UNIT II PLANNING 9

Nature and purpose of planning – planning process – types of planning – objectives –

setting objectives – policies – planning premises – strategic management – planning tools
and techniques – decision making steps and process.

2marks
1. Define Planning.
Deciding in advance what to do, how to do, when to do and who is to do it. Bridges the gap
between where we are to where we want to go.
According to Koontz O'Donnel - "Planning is an intellectual process, the conscious
determination of courses of action, the basing of decisions on purpose, acts and considered
estimates".

2. What are the natures of planning?

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

3. What are the types of planning?

- Long term planning : Long term planning covers a long period in future eg, 5,10 or 15 years.
It takes into account all long term economic, social and technological factors as well as their
influence on the long term objectives of the organisation. For examples: Development of new
product.
- Medium term planning: It focuses on a period between two and five years. Such planning is
more detailed and specific than long term planning. It may include plans for purchase of
materials , sales budget, labour expenses, etc.
- Short term planning: such planning covers a short period usually one year.It deals with
specific activities to be undertaken to accomplish the objectives laid down under long range
planning. For example work methods, employee training, etc.

4. What are the purpose of planning?

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-To manage by objectives: All the activities of an organization are designed to achieve certain
specified objectives. However, planning makes the objectives more concrete by focusing
attention on them.
- To offset uncertainty and change: Future is always full of uncertainties and changes.
Planning foresees the future and makes the necessary provisions for it.
-To secure economy in operation: Planning involves, the selection of most profitable course of
action that would lead to the best result at the minimum costs.
-To help in co-ordination: Co-ordination is, indeed, the essence of management, the planning is
the base of it. Without planning it is not possible to co-ordinate the different activities of an
organization.
-To make control effective: The controlling function of management relates to the comparison
of the planned performance with the actual performance. In the absence of plans, a management
will have no standards for controlling other's performance.
-To increase organizational effectiveness: Mere efficiency in the organization is not important;
it should also lead to productivity and effectiveness. Planning enables the manager to measure
the organizational effectiveness in the context of the stated objectives and take further
actions in this direction.

5. Define Management by objectives.

“MBO is a process whereby the superior and the mangers of an organization jointly identify its
common goals, define each individual’s major area of responsibility in terms of results expected
of him, and use these measures as guides for operating the unit and assessing the contribution of
each of its members.”
.
6. Define planning premises.
“Planning premises are the anticipated environment in which plans are expected to operate. They
include assumptions or forecast of the future and known conditions that will affect the operations
of plans. Eg as prevailing policies and existing company plans that control the basic nature of
supporting plans.

7. Define forecasting.
Forecasting is the formal process of predicting future events that will significantly affect the
functioning of the enterprises.
Features
1. Involvement of Future events
2. Depends upon past and present events
3. Happening of future events
4. Make use of forecasting techniques

8. Define Decision making.

George R. Terry, "Decision-making is the selection based on some criteria from two or more
possible alternatives".
Haynes & Massie “Decision making is a process of selection from a set of alternative courses of
action which is thought to fulfills the objective of the decision – problem more satisfactorily than
others.”

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9. What are the steps in goal setting?

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10. What are the factors involved in decision making?
Tangible Factors - things which can be measured, Fixed cost, operating cost, profits, machine,
etc
Intangible factors – Unmeasurable elements. Eg. Employee morale, quality of labour relations,
Consumer behaviour, etc. – Personal values & Orgn Culture, Group decision making, Creative
and innovation.

11. Define Break even analysis.

It points out the relationship between revenues, costs, and profits. To compute breakeven point
(BE), a manager needs to know the unit price of the product being sold (P), the variable cost per
unit (VC), and total fixed costs (TFC). An organization breaks even when its total revenue is just
enough to equal its total costs.

12. Define Project Management.

Project management is the task of getting a project’s activities done on time, within budget, and
according to specifications.

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16 marks

1. Explain Planning process?

a) Perception of Opportunities:
Although preceding actual planning and therefore not strictly a part of the planning process,
awareness of an opportunity is the real starting point for planning. It includes a preliminary look
at possible future opportunities and the ability to see them clearly and completely, knowledge of
where we stand in the light of our strengths and weaknesses, an understanding of why we wish to
solve uncertainties, and a vision of what we expect to gain. Setting realistic objectives depends
on this awareness. Planning requires realistic diagnosis of the opportunity situation.
b) Establishing Objectives:
The first step in planning itself is to establish objectives for the entire enterprise and then for
each subordinate unit. Objectives specifying the results expected indicate the end points of what
is to be done, where the primary emphasis is to be placed, and what is to be accomplished by the
network of strategies, policies, procedures, rules, budgets and programs. Enterprise objectives
should give direction to the nature of all major plans which, by reflecting these objectives, define
the objectives of major departments. Major department objectives, in turn, control the objectives
of subordinate departments, and so on down the line. The objectives of lesser departments will
be better framed, however, if subdivision managers understand the overall enterprise objectives
and the implied derivative goals and if they are given an opportunity to contribute their ideas to
them and to the setting of their own goals.

c) Considering the Planning Premises:

Another logical step in planning is to establish, obtain agreement to utilize and disseminate
critical planning premises. These are forecast data of a factual nature, applicable basic policies,
and existing company plans. Premises, then, are planning assumptions – in other words, the
expected environment of plans in operation. This step leads to one of the major principles of
planning. The more individuals charged with planning understand and agree to utilize consistent
planning premises, the more coordinated enterprise planning will be. Planning premises include
far more than the usual basic forecasts of population, prices, costs, production, markets, and
similar matters. Because the future environment of plans is so complex, it would not be
profitable or realistic to make assumptions about every detail of the future environment of a plan.
d) Identification of alternatives:
Once the organizational objectives have been clearly stated and the planning premises have been
developed, the manager should list as many available alternatives as possible for reaching those
objectives. The focus of this step is to search for and examine alternative courses of action,
especially those not immediately apparent. There is seldom a plan for which reasonable

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alternatives do not exist, and quite often an alternative that is not obvious proves to be the best.
The more common problem is not finding alternatives, but reducing the number of alternatives
so that the most promising may be analyzed
e) Evaluation of alternatives
Having sought out alternative courses and examined their strong and weak points, the following
step is to evaluate them by weighing the various factors in the light of premises and goals. One
course may appear to be the most profitable but require a large cash outlay and a slow payback;
another may be less profitable but involve less risk; still another may better suit the company in
long–range objectives A company may wish to enter a new product line primarily for purposes
of prestige; the forecast of expected results may show a clear financial loss, but the question is
still open as to whether the loss is worth the gain.
f) Choice of alternative plans
An evaluation of alternatives must include an evaluation of the premises on which the
alternatives are based. A manager usually finds that some premises are unreasonable and can
therefore be excluded from further consideration. This elimination process helps the manager
determine which alternative would best accomplish organizational objectives.
g) Formulating of Supporting Plans
After decisions are made and plans are set, the final step to give them meaning is to numberize
them by converting them to budgets. The overall budgets of an enterprise represent the sum total
of income and expenses with resultant profit or surplus and budgets of major balance– sheet
items such as cash and capital expenditures. Each department or program of a business or other
enterprise can have its own budgets, usually of expenses and capital expenditures, which tie into
the overall budget. If this process is done well, budgets become a means of adding together the
various plans and also important standards against which planning progress can be measured.
h) Establishing sequence of activities
Once plans that furnish the organization with both long-range and short-range direction have
been developed, they must be implemented. Obviously, the organization can not directly benefit
from planning process until this step is performed.
2. Explain the different types of plan?
SinglePla
Use Plan
Multi USE
Objectives: objectives are ends towards which the activities of an organisatiion are directed.
-Programmes Plan
Objectives are known by different names eg, goals, aims, purposes, missions, targets etc. they are
-Budgets
the end points of-Objectives
planning as planning is done to achieve objectives. Objectives are established to
-Schedules
guide the efforts of an organisation and each of its constituents.
- Strategies
-Projects
-Policies
-Procedures

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Strategy: A strategy is the complex plan for bringing the organisation from a given posture to a
desired position in a future period of time.Stratey is the basic plan chosen to achieve objectives
while tactics are the means of implementing the plan.
Types of strategies:
- Grand or Master strategy: it is the basic strategy of an organisation. ?It sets the task
of the organisation and serves as the basis for all other plans. It determines the nature
and scope of the enterprise.It is also known as corporate strategy.
- Stability strategy: An organisation which follows this strategy is satisfied with its
performance and wants the same rate of growth. Such a strategy may be followed
when the environment is stable, customer are limited, there is minimum need for
specialized knowledge and skill, values and attitudes of top management donot like
growth.
- Growth strategy: this means an enterprise wants to raise its level of performance or
rate of growth. The following ways may be adopted for this purpose:
Market penetration: Increasing sale of existing products in existing markets.
Market development: increasing sale of existing products in new markets.
Product development: developing new products for sale in existing markets.
Diversification: selling new products in new markets.
- Integration strategy: taking over or combining with other business firms is called
integration strategy. This may assume several forms eg; horizontal integration,
vertical integration, amalgamation, merger and conglomeration.
- Turnaround or Retrenchment strategy: this means reduction in the level of
performance. A firm may close down its unprofitable product lines.
- Divestment or closure strategy. This implies giving up operations altogether or
closing down.

