Bcom II Management Notes

8/15/2019 Bcom II Management Notes

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Chapter 4

Administrative Theory of Management/Principles of Management

topics* Administrative theory of Management

* Principles of Management

* Nature of Management Principles

* Characteristics of Management Principles

Q.1. Describe in brief the administrative theory of Management

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#riefly e$plain the %ayol&s general principles of Management.!"

'o arrange is to forecast and plan( to organi)e( to command( to coordinate and to control( Discuss

!"Discuss the contribution of %ayol to the science of Management.

Henri Fayol - Father of Management

%ayol as a %rench mining engineer in his early thirties( but after that he sitched over to general management aas Managing Director from 1+++ to 1,1+. -e rote his boo General and Industrial Management in 1,1/ in

%rench( hich as translated in 0nglish in 1,,( only hen American Management riters came to no about

ideas.%ayol is non as the father of management or the founder of the classical management. Not because he as firs

to investigate managerial behavior( but because he as the first to systemati)e it. -e as contemporary to 'aylor

'aylor as basically concerned ith organi)ational functions( hereas %ayol as interested in

the total organi)ation. 2t may be noted that 'aylor is non as the father of scientific management, i.e. supervisoror lower management, while Fayol is recognized as the father of management , i.e. the higher management or the

general management.

Division of Bsiness Activities

According to %ayol( business activities in any organi)ation consist of si$ interdependent operations as follos3

1. 'echnical 4 activities concerning production.

5. Commercial 4 activities concerning buying( selling and e$change.

6. %inancial 4 activities concerning optimum use of capital.. 7ecurity 4 activities concerning protection of property.

8. Accounting 4 activities concerning final accounts( costs and statistics. And

/. Managerial 4 activities concerning planning( organi)ing( commanding( coordinating and controlling.According to him( the first five activities ere ell non and as such to devoted his attention to the description

and e$planation of the managerial activities. Also he analy)ed the nature of such activities and sill re9uirements

hich ere so far given little scattered attention by thiners.:niversality of Management3 ;0lements of Management


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%ayol considered the process of management to be of universal application and distinguished beteen five

elements of the process. -e regarded these elements of management as the function of management( hich ere

being performed by all managers universally and at all the levels of organi)ation. -e divided managementfunctions into five parts as follos3

• %orecasting and planning

•!rgani)ing

• Command

• Coordination

• Control

'hus( according to %ayol( management means to forecast and plan( to organi)e( to command( to co4ordinate and tocontrol. 'he management as defined as the process of performing these functions. 2t may be noted that the presen

pattern of management functions follos broadly the lines set by %ayol.

%ayol emphasi)ed that management involved the application of certain sills( hich could be ac9uired by persons o

the basis of systematic instructions and training. !nce ac9uired the sills could be applied to all inds of institutionincluding church( schools( political as ell as industrial organi)ation.

Q.5. Describe the basic principles of management

Principles of Management

%ayol made a distinction beteen "elements of management" and "general principles of management" . #esides a

systematic analysis of the management process and management functions( %ayol formulated a set of fourteen

principles as guidelines for implementing the process of management.

'hese principles may be listed as follos3

!" Division of #or$2n any organi)ed situation( or should be divided into compact =obs to be assigned to individuals. 'his applies tomanagerial or and non4managerial or. Division of labour facilities speciali)ation and improves efficiency( if i

done ithin reasonable limits.

%" Athorities and &esponsi'ility

'he authority is the official right to a manager to manage people and things. Authority of a manager goes hand in

hand ith the responsibility for effective results. 2n other ords( there should be parity or balance beteen authorit

and responsibiliy vested in a managerial position.

(" Discipline

Discipline is defined as observance of diligence and respect for seniors and rules and regulations. Managers asleaders of their or groups should enforce discipline throughout the organi)ation. %ayol declares that discipline

re9uires good superiors at all levels. -e emphasi)ed the need of discipline among the personnel for the smooth

running of organi)ation. -e advocated penalties to prevent in violation.

4" )nity of Command

2t means that a subordinate in an organi)ation should be under direct supervision of a single from hom he should

instructions and to hom be should be accountable. 2n other ords( every employee should have only one boss. 2f subordinate has more than one boss( to that case conflict and condition in authority and instructions of general boss

ould result.


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*" )nity of Direction

%ayol advocates one head, one plan for a group of activities having same ob=ective. 2n other ords( a set of activiti

having the same ob=ective should be under the direction of a single manager. 7imilarly( there should be one plan of

action for such a set of activities because the ob=ective is the same. 'his principle promotes smooth coordination ofactivities( efforts and resources.

+" ,'ordination of ndividal nterest to .rop nterest

'he collective good and common interest of the organi)ation should prevail over the narro( sectional and self4

interest of its members of an organi)ation for the elfare of both the organi)ation and the members.

" &emneration of Personnel

"emuneration as ell the methods of payment in an organi)ation should be fair so as to afford ma$imum satisfacti

both to the organi)ation and its employees.

0" Centrali1ation

According to %ayol( every thing hich reduces the importance of subordinates role is centrali)ation and that hich

increases it( is decentrali)ation. 2n his opinion( the 9uestion of centrali)ation and optimum degree in particular case

'here should be a proper combination and decentrali)ation in an organi)ation based on a consideration of severalinternal and e$ternal factors.

2" ,calar Chain

%ayol defines the scalar chain as the chain of superiors ranging from the ultimate authority (i.e. top authority) to th

lowest rans. 2t is also non as hierarchy of management. 0very communication should follo the prescribed rou

i.e. the proper channel. Authority relationships are said to be scalar hen subordinates report to their immediatesuperiors and hen their superiors( in turn( directly report as subordinates( to their superiors.

!3" rder

!rder relates to both persons and things. 2t means a systematic arrangement of materials and systematic placement

people in the organi)ation. 2n material order ( everything should be in its proper place and there should be a place fo

everything. %or social order there should be a place assigned to each employee( and each employee should be in th

place assigned. 'he right man in the right place is the ideal here.

!!" 56ity

09uity means combination of fairness( indliness and =ustice. 09uity motivates the orers to perform their duties.#esides( it promotes a friendly atmosphere beteen superiors and subordinates.

!%" ,ta'ility of Tenre of Personnel

Management should strive to minimi)e employee turnover ;i.e. changes in staff


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infle$ible.

Critical 5valation

%ayol&s administrative or process or functional theory of management may be evaluated as follos3

7A8 Contri'tion of Fayol9s #or$

%ayol&s ma=or contribution as to identify management as a separate set of sill or functions performed by managein the organi)ations. 'he sills and abilities re9uired for effective management ere stated to be dependent on the

manager&s positions at different levels of organi)ation. %ayol pointed out that administrative or managerial sills e

more essential for higher4level manager( hereas technical sills and abilities ere re9uired more of the loer leve

%ayol as the first thiner ho emphasi)ed( for the first time the necessity of formal education and training in

management. -e as the person ho provided a set of means ;i.e. planning, organizing, commanding, coordinatin

and controlling) for understanding the management process. e also provided principles for implementing thisprocess.

-e provided conceptual frameor for analy)ing the management process and emphasi)ed that management as a

separate( distinct activity.

Management as a body of noledge gained immediately from %ayol&s analysis of management sills of universalrelevance and the analysis of the principles of general management.

7B8 :imitations or #ea$nesses

%ayol&s administrative theory of management is critici)ed on the folloing grounds.

1. 2t is too formal as %ayol divides "#usiness activities" into si$ categories( and their management into five function

and the implementation of these functions ith the help of fourteen principles.

5. 7ome critics call this theory as inconsistent( vague and inade9uate.

6. 2t does not pay ade9uate attention to orers. 2t has pro4management bias.. >ernert 7imon calls %ayol&s principles as proverbs( comparable to follore and fol isdom.

Conclsion

2nspite of several criticisms of %ayol&s or( his theory of managerial functions still e$erts considerable influence othe practice of management as ell as the teaching of this sub=ect orld over.

2t may be also noted that hen combined together the scientific management approach and the functional approach

are called classical school or classical theory of management or classical approach to management .

Q.6. ?hat are Management Principles 0$plain the nature of Management Principles.!"

?hy Management Principles are needed ?hat are their limitations

Meaning of Management Principles

Management principles may be defined as fundamental truths of general validity. 'hey are helpful in predicting andunderstanding the results of managerial actions. 'he principles have been derived from the e$perience of managers

different fields of activity. Primarily members of the classical management school have developed them.

