PRINCIPLES OF MANAGEMENT (2, 5 & 10 marks POM)

1) What is the meaning of management?

Management is the creation and maintenance of an internal environment in an enterprise where individuals, working in groups, can
perform efficiently and effectively towards the attainment of the group goals
2) State three levels of Management
The three levels of Management are:
 Top management
 Middle management
 Supervisory or operating management
3) What are the functional areas of management?
The field of management is very wide. The operational areas or the functional areas of business management may be classified into
following categories:
 Production management  Financial management
 Marketing management  Personnel management
4) What is administration?
Although the terms administration and management may appear to be similar, they are actually different. Administration is
concerned with laying down suitable policies for the whole concern whereas management will simply execute these. Administrators
are the owners of the business. All policies decisions are made by administration.
5) What are the objectives of time study?
The objective of conducting the time study is to determine standard time needed to perform every job. For this, The various
elements associated with the job are identified and the time taken to perform each such element is recorded.
6) Expand “PODSCORB”.
Luther Gullick has given the keyword “POSDCORB”
 P-Planning  Co – controlling
 O– Organizing  R – reporting
 S – staffing  B – budgeting
 D – directing
7) Who is called the father of modern management? Watch refuse zest
Taylor is called the father of scientific management and Henry fayol is called the father of principles of management
8) Define Management
Management has been defined in various ways. Simply started,” management is an art of getting things done through others.” this is
very popular definition.
9) State the features of business objectives.
According to Drucker,” there is only one valid definition of business purpose, to create a customer”. According to him, objectives
of needed in every area where performance and results directly and vitally affect the survival and prosperity of the business. There
are 8 such areas in which objectives of performance and results to be set – market standing, innovation, productivity, physical and
financial resources, profitability, manager performance and development, worker performance and attitude and public
responsibility.
10) Write a note on division of labour.
Division of work or specialization of labour belongs to the natural order it takes a person to acquire an ability and accuracy with
which he can do more and better work with the same effort.
11) Mention the experiment conducted by Elton Mayo
Elton Mayo served as the leader of the term which carried out the famous Hawthorne experiment Illumination experiments designed
to access the effects of illumination on employee efficiency. Test room experiments designed to judge the influence of working
conditions on worker performance Interviewing studies undertaken to improve employee attitudes
Observational studies carried out to understand the factors influencing informal organization of work groups
12) Write a short note on forecasting.
Forecasting is the process of predicting future conditions that will influence and guide the activities, behavior and performance of
the organization. It is a systematic attempt to probe the future by inference from known factors.
13) Define planning.
Planning deciding an advance what to do, when to do it, and who is to be do it. It bridges the gap from where we are to where we
want to go- Koontz and O ' Donnell.
14) What do you mean by procedure?
A procedure is a chronological sequence of steps to be undertaken to enforce a policy and to attain and objective. It lays down the
specific manner in which effective activity is performed.
15) What is forward looking?
Planning is always future oriented. It requires forward-looking. As Future is uncertain, a plan must make suitable provisions to meet
any crisis. Fluctuating demand, unavailability of raw materials, changes in government regulations, Union demands etc, may come
as hurdle in the plan implementation stage.
16) Differentiate procedure from programme.
A procedure is a chronological sequence of steps to be undertaken to enforce a policy and to attain and objective. It lays down the
specific manner in which effective activity is performed. A programme is a concrete scheme of action designed to accomplish a
given task. It specifies the steps to be taken, resources to be used, time limits for each step and assignment of task.
17) Write about departmentalization.
Departmentalization may be defined as a process of grouping individual jobs in to departments. it Involves grouping of activities
and employees into departments so as to facilitate the accomplishment of organization objectives.
18) State the types of committees.
A committee a group of person interested with certain task. The committee members or expected to discuss the problem under
consideration in detail and come out with the solution. Committees are usually classified into following types: Standing on
permanent committee, Temporary committee, Advisory committee, Formal committee, and Informal committee.
19) Write a note on informal organization?
It arises from personal and social relations of people. It is not formally designed but develops spontaneously out of interactions
between persons. It influenced by personal attitudes, likes and dislikes.
20) What is committee?
A committee is a group of person entrusted with certain task. The committee members are expected to discuss the problem under
consideration in detail and come out the solution.
21) What is formal organization?
Formal communication follows the routes formally laid down in the organization structure of the Enterprise. Formal channels are
the paths of organization. Formal organizations are consciously and deliberately created. Authority and responsibility are vital for
formal organization.
22) What are the uses of organization chart?
An organization chart serves as a useful tool of management in following steps:
An organization chart shows clearly the various positions in the organization and how they related to one another. It provides a clear
Understanding of how a job contributes to organizational objective It shows at a glance the lines of authority and responsibility.
23) Write a note on span of control
The term span of management is also known as span of control and span of supervision. Span of management refers to the number
of subordinates that reports directly to a single manager or superior. It is necessary to decide the appropriate span for every
executive.
24) List out the benefits of committee form of organization.
A Committee is a group of person entrusted with certain tasks. The committee members are expected to discuss the problem under
consideration in detail and come out with a solution. The following are the advantages of committee. It provides scope for
judgments The committee also secure proper coordination among the individuals and departments.
25) What does delegation mean?
