Unit 1: Nature of Management

Concept of Management:

Management is the activity of directing leading to achieve the predetermined goals.

In other sense, the word management is combination of three word that is manage-
men-t (tactfully) which means to manage human resources tactfully for mobilization
of other physical resources to meet goal.

According to Robbins "management is the process of getting things done by other

things with the aim of achieving goal effectively and efficiently.”

In conclusion, management is the process of PODSLC. PODSLC means planning,

organizing, staffing, directing, leading and controlling respectively. It is an art of
getting things done through people for the achievement of goals. Principle of
management have been universally applied. It is essential for organizational
effectiveness. Good management achieved the organizational objectives with the
best use of all kind of resources.

Level of management:

The level of management are as follows:

Shareholder
Top-level Management Middle Level Management Lower-Level Management
Board of Directors Department Manager Supervision
Chief Executive Officer Division Head Foreman
General Manager Section Head Clerk
Managing Director Head of Departments
Branch Manager
1. Top-level of management: Top-level management consists of board for director
(BOD). Chief executive officer (CEO), general manager and managing director.
Top-level management is the supreme body of an organization they are responsible
in formulating long term plans, policies, mission, vision, goals, etc. of an
organization.
Important function of top-level management:
i. To determine the goals of an organization
ii. to make plan and policies to attain a goal.
iii. to set up an organization structure to conduct the operation is for plan
iv. To provide overall direction in the organization
v. Investing in research and development
2. Middle level of management: Middle level of management consists of head of
department, branch manager, division head, section head etc. Middle level
management are primarily responsible to implement the policies and plan developed
by the top-level management. Middle level management are essential to bridge the
upper and lower level of organization.

Important function of middle level management:

The important function of middle level management are as follows:
i. To interpret the policies found by the top-level management
ii. To recruit and select suitable operative supervisory staff.
iii. To assign duties and responsibilities for first line officer.
iv. To motivate personal (staff) to attend a productivity and reward them
properly

3. Lower level of management: Lower-level management consists of foreman,

supervisors, sales officer, marketing officer, etc. lower-level management is also
known as fast line management and operating level management. It is directly
concerned with the direction and control of the performance of the operative non-
managerial employees.
Important function of lower-level management:
i. Instruction and guidance to the operating employees and workers.
ii. Preparation of short-term plan.
iii. Assignment of duties: it assigns job, duties and responsibilities to the non-
managerial employees.
iv. To arrange the necessary tools and equipment, materials etc. for the workers.
v. To solve the problems of workers
vi. To inform the unsolved problems of workers to the management.

Feature of Management:

1. Process: management is a process. the function short is planning, organizing,

directing, staffing, leading and controlling are included in the process which proper
coordination of resources by means of managerial function.

2. Group Activity: management is based on group activities. The significance of

management is the group participation both note industrialization. a group can easily
and effectively attain the goals of organization rather than an individual.

3. Purposeful: every management activity is purposeful. Management it helps in or

contributes greatly for efficient and effective use of different resources to achieve
the goal. The main objective of management is to maximize the productivity through
minimum sources.
4. Both science and art: management is both science and art. It is science because
it is based on same basic principle of universal application. it is also in because the
result of an organization depends upon the personal skills, efficiency and experience
of manager and his subordinates.

5. Profession: management is also profession because it has the feature of profession

like specific knowledge, formal education, service motive, ethical codes etc. So, in
today's world measurement is Taken as a profession.

6. Universal: management is universal in nature. It is necessary and practice in

almost all types of organization. Management institute query or essential where there
is human activity. It means that wherever there is a human activity, there is
management. The principle of management is universally applicable.

7. Dynamic: management is a continuous and dynamic activity. Principle of

management and not rigid. The principles are flexible as for the need and
requirement of time and organization. The system of management of today may not
be suitable or applicable tomorrow. So, management modifies its style and system
is for time and situation which saves the organization to adjust itself in changing
environment of business.

8. Social Process: management is a social process because it consists of getting

things done through others. This involves dealing with people. the effort of human
beings has to be directed, coordinated and regulated by management. Moreover,
management has a social obligation to make optimum use of limited resources for
the benefit of community as a whole.

9. Multi-disciplinary: Management draws knowledge and concept from other

discipline such as economics, psychology, sociology, statistics, operation, research
etc. management integrates ideas and concepts taken from other discipline and use
them in managing the organization.

Function of management:

1. Planning: planning is an important function of management. It involves selecting

courses of action from a set of alternatives. Planning decides advance as to: what is
to be done? And how it is to be done? When it is to be done? Where it is to be done?
You will do it and how results are to be evaluated? decision making is the part of
planning process that involves development of alternatives, evaluation of
alternatives and selecting the best alternatives
2. Organizing: it is another important function of management. Organizing
involves: determining the activities, the activities to be done, grouping the activities,
assigning the group of activities to individuals and creating structure of authority
and responsibility among the people to achieve of the enterprises. It is a tool for
achieving organizational objectives and mechanisms for propose full action for
implementation of policies and programs.

3. Staffing: staffing is also an important function of management. The staffing

function involves recruitment, selections, socialization, training and
development etc. It is Human resource management function in an organization. It
ensures qualified efficient, experienced and skilled staff.

4. Direction: direction is the act of ordering subordinates by exercising power for

organizational performance. It is required all level of management. Direction
maintains good human relation and is motivates staff.

5. Leading: leading is also important function of management. it influences the

group towards the attainment of goals. Leadership is also considered as personal
quality of an individual who organizes the effort, capabilities and talents of the
followers and directs towards the attainment of organizational goals. leading
involves:
i. Issue, order and instruction.
ii. guiding, training, motivating supervision and communicating
iii. Coordination and influencing.

6. Controlling: define all basic function of management is controlling. It is the

process of maintaining the organization's progress towards its goals. The controlling
function involves: evaluating actual performance, comparing actual performance to
standard and taking corrective action if necessary. It increases productivity and
reduce cost of production.
Management: science, art and profession
Management as an art: Art is an application of knowledge and skills to get desired
results. Management is also taken as an art; a creative art is it requires. Acknowledge
of innovating and integrating skills in relation to good resources etc. Management
also satisfied basic features of an art. An artist as to apply his theoretical knowledge
into practice to get the desired result. In the same way the management also applies
the theoretical knowledge in practice. So, it is an art as well. the main element of art
and involvement of those elements in management are as follows:
a. Practical knowledge
b. Personal ability
c. Result oriented
d. Regular practice
e. Creativity
f. Situational
g. Personal judgement.

Management as a science: Science is a systematic body of knowledge with

observation and experiment. Its principles are: universal established, cause and
effect relationship between variables. In the same way, management also satisfies
the features of science which contains systematic body of knowledge. In the form of
general principles which can be applied in all placed through the world. The
principles of management are also based on experiments and observations. Likewise,
it also establishes cause and effect relationship between variables. So, management
is a science. it studies about human behavior but it is not natural science like physics
and chemistry. Essential features are as follows:
a. Systematic knowledge
b. Based on observation and experimentation
c. Cause and effect relationship
d. Universal validity of principles.

Management is a profession: Profession is an occupation. for a profession there

must be in academic and professional qualification presented by law. A professional
manager is one who specializes in the work of planning, organizing, leading and
controlling the effort through systematic use of knowledge. The example of
profession is occupation of lawyer, doctor, accountant, etc. The essential features of
profession most helpful in things:
a. Specialized knowledge
b. Formal education and training
c. social responsibility
d. Representative body.

Management also features these means and features. Therefore, it can also be taken
as a profession.

Q. Difference between Administration and Management:

Basis of
Administration Management
differences
Nature It is mental or thinking It is an executive function
It is operational or executive level
Level It is top-level management
of management
Determination of objectives and Implementation of planning and
Work
policies policies
 Used mainly in business
Used mainly in government,
Use organization which are for
education and social institution
economic motives
Generally, owners are involved Generally, personnel or employees
Involvement
in administration are involved in management.
Skill and It needs technical and managerial
It needs administrative ability.
ability ability
American school of thought British school of thoughts believes
Belief believes that management is a that administration is a part of
part of administration management
Management function includes
Determination of objective of
Function planning, organizing, staffing,
formulation of function
directing, leading and controlling

Important questions

1. Define management. Explain the features of management.

2. Give the differences between administration and management.
3. Discuss management as an art, a science or profession.
4. What is the function of management?
5. Describe the level of organization of management.

Unit 2: Principle of Management

Concept of principle of management:
Management principles are fundamental truth of general validity which has values
in predicting the result of management action. It is derived through the series of
experiments and observations. Principle of management are universally used not just
for managing business organizations, they are also applied to various other types of
organizations, educational, social, military and government.

Features of principle of management:

1. It is universal in nature. It means that the principle of management is

applicable throughout the world. its principles are applicable in business,
organizations, schools and colleges hospital, social service organization.
2. The principle of management is flexible in nature. It means that the principles
cannot be applied equally all the time in all the situation. the principle which
is suitable in one condition may not be suitable in another condition. So, the
principle is subject to change in accordance with change in context.
 3. It establishes cause and effect relationship. It gives information about
consequences for example the quantity demanded decreases when the price
rises.
4. All the management principles are equally important. No single principle has
great important than the other as all the principle are applicable in some way
or other.

Principles of management:

1. Scientific management: F.W. Taylors is widely known as father of scientific

management. F.W. Taylors was born in 1856 in US.
2. Fayol's administrative management
3. Bureaucracy theory.
Concept of scientific management:
Scientific management means application of principal and methods of science in in
the field of management. It is an art of knowing best and cheapest way of utilizing
the human, physical and financial resources of an organization for optimum benefits.
It is the art of knowing exactly what is to be done? By whom it is to be done? And
what is the best and cheapest way of doing it? Scientific method is applied in the
field of management in i.e. recruitment, selection training placement of workers and
methods and work in best and cheapest way.
According to F.W. Taylor " Scientific management is doing exactly what you want
from mean seeing that they do it in the best and cheapest way."

Principles of scientific management:

1. Replacing rule of thumbs with science:

scientific management replaces the working procedure based on rules of

thumbs. Scientific study and analysis of each job is required in order to replace
the old rule of thumb approach. True scientific investigation the best way of
doing would can be developed.

2. Harmony: F.W. Taylor emphasized the harmony and mutual relationship

among management and employers to attain common goals. Satish K track
mutual beneficial relationship should be established among them. they should
be good cooperation between employees and management of Organization in
order to make the work done exactly and to receive the original good more
effectively and efficiently.
Maximum output: F.W. Taylor is more concerned with continuous production
and productivity. The aim of both management and employees should be to
maximize the output. This should be done by both parties in their own sales
 interest. maximum output and optimum utilization of resources will bring
higher profit for the business and better wages for the employees.
3. Corporation (not individual): dish assumption clearly says that cooperation
between management and labor is the foundation of scientific management.
Co-operation creates change any feeling of mutuality e in all aspects instead
of individual. If it exists in the firm, maximum it can be guaranteed.
4. Financial incentives: Taylor tactfully suggested that workers should be given
financial incentives. This financial institutes may help the Organization was
to motivate the workers towards the job performances. Thus, he introduced
the differential price, rate, system. According to this approach, the visit should
be based on individual performance of the workers.
5. Development of employees: scientific management suggests, scientific
section of employees and their proper training and development is essential
for efficiency in production. Employees that are selected most be given
training to develop their abilities and improve performance. If you should be
made to take up his employees for his/her greatest efficient and prosperity.
Limitations of scientific management:
1. No one best way of doing work: the scientific management assume that there
is one best way for each job to be done what the way of doing job depends on
the situations and conditions.
2. Mechanistic (related with machine and production): the scientific
management is mechanistic. It is more useful for only stable and simple
Organization then for the dynamic Organization of today. He does not
consider the human element. Taylor considered worker as robots, which can
speed of the work at any cost.
3. Neglect human aspects of workers: the scientific management neglects
women respect of workers at the workplace. They are treated is machine.
Importance was given to productivity which creates aggressive attitude among
workers. Therefore, many employees joined trade union. This also resulted in
mistrust between management and employees.
4. Focus on production: scientific management focuses on production to the
exclusion of marketing, finance and other functional area. Thus, it tends to be
more of industrial engineering then a theory of management.
Contributions of scientific management:
1. Scientific management principles can be applied to solve problems in the
Organizations.
2. It helps to increase production and productivity increasing the efficiency and
effectiveness of workers involved.
3. It focuses on economic of scale lowering cost of production by using latest
machines and tools.
 4. It is to change the attitudes or behavior of the managers and workers in the
Organization by developing and trusting each other.
5. It aims to increase and improve living standards of the employee or workers.
6. It helps to increase the knowledge, skills, capacity and effectiveness of
workers in the Organizations by organizing and emphasizing training and
development programmes to them.
7. It promotes the use of scientific method in place of traditional rule of thumb.
8. It promotes the cooperation between managers and workers.
9. It encourages to have right person on the right job through scientific selection
and proper training.
10. It motivates workers to work by using incentive wage payment system.
11.
Fayol's administrative management theory Henry Fayol (1841-1925)
Henry Fayol is the father of modern theory of general and industrial management.
he is also considered to be the father of administrative management theory. In Henry
Fayol's book, "general and industrial management" (1916) he describes numbers of
management principles. he had developed 14 principles of management through his
experiment and experiences the principles are as follows:

1. Division of work: Division of work means distribution of right work to the

right person. Each person should perform only the assigned part of the job.
This leads to develop the concept of specialization in efficiency among the
workers.
2. Authority and responsibility: The right to give order and power is called
authority. On the other hand, responsibility means obligation to perform the
work in the manner described and directed by superior authorities. authority
and responsibility is the major part of an Organization. responsibility without
authority cannot perform work confidently and authority without
responsibility make a person irresponsible.
3. Discipline: Discipline implies obedience and respect of authority. It is
essential for the smooth running of an organization. discipline denotes the
obedience to authority, observation of the rules and service norms of
performance, respect of agreement and respect for supervision.
4. Unity of command: Our employees should be given order by one person. If
many persons order to 1 employee there may be conflict in command,
confusion and in delay in work arise.
5. Unity of direction: Unity of direction signifies that each group of activities
having the same objective must have one head and one plan. According to
entry, there should be one head and one plan for a group activity having the
same objective. it is essential for better coordination among various activities
to be performed by an organization.
6. Subordination of individual interest to the organizationally interest: If
Organizational interest is achieved, individual interest can be achieved
automatically. Show Organizational interest should be given first priority.
Individual interest will not be given more importance than the Organizational
interest.
7. Remuneration: According to this principle proper and fair remuneration
should be given to the employees. The rate of remuneration should be based
on general business condition cost of living productivity of concerned
employees and the capacity of Organization to play Fayol suggested extra
remuneration should be respectfully given for extra work.
8. Centralization: Centralization reduce subordinate’s roles whereas
decentralization increases it. According to Fayol, manager should retain final
responsibility but the subordinates should be given enough authority to do
their jobs properly. Hence, there must be good balanced centralization and
decentralization of authority and power.
9. Scalar chain: Fayol describe the scalar chain is the chain of superiors ranging
from the ultimate on top of it to the lowest rank. it is the line of authority that
run in the order of rank from top-level management to the lower-level
management. The scalar chain is chain of command as well as chain of
communication.
10. Order: This principle is related to arrangement of materials and people.
Material order implies a proper price for everything and everything in its right
place. Similarly, every man in the Organization should be properly placed.
The right man in the right job is very important for the successful functioning
of an organization.
11. Equity: Equity refers to equality in all aspect or equality of fair treatment. No
one should be discriminated on the basis of caste and creeds for equal job all
should be made equally responsible. Thus, equity insurers healthy
industrialization between management and labor.
12. Stability: Employees and managers must have job security like security of
income and employment. It minimizes the term over rate of employees.
13. Initiative: Employee should not remain like a machine only waiting for the
order of their boss. they should take initiative to work with new thought and
Idea even if there may be little mistakes. That means they should use their
wisdom and judgement. The initiation makes every work possible is it
encourages and boost up the moral of employees.
14. Esprit de crops (group activities): it refers to union i.e. strength. It means
we must do the work unitedly in order to materialize the goods of an
organization age single effort is not enough. We must work together in a
cooperative manner with positive attitude.
Contribution of administrative management:

Sales contribution to management thought is significance. The contribution of

administrative management are as follows:
1. Under administrative management, business activities are classified is
technical, commercial, financial, security an administrative activity.
2. Under administrative management managerial function classified is planning,
organizing, commanding, coordinating and controlling.
3. Under administrative management, Fayol was the first to list and describe
management principles systematically.
4. Under administrative management, qualities of managers are classified as
physical, mental, moral, educational, technical or professional qualities and
experience.
5. The concept that management is a separate body of knowledge is applicable
to all forms of individual as well as group activities.
6. A first complete and comprehensive theory of management which could be
applied to all organization.
7. The concept of teaching and developing management curriculum in colleges
and universities.

Bureaucratic theory Max Weber's (1864-1920)

Max Weber was German sociologist. He described an ideal type of organization with
equal of bureaucracy. Bureaucracy is much more useful to operate large and
complex organization. Max Weber has advocated for bureaucracy that it is logical
rational and effective. Therefore, bureaucracy is a model of organization based on
defined position, formal authority and regulated environment that included well-
documented rules, policies and procedures.
Principle of bureaucracy theory:

1. Job specialization: work is to be done by specialist and people are organized

into units based on type of work they do or skills they have. It focuses on
specialization rather than generalization of work. According to the principle,
the top-level executive should be well acknowledgeable, skilled, trained and
learned to carry out different function in an organization.
2. Formal selection: organization member is to be selected on the basis of
technical qualification and competences demonstrated by training education
of formal examination.
3. Impersonality: rules and controls and applied uniformly evading
involvement with politicians and personal preference of employees.
Organization should run on the impersonal reflection.
 4. Formal rules and regulations: to ensure uniformity and to regulate action of
employees, major most depend heavily upon formal organizational rules and
regulation. Thus, rules of law lead to infertility in interpersonal relations.
5. Authority hierarchy: position organized in a hierarchy with a clear chain of
command in an organization. Hierarchy is a system of ranking various
position in the descending scale from top to bottom.