Management principles are intended to improve the practice of management by providing guidelines for manageria

actions in the management process. 'hey become the basis of scientific process of management.


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Fle;i'ility of Management Principles 7


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respect of each member&s output./. ?orers cannot be motivated solely by economic reard. More important motivators are =ob security( recognitio

by superiors and freedom to tae initiative and to e$press their individual opinions as matters of their on concern

Q.5. ?rite a comprehensive note on #ehavioural approach to management.

!"

0$plain the significance of the #ehavioural approach in management. ?hat are its main features Discuss.

#ehavioural !r 7ocial 7cience Approach

-istorical Perspective

'he #ehavioral or social science approach developed as a corollary to the human relations approach.7ocial scientists and organi)ation theorists are of the opinion that best results can be obtained by building theories o

management and organi)ation based on findings of the #ehavioural sciences( such as psychology( sociology(

psychiatry( economics( cultural anthropology and philosophy.#ehavioural approach reflects the findings of intensive carried out by #ehavioural scientists lie Chester 2 #ernard

Douglas McBregor( Chris Argyris( A.-. Maslo( -er)berg( "ensis @iert etc. many of the conclusions of the

-athorne studies have been reaffirmed by subse9uent research studies. Moreover( certain ideas have been refined

e$tended and these behaviour scientists have highlighted other important ideas. 'hese scientists have tried toeliminate the e$aggeration of the importance of informal relations. 'he focal point of management action is the

behaviour of human being in the organi)ation 4 management as a technical process only( as given up.#ehavioural scientists conduct research to anser the 9uestion. "&hy a person or a group of persons #ehaves or acin a particular manner' hey try in answer in any pro#lems faced #y the managers #y eplaining the #ehaviour of

the people" .

0lements !r Concepts or %eatures !f #ehavioural Approach

'he #ehavioural approach concerns itself ith the social and psychological aspects of human behaviour in

organi)ation. 'he behaviour of members of an organi)ation clearly affects both its structure and its functioning as

ell as the principles on hich it can be managed. #ehavioural researches have provided sufficient evidence that

human element is the ey factor in the success are failure of an organi)ation. 2n several e$periments( it has beenobserved that people prefer to be consulted rather than receive order or information. @ess reliance on the use of

authority is preferred.

7ome of the more important elements or concepts of #ehavioural approach may be outlined as follos31. 2ndividual #ehaviour

2ndividual behaviour is closely lined ith the behaviour of the group to hich he belongs. 'he group dictates

changes in his behaviour. 2ndividuals observe those or standards hich are prescribed by the group.

5. 2nformal @eadership

2nformal leadership( rather than formal authority of managers is more important for setting and enforcing group

standards of performance. A a leader( a manager may be more effective and acceptable to subordinates( if he adopts

the democratic style of leadership.

6. Participation2f the subordinates are encouraged and alloed to participate in establishing goals( there ill be positive effect on

their attitude toards or. 2f employees are involved in planning( designing the =obs and decision4maing( there

be least resistance to changes effected in technology and or methods.

. Motivation by 7elf4Control and 7elf4Development

#ehavioural scientists maintain that by nature most people en=oy or and are motivated by self4control and self4development. Managers should try to identity and provide necessary conditions conducive to the proper and suffici

use of human potential. 'he managers attitude toards human behaviour should positive. 'hey should no that


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average man is not la)y by nature. #ut he is ambition. 0very man lies to or and prefers to assume responsibilitiMacBregor maintains that employees favour self4direction and self4control. #ehaviouralists believe that in place of

the concept of social man the concept of self4actuali)ing man ould be more appropriate to e$plain human

motivations.Chester 2 #ernard pointed out that material reard is of crucial signification only upto a definite point. 'he incentiv

of status( poer( good physical conditions opportunities of participation and good social ;i.e.( cultural

interrelationships< are very important.

8. 2nformal !rgani)ation#ehaviouralists particularly #ernard( consider informer organi)ation as an essential part of the formal organi)ation

2nformer organi)ation must alays be taen into account hile determining managerial behaviour.

/. Beneral 7upervision Not Close !ne

As regards supervision of subordinates( #ehaviouralists particularly @iert( are not in favour of close supervision.'hey advocate general supervision( hich tends to be associated ith high productivity.

#asic Assumptions ;Are Propositions< !f #ehavioural 7cientists

'he #ehavioural science approach is based on certain assumptions about man and organi)ation( hich my be looeupon as their prepositions ;statements of opinion or =udgement< also. 'hose may be outlined as follos

1. !rgani)ation is socio4technical system involving people and technology as their primary components.

5. 'he behaviour of the members of an organi)ation clearly affect both its structure and its functioning( as ell as tprinciples on hich it can be managed.

6. 2ndividual&s behaviour is closely lined ith a greatly influenced by the behaviour of the group to hich he

belongs.. A ide range of factors influences or and interpersonal behaviour of people in the organi)ation.

8. Congruence ;agreement< beteen organi)ational goals and individual goals organi)ations members ould be

established.

/. 7everal individual differences in perceptions( aspirations( needs( feelings( abilities and values of people e$cite inthe organi)ation( such difference along ith their changing nature over periods of time have to be recogni)ed.

. 2nformal leadership rather than the formal authority of supervisors is more important for increase in employee

performance.+. Democratic leadership style and participative managerial style encourage positive attitude of employee toards

or and faster&s high moral and initiative among them.

,. #y nature most people en=oy or and are motivated by self4direction( self4control and self4development.1. Conflict in organi)ation may to some e$tent to inevitable and at times even desirable for development( innovati

and creativity in certain cases. Conflicts and cooperation coe$ist in organi)ations. Conflicts are not to be suppresse

but are to be resolved and that too not alays. Coordinated in vital for achievement of organi)ational goals.

'he above preposition are important elements of #ehavioural science thining. 'hus the #ehavioural approach

represents a significant advance over the human relations approach.'he ma=or areas of research and analysis by the #ehavioural scientists are interaction beteen organi)ational

structure( or performance and employees behaviour( conse9uences of traditional( coercive controls on humans(influence of technological advances and changes on group behaviour( human needs and aspirations( theories of

motivation and leadership( developmental aspects of human resources( organi)ational behaviour aspects( group

dynamics( patterns of communication and their importance in the organi)ation( managerial styles and their impact oemployee behaviour( organi)ational climate( culture and politics( organi)ational development( change and conflict(

organi)ational rules and status( and so on.

Q.6. Distinguish beteen -uman "elations and #ehavioural approaches

Distinction #eteen -uman "elations and #ehavioural Approaches


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As indicated earlier( #ehavioural science approach is an improvement over the human relations thining. 'his may

e$plained in the folloing ays.

1. Areas of 7tudy

'he human relations movement ept it limited to the study of psychological needs of people( supervision styles(

oring conditions( interpersonal relations( communication etc. !n the other hand #ehavioural scientists have gone

very far and ide in the study of organi)ational and managerial aspects covering the areas as mentioned in the

previous paragraph.

5. -uman Nature Assumptions-uman relation theorists have made some general( unverifiable assumption about human nature holding "social

man" vie. 2n contrast( #ehavioural scientists have understood the factual nature of individuals and of their

behaviour4holding "self*actualizing man" model.

6. -uman Needs

-uman relations thiners presume that people have only social needs( hereas the #ehavioural scientists regard

individuals as different from one another and dynamic ith respect to their needs and attitudes and emphasi)e bothsocial and psychological needs.

. !rgani)ation Nature-uman relations approach believes organi)ations to be purely social systems( hile #ehavioural science approach

vies organi)ations as socio4technical systems hich are re9uired to accomplish a set of individual( social and

corporate ;economic< goals.

8. 0mployee 7atisfaction

-uman relations theorists advocate that employees satisfaction is achieve through economic and other incentives anthen it automatically leads to higher employee productivity. !n the other hand( #ehavioural scientists assert that

employee satisfaction is a matter of a set of factors including fulfillment of social and self4actuali)ation needs and

high morale is also necessary for achieving higher employee productivity( hich is a composite thing made by

different factors including participative management.

/. Conflict 'reatment

-uman relation thiners proposed that conflict( competition and disagreement is to be avoided or should alays beresolved( hereas #ehavioural scientists concede that conflict is not alays bad( it may be constructive too( it is

inevitable and may not alays be resolved.

