Chapter -4

Planning
Planning: Concept and Process
Concept of Planning
Planning is deciding in advance what to do and how to do.

It is one of the basic managerial functions.

Thus, planning is closely connected with creativity and innovation.

But the manager would first have to set objectives, only then will a manager know
where he has to go. Planning seeks to bridge the gap between where we are and
where we want to go.
Planning is what managers at all levels do. It requires taking decisions since it
involves making a choice from alternative courses of action.

Planning involves setting objectives and developing appropriate courses of action

to achieve these objectives.
Objectives provide direction for all managerial decisions and actions. Planning
provides a rational approach for achieving predetermined objectives. All members,
therefore, need to work towards achieving organisational goals. These goals set the
targets which need to be achieved and against which actual performance is
measured.

Planning: Keeping the objective in view and being in action Planning means setting
objectives and targets and formulating an action plan to achieve them.

It is concerned with both ends and means 1.e., what is to be done and how it is to
be done.

Planning Process

Planning is deciding in advance what to do and how to do. It is a process of decision

making. How do we go about making a plan? Since planning is an activity there are
certain logical steps for every manager to follow.

1. Setting Objectives
The first and foremost step in the planning process is setting objectives. Every
organisation must have certain objectives.
 Objectives may be set for the entire organisation and each department or unit
within the organisation.
 Objectives or goals specify what the organisation wants to achieve, i.e. end point
of planning or the end result of activities. For example, an organisation may have
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 an objective of increasing sales by 10% or earning 20% Return on Investment
(ROI) from business.
 Objectives serve as a guide for overall business planning.
 They are usually set by top management of the organisation.

2. Developing premises

Planning is concerned with the future, which is uncertain. Therefore, the manager is
required to make certain assumptions about the future, which are considered to be
the base material upon which plans are to be drawn. These assumptions are called
planning premises.
 Assumptions are made in the form of forecasts. Forecasting is important in
developing premises as it is technique of gathering information.
 Forecasts can be made about the demand for a particular product, government
policy change, interest rates, tax rates, etc. Accurate forecasts, therefore, become
essential for successful plans.

3. Identifying alternative courses of action

Once objectives are set and assumptions are made, then the next step is to identify
all possible alternative courses of action to achieve the objectives.
If the project is important, then more alternatives should be generated and
thoroughly discussed amongst the members of the organisation.

4. Evaluating alternative courses

The next step is to weigh the pros and cons of each alternative. The positive and
negative aspects (i.e., feasibility and consequences) of each proposal are evaluated
in the light of the objective to be achieved. For example,
in financial plans the risk-return trade-off is very common. The more risky the
investment, the higher the returns it is likely to give. To evaluate such proposals
detailed calculations of earnings, earnings per share, interest, taxes, dividends are
made and decisions are taken.

5. Selecting an alternative

This is the real point of decision-making. The best plan has to be adopted and
implemented. The ideal plan would be the most feasible, profitable and with least
negative consequences.

 Sometimes, a combination of plans may be selected instead of one best course.

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 The manager will have to apply permutations and combinations and select the
best possible course of action.

6 Implementing the plan

This step is concerned with putting the plan into action, i.e., doing what is required.
 This is the step where other managerial functions also come into the picture. For
example, if there is a plan to increase production then more labour, more
machinery will be required.
 This step would also involve organising for labour and purchase of machinery.
7. Follow-up action
Follow-up action means to see whether plans are being implemented and activities
are performed according to plans. Monitoring the plan is equally important to ensure
that objectives are achieved.

Features of Planning
The planning function of the management has certain special features. These
features throw light on its nature and scope.
1. Planning focuses on achieving objectives.
Specific goals are set out in the plans along with the activities to be undertaken to
achieve the goals. Thus, planning is purposeful.
Planning has no meaning unless it contributes to the achievement of predetermined
organisational goals.
2. Planning is a primary function of management.
Planning lays down the base for other functions of management. All other
managerial functions are performed within the framework of the plans drawn. Thus,
planning precedes other functions. This is also referred to as 'the primacy of
planning'.The various functions of management are interrelated and equally
important. However, planning provides the basis of all other functions.
3. Planning is pervasive.
Planning is required at all levels of management as well as in all departments of the
organisation.
Planning is not an exclusive function of top management nor of any particular
department. But the scope of planning differs at different levels and among different
departments.
 The top management undertakes planning for the organisation as a whole.
 Middle management does the departmental planning.
 At the lowest level, day-to-day operational planning is done by supervisors.

4. Planning is continuous.

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Plans are prepared for a specific period of time, may be for a month, a quarter, or a
year. At the end of that period there is need for a new plan to be drawn on the basis
of new requirements and future conditions.
Hence, planning is a continuous process because a plan is framed, it is implemented,
and is followed by another plan, and so on.

5. Planning is futuristic.
Planning essentially involves looking ahead and preparing for the future.
The purpose of planning is to meet future events effectively to the best advantage of
an organisation. It implies peeping into the future, analysing it and predicting it.
Planning is, therefore, regarded as a forward looking function based on forecasting.
Through forecasting, future events and conditions are anticipated and plans are
drawn accordingly. For example, sales forecasting is the basis on which a business
firm prepares its annual plan for production and sales.

6. Planning involves decision making.

Planning essentially involves choice from among various alternatives and activities. It
involves thorough examination and evaluation of each alternative and choosing the
most appropriate one.

7. Planning is a mental exercise.

Planning requires application of mind involving foresight, intelligent imagination and

sound judgement.
It is basically an intellectual activity of thinking rather than doing, because planning
determines the action to be taken.

Importance of Planning
No enterprise can achieve its objectives without systematic planning. It is rightly
remarked "Failing to plan is planning to fail." The major benefits of planning are given
below:

1. Planning provides directions.

By stating in advance how work is to be done planning provides direction for action.
 Planning ensures that the goals or objectives are clearly stated so that they act as
a guide for deciding what action should be taken and in which direction.
 If goals are well defined, employees are aware of what the organisation has to do
and what they must do to achieve those goals.
 Departments and individuals in the organisation are able to work in coordination.

2. Planning reduces the risks of uncertainty.

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Planning is an activity which enables a manager to look ahead and anticipate
changes. By deciding the tasks to be performed, planning shows the way to deal with
changes and uncertain events.

3. Planning reduces overlapping and wasteful activities.

 Planning serves as the basis of coordinating the activities and efforts of different
divisions, departments and individuals. It helps in avoiding confusion and
misunderstanding.
 Since planning ensures clarity in thought and action, work is carried on smoothly
without interruptions. Useless and redundant activities are minimised or
eliminated.
 It is easier to detect inefficiencies and take corrective measures to deal with
them.

4. Planning promotes innovative ideas.

Planning is deciding in advance what to do and how to do. Before doing something,
the manager must formulate an idea of how to work on a particular task. Thus,
planning promotes innovative ideas.
Since planning is the first function of management, new ideas can take the shape of
concrete plans.

5. Planning facilitates decision making.

 Planning helps the manager to look into the future and make a choice from
amongst various alternative courses of action.
 The manager has to evaluate each alternative and select the best possible
alternative course of action.

6. Planning establishes standards for controlling.

 Planning provides the goals or standards against which actual performance is

measured. By comparing actual performance with some standards, managers can
know whether they have actually been able attain the goals. If there is any
deviation it can be corrected. Therefore, we can say that planning is pre-requisite
for controlling
 If there were no goals and standards, then finding deviations which are a part of
controlling would not be possible. Thus, planning provides the basis of control.

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Limitations of Planning

Planning might fail in spite of the best efforts of management due to the following
major limitations of planning:

1. Planning leads to rigidity.

In an organisation, a well-defined plan is drawn up with specific goals to be achieved
within a specific time frame. These plans then decide the future course of action and
managers may not be in a position to change it. This kind of rigidity in plans may
create difficulty.
Managers need to be given some flexibility to be able to cope with the changed
circumstances.

2. Planning may not work in a dynamic environment.

The business environment is dynamic, nothing is constant. The environment consists
of a number of dimensions, economic, political, physical, legal and social dimensions:
The organisation has to constantly adapt itself to changes.
 It becomes difficult to accurately assess future trends in the environment if
economic policies are modified or political conditions in the country are not
stable or there is a natural calamity.
 Competition in the market can also upset financial plans, sales targets may have
to be revised and, accordingly, cash budgets also need to be modified since they
are based on sales figures. Planning cannot
foresee everything and thus, there may be obstacles to effective planning.

3. Planning reduces creativity.

The top management undertakes planning for the organisation as a whole. Usually,
the rest of the members just implement these plans. As a consequence, middle
management and other decision makers are neither allowed to deviate from plans
nor are they permitted to act on their own. Thus, much of the initiative or creativity
inherent in them also gets lost or reduced.
Most of the time, employees do not even attempt to formulate plans. They only
carry out orders. Thus, planning in a way reduces creativity since people tend to
think along the same lines as others. There is nothing new or innovative.

4. Planning involves huge costs.

When plans are drawn up huge costs are involved in their formulation. These may be
in terms of time and money.
 Checking accuracy of facts may involve lot of time. Detailed plans require
scientific calculations to ascertain facts and figures.

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 There are a number of incidental costs like expenses on boardroom meetings,
discussions with professional experts and preliminary investigations to find out
the viability of the plan.
Sometimes, the costs incurred may not justify the benefits derived from the plans.

5. Planning is a time-consuming process.

Sometimes plans to be drawn up take so much of time that there is not much time
left for their implementation.
6. Planning does not guarantee success.
 The success of an enterprise is possible only when plans are properly drawn up
and implemented. Any plan needs to be translated into action or it becomes
meaningless.
 Managers have a tendency to rely on previously tried and tested successful plans.
It is not always true that just because a plan has worked before it will work again.
Besides, there are so many other unknown factors to be considered.
This kind of complacency and false sense of security may actually lead to failure
instead of success.

Types of Plans
Single-use plans and Standing plans

An organisation has to prepare a plan before making any decision related to business
operation, or undertaking any project.
A plan is a specific action proposed to help the organization achieve its objectives.
It is a document that outlines how goals are going to be met.
The importance of developing Plans is evident from the fact that there may be more
than one means of reaching a particular goal. So with the help of logical plans,
objectives of an organization could be achieved easily.
Plans can be classified into several types depending on the use and the length of the
planning period. Certain plans have a short-term horizon and help to achieve
operational goals. These plans can be classified into single- use plans and standing
plans.
Single-use Plan Standing plans (also known as 'Repeat
use plans')

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A single-use plan is developed for a one- A standing plan is used for activities that
time event or project. occur regularly a period of time.
 Such a course of action is not likely to  Standing plans are used over and over
be repeated in future, i.e., they are again because they focus on
for non-recurring situations. organizational situations that occur
repeatedly.
 The duration of this plan may depend  It is usually developed once but is
upon the type of the project. It may modified from time to time to meet
span a week or a month. A project business needs as required.
may sometimes be of only one day,  It is designed to ensure that internal
such as, organising an event or a operations of an organisation run
seminar or conference. smoothly. Such a plan greatly
enhances efficiency in routine
decision-making.
 Single-use plans include:  Standing plans include:
(i) Budgets (i) Policies
(ii) Programmes (ii) Procedures
(iii) Projects (iii) Methods
Note: Projects are similar to programmes (iv) Rules
but differ in scope and complexity

1. Objectives
Objectives are the end points which are numerically expressed, that the
management seeks to achieve within a given time period, e.g. increasing sales by
10% in the next quarter.
 Objectives specify what the organisation wants to achieve, i.e. end point of
planning or the end result of activities. They focus on broad general issues.
 Objectives need to be expressed in specific terms, i.e., they should be measurable
in quantitative terms, in the form of a written statement of desired results to be
achieved within a given time period.
 Objectives are usually set by the top management and serve as a guide for overall
planning. Each unit then formulates their own objectives keeping in view the
overall organisational goals.
2. Strategy
A strategy is a comprehensive plan for accomplishing an organisation's objectives
taking business environment into consideration.
This comprehensive plan will include three dimensions:
(i) determining long term objectives,
(ii) adopting a particular course of action, and

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(iii) allocating resources necessary to achieve the objective.
 A strategy is part of strategic planning or management. It is a general plan
prepared by top management outlining resource allocation, priorities and takes
into consideration the business environment and competition.
 It provides broad contours of an organsiation's business and refers to future
decisions defining the organisation's direction and scope in the long run.
 Whenever a strategy is formulated, the business environment needs to be taken
into consideration.
 The changes in the economic, political, social, legal and technological
environment will affect an organisation's strategy. Strategies usually take the
course of forming the organisation's identity in the business environment.
 Major strategic decisions will include decisions like whether the organisation will
continue to be in the same line of business, or combine new lines of activity with
the existing business or seek to acquire a dominant position in the same market.
For example, a company's marketing strategy has to address certain questions
i.e., What is the demand for the product? Which channel of distribution to use?
What is the pricing policy? and How do we advertise the product?

3. Policy
Policy is a general guideline that guides thinking or channelises energies towards a
particular direction. It brings uniformity in decision making and action for
interpretation of strategy.
For example, the admission policy of an educational institution, recruitment policy,
pricing policy or purchase policy of a company within which objectives are set and
decisions are made.
 Policies are general forms of standing plans that specifies the organisations
response to a certain situation like the admission policy of an educational
institution. If there is an established policy, it becomes easier to resolve problems
or issues. As such, a policy is the general response to a particular problem or
situation.
 There are policies for all levels and departments in the organisation ranging from
major company policies to minor policies. Major company policies are for all to
know i.e., customers, clients, competitors etc., whereas minor polices are
applicable to insiders and contain minute details of information vital to the
employees of an organisation.
 Policies define the broad parameters within which a manager may function. The
manager may use his/ her discretion to interpret and apply a policy. For example,
the decisions taken under a Purchase Policy may be: should the company make or
buy its requirements of packages? how should vendors be selected for procuring
supplies? How many suppliers should a company make purchases from? All these
queries would be addressed by the Purchase Policy.

4. Procedure
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Procedure consists of sequence of routine steps performed in a chronological order
to carry out activities. It details the exact manner in which any work is to be
performed. For example, a procedure for reporting progress in production, a
procedure for requisitioning supplies before production.
 The sequence of steps or actions to be taken are generally to enforce a policy and
to attain pre-determined objectives.\
 Procedures are generally meant for insiders to follow.

5. Method
Method is the prescribed way or manner in which a task has to be performed taking
into consideration the objective of the organisation.
 It deals with a task comprising of one step of a procedure and specifies how this
step is to be performed. The method may vary from task to task.
 Selection of right method saves time, money and effort and increases efficiency.

Example:
For imparting training to employees at various levels from top management to
supervisory management, different methods can be adopted. For higher level
management orientation programmes, lectures and seminars can be organised
whereas at the supervisory level, on the job training methods and work oriented
methods are appropriate.
6. Rule
A rule is a specific statement that specifies clearly what is to be done or not to be
done. It is a guide to behaviour.
For example, 'no smoking' in office premises, reporting for work at a particular time,
etc.
 A rule does not allow for any flexibility or discretion and prescribes a penalty for
violation.
 A rule reflects a managerial decision that a certain action must or must not be
taken.
 Rules are usually the simplest type of plans because there is no compromise or
change unless a policy decision is taken.
7. Budget
A budget is a statement of expected results for a given future period expressed in
numerical terms, e.g. Sales budget, Cash budget, etc.
For example, a sales budget may forecast the sales of different products in each area
for a particular month.
 A budget is a plan which quantifies future facts and figures.
 A budget is a statement of expenses, revenue and income for a specified period.
 Since budget represents all items in numbers, it becomes easier to compare
actual figures with expected figures and take corrective action subsequently.
Thus, a budget is also a control device from which deviations can be taken care
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 of. But making a budget involves forecasting, therefore, it clearly comes under
planning. It is a fundamental planning instrument.
8. Programme
Programmes are detailed statements about a project which outlines the objectives,
policies, procedures, rules, tasks, human and physical resources required and the
budget to implement any course of action. Examples: Construction of a shopping
mall, opening a new department, etc.
 A programme may consist of identifying steps, procedures required for opening a
new department to de with other minor work.
 Programmes will include the entire gamut of activities as well as the
organisation's policy and how it will contribute to the overall business plan. The
minutest details are worked out i.e., procedures, rules, budgets, within the broad
policy framework.

Objective Type Questions

1. Planning has no meaning unless _______________________

(Complete the sentence)
2. ____________________ is a process of decision-making. (Choose the
correct alternative).
(a) Planning (b) Organising (c) Directing (d) Controlling
3. ___________________ is the step in the planning process where other managerial
functions also curve into the picture.
(Choose the correct alternative)
(a) Evaluating alternative courses (b) Selecting an alternative (
(c) Implementing the plan (d) Following action
4. ________________ is the step in the planning process which involves organising
for labour and purchase of machinery. (Fill up the blank
with correct answer)
5. To see whether plans are being implemented and activities are performed
according to schedule is a part of the planning Follow up action process.
(True/False)
6. While formulating a plan, the manager is required to make certain assumptions
about the future. What are these assumptions called?
7. Following are the steps of Planning Process. Arrange them in correct sequence:
(a) Developing premises (b) Identifying the course of action
(c) Setting objective O (d) Evaluating alternative courses
8. "Management translates work into goals and also finds ways and means to achieve
those goals." Name the term highlighting. the above statement.
9. What is important in developing planning premises and why?

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10. 'To see whether plans are being implemented and activities are being performed
according to schedule' is a step of planning process. Identify the step.
(CBSE 2013)
11. The purpose of planning is _________________________.
(Complete the sentence)
12. Planning is basically an intellectual activity of thinking rather than doing because
________________________________.
(Complete the sentence)
13. "Planning requires logical and systematic thinking rather than guess work or
wishful thinking."
(Complete the sentence)
(True/False)
14. 'Planning requires logical and systematic thinking rather than guess work or
wishful thinking? What characteristic of planning does this statement highlight?
15. Which of the following statements is false?
(a) Planning reduces creativity. (b) Planning is
economical.
(c) Planning focuses on achieving objectives. (d) Planning is a mental
exercise.
16. Following a pre-decided plan, when circumstances have changed, may not turn
out to be in the organisation's interest. Which limitation of planning is indicated
here?
17. Organising an event or a seminar or conference is a _______________ (Single use
plan/standing plan) (Fill up the
blank with correct option)
18. Objectives and strategies are classified as standing plans.
True/False?
19. Match the following:

(i) Rule (a) Single use plan

(ii) Budget (b) Standing plan
(iii) Method
(iv) Programme

20. Opening a new department is an example of ___________________

(Project/Programme)
(Fill up the blank with correct
option)
21. ___________________ is a statement of expenses, revenue and income for a
specified period.
(Choose the correct
alternative)

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(a) Programme (b) Budget (c) Objective (d)
Rule
22. A ____________________ is designed to ensure that internal operation of an
organisation run
smoothly. (Single use plan/ Standing plan) (Fill up the blank with
correct option)
23. A ______________________ enhances efficiency in routine decision making.
(Single use plan/ Standing plan) (Fill up the
blank with correct option)
24. A __________________________ is developed once but is modified from time to
time to meet business needs as required. (Single use plane/Standing Plan)
(Fill up the blank with
correct option)
25. Match the following:

(i) General forms of standing plans that specifies the (a) Method
organisation response to a certain situation
(ii) Steps to be followed in particular circumstances. (b) Rule
(iii) The manner in which a task has to be performed (c) Policy
(iv) Clear statement as to exactly what has to be done. (d) Procedure

26. Match the following:

(i) Reporting progress in production (a) Objective

(ii) Reporting for work at a particular time (b) Strategy
(iii) Guide for overall planning (c) Rule
(iv) General plan prepared by top (d) Procedure
management outliving resource
allocation, priorities and takes into
consideration the business environment
and corporation

27. A _________________ may be prepared to show the number of workers

required in the factory at peak production times. (Fill in
the blank with the correct type of plan)
28. Budget is only a planning instrument.
True/False?
29. Budget is a fundamental planning instrument.
True/False?
30. ____________________ will include the entire gamut of activities as well as the
organisation's policy and how it will contribute to the overall business plan.
(Choose the correct alternative)
(a) Policy (b) Programme (c) Budget (d) Objectives

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31. Rules are usually the simplest type of plans because _________. (Complete the
sentence)
32. _________________________ reflects a managerial decision that a certain action
must or must not be taken.
(Choose the correct alternative)
(a) Policy (b) Rule (c) Method (d) Objective
33. ___________________ deals with a task comprising one step of a procedure and
specifies how this is to be performed. (Fill up
the blank with correct answer)
34. ________________________ provide the prescribed ways or manner in which a
task has to be performed considering the objective.
(Choose the correct alternative)
35. __________________ detail the exact manner in which any work is to be
performed.
(Choose the correct
alternative)
(a) Procedures b) Methods (c) Rules (d) Policies
36. Policies and procedures are interlinked with each other because _____________.
(Complete
the sentence)
37. ________________________Mprovide a basis for interpreting strategy which is
usually stated in general terms.
38. Policies are guide to managerial action and decision in the implementation
of___________________ . (Fill up the blank with
correct answer)
39. __________________ is the general response to a particular problem or
situation
(a) Objective (b) Strategy (C) Policy (D) Rufe
40. ____________________ defines the broad parameters within which a manager
may function.
(Choose the correct
alternative)
41. Match the following:

(i) The end result of activities (a) Policy

(ii) The broad contours of an organisation's business (b) Procedure
(iii) The general response to a particular problem or (c) Objective
situation
iv) It details the exact manner in which any work is (d) Strategy
to be performed

42. Match the following:

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(i) The end point of planning (a) Method
(ii) A comprehensive plan for accomplishing an organisation's (b) Objective
objectives
(iii) General statements that guide thinking or channelise energies (c) Strategy
towards a particular direction)
(iv) It provides the prescribed ways or manner in which a task has (d) Policy
to be performed considering the objective.

43. A _______________________ provides the broad contours of an organisation's

business.
(Choose the correct
alternative)
(a) Objective b) Strategy (c) Policy (d) Programme
44. A ___________ refers to future decisions defining the organisation's direction
and scope in the long run.
(Choose the correct alternative)
(a) Objective (b) Strategy (c) Policy (d) Budget
45. ___________________ take the course of forming the organisation's identity in
the business environment. (Choose
the correct alternative)
(a) Objectives (b) Strategies (c) Policies (d) Programmes
46. Match the following:

(i) Deciding as to what will be the pricing policy? Which channel of (a) Objectives
distribution to use? and how to advertise the product?
(ii) The future state of affairs which the organisation strives to (b) Strategies
realise
(iii) The guide to managerial action and decisions (c) Programme
(iv) Detailed statements about a project which outlines the (d) Policies
objectives, policies, procedures rules, tasks, human and physical
resources required and the budget to implement any course of
action

47. Name the type of plan which provides the broad contours of an organisation's
business.

(CBSE 2012)
48. Name the type of plan which is time bound and linked with measurable outcome

(CBSE 2012)
49. A company needs a detailed plan for its new project, "Construction of a Shopping
Mall". What type of plan is it?

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50. Increasing sales by 10% in the next quarter is an important type of plan. Identify
the type of plan.
(Choose the correct alternative)
(a) Objective (b) Policy (c) Strategy (d) Programme
51. ___________________ are routine steps on how to carry out activities.
(Choose the correct
alternative)
(a) Policies (b) Strategies (c) Procedures (d) Rules
52. Name the type of plan which represents the end point of planning.
(Choose the correct
alternative)
(a) Objectives (b) Strategies (c) Procedures (d) Rules
53. Name the type of plan which refers to future decisions defining the organisation's
direction and scope in the long run.
(Choose the correct alternative)
(a) Objectives (b) Strategies (c) Procedures (d) Rules
54. Name the type of plan which defines the formal parameters within which the
managers may function.
(Choose the correct alternative)
(a) Policies (b) Strategies (c) Procedures (d) Rules
55. Name the type of plan which reflects the managerial decision that a certain
action must or must not be taken.
(Choose the correct alternative)
(a) Policies (b) Procedures (c) Strategies (d) Rules
56. Chaitanya Limited follows a standard procedure for selection of a Production
Manager for its company. Is it a single-use plan or a standing plan? Give the reason.
57. Sahil Limited prepares budget for its Annual General Meeting for Financial Year
2020-21. Is it a single-use plan or a standing plan? Give the reason.
58. Shagun Ltd. decides to advertise its products on radio and newspapers. What
type of plan it is?
59. Tanya Ltd. decides that at the supervisory level, on-the-job training can be used
while for higher level management, lectures and orientation programmes should be
organised. What type of plan it is? known as?
60. Which one of the following is a standing plan? (Choose the correct
alternative)
(a) Policy (b) Budget (c) Project (d) Programme

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Case Studies

Analysing, Evaluating & Creating Type Questions

1. A company is manufacturing garments. The manager wants to increase profits by

purchasing new high almatives speed machines or increasing the sale price or using
waste material in manufacturing stuffed toys. He decided that 'using waste
material' to increase the profit is the best solution for him.
(a) Identify the concept of management involved.
(b) Mention the steps involved in the above process by quoting the lines from the
question.
(c) To complete the process of the concept identified in (a), what two next steps does
the manager have to take? Explain.
(6 marks)
Ans. (a) The concept of management involved is PLANNING.
(b) Steps involved are:
(i) Setting objectives: increasing profits
(ii) Developing premises: making certain assumptions about future.
(iii) Identifying alternative courses of action:
- purchasing new high speed machines, or
- increasing the sale price, or
- using waste material in manufacturing stuffed toys
(iv) Evaluating alternatives: positive and negative aspects of these alternatives are
evaluated.
(v) Selecting an alternative: using waste material in manufacturing stuffed toys.
(c) Further steps to complete the process of planning:
(vi) Implementing the plan: This step is concerned with putting the plan into action. It
involves organising for labour and purchase of machinery. manaquial functions come
into the picture
(vii) Follow-up action: The managers also take follow up action to ensure that
objectives are achieved.

2. Having transformed 2,500 Kirana stores across eight cities into virtual super
markets, the start up Quick Bizz further decided in advance, to collaborate with
15,000-20,000 store owners in top 30 cities of the country by the end of this year.
The company has set its eye on digitizing over 1,00,000 kirana stores over next 18-
24 months. Objective
(a) Identify and explain the step in the process of one of the functions of
management discussed above.
(b) Also explain the last step to be performed by Quick Bizz as part of the process.
(CBSE SQP 2018)
(4 marks)

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Ans. (a) Following is the step in process of Planning: Setting objectives
(Explain)
(b) Following is the last step to be performed by Quick Bizz as part of the process of
Planning: Follow up action .
(Explain)

3. On the introduction of Goods and Services Tax Act, experts in the field of
business started analysing and (Explain) forecasting its impact on various sectors
and industries. Vivek, an established businessman, attended a few seminars and
conferences organised by such experts to familiarise himself with this information.
He wanted to use these forecasts to reduce the uncertainty in making decisions for
the future in his business. Name the step in the planning process that is being
discussed in the above paragraph. (CBSE 2017) (1 mark) Ans. Developing premises
4. Saurabh decided to start a chocolates manufacturing business. He set the target
of earning 10% profit on sales in the first year. As a good businessman, he was
concerned about the future of the business, which was uncertain. He gathered
information that the demand for chocolates is increasing day-by-day He used this
information as the base for future planning and shared it with his team. On the
basis of the gathered information, he scheduled a meeting in the following week to
find innovative ways to achieve the objectives.
List the first two steps, which have been followed by Saurabh that are related to
the process of one of the functions of management.
(CBSE 2018) (1 mark)
Ans. Two steps of Planning which have been followed by Saurabh are: (i) Setting
Objectives (ii) Developing Premises

5. Saurabh Jain set up a telecom business in Nasik Ketone' with an ambitious target
of reaching out to 90% of the Indian population within one year. He chose this
business on the belief that the demand for data services will increase 4 times
within the next 2-3 years. To fulfill such an ambitious target, he had to either
acquire an existing telecom business or collaborate or go independent aggressively
in the light of tough competition. He assessed the proposals of different companies
vis-à-vis earnings per share, taxes, dividends paid etc. and their future projections
knowing fully well country's economic policies get modified.
The above paragraph discusses some of the steps of one of the functions of
management. By quoting the lines from the above paragraph, explain these steps
in chronological order.

(6 Marks)
Ans. Steps discussed in the above case are:
(i) Setting objectives (Explain
these steps)

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Saurabh Jain set up a telecom business in Nasik Ketone' with an ambitious target of
reaching out to 90% of the Indian population within one year'
(ii) Developing premises
He chose this business on the belief that the demand for data services will increase 4
times within the next 2-3 years
(iii) Identifying alternative courses of action
To fulfill such an ambitious target, he had to either acquire an existing telecom
business or collaborate or go independent aggressively in the light of tough
competition'
(iv) Evaluating alternative courses
He assessed the proposals of different companies vis-à-vis earrings per share, taxes,
dividends paid etc and their future projections knowing fully well that the projections
may change if the country's economic policies get modified'

6. Rahul decided to start a desert cooler manufacturing business. He sets the target
of earning 20% profit on sales in the first year. He was very much concerned about
the future prospects of the business, which were uncertain. For this, he gathered
information from the potential market and analyzed that the demand for wall-
mounted coolers is increasing day by day. He used this information as the base for
future planning. On the basis of the gathered information, he called a meeting in
the following week to find new methods to achieve the objective.
(a) Identify the function of management involved in the above case.
(b) Enumerate the next two steps, which have been followed by Rahul that are
related to the process of) one of the functions of management. (CBSE
SQP 2018-19) (3 marks)
Ans. (a) Planning
(b) (i)Identifying alternative courses of action (ii) Evaluating alternative courses of
action

7. Super Fine Rice Ltd. has the largest share of 55% in the market. The company's
policy is to sell only for cash. In 2020, for the first time company's number one
position in the industry has been threatened because other companies started
selling rice on credit also. But the managers of Super Fine Rice Ltd. continued to
rely on its previously tried and tested successful plans which didn't work because
the environment is not static. This led to decline in sales of Super Fine Rice Ltd. The
above situation is indicating two limitations of planning which led to decline in it
sales. Identify these limitations. (1 mark)
Ans. (i) Planning does not guarantee success. (ii) Planning may not work in dynamic
environment.

8. ABC Ltd. has a plan of increasing profits by 20%. It has devoted a lot of time and
money to this plan. But the competition starts increasing, so it could not change its

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plan to beat its competitors because huge amount of money had already been
devoted to the pre-decided plan. It caused losses to the company.
Explain any two limitations of planning highlighted in the above case. Also, quote
the lines from it.
(4 marks)
Ans. (i) Planning is a time consuming process.
ABC Ltd. has devoted a lot of time and money to its plan.'

(ii) Planning leads to rigidity

The competition starts increasing, so it could not change its plan to beat its
competitors because huge amount of money had already been devoted to the pre-
decided plan.'
(give explanation of these
two limitations)
9. In 2015, Naveen left his luxurious life in Mumbai, where he worked as a manager
for Blue Birds Ltd. He shifted to Begampur, Chhattisgarh to fulfil his grandmother's
dream of converting their 25-acre ancestral land into a fertile farm. For this he set
out specific goals along with the activities to be performed to achieve the goals.
Every activity was a challenge since he was clueless about farming. He learnt every
activity from filling the land to sowing the seeds. To aid farmers he launched his
own company 'Innovative Agriculture Solutions Pvt. Ltd'.
It was difficult initially as no one trusted an urban youth telling farmers about
farming. But when everything was discussed in detail the farmers started taking
interest. He wanted to ensure that the future events meet effectively the best
interests of the company. Through sales forecasting, he prepared an annual plan
for production and sales.
He also found that the farmers grew only paddy, which was an activity of 3-4
months and the land remained idle for the rest 8-9 months of the year. He not only
identified but evaluated various alternatives through which the farms could be
utilised for the remaining months of the year. Through correct foresight and logical
and systematic thinking based on analysis of all facts, all alternatives were
examined and evaluated. He presented a plan to the farmers, where after
harvesting paddy, vegetables could be grown. The above case highlights the
features of one of the functions of management. By quoting lines from the above
identify and explain these features. (CBSE 2018) (4
marks)
Ans. Features of planning are: (Explain
these features)
(i) Planning focuses on achieving objectives.
He set out specific goals along with the activities to be performed to achieve the
goals'
(ii) Planning is futuristic.

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He wanted to ensure that the future events meet effectively the best interests of the
company' "Through sales forecasting, he prepared an annual plan for production and
sales'
(iii) Planning involves decision making.
He not only identified but evaluated various alternatives through which the farms
could be utilised for the remaining months of the year.
............ all alternatives were examined and evaluated'
(iv) Planning is a mental exercise.
"Through correct foresight and logical and systematic thinking based on analysis of
all facts....

10. Ravi was working in a mobile company. It had an assembling unit in Noida. In
this assembling unit, standard output of producing 12 units per day per worker had
been set. While assembling mobile phones, he realised that by simply reorganising
the sequence of tasks more units can be assembled at a lower cost. He went to his
supervisor and informed him about his new discovery. The supervisor, on the
contrary, instructed him to carry out work as per the method and techniques
decided earlier. Identify this limitation of one of the functions of management.
(1 mark)
Ans. Planning reduces creativity.

11. An Auto Company, Win Ltd. is facing a problem of declining market share due
to increased competition from other new and existing players in the market. Its
competitors are introducing lower priced models for mass consumers who are price
sensitive. The Board of Directors of the Company announced a meeting to discuss
the decisions regarding pricing and launching a new range of models, in order to
increase the market share of the company. Attending the meeting was not a
discretion for the directors and a penalty was announced for not attending the
meeting. The following decisions were taken in the meeting:
(a) to define the desired future position of the company, as acquiring a dominant
position in the market by increasing the market share to 10% in 1 year.
(b) to change the criteria for choosing vendors for procuring supplies;
(c) to invest in development of the human resources of the organisation by
providing training to higher levels by holding seminars and providing on the job
training for the supervisory management.
What are standing plans and single use plans? Briefly explain the plans discussed
above, which can be classified as standing plans, by quoting the lines.
(5 marks)
Ans. Standing plans are used for activities that occur regularly over a period of time.
It is designed to ensure that internal operations of an organisation run smoothly.
A single use plan is developed for a one-time event or project. Such a course of
action is not likely to be repeated in the future.
The following type of plans discussed above are classified as standing plans:

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(i) "changing the vendors.......
Policy is a general statement that guides thinking or channelizes energies towards a
particular direction.
(ii) "Seminar for higher levels...... supervisory management"
Method provides the prescribed ways or manner in which a task has to be performed
considering the objective.
(iii) "Attending the meeting not discretion.......... penalty"
Rules are specific statements that inform what is to be done.

12. Two years ago, Madhu completed her degree in food technology. She worked
for some time in a company manufacturing chutneys, pickles and murabbas. She
was not happy in the company and decided to have her own organic food
processing unit for the same. She set the objectives and the targets and formulated
action plan to achieve the same.
One of her objective was to earn 10% profit on the amount invested in the first
year. It was decided that raw materials like fruits, vegetables, spices etc. will be
purchased on three months credit from farmers cultivating organic crops only. She
also decided to follow the steps required for marketing of the products through her
own outlets. She appointed Mohan as Production Manager who decides the exact
manner in which the production activities are to be carried out. Mohan also
prepared a statement showing the number of workers that will be required in the
factory throughout the year. Madhu informed Mohan about her sales target for
different products, areawise for the forthcoming quarter. While working on the
production table a penalty of 100 per day for not wearing the cap, gloves and
apron was announced. Quoting lines from the above para identify and explain the
different types of plans discussed. (CBSE
2016) (5 marks)

Ans. (i) Objective

...to earn 10% profit on the amount invested in the first year'
(ii) Policy
It was decided that raw materials ..... cultivating organic crops only.'
(iii) Procedure
She also decided to follow the steps required for marketing of the products through
her own outlets." (iv) Method
...decides the exact manner in which the production activities are to be carried out."
(v) Budget
Mohan also prepared a statement showing the number of workers..... the
forthcoming quarter.'
(vi) Rule
While working on the production table a penalty of 100 per day for not wearing the
cap, gloves and apron was announced.'

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13. Laxmi Chemicals Ltd., a soap manufacturing company wanted to increase its
market share from 30% to 55% in the long run. A recent report submitted by the
Research & Development Department of the (explain any five) company had
predicted a growing trend of herbal and organic products. On the basis of this
report decided to diversify into new variety of soaps with natural ingredients
having benefits and the fragrances of Jasmine, Rose, Lavendear, Mogra, Lemon
Grass, Green Apple, Strawberry etc. The Unique Selling Proposition (USP) was to
promote eco-friendly living in the contemporary life style. The company decided to
allocate 30 crores to achieve the objective.
Identify the type of one of the functions of management mentioned above which
will help the company to acquire dominant position in the market. (CBSE SQP
2016) (1 mark)
Ans. Strategy

14. Define 'Policy' as a type of plan. Why is policy called a basis for interpreting
strategy? Explain with example.
(3 marks)
Ans. Policy is a general statement that guides thinking or channelises energies
towards a particular direction.
Policy provides a basis for interpreting strategy as it guides to managerial action and
decisions in the implementation of strategy. For example, a company may have a
recruitment policy, pricing policy, purchase policy, etc. within which objectives are
set and decisions are made. If there is an established policy, it becomes easier to
resolve problems or issues. As such, a policy is the general response to a particular
problem or situation.

15. Vardan Patel started the business of preparation and supplying sweets through
home delivery at a production cum show-room 'Express Sweets' at Ahmedabad. He
made a plan forecasting the sales of different types of sweets in various localities
of Ahmedabad for each month of the year to earn a profit of 20% on Capital
employed.
He sets a sales target of 20,00,000 in the current year with a 10% increase every
year.
He then set the criteria for selecting suppliers from whom he would make
purchases of raw material. The Chen planning paid off and the business was able to
achieve its targets.
(a) Identify any two types of plans by quoting the lines from the above.
(b) Also give the meaning of the types of plans identified in part (a) above.
(CBSE
2018) (4 marks)
Ans. (a) The two types of plans are:
(i) Objective

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'He set a sales target of 20,00,000 in the current year with a 10% increase every
year.'
He made a plan forecasting the sales of different types of sweets in various localities
of Ahmedabad for each month of the year to earn a profit of 20% on Capital
employed.'
(ii) Policy
He then set the criteria for selecting suppliers from whom he would make purchases
of raw material.'
(b) Give the meaning of objective and policy.

16. Gunjan is the director of Zyesha Ltd., a ladies garments manufacturing

company. In a Board's meeting, she addresses certain questions such as
- What is the demand for the product?
- Which channel of distribution to use?
- What is the pricing policy?
- How do we advertise the product?
- Identify and explain the type of plan highlighted above.
(3 marks)
Ans. Strategy (explain)

17. Panorama Ltd. is a company selling LED television sets. Shivek, a manager of
the company, makes certain decisions in the nature of manufacturing or buying
decisions, should the company make or buy its requirements of packages, printing
of labels, selection of vendors for procuring supplies?
Identify and explain the type of plan highlighted above.
(3 marks)
Ans. Policy: The manager of Panorama Ltd. is making the company's Purchase Policy.
(Explain)

18. Mr. Mohan, Financial manager of ABC Ltd., has prepared the annual Statement
of proposed expenditure to be presented in the Annual General Meeting.
Identify the type of plan formulated by the financial manager. (CBSE SQP 2018-19)
(1 mark)
Ans. Budget is the type of plan formulated by the financial manager.

19. Name the type of plan which is prepared to show the number of workers
required in the factory at peak production times.
(1 mark)
Ans. Budget
20. An auto company C Ltd. is facing a problem of declining market share due other
new and existing players in the market. Its competitors are introducing lower
priced models for mass consumers who are price sensitive. C Ltd. sets its long-term

24 | P a g e
objective to increase profits by 20% features and new technological advancements.
For this, the company raises 100 crore by issuing equity shares.
(a) Identify the type of plan the company is preparing.
(b) State its three dimensions by quoting the line from the above paragraph.
(4 marks)
Ans. (a) Strategy
(b) Strategy is a comprehensive plan for accomplishing an organisation objectives. It
includes three dimensions:
(i) Determining long term objectives
"C Ltd. sets its long-term objective to increase profits by 20% in the next year."
(ii) Adopting a particular course of action
"... the company is introducing new models with added features and new
technological advancements."
(iii) Allocating resources necessary to achieve the objective
"... the company raises 100 crore by issuing equity shares."

21. Maruti started offering a discount of 20,000 on purchase of Wagon R. In

response to this, Hyundai started with a scheme of free MP3 player with every
Santro. Identify the type of plan indicated in the given statement.
(1 mark)
Ans. Strategy

22. In 'Chak De India' movie, Shahrukh Khan becomes the coach of the girls' hockey
team. He knows that he has to prepare the girls for the international hockey
matches and bring the world cup after winning. For this he prepares a long-term
plan and thinks the ways how to beat the competitors. He coaches the girls to play
in different ways like defensive, offensive, etc. At the outset of a match he explains
who will open the match, and how the ball will be passed by one player to another
step by step.
Identify any three types of plans that are highlighted in the above case, quoting the
lines from it.
(3 marks) Ans. (i) Objective
...bring the world cup after winning.'
(ii) Strategy
For this he prepares a long-term plan and thinks the ways how to beat the
competitors."
(iii) Method
'He coaches the girls to play in different ways like defensive, offensive, etc.'
(iv) Procedure
At the outset of a match he explains who will open the match, and how the ball will
be passed by one player to another step by step.'
(any three)

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23. A reputed car manufacturing company in NCR is facing the problem of decline
in its market share due to its internal mismanagement. Therefore it has planned to
increase its production capacity at its Gurgaon plant by manufacturing low priced
eco-friendly cars for price sensitive consumers and introducing new models with
added features for quality conscious consumers. For this the company issues shares
to the public and raises 150 crore. The company purchases more machinery
required to increase production.
(a) Identify the type of plan the company is preparing.
(b) State the steps involved in this plan quoting the lines from the above case. (4
marks)
Ans. (a) Strategy
(b) Steps involved in preparing a strategy are:
(i) Determining long-term objectives
it has planned to increase its production capacity at its Gurgaon plant..."
(ii) Adopting a particular course of action
...manufacturing low priced eco-friendly cars for price sensitive consumers and
introducing new models with added features for quality conscious consumers.
(iii) Allocating resources necessary to achieve the objectives
...the company issues shares to the public and raises 150 crore. The company
purchases more machinery required to increase production."