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 - Functional strategies: these strategies are used for development of resources to
achieve specific objectives. They are also known as programme strategies or minor
strategies. For example, an intensive advertising campaign may be a substrategy to
support the master strategy.
Policies:
A policy is a general guide to thinking and action rather than a specific course of action. It
defines the area or limits within which decisions can be made to achieve organisational
objectives. Policies are flexible and broad plans providing scope for judgment and
interpretation on the opart of subordinate managers.
(a) Originated Policy. An originated policy is that which is formulated by the managers in
the organisation for their subordinate's action as well as their own action. Such a policy
flows form higher level because such a policy is originated in the broad framework of the
objectives which are set and defined by top management. This policy may be broad
giving a general guidance for the action or may be spelled so completely as to leave little
scope for definition and interpretation.

(b) Appealed Policy. Appealed policy arises from the appeal made by a subordinate to
his superior for deciding an important case. The need for such an appeal may arise
because th particular case has not been covered by earlier policies. The appeals are taken
upward and decisions made on them set a kind of common law to be followed by others.
Appealed policies are mostly incomplete, unco-ordinated and confused. As such, if
frequent appeals are made, the managers should visualize their policy formulation, its
communication and interpretation so that guidelines become clear and specific.

(c) Implied Policy. Sometimes, policies are not clearly stated, and the actions of
managers, particularly at higher levels, provide guidelines for actions at the lower levels.
These actions might be constituting policy. Or sometimes, the orgnaisation have clearly
expressed policies for its image, but it is unable to enforce these. In such a case, the
action of a decision-maker, consciously or unconsciously, depends upon their own
guidelines, prejudices and whims. Moreover, in the absence of any specific guideline,
decision is based on individual interpretation of actions observed in the orgnaisation
crating chaos.

(d) Imposed Policy. Imposed policy arises from th influence of some outside forces like
government, trade unions, and trade associations. In the present social structure, external
variables affect the functioning of a business organisation to a great extent. These
variables may impose th specific policy or conditions may be created to adopt a particular
policy. In India, the rise of public sector and government regulations create such
situations.
Procedures:
A procedure is a chronological sequence of steps to be undertaken to enforce a policy and to
attain an objective. It lays down the specific manner in which a particular activity is to be
performed. It is a planned sequence of operations for performing repetitive activities uniformly
and consistently.

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Rules: Rules are rigid and definite plans that specify what is to be done or not to be done in
given situations. A rule provides no scope for discretion and judgement. It is a prescribed guide
to conduct or action. No deviation is expected from the rule.

Programmes: 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 assignments
of task. IT is a sequence of action steps arranged in the priority necessary to implement a policy
and achieve an objective.

Budget: A budget is a statement of expected results expressed in numerical terms for a definite
period of time in the future. It expresses a plan in precise terms. Budget serve as means of
coordination and control. They provide clarity, direction and purpose in the activities of an
organisation by laying down verifiable and measurable goals for a specified period of time.

Schedules: A schedule specifies time limits within which activities are to be completed.
Scheduling is the process of establishing a time sequence for the work to be done. Schedules are
essential for avoiding delays and for ensuring continuity of operations.

Projects: A project is a distinct cluster of functions and facilities for a definite purpose and
definite time period. It is designed and executed as a distinct plan. It is integrated into a unity and
is designed to achieve a stated objective.

3. Explian the steps in MBO process and its advantages and disadvantages?

MBO process consists of:

1) Setting objectives:
For Management by Objectives (MBO) to be effective, individual managers must understand the
specific objectives of their job and how those objectives fit in with the overall company
objectives set by the board of directors.
The managers of the various units or sub-units, or sections of an organization should know not
only the objectives of their unit but should also actively participate in setting these objectives and
make responsibility for them.
Management by Objective (MBO) systems, objectives are written down for each level of the
organization, and individuals are given specific aims and targets.
2) Developing action plans
Actions plans specify the actions needed to address each of the top organizational issues and to
reach each of the associated goals, who will complete each action and according to what timeline.
An overall, top-level action plan that depicts how each strategic goal will be reached is
developed by the top level management. The format of the action plan depends on the objective
of the organization.

3) Reviewing Progress:
Performance is measured in terms of results. Job performance is the net effect of an employee's
effort as modified by abilities, role perceptions and results produced. Effort refers to the amount
of energy an employee uses in performing a job. Abilities are personal characteristics used in
performing a job and usually do not fluctuate widely over short periods of time. Role perception

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refers to the direction in which employees believe they should channel their efforts on their jobs,
and they are defined by the activities and behaviors they believe are necessary.
4) Performance appraisal:
Performance appraisals communicate to employees how they are performing their jobs, and they
establish a plan for improvement. Performance appraisals are extremely important to both
employee and employer, as they are often used to provide predictive information related to
possible promotion. Appraisals can also provide input for determining both individual and
organizational training and development needs. Performance appraisals encourage performance
improvement. Feedback on behavior, attitude, skill or knowledge clarifies for employees the job
expectations their managers hold for them. In order to be effective, performance appraisals must
be supported by documentation and management commitment.

Advantages
• Motivation – Involving employees in the whole process of goal setting and increasing
employee empowerment. This increases employee job satisfaction and commitment.
• Better communication and Coordination – Frequent reviews and interactions between superiors
and subordinates helps to maintain harmonious relationships within the organization and also to
solve many problems.
• Clarity of goals
• Subordinates have a higher commitment to objectives they set themselves than those imposed
on them by another person.
• Managers can ensure that objectives of the subordinates are linked to the organization's
objectives.
Limitations
There are several limitations to the assumptive base underlying the impact of managing by
objectives, including:
• It over-emphasizes the setting of goals over the working of a plan as a driver of outcomes.
• It underemphasizes the importance of the environment or context in which the goals are set.
That context includes everything from the availability and quality of resources, to relative buy-in
by leadership and stake-holders.

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• Companies evaluated their employees by comparing them with the "ideal" employee. Trait
appraisal only looks at what employees should be, not at what they should do. When this
approach is not properly set, agreed and managed by organizations, self-centered employees
might be prone to distort results, falsely representing achievement of targets that were set in a
short-term, narrow fashion. In this case, managing by objectives would be counterproductive.

4. Explian different types of decisions?

TYPES OF DECISIONS

a) Programmed and Non-Programmed Decisions: Herbert Simon has grouped organizational

decisions into two categories based on the procedure followed. They are:
i) Programmed decisions: Programmed decisions are routine and repetitive and are made within
the framework of organizational policies and rules. These policies and rules are established well
in advance to solve recurring problems in the organization. Programmed decisions have short-
run impact. They are, generally, taken at the lower level of management.
ii) Non-Programmed Decisions: Non-programmed decisions are decisions taken to meet non-
repetitive problems. Non-programmed decisions are relevant for solving unique/ unusual
problems in which various alternatives cannot be decided in advance. A common feature of non-
programmed decisions is that they are novel and non-recurring and therefore, readymade
solutions are not available. Since these decisions are of high importance and have long-term
consequences, they are made by top level management.
b) Strategic and Tactical Decisions: Organizational decisions may also be classified as
strategic or tactical.
i) Strategic Decisions: Basic decisions or strategic decisions are decisions which are of crucial
importance. Strategic decisions a major choice of actions concerning allocation of resources and
contribution to the achievement of organizational objectives. Decisions like plant location,
product diversification, entering into new markets, selection of channels of distribution, capital
expenditure etc are examples of basic or strategic decisions.
ii) Tactical Decisions: Routine decisions or tactical decisions are decisions which are routine
and repetitive. They are derived out of strategic decisions. The various features of a tactical
decision are as follows:
• Tactical decision relates to day-to-day operation of the organization and has to be taken very
frequently.
• Tactical decision is mostly a programmed one. Therefore, the decision can be made within the
context of these variables.
• The outcome of tactical decision is of short-term nature and affects a narrow part of the
organization.
• The authority for making tactical decisions can be delegated to lower level managers because:
first, the impact of tactical decision is narrow and of short term nature and Second, by delegating
authority for such decisions to lower-level managers, higher level managers are free to devote
more time on strategic decisions.

