Quality decisions: The quality of decisions in line and staff structure is high because
decisions come after careful consideration and thought. Each expert gives his advice
in the area of his specialization, which is reflected in the decisions.
3. Prosper for personnel growth: This system of organizing offers ample prospect
efficient personnel to grow in the organization. It also offers opportunity for
concentrating a particular area, thereby increasing personnel efficiency.
Demerits
1. Lack of well-defined authority: In practice, it is difficult to differentiate clearly
between line and staff because the authority is often diffused. Thus the managers may
not be clear as to what is expected of them or what is the actual area of the operation
of their authority. Thus confusion may be created in the organization.
2. Line and staff conflicts: Such conflicts may be because of various reasons and
sometimes the organizational conflicts may be taken as personal conflicts resulting in
interpersonal problems.
MATRIX ORGANIZATION
The matrix design is created by superimposing a set of project structures on top of a
functional structure. Members of each project team are selected or assigned from the
functional department. The matrix design features a multiple command structure in which an
individual may have any number of superiors, including one functional superior and one or
situations.
Merits
1. Involves and challenges matrix team members.
2. Provides enlarges tasks for people.
3. Develop employee skills.
4. Encourages people to identify with end products.
5. Provides for integration of organizational information.

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 6. Fosters the development of managerial skills.
7. Fosters the development of managerial skills.
Demerits
1. Demands high level of interpersonal skills.
2. Fosters confusion and frustration from its multiple-command structure.
3. Leads to power struggles between functional and project managers.
Hybrid Organization
The hybrid organization utilizes both functional and divisional departmentalization, as
needed by the unique characteristics of the overall organization. Some departments are
arranged along functional lines so that those workers who perform similar tasks divisions.
The advantage is that the whole organization enjoys the unique benefits of both divisional
goals.
Advantages
1. Provide specialization
2. Allows task assignments consistent with technical training
3. Allows excellent coordination within functions.
4. Facilitates top management in direction and control
Disadvantages
1. Poor communication across functional departments
2. Slow response times to external changes
3. Difficulty in pinpointing responsibility
4. Fails to encourage creativity.

What is authority in an Organization?

Authority is the right to perform or command. It allows its holder to act in certain designated
ways and to directly influence the actions of others through orders. It also allows its holder to
allocate the organization’s resources to achieve organizational objectives.
Responsibility
The state or fact of having a duty to deal with something or of having control over someone.
What is difference between authority and responsibility? RR
 Explain the principles of organizing.
 What are the benefits of a good organizational? Give Example. RR

Chapter 4 (Staffing)
The managerial function of staffing involves effective recruitment, selection, placement,
approval, and development of people to occupy the roles in the organizational structure.
Staffing Defined

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Staffing is a series of steps that managers perform in order to provide the organization with
the right person for the right position.
Exodus 18:21 says “select capable men from all the people men who fear God, trustworthy
men who hate dishonest gain.”
Take away my people, but leave my factories and soon grass will grow on the factory floors.
Take away my factories, but leave my people and soon we will have a new and better factory.
Andrew Carnegie
Staffing Process

HR-Planning
HHH Recruitment

Screening and Selection

basically Staffing Means
Right People at Right
Position at Right Time.
Hiring

1. The manager should plan a sufficient number of workers to do all the necessary work.
2. There should be no overstaffing nor under staffing.
3. Jon analysis must be conducted in order to avoid overloading or under loading of
workers.
4. After determining the number of workers needed, recruitment follows.
5. Recruitment is trying to attract potential workers in order to have a pool or recruits to
choose from.
6. When recruitment is absent, the organization will be forced to hire whoever is
available who may be considered as the best.
7. There must be a sufficient number of applicants before choosing the best.
8. The best applicant is the one whose qualifications match the job requirements.
9. Screening and selection devices must be applied in choosing the best applicant. These
are: interview, testing, examination of the credentials, background investigation and
other means.
10. Staffing is simply putting people to jobs.
Systems Approach to Staffing
The key staffing activities are described below