Answer Key :-
Objective Type Questions

1. it contributes to the achievement of pre-determined organisational goals.

2. (a) Planning
3. (c) Implementing the plan
4. Implementing the plan
5. True: This step of the planning process is 'Follow-up action'.
6. Planning premises
7. (c) Setting objective (a) Developing premises (b) Identifying the course of action (d)
Evaluating alternative courses.
8. Planning
9. Forecasting is important in developing premises as it is a technique of gathering
information about demand for a particular product, interest rates, tax rates, etc.
10. Follow up action
11. to meet future events effectively to the best advantages of an organisation.
12. it is mental exercise of determining the action to be taken.
13. True: Planning is intellectual thinking based on the analysis of facts and forecasts.
14. Planning is mental exercise.
15. (b) Planning is economical.
16. Planning leads to rigidity.

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Think about it:- False: Because planning promotes innovative ideas. Since planning is
the first function of management, new ideas can take the shape of concrete plans.
However, planning in a way reduces creativity since people tend to think along the
same lines as others.

17. Single use plan.

18. False: Objectives and strategy are not classified as single use or standing plans.
19. (i)-(b), (ii)-(a), (iii)-(b), (iv)-(a)
20. Programme. 21. (b) Budget 22. Standing plan
23. Standing plan 24. Standing Plan 25. (i)-(c), (ii)-(d), (iii) - (a), (iv)-
(b)
26. (a)-(iv), (b)-(iii), (c)-(i), (d)-(ii)
27. Budget
28. False: A budget is also a control device from which deviations can be taken care
of.
29. True: Because a budget is a statement of expected results expressed in numerical
terms. It involves forecasting, therefore, it clearly comes under planning.
30. (b) Programme
31. There is no compromise or change unless a policy decision is take.
32. Bule 33. Method 34. (b) Methods
35. (a) Procedures
36. procedures are steps to be carried out withing a broad policy framework.
37. Policies 38. Strategy 39. (c) Policy
40. (b) Policy 41. (i)-(c), (ii)-(d) (iii)-(a), (iv)-(b)
42. (i) - (b), (ii)-(c), (iii)-(d), (iv)-(a)
43. (b) Strategy
44. (b) Strategy
45. (b) Strategies
46. (a)-(ii), (b)-(i), (c)-(iv), (d)-(iii)
47. Strategy
48. Objective/Budget
49. The company will prepare Programme'. 50. (a) Objective
51. (c) Procedures 52. (a) Objectives
53. (b) Strategies 54. (a) Policies

55. (d) Rules

56. Standing Plan; because the selection procedure will be used over and over again
with necessary modifications only
57. Single use plan; because it will be discarded when the annual general meeting is
over.
58. Strategy 59. Method
60. (a) Policy

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Multiple Choice Questions (MCQs)

1. Which of the following is not a step in the process of planning?

(a) Making assumptions about the future.

(b) Evaluating different proposals in light of the objectives to be achieved.

(c) Allocation of jobs to members of each department.

(d) Seeing whether activities are performed as per schedule or not.

2. Which of the following is not a limitation of planning?

(a) Leads to rigidity (b) Reduces creativity

(c) Is futuristic (d) Is time consuming

3. "If there was no planning, employees would be working indifferent directions and
the organisation would not be able to achieve its desired goals." Identify the point of
importance of planning highlighted above.

(a) Planning reduces the risks of uncertainty

(b) Planning promotes innovative ideas

(c) Planning provides directions

(d) Planning facilitates decision making

4. "Changes or events cannot be eliminated but they can be anticipated and

managerial responses to them can be developed." Identify the point of importance
of planning highlighted above.

(a) Planning reduces the risks of uncertainty

(b) Planning promotes innovative ideas

(c) Planning provides directions

(d) Planning facilitates decision making

5. "Since planning is the first function of management, new ideas can take the shape
of concrete plans. " Identify the point of importance of planning highlighted above.

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(a) Planning reduces the risks of uncertainty

(b) Planning promotes innovative ideas

(c) Planning provides directions

(d) Planning facilitates decision making

6. "Planning is required at all levels of management as well as in all departments of

the organisation. It is not an exclusive function of top management nor of any
particular department. But the scope of planning differs at different levels and
among different departments." Identify the feature/characteristic of planning
highlighted above.

(a) Planning is continuous (b) Planning is futuristic

(c) Planning is pervasive (d) Planning involves decision

making

7. "A plan is framed, it is implemented, and is followed by another plan, and so on."
Identify the feature/characteristic of planning highlighted above.

(a) Planning is continuous (b) Planning is futuristic

(c) Planning is pervasive (d) Planning involves decision

making

8. "It implies peeping into the future, analysing it and predicting it. Through
forecasting, future events and conditions are anticipated and plans are drawn
accordingly." Identify the feature/characteristic of planning highlighted above.

(a) Planning is continuous (b) Planning is futuristic.

(c) Planning is pervasive (d) Planning involves decision

making

9. "Planning requires logical and systematic thinking rather than guesswork or

wishful thinking," Identify the feature/ characteristic of planning highlighted above.

(a) Planning is continuous (b) Planning is futuristic.

(c) Planning is pervasive (d) Planning involves decision

making

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10. We have often seen in our daily lives also, that things do not always go according
to plan _____________ affect our business plans.

(a) Unforeseen events and changes (b) Legal regulations

(c) Rise in costs and prices (d) All of these

11. "Following a pre-decided plan, when circumstances have changed, may not turn
out to be in the organisations interest." Identify the limitation of planning highlighted
above.

(a) Planning leads to rigidity

(b) Planning may not work in a dynamic environment

(c) Planning does not guarantee success

(d) Planning reduces creativity

12. "Planning cannot foresee everything and thus, there may be obstacles to
effective planning. It becomes difficult to accurately assess future trends in the
environment if economic policies are modified or political conditions in the country
are not stable or there is a natural calamity." Identify the limitation of planning
highlighted above.

(a) Planning leads to rigidity

(b) Planning may not work in a dynamic environment

(c) Planning does not guarantee success

(d) Planning reduces creativity

13. "There are a number of incidental costs, like expenses on boardroom meetings,
discussions with professional experts and preliminary investigations to find out the
viability of the plan." Identify the limitation of planning highlighted above.

(a) Planning leads to rigidity

(b) Planning may not work in a dynamic environment

(c) Planning does not guarantee success

(d) Planning involves huge costs

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14. "It is not always true that just because a plan has worked before it will work
again. Besides, there are so many other unknown factors to be considered. This kind
of complacency and false sense of security may actually lead to failure of planning."
Identify the limitation of planning highlighted above.

(a) Planning leads to rigidity

(b) Planning may not work in a dynamic environment

(c) Planning does not guarantee success

(d) Planning involves huge costs

15. "If the end result is clear it becomes easier to work towards the goal." Identify
the step of one of the functions of management highlighted above.

(a) Setting Objectives (b) Follow-up action

(c) Developing Premises (d) Implementing the plan

16. Planning is concerned with the future which is uncertain. Therefore, the manager
is required to make certain assumptions. These assumptions are called
_________________.

(a) Ends (b) Alternatives

(c) Premises (d) Ideas

17. "Accurate forecasts become essential for successful plans." Identify the step of
one of the functions of management highlighted above.

(a) Setting Objectives (b) Follow-up action

(c) Developing Premises (d) Implementing the plan

18. "An innovative course may be adopted by involving more people and sharing
their ideas." Identify the step of planning function of management highlighted above.

(a) Setting Objectives

(b) Developing Premises

(c) Identifying alternative courses of action

(d) Evaluating alternative courses

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19. "Each alternative course of action has many variables which have to be weighed
against each other." Identify the step of planning function of management
highlighted above.

(a) Setting Objectives

(b) Developing Premises

(c) Identifying alternative courses of action

(d) Evaluating alternative courses

20. "In financial plans, the risk-return trade - off is very common. The more risky the
investment, the higher the returns it is likely to give. To evaluate such proposals
detailed calculations of earnings, earnings per share, interest, taxes, dividends are
made and decisions taken." Identify the step of planning function of management
highlighted above.

(a) Setting Objectives

(b) Developing Premises

(c) Identifying alternative courses of action

(d) Evaluating alternative courses

21. "This is the real point of decision making. The best plan has to be adopted and
implemented." Identify the step of planning function of management highlighted
above.

(a) Evaluating alternative courses

(b) Selecting an alternative

(c) Implementing the plan.

(d) Follow-up action

22. "This is the step where other managerial functions also come into the picture.
This step would also involve organising for labour and purchase of machinery."
Identify the step of one of the functions of management highlighted above.

(a) Evaluating alternative courses

(b) Selecting an alternative

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(c) Implementing the plan

(d) Follow-up action

23. "To see whether plans are being implemented and activities are performed
according to schedule is also part of the planning process. Monitoring the plans is
equally important to ensure that objectives are achieved." Identify the step of one of
the functions of management highlighted above.

(a) Evaluating alternative courses

(b) Selecting an alternative

(c) Implementing the plan

(d) Follow-up action

24. _______________ is a process of decision-making.

(a) Planning (b) Organising

(c) Directing (d) Controlling

25. Which of the following statements is false?

(a) Planning reduces creativity.

(b) Planning is economical.

(c) Planning focuses on achieving objectives.

(d) Planning is a mental exercise.

26. A plan is framed, it is implemented, and is followed by another plan on the basis
of new requirements and future conditions. Which of the following best describes
the above statement?

(a) Planning focuses a achieving objectives.

(b) Planning is continuous.

(c) Planning is futuristic.

(d) Planning is a mental exercise.

27. ________________ are the base material upon which plans are to be drawn.

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(a) Objectives (b) Premises

(c) Alternatives (d) Implementation

28. Planning is the most challenging activity for the management as ___________.

(a) it guides all future actions leading to growth and prosperity of the business.

(b) specific goals are set out in the plans along with the activities to be undertaken to
achieve the goals.

(c) if there was no planning, employees would be working indifferent directions and
the organisation would not be able to achieve its desired goals.

(d) None of the above

29. Following are the steps of Planning Process. Arrange them in correct sequence:

(i) Developing premises

(ii) Identifying the course of action

(iii) Setting objective

(iv) Evaluating alternative courses

(a) (iii), (i), (ii), (iv) (b) (i), (iv), (iii), (ii)

(c) (iii), (ii), (i), (iv) (d) (i), (iii), (ii), (iv)

30. A company wants to increase its market share from the present 10% to 25% to
have a dominant position in the market by the end of the next financial year. Ms
Rajni, the sales manager has been asked to prepare a proposal that will outline the
options available for achieving this objective. Her report included the following
options - entering new markets, expanding the product range offered to customers,
using sales promotion techniques such as giving rebates, discounts or increasing the
budget for advertising activities. The step of the planning process which has been
performed by Ms. Rajni is __________________.

(a) Setting Objectives

(b) Developing Premises

(c) Identifying alternative courses of action

(d) Evaluating alternative courses

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31. On the introduction of Goods and Services Tax Act, experts in the field of
business started analysing and forecasting its impact on various sectors and
industries. Vivek, an established businessman, attended a few seminars and
conferences organised by such experts to familiarise himself with this information.
He wanted to use these forecasts to reduce the uncertainty in making decisions for
the future in his business. Name the step in the planning process that is being
discussed in the above paragraph.

(a) Setting Objectives

(b) Developing Premises

(c) Identifying alternative courses of action.

(d) Evaluating alternative courses

32. Saurabh decided to start a chocolates manufacturing business. He set the target
of earning 10% profit on sales in the first year. As a good businessman, he was
concerned about the future of the business, which was uncertain. He gathered
information that the demand for chocolates is increasing day-by-day. He used this
information as the base for future planning and shared it with his team. On the basis
of the gathered information, he scheduled a meeting in the following week to find
innovative ways to achieve the objectives. List the first two steps, which have been
followed by Saurabh that are related to the process of one of the functions of
management.

(a) Setting Objectives

(b) Developing Premises

(c) Identifying alternative courses of action

(d) Evaluating alternative courses

33. Super Fine Rice Ltd. has the largest share of 55% in the market. The company's
policy is to sell only for cash. In 2020, for the first time company's number one
position in the industry has been threatened because other companies started selling
rice on credit also. But the managers of Super Fine Rice Ltd. continued to rely on its
previously tried and rested successful plans which didn't work because the
environment is not static. This led to decline in sales of Super Fine Rice Ltd. The
above situation is indicating two limitations of planning which led to decline in it
sales. Identify these limitations.

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(a) Planning leads to rigidity

(b) Planning may not work in a dynamic environment

(c) Planning does not guarantee success

(d) Planning involves huge costs

34. Ravi was working in a mobile company. It had an assembling unit in Noida. In this
assembling unit, standard output of producing 12 units per day per worker had been
set. While assembling mobile phones, he realised that by simply reorganising the
sequence of tasks more units can be assembled at a lower cost. He went to his
supervisor and informed him about his new discovery. The supervisor, on the
contrary, instructed him to carry out work as per the method and techniques decided
earlier. Identify this limitation of one of the functions of management.

(a) Planning leads to rigidity

(b) Planning may not work in a dynamic environment

(c) Planning does not guarantee success

(d) Planning reduces creativity

35. Which of the following statement is false?

(a) To see whether plans are being implemented and activities are performed
according to schedule is a part of the planning process.

(b) Planning requires logical and systematic thinking rather than guess work or
wishful thinking.

(c) Planning is an exclusive function of top management.

(d) None of the above

36. Suhasini a home science graduate from a reputed college has recently done a
cookery course. She wished to start her own venture with a goal to provide 'health
food' at reasonable price. She discussed her idea with her teacher (mentor) who
encouraged her. After analyzing various options for starting her business venture,
they shortlisted the option to sell ready made and 'ready to make' vegetable shakes
and sattu milk shakes. Then, they both weighed the pros and cons of both the
shortlisted options. Identify the function of management being discussed above.

(a) Planning (b) Controlling

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(c) Organising (d) Directing

37. Prem India Limited is a well-established International Camera Company. It was

pioneer in introducing products like non-digital 'aim and shoot cameras. After tasting
success in the previous project, they introduced wide array of products in DSLR
cameras. Their products range from 20 to 250 mega pixels digital cameras. With the
advancement of technology, they planned to make huge investment in developing
and selling even higher resolution digital cameras. The made a budget allocation of
1,000 crore in developing it. The company has started working on this improved
product. It is a lengthy process of research and development. It may take 2 to 3 years
to actually start production. In the mean time one of its competitors moved a step
forward and developed and marketed mirror-less cameras in the market. It resulted
in heavy losses to Prem India Limited.

Identify the limitation of planning from the above para.

(a) Planning involves huge cost.

(b) Planning is time-consuming.

(c) Planning may not work in a dynamic environment.

(d) All the above

38. Having transformed 2,500 Kirana stores across eight cities into virtual super
markets, the start up Quick Bizz further decided in advance, to collaborate with
15,000-20,000 store owners in top 30 cities of the country by the end of this year.
The company has set its eye on digitizing over 1,00,000 kirana stores over next 18-24
months.

Identify the step in the process of one of the functions of management discussed
above.

(a) Setting Objectives

(b) Developing Premises

(c) Identifying alternative courses of action

(d) Evaluating alternative courses

39. Pan Masala and Sons is a manufacturer of tobacco products. It decided to

increase profits by at least 20% in the next quarter. It has many options.

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(i) To increase the working hours of labourers without additional payment.

(ii) To employ children from the local community.

(iii) To sell its products outside the schools and colleges.

It opted the (ii) and (iii) options to achieve the target.

Identify the function of management described in the above para.

(a) Planning (b) Controlling

(c) Organising (d) Directing

40. A company is manufacturing garments. The manager wants to increase profits by

purchasing new high speed machines or increasing the sale price or using waste
material in manufacturing stuffed toys.

He decided that 'using waste material' to increase the profit is the best solution for
him.

Identify the concept of management involved.

(a) Planning (b) Controlling

(c) Organising (d) Directing

41. ABC Ltd, has a plan of increasing profits by 20%. It has devoted a lot of time and
money to this plan. But the competition starts increasing, so it could not change its
plan to beat its competitors because huge amount of money had already been
devoted to the pre-decided plan. It caused losses to the company.

Identify the limitations of planning highlighted in the above case.

(a) Planning is a time consuming process.

(b) Planning leads to rigidity

(c) Planning reduces creativity

(d) Planning is a costly process.

42. Which step in the process of 'Planning' function of management involves

weighing pros and cons of each alternative?

(a) Developing Premises

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(b) Identifying alternative courses of action

(c) Evaluating alternative courses

(d) Selecting an alternative

43. Which of the following statements correctly explains the limitation of planning
'Planning does not guarantee success?

(a) Planning is required at all levels of management and in all the departments of the
organization.

(b) Planning involves thorough examination and evaluation of available alternatives.

(c) Relying on a previously tried and tested successful plan just because it had
worked before and will work again.

(d) By deciding in advance the tasks to be performed, planning shows the way to deal
with changes and uncertain events.

44. 'Planning is an intellectual activity of thinking rather than doing'. Which feature
of planning is highlighted in this statement?

(a) Planning focuses on achieving objectives.

(b) Planning is futuristic.

(c) Planning involves decision making.

(d) Planning is a mental exercise.

45. 'Uttam Ayurvedic Ltd. is an established Indian company manufacturing organic

consumer goods like toothpastes and shampoos. It has planned to increase its
market share from 30% to 40% in the current financial year. With the expanding
market of organic products, other companies in the consumer goods industry have
also launched these products with organic components. The competition in the
market has increased and it was found that the sale Uttam Ayurvedic Ltd. came
down and its market share was reduced to 23%.

Identify the limitation of planning highlighted in the above case:

(a) Planning may not work in dynamic environment.

(b) Planning is time consuming.

(c) Planning involves huge costs.

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(d) Planning reduces overlapping and wasteful activities.

46. The step in the process of 'planning' which is concerned with putting the plan
into action i.e. doing what is required is called:

(a) Implementing the plan (b) Follow-up action

(c) Developing premises (d) Selecting an alternative

47. Ritu Kapoor has set up a bakery, 'Bakes and Cakes in Pune. She receives online
orders for cakes from within the city and supplies them on the same day. She set a
target that she would earn a revenue of 5,00,000 in the first year. She informed her
employees about the target and asked them to contribute ideas to achieve the same.

Ritu Kapoor has performed the first step in the process of one of the functions of
management. The next step to be performed is:

(a) Identifying alternative courses of action.

(b) Setting objective

(c) Developing premises

(d) Follow-up action

48. The owner of 'Sweet Moments' wedding hall spent a great deal of time, money
and effort in renovation expecting a bumper wedding season in 2020 but due to the
pandemic, weddings became intimate home affairs and not many bookings
happened.

The limitation of planning highlighted in the above case is:

(a) It reduces creativity.

(b) It may not work in a dynamic environment.

(c) It leads to rigidity.

(d) It is time consuming.

49. In one of the steps in the process of planning, the manager is required to make
certain assumptions about the future which are the base material upon which plans
are to be drawn. Identify the step:

(a) Setting objectives

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(b) Developing premises

(c) Identifying alternative courses of action

(d) Selecting an alternative

50. ______________ provides the standards against which actual performance is

measured.

(a) Controlling (b) Planning

(c) Directing (d) Staffing

51. Planning ensures that the goals are clearly stated, so that they act as a guide for
deciding what action should be taken and in which direction. If goals are well-
defined, employees are aware of what the organisation has to do to achieve those
goals. The above para highlights the following point of importance of planning:

(a) Planning promotes innovating ideas.

(b) Planning establishes standards for controlling.

(c) Planning provides direction.

(d) Planning is pervasive.

52. Prem Lal, the Managing Director of Awasthi Ltd, retired after 33 years of service.
The responsibility was given to Raj. Raj realised that there was lot of rivalry,
confusion and misunderstanding among the departmental heads. He detected
inefficiencies, took corrective measures and developed a master plan for the
organisation to follow. This served as a basis for coordinating the activities of all
departments, led to clarity of thought and action and work got off to a smooth start.

The point of importance of planning discussed above is:

(a) Planning reduces overlapping and wasteful activities.

(b) Planning establishes standards for controlling.

(c) Planning reduces the risks of uncertainty.

(d) Planning promotes innovative ideas.

53. "Esya Cars' was founded by engineers who wanted to prove that people don't
need to compromise to drive electric vehicles. They took it as a challenge and new
ideas took the shape of concrete plans. In July, 2021 they launched their first set of
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all electric cars, proving to the world that electric vehicles can be better, quicker and
more fun to drive than gasoline cars.

The point of importance of planning discussed in the above case is:

(a) Planning reduces the risk of uncertainty.

(b) Planning reduces overlapping and wasteful activities.

(c) Planning promotes innovative ideas.

(d) Planning establishes standards for controlling.

54. Amulya wants to start her own cafe. Her long-term goal is to get 40% of the
market share. For this she gathered information and made forecasts about the
potential demand, purchasing power of the consumers as well as preferences of the
consumers and government policy towards this business, etc. By doing this, Amulya
had completed some steps in the process of planning.

Choose the step in the planning process that Amulya has to follow next:

(a) Setting objectives

(b) Developing premises

(c) Identifying alternatives courses of action

(d) Evaluating alternative courses

55. 'Surya Fashion Ltd.' hired Suresh Malhotra, an ace fashion designer to develop a
new product line. He charged 50 lakh for consultation. The company spent another
1.5 crore in formulating the marketing campaign for launching their new product
line. Their products were not liked by the consumers and the company could
generate a revenue of 15 lakh only from this product line. Thus, the cost incurrec is
not justifying the benefits derived from the plans.

Which limitation of planning is reflected in the above para?

(a) Planning is time consuming

(b) Planning involves huge costs

(c) Planning leads to rigidity

(d) Planning reduces creativity

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56. __________ provides a rational approach for setting objectives and developing
appropriate courses of action for achieving predetermined objectives.

(a) Directing (b) Staffing

(c) Planning (d) Controlling

57. "Changes or events cannot be eliminated but they can be anticipated and
managerial responses to them can be developed." is suggested by the following
importance of planning:

(a) Planning facilitates decision making

(b) Planning promotes innovative ideas

(c) Planning provides direction

(d) Planning reduces the risks of uncertainty.

58. The Statement "Planning is a primary function", suggests that _____________

(a) Planning precedes other functions

(b) Planning requires logical and systematic thinking

(c) Plan is framed, it is implemented, and is followed by another plan, and so on

(d) Planning is required at all levels of management as well as in all departments of

the organisation.

59. Planning is closely connected with _______________ and _______________

(a) Responsibility and accountability

(b) Delegation and decentralization

(c) Stability and security

(d) Creativity and innovation

60. Which step in the process of planning will precede the step in which the manager
is required to make certain assumptions about the future, which are the base
material upon which the plans are drawn.

(a) Implementing the plan

(b) Identifying alternative courses of action

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(c) Setting objectives

(d) Selecting an alternative.

61. Planning requires logical and systematic thinking rather than guess work. The
feature of planning being referred to in the above statement is:

(a) Planning is a continuous process

(b) Planning is futuristic

(c) Planning is pervasive

(d) Planning is a mental exercise

62. "Following a pre-decided plan, when circumstances have changed, may not turn
out to be in the organisation's interest." The limitation of planning being referred to
in the above statement is ______________.

(a) Planning does not guarantee success

(b) Planning may not work in a dynamic environment

(c) Planning leads to rigidity

(d) Planning is a time consuming process.

63. If there is a plan to increase production then more labour, more machinery will
be required. This step in the process of planning will involve organising for labour
and purchase of machinery, Identify the step in the planning process being discussed
above.

(a) Identifying alternative courses of action

(b) Setting objectives

(c) Selecting an alternative

(d) Implementing the plan

64. A sanitizer manufacturing company wants to become a market leader. For this
purpose the manager follows an activity with certain logical steps. The first step
suggested by him is to increase profits by at least 30% in the next quarter. What will
be the last step of the activity being followed by the manager.

(a) Follow-up action

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(b) Identifying alternative course of action

(c) Setting objectives

(d) Evaluating alternative courses of action

ANSWER KEY

1. (c) 2. (c) 3. (c) 4. (a) 5. (b) 6. (c) 7. (a) 8. (b) 9. (d) 10. (d) 11. (a) 12. (b) 13.
(d) 14. (c)

15. (a) 16. (c) 17. (c) 18. (c) 19. (d) 20. (d) 21. (b) 22. (c) 23. (d) 24. (a) 25. (b) 26.
(b) 27. (b) 28. (a)

29. (a) 30. (c) 31. (b) 32. (a) (b) 33. (b) (c) 34. (d) 35. (c) 36. (a) 37. (d) 38. (a)
39. (a) 40. (a) 41. (a) (b) 42. (c)

43. (c) 44. (d) 45. (a) 46. (a) 47. (c) 48. (b) 49. (b) 50. (b) 51. (c) 52. (a) 53.
(c) 54. (c) 55. (b) 56. (c)

57. (d) 58. (a) 59. (d) 60. (c) 61. (d) 62. (c) 63. (d) 64. (a)

Case-based Multiple Choice Questions (MCQs)

CASE STUDY 1: Read the following text and answer question no. 1-4 on the basis of
the same:

Mega Ltd. holds an Annual Management Programme every year in the month of
March in which the top managerial personnel formulate plans for the next year by
analysing and predicting the future to meet future events effectively. They make
certain assumptions about the future which are considered to be the base material
upon which the plans are to be drawn. As they are responsible for providing direction
to the organisation, facts are thoroughly checked through scientific calculations.
Detailed plans are prepared after discussion with professional experts. Preliminary
investigations are also undertaken to find out the viability of the plan. Since it is an
intellectual activity requiring intelligent imagination and sound judgement, it is
mainly done by the top management. Usually rest of the members just implement
the plans. Middle level managers are neither allowed to deviate from the plans nor

45 | P a g e
are they permitted to act on their own. The top management ensures that the
expenses incurred in formulating the plans justify the benefits derived from them.
The Management of Mega Ltd. is able to anticipate changes/uncertainties and
develop managerial responses to them.

1. "They make certain assumptions about the future which are considered to be the
base material upon which the plans are to be drawn." Identify the step of the
planning process highlighted above.

(a) Setting Objectives (b) Developing Premises

(c) Implementing the plan. (d) Follow up action

2. "Detailed plans are prepared after discussion with professional experts.

Preliminary investigations are also undertaken to find out the viability of the plan...
Middle level managers are neither allowed to deviate from the plans nor are they
permitted to act on their own." Identify the limitation (s) of the planning highlighted
above.

(a) Planning leads to rigidity

(b) Planning reduces creativity

(c) Planning is a time-consuming process

(d) Planning involves huge costs

3. "the top managerial personnel formulate plans for the next year by analysing and
predicting the future to meet future events effectively...Since it is an intellectual
activity requiring intelligent imagination and sound judgement, it is mainly done by
the top management." Identify the feature(s) of the planning highlighted above.

(a) Planning focuses on achieving objectives

(b) Planning is futuristic

(c) Planning is pervasive

(d) Planning is a mental exercise

4. "The Management of Mega Ltd. is able to anticipate changes/uncertainties and

develop managerial responses to them." Identify the point of importance of planning
highlighted above.

(a) Planning reduces the risks of uncertainty

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(b) Planning promotes innovative ideas

(c) Planning provides directions

(d) Planning facilitates decision making

CASE STUDY 2: Read the following text and answer question no. 5-8 on the basis of
the same:

An auto company C Ltd. is facing a problem of declining market share due to

increased competition from other new and existing players in the market. Its
competitors are introducing lower priced models for mass consumers who are price
sensitive. C Ltd. realized that it needs to take steps immediately to improve its
market standing in the future. It decided to increase sales by 10% and gave direction
to all departments at all levels what they are expected to do to achieve the objective.
The managers also made certain assumptions about the future, and forecasting was
made about the demand for new products, prices of machinery and equipment
needed, etc.

For quality conscious consumers, C Limited plans to introduce new models with
added features and new technological advancements. The company has formed a
team with representatives from all the levels of management. This team will
brainstorm and will determine the steps that will be adopted by the organisation for
implementing the above strategy. However, it is very difficult to assess future trends
in the environment if economic policies are modified or political conditions in the
country are not stable. Intense competition in the market can also upset financial
plans, then sales targets may have to be revised.

5. Identify the function of management highlighted in the given case.

(a) Planning (b) Organising

(c) Directing (d) Controlling

6. "It decided to increase sales by 10% and gave direction to all departments at all
levels what they are expected to do to achieve the objective. The managers also
made certain assumptions about the future, and forecasting was made about the
demand for new products, prices of machinery and equipment needed.’ Identify the
step of the function of management identified.

(a) Setting Objectives (b) Developing Premises

(c) Both (a) and (b) (d) Follow up action

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7. ...it is very difficult to assess future trends in the environment if economic policies
are modified or political conditions in the country are not stable. Intense competition
in the market can also upset financial plans, then sales targets may have to be
revised." Identify the above. limitation of the function of management identified as
highlighted above.

(a) Planning leads to rigidity

(b) Planning may not work in a dynamic environment

(c) Planning is a time-consuming process

(d) Planning does not guarantee success

8. Identify the feature(s) of the function of management identified as discussed in

the case.

(a) Planning is a mental exercise (b) Planning is futuristic

(c) Planning is pervasive (d) All of these

CASE STUDY 3: Read the following text and answer question no. 9-12 on the basis
of the same:

In 2015, Naveen left his luxurious life in Mumbai, where he worked as a manager for
Blue Birds Ltd. He shifted to Begampur, Chhattisgarh to fulfil his grandmother's
dream of converting their 25-acre ancestral land into a fertile farm. For this he set
out specific goals along with the activities to be performed to achieve the goals.

Every activity was a challenge since he was clueless about farming. He learnt every
activity from filling the land to sowing the seeds. To aid farmers he launched his own
company 'Innovative Agriculture Solutions Pvt. Ltd.

It was difficult initially as no one trusted an urban youth telling farmers about
farming. But when everything was discussed in detail the farmers started taking
interest. He wanted to ensure that the future events meet effectively the best
interests of the company. Through sales forecasting, he prepared an annual plan for
production and sales.

He also found that the farmers grew only paddy, which was an activity of 3-4 months
and the land remained idle for the rest 8-9 months of the year. He not only identified
but evaluated various alternatives through which the farms could be utilised for the
remaining months of the year. Through correct foresight and logical and systematic

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thinking based on analysis of all facts, all alternatives were examined and evaluated.
He presented a plan to the farmers, where after harvesting paddy, vegetables could
be grown.

9. Identify the function of management highlighted in the given case.

(a) Planning (b) Organising

(c) Directing (d) Controlling

10. "...he set out specific goals along with the activities to be performed to achieve
the goals." Identify the feature of the function of management identified as
highlighted above.

(a) Planning focuses on achieving objectives

(b) Planning is futuristic

(c) Planning is pervasive

(d) Planning is continuous

11. "He wanted to ensure that the future events meet effectively the best interests
of the company. Through sales forecasting, he prepared an annual plan for
production and sales." Identify the feature of the function of management identified
as highlighted above.

(a) Planning focuses on achieving objectives

(b) Planning is futuristic

(c) Planning is pervasive

(d) Planning is continuous

12. "Through correct foresight and logical and systematic thinking based on analysis
of all facts, all alternatives were examined and evaluated. He presented a plan to the
farmers, where after harvesting paddy, vegetables could be grown." Identify the step
of the function of management identified as highlighted above.

(a) Identifying alternative courses of action

(b) Evaluating alternative courses

(c) Selecting an alternative

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(d) Both (b) and (c)

CASE STUDY 4: Read the following text and answer question no. 13-16 on the basis
of the same:

Simplex limited had been taken over by Mundhra Group immediately following
India's independence. Since then it enjoys a rich record of industry presence and
experience. In 2005, with the aim to accelerate growth the company had gone
through several rounds of meetings and discussions before launching ERP system to
attract large projects. The management had done effective forecast and critical
thinking regarding allocation resources to reduce wastage. For this purpose the
company had laid down multiple courses of action to meet the challenge of adverse
situations. In 2008, the company suffered loss in many projects due to the great
recession despite taking many cost cutting measures. The management had taken
utmost care regarding the possible outcome and timely review of the plans

to achieve the set target during that hard time. In 2010 the system implemented
successfully which subsequently helped the company to execute numerous projects
with precision and timeliness.

13. "In 2005, with the aim to accelerate growth the company had gone through
severalrounds of Meetings and discussions." What is the objective mentioned here
according to the process stated here?

(a) Developing Premises (b) Growth & development

(c) Launching IT enabled system (d) Cost cutting.

14. "In 2008, the company suffered loss in many projects due to the great recession
despite taking many cost cutting measures." Which limitation of the management
process is indicated here?

(a) It fails to cope with sudden changes

(b) It involves huge cost

(c) It requires critical thinking

(d) Economic Environment

15. State whether the given statement is True or False:

"The management had done effective forecast and critical thinking regarding
allocation of resources to reduce wastage."

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16. "The management had taken utmost care regarding the possible outcome and
timely review of the Plans to achieve the set target during that hard time." Which is
the last step of the Process mentioned here?

(a) Implementation of plan

(b) Timely execution of projects

(c) Follow up

(d) To prepare alternative course of action

CASE STUDY 5: Read the following text and answer question no. 17-20 on the basis
of the same:

Rahul decided to start a desert cooler manufacturing business. He sets the target of
earning 20% profit on sales in the first year. He was very much concerned about the
future prospects of the business, which were uncertain. For this, he gathered
information from the potential market and analyzed that the demand for wall-
mounted coolers is increasing day by day. He used this information as the base for
future planning. On the basis of the gathered information, he called a meeting in the
following week to find new methods to achieve the objective.

17. Identify the function of management involved in the above case.

(a) Planning (b) Controlling

(c) Organising (d) Directing

18. "... gathered information from the potential market and analyzed that the
demand for wall-mounted coolers is increasing day by day." Identify the step
involved in the function of management.

(a) Setting Objectives

(b) Developing Premises

(c) Identifying alternative courses of action

(d) Evaluating alternative courses

19. Identify the next two steps, which have been followed by Rahul that are related
to the process of the function of management.

(a) Setting Objectives

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(b) Developing Premises

(c) Identifying alternative courses of action

(d) Evaluating alternative courses

20. Identify the feature of the function of management highlighted in the above case.

(a) Planning focuses on achieving objectives.

(b) Planning is futuristic.

(c) Planning involves decision making.

(d) All of these

ANSWER KEY

1. (b) 2. (b), (d) 3. (b), (d) 4. (a) 5. (a) 6. (c) 7. (b) 8. (d) 9. (a) 10. (a) 11.
(b) 12. (d) 13. (b) 14. (a)

15. (True) 16. (c) 17. (a) 18. (b) 19. (c) (d) 20. (d)

Multiple Choice Questions (MCQ) on Assertion-Reasoning Type/ Statements

1. Given below are two statements. One is Assertion (A) and another is Reason (R):

Assertion (A): Planning essentially involves looking ahead and preparing for future
through forecasting.

Reason (R): Forecasting helps to anticipate future events and drawing up of plans.

In the context of the above statements, identify the correct option:

(a) Both Assertion (A) and Reason (R) are correct.

(b) Assertion (A) is correct, but Reason (R) is incorrect.

(c) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct
explanation of Assertion (A).

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(d) Both Assertion (A) and Reason (R) are correct, bur Reason (R) is not the correct
explanation of Assertion (A).

2. For the following statements, choose the correct option:

Statement I: Planning is a continuous process.

Statement II: Once plans are framed and implemented, they need to be followed by
new plans according to the new requirements.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

3. Given below are two statements. One is Assertion (A) and another is Reason (R):

Assertion (A): Planning is futuristic.

Reason (R): Planning is concerned with the future which is certain and does not
require forecast.

(a) Both (A) and (R) are correct

(b) (A) is correct and (R) is incorrect

(c) Both (A) and (R) are correct, and R is the correct explanation of R

(d) Both (A) and (R) are correct, and R is not the correct explanation of R

4. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Planning is closely connected with creativity and innovation.

Reason (R): Before doing something, the manager must formulate an idea of how to
work on a particular task.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true.

(b) Both Assertion (A) and Reason (R) are false.

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(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

5. For the following statements, choose the correct option:

Statement I: Planning seeks to bridge the gap between where we are and where we
want to go.

Statement II: Planning involves setting objectives and developing appropriate

courses of action to achieve these objectives.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct

6. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Planning is the most challenging activity for the management.

Reason (R): It guides all future actions leading to growth and prosperity of the
business.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A).

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

7. For the following statements, choose the correct option:

Statement I: Controlling is a prerequisite for planning.

Statement II: Planning provides the goals or standards against which actual
performance is measured.

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Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

8. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Planning is basically an intellectual activity of thinking rather than

doing.

Reason (R): Planning requires application of the mind involving foresight, intelligent
imagination and sound judgement.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true.

(b) Both Assertion (A) and Reason (R) are false.

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

9. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Planning requires wishful thinking.

Reason (R): Planning is basically an intellectual activity of thinking rather than doing,
because planning determines the action to be taken.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true.

(b) Both Assertion (A) and Reason (R) are false.

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

10. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Planning is an exclusive function of top management.

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Reason (R): Planning is done by the top management; rest of the members just carry
out orders.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true.

(b) Both Assertion (A) and Reason (R) are false.

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

11. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Planning cannot work in a changing environment.

Reason (R): The business environment is dynamic, Planning cannot foresee

everything and thus, there may be obstacles to effective planning.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A).

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

12. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Planning always reduces creativity.

Reason (R): Planning in a way reduces creativity since people tend to think along the
same lines as others. There is nothing new or innovative.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A).

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(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

13. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Planning promotes innovative ideas.

Reason (R): Since planning is the first function of management, new ideas can take
the shape of concrete plans.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true.

(b) Both Assertion (A) and Reason (R) are false.

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true,

14. For the following statements, choose the correct option:

Statement I: Planning is deciding in advance what to do and who is to do it.

Statement II: Planning is what managers at all levels do,

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

15. For the following statements, choose the correct option:

Statement I: Planning will be a futile exercise if it is not acted upon or implemented.

Statement II: Planning is closely connected with creativity and innovation.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

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(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

16. For the following statements, choose the correct option:

Statement I: If there was no planning, employees would be working in different

directions and the organisation would not be able to achieve its desired goals.

Statement II: Planning cannot eliminate but only anticipate changes an uncertaint
events.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

17. For the following statements, choose the correct option:

Statement I: Planning serves as the basis of coordinating the activities and efforts of
different divisions, departments and individuals.

Statement II: Planning is the most challenging activity for the management as it
guides all future actions leading to growth and prosperity of the business.

Choose the correct option from the options given below:

(a) Both the Statements I and II are correct.

(b) Both the Statements I and II are not correct.

(c) Statement I is correct and Statement II is not correct.

(d) Statement II is correct and Statement I is not correct.

18. For the following statements, choose the correct option:

Statement I: Planning involves seTting targets and predicting future conditions.

Statement II: Planning provides the basis of control.

Choose the correct option from the options given below:

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(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

19. For the following statements, choose the correct option:

Statement I: Planning is purposeful.

Statement II: Planning is pervasive.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

20. For the following statements, choose the correct option:

Statement I: Planning has no meaning unless it contributes to the achievement of

predetermined organisational goals.

Statement II: The other functions of management are not as important as planning
because it provides the basis of all other functions.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

21. For the following statements, choose the correct option:

Statement I: Planning is required at all levels of management as well as in all

departments of the organisation.

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Statement II: Planning is not an exclusive function of top management nor of any
particular department; but the scope of planning differs at different levels and
among different departments.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

22. For the following statements, choose the correct option:

Statement I: Planning is basically an intellectual activity of doing rather than thinking,

because planning determines the action to be taken.

Statement II: Planning presupposes the existence of alternatives and, thus, involves
thorough examination and evaluation of each alternative and choosing the most
appropriate one.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

23. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Planning leads to rigidity.

Reason (R): Following a pre-decided plan, when circumstances have changed, may
not turn out to be in the organisations interest.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

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(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A).

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

24. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Planning reduces creativity.

Reason (R): Planning is an activity which is done by the top management. Usually the
rest of the members just implements these plans. As a consequence, middle
management and other decision makers are neither allowed to deviate from plans
nor are they permitted to act on their own.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

25. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Planning reduces creativity.

Reason (R): Since people tend to think along the same lines as others, there is
nothing new or innovative.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A).

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

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26. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Planning does not guarantee success.

Reason (R): The success of an enterprise is possible only when plans are properly
drawn up and implemented. Any plan needs to be translated into action or it
becomes meaningless.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A).