. Manager&s "ole

:nder human relations model( manager&s traditional role of controller is modified to include responsibility for

maintenance of the human system. !n the other hand( under the behavioural science model( the manager&s basic rol

is rather dramatically redefined and he is no longer vieed as a controller but rather as a developer and facilitator o

the performance of the socio4technical system to hich he is assigned.

+. Nature of Approaches-uman relations approach is critici)ed for being unscientific ;i.e. vague and simplistic and for patting forth broad

conclusions having personal bias. !n the other hand( behavioural scientists have made their propositions based on

e$tensive researches and its sub discipline organi)ational behaviour also has a strong research orientation.

Contribution

'he contribution of behavioural science to management thought and practice consists primarily of creating ne


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insights rather than ne techni9ues. 2t has developed a useful ay of thining about the role of a manager( the natuof organi)ations and the behaviour of individuals ith organ)iations.

Q.. ?hat is management science approach to management Critically e$amine it.

!"

Define management science approach and e$plain the characteristics of the situation in hich management science

applications are usually made.

Management 7cience !r !perations "esearch !r Approach

Quantitative Approach

A 9uantitative approach to management thought is non as management science or operations approach.

EC.?est Churchman. "ussell Adoff and 0.@eonard ArnoffE define the management science or operations research !approach as an application of the scientific method to problems arising in the operation of a system and a solving othese problems by the solving of mathematical e9uations representing the system. ;2ntroduction to !perations

"esearch. Ne For ?illey. 1,8


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'he !perations "esearch groups ere very successful in using the scientific method to solve their operationalproblems.

No( the management science approach is being used in many companies in 2ndia and other countries and applied many diverse management problems( such as production scheduling( plant location product pacaging etc.

Characteristics of Management 7cience Applications

%our primary characteristics are usually present in situations in hich management science techni9ues are applied.

'hese are as follos3

1. @arge Number of Gariables

'he management problems studied is so complicated that managers need help in analy)ing a large number of

variables.

5. :se of Mathematical Model

'he use of mathematical models the investigate the decision situation in typical in management science application

Models are constructed to represent reality and then used to determine ho the real orld situation might be

improved.

6. :se of a Computer

A management science application maes use of computers. 'here are to factors that mae computers e$tremely

valuable to the management science analyst.

'oday( managers are using such management science tools as inventory control methods( netor models and

probability models as aid in decision maing process. 7ince management science thought is still evolving( more an

more sophisticated analytical techni9ues can be e$pected.

Critical 0valuation of Management 7cience Approach

Management science team presents management ith an ob=ective basis for maing a decision. Management scien

techni9ues increase the effectiveness of the managers decision maing. 'hey are best suited analy)ing 9uantifiable

factors( such as e$penses( sales and units of production. 'hey are used in such activities as capital budgeting

management( cash flo management( production scheduling( development of product strategies( planning for humaresource development programmes( maintenance of optional inventory levels and aircraft scheduling.

-oever( is special idespread use for many problems( management science of today has not developed to a point

here it can effectively deal ith an important aspect of the organi)ation( that is the human side of an enterprise. #

no doubt that it has marvelously contributed to the solving of planning and control problems and to the progress inthe areas of organi)ing( staffing and the leading the organisation. Anyho some managers complain about the

complicated nature of the concepts( language and techni9ues of management science( hich are not readily

understandable and not easily implemental. 7ome other managers indicate about the drabac of managementscience in that if fails to address to the psychological and #ehavioural components of orplace activities because

the managers are not sufficiently involved ith management scientists at the initial level of developing decision


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maing techni9ues and as a result the later implementation of these techni9ues remain often unsuccessful. 'here e$a lac of aareness among the management scientist regarding the problems and constraints actually faced by the

managers in orgnani)ation( particularly because of their remoteness from the

Chpater /3

Chapter / 4 Broth Development of Management 'hought

* 0volution of Management

Q.1. #riefly describe the evolution of management thought from early days to moder times.

!"

0$amine the evolution of management thought from the early pioneers to modern thiners.

!"

Describe briefly various schools or management thought prevalent from time to time.

Broth and Development of Management 'hought

'he management thought has gron and developed gradually in the folloing stages3

1. 0arly 0ra

'he is non as pre4scientific management era. During this era the management finally came into being as a separa

field of study and research.

5. 7cientific Management 0ra

During this era some principles of scientific management ere developed. 'his era sa great advances in

management practice by application of empirical studies to determine faster and better methods of production.

6. Processes or %unctional or Administrative 0ra

During this era( a clear distinction as made beteen technical activities and managerial activities. Planning(organi)ing( command( coordination and control ere recogni)ed as managerial activities. 'he organisation as

recogni)ed as a rational4legal structure.

. -uman "elations 0ra

During this era( special emphasis as laid on EorerE aspect of the organisation. 2t as pleaded that orers shou

be cared as human assets of the enterprise.


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8. #ehavioural !r 7ocial 7ciences 0ra

During this era( the individual( the or groups and the participative management aspects ere emphasi)ed.

/. Management 7cience !r Quantitative 0ra

'his era sa the scholars to lay emphasis on rational decision4maing and use of mathematical techni9ues for

managing the organisations.

. Modern 0ra

During this era( emphasis is being laid on treating the organisation as a system composed of interrelated and

interdependent parts( oring in its specific environment. Moreover( it has been e$perienced and advocated that th

is no one best ay of dealing ith a situation. 'he manager has to find a best ay in each specific situationdepending on the different circumstances of the individual case.

Chapter 4 %unctional Areas !r 7cope of Management

* Production Management

* Nature 2mportance of Production Management

* Advantages of Production Planning Control

* #asic %unctions of Mareting

* 7tages or 7teps in Mareting "esearch ProcessQ.1. Define Production Management. 0$plain production planning and control. Discuss briefly the various techni9u

of production control.

!"

?hat is Production Management Discuss the functions of production( planning and control.

!"

Define Production( Planning and Control. ?hat are its main steps or elements Discuss in brief.

!r

?hat are Production( Planning and Control ?hat are its ob=ects and advantages !utline the re9uirement of

effective production control system.

Definition of Production Management

2n modern competitive orld( if an enterprise and master its production and mareting( it ill be able to ac9uire an

maintain a considerable maret share.


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Production may be define as the conversation of the ra material into finished goods are services through

transforming process for purposes of supplying them into the maret. 'hus( it is process of creation of goods andservices. 'he terms Eproduction and manufacturingE are generally used as synonyms. Production activities are vital

for the survival( groth and development of every enterprise.

Production to be successful has to be managed. -ence production management assumed great importance in every

organisation.

7ome important definition of production management may be given as follos3

0lood #uffa

Production management deals ith decision4maing related to production process so that the resulting goods and

services are produced according to the specifications in the amounts and by the schedule demanded and at minimum

cost.

A.?.%ield

Production management is the process of planning and regulating the operations of that part of enterprise hich is

responsible for actual transformation of materials into finished products.

Ma=or Activities of Production Management

Production management deals ith manpoer and physical resources and facilities for transforming inputs into

outputs. Production Management involves three ma=or activities or fucntions3

1. Planning of Production 2nputs

2t includes determining of necessary inputs including ra materials( labour( electrical poer( machines ande9uipments( facilities etc.( re9uired for production or.

5. 2nstallation of the Necessary 2nputs

2t includes taing decisions ith regard to designing of the plant( choice of the best machines and arrangement of

other necessary facilities so that the production or can be started.

6. Co4!rdination and Control of the Production Process

An effective production system involves co4ordination among the various activities and affairs ithin the productio

department itself and also integration of its activities and decisions ith other departments of the enterprise( such afinance( mareting( purchases( personnel( according and research and development. 2t also includes determining the

necessary se9uence of operations( preparing or schedules and assigning or to specific employees( so as to

ensure smooth production operations. Control includes ensuring that the actual production performance meets thepredetermined production plans and goals and also providing for proper feedbac for taing corrective action.


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Q.5. Describe the nature importance of production management

Nature and 2mportance of Production Management

Production management has become an important no a day that it is treated to be a separate( independent function

area of management.

Production management has assumed its importance because of the folloing reason3

1. 2t is the foundation for earning profits 4 by producing goods or services and selling them into the maret.