In any organization an individual alone cannot perform the entire task. He has therefore to assign work to different persons who are
engaged for the purpose. Delegation of authority is only the process of transfer of authority by a superior to his subordinates to
enable the latter to perform the task assigned.
26) What is meant by recruitment?
Once the manpower needs are determined, the process of recruitment starts. Recruitment is the process of identifying the sources of
prospective candidates and attracting them to apply for jobs in the organization
27) What are the elements of delegation?
The element of delegation involves the following steps:
 Determination of results expected  Granting of authority
 Assignment duties  Creating accountability for performance
28) What is panel interview?
In search an interview are several interviewers. Each interviewer ask questions about a particular area for example one interviewer
may ask questions about the candidates education second about his aptitudes and interests the third about his experience extra the
candidates suitability is decided on the bass of the combined performance rating of the interviewers..
29) Define training.
Training is an organized process for increasing the knowledge and skills of people for definite purpose the purpose of training is to
improve the employee’s current job performance. Training is a continuous process because a person never stops learning training
should be differentiate from education and development.
30) What are the different sources of recruitment?
The various sources of recruitment may be grouped into two broad categories:
 Internal sources - internal sources consists of the employees currently working in the organization
 External sources – advertisement, recruitment agencies, employment exchanges, educational institutions, recommendation,
labour contractors, gate hiring, unsolicited applicants or casual callers.
31) What does authority need?
Authority may be defined as the legitimate right to give orders on to get orders obeyed. Donate setting rights granted to a position in
an organization. It includes the right to take decisions and get them executed by subordinates. It also consists of the right to
command and allocate resources.
32) Write a short note on MBO
Management by objectives involves focus on every individual goal. It is mainly a technique of planning and appraisal. MBO is a
time consuming and expensive process. Under Management by objectives there is active participation of subordinate staff in the
decision making process.
33) What does direction?
Directing is the process of guiding people in their work and ensuring that they do it in the best possible manner. It generally
involves the following activities:
 Assigning duties  Monitoring performance and
 Explaining the methodology of work  Correcting deviation
 Issuing order and instructions
34) Write a note on control.
Control is a function exercised in all organization to ensure the optimum utilization of scarce resources. Controlling may be defined
as the process of analyzing actual operations and seeing that actual performances is guided towards expected performance.
35) Give any two advantages of MBE
Management by exception provides the following benefits:
It saves the time of managers because they deal only with exceptional matters. Routine problems are left to subordinates
It focuses managerial attention on major problems. As a result there is better utilization of managerial talents and energy
36) Define coordination.
In the words of Haimann, “coordination is the orderly synchronizing of efforts of the subordinates to provide the proper amount,
timing and quality of execution show that their unified efforts lead to stated objective, namely, the common purpose of enterprise.”
37) State any two benefits of control?
A good control system provides the following advantages:
It enables the management to verify the quality of various plans and policies A Control system ensures achievement of objectives.
38) Define the term controlling?
According to koontz and O'Donnell, “The managerial function of controlling is the measurement and correction of the performance
of activities of subordinates in order to make sure that Enterprise objectives and plans devised to attain them are being
accomplished.”
39) Expand the term MBO and MBE
MBO - Management by objectives
MBE - Management by exception
40) What are the components of control?
Planning - control is designed to achieve certain objectives.
Information feedback – control involves comparison of actual performance with planned performance.
Delegation of authority - control action can be taken only when adequate authority has been delegated to detect deviation and
correct them.
Remedial action – there is no control until action is taken to rectify the mistakes and deviations.
41) State any one difference between coordination and cooperation.
(1)Coordination is the essence of management and it is vital for the success of all managerial functions. Co-Operation on the other
hand, does not enjoy the status of essence of management.
(2) Coordination requites deliberate and intentional efforts of a manager. On the other hand operation is voluntary. In other words
coordination is a contrived process. Whereas cooperation is a natural process.
42) Define Breakeven point.
Breakeven point is the point at which total revenue is equal to total cost. St is the point of no profit and no loss. Break even analysis
is very useful in determining profitable volume of output and sales. It is widely used in decisions relating to expansion, product mix,
selling prices, etc.
43) What are the different types of coordination?
 Coordination may be divided on different bases.  Vertical and horizontal coordination
 Internal and external co-ordination  Procedural and substantive coordination
44) Write a note on technique of coordination.
The main technique of coordination is as follows:
 Sound planning
 Simplified organization
 Effective leadership and supervision
 Chain of command
5 AND 10 MARKS
1. Nature of management
Define management
To manage is to forecast and plan, to organize, to command, to co-ordinate, and control- Henry Fayol.
 It is a universal activity: the work can be done in a more systematic manner with the application of the techniques of
management. The material and human resources can be effectively handled and the goal can be attained with maximum
efficiency.
 It is goal oriented: management focuses attention on the attainment of specific objective. For example a business man
may aim for particular sales.
 It is an intellectual activity: management does not accept the hit or miss approach to work. Every work needs to be
properly planned and executed. The necessary resources have to be fixed on them.
 It is a process: t is a process Management is essentially a process consisting of various stages functions Planning is the
starting point of management and control is its last stage In between there are other functions like organizing, directing
and coordinating.
 Management is both a science & art: The practice of science needs knowledge of the theory as well as the formulae On
the other hand, the practice of art requires skill Management is a social science. It focuses attention on the behavior of
individuals and groups.
 It is a social process: As mentioned in the previous point, management deals with the behavior of individuals and groups.
