MISRIMAL NAVAJEE MUNOTH JAIN ENGINEERING COLLEGE

DEPARTMENT OF MBA
PRINCIPLES OF MANAGEMENT
UNIT 1
OVERVIEW OF MANAGEMENT
PART A (2 MARKS)
1. Define management?
According to F.W Taylor Management is the art of knowing what you want to do and
then seeing that it is done in the end in a cheapest way
2. What are the needs of management principles?
a. To increase managerial effectiveness
b. To improve research
c. to understand nature of management
d. to train management
3.Define the nature of management principles?
a. flexibility
b. universal applications
c. principles are relative not absolute
4.What are the 4 basic principles of F.W Taylor?
a. observation and measurement should be used in the organizations.
b. the employess should be scientifically selected and trained
c. due to scientific selection and training of employee has the opportunity of earning
a high rate of pay
d. a mental revolution in the form of constant cooperation between the employer and
employees should be given the benefits of scientific management
5.State the 6 categories of fayol with the theory of administration?
a. technical( production, manufacture)
b.commercial ( buying, selling , exchange)
c. financial( search for and optimum use of capital)
d. security( protection of property and persons)
e. accounting( balance sheets , cost statistics)
f. management( planning, organizing , coordination, directing,
controlling)

6. what do you mean by management as a science?

It may be define as representing knowledge gathered by an observation and
experiment, critically tested, systematized and brought under general principles.

7. What do you mean by management as a art?

An art may be defined as a skill or knowledge in a particular field of activity, or a
method or doing a thing
8. What do you mean by the term management?
Management is the art of getting things done by a group of people with the effective
utilization of available resources.
9. What is scalar chain?
Instructions and orders should be sent from the top management to lower management
10. state the 14 principles og management by fayol?
a. division of work
b. authority and responsibility
c. discipline
d. unity od command
e. unity of direction
f. subordination of individual intrest to general interest
g. remuneration of personnel
h. centralization
i. order
j.equity
k. stability of tenure of personnel
l. initiative
m.espirit decorps
11.what is espirit de- corps?
This means union is strength. In organization employess should be harmony and unity.
12. what are the management levels?
a. top management level

b. middle management level

c. lower management level
13.write the functions of management?
a. planning
b. organizing
c. staffing
d. coordinating
e. controlling
14.what is management ethics?
the discipline dealing with that which is good and bad with moral duty and obligation By
WEBSTER
15. What are managerial roles?
a. interpersonal roles
b. informational roles
C. decisional roles
PART B (16 MARKS)
1.

Explain the nature and scope of Management?

a) Functional Areas of Management areas:

1. Financial Management
2. Human Resource Management
3. Marketing Management
4. Production Management
5. Material Management
6. Purchasing Management
7. Maintenance Management
8. Office Management
b) Management is an Inter-Disciplinary Approach
c) Principles of Management
The principles of management are of universal application. These principles are
applicable to any group activity undertaken for the achievement of some common goals.
d) Management is an Agent of Change
The techniques of management can be improved by proper research and development.

2.

Discuss the contribution of Henry Fayol to Management.

1. Division of Work
2. Authority and Responsibility
3. Discipline
4. Unity of Command
5. Unity of Direction
6. Subordination of individual interest to general interest
7. Remuneration of personnel
8. Centralisation
9. Scalar Chain
10.Order
11.Equity
12.Stability of Tenure of Personnel
13.Initiative
14.Esprit-de-corps

3.

Discuss the contribution of F.W.Taylor to Management?

F.W.Taylor suggested that those responsible for management should adopt a scientific approach in
their work, and make use of "scientific method" for achieving higher efficiency. The scientific method
consists essentially of
(a) Observation
(b) Measurement
(c) Experimentation and
(d) Inference.
He advocated a thorough planning of the job by the management and emphasized the necessity of
perfect understanding and co-operation between the management and the workers both for the
enlargement of profits and the use of scientific investigation and knowledge in industrial work. He
summed up his approach in these words:
Science, not rule of thumb
Harmony, not discord
Co-operation, not individualism
Maximum output, in place of restricted output.

4. What are the basic concepts of management

A.
B.
C.
D.
E.

5.

Management
Management
Management
Management
Management

as
as
as
as
as

a process
a activity
a group
a discipline
an economic resource.

Is Management art or Science. Comment

Management as a science or art?

This a controversy with regard to the nature of management.
A. What is science?
The following characteristics are the essential for a subject to be recognized as science
1.
2.
3.
4.
5.

Universal principles
Scientific enquiry or experiments
Establish cause and effective relationship
Principle should be verifiable
Science results are always accurate

Management is inexact science because

1. Every organization human resources are different attitudes, aspirations and perceptions. So
standard results may not be obtained.
2. Readymade and standard solutions cannot be obtained.
3. Management is complex and un predictable.
4. Every Organization decisions are influenced by the environment.
The environment is so complex and unexpected changes
B. What is an Art?
Art means application of skill in finding a desired result. Art is the way of doing things
skillfully.
MANAGEMENT IS AN ART BECAUSE OF THE FACTS:
1. Practical knowledge
2. Personal skill
3. Result-oriented approach
4. Creativity and
5. Important through continuous practice
C. MANAGEMANT IS BOTH-SCIENCE AND AN ART
Management is a science because it contains general principles.
1. It is also an art because it requires certain personal skills to achieve desired results.

6. Explain Function of a Manager?

Managerial Skills:
There are four skills of managers are expected to have ability of:
(1)Technical skills:
Technical skills that reflect both an understanding of and a proficiency in a

specialized field. For example, a manager may have technical skills in accounting, finance,
engineering, manufacturing, or computer science.
(2) Human Skills:
Human skills are skills associated with managers ability to work well with others, both as a
member of a group and as a leader who gets things done through other.
() Concept Skills:
Conceptual skills related to the ability to visualize the organization as a whole, discern
interrelationships among organizational parts, and understand how the organization fits into the
wider context of the industry, community, and world. Conceptual skills, coupled with technical
skills, human skills and knowledge base, are important ingredients in organizational performance.
() Design Skills:
It is the ability to solve the problems in ways that will benefit the enterprise.
Managers must be able to solve the problems.

7. Explain the evolution of management thought?

1. Pre-scientific management period.
2. Classical Theory
(a) Scientific Management of Taylor
(b) Administrative Management of Fayol
(c) Bureaucratic Model of Max Weber.
3. Neo-classical Theory or Behaviour Approach
4. Modern Theory
a) Systems Approach
b) Contingency approach.

8.

Explain the function of Manager.

(1) Planning
(2) Organising
(3) Staffing
(4) Directing
(5) Motivating
(6) Controlling

(7) Co-ordinating and

(8) Communicating.

9. Explain the Organization environmental factors?

1) INTERNAL ENVIRONMENTAL FACTORS
The internal environment is the environment that has a direct impact on the business. The
internal factors are generally controllable because the company has control over these factors.It can
alter or modify these factors. The internal environmental factors are resources, capabilities and
culture.
i) Resources:
A good starting point to identify company resources is to look at tangible, intangible and
human resources. Tangible resources are the easiest to identify and evaluate: financial resources
and physical assets are identifies and valued in the firms financial statements. Intangible resources
are largely invisible, but over time become more important to the firm than tangible assets because
they can be a main source for a competitive advantage. Such intangible recourses include
reputational assets (brands, image, etc.) and technological assets (proprietary technology and knowhow).Human resources or human capital are the productive services human beings offer the firm in
terms of their skills, knowledge, reasoning, and decision-making abilities.
ii) Capabilities:
Resources are not productive on their own. The most productive tasks require that resources
collaborate closely together within teams. The term organizational capabilities are used to refer to a
firms capacity for undertaking a particular productive activity.
Our interest is not in capabilities per se, but in capabilities relative to other firms. To identify
the firms capabilities we will use the functional classification approach. A functional classification
identifies organizational capabilities in relation to each of the principal functional areas.
iii) Culture:
It is the specific collection of values and norms that are shared by people and groups in an
organization and that helps in achieving the organizational goals.
2) EXTERNAL ENVIRONMENT FACTORS
The two types of external environment are micro environment and macro environment.
a) MICRO ENVIRONMENTAL FACTORS
These are external factors close to the company that have a direct impact on the organizations
process as shown in figure.

b) MACRO ENVIRONMENTAL FACTORS

An organization's macro environment consists of nonspecific aspects in the organization's
surroundings that have the potential to affect the organization's strategies. When compared to a
firm's task environment, the impact of macro environmental variables is less direct and the
organization has a more limited impact on these elements of the environment.
The macro environment consists of forces that originate outside of an organization and
generally cannot be altered by actions of the organization. In other words, a firm may be influenced
by changes within this element of its environment, but cannot itself influence the environment.
Macro environment includes political, economic, social and technological factors.
i) Political Factors
Political factors include government regulations and legal issues and define both formal and
informal rules under which the firm must operate. Some examples include:
Tax policy
Employment laws
Environmental regulations
Trade restrictions and tariffs
Political stability
ii) Economic Factors
Economic factors affect the purchasing power of potential customers and the firm's cost of
capital. The following are examples of factors in the macro economy:
Economic growth

 Interest rates
Exchange rates
Inflation rate
iii) Social Factors
Social factors include the demographic and cultural aspects of the external macro
environment. These factors affect customer needs and the size of potential markets. Some social
factors include:
Health consciousness
Population growth rate
Age distribution
Career attitudes
Emphasis on safety
iv) Technological Factors
Technological factors can lower barriers to entry, reduce minimum efficient production levels,
and influence outsourcing decisions. Some technological factors include:
R&D activity
Automation
Technology incentives
Rate of technological change

10.

What are the trends and challenges of management in global scenario?

Globalisation (or globalization) is the process of international integration arising from the
interchange

of world

views,

products,

ideas,

and

other

aspects

of culture. Advances

in transportation and telecommunications infrastructure, including the rise of the telegraph and its
posterity the Internet, are major factors in globalization, generating further interdependence of
economic and cultural activities.
Modern Globalization
During the 19th century, globalization approached its modern form as a result of
the industrial revolution. Industrialization allowed standardized production of household items
using economies of scale while rapid population growth created sustained demand for commodities.
Global business organization

With improvements in transportation and communication, international business grew

rapidly after the beginning of the 20th century. International business includes all commercial
transactions (private sales, investments, logistics, and transportation) that take place between two
or more regions, countries and nations beyond their political boundaries.
Businesses generally argue that survival in the new global marketplace requires companies to
source goods, services, labor and materials overseas to continuously upgrade their products and
technology in order to survive increased competition.
International trade
International

trade is

the

exchange

of capital, goods,

and services across international

borders or territories.[42]In most countries, such trade represents a significant share of gross
domestic

product (GDP). Industrialization,

advanced transportation, multinational

corporations, offshoring and outsourcing all have a major impact on world trade. The growth of
international trade is a fundamental component of globalization.
Trade agreements, economic blocks and special trade zones
Establishment of free trade areas has become an essential feature of modern governments to
handle preferential trading arrangements with foreign and multinational entities.
A Special Economic Zone (SEZ) is a geographical region that has economic and other laws that are
more free-market-oriented than a country's typical or national laws. "Nationwide" laws may be
suspended inside these special zones.
Tax havens
A tax haven is a state, country or territory where certain taxes are levied at a low rate or not
at all, which are used by businesses for tax avoidance and tax evasion. Individuals and/or
corporate entities can find it attractive to establish shell subsidiaries or move themselves to areas
with reduced or nil taxation levels. This creates a situation of tax competition among governments.
Different jurisdictions tend to be havens for different types of taxes and for different categories of
people and companies.
Economic globalization
Economic globalization is the increasing economic interdependence of national economies
across the world through a rapid increase in cross-border movement of goods, service, technology
and capital.[108] Whereas the globalization of business is centered around the diminution of
international trade regulations as well as tariffs, taxes, and other impediments that suppresses
global trade, economic globalization is the process of increasing economic integration between
countries, leading to the emergence of a global marketplace or a single world market.