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5. Explain decision making process?

1. Specific Objective: The need for decision making arises in order to achieve certain specific
objectives. The starting point in any analysis of decision making involves the determination of
whether a decision needs to be made.
2. Problem Identification: A problem is a felt need, a question which needs a solution. In the
words of Joseph L Massie "A good decision is dependent upon the recognition of the right
problem". The objective of problem identification is that if the problem is precisely and
specifically identifies, it will provide a clue in finding a possible solution. A problem can be
identified clearly, if managers go through diagnosis and analysis of the problem.
Diagnosis: Diagnosis is the process of identifying a problem from its signs and symptoms. A
symptom is a condition or set of conditions that indicates the existence of a problem. Diagnosing
the real problem implies knowing the gap between what is and what ought to be, identifying the
reasons for the gap and understanding the problem in relation to higher objectives of the
organization.
Analysis: Diagnosis gives rise to analysis. Analysis of a problem requires:
• Who would make decision?
• What information would be needed?
• From where the information is available?
Analysis helps managers to gain an insight into the problem.
3. Search for Alternatives: A problem can be solved in several ways; however, all the ways
cannot be equally satisfying. Therefore, the decision maker must try to find out the various
alternatives available in order to get the most satisfactory result of a decision. A decision maker
can use several sources for identifying alternatives:
• His own past experiences
• Practices followed by others and
• Using creative techniques.
4. Evaluation of Alternatives: After the various alternatives are identified, the next step is to
evaluate them and select the one that will meet the choice criteria. /the decision maker must
check proposed alternatives against limits, and if an alternative does not meet them, he can
discard it. Having narrowed down the alternatives which require serious consideration, the
decision maker will go for evaluating how each alternative may contribute towards the objective
supposed to be achieved by implementing the decision.
5. Choice of Alternative: The evaluation of various alternatives presents a clear picture as to
how each one of them contribute to the objectives under question. A comparison is made among
the likely outcomes of various alternatives and the best one is chosen.
6. Action: Once the alternative is selected, it is put into action. The actual process of decision
making ends with the choice of an alternative through which the objectives can be achieved.
7. Results: When the decision is put into action, it brings certain results. These results must
correspond with objectives, the starting point of decision process, if good decision has been

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made and implemented properly. Thus, results provide indication whether decision making and
its implementation is proper.

6. Explain strategic management process?

Strategic management is the continuous planning, monitoring, analysis and assessment of all that
is necessary for an organization to meet its goals and objectives.

Step 1: Identifying the Organization’s Current Mission,

Goals, and Strategies
Every organization needs a mission—a statement of its purpose. Defining the mission forces
managers to identify what it’s in business to do. For instance, the mission of Avon is “To be the
company that best understands and satisfies the product, service, and selffulfillment needs of
women on a global level.” The mission of Facebook is “a social utility that connects you with the
people around you.”
Step 2: Doing an External Analysis
Analyzing that environment is a critical step in the strategic management process. Managers do
an external analysis so they know, for instance, what the competition is doing, what pending
legislation might affect the organization, or what the labor supply is like in locations where it
operates. In an external analysis, managers should examine the economic, demographic,
political/legal, sociocultural, technological, and global components to see the trends and changes.
Once they’ve analyzed the environment, managers need to pinpoint opportunities that the
organization can exploit and threats that it must counteract or buffer against. Opportunities are
positive trends in the external environment; threats are negative trends.
Step 3: Doing an Internal Analysis
An organization’s resources are its assets—financial, physical, human, and intangible—that it
uses to develop, manufacture, and deliver products to its customers. They’re “what” the
organization has. On the other hand, its capabilities are its skills and abilities in doing the work
activities needed in its business—“how” it does its work. The major value-creating capabilities
of the organization are known as its core competencies.12 Both resources and core
competencies determine the organization’s competitive weapons.
After completing an internal analysis, managers should be able to identify organizational
strengths and weaknesses. Any activities the organization does well or any unique resources that
it has are called strengths. Weaknesses are activities the organization doesn’t do well or
resources it needs but doesn’t possess. The combined external and internal analyses are called
the SWOT analysis, which is an analysis of the organization’s strengths, weaknesses,
opportunities, and threats.
Step 4: Formulating Strategies
As managers formulate strategies, they should consider the realities of the external environment
and their available resources and capabilities in order to design strategies that will help an

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organization achieve its goals. The three main types of strategies managers will formulate
include corporate, competitive, and functional.
Step 5: Implementing Strategies
Once strategies are formulated, they must be implemented. No matter how effectively an
organization has planned its strategies, performance will suffer if the strategies aren’t
implemented properly.
Step 6: Evaluating Results
The final step in the strategic management process is evaluating results. How effective have
the strategies been at helping the organization reach its goals? What adjustments are necessary?

7. Explain planning Tools and Techniques or Forecasting?

es. Managers
ures such as
e, and use of

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Scheduling: Allocating resources by detailing what activities have to be done, the order in which
they are to be completed, who is to do each, and when they are to be completed.

Break even analysis: It is a widely used resource allocation technique to help managers
determine breakeven point. To compute breakeven point (BE), a manager needs to know the unit
price of the product being sold (P), the variable cost per unit (VC), and total fixed costs (TFC).
An organization breaks even when its total revenue is just enough to equal its total costs.

Linear Programming: resources can be combined in alternative ways to produce a number of

output mixes, and that a linear relationship exist between variables (a change in one variable
must be accompanied by an exactly proportional change in the other).

Project management is the task of getting a project’s activities done on time, within budget, and
according to specifications.

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UNIT III ORGANISING 9
Nature and purpose – Formal and informal organization – organization chart – organization
structure – types – Line and staff authority – departmentalization – delegation of authority –
centralization and decentralization – Job Design – Human Resource Management – HR Planning,
Recruitment, selection, Training and Development, Performance Management , Career planning
and management.

1. Define organizing.
Allen defines Organising 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 accomplishing their
objectives.”

2. Define organization.
Koontz and O’Donnell defines as “Organisation is the establishment of authority and
relationships with provision for coordination between them, both vertically and horizontally in
the enterprise structure.

3. What are the nature of organizing?

-Division of Work: Under division of work the entire work of business is divided into many
departments .The work of every department is further sub-divided into subworks.
- Coordination: Under organizing different persons are assigned different works but the aim of
all these persons happens to be the some - the attainment of the objectives of the enterprise.
Organization ensures that the work of all the persons depends on each other’s work even though
it happens to be different.
-Plurality of Persons: Organization is a group of many persons who assemble to fulfill a
common purpose. A single individual cannot create an organization.
-Common Objectives: There are various parts of an organization with different functions to
perform but all move in the direction of achieving a general objective.
-Well-defined Authority and Responsibility: Under organization a chain is established
between different posts right from the top to the bottom.
-Organization is a Structure of Relationship: Relationship between persons working on
different posts in the organization is decided.
- Organization is a Machine of Management: Organization is considered to be a machine of
management because the efficiency of all the functions depends on an effective organization.
-Organization is a Universal Process: Organization is needed both in business and nonbusiness
organizations.