In a work place individual work as a team. The behavior of an individual is bound to be different while he is part of a
group.
 It is an on-going activity: Management is a continuous present À stage will not be reached where one can say that
management is relevant.
 It is intangible: Management is an invisible. It cannot be seen. But it can be felt.
 Management is a profession: like medical, law and engineering, management gas also come to be recognized as a
profession.
 It is a factor of production: management is also considered as a factor of production just like land, labor, capital and
enterprise.
2. Importance of management
 Systematic approach to work: planning which is one of the important functions of management provides for a
systematic approach to work.
 Mobilization of the necessary resources: every business needs men machine, materials and money.
 Division of work: management recognizes the need for division of work in any work place. The total work to done ids
divided into different parts and each part is ensured to a particular individual.
 Selection of the right man for the right job: management give utmost important to the selection of the right for the
right job. It became necessary to get the right person o do a particular job.
 Manpower development: the candidates, who have been selected for he various job, may not have particular exposure
to work.
 Inducement of workers: another important role played y management is in the matter of motivating the employees of
the organization.
 Stability of tenure: management advocates stability of tenure for al I an organization and particular for the managerial
personnel.
 Integration of business activates: in a business a number of activities like purchases, production marketing and sale
take place.
 Performance of control: it is necessary for every business to find out whether hat has been planned has been achieved
the end of his pan period.
 Fulfillment of social obligation
3. Role of manager
To have contacts: he has to establish and maintain contacts with many people both within and outside the business
To supervise: every manager has to supervise the work of his subordinates while the latter are doing their work and
offer necessary help.
To attain target: manager may work under pressure most of the time as they have target to achieve.
To delegate authority: managers have to get things done by their subordinates.
To act as a leader: as a leader, the manager has to set an example to his subordinates. He must be sincere, honest and
committed to his work.
To ensure proper use of resources: the manager has to ensure that the organizational resources such as men, machines,
materials and money are optimally utilized.
 To undertake trips: managers, particularly those in charge of sales, may have to undertake business trips frequently
and as a result they may not be able to remain in hometown always.
To make decision: managers also have to make certain routine decisions in connection with matters pertaining to the
daily operations of the business.
To act as a spokesman: the manager also acts as a spokesman of the organization and conveys certain information to
the public whenever necessary
4. Level of management
Top management: Board of directors, Chairman, Managing director
 To lay do the basic objectives of the business
 To frame major policies for the business.
 To organizes the business into different department for the efficient attainment of the enterprise goals.
 To appoint departmental heads and review their performance.
Middle management: Production manager, Finance manager, marketing manager
 Formulation of suitable policies at the departmental level
 Production, finance, marking and sales planning and control
 Periodical review of performance
 Interaction with the subordinate staff.
Supervisory management: Office manager, Foreman, Supervisor
 To plan the day-to-day work.
 To assign work to all the employees and undertake supervision
 To monitor the performance of the employees
 To send periodical report to the middle level manager
5. Functions of management
Planning
 It is goal oriented  It is continuous process
 It is an intellectual activity  It is forward looking
 It is the primary function of management
Organizing
 It is concerned with the accomplishment of the enterprise goal.
 It provide for authority- responsibility relationship
 Its activities depend totally on a suitable system of communicate
Staffing
 Recruitment and selection of employees  Performance appraisal
 Training  Employee transfer
 Wage and salary administration
Directing
 Undertaking supervision  Leadership- to guide employees
 Issuing order and instructions pertaining to work  Co-ordination
 Communication relationship between management
and employee
Planning
 Rules and procedures  Effective communication
 Sound organization  Creation of a separate co-ordination
Controlling
 Establishment of standards
 Measurement of actual performance
 Find out division and taking corrective action.

Scientific management
F.W.Taylor (1856-1915) he is called the father of scientific management for his scientific approach solve management
problems
6. Techniques of scientific management
Work study: work study aims at improving efficiency. Under scientific management, the amount of work an average
can do standard working conditions is objectively determined. This is referred to as ‘fair-day’s work. In determining the
fair day’s (a) time study (b) motion study (c) method study (d) fatigue study
Scientific task planning: it lay down production targets and their attainment. It ensures quality of output. Lower cost of
production, specialization etc.,
 Routing- concerned with the sequence of production operations.
Scheduling- prescribes deadlines for each work.
Dispatching- concerned with issuing orders to carry out the work
Feedback- helps to check whether the work has been done as planned.
Scientific selection, placement and training of workers: Taylor wanted the right man to be appointed for the right job
in every work place. The task of finding the right man should be entrusted only to specialists.
Standardization and simplification: the materials used for its manufacture, the tools and equipment used, the method
used, quality, time and the working conditions are all standardized,
7. Important of scientific management
 Replacement of thumb rule method by a scientific one
 Scientific selection, placement, training and development of workers.
 Harmonious relationship between the workers and the management
 Co-operation between the workers & the management and between workers
 Maximum and not restricted output
8. Elements of management
 Planning: it is concerned with thinking about future happening and also taking necessary steps to handle them. The plan
must take into account the resources of the business, the importance of the work undertaken and also the future trends.
 Organizing: it is concerned with the provision of everything that is needed to fulfill the objective of the enterprise,
namely, raw materials, tools, staff etc.