UNIT II
PLANNING
PART A (2MARKS)
1. What is planning?
Planning is a process of selecting the objectives and determining the course of action
required to achieve these objectives.
2.What is MBO
It is a process whereby the superior and the subordinate managers of an enterprise jointly
identify its common goals, define each individuals major areas of responsibility in terms of
results expected of him, and use these measures as guides for operating the unit and
assessing the contribution of each of its members.
3.What are the benefits of MBO
1.
2.
3.
4.
5.

Improvement of managing
Clarification of organization
Personnel satisfaction
Team Work
Fast decision making

4. Note down the weakness of MBO

1.
2.
3.
4.
5.

Time consuming
Increased paper work
Danger of inflexibility
Difficulty of setting goals
Emphasis on short term goals

5. What is the nature of planning?

1.
2.
3.
4.
5.

Planning
Planning
Planning
Planning
Planning

is
is
is
is
is

a primary function
a dynamic process
a selective process
based on facts
an intellectual process

6. What are the types of plans?

1. Standing Plans
2. Single use plans
7. What is meant by strategies?
Strategy of an organization is the programmes of action and deployment of resources to
attain its objectives.
8. Define Policies

Policies are general statement or understandings which provide guidance in decision

making to various managers.
9. What are the major kinds of strategies and policies
1.
2.
3.
4.
5.
6.

Growth
Finance
Organization
Personnel
Products or services
Market.

10. Give the flow diagram of planning of steps

1.
2.
3.
4.
5.
6.
7.
8.

Identification of opportunities
Establishment of objectives
Developing planning premises
Identification of alternatives
Evaluation of alternatives
Selecting an alternative
Formulating derivative plans
Establishing sequence of activities

11. What is meant by strategy?

It is defined as the special type of plan prepared for meeting the challenge posted by
activities of competitors and other environmental forces.
12. What is decision making?
It is defined as the process of choosing a course of action from among the alternatives to
achieve the desired goal.
13. What are the steps in decision making process
1.
2.
3.
4.
5.
6.

Identification of the problem

Diagnosis and analysis the problem
Search for alternatives
Evaluation of alternatives
Selecting an alternative
Implementation and follow up.

14. What are the types of decision making depending on rationality

1.
2.
3.
4.
5.

Objectively rational decision

Subjectively rational decision
Consciously rational decision
Organizationally rational
Personally rational

15. What are the types of decisions?

1. Programmed and Non-Programmed decisions

2. Organizational and personal decisions
PART B (16 MARKS)
1. Explain the Nature of Planning?
1. Planning is goal-oriented: Every plan must contribute in some positive way towards the
accomplishment of group objectives. Planning has no meaning without being related to goals.
2. Primacy of Planning: Planning is the first of the managerial functions. It precedes all other
management functions.
3. Pervasiveness of Planning: Planning is found at all levels of management. Top management
looks after strategic planning. Middle management is in charge of administrative planning. Lower
management has to concentrate on operational planning.
4. Efficiency, Economy and Accuracy: Efficiency of plan is measured by its contribution to the
objectives as economically as possible. Planning also focuses on accurate forecasts.
5. Co-ordination: Planning co-ordinates the what, who, how, where and why of planning. Without
co-ordination of all activities, we cannot have united efforts.
6. Limiting Factors: A planner must recognize the limiting factors (money, manpower etc) and
formulate plans in the light of these critical factors.
7. Flexibility: The process of planning should be adaptable to changing environmental conditions.
8. Planning is an intellectual process: The quality of planning will vary according to the quality of
the mind of the manager.

2. What are the features of planning

1.
2.
3.
4.
5.
6.

It is primary function of management.

It is an intellectual process
Focuses on determining the objectives
Involves choice and decision making
It is a continuous process
It is a pervasive function

3. Explain the process of planning.

The planning process involves the following steps:
1. Determining /Establishment of objectives
2. Developing Planning Premises
3. Identifying the alternative courses of action
4. Determining and Evaluating the alternative courses of action
5. Selecting the best course of action

6. Formulation of derivative plans

7. Implementation og plan
8. Periodic evaluation and review

4. Explain the types of plans of planning.

In the process of planning, several plans are prepared which are known as components of
planning.
Plans can be broadly classified as
a) Strategic plans
b) Tactical plans
c) Operational plans
d) Operational plans.

D. OBJECTIVES
Synopsis
1.
2.
3.
4.
5.

Introduction
Features of Objectives
Advantages of Objectives
Process of Setting Objectives
S.M.A.R.T. Objectives

1. INTRODUCTION
Objectives may be defined as the goals which an organisation tries to achieve. Objectives are described
as the end- points of planning. According to Koontz and O'Donnell, "an objective is a term commonly used to
indicate the end point of a management programme." Objectives constitute the purpose of the enterprise and
without them no intelligent planning can take place. Objectives are, therefore, the ends towards which the
activities of the enterprise are aimed.
2. FEATURES OF OBJECTIVES
1.
2.
3.
4.
5.
6.
7.
8.

The objectives must be predetermined.

A clearly defined objective provides the clear direction for managerial effort.
Objectives must be realistic.
Objectives must be measurable.
Objectives must have social sanction.
All objectives are interconnected and mutually supportive.
Objectives may be short-range, medium-range and long-range.
Objectives may be constructed into a hierarchy.

3. ADVANTAGES OF OBJECTIVES
1. Clear definition of objectives encourages unified planning.
2. Objectives provide motivation to people in the organisation.

3. When the work is goal-oriented, unproductive tasks can be avoided.

4. Objectives provide standards which aid in the control of human efforts in an organisation.
5. Objectives serve to identify the organisation and to link it to the groups upon which its existence
depends.
6. Objectives act as a sound basis for developing administrative controls.
7. Objectives contribute to the management process: they influence the purpose of the organisation,
policies, personnel, leadership as well as managerial control.

4. PROCESS OF SETTING OBJECTIVES

Objectives are the keystone of management planning. It is the most important task of management.
Objectives are required to be set in every area which directly and vitally effects the survival and prosperity of
the business. In the setting of objectives, the following points should be borne in mind.
1. Objectives are required to be set by management in every area which directly and vitally affects the survival
and prosperity of the business.
2. The objectives to be set in various areas have to be identified.
3. While setting the objectives, the past performance must be reviewed, since past performance indicates what
the organisation will be able to accomplish in future.
4. The objectives should be set in realistic terms i.e., the objectives to be set should be reasonable and capable
of attainment.
5. Objectives must be consistent with one and other.
6. Objectives must be set in clear-cut terms.
7. For the successful accomplishment of the objectives, there should be effective communication.

5. S.M.A.R.T. Objectives ARE TO BE

1.
2.
3.
4.
5.

SPECIFIC
MEASURABLE
ACTION ORIENTED
REALISTIC
REVIEWED

POLICIES
MEANING
Policies and procedures are designed to influence and determine all major decisions and actions, and
all activities take place within the boundaries set by them. Procedures are the specific methods employed to
express policies in action in day-to-day operations of the organization. Together, policies and procedures ensure
that a point of view held by the governing body of an organization is translated into steps that result in an
outcome compatible with that view.
DEFINITION

A set of policies are principles, rules, and guidelines formulated or adopted by

an organization to reach its long-term goals and typically published in a booklet or other form that is widely
accessible.
Policies are general statements or understandings that guide managers thinking in decision making.
They usually do not require action but are intended to guide managers in their commitment to the decision they
ultimately make.
ESSENTIALS OF POLICY FORMULATION
The essentials of policy formation may be listed as below:
1.
2.
3.
4.
5.
6.
7.

A policy should be definite, positive and clear. It should be understood by everyone in the organisation.
A policy should be translatable into the practices.
A policy should be flexible and at the same time have a high degree of permanency.
A policy should be formulated to cover all reasonable anticipatable conditions.
A policy should be founded upon facts and sound judgment.
A policy should conform to economic principles, statutes and regulations.
A policy should be a general statement of the established rule.

Importance of Policies
Policies are useful for the following reasons:
1. They provide guides to thinking and action and provide support to the subordinates.
2. They delimit the area within which a decision is to be made.
3. They save time and effort by pre-deciding problems and
4. They permit delegation of authority to mangers at the lower levels.

TYPES OF PLANNING PREMISES

Decision - Making - Types of decision - Decision Making Process - Rational Decision Making Process Decision Making under different conditions.
DECISION MAKING
MEANING
Decision-making is the process of selecting one alternative from among a number of alternatives
available. The need for decision-making will arise only when there are options. If there is only one way of
doing a task, there is nothing to decide.
DEFINITION
In the words of Ray A Killian, "A decision in its simplest form is a selection of alternatives".
CHARACTERISTICS OF DECISION MAKING
Decision making implies that there are various alternatives and the most desirable alternative is chosen
to solve the problem or to arrive at expected results.
1. The decision-maker has freedom to choose an alternative.
2. Decision-making may not be completely rational but may be judgmental and
emotional.
3. Decision-making is goal-oriented.
4. Decision-making is a mental or intellectual process because the final decision is made by the decision-maker.
5. A decision may be expressed in words or may be implied from behaviour.
6. Choosing from among the alternative courses of operation implies uncertainty about the final result of each
possible course of operation.
7. Decision making is rational. It is taken only after a thorough analysis and reasoning and weighing the
consequences of the various alternatives.
1. It is a goal-oriented activity
2. Existence of alternative courses of action
3. It may be positive or negative
4. It may also be a decision not to decide
5. Decision-making is both a science and an art
6. It is situational
7. It may be voluntary or induced
8. It is a complex mental exercise
9. It is an ongoing activity
Characteristics of Effective Decisions
An effective decision is one which should contain three aspects. These aspects are given below:

1. Action Orientation: Decisions are action-oriented and are directed towards relevant and controllable aspects
of the environment. Decisions should ultimately find their utility in implementation.
2. Goal Direction: Decision making should be goal-directed to enable the organization to meet its objectives.
3 Effective in Implementation: Decision making should take into account all the possible factors not only in
terms of external context but also in internal context so that a decision can be implemented properly.
TYPES OF DECISIONS
a) Programmed and Non-Programmed Decisions
i) Programmed decisions
ii) Non-Programmed Decisions
b) Strategic and Tactical Decisions
i) Strategic Decisions
ii) Tactical Decisions
1. Organisational and personal Decisions
2. Routine and strategic decisions
4. Policy and operating decisions
Policy decisions are of fundamental nature as they affect the whole organisation. Operating decisions are made
for executing policy decisions.
5.Individual and group decisions
Decisions taken by a single individual are individual decisions. Group decisions are those taken by a group of
persons.