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  Enterprise plans are the basis of staffing: At the base of staffing are enterprise
plans, which are formulated during the planning process. In planning, opportunities
for enterprise are identified and objective are set based on forecast and strategy.
 Organization plans provide a key to staffing needs: In order to carry out the plans,
organization arrangement must be made. To carry out every phase of any program
successfully, the organization structure must be filled and maintained with competent
managers.
 Requirement of managers are determined: The number of managers needed in an
enterprise depends not only upon its size but also upon the complexity of the
organization structure, its plans for expansion, and the rate of turnover among
managerial personnel.
 Management inventory is developed: It is common for any business to keep an
inventory of raw materials and goods to enable it to carry on its operations.
 Recruitment, selection, placement and promotion is ensured: After the need for
managerial personnel has been determined, a number of candidates may have to be
recruited. This involves attracting qualified managerial candidates to fill
organizational roles.
 Managers are appraised: Appraisal serves as a basis for identifying personnel within
the enterprise who deserve promotion. Appraisal is a necessity in organizational life.
Superiors need to know about the quality of performance of their subordinates and for
which appraisal is made appropriately.
 Provision of training and development is ensured: Managerial appraisal should
also be used as the basis for identifying training and development needs.
 Leading and controlling functions carried out: Well-selected and well-trained
managers provide good leadership and create an environment in which people are
motivated and communicate effectively.
Recruitment and Selection
The different procedures steps involved in the selection process are:
 Job description
 Application forms
 Employment tests
 Interview
 Physical examination and
 Induction or orientation
Job Description
A job description is a combination of short statement that describe both the work to be
performed and the essential requirements of the particular jobs.
The job description includes:
 Job title
 Department in which the job exists
 Work to be performed by the new employee
 Job responsibilities

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  Job Knowledge
 Machines, tools and processes to be handled.
 Relation with other jobs
 Qualification and experience required
 Physical activities
Characteristic of Employment Tests
The characteristic of an employment test is as follow;
 A test should be designed on the basis of a sound job analysis programmed.
 The test should be reliable.
Types of Employment Tests
Various types of employment tests include:
 Achievement tests
 Aptitude tests
 Intelligence tests
 Interest tests
 Personality tests
Purpose of interview
 To find the most suitable candidate for the job
 To study the applicant’s motivational and emotional patterns
 To measure the applicant against the specific requirements for the job
 To explore the applicant’s innate abilities
 To study the impact of the applicant’s personality upon others
Types of Interviews
Interviews are basically of two types: (1) guided, and (2) Unguided. In guided, directed or
patterned interview, a list of questions is prepared based on an analysis of the job
specifications. This type of interview measures the personality traits such as self-reliance,
emotional stability, and ability to get along with others, willingness to shoulder responsibility
etc.

Unguided or unpattern interview, as its name implies, is not directed by the interviewer;
instead the applicant talks about what he chooses. Unguided interview is more often used in
situations other than employment, e.g. counselling, handling grievances etc.
Physical Examination
Physical examination or medical check-up has to be carried out for the freshly recruited
people. It many organizations, medical check-up is a must and it denotes the physical well -
being of an employee.
1. It serves to ascertain the applicant’s capability to meet the job requirements.
2. It helps to prevent communicable disease entering the organization.

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Orientation Training
 To strengthen the confidence of the new employees.
 To ensure that new employees may not form false impression about their place of work.
 To promote a feeling of belongingness and loyalty to the organization.
 To give the new employees the information they need such as regarding the facilities,
rules, and regulations:
Concept of Human Resource Development
Human resource development (HRD), in the organizational context, is a process by which the
employees of an organization are helped in a continuous and planned way to:
1. Acquired or sharpen capabilities required to perform various functions associated with
their present or expected future roles.
2. Develop their general capabilities as individuals and discover and exploit their own
inner potentials for their own and/or organizational culture in which supervisor-
subordinate relationships, team work, and collaboration among subunits are strong
and contribute to the professional well-being, motivation, and pride of employees.
Performance Appraisal
1. Understand the difficulties of their subordinates and try to sort them out.
2. Understand the strength and weaknesses of their subordinates and help the
subordinates to realize these
3. Help the subordinates to become aware of their positive contributions
4. Encourage subordinates to accept more responsibilities and challenges.
5. Help subordinates to acquire new capabilities.
6. Plan for effective utilization of the subordinates’ talents.
Career Planning
The HRD philosophy is that people perform better when they feel trusted and see meaning in
what they are doing. Long range plans for the organization are made known to the
employees. Employees are helped to prepare for change whenever such change planned; in
fact, the employees help to facilitate the change.
Training
Training is linked with performance appraisal and career development. Employees generally
are trained on the job or through special in-house training programed. For some employees
(including managers), outside training may be utilized to enhance, update, or develop specific
skills.
Employee Welfare
Employees at lower level in the organization usually perform relatively monotonous tasks
and have fewer opportunities for promotion change. In order to maintain their work
commitment and motivation, the organization must provide some welfare benefits such as
medical insurance, disability insurance, and holidays and vacations.
Workers participation in management