 Command: the manager, according to fayol, shall strive to get optimum return from all his subordinates. The manager
will be able to perform his duties effectively only if has intimate knowledge of his staff, leadership qualities and the
capacity to identify and motivate efficient employees.
 Co-ordination: linking the activities of the various department of a business is what is known as co-ordination. The
activities of one department after those another department.
 Control: the need for control arises due to the fact the business will be interested in kunowing the success or failure of
the plan.
9. Principles of management
1. Division of Work-Henri believed that segregating work in the workforce amongst the worker will enhance the quality
of the product. Similarly, he also concluded that the division of work improves the productivity, efficiency, accuracy and
speed of the workers. This principle is appropriate for both the managerial as well as a technical work level.
2. Authority and Responsibility-These are the two key aspects of management. Authority facilitates the management to
work efficiently, and responsibility makes them responsible for the work done under their guidance or leadership.
3. Discipline-Without discipline, nothing can be accomplished. It is the core value for any project or any management.
Good performance and sensible interrelation make the management job easy and comprehensive. Employees good
behaviour also helps them smoothly build and progress in their professional careers.
4. Unity of Command-This means an employee should have only one boss and follow his command. If an employee has
to follow more than one boss, there begins a conflict of interest and can create confusion.
5. Unity of Direction-Whoever is engaged in the same activity should have a unified goal. This means all the person
working in a company should have one goal and motive which will make the work easier and achieve the set goal easily.
6. Subordination of Individual Interest-This indicates a company should work united towards the interest of a company
rather than personal interest. Be subordinate to the purposes of an organization. This refers to the whole chain of
command in a company.
7. Remuneration-This plays an important role in motivating the workers of a company. Remuneration can be monetary or
non-monetary. However, it should be according to an individual’s efforts they have made.
8. Centralization-In any company, the management or any authority responsible for the decision-making process should
be neutral. However, this depends on the size of an organization. Henri Fayol stressed on the point that there should be a
balance between the hierarchy and division of power.
9. Scalar Chain-Fayol on this principle highlights that the hierarchy steps should be from the top to the lowest. This is
necessary so that every employee knows their immediate senior also they should be able to contact any, if needed.
10. Order-A company should maintain a well-defined work order to have a favorable work culture. The positive
atmosphere in the workplace will boost more positive productivity.
11. Equity-All employees should be treated equally and respectfully. It’s the responsibility of a manager that no employees
face discrimination.
12. Stability-An employee delivers the best if they feel secure in their job. It is the duty of the management to offer job
security to their employees.
13. Initiative-The management should support and encourage the employees to take initiatives in an organization. It will
help them to increase their interest and make then worth.
 14. Esprit de Corps-It is the responsibility of the management to motivate their employees and be supportive of each other
regularly. Developing trust and mutual understanding will lead to a positive outcome and work environment.
10. Management by objective (MBO)
MBO is a comprehensive managerial activity in a systematic manner and that is consciously direct toward the effective and
efficient achievement of organizational and individual objective.
 Establishment of objective
 Periodical review
 Final review
11. Advantages of MBO
 Manager and employee efforts are focused
 Performance can be improved
 Employees are motivated
 Departmental and individual goals are aligned
Disadvantages of MBO
 Constant change prevents MBO from taking hold
 Poor employer-employee relations reduces MBO effectiveness
 Strategic goal may be displaced by operational goals
 To much paperwork saps MBO energy
12. Characteristic of MBO
 Resource optimization  Simple and comprehensive
 Goal oriented  Operational
 Multiple accountability  Employee management participation
 Universal application  Key result area
 Systems approach
13. Process of MBO
 Organizational goals  Evaluation of performance
 Employees objective  Reward corporate objective
 Monitor performance
14. Nature of planning
Define planning
Planning is deciding the best alternative among other to perform different managerial operations in order to achieve the
predetermined goal – Henry Fayol
Planning is the primary function of management: management is the starting points of management. It is only planning
which gives meaning to all other managerial functions.
It is goal oriented: the goal of every business is to make profit. Planning helps to attain the goal in the most effective and
efficiency manner.
It is all-pervasive: planning is done by everyone at every level of management, namely top level, middle level, lower level.
It is an intellectual activity: Planning is a mental activity. It involves application of mind and intelligence to attain, in a
systematic manner, the organizational objective.
It is future oriented: planning is required to attain the future goals of an organization.
It required an integrated approach: the plans of different departments are inter-related and inter-dependent, a co-ordinated
approach is needed for the successful implementation of each plan.
It is continuous process: it means that a stage will never come when 6the planning will not be felt at all. Planning is
required as long as we live in this world.
15. Classification of planning/type
Long-term planning: the period covered by the long term plan is usually 5 to 15 years. The long term planning is also
called strategic planning.
 Introduction of new product
 Entering a new market
 Changing the relationship
 Increasing the sales of operation
 Entering a new market
Medium-term planning: it is also known as tactical planning. The priod covered by the medium- term plan is usually 1 to 5
years.
 Making additions to an existing plan
 Expanding output from its present level
 Appointment of additional staff
 Short term planning: the period of the short term plan is less than one year. It is also known as operational planning.
 Purchase of raw material.
 Arranging for employee training
 Provision of certain amenities of staff
16. Merits/ advantages of planning
It focuses on objective: once the objective of the business has been fixed, the next step is to prepare a plan for its effective
accomplishment.