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

27. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Planning does not guarantee success.

Reason (R): Managers have a tendency to rely on previously tried and tested
successful plans. It is not always true that just because a plan has worked before it
will work again.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A).

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

28. For the following statements, choose the correct option:

Statement I: Premises are the base material upon which plans are to be drawn.

Statement II: To see whether plans are being implemented and activities are
performed according to schedule is a part of the planning process.

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Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

29. For the following statements, choose the correct option:

Statement I: 'Follow-up action' is the real point of decision making under the
planning process.

Statement II: 'Implementing the plan' is the step where other managerial functions
also come into the picture.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

30. For the following statements, choose the correct option:

Statement I: Single-use plans include budgets, programmes and projects.

Statement II: Standing plans include policies, procedures, methods and rules.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

31. For the following statements, choose the correct option:

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Statement I: Policies are general forms of standing plans that specifies the
organisations response to a certain situation like the admission policy of an
educational institution.

Statement II: Procedures describe steps to be followed in particular circumstances

like the procedure for reporting progress in production.

Choose the correct option from the options given below:

(a) Both the Statements I and II are correct.

(b) Both the Statements I and II are not correct.

(c) Statement I is correct and Statement II is not correct.

(d) Statement I is incorrect and Statement II is correct.

32. For the following statements, choose the correct option:

Statement I: Procedures provide the manner in which a task has to be performed.

Statement II: Rules are very clearly stated as to exactly what has to be done like
reporting for work at a particular time.

Choose the correct option from the options given below:

(A) Both the Statements I and II are correct.

(b) Both the Statements I and II are not correct.

(c) Statement I is correct and Statement II is not correct.

(d) Statement I is incorrect and Statement II is correct.

33. For the following statements, choose the correct option:

Statement I: Single-use and standing plans are part of the operational planning
process.

Statement II: 'Strategy is neither a single-use plan nor a standing plan.

Choose the correct option from the options given below.

(a) Both the Statements I and II are correct.

(b) Both the Statements I and II are not correct.

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(c) Statement I is correct and Statement II is not correct.

(d) Statement I is incorrect and Statement II is correct.

34. For the following statements, choose the correct option:

Statement I: Policy is a general plan prepared by top management outlining resource

allocation, priorities and takes into consideration the business environment and
competition.

Statement II: Objectives are usually set by the top management and serve as a guide
for overall planning.

Choose the correct option from the options given below

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

35. For the following statements, choose the correct option:

Statement I: Objectives represent the end point of planning.

Statement II: A strategy provides the broad contours of an organisation's business.

Choose the correct option from the options given below

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement 1 is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

36. For the following statements, choose the correct option:

Statement I: A strategy is a comprehensive plan for accomplishing an organisation

objectives, and includes three dimensions- determining long term objectives,
adopting a particular course of action and allocating resources necessary to achieve
the objective

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Statement II: Whenever a policy is formulated, the business environment needs to
be taken into consideration.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

37. For the following statements, choose the correct option:

Statement I: Rules are guides to managerial action and decisions in the

implementation of strategy.

Statement II: Policies define the broad parameters within which a manager may
function.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct

38. For the following statements, choose the correct option:

Statement I: Procedures are routine steps on how to carry out activities; They detail
the exact manner in which any work is to be performed.

Statement II: Procedures are steps to be carried out within a broad policy
framework.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct

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(d) Both the Statements I and II are not correct

39. For the following statements, choose the correct option:

Statement I: Methods provide the prescribed ways or manner in which a task has to
be performed considering the objective.

Statement II: Method deals with a task comprising one step of a procedure and
specifies how this step is to be performed.

Choose the correct option from the options given below:

(a) Both the Statements I and II are correct.

(b) Both the Statements I and II are not correct.

(c) Statement I is correct and Statement II is not correct.

(d) Statement II is correct and Statement I is not correct.

40. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Rules are general statements that inform what is to be done.

Reason (R): Rules do not allow for any flexibility or discretion.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true.

(b) Both Assertion (A) and Reason (R) are false.

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

41. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Rules are usually the simplest type of plans.

Reason (R): Because there is no compromise or change unless a policy decision is

taken.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

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(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A).

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

42. For the following statements, choose the correct option:

Statement I: Programmes are detailed statements about a project which outlines the
objectives, policies, procedures. rules, tasks, human and physical resources required
and the budget to implement any course of action.

Statement II: Programmes include the entire gamut of activities as well as the
organisation's policy and how it will contribute to the overall business plan.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

43. For the following statements, choose the correct option:

Statement I: A budget is a statement of expected results expressed in numerical

terms. It is a plan which quantifies future facts and figures.

Statement II: A budget is also a control device from which deviations can be taken
care of.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

44. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Budget is a fundamental planning instrument.

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Reason (R): Making a budget involves forecasting, therefore, it clearly comes under
planning.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion

(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A).

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

ANSWER KEY

1. (c) 2. (c) 3. (b) 4. (a) 5. (c) 6. (a) 7. (b) 8. (a) 9. (d) 10. (b) 11. (a) 12. (d) 13.
(a) 14. (b)

15. (c) 16. (c) 17. (a) 18. (c) 19. (c) 20. (a) 21. (c) 22. (b) 23. (a) 24. (b) 25. (a) 26.
(a) 27. (a) 28. (c)

29. (b) 30. (c) 31. (a) 32. (d) 33. (a) 34. (b) 35. (c) 36. (a) 37. (b) 38. (c) 39. (a) 40. (d) 41.
(a) 42. (c)

43. (c) 44. (a)

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Chapter - 5
Organising

Organising: Concept, Process and Importance

Meaning of 'Organising' as a Process
Organising essentially implies a process which coordinates human efforts, assembles
resources and integrates both into a unified whole to be utilised for achieving
specified objectives.
Organising can be defined as a process that initiates implementation of plans by
clarifying jobs and working relationships and effectively deploying resources for
attainment of identified and desired results (goals).
Organising is a process by which the manager brings order out of chaos, removes
conflict among people over work or responsibility sharing and creates an
environment suitable for teamwork.
Steps in the Process of Organising
Organising involves a series of steps that need to be taken in order to achieve the
desired goal. The following steps emerge in the process of organising:
1. Identification and division of work
The first step in the process of organising involves identifying and dividing the work
that has to be done in accordance with previously determined plans.
The work is divided into manageable activities so that duplication can be avoided and
the burden of work can be shared among the employees.
2. Departmentalisation
Once work has been divided into small and manageable activities then those
activities which are similar in nature are grouped together. This grouping process is
called departmentalisation. This facilitates specialisation
3. Assignment of duties
It is necessary to define the work of different job positions and accordingly allocate
work to various employees. Once departments have been formed, each of them is
placed under the charge of an individual. Jobs are then allocated to the members of
each department in accordance to their skills and competencies.
4. Establishing reporting relationships
Merely allocating work is not enough. Each individual should also know who he has
to take orders from and to whom he is accountable
The establishment of such clear relationships helps to create a hierarchical structure
and helps in coordination amongst various departments.

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Importance/Significance of Organising
The significance of the organising function mainly arises from the fact that it helps in
the survival and growth of an enterprise and equips it to meet various challenges. In
order for any business enterprise to perform tasks and successfully meet goals, the
organising function must be properly performed.
The following points highlight the crucial role that organising plays in any business
enterprise:

1. Benefits of specialisation
Organising leads to a systematic allocation of jobs amongst the work force.

This reduces the workload as well as enhances productivity because of the specific
workers performing a specific job on a regular basis.
Repetitive performance of a particular task allows a worker to gain experience in
that area and leads to specialisation.

2. Clarity in working relationships

The establishment of working relationships clarifies lines of communication and
specifies who is to report to whom.
This removes ambiguity in transfer of information and instructions.
It helps in creating a hierarchical order thereby enabling the fixation of responsibility
and specification of the extent of authority to be exercised by an individual.

3. Effective administration
Organising provides a clear description of jobs and related duties.
This helps to avoid confusion and duplication.
Clarity in working relationships enables proper execution of work.
Management of an enterprise becomes easy and this brings effectiveness in
administration.

4. Optimum utilisation of resources

Organising leads to the proper utilisation of all material, financial and human
resources.
The proper assignment of jobs avoids overlapping of work and also makes possible
the best use of resources.
Avoidance of duplication of work helps in preventing confusion and minimising the
wastage of resources and efforts.

5. Development of personnel

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Organising helps in development of personnel by delegation of work to subordinates.
Effective delegation allows the manager to reduce their workload by assigning
routine jobs to their subordinates.
It allows the managers to develop new methods and ways of performing tasks It
gives them the time to explore areas for growth and the opportunity to innovate
thereby strengthening the company's competitive position.
It also develops in the subordinate the ability to deal effectively with challenges and
helps them to realise their full potential.

6. Adaptation to change
The process of organising allows the organisation structure to be suitably modified
according to changes in business environment. It thus provides stability to the
enterprise as it can continue to survive and grow in spite of changes.

7. Expansion and growth

Organising helps in the growth and diversification of an enterprise by enabling it to
deviate from existing norms and taking up new challenges.
It allows a business enterprise to add more job positions, departments and even
diversify their product
lines.
New geographical territories can be added to current areas of operation and this will
help to increase customer base, sales and profit.

Organisation Structure: Concept and Types

Meaning of Organisation Structure (or Organising as a Structure)
Organisation structure is the outcome of the organising process.
The organisation structure can be defined as the framework within which
managerial and operating tasks are performed.
 An organisation structure provides the framework which enables the enterprise
to function as an integrated unit by regulating and coordinating the
responsibilities of individuals and departments.
 It specifies the relationships between people, work and resources.
 It allows correlation and coordination among human, physical and financial
resources and this enables a business enterprise to accomplish desired goals.
 A proper organisation structure is essential to ensure a smooth flow of
communication and better control over the operations of a business enterprise.
 An effective structure will result in increased profitability of the enterprise.
Example: Sonali opened her own travel agency. The success of her travel agency
depends on a harmonious relationship between the customer and the employees of

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the travel agency. In order to achieve this objective, she has divided the entire work
of the agency into three subheads based on the functions namely operations, sales
and administration.
---- Operations include travel counsellor, reservation and ticketing and customer
care. ---- Sales include the Accounts executive.
---- Administration includes Book Keeper, Cashier and utility personnel.
This division of work on the basis of functions has resulted into an organisational
structure specifying the line of authority and responsibility.
Need for an adequate organisation structure
The need for an adequate organisation structure is felt by an enterprise whenever it
grows in size or complexity. As an organisation grows, coordination becomes difficult
due to the emergence of new functions and increase in structural hierarchies.
How is the organisation structure of a firm shown?
The organisation structure of a firm is shown in an organisation chart.
The span of management, to a large extent gives shape to the organisational
structure. Span of management refers to the number of
subordinates that can be effectively managed by a superior. This determines the
levels of management in the structure.
Types of Organisation Structure
The type of structure adopted by an organisation will vary with the nature and types
of activities performed by an organisation. The organisational structure can be
classified under two categories which are as follows:
1. Functional structure
Functional structure is an organisational structure formed by grouping of jobs of
similar nature according to functions and organising these major functions as
separate departments.
All departments report to a coordinating head, say Managing Director.
For example, in a manufacturing concern division of work into key functions will
include production, finance, marketing, and human resource (HR). These
departments may be further divided into sections. For instance, marketing
department may have sections like packaging, advertising, selling, etc.
A functional structure is an organisational design that groups similar or related
functions/jobs together.

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Suitability: Functional structure is suitable for those enterprises which have only one
category of products offer, however:
 the size of the organisation is large,
 it has a diversified activities and
 operations require a high degree of specialisation.

2. Divisional structure
Many large organisations with diversified activities have re-organised themselves
away from the simpler and basic functional structure towards a divisional structure
which is more suited to their activities.
This is particularly true of those enterprises which have more than one category of
products to offer. This is because although every organisation performs a set of
homogeneous functions, as it diversifies into varied product categories, the need for
a more evolved structural design is felt to cope with the emerging complexity.
A divisional structure is the organisation structure which comprises of separate
business units or divisions. Generally, manpower is grouped on the basis of
different products manufactured. For example, a large company may have divisions
like Footwear, Garments, etc.

 Each unit or division has a divisional manager responsible for performance and
who has authority over the unit or division.
 Each division is multi-functional because within each division functions like
production, marketing, finance, purchase etc. are performed together to achieve
a common goal. In other words, within each division, the functional structure
tends to be adopted. However, functions may vary across divisions in accordance
with a particular product line.
 Each division works as a profit center where the divisional head is responsible for
the profit or loss of his division.
 Each division is self-contained as it develops expertise in all functions related to a
product line.
Suitability: A divisional structure is suitable for those business enterprises where a
large variety of products manufactured using different productive resources.
An organisation will decide to adopt a divisional structure when:
 an organisation grows and needs to add more employees,
 create more departments and
 introduce new levels of management.

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Functional Structure: Advantages and Disadvantages

ADVANTAGES DISADVANTAGES

1. specialisation:- A Functional Structure leads 1. Functional empires: A functional structure

to occupational specialisation since emphasis is places less emphasis on overall enterprise
placed on specific functions. This promotes objectives than the objectives pursued by a
efficiency in utilisation of manpower as functional head. Such practices may lead to
employees perform similar tasks within a functional empires wherein the importance of a
department and are able to improve particular function may be over- emphasised.
performance. Pursuing departmental interests at the cost of
organisational interests can also hinder the
interaction between two or more departments.
2. Better control: It promotes control and 2. Problems in coordination: It may lead to
coordination within a department because of problems in coordination as information has to b
similarity in the tasks being performed. exchanged across functionally differentiated
departments.
3. Managerial and operational efficiency: It 3. Conflict of interest: A conflict of interests may
helps, in increasing managerial and operational arise when the interests of two or more
efficiency and this results in increased profit. departments are not compatible For example, th
sales department insisting on a customer friendly
design may cause difficulties in production. Such
dissension can prove to be harmful in terms of
fulfillment of organisational interest. Inter-
departmental conflicts can also arise in the
absence of clear separation of responsibility.
4.Economical: It leads to minimal duplication of 4. Inflexibility: It may lead to inflexibility as
effort which results in economies of scale and people with same skills and knowledge base may
this lowers cost. develop a narrow perspective and thus, have
5. Ease in training employees: It makes training difficulty in appreciating others' point of view.
of employees easier as the focus is only on a [Functional heads do not get training for top
limited range of skills. management positions because they are unable
to gather experience in diverse areas.
6. Due attention: It ensures that different
functions get due attention.

Divisional Structure: Advantages and Disadvantages

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 ADVANTAGES DISADVANTAGES
1. Product specialisation: Product specialisation 1. Conflicts: Conflict may arise among different
helps in the development of varied skills in a divisions with reference to allocation of funds and
divisional head and this prepares him for higher further a particular division may seek to maximise
positions. This is because he gains experience in its profits at the cost of other divisions.
all functions related to a particular product.
2. Greater accountability: Divisional heads are 2. Costly process: It may lead to increase in costs
accountable for profits, as revenues and costs since there may be a duplication of activities
related to different departments can be easily across products. Providing each division with
identified and assigned to them. This provides a separate set of similar functions increases
proper basis for performance measurement. It expenditure.
also helps in fixation of responsibility in cases of
poor performance of the division and
appropriate remedial action can be taken.
3. Flexibility and initiative: It promotes 3. Ignoring of organisational interests: It provides
flexibility and initiative because each division managers with the authority to supervise all
functions as an autonomous unit which leads to activities related to a particular division. In course
faster decision making. of time, such a manager may gain power and in a
4. Expansion and growth: It facilitates bid to assert his independence may ignore
expansion and growth as new divisions can be organisational interests.
added without interrupting the existing
operations by merely adding another divisional
head and staff for the new product line.

Basis Functional Structure Divisional Structure

1. Formation Formation is based on functions Formation is based on product lines
and is supported by functions.

2. Specialisation Functional specialisation Product specialisation

3. Responsibility Difficult to fix on a department Easy to fix responsiblity for

performance
4. Managerial Difficult, as each functional Easier, autonomy as well as the chance
Development manager has to report to the to perform multiple functions helps in
top management. managerial development.

5. Cost Functions are not duplicated, Duplication of resources in various

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 hence economical. departments, hence costly

6. Coordination Difficult for a multi-product Easy, because all functions related to a

company particular product are integrated in
one department.

Difference between Functional and Divisional Structure

Formal and Informal Organisation

Formal Organisation
In all organisations, employees are guided by rules and procedures.
To enable smooth functioning of the enterprise, job description and rules and
procedures related to work processes have to be laid down. This is done through the
formal organisation.
Formal organisation refers to the organisation structure which is designed by the
management to accomplish a particular task.
It specifies clearly the boundaries of authority and responsibility and there is a
systematic coordination among the various activities to achieve organisational
goals.
Features of Formal Organisation
1. It is deliberately designed by the top management to facilitate the smooth
functioning of the organisation.
2. It is a means to achieve the objectives specified in the plans, as it lays down rules
and procedures essential for their achievement.
3. It specifies the relationships among various job positions and the nature of their
interrelationship. This clarifies who has to report to whom.
4. Efforts of various departments are coordinated, interlinked and integrated through
the formal organisation.
5. It places more emphasis on work to be performed than interpersonal relationships
among the employees.
Informal Organisation
When people have frequent contacts they cannot be forced into a rigid formal
structure. Rather, based on their interaction and friendship they tend to form groups
which show conformity in terms of interest.
Interaction among people at work gives rise to a 'network of social relationships
among employees' called the informal organisation.

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Examples of informal organisation or groups formed with common interest may be
those who take part in cricket matches on Sundays, meet in the cafeteria for coffee,
are interested in dramatics etc.
Features of Informal Organisation
1. It emerges spontaneously and is not deliberately created by the management.
2. An informal organisation originates from within the formal organisation as a result
of social or personal interaction among employees.
3. The standards of behaviour evolve from group norms rather than officially laid
down rules and regulations. There is no set behaviour pattern.
4. Independent channels of communication without specified direction of flow of
information developed by group members. Informal organisation does not have fixed
lines of communication.
5. It has no definite structure or form because it is a complex network of social
relationships among members. It has no written rules, and is fluid in form and scope.

Difference between Formal and Informal Organisation

Basis Formal Organisation Informal Organisation

1. Meaning Structure of authority Network of social relationships
relationships created by the arising out of interaction
management. among employees.
2. Origin Arises as a result of company Arises as a result of social
rules and policies. interaction.
3. Authority Arises by virtue of position in Arises out of personal qualities.
management.
4. Behaviour It is directed by rules. There is no set behaviour
pattern.
5. Flow of Communication Takes Place Flow of communication is not
Communication through the scalar chain. Through a planned route. It can
take place in any direction.
6. Nature Rigid Flexible
7. Leadership Managers are leaders. Leaders may or may not be
managers. They are chosen by
the group.

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Formal Organisation: Advantages and Limitations

ADVANTAGES LIMITATIONS

1. Fixation of responsibility: It is easier to 1. Procedural delays: The formal

fix responsibility since mutual communication may lead to procedural
relationships are clearly defined. delays as the established chain of
command has to be followed which
increases the time taken for decision
making.

2. Clarity of roles: There is no ambiguity 2. Inadequate recognition of creativity:

in the role that each member has to play Poor organisation practices may not
as duties are specified. This also helps in provide adequate recognition to creative
avoiding duplication of effort. talent, since it does not allow any
deviations from rigidly laid down polices.

3. Unity of command: Unity of command 3. Limited in scope: It is difficult to

is maintained through an established understand all human relationships in an
chain of command. enterprise as it places more emphasis on
4. Effective accomplishment of goals: It structure and work.
leads to effective accomplishment of
goals by providing a framework for the
operations to be performed and ensuring
that each employee knows the role he
has to play.
5. Stability to the organisation: It
provides stability to the organisation.
This is because behaviour of employees
can be fairly predicted since there are
specific rules to guide them.

Informal Organisation: Advantages and Disadvantages

ADVANTAGES DISADVANTAGES
1. Speed: Prescribed lines of 1. Disruptive force: When an informal
communication are not followed. Thus, organisation spreads rumours, it

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the informal organisation leads to faster becomes a destructive force and goes
spread of information as well as quick against the interest of the formal
feedback. organisation.
2. Fulfillment of social needs: It helps to 2. Resistance to change: The
fulfill the social needs of the members management may not be successful in
and allows them to find like minded implementing changes if the informal
people. This enhances their job organisation opposes them. Such
satisfaction since it gives them a sense of resistance to change may delay or restrict
belongingness in the organisation. growth.

3. Fills inadequacies of formal structure: 3. Priority to group interests: It

It contributes towards fulfillment of pressurises members to conform to
organisational objectives by group expectations. This can be harmful
compensating for inadequacies in the to the organisation if the norms set by
formal organisation. For example, the group are against organisational
employees reactions towards plans and interests.
policies can be tested through the
informal network.

Delegation and Decentralisation

Concept of Delegation
Delegation refers to the transfer of authority from a superior to a subordinate, the
entrustment of responsibility and the creation of accountability for performance,
which helps a manager to extend his area of operations as without it, his activities
would be restricted to only what he himself can do.
 Delegation is a pre-requisite to the efficient functioning of an organisation
because it enables a manager to use his time on high priority activities.
 It also satisfies the subordinates' need for recognition and provides them with
opportunities to develop and exercise initiative.
Elements of Delegation
1. Authority
Authority refers to the right of an individual to command his subordinates and to
take action within the scope of his position.
 The concept of authority arises from the established scalar chain which links the
various job positions and levels of an organisation. In the formal organisation
authority originates by virtue of an individual's position and the extent of
authority is highest at the top management levels and reduces successively as we

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 go down the corporate ladder. Thus, authority flows from top to bottom, i.e., the
superior has authority over the subordinate.
 Authority relationships helps to maintain order in the organisation by giving the
managers the right to exact obedience and give directions to the workforce under
them.
 Authority determines the superior subordinate relationship wherein the superior
communicates his decision to the subordinate, expecting compliance from him
and the subordinate executes the decision as per the guidelines of the superior.
2. Responsibility
Responsibility is the obligation of a subordinate to properly perform the assigned
duty.
 It arises from a superior-subordinate relationship because the subordinate is
bound to perform the duty assigned to him by his superior.
 Responsibility flows upwards i.e., a subordinate will always be responsible to his
superior.
3. Accountability
Accountability implies being answerable for the final outcome of the assigned task.
 Once responsibility for performance of an assigned task is accepted, one cannot
deny accountability. Thus, accountability arises from responsibility.
 Accountability flows upwards i.e., a subordinate will be accountable to a superior
for satisfactory performance of work. The subordinate will be expected to explain
the consequences of his actions or omissions.

Elements of Delegation - A comparison

Basis Authority Responsibility Accountability
1. Meaning Right to command Obligation to perform Answerability for
an outcome of the
assigned task. assigned task.
2. Origin Arises from formal Arises from delegated Arises from
position authority responsibility
to superior
3. Flow Flows downward Flows upward from Flows upward from
from superior to subordinate to subordinate to

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 subordinate. superior. superior.

4.Delegation Can be delegated Cannot be entirely Cannot be delegated

delegated. at all.

Principles of Delegation
1. For effective delegation, the authority granted must be commensurate with the
assigned responsibility. (Principle of 'authority and responsibility'): An important
consideration to be kept in view with respect to both authority and responsibility is
that when an employee is given responsibility for a job, he must also be given the
degree of authority necessary to carry it out.
For effective delegation, the authority granted must be commensurate with the
assigned responsibility. Thus, if authority granted is more than responsibility, it may
lead to misuse of authority, and if responsibility assigned is more than authority it
may make a person ineffective.

2. The authority granted to a subordinate can be taken back and redelegated to

another person: If the subordinate fails to perform the assigned task, the authority
granted to him/her can be taken back and redelegated to another person.

3. Delegation does not mean abdication (Principle of 'absoluteness of

accountability'): Delegation helps a manager to extend his area of operations.
However, delegation does not mean abdication. It means that the shall still be
accountable for the performance of the assigned tasks.
Delegation of authority, undoubtedly empowers an employee to act for his superior
but the superior would still be accountable for the final outcome.
Thus, irrespective of the extent of delegated authority, the manager shall still be
accountable to the same extent as before delegation.
It indicates that the manager has to ensure the on the proper discharge of duties by
his subordinates. It is generally enforced through regular feedback extent of work
accomplished.
Example: Suppose the directors of a company manufacturing computers have asked
their marketing manager to achieve a target sale of 100 computers per day. The
marketing manager has delegated the task to a sales manager working under him but
the authority to give discount was not given by him. The sales manager could not
achieve the target.
In this case, the marketing manager cannot blame the sales manager since he was
not given the authority to give discount.

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However, the authority granted to the sales manager can be taken back and
redelegated to another person. The marketing manager shall still be accountable to
the directors. The process of delegation does not relieve the marketing manager of
his own accountability. Accountability cannnot be delegated at all.

Importance of Delegation
Delegation ensures that the subordinates perform tasks on behalf of the manager
thereby reducing his workload and providing him with more time to concentrate on
important matters.
"Delegation is a key element in effective organising.
" Effective delegation leads to the following benefits:
1. Effective management
 By empowering the employees, the managers are able to function more
efficiently as they get more time to concentrate on important matters.
 Freedom from doing routine work provides them with opportunities to excel in
new areas.
2. Employee development
 As a result of delegation, employees get more opportunities to utilise their talent.
It allows them to develop those skills which will enable them to perform complex
tasks and assume those responsibilities which will improve their career prospects.
 It makes them better leaders and decision makers. Thus, delegation helps by
preparing better future managers. Delegation empowers the employees by
providing them with the chance to use their skills, gain experience and develop
themselves for higher positions.
3. Motivation of employees
 Delegation helps in developing the talents of the employees. It also has
psychological benefits. When a superior entrusts a subordinate with a task, it is
not merely the sharing of work but involves trust on the superior's part and
commitment on the part of the subordinate.
 Responsibility for work builds the self-esteem of an employee and improves his
confidence. He feels encouraged and tries to improve his performance further.
4. Facilitation of growth
Delegation helps in the expansion of an organisation by providing a ready workforce
to take up leading positions in new ventures. Trained and experienced employees are
able to play significant roles in the launch of new projects.
5. Basis of management hierarchy

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 Delegation of authority establishes superior-subordinate relationships, which are
the basis of hierarchy of management. It is the degree and flow of authority
which determines who has to report to whom.
 The extent of delegated authority also decides the power that each job position
enjoys in the organisation.
6. Better coordination
 The elements of delegation, namely authority, responsibility and accountability
help to define the powers, duties and answerability related to the various
positions in an organisation. This helps to avoid overlapping of duties and
duplication of effort as it gives a clear picture of the work being done at various
levels.
 Such clarity in reporting relationships help in developing and maintaining
effective coordination amongst the departments, levels and functions of
management.
Concept of Decentralisation
In many organisations, the top management plays an active role in taking all
decisions while there are others in which this power is given to even the lower levels
of management.
Those organisations in which decision making authority lies with the top
management are termed as 'centralised organisations' whereas those in which such
authority is shared with lower levels are 'decentralised organisations.
Decentralisation explains the manner in which decision making responsibilities are
divided among hierarchical levels. Put simply, decentralisation refers to delegation of
authority throughout all the levels of the organisation.
Decentralisation refers to systematic delegation of authority through all the levels
of management and in all the departments except that which can be exercised only
at central points.
Decision making authority is shared with lower levels and is consequently placed
nearest to the points of action. In other words, decision making authority is pushed
down the chain of command. When decisions taken by the
lower levels are numerous as well as important an organisation can be regarded as
greatly decentralised.
Difference between Delegation and Decentralisation

Basis Delegation Decentralisation

1. Nature Delegation is a compulsory act Decentralisation is an optional
because policy decision. It on is done at the
no individual can perform all discretion of the top management.
tasks

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 his own.

2. Freedom More control by superiors Less control over executives hence

of action hence less greater freedom of action.
freedom to take own decisions.
3.Status It is a process followed to share It is the result of the policy decision
tasks. of the top management

4. Scope It has narrow scope as it is It has wide scope as it implies

limited to superior and his extension of delegation to the
immediate subordinate. lowest level of management.
5. Purpose To lessen the burden of the To increase the role of the
manager. subordinates in the organisation by
giving them more autonomy,

Importance of Decentralisation
1. Relief to top management
 Decentralisation diminishes the amount of direct supervision exercised by a
superior over the activities of a subordinate because they are given the freedom
to act and decide within the prescribed limits. Personal supervision is generally
replaced by other forms of control such as return on investment etc.
 Decentralisation also leaves the top management with more time which they can
devote to important policy decisions rather than occupying their time with both
policy as well as operational decisions.
2. Develops initiative among subordinates
Decentralisation helps to promote self-reliance and confidence amongst the
subordinates. This is because when lower managerial levels are given freedom to
take their own decisions they learn to depend on their own judgment.
 It also keeps them in a state wherein they are constantly challenged and have to
develop solutions for the various problems they encounter.
 A decentralisation policy helps to identify those executives who have the
necessary potential to become dynamic leaders.
3. Develops managerial talent for the future
 Decentralisation gives subordinates a chance to prove their abilities and creates a
reservoir of qualified manpower who can be considered to fill up more
challenging positions through promotions.
 It also helps to identify those who may not be successful in assuming greater
responsibility.
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Thus, decentralisation is a means of management education as well as an
opportunity for trained manpower to use its talent in real life situations.
4. Quick decision making
 In a decentralised organisation, since decisions are taken at levels which are
nearest to the points of action and there is no requirement for approval from
many levels, the decision-making process is much faster.
 There are also less chances of information getting distorted because it doesn't
have to go through long channels.
5. Facilitates growth
 Decentralisation awards greater autonomy to the lower levels of management as
well as divisional or departmental heads. This allows them to function in a
manner best suited to their department and fosters a sense of competition
amongst the departments.
 Consequently, with each department doing its best in a bid to outdo the other,
the productivity levels increase and the organisation is able to generate more
returns which can be used for expansion purposes.

6. Better control
 Decentralisation makes it possible to evaluate performance at each level and the
departments can be individually held accountable for their results.
 Feedback from all levels helps to analyse variances and improve operations.

Objective Type Questions

1. Name the function of management which examines the activities and resources
required to implement the plan.
2. ______________ function of management includes the designing of roles to be
filled by suitably skilled people. (Fill up the blank
with correct answer)
3. _______________ essentially implies a process which coordinates human efforts,
assembles resources and integrates both into a unified whole to be utilised for
achieving specified objectives.
(Choose the correct
alternative)
(a) Coordination (b) Planning (c) Organising (d)
Directing

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4. ______________ is a process that initiates implementation of plans by clarifying
jobs and working relationships and effectively deploying resources for attainment of
identified and desired results (goals). (Organising/Directing/Controlling)
(Fill up the blank with correct option)
5. The process of organising involves identifying and dividing the work into small and
manageable activities, and then grouping those activities which are similar in nature.
This grouping process is called __________________. This facilitates _____________.
(Fill up the blanks with correct answers)
6. Establishing reporting relationships under organising function helps in
__________________ (Complete the
sentence)

7. The significance of the organising function of management mainly arises from the
fact that ________________.
(Complete the sentence)
8. ____________________ is a process by which the manager brings order out of
chaos, removes conflict among people over work or responsibility sharing and
creates an environment suitable for teamwork.
(Fill up the blank with correct answer)
9. Which function of management is concerned with establishing relationships for
the purpose of enabling people to work most effectively together in accomplishing
objectives?
10. Name the function of management which coordinates the physical, financial and
human resources and establishes productive relations among them for achievement
of specific goals.
`
(CBSE 2008)
11. It is a process of management by which the manager brings order out of chaos,
removes conflict among people over work or responsibility sharing and creates an
environment suitable for team work. Identify it.

12. Span of management refers to _______________ (Choose the correct

alternative)
(a) Number of managers
(b) Length of term for which a manager is appointed
(c) Number of subordinates under a superior
(d) Number of members in top management

13. A tall structure has a ___________________ (Choose the

correct alternative)
(a) Narrow span of management (b) Wide span of management
(c) No span of management (d) Less levels of management

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14. Grouping of activities on the basis of product lines is a part of ______________.
(Choose the correct
alternative)
(a) Delegated organisation (b) Divisional organisation
(c) Functional organisation (d) Autonomous organisation
15. Grouping of activities on the basis of functions is a part of
____________________.
(a) Decentralised organisation (b) Divisional organisation
(c) Functional organisation (d) Centralised organisation
(Choose the correct
alternative)
16. Which type of organisational structure is suitable for a large scale organisation
having diversified activities requiring high degree of specialisation in operations?
(CBSE 2013)
17. Name the type of 'organisational structure' which promotes efficiency in
utilisation of manpower.
18. ________________ refers to the number of subordinates that can be effectively
managed by a superior. (Fill up the blank
with correct answer)
19. The type of organisation structure adopted by an enterprise will vary with
_________.
(Fill up the blank with correct
answer)
20. __________________ is an organisational design that groups similar or related
jobs together. (Functional structure/Divisional structure)
21. _______________ promotes efficiency in utilisation of manpower as employees
perform similar tasks within a department and are able to improve performance.
(Functional structure/Divisional structure)
(Fill up the blank with correct option)
22. __________________ promotes control and coordination within a department
because of similarity in the tasks being performed. (Functional structure/Divisional
structure)
(Fill up the blank with correct
option)
23. _________________ makes training of employees easier as the focus is on a
limited range of skills. (Functional structure/Divisional structure) (Fill up
the blank with correct option)
24. The sales department insist on a customer friendly design which causes
difficulties in production. Such dissension can prove to be harmful in terms of
fulfillment of organisational interest. Such a conflict of interests arise in case of -
____________________ being adopted by the organisation. (Functional
structure/Divisional structure) (Fill up the blank with correct option)

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 25. ___________________ may lead to inflexibility as people with same skills and
knowledge base may develop a narrow perspective and thus, have difficulty in
appreciating the others point of view. (Functional structure/Divisional structure).
(Fill up the blank with correct option)
26. _______________ is most suitable when the size of the organisation is large, has
a diversified activities and operations require a high degree of specialisation.
(Functional structure/Divisional structure).
(Fill up the blank with correct option)
27. _______________ Many large organisation which have diversified into varied
product categories have reorganised themselves towards to cope with the emerging
complexity. (Functional structure/Divisional structure)
(Fill up the blank with correct option)
28. Under _____________________ a manager gains experience in all functions
related to a particular product. (Functional structure/Divisional structure). (Fill up
the blank with correct option) 29. promotes flexibility and initiative because each
business unit functions as an autonomous unit which leads to faster decision-making.
(Functional structure/Divisional structure).
30. _________________ may lead to increase in costs since there may be a
duplication of activities across products. (Functional structure/Divisional structure)
(Fill up the blank with correct
option) 31. ___________________ is suitable for those business
enterprises, where a large variety of products are manufactured using different
productive resources. (Fill up the blank with correct answer)
32. When an organisation grows and needs to add more employees, create more
departments and introduce new levels of management, it will decide to adopt a
________________
(Fill up the blank with
correct answer)
33. Match the following:

(i) It is difficult to fix responsibility on a particular department. (a) Functional

structure
(ii) It is costly because of duplication of resource in various (b) Divisional
departments. structure

(iii) Coordination is easy because all functions related to a

particular product are integrated in one department.
(iv) Managerial development is difficult as each manager has
to report to the top management.

34. The need for an adequate organisation structure is felt by an enterprise in when
(i) _________________ because (ii) _____________.

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35. A network of social relationships that arise spontaneously due to interaction at
work is called:
(Choose the correct
alternative)
(a) Formal organisation (b) Informal organisation
(c) Decentralisation (d) Delegation
36. The form of organisation known for giving rise to rumours is called
(Choose the correct
alternative)
(a) Centralised organisation (b) Decentralised organisation
(c) Informal organisation (d) Formal organisation
37. In all organisations, employees are guided by rules and procedures. To enable
smooth functioning of the enterprises, job description and rules and procedures
related to work processes have to be laid down. This is done through the
_______________.(Formal organisation/Informal organisation)
(Fill up the blank with correct option)

38. Match the following:

(i) It places more emphasis on work to be performed than (a) Formal
inter personal relationships among the employees organisation..
(ii) It has no definite structure or form. (b) Informal
organisation.
(iii) The standards of behaviour evolve from group norms.
(iv) It is a means to achieve the objectives specified in the
plans.

39. Formal organisation provides stability to the organisation because

____________________.
(Complete
the sentence).
40. The formal communication may lead to procedural delays as
_____________________.
(Complete
the sentence).
41. In a formal organisation, poor organisation practices may not provide adequate
recognition to creative talent, since _________________________.
(Complete the sentence).
42. It is difficult to understand all human relationships in a formal organisation as
______________.
(Complete
the sentence).
43. Match the following:

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(i) Arises as a result of social interaction. (a) Formal organisation
(ii) Flexible nature (b) Informal organisation
(iii) Behaviour is directed by rules.
(iv) Authority arises by virtue of position in management.

44. Informal organisation has no definite structure or form because

________________.
(Complete the
sentence)
45. Which of the following does not follow the scalar chain? (Choose the correct
alternative)
(a) Functional structure (b) Divisional structure
(c) Formal organisation (d) Informal organisation
46. Which of the following is not the correct characteristic of formal organisation:
(Choose the correct
alternative)
(a) It clarifies the official lines of communication
(b) Its purpose is to achieve organisational objective
(c) It coordinates and integrates the efforts of various departments
(d) It is formed by the individuals to get social and psychological satisfaction
47. Name the type of organisation in which job description and rules and procedures
related to work processes are laid down.
48. Name the type of organisation which is fluid in form and scope and does not have
fixed lines of communication.
49. Which of the following is not an element of delegation? (Choose the correct
alternative)
(a) Accountability (b) Authority
(c) Responsibility (d) Informal organisation
50. It refers to the right to take decisions inherent in a managerial position to tell
people what to do and expect them to do it. Identify the concept.
51. It arises from a superior-subordinate relationship wherein the subordinate is
bound to perform the duty assigned to him by his superior. Identify the concept.
52. Which of the following is the ideal situation?
(a) Authority > Responsibility
(b) Authority = Responsibility
(c) Authority < Responsibility
53. For delegation to be effective, it is essential that responsibility should be
accompanied with necessary _________________.
(Choose the correct alternative)
(a) Authority (b) Manpower (c) Incentives (d) Promotions
54. Decentralisation explains the manner in which decision making authority is
pushed down the

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_____________________. (Fill up the blank with
correct answer)
55. When decisions taken by the lower levels are numerous as well as important, an
organisation is greatly ___________________. (centralised/decentralised). (Fill up
the blank with correct option)
56. An organisation is ________________ (centralised/decentralised) when decision
making authority is delegated. (Fill up
the blank with correct option)
57. Complete centralisation would imply concentration of all decision making
functions at the ___________________.
(Choose the correct alternative)
(a) lower level of the management hierarchy (b) apex of the management
hierarchy
(c) middle level management (d) None of these
58. A manager must delegate authority if ___________.
(Complete the sentence)
59. _______________ refers to the downward transfer of authority from a superior
to a subordinate.
(Fill up the blank with
correct answer)
60. Delegation is a pre-requisite to the efficient functioning of an organisation
because_______________________.
(Complete the sentence)
61. "Delegation does not mean abdication." What does it mean?
62. ________________ reduces successively as we go down the corporate ladder.
(Authority/Responsibility/Accountability) (Fill up the blank with
correct option)
63. As an organisation grows in size and complexity, there is a tendency to move
towards decentralised decision-making because ______________.
(Complete the sentence)
64. Decentralisation should be applied with caution as _____________.
(Complete the sentence).
65. In a decentralised organisation, there is no need for supervision over the
activities of a subordinate.
(True/False)
66. Decentralisation is __________________ (least/greatest) when checking
required on decisions taken by lower levels of management is least. (Fill up
the blank with correct option)
67. In a decentralised organisation, one of the challenges is the accountability of
performance. In response to this challenge, better control systems are being evolved
by the corporate enterprises. Name any two such control systems.
68. Centralisation refers to __________________. (Choose the
correct alternative)

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(a) Retention of decision making authority (b) Dispersal of decision
making authority
(c) Creating divisions as profit centers (d) Opening new centers or
branches
69. Which of the following is not an element of the process of delegation?
(Choose the correct
alternative)
(a) Creation of an obligation (b) Granting of authority
(c) Freedom from responsibility (d) Assignment of duties.
70. A manager has kept all right of decision-making with himself. Each and every
employee has to come to him for orders again and again. Identify the concept of
management not followed by the manager.
71. "A manager is of the view that he is not responsible for the quality of work that
he has delegated to his subordinate." Do you agree with his viewpoint?
72. Name the concept of management which helps a manager to extend his area of
operations as without it, his activities. would be restricted to only what he himself
can do.
73. It determines the superior-subordinate relationship wherein the superior
communicates his decision to the subordinate, expecting compliance from him.
Identify the concept.

Case Studies
Analysing, Evaluating & Creating Type Questions

1. In a school, twelve students work for the school library in the summer vacations.
One afternoon they are told to unload a shipment of new releases, stock the
bookshelves, and then dispose of all waste (packaging, paper etc). One student
supervises the work by grouping students, divides the work, assigns each group
their quota and develops reporting relationships among them.
Identify the function of management highlighted above.
(1 mark)
Ans. Organising' function of management is highlighted in the given case.