Merits :
1. Decision making helps to adopt best course of action.
2. Optimum use of resources.
3. It helps to find a solution.
4. It helps to promote efficiency.
5. It helps to resolve conflicts.
De-merits:
1. Decision maker is unaware of the alternatives available.
2. Indecisiveness.

3. Failure to make correct diagnosis.

4. Quick decision.
5. Unavailability of necessary information.
6. Resistance
7. Making decision by itself cannot solve any problem.
5.

Explain the process of MBO. Explain its Merits and demerits.

1. Set Goals
a. The most difficult step.
2. Develop Action Plan
a. For both workgroups and individuals.
3. Review Progress/ Take corrective action
a. Periodic during the year.
4. Appraise Overall Performance.
a. Review Annual Goals.
A. ADVANTAGES OF MBO
(1) It promotes better communication relationship between the superior and his
subordinates.
(2) It gives the subordinate an opportunity to fix his own targets in consultation with his superior.
(3) As the subordinates have the freedom to determine their own targets, they feel motivated.
(4) The periodic review of the subordinates performance enables him to know whether he is
proceeding in the right direction.
B. DISADVANTAGES OF MBO
(1) The superior and his subordinate may have to meet several times for the sake of setting the
objectives mutually.
(2) Periodic review of the subordinates performance involves lot of time and also paper work.
(3) MBO has not much to do with the lower levels of management.

6. What is the strategic planning process?

Stage One: Setting goals and

objectives
Stage Two: Internal and
external
analysis
Stage Three:
Selecting a proper
strategy
Stage Four: Implementing the
strategy
Stage
Five: Evaluating the
strategy

7. What are the essentials of policy formulation and its importance?

The essentials of policy formation may be listed as below:
8. A policy should be definite, positive and clear. It should be understood by everyone in the
organisation.
9. A policy should be translatable into the practices.
10.A policy should be flexible and at the same time have a high degree of permanency.
11.A policy should be formulated to cover all reasonable anticipatable conditions.
12.A policy should be founded upon facts and sound judgment.
13.A policy should conform to economic principles, statutes and regulations.
14.A policy should be a general statement of the established rule.
Importance of Policies
Policies are useful for the following reasons:
1.

They provide guides to thinking and action and provide support to the subordinates.

2. They delimit the area within which a decision is to be made.

2. They save time and effort by pre-deciding problems and
3. They permit delegation of authority to mangers at the lower levels.

15. What are the characteristics and types of decision making?

1. It is a goal-oriented activity
2. existence of alternative courses of action
3. it may be positive or negative
4. it may also be a decision not to decide
5. decision-making is both a science and an art
6. it is situational
7. it may be voluntary or induced
8. it is a complex mental exercise
9. it is an ongoing activity

9. What are the types of decisions?

a) Programmed and Non-Programmed Decisions
i) Programmed decisions
ii) Non-Programmed Decisions
b) Strategic and Tactical Decisions
i) Strategic Decisions
ii) Tactical Decisions

10.

What are the advantages of organizing?

1. Increase In Managerial Efficiency:

2. Proper Utilization of Resources:
3. Sound Communication Possible:
4. Facilitates Coordination:
5. Increase in Specialization:
6. Helpful in Expansion:
7. Facilitates Administration
8. Facilitates Growth and Diversification
9. Provides for Optimum use of Technological Improvements
10.Stimulates Creativity
11.Facilitates stability of the organization
12.Reduces Employee Turnover
13.Reduces Duplication of Activities

UNIT III
ORGANISING
PART A (2 MARKS)
1. Define Organizing.
Organizing is the process of identifying and grouping of activities required to
attain the objectives, delegating authority, creating responsibility and establishing
relationship for the people to work effectively.
2. List out sources of authority.
1. Formal authority theory
2. Acceptance authority theory
3. Competence theory
3. What is performance appraisal?
It is the process of evaluating an employees performance of a job in terms of
its requirements.
4. Define Training.

Training is the act of increasing the knowledge and skills of an employee for
performing a particular job. It is also called as learning.
5. Advantages of organization.
1. Facilitate administration
2. Increase the efficiency of management
3. Facilities growth and diversification
4. Ensures optimum use of man and material resources.
6. Mention the various principles involved in organization.
1. Principle of unity of objective
2. Principle of division of work or specialization
3. Principle of efficiency
4. Principle of span of control.
7. What is Matrix Structure?
Matrix structure is a ybrid organizational form. Containing characteristics of
both project and functional structures.
8. Define authority.
Authority is the right to give orders and the power to exact obedience.
9. Define Selection.
Selection is the deliberate effort of the organization to select a fixed number of
personnel from a large number of applicants.
10.

How can we define power.

Power is the probability that one actor within the relationship will be in a
position to carry out his own despite resistance.

11.

Define recruitment.
Recruitment is the process of searching for prospective employess and
stimulating them to apply for jobs in the organization.
Define interview.

12.

Interviwew is a selection techniques that enables the interviewer to view

the total individual and to appraise him and his behavior. It consists of
interaction between interviewer and the applicant.
13.

List out the career stages.

1. Trial Stage
2. Establishment stage
3. Mid career crisis sub stage
4. Maintenance stage
5. Late career stage.

14.

List out the types of training.

1. On the job training.

2. Off the job training.
15.

What are the types of departmentation?

1. Departmentation by numbers.
2. Departmentation by time.
3. Departmentation by enterprise function.
4. Departmentation by customers.
5. Departmentation by equipment or process.
6. Departmentation by product.
PART B (16 MARKS)

1.

Explain the process of Decision Making and explain the types of decision making?

TYPES OF DECISIONS
a) Programmed and Non-Programmed Decisions

i) Programmed decisions
ii) Non-Programmed Decisions
b) Strategic and Tactical Decisions
i) Strategic Decisions
ii) Tactical Decisions
1. Organisational and personal Decisions
2. Routine and strategic decisions
4. Policy and operating decisions
Policy decisions are of fundamental nature as they affect the whole organisation. Operating
decisions are made for executing policy decisions.
5.Individual and group decisions
Decisions taken by a single individual are individual decisions. Group decisions are those
taken by a group of persons.

2. Explain formal and Informal Organization?

3.

Explain various types of Organization structure or design?

1. Line organisation
2. Functional organisation
3. Line and staff organisation
4. Committee organisation
5. Project organisation
6. Matrix organisation

4.

What are the factors affecting Span of Management, its types ?

1.
2.
3.
4.
5.
6.
7.
8.

Capacity of Superior:
Capacity of Subordinates:
Nature of Work:
Degree of Centralization or Decentralization:
Degree of Planning:
Communication Techniques:
Use of Staff Assistance:
Supervision of others

Types of Span of control

1. Narrow span of control.

2. Wide span of control

5.

Explain delegation of Authority its nature and process?

MEANING

No individual can perform all the activities by himself. Therefore, the total work of an
organization is divided among different persons. Every individual is given some authority so that he
can accomplish his task. Every manager shares his authority with his subordinates because he
alone cannot exercise all the authority himself. After assigning duty and granting authority to
subordinates, a manager holds them accountable for proper discharge of duty. This part of the
organising process is known as delegation of authority.
DEFINITION:
The process of delegation involves the determination of results expected, the assignment of
tasks, the delegation of authority for the accomplishment of these tasks and the execution
of responsibility for their accomplishment Konntz and ODonnell.
2. Delegation means assigning work to others and giving them authority to do it F.G.More.
NATURE / CHARACTERISTICS:
1. Delegation takes place when a superior grants some discretion to a subordinate.
2. A manager cannot delegate authority which he himself does not posses. .
3. Generally authority regarding routine decisions and for execution of policies is delegated to
subordinates. A manager retains the authority to take policy decisions and to exercise control over
the activities of subordinates.
4. The extent of authority which is delegated depends upon several factors.
He can reduce, enhance or take back the delegated authority.
5. Delegation does not imply reduction in the authority of a manager.
6. Delegation may be specific or general, written or implied, formal or informal. Delegation may be
downward, upward or side-wards but downward delegation is the most common type of delegation
in practice.
7. Delegation does not mean abdication of responsibility. No manager can escape from his obligation
by delegating authority to subordinates. Therefore, he must provide a means of checking upon the
work that is done for him to ensure that it is done as he wishes.
8. Delegation is an art because
(a) It is creative
(b) It is practice based
(c) It is result-oriented
(d) It involves use of personal skills and
(e) It is a personalized process.

STEPS/PROCESS OF DELEGATION:

6.

Explain Delegation?
ADVANTAGES / BENEFITS / MERITS OF DELEGATION :
The advantages of delegation of authority in an organisation may be stated as follows:
1. Vital for every organisation Delegation of authority is important for every organisation. No
individual, in any organisation, can perform all the tasks by himself. He needs the support of a
team of individuals. The task of sharing the work and accomplishing the same is done through the
process of delegation.
2. Relief to Managers The manager of each department is able to divide the entire work of his
department among his subordinates. The manager, thus, is able to concentrate on more important
duties. The routine work is being attended by his subordinates.
3. Specialisation The every division of the work of a business enterprise into production,
marketing, finance, personnel, etc., is to derive the benefits of specialisation. Each of these divisions
is looked after by a manager. For example in the marketing department, different individuals may
specialise in different marketing activities like advertising, sales promotion, packing, gathering
market news and so on. Each such individual will work under the control of the Marketing Manager.
4. Prompt Decisions Delegation of authority to subordinates enables them to make decisions
within the scope of their authority. For example, a foreman has the authority to make certain
decisions within his level of authority. It is, therefore, not necessary to refer every matter to the
superior and to await his decisions.
5. Improvement of Job Satisfaction A subordinate showing good results should definitely be
rewarded. The reward may come to him in the form of tangible or intangible benefits. Such a
person, therefore, is bound to have a higher level of job satisfaction.
6. Scope for business expansion- As the subordinates of the organisation are well versed in
performing their tasks the business can successfully undertake expansion or diversification
activities.
DEMERITS OF DELEGATION
Delegation of authority may create the following problems :
1. Desire of domination :

Some managers have the desire for domination. They have a feeling that delegation of authority to
subordinates would result in loss of control. Such managers want their subordinates to come to
them always for getting approval.
2. Lack at confidence in subordinates :
Sometimes a manager may think that his subordinate may take a bad decision and a result his
department may have to suffer. Because of such a fear he may show hesitation.
3. Fear of criticism :
A subordinate may not accept authority for the fear of being criticised if he fails to performs to the
expected level.
4. Lack of incentives :
Suitable incentives must be provided to encourage those subordinates who prove their mettle
Lack of incentives is another reason why subordinates do not show any preference for authority.
5. Lack of resources :
Assignment of work to subordinates alone is not enough. The authority gives to the subordinates
must enable them to have access to the various resources, namely men machines materials and
money. If the organisation lacks these resources the subordinates will not be able to perform their
tasks effectively. Delegation of authority will fail in such a case.
6. Absence of proper control system :
The success of delegation can be measured only if the organisation has a proper control system.
The absence of such a system would only make delegation a futile exercise.

