MANAGEMENT &

ENTREPRENEURSHIP
(BEE501)
SYLLABUS: MODULE 1
• Management – Definition, Importance - Nature and Characteristics of
Management, Management Functions, Roles of a Manager, Levels of
Management, Managerial Skills, Management & Administration,
Management as a Science, Art & Profession.
• Planning – Nature, Importance and Purpose of Planning, Types of
Plans, Steps in Planning, Limitations of Planning,
• Decision Making – Meaning, Types of Decisions, Steps in Decision
Making.
 Definition of Management:
• Simplest definition is that it is defined as the art of getting things done
through people.
• Management can also be defined as the process consisting of
planning, organizing, actuating, and controlling performed to
determine and accomplish the use of people and resources.
• It is systematic way of doing things.
• A manager is one who contributes to the organizational goals
indirectly by directing the efforts others by not performing the task by
himself
• A person who is not a manager makes his contribution to the
organizations goals directing by performing the task himself.
• The definition involves the act of achieving the organizations
objectives.
• Management involves the act of achieving organizations objectives.
• The definition involves the act of achieving the organizations
objectives.
• Management involves the act of achieving organizations objectives.
 Important Management
activities or functions
1. Planning: means thinking of their actions in advance.
2. Organizing: means that managers coordinate human and material
resources of the organization.
3. Actuating: means that managers motivate and direct subordinates.
4. Controlling: means that mangers attempt to ensure that there is no
deviation from the norm or plan.
5. Innovating: means creating new ideas which may improve a product,
process or practice.
6. Representing: means representing his/her organization before various
outside groups which may have some stake in the organization.
 Nature of management:
• All the managers carry out the managerial functions of planning,
organizing, staffing leading and controlling
• Management applies to any kind of organization
• Applies to managers at all organizational levels
• The aim of the managers is same create the surplus
• Managing is concerned with productivity, which implies effectiveness
and efficiency
Characteristics of management:
• Management is:
• Intangible (not measurable and cannot be seen) but its presence can be felt
by efforts in the production sales and revenues.
• Universal and it is applicable to all sizes and forms of organizations
• A group activity and it involves getting things done with and through others
• Is goal oriented and all actions of management are directed at achieving
specific goals.
• Is science as well art and emerging now as a profession
• Is multidisciplinary and it has contributions from psychology, sociology,
anthropology
Scope of the management:
• The management is a must for every organization which encompasses
for profit as well as nonprofit organizations, government as well as
non-government organizations, and service as well as manufacturing
organizations.
• It is in fact difficult to find an area of activity where management is
not applicable.
• Management is not only limited to business enterprises for profits but
also to the for nonprofit organizations like educational institutions,
health care organizations, financial organizations, stores management
for keeping their cost of the operation at the optimal levels
• Government organizations like municipal corporations, water supply
departments, electricity boards in providing best possible services to
the public
• Non-government agencies like environmental agencies benefit from
management in achieving their social objectives in cost effective
manner
• Manufacturing organizations extensively use management to increase
production to enhance the quality of the products manufactured and
similarly
• Service organizations benefit from management in providing an
exemplary service experience to the customers.
Management functions or The Process
of Management
1. Planning is a function that determines in advance what should be
done which is looking ahead and preparing for the future
• It is a process of determining the objectives and charting out the
methods of attaining those objectives.
• It is determination of what, where and how it is to be done and how
the results are to be evaluated.
• It is done for the organization as a whole but every division,
department or subunit of the organization.
• It is a function which is performed by the managers at all levels-top
(which may be as long as five years), middle (shorter may be week)
and supervisory.
2. Organizing and staffing is a function which may be divided into two main
sections namely the human organization and material organization.
• Once the plans have been developed and the objectives established they
must design and develop a human organization to carry out plans
successfully.
• It may defined as a structure which results from identifying and grouping
work, defining and delegating responsibility and authority and establishing
the relationships.
• Staffing is also considered an important function in building the human
organization involves building the right person for the right job.
• Fixes responsibility for a manager to find the right person for the right job
and ensures enough manpower for the various positions needed for the
organization which involves selection and training of future managers and
suitable system of compensation
• Different objectives require different kinds of organizations.
3. Directing is the next step after planning, organizing and staffing
• Involves three sub-functions namely communication, leadership and motivation.
• Communication is the process of passing information from one person to
another
• Leadership is the process of guiding and influencing the work of his subordinates
by the manager.
• Motivation is the arousing the desire in the minds of the workers to give their
best to their enterprise.
• To pull out the weight effectively, to be loyal to their enterprise and carry out
the task effectively. f. Has two types of motivation financial and nonfinancial
• Financial: takes the form of salary, bonus, profit-sharing etc. h. Nonfinancial:
takes the form of job security, opportunity of advancement recognition praise
etc.
• Controlling is a function which ensures everything occurs in
conformity with plans adopted and involves three elements:

• Establishing the standards of performance

• Measuring current performance and comparing it against the

established standards.