2. In a school fete, the whole activity is divided into task groups each dealing with a
specific area like the food committee, the decoration committee, the ticketing
committee and so on. These are under the overall supervision of the official in-
charge of the event. Coordinating relationships are established among the various
groups to enable smooth interaction and clarity about each group's contribution
towards the event.
(a) Identify and state the function of management highlighted above.

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(b) State the steps involved in the function of management identified in part (a) by
quoting the lines from the above paragraph.
(6 marks)
Ans. (a) Organising (give meaning)
(b) The following steps emerge in the process of organising: (Explain
the steps)
(i) Identification and division of work
"...the whole activity is divided into task groups..."
(ii) Departmentalisation/Departmentation
"...each dealing with a specific area...
(iii) Assignment of duties
"... the food committee, the decoration committee, the ticketing committee ... are
under the overall supervision of the official in-charge of the event.
(iv) Establishing reporting relationships
"... Coordinating relationships are established ... clarity about each group's
contribution towards the event."

3. Rishu, Ashu and Ravi have decided to start a business of manufacturing toys.
They identified the following main activities which they have to perform: (i)
Purchase of raw materials, (ii) Purchase of machinery, (iii) Production of toys, (iv)
Arrangement of finance, (v) Sale of toys, (vi) Identifying the areas where they can
sell their toys and (vii) Selection of employees
In order to facilitate the work they thought that four managers should be
appointed to look after (a) Production, (b) Finance, (c) Marketing, (d) Personnel.
A. Identify the function of management involved in the above-mentioned para.
B. Quote the lines from the above para which help you in identifying this function.
C. State the steps followed in the process of this function of management.
(5 marks)
Ans. A. Organising
B. They identified the following main activities which they have to perform.
In order to facilitate the work they thought that four managers should be appointed
to look after. (a) Production, (b) Finance, (c) Marketing, (d) Personnel.'
C. Steps in Organising Process:
(i) Identifying and dividing the work into manageable activities.
(ii) Departmentalisation/Departmentation where activities of a similar nature are
grouped together. (iii) Assignment of duties to job positions.
(iv) Establishing reporting relationships so that each individual knows from whom he
has to take orders and to whom he is accountable.

4. Ramdas, aged 49 is working in an aviation company. He is the senior-most

employee in his division. He is even senior to the division manager, Kanaputti.
Ramdas is considered one of the most committed, capable and hard-working
employees. As a result of his abilities and seniority, he generally received the work

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assignments of his choice. Although there was no formal designation of various
special projects assigned to Ramdas, he handled them as a matter of routine. A
problem developed when an able and intelligent person Nagarjuna, aged 33, was
appointed by Kanaputti. Nagarjuna's previous three years experience in the closely
related work, made it possible for him to catch on to the routine work of his new
job more rapidly than was customary for a new employee. On several occasions,
Kanaputti noticed the tension developing between the two employees. However,
he didn't want to get involved in their personal issues as long as the work was
completed effectively and efficiently by them. One day, the tension between them
reached the boiling point and Ramdas complained to Kanaputti stating that his
duties were being largely taken over by Nagarjuna. Kanaputti issued the order
stating the clear allocation of the jobs and related duties between the two. He
further clarified the working relationship between them by specifying who was to
report to whom. This helped in reducing the workload, enhancing productivity and
removing ambiguity.
(i) Identify and state the step of organising process which has not been carried out
properly and contributed to this problem.
(ii) State the two steps of the organising process which have been taken by
Kanaputti to respond to the complaint of Ramdas.
(iii) Also state two points of importance of organising as reflected in the above
case.
(CBSE SQP 2017) (4 marks)
Ans. (i) Assignment of duties: Defining the work of different job positions and
allotting the work according to the skills of the employees.
(ii) Kanaputti responded to the complaint of Ramdas by
(a) Assigning the duties
(b) Establishing reporting relationship
(iii) (a) clarity in working relationship
(b) Benefits of specialisation
(c) Effective administration (any two)

5. Zamon Ltd. is manufacturer of electronics goods based in Pune. On one hand it

deals in items like books, music instrument, videotapes etc., and on the other hand
it deals in laptops and mobile phones.
The company had a functional structure with separate heads for production,
marketing and finance. All the functional heads were looking after the products,
but at times their activities overlapped. This led to problems related to
coordination and inter-departmental conflicts. To facilitate specialization Ramit,
the CEO of the company decided to group books, music instrument, videotapes etc.
under 'Media' and laptops and mobile phones under 'consumer electronics'. While
doing so Ramit has performed a step in the process of one of the functions of
management. Identify the step. (CBSE 2018) (1 mark)
Ans. Departmentalisation

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1. A company, which manufactures a popular brand of toys, has been enjoying
good market reputation. It has separate departments for Production, Marketing,
Finance, Human Resources and Research and Development.
Lately to use its brand name and also to cash on to new business opportunities it is
thinking to diversify into manufacture of new range of electronic toys for which a
new market is emerging.
(a) Identify the type of the organisational structure the company should adopt with
diversification. Give reasons in support of your answer.
(b) State any four benefits the company will derive from the organisational
structure identified in part (a).
(5 marks)
Ans. (a) Divisional structure; since the company is diversifying into manufacture of
new range of electronic toys, it needs to add more employees, create more
departments and introduce new levels of management.
(a) The business will get the following benefits by adopting the divisional structure:

(Explain
any four)

2. Neha runs a factory wherein she manufactures shoes. The business has been
doing well and she intends to expand by diversifying into leather bags as well as
western formal wear thereby making her company a complete provider of
corporate wear. This will enable her to market her business unit as the one stop for
working women. Which type of structure would you recommend for her expanded
organisation and why? State any four benefits the company will derive from the
organisational structure. (5 marks)
Ans. Divisional structure; since Neha intends to expand by diversifying into leather
bags as well as western formal wear, she needs to add more employees, create more
departments and introduce new levels of management.
The business will get the following benefits by adopting the divisional structure:
(Explain any four)

3. A truck manufacturing company has its registered office in Delhi, manufacturing

unit at Gurgaon and marketing department is located at Faridabad. Which type of
organisational structure should it adopt to achieve its target? Give reasons. State
any four advantages of this organisation structure.
(6 marks)
Ans. The company should adopt 'Functional Structure' since it manufactures trucks
only (a single product). The company separate departments like manufacturing unit
(Gurgaon), marketing and sales department (Faridabad), etc.

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That means, the size of the organisation is large, it has diversified activities and
operations require a high degree of specialisation. So, it should adopt functional
structure.
By adopting functional structure, the company gets the following advantages:
(Explain any four)

4. Kiran Industries is a company manufacturing office furniture. The company chose

to diversify its operations to improve its growth potential and increase market
share. As the project was important many alternatives were generated for the
purpose and were thoroughly discussed amongst the members of the organisation.
After evaluating the various alternatives Sukhvinder, the Managing Director of the
decided that they should add 'Home Interiors and Furnishings' as a new line of
business activity.
(a) Name the framework, which the diversified organisation should adopt, to
enable it to cope with the emerging complexity? Give one reason in support of
your answer.
(b) State any two limitations of this framework. (CBSE SQP 2016)
(4 marks)
Ans. (a) Divisional Structure (give any one
advantage)
(b) Limitations of the Divisional Structure: (give any two
limitations)

5. Aradhana and Gandharv are heads of two different departments in Yumco Ltd.'
They are efficient managers and are able to motivate the employees of their
respective departments to improve performance. However, their drive to excel in
their own sphere of activity instead of giving emphasis on objectives of the
enterprise has hindered the interaction between the departments that Aradhana
and Gandharv are heading. Often there are inter-departmental conflicts and they
have become incompatible. This has proved to be harmful in the fulfilment of the
organisational objectives. The situation has deteriorated to such an extent that the
CEO of 'Yumco Ltd.' has hired a consultant, Rashmi, to resolve the problem. After
studying the situation closely, Rashmi found that the problem has arisen due to
inflexibility and a narrow perspective on the part of both Aradhana and Gandharv.
She is of the view that this situation is a result of the type of organisational
structure 'Yumco Ltd.' has adopted.
From the above information, identify the organisational structure adopted by
'Yumco Ltd.' and state any three advantages of the structure so identified.
(CBSE 2018) (4 marks)
Ans. Functional Structure is the organisational structure adopted by Yumco Ltd.'.
Advantages of Functional Structure: (State any
three)

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6. 'Himalaya Ltd.', is engaged in manufacturing of washing machines. The target of
the organisation is to manufacture 500 washing machines in a day. There is an
occupational specialisation in the organisation which promotes efficiency of
employees. There is no duplication of efforts in such type of organization structure.
Identify the type of organisation structure described above. (CBSE 2015) (1
mark)

Ans. Functional structure

7 A company has been registered under the Companies Act with an authorised
share capital of* 20,000 crore. Its registered office is situated in Delhi and
manufacturing unit in a backward district of Rajasthan. Its marketing department is
situated in Bhopal. The company is manufacturing Fast Moving Consumer Goods
(FMCG). Which type of organisational structure would suit the requirements of the
company?

Ans. Divisional Structure multiproducet

(1 mark)

8. An electronic company manufacturing TV and Refrigerators wants to bring two

new products Washing Machines and ACs in the market. For each product separate
division is to be set up. The in-charge of washing machine division and AC division
will be a female and a disabled person respectively.
What type of organisational structure is suitable for this company?

Ans. Divisional structure

(1 mark)

9. Identify and explain the type of organisation structure that should be followed
by the company in each case: (i) Vrinda Ltd. grows, so it needs to add more
employees, create new departments and introduce new
levels of management.
(ii) Shreya Ltd. is a large organisation having diversified activities and operations
requires a high degree
of specialisation.

Ans. (i) Divisional structure

(ii) Functional structure

10. A company has its registered office in Delhi, manufacturing unit at Gurgaon and
marketing and sales department at Faridabad. The company manufactures the Fast
Moving Consumer Goods (FMCG). Which type of organisational structure should it
adopt to achieve its target? Why?

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Ans. Divisional structure ; since the company manufactures many consumer
products, it is a multi-product company. The company will have separate business
units or divisions for each product. Each unit will have a divisional manager
responsible for performance of his division.

11. Ravi runs a locks manufacturing factory. He manufactures locks used in houses.
He wants to expand his business. For this, he wants to enter into the
manufacturing of locks for cars and motorcycles. Which type of organisational
structure will he choose for his factory and why?

Ans. Functional structure

diversified activities
(1 mark)

12. A company is manufacturing Televisions, Refrigerators, Airconditioners,

Washing machines and Gas stoves using different productive resources and is at
the threshold of growth, requiring more emplooyees. Suggest a suitable
organisational structure for this company giving reason in support of your answer.
Draw a diagram depicting the structure. State any three disadvantages of this form
of organisational (6 marks)
structure.

Ans. Functional structure

13. A Steel Manufacturing Company has the following main jobs: (i) Manufacturing,
(ii) Finance, (iii) Marketing, (iv) Personnel and, (v) Research and development.
(a) Which type of organisational structure will you choose for this type of a
company and why? (b) State any five advantages that this structure offers to an
organisation.
(6 marks)

Ans. (a) Functional structure; because the company has diversified activities and
operations require a high degree of
specialisation.
(b) Advantages of functional structure
(any five)

Case Studies Analysing, Evaluating & Creating

Type Questions

Q1. 'Shan Spices Ltd. are the manufacturer of different food specific spices like Rajma
Masala, Cholley Masala, Aaloo Parantha Masala etc. Mr. Raghav, the owner of the

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company has created different departments for purchase, production, marketing,
finance and human resource. There are thirty employees working in the organisation.
Planning is of paramount importance to the company as Mr. Raghav believes that
effective planning leads to achievement of organisational objectives. So in order to
make employees focus on objectives, he issued instructions that during working
hours only official matters will be discussed. He made certain rules and code of
conduct for the employees to follow, according to which employees are not allowed
to visit and talk to the employees of other departments except for official work. He
emphasised on work performance which resulted in smooth functioning of the
organisation.

(i) Identify and state the type of organisation mentioned in the above para.

(ii) State one feature of the concept identified in part (1) as mentioned in the above
para.

(iii) What was the purpose behind the formulation of rules for the employees that
restricted their personal communication with the employees of other departments?
(CBSE SQP 2017) (3 marks)

Ans. (i) Formal organisation (give meaning)

(ii) Focus on objective and work performance

(iii) Avoidance of the emergence of informal organisation which may obstruct the
fulfilment of organisational goals.

Q2. A.V.M.Ltd. set-up its electric appliances manufacturing factory in a backward

area of Himachal Pradesh where subsidies are provided by the government and
labour is available at cheaper rates.

A.V.M Ltd. was able to produce its products at low cost thereby generating enough
profits in the first year itself. It was because of the fact that the limits of authority
and responsibility of the employees were clearly defined and the activities of various
departments were coordinated and integrated. The Production Manager of the
company also came to know about the availability of raw material at cheaper rates
from a vendor. For this he wrote a letter to the Managing Director of the company
for getting sanction. But because of procedural delays in getting this sanction and
procuring funds from the Finance Manger, the order could not be placed.

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(a) Identify the type of organization that led to procedural delays and because of
which the company could not get the advantage of procuring raw material at
cheaper rates.

(b) State any three of the type of organization identified in (a) above other than
those discussed in the above case.
(CBSE 2018) (4 marks)

Ans. (a) Formal organisation

(b) Advantage of formal organisation:

(any two)

(i) It helps to maintain unity of command through an established chain of command.

(ii) It leads to effective accomplishment of goals by ensuring that each employee

knows the role he has to play.

(iii) It provides stability to the organization as behavior of employees can be fairly

predicted.

Q3. 'Steelo Ltd.' decided to set-up its steel manufacturing factory in the backward
area of Odisha where very less job opportunities were available. People of that area
welcomed this effort of 'Steelo Ltd. To attract people to work in its factory it also
decided to provide many other facilities like school, hospital, market etc. in the
factory premises.

"Steelo Ltd.’ started earning huge profits. Another competing company asked its
production manager 'Aslam' to investigate the reasons of earning huge profits by
'Steelo Ltd.'

Aslam found that in both the companies there was systematic co-ordination among
the various activities to achieve organisational goals. Every employee knew who was
responsible and accountable to whom. The only difference was that in his
organisation communication took place only through the scalar chain were as 'Steelo
Ltd.' was allowing flow of communication in all the directions as per the requirement
which lead to faster spread of information as well as quick feedback.

(a) Identify and state the type of organisation which permits 'Steelo Ltd.' the flow of
communication in all the directions.

(b) State another advantage of the type of organisation identified in (a) above.
(CBSE 2016) (3 marks)

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Ans. (a) Informal organisation
(give the meaning)

(b) It helps to fulfill the social needs of the members. This enhances their job
satisfaction since it gives them a sense of belongingness in the organisation.

Q4. Progress Ltd. is facing difficulties in introduction of machinery of latest

technology as they are facing resistance from the informal groups who are
pressurizing the members to work against organisational interests. As the Human
Resources manager of the company would you advise the management of the
company to confront them or give them some other suggestion to deal with the
informal groups. (CBSE SQP 2018) (3 marks)

Ans. (a) It would be in the best interest of the organisation if the existence of such
groups is recognised and the roles that their members play are identified.

(b) The knowledge of such groups can be used to gather their support and
consequently lead to improved organisational performance. Such groups can also
provide useful communication channels.

(c) Instead of confronting them, the management should take skillfully take
advantage of both formal and informal organisation so that work continues
smoothly,

Q5. Radhika is the General Manager of Govinda Ltd. Radhika is facing lot of problems
on the issues relating to some sales policies. The organisation has an aim to increase
sales by 20% and return on investment by 10%. Instead of talking to the Sales
Department she directly consulted her boss Lalita about the problem. She talked to
her freely and did not follow strict rules and regulations relating to formal line of
communication.

Identify the type of organisation.

(1 mark)

Ans. Informal organisation

Q6. ABC Ltd. is manufacturing shoes. Their business has been doing well as their
organisation specifies how much work should a worker do and in what manner. It
follows a rigid structure which has been deliberately planned and created by top
management for the coordination of activities. But inspite of all these, there are
procedural delays. Identify the type of organisation.
(1 mark)

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Ans. Formal organisation

Q7. A company manufacturing sewing machines set up in 1945 by the British

promoters follows formal organisation culture in totality. It is facing lot of problems
in delays in decision-making. As the result it is not able to adapt to changing business
environment. The work force is also not motivated since they cannot vent their
grievances except through formal channels, which involve red tape. Employee
turnover is high. Its market share is also declining due to changed circumstances and
business environment.

You are to advise the company with regard to change it should bring about in its
organisation structure to overcome the problems faced by it. Give three reasons in
terms of benefits it will derive from the changes suggested by you.
(4 marks)

Ans. (i) Introduction of informal organisation.

(ii) (Explain three advantages of informal organisation.)

Q8. Samir Gupta started a telecommunication company, ‘Donira Ltd.' to manufacture

economical mobile phones for the Indian rural market with 15 employees. The
company did very well in its initial years. As the product was good and marketed
well, the demand of its products went up. To increase production the company
decided to recruit additional employees. Samir Gupta, who was earlier taking all the
decisions for the company had to selectively disperse the authority. He believed that
subordinates are competent, capable and resourceful and can assume responsibility
for effective implementation of their decisions. This paid off and the company was
not only able to increase its production but also expanded its product range.

(a) Identify the concept used by Samir Gupta through which he was able to steer his
company to greater heights.

(b) Also explain any three points of importance of this concept.

(CBSE 2015) (4 marks)

Ans. (a) Decentralisation

(b) Importance of Decentralisation

(Explain any three)

Q9. Aman Chadha started 'Bulls Eyes' a company for providing cyber security
solutions to businesses. Its objective is to prevent, detect and respond to cyber

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attacks and protect critical data. He was a hardworking software engineer and an
expert in cyber security. His reputation grew by leaps and bounds as he was not only
a person of integrity but also did his work with utmost honesty and sincerity. The
business started growing day by day. He was delighted when he was offered a big
project by the Ministry of Defence. While working on the project, he found that the
volume of work made it impractical for him to handle all the work by himself. He
decided to expand the team. The company maintained a close liaison with a local
engineering college. During a campus placement, Ishan and Vrinda were appointed
to work for the new project.

He found the new employees capable, enthusiastic and trustworthy. Aman Chadha
was thus, able to focus on objectives and with the help of Ishan and Vrinda, the
project was completed on time. Not only this Aman Chadha was also able to extend
his area of operations. On the other hand, Ishan and Vrinda also got opportunities to
develop and exercise initiative.

(i) Identify and briefly explain the concept used by Aman Chadha in the above case
which helped him in focusing on objectives.

(ii) Also, state any four points of importance of the concept identified in (i) above.
(CBSE 2017) (6 marks)

Ans. (i) Delegation (give the

meaning)

(ii) Importance of delegation of authority:

(Explain any four)

Q10. The manager of Sudha Industries is overburdened with routine work and is
unable to concentrate on core issues of the company. The overcome this problem,
he entrusted some of his responsibility and authority to his immediate subordinate
to share some of his routine work. Which concept of management is used by the
manager?
(1 mark)

Ans. Delegation

Q11. Shreya Ltd. has been awarded recently with the 'Best Employer of the Year
Award'. The company has believed in the ideas and suggestions of its employees.
There is selective dispersal of decision making authority at all levels. There is no
delay in delivery of orders to customers due to prompt decisions taken by

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employees. Identify the concept of management followed by the company.
(1 mark)

Ans. Decentralisation

Q12. A company X limited manufacturing cosmetics, which has enjoyed a pre-

eminent position in business, has grown in size. Its business was very good till 1991.
But after that, new liberalised environment has seen entry of many MNC's in the
sector. With the result the market share of X limited has declined. The company had
followed a very centralised business model with Directors and divisional heads
making even minor decisions. Before 1991 this business model had served the
company very well as consumers had no choice. But now the company is under
pressure to reform.

What organisation structure changes should the company bring about in order to
retain its market share? How will the changes suggested by you help the firm?
Explain any three points. (NCERT) (1 mark)

Ans. The top management of X limited should apply the policy of ‘Decentralisation’
(Explain any three importance)

Q13. Anoop Gaur started 'Cat's Eye', a company for providing cyber security solutions
to businesses. Its objective was to prevent, detect, respond to cyber attacks and
protect critical data. He was a hardworking software engineer and an expert in cyber
security. His reputation grew by leaps and bounds as he was not only a person of
integrity but also did his work with utmost honesty and sincerity. The business
started growing day by day. He was delighted when he was offered a big project by
the Ministry of Science and Technology. While working on the project he found that
the volume of work made it impractical for him to handle all the work by himself.
Therefore he decided to expand the team. The company maintained a close liaison
with an engineering college in the State. During a campus placement, Aarav and
Pranshi were appointed to work for the new project. He found the new employees
capable, enthusiastic and trustworthy, Anoop Gaur was thus, able to focus on the
objectives and with the help of Aarav and Pranshi, the project was completed on
time. Not only this, Anoop Gaur was also able to extend his area of operations. On
the other hand, Aarav and Pranshi also got opportunities to develop and exercise
initiative.

(a) Identify and briefly explain the concept used by Anoop Gaur in the above case
which helped him in focusing on objectives.

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(b) Also, explain any four points of importance of the concept identified in part (a).
(6 marks)

Ans. Delegation (Explain its

importance - any four points)

Check List of Objective Type Questions

Objective Type Questions 5.1

1. Organising

2. Organising

3. (c) Organising

4. Organising

5. Departmentalisation; Specialisation

6. Coordination amongst various departments

7. it helps in the survival and growth of an enterprise and equips it to meet various
challenges.

8. Organising

9. Organising

10. Organising

11. Organising

Objective Type Questions 5.2

1. (c) Number of subordinates under a superior

2. (a) Narrow span of management

3. (b) Divisional organisation

4. (c) Functional organisation

5. Functional Structure

6. Functional Structure

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7. Span of management

8. The nature and types of activities performed by it.

9. Functional structure

10. Functional structure

11. Functional structure

12. Functional structure.

13. Functional structure

14. Functional structure

15. Functional structure.

16. Divisional structure

17. Divisional structure

18. Divisional structure

19. Divisional structure

20. Divisional structure

21. Divisional structure.

22. (i)-(a), (ii)-(b), (iii)-(b), (iv)-(a).

23. (i) It grows in size or complexity.

(ii) As an organisation grows, coordination becomes difficult due to the emergence of

new functions and increase in structural hierarchies.

Objective Type Questions 5.3

1. (b) Informal organisation

2. (c) Informal organisation

3. Formal organisation

4. (i)-(a), (ii)-(b), (iii)-(b), (iv)-(a).

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5. behaviour of employees can be fairly predicted since there are specific rules to
guide them.

6. the established chain of command has to be followed which increases the time
taken for decision making.

7. it does not allow any deviations from rigidly laid down policies.

8. it places more emphasis on structure and work

9. (i)-(b), (ii)-(b), (iii)-(a), (iv)-(a)

10. it is a complex network of social relationships among members

11. (d) Informal organisation.

12. (d) It is formed by the individuals to get social and psychological satisfaction.

13. Formal organisation

14. Informal organisation

Objective Type Questions 5.4

1. (d) Informal organisation

2. Authority

3. Responsibility

4. (b) Authority = Responsibility

5. (a) Authority

6. Chain of command

7. Decentralised

8. Decentralised

9. (b) apex of the management hierarchy

10. he desires to meet the organisational goals, focus on objectives and ensure that
all work is accomplished

11. Delegation

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12. it enables a manager to use his time on high priority activities. It also satisfies the
subordinate's need for recognition and provides them with opportunities to develop
and exercise initiative.

13. It means the manager shall still be accountable to the same extent for the
performance of the assigned tasks, before delegation.

14. Authority

15. in large organisations employees who are directly and closely involved with
certain operations tend to have more knowledge about them than the top
management.

16. It can lead to organisational disintegration if departments start to operate on

their own guidelines which may be contrary to the interest of the organisation.

17. False: Decentralisation diminishes the amount of direct supervision exercised by

a supervisor over the activities of a subordinate as they are given the freedom to act
and decide within the prescribed limits. However, personal/ direct supervision is
replaced by other forms of control only such as return on investments, etc.

18. Greatest.

19. (i) Balance score card (ii) Management Information system

20. (a) Retention of decision making authority

21. (c) Freedom from responsibility

22. Delegation

23. No, because delegation does not mean abdication. The manager shall still be
accountable for the performance of the assigned tasks.

24. Delegation

25. Authority

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Chapter 5 Organising

Multiple Choice Questions (MCQS)

1. Which statement is not correct, with respect to Organisation Structure'?

(a) Ensures coordination among human and physical resources.

(b) Ensures smooth flow of communication.

(c) Specifies relationship between people, work and resources

(d) Establishes standards for controlling.

2. For delegation to be effective, it is necessary that authority granted must be

commensurate with assigned ____________________.

(a) Accountability (b) Autonomy

(c) Responsibility (d) None of these

3. _______________ is a process that initiates implementation of plans by clarifying

jobs and working relationships and effectively deploying resources for attainment of
identified and desired results (goals).

(a) Organising (b) Directing

(c) Controlling (d) Staffing

4. Identify the type of organisation structure from the organisational chart given
below of Swastika Industries Ltd. located in Uttarakhand:

(a) Functional structure (b) Divisional structure

(c) Formal organisation structure (d) Informal organisation structure

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5. "Not only is this function of management important for productive cooperation
between the personnel but also for clarification of extent of authority, as well as
responsibility for results and logical grouping of activities." Identify the function of
management highlighted above.

(a) Planning (b) Organising

(c) Directing (d) Controlling

6. ____________ determines the superior subordinate relationship wherein the

superior communicates his decision to the subordinate, expecting compliance from
him and the subordinate executes the decision as per the guidelines of the superior.

(a) Authority (b) Responsibility

(c) Accountability (d) Delegation

7. _____________________ is restricted by laws and the rules and regulation of the

organisation, which limit its scope. However, as we go higher up in the management
hierarchy, its scope increases.

(a) Authority (b) Responsibility

(c) Accountability (d) Delegation

8. ______________ empowers an employee to act for his superior but the superior
would still be accountable for the outcome.

(a) Authority (b) Responsibility

(c) Accountability (d) Delegation

9. __________________ ensures that the subordinates perform tasks on behalf of

the manager thereby reducing his workload and providing him with more time to
concentrate on important

(a) Authority (b) Responsibility

(c) Delegation (d) Decentralisation

10. The extent of __________________ decides the power that each job position
enjoys in the organisation.

(a) Authority (b) Responsibility

(c) Delegation (d) Decentralisation

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11. When decisions taken by the lower levels are numerous as well as important an
organisation can be regarded as greatly _________________.

(a) centralised (b) decentralised

(c) efficient (d) none of these

12. ____________________ keeps the subordinates in a state wherein they are

constantly challenged and have to develop solutions for the various problems they
encounter.

(a) Delegation (b) Decentralisation

(c) Controlling (d) Responsibility

13. Formal training plays an important part in equipping subordinates with skills that
help them rise in the organisation but equally important is the experience gained by
handling assignments independently.

Identify the concept of management highlighted in the phrase "experience gained by

handling assignments independently"?

(a) Training (b) Development

(c) Delegation (d) Decentralisation

14. The management hierarchy can be looked upon as a chain of communication. In

_____________ organisation because every decision is taken by the top
management the flow of information is slow as it has to traverse many levels.
Response also takes time. This reduces the speed of decision making and makes it
difficult for an enterprise to adapt to dynamic operating conditions.

(a) centralised (b) decentralised

(c) large (d) small

15. Decentralisation is ___________________ when checking required on decisions

taken by lower levels of management is least.

(a) least (b) greatest

(c) low (d) None of these

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16. The extent of achievement of organisational objectives as well as the
contribution of each department in meeting the overall objectives can be
ascertained. In which type of Organisation structure this is possible?

(a) Centralised Organisation structure

(b) Decentralised Organisation structure

(c) Formal Organisation structure

(d) Informal Organisation structure

17. In this step of organising process, the work is divided into manageable activities
so that duplication of work can be avoided and the burden of work can be shared
among the employees. The step referred above is:

(a) Identification and division of work

(b) Departmentalisation

(c) Assignment of duties to job positions

(d) Establishing reporting relationships

18. The management function of ____________________ ensures that efforts are

directed towards the attainment of goals laid down in the planning function in such a
manner that resources are used optimally and people are able to work collectively
and effectively for a common purpose.

(a) Planning (b) Organising

(c) Staffing (d) Directing

19. "It is a means for translating plans into action." Identify the function of
management highlighted by the statement.

(a) Planning (b) Organising

(c) Staffing (d) Directing

20. _________________ essentially implies a process which coordinares human

efforts, assembles resources and integrates both into a unified whole to be utilised
for achieving specified objectives.

(a) Planning (b) Organising

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(c) Staffing (d) Directing

21. ___________________ provides the framework which enables the enterprise to

function as an integrated unit by regulating and coordinating the responsibilities of
individuals and departments.

(a) Coordination (b) Span of Management

(c) Decentralisation (d) Organisation structure

22. _____________ is an organisational design that groups similar or related jobs

together.

(a) Functional structure (b) Divisional structure

(c) Delegation (d) Decentralisation

23. Many large organisations with diversified activities have reorganised themselves
away from the simpler and basic organisational design towards a framework which is
more suited to their activities. This is particularly true of those enterprises which
have more than one category of products to offer. Identify the type of Organisation
structure highlighted above.

(a) Functional structure (b) Divisional structure

(c) Delegation (d) Decentralisation

24. In a ____________ the organisation structure comprises of separate business

units.

(a) Functional structure (b) Divisional structure

(c) Delegation (d) Decentralisation

25. In a ___________________, manpower is generally grouped on the basis of

different products manufactured.

(a) Functional structure (b) Divisional structure

(c) Delegation (d) Decentralisation

26. "A manager, no matter how capable he is, cannot manage to do every task on his
own. The volume of work makes it impractical for him to handle it all by himself. As a
consequence, if he desires to meet the organisational goals, focus on objectives and
114 | P a g e
ensure that all work is accomplished, he must grant authority to subordinates to
operate within prescribed limits." Identify the concept of management highlighted
above.

(a) Functional structure (b) Divisional structure

(c) Delegation (d) Decentralisation.

27. ______________ is the process a manager follows in dividing the work assigned
to him so that he performs that part which only he because of his unique
organisational placement, can perform effectively and so that he can get others to
help with what remains.

(a) Organisation structure (b) Span of management

(c) Delegation (d) Decentralisation

28. The concept of ____________ arises from the established scalar chain which links
the various job positions and levels of an organisation.

(a) Authority (b) Responsibility

(c) Accountability (d) Decentralisation

29. _________________ arises from a superior- subordinate relationship because

the subordinate is bound to perform the duty assigned to him by his superior.

(a) Authority (b) Responsibility

(c) Accountability (d) Decentralisation

30. In many organisations the top management plays an active role in taking all
decisions while there are others in which this power is given to even the lower levels
of management. Decision making authority is shared with lower levels and is
consequently placed nearest to the points of action. Identify the concept of
management highlighted by the phrase "Decision making authority is shared with
lower levels and is consequently placed nearest to the points of action."

(a) Authority (b) Accountability

(c) Delegation (d) Decentralisation

31. ______________ refers to systematic effort to delegate to the lowest level all
authority except that which can be exercised at central points.

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(a) Authority (b) Accountability

(c) Delegation (d) Decentralisation

32. It is a philosophy that implies selective dispersal of authority because it

propagates the belief that people are competent, capable and resourceful. They can
assume the responsibility for the effective implementation of their decisions. Thus
this philosophy recognises the decision maker's need for autonomy. Identify the
concept of management highlighted above.

(a) Authority (b) Accountability

(c) Delegation (d) Decentralisation

33. In a decentralised organisation, personal supervision by a superior is generally

replaced by other forms of control such as:

(a) Critical Point Control (b) Control by Exception

(c) Return on Investment (d) None of these

34. Span of management refers to ______________________.

(a) Number of managers

(b) Length of term for which a manager is appointed

(c) Number of subordinates under a superior

(d) Number of members in top management

35. Grouping of activities on the basis of product lines is a part of ____________.

(a) Delegated organisation (b) Divisional organisation

(c) Functional organisation (d) Autonomus organisation

36. Grouping of activities on the basis of functions is a part of _______________.

(a) Decentralised organisation (b) Divisional organisation

(c) Functional organisation (d) Centralised orgainsation

37. Which of the following is not an element of delegation?

(a) Accountability (b) Authority

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(c) Reponsibility (d) Informal organisation

38. Which of the following is the ideal situation?

(a) Authority > Responsibility (b) Authority = Responsibility

(c) Authority < Responsibility (d) None of these

39 . For delegation to be effective, it is essential that responsibility should be

accompanied with necessary ______________.

(a) Authority (b) Manpower

(c) Incentives (d) Promotions

40. Complete centralisation would imply concentration of all decision making

functions at the _______________.

(a) lower level of the management hierarchy

(b) apex of the management hierarchy

(c) middle level management

(d) None of these

41. Centralisation refers to _________________.

(a) Retention of decision making authority

(b) Dispersal of decision making authority

(c) Creating divisions as profit centers

(d) Opening new centers or branches

42. Which of the following is not an element of the process of delegation?

(a) Creation of an obligation (b) Granting of authority

(c) Freedom from responsibility (d) Assignment of duties.

43. ___________________ gives shape to the organisation structure.

(a) Extent of delegation: (b) Span of Management,

(c) No of employees; (d) Planning

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44. As an organisation grows in size and complexity, there is a tendency to move
towards decentralised decision making because _______________________.

(a) employees have more knowledge about operations.

(b) people are competent, capable and resourceful.

(c) it recognises the decision maker's need for autonomy.

(d) All of these

45. ___________________ provides the framework which enables the enterprise to

function as an integrated unit by regulating and coordinating the responsibilities of
individuals and departments.

(a) Organisation structure (b) Span of management

(d) Decentralisation (c) Delegation

46. Which of the following statement is true?

(a) In a decentralised organisation, there is no need for supervision over the activities
of a subordinate.

(b) A large size organisation can be totally decentralised.

(c) Decentralisation is extending delegation to the lowest level.

(d) The purpose of decentralisation is to lessen the burden of the manager.

47. The process of organising involves identifying and dividing the work into small
and manageable activities, and then grouping those activities which are similar in
nature. This grouping process is called ________________.

(a) Organisation structure (b) Span of Managerment

(c) Departmentalisation (d) Delegation

48. ______________ refers to the number of subordinates that can be effectively

managed by a superior.

(a) Organisation structure (b) Span of Management

(c) Departmentalisation (d) Delegation

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49. ______________ is most suitable when the size of the organisation is large, has a
diversified activities and operations require a high degree of specialisation.

(a) Functional structure (b) Divisional structure

(c) Delegation (d) Decentralisation

50. Under _________________, a manager gains experience in all functions related

to a particular product.

(a) Functional structure (b) Divisional structure

(c) Delegation (d) Decentralisation

51. ____________________ may lead to increase in costs since there may be a

duplication of activities across products.

(a) Functional structure (b) Divisional structure

(c) Delegation (d) Decentralisation

52. ____________ is suitable for those business enterprises, where a large variety of
products are manufactured using different productive resources.

(a) Functional structure (b) Divisional structure

(c) Delegation (d) Decentralisation

53. When an organisation grows and needs to add more employees, create more
departments and introduce new levels of management, it will decide to adopt a
__________________.

(a) Functional structure (b) Divisional structure

(c) Delegation (d) Decentralisation

54. The need for an adequate organisation structure is felt by an enterprise when
_____________.

(a) it grows in size or complexity.

(b) coordination becomes difficult due to the emergence of new functions.

(c) there is a need for better control over the operations of the business enterprise.

(d) All the above

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55. When decisions taken by the lower levels are numerous as well as important, an
organisation is greatly ___________________.

(a) centralised (b) decentralised

(c) efficient (d) none of these

56. An organisation is ___________ when decision making authority is delegated.

(a) centralised (b) decentralised

(c) efficient (d) none of these

57. ____________________ refers to the downward transfer of authority from a

superior to a subordinate.

(a) Functional structure (b) Divisional structure

(c) Delegation (d) Decentralisation

58. Delegation is a pre-requisite to the efficient functioning of an organisation

because ____________________.

(a) it enables a manager to use his time on high priority activities.

(b) it also satisfies the subordinate's need for recognition.

(c) it provides the subordinates with opportunities to develop and exercise initiative.

(d) All the above

59. ___________ reduces successively as we go down the corporate ladder.

(Authority/Responsibility/Accountability)

(a) Authority (b) Responsibility

(c) Accountability (d) Decentralisation

60. Decentralisation should be applied with caution as _______________.

(a) It can lead to organisational disintegration if departments start to operate on

their own guidelines which may be contrary to the interest of the organisation.

(b) Decentralised must always be balanced in areas of major policy decision.

(c) It recognises the decision maker's need for autonomy.

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(d) It propagates the belief that people are competent, capable and resourceful.

61. _______________ is the outcome of the organising process.

(a) Organisation structure (b) Span of management

(c) Delegation (d) Decentralisation

62. __________________ is the framework within which managerial and operating

tasks are performed. It specifies the relationships berween people, work and
resources. It allows correlation and coordination among human, physical and
financial resources.

(a) Organisation structure (b) Span of management

(c) Delegation (d) Decentralisation

63. The Organisation structure of a firm is shown in _______________.

(a) Organisation chart (b) Span of management

(c) Functional Structure (d) Divisional Structure

64. A company has its registered office in Delhi, manufacturing unit at Gurgaon and
marketing and sales department at Faridabad. The company manufactures the
consumer products. The type of Organisation structure the company should adopt to
achieve its target is _________________.

(a) Functional structure (b) Divisional structure

(c) Formal Organisation Structure (d) Informal Organisation Structure

65. _______________ gives shape to the Organisation structure.

(a) Organisation chart (b) Span of management

(c) Functional Structure (d) Divisional Structure

66. Match the concept of management in Column I with their respective explanation
in Column II:

A. Organisation structure (i) Number of subordinates under a superior.

B. Decentralisation (ii) The framework within which managerial and
operating tasks are performed.
C. Span of Management (iii) An optional policy decision of the top management.

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(a) (i), (ii), (iii) (b) (i), (iii), (ii)

(c) (ii), (iii), (i) (d) (iii), (ii), (i)

67. Match the concept of management in Column I with their respective explanation
in Column II:

A. Authority (i) It refer to the right to take decisions inherent in a

managerial position to tell people what to do and expect them
to do and it.
B. Responsibility (ii) Obligation of a subordinate to properly perform the
assigned duty.
C. Accountability (iii) Answerabililty for the final outcome of the assigned task.

(a) (i), (ii), (iii) (b) (i), (iii), (ii)

(c) (ii), (iii), (i) (d) (iii), (ii), (i)

68. In a decentralised organisation, one of the challenges is the accountability of

performance. In response to this challenge, better control systems are being evolved
by the corporate enterprises. Identify such control system(s).

(a) Balance score card (b) Management Information

system

(c) Critical Point Control (d) Management by Exception

69. A manager has kept all right of decision-making with himself. Each and every
employee has to come to him for orders again and again. Identify the concept of
management not followed by the manager.

(a) Authority (b) Responsibility

(c) Delegation (d) Decentralisation

70. Name the concept of management which helps a manager to extend his area of
operations as without it, his activities would be restricted to only what he himself
can do.

(a) Authority (b) Responsibility

(c) Delegation (d) Decentralisation

71. A tall structure has a _________________.

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(a) Narrow span of management (b) Wide span of management

(c) No span of management (d) Less levels of management

72. It refers to the right to take decisions inherent in a managerial position to tell
people what to do and expect them to do it. Identify the concept.

(a) Authority (b) Responsibility

(c) Delegation (d) Decentralisation

73. It determines the superior-subordinate relationship wherein the superior

communicates his decision to the subordinate, expecting compliance from him.
Identify the concept.

(a) Authority (b) Responsibility

(c) Delegation (d) Decentralisation

74. Roasted Coffee Corporation is a coffeehouse chain operating in 7 states of India.

Through its effective Organisation structure, it has grown despite pressure from
competitors in the national market. The company has a Purchase and Production
department, Supply chain management and logistics department, Brand
management department and Sales department. This structure has facilitated
operational efficiency, as employees became specialists within their own realm of
expertise. They could be imparted specialised training as the focus was on limited
range of skills.

Identify the organizational structure of Roasted Coffee Corporation.

(a) Functional structure (b) Divisional structure

(c) Formal Organisation Structure (d) Informal Organisation Structure

75. A company, which manufactures a popular brand of toys, has been enjoying good
market reputation. It has separate departments for Production, Marketing, Finance,
Human Resources and Research and Development. Lately to use its brand name and
also to cash on to new business opportunities it is thinking to diversify into
manufacture of new range of electronic toys for which a new market is emerging.
The organisation structure that should be adopted by the company is
_______________.

(a) Functional structure (b) Divisional structure

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(c) Formal Organisation Structure (d) Informal Organisation Structure

76. National Vritech Ltd. has grown in size. It was a market leader but with changes in
business environment and with the entry of MNCs its market share is declining. To
cope up with the situation CEO starts delegating some of his authority to the General
Manager, who also felt himself overburdened and with the approval of CEO
disperses some of his authority to various levels throughout the organisation.
Identify the concept of management discussed above.

(a) Authority (b) Responsibility

(c) Delegation (d) Decentralisation

77. In a school, twelve students work for the school library in the summer vacations.
One afternoon they are told to unload a shipment of new releases, stock the
bookshelves, and then dispose of all waste (packaging, paper etc). One student
supervises the work by grouping students, divides the work, assigns each group their
quota and develops reporting relationships among them. Identify the function of
management highlighted above.