5. 2t ensures that produced goods or services are of desired 9uality( in re9uired 9uantity and according to time4

schedules.

6. 2t facilitates optimum inventory level.

. 2t ensures proper co4ordination and necessary control( hich are re9uired for ade9uate( time and cost4consciousproduction.

8. 2t ensures coping ith the changes in demands in the maret and maintains stability in the production department

Production Planning and Control

Production Planning( Planning is deciding in advance hat to do( ho to do it( hen to do it( ho is to do it. 'hen(

production planning involves decision maing in various production aspects( such as designing of production plansprogrammes and goals( selection of production process( plant layout( provision of physical facilities ;lie material(

tools( machines( e9uipments etc.< and preparation of time4schedules.

E@arence #ethel !bservesE Production planning taes a given product or line of products and organi)es in advancthe manpoer materials( machines and money re9uired for a predetermined output in a given period of time. 2t star

ith a product concept capable of being manufactured( a general idea of the process by hich it can be made and a

sales forecast for the descernible future.

Production Control

Control means ensuring that actual performance meets the predetermined standards. 'hen( Eproduction controlE ref

to a set of steps for verifying hether production operations occur in conformity ith the production plan adopted.

guides and directs the flo of production so that the goods of desired 9uality are manufactured at the right time and

ma$imum possible economic manner. 2t may be noted that Eproduction controlE is fre9uently used synonymouslyith Eproduction planning and controlE ith planning being implied.

7priegel and @ansburgh define production control as

the process of planning production in advance of operations( establishing the e$act route of each individual item( pa

or assembly( setting( starting and finishing dates for each important item( assembly( and the finished products and

releasing the necessary orders as ell as initiating the re9uired follo4up to effective the smooth functioning of theenterprise.


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>ames @undy says

#asically( the production control function involves the co4ordination and integration of the factors of production fooptimum efficiency. 'he principal ob=ective of production control is to facilitate the tas of manufacturing and see

that everything is being done strictly in accordance ith the plan. 2t co4ordinates and integrates the factors of

production for optimism and directs and checs the course and progress of or.

Q.6. Describe the advantages of production planning control

Advantages of Production Planning and Control

Production planning and control yields the folloing main advantages(

1. Avoidance of "ush !rders

Production is ell planned and its time aspects are ell controlled. 'herefore( production control reduces the numbof ris4orders and overtime or on plant.

5. Avoidance of #ottlenecs

'he incomplete or does not get accumulated because production control maintains an even flo of or.

6. Cost "eduction

Production control programmes minimi)es the idleness of men and machines( eeps in process inventories at a

satisfactory level( leads to a better control of ra materials inventory( reduces costs of storage and materials handlin

helps in maintaining 9uality and containing re=ection and thus reduces unit cost of production.

. 0ffective :tili)ation of "esources

2t reduces the loss of time by the orers aiting for materials and maes most effective use of e9uipments.

8. Co4!rdination

2t serves to co4ordinate the activities of plant and results in a concerted effort by ormen.

/. #enefits to ?orers

Ade9uate ages( stable employment( =ob 7ecurity( improved oring conditions( increased personal satisfaction(

high morale.

. 0fficient 7ervice to Customers

2t ensures better service to the customers by enabling production to be conducted in accordance ith the time


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schedules and therefore deliveries are made on promised dates.

Q.. ?hat are the #asic functions of Mareting

#asic %unctions of Mareting

'he mareting process performs certain activities as the goods or services move from producer to consumer. 0very

firm does not perform all these activities or =obs. -oever( any company that ants to operate its mareting system

successfully must carry them out. 'he folloing mareting tass have been recogni)ed for a long time.

1. 7elling

2t is core of mareting. 2t is concerned ith the persuasion of prospective buyers to actually complete the purchase

an article. 7etting pays an important part in reali)ing the ultimate aim of earning profit. 7elling is enhanced by mea

of personal selling( advertising( publicity and sales promotion.

5. #uying

2t involves hat to buy( hat 9uality( ho much( from hom( hen and at( hat price. People in business buy to

increase sales or to decrease costs. Purchasing agents are much influenced by 9uality( service and price. 'he producthat the retailers buy for resale are determined by the need and preferences of their customers.

6. 'ransportation

'ransport is the physical means hereby goods are moved from the places here they are produced to those they ar

needed for consumption. 'ransportation is essential from the procurement of ra materials to the delivery of finishproducts to the customers places. Mareting relies mainly on railroads( tracs( aterays( pipelines and air transpo

'he type of transportation is chosen on several consideration such as suitability( speed and cost.

. 7torage

2t involves the holding of goods in proper condition from the time they are produced until they are needed by

consumers ;in case of finished products< or by the production department ;in case of ra materials and stores


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7toring protects the goods from deterioration and helps in carrying over surplus for feature consumption or use inproduction. Boods may be stored in various arehouses situated at different places. 7toring assumes greater

importance hen production is seasonal or consumption may be seasonal. "etail firms are called EstoresE.

8. 7tandardi)ation and Brading

'he other activities that facilitate mareting are standardi)ation and grading. 7tandardi)ation means establishment

certain standards or specifications for products based on intrinsic physical 9ualities of any commodity. 'his mayinvolved 9uantity ;eight or si)e< or it may involve 9uality ;colour( shape( appearance( material( taste( seetness et

Bovernment may also set some standards e.g.( in case of agricultural products. A standard conveys a uniformity of products.

EBrading means classification of standardi)ed products into certain ell4defined classes or groups.E 2t involves thedivision of products into clauses made up of unit processing similar characteristics of si)e and 9uality. Brading is

very important for Era materialE ;such as fruits and cerials


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pricing of products( selection of distribution channels( framing of mareting ob=ectives( environmental scanning(target maret selection( maret programming and developing mareting strategy.

Q.. Describe the various stages or steps in mareting research process.7tages or 7teps in Mareting "esearch Process

Mareting research e$ercise may tae many forms but systematic en9uiry is a feature common to all such forms.

#eing a systematic process. 'hough it is not necessary that all research processes ould invariably follo a given

se9uence( yet mareting research aften follos a generali)ed pattern( hich can be broen don and studied asse9uential stages stages. 'he various stages or steps in the mareting research process may be discussed as follos

1. 2dentification and Defining of the Problem

'he maret research process begins ith the identification of a problem faced by the company. 'he clear cut

statement of problem may not be possible at the very outset of research process because often only the symptoms o

the problems are apparent at that stage. 'hen( after some e$planatory research( clear definition of the problem is of

crucial importance in mareting research because such research is a costly process involving time( energy and monClear definition of the problem helps the researcher in all subse9uent research efforts including setting of proper

research ob=ectives( the determination of the techni9ues to be used and the e$tent of information to be collected. 2tmay be noted that the methods of e$planatory research popularly in use are 3 survey of secondary data( e$periencesurvey or pilot studies i.e. studies of a small initial sample. All this is also non as preliminary investigation.

5. 7tatement of "esearch !b=ectives

After identifying and defining the problem ith or ithout e$planatory research( the researcher must mae a formastatement of researcher ob=ectives. 7uch ob=ectives may be stated in 9ualitative or 9uantitative terms and e$pressed

research 9uestions( statement or hypothesis. %or e$ample( the research ob=ective. E'o find out the e$tent to hich

sales promotion schemes affected the sales volumeE is a research ob=ective e$pressed as a statement. !n the other

hand( a hypothesis is a statement that can be refuted or supported by empirical findings. 'he same research ob=ectivcould be stated( E'o test the proposition that sales are positively affected by the sales promotion schemes undertae

this inter.E 0$ample of another hypothesis may be. E'he ne pacaging pattern has resulted in increase in sales an

profit.E !nce the ob=ective or the hypothesis are developed( the researcher is ready to choose the research design.

6. Planning the "esearch Design or Designing the "esearch 7tudy

After defining the research problem and deciding the ob=ectives( the research design must be developed. A research

design is a master plan specifying the procedure for collecting and analy)ing the needed information. 2t represents

frameor for the research plan of action. 'he ob=ectives of the study are included in the research design to ensure

that data collected are relevant to the ob=ectives. At this stage( the researcher should also determine the type ofsources of information needed( the data collection method ;e.g. survey or intervie


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!"

Define Management by !b=ectives. 0$plain the Management by !b=ectives Cycle.