It helps to avoid no work or work pressure situation: in the absence of planning the workers in an organization may have to
work even beyond working time due to the volume of work particularly towards the end of the year.
It ensures efficiency as well as effectiveness: Efficiency is ensured by doing right things and effectiveness is achieved by
doing things right. Planning helps to do not only right things but also things right. Each department knows what it is
supposed to do well in advance as a result of planning.
It reduces risk and uncertainty: Planning is for future use and future is uncertain. While planning, future uncertainties are
anticipated and adequate provisions are made to meet or overcome the same. Planners know very well that prevention is
better than cure.
It provides for co-ordination: The work done in any organization is a team-work. Different departments participate in the
process of goal attainment. Planning makes the responsibilities of each individual and department very clear. Only when
each individual does his/her part well, it will be possible to reach the target of the whole enterprise.
It facilitates control: If planning is the first function of management, control is the last function. Planning without control is
useless and control without planning is meaningless. Control helps the enterprise to know whether the plan has been
successfully implemented and the objective has been achieved
Planning provide scope for decentralization: dispersal of authority throughout the organization is what is known as
decentralization. Once the basic and derivative plans of the enterprise have been prepared, the next step is to explain the
same to all the subordinates who are going to perform the various tasks.
Limitation of planning
Uncertain nature: The element of uncertainty cannot be totally eliminated in planning. Plans are meant for future use but
future happenings cannot be accurately foreseen.
Expensive: Preparation and implementation of any plan is expensive not only in terms of time but also in terms of efforts
and money required. Formulation of plans requires collection of data from different sources, analysis and evaluation of the
various courses of action in order to take a decision on the best course of action.
Inflexibility: It is always necessary to strictly adhere to the plan in so far as the daily work routine in an enterprise is
concerned. Lack of flexibility in plans leads to monotony and boredom.
Loss initiative: he staff in an enterprise shall perform their duties in the way they are expected to do in the plans. As a
result, they are reduced to machines. There is no scope for the display of skills by individuals and this leads to loss of
initiative.
Ignorance of subordinate’s interests: Plans are prepared to attain the organizational goal in the most effective manner. In
doing so, often, the interests, preferences, capabilities and attitudes of the employees are ignored.
Complacent attitude: There is always a feeling that once the plan is prepared, the target of the enterprise can easily be
attained. The success of every plan depends much on the effectiveness with which it is implemented.
17. Process / steps /stages in the planning
Identifying business opportunities: it is necessary to make an analysis of both the internal and external environment to
known the trends in the near future. Government regulations, technological changes, availability of material and labour and
the extent of competition are some of the important factors affecting business prospectors.
Establishment of objective: the overall objective of the must be stated along with the specific objectives of individual
departments and division in the organization.
Determination of planning premises: as planning is for future and future is uncertain, certain assumption about the future
become necessary.
Identifying the alternative courses of action: there are always alternative ways of carrying out any task just as there are
different routes to reach a destination point. (a) Large scale production (b) curtailing the cost of production and distribution
Evaluating the alternative courses of action: once
 Selecting the best course of action
 Formulating the plans
 Evaluation and review
18. Method of planning
• Repeated use plans
• Objective
• Policies
• Procedures
 • Rules and
• Strategies
• Single use plans
• Programmed and
• Budgets
19. Essential of good policy
A policy serves as a valuable guide to those individual who have to make certain important decision in the course of
accomplishment of the business objective.
 The objective of the business should form the base  It should be set in writing, clear, easy to understand
of the policy and can be simply followed
 The policy must be able to reflect the objectives on  It must be set based on fact and logic
the current company’s internal situation  It should cover current situation but also future
 It must be in line with the government rule and expectations
regulations  It should take into consideration ethics
 It must be fair, loyal and just
20. Kinds of policies
 External policies-policies framed to give effect to the decision of the government, judiciary, trade association and such
other external forces are what are called external policies.
 Internal policies – policies formulated to give effect to certain decisions taken by the owners of a business establishment
are what are called internal policies.
 Appeals policies – policies are formulated to give effect to the suggestion of the staff of the staff of an organization.
 Explicit policies – policies of an organization that are stated outwardly are called explicitly politic policies.
 Implicit policies – policies are not stated outwardly.
21. Merits of policies
 Policies guide managers in taking decisions
 They save time by providing a ready solution to certain key organizational problem.
 They ensure consistency in decision-making
 Policies enable managers to take bold decisions.
 Policies also prevent the managers from misusing their authority by prescribing the limits beyond which their actions
cannot go.
Demerits of policies
 Policies cannot provide solution to all organizational problems.
 Policies only provide guideline for decisions and do not provide an instant solution to any organizational problems.
 It is necessary to review any policy periodically. Policies too tend to become outdated with the efflux of time.
22. Definition of decision making
According to Haynes and massie, decision making is a process of selection from a set of alternative courses of action which
is through to fulfill the objective of the decision-problem more satisfactorily than others.
Characteristic of decision making
It is goal oriented activity: The objective of decision-making is always to attain a specific goal. For example, a student, whose
goal is to become a Commerce graduate, has to be admitted in a college.
Existence of alternative courses of action: As mentioned earlier, the need for decision-making would arise only when there
are alternative ways of performing a task. If there is only one course of action available there is nothing to decide.