4. What are the purpose or advantages of organizing?

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5. Explain organizing process?
a) Determination of Objectives:
It is the first step in building up an organization. Organization is always related to certain
objectives. Therefore, it is essential for the management to identify the objectives before starting
any activity.
b) Enumeration of Objectives:
If the members of the group are to pool their efforts effectively, there must be proper division of
the major activities. The first step in organizing group effort is the division of the total job into
essential activities.
c) Classification of Activities:
The next step will be to classify activities according to similarities and common purposes and
functions and taking the human and material resources into account. Then, closely related and
similar activities are grouped into divisions and departments and the departmental activities
are further divided into sections.
d) Assignment of Duties:
Here, specific job assignments are made to different subordinates for ensuring a certainty of
work performance. Each individual should be given a specific job to do according to his ability
and made responsible for that. He should also be given the adequate authority to do the job
assigned to him.
e) Delegation of Authority:
Since so many individuals work in the same organization, it is the responsibility of management
to lay down structure of relationship in the organization.

6. Differentiate between formal and informal organisation.

Formal Organization Informal Organization

1. Formal organization is established with the 1. Informal organization springs on its own. Its
explicit aim of achieving well-defined goals. goals are ill defined and intangible.
2. Formal organization is bound together by 2. Informal organization is characterized
authority relationships among members. A by a generalized sort of power relationships.
hierarchical structure is created, constituting Power in informal organization has bases other
top management, middle management and than rational legal right.
supervisory management.
3. Formal organization recognizes certain tasks 3. Informal organization does not have
which are to be carried out to achieve its goals. any well-defined tasks.
4. The roles and relationships of people in 4. In informal organization the relationships
formal organization are impersonally defined among people are interpersonal.
5. In formal organization, much emphasis is 5. Informal organization is characterized by
placed on efficiency, discipline, conformity, relative freedom, spontaneity, by relative
consistency and control. freedom, spontaneity, homeliness and warmth.
6. The communication system in formal 6.In informal organization, the communication
organization follows certain pre-determined pattern is haphazard, intricate and natural.
patterns and paths.

7. Define organisational chart.

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An organisation chart is a graphic portrayal of the various positions in the enterprise and the
formal relationships among them.
Types:
- Vertical chart
- Horizontal chart
- Concentric chart

8. Define Authority
“Authority may be defined as legitimate right to give orders and to get orders obeyed. It denotes
certain rights to take decision and get them executed by their subordinates.

9. Differentiate between line and staff authority

Line Authority Staff Authority

Right to decide and command Right to provide advice, assistance and
information
Contributes directly to the Assist line in the effective accomplishment of
accomplishment of Organisational Organisation objectives
objectives
Relatively unlimited and general Relatively restricted to a particular function
Flow downward from a superior to May flow in any direction depending upon the
subordinate need of advice
Creates superior and subordinate relation Extension of line and support line
Exercise control Investigates and reports
Makes operating decision Provides idea for decision

10. Define functional authority.

It is the right which an individual or department has delegated to it over specialized processes,
practices, policies or other matters relating to activities undertaken by personnel in department
other than its own.

11. Define delegation of authority.

Koontz and O’Donnel, “The entire process of delegation involves the determination of results
expected, the assignment of tasks, the delegation of authority for accomplishment of these tasks,
and the exaction of responsibility for their accomplishments.”

12. What are the elements of delegation?

Authority - in context of a business organization, authority can be defined as the power and
right of a person to use and allocate the resources efficiently, to take decisions and to give orders
so as to achieve the organizational objectives.
Responsibility - is the duty of the person to complete the task assigned to him. A person who is
given the responsibility should ensure that he accomplishes the tasks assigned to him. If the tasks
for which he was held responsible are not completed, then he should not give explanations or
excuses.
Accountability - means giving explanations for any variance in the actual performance from
the expectations set. Accountability cannot be delegated.
13. State the process of delegation?

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a) Determination of results expected
b) Assignment of duties
c) Granting of authority
d) creating accountability for performance

14. What are the principles of delegation?

a. Delegation to conform to desired objectives
b. Responsibility not delegatable
c. Authority to match duties
d. Unity of command
e. Limits to authority to well-defined

15. Differentiate centralization and decentralization.

CENTRALIZATION:
It is the process of transferring and assigning decision-making authority to higher levels of an
organizational hierarchy. The span of control of top managers is relatively broad, and there are
relatively many tiers in the organization.
Advantages of Centralization
• Provide Power and prestige for manager
• Promote uniformity of policies, practices and decisions
• Minimal extensive controlling procedures and practices
• Minimize duplication of function
Disadvantages of Centralization
• Neglected functions for mid. Level, and less motivated beside personnel.
• Nursing supervisor functions as a link officer between nursing director and first-line
management.
DECENTRALIZATION:
It is the process of transferring and assigning decision-making authority to lower levels of an
organizational hierarchy. The span of control of top managers is relatively small, and there are
relatively few tears in the organization, because there is more autonomy in the lower ranks.
Advantages of Decentralization
• Raise morale and promote interpersonal relationships
• Relieve from the daily administration
• Bring decision-making close to action
• Develop Second-line managers
• Promote employee’s enthusiasm and coordination
• Facilitate actions by lower-level managers
Disadvantages of Decentralization
• Top-level administration may feel it would decrease their status
• Managers may not permit full and maximum utilization of highly qualified personnel
• Increased costs. It requires more managers and large staff
• It may lead to overlapping and duplication of effort.

16. Differentiate job description and job specification?

A job description (JD) is a written statement of what the job holder does, how it is done, under
what conditions it is done and why it is done. It describes what the job is all about, throwing light

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on job content, environment and conditions of employment. It is descriptive in nature and defines
the purpose and scope of a job.
Contents
A job description usually covers the following information:
- Job title: Tells about the job title, code number and the department where it is done.
- Job summary: A brief write-up about what the job is all about.
-Job activities: A description of the tasks done, facilities used, extent of supervisory help, etc.
-Working conditions: The physical environment of job in terms of heat, light, noise and other
hazards.
-Social environment: Size of work group and interpersonal interactions required to do the job.
Job Specification
Job specification summarizes the human characteristics needed for satisfactory job completion. It
tries to describe the key qualifications someone needs to perform the job successfully. It spells
out the important attributes of a person in terms of education, experience, skills, knowledge and
abilities (SKAs) to perform a particular job
Contents
A job specification usually covers the following information:
• Education
• Experience
• Skill, Knowledge, Abilities
• Work Orientation Factors

17. Define job design.

Job design is the specification of contents, methods and relationship of jobs in order to satisfy
technological and organizational requirements as well as the social and personal requirements of
the job holder.

18. Define staffing.

Def – Koontz and O‟Donnell “ The managerial functions of staffing involves manning the
Organisational structure through proper and effective selection, appraisal and development of
personnel to fill the roles designed into structure.

19. Define interview and its types.?

Interview is a face to face conversation between an applicant and the employer. The purpose of
Interview is to collect information on behaviour, attitudes, opinions, maturity, emotional stability,
enthusiasm, confidence, response and other commercial behaviour.
Types of Interview
1. Structured Interview – is also called as patterned interview. The interviewers are trained in
the process to be used. A list of questions on analysis of the job specification is prepared. The
Interviewing process attempts to predict how candidates will perform in the work situations.
2. Group or Discussion Interview – The interviewees are given certain problems and are asked
to reach a specific decision within a particular time limit. The applicants enter into group
discussion, knowing that the interview is a test, but do not know which qualities are being
measured or tested. The object is to see how individuals perform on a particular task or in a
particular situations

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3. Panel or Board Interview – Candidate is interviewed by a number of interviewers. Questions
may be asked in turn or asked in random order as they arise on any topic.
4. Stress Interview – The Interview assumes a hostile role toward the applicant. He deliberately
puts him on the defensive by trying to any, embarrass or frustrate him. The purpose is to find out
how a candidate behaves in a stress situation whether he loses his temper, gets confused or
frightened.

20. Define orientation.

A person starting a new job needs the same type of introduction to his or her job and the
organization. This introduction is called orientation.

16 marks

1.Explain the different Types of organization structures?

1.Line organisation:
A line organisation has only direct, vertical relationships between different levels in the firm.
There are only line departments-departments directly involved in accomplishing the primary goal
of the organisation. For example, in a typical firm, line departments include production and
marketing. In a line organisation authority follows the chain of command.
Advantages:
1. Tends to simplify and clarify authority, responsibility and accountability relationships
2. Promotes fast decision making
3. Simple to understand.
Disadvantages:
1. Neglects specialists in planning
2. Overloads key persons.

2. Staff or functional organisation

Functional authority organisation, staff personnel who are specialists in some fields are
given functional authority (The right of staff specialists to issue orders in their own
names in designated areas).