7. Explain the staff functions?

STAFFING
Staffing involves filling the positions needed in the organization structure by appointing competent
and qualified persons for the job. The staffing process encompasses man power planning,
recruitment, selection, and training.

MEANING:
Staffing is that part of the process of management which is concerned with obtaining
utilizing and maintaining a satisfied work force. Its purpose is to establish and maintain sound
personal relations at all levels in the organisation so as to make effective use of personnel to attain

the objectives of the organisation and to provide personal and social satisfaction, which personnel
wants.
DEFINITION OF STAFFING :
In the words of Koontz and ODonnell, staffing can be defined as filling positions in the
organizational structure

through identifying work force requirements, inventorying

thework force, recruitment, selection,

placement, promotion, appraisal , compensation and training of people.

a) Manpower requirements:
Manpower Planning which is also called as Human Resource Planning consists of putting right
number of people, right kind of people at the right place, right time, doing the right things for which
they are suited for the achievement of goals of the organization. The primary function of man power
planning is to analyze and evaluate the human resources available in the organization, and to
determine how to obtain the kinds of personnel needed to staff positions ranging from assembly line
workers to chief executives.
b) Recruitment: Recruitment is the process of finding and attempting to attract job candidates who
are capable of effectively filling job vacancies.
Job descriptions and job specifications are important in the recruiting process because they specify
the nature of the job and the qualifications required of job candidates.
c) Selection:
Selecting a suitable candidate can be the biggest challenge for any organization. The success of an
organization largely depends on its staff. Selection of the right candidate builds the foundation of
any organization's success and helps in reducing turnovers.

d) Training and Development:

Training and Development is a planned effort to facilitate employee learning of jobrelated behaviors
in order to improve employee performance. Experts sometimes distinguish between the terms
training and development; training denotes efforts to increase employee skills on present jobs,
while development refers to efforts oriented toward improvements relevant to future jobs. In
practice, though, the distinction is often blurred (mainly because upgrading skills in present jobs
usually improves performance in future jobs

8.

Discuss the relative Merits and demerits of centralization and decentralization of

authority.

MERITS / ADVANTAGES OF CENTRALISATION:

1.Effective utilisation of talents of the top Leader.
2.All parts move together. A unifying force that integrates all operations.
3.A strong co-ordinated top management team is developed.
4. Uniformity of policy and plans.
5.Best-arrangement to tackle emergencies. Resources and information can be
mobilised quickly and effectively.
6. Duplication of functions and facilities are minimised.
DEMERITS / DISADVANTAGES OF CENTRALISATION:
1. Delays in decision-making and Communication.
2. Centralised power and authority may be abused.
3. Inhibits development of lower level people.
4. Low motivation and morale of lower level people.
5. Fortunes of the enterprise depend on the health and vitality of top executives.

9.

How can decentralization be made more effective?

Decentralisation refers to the systematic effort to delegate to the lowest levels of authority except
that which can only be exercised at central points. Decentralisation is much more than delegation.
Delegation means transfer of authority from one individual to another. But decentralization
implies diffusion of authority throughout the organisation.
ADVANTAGES OF DECENTRALISATION
1. Motivation of subordinates

2. Effective communication
3.

Executive development

10. What are the sources of recruitment?

UNIT IV
DIRECTING
PART A (2 MARKS)
1. Definition of Directing?
Direction is a complex function that includes all those activities, which are designed to
encourage a subordinate to work effectively and efficiently
--Konntz and ODonnell.
2. Explain the nature of Directing.

1.
2.
3.
4.
5.

Elements of Management
Continuing Function
Pervasive Function
Creative Function
Linking function
6. Management of Human Factor
3. What are the scopes of directing?
1.
2.
3.
4.

Initiates action
Ensures coordination
Improves efficiency
Facilitates change

5. Assists stability and growth.

5.

What are the elements of directing?

The three elements of directing are
1. Motivation
2. Leadership
3. Communication

6.

What are the role of direction?

Direction is the heart of administration as it is indispensable for work performance. Direction

is needed to tell them what to do, how to do, and when to do. Effective direction provides the
following advantages:
1. Initiates action.
2. Ensures co-ordination. .
3. Improves efficiency.
4. Facilitates change.
5. Assists Stability and growth Effective
7. What are the importance of direction?
1. Direction integrates employees' efforts:
2. Direction initiates action:
3. Direction gets output from individuals
4. Direction facilitates changes

8. what are the steps involved in creativity ?

9. Definitions of motivation
According to Koontz and O'Donnell, "Motivation is a class of drives, needs, wishes and
similar forces".

10. What are the types of motivation?

11.
Definition of leadership.
Peter F Drucker considers "leadership" as a human characteristic which lifts a man's
vision to higher sights, raises a man's performance to higher standards and builds
man's personality beyond its normal limitations.
12.
What are the leadership skill?
(a) Human skill
(b) Conceptual skill
(c) Technical skill and
(d) Personal skill.

13. Define organization culture?

According to Needle organizational culture represents the collective values, beliefs and
principles of organizational members and is a product of such factors as history, product, market,
technology, and strategy, type of employees, management style, and national cultures and so on.
Corporate culture on the other hand refers to those cultures deliberately created by management to
achieve specific strategic ends.

14.

TYPES OF ORGANIZATIONAL CULTURE

Deal and Kennedy argue organizational culture is based on based on two elements:
1. Feedback Speed: How quickly are feedback and rewards provided (through which the
people are told they are doing a good or a bad job).
2. Degree of Risk: The level of risk taking (degree of uncertainty).
The combination of these two elements results in four types of corporate cultures:
a) Tough-Guy Culture or Macho Culture (Fast feedback and reward, high risk):
i. Stress results from the high risk and the high potential decrease or increase of
the reward.
ii. Focus on now, individualism prevails over teamwork.
iii. Typical examples: advertising, brokerage, sports.
b) Work Hard/Play Hard (Fast feedback and reward, low risk):
i. Stress results from quantity of work rather than uncertainty.
ii. Focus on high-speed action, high levels of energy.
iii. Typical examples: sales, restaurants, software companies.

15.

What is Grapevine?

Grapevine Characteristics
a. Informal, not controlled by management.
b. Perceived by most employees as being more believable and reliable than formal
communications.
c. Largely used to serve the self-interests of those who use it.
d. Results from:
i. Desire for information about important situations
ii. Ambiguous conditions
e Conditions that cause anxiety
PART B (16 MARKS)
1. What are the nature and characteristics of motivation?
Psychologists generally agree that all behavior is motivated, and that people have reasons for
doing the things they do or for behaving in the manner that they do. Motivating is the work a
manager performs to inspire, encourage and impel people to take required action.
The following salient features of motivation explain its nature:
1. Motivation is a psychological concept
The needs of person influence his behaviour.A subordinate, whose needs have been fully satisfied,
feels mentally relieved. The quantum of tangible benefits provided, e.g. higher pay to subordinate
may not actually determine mental satisfaction. Even a word of appreciation from the manager may
provide
greater mental satisfaction to an employee and induce him to work harder. Motivation, thus, has
something to do with the psychology of the employees.
2. Motivation is always total and not piece-meal
It means that a person cannot be motivated in instalments. An employee will not be motivated if
some of his needs are partly satisfied. For example, if an employee awaits a transfer to his native
place and is also due to get his promotion, he will not feel motivated if only one of the benefits is
sanctioned.
It is, therefore, the duty of the employer to grant any benefit to his employees fully as and when it is
due.
3. Motivation may be financial or non-financial
An employee may be motivated through financial or non-financial incentives. Financial incentives
are the monetary benefits provided to an employee in the form of higher pay, bonus, commission
etc., Non-financial incentives are the non-monetary benefits such as greater decision-making
authority, better
designation and so on.

4. Method of Motivation may be positive as well as negative

Many people think that the method of motivation should always be positive. It may even be
negative. The method is positive if it is in the form of higher pay, greater authority, better
designation etc., The method of motivation is negative in the following cases:
(i) Issue of Memo to a worker showing negligence.
(ii) Placing a worker who is avoiding duties under suspension
(iii) Pay-cut.
(iv) Imposing fines or penalties for violating rules and regulations in the work place
etc.
5. Motivation is a continuous process
Man is a wanting animal. As soon as one need is satisfied another appears in its place. This is an
unending process. Motivation, therefore, is not a time-bound process. In the work place, an
employee needs to be motivated as long as he is in employment.

wat are the process/steps of motivation?

Motivation is the result of an interaction between human needs and incentives. A person
feels motivated when available incentives lead to the satisfaction of his motives or needs.
The various steps in the process of motivation are described below.
1. Awareness of Need
Needs or motives of a person are the starting point in the motivational process. Motives are
directed towards the realisation of certain goals which in turn determine the behaviour of
individuals. This behaviour leads to goal-directed behaviour. In other words, awareness of
unsatisfied needs creates tension in the mind of a person.
2. Search forAction
In order to relieve his tension and to satisfy his needs, the individual looks for a suitable
action. He develops certain goals and makes an attempt to achieve them.
3. Fulfillment of Need
In case the individual is successful in his attempt, his need is satisfied and he feels
motivated. If the attempt is unsuccessful the need remains unsatisfied and the individual engages
himself in search for a new action. He will engage himself in constructive or defensive behaviour.

2. What are the importance / merits of motivation :

Motivation, as a tool of direction, is important in view of the following reasons:

1. Inducement of employees
In the workplace, motivation is important to induce an employee to contribute to his maximum
2.Discovery of New Need
Once one need is fulfilled, some other need will emerge and the individual will set a new goal. This
process continues to work within an individual because human needs are unlimited.

3. Higher efficiency
Well-motivated employees put in maximum efforts in discharging their duties. This leads to higher
output and thereby reduces the average cost per unit produced. Optimum output and lower cost is
what is essential to achieve maximum efficiency.
4. Optimum use of resources
Motivated employees do not avoid their duties. It is, therefore, possible to make optimum use of the
enterprise resources, particularly, materials and machines. The employees also do not remain idle
during working hours. As a result, there is no loss of labour hours.
5. Avoidance of loss due to mishandling and breakage
Properly motivated employees are always careful in their work. They do not show negligence. As a
result, loss due to mishandling of machines and equipment and due to breakage will certainly be
avoided.
6. No complaints and grievances
Well-motivated employees do not make unnecessary complaints about anyone or anything. They like
their job and the organisation. As all their needs are fulfilled by their employer, they hardly have
any grievance.
7. Better human relations

3. What are the theories of motivation?

THEORIES OF MOTIVATION

Many experts have developed different theories on the concept of motivation. Popular ones are given
below:
1. Maslows need hierarchy theory:
2. Mcgregors xand ytheories
3. Frederick herzbergs motivation-hygiene theory:
4. Victor vrooms expectancy theory

4. What are the Qualities of a Leader:

To be successful leader, a person is expected to possess the following qualities:
1. Ability to analyse
The leader must be able to analyse any problem and offer an immediate solution. He should be
alert mentally.
2. Emotional stability
The leader must not make decisions influenced by emotions. He has to approach any problem
intellectually and find a solution.
3. Self-confidence
A person cannot be a successful leader if he lacks self confidence. If he has confidence in himself,
he will be able to overcome resistance from anyone for his proposals.
4. Foresight
The leader must foresee what is likely to happen. He must be able to visualise the future events and
prepare his followers to meet challenges.
5. Sense of judgement
The leader must be able to judge what is good under the given circumstances. Only then he will be
able to evolve certain practical decisions.
6. Understanding
The leader must not always thrust his views on his followers. He must also listen to their viewpoints
particularly while making decision in a critical situation.
7. Mental courage
The leader must be capable of taking certain bold decisions. For this he must have mentalcourage.
He need not play safe by just endorsing the decisions of others.
8. Capacity to motivate
Needless to say, the leader must be able to induce and motivate his followers to work for the mission
he has undertaken.