Important questions

1. Explain briefly principle of administrative management as developed by H.

Fayol.
2. Give the meaning of scientific management. Explain the principle of scientific
management.
3. Explain the Max Weber's principle of Bureaucracy theory.
4. Describe Fayol's contributions in the development of management.
5. Explain briefly the contribution of Taylor's scientific managements.

Unit 3: Planning & Decision Making:

Meaning and concept of planning:

Planning is the primary function of management. Simply, planning is thinking in

advance about the task (work) to be done in the future. In other words, planning is
an intellectual process which is concerned with deciding in advance what to do? how
to do it? When to do it? and by whom to be done?
According to Louis Allen," planning involves the development of forecast,
objectives, policies, programs, procedures, serials and budgets.”
According to ME Harley, "planning is deciding in advance what is to be done"
In conclusion planning is predetermination of objectives and an intellectual course
of action that should be taken to acid defined goals efficiently and on time. No work
can be successful without planning.
Types of planning:

A. On the basis of managerial hierarchy:

a. Strategic plan: A long term plan prepared by top-level management after the
environmental scanning is known as a strategic plan. It is planning for the total
enterprise. It is good and general in nature. It clearly days down the basic goals,
strategies and policies for the enterprise as a whole. This plan is also known as a
strategic plan. This plan is set by the board of directors with the environment of CEO
and other high-ranking personnel.
b. Tactical plan: Departmental level plants are called tactical plans. Such plans are
prepared as means to achieve strategic goals. Generally, search plans are met on
plants which have been formed by middle level managers. It is prepared for smooth
running or implementation of corporate plan with time bound.

c. Operational plan: operational plans are formed to reach operational goals. Such
plans are developed mainly by lower-level managers. This plan has very short-term
focus. The front-line managers and supervisors are responsible for developing and
implementing operational plans.

B. On the basis of time:

a. long term plan: Long term plan: the plants prepared for achievement of
organizational goals for strategic goals are called long term plan. Generally, such
plans are formed for more than 5 years. Long term plans are formed by top/high
level management.

b. Mid-term plan: The plants prepare to achieve tactical goals are called mid-term
plans. Generally, search plans may be prepared for one to three years. Mid-term
plans are formed by middle level managers.

c. short term plan: Short term plans are prepared for the achievement of operational
goals. Generally, such plans are formed for not more than 1 year. Search plans are
prepared by lower-level managers. All the operational planning is a short-term plan.
The plan only provides guidelines to members. The members can modify short plans
on the basis of their facility, need and requirement. School, colleges, yearly plan is
an example of a flexible plan way for subject change.
C. On the basis of use:
a. Single use plans: The plans specially prepared for specific purpose and for non-
repetitive activities are called single use plans. Such types of plans are useful only
once. Budget projects and programs can be taken as examples of use plans. Short
plan becomes meaningful at least once the defined objective is gained.
b. Standing use plans: the plants prepare for guiding the activities to be performed
by repetition at call standing plans. Policy, produce and objective rules are examples
of standing plans. Search plans are prepared for long term.
Planning process:
1. Identification of needs for planning: identification of needs for planning is the
first stage of the planning process. A planner should be fully conscious about the
need of plan before planning. Planners should be conscious about internal and
external environments. Management needs to analyze the weakness, strength,
opportunity and threats.
2. Setting objectives: Setting objectives is the second stage of the planning process.
Objective may be long term or short-term. The objective should be made clear and
specific according to the primary importance of work. While forming the objective
of the organization, departmental and technical objective should also be made clear.
Measures of all levels should be well informed about this task and the goal set must
be smart (specific, measurable, attainable, realistic and timely) for the successful
future.

3. Developing planning premises: Developing planning premises is the third stage

of the planning process. Premises mean forecast of sales volume, production cost,
prospective environmental changes, wages, rates, tax rate, etc. So, planning premises
provide basic information necessary for effective planning.

4. Identification of alternative: in the first step of the planning process various

alternatives are identified. Indian can be the only one way to solve any problem.
There may be several alternatives for solving problems. For this, different sources
may provide information for example newspaper, TV, net, experience of managers,
competitors, analysis etc.

5. Evaluation of alternatives: all the alternatives mean not be of equal importance.

So, the alternative should be evaluated with the help of proper technique at time of
alternatives evaluation. The cost, the risk, profit etc. elements should be compared.
Some alternatives may be more profitable but risky. Some alternatives may be less
risky and less profitable. So, such alternatives can be evaluated with the help of
arithmetical, modern and computer.

6. Selecting the best alternative: after evaluating the alternative according to their
strong and weak point usefulness. Now, we are here at the real point of decision
making. the management has to select the best alternative which helps to achieve the
organizational goal.

7. Formulating supporting plan: in the next step, supporting plans are formulated
on the basis of min plan or master plan. Different types of planks or as long term,
midterm, and short-term plans that are associated with each and every department
should be formulated. but while formulating supporting plans, the plans to contradict
with the main plan.

8. Implementing the plan: All those plans remain on the paper should be
implemented to give meaningful sense only then a planning process ends. After
implementing the plan, we can know how it is effectively utilized. If any necessary
changes are felt, it will be improved next time when planning is a cyclical process.
Benefits/advantage of planning

1. To achieve the goals: Planning is directed towards achieving enterprise

objectives. Good and effective management is possible only with management by
objective. planning the organization knows its present position and also where it
wants to go.
2. To reduce uncertainty: Planning apps to forecast possible changes and uncertain
future provides alternative ways to lead the organization towards development and
prosperity despite uncertainty. So, business organizations can remain free from
changing in demand, interest, fashion, technology and so on.

3. To maintain effective control: Planning and controlling both are interrelated

subject matters or inseparable because control involves keeping activity on
predetermined goals by rectifying deviation from the plan whereas planning helps
by setting standards.

4. To increase organizational effectiveness: Planning utilizes the resource

properly to reduce the wastage and maintenance cost of production. Thus, planning
helps the organization to run in profitability. Planning performs the above activities
and also helps to increase the effectiveness of the organization.

5. To develop innovation: Planning is the basic and primary function of

management. It develops the initiative and creates an aspect of managers. Planning
enables and encourages the manager to use their creativity and innovation.

6. To maintain the resources: All the physical, human, financial and informational
resources of an organization are fully utilized and mobilized through proper
planning. Hence, all the resources give considerable benefit to the organization.

7. To maintain coordination: In order to achieve an objective of business and

organization, there should be better coordination among all the activities,
department, sections and employees. new coordination can be bought in different
activities of an organization without planning.

8. To increase competitive strength: We know that today's business is facing tough

competition. show in order to face search competitions we need to formulate sound
planning which will improve the efficiency of products or services. It helps to stand
out in the mass of competitors.
Limitation or disadvantage of planning
1. Time consuming process: Planning is a time-consuming process. It is the
business unit to come in action. In the process of planning, every step may
consume a lot of time. It is unsuitable for immediate situations.

2. Costly process: The planning procedure involves too much expenditure, money
and effort. Both are required in the process of planning such as collecting
information, preparing estimates, forecasting and evaluating the alternatives. So
planning is not suitable for a small size business organization.

3. Rapid changes problem: Rapid changes in technology, consumer, interest and

fashion app for the constraints to planning. In a complex and rapidly changing
environment planning is more difficult as it has new problems. In the rapidly
changing conditions, planning activity taken in one period cannot be relevant for
another period.

4. Problem of accurate information: Before preparing planning, sufficient and

reliable data and information are to be collected from different sources inside and
outside the organization. if reliable information and data are not available for
planning there is a chance of business loss and failure.

5. Lack of flexibility: Planning makes an organization stable. Due to internal and

external reasons, plans cannot be changed according to the situation. So it lacks
flexibility. Plans are formulated considering the possibility of changes in the future
but irregular changes directly affect the plan.

Nature/ characteristics/ features of planning

1. Goal-oriented: Goals or objectives are the end result towards which an activity
is directed. The first stage of planning is the conscious and explicit statement of the
ultimate objectives. However, the goal should be clear, specific and realistic as well.
Primary function: planning is the primary function of management. planning
provides the basis for organizing, staffing, leading and controlling and flows through
all of them as their life blood.

2. Pervasiveness of planning: Managers at all levels of organization perform the

planning function. Planning is needed for all activities at all levels although the
nature and extent of planning varies with the position a person is holding in the
organizational hierarchy and with the board guidelines provided by his superiors.
Planning at low levels is also necessary but it should still remain within the
framework of the master plan set by the top management.
3. Continuous activity: Planning is a continuous and never-ending process. All the
organizations, at all points of time, have clearly defined hierarchy of plans. Manager
can't plan once for all. There is always a need for continuous revision of existing
plans and implementation of new ones.

4. Intellectual process: Planning involves logical thinking decision making. All

decisions require ability required ability, experience and foresightedness on the part
of managers. They are required to anticipate the changes in the environment, make
predictions about the future problems and search for alternative courses of action.
Thus, planning is a mental or thinking process.

5. Forward looking: Planning is always done for the future. One of the basic
objectives of every business firm is to ensure its survival and growth. This is possible
only if it is able to cope with the changing environment. Thus, planning implies
anticipating, analysis and predicting the future.

6. Directed towards efficiency: Planning involves efficient utilization of various

resources like materials, machines, capital, labor etc. An effort is made to achieve
organizational objectives with minimum resources

Nature/ characteristic/ feature of planning: [Important Questions]

1. Intellectual process: Planning is an intellectual process, it is related to thinking

before doing something, thus, it is a mental exercise. A planner has to think about
the questions like how to do it? Who is to do it? what to do? and when to do it? A
planner should be educationally and mentally sound.

2. Goal oriented: Learning begins with the determination of organizational goals.

With the determination of goods, the way to achieve the goal is decided in the
planning. All kinds of plans are linked with a goal of organization, without goals,
plan has no meaning. Thus, it is clear that planning is helpful in the attainment of
goals of the organization.

3. Primary function: Planning is the primary function of management. It starts with

the setting of specific measurable attainable realistic and timely objectives. In the
absence of planning, no other functions of management such as organizing, staffing,
leading and controlling can be performed effectively. So planning is also a basic and
primary function of management.

4. Pervasiveness: Planning is pervasive. Every work needs planning to accomplish

its objectives. It has equal importance at all levels of management. The top-level
managers formulated strategic plans while the middle level manager formulates
tactical plans, and the lower-level manager formulates optional plans. All plans will
be integrated for the achievement of organizational goals. Plants are equally
necessary in every sector of the universe.

5. Continuous process: Planning is a continuous process, it is endless. Planning is

a continuous process for the following reasons:

1. Plan is prepared for a particular period. Hence, there is need for a new plan
after the expiry of the period
2. In case of any discrepancy, plans are to be revised.
3. In case of rapid changes in the business environment plans are to be revised.

6. Directed towards efficiency: Planning is directed towards efficiency. A

successful plan is what to do in the future? where to do it? Why to do it? When to
do it? by whom to be done and so on. planning helps to achieve organizational
objectives with minimum resources by utilizing the various resources like materials,
machine, capital and Labor efficiency.

7. Forward looking: Planning is the course of action for the future. It decides the
plan of action, what is to be done, when it is to be done, by whom is it to be done all
these questions are related to the future. Under planning, answers to these questions
are found out. Since planning is concerned with future activities, it is called
futuristic. Planning defines objectives, means and policy for future works. Thus, it
is related to the future.
Decision Making

Concept of decision making:

Decision making means to select the course of action from two or more alternatives.
In other words, the act of choosing one alternative from among a group of
alternatives is known a decision Making. It is the process of solving problems by
selecting the best alternative from various alternative to achieve the common good.
It is an integral part of modern management. Everyday a manager has to take
different types of decision to solve the problem.

According to George Terry, “Decision making is the selection based on some

criteria from two or more possible alternative"
Process/step of decision making:

a. Identification of problem: Identification of problem is the first step in the process

of decision making. It is lightly said that “Problem well defined is problem half
solved”. Information relevant to the problems should be gathered so that critical
analysis of problem is possible.

b. Analyzing the problem: After identification of problem the next step is to

analyze the problem. The problem should be analyzed on the basis of available data
and information related to the problems. A decision maker should find out the basis
and minor reason for creation of the problems.

c. Development of alternative: The decision maker should be creative. He should

develop the various alternative to solve the problem. All possible solution should be
developed and studied.

d. Selecting the best alternative: After development of alternative the next step is
to select the best alternative. That alternative is the best alternative which can fully
contribute and can be implemented for the success of execution of plan. If the
selected alternatives couldn't become the best then it might lead to failure o the
business.

e. Implement the selected alternative: After selecting, the best alternative, the next
Step is to implement the selected alternatives and to implement the activities,
managers need support from every corner. If he fails to get the support he can't
implement the selected alternative into action. This may lead to failure of the
business. Therefore, the success totally depends upon the ability to translate into
action.

f. Evaluate the results and follow up: In the last step, the implemented activities
are continuously monitored and evaluated and the results obtained should also be
evaluated. If the result is not in accordance with the expectation, certain changes
have to be made to make it success! That can be follow-up by controlling.

Types of decision making

A. Programmed and Non-programmed: A programmed decision is applied to

structure a routine problem. This used for routine and respective work. Decision
maker know in advance what decision one has to take in a particular set of
conditions. Programmed decision is also known as readymade decision. Under this
type of decision, it is not necessary to make detailed study to solve any kind of
problem. Non-programmed decision is used for unstructured novel and will define
situation of a nonrecurring nature. They have no readymade courses of action as
decision may be changed with the changed in environment factors.

B. Major and minor decision making: Among several decisions some decisions
are considered more important than others. The decision which are relatively more
important are considered a major and which are less important are considered as
minor decisions. The major decisions are those which have long range impact like
replacement of man by machine.

C. Routine and basic decision making: Routine decisions relate by day to day
working of the organization. Such decision is made within the framework of set
rules, policies and procedures. Such decisions are taken frequently by middle and
the lower-level manager who are responsible for the supervision of actual operation.
But those decision which are very crucial, unique and which involved long term
commitment, large investment policy decision etc are basic decisions.

D. Individual and group decision making: Decision can also be classified on the
basis of persons involved in the decision-making process. When an individual takes
a decision, it is known as individual decision. Individual decision is generally taken
in small organization. Individual decision is also taken in big organization if they are
of routine nature. When a number of persons collectively take the decisions, it is
known as group decision such as decision taken by the board of directors, committee
etc. Such decision is generally taken in big organization which follow the
participative style of management.

E. Policy and operating decision making: Decision which are involved in a change
of the procedure, programmed or strategy of the organization and which are taken
by the top-level management are called policy decision, whereas operating decisions
are related to the day-to-day operation of the enterprise. This type of decision is
taken by lower-level management. It is generally related with routine activities for
smooth functioning of policy.
Importance of decision making
a. Fundamental function: Decision making is the fundamental basic function of a
manager which is directed to obtain the organizational goal. The function or task is
performed by manager at all the levels of organizations.
b. Indispensable component: Decision making is an indispensable component of
management process. Every manager is engaged in decision making for what is to
be done? Who will do it? How it is to be done? Why it is to be done? and where it is
to be done?
c. Pervasive function: Decision making is the pervasive function of manager aimed
at achieving organizational goal. All managerial functions such as planning,
organizing leading and controlling as well as all functional area such as production,
sells, marketing and finance involved in decision making. The function of decision
making is performed by managers at all level of managerial hierarchy.

d. Selecting the best alternative: A decision making is basically a choice making

process. It is necessary in every organization because there are many alternative
courses of action to most situations. The decision maker evaluates various merits
and demerits of every alternative and select the most acceptable alternative.

e. Evaluation of managerial performance: Managers spend a great deal of their

time in decision making. Making good decision is not only important but also
essential to managerial success. Hence, managerial performance is evaluated on the
basis of a number and the importance of good and effective decision.

f. Successful operation of business: In every organization all activities are done

through decision. In this competitive age, the organization can exist and develop
only when practical, appropriate and correct decision are made. Therefore,
successful operation of business depends upon wise proper decisions.

Unit 4: Organizing

Concept of Organizing:
Organizing is the main function of management. It can be taken as the backbone of
management. It is the process of identification and grouping of activities of
enterprises and established in the activity and relationship among them. It ensures
the right person, at the right places, at the right time. Grouping the activities and
resources in a logical manner is organizing. It includes dividing the work,
assigning people to it, allocating resources and coordinating effort, job designing,
structuring, authority responsibility, etc.
According to Henry Fayol, "to organize business means to provide everything
useful do it like function, raw materials, tools, capital and personnel. In conclusion,
organizing is a managerial function that involves arranging and structuring work to
accomplish the organizational goal.
Process of organizing:

1.Determination of objectives: Every organization is organized and established

with particular objectives which is the first step of an organization process. Without
objective, organizing has no meaning. All the activities in organizing are carried out
to fulfil those activities. Thus, objectives the organization should be clearly
determined.
2. Identification of activities: The next step in organizing is to identify and define
the activities to be performed in order to fulfil the objective. Thus, organizations
should identify its activities to be done, considering the environmental change.

3. Grouping activities: after identification of activities, the next process is grouping

in the activities. The act of grouping of activities is known as departmentation.
For example production department, sales, financing, human resource, marketing
department etc. And these activities may be grouped in different basics like
functions, products, customers, etc.

4. Allocation of duties and responsibilities: Now, in the fourth step of the

organizing process, a group of related activities is assigned to different individuals
for the ability of the individual, capability of people and job requirement must be
matched. The process of assigning duties creates responsibility to perform the work
among workers and avoid duplication of work and overlapping efforts.