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 3. Line and Staff Organisational Structure:

These organisations have direct, vertical relationships between different levels and also
specialists responsible for advising and assisting line managers. Such organisations have
both line and staff departments. Staff departments provide line people with advice and
assistance in specialized areas (for example, quality control advising production
department).

Advantages:
1. Committee decisions are better than individual decisions
2. Better interaction between committee members leads to better co-ordination of activities
3. Committee members can be motivated to participate in group decision making.
4. Group discussion may lead to creative thinking.
Disadvantages:
1. Committees may delay decisions, consume more time and hence more expensive.
2. Group action may lead to compromise and indecision.
3. ‘Buck passing’ may result.
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4. Divisional Organisational Structure:
In this type of structure, the organisation can have different basis on which departments are
formed. They are:
(i) Function, (ii) Product, (iii) Geographic territory, (iv) Project and(iv) Combination approach.

5. Project Organisational Structure:

A project organisation is a temporary organisation designed to achieve specific results by using
teams of specialists from different functional areas in the organisation. The project team focuses
all its energies, resources and results on the assigned project. Once the project has been
completed, the team members from various cross functional departments may go back to their
previous positions or may be assigned to a new project. Some of the examples of projects are:
research and development projects, product development, construction of a new plant, housing
complex, shopping complex, bridge etc.

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6. Matrix Organisational Structure:
It is a permanent organisation designed to achieve specific results by using teams of specialists
from different functional areas in the organisation.
Feature:
Superimposes a horizontal set of divisions and reporting relationships onto a hierarchical
functional structure
Advantages:
1. Decentralised decision making.
2. Strong product/project co-ordination.
3. Improved environmental monitoring.
4. Fast response to change.
5. Flexible use of resources.
6. Efficient use of support systems.
Disadvantages:
1. High administration cost.
2. Potential confusion over authority and responsibility.
3. High prospects of conflict.
4. Overemphasis on group decision making.
5. Excessive focus on internal relations.
7. Hybrid Organisational Structure:
Advantages:
1. Alignment of corporate and divisional goals.
2. Functional expertise and efficiency.
3. Adaptability and flexibility in divisions.
Disadvantages:
1. Conflicts between corporate departments and units.
2. Excessive administration overhead.
3. Slow response to exceptional situations.

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2.Explain Departmentation and its types?

DEPARTMENTATION refers to the process of grouping activities into departments.

Departmentation is the process of grouping of work activities into departments, divisions, and
other homogenous units.
a) FUNCTIONAL DEPARTMENTATION
Functional Departmentation is the process of grouping activities by functions performed.
Activities can be grouped according to function (work being done) to pursue economies of scale
by placing employees with shared skills and knowledge into departments for example human
resources, finance, production, and marketing. Functional departmentation can be used in all
types of organizations.
Advantages:
• Advantage of specialization
• Easy control over functions
• Pinpointing training needs of manager
• It is very simple process of grouping activities.
Disadvantages:
• Lack of responsibility for the end result
• Overspecialization or lack of general management
• It leads to increase conflicts and coordination problems among departments.

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b) PRODUCT DEPARTMENTATION
Product departmentation is the process of grouping activities by product line. Tasks can also be
grouped according to a specific product or service, thus placing all activities related to the
product or the service under one manager. Each major product area in the corporation is under
the authority of a senior manager who is specialist in, and is responsible for, everything related to
the product line. Dabur India Limited is the India’s largest Ayurvedic medicine manufacturer is
an example of company that uses product departmentation. Its structure is based on its varied
product lines which include Home care, Health care, Personal care and Foods.
Advantages
• It ensures better customer service
• Unprofitable products may be easily determined
• It assists in development of all around managerial talent
• Makes control effective
• It is flexible and new product line can be added easily.
Disadvantages
• It is expensive as duplication of service functions occurs in various product divisions
• Customers and dealers have to deal with different persons for complaint and information
of different products.

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c) CUSTOMER DEPARTMENTATION
Customer departmentation is the process of grouping activities on the basis of common
customers or types of customers. Jobs may be grouped according to the type of customer served
by the organization. The assumption is that customers in each department have a common set of
problems and needs that can best be met by specialists. UCO is the one of the largest commercial
banks of India is an example of company that uses customer departmentation. Its structure is
based on various services which includes Home loans, Business loans, Vehicle loans and
Educational loans.
Advantages
• It focused on customers who are ultimate suppliers of money
• Better service to customer having different needs and tastes
• Development in general managerial skills
Disadvantages
• Sales being the exclusive field of its application, co-ordination may appear difficult
between sales function and other enterprise functions.
• Specialized sales staff may become idle with the downward movement of sales to any
specified group of customers.

d) GEOGRAPHIC DEPARTMENTATION
Geographic departmentation is the process of grouping activities on the basis of territory. If an
organization's customers are geographically dispersed, it can group jobs based on geography. For
example, the organization structure of Coca-Cola Ltd has reflected the company’s operation in
various geographic areas such as Central North American group, Western North American group,
Eastern North American group and European group
Advantages
• Help to cater to the needs of local people more satisfactorily.
• It facilitates effective control
• Assists in development of all-round managerial skills
Disadvantages
• Communication problem between head office and regional office due to lack of means of
communication at some location
• Coordination between various divisions may become difficult.
• Distance between policy framers and executors
• It leads to duplication of activities which may cost higher.
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e) PROCESS DEPARTMENTATION

Departmentation by process: - is done on the basis of several discrete stages in the process or
technologies involved in the manufacture of a product.
Advantages
• Oriented towards end result.
• Professional identification is maintained.
• Pinpoints product-profit responsibility.
Disadvantage
• Conflict in organization authority exists.
• Possibility of disunity of command.
• Requires managers effective in human relation.

f) MARTIX DEPARTMENTATION

Composite or hybrid method forms the common basis for classifying activities rather than one
particular method,. One of the mixed forms of organization is referred to as matrix or grid

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organization’s According to the situations, the patterns of Organizing varies from case to case.
The form of structure must reflect the tasks, goals and technology if the originations the type of
people employed and the environmental conditions that it faces. It is not unusual to see firms that
utilize the function and project organization combination.
Advantages
• Efficiently manage large, complex tasks
• Effectively carry out large, complex tasks
Disadvantages
• Requires high levels of coordination
• Conflict between bosses
• Requires high levels of management skills

2. Explain HR planning?

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Human Resource planning: consists of putting right number of people, right kind of people at
the right place, right time, doing the right things for which they are suited for the achievement of
goals of the organization. The primary function of man power planning is to analyze and
evaluate the human resources available in the organization, and to determine how to obtain the
kinds of personnel needed to staff positions ranging from assembly line workers to chief
executives.

Recruitment: Recruitment is the process of finding and attempting to attract job candidates who
are capable of effectively filling job vacancies. Job descriptions and job specifications are
important in the recruiting process because they specify the nature of the job and the
qualifications required of job candidates.

Selection: Selecting a suitable candidate can be the biggest challenge for any organization. The
success of an organization largely depends on its staff. Selection of the right candidate builds the
foundation of any organization's success and helps in reducing turnovers.

Orientation: An introduction, as to guide one in adjusting to new surroundings, employment

and an activity.

Training: Training and Development is a planned effort to facilitate employee learning of job
related behaviors in order to improve employee performance. Experts sometimes distinguish
between the terms “training” and “development”; “training” denotes efforts to increase employee
skills on present jobs, while “development” refers to efforts oriented toward improvements

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relevant to future jobs. In practice, though, the distinction is often blurred (mainly because
upgrading skills in present jobs usually improves performance in future jobs).

Performance management: IT is a process by which managers and employees work together to

plan, monitor and review an employee's work objectives and overall contribution to the
organization.
Compensation and benefits: Compensation describes the cash rewards paid to employees in
exchange for the services they provide. It may include base salary, wages, incentives and/or
commission. In addition to salary, which is an important part of the compensation package,
an employee may be eligible for a broad range of valuable benefits, such as comprehensive
health care insurance, life insurance, retirement programs, sick leave, vacation leave and paid
holidays.
Career development: It is the lifelong process of managing learning, work, leisure, and
transitions in order to move toward a personally determined and evolving preferred future. It
looks at :
 how individuals manage their careers within and between organizations and,
 how organizations structure the career progress of their members, it can also be tied
into succession planning within most of the organizations.