9. Ability to guide The leader will be able to guide his followers in the work process only if he
himself is well versed in the actual work.
10. Communication skills
Successful leaders are always known for the communication skills. Such skills are essential to
direct the followers to work for attaining the desired goal.
11. Sociability
The leader should not be indifferent to the needs of his followers. If any follower has certain
personal problems, the leader must do his best to help him. The leader must make himself
accessible to his followers.
12. Sound physical health
The leader must possess strong physical health. If only the leader has sound physical health, he
will be able to work for his mission with endurance.
13. Practicing what is preached
The leader must be a person who practices what he preaches. He can talk of commitment to work
only if he himself is committed to work. He can talk of honesty if only he is honest in his dealings.
14. Ambitious
The leader must always be an ambitious person. Only then his subordinates will be able to work
with enthusiasm.
15. Positive thinking
Last and not the least, the leader must be an optimist. He must always have a positive attitude
towards his work.

5. What are the leadership styles?

The leadership style we will discuss here are:
a) Autocratic style
b) Democratic Style
c) Laissez Faire Style

6. What are the leadership theories ?

The various leadership theories are
a) Great Man Theory:
Assumptions
Leaders are born and not made.
Great leaders will arise when there is a great need.

Description
Early research on leadership was based on the study of people who were already great leaders.
These people were often from the aristocracy, as few from lower classes had the opportunity to lead.
This contributed to the notion that leadership had something to do with breeding.
The idea of the Great Man also strayed into the mythic domain, with notions that in times of need,
a Great Man would arise, almost by magic. This was easy to verify, by pointing to people such as
Eisenhower and Churchill, let alone those further back along the timeline, even to Jesus, Moses,
Mohammed and the Buddah.
Discussion
Gender issues were not on the table when the 'Great Man' theory was proposed. Most leaders were
male and the thought of a Great Woman was generally in areas other than leadership.Most
researchers were also male, and concerns about androcentric bias were a long way from being
realized.
b) Trait Theory:
Assumptions
People are born with inherited traits.
Some traits are particularly suited to leadership.
People who make good leaders have the right (or sufficient) combination of traits.
Description
Early research on leadership was based on the psychological focus of the day, which was of people
having inherited characteristics or traits. Attention was thus put on discovering these traits, often
by studying successful leaders, but with the underlying assumption that if other people could also
be found with these traits, then they, too, could also become great leaders. McCall and Lombardo
(1983) researched both success and failure identified four primary traits by which leaders could
succeed or 'derail':
Emotional stability and composure: Calm, confident and predictable, particularly when under
stress.
Admitting error: Owning up to mistakes, rather than putting energy into covering up. Good
interpersonal skills: able to communicate and persuade others without resort to negative or coercive
tactics.Intellectual breadth: Able to understand a wide range of areas, rather than having a narrow
(and
narrow-minded) area of expertise.
c) Behavioral Theory:
Assumptions

 Leaders can be made, rather than are born.

Successful leadership is based in definable, learnable behavior.
Description
Behavioral theories of leadership do not seek inborn traits or capabilities. Rather, they look at what
leaders actually do.
If success can be defined in terms of describable actions, then it should be relatively easy for other
people to act in the same way. This is easier to teach and learn then to adopt the more ephemeral
'traits' or 'capabilities'.
d) Participative Leadership:
Assumptions
Involvement in decision-making improves the understanding of the issues involved by those who
must carry out the decisions.
People are more committed to actions where they have involved in the relevant decision making.
People are less competitive and more collaborative when they are working on joint goals.
When people make decisions together, the social commitment to one another is greater and thus
increases their commitment to the decision.
Several people deciding together make better decisions than one person alone.
Description
A Participative Leader, rather than taking autocratic decisions, seeks to involve other people in the
process, possibly including subordinates, peers, superiors and other stakeholders. Often, however,
as it is within the managers' whim to give or deny control to his or her subordinates, most
participative activity is within the immediate team. The question of how much influence others are
given thus may vary on the manager's preferences and beliefs, and a whole
spectrum of participation is possible
e) Situational Leadership:
Assumptions
The best action of the leader depends on a range of situational factors.
Description
When a decision is needed, an effective leader does not just fall into a single preferred style.
In practice, as they say, things are not that simple. Factors that affect situational decisions include
motivation and capability of followers. This, in turn, is affected by factors within the particular
situation. The relationship between followers and the leader may be another factor that affects
leader behavior as much as it does follower behavior. The leaders' perception of the follower and the

situation will affect what they do rather than the truth of the situation. The leader's perception of
themselves and other factors such as stress
and mood will also modify the leaders' behavior.
f) Contingency Theory:
Assumptions
The leader's ability to lead is contingent upon various situational factors, including the leader's
preferred style, the capabilities and behaviors of followers and also various other situational factors.
Description
When people make decisions together, the social commitment to one another is greater and thus
increases their commitment to the decision.
Several people deciding together make better decisions than one person alone.
Description
A Participative Leader, rather than taking autocratic decisions, seeks to involve other people in the
process, possibly including subordinates, peers, superiors and other stakeholders. Often, however,
as it is within the managers' whim to give or deny control to his or her subordinates, most
participative activity is within the immediate team. The question of how much influence others are
given thus may vary on the manager's preferences and beliefs, and a whole
spectrum of participation is possible
e) Situational Leadership:
Assumptions
The best action of the leader depends on a range of situational factors.
Description
When a decision is needed, an effective leader does not just fall into a single preferred style.
In practice, as they say, things are not that simple. Factors that affect situational decisions include
motivation and capability of followers. This, in turn, is affected by factors within the particular
situation. The relationship between followers and the leader may be another factor that affects
leader behavior as much as it does follower behavior.
The leaders' perception of the follower and the situation will affect what they do rather than
the truth of the situation. The leader's perception of themselves and other factors such as stress
and mood will also modify the leaders' behavior.
f) Contingency Theory:
Assumptions

The leader's ability to lead is contingent upon various situational factors, including the
leader's preferred style, the capabilities and behaviors of followers and also various other situational
factors.
Description
Contingency theories are a class of behavioral theory that contend that there is no one best
way of leading and that a leadership style that is effective in some situations may not be successful
in others.
An effect of this is that leaders who are very effective at one place and time may become
unsuccessful either when transplanted to another situation or when the factors around them
change.
Contingency theory is similar to situational theory in that there is an assumption of no
simple one right way. The main difference is that situational theory tends to focus more on the
behaviors that the leader should adopt, given situational factors (often about follower behavior),
whereas contingency theory takes a broader view that includes contingent factors about leader
capability and other variables within the situation.
g) Transactional Leadership:
Assumptions
People are motivated by reward and punishment.
Social systems work best with a clear chain of command.
When people have agreed to do a job, a part of the deal is that

they cede all

authority to their manager.

The prime purpose of a subordinate is to do what their manager tells them to do.
Description
The transactional leader works through creating clear structures whereby it is clear what is
required of their subordinates, and the rewards that they get for following orders. Punishments are
not always mentioned, but they are also well-understood and formal systems of discipline are
usually in place.
The early stage of Transactional Leadership is in negotiating the contract whereby the subordinate
is given a salary and other benefits, and the company (and by implication the subordinate's
manager) gets authority over the subordinate. When the Transactional Leader allocates work to a
subordinate, they are considered to be fully responsible for it, whether or not they have the
resources or capability to carry it out. When things go wrong, then the subordinate is considered to
be personally at fault, and is punished for their failure (just as they are rewarded for succeeding).

Contingency theories are a class of behavioral theory that contend that there is no one best
way of leading and that a leadership style that is effective in some situations may not be successful
in others. An effect of this is that leaders who are very effective at one place and time may become
unsuccessful either when transplanted to another situation or when the factors around them
change.
Contingency theory is similar to situational theory in that there is an assumption of no simple one
right way. The main difference is that situational theory tends to focus more on the behaviors that
the leader should adopt, given situational factors (often about follower behavior), whereas
contingency theory takes a broader view that includes contingent factors about leader capability
and other variables within the situation.
g) Transactional Leadership:
Assumptions
People are motivated by reward and punishment.
Social systems work best with a clear chain of command.
When people have agreed to do a job, a part of the deal is that they cede all authority to
their manager.
The prime purpose of a subordinate is to do what their manager tells them to do.
Description
The transactional leader works through creating clear structures whereby it is clear what is
required of their subordinates, and the rewards that they get for following orders. Punishments are
not always mentioned, but they are also well-understood and formal systems of discipline are
usually in place.
The early stage of Transactional Leadership is in negotiating the contract whereby the subordinate
is given a salary and other benefits, and the company (and by implication the subordinate's
manager) gets authority over the subordinate. When the Transactional Leader allocates work to a
subordinate, they are considered to be fully responsible for it, whether or not they have the
resources or capability to carry it out. When things go wrong, then the subordinate is considered to
be personally at fault, and is punished for
their failure (just as they are rewarded for succeeding).
h)Transformational Leadership:
Assumptions
People will follow a person who inspires them.
A person with vision and passion can achieve great things.

 The way to get things done is by injecting enthusiasm and energy.

Description
Working for a Transformational Leader can be a wonderful and uplifting experience. They put
passion and energy into everything. They care about you and want you to succeed.
Transformational Leaders are often charismatic, but are not as narcissistic as pure Charismatic
Leaders, who succeed through a belief in themselves rather than a belief in others.

7.

What are the communication process?

The figure below depicts the communication process. This model is made up of seven
parts:
(1) Source, (2) Encoding, (3) Message, (4) Channel, (5) Decoding, (6) Receiver, and (7)
Feedback.

8.What are the importance/benefits of communication and its types?