Meaning and Definition of Management by !b=ectives ;M#!<

Management by !b=ectives ;M#!< has become a idely used slogan. 2t is a basic mentality that a high4performanc

manager brings to the =ob of managing. Peter Drucer coined the term EManagement by !b=ectivesE in 1,8. -eprofounded Management by !b=ectives concept and emphasi)ed it and than it developed as a management

philosophy. 7ome authors has used the term Emanagement by resultsE interchangeable ith Management by!b=ectives.

Management by !b=ectives is an overall philosophy of management that concentrates on goals and end results.Management by !b=ectives is based on the presumption that people perform better hen they no hat is e$pect

of them and can relate their personal goals to organisation goals. 2t also assumes that people are interested in the go

setting process and in evaluating their performances against the target.

7ome important definitions of Management by !b=ectives may be given as follos3

Beorge 7. !diorne

'he system of management by ob=ectives can be described as a process hereby the superior and subordinatemanagers of an organisation =ointly identify its common goals( define each individual&s ma=or ares of responsibility

terms of the results e$pected of him and use these measures as guides for operating the unit and assessing the

contribution of each of its members.

Peter Drucer

-e says that management by ob=ectives and self4control is a philosophy of management( resting on a concept of

human action( human behaviour and human motivation. Management by ob=ectives applies to every manager at any

level and to all business enterprises hether large or small. -e says the Management by !b=ectives Eensuresperformance by converting ob=ective needs into personal goalsE

-ein) ?eihrich and -arold Ioont)

EManagement by ob=ectives is a comprehensive managerial system that integrates many ey managerial activities i

systematic manner and that is consciously directed toard the effective and efficient achievement of organi)ational

and individual ob=ectives.E

0ssential Characteristics of %eatures of Management by !b=ectives

A careful study of the above definitions bring out the folloing features of Management by !b=ectives3

1. Management by !b=ectives is a philosophy or a system and not merely a techni9ue.

5. 2t emphasi)es participative goal setting.


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6.2t clearly defines each individual&s responsibilities in terms of results.

. 2t focuses attention on hat must be accomplished ;goals


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. Performance Appraisal

'his is the last phase of Management by !b=ectives programme that evaluates performance annually. 'he annualrevie or appraisal is comprehensive and is done at the organi)ational level. 'he actual annual results are evaluated

against the set ob=ectives. 7uch assessment is also used for determining targets for ne$t year for modification in

standards ;goals< if needed and for taing corrective actions in order to avoid deviations from predetermined

ob=ectives.

Management by !b=ectives Cycle and "ecycling !b=ectives

?hen all the four steps or phases in the Management by !b=ectives as mentioned above are completed then one

Management by !b=ectives cycle is said to be over. 'he last phase or the fourth step in the Management by!b=ectives cycle is used as an input for recycling ob=ectives and other actions. !b=ectives are changed or modified

the light of the environmental changes and the e$periences gained over the year. 'hen( revised action plans are

developed as per needs( periodic revie is done. And performance is gain evaluated. 'hus goes on the recycling.

Q.5. Describe the benefits of Management by !b=ectives#enefits of Management by !b=ectives

1. #alanced 7tress on !b=ectives

Management by !b=ectives forces managers to set ob=ectives ith balanced stress on ey result areas. 'hus( crisis

conditions are avoided to tae place in the organisation.

5. #etter Managing

Management by !b=ectives forces managers to thin about planning for results( rather than merely planning activitior or. Managers are re9uired to ensure that the targets are realistic and needed resources are made available to

subordinates to achieve the targets. Clearly set ob=ectives for the subordinates serve as evaluation standards as ell

motivators for them. 'hus( Management by !b=ectives results in improvement in managing.

6. #etter !rgani)ing

'he positions in the enterprise can be built around the ey result areas. Managers are re9uired clarifying

organi)ational roles and structures. -ence better organi)ing.

. Breater 0mployee 2nvolvement and Commitment

2f Management by !b=ectives programme is installed in an organi)ation( people are not =ust doing or( folloing

instructions and aiting for guidance and decisions from EaboveE and the superiors do not dictate things. 'hey are

no individuals ith clearly defined goals( hich have been formali)ed through their on participation in theprocess. Moreover( they fully ell understand the areas of their discretion 4 their authority. 'hey are also confident

getting needed help from their superiors. 'here is clarity of roles. 'hese elements together mae for a feeling of

greater personal commitment on the part of the subordinates. 'hey become more enthusiastic in attaining the target'here is high motivationH there is high morale too.


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8. !rderly Broth of !rgani)ation

Management by !b=ectives provides for the maintenance and orderly groth organi)ation by means of predeterminset of ob=ectives for everyone involved. 2t is also provides in measurement of hat is actually achieved. 'he progre

and even the tenure of all responsible managers are dependent upon their producing the results. Management by

!b=ectives emphasi)es the ability( sill and achievement of managers rather than their personality. 'hus( the orderly

groth and development of the organisation is ensured.

/. Development of 0ffective Controls

Management by !b=ectives not only sharpens the planning( but also develops effective controls. 2t specifically

provides for periodic revies and annual performance appraisals serving as the needed feedbac for furtherstreamlining the ob=ectives or targets. 2t maes possible for a manager to control his on performance( high degree

self4control resulting in stronger motivation. Control from EaboveE is substituted by control from EselfE Manageme

by !b=ectives facilitates coordinated effort and teamor.

. Benerating of an 2deal Atmosphere

Douglas McBregor says. E'he motivation( the potential for development( the capacity for assuming responsibility(

readiness to direct behaviour toard organisation goals are all present in people. Management does not put them

there. 'he essential tas of management is to arrange organi)ational conditions and methods of operations so thatpeople can achieve their on goals best by directing their on efforts toards organi)ational ob=ectives.E 'his is an

ideal atmosphere suitable for better industrial relations and ensured success of the enterprise.

+. !b=ective Appraisal

Management by !b=ectives provides a scientific basis for evaluating a subordinate&s performance( because goals;standards< are =ointly set by the superior and the subordinates

J18 -oorain( >un +( 515Q.6. Describe the limiatation of Management by !b=ectives.

@imitations of Management by !b=ectives

2n spite of its many advantages( the Management by !b=ectives has some eanesses as follos3

1. :nfavourable Attitude of Managers

7ome managers have an attitude that the regular attention re9uired of them by Management by !b=ectives system(

dras heavily on their busy time4schedule and is not consistent ith their roles. 'hey feel that it is not so effective ay as some other approaches. 7ome managers vie their roles as principally involving policy4maing( budget

formulation etc.

5. 0$cessive Paper ?or

Management by !b=ectives programme involves a huge amount of nesletters( instruction boolets( training

manuals( 9uestionnaires( performance date( revie and appraisal reports to be prepared by the superiors and

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subordinates. 'hus( Management by !b=ectives is said to have created one more Epaper millE in the organisationadded to the already e$isting large amount of paper or.

6. Problems about Boal 7etting

Management by !b=ectives re9uires issuance of proper( e$haustive guidelines to goal4setters. -oever( managers

responsible for practicing Management by !b=ectives do not themselves understand and appreciate a good deal abo

it( e$pecially about the concept of self4control and self4direction hich is basic to Management by !b=ectives.7imilarly( there are several other difficulties in goal setting3

* Positive and active participation from subordinates is not easily forthcoming.

* 'ruly verifiable goals are not easy to formali)e.

* 0mpahasis is put on short4range goals( here as long4range goals are avoided( though long4range goals are vital f

groth and development of the organisation.

* Boals remain infle$ible and rigid. %or e$ample( changes desirable in annual budgets are not easily accepted in the

middle of the year.

* !ver4use of 9uantitative goals =eopardi)es the 9ualitative aspect hich may even more important the 9uantificatio

is some case.

* Boals tend to tae precedence or priority over the people ho uses them. Any action is acceptable if it serves in th

attainment of goals( ithout caring of its impact on people. 'hus( all these difficulties come in the ay of maing

management by ob=ectives operational in an organisation. %urther( managing involves more than goal setting.

. 'ime4Consuming Nature of Management by !b=ectives

Management by !b=ectives system is time4consuming especially in the early phases of its introduction hen

employees are unfamiliar ith its process. 7ince managers also have to learn the necessary sills it is commonly

estimated that it taes 5 years to tae an management by ob=ectives programme oring smoothly. A femanagement by ob=ectives programme oring smoothly. A fe management by ob=ectives programmes have faile

because managers could not spare ade9uate time needed for its various phases.