4. Explain different sources of recruitment?

5. Explain selection process?

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6.Define Training process and its types?

Training is a process of learning a sequence of programmed behaviour. It improves the

employee's performance on the current job and prepares them for an intended job.

Training Process:
1) Identifying Training needs: A training program is designed to assist in providing solutions for
specific operational problems or to improve performance of a trainee.
• Organizational determination and Analysis: Allocation of resources that relate to
organizational goal.
• Operational Analysis: Determination of a specific employee behaviour required for a
particular task.
• Man Analysis: Knowledge, attitude and skill one must possess for attainment of
organizational objectives
2) Getting ready for the job: The trainer has to be prepared for the job. And also who needs to
be trained - the newcomer or the existing employee or the supervisory staff.
Preparation of the learner:
• Putting the learner at ease
• Stating the importance and ingredients of the job
• Creating interest
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• Placing the learner as close to his normal working position
• Familiarizing him with the equipment, materials and trade terms
3) Presentation of Operation and Knowledge: The trainer should clearly tell, show, illustrate and
question in order to convey the new knowledge and operations. The trainee should be
encouraged to ask questions in order to indicate that he really knows and understands the job.
4) Performance Try out: The trainee is asked to go through the job several times. This gradually
builds up his skill, speed and confidence.
5) Follow-up: This evaluates the effectiveness of the entire training effort

7.Explain the different TRAINING METHODS?

On-the-job training Methods:

Under these methods new or inexperienced employees learn through observing peers or
managers performing the job and trying to imitate their behaviour. These methods do not cost
much and are less disruptive as employees are always on the job, training is given on the same
machines and experience would be on already approved standards, and above all the trainee is
learning while earning. Some of the commonly used methods are:
1. Coaching:
Coaching is a one-to-one training. It helps in quickly identifying the weak areas and tries to
focus on them. It also offers the benefit of transferring theory learning to practice. The biggest
problem is that it perpetrates the existing practices and styles. In India most of the scooter
mechanics are trained only through this method.
2. Mentoring:
The focus in this training is on the development of attitude. It is used for managerial employees.
Mentoring is always done by a senior inside person. It is also one-to- one interaction, like
coaching.
3. Job Rotation:
It is the process of training employees by rotating them through a series of related jobs. Rotation
not only makes a person well acquainted with different jobs, but it also alleviates boredom and
allows to develop rapport with a number of people. Rotation must be logical.
4. Job Instructional Technique (JIT):
It is a Step by step (structured) on the job training method in which a suitable trainer (a) prepares
a trainee with an overview of the job, its purpose, and the results desired, (b) demonstrates the
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task or the skill to the trainee, (c) allows the trainee to show the demonstration on his or her own,
and (d) follows up to provide feedback and help. The trainees are presented the learning material
in written or by learning machines through a series called ‘frames’. This method is a valuable
tool for all educators (teachers and trainers). It helps us:
a. To deliver step-by-step instruction
b. To know when the learner has learned
c. To be due diligent (in many work-place environments)
5. Apprenticeship:
Apprenticeship is a system of training a new generation of practitioners of a skill. This method of
training is in vogue in those trades, crafts and technical fields in which a long period is required
for gaining proficiency. The trainees serve as apprentices to experts for long periods. They have
to work in direct association with and also under the direct supervision of their masters.
The object of such training is to make the trainees all-round craftsmen. It is an expensive method
of training. Also, there is no guarantee that the trained worker will continue to work in the same
organisation after securing training. The apprentices are paid remuneration according the
apprenticeship agreements.
6. Understudy:
In this method, a superior gives training to a subordinate as his understudy like an assistant to a
manager or director (in a film). The subordinate learns through experience and observation by
participating in handling day to day problems. Basic purpose is to prepare subordinate for
assuming the full responsibilities and duties.

B. Off-the-job Training Methods:

Off-the-job training methods are conducted in separate from the job environment, study material
is supplied, there is full concentration on learning rather than performing, and there is freedom of
expression. Important methods include:
1. Lectures and Conferences:
Lectures and conferences are the traditional and direct method of instruction. Every training
programme starts with lecture and conference. It’s a verbal presentation for a large audience.
However, the lectures have to be motivating and creating interest among trainees. The speaker
must have considerable depth in the subject. In the colleges and universities, lectures and
seminars are the most common methods used for training.
2. Vestibule Training:
Vestibule Training is a term for near-the-job training, as it offers access to something new
(learning). In vestibule training, the workers are trained in a prototype environment on specific
jobs in a special part of the plant.
An attempt is made to create working condition similar to the actual workshop conditions. After
training workers in such condition, the trained workers may be put on similar jobs in the actual
workshop.
This enables the workers to secure training in the best methods to work and to get rid of initial
nervousness. During the Second World War II, this method was used to train a large number of
workers in a short period of time. It may also be used as a preliminary to on-the job training.
Duration ranges from few days to few weeks. It prevents trainees to commit costly mistakes on
the actual machines.

3. Simulation Exercises:

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Simulation is any artificial environment exactly similar to the actual situation. There are four
basic simulation techniques used for imparting training: management games, case study, role
playing, and in-basket training.
(a) Management Games:
Properly designed games help to ingrain thinking habits, analytical, logical and reasoning
capabilities, importance of team work, time management, to make decisions lacking complete
information, communication and leadership capabilities. Use of management games can
encourage novel, innovative mechanisms for coping with stress.
Management games orient a candidate with practical applicability of the subject. These games
help to appreciate management concepts in a practical way. Different games are used for training
general managers and the middle management and functional heads – executive Games and
functional heads.
(b) Case Study:
Case studies are complex examples which give an insight into the context of a problem as well as
illustrating the main point. Case Studies are trainee centered activities based on topics that
demonstrate theoretical concepts in an applied setting.
A case study allows the application of theoretical concepts to be demonstrated, thus bridging the
gap between theory and practice, encourage active learning, provides an opportunity for the
development of key skills such as communication, group working and problem solving, and
increases the trainees” enjoyment of the topic and hence their desire to learn.
(c) Role Playing:
Each trainee takes the role of a person affected by an issue and studies the impacts of the issues
on human life and/or the effects of human activities on the world around us from the perspective
of that person.
It emphasizes the “real- world” side of science and challenges students to deal with complex
problems with no single “right” answer and to use a variety of skills beyond those employed in a
typical research project.
In particular, role-playing presents the student a valuable opportunity to learn not just the course
content, but other perspectives on it. The steps involved in role playing include defining
objectives, choose context & roles, introducing the exercise, trainee preparation/research, the
role-play, concluding discussion, and assessment. Types of role play may be multiple role play,
single role play, role rotation, and spontaneous role play.
(d) In-basket training:
In-basket exercise, also known as in-tray training, consists of a set of business papers which may
include e-mail SMSs, reports, memos, and other items. Now the trainer is asked to prioritise the
decisions to be made immediately and the ones that can be delayed.
4. Sensitivity Training:
Sensitivity training is also known as laboratory or T-group training. This training is about
making people understand about themselves and others reasonably, which is done by developing
in them social sensitivity and behavioral flexibility. It is ability of an individual to sense what
others feel and think from their own point of view.
It reveals information about his or her own personal qualities, concerns, emotional issues, and
things that he or she has in common with other members of the group. It is the ability to behave
suitably in light of understanding.

Traditional training methods:

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Types of Training

8. Define Performance appraisal and its process?

Performance appraisal is the process of obtaining, analyzing and recording information about the
relative worth of an employee. The focus of the performance appraisal is measuring and
improving the actual performance of the employee and also the future potential of the employee.
Its aim is to measure what an employee does.

Objectives of Performance appraisal:

• To review the performance of the employees over a given period of time.
• To judge the gap between the actual and the desired performance.
• To help the management in exercising organizational control.
• To diagnose the strengths and weaknesses of the individuals so as to identify the training
and development needs of the future.
• To provide feedback to the employees regarding their past performance.
• Provide information to assist in the other personal decisions in the organization.
• To reduce the grievances of the employees.

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Steps:
a) Establishing performance standards:
b) Communicating the standards:
c) Measuring the actual performance:
d) Comparing the actual with the desired performance:
e) Discussing results:
f) Decision making:

Performance Appraisal Methods:

Ranking Method: It is the oldest and simplest formal systematic method of performance
appraisal in which employee is compared with all others for the purpose of placing order of
worth. The employees are ranked from the highest to the lowest or from the best to the
worst. In doing this the employee who is the highest on the characteristic being measured
and also the one who is L lowest, are indicated. Then, the next highest and the next lowest
between next highest and lowest until all the employees to be rated have been ranked.
Thus, if there are ten employees to be appraised, there will be ten ranks from 1 to 10.