(a) Planning (b) Organising

(c) Staffing (d) Directing

78. Zamon Ltd. is manufacturer of electronics goods based in Pune. On one hand it
deals in items like books, music instrument, videotapes etc., and on the other hand it
deals in laptops and mobile phones. The company had a functional structure with
separate heads for production, marketing and finance. All the functional heads were
looking after the products, but at times their activities overlapped. This led to
problems related to coordination and inter-departmental conflicts. To facilitate
specialization Ramit, the CEO of the company decided to group books, music
instrument, videotapes etc. under 'Media and laptops and mobile phones under
'consumer electronics’. While doing so Ramit has performed a step in the process of
one of the functions of management. Identify the step.

(a) Identification and division of work

(b) Departmentalisation

(c) Assignment of duties

(d) Establishing authority and reporting relationships

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79. Kiran Industries is a company manufacturing office furniture. The company chose
to diversify its operations to improve its growth potential and increase market share.
As the project was important many alternatives were generated for the purpose and
were thoroughly discussed amongst the members of the organisarion. After
evaluating the various alternatives Sukhvinder, the Managing Director of the
company decided that they should add 'Home Interiors and Furnishings' as a new line
of business activity. Name the framework, which the diversified organisation should
adopt, to enable it to cope with the emerging complexity?

(a) Functional structure (b) Divisional structure

(c) Formal Organisation Structure (d) Informal Organisation Structure

80. Aradhana and Gandharv are heads of two different departments in 'Yumco Ltd.'
They are efficient managers and are able to motivate the employees of their
respective departments to improve performance. However, their drive to excel in
their own sphere of activity instead of giving emphasis on objectives of the
enterprise has hindered the interaction between the departments that Aradhana and
Gandharv are heading. Often there are inter-departmental conflicts and they have
become incompatible. This has proved to be harmful in the fulfilment of the
organisational objectives. The situation has deteriorated to such an extent that the
CEO of 'Yumco Ltd.' has hired a consultant, Rashmi, to resolve the problem. After
studying the situation closely, Rashmi found that the problem has arisen due to
inflexibility and a narrow perspective on the part of both Aradhana and Gandharv.
She is of the view that this situation is a result of the type of Organisation structure
'Yumco Ltd." has adopted. From the above information. identify the Organisation
structure adopted by 'Yumco Ltd."

(a) Functional structure (b) Divisional structure

(c) Formal Organisation Structure (d) Informal Organisation Structure

81. "Himalaya Ltd.', is engaged in manufacturing of washing machines. The target of

the organisation is to manufacture 500 washing machines in a day. There is an
occupational specialisation in the organisation which promotes efficiency of
employees. There is no duplication of efforts in such type of organization structure.

Identify the type of organisation structure described above.

(a) Functional structure (b) Divisional structure

(c) Formal Organisation Structure (d) Informal Organisation Structtire

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82. A company has been registered under the Companies Act with an authorised
share capital of 20,000 crore. Its registered office is situated in Delhi and
manufacturing unit in a backward district of Rajasth. Its marketing department is
situated in Bhopal. The company is manufacturing Fast Moving Consumer Goods
(FMCG). Which type of Organisation structure would suit the requirements of the
company?

(a) Functional structure (b) Divisional structure

(c) Formal Organisation Structure (d) Informal Organisation Structure

83. An electronic company manufacturing TV and Refrigerators wants to bring two

new products Washing Machines and ACs in the market. For each product separate
division is to be set up. The in-charge of washing machine division and AC division
will be a female and a disabled person respectively. What type of Organisation
structure is suitable for this company?

(a) Functional structure (b) Divisional structure

(c) Formal Organisation Structure (d) Informal Organisation Structure

84. Ravi runs a locks manufacturing factory. He manufactures locks used in houses.
He wants to expand his business For this, he wants to enter into the manufacturing
of locks for cars and motorcycles.

Which type of Organisation structure will he choose for his factory and why?

(a) Functional structure (b) Divisional structure

(c) Formal Organisation Structure (d) Informal Organisation Structure

85. The manager of Sudha Industries is overburdened with routine work and is
unable to concentrate on core issues of the company. The overcome this problem,
he entrusted some of his responsibility and authority to his immediate subordinate
to share some of his routine work. Which concept of management is used by the
manager?

(a) Authority (b) Responsibility

(c) Delegation (d) Decentralisation

86. Shreya Ltd. has been awarded recently with the 'Best Employer of the Year
Award'. The company has believed in the ideas and suggestions of its employees.
There is selective dispersal of decision making authority at all levels. There is no

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delay in delivery of orders to customers due to prompt decisions taken by
employees. Identify the concept of management followed by the company.

(a) Authority (b) Responsibility

(c) Delegation (d) Decentralisation

87. Good Looks Ltd are the manufacturers of cosmetics. The enjoyed a pre-eminent
composition in the business and has grown in size. Till recently the company had
been doing good business, but after the entry or competitors the market share of
Good Looks Ltd’ has declined. One of the reasons for this was that all decisions were
taken by the higher management. This has resulted in the concentration of all
decision-making process at the apex of the management hierarchy. Worried about
the decline in market share and profit, the company appointed 'Structures
Consultants India Ltd as a consultant to suggest improvements in the organisation's
decision-making process. The consultant suggested that the decision-making
responsibilities may be divided among hierarchical levels. They said that if decision-
making authority will be shared with the lowest levels and is consequently placed
near the point of action, it will help in quick decision-making and this will help the
company in adapting itself to the dynamic operating conditions. They stated that the
philosophy of dispersal of authority propagates the belief that people att competent,
capable and resourceful and can assume the responsibility of effective
implementation of their decisions.

Identify the meaning of the concept based on which Structures Consultants India Ltd.
gave their recommendation to Good Looks Ltd."

(a) Delegation (b) Decentralisation

(c) Centralisation (d) Organisational structure

88. Neha runing to herein she manufactures shoes. The business has been doing well
and she intends to expand by diversifying into leather bags as well as western formal
wear thereby making her company a complete provider of corporate wear. This will
enable her to market her business unit as the one stop for working women.

Which type of structure would you recommend for her expanded organisation?

(a) Functional structure (b) Divisional structure

(c) Formal organisation structure (d) Informal organisation structure

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89. A truck manufacturing company has its registered office in Delhi, manufacturing
unit at Gurgaon and marketing department is located at Faridabad. Which type of
Organisation structure should it adopt to achieve its target?

(a) Functional structure (b) Divisional structure

(c) Formal organisation structure (d) Informal organisation structure

90. A company has its registered office in Delhi, manufacturing unit at Gurgaon and
marketing and sales department at Faridabad. The company manufactures the Fast
Moving Consumer Goods (FMCG). Which type of Organisation structure should it
adopt to achieve its targer?

(a) Functional structure (b) Divisional structure

(c) Formal organisation structure (d) Informal organisation structure

91. SVN is a private limited company which trades in garments, toiletries, packaged
food and health drinks. These divisions are organised as separate business units.
Each of its units is multifunctional and self-contained. Coordination among units is
easy as all functions related to a particular product are integrated in one
department. Identify the type of Organisation structure.

(a) Functional structure (b) Divisional structure

(c) Formal organisation structure (d) Informal organisation structure

92. The process that initiates implementation of plans by clarifying jobs, working
relationships and effectively deploying resources for attainment of identified and
desired results is called:

(a) Coordination (b) Management

(c) Organising (d) Delegation

93. One of the questions that needs to be answered in the organizing function is 'At
what level are decisions made'? Decision making authority in an organization can be
pushed down to the lower levels or it may lie with the top management. However it
is not an 'either or' concept. When an organization grows in size or complexity, there
is tendency towards sharing decision making authority with the lower levels. This is
because in large organizations, employees who are closely involved with certain
operations tend to have more knowledge about them than the top management. An
important concept of organizing function is discussed above. Identify the concept.

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(a) Delegation (b) Decentralisation

(c) Centralisation (d) Organisational structure

94. Voltage fluctuations have been common and quite high in India. They harm our
electrical appliances like television, refrigerators and air conditioners, often leaving
them in a permanently damaged condition. N-Guard Company decided to
manufacture stabilizers for North India where the voltage fluctuation ranges from
220V-230V. Once the demand for the North India was taken care of, they decided to
launch stabilizers of varying voltages from 90 V-260V for meeting the requirements
of voltage fluctuations in other regions of India also. Three engineers were appointed
for South, West and East regions of India, as the voltage was different in all the three
regions. Though all the engineers were appointed to manufacture stabilizers but the
product differed from region to region.

Identify the Organisation structure of N-Guard Company.

(a) Functional structure (b) Divisional structure

(c) Formal organisation structure (d) Informal organisation structure

95. Alliance Ltd. is engaged in manufacturing plastic buckets. The objective of the
company is to manufacture 100 buckets a day. To achieve this, the efforts of all
departments are coordinated and interlinked and authority- responsibility
relationship is established among various job positions. There is clarity on who is to
report to whom. Name the function of management discussed above.

(a) Planing (b) Organising

(c) Staffing (d) Controlling

96. Rishu, Ashu and Ravi have decided to start a business of manufacturing toys.
They identified the following main activities which they have to perform:

(i) Purchase of raw materials, (ii) Purchase of machinery, (iii) Production of toys, (iv)
Arrangement of finance, (v) Sale of toys, (vi) Identifying the areas where they can sell
their toys and (vii) Selection of employees

In order to facilitate the work they thought that four managers should be appointed
to look after

(a) Production, (b) Finance, (c) Marketing, (d) Personnel.

Identify the function of management involved in the above-mentioned para.

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(a) Planing (b) Organising

(c) Staffing (d) Controlling

97. A company, which manufactures a popular brand of toys, has been enjoying good
market reputation. It has separate departments for Production, Marketing, Finance,
Human Resources and Research and Development.

Lately to use its brand name and also to cash on to new business opportunities it is
thinking to diversify into manufacture of new range of electronic toys for which a
new market is emerging.

Identify the type of the Organisation structure the company should adopt with
diversification.

(a) Functional structure (b) Divisional structure

(c) Formal organisation structure (d) Informal organisation structure

98. Samir Gupra started a telecommunication company, 'Donira Ltd. to manufacture

economical mobile phones for the Indian rural market with 15 employees. The
company did very well in its initial years. As the product was good and marketed
well, the demand of its products went up. To increase production the company
decided to recruit additional employees. Samir Gupta, who was earlier taking all the
decisions for the company had to selectively disperse the authority. He believed that
subordinates are competent, capable and resourceful and can assume responsibility
for effective implementation of their decisions. This paid off and the company was
not only able to increase its production but also expanded its product range.

Identify the concept used by Samir Gupta through which he was able to steer his
company to greater heights.

(a) Delegation (b) Decentralisation

(c) Centralisation (d) Organisational structure

99. ___________________ is the process of dividing work into manageable activities

and then grouping the activities which are similar in nature.

(a) Coordination (b) Departmentalisation

(c) Organisation Structure (d) Delegation of authority

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100. _____________ is the process by which the manager brings order out of chaos,
removes conflict among people over work or responsibility sharing and creates an
environment suitable for teamwork.

(a) Planning (b) Organising

(c) Staffing (d) Controlling

101. ______________ ensures that the heads of separate business units in the
organisation are responsible for profit or loss of their unit and have authority over it.

(a) Span of management (b) Divisional Structure

(c) Functional structure (d) Hierarchy of Authority.

102. An important difference between S&M Ltd and most other companies is that
instead of operating as one large corporation it operates as 180 smaller companies
each focused on a specific product and area, implying selective dispersal of authority,
recognising the decision makers need for autonomy, as decision making authority is
pushed down the chain of command. It enables the company to maintain short lines
of communication with customers and employees, and accelerate the development
of talent.

Identify the philosophy that is being followed by S&M Ltd.

(a) Centralisation (b) Decentralisation

(c) Delegation (d) Authority and resposibility

103. The element of delegation which relates to the obligation of a subordinate to

properly perform the assigned duty is known as:

(a) Authority (b) Responsibility

(c) Accountability (d) Centralisation

104. The type of organizational structure in which jobs of similar nature are grouped
together on the basis of functions to form departments is called:

(a) Functional structure (b) Divisional structure

(c) Informal structure (d) Grouped structure

105. The purpose of 'Departmentalisation' in the process of 'organising' is:

(a) To adapt changes in the business environment.

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(b) To facilitate specialization.

(c) To facilitate expansion and growth of the organization without interrupting the
existing operations.

(d) To help in increasing managerial efficiency.

106. Name the concept which explains the manner in which decision making
responsibilities are divided among hierarchical levels:

(a) Organisational structure (b) Span of

management

(c) Delegation (d) Decentralisation

107. Which of the following statements is correct with reference of 'organising'

function of management?

(a) Leads to systematic allocation of jobs and facilitates specialization.

(b) Reduces the risk of uncertainty.

(c) Helps in obtaining competent personnel.

(d) Judges accuracy of standards.

108. Which of the following statements is true?

(a) Accountability can be entirely delegated

(b) Accountability flows downward.

(c) Accountability refers to answerability for final outcome of the assigned task.

(d) Accountability means the right of an individual to command his subordinates.

109. ‘Agile Pvt. Ltd.’ manufactures athletic footwear. Owing to its popularity among
sports teams across the country, it recently decided to enter into manufacturing of
sports clothing and accessories.

The type of organizational structure which is suitable for the company is:

(a) Functional structure (b) Divisional structure

(c) Horizontal structure (d) Informal structure

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110. ‘While performing the organizing function, jobs are allocated to the members of
each department in accordance with their skills and competencies.’

Identify the step in the organizing function being discussed above:

(a) Identification and division of work.

(b) Departmentalisation.

(c) Assignment of duties.

(d) Establishment of reporting relationships.

111. Which one of the following is not a step in the process of 'organising?

(a) Identification and division of work (b) Departmentalisation

(c) Span of management (d) Assignment of duties

112. Grouping activities of similar nature together to facilitate specialisation is called

___________.

(a) Delegation (b) Departmentalisation

(c) Decentralisation (d) Division of work

113. Which organisational structure is suitable for business having a large variety of
products?

(a) Functional (b) Divisional

(c) Informal (d) Vertical

114. The framework within which managerial and operating tasks are performed,
which specifies the relationship between people, work and resources and allows
coordination among different resources to accomplish desired goals is known as:

(a) Organisation chart (b) Levels of management

(c) Span of management (d) Organisation structure

115. Which type of organisation structure has a likely disadvantage of pursuing

deparmental interests at the cost of organisational interests leading to creation of
functional empires wherein importance of a particular function may be over-
emphasised?

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(a) Formal organisational structure

(b) Functional organisational structure

(c) Divisional organisational structure

(d) Informal organisational structure

116. An organisation can never be completely centralised or decentralised. As it

grows in size and comlexity there is a tendency to move towards ______________
decision-making.

(a) Centralised (b) Concentric

(c) Decentralised (d) Innovative

117. 'Rainbow World School’ planned its annual alumni meet to get in touch with old
students. Task groups like invitation committee, decoration committee and food
committee were formed and placed under the overall surpervision of the official
incharge of the event. Reporting relationships were established among various
groups to enable smooth interaction and clarity about each group's contribution
towards the event.

The management function being discussed here is:

(a) Planning (b) Directing

(c) Organising (d) Staffing

118. Which of the following concepts of organising provides more control by

superiors leading to less freedom to subordinates to take their own decisions. It is a
compulsory act.

(a) Departmentalisation (b) Delegation

(c) Decentralisation (d) Accountability

119. Sunshine Industries which started off as a single product company has over the
years diversified into varied product categories and the need for a more evolved
structural design was felt to cope with emerging complexity. Suggest the
organisation structure that would be suitable for Sunshine Industries now:

(a) Functional structure (b) Divisional structure

(c) Operational structure (d) Occupational structure

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120. ____________ is the right to command and _____________ is the obligation of
a subordinate to properly perform the assigned duty.

(a) Authority, responsibility (b) Accountability, authority

(c) Authority, accountability (d) Responsibility,

accountability

121. Vijay was a founder of a leading chain of Automobile shops dealing in high-end
cars. He believed in retaining all decision-making authority with him. He wanted tight
control over the entire business. Getting overburdened with work, he decided to
focus only on crucial decisions. He asked the vice president of his company to help
him with routine matters. This case study reflects a shift from one concept of
organisation to another which is:

(a) Delegation to decentralisation

(b) Centralisation to decentralisation

(c) Decentralisation to delegation

(d) Centralisation to delegation

122. Manoj, a leading director of a big movie production house always gives
opportunities to his subordinates to utilise their talent. His subordinate Shruti used
these opportunities to showcase her talent and developed her skills to perform
complex tasks. Eventually Shruti started directing films on her own and was
promoted as an Assistant Director, with a huge increase in salary. The point of
importance of delegation reflected in the above case is:

(a) Better coordination (b) Effective management

(c) Employee development (d) Basis of management hierarchy

123. Which type of organisational structure will you suggest for a firm which has
diversified activities and operations requiring a high degree of specialisation?

(a) Centralised structure (b) Decentralised Structure

(c) Divisional structure (d) Functional structure

124. "Grouping similar nature jobs into larger units called departments" is the step in
the process of one of the functions of management. Identify the function of
management.

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(a) Planning (b) Organising

(c) Directing (d) Staffing

125. ______________ ensures that the subordinate performa tasks on behalf of the
manager thereby reducing his workload and providing him with more time to
concentrate on important matters.

(a) Decentralization (b) Delegation of authority

(c) Authority (d) Accountability

126. Name the concept that refers to the number of subordinates that can be
effectively managed by a superior and determines the number of levels of
management in the organisation.

(a) Organisation structure (b) Span of management

(c) Hierarchy of authority (d) Delegation of Authority

127. Arrange the following steps in the process of organising in the correct sequence:

(i) Assignment of duries

(ii) Departmentalisation

(iii) Identification and division of work

(iv) Establishing reporting relationship

Choose the correct option:

(a) (i): (ii); (iv); (iii) (b) (iii); (ii): (i); (iv)

(c) (iii); (ii); (iv); (i) (d) (ii); (ii): (i); (iv)

ANSWER KEY

1. (d) 2. (c) 3. (a) 4. (b) 5. (b) 6. (a) 7. (a) 8. (d) 9. (c) 10. (a) 11. (b) 12. (b) 13.
(d) 14. (a)

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15. (b) 16. (b) 17. (a) 18. (b) 19. (b) 20. (b) 21. (d) 22. (a) 23. (b) 24. (b) 25. (b) 26.
(c) 27. (c) 28. (a)

29. (b) 30. (d) 31. (d) 32. (d) 33. (c) 34. (c) 35. (b) 36. (c) 37. (d) 38. (b) 39. (a) 40. (b) 41.
(a) 42. (c)

43. (b) 44. (a) 45. (a) 46. (c) 47. (c) 48. (b) 49. (a) 50. (b) 51. (b) 52. (b) 53.
(b) 54. (a) 55. (b) 56. (b)

57. (c) 58. (d) 59. (a) 60. (a) 61. (a) 62. (a) 63. (a) 64. (b) 65. (b) 66. (c) 67. (a) 68.
(a), (b) 69. (c) 70. (c)

71. (a) 72. (a) 73. (a) 74. (a) 75. (b) 76. (d) 77. (b) 78. (b) 79. (b) 80. (a) 81.
(a) 82. (b) 83. (b) 84. (a)

85. (c) 86. (d) 87. (b) 88. (b) 89. (a) 90. (b) 91. (b) 92. (c) 93. (b) 94. (a) 95. (d) 96. (b) 97.
(b) 98. (b)

99. (d) 100. (b) 101. (b) 102. (b) 103. (b) 104. (a) 105. (b) 106. (d) 107. (a)
108. (c) 109. (b) 110. (c) 111. (c)

112. (b) 113. (b) 114. (d) 115. (b) 116. (c) 117. (c) 118. (b) 119. (b) 120. (a) 121. (d)
122. (c) 123. (d) 124. (b)

125. (b) 126. (b) 127. (b)

Case-based Multiple Choice Questions (MCQs)

CASE STUDY 1: Read the following text and answer question no. 1-4 on the basis of
the same:

Infocom has diversified itself into several product lines Telecommunications,

Engineering, financial services. Each subsidiary is self-sufficient with their own
administrative functions, propagating the belief that people can assume the
responsibility for the effective implementation of their decisions and should be given
autonomy. This has reduced the need for direct supervision by superiors, has
promoted flexibility, initiative and faster decision making. The orders of customers
are never delayed, as a result of good policy decisions of top management. The
philosophy of the top management awards greater autonomy to the lower levels of
management.

137 | P a g e
1. Identify a suitable framework for the company within which the managerial and
operating task are to be performed.

(a) Functional structure (b) Divisional structure

(c) Formal Organisation Structure (d) Informal Organisation Structure

2. Identify the philosophy of the top management highlighted in the above case

(a) Centralisation (b) Decentralisation

(c) Delegation (d) None of these

3. "This has reduced the need for direct supervision by superiors, has promoted
flexibility, initiative and faster decision making” Identify the point of importance of
the philosophy of top management, as highlighted above.

(a) Develops initiative among subordinates

(b) Develops managerial talent for the future

(c) Relief to top management

(d) Better control

4. "The philosophy of the top management awards greater autonomy to the lower
levels of management." Identify the point of importance of the philosophy of top
management, as highlighted above.

(a) Quick decision making (b) Better control

(c) Relief to top management (d) Facilitates growth

CASE STUDY 2: Read the following text and answer question no. 5-8 on the basis of
the same:

Ramdas, aged 49 is working in an aviation company. He is the senior-most employee

in his division. He is even senior to the division manager. Kanaputri. Ramdas is
considered one of the most committed, capable and hard-working employees. As a
result of his abilities and seniority, he generally received the work assignments of his
choice. Although there was no formal designation of various special projects assigned
to Ramdas, he handled them as a matter of routine. A problem developed when an
able and intelligent person Nagarjuna, aged 33, was appointed by Kanapurti.
Nagarjuna's previous three years experience in the closely related work, made it
possible for him to catch on to the routine work of his new job more rapidly than was

138 | P a g e
customary for a new employee. On several occasions. Kanaputti noticed the tension
developing between the two employees. However, he didn't want to get involved in
their personal issues as long as the work was completed effectively and efficiently by
them. One day, the tension between them reached the boiling point and Ramdas
complained to Kanaporti stating that his duties were being largely taken over by
Nagarjuna. Kanaputti issued the order stating the clear allocation of the jobs and
related duties berween the two. He further clarified the working relationship
between them by specifying who was to report to whom. This helped in reducing the
workload, enhancing productivity and removing ambiguity.

5. Identify the function of management highlighted in the above case,

(a) Planning (b) Organising

(c) Staffing (d) Directing

6. Identify the step in the process of the function of management identified, which
has not been carried our properly and contributed to this problem.

(a) Identification and division of work

(b) Departmentalisation

(c) Assignment of duties

(d) Establishing authority and reporting relationships

7. Identify the two step in the process of the function of management identified,
which have been taken by Kanapurti to respond to the complaint of Ramdas.

(a) Identification and division of work.

(b) Departmentalisation

(c) Assignment of dutiesww

(d) Establishing authority and reporting relationships

8. Identify the point(s) of importance of the function of management identified, as

reflected in the above case.

(a) clarity in working relationship

(b) Benefits of specialisation

(c) Effective administration

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(d) All the above

CASE STUDY 3: Read the following text and answer question no. 9-12 on the basis
of the same:

Aman Chadha started 'Bulls Eyes' a company for providing cyber security solutions to
businesses. Its objective is to prevent, detect and respond to cyberattacks and
protect critical data. He was a hardworking software engineer and an expert in cyber
security. His reputation grew by leaps and bounds as he was not only a person of
integrity but also did his work with utmost honesty and sincerity. The business
started growing day by day. He was delighted when he was offered a big project by
the Ministry of Defence. While working on the project, he found that the volume of
work made it impractical for him to handle all the work by himself. He decided to
expand the team. The company maintained a close liaison with a local engineering
college. During a campus placement, Ishan and Vrinda were appointed to work for
the new project.

He found the new employees capable, enthusiastic and trustworthy. Aman Chadha
was thus, able to focus on objectives and with the help of Ishan and Vrinda, the
project was completed on time. Not only this Aman Chadha was also able to extend
his area of operations. On the other hand, Ishan and Vrinda also got opportunities to
develop and exercise initiative.

9. Identify the concept used by Aman Chadha in the above case which helped him in
focusing on objectives.

(a) Delegation (b) Decentralisation

(c) Centralisation (d) Authority

10. Identify the points of importance of the concept identified in Q.9 above.

(a) Basis of management hierarchy

(b) Motivation of employees

(c) Develops managerial talent for the future

(d) Better control

11. Which of the following statement is Not true for the concept of management
identified?

(a) It means granting of authority to subordinates to operate within prescribed limits.

140 | P a g e
(b) It facilitates growth and expansion of the organisation.

(c) It is a process followed to share tasks.

(d) It has wide scope.

12. What is the purpose of the concept of management identified?

(a) To lessen the burden of the manager.

(b) To provide relief to the top management.

(c) To increase the role of the subordinates by giving them more autonomy.

(d) Both (b) and (c)

CASE STUDY 4: Read the following text and answer question no. 13-16 on the basis
of the same:

A company X limited manufacturing cosmetics, which has enjoyed a pre-eminent

position in business, has grown in size. Its business was very good till 1991. But after
that, new liberalised environment has seen entry of many MNC's in the sector. With
the result the market share of X limited has declined. The company had followed a
very centralised business model with Directors and divisional heads making even
minor decisions. Before 1991 this business model had served the company very well
as consumers had no choice. But now the company is under pressure to reform.

13. Which organisation structure is suitable for company 'X'?

(a) Functional structure (b) Divisional structure

(c) Formal organisation structure (d) Informal organisation structure

14. What organisation structure changes should the company bring about in order to
retain its market share?

(a) It should adopt functional structure.

(b) It should adopt divisional structure.

(c) It should adopt centralisation.

(d) It should adopt decentralisation.

How will the changes suggested by you help the firm?

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15. How will the changes suggested by you help the firm?

(a) It will help in increasing managerial and operational efficiency, resulting in

increased profit.

(b) It will facilitate expansion and growth as new divisions can be added without
interrupting the existing operations by merely adding another divisional head and
staff for the new product line.

(c) It will help in quick decision-making since decisions will be taken at levels which
are nearest to the points of action.

(d) It will facilitate effective management.

16. __________________ explains the manner in which decision-making

responsibilities are decided among hierarchical levels.

(a) Delegation (b) Decentralisation

(c)Authority (d) Accountability

CASE STUDY 5: Read the following text and answer question no. 17-20 on the basis
of the same:

It's not quite there yet, but the goal is certainly within reach. One of India's largest IT
solutions providers, Wipro Technologies, is taking on the likes of IBM and Accenture
in its effort to be included among the largest and most successful technology services
companies in the world. Restructuring Wipro was considered the most important
step in becoming a global giant, driven by the goal towards improved customer-
orientation. During the past few months, Wipro separated itself into several
subsidiaries by product line: telecommunications, engineering, financial services, etc.
Each subsidiary brings in about $300 million in annual earnings and is self-sufficient
with their own accounting books, personnel and administrative functions. Wipro
shifted from a centralised to decentralised management system. All responsibilities
for growth lay with the management of each entity. "We tried to de-layer the
organisation and empower our business leaders with a much higher degree of
growth responsibility," said Premji. "We removed an entire layer [of executives)".

17. Identify the function of management highlighted in the above case.

(a) Planning (b) Organising

(c) Staffing (d) Directing

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18. Identify the type of organisational design which is most suitable for Wipro?

(a) Functional structure (b) Divisional structure

(c) Formal organisation structure (d) Informal organisation structure

19. Identify the concept of management highlighted above.

(a) Authority (b) Responsibility

(c) Delegation (d) Decentralisation

20. What has Wipro done to become a contending force among other global grants?

(a) Organised itself in a manner that allowed customer orientation to dominate over
other goals.

(b) Diversified on the basis of product lines.

(c) Modified the relationships within the management hierarchy to suit the goals.

(d) All the above

CASE STUDY 6: Read the following text and answer question no. 21-24 on the basis
of the same:

The directors of Gunjan Ltd., an organisation manufacturing colour televisions, have

asked their production manager to achieve a target production of 150 televisions per
day. The production manager has asked his foreman to achieve this target, but he did
not give him the authority for the requisition of tools and materials from the stores
department. The foreman could not achieve the desired target.

21. The directors can blame the production manager.

(True/False)

22. Identify the principle on the basis of which you have answered Q.21.

(a) Authority must be equal to responsibility.

(b) Division of work

(c) Delegation does not mean abdication.

(d) Centralisation and Decentralisation

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23. The production manager can blame his foreman.
(True/False)

24. Identify the principle on the basis of which you have answered Q.23.

(a) Authority and responsibility.

(b) Division of work

(c) Delegation does not mean abdication.

(d) Centralisation and Decentralisation

CASE STUDY 7: Read the following text and answer question no. 25-28 on the basis
of the same:

In a school fete, the whole activity is divided into task groups each dealing with a
specific area like the food committee, the decoration committee, the ticketing
committee and so on. These are under the overall supervision of the official in-
charge of the event. Coordinating relationships are established among the various
groups to enable smooth interaction and clarity about each group's contribution
towards the event.

25. Identify the function of management highlighted above.

(a) Pllaning (b) Controlling

(d) Coordination (c) Organising

26. "... the food committee, the decoration committee, the ticketing committee …
are under the overall supervision of the official in-charge of the event."

Identify the step involved in the function of management identified in Q.26

highlighted in the above line.

(a) Identification and division of work

(b) Departmentalisation/Departmentation

(c) Assignment of duties

(d) Establishing authority and reporting relationships

27. "...each dealing with a specific area like the food committee, the decoration
committee, the ticketing committee and so on."

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Identify the step involved in the function of management identified in Q.26
highlighted in the above line.

(a) Identification and division of work

(b) Departmentalisation/Departmentation

(c) Assignment of duties

(d) Establishing authority and reporting relationships

28. Identify the concept of management highlighted in the above case.

(a) Delegation (b) Decentralisation

(c) Centralisation (d) Span of management

CASE STUDY 8: Read the following text and answer question no. 29-34 on the basis
of the same:

JS Printing Solutions Ltd. is a company manufacturing printers and scanners. The

management of this company is known for speedy and prompt delivery of orders. As
a result, the market share of this company is growing. The company grabbed a new
project to supply 1,500 printers to Uprise Bank Ltd. for its various branches, within
two weeks. The production Manager, Ashok, made one of his efficient subordinates,
Deepak the incharge of the project and also gave him the right to command workers
in order to meet the target. Now Ashok could use his time on high priority areas. He
felt that this will also give an opportunity to Deepak to gain experience and develop
himself for higher positions.

On getting the charge, Deepak was very happy, his confidence level increased and he
was encouraged to do his best to fulfill the responsibility. Considering his
responsibility, Ashok kept a track of the completion of work with Deepak and he is
providing him the needed guidance to reach the target on time.

29. Identify the concept of management used by Ashok to ensure accomplishment of

the new project.

(a) Functional structure (b) Divisional structure

(c) Delegation (d) Decentralisation

30. The application of the concept used above allows Ashok to use his time on high
priority areas. This will lead to the organization towards:

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(a) Adaptation to change

(b) Effective Management

(c) Economies of Scale

(d) Reduction in conflicts among different divisions.

31. 'On getting the charge, Deepak was very happy, his confidence level increased
and he was encouraged to do his best to fulfill the responsibility given to him.’

The concept discussed above helps in:

(a) Departmentalisation.

(b) Reduction in conflicts among different divisions.

(c) Motivating the employees.

(d) Promoting control and co-ordination within a department.

32. The concept discussed above provides benefits to:

(a) Superior only (b) Subordinate only

(c) Both superior and subordinate (d) Neither superior nor subordinate

33. The concept discussed above helps in facilitation of growth of an organization as:

(a) The subordinate gets freedom from routine work.

(b) Duplication of effort is avoided.

(c) The subordinate gains experience and he is in a position to take up leading

positions in new ventures.

(d) It makes training of employees easier.

34. Which of the following statements is not true about the concept discussed
above?

(a) It is a process followed to share tasks.

(b) It is necessary in all organisations.

(c) It helps to lessen the burden of a manager.

(d) It is a philosophy that implies selective disposal of authority.

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CASE STUDY 9: Read the following text and answer question no. 35-40 on the basis
of the same:

"Saarthi', the name has been associated with the manufacturing and sale of Fashion
products since 1960, when Kapil Saarthi opened his first retail fashion clothing outlet
in Ahmedabad. Sarthi Cosmetics was incorporated in India in 1940, and became a
member of the S & M family of companies in 1959. Sarthi Perfumes began
operations in Gujarat in an existing administrative S&CM facility in 1985. An
important difference between S&M and most other companies is that instead of
operating as one large corporation it operates as 180 smaller companies each
focused on a specific product and area, implying selective dispersal of authority,
recognising the decision makers need four autonomy, as decision making authority is
pushed down the chain of command. It enables the company to maintain short lines
of communication with customers and employees, and accelerate the development
of talent.

35. Identify the philosophy that is being followed by S&M through which it is dividing
the decision making responsibilities among hierarchical levels.

(a) Delegation of authority (b) Decentralization of authority;

(c) Division of work (d) Span of management.

36. "Why is there, need to apply the philosophy being followed by S&M, with
caution?

(a) As it can cause a delay in communication

(b) As it can cause disintegration of the organisation

(c) As it can increase the workload of the top management

(d) As it can reduce the chances of growth of the firm.

37. The application of the philosophy discussed above can foster a sense of
competition amongst the departments, which in turn will help the firm in the
following manner:

(a) Facilitates growth (b) Better control

(c) Relief to top management (d) Quick decision making.

38. Quote the line from above which highlights the importance of the philosophy
towards providing management education to employees.

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(a) "Maintain short lines of communication

(b) 'Accelerate the development of talent'

(c) 'selective dispersal of authority;

(d) 'Recognises decision makers need for autonomy'

39. As "The decision making authority is pushed down the chain of command" at
S&M enterprises, it provides the benefit of quick decision making to the organisation
because:

(a) There is no requirement for approval from many levels

(b) Organisation is able to generate more returns

(c) There are innovative performance systems

(d) It's a means of management education

40. The philosophy being followed by S&M is not followed by most other companies.
This tells us that the philosophy is

(a) Optional

(b) Compulsory

(c) Limited to superior and his subordinate

(d) Merely done to lessen the burden of the manager

ANSWER KEY

1. (b) 2. (b) 3. (c) 4. (d) 5. (b) 6. (c) 7. (c), (d) 8. (d) 9. (a) 10. (a), (b)
11. (d) 12. (a) 13. (a)

14. (d) 15. (c) 16. (b) 17. (b) 18. (b) 19. (d) 20. (d) 21. Ture 22. (c) 23. False
24. (a) 25. (c) 26. (c)

27. (b) 28. (b) 29. (c) 30. (b) 31. (c) 32. (c) 33. (c) 34. (d) 35. (b) 36. (b) 37. (a) 38.
(b) 39. (a) 40. (a)

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Multiple Choice Questions (MCQ) on Assertion-Reasoning Type/Statements

1. Given below are two statements. One is Assertion (A) and another is Reason (R):

Assertion (A): Delegation is a pre-requisite to the efficient functioning of an

organization.

Reasoning (R): It enables a manager to use his time on high priority activities.

Choose the correct option:

(a) Both (A) and (R) are incorrect.

(b) (A) is correct, but (R) is incorrect.

(c) Both (A) and (R) are correct and (R) is the correct explanation of (A).

(d) Both (A) and (R) are correct, but (R) is not the correct explanation of (A).

2. For the following two statements choose the correct option:

Statement I: Accountability can be delegated

Statement II: Responsibility can be delegated completely

Choose the correct option from the options given below:

(a) Statement I is correct and II is wrong

(b) Statement II is correct and I is wrong

(c) Both the statements are correct

(d) Both the statements are incorrect

3. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Delegation helps a manager to extend his area of operations as

without it, his activities would be restricted to only what he himself can do.

Reason (R): A manager, no matter how capable he is, cannot manage to do every
task on his own. The volume of work makes it impractical for him to handle it all by
himself.

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Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true.

(b) Both Assertion (A) and Reason (R) are false.

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

4. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Delegation does not mean abdication.

Reason (R): Irrespective of the extent of delegated authority, the manager shall still
be accountable to the same extent as before delegation.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A).

(c) Assertion (A) is true and Reason(R) is false,

(d) Assertion (A) is false and Reason(R) is true.

5. For the following statements, choose the correct option:

Statement I: Responsibility is derived from authority and accountability is derived

from responsibility.

Statement II: Responsibility is the obligation of a subordinate to properly perform

the assigned duty, for which he/she has been delegated authority by his/her
superior.

Choose the correct option from the options given below

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

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6. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): A large sized organisation can be totally decentralised.

Reason (R): As an organisation grows in size and complexity, there is a tendency to

move towards decentralised decision-making.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true.

(b) Both Assertion (A) and Reason (R) are false.

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

7. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Decentralisation is extending delegation to the lowest level.

Reason (R): Decision making authority is shared with lower levels and is
consequently placed nearest to the points of action.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true.

(b) Both Assertion (A) and Reason (R) are false.

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

8. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Delegation is considered essential for effective organising.

Reason (R): Delegation helps a manager to extend his area of operations as without
it, his activities would be restricted to only what he himself can do.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

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(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A).

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

9. For the following statements, choose the correct option:

Statement I: Decentralisation is a compulsory act of the top management.

Statement II: The purpose of decentralisation is to increase the role of the

subordinates in the organisation by giving them more autonomy.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

10. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Decentralisation must always be balanced with centralisation in areas

of major policy decisions.

Reason (R): The management needs to carefully select those decisions which will be
pushed down to lower levels and those that will be retained for higher levels.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true.

(b) Both Assertion (A) and Reason (R) are false.

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

11. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Decentralisation should be applied with caution by the top

management.

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Reason (R): Decentralisation can lead to organisational disintegration if the
departments start to operate on their own guidelines which may be contrary to the
interest of the organisation.

Select the correct alternative:

(a) Assertion (A) is true and Reason(R) is false.

(b) Assertion (A) is false and Reason(R) is true.

(c) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

(d) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A).

12. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Organisation structure is the outcome of the planning process.

Reason (R): The organising process leads to the creation of an organisation structure
which includes the designing of roles to be filled by suitably skilled people.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true.

(b) Both Assertion (A) and Reason (R) are false.

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

13. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): The need for an adequate organisation structure is felt by an

enterprise whenever it grows in size or complexity.

Reason (R): As an organisation grows, coordination becomes difficult due to the

emergence of new functions and increase in structural hierarchies. Thus, for an
organisation to function smoothly and face environmental changes, it becomes
necessary to pay attention to its structure.

Select the correct alternative:

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(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A).

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

14. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Organisation structure is an indispensable means; and the wrong

structure will seriously impair business performance and even destroy it.

Reason (R): A proper organisation structure is essential to ensure a smooth flow of

communication and better control over the operations of a business enterprise. It
specifies the relationships between people, work and resources.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A).

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

15. For the following statements, choose the correct option:

Statement I: Organising is a means for translating plans into action.

Statement II: Controlling ensures that efforts are directed towards the attainment of
goals laid down in the planning function in such a manner that resources are used
optimally and people are able to work collectively and effectively for a common
purpose.

Choose the correct option from the options given below.

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

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(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

16. For the following statements, choose the correct option:

Statement I: The organising function leads to the creation of an organisational

structure which includes the designing of roles to be filled by suitably skilled people
and defining the inter relationship between these roles so that ambiguity in
performance of duties can be eliminated.

Statement II: Organising essentially implies a process which coordinates human

efforts, assembles resources and integrates both into a unified whole to be utilised
for achieving specified objectives.

Choose the correct option from the options given below

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

17. For the following statements, choose the correct option:

Statement I: Directing is a process that initiates implementation of plans by clarifying

jobs and working relationships and effectively deploying resources for attainment of
identified and desired results (goals).

Statement II: Organising is the process of defining and grouping the activities of the
enterprise and establishing authority relationships among them.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

18. Read the following statements-Assertion (A) and Reason (R):

155 | P a g e
Assertion (A): Organising helps in the growth and diversification of an enterprise.

Reason (R): It allows a business enterprise to add more job positions, departments
and even diversify their product lines. New geographical territories can be added to
current areas of operation and this will help to increase customer base, sales and
profit.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A).

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

19. For the following statements, choose the correct option:

Statement I: Organising is the process of identifying and grouping the work to be

performed, defining and delegating responsibility and authority, and establishing
relationships for the purpose of enabling people to work most effectively together in
accomplishing objectives.

Statement II: Organising is a process by which the manager brings order out of
chaos, removes conflict among people over work or responsibility sharing and
creates an environment suitable for teamwork.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

20. For the following statements, choose the correct option:

Statement I: An organisation structure provides the framework which enables the

enterprise to function as an integrated unit by regulating and coordinating the
responsibilities of individuals and departments.

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Statement II: A proper organisation structure is essential to ensure a smooth flow of
communication and better control over the operations of a business enterprise.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct,

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

21. For the following statements, choose the correct option:

Statement I: The organisation structure of a firm is shown in an organisation chart.

Statement II: Span of management refers to the number of subordinates that can be
effectively managed by a superior.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

22. For the following statements, choose the correct option:

Statement I: The span of management determines the levels of management in the

organisation structure.