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 OBJECTIVES
The objectives or the necessity of permitting workers to participate in management can be:
 To achieve industrial peace and harmony.
 To develop internal motivation in the workers.
 To boost the morale of employees.
 To raise the levels of the employee production, productivity, and product quality.
 To satisfy workers by making them feel that they also have their voice in the
management.
 To give workers a better understanding of their role in the working of the industry.
 To reduce labor turn-over, absenteeism and tardiness.
 To make managing subordinates, easy.
8. Define staffing. What are the key staffing activities?
9. What are the duties and responsibilities of a cashier? (RR)

Chapter 5 (Directing)
Directing is the process of motivation, and leading the workers so that they can accomplish the
goals on time.
Motivating is influencing the inside feelings of workers toward achieving organizational goals.
Leading is inspiring and encouraging the workers to perform their tasks.
Directing-leadership
Inspiring and encouraging workers to perform better
Biblical Passage
“When the righteous are in authority, the people rejoice: but when the wicked beareth rule, the
people mourn.” Proverbs 29:2
Roles of a leader
1. Educator. The manager/leader is expected to teach the subordinates on:
 Job skills
 Acceptable behavior
2. Judge: The manager/leader is expected to appraise the employees’ performance enforce
policies and settle disputes.
3. Counselor: The manager/leader is expected to be a good listener, adviser and problem
solver.
4. Spokesman: A manager/leader is expected to relay employees’ suggestions, concerns, and
point of views to higher authorities
Leadership Styles
MC Gregory’s Theory X and Theory Y or the positive and negative style.
Theory X is the negative, while theory Y is the positive
The theory Y leader assume that workers are:
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  Matured
 Enjoy work
 Self- directed
 Creative
 Accept added assignments
 Capable of sharing decisions when needed
 Perform duties well without prodding or without being watched.
 Do the work beyond expectations and
 Innovative
With the leader’s positive assumption, his style is also positive He:
 Assigns responsibility and authority
 Reorganize jobs well done
 Assures job security, and
 is generous in giving monetary rewards
 practice shared decision making
 has trust and confidence in subordinates
 is generous with praise
The Theory X leader assumes workers are:
 Self- centered
 dislike work
 lack ambition
 avoid responsibility
 motivated by material rewards
 take advantage of the situation when opportunity arises
 look at work as a burden
 clock-watchers
With the leader’s negative assumption his style is also negative. He
 is suspicious
 threatens job security of workers
 coerces them to work harder
 terminates workers if they don’t do well
 is self-centered
 is ego-centric

Leadership is the activity of influencing people to strive willingly for group objectives. A
supervisor is the leader of a group or has a set target to be achieved in a given time.
Supervision
Close supervision reduces the worker’s effectiveness. Most workers want enough supervision to
be sure that they doing their work correctly. New workers need close supervision than old
workers.

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General Supervision gives the employees a chance to develop their talents; they learn to make
decisions by being in a position to make them. Since the work is a result of their own efforts,
they take pride in their work, improve productivity and show less absenteeism.
Leadership
Leadership, as defined earlier, is interpersonal influence exercised in order to guide people
toward goal achievement. The person exercising this influence is called a leader.
Authority is the right or privilege of directing or requesting workers to do or to refrain form
doing something.
Leadership Traits
1. Leaders are self-confident, well integrated, and emotionally stable.
2. Leaders want to take leadership responsibility and are competent in handling new situations.
3. Leaders identify with the goal and values of the groups they lead.
4. They are warm, sensitive, and sympathetic toward other people, and give practical
suggestions.
5. They are intelligent in relation to other group members.