8. Difficulties in Maing !rgani)ational Changes

Management by !b=ectives system re9uires to be integrated ith other systems in the organisation( such as

budgeting( forecasting( communication( control etc. 7ometimes current practices may have to be changed. 'hus(greater decentrali)ation may become a necessity. Moreover( some systems may re9uired to be changed( for e$ampl

control system( data processing system etc. Managers feel such changes as time4consuming( distributing there Estat9uoE ;or as it is< facilities and difficult in different other ays.

/. %ailure to 'each Management by !b=ectives Philosophy

Management by !b=ectives as a concept is simple but it is deceptively so. 2t is much easier to e$plain this principlethan to introduce it to an organsation( especially in a very dynamic and changing environment. Moreover(

management by ob=ectives is still building toard achieving a fully institutionali)ed system of management to be


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used by the entire ey manager. 7ometimes managers fail to use ob=ectives as a constructive force( even ith the fuparticipation and assistance of their superiors. 2n order to understand the philosophy of management by ob=ectives(

managers have to mae themselves professionals.

J1/ -oorain( >un +( 515

Q.. Describe the steps for improving the prospects or effectiveness of Management by !b=ectives.7teps for 2mproving the Prospects !r 0ffectiveness of Management by !b=ectives Application

1. 'op Management 7upport and Commitment

Management by !b=ectives should be used by a strong poer and authority structure( i.e. by the top management( s

that Eplanning for orE may be rightly shifted to Eplanning for goals or resultsE. David -ampton says( E2f you an

to mae Management by !b=ectives or( you must integrate it into the real systems of or and influence.EManagement by !b=ectives must be considered a ay of managing and not to an addition to the managerial =ob.

-arold Ioont) points out. EAn effective programme of managing by ob=ectives must be oven into an entire patterand style of managing. 2t cannot or as a separate techni9ue standing alone.E 2n this hole content( top managemsupport and commitment to management by ob=ectives programme is essential and vital.

5. !ther 2mportant 7teps

* Managers should be given ade9uate training in management by ob=ectives philosophy and procedures beforeinstalling the system. %or this purpose( ade9uate time and resources are re9uired and therefore be arranged.

* Necessary mechanism for maing management by ob=ectives programme a success should devised and for this

purpose the administrators of management by ob=ectives programme must be endoed ith sufficient authority topunish and reard at their on levels.

* %eedbac should be made effective the more specific timely the feedbac the more positive the effect.

* 0mployee Participation should be made real and committed by properly motivating them.

* Management by !b=ectives must be carried all the ay don to the first line or supervisory level.

* 2t should be seen that conflicting ob=ectives are not set at any level and important non49uantifiable ob=ectives are

not brushed aside.

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Meaning and Definition of Decision Maing

Decision maing may be revieed as the process of selecting a course of action from among several alternatives in

order to accomplish a desired result. 'he purpose of decision maing is to direct human behaviour and commitmen

toards a future goal. 2f there are no alternatives( if no choice is to be made( if there is no other ay4out( then there

ould be not need for decision maing. 2t involves committing the organisation and its resources to a particular

choice of course of action thought to be sufficient and capable of achieving some predetermined ob=ective.

Managers at all level in the organisation mae decision and solve problems. 2n fact( decision4maing is the processreducing the gap beteen the e$isting situation and the desired situation through solving problems and maing use

opportunities. A decision is a course of action consciously selected from available alternatives( ith a vie to

achieving a desired goal. 2t is an outcome of the =udgement and represents a choice and commitment to the same. 2ta final resolution of a conflict of needs( means or goals made are the face of uncertainty( comple$ity and multiplici

A decision is conclusion reached after consideration it occurs hen one option is selected to the e$clusion of others

it is rendering of =udgement.

Different management scholars have defined Decision maing as follos3

Beorge 'erry

Decision maing is the selection based on some criteria from to or more alternatives.

-ein) ?eihric and -arold Ioont)

Decision maing is defined as the selection of a course of action among alternatives( it is the care of planning.

@ouis Allen

Decision maing is the or a manager performs to arrive at conclusion and =udgement.

Nature !r Characteristics of Decision Maing

Decision maing is globally thought to be selection from alternatives. 2t is deeply related ith all the traditional

functions of a manager( such as planning( organi)ing( staffing( directing and controlling. ?hen he performs these

functions( he maes decisions. -oever( the traditional management threorists did not pay much attention to decisi

maing. 2nfact( the meaningful analysis of decision maing process as initiated by Chester #ernard ;1,6+< ho

commented( 'he process of decision are largely techni9ues for narroing choice.

'he nature of decision4maing may be clearly understood by its folloing characteristics features3

1. Decision maing is an intellectual process( hich involves imagination( reasoning( evaluation and =udgement.

5. 2t is a selection process in hich best or most suitable course of action is finali)ed from among several available

alternatives. 7uch selected alternative provides utmost help in the achievement of organi)ational goals. 'he problemfor hich there is only one selection are most decision problems.


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6. Decision maing is a goal oriented process. Decisions are made to attain certain goals. A decision is rated good tbe e$tent it helps in the accomplishment of ob=ectives.

. 2t is a focal point at hich plans( policies( ob=ectives( procedures( etc.( are translated into concrete actions.

8. Decision maing is a continuous process persuading all organi)ational activity( at all levels and in the hole

universe. 2t is a systematic process and an interactive activity.

/. Decision maing involves commitment of resources( direction or reputation of the enterprise.

. Decision maing is alays related to place( situation and time. 2t may be decision not act in the givencircumstances.

+. After decision maing it is necessary and significant to communicate its results ;decisions< for their successfule$ecution.

,. 'he effectiveness of decision4maing process is enhanced by participation.

0lements of Decision Maing

'here are folloing elements in decision maing.

* 'he decision maer.

* 'he decision problem or goal.

* Attitudes( values and personal goals of the decision maer.

* Assumption ith regard to future events and things.

* 'he environment in hich decision is to be made.

* Available non alternatives and their estimated or imagined outcomes.

* Analytical results in the hole perspective.

* 'he constraints.

* 'he act of selection or choice.

* 'iming of decision.

* Proper communication of decision for its effective e$ecution.Q.5. Discuss in brief different theories of Decision4Maing.

!"

?hat are the principles of Decision4Maing -o and hy the employee participation in Decision4Maing proces

should be introduced

!"


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Mae out a case for employees participation in Decision4Maing

'heories of Decision Maing

'he most common bases upon hich decisions are made are( fact e$perience( intuition and authority. 'he decision

itself is concerned ith the achievement of an ob=ective. #ridging the gap beteen the basis for the decision and th

decision itself is the theory ;or techni9ue< used to arrive at the decision. 'heories of decision maing stem from themanner in hich decisions are made.

0rnest Dale has suggested a comprehensive list of theories of decision maing as follos

1. 'raditional 0conomic 'heory

5. Psychological 'heory

6. Mathematical 'heory.

1. 'raditional 0conomic 'heory !r Marginal 'heory

'he simplest theory of business decision maing is that the decision maers try to ma$imi)e profits and that ey

consider all courses of action open to them in attempting to do. 'his is the theory held by traditional economists.Although it may be partially true that the decision maers generally have the effect of profits on mind( they may no

alays attempt to ma$imi)e profits. Marginal theory is based on the la of diminishing return. According to this la

ith the additional units of inputs ;labour and capital


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comple$. 'he linear programming( venture analysis( game theory( 9ueuing theory( probability theory( etc are some the e$amples of idely used !perations "esearch techni9ue. Although these techni9ues provide a good deal of

analysis( yet the rational and psychological aspects of decision maing cannot be ignored totally. 'he attitude(

intelligence and isdom of the decision maer shall alays have an important impact on the 9uality of decisionsmade by him

Q.6. Policies are guide4posts for managerial action. Discuss this statement and give at least to e$amples of policie

in any area of business management.

!"

?hat is Policy ?hat characteristics do policies have Also discusses various classifications of an industrial policy

!"

?hat is Policy and ?hat are the essentials of a sound policy

Meaning and Definition of Policy

A policy is a general statement that guides thining( action and decision maing of managers for the successful

achievement or organi)ational ob=ectives Policies define the limits ithin hich decisions are to be made. 'his

ensures consistent and unified performance and e$ercise of discretion by managers.