• Taking action to correct any performance that does not meet the
standards, management process
• Innovating: It is very much necessary for an organization to grow
better, for which INNOVATION
• becomes very essential. A frequent catchphrase used in Organization
is “Innovate or evaporate”.
• Innovation means creating new ideas in the organization which may
improve a product, process or
• practice for their betterment.
• Representing: A manager is also required to spend a part of his/her
time in representing his organization before various outside groups
which may have some stake in the organization.
• These stake-holders can be government officials, labour unions,
customers, suppliers, financial institutions, etc. They have influence
over the organization.
• A manager must win their support by effectively managing the social
impact of the organization
 Roles of a Manager:

I. Interpersonal roles:
• Figure head: performs duties of ceremonial nature such as greeting
the touring dignitaries, attending the wedding of an employee etc.
• Leader: every manager must motivate and encourage their
employees, try to reconcile their individual needs with the goals of
the organization.
• Liaison: in this role, every manager must develop contacts outside the
vertical chain of command to collect information useful for the
organization.
II. Informational roles:
• Monitor: must perpetually scan his environment for information;
interrogate his liaison and subordinates to get any solicited
information useful for the organization.
• Disseminator: manager passes the privileged information directly to
the subordinates who otherwise would not have access to it.
• Spokesman: may require spending a part of the time in representing
the organization before various outside groups having some stake in
the organization such as government officials, labour unions, and
financial institutions.
III. Decisional roles:
• Entrepreneur: in this role the manager proactively looks out for
innovation to improve the organization by means of means creating
new ideas, development of new products or services or finding new
uses for the old ones.
• Disturbance handler: must act like a fire-fighter to seek solutions to
various unanticipated problems
• Resource allocator: must divide work and delegate authority among
his subordinates.
• Negotiator: must spend considerable time in negotiations. Example:
the foreman negotiating with the workers for the grievance problems
 Levels of Management:

• Top level / Administrative level - consists of board chairman, the

company presidents, and the executive vice presidents.

• Middle level / Executory - consist of vast and diversified group

consisting plant managers, personnel managers and department
heads.
• Low level / Supervisory / Operative / First-line managers - is made up
of foreman and white collared supervisors.
 Managerial skills:

• The manager is required to possess three major skills:

• Conceptual skill which deals with ideas,
• Human relations skill which deals with people and
• Technical skill which deals with things.

1. Conceptual skill: deals with the ability of manager to take a broad and farsighted view of
organization and its future, ability to think in abstract ability to analyze the forces working in a
particular situation.
2. Technical skill: are managers understanding of the nature of the job that people under him
have to perform. It refers to the person’s knowledge and proficiency in any type of process or
technique.
3. Human relations skill: is the ability to interact effectively with people at all levels and the
manager sufficient ability to: a. to recognize the feelings and sentiments of others. b. to judge
the possible reactions to and the outcomes of various courses of action c. to examine his own
concepts and values which may enable to more useful attitudes and about himself.
Management & Administration:
Management as a Science, Art & Profession
• Management is called SCIENCE if –

1. the methods of the inquiry are systematic and empirical

2. if the information can be ordered and analyzed and

3. results are cumulative and communicable

Management as ART -

• As the science considers the why phenomena management as an art

is concerned with the understanding how a particular task can be
accomplished which involves art of getting things done through
others in a dynamic and non-repetitive fashion and has to constantly
analyse the existing situation, determine the objectives, seek the
alternatives, implement, coordinate, control and evaluate information
and make decisions.
• As the knowledge of management theory and principles is a valuable
kit of the manager but it cannot replace his managerial skills and
qualities which has to be applied and practiced which makes us to
consider manager as an art.
• Like the art of a musician or the art of a painter who uses his own skill
and does not copy the skills of others
Management is a PROFESSION-

Characteristics of a profession:
• Existence of organized and systematic knowledge
• Formalized methods of acquiring training and experience.
• Existence of an association with the professionalization as a goal
• Existence of an ethical code to regulate the behavior of the members
of the profession
• Charging of fees based on service.
• Management as Profession:
• Does not have fixed norms of managerial behavior
• No uniform of code of conduct or licensing of managers
• Entry of managerial jobs are not restricted to individuals with a
special academic degree only and hence management cannot be
called a profession
 PLANNING

• Planning is an intellectual process which requires manager to think before acting.

• It is thinking in advance. it is planning that managers of organization decide what
is to be done, when it is to be done, how it is to be done, and how has to do it.
• Decision making is an integral part of planning.
• It is the process of choosing among alternatives. Obviously, decision making will
occur at many points in the planning process.
• Planning is a continuous process like a navigator constantly checks where his ship
in going in the vast ocean, a manger must constantly watch his plans must
constantly monitor the conditions, both within and outside the organization to
determine if changes are required in his plans.
Nature of Planning:
• Planning involves selection of objectives, goals and determines the ways
and means of achieving them.
• Thus planning bridges the gap from ‘where the Organization is’ to ‘where it
wants to be’. Planning is dynamic in nature and is basically a discrete
exercise.
• Nature of planning indicates essential quality or general characteristics of
planning.
• Planning involves four essential qualities:
1. Planning must contribute to accomplish purpose and objectives.
2. It must be considered as parent exercise in all processes.
3. It must spread through all management functions.
4. It must be efficient in such a manner so as to achieve the designed goals at the
least cost
Importance of planning:

1. Minimizes risk and uncertainty

2. Leads to success:
3. Focus attention on the organizations goals:
4. Facilitates control:
5. Trains executives:
1. Minimizes risk and uncertainty
• By providing a more rational, fact-based procedure for making
decisions, planning allows managers and organizations to minimize
risk and uncertainty.
• Planning does not deal with future decisions, but in futurity of
present decisions.
2. Leads to success:

• Planning does not guarantee success but studies have shown that,
often things being equal, companies which plan not only outperform
the non-planners but also their past results.
• This may be because when a businessman’s actions are not random
arising as mere reaction to the market place
• Planning leads to success by doing beyond mere adaption to market
fluctuations.
• With the help of a sound plan, management can act proactively and
not simply react.
• It involves to attempt to shape the environment on the belief that
business is not just the creation of environment but its creator as well
3. Focus attention on the organizations goals:

• Planning helps the manger to focus attention on the organizations

goals and activities.
• This makes it easier to apply and coordinate the resources of the
organization more economically.
• The whole organization is forced to embrace identical goals and
collaborate in achieving them.
• It enables the manager to chalk out in advance an orderly sequence
of steps for the realization of organizations goals and to avoid
needless overlapping of activities.
4. Facilitates control:

• In planning, the manager sets goals and develops plans and to

accomplish these goals.
• These goals and plans then become standards against which
performance can be measured.
• The function of control is to ensure that activities conform to the
plans.
• Thus control can be exercised only if there are plans
5. Trains executives:

• Planning is also an excellent means for training executives.

• They become involved in the activities of the organization and the
plans arouse their interest in the multifarious aspects of planning.
Forms of planning:

• There are many forms and styles of planning, and planning practices
are likely to vary from organization to organization.
• One useful way of classifying them is to distinguish between strategic
planning and tactical planning.
• About Strategic planning involves deciding what the major goals of
the entire organization will be and what policies will guide the
organization in its pursuit of these goals and depends on the data
collect in the outside the organization such as market analysis,
estimates of costs, technological developments and so on and if the
data being mostly imprecise make strategic planning less certain.
• About Tactical planning involves deciding specifically how the
resources of the organization will be used to help the organization
achieve these strategic goals.
• for example; if the organization has prepared a ten-year strategic
plan which envisages a profit rate of 25% on capital employed in
the tenth year, it also necessary to prepare a more detailed tactical
plan for the next year, with a specific target of 10% on the capital
employed.
• Contingency planning takes into account possible occurrences. It is
planning for ‘what to do if there is a recession or if there is a change in
government policy and so on.
Steps in planning:
• The various steps involved in planning are as follows:
1. Establishing verifiable goals or set of goals to be achieved
2. Establishing planning premises
3. Deciding the planning period
4. Finding alternate courses of action
5. Evaluating and selecting the alternate courses of action
6. Developing the derivative plans
7. Establishing and Deploying Action Plans
8. Measuring and controlling the process
1) Establishing verifiable goals or
set of goals to be achieved:
• The first step in planning is to determine the enterprise objectives
which are often set up by the upper level or top managers, usually
after number of possible objectives have been carefully considered.
• There are many types of objectives managers may select: desired
sales volume or growth rate, the development of a new product or
service or even a more abstract goal such as becoming more active in
the community.
• The type of goal selected will depend on a number of factors: the
basic mission of the organization, the value its mangers hold and the
actual and the potential abilities of the organization.
2) Establishing planning premises:
• It is the second step in planning to establish planning premises which
is vital to the success of planning as they supply pertinent facts and
information relating to the future such as population trends, general
economic conditions, production costs and prices, probable
competitive behavior, capital and material availability and
government control and so on. Planning can be variously classified as
under
• a. internal and external premises
• b. tangible and intangible premises
• c. controllable and non-controllable premises
 a. Internal and external premises

• Premises may exist within and outside company.

• Internal premises include sales forecasts, policies and Programmes of
the organization, capital investment in plant and equipment,
competence of management, skill of labor, etc.
• External premises can be classified into three different groups
Business environment, factors which influence the demand for the
product, and the factors which affect the resources available to the
enterprise.
b. Tangible and non-tangible
premises
• Tangible premises: those which can be quantitatively measured while
Intangible premises are those which being qualitative in character and
cannot be measured.
• Tangible examples: population growth, industry demand, capital and
resources invested in the organization are all tangible.
• Intangible examples: political stability, sociological factors, business
and economic environment are all tangible
c. Controllable and non-controllable
premises
• Some of the planning premises are controllable and some are non-
controllable and because of the non-controllable factors there is need
for the organization to revise the plans periodically in accordance with
the current development.
• Examples of uncontrollable factors: strikes, wars, natural calamities,
emergency, legislation etc.
• Examples of controllable factors: company’s advertising agency,
competence of management member’s skill of the labour force,
availability of resources in terms of capital and labour, attitude and
behavior of the owners of the organization.
3) Deciding the planning period:
• It is the next task once the upper level managers have selected the
basic long term goals and the planning premises.
• Business plans are made in some instances once for a year and plans
are made for decades based on some logic and future thinking.
• The factors which affect the choice of period are: a. Lead time in
development and commercialization of new product. b. The time
required to recover capital investments or the pay-back period and c.
Length of the commitments which are already made.
• 4) Finding alternate courses of action: The fourth step of planning is
to search for & examine the alternate courses of action. Example:
securing the technical knowhow by engaging a foreign technician or
by training staff abroad.
• 5) Evaluating and selecting the alternate courses of action: After
listing the alternates, selecting the best alternate or course of action
is done with the help of quantitative techniques and operations
research.
• 6) Developing the derivative plans: Once plan formulated, its broad
goals must be translated on day to day operations of organization
Middle level managers must draw up the appropriate plans,
programmes and budgets for their sub-units which are described as
derivative plans.
• 7) Establishing and Deploying Action Plans: Action represents ‘the
lowest level of execution’. The action plan identifies particular
activities necessary for this purpose and specifies the who, what,
when, where and how of each action. A draft version of the action
plan should be communicated to inform those directly involved & gain
their cooperation.
• 8) Measuring and controlling the process: Plan cannot be run
without monitoring its progress. The managers must check the
progress of their plans. a. Take whatever remedial action is necessary
to make the plan work b. Change the original plan is it is unrealistic
Limitations of planning:

1. Planning is expensive and time consuming process. it involves significant

amount of money, energy and also risk without any assurance of the
fulfilment of the organizations objectives
2. Sometimes restricts the organization to the most rational and risk free
opportunities. Curbs the initiatives of the manager and forces him to
operate within the limits set by it and sometimes cause delay in decision
making in case of emergency.
3. Scope of planning is limited with rapidly changing situations.
4. Establishment of advance plans tends to make administration inflexible.
Example: business changes, change in government policy, may make the
original plan lose its value.
5. Another limiting factor in planning is the formulating of the accurate
premises.
6. Planning may sometimes face peoples’ resistance to it.
DECISION MAKING
• Quite literally, organizations operate by people making decisions.
• A manager plans, organizes staffs, leads, and controls her team by
executing decisions.
• The effectiveness and quality of those decisions determine how
successful a manager will be
The Decision-Making Process
• The decision-making process involves the following steps:
1. Define the problem.
2. Identify limiting factors.
3. Develop potential alternatives.
4. Analyze the alternatives.
5. Select the best alternative.
6. Implement the decision.
7. Establish a control and evaluation system.
Conditions that influence Decision Making

• Certainty
• Risk
• Uncertainty
• Personal Decision-Making Styles
Decision Models
• Rational/Logical decision model
• Intuitive decision model
• Predisposed decision model
Types of decisions
1. Programmed and non-programmed decisions:
2. Routine and strategic decisions
3. Tactical (Policy) and operational decisions:
4. Organizational and personal decisions:
5. Major and minor decisions
6. Individual and group decisions:
• The following are among the advantages of Group decisions:
• Groups provide a broader perspective.
• Employees are more likely to be satisfied and to support the final
decision.
• Opportunities for discussion help to answer questions and reduce
uncertainties for the decision makers.
• These points are among the disadvantages of Group decisions:
• This method can be more time-consuming than one individual making
the decision on his own.
• The decision reached could be a compromise rather than the optimal
solution.
• Individuals become guilty of groupthink — the tendency of members
of a group to conform to the prevailing opinions of the group.
• Groups may have difficulty performing tasks because the group,
rather than a single individual, makes the decision, resulting in
confusion when it comes time to implement and evaluate the
decision
Difficulties in Decision making
(Limitations)
1. Non-actionable information
2. Non-supportive environment
3. Non-acceptance by subordinates
4. Ineffective communication
5. Incorrect timing
Steps in decision making (With example for
easy remembrance)
THANK YOU
• Assignment 1:
• Date of Submission:

Activity:
• Model a decision making
• Model a planning Strategies
• Study a management team
 MODULE 2 - ORGANISING AND STAFFING

SYLLABUS:
• Organizing and Staffing - Meaning, Nature and Characteristics of Organization – Process of
Organization, Principles of Organization, Departmentalization, Committees – meaning, Types of
Committees, Centralization Versus Decentralization of Authority and Responsibility, Span of Control
(Definition only), Nature and Importance of Staffing, Process of Selection and Recruitment.
• Directing and Controlling - Meaning and Nature of Directing-Leadership Styles, Motivation Theories
Communication – Meaning and Importance, Coordination- Meaning and Importance, Techniques of
Coordination. Controlling – Meaning, Steps in Controlling.
ORGANISING AND STAFFING

Definition
• An organization can be defined as a social unit or human grouping
deliberately structured for the purpose of attaining specific goals.
• An organization can also be defined as the process of identifying
and grouping of the work to be performed, defining and delegating
responsibility and authority and establishing relationships for the
purpose of enabling people to work most effectively together in
the accomplishment of their objectives.
N a tu re o fo rg a n iza tio n :

• An organization basically consists of group of people who form the dynamic human element
of the organization

• Organization helps in identifying the various tasks to be performed which are assigned to the
individuals to perform to achieve the common objectives or common purpose of the
organization.

• It ensures to achieve coordination amongst the people working in various departments of the
organization and ensures integrated efforts to achieve organizational objectives or goals.

• It delegates authority to the managers with commensurate responsibility and accountability

for the discharge of their duties and also amongst different hierarchical levels in an
organization.
• It also aides in achieving financial, physical material and human
resources.
• Organizations are part of the larger environment and hence they
are influenced by the external environment.
• Organization helps in the realization of the plans made by the
managers
• It helps in nurturing and growing special skills and talents by the
virtue of division of labour
• It facilities seamless communication.
Characteristics of an organization:

• Every organization has a purpose, goal or goals [task of planning]

• Every organization has a clear concept of the major duties or activities required
to achieve the purpose

• Classification of activities into JOBS

• Establishment of relationships between these jobs in order to ensure

coordination. This is achieved through division of labour and delegation of
authority.
Purpose of an organization

• The purpose of any organization is to achieve goals for

which it is formed and aims at achieving common
objectives through its group members efforts.