Types of leadership
1. Autocratic Leaders
As the name suggests, these leaders give orders for everything and provide no
freedom of work for subordinates. Some workers may feel that they are not given
freedom to make decisions. This one-way communication might lead to
misunderstanding and subsequent errors. Such styles are needed during crises.
2. Participative leaders
These leaders invite participation from subordinates to exercise their responsibility
and freedom. They are concerned about their relations with the employees.
Democratic leaders confer final authority on the group. Consultative leaders require a
great deal of involvement, but they alone have the authority to make final decisions.
Participative leaders expect constant feedback. This style if functioning consumes
time.
3. Free-reign Leaders
They are completely non- directional. They give the group complete freedom to
decide, having make clear the goals and guidelines to achieve it. This offers the
greatest use of time and resources. This approach can motivate people to initiate and
carry out complex work plans efficiently and responsibly. This style of functioning is
seen, to some degree, among professional like engineers, teachers, and scientists.
4. Laissez- Faire
 Totally trust their employee
 Concentrate on rational aspect of work
 Does not focus on the management aspect of his work.
 Hands off style
The characteristic of Autocratic leaders and the effect of their leadership on workers are;
Characteristics Leader Workers
Communication Downward Passive
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Use of power Centralized Threatened
Policy-making Inconsiderate Resentful
Discipline Total Discipline Apprehensive
Decision-making Makes and announces Apprehensive
The characteristics of democratic leaders and the effect of their leadership on workers are:
Characteristics Leader Workers
Communication Open well-informed
Use of power Shared authority Responsible
Policy0making Group discussion Involved
Discipline Consultative well disciplined
Decision-making Ask group for reco
mmendation Cooperative and supportive
The characteristics of free rein leaders and the effect of their leadership on workers are:
Characteristic Leader Workers
Communication Takes place between leader Aggressive
And worker
Use of power Avoids power they provide their own
motivation
Policy-making Permissive Complete freedom
Discipline No discipline Discourteous
Christian Leadership style
The Christian leadership style is based on love-loving the work, the workers, and God.
 Humble
 Does not abuse authority
 Seek deep relationship and commitment to God
 Seek for truth and wisdom
Which leadership style is the Best?
 Apparently, there is no one best and permanent style.
 The style of the manager could be a combination of the difference styles and could
change overnight
 The manager has to consider the specific situation and the conditions of the workers
1. Quality leadership is setting the example you want others to follow-doing the tough the
tough things first, working longer hours going more miles, filling the day with full
measure.

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2. Leading involves communicating- tell your expectation to the workers, share your vision
and get their input.
3. Leaders listen to and trust their subordinates.
4. Leading is loving your work.
5. Leaders stand ready, willing and able to do anything they ask their subordinate to do.
6. Leaders recognized and reward outstanding performance.
7. Leaders must set high ethical standards
8. Leaders work faster, better, more reliably with fewer errors and at a lower cost.
9. Leaders have integrity-honesty
Motivating
Motivating is the force that energizes behavior of workers so that they will work harder and
smarter. To influence is to focus on workers’ needs and behavior.
Workers Needs
 Physical, physiological or biological needs
 Security or safety needs (safe working condition, medical benefit)
 Social or belonging needs (friendship, affection)
 Esteem or psychological needs (recognition and appreciation
 Self-realization need
Employees stay when they are:
Paid well, Mentored, Challenged, Promoted, Involved, Appreciated, Valued, Empowered,
Trusted.
Physical needs
Basic needs for things such as food, water, and shelter that must be met in order a person to
survive.
Example: By providing a level of pay that enables a person to buy food and clothing and have
decent housing.

Communication
Communication is one of the most important facilitators of managerial activities. Without it,
facts, ideas, and experiences cannot be exchanged.
Types of communication
Formal communication follows the chain of command of the formal organization. This may
include executive orders regarding new bonus system or stock option plans, technical
information for decision-making purposes, procedural policies and rules as set forth in the
company manuals.
Informal communication, also called grapevine are not provided in the organization
structure. It may be used to spread false or distorted messages. Downward communication

24
refers to the flow of messages from the top-level to the lower level of the organization.
Upward communication refers to the movement of messages from the lower lever to the
higher level management. Horizontal communications refer to the passing of messages within
a department as in case of staff relationship.
Purpose of communication
1. To increase acceptance of organizational rules by subordinates in allowing then to
exchange views, resolve ambiguities about their jobs, and settle conflicts among
groups and individuals.
2. To gain greater commitment to organizational objectives by motivating, controlling
and evaluating the performance of organizational personnel. Assigning tasks, issuing
orders, praising performance, and criticizing mistakes involves some degree of
effective communication.
3. To provide data necessary for decision-making. Communication is a vital information
function for solving simple or complex problems and making accurate decisions to
positively influence organizational performance.
Barriers to effective communication
1. Lack of openness
2. Assumptions
3. Fear
4. Language
5. Perception
6. Time constraints
1. What is the purpose of communication?
2. Distinguish between formal and informal communication.
3. What are the barriers to effective communications?
4. What are the leadership traits?