It may be positive or negative: Another interesting feature of decision making is that the decision made may be either
positive or negative. For example, if the employees in an organisation want their pay scales revised and decide to go on
strike if their demand is not conceded, the decision of the management may either be positive or negative.
It may also be a decision not to decide: It is always difficult to take a quick decision on a sensitive issue. An immediate
'yes' or 'no' is not always possible in all matters. In such a case, the tendency will be to defer the decision to the extent
possible. The decision, therefore, is ‘no decision
Decision making is both a science and arts: As a science, decision making requires knowledge of the method, rule or
principle concerning the problem. As an art, it requires skill for making the decision a success.
It is situational: It means that the decision-maker may make different decisions for the same problem under different
situations.
It may be voluntary or induced: When the decision-maker makes the decision himself and is not pressurized by anyone,
such a decision is known as a voluntary decision. He makes the decision spontaneously and with an open mind. On the other
hand, when he is pressurized either by individuals or by the situation to evolve a decision to solve a problem, the decision
becomes induced
 It is complex mental exercise: Decision-making involves careful consideration of the alternative courses of action,
evaluation of the same and selection of the best course of action. The entire process of decision making requires application
of mind and intelligence.
It is ongoing activity: Decision-making is a continuous process. Decisions are to be taken in everyone's life right from
cradle to grave.
23. Problem of decision making
 Lack of knowledge of the alternative courses of  Quick decision
action  Unavailability of necessary information
 Indecisiveness  Resistance
 Failure to make correct diagnosis  Making decision by itself cannot solve any probl
24. Guideline for effective decision making
 Anticipate organizational problem and develop solution
 Approach professionals
 Get rid of the tendency to postpone decisions
 Involve subordinates in the decision making process
 Take follow up action
25. Process of decision making or steps involved in decision making
Identifying and understanding the problem: The first step in the process of decision making is to identify and understand
the actual problem. If only the actual problem is identified, it will be possible to provide a remedy by evolving a suitable
decision.
Making an analysis of the problem: once the actual problem is identified, the next step is to make a detailed analysis of the
same. Analysis of the problem requires data which may be obtained from both internal and external sources
Identifying alternative solution: after the problem has been analyzed in details, the next step is to develop alternative
solution. Any organizational problem has many solutions.
Evaluating the alternative problem: Evaluation of alternatives is done by seeing the merits and demerits of each.
Selecting the best solution: the solution considered the best and the most viable one, under the circumstances, is selected.
Implementing the decision: implementation the decision is done by communicating the same to all concerned the
responsibility for carrying out the decision must be fixed on individuals.
Review: periodic review of the decision, during the period of its implementation is necessary. This is done by comparing the
actual results with the expected results.
26. Process of organization
Division of work: the entire work of a business enterprise is divided into a number of activities for better performance and
control. Example manufacturing concern
Grouping activities: as the second step, activities, which are similar in nature and also closely related, will be put under the
control of a department. For example marketing department (ad, window display)
Assignment: assign work to every individual who is employed in a particular department for example finance department
individual may be assigned the work of receiving cash.
Delegation of authority: An employee, who has been assigned some work, needs to be given certain authority to carry out
the responsibility. For example salesman
Creation of accountability: a subordinate to whom authority has been delegated must be made accountable to his superior
for the use of authority and for the work done
Definition relationships: every subordinate has to carry out the tasks assigned to him superior only and he is accountable to
that superior alone.
27. Important of organization
 Vital for implementing plans  Communication relationship
 Specialization  Creativity
 Optimum use of resources  Co-ordination
 Teamwork  Continuity
28. Organization chart / structure
Production manager Marketing manager
Fore man1 Asst.marketing manager 1
Worker 1 Salesman1
Worker 2 Salesman2
Fore man 2 Asst. marketing manager2
Worker 1 Sales man1
Worker 2 Sales

29. Merits of an organization chart

  It shows the official positions of each individual in an organization
 From the organization chart, it is possible to make out who the superiors and subordinates are
 It gives identity to the personnel in an establishment
 It helps an outsider to understand the different designation in an organization
Demerits of organization chart
 An organization chart only shows the formal or official relationships in an organization.
 It may, sometimes, promote ill-feelings among the personnel in an organization.
30. Principals of organization
 Objective: the various activities performed in an organization should help to attain the goal of the enterprise
 Division of work: the total work of the enterprise should be divided into identifiable functions
 Authority and responsibility: authority is the official right of manager
 Delegation: it mean transfer of authority by a superior to his subordinate
 Balance: authority and responsibility must always be equal
 Responsibility is absolute: responsibility is never delegated, for the performance of his subordinates, a superior is
accountable to his own superior
 Unit of direction: it means that each group of activities having the same objective must have only one head and one
plan.
 Distinction between line and staff organization: line functions are concerned with the performance of the basic
activities of the business.
 Simplicity: the organization structur must not be a complicated one. It should have only few levels of authority so that
there is free flow of communication between person
 Flexibility: it should be capable of being adjusted according to the required changes in future.
31. Distinction between formal and informal organization
Formal organisation Informal organisatin
It is consciously and deliberately create authority and It arises spontaneously
responsibility are vital for its functioning
Rules and procedures are important It is personal factors such as friendship affinity trust and
confidence that are important
It can be shown on the organization chart Personal relationship between individuals is more
important
Authority flows downwards and responsibility flows There is no flow of authority and responsibility
upwards
Designations and official positions are very important Designations and official positions are unimportant
It is permanents and stable It is unstable
32. Type of organization
 Line organization  Committee organization
 Line and staff organization  Project organization
 Functional organization  Matrix organization
33. Merits of line organization
 It is very simple to establish and can be easily understood by the employees.