Paired Comparison: In this method, each employee is compared with other employees on one-
on one basis, usually based on one trait only. The rater is provided with a bunch of slips each
coining pair of names, the rater puts a tick mark against the employee whom he insiders the
better of the two. The number of times this employee is compared as better with others
determines his or her final ranking.

Forced-Choice Method:The forced-choice method is developed by J. P. Guilford. It contains a

series of groups of statements, and rater rates how effectively a statement describes each
individual being evaluated. Common method of forced-choice method contains two statements,
both positive and negative.
Examples of positive statements are:
1. Gives good and clear instructions to the subordinates.
2. Can be depended upon to complete any job assigned.
A pair of negative statements may be as follows:
1. Makes promises beyond his limit to keep these.
2. Inclines to favour some employees.
Each statement carries a score or weight, which is not made known to the rater. The human
resource section does rating for all sets of statements— both positive and negative. The final
rating is done on the basis of all sets of statements. Thus, employee rating in this manner makes
the method more objective. The only problem associated with this method is that the actual
constructing of several evaluative statements also called ‘forced-choice scales’, takes a lot of
time and effort.

Check-List Method:The basic purpose of utilizing check-list method is to ease the evaluation
burden upon the rater. In this method, a series of statements, i.e., questions with their answers in
‘yes’ or ‘no’ are prepared by the HR department .The check-list is, then, presented to the rater to

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tick appropriate answers relevant to the appraisee. Each question carries a weight-age in
relationship to their importance.

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9.Explain career development stages?

1. Exploration

Many of the critical choices individuals make about their careers are made prior to entering the
workforce on a paid basis. Very early in our lives, our parents and teachers begin to narrow our
alternatives and lead us in certain directions.

The careers of our parents, their aspirations for their children and their financial sources are
crucial factors in determining our perception of what careers are open to us.

The exploration period ends for most of us in our mid-twenties as we make the transition from
college to work. From an organisational standpoint this stage has little relevance since it occurs
prior to employment.

2. Establishment

The establishment period begins with the search for work and includes our First job, being
accepted by our peers, learning the job and gaining the first tangible evidence of success or
failure in the real world. It is a time which begins with uncertainties, anxieties and risks.

It is also marked by making mistakes and learning from these mistakes and the gradual
assumption of increased responsibilities. However, the individual in this stage has yet to reach
his peak productivity and rarely gets the job that carries great power or high status.

3. Mid-career

Most people do not face their first severe dilemmas until they reach their mid-career stage. This
is a time when individuals may continue their prior improvements in performance or begin to
deteriorate. At this point in a career, one is expected to have moved beyond apprenticeship to
worker-status.

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Those who make a successful transition assume greater responsibilities and get rewards. For
others, it may be a time for reassessment, job changes, adjustment of priorities or the pursuit of
alternative lifestyles.

4. Late career

For those who continue to grow through the mid- career stage, the late career usually is a
pleasant time when one is allowed the luxury to relax a bit. It is the time when one can enjoy the
respect given to him by younger employees. During the late career, individuals are no longer
learning, they teach others on the basis of the knowledge they have gained.

To those who have stagnated during the previous stage, the late career brings the reality that they
cannot change the world as they had once thought.

It is a time when individuals have decreased work mobility and may be locked into their current
job. One starts looking forward to retirement and the opportunities of doing something different.

5. Decline

The final stage in one’s career is difficult for everyone but it is hardest for those who have had
continued successes in the earlier stages. After several decades of continuous achievements and
high levels of performance, the time has come for retirement.

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UNIT IV DIRECTING 9
Foundations of individual and group behaviour – motivation – motivation theories –
motivational techniques – job satisfaction – job enrichment – leadership – types and theories of
leadership –communication – process of communication – barrier in communication – effective
communication –communication and IT.

1. Define Directing.

Directing concerns the total manner in which a manager influences the actions of subordinates. It
is the final action of a manager in getting others to act after all preparations have been completed.
It consists of the following elements:
 issuing orders and instructions
 continuing guidance and supervision of subordinates
 motivating subordinates to work hard for meeting the expectation of management.
 maintaining discipline and rewarding those who perform well
 providing leadership to subordinates.

2.What are the techniques of directing?

 Delegation
 Supervision
 Orders and instructions
 Motivation
 Leadership
 Communication
3.Define a Group.
A group is defined as two or more interacting and interdependent individuals who come together
to achieve specific goals.

4. What do you mean by formal and informal group?

Formal groups are work groups that are defined by the organization’s structure and have
designated work assignments and specific tasks directed at accomplishing organizational goals.
Informal groups are social groups. These groups occur naturally in the workplace and tend to
form around friendships and common interests. For example, five employees from different
departments who regularly eat lunch together are an informal group.

5. Explain Group development process?

The forming stage has two phases. The first occurs as people join the group. In a formal group,
people join because of some work assignment. Once they’ve joined, the second phase begins:
defining the group’s purpose, structure, and leadership. This phase involves a great deal of
uncertainty as members “test the waters” to determine what types of behavior are acceptable.
This stage is complete when members begin to think of themselves as part of a group.
The storming stage is appropriately named because of the intra group conflict. There’s conflict
over who will control the group and what the group needs to be doing. During this stage, a

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relatively clear hierarchy of leadership and agreement on the group’s direction emerge.

The norming stage is one in which close relationships develop and the group becomes cohesive.
There’s now a strong sense of group identity and camaraderie. This stage is complete when the
group structure solidifies, and the group has assimilated a common set of expectations (or norms)
regarding member behavior.
The fourth stage is the performing stage. The group structure is in place and accepted by group
members. Their energies have moved from getting to know and understand each other to
working on the group’s task. This is the last stage of development for permanent work groups.
However, for temporary groups—project teams, task forces, or similar groups that have a limited
task to do—the final stage is adjourning. In this stage, the group prepares to disband. The group
focuses its attention on wrapping up activities instead of task performance. Group members react
in different ways. Some are upbeat, thrilled about the group’s accomplishments. Others may be
sad over the loss of camaraderie and friendships.

6. Define Organizational Behaviour.

Organizational behavior is the study of the actions of people at work. The goals of OB are to
explain, predict, and influence behavior. Managers need to be able to explain why employees
engage in some behaviors rather than others, predict how employees will respond to various
actions and decisions, and influence how employees behave.

7. Define Attitude and its three components.

Attitudes are evaluative statements—favorable or unfavorable—concerning objects, people, or
events. They reflect how an individual feels about something. When a person says, “I like my
job,” he or she is expressing an attitude about work.
An attitude is made up of three components: cognition, affect, and behavior. The cognitive
component of an attitude refers to the beliefs, opinions, knowledge, or information held by a
person (for instance, the belief that “discrimination is wrong”). The affective component of an
attitude is the emotional or feeling part of an attitude. Using our example, this component would
be reflected by the statement, “I don’t like Pat because he discriminates against minorities.”
Finally, affect can lead to behavioral outcomes. The behavioral component of an attitude refers
to an intention to behave in a certain way toward someone or something

8. Define Job satisfaction.

Job satisfaction refers to a person’s general attitude toward his or her job. A person with a high
level of job satisfaction has a positive attitude towards his or her job.

9. Explain cognitive dissonance theory?

Cognitive dissonance theory sought to explain the relationship between attitudes and behavior.
Cognitive dissonance is any incompatibility or inconsistency between attitudes or between
behavior and attitudes. The theory argued that inconsistency is uncomfortable and that
individuals will try to reduce the discomfort and thus, the dissonance. Of course, no one can
avoid dissonance. You know you should floss your teeth every day, but don’t do it. There’s an
inconsistency between attitude and behavior. How do people cope with cognitive dissonance?
The theory proposed that how hard we’ll try to reduce dissonance is determined by three things:
(1) the importance of the factors creating the dissonance, (2) the degree of influence the
individual believes he or she has over those factors, and (3) the rewards that may be involved in
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dissonance.