Chapter 6 (Controlling)
Controlling is determining what is being accomplished i.e. evaluating the performance and, if
necessary, applying corrective measures so that the performance takes place according to
plans.
Checking up or monitoring on how well the plan is being accomplished as activities are
performed.
Effective controlling assists in the effort to regulate actual performance to assure that it takes
place as planned.
Control Process
1. Measuring performance.
2. Comparing performance with the standard, and ascertaining the difference, if any.
3. Correcting unfavorable deviation by means of remedial action.

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Levels of control
Planning Controlling
 Strategic plan strategic control
 Tactical plan Managerial control
 Operating plan Operational control
Management Levels
 Top Strategic control/ goal, plan
 Middle Structural control/ tactical
 First line operation/financial control/ individual task and
Performance
The control process
Plan
The control process begins with planning and the establishment of performance objectives.
There are two types of standards:
Output standard: measures performance results in terms of quantity, quality, cost, or time.
Input standards: measure work efforts that go into a performance task
Check
The comparison of actual performance with desired performance establishes the need for
action
Ways of making such comparisons include:
Historical, Relative, Engineering, Benchmarking
Act
Taking any action necessary to correct or improve things
Managed by Exception can save the managers time, energy, and other resources, and
concentrates efforts on areas showing the greatest need.
There are two types of exception
Problem: below standard
Opportunities: above standard
Measuring performance: is the comparison of the actual results or the “what is” and the
standard or the “what should be”.
Corrective action: is necessary when the deviation between the actual and the standard is
significant.
Information
Financial Control:

26
  Budget
 Financial analysis
 Financial audit
Budget:
 Cash budget
 Financing budget
 Capital expenditure budget
Financial analysis
 Liquidity ratio
 Profitability ratio
 Debt ratio
Break-even analysis
 Break- even volume analysis
 Break-even selling price analysis
 Break even sales analysis
Financial audit
 Internal audit
 External audit
Operations Control
 Process control
 Capacity control
 Inventory control
 Quality control
Human resources control
 Performance appraisal
 Absenteeism analysis
 Turnover analysis

Observation is the process of watching someone or something. Often, observation is an

informal action, but it can also be formal and involve data collection.
Observation and feedback about employee performance. Feedback should be based on
observed, factual, specific work-related behaviors, actions, statements, results, and working
relationships. Effective feedback helps the employees sustain good performance, develop
new skills, and improve performance when necessary.
Auditor Job Duties: Ensure compliance with established internal control procedure by
examining records, reports, operating practices, and documentation. Verifies assets and

27
liabilities by comparing items to documentation. Complete audit work papers documentation
and tests.
Management Audit
Management audits have developed over the years as a way to evaluate the effectiveness and
efficiency of various systems within an organization, from social responsibility to accounting
control. Management audits may be performed for either internal or external purposes.
External Audit
An external audit is directed toward the evaluation of firms outside the boundaries of the
corporation. The results of an external audit are generally used primarily for planning
purposes.
Internal Audit
Internal management audits may use to improve the planning process as well as internal
control systems. It reviews the company’s past, present, and future performance.

Chapter 7 (Decision Making)

Decision-making is the process of selecting a course of action from among alternatives. It is a
core of planning.
Decision making process
1. Defining the problem: Precise definition and identification of main and sub-problems
needed.
2. Classifying objectives: Classification with reference to criticality and order of
importance is required.
3. Identifying evaluation criteria: Cost, performance and risk involved are to be
assessed, quantitatively.
4. Model building: It may be mathematical or analytic through computer simulation; to
assess the likely consequences of various alternatives.
5. Evaluating results: The analysis should lead to a recommendation for some type of
action.
6. Taking final decision: The best possible solution is selected after taking into accunt
the risks involved and the uncertain future.
7. Feedback or following up the decision:
Classification of Decisions
1. Organizational and Personal: When a person takes a decision in the organization as
an executive, it will be an organizational decision. Personal decisions are those taken
by an executive about himself.
2. Routine and Strategic Decision: Routine decisions are made by following certain
established rules or procedure and policies. These decisions do not require fresh
information or knowledge. Routine decisions are taken at middle or lower level of
management.