 There is a clear-cut identification of authority and responsibility relationship.
 It ensures better discipline in the enterprise because every individual knows to whom he is responsible.
 It facilitates prompt decision making because there is a definite authority at every level. An executive cannot shift his
decision-making to others nor can the blame be shifted.
 It facilitates unity of command and thus conforms to the scalar principle of organisation.
Demerits of line organization
 There is concentration of authority at the top. If the top level executives are not capable persons, the enterprise will not
be successful.
 With growth, the line organisation makes the top executive overloaded with work.
 There is practically no communication from bottom upward because of concentration of authority at the higher levels. If
superiors take wrong decision, it would be carried out without anybody having the courage to point out its deficiencies.
 Line organisation is not suitable in a big organisation because there is lack of specialisation. Many jobs create problems
of their own which may not be within the competence of the superior and require handling by specialists.
34. Merits of line and staff organization
 There is a planned specialization.
 There is a well-defined authority and responsibility. The line of command is maintained.
 There is bifurcation of conceptual and executive function.
  The staff with its expert knowledge provides opportunities to the line officers for adopting a rational multidimensional
view towards a problem. This type of organisation nourishes organisation growth as each man grows in his own
specialty. It also helps co-ordination through co-operation and leadership.
Demerits of line and staff organization
 There are bound to be occasions when line and staff may differ in opinion. This may result conflict of interest &
prevents a harmonies relationship
 There is a misinterpretation of expert advice by incompetent line executives.
 The staff people feel themselves status-less without authority.
 Staff becomes ineffective in absence of authority.
35. Type Committee organization
Standing or permanent committee: such a committee is never dissolved. Although there may be changes in membership, the
committee remains always. The board of directors is an example
Temporary or ad hoc committee: a temporary committee is one that is created for a purpose. As soon as the purpose has been
accomplished, the committee sands dissolved.
Executive committee: an executive committee is one that has powers to make important decisions for the enterprise.
Advisory committee: an advisory committee can only make suggestions. It does not have the powers to make decisions.
Formal committee: a formal committee is one that is constituted as per the rules and policies of the organization. It has
hierarchy. It functions according to the line of authority.
Informal committee: an informal committee is one that is not constituted as per the rules and policies of the organization.
36. Explain the different bases of departmentation.
Purchase department  Appointment of dealers and distributions
 Purchase of raw materials  Advertisement and sales promotion
 Maintenance of necessary records pertaining to  Monitoring the performance of salesmen
materials Personnel department
 Stores control, etc  Recruitment and selection of employees
Production department  Tanning
 Manufacture  Wages administration, etc
 Quality control Finance department
 Plant maintenance, etc  Provision of working capital and also
Marketing department  Fixed capital foe all other department
 Determination of sales target

37. Need for depart mentation

 Division of work  Better assessment of performance
 Identity  Better control over subordinates and their activities
 Freedom to act  Scope for expansion
 Responsibility
38. Important of depart mentation
 Departmentation gives the advantage of division of labor. As a result, the organization is able to benefit from
specialization
 Departmentation gives identity to every department. Each department can be identified with its head and other
subordinate staff.
 Each department has the freedom to plan its activities and work accordingly.
 The individual in every department as to carry out a definite task. This makes him committed to his work.
 Departmentation provides scope for a better assessment of the performance of the subordinates by their respective
department heads.
39. Explain the different bases of departmentation
 Departmentation by functions  Departmentation by Process or equipment
 Departmentation by Products  Departmentation by Time and number
 Departmentation by Territory
 Departmentation by Customer
40. Explain the factors influencing the span of supervision.
Ability of the manager: if the superior is capable, he can manage more number of subordinates.
Capabilities of the subordinates: if the subordinates are all capable, they may not require much help from their superior.
Nature of work: if the nature of the work done by the subordinates is simple and respective, they may not require much
help from their superior.
Facilities available: the organization can provide such facilities to the staff as fax, computer, cell phone, pager, internet,
etc., it become easy to send or receive any kind of information at any time.
 Extent of delegation: the subordinate approach the superior often not only when he requires the latter’s help but also when
the authority given to him is inadequate.
Quality of plan: if the organization has definite objectives, policies, procedures and rules, it becomes easy for the
subordinate to carry out his tasks without having to trouble his superior officer.
Geographical dispersal of subordinates: this is particularly true in the case of the sales staff of an enterprise.
41. Distinction between authority and power
Authority Power
It is the official right of an individual It is the capacity of an individual
It accrues to a person by virtue of his official position It accrues to a person by virtue of his personal position
which is determined by his intelligence, knowledge, skill and
other personal qualities
It can be transferred by the process of delegation Power, being the personal capacity of an individual, cannot
be transferred to anyone
Authority flows downward. Power may flow in all directions.