Statement II: The organisation structure can be defined as the framework within
which managerial and operating tasks are performed.

Choose the correct option from the options given below:

(a) Both the Statements I and II are correct.

(b) Both the Statements I and II are not correct.

(c) Statement I is correct and Statement II is not correct.

(d) Statement II is correct and Statement I is not correct.

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23. For the following statements, choose the correct option:

Statement I: A functional structure is an organisational design that groups similar or

related jobs together.

Statement II: A functional structure places more emphasis on overall enterprise

objectives than the objectives pursued by a functional head.

Choose the correct option from the options given below:

(a) Both the Statements I and II are correct.

(b) Both the Statements I and II are not correct.

(c) Statement I is correct and Statement II is not correct.

(d) Statement II is correct and Statement I is not correct.

24. For the following statements, choose the correct option:

Statement I: Functional structure is most suitable when the size of the organisation
is large, has a diversified activities and operations require a high degree of
specialisation.

Statement II: When an organisation grows and needs to add more employees, create
more departments and introduce new levels of management, it will decide to adopt
a divisional structure.

Choose the correct option from the options given below:

(a) Both the Statements I and II are correct.

(b) Both the Statements I and II are not correct.

(c) Statement I is correct and Statement II is not correct.

(d) Statement II is correct and Statement I is not correct.

25. For the following statements, choose the correct option:

Statement I: In a divisional structure, the organisation structure comprises of

separate business units or divisions.

Statement II: In a divisional structure, each division is self-contained as it develops

expertise in all functions related to a product line.

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Choose the correct option from the options given below:

(a) Both the Statements I and II are correct.

(b) Both the Statements I and II are not correct.

(c) Statement I is correct and Statement II is not correct.

(d) Statement II is correct and Statement I is not correct.

26. For the following statements, choose the correct option:

Statement I: Divisional structure may lead to inflexibility as people with same skills
and knowledge base may develop a narrow perspective and thus, have difficulty in
appreciating by other point of view.

Statement II: Functional structure promotes flexibility and initiative because each
division functions as an autonomous unit which leads to faster decision making.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

27. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Functional heads do not get training for top management positions.

Reason (R): Because they are unable to gather experience in diverse areas.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true.

(b) Both Assertion (A) and Reason (R) are false.

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

28. For the following statements, choose the correct option:

Statement I: The structure in a formal organisation can be functional or divisional.

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Statement II: The formal organisation is a system of well-defined jobs, each bearing a
definite measure of authority, responsibility and accountability.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

29. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Under formal organisation, it is easier to fix responsibility.

Reason (R): Because mutual relationships are clearly defined.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A).

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

30. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Formal organisation provides stability to the organisation.

Reason (R): It places more emphasis on structure and work.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A).

(c) Assertion (A) is true and Reason(R) is false.

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(d) Assertion (A) is false and Reason(R) is true.

31. For the following statements, choose the correct option:

Statement I: Informal organisation emerges from within the formal organisation

when people interact beyond their officially defined roles.

Statement II: Informal organisation has no written rules, is fluid in form and scope
and does not have fixed lines of communication.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

32. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Informal organisation has no definite strucure or form.

Reason (R): Because it is a complex network of social relationships among members.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A). .

(c) Assertion (A) is true and Reason(R) is false

(d) Assertion (A) is false and Reason(R) is true.

33. For the following statements, choose the correct option:

Statement I: In an informal organisation, unity of command is maintained through an

established chain of command.

Statement II: In an informal organisation, the standards of behaviour are officially

laid down rules and regulations.

Choose the correct option from the options given below:

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(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

34. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Informal organisation cannot be altogether eliminated.

Reason (R): The knowledge of informal groups can be used to gather their support
and consequently lead to improved organisational performance. Such groups can
also provide useful communication channels.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A)

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

35. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Delegation is a pre-requisite to the efficient functioning of an

organisation.

Reason (R): It enables a manager to use his time on high priority activities and also
satisfies the subordinate's need for recognition.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A).

(c) Assertion (A) is true and Reason(R) is false.

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(d) Assertion (A) is false and Reason(R) is true.

36. For the following statements, choose the correct option:

Statement I: The manager shall still be accountable for the performance of the
assigned tasks.

Statement II: The authority granted to a subordinate can be taken back and
redelegated to another person.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

37. For the following statements, choose the correct option:

Statement I: Delegation of authority merely means the granting of authority to

subordinates to operate within prescribed limits.

Statement II: Decentralisation is the entrustment of responsibility and authority to

another and the creation of accountability for performance.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

38. For the following statements, choose the correct option:

Statement I: The concept of authority arises from the established scalar chain which
links the various job positions and levels of an organisation.

Statement II: In the formal organisation authority originates by virtue of an

individual's position and the extent of authority is highest at the top management
levels and reduces successively as we go down the corporate ladder.

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Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

39. For the following statements, choose the correct option:

Statement I: Authority determines the superior subordinate relationship wherein the

superior communicates his decision to the subordinate, expecting compliance from
him and the subordinate executes the decision as per the guidelines of the superior.

Statement II: Authority is restricted by laws and the rules and regulation of the
organisation, which limit its scope. However, as we go higher up in the management
hierarchy, the scope of authority increases.

Choose the correct option from the options given below:

(a) Both the Statements I and II are correct.

(b) Both the Statements I and II are not correct.

(c) Statement I is correct and Statement II is not correct.

(d) Statement II is correct and Statement I is not correct.

40. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Responsibility flows upwards.

Reason (R): A subordinate will always be responsible to his superior to properly

perform the assigned duty.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true.

(b) Both Assertion (A) and Reason (R) are false.

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

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41. For the following statements, choose the correct option:

Statement I: If authority granted is more than responsibility, it may lead to misuse of

authority, and if responsibility assigned is more than authority it may make a person
ineffective.

Statement II: While authority is delegated, responsibility is assumed, accountability

is imposed.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

42. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Delegation leads to effective management.

Reason (R): Delegation empowers the employees by providing them with the chance
to use their skills, gain experience and develop themselves for higher positions.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A).

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

43. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Delegation helps in the expansion of an organisation.

Reason (R): It provides a ready workforce to take up leading positions in new

ventures.

Select the correct alternative:

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(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A).

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

44. For the following statements, choose the correct option:

Statement I: Delegation explains the manner in which decision making

responsibilities are divided among hierarchical levels.

Statement II: When decisions taken by the lower levels are numerous as well as
important an organisation can be regarded as greatly decentralised.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

45. For the following statements, choose the correct option:

Statement I: An organisation is centralised when decision-making authority is

retained by higher management levels whereas it is decentralised when such
authority is delegated.

Statement II: As an organisation grows in size and complexity, there is a tendency to

move towards decentralised decision making.

Choose the correct option from the option given below;

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

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46. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): As an organisation grows in size and complexity, there is a tendency to

move towards decentralised decision making.

Reason (R): This is because in large organisations those employees who are directly
and closely involved with certain operations tend to have more knowledge about
them than the top management which may only be indirectly associated with
individual operations.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A).

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

47. For the following statements, choose the correct option:

Statement I: Delegation is a philosophy that implies selective dispersal of authority

because it propagates the belief that people are competent, capable and resourceful.

Statement II: Decentralisation recognises the decision maker's need for autonomy.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct

(d) Both the Statements I and II are not correct.

48. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Decentralisation helps to promote self-reliance and confidence

amongst the subordinates.

Reason (R): This is because when lower managerial levels are given freedom to take
their own decisions they learn to depend on their own judgment. It also keeps them

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in a state where in they are constantly challenged and have to develop solutions for
the various problems they encounter.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true.

(b) Both Assertion (A) and Reason (R) are false.

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

ANSWER KEY

1. (c) 2. (d) 3. (a) 4. (a) 5. (c) 6. (d) 7. (a) 8. (a) 9. (b) 10. (a) 11. (c) 12. (d) 13.
(a) 14. (a)

15. (a) 16. (c) 17. (b) 18. (a) 19. (c) 20. (c) 21. (c) 22. (a) 23. (c) 24. (a) 25. (a) 26.
(d) 27. (a) 28. (c)

29. (a) 30. (b) 31. (c) 32. (a) (c) 33. (d) 34. (a) 35. (a) 36. (c) 37. (a) 38. (c) 39.
(a) 40. (a) 41. (c) 42. (b)

43. (a) 44. (b) 45. (c) 46. (a) 47. (b) 48. (a)

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Chapter -6
Staffing

Concept and Importance of Staffing

Meaning of Staffing
In any organisation, there is a need for people to perform work.
The staffing function of management fulfills this requirement and finds the right
people for the right job.
Basically, staffing fills the positions as shown in the organisation structure.
After planning and selection of the organisation structure, the next step in the
management process is to fill the various posts provided in the organisation. This is
termed as the management of 'staffing' function.
In the simplest terms, staffing is 'selecting right person for the right job'.
It begins with workforce planning and includes different other function like
recruitment, selection, training,
Staffing recognises the importance of every single person employed by an
organisation as it is the individual worker, who is the ultimate performer.
Staffing is the managerial function of filling and keeping filled the positions in the
organisation structure. This is achieved by, first of all, identifying requirement of
workforce, followed by recruitment, selection, placement, promotion, appraisal
and development of personnel, to fill the roles designed into the organisation
structure.
Importance of Staffing
Human resources are the most important asset of an organisation.
The ability of an organisation to achieve its goal depends upon the quality of its
human resources.
If right kind of employees are not available, it will lead to wastage of materials, time,
effort and energy, resulting in lower productivity and poor quality of products.
The enterprise will not be able to sell its products profitably.
It is, therefore, essential that right kind of people must be available in right number
at the right time. They should be given adequate training so that wastage is
minimum.
Thus, staffing is a very important managerial function. No organisation can be
successful unless it can fill and keep filled the various positions provided for in the
structure with the right kind of people. Proper staffing ensures the following
benefits to the organisation:
1. Obtaining competent personnel
It helps in discovering and obtaining competent personnel for various jobs.

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2. Higher performance
It ensures higher performance, by putting right person on the right job.
3. Continuous survival and growth
It ensures the continuous survival and growth of the enterprise through the
succession planning for managers.
4. Optimum utilisation of human resources
It helps to ensure optimum utilisation of the human resources. By avoiding
overmanning, it prevents under- utilisation of personnel and high labour costs. At the
same time it avoids disruption of work by indicating in advance the shortages of
personnel.
5. Improves job satisfaction
It improves job satisfaction and morale of employees through objective assessment
and fair reward for their contribution.
Staffing as part of Human Resource Management (HRM)
Staffing is a function which all managers need to perform. It is a separate and
specialised function and there are many aspects of human relations to be
considered. It is the job of managers to fill positions in their organisation and to
make sure that they remain occupied with qualified people.
Staffing is closely linked to organising since after the structure and positions have
been decided, people are required to work in these positions. Subsequently, they
need to be trained and motivated to work in harmony with the goals of the
organisation. Thus, staffing is seen as a generic function of management.
The staffing function deals with the human element of management. Managing the
human component of an organisation is the most important task because the
performance of an organisation depends upon how well this function is performed.
The success of an organisation in achieving its goals is determined to a great extent
on the competence, motivation and performance of its human resource. It is the
responsibility of all managers to directly deal with and select people to work for the
organisation. When the
manager performs the staffing function, his role is slightly limited. Some of these
responsibilities will include:
 placing the right person on the right job,
 introducing new employees to the organisation,
 training employees and improving their performance,
 developing their abilities, maintaining their morale and protecting their health
and physical conditions.
In small organisations, managers may perform all duties related to employees
salaries, welfare and working conditions. But as organisations grow and number of

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persons employed increases, a separate department called the 'Human Resource
Department' is formed which has specialists in managing people.
The management of human resource is a specialised area which requires the
expertise of many people. The number of human resource specialists and size of this
department gives an indication of the size of the business as well. For a very large
company, the Human Resources Department itself will contain specialists for each
function of this department.
Specialised activities and duties which the human resource personnel must
perform
Human Resource Management includes many specialised activities and duties which
the human resource personnel must perform. These duties are:
1. Recruitment i.e., search for qualified people.
2. Analysing jobs, collecting information about jobs to prepare job descriptions.
3. Developing compensation and incentive plans.
4. Training and development of employees for efficient performance and career
growth.
5. Maintaining labour relations and union management relations.
6. Handling grievances and complaints.
7. Providing for social security and welfare of employees.
8. Defending the company in law suits and avoiding legal complications.

Staffing Process
1. Estimating Manpower Requirements
Staffing function in the management process is the timely fulfillment of the
manpower requirements within an organisation. These requirements may arise in
case of starting a new business or expanding the existing one or they may arise as a
matter of the need for replacing those who quit, retire or are transferred or
promoted from or are fired from the job.
Estimating manpower requirements means knowing how many persons are
needed and of what type (i.e., educational qualification, skills, prior experience,
personality characteristics, etc.) in the organisation to fill the various job positions
created while designing the organisational structure.
Understanding the manpower requirements would necessitate workload analysis on
the one hand and workforce analysis on the other.
(a) Workload Analysis
Workload Analysis is an assessment of the number and types of human resources
necessary for the performance of various jobs and accomplishment of
organisational objectives.
(b) Workforce Analysis

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Workforce Analysis is an assessment of the number and type of human resources
available in the organisation.
Workload analysis and workforce analysis would reveal whether the organisation is
understaffed, overstaffed or optimally staffed. In fact, this exercise would form the
basis of the subsequent staffing actions.
 A situation of over-staffing somewhere would necessitate employee removal or
transfer elsewhere. Otherwise, there would be 'more play, less work' in the
organisation.
 On the other hand, a situation of under-staffing would necessitate the starting of
the recruitment process.
2. Recruitment
The information generated in the job description and the candidate profile may be
used for developing the 'situations vacant' advertisement.
Advertising is commonly part of the recruitment process, and can occur through
several means, through newspapers, through professional publication, through a job
center, through campus interviews, etc. The advertisement may also be displayed on
the factory/ office gate or else it may be published in print media or flashed in
electronic media. The requisite positions
may be filled up from within the organisation or from outside.
Thus, there are two sources of recruitment - Internal and External.
Both internal and external sources of recruitment may be explored. Internal sources
(e.g. transfers and promotions) may be used to a limited extent.
For fresh talent and wider choice external sources (e.g. advertisements,
management consultants, internet, etc.) are used.
Recruitment may be defined as the process of searching for prospective employees
and stimulating them to apply for jobs in the organisation.
Recruitment is positive process as it seeks to attract suitable applicants to apply for
available jobs in the organisation. There is no rejection in this process.
Recruitment Process
The various activities/steps involved with the process of recruitment:
1. Identification of the different sources of labour supply
2. Assessment of their validity
3. Choosing the most suitable source(s)
4. Inviting applications from the prospective candidates, for the vacancies.

Objective of Recruitment
The objective of recruitment is to identify and attract potential employees with the
necessary characteristics or qualification, in the adequate number for the jobs
available. It locates available people for the job and invites them to apply for the job

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in the organisation.
In other words, the essential objective of recruitment is to create a pool of the
prospective job candidates.
3. Selection
Selection is the process of identifying and choosing the best person out of a number
of prospective candidates for a job.
Selection is the process of choosing from among the pool of the prospective job
candidates developed at the stage of recruitment.
It is a negative process because the candidates are required to take a series of
employment tests and interviews. At every stage, many are eliminated and a few
move on to the next stage until the right type is found.
Those who are able to successfully negotiate the test and the interviews are offered
an employment contract, a written document containing the offer of employment,
the terms and conditions and the date of joining.
Even in case of highly specialised jobs where the choice space is very narrow, the
rigour of the selection process serves two important purposes:
(i) It ensures that the organisation gets the best among the available.
(ii) It enhances the self-esteem and prestige of those selected and conveys to them
the seriousness with which the things are done in the organisation.

4. Placement and Orientation

Placement
Joining a job marks the beginning of socialisation of the employee at the workplace.
This is called 'Placement'. Placement refers to the employee occupying the position
or post for which he/she has been selected.
Orientation
The employee is given a brief presentation about the company and is introduced to
his superiors, subordinates and the colleagues. He is taken around the workplace and
given the charge of the job for which he has been selected. This process of
familiarisation (called 'Orientation') is very crucial and may have a lasting impact on
his decision to stay and on his job performance.
Orientation is introducing the selected employee to other employees and
familiarising him/her with the rules and policies of the organisation.
5. Training and Development
Training and Development is an attempt to improve the current or future employee
performance by increasing employee's ability to perform through learning, usually by
changing the employee's attitude or increasing his or her skills and knowledge.

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What people seek is not simply a job but a career. Everyone must have the
opportunity to rise to the top.The way to provide such an opportunity is to facilitate
employee training.
Organisations have either in- house training centers or have forged alliances with
training and educational institutes to ensure continuing learning of their employees.
The organisations too benefit in turn. If employee motivation is high, their
competencies are strengthened, they perform better and thus, contribute more to
organisational effectiveness and efficiency. By offering the opportunities for career
advancement to their members, organisations are not only able to attract but also
retain its talented people.
Training
Training is the process by which aptitudes, skills and abilities of employees to
perform(specific jobs are increased. It is a process of learning new skills and
application of knowledge. It attempts to improve the performance of employees
on the current job or prepare them for them for any intended job.
Development
Development refers to the learning opportunities designed to help employees
grow. It means growth of an individual in all respects.

Training Development
It is a process of increasing knowledge It is a process of learning and growth.
and skills.
It is to enable the employee to do the job It is to enable the overall growth of the
better. employee.
Training is a job-oriented process. Development is a career-oriented process
Training is a short-term process. Development is an on-going process. It
includes training also.

6. Performance Appraisal
Performance appraisal means evaluating an employee's current and/or past
performance as against certain predetermined standards.
The employee is expected to know what the standards are and the superior is to
provide the employee feedback on his/her performance. The performance appraisal
process, therefore, will include:
(a) defining the job,
(b) appraising performance and
(c) providing feedback.

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7. Promotion and Career Planning
Promotions refer to being placed in positions of increased responsibility. They
usually responsibility and job satisfaction.
It becomes necessary for all organisations to address career related issues and
promotional avenues for their employees because by offering the opportunities for
career advancement to their members, organisations are not only able to attract but
also retain its talented people. Therefore, managers need to design activities to serve
employees' long-term interests also. They must encourage employees to grow and
realise their full potential. Promotions are an integral part of people's career.
8. Compensation
Compensation refers to all forms of pay or rewards going to employees. It may be
in the form of direct financial payments like wages, salaries, incentives,
commissions and bonuses and indirect payments like employer paid insurance and
vacations.
Types of direct financial payments
1. Time based wage plan: A time based plan means salary and wages are paid either
daily, weekly or monthly or annually.
2. Performance based wage plan: Performance based plans means salary/wages are
paid according to piecework. For example, a worker may be paid according to the
number of units produced by him/her.
Factors which influence the design of any pay plan/compensation plan
(i) Legal factors (labour laws) (iii) Company policy
(iii)Labour union (iv) Equity' principle

Recruitment - Internal and External Sources

Internal Sources of Recruitment
There are two important sources of internal recruitment, namely, transfers and
promotions.
1. Transfers
It involves shifting of an employee from one job to another, one department to
another or from one shift to another, without a substantive change in the
responsibilities and status of the employee.
It may lead to changes in duties and responsibilities, working condition etc., but
not necessarily salary.
 Transfer is a good source of filling the vacancies with employees from over-
staffed departments.
 It is practically a horizontal movement of employees. Shortage of suitable
personnel in one branch may be filled through transfer from other branch or
department.

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 Job transfers are also helpful in avoiding termination and in removing individual
problems and grievances.
 Transfers can also be used for training of employees for learning different jobs.
2. Promotions
Business enterprises generally follow the practice of filling higher jobs by promoting
employees from lower jobs. Promotion refers to shifting an employee to a higher
position, carrying higher responsibilities, facilities, status and pay.
 Promotion is a vertical shifting of employees.
 This practice helps to improve the motivation, loyalty and satisfaction level of
employees.
 It has a great psychological impact over the employees because a promotion at
the higher level may lead to a chain of promotions at lower levels in the
organisation.
Internal Sources of Recruitment - Merits and Limitations
MERITS LIMITATIONS
1. Motivates employees: Employees are 1. Reduces scope for induction of fresh
motivated to improve their performance. talent: When vacancies are filled through
A promotion at a higher level may lead to internal promotions, the scope for
a chain of promotion at lower levels in induction of fresh talent is reduced.
the organisation. This motivates the Hence, complete reliance on internal
employees to improve their performance recruitment involves danger of
through learning and practice. Employees 'inbreeding' by stopping 'infusion of new
work with commitment and loyalty and blood' into the organisation.
remain satisfied with their jobs. Also,
peace prevails in the enterprise because
of promotional avenues.
2. Simplifies the process of selection and 2. Employees may become lethargic: The
placement: Internal recruitment also employees may become lethargic if they
simplifies the process of selection and are sure of time bound promotions.
placement. The candidates that are
already working in the enterprise can be
evaluated more accurately and
economically. This is a more reliable way
of recruitment since the candidates are
already known to the organisation.
3. Tool of training: Transfer is a tool of 3. Incomplete source: A new enterprise
training the employees to prepare them internal sources of recruitment. No
for higher jobs. Also people recruited organisation fill all its vacancies from
from within the organisation do not need internal sources. The existing be
induction training. insufficient or they may not fulfill the
staff may eligibility criteria of the jobs to

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 be filled.

4. Adjustment of surplus staff: Transfer 4. Spirit of competition hampered: The

has the benefit of shifting workforce spirit of competition among the
from the surplus departments to those employees may be hampered.
where there is shortage of staff.

5. Economical: Filling of jobs internally is 5. May reduce productivity: Frequent

cheaper as compared to getting transfers of employees may often reduce
candidates from external sources. the productivity of the organisation.

External Sources of Recruitment

The commonly used external sources of recruitment are discussed below:
1. Direct Recruitment
Under the direct recruitment, a notice is placed on the notice-board of the enterprise
specifying the details of the jobs available.
Job-seekers assemble outside the premises of the organisation on the specified date
and selection is done on the spot.
The practice of direct recruitment is followed usually for casual vacancies of unskilled
or semi-skilled jobs.
Such workers are known as casual or badli workers and they are paid remuneration
on daily wage basis.
Suitability: It is suitable for filling casual vacancies when there is a rush of work or
when_some permanent workers are absent.

Advantage: This method of recruitment is very inexpensive as it does not involve any
cost of advertising the vacancies.

2. Labour Contractors
Labour contractors maintain close contacts with labourers and they can provide the
required number of unskilled workers at short notice.
Workers are recruited through labour contractors who are themselves employees of
the organisation.
Disadvantage: If the contractor himself decides to leave the organisation, all the
workers employed through him will follow suit.

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3. Casual Callers
Many reputed business organisations keep a database of unsolicited applicants in
their offices. Such job-seekers can be a valuable source of manpower.A list of such
job-seekers can be prepared and can be screened to fill the vacancies as they arise.
Advantage: It reduces the cost of recruiting workforce in comparison to other
sources.
4. Employment Exchange
Employment exchanges run by the Government are regarded as a good source of
recruitment for unskilled and skilled operative jobs. In some cases, compulsory
notification of vacancies to employment exchange is required by law. Thus,
employment exchanges help to match personnel demand and supply by serving as
link between job-seekers and employers.
Disadvantage: The records of employment exchange are often not up to date and
many of the candidates referred by them may not be found suitable.

5. Advertising on Television
The practice of telecasting of vacant posts over Television is gaining importance
these days. The detailed requirements of the job and the qualities required to do it
are publicised along with the profile of the organisation where vacancy exists.
.6. Web Publishing
Internet is becoming a common source of recruitment these days. There are certain
websites specifically designed and dedicated for the purpose of providing
information about both job seekers and job opening e.g. www. naukri.com. In fact,
websites are very commonly visited both by the prospective employees and the
organisations searching for suitable people.
7. Advertisement in newspapers or trade and professional journals
Advertisement in newspapers or trade and professional journals is generally used
when a wider choice is required.
Advantage: More information about the organisation and job can be given in the
advertisement. Advertisement gives the management a wider range of candidates
from which to choose.
Disadvantage: It may bring in a flood of response, and many times, from quite
unsuitable candidates.
8. Recommendations of Employees
Applicants introduced by present employees, or their friends and relatives may prove
to be a good source of recruitment. Such applicants are likely to be good employees

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because their background is sufficiently known. A type of preliminary screening takes
place because the present employees know both the company and the candidates
and they would try to satisfy both.
9 Placement Agencies and Management Consultants
In technical and professional areas, private agencies and professional bodies appear
to be doing substantive work. Placement agencies: Placement agencies provide a
nationwide service in matching personnel demand and supply. These agencies
compile bio-data of a large number of candidates and recommend suitable names to
their clients.
 Such agencies charge fee for their services and they are useful where extensive
screening is required.
 These professional recruiters can entice the needed top executives from other
companies by making the right offers.
Management Consultants: Management consultancy firms help the organisations to
recruit technical, professional and managerial personnel.
 They specialise in middle level and top level executive placements.
 They maintain data bank of persons with different qualifications and skills.
10. Campus Recruitment
Recruitment from educational institutions is a well-established practice of
businesses, which is referred to as 'campus recruitment'.
Colleges and institutes of management and technology have become a popular
source of recruitment for technical, professional and managerial jobs.
Many big organisations maintain a close link with the universities, vocational schools
and management institutes to recruit qualified personnel for various jobs.

External Sources of Recruitment - Merits and Limitations

MERITS LIMITATIONS
1. Competitive Spirit: If a company taps 1. Costly process: It is very costly to
external sources, the existing staff will recruit staff from external sources. A lot
have to compete with the outsiders. of money has to be spent on
They will work harder to show better advertisement and processing of
performance. applications.
2. Wider Choice: When vacancies are 2. Lengthy process: Recruitment from
advertised widely, a large number of external sources takes a long time. The
applicants from outside the organisation business has to notify the vacancies and
apply. The management has a wider wait for applications to initiate the
choice while selecting the people for selection process.

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employment.

3. Qualified Personnel: By using external 3. Dissatisfaction among existing staff:

sources of recruitment, the management External recruitment may lead to
can attract qualified and trained people dissatisfaction and frustration among
to apply for vacant jobs in the existing employees. They may feel that
organisation. their chances of promotion are reduced.
4. Fresh Talent: The present employees
may be insufficient or they may not fulfill
the specifications of the jobs to be filled.
External recruitment provide wider
choice and brings new blood in the
organisation.

Selection Process
Steps in the Process of Selection
1. Preliminary Screening
Preliminary screening helps the manager eliminate unqualified or unfit job seekers
based on the information supplied in the application forms.
2. Selection Tests
An employment test is a mechanism (either a paper and pencil test or an exercise)
that attempts to measure certain characteristics of individuals. These characteristics
range from aptitudes, such as manual dexterity, to intelligence, to personality.
Important tests used for selection of employees are:
(i) Intelligence Tests: This is one of the important psychological tests used to
measure the level of intelligence quotient of an individual. It is an indicator of a
person's learning ability or the ability to make decisions and judgments.
(ii) Aptitude Test: It is a measure of individuals potential for learning new skills. It
indicates the person's capacity to develop. Aptitude tests are good indices of a
person's future success score.
(iii) Trade Test: Trade tests measure the existing skills of the individual. They
measure the level of knowledge and proficiency in the area of professions or
technical training.
(iv) Personality Tests: Personality tests provide clues to a person's emotions, her
reactions, maturity and value system etc. These tests probe the overall personality.
Hence, these are difficult to design and implement.

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(v) Interest Tests: Every individual has fascination for some job than the other.
Interest tests are used to know the pattern of interests or involvement of a person.
3. Employment Interview
Interview is a formal, in-depth conversation conducted to evaluate the applicant's
suitability for the job. The role of the interviewer is to seek information and that of
the interviewee is to provide the same. Though, in present times, the interviewee
also seeks information from interviewer.
4. Reference and Background Checks
Many employers request names, addresses, and telephone numbers of references
for the purpose of verifying information and, gaining additional information on an
applicant. Previous employers, known
persons, teachers and university professors can act as references.
5. Selection Decision
The final decision has to be made from among the candidates who pass the tests,
interviews and reference checks.
6. Medical Examination
After the selection decision and before the job offer is made, the candidate is
required to undergo a medical fitness test. The job offer is given to the candidate
after being declared fit in the medical examination.
7. Job Offer
The next step in the selection process is job offer to those applicants who have
passed all the previous hurdles. Job offer is made through a letter of
appointment/confirm his acceptance. Such a letter generally contains a date by
which the appointee must report on duty. The appointee must be given reasonable
time for reporting.
8. Contract of Employment
After the job offer has been made and candidate accepts the offer, certain
documents need to be executed by the employer and the candidate.
Attestation form: This form contains certain vital details about the candidate, which
are authenticated and attested by him or her. Attestation form will be a valid record
for future reference.
Contract of employment: There is also a need for preparing a contract of
employment. Basic information that should be included, in a written contract of
employment will vary according to the level of the job, but the following checklist
sets out the typical headings:
 Job Title
 Rates of pay
 Leave rules
 Work rules

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 Duties
 Allowances
 Sickness, grievance procedure
 Termination of employment
 Responsibilities
 Hours of work
 Disciplinary procedure

Training and Development - Importance and Methods

Importance/Benefits of Training and Development

Importance/Benefits to the Organisation Importance/Benefits to the Employee

1. Systematic learning: Training is a 1. Batter Career: Improved Skill and
systematic learning, 1, Better career: Knowledge due to training lead to batter
Improved skills and knowledge due to career of the individual. training lead to
always better than hit and trial methods better career of the individual.
which lead to wastage of efforts and
money.
2. Higher profits: It enhances employee 2 Increased earnings: Increased
productivity both in terms of quantity performance by the individual help him
and quality, leading to higher profits. to earn more.

3. Equips future managers: Training 3. More efficient to handle machines:

equips the future manager who can take Training makes the employee more
over in case of emergency. efficient to handle machines. Thus, less
prone to accidents.

4. Reduces absenteeism and employee 4. Increases morale: Training increases

turnover: Training increases employee the satisfaction and morale of
morale and reduces absenteeism and employees.
employee turnover.

5.Effective response to environment

changes: It helps in obtaining effective
response to fast changing environment --
- technological and economic.

Training Methods

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 On-the-Job Training Methods Off-the-Job Training Methods
 On-the-Job methods refer to the  Off-the-Job methods are used away
methods that are applied to the from the work place.
workplace, while the employee is
actually working.  It means 'learning before doing'.
 It means 'learning while doing'.  Example: Vestibule training
 Examples: (i) Apprenticeship training
programmes
(ii) Internship training

1. Apprenticeship training programmes

Apprenticeship programmes put the trainee under the guidance of a master worker.
 These are designed to acquire a higher level of skill.
 People seeking to enter skilled jobs, to become, for example, plumbers,
electricians or iron-workers, are often required to undergo apprenticeship
training.
 These apprentices are trainees who spend a prescribed amount of time working
with an experienced guide, or trainer.
2. Vestibule Training
 Employees learn their jobs on the equipment they will be using, but the training is
conducted away from the actual work floor.
 Actual work environments are created in a class room and employees use the
same materials, files and equipment.
 This is usually done when employees are required to handle sophisticated
machinery and equipment.
3. Internship Training
 It is a joint programme of training in which educational institutions and business
firms cooperate.
 Selected candidates carry on regular studies for the prescribed period. They also
work in some factory or office to acquire practical knowledge and skills.
4. Induction training
 Induction training is a type of training given to help a new employee in settling
down quickly into the job by becoming familiar with the people, the
surroundings, the job and the business.
 The duration of such type of training may be from a few hours to a few days.

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Case Studies Analysing, Evaluating & Creating Type
Questions

Q1. Mr. Ali Mohammad, the CEO of Super Ltd. believes that human resource is the
most important asset of the firm. He believes that no organisation can be successful
unless it can fill and keep filled the various positions provided for in the structure
with the right kind of people.

Identify the function of management being discussed above and state the benefits to
the organisation that its proper application in the firm will ensure.
(6 marks)

Ans. Staffing

Proper staffing ensures the following benefits to the organization:

(i) helps in discovering and obtaining competent personnel for various jobs;

(ii) makes for higher performance, by putting right person on the right job;

(iii) ensures the continuous survival and growth of the enterprise through the
succession planning for managers;

(iv) helps to ensure optimum utilisation of the human resources. By avoiding

overmanning, it prevents under-utilisation of personnel and high labour costs. At the
same time it avoids disruption of work by indicating in advance the shortages of
personnel; and

(v) improves job satisfaction and morale of employees through objective assessment
and fair rewarding of their contribution.

Q2. Mr. Ramswaroop recently completed his Post Graduate Diploma in Human
Resource Management. A large steel manufacturing company which employs 800
persons appointed him as its human resource manager. Mr. Ramswaroop has been
given complete charge of the company's Human Resource Department.

The company has an expansion plan in hand which may require another 200 persons
for various types of additional requirements.

State any four functions Mr. Ramswaroop is supposed to perform.

(4 marks)

Ans. The functions which Me. Ramswaroop is supposed to perform as HR manager

are: (any four)

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(i) Recruitment i.e., search for qualified people.

(ii) Analysing jobs, collecting information about jobs to prepare job descriptions.

(iii) Developing compensation and incentive plans.

(iv) Training and development of employees for efficient performance and career
growth.

(v) Maintaining labour relations and union management relations.

(vi) Handling grievances and complaints.

(vii) Providing for social security and welfare of employees.

(viii) Defending the company in law suits and avoiding legal complications.

Q3. Ms. Jayshree recently completed her Post Graduate Diploma in Human Resource
Management. A large steel manufacturing compay which employs 800 persons
appointed her as its human resource manager. Ms, Jayshree has been given
complete charge of the company’s Human Resource Department.

The company has an expansion plan in hand which may require another 200 persons
for various types of additional requirements.

(a) Identify the step of one of the functions of management involved in the shove
case.

(b) Identify and state the concept which will help in deciding the number of persons
required.

(c) Identify and explain the next two steps in the function of management identified
in part (a) to fulfill the additional requirements of 200 persons.
(4 marks)

Ans. (a) The step of staffing function of management involved in the case is
‘Estimating Manpower Requirements’.

(b) Workload Analysis

(c) (i) Recruitment (ii) Selection

(Explain)

Q4. The IT major GIPRA is terminating the employment of its senior managers, if
after evaluating their performance against pre-determined standards if it is found

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lacking. With this disruption analysts say a large portion of the employees may
become irrelevant unless they learn new skills and apply the knowledge to work on
emerging technologies. GIPRA is ready to facilitate employee learning, through its in-
house centers.

A. Name the function of management performed by GIPRA to maintain a satisfactory

work force.

B. Identify and explain the two steps in the process of the function of management
discussed above.

C. Also state any two steps of the function of management discussed, that the firm
had to perform before performing the above steps.
(CBSE SQP 2018) (6 marks)

Ans. A. The function of management being performed by GIPRA to maintain a

satisfactory work force is Staffing.

B. The two steps of staffing discussed above are:

(a) Training and development (b) Performance Appraisal

(Explain)

C. Following are the two steps in the process of staffing that the management had to
perform before performing the above steps: (Explain any two)

(a) Estimating manpower requirements (b) Recruitment

(c) Selection (d) Orientation and Placement

Q5. Aakanksha, Nikita and Parishma are the owners of a handicraft unit in the urban
area of Dibrugarh in Assam, which is involved in the manufacturing and marketing of
Sital Pati, traditional mats and Jappi (the traditional headgear). They decided to shift
this manufacturing unit to a rural area with an objective of reducing the cost and
providing job opportunities to the locals.

They followed the functional structure in this organisation with a view to increasing
managerial and operational efficiency.

They assessed and analysed the type and number of employees required, keeping in
mind that they had to encourage the women, and the people with special needs
belonging to the rural area.

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State the next three steps that they will have to undertake, for obtaining a satisfied
workforce for their handicraft unit.
(CBSE SQP 2016) (3 marks)

Ans. The next three steps in the process of staffing are stated below: (i) Recruitment
(ii) Selection (iii) Placement and orientation
(Explain)

Q6. Sahil, the director of garments company, is planning to manufacture bags for the
utilisation of waste material of one of his garments unit. He decided that his
manufacturing unit will be set up in a rural area of Orissa where people have very
less job opportunities and labour is available at very low rate. He also thought of
giving equal opportunities to men and women. For this he selected S. Chatterjee,
Indrajeet Kaur, Aslam and Sarabjeet as heads of Sales, Accounts, Purchase and
Production departments.

Identify and state the next two steps that Sahil has to follow in the staffing process
after selecting the above heads.
(3 marks)

Ans. The next two steps that Sahil has to follow in the staffing process are:
(Explain)

(a) Placement and Orientation (b) Training and development

Q7. Alpha Enterprises is a company manufacturing water geysers. The company has a
functional structure with four main functions-Production, Marketing, Finance and
Human Resource. As the demand for the product grew, the company decided to hire
more employees. Identify the concept which will help the Human Resource Manager
in deciding the actual number of persons required in each department.
(CBSE 2017) (1 mark)

Ans. Workload Analysis

Q8. Bhagwati Enterprises is a company engaged in the marketing of air-conditioners

of a famous brand. The company has a functional structure with the four main
functions- Purchase, Sales, Finance and Staffing. As the demand for the product
grew, the company decided to recruit more employees. Identify the concept which
will help the Human Resource Manager to find out the number and type of
personnel available so that he could decide and recruit the required number of
persons for each department. (CBSE 2017) (1 mark)

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Ans. Workforce analysis.

Q9. Resolutions Pvt. Ltd. is a publishing company. Its book on Business Studies for
class XII is in great demand. As result, the employees in the marketing department
are always racing against time. The employees have to work overtime and on
holidays to cater to the demand. Managers in the marketing department are under
stress as they have to handle more than two territories. The work stress has led to
dissatisfaction among the employees and managers.

(a) Name and explain the step of staffing process which has not been performed
properly.

(b) State the next two stages immediately following the step identified in part (a).
(CBSE SQP 2017) (4 marks)

Ans. (a) Estimation of manpower requirement

(b) (i) Recruitment (ii) Selection

Q10. A company X Ltd. is setting up a new plant in India for manufacturing auto
components. India has highly competitive and cost-effective production base in this
sector. Many reputed car manufacturers source their auto components from here.

X Ltd. is planning to capture about 40% of the market share in India and also export
to the tune of at least $5 million in about 2 years of its planned operations. To
achieve these targets, it requires a highly trained and motivated workforce.

You have been retained by the company to advise it in this matter. Suggest the
company about the three main aspects of staffing function.

Ans. The three main aspects of staffing function are:

(i) Recruitment

The company should rely upon the external sources of recruitment as it is setting up
a new plant. Methods of external recruitment the company should adopt are
advertisement, management consultants and placement agencies, campus
recruitment, etc. to recruit technical, professional and managerial personnel.

(ii) Selection

Selection process of employees will include preliminary screening of application

forms to eliminate unqualified job-seekers; selection tests such as intelligence test,
aptitude test, etc., employment interview to judge the candidates suitability for the

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jobs, reference and background checks, selection decision, medical examination, job
offer and contract of employment.

(iii) Training and development

The company should initiate various training programmes to increase the knowledge
and skills of the employees so that they may handle sophisticated/hi-tech machines
and equipment, e.g. Apprenticeship training Vestibule training, Internship, etc.

Objective Type Questions 6.2

1. Name the function in the management process which is concerned with the timely
fulfillment of manpower requirements within an organisation.

2. How is manpower requirement in an organisation estimated?

3. Match the following:

(i) An assessment of the number of and types of human (a) Workforce

resources necessary for the performance of various jobs and analysis
accomplishment of organisational objectives.
(ii) An analysis that would reveal the number and type of human (b) Workload
resources available. anaylsis
(iii) Assessment, evaluation and final match. (c) Training
(iv) Acquainting and skill development (d) Selection

4. Operationally, understanding the manpower requirements would necessitate

workload analysis on the one hand and workforce analysis on the other. Such an
exercise would reveal _________________. (Complete the sentence).

5. Under staffing is not good for an organisation; however, over-staffing is a desirable

situation. (True/False)

6. A situation of over staffing somewhere in an organisation would necessitate

_________________.
(Complete the sentence).

7. A situation of under staffing would necessitate the starting of the

_________________ process.
(Fill up the blank with correct answer)

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8. Tina is HR manager of Vipin Garments Ltd. The demand for the company's
products in on the rise, whereas the company is unable to meet the rising demand.
Tina conducts workload and workforce analysis and finds that the organisation is
under- staffed, which is the reason behind less production of output. What step or
action, Tina should undertake before starting the recruitment process?

9. The _________________ step of staffing process involves locating the potential.

Candidate and inviting them to apply for the job in the organisation.
(Fill up the blank with correct answer)

10. _________________ (i) is the process of choosing from among the pool of the
prospective job candidates developed at the stage of (ii) (Recruitment/Selection)
(Fill up the blanks with correct options)

11. In the staffing process _________________ precedes the ___________ of a right

candidate for the given position in the organisation.
(Fill up the blanks with correct answers)

12. _________________ seeks to attract suitable applicants to apply for available

jobs.
(Fill up the blank with correct option)

13. In the selection process, those who are able to successfully negotiate the test and
the interviews are offered employment contract, a written document containing the
offer of employment, the terms and conditions and the date of joining.