28
 3. Decisions Programmed and Non-Programmed: They rely primarily on previously
established criteria. Non-programmed decisions are open decisions and deal with
unique problems. All strategic decisions are non-programmed decisions. Allocating
resources, improving customer satisfaction, taking over sick units etc.
4. Policy and operative decision: Policy decisions determine the basis policy of the
organization and are taken up at top-level management. Operative decisions are less
important and are related to day-to-day operations of the business.
5. Individual and Group Decisions: These individual decisions are programmed and
are less important. Group decisions are taken by group of persons.
6. Major and Minor Decisions: A decision related to a purchase of a CNC machine
costing RS.10 lakhs is a major decision while purchase of stationery items involves a
minor decision.
Difficulties in Decision Making
 Incomplete information
 Unsporting environment
 Ineffective communication
 Incorrect timing
What are the advantage and disadvantage of group decision-making? (RR)

Chapter 8 (Productivity and Operations Management)

Operations management is important to managers for at least two reasons. First, it can
improve productivity which in turn improve the financial health of the organization.
Second, it can help organizations meet customers’ competitive priorities.
Productivity is of great important, specially, for undeveloped and developing countries, since
is a measure of how well the resources are utilized to get the maximum output. So there
should be a tendency to perform a job by cheaper and quicker means.
Production of any commodity or service is the volume of output. Productivity is the
efficiency of the system use for production.
Factors of Production
The important factors affecting productivity can be classified into external factors and
internal factors.
The various factors are:
1. Capital availability
2. Natural resources
3. Taxation
4. Laws and restriction imposed by Government
5. Competing in the market
6. Technical and other training facilities
7. Political, social and economic conditions
8. Availability of water, power and other input supplies.

29
Internal factors
1. Product design
2. Input materials
3. Technological development and innovations
4. Plant Layout
5. Material handling technical utilized
6. Work study (a system of method to maximum output)
7. Method study (work systematic)
8. Production planning and control
Reasons for low productivity
The factors responsible for low productivity are:
1. Poor product design
2. Lack of standardization (of products, input materials etc.)
3. Improper equipment/ machines/ cutting tools
4. Poor process planning
5. Poor plant layout
6. Unnecessary variety of products
7. Shortage of input materials, tools,
8. Frequent change in product design
9. Frequent breakdown of machine due to poor preventive maintenance
10. Poor working conditions and environment
11. More absenteeism of workers without prior permission
Factors Increasing Productivity
In order to improve productivity, the following factors are to be taken into consideration and
need to be controlled
1. Wastage of materials
2. Breakdown of Machines
3. Waiting time concerning manpower and machines time concerning
4. Poor working conditions
5. Poor management
6. Material handling
Management can play and important role in improving productivity, as
1. It brings the resources together
2. It directs and controls the workers
3. It helps in bringing latest techniques and puts in effort to see that the techniques being
used.
Raw material productivity can be improved by ensuring:
1. Changes in product design
2. Proper training and motivation workers
3. Better material planning and control
4. Waste reduction and scrap control

30
 5. Ability of alternative cheaper materials
The labor productivity can be improved by:
1. Providing training to workers to utilize best methods of production
2. Constant motivation of workers through financial and non-financial incentives.
3. By boosting the morale of employees.
4. Improving working conditions in the plant.
Factors Affecting Productivity
1. Manpower
 Selection of right man for a specific job
 Training requirements
 Number of personnel required in each of the departments.
2. Equipment and Machines
 The number of machine tools and their capacity
 The accessories required
 The maintenance schedule
3. Input material
4. Time
5. Floor area of apace
6. Power of energy
7. Finance
Cost control
Productivity can be improved by reducing the production cost. It can be achieved by keeping
a close watch over expenditure, minimization of material wastages, reduction in machine’s
breakdown period or idleness or machines, reduction in waiting for men, power and
materials, avoiding excessive material handling and minimization of overtime expenditure.
1. What is productivity?
2. How productivity is different from production?
3. What are the external and internal factors affecting productivity?
4. Explain some of the reasons for low productivity?