• The organizations exist for different purpose and the efforts

for organizational members are directed for the
achievement of this purpose.
Process of organizing:
• Organizing means the design of the ‘Organization Structure’. The principles
of organization are as follows;
• Consideration of Objectives: The objectives of the enterprise influence the
organization structure and hence the objectives of the enterprise should first
be clearly defined. Then every part of the organization should be geared to
the achievement of these objectives.
• Deciding the Organizational boundaries
• Grouping of activities as Departments based on Specialization: Effective
organization must promote specialization. The activities of the enterprise
should be divided according to functions and assigned to persons according
to their specialization.
• Analyzing inter-department Relations and deciding which Departments
will be key departments
• Determining levels at which various types of decisions are to be made:
As the executives at the higher levels have limited time, only exceptionally
complex problems should be referred and routine matters should be dealt
with by the subordinates at lower levels. This will enable the executives at
higher levels to devote time to more important and crucial issues.
• Determining the span of Management [Span of control]: As there is a limit
to the number of persons that can be supervised effectively by one boss, the
span of control should be as far as possible, the minimum. That means, an
executive should be asked to supervise a reasonable number of subordinates
only.
• Setting up a coordination mechanism: As individuals and departments
carry out their specialized activities, the overall goals of the organization
must be taken care of. Therefore Coordination is an important aspect for
smooth functioning of the organization.
Principles of organization

• The principles of organization are as follows;

• Objectives: The objectives of the enterprise influence the organization structure and hence
the objectives of the enterprise should first be clearly defined. Then every part of the
organization should be geared to the achievement of these objectives.
• Specialization: Effective organization must promote specialization. The activities of the
enterprise should be divided according to functions and assigned to persons according to
their specialization.
• Span of control: As there is a limit to the number of persons that can be supervised
effectively by one boss, the span of control should be as far as possible, the minimum. That
means, an executive should be asked to supervise a reasonable number of subordinates only.
• Exception: As the executives at the higher levels have limited time, only exceptionally
complex problems should be referred and routine matters should be dealt with by the
subordinates at lower levels. This will enable the executives at higher levels to devote time to
more important and crucial issues.
• Scalar Principle: This Principle is sometimes known as the “chain of
command”. The line of authority from the chief executive at the top to the
first-line supervisor at the bottom must be clearly defined.
• Unity of command: Each subordinate should have only one superior whose
command he has to obey. Multiple-subordination must be avoided for it
causes Uneasiness, disorder, indiscipline and undermining of authority.
• Delegation: Proper authority should be delegated at the lower levels oh
manager of the organization also. The authority delegated should be equal to
responsibility that is each manager should have enough authority to
accomplish the task assigned to him. Inadequate delegation often results into
multiplication of staff and service activity.
• Responsibility: The superior should be held responsible for the acts of his
subordinates. No superior should be allowed to avoid responsibility by
delegating authority to his subordinates
 DEPARTMENTALIZATION

• Definition: The horizontal differentiation of tasks or activities into

discrete segments is called departmentalization.
Departmentalization is one important step of building an
organization. The aim is to take advantage of the division of labor
and specialization up to a certain limit.
 PURPOSE DEPARTMENTALIZATION:

A. Products:
• Eminently suited for large organization manufacturing a variety of products.
• For each major product a separate semi-autonomous department is created and is put under
the charge of a manager who may also be responsible for producing profit of a given
magnitude.
• For each department, all the needed manufacturing, engineering, marketing, manpower and
other facilities are assembled.
• Product departmentalization is the logical pattern to be followed when each product requires
raw materials, manufacturing technology and marketing methods that are markedly different
from others from those used by other products in the organization. Example: many
companies like Hindustan Lever, Richardson Hindustan and Johnson & Johnson have
product based departments.
Advantages:
• This form relieves top management from operating task responsibility and therefore
can concentrate on such centralized activities such as finance, R&D and control.
• Enables top management to compare performances of different products and invest
more resources in profitable products and withdraw resources from unprofitable
ones.
• In this form as the responsibility is entrusted on a particular department head, he is
stimulated for improving his performance.
• In this form natural team work develops as each worker sees that his contribution is
needed to make the whole product.
Drawbacks:
• This form results in duplication of staff and facilities.
• Extra expenditure is incurred in maintaining a sales force for each product line.
• Employment of a large number of managerial powers is required.
• Equipment in each product may not be utilized fully.
B. Customers:

• An enterprise may be divided into number of departments on the basis of the

customers that it services.

Example: An electronics department may be divided into separate departments for

military, industrial and consumer customers.

C. Regions or territory:

• When production or marketing units of an organization are geographically dispersed in

various locations, it is logical to departmentalize those units on a geographical basis.
Example: The Indian railways are departmentalized on this basis like north, west, and south, eastern,
central are departments in this sense.
Advantages:
• Motivates each divisional head to show high performance.
• Provides each regional head an opportunity to adapt to his local situation and customer need
with speed and accuracy.
• Affords valuable top management training and experience to middle-level executives.
• Enables the organization to take advantage of location factors, such as availability of raw
materials, labor, market etc.
• Enables the organization to compare regional performances and invest more resources in
profitable regions and withdraw resources from unprofitable ones

• Drawbacks:
• Gives rise to duplication of various activities and many of the routine and service functions
carried out by the regional offices can be carried out centrally by the head office very
economically.
• Many regional units may forget the overall interest of the total organization
D. Division (Free-form organization)