Authority relationship can be shown in the organization Power positions cannot be shown by means of the
chart. organization chart
The authority of an official increases with an elevation in his The power of an individual does not change with a change in
official status his official status
42. Important of delegation
 Vital for every organization  Prompt decision
 Relief to managers  Improvement of job satisfaction
 Specialization  Scope for business expansion

43. Type of delegation

General delegation: in this case, the subordinate has the authority to perform any function that may be necessary for the
accomplishment of the overall enterprise goal
Specific delegation: the subordinate has the authority to perform only a specific function
Written delegation: delegation made by written orders and instructions is what is known as written delegation.
Unwritten delegation: delegation is based on customer or conventions
Formal delegation: in the case of formal delegation, authority is delegation as laid down in the organization structure
Informal delegation: a subordinate performs a certain function although he is not officially bound to do it.
Upward delegation: delegation is usually a downwards process, which is only a superior delegate’s authority to his
subordinate.
Side wards delegation: sideward delegation takes place when a subordinate assigns certain work to another subordinate
working at the same level.
44. Principles of delegation
Authority, Responsibility and Accountability: These are the elements that make delegation an effective process.
Parity of Authority and Responsibility: Though authority exactly equal to responsibility cannot be delegated, it must be
commensurate with responsibility so that delegates can give instructions to subordinates to get the work done
Scalar Chain: Every member should know his position in the scalar chain to know his superiors who have the power to
delegate and his subordinates to whom he can delegate the duties.
Completeness of Delegation: No part of the work (except the one which is reserved by managers) should be left out from
being delegated.
Unity of Command: Every person should have one boss to report. If people have more than one boss, they develop the
tendency to shift the blame of non-achievements to their bosses.
Absoluteness of Responsibility: Though responsibility and authority to carry out the responsibility is delegated to
subordinates, the delegator continues to remain responsible for the acts of subordinates to his superiors
Delegation by Results: Delegation has to be result-oriented. Managers should specify the objective of delegation, that is,
what they want subordinates to do and then delegate tasks along with authority
45. Benefits of decentralization
Advantages of decentralization Disadvantages of decentralization
Relief to top manager Difficulty in securing co-ordination
Prompt decision Expensive
Motivation of subordinate Lack of uniformity
Progress due to autonomy Lack of efficient personnel
Effective communication Unsuitable for small enterprise
46. Distinction between delegation and decentralization
Delegation Decentralization
It means concentration of authority in the hands of a few at It means dispersal of authority throughout the organization
the top
It is process It is the end result of delegation
It refers to the relationship between a superior and his It refers to the relationship between the top management and
subordinate the different department and division of an enterprise
Delegation is important to get thing done by the subordinate Decentralization is optional. The top management may or
may not favour the proposal to decentralize
The particular superior who has delegated authority to his The top management exercises overall control.
subordinate exercises control over him.
47. Factors determining the degree of decentralization
 Attitude of the top management
 Size of the enterprise/sale of operations
 Nature of functions
 Extent of diversification
 Availability of capable manager
48. Explain the characteristics of control
It is backward looking: controlling involves comparing the actual performance with the targets.
It gives meaning to planning: planning will lose its significance in the absence of control
It involves appraisal or evaluation: the very nature of the control functions to make an appraisal or evaluation of the actual
performance
It is a pervasive function: control, like planning, is a pervasive function, which is performed at all levels of management
It is forward looking too: by comparing actual performance with the expected level of performance, deviations can be
detect
It is a continuous process: as long as there is planning there will be control
49. Important of control
 It ensures attainment of enterprise objective  It provides scope for delegation
 T highlights the quality of plans  It facilitates co-ordination
 It ensures successful implementation  It promotes efficiency
 It ensure that employees work with
commitment
50. Problem of control
 Problem in setting a realistic standard  Problem in setting qualitative standards
 Resistance from employees  Delay in taking corrective action
 Lack of good system of communication  Expensive
 Degree of change
51. Control process ( stages or steps involved in control)
Establishment of standards: the first step in the process of control is to establish standards for every business operation.
Standards are the criteria against which the actual results can be measured.
Measurement of actual performance and making comparisons: after standards have been set the next step is to measure the
actual performance of individuals, groups, department and the enterprise as a whole.
Finding out deviation and: when the actual performance is compared with the established standards, it will become clear
whether the target has been exceeded or just attained or not reached.
Taking corrective action: a good control system should try to remove the defect causing deviation from the target.
52. Nature and characteristic of co-ordination

 The need for co-ordination arise due to inter-  It does not arise spontaneously
dependence  It may performed by specialists appointed for the
 It aim at attaining the common goal purpose
 It is duty of every manager  It is an on-going activity

53. Important of co-ordination

 Co-ordination helps to attain common goal  It promotes efficiency

 It helps to avoid overlapping of activities  It promotes good human-relations
 It provides a sense of direction  It reconciles personal goal with the enterprise
goal
54. Problem in co-ordination

 Multiplicity of activity
 Large number of employee
 Division of work
 Inter-dependence
 Clash of interests
 Differences in perception, values and beliefs
55. Principles of co-ordination
Principle of direct personal contact: this principle says that direct personal contact with the persons concerned is essential
for achieving effective coordination. Face-to-face communication is the best way to resolve any issue.
Early beginning: setting of targets and preparation of plans must be done in consultation with the subordinate staff. Once
this is done, co-ordination is taken care of.
Reciprocity: according to this principle, when a person known that he can influence and can be influenced by others, he
would certainly avoid unilateral or one sided action.
Continuity: co-ordination is a never ending activity. The need for it will be felt as long as there are enterprise activities.