5. Delegation of authority: Delegation of authority is an essential step of

organizing. Without delegation of authority, individuals will not be able to perform
his/her task. The authority and responsibility should be properly balanced and top-
level management most delegate authority to its lower level management.

6. Coordination: In order to get optimum performance, coordination is necessary.

The activities and effort of different individuals and departments should be
coordinated for teamwork and efficient performances.

Principles of organizing

1. Authority and responsibility: Authority English punctuality is the major part of

an organization. They must be clear and balance these two factors. Responsibility
without authority cannot perform work confidently and authority without
responsibility makes a person irresponsible.
2. Balance: According to this principle there must be balance ok equal workload
among all departments and employees. The main objective of this principle are:
1. To complete given work in time
2. To increase efficiency
3. To manage division of work
4. To manage centralization and decentralization
5. To balance between vertical and horizontal structure
6. To balance resources between top-level management and middle level
management.
7. To balance between management and communication.
3. Co-ordination: every organization has established a predetermined and defined
goal. The different departments and employees are involved in various activities but
a common goal. This principle makes harmonious working relations between all
departments and employees and all levels of enterprises.

4. Division of work: entire work of an organization should be divided into different

parts. the employees should only action part of job. In other words, division of work
improve efficiency and productivity of the workers. In a sound organizational
structure division of work can be practice well.

5. Efficiency: organization should be able to attain the missions and objectives of

enterprise at the minimum cost. It can be done only by establishing efficiency. An
efficient organizational structure helps to operate the resources efficiently. Proper
organizational structure and knowledge are experienced by employees are essential
to achieve organizational efficiency.

6. Flexibility: the organization structure must be flexible or adjustable in any

situation. For example, internal and external environment. This principle sweet be
so flexible that organization can easily adopt any kind of political, economic, social
and technical changes. lack of flexibility or complex procedures or absolute control
are the obstacle of growth and development of organization.

7. Goal: the goals of the organization influence the organization's structure. Hence,
the goals and objectives must be clearly defined for its department and employees
then the entire goal of the organization cannot be achieved.

8. Leadership: this principle states that there must be only one superior who gives
command. It means only one superior command to many sub ordinates. if a person
is to receive direction from several superior it may result confusion, conflict and
indiscipline.

9. Simplicity: organizational structure should be simple. It should be very easy to

understand about authority, rules, regulation and duties of everyone in the
organization. it promotes better understanding relationship and cooperation among
all the members.

10. Scalar chain: scalar chain is also known as a chain of command. This principle
states that the authority flow from the top-level to lower level and the chain of
command should not be broken. Chain of command should be short and clear which
makes decision making and communication more effective.
11. Specialization: specialization refers to the distribution of works among the
workers on the basis of their qualification, experience and talent. it increases the
efficiency of workers and motivates them to put their paste in the work. When an
individual employee repeatedly performs specific single job then he/she becomes an
expert in the job.

12. Span of control: it is a principal or it is just a device with the help of which
phone number of subordinates can be controlled, their number can be determined
and their activities can be supervised. A manager cannot supervise and control
unlimited numbers of subordinates. Hence, depending upon the size and nature of
an organization, one can have narrow or wide span of control to bring effectiveness
in order to achieve the organizational goals.

13. Homogeneity: it is a logical process of grouping similar activities into one

group. it means similar words having the same objectives it should be divided into
one group.

14. Continuity: the business activities of an organization are a continuous process

up to the existence of the organization. it is never ending function of an organization
because of changing environment. Continuity health organization to survive and run
for long duration of time.

Importance of organizing:

1. Efficient administration: A sound organization is necessary for efficient

administration and management. Organizing is an important and only tool to achieve
enterprise goal. It helps the management in many ways. It defines various activities
and their authority relationship in the organizational structure. It can avoid confusion
and delay as well as duplication of work.

2. Optimum utilization of human resources: A sound and effective organization

utilizes to human resources properly. it places the right person in the right job in the
right position and department. Such matching of individual and job help in better
use of human talent and capability.

3. Facilitates growth and diversification: scientific organizing function facilitated

growth and diversification of an organization. Any organization should not remain
always in the same condition. It should be developed and diversified according to
the running of time. Organizational structure plays an important role in its growth
and diversification. Organizing contributes to the growth and diversification of the
enterprise through decentralization.
4. Optimum use of new technology: use of new technology in organizing process
is flexible. a scientific organizing function provides opportunity for optimum use of
technological innovation. Dynamic organizing and be effectively and easily adjusted
to the technological changes.

5. Specialization: organizational structure is the network of relationship in which

the work is divided into units and department. This division of work is helping in
having specialization in various activities concern.

6. Effective coordination and communication: it is the only sound organizing of

an enterprise which creates coordination and establishes communication among
various department and individual along with different level of enterprise. It is helps
to establish structural relationship between difficult jobs and position.

7. Productivity and job satisfaction: organizing process is based on democratic

and participative management. Hence, the entire organization's environment is
favorable for productivity and job satisfaction.

Organizational structure: the organizational structure of an organization is

referred to as the Framework that is designed to clarify the tasks, authority,
responsibility and power of managers and staff in a systematic manner. An
organizational structure is most important requirement of management that removes
barriers and conclusion from the performance of duties and rights. It is also called
organizational chart.

Types of organizational structure:

1. Line organization structure: Line organization is one of the simple and oldest
type of organization. Which organization provides the clear division of authority
and responsibilities. In which type of organization, the authority flows from top-
level to bottom level and accountability and flows from bottom level to top-level
management. It is also called military organization is it was first developed and
used by military.

a. Pure line organization: Pure line organization is that type of organization in

which similar type of works is performed by the workers/employees. And workers
are grouped for carrying out their duties. These employees are under direct control
of supervision of one manager.

b. Departmental line organization: in departmental line organization, different

departments are established to carry out the function and each department has a
department head to control and supervise to employees. The employees of one
department can't be directed and controlled by the other department head.
Characteristic of line organization:

a. Scalar chain: There is scalar chain formal line of authority moves from top to
bottom in a straight line. This chain specifies the root of order, information, etc.

b. Span of control: there is a limit on subordinates under one supervisor in line

organization. This number varies with the volume nature and type of work. Normally
one manager and 1 to 4 employees on average.

c. Level: there are different levels of management such as top-level medium level
and lower level. EA level of management has certain authority and responsibility.

d. Flow of authority: there is vertical flow of authority and responsibility.

possibility goes downward from top-level and accountability goes upward from
bottom level along the chain of command.

e. Unity of command: there is unity of command. An employee received order from

his hall immediate boss. He/she is enjoyable with him/her.

Advantages of line organization:

a. Simplicity: It is the simplest type of organization. It can be easily understood by

all employees. Clear authority and responsibility, relationship, chain of command,
direct supervision, etc. make it simpler. It is easy to understand and implement.

b. Clear authority and responsibility: the authority of every person is clearly

defined in line organization. Everyone knows her duty, authority and responsibility.
Similarly, he/she knows when he/she gives order and whom to give order to.

c. Quick decision: In this type of organization, manager can take quick decision.
Due to the factors of fix responsibility and unity of command, the officials can take
quick decisions.

d. Less expensive: line organization is economical. Effective supervision, better

controls, uniformity in direction, clearly define authority, effective performance, etc.
brings economy in line organization.

e. Flexibility: Since is department has authority and responsibility of his or her

department, he or she cannot adjust the organization as per dynamic enforcement.
Thus, line of organization is flexible.
f. Unified control: the control is unified and concentrates on one person and
therefore, he can independently make visions of his own. Infect control ensure better
discipline.

Disadvantage of line organization:

a. Autocratic: Authority is centralized at top-level in organization. It leads to

autocratic behavior. Lower level of subordinates has no opportunity to take part in
decision making.

b. Lack of specialization: There is no functional specialization in line organization.

As one person looks over all the work the work relating to his department it, there is
no scope for specialization. One person cannot be expert in all area.

c. Scope of favoritism: There is scope for favoritism in line organization. In

organization, the anomalies short age favoritism nepotism hypocrisy personals
prejudice, etc. get encouraged by which incompetent personals can get higher
position. Lower level is not provided with any opportunity to present their view point
of the top-level.

d. One-way communication: There is one-way communication from top to bottom.

The policies and strategies which are framed by the top-level authority are carried
out in the same way. This leaves new scope of communication from the other end.
The complaints and suggestions of lower authority and not communicated back to
the top-level authority.

e. Useful for small organizations: line organization is very old, simple and
common type of organization. it is extremely useful for small organization but not
useful for big and dynamic organizations.

2. Line and staff organization: Line and staff organization structure is also simple
structure. it defines duties authority's responsibilities and accountabilities for all
level of employees. It has unity in command. Direction goes from top to downward
and request goes from bottom to upward. Special employees or technicians are
appointed to help chief executive. Their duty and authority are not prearranged in
line what they work is the advisory. They have no authority to give order or direction.
The objective of line and staff organization structure is to use experts and technicians
to achieve organizational effectiveness. The expert and technicians give advice and
suggestion to line officials and managers. The help managers in policy making
activities.
Line and staff design structure have two types of staff: they are in line authority and
functional specialists. Line authority add those employees who have officially
sanctioned ability to give order to subordinate employees within an organization and
functional specialists are advisors of line authorities. Function of specialists are
expert of an organization. The provide advice to the line authority is in in the
performance of their duties. Functional specialist has no authority to give direction
to the line authority.

Characteristics:

a. Mixed structure: the line and staff organizational structure is the blend of line
and staff design structures. It ensures all the benefits of both line and staff. It was
evolved in order to avoid the defects of the line and staff organization and achieve
the advantage of these two forms of organization.

b. Practical decisions: in this organizational structure, there is a provision offline

opportunities and functional specialist. The functional specialist provides advice to
the line officers or authority in the performance of their duties, which ensures high
quality of decisions.

c. Work efficiency: there is a provision of two types of staff in line and staff. They
are line authority and functional specialist. Line authority has officially sanctioned
ability to give orders to subordinate employees within an organization but have no
authority to give direction to the functional specialist. Provision of two types of staff
increases work efficiency.

d. Effective coordination: This organizational structure ensures effective

coordination among different levels of management and union. Top-level of
management plays a vital role in maintaining coordination in an organization
command, rules and regulations.

e. Flexible: Line and staff organization is highly flexible. Organization can create
new department most existing department and appoint line authority and functional
specialist is for requirement of the organization.

Advantage of line and staff organization:

a. Socialization: this type of organization is based on planned functional

specialization.

b. Simple: this is very easy to understand and implement.

c. Sound decision: line and staff organization had made it possible to take second
decision.
d. Reduce workload: best of officers provide expert suggestions often detailed
analysis of each important management activity. This reduces the workload of line
officers.

e. Flexibility: in line and staff organization, start can be added to the line without
disturbing the procedure. Hence, there is greater flexibility in the organization.

f. Coordination: when all activities relating to one department are managed by one
individual, there is possibility of effective coordination.

Advantages of line and staff organization:

a. Relief to line executive: On a line and staff organization, the advice and
counselling which is provided to line executive divides the work between the two.
The line executive can concentrate on the education of plants and they get relieved
of dividing their attention to many areas.

b. Expert advice: the line and staff organization facilitate expert advice to the line
executive at the time of need. the planning and investigation which are related to
different metals can be done by the staff is specialist and line officials can
concentrate on execution plans.

c. Better of specialization: Line and staff through division of all concern into two
types authority divides the enterprise into parts and functional areas. This helps
every official and officials to concentrate in their own area.

d. better coordination: line and staff organization through specialization is able to

provide better decision making and concentration remains in few hands. this feature
helps in bringing coordination in work is every official is concentrating in their own
area.

e. Benefit of research and development: through the advice of specialised staff,

line executive get time to execute plans by taking productive decision which are
helpful for a concern. this gives a wide scope to the line executive to bring innovation
and go for research work in those areas. This is possible due to the presence of staff
specialist.
Disadvantage of line and staff organization:

a. Conflict: there is generally conflict between the line executives and staff
executives. Line managers feel that staff specialist does not always give right type
of advice and staff officers generally complain that dear advice is not properly
considered.
b. Lack of initiation: line managers excessively depend on staff's advice for
decision making. the original idea, action and initiative of online managers may be
gradually reduced.
c. Costly process: this form of organization is relatively expensive because under
this form two separate types of executive line and staff are to be employed at high
salary.
d. Confusion: in this form of organization, authority and responsibility between the
line and staff executive may not be clearly made which may result in confusion and
may hamper the coordination.
e. Negligence: staff member lacks practical knowledge. They are not accountable
for result.

3. Functional organizational structure:

Functional organizational structure was developed by F.W. Taylor to save the

serious problem of lack of socialization in the line of organizational structure and
the lack of authority to implement tire of expert in the line and staff organizational
structure. According to him, each person is not specialized in different subjects.
Therefore, he is in a position that activity should be divided into groups or main
groups and how to handle the activities. Under functional organization the entire
work of organization is divided into major function. Functional organization groups
employees according to board business activities resulting in departments such as
development, manufacturing, sales, manufacturing department, HR department and
finance department. Departmental managers supervise wide base of employees
under them. Each employee is superior. each department performs is specialized
functions for the entire organization. The sales department deals with sales on behalf
of the entire organization.
Characteristics:
The characteristics of functional design structure are:
a. Division of activities: The functional design structure device business activities
into specific functions of research and development, manufacturing, sales, finance,
human resource and so on.
b. Functional departments: The functional design structure device departments on
the basis of functions of organization such as research and development department,
manufacturing department, sales department, finance department, human resources
department and so on.
c. High efficiency: High efficiency is achieved in functional design structure
because every function is performed with specialist.
d. Suitable: A functional structure is best suited as a producer a producer of
standardized product as large volume and low cost.
e. Effective communication: The functional organizational structure ensures
effective communication between functional groups. People easily communicate
and co-ordinate with their friends and departments.

f. Centralization: All the authorities and decision-making power are centralized in

the hand of top manager.

Advantages of functional Organizations structure:

1. Specialization: It ensures maximum use of the principle of managers

specialization. All managers are specialized of their field. Hence, it provides the
benefit of specialization.

2. Efficiency: It increase the efficiency of the subordinates they get advice and
assistance from specialist. Efficiency also higher because every person concentrates
on a single leading function.

3. Relief to executive: This organization is based on specialization. Therefore, every

executive concentrate on a particular activity they are not over burdened with work.

4. Mass production: It facilitates mass production through specialization and

standardization of operation.

5. Flexibility: Any Change in the organization can be introduced without disturbing

the whole organization. Hence, there is an element of flexibility in these types of
organization.
Other advantage:
1. It ensures the separation of mental and manual function.
2. Division of work is possible.
3. There is the possibility of promoting cooperation as there is no space for one
man control.

Disadvantages of functional Organizations structure:

1. Lack responsibility: Management has to face difficulty in defining authorities
and responsibilities to the employees because of multiple authorities. There is also
difficult to group organizational activities into different department.
2. Lack of unity of command: Functional design structure lacks of command as a
result one worker has to obey orders of several bosses and has to be responsible to
all.
3. Conflict: Due to the lack of clearly defined authority, conflict may appear
between foreman and supervisor in functional organization. They may remain in
own stand on certain issues.
4. Highly mechanized: The functional design structure is highly mechanized. It is
not appropriate in stable environment and for routine task and technology. It cannot
manage change.
5. Lack of Coordination: There may be a lack of mutual understanding between
the function specialist and other subordinates which may result in lack of co-
ordination.
6. Delay in decision making: Management has to invert more time to come into a
concrete decision, so there may be relay decision making.

Departmentation

Departmentation is the process of grouping jobs according to the sound logical

arrangement. It simplifies administration, increases efficiency, managers the right
person at the right place and fixes authority and responsibility. It also motivates and
develops managers and facilitates coordination of specialists. Departmentation
combines jobs into several groups. It can be made on the basis of functional area,
number, customer, process, product time and service.

According to Y.K. Bhusana, "Departmentation is the process of grouping activities

into units for a purpose of administration"

In conclusion, the process of grouping the activities into department is known as

departmentation. Improvise advantages of specialization, fixes authority and
responsibility, accountability, develop managers and helps to achieve organizational
effectiveness.

Methods/types/basis of departmentation:

A. Departmentation by function: This is a very popular basis of departmentation.

It is very simple and most common method of departmentation. Under this method,
activities are grouped into different functions and each major function is grouped
into a separate department. For example: production, marketing, finance, personal
and research and department in a manufacturing company.
Advantages:
i. Logical Form: it is your most logical form of departmentation.
ii. Better coordination: it ensures better coordination in an organization.
iii. Opportunity: employees have the opportunity to move up within the functional
areas which gives reasons for them to stay long term.
iv. Eliminates duplication: It eliminates duplication in work.
v. Effective control: effective control is possible in functional departmentation.
vi. Reduces the burden of top management: this type of departmentation reduces
the overload and overburdened of the top management. The CEO need not have to
give his/her time to the departmental work, he/she can get sufficient time in planning
for growth and development of the organization.
vii. Autonomy: department has the autonomy to work as for rules and regulation on
change head of department and employees do better for the department and
prosperity of their concerned department.

Disadvantage:
i. Costly: it involves maximum supervision and administrative cost.
ii. Not suitable for large organizations: If the organization grows larger, the
functional areas can become difficult to manage properly.
iii. Conflicts: functional areas may become distracted by their own goals and focus
on them rather than on overall company objectives.
iv. Declines in organizational effectiveness: The major goal gets less importance
from departmentation on the basis of functions. This brings decline in organizational
effectiveness.
v. Static: it is static. It cannot response to the environmental change

B. Departmentation by product or service: Grouping of organization activities on

the basis of product or product line is called departmentation by product. This type
of departmentation is important in a multiline large-scale enterprise. Thus, product
departmentation is suitable for a large enterprise with diversified product i.e.
multiline goods or service. For example: agriculture good departments, general
consumer goods department, technical or consumer durable product department,
machinery and equipment department, etc.