14. In case the candidates are selected only on the basis of academic qualifications
and aptitude for learning they might need specific training skills. For example, if one
is selected by a business process outsourcing (BPO) unit by virtue of being extrovert
and well-versed in English speaking one needs to be trained in the relevant business
processes, telephonic conversation etiquettes as well as diction adaptation. In such a
case, after recruitment and selection, what step will come first? (Placement/Training)
(Choose the correct option)

15. What people seek is not simply a job but a career. Everyone must have the
opportunity to rise on the top. The best way to provide such an opportunity is
through _______________. (Choose the correct alternative)

(a) Training and development (b) Promotion and career

planning

(c) Both (a) and (b) (d) Compensation

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16. Name the two sources of employee training.

17. After the employees have undergone a period of training and they have been on
the job for some time, there is a need to evaluate their performance through
______________. (Fill up the blank with correct answer)

18. ___________ means evaluating an employee's current and/or past performance

as against certain pre-determined standards.
(Choose the correct alternative)

(a) Controlling (b) Supervision (c) Control by exception

(d) Performance appraisal

19. The performance appraisal process includes:

(Choose the correct alternative)

(a) Defining the job (b) Evaluating performance(c) Providing feedback (d)
All of these

20. "It becomes necessary for all organisations to address career related issues and
promotional avenues for their employees. Managers must encourage employees to
grow and realise their full potential."

Which of the following concept is highlighted above? (Choose

the correct alternative)

(a) Training and development (b) Promotion and career

planning

(c) Directing (d) Motivation

21. In different organisations, there are different ways to prepare pay plans for their
employees depending on the net worth of the job. Basically the price of the job
needs to be determined. One of the step of one of the functions of management is
highlighted in the above para.

Identify the step.

22. Which of the following is not a direct financial payment as a part of

compensation given to employees?

(Choose the
correct alternative)

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(a) Wages and salaries (b) Incentives (c) Commission (d)
Employer paid vacations

23. Match the following:

(i) Payment of wages/salary either daily, (a) Performance based direct

weekly or monthly or annually financial payment
(ii) Payment of wages/salary and salary (b) Time based direct financial
according to piece work payment
(iii) Commission and bonuses. (c) Direct financial payments
(iv) Employer paid insurance (d) Indirect financial payment

24. Yashraj is a HR manager in Piyush Constructions Ltd. He is paid an annual salary

of 10 lakh. He is also given company shares at a price less than the market price.

Which of the following method of compensation is used by company to pay to its HR

manager?
(Choose the correct alternative)

(a) Time based direct financial payment

(b) Performance based direct financial payment

(c) Time based pay plus incentives

(d) Time based pay as well as performance based financial incentive.

25. Roshni is an employee of Gloriya Life Insurance Ltd., who gets an annual salary of
8 lakh. As per the contract of employment, Roshni has a target business turnover of 1
crore per month. She gets turnover 10% commission if the turnover exceeds 1 crore
in any month. As a company policy, all the employees get medical aid and education
to the children. Which of the following pay plan is highlighted above?
(Choose the correct alternative)

(a) Time based direct financial payment

(b) Performance based direct financial payment

(c) Time based pay as well as performance based financial incentives

(d) Time based pay plus incentives

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26. Enumerate any four factors, other than time based and performance based,
which also influence the design of any pay plan.

27. Enumerate any two factors that need to be kept in mind which influence the way
recruitment, selection and training will be actually carried out.

28. Which of the following is not a component of staffing? (Choose

the correct alternative)

(a) Recruitment (b) Advertising (c) Selection (d)

Training

29. While designing the organisational structure, managers undertake an analysis of

the decisions and the decision-making levels, activities as well as relationship among
them with a view to evolving the horizontal and vertical dimensions of the structure.
Thus, various job positions are created. Clearly, performance of each job necessitates
the appointment of a person with a specific set of educational qualifications, skills,
prior experience and so on.

Identify the step of staffing function of management highlighted above.

30. "It covers not only those activities which improve job performance but also those
which bring about growth of the personality, help individuals in the progress towards
maturity and actualisation of their potential capacities so that they become not only
good employees but better men and women."

Identify the step of staffing process highlighted above.

31. "What people seek is not simply a job but a career. Everyone must have the
opportunity to rise to the top. The best way to provide such an opportunity is to
facilitate employee learning."

Identify the step involved in the staffing process highlighted in the above statement.

32. Match the following aspects of staffing:

(a) Identifying and attracting prospective (i)

employees. Recruitment
(b) Assessment, evaluation and final match. (ii) Training
(c) Acquainting and skill development. (iii) Selection

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33. "Some learning opportunities are designed and delivered to improve skills and
abilities of employees whereas some others are designed to help in the growth of
individuals in all respects." Identify the two concepts.

34. ________________ means determining the number and types of personnel

required to fill various positions in the organisation.
(Choose the correct alternative)

(a) Recruitment (b) Selection (c) Staffing (d) Human

Resource Planning

35. _________________ seeks to attract suitable candidates to apply for available

jobs.
(Choose the correct alternative)

(a) Human resource planning (b) Orientation (c) Recruitment

(d) Selection

36. __________________ is the process of learning and growth.

(Choose the correct alternative)

(a) Training (b) Education (c) Development (d) None of these.

37. __________________ refers to the learning opportunities designed to help the

employees to grow. It involves the growth of the individuals in all respect like
personality, maturity, etc. (Choose the correct alternative)

(a) Training (b) Development (c) Education (d) Selection

38. Name the concept related to: (i) searching for qualified people. (ii) discovering
the most suitable candidate to fill the vacant Job position.

39. Which of the following option is correct:

1. Recruitment is a positive step.

2. Selection is a negative step.

3. Both recruitment and selection are part of staffing.

(a) 1 is correct (b) 2 is correct (c) Both 1 & 2 are correct (d)
All are correct

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 Objective Type Questions 6.3

1. The practice of direct recruitment is followed usually for: (Choose

the correct alternative)

(a) Casual vacancies of unskilled or semi-skilled jobs.

(b) Senior positions of industry as well as commerce.

(c) Recruiting technological, professional and managerial personnel.

(d) Highly educated people.

2. The practice of direct recruitment is suitable for filling casual vacancies of unskilled
or semi-skilled jobs when ____________________.
(Complete the sentence)

3. Many reputed business organisations keep a database of unsolicited applicants in

their offices. A list of such job seekers can be prepared and screened to fill the
vacancies as they arise. The method of recruitment described is:
(Choose the correct alternative)

(a) Transfers (b) Direct recruitment (c) Campus recruitment (d) Casual
callers

4. Most of the senior positions of industry as well as commerce are filled by this
method of recruitment:
(Choose the correct alternative)

(a) Promotions (b) Advertisement (c) Employment exchange (d)

Campus recruitment

5. The disadvantage of using advertisement for recruitment of employees is that

________________.
(Complete the sentence)

6. Employment exchange run by the government are regarded as a good source of

recruitment for:
(Choose the correct alternative)

(a) Casual vacancies of unskilled or semi-skilled jobs.

(b) Filling the senior positions of industry as well as commerce

(c) Unskilled and skilled operative jobs.

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(d) Technical, professional and managerial jobs.

7. Transfer' Involves shifting of an employee from _______________.

(Choose the correct alternative)

(a) One job to another (b) One department to another (c) One shift to another
(d) All of these

8. Transfer involves change in salary also.

(True/False)

9. Match the following:

(i) A horizontal movement of employees (a) Promotion

(ii) A vertical shifting of employees (b) Transfer

10. Promotion helps to improve the motivation and satisfaction level of employees. It
has a great psychological impact over the employees because
____________________. (Complete the sentence)

11. Internal recruitment is a more reliable way of recruitment since

_______________. (Complete the sentence)

12. Which of the following is not a limitation of internal sources of recruitment?

(Choose the correct alternative)

(a) It reduces the productivity of the organisation.

(b) Spirit of competition among the employees may be hampered.

(c) The employees may become lethargic

(d) It is cheaper.

13. An enterprise has to tap external sources of recruitment for various positions
because ______________.
(Complete the sentence)

14. The disadvantage of using employment exchange run by the government is that
_______________.
(Complete the sentence)

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15. Placement agencies, as a method of recruitment are very useful where
________________.
(Complete the sentence)

16. ___________________ specialise in middle level and top level executive

placements.
(Choose the correct alternative)

(a) Campus recruitment (b) Employment

exchange

(d) Placement agencies (c) Management

Consultants

17. For recruitment of technical, professional and managerial personnel,

_________________ is most suitable.
(Choose the correct alternative)

(a) Advertisement (b) Campus recruitment

(c) Management consultants (d) Both (b) and (c)

18. Aastha Ltd, a cellular network company, approached Quick Consultants Pvt. Ltd.
for recruitment of top level executive placements Quick Consultants Pvt. Ltd.
advertised the jobs on www.naukri.com on behalf of Aastha Ltd. The recruitment
method followed by Aastha Ltd is: (Choose the correct
alternative)

(a) Advertisement (b) Management consultants

(c) Placement agencies (d) Web-publishing

19. ________________ maintain data bank of persons with different qualifications

and skills and even advertise the jobs an behalf of their clients to recruit right type of
personnel.
(Fill in the blanks with correct method of recruitment)

20. ________________ provide a nationwide service in matching personnel demand

and supply. They compile bio-data of a large number of candidates and recommend
suitable names to their clients. They charge fee for their services. They can even
entice the needed top executives from other companies by making the right offers.

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 (Choose the
correct alternative)

(a) Management consultants (b) Placement agencies

(c) Recommendation of employees (d) Labour contractors

21. Recruitment from educational institutions, such as vocational schools,

universities, colleges, institutes of management and technology, etc. of business for
recruitment of (i) ______________ jobs. This is referred to as (ii)
_________________. (Fill in the blanks
with correct answers)

22. Applicants introduced by present employees, or their friends and relatives may
prove to be a good source of recruitment. Such applicants are likely to be good
employees because _________________.
(Complete the sentence)

23. _______________ maintain close contacts with labourers and they can provide
the required number of unskilled workers at short notice. (Fill in
the blanks with correct method of recruitment)

24. Recruitment from external sources is a lengthy process because

_______________. (Complete the sentence)

25. The disadvantage of using labour contractors for recruitment of unskilled workers
at short notice is that ________________.
(Complete the sentence)

26. Divya Ltd. advertised its vacancies on the website www.jobseekers.com. The
method of recruitment used by the company is ___________________.
(Fill in the blank with correct answer)

27. Which of the following is not a limitation of external sources of recruitment?

(Choose the correct alternative)

(a) Competitive spirit (b) Dissatisfaction of existing staff

(c) Lengthy process (d) Costly process

28. External recruitment may lead to dissatisfaction and frustration among existing
employees because ______________.
(Complete the sentence)

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29. Recruitment from external sources is a very costly process because
________________.
(Complete the sentence)

30. Which of the following is not an internal source of recruitment? (Choose

the correct alternative)

(a) Transfers (b) Promotions (c) Labour contractor (d)

None of these

31. Which of the following is an external source of recruitment?

(Choose the correct alternative)

(a) Media advertising (b) Employment exchange

(c) Placement agencies (d) All of these

32. Which of the following is not an advantage of external source of recruitment?

(Choose the correct alternative)

(a) Fresh talent (b) Competitive spirit (c) Wider choice (d)
Motivates employees.

33. Name any two methods of recruitment suitable to recruit technical, professional
and managerial personnel.

34. Match the following:

(i) A company gets applications on and off even without (a) Direct
declaring any vacancy. However, as and when the vacancy recruitment
arises, the company makes use of such applications.
(ii) Casual vacancies of unskilled or semi-skilled jobs when there (b) Advertisement
is a rush of order or when some permanent workers are absent.
(ii) Recruitment by which most of the senior positions of the (c) Casual callers
industry as well as commerce are filled.

35. Which source of external recruitment is ideal for a manufacturing organisation?

Why?

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36. A company gets application on and off even without declaring any vacancy.
However, as and when the vacancy arises, the company makes use of such
applications. Name the source of recruitment used by the company.

37. Name the most common method of recruitment of employees.

(CBSE 2013)

38. Which of the following is not an external source of Recruitment?

(Choose the correct alternative)

(a) Transfer (b) Advertisement (c) Employment exchange (d) Placement agencies

Case Studies Analysing, Evaluating & Creating Type

Questions

Q1. A company is manufacturing paper plates and bowls. It produces 1,00,000 plates
and bowls per day. Due to local festival there is a rush of work and some permanent
workers have gone to their villages. The company got an urgent order of extra 50,000
plates and bowls per day.

Advise how the company will fulfill its order and which method of recruitment would
you suggest. (3 marks)

Ans. To fulfill the urgent order of extra 50,000 plates and bowls per day the company
should follow the recruitment step of the staffing process. The suitable method of
recruitment is 'direct recruitment' (an external source of recruitment).
(Explain)

Q2. Zenith Ltd. is a highly reputed company and many people wanted to join this
company. The employees of this organisation are very happy and they discussed how
they came in contact with this organisation.

Aman said that he was introduced by the present Sales Manager, Mr. John.

Benu said that he had applied through the newspaper and was appointed as H.R
Manager.

Vaibhav said that he was neither related to any of the employee of the organisation
nor there was any advertisement in the newspaper even then he was directly called
from IIM, Ahmedabad from where he was about to complete his MBA.

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(a) The above discussion is indicating an important function of management. Name
the function of management

(b) The management function identified in part (a) follows a particular process.
Explain the step of this process which is being discussed in the above para.

(c) Identify the sources of the step identified in part (b) by quoting the lines from the
above para. (6 marks)

Ans. (a) Staffing

(b) Recruitment
(Explain)

(c) Recommendations of employees: "Aman said that he was introduced by the

present Sales manager, Mr. John." Advertisement: "Benu said that he had applied
through the newspaper and was appointed as H.R Manager." Campus recruitment:
"Vaibhav was directly called from IIM Ahmedabad from where he was about to
complete his MBA."

Q3. There were two vacancies for the post of Assistant Manager in 'Gyan Electrics
Private Ltd. 'Parth' the Human Resources Manager identified one suitable candidate
'Vishwas' from within the organization and promoted him to the post of Assistant
Manager. For another post, the Manager 'Parth' took help of a placement agency
and selected 'Saleem'. After six months, Parth observed that ‘Vishwas' performance
was much better than Saleem's performance though 'Vishwas' was less qualified
than ‘Saleem’. Hence, ‘Parth’ decided that in future he will not make any
appointment with the help of an outside source.

Explain any four reasons on the basis of which 'Parth' would have taken the above
decision.
(CBSE 2018) (6 marks)

Ans. Reasons on the basis of which ‘Parth' would have taken the decision not to
make appointment with the help of an outside source are: (Explain
any four advantages of internal sources of recruitment)

Q4. Himesh is working as a supervisor in a company. Due to his hard work, he is

promoted to the post of Production Manager. Now the post of supervisor is vacant
and no one can be transferred or promoted to this post. Name the source of
recruitment the company will use to fill up this post. (1
mark)

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Ans. External source of recruitment

Q5. Max Industries wants to hire staff for its Chemicals division. The Human
Resource Department lists out the following methods of recruitment. Identify the
source of recruitment indicated in the given cases.

(i) Consider voluntary applications received earlier from various job-seekers.

(ii) Using www.naukri.com to search for prospective candidates.

Ans. (i) Casual Callers (ii) Web Publishing

(1 mark)

Q6. Giridhar Ltd. is a highly reputed company. The employees of this organisation
discussed how they came in contact with this organisation. Reena said she was
introduced by the Purchase Manager, Mr. John. Indu said she was directly called by
the company from her IIM institute. Identify the different sources of recruitment.
(1 mark)

Ans. Reena - Recommendations of employees; Indu Campus recruitment

Objective Type Questions 6.4

1. The selection process may continue even after the offer of employment,
acceptance and joining of the candidate. It is so because _____________.
(Complete the sentence)

2. The selection process ends after the offer of employment through a contract of
employment.
(True/False)

3. ______________ helps the manager eliminate unqualified or unfit. Job seekers

based on the information supplied in the application forms.
(Fill in the blank with correct answer)

4. Match the following:

(i) An indicator of a person's learning ability (a) Intelligence

test
(ii) To judge the involvement of a person (b) Aptitude
test

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(ii) To measure the level of knowledge and proficiency in the area (c) Trade test
of professions or technical training
(iv) indicates the person's capacity to develop (d) Interest
tests

5. Intelligence test in a measure of individual's potential for learning new skills.

(True/False)

6. _______________ is a measure of individual's potential for learning new skills.

(Fill
in the blank with correct answer)

7. ______________ are good indices of a person's future success score. (Fill in the
blank with correct answer)

8. Aptitude tests are used to measure the level of intelligence quotient (IQ) of an
individual. (True/False)

9. ________________ is one of the important psychological tests used to measure

the level of IQ of an individual.
(Choose the correct alternative)

(a) Trade test (b) interest test (c) Aptitude test (d)
intelligence test

10. Personality tests are difficult to design and implement because

_______________.

11. _______________ measure the existing skills of the individual. They measure the
level of knowledge and proficiency in the areas of professions of technical training.

(a) Intelligence tests (b) Aptitude test (c) Trade test (d) Interest test

12. _______________ are used to know the pattern of interests or involvement of a

person.

13. The difference between aptitude test and trade test is that the ______________
measures the actual skills possessed. Whereas _______________ the potential to
acquire skills.

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14. _____________ is a formal, in-dept conversation conducted to evaluate the
applicant's suitability for the job. (Fill in the blanks with
correct step of the selection process of employees)

15. After the selection decision and before the job offer is made, the candidate is
required to undergo a ____________.

16. After the job offer has been made through a ___________________ and
candidate accepts the offer, certain document need to be executed by the employer
and the candidate. One such document is _______________ which contains viral
details about the candidates, which are authenticated and attested by him/her. It is a
valid record for future reference.

17. __________________ includes job title, duties, responsibilities, date when

continuous employment starts and the basis for calculating service, rates of pay,
allowances, hours or work, leave rules, termination of employment, etc.

18. Which of the following is not a selection test?

(a) Intelligence test (b) Aptitude test (c) Trade test (d) Medical fitness test

19. Match the following:

(i) An interior decorator (a) intelligence test

(ii) A computer operator (b) Trade test
(iii) A public dealing officer (c) Interest test
(iv) A school teacher (d) Personality test

20. It is the process of differentiating between applicants in order to identify and hire
those with a greater likelihood of success in job. Identify it.

21. Star Industries is conducting the following tests to select the most suitable
candidate out of the various applicants, Identify the selection test highlighted in each
case.

(i) This test is conducted to determine actual skills possessed by the candidate.

(ii) This text aims to measure the IQ level of the applicant.

Case Studies Analysing, Evaluating & Creating Type Questions

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1. Mr. Murthy is the Human Resource Manager of Jai Hind Hospital in Vellore. He has
to appoint nurses for the hospital. Since patients in the hospital are of different
types, he wants to find out the candidates' maturity and emotions in dealing with the
patients. He also wants to know about the candidates' ability to make decisions.

Explain two types of tests that Mr. Murthy can use to meet his requirements.
(CBSE 2017) (4 marks)

Ans. Two types of tests that Mr. Murthy can use to meet his requirement are: )

(i) Personality Test (ii) Intelligence Test

(Explain)

2. Nishant, the director of a garments company, is planning to manufacture bags for

the utilisation of waste material from one of his garments units. He has decided that
this manufacturing unit will be set up in a rural area of Odisha where people have
very few job opportunities and labour is available at very low rates. He has also
thought of giving equal opportunities of men and women. For this he wants four
different heads for Sales, Accounts, Purchase and Production. He gives an
advertisement and shortlists ten candidates per post after conducting different
selection tests. Identify and state the next three steps for choosing the best
candidate out of the candidates short listed.
(CBSE 2013) (3 marks)

Ans. The next three steps for choosing the best candidate are:

(a) Employment interview (b) Reference and background checks (c) Selection
decision (Explain)

3. A public transport corporation has hired 2000 buses for the different routes for
the passengers of metropolitan city. In order to fill vacancies, it advertised in the
newspaper and number of applicants applied for the same. The company has to now
undertake the process of selection to identify and select the best. Explain the first six
steps involved in the process.
(CBSE 2018) (6 marks)

Ans. (Explain the first six steps involved in the selection process of employees.)

Objective Type Questions 6.5

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1. The importance of employee training has increased as __________________.
(Complete the sentence)

2. Which one of the following is not a benefit of training to an organisation?

(Choose the correct alternative)

(a) Enhances employee productivity (b) Equips the future manager

(c) Increases employee turnover (d) Reduction in wastage of efforts

and money

3. Which of the following is not a benefit of training and development to the

employees?
(Choose the correct alternative)

(a) Increased performance help to earn more (b) Enhances employee

productivity

(c) More efficient to handle machines (d) Increases the satisfaction

and morale of employees

4. Match the following:

(i) It is to enable the employee to do the job (a) Training

better
(ii) It is to enable the overall growth of the (b)
employee Development

5. Match the following:

(i) It is career-oriented process (a) Training

(ii) It is a job-oriented process (b)
Development

6. ______________ is a process of learning new skills and application of knowledge.

(Training/Development)

7. _______________ attempts to improve the performance of employees on the

current job or prepare them for any intended job. (Training/Development)
(Fill in the blank with correct option)

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8. ________________ covers not only those abilities which improve job performance
but also those which bring about growth of the personality, help individuals in the
progress towards maturity and actualisation of their potential capacities so that they
become not only good employees but better men and women.
(Fill in the blank with
correct option)

9. _______________ are designed to acquire a higher level of skill. People seeking to

enter skilled jobs, to become, for example, plumbers, electricians or iron-workers,
are often required to undergo such training.
(Fill in the blank with correct answer)

10. This is a method of training in which actual work environments are created in a
classroom and employees use the same materials, files and equipment. This is
usually done when employees are required to handle sophisticated machinery and
equipment. (Choose the correct
alternative)

(a) Apprenticeship programmes (b) Internship training

(c) Vestibule training (d) Induction training

11. This is a training method in which selected candidates carry on regular studies for
the prescribed period. They also work in some factory or office to acquire practical
knowledge and skills. (Choose the correct alternative)

(a) Apprenticeship programmes (b) Internship training

(c) Vestibule training (d) Induction training

12. Match the following:

(i) Introductory training programme to introduce the selected (a) Apprenticeship

employee to other employees and familiarise him/her with the programmes
rules and policies of the organisation
(ii) It is a joint programme of training in which educational (b) Internship
institutions and business firms cooperate. training
(iii) Employees learn their jobs on the equipment they will be (c) Vestibule
using but the training is conducted away from the actual work training
floor.
(iv) The trainee works under the guidance of a master worker or (d) Induction
an experienced guide, or trainer for a prescribed period. training

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13. The workers of a factory are unable to work on new machines and always
demand for help of supervisor. The Supervisor is overburdened with their frequent
calls.

Suggest the remedy.

14. The quality of production is not as per standards. On investigation it was

observed that most of the workers were not fully aware of the proper operation of
the machinery.

What could be the way to improve the quality of production to meet the standards?

15. The workers of a factory remain idle because of lack of knowledge of hi-tech
machines. Frequent visit of engineer is made which causes high overhead charges.
The method of training by which this problem can be removed is _____________.

(a) Apprenticeship training (b) Internship training

(c) Vestibule training (d) Induction training

16. Match the following:

(i) The trainee learns under the guidance of a master (a) Internship training
worker.
(ii) Trainees learn on the equipment they will be using, but (b) Apprenticeship
training is conducted away from the actual work floor. training
(iii) Trainees work in some factory or office to acquire (c) Vestibule training
practical knowledge and skills along with regular studies.

Case Studies Analysing, Evaluating & Creating Type Questions

Q1. Blue Heavens Ltd. purchased a new hi-tech machine from Germany for
manufacturing high quality auto components in a cost effective manner. But during
the production process, the manager observed that the quality of production was
not as per standard. On investigation it was found that there was lack of knowledge
amongst the employees of using these hi-tech machines. So, frequent visit of
engineers was required from Germany. This resulted in high overhead charges.
Suggest what can be done to develop the skills and abilities of employees for
producing high quality products by using these hi-tech machines. Also state how the

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employees or the organisation will benefit from your suggestion.
(CBSE SQP 2015) (4 marks)

Ans. Training of employees (State any three benefits to the

organisation or employees)

Q2. ‘Moga Industries Ltd.' approached a well established university in the city of
Madurai to recruit qualified personnel for various technical and professional jobs.
They selected Tanya, Ritu, Garima and Chetan for various vacancies in the
organisation.

After the selection and placement, ‘Moga Industries Ltd.' felt the need to increase
the skills and abilities, and the development of positive attitude of the employees to
perform their specific jobs better. The company also realised that learning new skills
would improve the job performance of the employees. Hence, the company decided
to take action for the same.

(a) Name the step of the staffing process regarding which the company decided to
take action.

(b) State the benefits of the action to 'Moga Industries Ltd.'

(CBSE 2018) (6 marks)

Ans. (a) Training and Development. (b) Benefits of training to 'Moga Industries Ltd.’:
(Explain)

Q3. After passing his secondary school examination, David left the school at the age
of 15 years and started getting training under his father. His father, a renowned
electrician, had worked for many companies. He everyday started accompanying his
father on work and watched him carefully while working. David was a good learner
and learnt the techniques of work quickly. Now his father started passing on the
tricks of the trade to David. With the passage of time David acquired a high level skill
and became a well-known electrician in Indore. Big business-houses started calling
him for electrical-wiring.

(a) Name the method of training discussed in the above para.

(b) State any three benefits which David could get on being trained.
(CBSE 2018) (4 marks)

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Ans. (a) Apprenticeship Training (b) Benefits which David could get on being
trained: (Any three)

Q4. Ramesh has been working under the guidance of Harish, a carpenter, for the last
three years to learn the different skills of this job. Name the on-the-job method of
training Ramesh is undergoing. (1 mark)

Ans. Apprenticeship training

Q5. Manu, a Chief Manager in a company using highly sophisticated machines and
equipments, and wants that every employee should be fully trained before using the
machines and equipment. Suggest the best method of training that Manu can use for
training of the employees. (1 mark)

Ans. Vestibule Training (off-the-job method)

Check List of Objective Type Questions

Objective Type Questions 6.1

1. Staffing

2. (b) Staffing

3. False: It is only in case of a new enterprise that the staffing function follows the
planning and organising functions. However, in an existing enterprises, staffing is a
continuous process because new jobs may be created and some of the existing
employees may leave the organisation

4. New job may be created and some of the existing employees may leave the
organisation.

5. Human resources are the foundation of any business the right people can help to
take a business to the top the wrong people can break the business.

6. (i) Rapid advancement of technology, (ii) Increasing size of organisation, and (iii)
Complicated behaviour of human beings.

7. Staffing

8. The succession planning for managers

9. Objective assessment and fair reward for their contribution

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10. If right kind of employees are not available it will lead to wastage of material,
time, effort and energy, resulting in lower productivity and poor quality of product.
The enterprises will not be able to sell its products profitably.

11. Staffing function is closely linked to organising since after the organisation
structure and positions have been decided, people are required to work in these
positions. Subsequently, they need to be trained and motivated to work in harmony
with the goals of the organisation.

12. It includes filling and keeping filled the positions in the organisation structure,
which is considered to be the outcome of the organising process.

13. Staffing

14. Human resources department

15. (d) All of these

16. Staffing

Objective Type Questions 6.2

1. Staffing

2. On the basis of various job positions created while designing the organisation
structure.

3. (i)-(b), (ii)-(a), (iii)-(d), (iv)-(c)

4. Whether the organisation is understaffed, over staff or optimally staffed.

5. False: Neither under-staffing nor over-staffing is a desirable situation.

6. Employee removal or transfer elsewhere.

7. Recruitment

8. To translate the manpower Recruitments into specific job description and the
desirable profile of its occupant - the desired qualifications, experience, personality
characteristics, etc. This information becomes the base for looking for potential
employees.

9. Recruitment

10. (i) Selection (ii) Recruitment

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11. Recruitment, Selection

12. Recruitment

13. Employment contract

14. Training

15. (c) Both(a) and (b)

16. (i) In-house training centers

(ii) Forged alliances with training and educational institutes

17. Performance appraisal

18. (d) Performance appraisal

19. (d) All of these

20. (b) Promotion and career planning.

21. 'Compensation’ - a step of staffing process

22. (d) Employer paid vacations

23. (i)-(b), (ii)-(a), (iii)-(c), (iv)-(d)

24. (c) Time based pay plus incentives

25. (c) Time based pay as well as performance based financial incentives

26. Legal factors (labour laws), labour union, company policy and equity' principle

27. (i) Supply and demand of specific skills in the labour market

(ii) Unemployment rate

(iii) Labour market conditions

(iv) Legal and political considerations

(v) Company's image, policy

(vi) Human resource planning cost

(vii) Technological development

(viii) General economic environment

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28. (b) Advertising

29. Estimating the manpower requirements

30. Training and development

31. Training and Development

32. (a)-(i), (b)-(iii), (c)-(ii)

33. Training: 'Some learning opportunities are designed and delivered to improve
skills and abilities of employees.’

Development: Some others are designed to help in the growth of individuals in all
respects’

34. (d) Human Resource Planning

35. (c) Recruitment

36. (c) Development

37. (b) Development

38 (i) Recruitment (ii) Selection

39. (d) All are correct

Objective Type Questions 6.3

1. (a) Casual vacancies of unskilled or semi-skilled jobs.

2. There is a rush or work or some permanent workers are absent.

3. (d) Casual callers

4. (b) Advertisement

5. It may bring in a flood of response, and many times, from quite unsuitable
candidates.

6. (c) Unskilled and skilled operative jobs

7. (d) All of these

8. False: Transfer may lead to changes in duties and responsibility working condition
etc. but not necessarily salary.

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9. (i)-(b), (ii)-(a)

10. a promotion at the high level may lead to a chain of promotions at lower levels in
the organisation.

11. the candidates are already known to the organisation

12. (d) It is cheaper.

13. all the vacancies cannot be filled through internal recruitment. The existing staff
may be insufficient or they may not fulfill the eligibility criteria of the jobs to be filled.
Or, External recruitment provides wide choice and brings new blood in the
organisation.

14. the records of employment exchange are offer not up to date and many of the
candidates referred by them may not be found suitable

15. extensive screening is required; they can entice the needed top executives from
other companies by making the right offers

16. Management consultants

17. (d) Both (b) and (c)

18. (b) Management consultants

19. Management consultants.

20. (b) Placement agencies

21. (i) technical, professional and managerial jobs.

(ii) Campus recruitment.

22. their background is sufficiently known ; the present employees know both the
company and the candidates and they would try to satisfy both.

23. Labour contractors

24, the business has to notify the vacancies and wait for applications to initiate the
selection process.

25. since the labour contractors are themselves employees of the organisation,
therefore, if the contractor himself decides to leave the organisation, all the workers
employed through him will follow suit

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26. Web publishing

27. (a) Competitive spirit

28. they may feel that their chances of promotion are reduced

29. a lot of money has to be spent an advertisement and processing of applications.

30. (c) Labour contractor

31. (d) All of these

32. (d) Motivates employees

33. (i) Management consultants

(ii) Campus recruitment.

34. (i)-(c), (ii)-(b), (iii)-(a)

35. Advertisement, because it has wider choice to recruit and select most of the
senior position of industry and commerce. More information about the organisation
and job can be given in the advertisement.

36. Casual Callers

37. Advertisements through newspapers, journals, televisions, etc.

38. (a) Transfer

Objective Type Questions 6.4

1. Selection process, like any other managerial decision, involves judgement about
the performance potential of the candidate. The effectiveness of the selection
process would ultimately be tested in terms of on-the-job of the chosen person

2. False, involves judgement about the performance potential of the candidate. The
effectiveness of the selection process would ultimately be tested in terms of on-the-
job of the chosen person.

3. Preliminary screening

4. (i)-(a), (ii)-(d), (iii)-(c), (iv)-(b)

5. False

6. Aptitude test

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7. Aptitude tests

8. False

9. (d) Intelligence test

10. these tests prove the overall personality of the candidate: They provide clues to a
person's emotions, reactions, maturity and value system etc.

11. (c) Trade test

12. Interest tests

13. Trade rest, Aptitude test

14. Employment interview

15. medical examination/medical fitness test

16. Letter of appointment, The attestation form

17. Employment contract

18. (d) Medical fitness rest

19. (i)-(c), (ii)-(b), (iii) (d), (iv)-(a)

20. ‘Selection' is the process being referred to in the statement.

21. (i) Trade Test (ii) Intelligence Test

Objective Type Questions 6.5

1. jobs have become more complex

2. (c) Increases employee turnover

3. (b) Enhances employee productivity

4. (i)-(a), (ii)-(b)

5. (i)-(b), (ii)-(a)

6. Training

8. Development

7. Training

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9. Apprenticeship programmes

10. (c) Vestibule training

11. (b) Internship training

12. (i)-(d), (ii)-(b), (iii)-(c), (iv)-(a)

13. Training of workers

14. Training of workers

15. (c) vestibule training

16. (i)-(b), (ii)-(c), (iii)-(a)

CHAPTER 6 STAFFING

Multiple Choice Questions (MCQS)

1. 'In an interview with a leading news channel, Mr. Rakesh Kwatra, CEO of 'Get My
Job' has suggested that the Companies which want more and more people to apply
for jobs in their organisation should make the process for applying for jobs easier and
candidate friendly.’ Name the next two steps which follow the step, in the process of
the function of management being discussed above.

(a) Recruitment; Selection

(b) Selection; Placement and Orientation

(c) Placement and Orientation; Training and Development

(d) Training and Development; Performance Appraisal

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2. Using external sources for filling vacant positions:

(i) Gives a wider choice.

(ii) Simplifies the process of selection.

(iii) Instils a competitive spirit among the existing employees.

(iv) Does not infuse fresh talent in the organisation.

Choose the correct option from the following:

(a) (i) and (ii) (b) (i) and (iii) (c) (i), (ii) and (iv) (d) (ii) and (iv)

3. ______________ test is a measure of an individual's potential for learning new

skills.

(a) Personality (b) Aptitude (c) Intelligence (d)

Interest

4. Which of the following statement is true?

(a) Transfer involves change in salary also.

(b) The selection process ends after the offer of employment through a contract of
employment.

(c) Aptitude tests are used to measure the level of intelligence quotient (IQ) of an
individual.

(d) None of the above

5. ______________ is that part of the process of management which is concerned

with obtaining utilising and maintaining a satisfactory and satisfied workforce.

(a) Organising (b) Staffing (c) Directing (d) Motivation

6. Staffing is a continuous process because _________________.

(a) New jobs may be created and some of the existing employees may leave the
organisation.

(b) Once the number and types of personnel to be selected is determined,

management starts with the activities relating to recruiting, selecting and training
people, to fulfill the requirements of the enterprise.

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(c) After deciding what is to be done, how it is to be done and after creation of the
organisation structure, the management is in a position to know the human resource
requirements of the enterprise at different levels.

(d) All the above

7. Staffing is the most fundamental and critical drive of organisational performance

because ______________.

(a) Staffing recognises the importance of every single person employed by an

organisation as it is the individual worker, who is the ultimate performer.

(b) Staffing is a continuous process because new jobs may be created and some of
the existing employees may leave the organisation.

(c) Human resources are the foundation of any business the right people can help to
take a business to the top the wrong people can break the business.

(d) All the above

8. The staffing function has assured greater importance these days because of
_____________.

(a) Rapid advancement of technology

(b) Increasing size of organisation

(c) Complicated behaviour of human beings

(d) All of these

9. Staffing ensures the continuous survival and growth of the enterprise through
________________.

(a) Competent personnels for various jobs

(b) Right person on the right job

(c) Job satisfaction and morale of employees

(d) The succession planning for managers

10. Staffing improves job satisfaction and morale of employees through

________________.

(a) Competent personnels for various jobs

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(b) Objective assessment and fait reward for their contribution

(c) Right person on the right job

(d) The succession planning for managers

11. _____________ function of management deals with the human element of

management.

(a) Organising (b) Staffing (c) Directing (d) Motivation

12. Operationally, understanding the manpower requirements would necessitate

workload analysis on the one hand and workforce analysis on the other. Such an
exercise would reveal _________________.

(a) the number and types of human resources necessary for the performance of
various jobs and accomplishment of organisational objectives.

(b) the number and type available.

(c) whether we are understaffed, overstaffed or optimally staffed.

(d) All the above

13. A situation of over staffing somewhere in an organisation would necessitate

__________________.

(a) Employee removal (b) Transfer elsewhere

(c) Either (a) or (b) (d) Neither (a) nor (b)

14. A situation of under staffing would necessitate the starting of the ____________
process.

(a) Recruitment (b) Selection (c) Training (d) None of

these

15. The _________________ step of staffing process involves locating the potential.
Candidate and inviting them to apply for the job in the organisation.

(a) Recruitment (b) Selection (c) Training (d) None of

these

16. ________________ is the process of choosing from among the pool of the
prospective job candidates developed at the stage of ________________________.

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(a) Recruitment; Selection (b) Selection; Recruitment

(c) Recruitment, Training and Development (d) Selection; Training and

Development

17. In the staffing process _______________ precedes the _________________ of a

right candidate for the given position in the organisation.

(a) Recruitment; Selection (b) Selection Recruitment

(c) Recruitment; Training and Development (d) Selection; Training and

Development

18. ___________________ seeks to attract suitable applicants to apply for available

jobs.

(a) Recruitment (b) Selection (c) Training (d) None of

these

19. After the employees have undergone a period of training and they have been on
the job for some time, there is a need to evaluate their performance through
__________________.

(a) Placement and Orientation (b) Training and Development

(c) Performance appraisal (d) Promotion and Career Planning

20. The practice of direct recruitment is suitable for filling casual vacancies of
unskilled or semi-skilled jobs when ______________.

(a) There is a rush of work (b) Some permanent workers are

absent

(c) Either (a) or (b) (d) Neither (a) nor (b)

21. _______________ maintain data bank of persons with different qualifications

and skills and even advertise the jobs an behalf of their clients to recruit right type of
personnel.

(a) Employment exchanges (b) Labour contractors

(c) Management consultants (d) Placement Agencies

22. Recruitment from educational institutions, such as vocational schools,

universities, colleges, institutes of management and technology, etc. of business for

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recruitment of technical, professional and managerial jobs. This is referred to as
___________________.

(a) Employment exchanges (b) Campus recruitment

(c) Web publishing (d) Direct recruitment

23. _______________ maintain close contacts with labourers and they can provide
the required number of unskilled workers at short notice.

(a) Employment exchanges (b) Labour contractors

(c) Management consultants (d) Placement Agencies

24. Divya Ltd. advertised its vacancies on the website www.jobseekers.com. The
method of recruitment used by the company is _____________________.

(a) Employment exchanges (b) Campus recruitment

(c) Web publishing (d) Direct recruitment

25. Neel Madhav is the owner of a high-tensjon tower manufacturing company. The
company has six office staff, four supervisors., three contractors and some
permanent labourers. Whenever he gets a big project, he hires the required number
of unskilled workers at short notice,. The source of recruitment used by Neel Madhav
to hire unskilled workers is:

(a) Placement Agencies and Management Consultants (b) Casual callers

(c) Labour contractors (d) Advertisement

26. ________________ helps the manager eliminate unqualified or unfit job seekers
based on the information supplied in the application forms.

(a) Preliminary screening (b) Selection Tests

(c) Employment interview (d) Medical Examination

27. _____________ is a measure of individual's potential for learning new skills.

(a) Intelligence Test (b) Aptitude Test

(c) Interest Test (d) Personality Test

28. _______________ are good indices of a person's future success score.

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(a) Intelligence Tests (b) Aptitude Tests

(c) Interest Tests (d) Personality Tests

29. ______________ are used to know the pattern of interests or involvement of a

person.

(a) Intelligence Tests (b) Aptitude Tests

(c) Interest Tests (d) Personality Tests

30. _______________ is a formal, in-dept conversation conducted to evaluate the

applicant's suitability for the job.

(a) Preliminary screening (b) Selection Tests

(c) Employment interview (d) Medical Examination

31. After the selection decision and before the job offer is made, the candidate is
required to undergo a _____________.

(a) Preliminary screening (b) Selection Tests

(c) Employment interview (d) Medical Examination

32. ______________ includes job title, duties, responsibilities, date when continuous
employment starts and the basis for calculating service, rates of pay, allowances,
hours or work, leave rules, termination of employment, etc.

(a) Attestation form (b) Job offer

(c) Contract of employment (d) None of these

33. ________________ is a process of learning new skills and application of

knowledge.

(a) Training (b) Development (c) Orientation (d)

Education

34. ________________ attempts to improve the performance of employees on the

current job or prepare them for any intended job.

(a) Training (b) Development (c) Orientation (d)

Education

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35. ______________ covers not only those abilities which improve job performance
but also those which bring about growth of the personality, help individuals in the
progress towards maturity and actualisation of their potential capacities so that they
become not only good employees but better men and women.

(a) Training (b) Development (c) Orientation (d)

Education

36. __________________ are designed to acquire a higher level of skill. People

seeking to enter skilled jobs, to become, for example, plumbers, electricians or iron-
workers, are often required to undergo such training.

(a) Apprenticeship programmes (b) Internship training

(c) Vestibule training (d) Induction training

37. _______________ is the method of training in which the trainee works under the
guidance of a master worker.

(a) Apprenticeship programmes (b) Internship training

(c) Vestibule training (d) Induction training

38. ________________ is the management function to fill the role designed into the
organisation structure.