• In large, multi-product companies categorize themselves into several profit

centers on the basis of product, territory or customer; these units are called
divisions or free-form organizations. Each divisional head enjoys a freehand to
operate his division within the framework of general companywide policies. As a
division can be dropped or added with little disruption to the rest of the
organization, it is also called free-form organization.
• Example: L&T with divisions such as infrastructure, metallurgical, heavy equipment, financial services,
etc.
E. TIME
• In departmentalization by time, activities are grouped on the basis of timing of
their performance.
• For example: as a small machine shop grows in size, its owner has the choice of either adding
extra shifts (thus separating identical sub-groups by time) or renting two more shops (thus
by separating the two sub-groups territorially). Generally, departmentalization by time is
found in the production function of the enterprise.
Major disadvantages of departmentalization

• Accidental occurrences when carried out from one shift to another

affect the product of the other shift also.

• Workers working in the shift may incomplete work to workers of

the following shift.

• Difficult for the manager to correctly measure the performance of

certain department
 COMMITTEES

• A committee is a group of people who have been formally assigned some task or some problem for their
decision and implementation.
• Committees are broadly classified into Advisory committees and Executive committees.

Advisory committees:
• Committees are vested with staff authority
• Only have a recommendation role and cannot enforce implementation of their advice or recommendation.
• Examples of advisory committees formed in business enterprises: works committees, sales

Executive committees:
• Vested with the line of authority
• Not only take decisions but also enforce decisions and thus perform a double role of taking a decision and
ordering its execution.
• Example: Board of directors is an example of an executive committee.
Advantages of forming committees:

• People get an opportunity to better understand each other’s problems and

move towards organizational goals.
• Provide a forum for the pooling of knowledge and experience of many
persons of different skills, ages and backgrounds which helps in improving
the quality of decisions.
• Provide an opportunity to many persons to participate decision-making
process.
• They are excellent means of transmitting information and ideas, both upward
and down ward
• Contribute indirectly to their training and viewpoints.
• They are impersonal inaction and hence their decisions are generally
unbiased and are based on facts and there is no fear of single individual
taking a decision.
 Weaknesses of forming committees

• Committees keep up minutes and waste hours by setting up a committee which

takes a longer time to get action than from an individual manager.
• If wrong decision taken, no member can be individually blamed which encourages
irresponsibility among members of the committee.
• Can be expensive form of administration where huge amount is spent on
convening meetings and giving allowances to the members.
• Members of the coordinating committees feel appointed to protect their interests
of the departments rather than finding appropriate solution to the problem.
• Have a tendency to perpetuate themselves and difficult to dissolve them.
• Decisions are generally based on some compromise among members which are
not best decisions which results in log rolling.
• Consists of large number of persons, difficult to maintain secrecy.
• Chairman often changes, influences accumulate in the hands of some other person
which may result in domination and may bring about resistance from others.
 DECENTRALIZATION OF AUTHORITY

• The delegation if authority by an individual manager is closely related to and organizations

decentralization of authority.
• Management has to decide the amount of decision-making authority should be centralized in the
hands of the chief executive and the amount to be distributed among them at lower levels The
greater is the number of decisions made at the lower levels.
• The greater the decentralization
a) The greater is the number of decisions made at the lower levels.
b) The greater are the important decisions made at the lower levels.
c) The greater is the number of decisions made at the lower levels
d) The fewer are the people to be consulted at the lower level and lesser is the checking required on the decisions
made at the lower levels.
• Centralization and decentralization are not absolute but relative.
• Absolute centralization is not possible except in one man enterprise.
• Decentralization characterizes all organizations and there cannot be absolute decentralization of
authority because the manager cannot delegate all his authority without surrendering his
position as a manager.
 Advantages of decentralization:
• Reduces the problem of communication and red tape: As organization grows bigger it takes
long time for top managers to make decisions. Decentralization unclogs the communication
process and improves efficiency.
• Permits quicker and better decision making: The employees being close to the work,
knowledgeable often make better and swift decisions than their superiors who are not in touch
with the specifics of the situation
• Recognizes and capitalizes on the importance of the human element: Gives more power,
prestige and status and feel more motivated and satisfied in their jobs
• Leads to a competitive climate within the organization: Where each division is made into a
distinct profit center, its head is encouraged to exercise initiative and ingenuine.
• Ensures the development of employees: Because the employees are to be excellently trained for
promotions into positions of greater authority and responsibility.
• Facilitates diversification of products activities and markets: Initially these companies had a
centralized organizational structure due to limited products but as companies expanded these
companies decentralized their operations to provide greater independence and convenience.
 SPAN OF CONTROL (Definition only)

• The term “span of management” is also referred to as

span of control, span of supervision, span of authority or
span of responsibility. It indicates the number of
subordinates who report directly to a manager.
 STAFFING:

Nature and importance of proper staffing:

• Definition of Staffing: The process of recruiting, retaining, developing and
nurturing the workforce is called staffing
• It helps in discovering talented and competent workers and developing them
to move up the corporate ladder.
• Ensures greater production by putting the right man in the right job.
• It helps to avoid a sudden disruption of an enterprises production run by
indicating shortages of personal if any in advance.
• Helps to prevent underutilization of personnel through over manning and the
resultant high labor cost and low profit margins.
• Provides information to management for the internal succession of
managerial personnel in the event of unanticipated turnover.
Recruitment:
• It is defined as the process of identifying the sources for
prospective candidates and to stimulate them to apply for the jobs.
Sources of requirement:
• They can be broadly classified into two categories namely internal
and external.
• Internal sources refer to the present working force of the
company. Vacancies other than the lowest level may be filled by
the existing employees of the company.
 External sources of recruitment