Advantages:

i. Utilization of capital, skills and knowledge: it becomes possible for the

maximum utilization of capital, person’s skill any special knowledge.

ii. Effective coordination: Effective co-ordination takes place among departments

of the organization.

iii. Responsibility: responsibility of success and failure lies at the departmental

level. Departmental manager of HOD Bosch all the responsibilities of his/her
department.

iv. Suitable for large organizations: this method of fermentation is very suitable
for large organizations which deals with many kinds of product or product lines.
v. Specialization: Each department is dealt with by separate managers who have
special knowledge, ability and experience about the product line. Thus, this method
of departmentation ensures specialization.
Disadvantages:
i. Costly: it involves maximum administrative and other costs. It requires
knowledge, skilled, experienced and motivated managers and other employees.
ii. Problem in coordination: If there is lack of coordination among departments
then problems may appear in the way to goal achievement.
iii. Lack of autonomy: since planning, policy making and controlling remain in the
hand of chief executive officer, departmental managers do not get full autonomy.
iv. Ignorance of corporate objective: departmental manager may ignore the
corporate objectives.
v. Unhealthy competition: unhealthy competition text place among departments
which leads the organization towards failure.

C. Departmentation by territory: Departmentation can be done on the basis of

Territory or geographic location. It is useful to a large-scale enterprise whose
activities are widely geographically dispersed. Bank, insurance company, tele
company, education, etc. generally, adopt this type of departmentation. Under this
type of departmentation, activities are grouped into two regions; zones, branches etc.
Many multinational companies add these types of functions.
Advantages:
i. Emphasis on local region: The local region can gain benefit from this method of
departmentation. Details to develop the local market in different regions. Special
attention is given to the local market.
ii. Better coordination: This method of departmentation insurance coordination
through the creation of regional divisions.
iii. Effective communication: There effective communication with customers in
this type of organization. direct contact can be maintained with the local people.
iv. Economy: economics can be maintained by utilizing local resources effectively
and efficiently.
v. Dynamic: it considers environmental change. It can manage change effectively.
Disadvantages:
i. Need of efficient and experienced employees: efficient and experienced
employees are needed to conduct regional departments. Without them, no
organization can develop and expand.
ii. Costly: business departments incurred extra expenses which increases production
and administration cost. It is a costly method of departmentation.
iii. Difficulty in coordination and control: if the functions are dispersed, it is
difficult for the central office to effectively coordinate and control.
iv. Problem in integration: there is a problem of integration of regional division.
v. Suitable: geographic departmentation is suitable only for the big size business
organization.
D. Departmentation by customer: The activities of an enterprise that are grouped
on the basis of the type of customer is called departmentation by customer. Big
enterprises that provide special service to these types of customers adopt this type of
departmentation. It increases concentration on customer needs. It creates strong
public image.
Advantages:
i. Interest of customers: it reflects primary interest of customers and encourages
concentration on customer needs.
ii. Customer satisfaction: it focuses on customer satisfaction and starts and
develops their enterprise in the customer area.
iii. Close contact with customers: it becomes easy to remain in close contact with
customers and it becomes easy to identify their changing needs, wants and interests.
iv. Good relation: the customer can get an opportunity to know everything about
the organization, it helps to develop understanding between the organization and
customers, as a result good relation is maintained between them.
v. Suitable dynamic environment: it is suitable in the dynamic environment.
vi. Useful for the organization which deals with different kinds of customer: this
method of departmentation is very useful for the organization which deals with
different kinds of customer.

Disadvantages:
i. Difficult to meet needs of customer: Despite identification of customer's wants,
interests, needs, it is very difficult to meet them.

ii. Difficult in coordination: it is difficult to bring coordination between customer's

demand and organizational operation.

iii. Problem to define customer: The customers cannot always be defined clearly
regarding products.

iv. Not suitable for organizations which produce few products: This method of
departmentation is suitable only for the organization which deals with different types
of customers but not for which produces few products.

v. Underutilization: there is only utilization of facilities and labor specialized

workers in customer groups.

E. Departmentation by time: In this method of departmentation, activities are

grouped on the basis of timing of their performance. This is the older form of
departmentation. Generally used for lower level of organization. A separate
department may be made for each shift that is morning day evening and night. Which
type of departmentation is usually found in hospitals, hotels, telecoms, etc.

Advantages:

i. Suitable: it is economically, technically and practically suitable for the

organizations which provide 24 hours’ service to their customers.

ii. Utilization of available resources: there is possibility of optimum utilization of

available resources services human resource, physical resource, financial resources
and informational resources in this departmentation.

iii. Flextime: It includes flextime facility. those employees who cannot work in day
time can get the opportunity to work in evening or night time and vice versa.

iv. Better coordination: this method of departmentation facilitates the better

coordination by grouping employees into different shifts.

v. Authority and responsibility: it provides sufficient authority and makes a

responsible shift manager.

Disadvantages:

i. Lack of communication: As many departments work during their time, there

cannot be effective communication among them. It reduces coordination.

ii. Conflicts: sometimes difficulties may appear on the way to the organizational
goal due to conflict between the interest of shift or department.

iii. Unsuitable: departmentation on the basis of time is not suitable for types of
organization. It is appropriate only for public utility enterprises.
iv. Lack of supervision: people working in shifts may not be supervised properly.
v. Costly: it involves maximum cost due to payment to workers in different shifts.

F. Departmentation by process: In big organizations, activities are grouped on the

basis of process used in production activities. Manufacturing companies use this
basis of departmentation.

Advantages:

i. Effectiveness: it brings effectiveness in special workflow. It enhances operational

efficiency of the organization.
ii. Utilization: it utilizes available resources such as human, physical, technological
and informational effectively and efficiently.

iii. Suitable: it is a very suitable dynamic environment. It manages changes.

iv. Specialization: the people focused only on one task and the managers can be
expert in that task. Thus, it allows for specialization.

v. Authority and responsibility: it provides authority and responsibility to process

the head. It defines the authority of each process head and related employees.

Disadvantages:

i. Inappropriate: which is the most appropriate for manufacturing organization and

inappropriate for other sectors.

ii. Lack of coordination: In this method of departmentation, there is lack of

effective coordination.

iii. Conflicts: conflicts among goals and persons may appear in the lack of effective
coordination.

iv. Costly: it is a very costly method of departmentation.

G. Departmentation by numbers: In this method, departments are created on the

basis of the number of persons performing the same duties. Each group is placed
under the control of a supervisor. This method is generally followed in army or
security forces. In a manufacturing unit, this basis may be followed at the lower level
of hierarchy. This departmentation can be used in hospitals (patient's number), banks
(account holder's number), insurance (policy holder's number), traffic police
(vehicle's number), schools (students roll number), etc.

Concept of authority (upward to downward)

Authority is the right to give order and direct the actions of others through which the
organization's goals can be achieved. Authority is the legal power to act or to
command. it is essential for implementing the various managerial functions.
Authority in balls the lower to make decisions, to give orders, to give the activity
octagon image and to utilize organizations resources. It always flows from upward
to downward.
According to S.P. Robbins, "authority is the right to act or command others to act
towards the attainment of an organization's goal."

Concept of responsibility (downward to upward)

Responsibility is the aggregation of subordinates to perform the duty given by the

boss. It always shows from downward to upward. Responsibility cannot be
delegated. Responsibility is a personal obligation which can never be easily dated.
It arises only when your superior has assigned duty to a subordinate. The sense of
responsibility is the obligation to complete the job.

According to S.P. Robbins, "responsibility is the obligation to perform delegated

duties and tasks."

Concept of accountability

Accountability is related with both authority and responsibility. It is neither authority

nor responsibility. However, it is used as synonym 2 responsibility. Accountability
is the obligation of subordinate to report back to the superior that the assignment has
been completed. Accountability or ultimate responsibility cannot be delegated
because it is absolute in nature.

According to S.P. Robbins, "Accountability is the obligation to one superior to carry

out the assignment in a satisfactory manner." In conclusion, to perform the delegated
work satisfaction and give answer to the superior about the performance is
accountability. I cannot delegate it on any condition. All the person should fully
accountable for their performance.

Delegation of authority

Delegation of authority is a process of giving power or authority to subordinate by

the superior in order to perform a particular task. Delegation of authority always
flows from upward to downward. Delegation of authority is practically the basis of
modern management.

According to F.G. Moore, "delegation means assigning world to others and giving
them authority to do it". In conclusion we can say that delegation of authority is
assigning work to others and giving them necessary authority to do the same work.
it is a process which enables manager to put the managerial decisions in actions.
Principle of delegation of authority

i. Equity of authority and responsibility: it is the most important principle of

delegation of authority. The authority to the subordinates is given by superior on the
basis of the task assigned to them, neither more nor less to the task. If more authority
is delegated possibly there may be misuse and if less authority is delegated perhaps,
it may be difficult to accomplish the task.

ii. Absoluteness of responsibility: according to this principle, only authority can be

delegated but responsibility cannot be delegated. the person delegating authority is
himself responsible to his seniors. So, responsibility cannot be delegated.

iii. Unity of command: As far as possible should be commanded by one superior.

We should take their task from one superior and discharge their responsibility to the
same superior. It will help subordinates to know the sources of authority.

iv. Scalar chain: according to this principle, authority list from top to downward.
Scalar chain is the basis of relationship between senior and subordinates. A proper
understanding of scalar principle is necessary for the proper functioning of the
organization.

v. Functional definition of authority and responsibility: Before delegating

authority, a manager should define clearly the functions to be performed by
subordinates. Each subordinate must fully understand the nature and significance of
his job. It's relationship with other jobs and limits of his authority.

Importance of delegation of authority:

i. Higher productivity: delegation of authority ensures higher productivity.

Subordinates use is motivated to give their best at work. Delegation of authority of
also reduces the overburden of manager, as a result it they have enough time to
engage in policy making and managerial function.

ii. Quick decision making: delegation of authority ensures quick and rational
decision making. Efficient it can take the decision quickly within the limits of
authority. They have also easy to take decision on routine matters. They do not need
to consult which prepare for the same task.
iii. Improves morale: delegation of authority improves the morale of subordinates
as they are given duties and authority to complete same duties. Subordinates feel
that they are crucial and they are needed for organization. Their attitude will be
positive towards their superior and organization. They will be creative and
innovative.

iv. Effective communication: delegation of authority ensures effective

communication which develops good relationships between the superior and
subordinates. The subordinates are answerable to superiors and the superiors are
responsible for performance of subordinates. Effective communication also
improves the overall quality of organizational climate.

v. Maintains cordial relationship: delegation of authority maintains cordial

relationship between superiors and subordinates. superior trust their subordinates
and give them adequate authority and subordinates accept their responsibility. Unity
of command and scalar chain also enhances dear relationships.

vi. Employee development: delegation of authority helps to develop subordinates

or employees by providing opportunities of learning, enhancing their managerial
skills, involving them in the decision-making process and making them efficient
successors. It provides efficient managers.

Barriers to effective delegation of authority:

i. Lack of ability to direct: some higher-level managers cannot have ability to direct
subordinates such managers do not like to delegate authority.

ii. Lack of trust: delegation implies a trust full attitude between the superior and
subordinates. Lack of confidence in the capacity and the subordinates. Lack of
confidence in the capacity and ability, manager may not trust subordinates. If they
felt subordinates and not capable of accepting the responsibility, they may not get a
chance.

iii. Lack of self-confidence: most of the subordinates lack self-confidence to work

with full authority. As a result, they raise barriers in delegation of authority.

iv. Fear of competition: some managers may feel that if the authority is delegated,
their good news will do better and they may pose a threat to their advancement. show
your off competition from a lower level is a barrier to effective delegation.
v. Fear of criticism: lack of motivation in management discourages subordinates to
take a responsibility and accept authority. Such an environment is found in
organizations where there is a lack of reward and adjustment system.

Decentralization (top to lower)

Decentralization means the systematic delegation of authority or power of decision

making to the lowest level of organization or its branches or department where the
work is to be performed. IT relates which distribution of authority, disbursement of
power and granting of authority to the subordinates. It is just the opposite of
centralization. Decentralization of authority is a management philosophy through
which managers at middle level and lower level are given the opportunity to take
decision and action on matters related to their respective area of work.

According to S.P. Robbins, "Decentralization is the degree to which authority has

been delegated to downwards."

Advantages/needs/importance of decentralization:

i. Relief to top executive: Decentralization relief top executive from routine and
day-to-day time-consuming works. As a result, top-level management devote greater
attention to order important organizational issues like planning, strategy and
decision making.

ii. Quicker and better decision: Decentralization leads to quicker and better
decision making. The authority to make decisions is placed in the hands of those
who are responsible for executing the decision.

iii. Development of managers: Decentralization philosophy income managers to

make decisions and exercise their own judgement. They learn the art of exercising
decision and making authority. This develops managerial competency.

iv. Higher motivation: decentralization helps to improve the job satisfaction and
morale of lower-level managers by fulfilling their needs for autonomy, participation
and status. It also fosters team spirit and feeling of cooperation among the
subordinates.

v. Facilitate diversification: decentralization of authority facilitates growth and

diversification of organizational activities. It helps to develop and introduce new
product markets and activities and also productivity and profitability.
Factor affecting Decentralization of authority:
i. Size of the organization: an important factor to influence decentralization is the
size of the organization. if the organization is big in size and away is big then
decentralization is compulsory otherwise authority is centralized.
ii. Dispersion of operation: authority Decentralization is also influenced by the
dispersion of operation. If an organization has conducted its activities indifferent
places or regions, it needs to decentralize authority, if not it does not need
decentralization.
iii. Nature of decision: nature of decision is also influenced by decentralization. If
the nature of decision is complex, expensive, special and long-term affecting
authority, decentralization cannot be possible. For example; the functions such as
planning, organizing, directing, controlling, etc. shouldn't be decentralized. Only
simple nature functions can be decentralized.
iv. Philosophy of top management: decentralization of authority also depends on
the philosophy of top-level management. If top-level management believes in
authority decentralization it becomes possible or otherwise it becomes impossible.
v. Growth and expansion of organization: if an organization has developed
expansion and has grown big, it's division and subdivision work for several regions.
The workload becomes heavy and authority Decentralization becomes compulsory
for systematic conduction of organizing expansion. Its functional area becomes
limited and activity digitalization is not needed.
vi. Control techniques: management will be willing to delegate authority to
subordinates if control techniques are good. In the absence of adequate control
technique, there is least chance of Decentralization.
vii. Organization Strategy and environment: The study and environment of an
organization influence the market position and its competitive strength. These
factors in turn affect the degree of decentralization of the organization.
Importance of delegation of authority.
1. Effective management.
2. Development of employees
3. Create future managers
4. Better coordination
5. Facilitates growth
6. Reduce the load of Managers
7. Improve superior subordinates’ relationship
Differences between delegation and decentralization of authority.
Basis of
Delegation of authority Decentralization of authority
differences
Delegation of authority is the Decentralization of authority is the
process of transferring and end result of delegation and
Nature creativity of responsibility dispersion of authority.
between superior and Decentralization is not possible
subordinates. without delegation of authority.
It is vital and essential to the It is optional and situational in
Need
management process. organization
In delegation of authority,
In decentralization, the superior is
Responsibility only authority is delegated,
relieved from the responsibility.
not responsibility.
It is the process of sharing It is the result of the policy decision
Status
task and authority. taken by the top management.
It is a technique of
Decentralization is both philosophy
Technique management used to get the
and technique of management.
things done through others.
Degree of control becomes
Degree of
more in delegation of It is less in decentralization.
control
authority.
It becomes difficult to
Achievement achieve organizational goals It can be achieved without
of goals without authority of decentralization.
delegarion.de

Unit: 5. Leading
Concept of leadership

Leadership is a main function of management. It influences the group toward the

achievement of goals. Power is an important factor of leadership; without power no
leadership is possible. Leadership also considered as a personal quality of an
individuals who organize the effort, capacity, talents of the followers (subordinates)
and directs those towards the attainment of organizational goals. Effective
management leadership is necessary to operate an organization effectively. Without
leadership no organization can exit. Thus, leadership is an important managerial
function

According to Stephen P. Robbins, "Leadership is the ability to influence a group

towards achievement of goals.”
Qualities of good leadership.

1. Personal traits:
a. Dynamic personality: It includes charming and cheerful personality strong and
sound health, conversational ability etc.
b. Knowledge and intelligence: A leader to be effective must have various
knowledge like group behavior, human nature, technical and personal skills. He must
have intelligent perception of human psychology and ability to think clearly. So that,
he can easily handle the difficult situations.
c. Self-confidence: A good leader must have a self-confidence and strong will
power. He should remain enthusiastic and cheerful in the face of obstacles otherwise,
he can’t enjoy trust of his subordinates. Self-confidence always leads to success.
d. Emotional Stability: A leader should have stable and balanced temper which
makes a hand good impression in the mind of the subordinates. He should remain
enthusiastic and cheerful in the face of obstacles.
e. Take lead and initiative: A leader should have ability to take the lead and
initiative business consists of complexities which requires the leaders to take
decision quickly. Besides, he has to have farsighted and creative ideas for effective
decision.
f. Flexibility: A successful leader always believes in flexibility but not in rigidity
(Quality). He also requires to be prepared to considered and accommodate other
view point and alters his decisions.
2. Management traits:
a. technical knowledge: A leader should have technical knowledge of the activities
undertaken by the organization. Technical knowledge about the organization will
enable him to take right decision of different matters related to the organization.
b. Organizing ability: A leader should have organized ability for accomplish the
goals of organizations. He should bring together man, machine and money in the
best possible manner and use these resources in most profitable way.
c. Human relation: Leadership is primarily consent with influencing and managing
people. A leader must be able to win the confidence and loyalty people. He has to
expire and motivate the personnel.
d. Motivating skill: A leader must possess motivating skills to induce subordinates
towards predetermined performance. For this purpose, he must have a true
knowledge of the needs of subordinate and must apply appropriate motivation at the
right time.
e. Effective communicator: A leader must be an effective communicator. He must
ensure the maintenance of two-way communication system. So that, the leader and
the subordinates both are free to exchange views freely without interruption.
f. Power of judgement: A leader should possess power of judgement and ability to
take the right decision at the right time. Power of judgement depends on one's self
confidence and self-control.
Function of managerial leader
a. Determination of goals: The important function of leadership is to determine
organizational goal. A leader performs the creative function laying down goals and
policies for the subordinate. He acts as a guide in interpreting the goals and policies.
b. Organization of activities: A good leader divides organization activities among
the employees, in a systematic manner. The relationship between them is clearly laid
down this reduce the chance of conflict between them.
c. Achieving coordination: A leader integrates the goals of individual with the
organizational goals and creates a community goal. He keeps himself informed about
the working on the group. He shares information with the group for the coordination
of its effort.
d. Representative of workers: A leader is representative of the group. He takes
initiative in all matters of interest to the group. He also attempts to fulfill the
psychological needs of the subordinates. The leader ie expected to act as a link
between the worker group and top management.
e. Providing guidance: A leader guides the subordinates towards the achievement
of organizational objective. He is available for advice whenever a subordinate faces
any problem. The problems may be technical or emotional in nature.
f. Inspiration of employees: A good leader inspire the subordinates for better
performance. Motivation is necessary for getting the desired work from the
subordinates.