(a) Planning (b) Organising (c) Staffing (d) Directing

39. Match the following concepts of management with their respective explanations:

(A) Workforce (i) An assessment of the number of and types of human

analysis resources necessary for the performance of various jobs and
accomplishment of organisational objectives.
(B) Workload (ii) An analysis that would reveal the number and type of
anaylsis human resources available.
(C) Training (iii) Assessment, evaluation and final match.
(D) Selection (iv) Acquainting and skill development

(a) (i)-(A), (ii)-(B), (iii)-(C), (iv)-(D) (b) (i)-(B), (ii)-(A), (iii)-(C), (iv)-(D)

(c) (i)-(A), (ii)-(B), (iii)-(D), (iv)-(C) (d) (i)-(B), (ii)-(A), (iii)-(D), (iv)-
(C)

40. March the following:

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(A) Performance based direct (i) Payment of wages/salary either daily,
financial payment weekly or monthly or annually
(B) Time based direct financial (ii) Payment of wages/salary and salary
payment according to piece work
(C) Direct financial payments (iii) Commission and bonuses
(D) Indirect financial payment (iv) Employer paid insurance

(a) (i)-(A), (ii)-(B), (iii)-(C), (iv)-(D) (b) (i)-(B), (ii)-(A), (iii)-(C), (iv)-(D)

(c) (i)-(A), (ii)-(B), (iii)-(D), (iv)-(C) (d) (i)-(B), (ii)-(A), (iii)-(D), (iv)-
(C)

41. Match the following aspects of staffing:

(A) Recruitment (i) Identifying and attracting prospective

employees.
(B) Training (ii) Assessment, evaluation and final
match.
(C) Selection (iii) Acquainting and skill development.

(a) (i)-(A), (ii)-(B), (iii)-(C) (b) (i)-(B), (ii)-(C), (iii)-(A)

(c) (i)-(C), (ii)-(A), (iii)-(B) (d) (i)-(A), (ii)-(C), (iii)-(B)

42. Match the following:

(A) Direct (i) A company gets applications on and off even without
recruitment declaring any vacancy. However, as and when the vacancy
arises, the company makes use of such applications.
(B) Advertisement (ii) Casual vacancies of unskilled or semi-skilled jobs when there
is a rush of order or when some permanent workers are absent.
(C) Casual callers (iii) Recruitment by which most of the senior positions of the
industry as well as commerce are filled.

(a) (i)-(A), (ii)-(B), (ii)-(C) (b) (i)-(B), (ii)-(C), (iii)-(A)

(c) (i)-(C), (ii)-(A), (iii)-(B) (d) (i)-(A), (ii)-(C), (iii)-(B)

43. Match the following:

(A) Intelligence (i) An indicator of a person's learning ability

test

225 | P a g e
(B) Aptitude test (ii) To judge the involvement of a person
(C) Trade test (iii) To measure the level of knowledge and proficiency in the area
of professions or technical training
(D) Interest rest (iv) Indicates the person's capacity to develop

(a) (i)-(A), (ii)-(B), (iii)-(C), (iv)-(D) (b) (i)-(B), (ii)-(A), (iii)-(C), (iv)-(D)

(c) (i)-(A), (ii)-(B), (iii)-(D), (iv)-(C) (d) (iv)-(B), (i)-(A), (ii)-(D), (iii)-
(C)

44. Match Column I with Column II:

(A) Intelligence Test (i) An interior decorator

(B) Trade Test (ii) A computer operator
(C) Interest Test (iii) A public dealing officer
(D) Personality Test (iv) A school teacher

(a) (i), (ii), (iii), (iv) (b) (ii), (i), (iii), (iv)

(c) (iv), (ii), (i), (iii) (d) (iv), (iii), (ii), (i)

45. Match the method of training in Column I with explanation in Column II:

(A) Apprenticeship (i) It is a joint programme of training in which

Programmes educational institutions and business firms cooperate.
(B) Internship Training (ii) Employees learn their jobs on the equipment they
will be using but the training is conducted away from
the actual work floor.
(C) Vestibule Training (iii) The trainee works under the guidance of a master
worker or an experienced guide, or trainer for a
prescribed period.

(a) (i), (ii), (iii) (b) (ii), (i), (iii)

(c) (iii), (i), (ii) (d) (iii), (ii), (i)

46. March the method of training in Column I with explanation in Column II:

(A) Internship Training (i) The trainee learns under the guidance of a master
worker.
(B) Apprenticeship (ii) Trainees learn on the equipment they will be using,
Training but training is conducted away from the actual work

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 floor.
(C) Vestibule Training (iii) Trainees work in some factory or office to acquire
practical knowledge and skills along with regular studies.

(a) (i), (ii), (iii) (b) (ii), (i), (iii)

(c) (iii), (i), (ii) (d) (iii), (ii), (i)

47. Match the types of Selection tests in Column I with explanation in Column II:

(A) Intelligence tests (i) To measure the actual skills possessed.

(B) Aptitude rests (ii) To measure the potential to acquire skills
(C) Personality tests (iii) To judge the persons maturity and value system
(D) Trade tests. (iv) To judge the person's ability to make decision
and judgements.

(a) (i), (ii), (iii), (iv) (b) (ii), (i), (iii), (iv)

(c) (iv), (ii), (iii), (i) (d) (iv), (iii), (ii), (i)

48. Match the concept of management in Column I with explanation in Column II:

(A) Job description (i) Search for qualified people.

(B) Training and development (ii) For efficient performance and career
growth.
(C) Recruitment (iii) Analysing jobs collecting and information
about jobs.

(a) (i), (ii), (iii) (b) (ii), (i), (iii)

(c) (iii), (i), (ii) (d) (iii), (ii), (i)

49. No organisation can be successful unless it can fill and keep filled the various
positions provided for in the organisational structure with the right kind of people.
Identify the aspect of the management process highlighted above.

(a) Organisation Structure (b) Organising

(d) Coordination (c) Staffing

50. Name the part of the management process which is concerned with obtaining,
utilising and maintaining a satisfactory and satisfied workforce.

227 | P a g e
(a) Planning (b) Organising (c) Staffing (d) Directing

51. Name the function in the management process which is concerned with the
timely fulfillment of manpower requirements within an organisation.

(a) Planning (b) Organising (c) Staffing (d) Directing

52. In different organisations, there are different ways to prepare pay plans for their
employees depending on the net worth of the job. Basically the price of the job
needs to be determined. One of the step of one of the functions of management is
highlighted in the above para. Identify the step.

(a) Promotion and Career Planning (b) Compensation

(c) Performance Appraisal (d) Training and Development

53. Which of the following factors influence the design of any pay plan?

(a) Legal factors (labour laws) (b) Company policy

(c) Equity (d) All of these

54. Which of the following factors need to be kept in mind which influence the way
recruitment, selection and training will be actually carried out?

(a) Unemployment rate

(b) Supply and demand of specific skills in the labour marker

(c) Labour marker conditions (d) All of these

55. Which of the following factors need to be kept in mind which influence the way
recruitment, selection and training will be actually carried out?

(a) Legal and political considerations (b) Company's image, policy

(c) Human resource planning cost (d) All of these

56. Identify the methods of recruitment suitable to recruit technical, professional

and managerial personnel.

(a) Management consultants (b) Campus recruitment

(c) Web publishing (d) Direct recruitment

57. Which source of external recruitment is ideal for a manufacturing organisation?

228 | P a g e
(a) Advertisement (b) Campus recruitment

(c) Web publishing (d) Direct recruitment

58. A company gets application on and off even without declaring any vacancy.
However, as and when the vacancy arises, the company makes use of such
applications. Name the source of recruitment used by the company.

(a) Direct recruitment (b) Casual Callers

(c) Recommendations of employees (d) Web publishing

59. Name the most common method of recruitment of employees.

(a) Direct recruitment (b) Casual Callers

(c) Advertisements (d) Web publishing

60. It is the process of differentiating between applicants in order to identify and hire
those with a greater likelihood of success in job. Identify it.

(a) Recruitment (b) Selection

(c) Performance Appraisal (d) Training and Development

61. It is described as the managerial function of filling and keeping filled the positions
in the organisation structure. Identify it.

(a) Organisation Structure (b) Organising

(c) Staffing (d) Coordination

62. Tina is HR manager of Vipin Garments Ltd. The demand for the company's
products in on the rise, whereas the company is unable to meet the rising demand.
Tina conducts workload and workforce analysis and finds that the organisation is
under-staffed, which is the reason behind less production of output. What step or
action, Tina should undertake before starting the recruitment process?

(a) Estimating manpower requirements (b) Job description

(c) Candidate profile (d) Both (b) and (c)

63. In case the candidates are selected only on the basis of academic qualifications
and aptitude for learning they might need specific training skills. For example, if one
is selected by a business process outsourcing (BPO) unit by virtue of being extrovert
and well-versed in English speaking one needs to be trained in the relevant business
229 | P a g e
processes, telephonic conversation etiquettes as well as diction adaptation. In such a
case, after recruitment and selection, what step will come first?

(a) Placement (b) Orientation

(c) Performance Appraisal (d) Training

64. Yashraj is a HR manager in Piyush Constructions Ltd. He is paid an annual salary

of 10 lakh. He is also given company shares at a price less than the market price.
Which of the following method of compensation is used by company to pay to its HR
manager?

(a) Time based direct financial payment

(b) Performance based direct financial payment

(c) Time based pay plus incentives

(d) Time based pay as well as performance based financial incentive.

65. Roshni is an employee of Gloriya Life Insurance Ltd., who gets an annual salary of
8 lakh. As per the contract of employment, Roshni has a target business turnover of 1
crore per month. She gets turnover 10% commission if the turnover exceeds 1 crore
in any month. As a company policy, all the employees get medical aid and education
to the children. Which of the following pay plan is highlighted above?

(a) Time based direct financial payment

(b) Performance based direct financial payment

(c) Time based pay plus incentives

(d) Time based pay as well as performance based financial incentives

66. While designing the organisational structure, managers undertake an analysis of

the decisions and the decision-making levels, activities as well as relationship among
them with a view to evolving the horizontal and vertical dimensions of the structure.
Thus, various job positions are created. Clearly, performance of each job necessitates
the appointment of a person with a specific set of educational qualifications, skills,
prior experience and so on. Identify the step of staffing function of management
highlighted above.

(a) Estimating manpower requirements (b) Recruitment

230 | P a g e
(c) Selection (d) Placement and
Orientation

67. "It covers not only those activities which improve job performance but also those
which bring about growth of the personality, help individuals in the progress towards
maturity and actualisation of their potential capacities so that they become not only
good employees but better men and women." Identify the step of staffing process
highlighted above.

(a) Placement and Orientation (b) Training and

Development

(c) Performance Appraisal (d) Promotion and

Career Planning

68. "What people seek is not simply a job but a career. Everyone must have the
opportunity to rise to the top. The best way to provide such an opportunity is to
facilitate employee learning." Identify the step involved in the staffing process
highlighted in the above statement.

(a) Placement and Orientation (b) Training and

Development

(c) Performance Appraisal (d) Promotion and

Career Planning

69. "Some learning opportunities are designed and delivered to improve skills and
abilities of employees whereas some others are designed to help in the growth of
individuals in all respects." Identify the two concepts.

(a) Placement and Orientation (b) Training and

Development

(c) Performance Appraisal and Compensation (d) Promotion

and Career Planning

70. Aastha Ltd. a cellular network company, approached Quick Consultants Pvt. Ltd.
for recruitment of top level executive placements. Quick Consultants Pvt. Ltd.
advertised the jobs on www.naukri.com on behalf of Aastha Ltd. The recruitment
method followed by Aastha Ltd is:

(a) Advertisement (b) Web-publishing

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(c) Placement agencies (d) Management
consultants

71. _______________ provide a nationwide service in matching personnel demand

and supply. They compile bio-data of a large number of candidates and recommend
suitable names to their clients. They charge fee for their services. They can even
entice the needed top executives from other companies by making the right offers.

(a) Management consultants (b) Placement

agencies

(c) Recommendation of employees (d) Labour

contractors

72. The workers of a factory are unable to work on new machines and always
demand for help of supervisor. The Supervisor is overburdened with their frequent
calls. Suggest the remedy.

(a) Motivation (b)

Compensation

(c) Training of workers (d) Performance

Appraisal

73. The quality of production is not as per standards. On investigation it was

observed that most of the workers were not fully aware of the proper operation of
the machinery. What could be the way to improve the quality of production to meet
the standards?

(a) Motivation (b)

Compensation

(c) Training of workers (d) Performance

Appraisal

74. The workers of a factory remain idle because of lack of knowledge of hi-tech
machines. Frequent visit of engineer is made which causes high overhead charges.
The method of training by which this problem can be removed is
_____________________.

(a) Apprenticeship training (b) Internship training

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(c) Vestibule training (d) Induction
training

75. Biru Nandan, Chairman of Lalit group of companies founded Biru University' for
undergraduate and postgraduate courses in diverse disciplines. The Information
Technology department of the Lalit Power Ltd., had few vacancies related to Cyber
security. The Human Resource Department of the Company decided to recruit fresh
engineering graduates from 'Biru University' for the same. The source of recruitment
is _______________.

(a) Direct recruitment (b) Campus

Recruitment

(c) Employment exchange (d) Advertisement

76. The CEO of SCT Services, Rajan Gopinath's compensation includes salary,
commission and other allowances. The company also pays for his insurance and
vacations. Identify one indirect payment being made by the company to the CEO.

(a) Employer paid Insurance (b) Salary

(c) Commission (d) Allowances

77. Astra Builders has to deliver the flats to its buyers on time. Due to this there is a
sudden rush of work. Therefore, the company needs to arrange workers to work at
the sites at a short notice. The source of recruitment which may be used by the
company to tap the casual vacancy is:

(a) Direct recruitment (b)

Advertisement

(c) Recommendation of employees (d) Employment

Exchange

78. An organisation provides security services. It requires such candidates who are
reliable and don't leak out the secrets of their clients. Which step in the selection
process will help to ensure this?

(a) Personality Tests (b) Employment

Interview

(c) Reference and Background Checks (d) All of the

above

233 | P a g e
79. The workers of a factory remain idle because of lack of knowledge of hi-tech
machines. Frequent visit of engineer is made which causes high overhead charges.
How can this problem be removed?

(a) Apprenticeship programmes (b) Internship

training

(c) Vestibule training (d) Induction

training

80. Joining a job marks the beginning of socialisation of the employee at the
workplace. The employee is given a brief presentation about the company and is
introduced to his superiors, subordinates and the colleagues. He is taken around the
workplace and given the change of the job for which he has been selected. This
process of familiarisation is very crucial and may have a lasting impact on his decision
to stay and on his job performance. Identify the two concepts of one of the functions
of management highlighted above.

(a) Placement and Orientation (b) Training and

Development

(c) Performance Appraisal and Compensation (d) Promotion

and Career Planning

81. "At a time when organisation are debating the strategic importance of their
human resources, Infosys, its a consulting and software service organisation, includes
its human resources on its balance sheet to affirm their asset value"

Identify the concept of management highlighted above.

(a) Planning (b) Organising (c) Staffing (d) Directing

82. Mohan is working as a vice-president in Ashoka Ltd. He performs a separate and

specialised function having many aspects of human relations. His job is closely linked
with organising since after the structure and positions have been decided, people are
required to work in these positions. His function is seen as a generic function of
management. When he performs his duties, his role is slightly limited. The function
being performed by Mohan as the vice- president of Ashoka Ltd. is
________________.

(a) Planning (b) Organising (c) Staffing (d) Directing

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83. "Our assets walk out of the door each evening. We have to make sure that they
come back the next morning.” – Narayana Murthy, CEO of Infosys. Identify the
concept of management highlighted in the statement.

(a) Planning (b) Organising (c) Staffing (d) Directing

84. Alpha Enterprises is a company manufacturing water geysers. The company has a
functional structure with four main functions- Production, Marketing, Finance and
Human Resource. As the demand for the product grew, the company decided to hire
more employees. Identify the concept which will help the Human Resource Manager
in deciding the actual number of persons required in each department.

(a) Workload Analysis (b) Workforce Analysis

(c) Estimating manpower requirements (d) All of these

85. Bhagwati Enterprises is a company engaged in the marketing of air-conditioners

of a famous brand. The company has a functional structure with the four main
functions- Purchase, Sales, Finance and Staffing. As the demand for the product
grew, the company decided to recruit more employees. Identify the concept which
will help the Human Resource Manager to find out the number and type of
personnel available so that he could decide and recruit the required number of
persons for each department.

(a) Workload Analysis (b) Workforce Analysis

(c) Estimating manpower requirements (d) All of these

86. Mr. Murthy is the Human Resource Manager of Jai Hind Hospital in Vellore. He
has to appoint nurses for the hospital. Since patients in the hospital are of different
types, he wants to find out the candidates' maturity and emotions in dealing with the
patients. He also wants to know about the candidates' ability to make decisions.
Name two types of rests that Mr. Murthy can use to meet his requirements.

(a) Trade test (b) Personality test

(c) Aptitude test (d) Intelligence test

87. Ramesh has been working under the guidance of Harish, a carpenter, for the last
three years to learn the different skills of this job. Name the on-the-job method of
training Ramesh is undergoing.

(a) Apprenticeship training (b) Internship training

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(c) Vestibule training (d) Induction training

88. Manu, a Chief Manager in a company using highly sophisticated machines and
equipments, and wants that every employee should be fully trained before using the
machines and equipment. Suggest the best method of training that Manu can use for
training of the employees.

(a) Autocratic leadership (b) Democratic/ Participative

leadership

(c) Free-rein leadership (d) All of these

Answer Key

1. (b) 2. (b) 3. (b) 4. (d) 5. (b) 6. (d) 7. (c) 8. (d) 9. (d) 10. (b) 11. (b) 12. (c) 13. (c) 14.
(a) 15. (a) 16. (b) 17. (a)

18. (a) 19. (c) 20. (c) 21. (c) 22. (b) 23. (b) 24. (c) 25. (c) 26. (a) 27. (b) 28. (b) 29. (c)
30. (c) 31. (d) 32. (c) 33. (a)

34. (a) 35. (b) 36. (a) 37. (a) 38. (c) 39. (d) 40. (b) 41. (d) 42. (c) 43. (d) 44. (c) 45. (c)
46. (c) 47. (c) 48. (d) 49. (c)

50. (c) 51. (c) 52. (b) 53. (d) 54. (d) 55. (d) 56. (a), (b) 57. (a) 58. (b) 59. (c) 60. (b) 61.
(c) 62. (d) 63. (d) 64. (c)

65. (d) 66. (a) 67. (b) 68. (b) 69. (b) 70. (d) 71. (b) 72. (c) 73. (c) 74. (c) 75. (b) 76. (a)
77. (a) 78. (d) 79. (c) 80. (a)

81. (c) 82. (c) 83. (c) 84. (a) 85. (b) 86. (b), (d) 87. (a) 88. (c)

236 | P a g e
Case-based Multiple Choice Questions (MCQs)

CASE STUDY 1 : Read the following text and answer question no. 1-4 on the basis of
the same:

Ganesh was concerned about the sedentary lifestyle people are leading nowadays.
Their dependency on outside food is also increasing because corporate work culture
demands working till late night at offices. So, he decided to start a restaurant,
‘Healthy Eating Point’ to provide healthy food options to customers. After
completing planning and organising functions, he identified the various job positions
that are required to be filled i.e. a General Manager, an Accountant, two Chefs, two
boys for serving the food in the restaurant and three boys for home delivery of food.
He decided that his father, Karan, would be the General Manager of the restaurant.
He would be paid 50,000 per month for his services. His father requested him to
appoint his friend's son. Prem as an accountant who is well qualified for this post.
Ganesh agreed to this proposal. Earlier, Prem had a business of providing unskilled
workers to different organisations from remote areas of the country. Prem took
permission from Ganesh to continue with the old business. Ganesh happily agreed
and asked him to provide five boys for serving and delivering the food. For the
appointment of the two Chefs, Ganesh approached a renowned Hotel Management
Institute and was satisfied with the Chefs provided by the institute.

1. Identify the function of management discussed in the above case.

(a) Planning (b) Organising (c) Staffing (d) Directing

2. Identify the step of the function of management identified in Q.1, as discussed

above.

(a) Recruitment (b) Selection

(c) Placement and Orientation (d) Training and

Development

3. "His father requested him to appoint his friend's son, Prem as an accountant who
is well qualified for this post." Identify the source of recruitment highlighted above

(a) Labour Contractors (b) Direct recruitment

(c) Casual Callers (d) Recommendations of

employees

237 | P a g e
4. "For the appointment of the two Chefs, Ganesh approached a renowned Hotel
Management Institute and was satisfied with the Chefs provided by the institute."
Identify the source of recruitment highlighted above.

(a) Direct recruitment (b) Campus recruitment

(c) Management consultants (d) Casual Callers

CASE STUDY 2 : Read the following text and answer question no. 5-8 on the basis of
the same:

‘New range’ is a chain of departmental stores, in India with 56 outlets. It sells the
best products at the lowest price. The Human Resource department takes care to
select, train, motivate and retain the employees. Currently, it has 170 full time
employees and 30 part time employees. For top-level management, employees are
recruited through private consultants. These professional recruiters can entice the
needed top executives from other companies by making the right offers. Employees
appointed at the entry level are recruited through walk-in. For that, a notice is placed
on the notice board specifying the details of the jobs available. 'New range' also
encourages present employees or their friends and relatives to refer candidates.
They also visit some of the reputed educational institutions to hire some of the most
talented and promising students as its employees. "New range' shifts workforce from
surplus departments to those where there is shortage of staff instead of laying them
off.

5. Identify the function of management discussed in the above case.

(a) Planning (b) Organising (c) Staffing (d) Directing

6. Identify the step of the function of management identified in Q.5, as discussed

above.

(a) Recruitment (b) Selection

(c). Placement and Orientation (d) Training and

Development

7. “’New range’ shifts workforce from surplus departments to those where there is
shortage of staff instead of laying them off." Identify the source of recruitment
highlighted above.

(a) Transfers (b) Promotions (c) Lay off (d) Job Rotation

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8. Which of the following method/source of recruitment is not discussed in the
above case?

(a) Campus recruitment (b) Direct recruitment

(c) Casual Callers

(d) Placement Agencies and management consultants

CASE STUDY 3 : Read the following text and answer question no. 9-12 on the basis
of the same:

Xeno Ltd. is a global information technology consulting company with 45,000

employees serving over 600 clients in 23 countries. Its Chief Executive Officer, Mr
Neil Suman guided the company through two decades of diversification and growth
to emerge as one of the leading Indian companies in the software industry. The
company has set standards in ensuring the best training opportunities for its
employees.

The Project Guidance Program is a 52 day structured training program offered to all
recruits of varied backgrounds to be trained on essential behavioural and technical
skills that prepares them to work in live customer projects. These recruits are hired
from universities and management institutes for technical, professional as well as
managerial jobs. It is to help the new employees in settling down quickly into the job
by becoming familiar with the people, the surroundings, the job and the business.

9. Identify the function of management discussed in the above case.

(a) Planning (b) Organising (c) Staffing (d) Directing

10. Identify the external source of recruitment used by the company to hire new
employees.

(a) Direct recruitment (b) Campus recruitment

(c) Management consultants (d) Casual Callers

11. Identify the method of training used by the company to train employees selected
by the source of recruitment identified in Q.10.

(a) Apprenticeship programmes (b) Vestibule training

(c) Internship Training (d) Induction Training

(Orientation)

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12. Identify the ways in which the Project Readiness Program can benefit Xeno Ltd.

(a) Avoiding wastage of efforts and money as training is systematic learning, better
than hit and trial methods.

(b) Enhancing employee productivity both in terms of quantity and quality leading to
higher profits.

(c) Helping the organisation in obtaining effective response in a fast changing

environment.

(d) All the above

CASE STUDY 4 : Read the following text and answer question no. 13-16 on the basis
of the same:

Ashish, the Marketing Head, Raman, the Assistant Manager and Jyoti the Human
Resource Manager of 'Senor Enterprises Ltd.’ decided to leave the company.

The Chief Executive Officer of the company called Jyoti, the Human Resource
Manager and requested her to fill up the vacancies before leaving the organisation.
Informing that her subordinate Miss Alka Pandit was very competent and
trustworthy, Jyoti suggested that if she could be moved up in the hierarchy, she
would do the needful. The Chief Executive Officer agreed for the same. Miss Alka
Pandit contacted 'Keith Recruiters' who advertised for the post of marketing head for
'Senor Enterprises Ltd.’ They were able to recruit a suitable candidate for the
company, Raman's Vacancy was filled up by screening the database of unsolicited
applications lying in the office.

13. Identify the function of management discussed in the above case.

(a) Planning (b) Organising (c) Staffing (d) Directing

14. Identify the step of the function of management identified in Q.13, as discussed
above.

(a) Recruitment (b) Selection

(c) Placement and Orientation (d) Training and

Development

15. "Informing that her subordinate Miss Alka Pandit was very competent and
trustworthy, Jyoti suggested that if she could be moved up in the hierarchy, she

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would do the needful." Name the internal/external source of recruitment used by
'Senor Enterprises Ltd.’ highlighted above.

(a) Transfers (b) Promotions

(c) Recommendations of employees (d) Campus

Recruitment

16. "Raman's Vacancy was filled up by screening the database of unsolicited

applications lying in the office." Name the internal/external source of recruitment
used by 'Senor Enterprises Lad.’ highlighted above.

(a) Transfers (b) Web publishing

(c) Casual Callers (d) Placement Agencies

CASE STUDY 5. Read the following text and answer question no. 17-20 on the basis
of the same:

Ms. Jayshree recently completed her Post Graduate Diploma in Human Resource
Management. A large steel manufacturing company which employs 800 persons
appointed her as its human resource manager. Ms. Jayshree has been given
complete charge of the company's Human Resource Department. The company has
an expansion plain in hand which may require another 200 persons for various types
of additional requirements.

17. Identify the function of management highlighted in the above case.

(a) Planning (b) Organising (c) Staffing (d) Directing

18. Identify the step of function of management identified in the above case.

(a) Estimating manpower requirements (b) Recruitment

(c) Selection (d) Placement and Orientation

19. Identify the concept which will help in deciding the number of persons required.

(a) Workload Analysis (b) Workforce Analysis

(c) Human Resource Planning (d) Staffing

20. Identify the next two steps in the function of management identified in part (a) to
fulfill the additional requirements of 200 persons.

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(a) Recruitment; Selection (b) Selection: Placement and
Orientation

(c)Placement and Orientation; Training and Development

(d) Training and Development; Performance Appraisal

CASE STUDY 6 : Read the following text and answer the questions no. 21-24 on the
basis of the same:

Mr. VikasGoel is an H.R. Manager of "Sanduja Furniture Private Limited." At the

beginning of the new year he anticipated that the company will need 30 new
additional persons to fill up different vacancies. He gave an advertisement in the
newspaper inviting applications for filling up different vacant posts. As many as 120
applications were received. The same were scrutinized. Out of these, conditions of
15 applicants were not acceptable to the company. Letters of regret, giving reasons,
were sent to them. Remaining candidates were called for preliminary interview. The
candidates called for were asked to fill up blank application forms. Thereafter, they
were given four tests. The objective of the first test was to find out how much
interest the applicant takes in his work. The objective of the second test was to find
out 'specialization' of the applicant in any particular area. Third test aimed at making
sure whether the applicant was capable of learning through training or not. The
purpose of the fourth test was to find out how much capability a person has to mix-
up with other and persons, and whether he can influence other persons get
influenced by them.

21. The purpose of the fourth test was too find out how much capability a person has
to mix-up with other persons, and whether he can influence other persons and get
influenced by them. Which selection test is indicated in this situation?

(a) Personality Test (b) Intelligent Tests

(c) Aptitude Test (d) Trade Test

22. At the beginning of the new year he anticipated that the company will need 30
new additional persons to fill up different vacancies. Identify the first step of staffing.

(a) Placement and Orientation (b) Training and

Development

(c) Recruitment (d) Estimating

Manpower Requirements

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23. From the given lines, 'Out of these, conditions of 15 applicants were not
acceptable to the company.’ Letters of regret, giving reasons, were sent to them.
Which aspect of staffing is highlighted in the statement?

(a) Recruitment (b) Selection (c) Training (d) Education

24. The applicants were given four tests like intelligent test to interest test after
filling up blank application form. Identify the step of selection process which was
followed by the management.

(a) Selection Decision (b) Selection Tests

(c) Job Offer (d) Medical Examinatio

Answer Key

1. (c) 2. (a) 3. (d) 4. (b) 5. (c) 6. (a) 7. (a) 8. (c) 9. (c) 10. (b) 11. (d) 12. (d) 13. (c) 14.
(a) 15. (b) 16. (c) 17. (c)

18. (a) 19. (a) 20. (a) 21. (a) 22. (d) 23. (b) 24. (b)

Multiple Choice Questions (MCQ) on Assertion-Reasoning Type/ Statements

1. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): It is only in case of a new enterprise that the staffing function follows
the planning and organising functions.

Reason (R): In an existing enterprises, staffing is a continuous process because new

jobs may be created and some of the existing employees may leave the organisation.

Select the correct alternative:

(a) (A) is correct and (R) is incorrect.

(b) (A) is incorrect and (R) is correct.

(c) Both (A) and (R) are correct, and (R) is the correct explanation of (A).

(d) Both (A) and (R) are correct, and (R) is not the correct explanation of (A).

2. Read the following statements-Assertion (A) and Reason (R):

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Assertion (A): Under-staffing is not good for an organisation; however, over-staffing
is a desirable situation.

Reason (R): Neither under-staffing nor over-staffing is a desirable situation.

Select the correct alternative:

(a) (A) is correct and (R) is incorrect.

(b) (A) is incorrect and (R) is correct.

(c) Both (A) and (R) are correct, and (R) is the correct explanation of (A).

(d) Both (A) and (R) are correct, and (R) is not the correct explanation of (A).

3. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Transfer involves change in salary also.

Reason (R): Transfer may lead to changes in duties and responsibility working
condition etc. but not necessarily salary.

Select the correct alternative:

(a) (A) is correct and (R is incorrect.

(b) (A) is incorrect and (R) is correct.

(c) Both (A) and (R) are correct, and (R) is the correct explanation of (A).

(d) Both (A) and (R) are correct, and (R) is not the correct explanation of (A).

4. Read the sing statements-Assertion (A) and Reason (R):

Assertion (A): The selection process ends after the offer of employment through a
contract of employment.

Reason (R): It involves judgement about the performance potential of the candidate.
The effectiveness of the selection process would ultimately be tested in terms of on-
the-job of the chosen person.

Select the correct alternative:

(a) (A) is correct and (R) is incorrect.

(b) (A) is incorrect and (R) is correct.

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(c) Both (A) and (R) are correct, and (R) is the correct explanation of (A).

(d) Both (A) and (R) are correct, and (R) is not the correct explanation of (A).

5. For the following statements, choose the correct option:

Statement I: Intelligence test in a measure of individual's potential for learning new

skills.

Statement II: Aptitude tests are used to measure the level of intelligence quotient
(IQ) of an individual.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

6. For the following statements, choose the correct option:

Statement I: Organising involves desigining the roles to be filled by suitably skilled

people.

Statement II: Staffing involves filling in keeping filled the positions in the organisation
structure.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

7. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Staffing is that part of the process of management which is concerned
with obtaining, utilising and maintaining a satisfactory and satisfied work force.

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Reason (R): It begins with workforce planning and includes different other function
like recruitment, selection, training, development, promotion, compensation and
performance appraisal of work force.

Select the correct alternative:

(a) (A) is correct and (R) is incorrect.

(b) (A) is incorrect and (R) is correct.

(c) Both (A) and (R) are correct, and (R) is the correct explanation of (A).

(d) Both (A) and (R) are correct, and (R) is not the correct explanation of (A).

8. For the following statements, choose the correct option:

Statement I: Today, staffing may involve any combination of employees including

daily wagers, consultants and contract employees.

Statement II: Staffing recognises the importance of every single person employed by
an organisation as it is the individual worker, who is the ultimate performer.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

9. For the following statements, choose the correct option:

Statement I: No organisation can be successful unless it can fill and keep filled the
various positions provided for in the structure with the right kind of people.

Statement II: The staffing function has assumed greater importance these days
because of rapid advancement of technology, increasing size of organisation and
complicated behaviour of human beings.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

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(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

10. For the following statements, choose the correct option:

Statement I: Proper staffing makes for higher performance, by putting right person
on the right job.

Statement II: Staffing ensures the continuous survival and growth of the enterprise
through objective assessment and fair reward for their contribution.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement Il is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct,

(d) Both the Statements I and II are not correct.

11. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): It is essential that right kind of people must be available in right
number at the right time.

Reason (R): If right kind of employees are not available, it will lead to wastage of
materials, time, effort and energy, resulting in lower productivity and poor quality of
products. The enterprise will not be able to sell its products profitably.

Select the correct alternative:

(a) (A) is correct and (R) is incorrect.

(b) (A) is incorrect and (R) is correct.

(c) Both (A) and (R) are correct, and (R) is the correct explanation of (A).

(d) Both (A) and (R) are correct, and (R) is not the correct explanation of (A).

12. For the following statements, choose the correct option:

Statement I: Workforce analysis would enable an assessment of the number and

types of human resources necessary for the performance of various jobs and
accomplishment of organisational objectives.

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Statement II: Workload analysis would reveal the number and type available.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

13. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Before starting of the recruitment process, it is important to translate

the manpower requirements into specific job description and the desirable profile of
its occupant.

Reason (R): This information becomes the base for looking for potential employees.

Select the correct alternative:

(a) (A) is correct and (R) is incorrect.

(b) (A) is incorrect and (R) is correct.

(c) Both (A) and (R) are correct, and (R) is the correct explanation of (A).

(d) Both (A) and (R) are correct, and (R) is not the correct explanation of (A).

14. For the following statements, choose the correct option:

Statement I: Selection involves locating the potential candidate or determining the

sources of potential candidates.

Statement II: The essential objective of recruitment is to create a pool of the

prospective job candidates.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

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15. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Internal sources of recruitment may be used to a limited extent.

Reason (R): For fresh talent and wider choice external sources are used.

Select the correct alternative:

(a) (A) is correct and (R) is incorrect.

(b) (A) is incorrect and (R) is correct.

(c) Both (A) and (R) are correct, and (R) is the correct explanation of (A).

(d) Both (A) and (R) are correct, and (R) is not the correct explanation of (A).

16. For the following statements, choose the correct option:

Statement I: In most organisations there is a separate Human Resource Department,

which takes care of the staffing function.

Statement II: In small organisations the line manager is required to perform all the
functions of management.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

17. For the following statements, choose the correct option:

Statement I: The performance appraisal process includes defining the job, appraising
performance and providing feedback.

Statement II: Promotion and career planning means evaluating an employee's

current and/or past performance as against certain predetermined standards.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

249 | P a g e
(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

18. For the following statements, choose the correct option:

Statement I: Direct recruitment is suitable for filling casual vacancies when there is a
rush of work or when some permanent workers are absent.

Statement II: Most of the senior positions of industry as well as commerce are filled
by advertisement.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

19. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Most of the senior positions of industry as well as commerce are filled
by advertisement.

Reason (R): The advantage of advertising vacancies is that more information about
the organisation and job can be given in the advertisement. Advertisement gives the
management a wider range of candidates from which to choose.

Select the correct alternative:

(a) (A) is correct and (R) is incorrect.

(b) (A) is incorrect and (R) is correct.

(c) Both (A) and (R) are correct, and (R) is the correct explanation of (A).

(d) Both (A) and (R) are correct, and (R) is not the correct explanation of (A).

20. For the following statements, choose the correct option:

Statement I: Placement agencies even can entice the needed top executives from
other companies by making the right offers.

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Statement II: Management consultancy firms even advertise the jobs on behalf of
their clients to recruit right type of personnel.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

21. For the following statements, choose the correct option:

Statement I: Aptitude test is an indicator of a person's learning ability or the ability

to make decisions and judgments.

Statement II: Intelligence test is a measure of individuals potential for learning new
skills.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

22. For the following statements, choose the correct option:

Statement I: Personality tests probe the overall personality. Hence, these are difficult
to design and implement.

Statement II: The difference between aptitude test and trade test is that the former
measures the actual skills possessed and the later the potential to acquire skills.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

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(d) Both the Statements I and II are not correct.

23. For the following statements, choose the correct option:

Statement I: Recruitment involves assessment, evaluation and final match.

Statement II: Training includes acquainting and skill development.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

24. For the following statements, choose the correct option:

Statement I: Staffing includes acquisition, retention, development, performance

appraisal, promotion and compensation of the most important resource of an
organisation, that is, its human capital.

Statement II: The process of recruitment precedes the process of selection of a right
candidate for the given positions in the organisation.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

25. For the following statements, choose the correct option:

Statement I: The object of selection process is to attract potential employees with

the necessary characteristics or qualification, in the adequate number for the jobs
available.

Statement II: The prime concern of the staffing function in the management process
is the timely fulfillment of the manpower requirements within an organisation.

Choose the correct option from the options given below:

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(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

26. For the following statements, choose the correct option:

Statement I: Training is any process by which the aptitudes, skills and abilities of
employees to perform specific jobs are increased.

Statement II: Development refers to the learning opportunities designed to help

employees grow.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement. I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

27. For the following statements, choose the correct option:

Statement I: Transfers can also be used for training of employees for learning
different jobs.

Statement II: Transfer is a good source of filling the vacancies with employees from
under-staffed departments.

Choose the correct option from the options given below:

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

28. Read the following statements-Assertion (A) and Reason (R):

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Assertion (A): Promotion helps to improve the motivation, loyalty and satisfaction
level of employees.

Reason (R): It has a great psychological impact over the employees because a
promotion at the higher level may lead to a chain of promotions at lower levels in
the organisation.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A).

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

29. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Internal recruitment also simplifies the process of selection and
placement.

Reason (R): The candidates that are already working in the enterprise can be
evaluated more accurately and economically.

Select the correct alternative:

(a) Assertion (A) is true and Reason(R) is false.

(b) Assertion (A) is false and Reason(R) is true.

(c) Both Assertion (A) and Reason (R) are true.

(d) Both Assertion (A) and Reason (R) are false.

30. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): No organisation can fill all its vacancies from internal sources.

Reason (R): The existing staff may be insufficient or they may not fulfill the eligibility
criteria of the jobs to be filled.

Select the correct alternative:

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(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A).

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

31. For the following statements, choose the correct option:

Statement I: Filling of jobs from external sources is cheaper as compared to getting

candidates internally.

Statement II: External recruitment provides wide choice and brings new blood in the
organisation.

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

32. Read the following statements-Assertion (A) and Reason (R):

Assertion (A): Direct Recruitment is very inexpensive.

Reason (R): It does not involve any cost of advertising the vacancies; job-seekers
assemble outside the premises of the organisation on the specified date and
selection is done on the spot.

Select the correct alternative:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A).

(c) Assertion (A) is true and Reason(R) is false.

(d) Assertion (A) is false and Reason(R) is true.

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33. For the following statements, choose the correct option:

Statement I: Direct recruitment is suitable for filling casual vacancies when there is a
rush of work or when some permanent workers are absent.

Statement II: Employment exchanges run by the government is a good source of

recruitment when a wider choice is required.

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

34. For the following statements, choose the correct option:

Statement I: Management consultancy firms help the organisations to recruit

technical, professional and managerial personnel.

Statement II: Campus Recruitment is a popular source of recruitment for technical,

professional and managerial jobs.

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

35. For the following statements, choose the correct option:

Statement I: By using external sources of recruitment, the management can attract

qualified and trained people to apply for vacant jobs in the organisation.

Statement II: Internal recruitment provide wider choice and brings new blood in the
organisation. However, it is expensive and time consuming.

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

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36. For the following statements, choose the correct option:

Statement I: Aptitude Test indicates the person's capacity to develop.

Statement II: Intelligence tests measure the level of knowledge and proficiency in
the area of professions or technical training.

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

37. For the following statements, choose the correct option:

Statement I: The job offer is given to the candidate being declared fit after the
medical examination.

Statement II: Job offer is made through a letter of appointment/confirm his

acceptance.

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

38. For the following statements, choose the correct option:

Statement I: Training is a job oriented process of learning new skills and application
of knowledge.

Statement II: Development is a career oriented process to enable the overall growth
of the employee.

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

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39. For the following statements, choose the correct option:

Statement I: Vestibule Training is a joint programme of training in which educational

institutions and business firms cooperate.

Statement II: Internship Training is a training programme which puts the trainee
under the guidance of a master worker to acquire a higher level of skill.

(a) Statement I is correct and Statement II is not correct.

(b) Statement II is correct and Statement I is not correct.

(c) Both the Statements I and II are correct.

(d) Both the Statements I and II are not correct.

ANSWER KEY

1. (c) 2. (b) 3. (b) 4. (b) 5. (d) 6. (c) 7. (c) 8. (c) 9. (c) 10. (a) 11. (c) 12. (d) 13. (c) 14.
(b) 15. (c) 16. (c) 17. (a) 18. (c)

19. (c) 20. (c) 21. (d) 22. (a) 23. (b) 24. (c) 25. (d) 26. (c) 27. (a) 28. (a) 29. (c) 30. (a)
31. (b) 32. (a) 33. (a) 34. (c)

35. (a) 36. (a) 37. (c) 38. (c) 39. (d)

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