• Re-employing former employees: laid off employees or employees left due to personal reasons may be
reemployed who may require less training compared to the strangers of the enterprise.
• Friends and relatives of the present employees: personnel with a record of good relationships may be
encouraged to recommend their friends and relatives for Appointment in the concern where they are
employed.
• Applicants at the gate: suitable unemployed employees who call at the gates of the factories or companies
are called are interviewed by the factory or company personnel and those who are found suitable for the
existing vacancies are selected.
• College and technical institutes: many big companies remain in touch with the colleges and technical
institutions to recruit young and talented personnel.
• Employment exchanges: employment exchange set up by the government for bringing together those
men who are in search of the employment and these who are in search of employment and those who are
looking for men. Employment exchanges are considered a useful source for the recruitment of clerks,
accountants, typists.
• Advertising the vacancy: can be done by advertising the vacancy in leading newspapers which may be
used when the company requires services of persons possessing certain special skills or when there is
acute shortage of labor force.
• Labor unions: persons are sometimes recommended for appointment by their labor unions.
 Selection:
Steps in the selection procedure:

• Job analysis: Is the process by means of which a description is developed of

the present methods and procedures of doing a job, physical conditions in
which the job is done, relation of the job to other jobs and other conditions of
employment

• Job description: The results of the job analysis are set down in job
descriptions for production workers, clerical people and the first-line
supervisors and managers also.
• Job specification: A job specification is a statement of the minimum
acceptable human qualities necessary to perform a job satisfactorily.
 Commonly practiced steps for selections:

• Application bank: Filling the application blank by the candidate is the first step in which the applicant gives
relevant personal data such as qualification, experience, firms in which he has worked.
• Initial interview: Selected personnel based on the particulars furnished in the application blank are called for the
initial interview by the company which is the most important means of evaluating the poise or appearance of the
candidate.
• Employment tests: Are used for the further assessment of the candidate of his nature and abilities certain tests
are conducted by the company. These are: Aptitude test: is used in finding out whether a candidate is suitable for
clerical or a mechanical job which helps in assessing before training as how well the candidate will perform the job.
• Interest test: is used to find out the type of work in which the candidate has an interest.
• Intelligent test: used to find out the candidates intelligence and candidates mental alertness, reasoning ability,
poor of understanding are judged.
• Trade or performance achievement test: this test is used to measure the candidate’s level of knowledge and skill
in the particular trade or occupation in which all he will be appointed, in case he is finally selected. In this test the
candidate is asked to do a simple operation of the proposed job. Example: A candidate for a driver may be asked to
drive to test his driving proficiency, a typist may be asked to type out some letters to find out his speed and
efficiency.
• Personality test: is used to measure those characteristics of a candidate.

• Checking references: used to know about the important personal details

about the candidate, his character, past history his background verified
from the people mentioned in the application after selection and found
satisfactory at the interview.
• Physical or medical examination: is another step in selection procedure.
The objectives of this examination are
• to check the physical fitness of the applicant for the job applied for
• to protect the company against the unwarranted claims for compensation
under certain legislative enactments.
• Final interview: This interview is conducted for those who are ultimately
selected for employment and the selected candidates are given an idea
about their future projects within the organization.
 DIRECTING & CONTROLLING:

DIRECTING Definition:
• Means issuance of orders and leading and motivating subordinates as they
go about executing orders Consists of the process and techniques utilized
in issuing instructions and making certain that operations are carried on as
originally planned.
• Is a vital in managerial function Is used to stimulate action by giving
direction to his subordinates through orders and also supervise their work
to ensure that the plans and policies achieve the desired actions and
results.
• To conclude direction is the process of utilizing the techniques in issuing
instructions and making certain that operations are carried out on as
originally planned.
Requirements or Principles of effective direction
• Harmony of objectives: The goals of its members must be in complete
harmony with the goals of an organization
• The manager must direct the subordinates in such a way that they that they
perceive their goals to be in harmony with enterprise objectives.
• For Example the company’s profits may be associated with the employee’s
gains by giving additional bonus or promotion.
• Unity of Command: The subordinates must receive orders and instructions
from one supervisor only the violation of which may lead to conflicting
orders, divided loyalties and decreased personal responsibility for results.
• Direct supervision: Every supervisor must maintain face-to-face contact
with his subordinates which boosts the morale of the employees, increases
their loyalty and provides them with feedback on how well they are doing.
Efficient Communication:
• Communication is an instrument of direction through which the supervisor
gives orders, allocates jobs and explains duties and ensures performance.
• Is a two way process which enables the superior to know how his
subordinates feel about the company and how the company feels on a
number of issues concerning them.
• In communication comprehension is more important than the content.