The leader motivates the employees by providing them economic and non-economic
reward.

g. Building employee moral: Good leadership is indispensable to high employee

morale the leaderships shape the things and attitudes of the group. He develops good
human relations interaction between the member of the group. He maintains
voluntary operation and discipline among subordinates.

Leadership style:

1. Autocratic style: The autocratic leadership holds all the authorities of planning,
decision making, organizing and controlling with him/her. He/She doesn't think
necessary to consult or have discussion or take advice from others to do anything.
He/she direct commands and threatens his subordinates. So, it has only one way
communication. Such leadership are negative because the subordinate is uniformed,
unsecured and afraid to leader authority.
Advantages of autocratic leader.

1. It helps to provide strong motivation and reward to the leather.

2. It may work in the short-term like emergency or war.
3. Autocratic leadership can take quick decision.
4. No need to hire more competent assistant due to use order into action.
5. In autocratic leadership there is a provision of strict discipline among the
subordinates.

Disadvantages autocratic leadership

1. The employee or subordinates dislike it due to strictness and negative

motivational style. Subordinates have no role to the decision of the company.
2. Productivity decreases in the long time.
3. One man decision may be wrong.
4. The concept of creative isn’t passible in autocratic leadership.
5. It affects organizational efficiency due to lack of motivation, low morale,
frustration and insecurity of the employees.

2. Democratic style: Democratic leader provide participative environment in an

organization. He/she treats employees with humanity. He/she gives importances to
value and norms of employees. He/she provides opportunity of participation in
decision making and planning. Democratic leader respect others, take decisions after
having discussion and conclusion with others. He/she encourages delegation of
authority and two-way flow of communication is used.

Advantages of democratic style:

1. It brings greater employees and group cooperation.

2. It helps to bring job satisfaction.
3. It is useful for the recognition of human relation.
4. As the employees’ subordinates are involved in the decision-making process
there is a possibility of making better decision.
5. Worker’s participation in this style of leadership may help the workers to
utilize their capability more.

Disadvantages of democratic style

1. It is time Consuming the decision are made with the consultation of

employee’s subordinates.
2. It is no good for emergency time.
 3. The decision may not be effective as there is participation of lower-level
employees.
4. The style give priority to norms, value honors level respect etc but the
employees want financial facilities.
5. Reduce accountability.

3. Laissez fair style: Under this style the leader entrusts the decision-making
authority to his subordinates. This delegates all his authority so that subordinates
themselves take decisions. This style of leader is known as Laissez fair leader. He
avoids using power and leaves it to his subordinates to establish the goals. Let’s them
plan, organize and proceeds to attain the goals. He does not direct and hardly make
any contribution to the overall efforts. Subordinates are self-directed, self-control,
self-motivated. Laissez fair leadership is suitable for highly trained and professional
staff who are creative self-motivated required minimum guidance and control.

Advantage of Laissez fair leadership.

1. It increases job satisfaction and morale a subordinates

2. It provides maximum possible scope for the division of subordinates
3. Potential of subordinates is fully utilized.
4. Increased employees’ motivation.

Disadvantages of Laissez fair Leadership

1. It ignores the contribution of leader.

2. Sub-ordinates do not get the guidance of leaders.
3. It can make result in confusion
4. It can lead to lack of accountability.

Difference between autocratic leader and democratic leader

Autocratic leadership Democratic leadership
There is one way communication. There is two-way communication.
The decision-making process is time
The decision-making process is quick.
consuming and slow.
In this style, employees are highly
In this style, employees are highly satisfied.
dissatisfied.
Only one leader as decision maker. Participation in decision making process.
It is unpopular leadership style. It is popular leadership style.
Strict supervision and control. Recognition of human value.
It is me-oriented. It is we-oriented.
Unit 6: Controlling
Concept of Controlling

Control is the process that measures performance and guides it towards pre-
determine goals. Controlling is an important function of management. It monitors
performance, compare actual performance with standard and take action to ensure
desire result. Control is a dynamic process. Control prevents possible loss, damage,
leakage or misuse and increase productivity and profitability by optimum
mobilization of available resources. It creates friendly environment to enhance the
moral of employee. Control plays very important role in the achievement
organizational goal.

According to Ricky griffin, "control is monitoring organizational process toward

goal achievement.”

Importance of control

a. Optimum utilization of resources: Controlling has become immense importance

for proper and optimum utilization of human, physical and financial resources within
the organization. It ensures that whether the work is performed correctly from the
viewpoint of cost quality and time.

b. better planning: Control is the only means to ensure that the plans are being
implemented in the real sense. It points out the differences of planning by comparing
the actual performance with the planned, standard and suggest steps to improve
planning. It also provides useful information on the basis of which better plan can
be formulated in future.

c. psychological pressure: Control system puts a psychological pressure on the

employees for better performance. The employee will assure that their activities are
supervised, evaluated and these are related to either being rewarded or punished.

d. Reduction of cost: Controlling system helps the organization to reduce the cost
operation. It helps to eliminate wastage and leakage in the organization also the
duplication of work is checked, it reduces cost.

e. Helps in Coordination: As controlling determines standard of performance. It

helps to create co-ordination between the departments with it. Controlling is
essential to coordinate the activities of different staff and departments.
f. Simplified Supervision: Since, controlling consists of measuring and comparing
performance with the established standard. It helps the supervisor to keep their
subordinates under check and discipline. It provides regular reports on performance
and progress of work. Timely reports help supervisor in identifying gaps between
performance and standard.

g. Environment Adaptation: Business organization, operate in a constantly

changing environment. Control system helps manager to anticipate monitor and
responds to the changing condition. An effective control system is also required to
cope with complexities arising out of expansion diversification of business activities.

Controlling process:
a. Establishing standard: The first step in any control process is to establish the
performance standard against which actual performance a result can be compared.
Planning sets standard for performance standard may be quantitative when standard
is set in physical and monetary term such as: Volume of production, labor working
hours, cost revenue etc. standard may also be expressed in qualitative term in such
area as employee morale, motivation, superior subordinates’ relation etc. Where
quantitative standards cannot be set, standard should be clearly understandable.
Control standard should also be consistent with the organizational goal.

b. Measuring performance: The second step in the control process deals with the
measurement of the actual performance. It is the actual performance which as to be
compared with the standard. Hence, performance need to be measured constantly in
an ongoing process that provides quick feedback of accurate and relevant
Information. A sound management information system should be developing timely
and accurate measurement of performance.

c. Comparing actual performance with standard: The third step in the control
process is comparing the actual performance with standard. The comparison will
reveal whether the performance equal the standard be higher or be lower than the
standard. Where Standard are achieved generally no further managerial action is
necessary. Often Comparison will reveal the deviation where management must do
two things:

1. To find the extent of deviation.

2. Identify the causes of such deviation.
d. Taking corrective action: The last step in the control process is to take corrective
action. If actual performance does not meet the standard managers must initiated
corrective action. Such corrective action may be.
1. Revision of standards
2. Additional employee training
 3. Greater motivation
4. Change in the existing technique of direction
5. Revision of strategy and procedures
6. Product design improvement etc

Essentials of effective control

a. Suitability: Suitability is an element of effective control. It should reflect the

nature of the activities to be controlled. Besides, it should be surfed to the
organizational structure.

b. Quickness: Controlling evaluation performance should be in proper time and the

task of collect and distribution of related information should be as soon as possible.
If the deviation between standard and actual performance is not known in proper
time, corrective measure cannot be taken in time.

c. Economy: Control system should be economical that is less costly if it becomes

more costly increase the cost of production due to which product cannot compete in
market.

d. Simplicity: Simplicity is another important element of effective control. The

control system should be easy. So that the manager, subordinates and other employee
cam understand it easily. Complex controlling system may create confusion and
disorder among the employees. Even if new scientific controlling system is to be
introduced then it should be done in clear and understandable way.

e. Flexibility: Every organization operate it business in a dynamic environment

situation. Thus, the control system should be flexible. So, that it could be adjusted
to suit the need of any change in the environment. controlling system should not be
rigid.

f. Focus on strategic point: An effective control system should focus on those

critical area where deviation from standard is most likely to occur or would do the
greatest damage. The control system should also be concentrated on those area
where corrective action can be most effectively applied

g. Corrective action: Effective control system does not only show deviation
between standard and actual performance. It also helps in taking corrective
measures. So, corrective action is essence of control.

h. Acceptable: The control system should be made acceptable for all the members
of the organization. It should be acceptable by stakeholders.
Unit-7: Other Managerial Functions:

Motivation

We all know that motivation drives a person to achieve beyond normal. As such, it
is an environment can also make individuals think: What motivates people? How
can I motivate others? By asking about the source of motivation, one is looking for
an understanding or explanation of what is known psychologically about the
tendency of people to expand their energies. By asking how to motivate others, a
manager is assuming (a) that s/he can affect the behavior of others, and (b) that
his/her effect can override the other’s behavior.
Motivation as a factor influencing human behavior became an area of increasing
importance after the Second World War to fulfill the imperative need of increased
production. Motivation, concerned with all important human inputs, assumes crucial
importance when a system is confronted with challenges of development or a crisis
situation.
Importance of Motivation:
The importance of employee motivation may benefit the organization in many ways.
Let see some of the advantages of employee motivation to the firm as given below-

1. Ensures high productivity: Satisfied and high moral employees are necessary to
get high productivity motivation satisfied them and make them dedicated to
organization. So, motivation is related to goal-oriented activities which increases
productivity.

2. Better industrial relation: Motivation increase the productivity of the employees

and as a result earns higher wages. Attractive motivation scheme provides
satisfaction to employees these creates mutual co-operation at all levels. This will
reduce unrest land create better relation between management and workers.

3. Increase in willingness to work: Proper motivation system should be adopted

understanding the psychology of the employees. This increases their willingness to
work.

4. Effective utilization of resources: Effective utilization of all organization

resources that is physical, financial and human resources requires competent and
motivated employees. Motivation puts human resource into action. It creates
willingness to work among employees.

5. Accept organization changes: Organization operates in dynamic environment.

Changes should be made in organization according to the changes in environment.
Motivated as well as satisfied employees easily accepts changes. Thus, motivation
ensures changes management.

6. Improves environment of co-operation: Motivation improves moral of the

employees. This increases feeling of cooperation among employees and
management. Co-operative feeling develops in the employees as a result co-
operative environment prevails everywhere in the organization.

Types of motivation

A. Positive motivation: Positive Motivation is based on incentives or rewards.

Positive motivation is the process of attempting to influence others to do your will
through the possibility of incentive or reward. It implies use of incentive such as
increase pay, rewards, promotion, status and recognition etc. The incentive may be
in the form of monitory or non-monetary. Positive motivation is widely used in
present as of business.

B. Negative motivation: Negative motivation is based on force and fear. Negative

motivation means forcing people to work by holding out threats or punishment. Such
as threats of demotion, fear of loss of job etc. Fear causes people to act in a certain
way because they are afraid of the consequences if they don’t work. Thus, fear of
suspension, loss of job, demotion, wages cut etc can motivate employees to work
more the reason push him towards work, this method is hardly used.

In Fact, both positive and negative motivation are essential in organization. But the
fact that the work done by heart is more fruitful than the work done forcefully.

Techniques of motivation

1. Money as motivator: Money play an important role in motivation. Management

generally makes use of monitory incentive like wages, salaries, allowance, bonus,
retirement, benefits, provision of insurance, housing etc to motive employees. Most
managers have tended to place money high on the scale of motivators but behavioral
scientist place it low. However, money continuous to be an important motivator at
least in developing countries where physiological needs of employees only or
partially satisfied. Even in develop countries monitory incentive do result in greater
productivity. Hence, an attraction of getting more money such as more pay, bonus,
allowance, provision of insurance etc are powerful motivator to employees for high
performance.

2. Participation: Another technique of employee’s motivation is the participation.

Participation means the physical and mental involvement of people in activities.
Participation encourage and permits contribution to decision goals and plans along
with suggestion for implementation. It is also means of recognition. Most people are
motivated when they are consulted an action affecting them.

3. Quality of work life: Quality of work life is one of the important techniques to
motivation. Quality of work life refers to the quality of relation between employees
and their total working environment. It is employee’s perception of their physical
and mental wellbeing at work. Quality of work life is concerned with the overall
working climate in the organization.

4. Job Enrichment: Job Enrichment is the process of providing growth

opportunities challenges and potential for recognition in order that employees will
ready for the performance of job. Hence, job enrichment is best technique
motivation.

5. MBO technique (Management by Objective): MBO can be used as

motivational technique. Both superior and subordinate participate in discussion and
jointly said each individual major area of responsibility in-terms of result expected
of him/her. The subordinate performances result is evaluated in term of the set target.
Rewards are linked to performance. As a result, employees are motivated.
Maslow’s Hierarchy of Needs Theory
Human behavior is goal-oriented and motivation causes this behavior. Motivation
helps a person to understand his needs and tackle his needs purposely. The need
hierarchy model is the best way to understand human motivation factors and the
influence of the same.
Abraham Maslow had proposed the hierarchy of needs theory in 1943 based on an
assumption that there is a hierarchy of five needs in human life. The urgency and
importance may vary from person to person.
The needs are classified into five categories as per the theory in an order to
understand their importance and relevance to humans.
• Physiological Needs: The needs which are important for human survival and
maintenance are called Physiological needs. They are considered basic needs
or amenities such as shelter, food, clothes, water, air, etc.
• Safety Needs: The needs which help a human feel protected and secured are
called the safety needs of a human. These needs could be physical safety,
emotional safety, environmental safety or even protection of life and family.
• Social Needs: Humans are called social animals as they need love and
affection. There is always a need for care from family and friends.
• Esteem Needs: There are two factors to esteem needs. Esteem needs could be
internal or external. Internal esteem needs confidence, freedom, self-respect,
etc. External esteem needs attention, recognition, power, etc.
 • Self-Actualization Needs: This need includes a certain urge to become what
you think you have the potential to become. This need is directed more
towards the growth and success of an individual. These types of needs are
insatiable needs. The more knowledge a person gains the more he believes in
his capabilities and in turn there would never be a feeling of saturation of these
types of needs.
As per the theory, Maslow believes that human needs are unsatisfactory but are the
base of motivation for humans. He has bifurcated these above needs into two
categories. The Higher-order needs and the lower-order needs. The Physiological
and safety needs are lower-order needs as they can be satisfied externally. The other
three needs are classified as higher-order needs - social, esteem and self-
actualization as they can be only satisfied internally. As an organization or an
employer, it is important that the lower-order needs of the employees are satisfied to
promote motivation.
Implications of Maslow’s Hierarchy of Needs Theory
• An employer needs to ensure the employees are paid enough to meet their
physiological needs and should be allotted meal times at intervals.
• An employer needs to ensure the employees feel they are safe, secured and
protected. For example, providing job security, insurance privileges,
retirement benefits, etc.
• An employer needs to ensure the employees are promoted to work as a team
and organize social events to give an opportunity to the employees to know
the team on a social level as well.
• An employer needs to ensure the employees are appreciated for their
contribution and good performance should receive recognition. There could
be an award ceremony held to appreciate and recognize the efforts of the
employees. A promotion or growth opportunities should be considered as
well.
• An employer needs to ensure the employees are given opportunities to upskill
and move up the ladder in the organization by accepting more responsibilities.
Limitations of Maslow’s Hierarchy of Needs Theory
• The theory is based on an assumption that the needs of all individuals are the
same and that the motivation driving factors would be the same as well in
every individual. An individual is always driven by the most important and
powerful unsatisfied need, which could be different for every individual.
• The theory is not empirically supported, we cannot apply the same theory for
every employee in an organization.
• The theory is not applicable to all professions or professionals. Even if an
artist’s physiological needs are not met the artist would still strive for
recognition.
Herzberg’s Dual factors Theory
Herzberg et al. (1959) argue that motivation factors are necessary to improve job
satisfaction.

According to Herzberg, these motivators are intrinsic to the job and lead to job
satisfaction because they satisfy the needs for growth and self-actualization
(Herzberg, 1966).

In his original paper, Herzberg examines 14 motivational and hygiene factors, of

which there are notable examples:

Herzberg’s Motivation Factors

1. Advancement: Herzberg defined advancement as the upward and positive
status or position of someone in a workplace.

Meanwhile, a negative or neutral status at work represents negative

advancement.