Chapter 9: Information Technology and Management

Managers at all levels are finding that computer based information systems provide the
information necessary for effective management. The management information system (MIS)
Is rapidly becoming indispensable for planning, decision-making and control. E-commerce or
electronic commerce, is conducting business communications and transactions via computers
and over networks. It is the buying and selling of goods and service through digital
communications.
Chapter (10) Customer Relationship Management

31
Always remember that the customer (consumer) is the heartbeat of every firm. A better
understanding of consumers and the transaction relationships a firm has with them will lead
to a healthier small business.
What is customer relationship management?
Customer relationship management (CRM) means different things to different firms.
To some, it is symbolized by simple smiles or comments such as “thank you” and “come
again” communicated by employees to customers who have just made a purchase. For others,
CRM embodies a much broader marketing effort, leading to nothing short of complete
customization of products and/or services to fit individual customer needs. The goals of a
CRM program for most of small companies fall somewhere between these two perspectives.
Regardless of the level of a firm’s commitment to customer relationship management,
the central message of every CRM program is “Court customer for more than a one-time
sale.” A firm that strongly commits to this idea will appreciate the many benefits a CRM
program can offer.
Formally defined, customer relationship management (CRM) is a “company-wide
business strategy designed to optimize profitability and customer satisfactory by focusing on
highly defined and precise customer groups. In a way, CRM is a mindset-the implementation
of customer-centric strategies. Which put customers first so that the firm can succeed.
CRM involves treating customers the way the entrepreneur would want to be treated he or
she were a customer – the business version of the Golden Rule.
The central theme of CRM isn’t new. For decades, entrepreneurs have recognized the
importance of treating customers well; “the customer is king” is and old adage.
What is new is giving this idea a name and using technology to implement many of its
techniques. Modern CRM focuses on (1) customers rather than products; (2) Changes in
company processes, systems, and culture; and (3) all channels and media involved in the
marketing effort, from the Internets to field sales. They simply stored information about their
customers in computers for reasons other than invoicing. Their goal was to learn who their
customers were, what they wanted, and what sort of interests they had.

The Importance of CRM to the Small Firm

A firm’s next sale comes from one of two sources – a current customer or a new customer.
Obviously, both current and potential customers are valued by a small firm, but sometimes
current customers are taken for granted and ignored. While marketing efforts devoted to
bringing new customers into the fold are obviously important, keeping existing customers
happy should be an even higher priority. A CRM program addresses this priority. Some
firms, however, appear not to recognize this simple truth, and this results in different levels of
CRM initiatives.
1. Acquisition costs for new customers are huge.
2. Long-time customers spend more money than new ones.
3. Happy customer refers their friends and colleagues.
4. Order-processing costs are higher for new customers.
5. Old customers will pay more for products.

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Current customers- Happy customers- Pay more to buy product Refer friends and
colleagues
Unhappy customers- Buy from a competitor next time
New customers - Have high acquisition costs and order-processing costs

Creating Positive Transactional Relationships

Through Extraordinary Service
To be successful in the long run, small firms need to concentrate on building positive
transactional relationships with customers. A transactional relationship is an association
between a business and a customer that relates to a purchase or a business deal. Consumers
who have positive interactions with a business usually become loyal customers. Three basic
beliefs underlie our emphasis on providing exceptional customer service.
1. Small businesses possess greater potential for providing superior customer service
than do large firms.
2. Superior customer service leads to customer satisfaction.
3. Customer satisfaction results in a positive transactional relationship.

Maintaining Customer Relationships

No matter what type of business you operate, building and maintaining customer
relationships is essential to its success. A friend of mine who operates a very successful e-
commerce- based business responds regularly to his customers’ questions, even if he is
traveling outside of the United States. Since many of his customers are located in other parts
of the world, customer inquiries arrive and are answered from several different zones. His
response mention that he is traveling and is sending the e-mail from the city where he is
located on that particularly day. His staff is required to respond to all customer phone calls
and e-mail within 24 hours. If you operate a business, no matter how small or large,
customers like to feel there is a person who really cares about their needs. Whether the
information shared is by telephone or e-mail, promptness and a personal approach are keys to
the customers’ having a good feeling about your company. Regardless of whether your
business is a prompt, accurate, and understanding response will be very likely to continue
doing business with your company.