The importance of communication is explained below:
1. Helps in planning
Communication helps to prepare better plans for the enterprise. The views and suggestions of
the employees, clients, suppliers etc., are received and the same are incorporated in the enterprise
plans.
2. Vital for decision-making
The information necessary for decision-making is made available through proper communication.
For example, a decision on production is made after receiving information from the stores on the
stock of materials available and from the marketing department on the extent of demand.
3. Facilitates delegation
Delegation of authority by a superior to his subordinates will not be possible without proper
communication. The superior must first of all assign work to his subordinates and give them the
requisite authority to carry out their duties. This cannot be done without effective communication.
4. Facilitates effective leadership

As a leader, the manager will be able to guide his subordinates well only through proper
communication. When the subordinates have work-related problems, they have to necessarily
approach their superior for assistance. If the manager is a man of few words, he will not be able to
offer much help.
5. Helps to motivate
Assignment of work and delegation of authority alone will not be enough to get things done by the
subordinates. They need to be constantly motivated to perform well. It is the duty of the manager to
induce and instigate their subordinates to do their best. This will not be possible without proper
communication.
6. Helps in co-ordination
Although the activities performed by different individuals and departments are different, they are
directed towards the attainment of the enterprise goal.
7. Aid to job-satisfaction If a subordinate gets proper guidance from his superior, is able to
contact his superior in times
of need, has the requisite authority to carry out his tasks and is able to share his thoughts freely
with his colleagues, it should mean that the organisation must have a proper system of
communication. Such an employee is bound to have greater job-satisfaction.
8. Helps to save time and effort
It is possible to save time and effort by using effective means of communication. For example,
if the General Manger of the concern wants to announce a decision to all the employees, he can just
send a circular. The same may also be displayed in the notice board.
9. Aid to public relations
Every organisation has to maintain cordial relations with the members of the public. Many persons
may visit an enterprise everyday. They include customers, creditors, shareholder, Government
officials and so on. The Public Relations Officer must receive them and also attend to their needs.
Communication plays a significant role in all such activities.
Types of Communication:
Communication may be classified into the following types:
1. Based on Relationships (i) Formal
(ii) Informal.

9.

What

are

the

functions

of

communication

communication in the organization?

and

what

are

the

directions

of

Communication serves four major functions within an organization.

Control
Communication acts to control the employees' behaviour. Organizations have authority hierarchies
and formal guidelines that employees are required to follow. The control mechanism can work only
when the communication oral and written, is effective. Informal communication also controls
behaviour. Information
Communication is a vital necessity to an organization, just as the bloodstream is to the person. It is
essential that information must be communicated to the managers on the basis of which the plans
can be developed; these plans must be communicated to the operating managers and employees.
Motivation
Communication fosters motivation by clarifying to employees what is to be done, how well they are
doing and what can be done to prove performance if it is unsatisfactory.

Emotional Expression
Communication provides a release for the emotional expression of feelings and for fulfillment of
social

needs.

Employees

show

their

frustrations

and

feelings

of

satisfaction

through

communication.

DIRECTIONS OF COMMUNICATION IN THE ORGANIZATION

Within organizations, there are three directions in which communications flow: downward, upward
and laterally (horizontal).
Downward Communication
Downward communication involves a message travelling to one or more receivers at the lower level
in the hierarchy. The message frequently involves directions or performance
feedback. The downward flow of communication generally corresponds to the formal organizational
communications system, which is usually synonymous with the chain of command or line of
authority. This system has received a great deal of attention from both managers and behavioural
scientists since it is crucial to organizational functioning.
Upward Communication
In upward communication, the message is directed toward a higher level in the hierarchy. It
is often takes the form of progress reports or information about successes and failures of the
individuals or work groups reporting to the receiver of the message. Sometimes employees also send
suggestions or complaints upward through the organization's hierarchy.

The upward flow of communication involves two distinct manager-subordinate activities in addition
to feedback:
(a) The participation by employees in formal organizational decisions.
(b) Employee appeal is a result against formal organization decisions. The employee appeal is a
result of the industrial democracy concept that provides for two-way communication in areas of
disagreement.
Lateral Communication
When takes place among members of the same work group, among members of work groups at the
same level, among managers at the same level or among any horizontally equivalent personnel, we
describe it as lateral communications. In lateral communication,
the sender and receiver(s) are at the same level in the hierarchy. Formal communications that travel
laterally involve employees engaged in carrying out the same or related tasks.
The messages might concern advice, problem solving, or coordination of activities.
Guidelines for effective Communication
(i) Senders of message must clarify in their minds what they want to communicate. Purpose of the
message and making a plan to achieve the intended end must be clarified.
(ii) Encoding and decoding be done with symbols that are familiar to the sender and the receiver of
the message.
(iii) For the planning of the communication, other people should be consulted and encouraged to
participate.
(iv) It is important to consider the needs of the receivers of the information. Whenever appropriate,
one should communicate something that is of value to them, in the short run as well as in the more
distant future.
(v) In communication, tone of voice, the choice of language and the congruency between what is
said and how it is said influence the reactions of the receiver of the message.
(vi) Communication is complete only when the message is understood by the receiver. And one never
knows whether communication is understood unless the sender gets a feedback.
(vii)The function of communication is more than transmitting the information. It also deals with
emotions that are very important in interpersonal relationships between superiors, subordinates
and colleagues in an organization.
(viii) Effective communicating is the responsibility not only of the sender but also of the receiver of
the information.

10. What are the barriers to communication? How to over come this barriers?

There are several obstacles that tend to distort the flow the messages. Such distortion leads to
misunderstanding and frictions among the members of the organisation. These barriers do not
permit healthy human relationships and they are injurious to teamwork and morale. Therefore it is
necessary to analyse and remove the barriers to communication. The various barriers to
communication
may be described under three heads.
1. Organisational barriers
2. Mechanical barriers
3. Personal barriers
1. Organisational barriers:
Organisational barriers arise due to inadequate or improper policies, rules and facilities regarding
communication:
a) Ambiguous policies, rules and procedures
Organisation policies, rules and procedures lay down the communication channels and the subjectmatter of communication. When these policies and rules are not clear, flow of communication is not
smooth.

b) Status patterns
Formal relationships and status symbols highlight the position or rank of individuals. The
subordinates become conscious of their distance from the centre of authority and this awareness
tends to widen the communication gap between superiors and subordinates. Greater the difference
between the hierarchical positions in terms of their status, higher is the possibility of breakdown in
upward communication.
c) Long chain of command.
In a complex organisation structure, there are several levels of authority. Formal
communication have to pass through this chain (proper channel) . As a result there are delays and
distortions in communication. At every level, the message may be twisted or altered intentionally.
Such filtering is more common in the case of upward communication.
d) Inadequate facilities.
Inadequate facilities in communication system disturb the flow of communication.
2. Mechanical barriers:
Mechanical barriers arise due to problems in communication channels. These barriers are as
follows:
a) Overloading :

When the number of messages is greater than the capacity of communication channel, there is
overrloading. This causes delays and breakdowns in communication.
c) Semantic barriers :
Words used to convey messages have several meanings. Sometimes the message is not expressed in
clear and precise language. Omission of important details, faulty translation, use of technical
language and unclassified assumptions are the main semantic barriers to communication.
d) Noise :
Very often the communication is distorted and misunderstood due to noise in transmission and
fault in the instrument.
3. Personal barriers:
Most of the failures in communication arise due to faults on the part of the sender or receiver of the
message. The important personal or human barriers are given below.
a) Lack of attention or interest
When the receiver is not attentive to the message, he fails to grasp its meaning. Sometimes
subordinates do not want to communicate upward due to the fear that it may displease the
superior. Lack of proper attention or interest may arise due to several reasons.
b) Failure to communicate
A manager may fail to communicate effectively on account of various reasons. He may just be lazy
or assume that everybody knows. He may have the fear that sharing information with
subordinates may reduce his prestige and power. He may have little time to talk to subordinates. He
may not be aware of significance of the message for subordinates.
c) Hasty conclusion
The receiver may be in a hurry or may by habit jump to hasty conclusions before analyzing the
complete message. Such premature evaluation stops transfer of information and leads to wrong
interpretations.
d) Distrust of communicator
When the receiver lacks confidence in the competence or integrity of the sender, he may receive the
message with doubt or suspicion. Repeated experience of this type makes the receiver to delay or
postpone action.
e) Love for statusque
People by nature prefer to maintain the statusque as change creates uncertainty. When the
message tends to disturb the existing state of affairs or it is against the interests of the receiver, it is
likely to be resisted and ignored.
) Filtering:

Filtering refers to a sender manipulating information so it will be seen more favourably by

the receiver. The major determinant of filtering is the number of levels in an organization's
structure. The more vertical levels in the organization's hierarchy, the more opportunities for
filtering. Sometimes the information is filtered by the sender himself. If the sender is hiding some
meaning and disclosing in such a fashion as appealing to the receiver, then he is "filtering" the
message deliberately. A manager in the process of altering communication in his favour is
attempting to filter the information.
b) Selective Perception:
Selective perception means seeing what one wants to see. The receiver, in the
communication process, generally resorts to selective perception i.e., he selectively perceives the
message based on the organizational requirements, the needs and characteristics, background of
the employees etc. Perceptual distortion is one of the distressing barriers to the effective
communication. People interpret what they see and call it a reality. In our regular activities, we tend
to see those things that please us and to reject or ignore unpleasant things.
Selective perception allows us to keep out dissonance (the existence of conflicting elements in our
perceptual set) at a tolerable level. If we encounter something that does not fit out current image of
reality, we structure the situation to minimize our dissonance. Thus, we manage to overlook many
stimuli from the environment that do not fit into out current perception of the
world. This process has significant implications for managerial activities. For
c) Emotions:
How the receiver feels at the time of receipt of information influences effectively how he interprets
the information.
d) Language:
Communicated message must be understandable to the receiver. Words mean different things to
different people. Language reflects not only the personality of the individual but also the culture of
society in which the individual is living. In organizations, people from different regions, different
backgrounds, and speak different languages. People will have different academic backgrounds,
different intellectual facilities, and hence the jargon they use varies.
e) Stereotyping:
Stereotyping is the application of selective perception. When we have preconceived ideas about other
people and refuse to discriminate between individual behaviours, we are applying selective
perception to our relationship with other people. Stereotyping is a barrier to communications
because those who stereotype others use selective perception in their communication and tend to
hear only those things that confirm their stereotyped images.

f) Status Difference:
The organizational hierarchy pose another barrier to communication within organization, especially
when the communication is between employee and manager. This is so because the employee is
dependent on the manager as the primary link to the organization and hence more likely to distort
upward communication than either horizontal or downward communication.
g) Use of Conflicting Signals:
A sender is using conflicting signals when he or she sends inconsistent messages. A vertical
message might conflict with a nonverbal one. For example, if a manager says to his employees, "If
you have a problem, just come to me. My door is always open", but he looks annoyed whenever an
employee knocks on his door". Then we say the manager is sending conflicting messages.
h) Reluctance to Communicate:
For a variety of reasons, managers are sometimes reluctant to transmit messages. The reasons
could be: They may doubt their ability to do so.
They may dislike or be weary of writing or talking to others.
They may hesitate to deliver bad news because they do not want to face a negative
reaction.
When someone gives in to these feelings, they become a barrier to effective communications.
i) Projection:
Projection has two meanings.
(a) Projecting one's own motives into others behavior. For example, managers who are motivated by
money may assume their subordinates are also motivated by it. If the subordinate's prime motive is
something other than money, serious problems may arise.
(b) The use of defense mechanism to avoid placing blame on oneself. As a defense mechanism, the
projection phenomenon operates to protect the ego from unpleasant communications. Frequently,
individuals who have a particular fault will see the same fault in others, making their own fault
seem not so serious.
j) The "Halo Effect":
The term "halo effect" refers to the process of forming opinions based on one element from a group
of elements and generalizing that perception to all other elements. For example, in an organization,
a good attendance record may cause positive judgments about productivity, attitude, or quality of
work. In performance evaluation system, the halo effect refers to the practice of singling out one
trait of an employee (either good or bad) and using this as a basis for judgments of the total
employee.