2. The work itself: The content of job tasks can positively or negatively affect
employees.

The job’s difficulty and level of engagement can dramatically impact

satisfaction or dissatisfaction in the workplace.

3. Possibility for growth: Possibilities for growth exist in the same vein as
Maslow’s self-actualization; they are opportunities for a person to experience
personal growth and promotion in the workplace.

Personal growth can result in professional growth, increased opportunities to

develop new skills and techniques, and gaining professional knowledge.

4. Responsibility: Responsibility encompasses both the responsibilities held by

the individual and the authority granted to the individual in their role.

People gain satisfaction from being given the responsibility and authority to
make decisions. Conversely, a mismatch between responsibility and level of
authority negatively affects job satisfaction.

5. Recognition: When employees receive praise or rewards for reaching goals

or producing high-quality work, they receive recognition.
 Negative recognition involves criticism or blame for a poorly done job.

6. Achievement: Positive achievement can involve, for example, completing a

difficult task on time, solving a job-related problem, or seeing positive results
from one’s work.

Negative achievement includes failure to progress at work or poor job-related

decision-making.

Herzberg’s Hygiene Factors

Frederick Herzberg and his two collaborators, Mausner and Snyderman, developed
the motivation-hygiene theory in their book Motivation to Work.
Influenced by Maslow’s hierarchy of needs (Jones, 2011), Herzberg concluded that
satisfaction and dissatisfaction could not be measured reliably on the same
continuum and conducted a series of studies where he attempted to determine what
factors in work environments cause satisfaction or dissatisfaction.
Herzberg and his colleagues explored the impact of fourteen factors on job
satisfaction and dissatisfaction in terms of their frequency and duration of impact

Hygiene factors are those which decrease job dissatisfaction. Herzberg, Mausner,
and Snyderman used the term hygiene as “medical hygiene…[which] operates to
remove health hazards from the environment” (1959; Alshmemri et al., 2017).
Herzberg also states that hygiene factors are extrinsic to the job and function in “the
need to avoid unpleasantness” (Herzberg, 1966).

Hygiene factors, rather than relating to the content of the job in itself, tend to relate
to contextual factors such as interpersonal relations, salary, company policies, and
administration, relationship with supervisors, and working conditions:

1. Interpersonal relations: Interpersonal relationships involve the personal and

working relationships between an employee and his supervisors, subordinates,
and peers.

This can manifest in, for example, job-related interactions as well as social
discussions in both the work environment and during informal break times.

2. Salary: Salary includes wage or salary increases and negative unfulfilled

expectations of wage or salary increases
3. Company policies and administration: Company policies and
administration include factors such as the extent to which company
organization and management policies and guidelines are clear or unclear.
 For example, a lack of delegation of authority, vague policies and procedures,
and communication may lead to job dissatisfaction

4. Supervision: Supervision involves an employee’s judgments of the

competence or incompetence and fairness or unfairness of the supervisor or
supervision.

For example, this could include a supervisor’s willingness to delegate

responsibility or teach and their knowledge of the job.

Poor leadership and management can decrease job dissatisfaction

5. Working conditions: Finally, working conditions involve the physical

surroundings of the job and whether or not they are good or poor.

Factors leading to a good or poor workspace could involve the amount of

work, space, ventilation, tools, temperature, and safety

Supervision

Supervisor is a person in the first line management who monitors and regulates
workers in their performance of assigned and delegated task. Supervisor is the lowest
and most junior management. It is usually a step above leader but below manager.
A supervisor is responsible for day-to-day performance of a small group in the
organization. The supervisor job is to guide the group towards its goals see that all
members of the team and resolve the problem. The act of supervisors is known as
supervision. The word supervision is derived from latin language where super means
from the above and vision means to see. The supervision means overseen the
subordinates at work with an aim to correct the employees if they are going wrong.

According to R.C. Davis “Supervision is the function of assuming that the work is
being done in accordance with plan and instructions.”

Roles of Supervisor

1. Planner: A supervisor play a role of planner in an organization. He/she has to

plan the day-to-day work schedules. He/she also has to divide the work to workers
according to their skills experience and ability.

2. Manager: A supervisor also play a role of manager. He/she manages works.

He/she provides right works do right workers. He/she handles workers problems.
3. Leader: A supervisor act as a leader, He/she leads and guide workers. He/she
influences workers to work. He/she motivates workers to work as according to role
to attain organization goal.

4. Mediator: A supervisor plays the role of mediator. He/she works as collecting

links. He/she connects management and workers. He/she acts as spokesperson of
both Management and workers.

5. Inspector: A supervisor play the role of inspector. He/she inspects the

performance of workers. He/she provides regular guidance and compare actual
performance with standard fo find out deviation.

6. Counsellor: A Supervisor plays the role of counselor. He/she provides counseling

to workers. He/she builds good labor relation and maintain environment of
cooperation.

Functions of Supervisor

1. Planning: Planning and organizing are the basic function of supervisor. He/she
has to plan the daily works schedule and dividing the work among the workers
according to their interest, knowledge, skill and capability.

2. Providing quality working condition: A supervisor must provide healthy and

hygienic environment to the workers. He should arrange physical resources at right
place. Quality of working life is essential for organizational success.

3. Leading: A supervisor is a leader of workers. He/she leads his or her workers to

work their best. He/she also guides the workers by fixing production goal.

4. Motivating: A supervisor motivate his/her sub-ordinates by providing financial

and non-financial incentives. He/she inspires them for higher quality and
productivity.

5. Controlling: It is also an important function of supervisor controlling involves

comparing actual performance standard, finding out deviation and taking corrective
action if required, If there is big deviation between actual performance and standard
supervisor has to report top management.

6. Connecting link: A Supervisor is a linking between management and workers.

He/she communicates the policies of organization to workers and on the other hand
he/she passes the problems, complaint, suggestions etc to the management.
7. Reporting: A superior prepares statements on costs, output performance, quality
etc. and reports to the management. Management takes proper step with the help of
such reports. Thus, reporting jobs of supervisor is very crucial.

Factor affecting supervising:

1. Managerial Skills: Managerial skills is essential to supervisor to make effective

supervision. Managerial skill consists of planning skill, organizing skills, diverting
skill, coordinating skills, communicating skills, motivating skills and so on. In the
absence of this skill. Thus, supervisor cannot perform his/her duty effectively.

2. Technical skills: Supervisor should have technical skill too. In the lack of
technical skill, supervisor cannot supervise properly, guidance effectively and saved
technical nature problems. Supervision ability is increased by sufficient technical
skills

3. Human relation: A Supervisor creates sound human relation in organization

which is very essential for effective supervision. He/she guides the working force,
instruct and inspire them for better performances. He must work from the employees
centered approach than work centered approach. A good human relation always
brings out a good result.

4. Relief from non-supervisory duties: A supervisor must be free from all non-
supervisory duties. He/she must he given only supervisory and related duties like,
submission of report preparation of income statement etc. The supervision can’t be
effective.

5. Knowledge of plans and policies: Each and every activity of organization should
be performed according to its plans and policies. Thus, supervisor Should have the
knowledge of plans and policies of organization. In the lack of plan and policy,
he/she cannot guide the working force, instruction and inspire them for better
performance.

6. Working environment: Working environment also affect supervision, working

environment should be worker friendly there should be sufficient space, ventilation,
lighting, walker facility etc. on the workers. Quality of working life is essential.
Communication
Concept of communication:

Communication is the process of transmitting information from one person to

another. The word communication derived from latin word “communis” which mean
Common. Communication is essence of leading, decision making, coordinating and
motivating in an organization. It is considered as life blood of organization.

Communication is the continuous process. It never ends. It is universal. It is also

exchanging the facts, idea, thought feeling and values from one person to another. It
is an important function of management. Communication should be understood by
receiver in the same sense of sender.

According to Keith Devis "Communication is the process of passing information

and understanding from one person to another.”

Process of communication

1. Sender: The sender is the person or group who conveys the message. He initiates
the process of communication. Thus, Sender must have the message, idea,
information which he wants to convey.

2. Encoding: When senders translate the message into words, symbol or some other
form he is using encoding stills. It is necessary to encoding because it will make the
receiver understand the message. Language is the popular code. The function of
encoding is to provide a form in which message com be expressed.

3. Channel: The means of receiving massage is called channel. The Channel may
be audio(radio), audio visual(television), cinema, printed form (news, magazine),
personal (face to face), mechanical (telephone, internet, email, fax etc). Proper
channel can be selected according to nature, Importance and size of the messages.

4. Decoding: After message is received. Receiver decodes the message. Decoding

is the process by which the receiver translates the message and assigned it some
meaning. It involves interpretation. It will enable him to understand the message.

5. Receiver: Communication requires two parties, sender and receiver. The receiver
is the person who receive the message. The receiver may be listener, reader or
viewer. Effective communication is receiver oriented not sender oriented.

6. Feedback: The reaction given by message receiver in response to the message is

called feedback. Feedback play important role in making future communication
more effective.
7. Noise: Peaceful environment is necessary for effective information system.
External element may put obstacles in communication. Noise bring reduction in
effectiveness in communication. So, both message sender and receiver should be
careful about it.

Importance of communication

1. Smooth operation of organization: Success of business organization depends on

the effectiveness of communication whether big or small or medium, private or
public or government communication play a vital role in all business organization.
The lack of an effective communication system in an organization may lead to the
failure to the desired objective. So, communication has an important role in
successful operation of organization.

2. Quick decision and Implementation: Important information and date collected

through an effective communication system In an organization. Communication
provides the necessary information and data to managers for making decision
quickly and accurately.

3. Proper planning and coordination: Communication have Important role in

planning and coordinating. Determination of objectives, determination of premises,
development and analysis of alternatives, selection of best alternative and detailed
operational plan should be made for proper planning. All these functions can be done
with the help of communication, without communication no coordination is passible.

4. Essence of managerial function: Communication play important role in

discharging the various functions of management, managerial function such as
planning, organizing, directing staffing, leading and controlling etc, become
impossible without effective communication. So, communication is also the essence
of managerial function.

5. Better public relation: Communication helps to maintained sound relation with

the public. The objective of the business can be achieved when the pubic feeling is
realized through an effective communication of the business policies.

6. Sound Industrial relation: Effective communication alone can establish mutual

trust and confidence between management and labor. It enables management to
come in to close contact with workers. It serves as a bridge between them and create
team spirit in the organization.

7. Maximum production and minimum cost: The goal of each organization is to

produce maximum at minimum cost. For this purpose, it requires an effective
communication system. Effective communication system coordinates the various
factor of production which makes maximum output with minimum cost possible
through, establishing good human relation, operating efficiently and removing
misunderstanding among personnel.

Principle of communication

1. Principle of clarity: There must be some message and information for

communication. The message must be as clear as possible. So, that the receiver may
interpret it in the same sense and sprite in which it communicated. Thus, the message
to be communicate must be very clear in the minds of the communicators, under
communication delay the work waste time and affect the efficiency.

2. Principle attention: In order to make the message effective it is necessary that

the receiver attention must be drawn to the message communicated to him. Each one
of us is different in behavior, sentiments and emotion which decide the degree of
attention. Thus, the communicator must know the interest and need of the people
with whom he communicates.

3. Principle of adequacy: The message to be communicated must be adequate and

complete in all aspect. Incomplete aspect and inadequate information delay action
and destroy understanding and relation.

4. Principle of consistency: The message to be communicated should be consistent

with the plans, policies, programs and goals of the organization. This will increase
the credibility of the message and promote better understanding. Inconsistent
message always creates confusion in the mind of receiver.

5. Principle of motivation: Another important principle of communication is

motivation. The task of attracting employees to work. So, making them inspire to
work is called motivation. Motivation plays effective role in performance. So, it is
an important element of management. While communicating any massage the
employees should be motivated to work as intended.

6. Principle of timeline: The message should be communicated at the right time. If

communication is not in proper time. It shall loss its significance. Delayed
communication is only of historic value, outdated message is useless. Thus, timely
communication is more essential to achieve organizational objectives.

7. Principle of feedback: This is the most important principle of an effective

communication system. This principle calls for making communication or two-way
process. Communication is not complete unless sender receive the response or
reaction of the receiver.

Type of Communication

1. Vertical Communication: The message that flows from downward to upward

and upward to downward is called vertical communication. Thus, there are two type
vertical communication.

a. Downward communication: The process of sending message from upward to

downward according to organizational structure is called downward communication.
In this communication the message reaches downwards to subordinates from
managers order, direction, rules and regulation, circular programs etc. are the
example of downward communication. Downward communication starts at higher
level and ends at lower level of organizational structure. It may be both in oral and
written forms.

b. Upward Communication: The message that flows just the opposite of downward
is called upward communication. The communication that flows from downward to
upward is called upward communication. Reports, personal letters, request
suggestion unions, publication etc. is the example of upward communication.
Upward communication starts at lower-level end at higher level upward
communication may be written and oral form.

2. Horizontal communication: The communication that flows at equal level of

organizational structure is called horizontal communication. It is useful in getting
things done. It brings coordination in the functioning of different departments
through mutual understanding such communication starts and end of some level.
This type of communication may be both written or oral form. Horizontal
communication maintains mutual cooperation and relationship among some level
manage employees or workers.

3. Diagonal communication: The flow of message between employees who are

neither the same level nor the same department is called diagonal communication.
In other word diagonal communication refers to the flow of communication among
person at different level who have no direct reporting relationship. The flow of
information would be effective in diagonal communication.
Barriers to effective communication

1. Physical Barriers:

a. Noise: Noise is the main physical barrier of communication. Noise or sound

effects communication negatively. It hampers in both sending and receiving
communication.

b. Distance: Long distance also abstract in communication physical distance

between sender and receiver is a responsible factor for communication breakdown.

c. Feedback: If feedback mechanism is not good, communication cannot be

effective. Communication is obstacle.

2. Psychological barriers:

a. Selfishness: Selfishness is main psychological barriers of communication. Selfish

person finds all the people selfish person and understand as the same. It
automatically obstructs the communication.

b. Emotion: Emotion abstract the effective communication personal emotion

includes anger, fear, hate, jealous etc.

c. Perception: Person’s perception and understanding may be different from person

to person. Different person understands the same thing differently and explain
differently. It also obstructs communication.

d. Distrust: Trust or distrust the message sender also obstruct effective

communication. If the message and message sender is distrusted communications
obstructed.

e. Attitude: Human attitude is also psychological barrier of communication. If the

receiver doesn't care the message the sender trusts him/her many crumbles. In such
condition the communication cannot be effective.

3. Organizational barriers:

a. Poor planning: Preparation of message, selection of channel and timing of

communication should be properly planned of those are not properly planned, many
problems may be created.
b. Complex structure: A very complex structure involving several layers of
management, breakdown or distortion in communication may arise. Due to long
lines of communication, flow of information gets delayed and distorted.

c. Status and position: A status conscious manager may not allow his sub-ordinate
to express their felling freely. As a result, subordinates may hesitate to speak freely
to high level manager.

d. Poor timing: Poor timing can also be a barrier to communication because either
the sender or the receiver is not ready to focus on the message.

4. Semantic barriers:

a. Use of technical words: A communication often uses technical words which a

common man doesn't understand. It confuses the receiver.

b. Badly expressed message: Use of wrong words, missing of necessary word and
inadequate result in a badly expressed message.

c. Faulty translation: When the translation is not done correctly, the meaning of
the message may get destroy.

d. Complex sentences: Long and complex sentences structure also create problem
in communication.

Unit:8. Contemporary issues on management

Conflict management:

According to Ricky W. Griffin, “Conflict is disagreement among two or more

individuals, groups or organizations.”

Conflict management: Whenever there are people working together conflict is

common to see. Conflict is simply referring to all kinds of opposition or antagonistic
interaction between or among individual or groups. It exists whenever one party
perceives that another party has hampered or is about to hamper, the accomplishment
of goals. The consequences of conflict may be anxiety, lower satisfaction and
decreased performance.
Types of conflict:

1. Intra-personal conflict: It is a conflict within an individual. This type of conflict

arises due to divergent goals and multiple rules which the individual expected to
play. When the individual faces the problem of choosing among competing goals,
this type of conflict arises. It may also occur due to role ambiguity.

2. Inter-personal conflict: This type of conflict occurs when two or more persons
interact with one another. It is a conflict between and among individuals. The main
causes of interpersonal conflict are personality difference, perceptions, clash of
values and interest, power, status differences, scarcity of resources etc.

3. Inter-group conflict: Conflict between two or more groups of an organization is

called inter-group conflict. Conflict between line and staff, between management
and union etc. are examples of inter-group conflict. The major cause of inter-group
conflict is competition for scarce resources, joint decision making, introduction to
change etc.

4. Inter-organizational conflict: Sometimes conflict may arise between

organization as well. It is called inter-organizational conflict. The rise of competition
among organizations may lead to inter-organizational conflict

Managing conflicts in organizations.

A. Stimulating conflict: All the conflict are not always harmful. In order to have
positive effect, the optimum level of conflict must be stimulated. The following
methods are used to stimulate conflict.

1. Reorganizing: Changing the structure of an organization may work as a way of

creating conflict. Breaking up old work groups and departments and reorganizing
them so that, they may have new entrants or responsibilities such action will create
uncertainties and the call for readjustments.

2. Communications: Another way to stimulate conflict is by manipulating message.

Ambiguous or threatening massage can be communicated to simulate new ideas

3. Encouraging Competition: Organizations can also use bonus; incentive pay and
awards for excellent performance will stimulate conflict. This is because one group
tries to overcome the other group in order to compete each other.
4. Bringing in Outsiders: Management may sometimes create conflict by bringing
in people whose values, attitude and styles differ significantly from the prevailing
norms, divergent opinions, innovative ideas and originality can be developed.

5. Resolving conflict: Conflict even work when it is at optimum level. But conflict
has to be resolved when it goes beyond the optimum level. Some managers believe
eliminating conflict. It is called, resolving conflict.