• Follow-through:
• It is an act of following through the whole performance of his subordinates to
keep check on their activities, help them in their cat and point out
deficiencies if any and revise their direction if required.
 Leadership Styles:

• Three leadership styles widely used: Traits approach, Behavioral

approach, Contingency approach
• Traits approach: Trait is basically a character and deals with
personal abilities and assumed to be God’s gift and abilities are
identified as mental and physical energy, emotional stability,
knowledge of human relations, empathy, objectivity, personal
motivation, communication skills, teaching ability, social skills,
technical competence, friendliness and affection, integrity and
faith, intelligence etc.
• Trait theories argue that leaders share a number of common
personality traits and characteristics, and that leadership emerges
from these traits.
• Early trait theories promoted the idea that leadership is an innate,
instinctive quality that you either have or don't have.
• Now we have moved on from this approach, and we're learning
more about what we can do as individuals to develop leadership
qualities within ourselves and others.
• Traits are external behaviors that emerge from things going on
within the leader's mind – and it's these internal beliefs and
processes that are important for effective leadership.
• Behavioral approach: Behavioral theories focus on how leaders behave.
There are three types of leaders:
• Autocratic leaders make decisions without consulting their teams. This is
considered appropriate when decisions genuinely need to be taken quickly,
when there's no need for input, and when team agreement isn't necessary for
a successful outcome.
• Democratic leaders allow the team to provide input before making a
decision, although the degree of input can vary from leader to leader. This
type of style is important when team agreement matters, but it can be quite
difficult to manage when there are lots of different perspectives and ideas.
• Laissez-faire leaders don't interfere; they allow people within the team to
make many of the decisions. This works well when the team is highly capable
and motivated, and when it doesn't need close monitoring or supervision.
However, this style can arise because the leader is lazy or distracted, and,
here, this approach can fail.
3. Contingency approach:

• Situation influencing good leadership

• The realization that there isn't one correct type of leader
led to theories that the best leadership style is contingent
on, or depends on, the situation.
• These theories try to predict which leadership style is
best in which circumstance.
 Motivation Theories:

• Content theories: Describes WHAT motivates an individual. They throw light on the
various needs and incentives which cause behaviour. Maslow’s need hierarchy theory
• Alderfer’s ERG Theory
• Herzberg’s two factor theory
• McClelland’s achievement theory
• Process theories: Describes HOW behaviour is caused. Victor Vroom’s Expectancy theory
• Adam’s equity theory
• Adams' Equity Theory calls for a fair balance to be struck between an employee's "inputs" (hard
work, skill level, acceptance, enthusiasm, and so on) and their "outputs" (salary, benefits,
intangibles such as recognition, and more).
• According to the theory, finding this fair balance helps to achieve a strong and productive
relationship with the employee, with the overall result being contented, motivated employees.
• Reinforcement theory: Explains the ways in which behaviour is learned, shaped or
modified. Skinner’s behaviour modification theory
 COMMUNICATION

• Communication means Exchange of opinions, facts ideas or

emotions by two or more persons.
• The sum of all things what one does to create an understanding in
the minds of others.
• It is the process of passing information, correct understanding and
with right Interpretation from one person to another.
 Importance of communication:

• The importance of communication rose from the fact that earlier

business was considered only a technical and formal structure.
• But by Hawthorne’s experiments, it was realized that every
organization requires structure is a social system involving the
interactions of the people working at different levels and proper
communication is required to achieve the goals of the
organization.
• It is the basis to an organization’s existence from the birth to
continuing of the organization on through its continuing life.
• When communication stops, organized action comes to an end.
Thus, communication is the foundation of cooperative group
activity.
 COORDINATION

• Coordination is the orderly synchronization or fitting together of

the interdependent efforts of individuals to attain a common goal
• For example: In a hospital there is a proper synchronization of the
activities of the nurses, doctors, wards, attendants and lab technicians so
as to give a good care to the patient.

• Coordination can be considered as an essential part of all

managerial functions of planning, organizing, directing and
directing.
• If the manger performs these functions efficiently and expertly
coordination is automatically generated and there remains no
need for special coordination.
 Coordination is required at every level of all managerial
functions

• In planning: performs his function of planning by coordination of

the interrelating the plans of various departments
• In organizing: coordination is required in grouping and various
activities to subordinates and in creating departments
• In directing: coordination is required to take effect of his
particular action will have on other departments and executives
• In controlling: coordination is required manger evaluates
operations and checks whether performance is in conformity with
the desired results.
 Techniques of coordination:
• The following are the important techniques of coordination
1. Rules procedures and policies:
• Helps in coordinating the subunits in the performance of their Repetitive activities.
• Standard policies, procedures and policies are laid down to cover all possible situations
• If the breakdown of the above occurs more rules, regulations are required to be framed to take care of the
breakdown
2. Planning:
• Ensures coordinated effort and targets of each department dovetail with the targets of all other departments.
• Example: fixing the targets of the10000 units of additional production and consequently the sales requires the
coordination of the two departments respectively to meet the demands and achieve the target.
3. Hierarchy:
• Is the simplest device of achieving coordination by hierarchy or chain of command By putting together
independent units under one boss some coordination among their activities is achieved.
• Sometimes defective because makes individuals dependent upon, passive towards and subordinates to the
leader.
4.Direct contact:
• Used to solve the problems created at the lower levels which affects the
employees can be resolved by formal informal contacts to prevent
overloading to top executives.
5.Task force:
• Temporary group made up of representatives from the same departments
facing problems and exists as long as the problems lasts and each participant
returns to normal tasks once the solution is reached
6. Committees:
• Arise due the fact when certain decisions consistently become permanent.
• These groups are labelled committees.
• This device greatly eases the rigidity of the hierarchical structure, promotes
effective communication and understanding, of ideas, encourages the
acceptance of commitment to policies and makes implantation more
effective.