MEASURES TO OVERCOME COMMUNICATION BARRIERS:

The following measures may be adopted to overcome communication.
1.Overcoming personal barriers
The personal barriers mentioned earlier have to be overcome by individuals by improving their
vocabularly power and fluency, gaining self-confidence and so on. For this, they can even undergo a
short-term course in communication.
2. Shorter Communication channels
A long channel of communication only leads to delay in sending or receiving any information.
Further, a long channel gives scope for such problems as filtering. A shorter channel not only helps
to avoid delay but also keeps the information intact.
3. Direct contact
Wherever necessary, it must be possible to establish direct contact with the employees,
shareholders, customers, creditors and so on. This will provide scope for personal touch, which is
very important for communication to be effective.
4. Use of electronic devices
Business communication, in the present days, relies heavily on electronic devices. Every
contemporary organisation should, therefore, employ all such devices like fax machines, computers,
mobile phones, pagers, etc., in addition to the conventional telephone so as to make the system of
communication efficient and effective.
5. Use of grapevine
There is always delay in sending and receiving formal communication. To overcome such a problem,
informal communication or grapevine should be used wherever necessary to have quick access to
information.
6. Removing mechanical defects
All the mechanical devices used for communication including the telephone should be kept in
proper working condition.
7. Feedback
It is a technique used in communication to ensure that the message has been correctly received.
The person sending the message can, for example, ask the receiver certain questions pertaining to
the message conveyed to make sure that the receiver has clearly understood the message.
8. Mutual trust
Last, but not the least, effective communication requires an atmosphere of trust and confidence
between the superiors and subordinates. Only then any message will be sent and received with a
feeling of goodwill.

UNIT V
CONTROLLING
1. Define controlling
Koontz and O'Donnell - "Managerial control implies measurement of accomplishment
against the standard and the correction of deviations to assure attainment of objectives
according to plans."
2. What do you mean by organizational controlling?
Managers monitor and regulate how efficiently and effectively an organization and its
members are performing the activities necessary to achieve organizational goals
3. Nature or characteristics of the control function?
1.It is Backward looking
Controlling involves comparing the actual performance with the targets. This requires checking of
events after these have taken place. Control is, thus, a backward looking activity.
2.It gives meaning to planning
Planning will lose its significance in the absence of control. It is only control that indicates the
extent to which the plan has been successfully implemented. In the absence of control, it will not be
possible to know whether the target has been achieved.
3. It involves appraisal or evaluation
The very nature of the control function is to make an appraisal or evaluation of the actual
performance production, sales, etc., Deviation from the target can be detected only if actual
performance is assessed.
4. It is a pervasive function
Control, like planning, is a pervasive function, i.e, performed at all levels of management top,
middle and lower levels.
5. It is forward looking too
By comparing actual performance with the expected level of performance, deviations can be
detected. Once the causes for the deviations are found out, corrective measures must be employed
to prevent the occurrence of the flaws in future. Thus, control provides the necessary safeguards for
future uncertainties.
6. It is a continuous process
As long as there is planning there will be control. As planning is an endless activity, control should
also be endless.

4. What are the Merits/ Benefits/Importance of Control:

The benefits of control are as follows:
1. It ensures attainment of enterprise objective While planning helps to work systematically,
control helps to ascertain whether the fruits of labour have been realised.
2. It highlights the quality of plans Control brings out the positive and negative aspects of the
various plans of the enterprise. If there is any deficiency in planning, steps may be taken to improve
the quality of plans.
3. It ensures successful implementation of plans It is only control that ensures whether the
plans of the enterprise are being properly implemented. It points out the bottlenecks in the
implementation of plans and also suggests remedial measures.
4. It ensures that employees work with commitment Control requires the employees at all
levels to perform their duties as planned in order to attain the targets within the stipulated time. In
the absence of control, there may be a tendency to go slow.
5. It provides scope for delegation In every department of the enterprise, target attainment gets
the focus in view of the control function. To attain the target, the departmental heads have to
assign work to their subordinates and also give them the requisite authority to carry out their
tasks. Thus, control gives scope for delegation of authority by a superior to his subordinates.
6. It facilitates co-ordination The work of every employee influences and is influenced by the
work of others. What is, therefore, required is a co-ordinated effort. Control requires the employees
to integrate their efforts and work as a team in order to achieve the targets.
7. It promotes efficiency By fixing the deadline for the accomplishment of targets, control
ensures that the resources of the enterprise, namely, men, machines, materials and money are put
to optimum use. This leads to higher efficiency.

5 Types of Control?

6 What are the Budgetary Control Techniques

1. Revenue and Expense Budgets
2. Time, Space, Material, and Product Budgets
3. Capital Expenditure Budgets
4. Cash Budgets
5. Variable Budget
6. Zero Based Budget
7 What are the classifications of budgets?

7 what are the non-budgetary control techniques?

1. Statistical data
2. Break- even point analysis
3. Operational audit
4. Personal observation
5. PERT(Project Evaluation and Review Technique)

6. GANTT CHART
8 What do you mean by productivity?
1. Productivity refers to the ratio between the output from production processes to its
input.
2. Productivity may be conceived of as a measure of the technical or engineering
efficiency of production.
9 What are the Tools and Techniques to Improving Productivity?
1. Inventory planning and control
2. Just in time
3. Outsourcing
4. Operations Research
5. Value Engineering
6. Quality Circles
7. Work Specialization
8. Lean Manufacturing(low unit cost)
9. Computer Aided Techniques
10. What are the Advantages of cost control?
1. Better utilization of resources
2. To prepare for meeting a future competitive position.
3. Reasonable price for the customers
4. Firm standing in domestic and export markets.
5. Improved methods of production and use of latest manufacturing
techniques which have the effect of rising productivity and minimizing
cost.
10. What are the purchase controls?
Purchase control is an element of material control. Material procurement is known as
the purchase function. The functional responsibility of purchasing is that of the
purchase manager or the purchaser. Purchasing is an important function of materials
management because in purchase of materials, a substantial portion of the
company's finance is committed which affects cash flow position of the company.
Success of a business is to a large extent influenced by the efficiency of its purchase
organization.

11 What are the maintenance control?

1. Maintenance department has to exercise effective cost control, to carry out the
maintenance functions in a pre-specified budget, which is possible only through
the following measures
2. First line supervisors must be apprised of the cost information of the various
materials so that the objective of the management can be met without extra
expenditure on maintenance functions
12 What are the quality control?
Quality control refers to the technical process that gathers, examines, analyze &
report the progress of the project & conformance with the performance requirements
14 What are the PLANNING OPERATIONS?
1. An operational planning is a subset of strategic work plan.

2.

An operational plan is the basis for, and

justification of an annual operating budget request. Therefore, a five-year
strategic plan would need five operational plans funded by five operating
budgets.

15 What are the Operational plans should contain:

1.
2.
3.
4.
5.
6.
7.

clear objectives
activities to be delivered
quality standards
desired outcomes
staffing and resource requirements
implementation timetables
a process for monitoring progress.

1. Control Process (Stages or Steps involved in Control)

The following are the stages involved in the process of control:
1. Establishment of Standards
2. Measurement of Actual performance and making Comparisons
3. Finding out deviations and
4. Taking corrective actions

2. Explain the budgetary control techniques?

The various types of budgets are as follows
i) Revenue and Expense Budgets:
The most common budgets spell out plans for revenues and operating expenses in rupee terms. The
most basic of revenue budget is the sales budget which is a formal and detailed expression of the
sales forecast. The revenue from sales of products or services furnishes the principal income to pay
operating expenses and yield profits. Expense budgets may deal with individual items of expense,
such as travel, data processing, entertainment, advertising, telephone, and insurance.
ii) Time, Space, Material, and Product Budgets:
Many budgets are better expressed in quantities rather than in monetary terms. e.g.
direct-labor-hours, machine-hours, units of materials, square feet allocated, and units produced.
The Rupee cost would not accurately measure the resources used or the results intended.
iii) Capital Expenditure Budgets:
Capital expenditure budgets outline specifically capital expenditures for plant,
machinery, equipment, inventories, and other items. These budgets require care because they give
definite form to plans for spending the funds of an enterprise. Since a business takes a long time to
recover its investment in plant and equipment, (Payback period or gestation period) capital
expenditure budgets should usually be tied in with fairly long-range planning.
iv) Cash Budgets:
The cash budget is simply a forecast of cash receipts and disbursements against which actual cash
"experience" is measured. The availability of cash to meet obligations as they fall due is the first
requirement of existence, and handsome business profits do little good when tied up in inventory,
machinery, or other noncash assets.
v) Variable Budget:
The variable budget is based on an analysis of expense items to determine how

individual costs should vary with volume of output. Some costs do not vary with volume,
particularly in so short a period as 1 month, 6 months, or a year. Among these are depreciation,
property taxes and insurance, maintenance of
plant and equipment, and costs of keeping a minimum staff of supervisory and other key
personnel. Costs that vary with volume of output range from those that are completely variable to
those that are only slightly variable.
The task of variable budgeting involves selecting some unit of measure that reflects volume;
inspecting the various categories of costs (usually by reference to the chart of accounts); and, by
statistical studies, methods of engineering analyses, and other means, determining how these costs
should vary with volume of output.
vi) Zero Based Budget:
The idea behind this technique is to divide enterprise programs into "packages"
composed of goals, activities, and needed resources and then to calculate costs for each package
from the ground up. By starting the budget of each package from base zero, budgeters calculate
costs afresh for each budget period; thus they avoid the common tendency in budgeting of looking
only at changes from a previous period.
Advantages
There are a number of advantages of budgetary control:
Compels management to think about the future, which is probably the most important feature of
a budgetary planning and control system. Forces management to look ahead,to set out detailed
plans for achieving the targets for each department, operation and (ideally) each manager, to
anticipate and give the organization purpose and direction.
Promotes coordination and communication.
Clearly defines areas of responsibility. Requires managers of budget centres to be made
responsible for the achievement of budget targets for the operations under their personal control.
Provides a basis for performance appraisal (variance analysis). A budget is basically a yardstick
against which actual performance is measured and assessed. Control is provided by comparisons of
actual results against budget plan. Departures from budget can then be investigated and the
reasons for the differences can be divided into controllable and non-controllable factors.
Enables remedial action to be taken as variances emerge.
Motivates employees by participating in the setting of budgets.
Improves the allocation of scarce resources.
Economises management time by using the management by exception principle.
Problems in budgeting

 Whilst budgets may be an essential part of any marketing activity they do have a number of
disadvantages, particularly in perception terms.
Budgets can be seen as pressure devices imposed by management, thus resulting in:
a) bad labour relations
b) inaccurate record-keeping.
Departmental conflict arises due to:
a) disputes over resource allocation
b) departments blaming each other if targets are not attained.
It is difficult to reconcile personal/individual and corporate goals.
Waste may arise as managers adopt the view, "we had better spend it or we will lose it". This is
often coupled with "empire building" in order to enhance the prestige of a department.
Responsibility versus controlling, i.e. some costs are under the influence of more than one person,
e.g. power costs.
Managers may overestimate costs so that they will not be blamed in the future should they
overspend.