The techniques of resolving conflict as follows:

a. Problem solving: It involves bringing together the conflicting parties to share

their problems. Discussion over who is right or wrong is not allowed but only
discussion with regard to identification of problems and possible solution is
permitted. Misunderstanding among the conflicting members may be resolved by
this way.

b. Smoothing: Another technique of resolving is smoothing i.e. minimizing the

conflict and telling everyone the things will get better by highlighting the similarities
through peaceful co-existence and eliminating their misunderstanding. This is done
because the conflict may worsen the situation as people continue to brood over it.

c. Compromising: Compromising is coming to a port of agreement between two

extremes. It is the process of bargaining where the parties negotiate on the basis of
give and take principle. Each party involved in conflict gives something of value.

d. Avoidance: Conflict can also be temporarily resolved by avoiding the conflict. It

is something disregarding or a decision to sidestep the conflict of postponing the
conflict till later. If the conflicts are minor and attention is required for the issues
hen this method is suitable to adopt.

Participative Management

Participative management is a process in which subordinates are involved in

decision making function along with their immediate superiors. In this system,
employees are empowered greater control of the workplace. Participative
management has been taken as an important tool or employees’ motivation.

The forms of participative management are as follows:

a. Quality Control (QC): The concept of quality circle was first started in Japan in
the early 1960s to improve quality of products. Quality coracles consists of work
team composed of 8-10 employees from the same work area who meet regularly to
define, analyze and solve quality and work-related problems in their specific area of
operation. Membership is strictly voluntary and meetings are usually held once a
week usually for an hour before or after the job is over.

b. Quality of work-life (QWL): Another important form of participative

management is "quality of work life?”. Quality of work life is concerned with the
working relationship between employees and total working environment. More
specifically QWL can be defined as an attempt to develop a formal program to
integrate employees need and wellbeing with the intention to improve productivity,
workers empowerment and level of satisfaction. The means QWL are share
ownership, flexible working schedule, autonomy recognition, belonging, financial
and non-financial incentives.

c. Self-managed work team: Self-managed work team is also known as self-

directed autonomous work groups consisting 5 to 15 members. It is a formal group
of employees that operates without a manager and is responsible for a complete work
process. The team member can independently plan schedule works, assign tasks to
members, collective control over the works, making operation decisions and taking
action on problems.

d. Management by objective (MB0): Management by objective is the philosophy

of management in which there is participation by superiors and subordinates in the
different management function like planning, decision making etc. The whole
management process revolves around the objectives set by the supervisor and
subordinates

e. Co-ownership: It is that form of participative management in which company

makes employees shareholders by allowing them shares. They are employees as well
as owner of the company. Thus, their participation is also guaranteed in favor of the
employee’s participation share capital.

Features of participative management:

a. Ethical dimensions: Participative management has ethical dimensions and based

on moral principle and values. In this form of management, everyone is treated
equally when it comes to organizational decision making. It is based on employee
empowerment, responsibility sharing and delegation of authority.

b. Proper channel of communication: Participative form of management that

decides what employees need to do but it also encourages employees to participate
in decision making and give ideas and suggestion make organizational process better
and more efficient. They are allowed to share their problems, views, ideas and
feedback with their managers.

c. Empowers employee: Participative style of management gives employees a

chance to participate in management process. They are encouraged to come up with
their views. Gone are the days when employees were bossed around by their
managers. Now they are to be treated like co-workers. This provides a higher status
to employees as they also have a self-decision making.

d. Recognition of human dignity: In this form of management, all employees are

treated equally irrespective of their designations when it comes to giving ideas and
suggestions for organizational decision-making process. Employee are no more the
servants of managers but are the most important assets of an organization.

e. psychological satisfaction to employees: Most of our lives are spent at

workplace. It is important for everyone to have psychological satisfaction as far as
our employment is concerned. Commitment from the organization, respecting the
dignity of individuals and co-determining the company policies are some of the
features of participative Management that provide psychological satisfaction to
employees.

Benefit of participative management

a. Sense of ownerships: Participative management is a tool to make all the

employees involved in the decision-making process. It creates sense of ownership
among the employees toward the organization. The employees feel that they are pre
vital members of organization.

b. Motivates employees of productivity: Whenever the employees feel the sense

of ownership then they are satisfied with the organization. They concentrate more
attentively towards the organization. As a result of their motivation, productivity
also gets increased.

c. better creativity and innovation: In participative, management employees are

also provided an opportunity to express their opinions and ideas. In this process they
can also enhance their creativity innovation for the development of organization.

d. better decision-making: In participative management technique, a decision is

taken after consulting all the concerned members. Various alternative can be selected
among them. This results to better decision making.
e. Implementation: Participative management also considers the people every stage
of planning and goals setting process. As the employee are participated in the
planning and goal setting phases. They are also forced to implement those activities.
They are morally bound for the implementation phase.

f. Commitment: Participative management ensures the employees are also one of

the important assets in organization. The employees begin to feel themselves as a
part of organization. As a result, commitments of the employees towards the
organization also become stronger.

Knowledge Management

The concept of knowledge management is relatively a modern concept and has been
highly considerable today where modernization and globalization is taking huge
space. It has been an established discipline since 1990’s with a body of university
courses and both professionals and academic journals dedicated to it.

Knowledge management is the process of getting right information to the right

people at the right time, helping people create knowledge and shaking and acting on
information. It helps the management to take right decisions according to the
dynamic environment.

Features of knowledge management:

a. People oriented: It is directly linked to what people know, and how they can
support business and organizational objectives. It draws on human competence,
intuition, ideas and motivation.

b. Goal directed: It is inextricably tied to the strategic objectives of an organization.

It uses only the information that is most meaningful, practical and purposeful.

c. Ever changing: There is no such thing as immutable law in management.

Knowledge is compactly tested updated, revised and sometimes even “obsolete”
when it is no longer practicable. It is a fluid, ongoing process.

d. Value-added: It draws upon pooled expertise, relationship and alliances.

Organizations can further the two-way exchanges of ideas by bringing in experts
from the field to advice or educated managers on recent trends and development.
Forums, council and boards cam be inclement is creating common group and
organizational cohesiveness.
e. Visionary: The vision is expressed in strategic business terms rather than
technical terms and in a manager, that generates enthusiasm buy in, and motivate
managers to work together toward teaching common goals.

f. Complementary: It can be integrated with other organizational learning

initiatives such as total quality management (TQM). It is important for knowledge
managers to show interim success along with progress made on more protracted
efforts such a multiyear systems developments infrastructure, or enterprise
architecture projects.

Importance of knowledge management:

a. Competitive advantage: Knowledge can be an organization's most competitive

advantage. Wealth results when an organization uses its knowledge to create
customer value by advertising business problems. A firm's competitive advantages
depends largely on knowledge rather than anything else.

b. Technology: Because of tremendous advances in technology, enormous amount

of information can disseminate to people, regardless of their geographical location
or time zone. The speed of transmission and frequency in which this transmission is
received require an adaptable skilled and educated workforce from a knowledge
management perspective. The complexities associated with these technological
changes will think differently about the manner in which people learn inside or
outside of the classroom.

c. Organizational change: Due to organizational changes, restructing, merger and

acquisition, companies have lost some of their valued history and cultural norms. An
organization's ability to create, acquire, process, maintain and retain old and new
knowledge is possible through knowledge management.

d. Enhanced decision making: Knowledge management also helps in enhancing

decision making. It not only helps to learn but also helps in applying the acquired
knowledge or the future activities.

e. Workforce demographics: Knowledge management helps in maintaining

workforce demographics. It helps in knowledge sharing and transferring among
various groups of workforces in an organization.
Process of knowledge management

1. Data capture: Raw data must be collected somehow before it can be turned into
knowledge, or wisdom.

2. Data storage: There has to be a place to keep the collected information. Data
storage for most business and even individual today is digital, but even a filing
cabinet is a data storage solution.

3. Data organization: Once the data is collected it has to be organized into some
kind of useful structure. For instance, a piece of paper that contains raw data likes
sales figures, numbers, number of employees, price of products, employee
attendance numbers and last quarter profits is full of raw data but it’s a collection if
that’s not organized and can’t be easily used.

4. Data analysis: The often melds in the organization step, as the act of organizing
data often requires analysis. Once the data is analyzed, then it is more likely to be
knowledge than just raw information because the way the information works
together and things like cause and effect become more obvious. Patterns become
obvious and these can be used to illustrate general concepts. This turns the
information into useful knowledge.

5. Knowledge sharing: At this point, the raw data has become useful knowledge or
wisdom. While this is an improvement over raw, unorganized data, it's necessary to
determine the best way to share this wisdom with employees to make it truly useful
on a daily basis, and to use it to reach organizational goals.

Unit 9. Business letter Writing

Business Letters are described as letters used in the corporate world to address any
issue, to pass on some information, and for many other purposes. Business letters
are written professionally in a formal format and with a formal tone, in order to leave
a good impression. Some business letters are Cover Letters, Offer Letters, Letters of
Recommendation, Request Letters, Complaint Letters, Interview Follow-up Letters,
etc. Each business letter has its features, advantages, and purposes.

Uses of Business Letters:

• The purpose of a business letter is to maintain documentation of all the

important activities happening in an organization.
 • Business letters follow a clear and polite tone along with a formal format to
demonstrate professionalism.

• Business letters fulfil various purposes like addressing a complaint, informing

the termination or resignation, making an apology, making an announcement,
etc.
Structure of Business Letters:
Heading:
Many business organizations use printed letter head for business correspondence.
The letterhead contains the name, the address, the line of business, telegraphic
address, telephone numbers, telex numbers, e-mail address etc.
2. Date:

The date should be indicated in the upper right-hand corner of the letter sheet. It is
generally written two or three spaces below the last line of the letterhead.
There are two methods of indicating the date:
(i) In the order of day, month and year — 10 July 1999.
(ii) In the order of month, day and year — July 10, 1999. Both methods are
acceptable.
It is advisable to write the names of the month in full.
3. Inside Address:
The inside address consists of the names and address of the person or firm to whom
the letter is written. It is generally written two spaces above the attention line and
two spaces below the level of date. If there is no attention line it is given above the
salutation in the left margin. The full address, i.e., the name of the person, firm,
street, road etc. should be written as indicated in the source you got the address from.
The details should not be abbreviated.
While addressing a firm, ‘Messages is used before the name. If the firm bears
personal title, message should be used. If the letter is addressed to an officer by name
write Mr. or Shri before the name. If the officer is an unmarried woman add Miss
and if married Mrs. or Smt. before her name.
4. Attention Line:
When a letter is addressed to a company so that it should reach a particular office by
name or a particular department, then attention line is typed below the inside address.
This line is generally underlined.
5. Salutation:
Salutation means greetings. It shows the respect or affection or politeness which you
introduce in a letter. The choice of salutation depends upon the personal relationship
between the writer and the reader. It is placed two spaces below attention line or two
spaces below the inside address. While addressing a firm, company or a club, etc.
use ‘Dear Sirs’.
Dear Sirs,
6. Subject:
The purpose of subject line is to let the reader know immediately what the message
is about. By seeing this the reader can understand at a glance what the letter is about.
The usual practice is to type this line in a double space between the salutation and
the first line of the body.
Subj.: Payment of Bill.
7. Reference:
In a reply to an earlier letter reference number, date etc. may be mentioned below
the subject. Subject and reference must be separate and must stand out clearly to get
the attention of the reader.
8. Body of the letter:
The body is the most important part of a letter. The purpose of this part is to convey
the message and to produce a suitable response in the reader. It is, therefore,
important to organize and arrange the material very carefully.

Generally, the body consists of the following:

(i) Opening paragraph.
(ii) Main paragraph.
(iii) Closing paragraph.
The opening paragraph should be written in such a way that it attracts the attention
of the reader and makes him go through the letter.
The main paragraph contains the subject matter. It should cover all the relevant
points which the writer wants to convey. It should be written in simple, clear and
unambiguous terms.
The closing paragraph should indicate the expectations, intentions and wishes of the
sender.
9. Complimentary close:
The complimentary close is a polite way of ending a letter. It is typed two spaces
below the last line of the body of the letter.
10. Signature:
Signature is the assent of the writer to the subject-matter of the letter. It is placed
below the complementary close.
11. Enclosure:
Sometimes, papers such as price list, catalog, draft may be attached to the letter. This
is indicated after the signature and at the left-hand margin. Generally, the
abbreviated form “End.” is typed against which the number of enclosures is
indicated.
Qualities of a Good Business Letter:

1. Clarity:

Clear thinking and simple expression are the two important virtues of effective
writing. A good letter should show its idea directly and clearly. Each sentence should
be as simple as possible. The reader should have no difficulty in understanding what
the writer means to say. When the reader gets the same meaning from the-message
as what the sender intended, it is a good letter.
2. Conciseness:
Transmission of maximum information by using minimum words should be the aim
of letter-writing. Unnecessary details and roundabout expressions should be
avoided. People are busy and they receive a number of letters daily. Unless one says
quickly what one wishes to say, he will not be able to get the attention of the reader
and focus it on the message. Therefore, a letter should be simple and brief.
3. Completeness:
The letter should contain all the essential points a reader is expected to know. For
example, a sales letter should include the description of the goods, price, quality,
how and where to buy, the date of delivery, discounts etc. If it gives only partial
information, it is not a complete letter.
4. Correctness:
The correctness demands no error at all in grammar, idiom, spelling, and punctua-
tion. Besides, the information given in the letter must be accurate; otherwise, it will
shake the confidence of the reader. The message should not be transmitted unless
the sender is sure of its correctness.
5. Courtesy:
Courtesy means politeness. It always pays to be courteous in business. It softens the
sting of an unpleasant piece of information, creates goodwill and produces a
favorable response. Goodwill is a great asset for an organization and courtesy in
correspondence is one of the most natural and economical means of building it.
6. Cheerfulness:
There should be no negative approach in a letter. It must begin with a positive and
optimistic note. The approach should be friendly and convincing.
7. Promptness:
Promptness in replying a letter is absolutely necessary. The general practice is to
reply a letter the same day it is received. When it is known that a reply to a letter
requires time it is necessary to acknowledge the letter received and intimate the
probable time required sending full reply.
8. Appropriateness:
Appropriateness refers to writing or replying letters keeping in mind the relation and
psychology of the reader as well as the need of the occasion. The tone, style and
language should be changed according to the occasion.
9. The ‘You’ attitude:
In business letters, the reader’s interest must be emphasized and not the sender s
interest. To make letters effective, avoid words such as T and “we’ and use as many
as ‘you’ as possible. The ‘you attitude’ can be used effectively in all kinds of
business letters.
10. Integral:
The purpose of business communication is to create understanding, bring about
cooperation and initiate constructive action. Therefore, all communication should be
in conformity with the general objectives of the organization.

Drafting of business letter

INQUIRY LETTER AND REPLIES

Inquiry letter is a kind of letter of request or a request for information about a

product, service, jobs or other business information. A letter of request, also known
as a letter or letters of interesting candidates, will be sent to the companies. Letter of
request is a letter from a prospective buyer to the seller requesting information about
the products offered. With the offer of the seller will potential buyers will know the
price, and the sale and purchase, and a description of the goods or services to be
purchased. This is the purpose of the prospective buyer a written request to the seller.

Inquiries and replies these letters which ask or answer question are usually brief and
present no special difficulty. It consists of four steps:

1. State carefully the circumstances which necessitate the inquiry.

2. State any facts needed by the reader in making a complete reply.
3. Ask for the information, or state the questions.
4. Express gratitude for the favor requested.

Note: it is customary to enclose postage for a reply; a note of thanks should follow
a letter of this sort.

When a prospective buyer has to know the condition of the goods / services
following the price and terms of sale and purchase, of course he did not need to ask
for a quote from the seller. Letter of inquiry required in formal trade demand formal
procedures in writing. Letter of inquiry is often an early stage of the business
transactions. Through a letter of inquiry to ask a potential buyer or to request
information about the goods or services to be purchased. In reaction, the seller
explained the things he wanted to know the buyer, the buyer did finally order and
business transactions as the top buying and selling process.

1. Name and type of product

2. Special characteristics (specifications) of product, namely, the type, size,
quality, capacity and others;
3. Unit price.
4. Pieces;
5. Method of payment;
6. Means of delivery, and
7. Ease that may be obtained by the buyer, such as guarantees and other

In addition to the above-mentioned potential buyers asking price lists and catalogs
(if the items varied) and a technical description of the goods in the form of leaflets
or brochures. For items that allow, prospective buyers can also request a sample of
goods actually sent.
By letter of demand and supply of services, prospective buyers can ask:
1. The form of services that can be presented by the seller;
2. Equipment used by the seller as a support (if any);
3. Price;
4. Pieces and
5. Method of payment;
In demand service offerings, potential buyers can also request a price list (according
to the level of services to be provided). Usually all been included in the prospectus
which has been prepared by the company selling services.
Inquiry should not only be submitted to one seller, but to some sellers. This step was
taken so that the price list and the information collected will be compared with each
other to determine which one best suit your desires and financial ability of
prospective buyers.
The reply of inquiry letters should do the following things:

1. Acknowledge the inquiry, or state the circumstances necessitating the reply.

2. Answer the questions fully
3. Build goodwill and pave the way for further contact.

Note: in handling replies, the writer should be prompt and systematic. If the material
is not immediately available, the inquiry should be acknowledged and a date set for
the final reply.

example of inquiry:
 FAHRI CLOTHES
& CO
Jln.Kapten Muslim No.20
Medan
INDONESIA
15 february 2013

Distro cloud Corporation

Pasundan Raya Street, No. 15
Jakarta 1240

Dear Sirs,

We are a boutique located in Bekasi, and we were interested in your distro cloud
shirt medium size product. Therefore, we will appreciate it if you can send us a very
detailed explanation of the product complete with your catalogues, price list, term,
sample of design, and payment.