'he top managers generally frame the policies. -oever( a manager at any other level may lo don policies ith

the limits of his authority and also ithin boundaries set by policies of his seniors.

A policy is not static and may be modified or revieed in the light of changes in the environment. A policy may be

verbal( ritten or implied.

A ell defined policy help the manager to delegate authority ithout undue fear( because the policy lays don the

limits for decisions by the subordinates. Moreover( policies operationalise ob=ectives( speed up decision maing(ensure coordination( help in training and orienting employees and ensure proper administrative control.

Different scholars have defined the term policy as follos3

-ein) ?eihrich and -arold Iount)

Policies are plans in that they are general statement or understanding that guide or channel thining in decision

maing. Not all policies are statements they are often merely implied from the actions of managers.

%.'. -aner

A policy is a statement( verbal( ritten or implied of those principles and rules but are set by managerial leadershipguidelines and constraints for the organisation&s thought and action.


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0.%.2 #rech

Policy is a patter of direction for the guidance of those ho carry responsibility for the management of the activitie

of the enterprise.

Dalton Mc%arland

Policies are planned e$pressions of the company&s official attitudes toards the range of behaviour ithin hich itill permit or desire its employees to act.

Beorge 'erry

Policy is a verbal( ritten or implied overall guide setting up boundaries that supply the general limits and direction

in hich managerial action ill tae place.

Q.. Describe the characteristics or features of Policy.Characteristics !r %eatures of Policy

Policy has the folloing important features3

1. A policy is a standing( repeat4use plan for ansering the recurring problem of the similar nature.

5. 2t is a guide thining in decision maing. 2t is not an e$act order in hich things are done. 2t provides the

frameor ithin hich decisions should be taen. 2t unfolds the broad guidelines for achieving organi)ationalob=ectives.

6. 2t allos some amount of =udgement or discretion on the part of the e$ecutives.

. 2t prescribes the course of action selected to guide and determine present and future decisions.

8. 2t lays don the limits ithin hich decisions are to be made. 'his ensures consistent and unified performance ae$ercise of discretion on the part of the e$ecutives.

/. Policies are generally framed by top4level management( hoever( managers at other levels also can framenecessary policies to deal ith recurring problems of similar nature( such as departmental policies( divisional polici

4 formulated at the level of department or division.

. Departmental or divisional policies are formulated ithin the limits of the authority of hte respective in charge an

also ithin the limits set by the organi)ational policies.

+. A policy is not static. Policies are revieed and modified from time to time as per re9uirements or demands of thchanging environment.

Q.8. Describe the Garious types K Classification of Policies.Classification of Policies

A number of policies are used in an enterprise in order to attain the organi)ational ob=ectives. Policies may beclassified as follos3


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;A< !n the #asis of 7ource

According to their source( origin or emergence( policies may be of the folloing inds3

1. !riginated Policy

2t is also non as formulated policy. 2t is a policy deliberately formulated by top management to guide decision4maing at loer levels( board of directors( the chief e$ecutive( the e$ecutive committee of the board or heads of the

ma=or departments or divisions. 7uch policies are broad in scope and affect usually the hole organisation or itsma=or segments. 'hese policies are often ritten ones( typically in the form of a policy manual of the organisation

and flo don.

5. Appealed Policy

2t is a policy formulated on the appeal or re9uest of subordinates for filling the gaps left by originated policies. 2n

other ords( hen a subordinates refers an e$ceptional problem of recurring nature not covered by e$isting policiesto his superior and appeals for a policy decision. ?hen the superior maes decision in such a case( it becomes a

precedent ;policy< for future action. 7uch policies may be formulated at any level and are in the nature of floingupard policies.

6. 2mposed Policy

2t is a policy( hich an organisation is compelled to adopt due to some outside forces( such as the government and i

regulatory agencies( trade association( trade unions.

;#< !n the #asis of %unctions

Policies are needed in all areas of business of an enterprise. 'hese may be classified on the basis of differentmanagerial functions as follos3

1. Production Policy

"a material( purchase policy( repairs and maintenance policy( technology adoption and development policy( 9ualicontrol policy( inventory policy and research and development policy are some e$amples in the category. 2ndent for

the purchase of ra materials should be made at least a ee in advance is an e$ample of "a Materials Purchase

Policy.

5. -uman "esource Policy

0$amples in this category are recruitment policy( training policy( employee career development policy( ages andsalary policy( placement policy( promotion policy and transfer policy( employee participation policy. Any vacancy

shall be filled first by promotion from ithin the organisation and then( if need be( from outside sources 2s an

e$ample of "ecruitment Policy.

6. Mareting Policy

Capital structure policy( pacaging policy( distribution policy( advertising policy( customer service policy( credit


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policy( maret research policy and important e$amples in this category. Customer&s complaint must be respondedithin the ne$t day is an e$ample of Customer 7ervice Policy.

. %inance Policy

Capital structure policy( fi$ed capital policy( oring capital policy( investment policy( research policy( divident

policy are some e$amples in this category. 0$cess capital( if any should be invested for short term only( preferably

limited company shares registered in stoc e$change is an e$ample of 2nvestment Policy.

8. Accounting Policy

2nventory valuation policy( depreciation policy( provisions policy ;for bad debts etc< deferred revenue e$penditure

policy etc. are e$amples in this category. Deferred revenue e$penditure ;e.g.( a huge amount spent on advertisment

should be spread over the years of its benefit generation and ritten off every year accordingly( is an e$ample ofDeferred "evenue 0$penditure Policy.

Q./. Describe the process of policy formulation.

Process of Policy %ormulation

Policy formation is a creative and analytical phase of planning. 2t is based on the underlying ob=ectives of the

organisation. Policy formulation process involves various steps or activities and their analysis in order arrive at a

decision. 'he important steps involved in policy formulation may be briefly described as follos3

1. :nderstanding of Corporate !b=ectives

!rgani)ational ob=ectives are the starting point for policy formulation. 'hey are ultimate results( hich an

organisation tries to achieve. 'hey provide the foundation for policy formulation.

5. Analysis of the 0nvironment

'he basic purpose of policies is to integrate the organisation ith its environmentH hence the policy maers mustno the nature and other feature of the organisation environment. 'his re9uires a comprehensive analysis of the

environment 4 its opportunities and threats.

6. 2nternal Analysis

'he policy maers should be fully conversant ith the strengths and eanesses of the organisation. 'hey shouldclearly identify the factors hich are critical for the success of the organisation.

. Definition of Policy Area

Policy maers should then specify clearly the areas( hich re9uire policies to be made.

8. Choice !r 7election of Policy

After evaluation of different policy alternatives( the most appropriate or suitable policy alternative is selected. 'his

the stage here the manager arrives at the right policy in the concerned area.


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/. Communication and 2mplementation of Policy

'he selected policy is communicated in clear ords to those ho are supposed to implement it. 2mplementation ofpolicy is the operative aspect of policy hereby it is put into action. 'he concerned people apply the policy hen

problematic situations arise or hen they normally do their =obs.

. "evie and Modification of Policy

'he correctness of a policy is perceived hen it is put into practice. !n the basis of feedbac from the e$ecutors ofthe policy( a periodical revie is carried out and herever necessary( desired modification are made in the policy

from time to time. 7ometimes outdated or obsolete policies are reconstituted or reframed.

Chapter 13

Chapter 1 4 @eadership

* @eadership

* Garious theories of leadership

* Different styles of leadershipQ.1. ?hat leadership means ?hat are its important characteristics ?hy is their need of leadership also discussin

its importance

Meaning and Definition of @eadership

7imply stated( leadership is the process of influencing the behaviour of others toards the attainment of desired goor purpose in given circumstances. @eadership is a tool to get the desired or done through employees or

subordinates. @eadership is ma=orly e$plained on the basis of influence relationships and motivational consideratio

!ne method of solving the problem of motivation is the effort to provide inspiring and effective leadership to theemployees. 'he success of a manager is largely decided by the fact as to ho much effective he is as a leader.

@eadership is the ability to mae people act the ay the manager or leader ants. 2t is the process of influencing

others to become hat they are capable of becoming in the vie of the leader. @eadership( in essence is carrying thpeople ith the leader by their consent.

Different scholars have defined leadership in the folloing ays3

"ober 'annenbaum

@eadership is interpersonal influence( e$ercised in situations and directed( through the communication process(

toards the attainment of goals.