Components of Customer Satisfaction

A number of factors under a firm’s control contribute to customer satisfaction. One classic
article identifies the following four elements as keys to customer satisfaction:

1. Providing the most basic benefits of the product and/ or service – the elements that
customers expect all competitors to deliver.

33
 2. Offering general support services, such as customer assistance.
3. Setting up a system to counteract any bad experience customers may experience.
4. Delivering extraordinary services that excel in meeting customers’ preferences and
make the product and/or service seem customized.

Small firms are in a unique position to offer extraordinary.

1. Naming names. In todays detached, “just give me your account number” world,
nothing is more well received than individual, personalized attention. Even though
you may already be courteous and friendly to customers, greeting them by name is
valued 10 times more on the “worthy of loyalty” scale.
2. Customer care: Customers pretty much know what they do and don’t want form your
company. If you remember what they want on an individual basis-even if it’s
something as simple as knowing a dry cleaning customer likes starch in his collars-
then you have mastered one of the key elements of a strong loyalty program.

Simplified Model of Consumer Behavior

1. Psychological Influences
a. Needs
b. Perceptions
c. Motivations
d. Attitudes
1. Needs
Needs are often described as the starting point for all behavior. Without need, there
would be no behavior. Although consumer needs are innumerable, they can be
identified as falling into four categories – physiological, social, psychological, and
spiritual. For example, consumers purchase food products in supermarkets to satisfy
their physiological needs. But they also purchase food in status restaurants to satisfy
their social and/or psychological needs.
2. Perceptions
If a consumer has strong brand loyalty to a product, it is difficult for other brands to
penetrate his or her perceptual barriers. For example, a retailer may mark its fashion
clothing “on sale” to communicate a price reduction from usual levels, but customers’
perceptions may be that “these clothes are out of style.”
3. Motivations
If an acceptable reason for purchasing a product or service is provided, it will
probably be internalized by the customer as a motivating force.
4. Attitudes
Do they imply feelings of good or bad, favorable or unfavorable? An attitude is an
enduring opinion, based on a combination of knowledge, feeling, and behavioral
tendency. For examples, consumers with the belief that a local, family-run grocery
store has higher prices than a national supermarket chain may avoid the local store.

Hennery Fayol’s Principles of Management

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1. Division of work: The objective of work is to get better result with the same effort. It
is accomplished through reduction in the number of tasks to which attention and effort
must be directed.
2. Authority and responsibility: Authority is the right to give orders and responsibility
is its essential counterpart. Whenever authority is exercised responsibility arises.
3. Discipline: Discipline implies obedience and respect for the agreements between the
firm and its employees. Establishing of these agreements, binding a firm and its
employees from which disciplinary formalities emanate, should remain one of the
chief preoccupations of industrial heads. Discipline also involves sanction judiciously
applied.
4. Unity of command: An employee should receive orders from one superior only.
5. Unity of direction: Each group of activities having one objective should be unified
by having one plan and one head.
6. Subordination of individual interest to general interest: The interest on one
employees of group or employees should not prevail over that of the company or
broader organization.
7. Remuneration of personnel: To maintain the loyalty and support of workers, they
must be provided with a fair wage for services rendered.
8. Centralization: Like division of work, centralization belongs to the natural order of
things. However, the appropriate degree of centralization will vary with a particular
concern, sot it becomes a question of the proper proportion. It is a problem of finding
the measure that will give the best overall yield.
9. Scalar chain: The scalar chain is the chain of superiors ranging from the ultimate
authority to the lowest ranks. It is an error to depart needlessly from the line of
authority, but it is an even greater one to keep it when detriment to the business
ensues.
10. Order: A place for everything and everything in its place.
11. Equity: Equity is a combination of kindness and justice.
12 Stability of tenure of personnel: High employee turnover increases inefficiency. A
mediocre manager who stays is infinitely preferable to an outstanding manager who
comes and goes.
13 Initiative: Initiative involves thinking out a plan and ensuring its success. This gives
zeal the energy to an organization.
14 Esprit de corps: Union is strength, and it comes from the harmony of the personnel.

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