We would also to know if you are offering any trade discounts. If you can quote us
your

favorable prices, we would like to place our order as soon as possible.

We are looking forward to hearing from you. Soon.

Yours faithfully,
FAHRI CLOTHES &CO
Ahmad Fahri

Purchase Manager

Order Letter
Order letter is written to a company for official product or service requirement. It
has great number of uses in every type of business. So, we provide here some order
letter sample as well as order confirmation letter sample with execution letter
sample.

Color World wish to place an order with National Paints Co. Ltd. for various paints.
Prepare an order using imaginary terms and conditions. (Letter of order)
Order Letter Sample
Color World
15; New Market, Dhaka-1200

1st September 2012

Manager,
Sales Division
National Paints Co. Ltd.
20, Tongi,Gajipur.

Sub: Order for various paints.

Dear Sir,

Thank you for your quotation and the price list. We are glad to place our first order
with you for the following items:

SL. No:DescriptionQuantityWeightUnit priceAmount (Tk.)1 Enamels paint25

Tins100 1bs100025.000 2Synthetic paint20 Tins2001bs200040.0003White paint10
Tinsl0 lbs5005.000 70,000

Since the above goods are required immediately as our stock is about to exhaust very
soon. We request you to send the goods through your “Motor” van as the carriage
inward is supposed to be borne by you.

We shall arrange payment within ten (10) days to comply with 5/10, Net 30 terms.
Please send all commercial and financial documents along, with goods. We reserve
the right to reject the goods if received late.

Yours faithfully,

Mohammed Tareq
Purchase Manager,
Color world

Reply to Order Letter Sample

Star Trading co. Ltd
Station Road, Chittagong
10th March, 2012

Purchase Manager
EYE VIEW ELECTRONICS
12, Bijoy Sharani, Tejgaon, Dhaka

Dear sir,

We are pleased to inform you that we have dispatched your Ordered 500 TV sets as
per your specification. Those TV sets have been manufactured with best technology
and delivered through Karnaphuli express Train having special packaging. We hope
our product will meet your satisfaction.

As the credit terms are 2/20, net 40, we will appreciate proper remittance from you.
For your convenience, we have sent Invoice and Railway Receipt (RR) through
standard chartered Bank, station Road Branch, Chittagong. You can receive’ such
documents from Standard Chartered Bank, Head office, Dhaka

 We thank you for this order and hope to be benefited with your further order-in
consideration of the quality of our product, please confirm the arrival of goods
sharply.

We assure you of our best services and co- operation at all times.

Yours faithfully,

Probir,Roy
Sales.Manager
Star Trading co Ltd.

Complaint Letter
How many times has it happened that you bought a product and it turned out to be
defective? How many times did you avail a public service and were left dissatisfied?
Or, did you ever notice any problematic practice taking place at a public place? What
do you do in such situations? Most of the times, we do not take any action in such
situations because of which the problem doesn’t get the attention it deserves and
hence, negligence increases.
Sample Complaint Letter
Your Address
Your City, State, ZIP Code
(Your email address, if sending via email)

Date

Name of Contact Person (if available)

Title (if available)
Company Name
Consumer Complaint Division (if you have no specific contact)
Street Address
City, State, ZIP Code

Dear Contact Person or Organization Name):

Re: (account number, if applicable)

On (date), I (bought, leased, rented, or had repaired) a (name of the product,

with serial or model number, or service performed) at (location and other
important details of the transaction).

Unfortunately, your (product or service) has not performed well (or the service
was inadequate) because (state the problem). I am disappointed because (explain
the problem: for example, the product does not work properly; the service was
not performed correctly; I was billed the wrong amount; something was not
disclosed clearly or was misrepresented; etc.).

To resolve the problem, I would appreciate your (state the specific action you
want: money refunded, charge card credit, repair, exchange, etc.). Enclosed are
copies (do not send originals) of my records (include receipts, guarantees,
warranties, canceled checks, contracts, model and serial numbers, and any
other documents).

I look forward to your reply and a resolution to my problem and will wait until (set
a time limit) before seeking help from a consumer protection agency or the Better
Business Bureau. Please contact me at the above address or by phone at (home
and/or office numbers with area code).

Sincerely,

Your name
Enclosure(s)

Follow-up Letter
A follow-up letter is an important form of communication in a range of situations.
After a job interview, or a great business meeting, or even after making a good
business contact at a trade show, a follow-up letter is an effective means of
consolidating a relationship between you and the intended recipient. It provides a
platform for continued communication, and also to accent certain points discussed
at the previous meeting. A well written follow-up letter, free of English grammar
and spelling errors, can make all the difference to your success.

Let’s consider some tips to help you write a better follow-up letter in any
situation:

1. Use a follow-up letter to re-iterate your attributes, and the positive

dimensions of a new relationship for each party. If you are representing your
business, you can make a short sales pitch. If you are applying for a job,
remind the potential employer of your key skills.
2. Don’t cover old ground: offer new insights to add to your appeal.
3. Make sure your follow-up letter is sent within 2 days of the meeting or
interview; this will help keep things fresh, and promote continuity between
your performance at the interview and your letter.
4. In your follow up letter, indicate how you want to proceed from this point.
5. Do not convey any negative sentiments in your follow-up letter.

Sales Follow-Up Letter

A sales follow-up letter is a way of extending additional customer service to the
clients of the business. A basic sales follow-up letter includes the following details:

• The date and time that the sales purchase has been made.
• The items that the client has purchased.
• The details of the transaction and the options on how the company can be of
help should there be concerns, that may arise from the purchase.
• A message of appreciation for the trust that the client has given to the
company.
Circular Letter
ACCORDING TO PROF. W. J. WESTON, “THE LETTER THAT IS WRITTEN FOR A
LARGE NUMBER OF READERS TO CONVEY A MESSAGE IS CALLED A CIRCULAR
LETTER.”

Generally, the letter that is used to circulate any special message to a huge member
of audiences at the sometime is known as circular letter. it is one of the cost-effective
means of circulating information or introducing new products to mass people.
however, circular letters are not only used in business but also in social, political and
personal affairs.

Features of Circular Letter in Business Communication

A letter that circulates or announces the same information or message to a large
number of people at a time is called a circular letter or a circular. Launching new
business, changing business premises, changing the name of business, admission or
retirement of any partner or director, trademark notice etc. are communicated with
people through circular letter. An effective circular letter has some unique
characteristics which are discussed below-

• Wide Circulation: The most important feature of circular letter is that it

circulates the message to a large number of audiences at a time. It is in fact a
mass communication method. No other communication method enjoys this
advantage.
• Drafting Method: Drafting a circular letter follows certain method and style.
the art of writing circular letter varies depending on the situations. it is written
in simple language so that most of the people understand the information it
contains.
• Attractiveness: Another important feature of circular letter is that it is always
furnished in an attractive way to that it can easily gain the attention of people
information is arranged here in distinct manner.
• Conciseness: A circular letter is always concise but complete. It expresses the
message briefly and precisely. There is no scope of including any unnecessary
information in a circular letter.
• Reader’s Interest: Another feature of circular letter is that it always focuses
on readers interests. It explains how the readers will be benefited from the
message.
• Authenticity and Reliability: Offering authentic and reliable information is
another characteristic of circular letter. It never pushes fake or irresponsible
information to the public. authenticity of information increases the reliability
of the message.
 • Courtesy: Courtesy is an essential principle of every business letter and
circular letter is not an exception. The information is put here in courteous
way so that people feel good to read it.
• Universality: Circular letter is open to the people of all age groups. So, the
message, language and format of circular letter should be acceptable and
comprehensive to all.
• Relevancy: A circular letter includes only relevant information and excludes
all irrelevant or unnecessary information.
• Asking for Action: Every circular letter calls for certain action from the
readers. After reading the message in the circular letter the readers should be
intended to do specific job like purchasing the product or telling the news to
others and so on.
• Specific Purpose: A circular letter is written for a specific purpose. It is not
written to attain several objectives at a time.
• Persuasiveness: Persuasiveness is also a feature of circular letter. since
circular letter is written for specific objective, persuasive and convincing
language should be used to motivate the readers to go for certain action.
• Special Structure: Circular letter has special structure. It takes the form of
letter but contains something more than a letter.

Application for employment (Job Application Letter)

An application for employment is a standard business document which is prepared
with questions deemed relevant by an employer in order for the employer to
determine the best candidate to be given the responsibility of fulfilling the work
needs of the company. Most companies provide such forms to anyone upon request
at which point it becomes the responsibility of the applicant to complete the form
and returning it to the employer at will for consideration. The completed and
returned document notifies the company of the applicant’s availability and desire to
be employed and their qualifications and background so a determination can be made
as to which candidate should be hired.

Chapter 10: BUSINESS PLAN

Unlike the brief or lean formats introduced so far, the business plan is a formal
document used for the long-range planning of a company’s operation. It typically
includes background information, financial information, and a summary of the
business. Investors nearly always request a formal business plan because it is an
integral part of their evaluation of whether to invest in a company. Although nothing
in business is permanent, a business plan typically has components that are more
“set in stone” than a business model canvas, which is more commonly used as a first
step in the planning process and throughout the early stages of a nascent business. A
business plan is likely to describe the business and industry, market strategies, sales
potential, and competitive analysis, as well as the company’s long-term goals and
objectives. An in-depth formal business plan would follow at later stages after
various iterations to business model canvases. The business plan usually projects
financial data over a three-year period and is typically required by banks or other
investors to secure funding. The business plan is a roadmap for the company to
follow over multiple years.

1. To help you with critical decisions

The primary importance of a business plan is that they help you make better
decisions. Entrepreneurship is often an endless exercise in decision making and
crisis management. Sitting down and considering all the ramifications of any given
decision is a luxury that small businesses can’t always afford. That’s where a
business plan comes in.

Building a business plan allows you to determine the answer to some of the
most critical business decisions ahead of time.

Creating a robust business plan is a forcing function—you have to sit down and
think about major components of your business before you get started, like your
marketing strategy and what products you’ll sell. You answer many tough
questions before they arise. And thinking deeply about your core strategies can
also help you understand how those decisions will impact your broader strategy.

1. To help you with critical decisions

The primary importance of a business plan is that they help you make better
decisions. Entrepreneurship is often an endless exercise in decision making and
crisis management. Sitting down and considering all the ramifications of any given
decision is a luxury that small businesses can’t always afford. That’s where a
business plan comes in.

2. To iron out the kinks

Putting together a business plan requires entrepreneurs to ask themselves a lot of
hard questions and take the time to come up with well-researched and insightful
answers. Even if the document itself were to disappear as soon as it’s completed, the
practice of writing it helps to articulate your vision in realistic terms and better
determine if there are any gaps in your strategy.
3. To avoid the big mistakes
Only about half of small businesses are still around to celebrate their fifth birthday.
While there are many reasons why small businesses fail, many of the most common
are purposefully addressed in business plans.

According to data from CB Insights, some of the most common reasons businesses
fail include:

• No market need: No one wants what you’re selling.

• Lack of capital: Cash flow issues or businesses simply run out of money.
• Inadequate team: This underscores the importance of hiring the right people
to help you run your business.
• Stiff competition: It’s tough to generate a steady profit when you have a lot
of competitors in your space.
• Pricing: Some entrepreneurs price their products or services too high or too
low—both scenarios can be a recipe for disaster.

The exercise of creating a business plan can help you avoid these major mistakes.
Whether it’s cash flow forecasts or a product-market fit analysis, every piece of a
business plan can help spot some of those potentially critical mistakes before they
arise. For example, don’t be afraid to scrap an idea you really loved if it turns out
there’s no market need. Be honest with yourself!

4. To prove the viability of the business

Many businesses are created out of passion, and while passion can be a great
motivator, it’s not a great proof point.

Planning out exactly how you’re going to turn that vision into a successful business
is perhaps the most important step between concept and reality. Business plans can
help you confirm that your grand idea makes sound business sense.

A critical component of your business plan is the market research section. Market
research can offer deep insight into your customers, your competitors, and your
chosen industry. Not only can it enlighten entrepreneurs who are starting up a new
business, but it can also better inform existing businesses on activities like
marketing, advertising, and releasing new products or services.
5. To set better objectives and benchmarks
Without a business plan, objectives often become arbitrary, without much rhyme or
reason behind them. Having a business plan can help make those benchmarks more
intentional and consequential. They can also help keep you accountable to your long-
term vision and strategy, and gain insights into how your strategy is (or isn’t) coming
together over time.

6. To communicate objectives and benchmarks

Whether you’re managing a team of 100 or a team of two, you can’t always be there
to make every decision yourself. Think of the business plan like a substitute teacher,
ready to answer questions any time there’s an absence. Let your staff know that when
in doubt, they can always consult the business plan to understand the next steps in
the event that they can’t get an answer from you directly.

Sharing your business plan with team members also helps ensure that all members
are aligned with what you’re doing, why, and share the same understanding of long-
term objectives.

7. To provide a guide for service providers

Small businesses typically employ contractors, freelancers, and other professionals
to help them with tasks like accounting, marketing, legal assistance, and as
consultants. Having a business plan in place allows you to easily share relevant
sections with those you rely on to support the organization, while ensuring everyone
is on the same page.

8. To secure financing
Did you know you’re 2.5x more likely to get funded if you have a business plan?If
you’re planning on pitching to venture capitalists, borrowing from a bank, or are
considering selling your company in the future, you’re likely going to need a
business plan. After all, anyone that’s interested in putting money into your company
is going to want to know it’s in good hands and that it’s viable in the long run.
Business plans are the most effective ways of proving that and are typically a
requirement for anyone seeking outside financing.
9. To better understand the broader landscape
No business is an island, and while you might have a strong handle on everything
happening under your own roof, it’s equally important to understand the market
terrain as well. Writing a business plan can go a long way in helping you better
understand your competition and the market you’re operating in more broadly,
illuminate consumer trends and preferences, potential disruptions and other
insights that aren’t always plainly visible.

10. To reduce risk

Entrepreneurship is a risky business, but that risk becomes significantly more
manageable once tested against a well-crafted business plan. Drawing up revenue
and expense projections, devising logistics and operational plans, and understanding
the market and competitive landscape can all help reduce the risk factor from an
inherently precarious way to make a living. Having a business plan allows you to
leave less up to chance, make better decisions, and enjoy the clearest possible view
of the future of your company.

Understanding the importance of a business plan

Now that you have a solid grasp on the “why” behind business plans, you can
confidently move forward with creating your own.
Remember that a business plan will grow and evolve along with your business, so
it’s an important part of your whole journey—not just the beginning.

components of a business plan

Effective business plans contain several key components that cover various aspects
of a company's goals. The most important parts of a business plan include:
1. Executive summary
The executive summary is the first and one of the most critical parts of a business
plan. This summary provides an overview of the business plan as a whole and
highlights what the business plan will cover. It's often best to write the executive
summary last so that you have a complete understanding of your plan and can
effectively summarize it. Your executive summary includes your organization's
mission statement and the products and services you plan to offer or currently offer.
You may also want to include why you are starting the company if the business plan
is for a new organization.
2. Business description
The next part of a business plan is the business description. This component provides
a comprehensive description of your business and its goals, products, services and
target customer base. Include details regarding the industry your company plans to
serve along with any trends and major competitors within the industry. Add you and
your team's experience in the industry and what distinguishes your company from
the competition in your business description.

3. Market analysis and strategy

The purpose of the market analysis and strategy component of a business plan is to
research and identify a company's primary target audience and where to find this
audience. Factors to cover in this section include:

• The geographic locations of your target markets

• The primary pain points experienced by your target customers
• The most prominent needs of your target market and how your products or
services can meet these needs
• The demographics of your target audience
• Where your target market spends most of their time, such as particular social
media platforms and physical locations

The goal of this section is to clearly define your target audience so that you can make
strategic estimations about how your product or service might perform with this
audience.

4. Marketing and sales plan

This part of your business plan covers the specifics of how you plan to market and
sell your products and services. This section includes:

• Your anticipated marketing and promotion strategies

• Pricing plans for your company's products and services
• Your strategies for making sales
• Reasons for your target audience to purchase from your company versus your
competition
• Your organization's unique selling proposal
• How you plan to get your products and services in front of your target
audience
5. Management and organization description
This section of your business plan explores the details of your business's
management and organization strategy. Introduce your company leaders and their
qualifications and responsibilities within your business. You can also include human
resources requirements and the legal structure of your company.

6. Products and services description

Use this section to further expand on the details of the products and services your
company offers that you covered in the executive summary. Include all relevant
information about your products and services. This includes how you plan to
manufacture them, how long they can last, what needs they may meet and how much
you project it might cost to create them.

7. Competitive analysis
Add a detailed competitive analysis that clearly outlines a comparison of your
organization to your competitors. Outline your competitors' weaknesses and
strengths and how you expect your company might compare to these. Include any
advantages or distinctions your competition has in the marketplace. In addition,
explore what makes your business different from other companies in the industry,
along with any potential issues you may face when entering the marketplace, if
applicable.

8. Operating plan
This part of your business plan describes how you plan to operate your company.
Include information regarding how and where your company plans to operate, such
as shipping logistics or patents for intellectual property. The operating plan also
details operations related to personnel, like how many employees you hope to hire
in various departments.

9. Financial projection and needs

The financial section of your business plan explains how you anticipate bringing in
revenue. If you need funding for your business, this section also describes the
sources and amounts for that funding. Include your financial statements, an analysis
of these statements and a cash flow projection.

10. Exhibits and appendices

The last section of your business plan provides any extra information to further
support the details outlined in your plan. You can also include exhibits and
appendices to support the viability of your business plan and give investors a clear
understanding of the research that backs your plan. Common information to put in
this section includes:

• Resumes of company management and other stakeholders

• Marketing research
• Permits
• Proposed or current marketing materials
• Relevant legal documentation
• Pictures of your product
• Financial documents

The End:

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