Beorge 'erry

@eadership is the leadership in hich one person or the leader influences others to or together illingly on relate

tass to attain that hich the leader desires.


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organisation.

+. A leader leads he does not push. 2t means that a leader taes his folloers and their achievements to such a heigh

here they do not believe to reach. ?hen a leader leads( he serve also ( i.e.( he fully cars for the satisfaction of hisfolloers.

,. @eadership appears to be more of an emotional than an intellectual or rational process( because its direct concern

ith men hose both emotional and rational poers are to be stimulated or incited. 7uch poers can be had by

means of dedication not only by use of noledge. @eadership is a rational to the e$tent that is is goal directed.

1. Persons capable of e$ercising effective leadership in organisations are in critically short supply in relation to thtremendous demand.

11. @eadership is part of management( but not all for it.

15. @eadership is a nebulous( not fully clear accept even after so research done in this field. 2n other ords( still the

is no simple anser to the riddle.

Q.5. #riefly describe various theories of leadership.!"Discuss different approaches to leadership.

!"

0$plain the main theories of leadership.!"

Differentiate beteen tratist and situationalist theories. ?hich of the to is near to the modern thining

!"0numerate the 9ualities of leadership.

'heories of @eadership

@eadership styles focus on the behaviour pattern e$hibited by a leader during supervision of the subordinates. !n th

other hand( ho ill emerge an effective leader !r ho effective a leadership style ill be such 9uestions areansered by leadership theories. 7imply stated( theories focus on various approaches to successful leadership.

'he theories of leadership may be classified into three categories( 'rait theories( #ehavioural theories and situation

theories.

1. 'ratist @eadership 'heory

2n its early stage( this theory as called great man theory of leadership( hich says that leaders are #orn and not

made. Ancient people thought that certain natural 9ualities of leadership e$ist in a person. :ltimately( the great man

theory gave ay to a more real theory the 'rait approach.'rait theory vies leadership as a conglomerate ;or a large set< of different traits or 9ualities. 'he great man theory

believed that traits ere inherited. ?hereas( trait theory holds that traits are not alays inborn but can be ac9uiredthrough education( training and e$perience. 'rait theory holds that leadership is largely a matter of personality( a

function of specific traits. 2t suggests that there are certain uni9ue 9ualities or traits clearly identifiable in leaders. '

greater the degree of such traits possessed by a person the better and more successful ill be proved as a leader. 2tfurther suggests that leaders differ from folloers ith respect to certain ey traits and these traits remain unchange

across time. 'he trait theory attempts to isolate the attributes of successful and unsuccessful leader and using such a

list of traits( it predicts the success of failure of persons as leaders. 2t is to be noted that these traits are notmeasurable.

Garious thiners have differed on the pacage of traits. Many studies of traits have been made. "alph 7togdill foun


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;1,< that various researchers have identified specific traits related to leadership ability as follos3

+. hysical raits

%ive in all( such as energy( appearance and height.

-. Intelligence and #ility raits

%our in all( such as high level of intelligence and =udgement.

/. ersonality raits 7i$teen in all( such adaptability( agressiveness( enthusiasm and self4confidence.

0. as*1elated 2haracteristics

7i$ in all( such as achievement drive( persistence and initiative

3. 4ocial 2haracteristics

Nine in all( such as cooperativeness( interpersonal sills and administrative ability.

2t may be noted that the discussion of the importance of traits still goes on. More recently ;1,,1


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2t is described as e$ploitative authoraitative. 2ts managers are higher autocratic have little trust in subordinates andmotivate people through fear and punishment and only occasionally reard. 'hey engage in donard

communication and limit decision maing to themselves.

-. 4ystem - Management

2t is called benevolent 4 authoritative. 2ts managers have a patroni)ing confidence and trust in subordinates. 'hey

motivate ith reards and some fear and punishment. 'hey permit some upard communication and solicit some

ideas and opinions from subordinates. 'hey allo some delegation of decision maing but ith close policy contro

/. 4ystem / Management

2t is referred to as Consultative. 2ts managers have substantial but not complete confidence and trust in subordinate'hey usually try to mae use of subordinates ideas and opinions. 'hey use reard for motivation ith occasional

punishment and some participation.

Q.6. #riefly discuss various leadership styles and also refer to their advantages( disadvantages and conditions of us

?hich is the best style in your opinion

@eadership 7tyles

7imply stated( the term 5eadership style refers to the pattern of behaviour( hich a leader adopts in directingbehaviour of the folloers toards the attainment of organi)ational goals. %rom another viepoint( leadership stylethe position that a leader usually taes ith regard to ho much decision maing freedom he allos to his folloer

to have. 7imilarly( the behaviour e$hibited by a leader during supervision of his folloers is non as leadership

style. 'he nature and form of leadership style is affected by the folloing factors( e$isting circumstances( timeperiod( personality of the leader( his e$perience( attitude and orientation( nature of folloers( e$ternal environment

and so on. Most of the managers use several styles at one or the other point of time( but in hich category a manag

falls( is decided by the style that is mostly used by him. #asically and broadly( there are three important leadershipstyles as follos3

1. Autocratic !r Authoritarian 7tyle

2t is also non as directive style. 2t is basically treated as a traditional method of leadership. An autocratic leadercentrali)e poer and decision maing in him and e$ercise complete control over the subordinates. -e dominates an

drives his group through coercion and command. -e uses both positive and negative motivations( for e$ample(

reard( praise( fear of criticism or punishment. ?hen he uses positive motivations that is called #enevolentautocratic style and hen he uses negative motivations that is non as dictatorial or oppressive autocratic style. '

autocratic leader lies( 'heory L4undemocratic thining( he emphasi)es or only.

'he autocratic leder himself decides all policies. -e gives orders to the subordinates and e$pects them to follo suorders completely ithout any grudge or 9uestion. :nder this style( subordinate are thought to be ine$perienced an

isdom less and therefore they are given no freedom 4 the autocratic leader decides the technicalities and modalitie

of the or and the course of action. -ence any one e$cept the leader does not no the future action.

Autocratic style permits 9uic decision maing provides strong motivation and satisfaction to the leader centrali)e

poer and dictates terms( yields positive results hen great speed is re9uired and needs less competent subordinateat loer levels. 2ts ma=or disadvantages are( 2t leads to frustration( lo morale and conflict among subordinates are

induced to avoid responsibility( initiative and innovative behaviour. %ull potential of subordinates and their creativeideas are not utili)ed. 2n the absence of the leader( organi)ational continuity is threatened because subordinate gets

opportunity for development.

'his style may be appropriately used here subordinates are uneducated( unsilled( unise( ine$perienced( here tcompany endorses fear and punishment as accepted disciplinary techni9ues and here the leader prefers to be activ

and dominate to decision maing.

5. Democratic !r Participative 7tyles

'he democratic leader decentrali)es poer. -e involves subordinates in the decision maing. Decision are made in


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consultation and participation ith the subordinates. 'he style emphasi)es group4discussion and group decisionmaing. 'he democratic leader lie 'heory F4fairness( e9uity and human relation. -e emphasi)es both or and

orer. 'he subordinates are encouraged to utili)e their full talent potential and capacities and assume greater

responsibilities. 'he democratic leader shares poer ith subordinates( delegate ade9uate authority to them( eepsthem ell informed about matters of their interest and concern and allo ade9uate freedom for thining( discussing

e$pressing and maing suggestions. -e has faith in the subordinates and their isdom( sills and capacities. -e hol

ob=ective approach. Communication pattern is multi4dimensional.

'he ma=or advantages of this style are( 2t improves =ob satisfaction and moral( develops positive attitude( reduces

resistance to change( generates self4motivation due to participative decision maing and freedom of thought andimpression( increases productivity and develops better subordinates.

'he ma=or disadvantages of this style are( 2t is time consuming and causes delays in decision maingH may fail hethe communication pattern and sill are not strong enough is not orable here subordinates do not ant to tae

e$tra responsibility of sharing in decision maing and becoming part of every decision decreases productivity in

some cases especially hen decisions are diluted to appease or please everybody.Democratic style is more appropriate here subordinates are educated( silled( ise( creative and enthusiastic( he

the company endorses self4direction and self4control and reards and involvement as prime means of motivation an

control

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Bcom II Management Notes