3 Explain the non-budgetary control techniques?

There are, of course, many traditional control devices not connected with budgets, although
some may be related to, and used with, budgetary controls. Among the most important of these are:
statistical data, special reports and analysis, analysis of break- even points, the operational audit,
and the personal observation.
i) Statistical data:
Statistical analyses of innumerable aspects of a business operation and the clear presentation of
statistical data, whether of a historical or forecast nature are, of course, important to control. Some
managers can readily interpret tabular statistical data, but most managers prefer presentation of
the data on charts.
ii) Break- even point analysis:
An interesting control device is the break even chart. This chart depicts the relationship of sales
and expenses in such a way as to show at what volume revenues exactly cover expenses.
iii) Operational audit:

Another effective tool of managerial control is the internal audit or, as it is now coming to be called,
the operational audit. Operational auditing, in its broadest sense, is the regular and independent
appraisal, by a staff of internal auditors, of the accounting, financial, and other operations of a
business.

iv) Personal observation:

In any preoccupation with the devices of managerial control, one should never overlook the
importance of control through personal observation.
v) PERT:
The Program (or Project) Evaluation and Review Technique, commonly abbreviated PERT, is a is a
method to analyze the involved tasks in completing a given project, especially the time needed to
complete each task, and identifying the minimum time needed to complete the total project.
vi) GANTT CHART:
A Gantt chart is a type of bar chart that illustrates a project schedule. Gantt charts illustrate the
start and finish dates of the terminal elements and summary elements of a project. Terminal
elements and summary elements comprise the work breakdown structure of the project. Some
Gantt charts also show the dependency (i.e., precedence network) relationships between activities.

4. Explain the productivity?

Productivity refers to the ratio between the output from production processes to its input.
Productivity may be conceived of as a measure of the technical or engineering efficiency of
production. As such quantitative measures of input, and sometimes output, are emphasized.
Typical Productivity Calculations
Measures of size and resources may be combined in many different ways. The three common
approaches to defining productivity based on the model of Figure 2 are referred to as physical,
functional, and economic productivity. Regardless of the approach selected, adjustments may be
needed for the factors of diseconomy of scale, reuse, requirements churn, and quality at delivery.
a) Physical Productivity
This is a ratio of the amount of product to the resources consumed (usually effort). Product may be
measured in lines of code, classes, screens, or any other unit of product. Typically, effort is
measured in terms of staff hours, days, or months. The physical size also may be used to estimate
software performance factors (e.g., memory utilization as a function of lines of code).
b) Functional Productivity
This is a ratio of the amount of the functionality delivered to the resources consumed (usually
effort). Functionality may be measured in terms of use cases, requirements, features, or function
points (as appropriate to the nature of the software and the development method). Typically, effort
is measured in terms of staff hours, days, or months. Traditional measures of Function Points work
best with information processing systems. The effort involved in embedded and scientific software is
likely to be underestimated with these measures, although

several variations of Function Points have been developed that attempt to deal with this issue.
c) Economic Productivity
This is a ratio of the value of the product produced to the cost of the resources used to produce it.
Economic productivity helps to evaluate the economic efficiency of an organization. Economic
productivity usually is not used to predict project cost because the outcome can be affected by
many factors outside the control of the project, such as sales volume, inflation, interest rates, and
substitutions in resources or materials, as well as all the other factors that
affect physical and functional measures of productivity. However, understanding economic
productivity is essential to making good decisions about outsourcing and subcontracting. The basic
calculation of economic productivity is as follows:
Economic Productivity = Value/Cost

5 Explain the cost control?

Cost control is the measure taken by management to assure that the cost objectives set down in the
planning stage are attained and to assure that all segments of the organization function in a
manner consistent with its policies.
Steps involved in designing process of cost control system:
Establishing norms: To exercise cost control it is essential to establish norms, targets or
parameters which may serve as yardsticks to achieve the ultimate objective. These standards,
norms or targets may be set on the basis of research, study or past actual.
Appraisal: The actual results are compared with the set norms to ascertain the degree of
utilization of men, machines and materials. The deviations are analyzed so as to arrive at the
causes which are controllable and uncontrollable.
Corrective measures: The variances are reviewed and remedial measures or revision of targets,
norms, standards etc., as required are taken.
Advantages of cost control
1.
2.
3.
4.
5.

Better utilization of resources

To prepare for meeting a future competitive position.
Reasonable price for the customers
Firm standing in domestic and export markets.
Improved methods of production and use of latest manufacturing techniques which have the

effect of rising productivity and minimizing cost.

6. By a continuous search for improvement creates proper climate for the increase efficiency.
7. Improves the image of company for long-term benefits.
8. Improve the rate of return on investment.

6 Explain the purchase control?

Purchase control is an element of material control. Material procurement is known as the purchase
function. The functional responsibility of purchasing is that of the purchase manager or the
purchaser. Purchasing is an important function of materials management because in purchase of
materials, a substantial portion of the company's finance is committed which affects
cash flow position of the company. Success of a business is to a large extent influenced by the
efficiency of its purchase organization. The advantages derived from a good and adequate system of
the purchase control are as follows:
a) Continuous availability of materials: It ensures the continuous flow of materials. So
production work may not be held up for want of materials. A manufacturer can complete schedule
of production in time.
b) Purchasing of right quantity: Purchase of right quantity of materials avoids locking up of
working capital. It minimizes risk of surplus and obsolete stores. It means there should not be
possibility of overstocking and understocking.
c) Purchasing of right quality: Purchase of materials of proper quality and specification avoids
waste of materials and loss in production. Effective purchase control prevents wastes and losses of
materials right from the purchase till their consumptions. It enables the management to reduce
cost of production.
d) Economy in purchasing: The purchasing of materials is a highly specialized function. By
purchasing materials at reasonable prices, the efficient purchaser is able to make a valuable
contribution to the success of a business.
e) Works as information centre: It serves as a function centre on the materials knowledge relating
to prices, sources of supply, specifications, mode of delivery, etc. By providing continuous
information to the management it is possible to prepare planning for production.
f) Development of business relationship: Purchasing of materials from the best market and from
reliable suppliers develops business relationships. The result is that there may be smooth supply of
materials in time and so it avoid disputes and financial losses.
g) Finding of alternative source of supply: If a particular supplier fails to supply the materials in
time, it is possible to develop alternate sources of supply. the effect of this is that the production
work is not disturbed.
h) Fixing responsibilities: Effective purchase control fix the responsibilities of operating units and
individuals connected with the purchase, storage and handling of materials. In short, the basic
objective of the effective purchase control is to ensure continuity of supply of requisite quantity of
material, to avoid held up of production and loss in production and at the same time reduces the
ultimate cost of the finished products.

7 Explain the maintenance control?

Maintenance department has to excercise effective cost control, to carry out the
maintenance functions in a pre-specified budget, which is possible only through the following
1. Measures:
First line supervisors must be apprised of the cost information of the various materials so that
the objective of the management can be met without extra expenditure on maintenance
2. Functions
A monthly review of the budget provisions and expenditures actually incurred in respect of each
center/shop will provide guidlines to the departmental head to exercise better cost control.
The total expenditure to be incurred can be uniformly spread over the year for better budgetary
control. however, the same may not be true in all cases particularly where overhauling of
equipment has to be carried out due to unforseen breakdowns. some budgetary provisions must
be set aside, to meet out unforeseen exigencies.
The controllable elements of cost such as manpower cost and material cost can be discussed with
the concerned personnel, which may help in reducing the total cost of maintenance. Emphasis
should be given to reduce the overhead expenditures, as other expenditures cannot be
compromised.
It is observed through studies that the manpower cost is normally fixed, but the same way increase
due to overtime cost. however, the material cost, which is the prime factor in maintenance cost, can
be reduced by timely inspections designed, to detect failures. If the inspection is carried out as per
schedule, the total failure of parts may be avoided, which otherwise would increase the
maintenance cost. the proper handling of the equipment by the operators also reduces the
frequency of repair and material requirements. Operators, who
check their equipment regularly and use it within the operating limits, can help avoid many
unwanted repairs. In the same way a good record of equipment failures/ maintenance would
indicate the nature of failures, which can then be corrected even permanently.

8 Explain the quality control?

Quality control refers to the technical process that gathers, examines, analyze & report the progress
of the project & conformance with the performance requirements
The steps involved in quality control process are
1) Determine what parameter is to be controlled.
2) Establish its criticality and whether you need to control before, during or after results are
produced.

3) Establish a specification for the parameter to be controlled which provides limits of acceptability
and units of measure.
4) Produce plans for control which specify the means by which the characteristics will be achieved
and variation detected and removed.
5) Organize resources to implement the plans for quality control.
6) Install a sensor at an appropriate point in the process to sense variance from
specification.
7) Collect and transmit data to a place for analysis.
8) Verify the results and diagnose the cause of variance.
9) Propose remedies and decide on the action needed to restore the status quo.
10) Take the agreed action and check that the variance has been corrected.
Advantages and disadvantages
1. Advantages include better products and services ultimately establishing a good reputation
for a company and higher revenue from having more satisfied customers.
2. Disadvantages include needing more man power/operations to maintain quality control and
adding more time to the initial process.

9 Explain the planning operations?

An operational planning is a subset of strategic work plan. It describes short-term ways of
achieving milestones and explains how, or what portion of, a strategic plan will be put into
operation during a given operational period, in the case of commercial application, a fiscal year or
another given budgetary term. An operational plan is the basis for, and justification of an annual
operating budget request. Therefore, a five-year strategic plan would need five operational plans
funded by five operating budgets.
Operational plans should establish the activities and budgets for each part of the organization for
the next 1 3 years. They link the strategic plan with the activities the organization will deliver and
the resources required to deliver them.
An operational plan draws directly from agency and program strategic plans to describe agency
and program missions and goals, program objectives, and program activities. Like a strategic plan,
an operational plan addresses four questions:
Where are we now?
Where do we want to be?
How do we get there?
How do we measure our progress?

The OP is both the first and the last step in preparing an operating budget request. As the first step,
the OP provides a plan for resource allocation; as the last step, the OP may be modified to reflect
policy decisions or financial changes made during the budget development process.
Operational plans should be prepared by the people who will be involved in implementation. There
is often a need for significant cross-departmental dialogue as plans created by one part of the
organization inevitably have implications for other parts.
Operational plans should contain:
1.
2.
3.
4.
5.
6.
7.

clear objectives
activities to be delivered
quality standards
desired outcomes
staffing and resource requirements
implementation timetables
a process for monitoring progress.

10 What are the role of feed forward, concurrent, and feedback controls in
organizations?