10. Define Emotional intelligence and its components?

Emotional intelligence (EI), which is the ability to notice and to manage emotional cues and
information.
It’s composed of five dimensions:
Self-awareness: The ability to be aware of what you’re feeling.
Self-management: The ability to manage one’s own emotions and impulses.
Self-motivation: The ability to persist in the face of setbacks and failures.
Empathy: The ability to sense how others are feeling.
Social skills: The ability to handle the emotions of others.

11. Explain Big five model of personality?

1. Extraversion: The degree to which someone is sociable, talkative, assertive, and comfortable
in relationships with others.
2. Agreeableness: The degree to which someone is good-natured, cooperative, and trusting.
3. Conscientiousness: The degree to which someone is reliable, responsible, dependable,
persistent, and achievement oriented.
4. Emotional stability: The degree to which someone is calm, enthusiastic, and secure (positive)
or tense, nervous, depressed, and insecure (negative).
5. Openness to experience: The degree to which someone has a wide range of interests and is
imaginative, fascinated with novelty, artistically sensitive, and intellectual.

12. Define perception and factors affecting it?

Perception, which is a process by which we give meaning to our environment by organizing and
interpreting sensory impressions.
Factors affecting it:
- Personality
- Attribution: it refers to how a person tries to understand the behaviour or events or events
by interpreting them as caused by certain factors.
- Hallo effect: it describes a process in which a general impression which is favorable or
unfavorable is used by judges to evaluate several specific traits.

13. Explain attribution theory?

Attribution theory was developed to explain how we judge people differently depending on
what meaning we attribute to a given behavior. Basically, the theory suggests that when we
observe an individual’s behavior, we attempt to determine whether it was internally or externally
caused. Internally caused behaviors are those that are believed to be under the personal control of
the individual. Externally caused behavior results from outside factors; that is, the person is
forced into the behavior by the situation. That determination, however, depends on three factors:
distinctiveness, consensus, and consistency.

14. Define learning and its theories?

Learning is any relatively permanent change in behavior that occurs as a result of experience.
Two learning theories help us understand how and why individual behavior occurs.
Operant conditioning argues that behavior is a function of its consequences. People learn to
behave to get something they want or to avoid something they don’t want. Operant behavior is
voluntary or learned behavior, not reflexive or unlearned behavior. The tendency to repeat
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learned behavior is influenced by reinforcement or lack of reinforcement that happens as a result
of the behavior. Reinforcement strengthens a behavior and increases the likelihood that it will be
repeated. Lack of reinforcement weakens a behavior and lessens the likelihood that it will be
repeated.

Social learning theory:

individuals can also learn by observing what happens to other people and just by being told about
something as well as by direct experiences. Much of what we have learned comes from watching
others (models)—parents, teachers, peers, television and movie actors, managers, and so forth.
This view that we can learn both through observation and direct experience is called social
learning theory. The influence of others is central to the social learning viewpoint. The amount
of influence that these models have on an individual is determined by four processes:

1. Attentional processes. People learn from a model when they recognize and pay attention
to its critical features. We’re most influenced by models who are attractive, repeatedly available,
thought to be important, or seen as similar to us.
2. Retention processes. A model’s influence will depend on how well the individual remembers
the model’s action, even after the model is no longer readily available.
3. Motor reproduction processes. After a person has seen a new behavior by observing the model,
the watching must become doing. This process then demonstrates that the individual can actually
do the modeled activities.
4. Reinforcement processes. Individuals will be motivated to exhibit the modeled behavior if
positive incentives or rewards are provided. Behaviors that are reinforced will be given more
attention, learned better, and performed more often.

15. Define Organisatinal citizenship behaviour.

Organizational citizenship behavior (OCB) is discretionary behavior that’s not part of an
employee’s formal job requirements, but which promotes the effective functioning of the
organization. Examples of good OCBs include helping others on one’s work team, volunteering
for extended job activities, avoiding unnecessary conflicts, and making constructive statements
about one’s work group and the organization.

16.Define Job involvement.

Job involvement is the degree to which an employee identifies with his or her job, actively
participates in it, and considers his or her job performance to be important to his or her self-
worth.

17.Define Organisational Commitment.

Organizational commitment is the degree to which an employee identifies with a particular
organization and its goals and wishes to maintain membership in that organization.

18. Define Employee Engagement.

Employee engagement: Managers want their employees to be connected to, satisfied with, and
enthusiastic about their jobs.

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19.Define Motivation

Motivation refers to the process by which a person’s efforts are energized, directed, and
sustained toward attaining a goal. It is a process of stimulating someone to adopt a desired course
of action.

20. Define job design.

Job design refers to the way tasks are combined to form complete jobs. The jobs that people
perform in an organization should not evolve by chance.

21. Define Job enlargement.

Horizontally expanding a job through increasing job scope— the number of different tasks
required in a job and the frequency with which these tasks are repeated.

22.Define job enrichment.

Job enrichment increases job depth, which is the degree of control employees have over their
work. In other words, employees are empowered to assume some of the tasks typically done by
their managers. Thus, an enriched job allows workers to do an entire activity with increased
freedom, independence, and responsibility.

23.Explain Job Characteristics model?

job characteristics model (JCM) does.40 It identifies five core job dimensions, their
interrelationships, and their impact on employee productivity, motivation, and satisfaction.
These five core job dimensions are:
1. Skill variety, the degree to which a job requires a variety of activities so that an employee can
use a number of different skills and talents.
2. Task identity, the degree to which a job requires completion of a whole and identifiable piece
of work.
3. Task significance, the degree to which a job has a substantial impact on the lives or work of
other people.
4. Autonomy, the degree to which a job provides substantial freedom, independence, and
discretion to the individual in scheduling the work and determining the procedures to be used in
carrying it out.
5. Feedback, the degree to which doing work activities required by a job results in an individual
obtaining direct and clear information about the effectiveness of his or her performance.

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4. Define leadership.
Leadership is defined as influence, the art or process of influencing people so that they will strive
willingly and enthusiastically toward the achievement of group goals.
a) Leaders act to help a group attain objectives through the maximum application of its
capabilities.
b) Leaders must instill values – whether it be concern for quality, honesty and calculated risk
taking or for employees and customers.

5. State the different types of leadership styles.

1. Autocratic Leader –Commands and expects compliance, is dogmatic and positive, and leads
by the ability to withhold or give rewards and punishment.
2. Democratic or Participative – consults with subordinates on proposed actions and decision
and encourage participation from there
3. Free-rein leader / laissez-faire Leadership – uses his or her power very little, giving a high
degree of Interdepence in their operations. Leaders depend largely on subordinates to set their
own goals and the means of achieving them, and they see their role as one of aiding the operation
of followers by furnishing them with information and acting primarily as a contact with the
groups external Environment.
4. Paternalistic Leadership – Serves as the head of the family and treats his followers like his
family members. He assumes a paternal or fatherly role to help, guide and protect the followers.
Functions
 Goal Determination
 Motivating Followers
 Direction
 Coordination
 Representation

6. Define Leader-Member Exchange Theory.

Leader–member exchange theory (LMX) says that leaders create in-groups and outgroups and
those in the in-group will have higher performance ratings, less turnover, and greater job
satisfaction. LMX theory suggests that early on in the relationship between a leader and a given
follower, a leader will implicitly categorize a follower as an “in” or as an “out.” That relationship
tends to remain fairly stable over time.

7. Define Transactional Leaders.

Transactional leaders; that is, leaders that lead primarily by using social exchanges (or
transactions). Transactional leaders guide or motivate followers to work toward established goals
by exchanging rewards for their productivity.

8. Define Transformational leader.

Transformational leader—stimulates and inspires (transforms) followers to achieve
extraordinary outcomes. Transformational leadership develops from transactional leadership.
Transformational leadership produces levels of employee effort and performance that go beyond
what would occur with a transactional approach alone. Moreover, transformational leadership is

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more than charisma, because the transformational leader attempts to instill in followers the
ability to question not only established views but those views held by the leader.

9. Define Charismatic leader.

Charismatic leader—that is, an enthusiastic, self-confident leader whose personality and
actions influence people to behave in certain ways. they have a vision, the ability to articulate
that vision, a willingness to take risks to achieve that vision, a sensitivity to both environmental
constraints and follower needs, and behaviors that are out of the ordinary.

10. Define Communication.

According to Koontz and O'Donnell, "Communication, is an intercourse by words, letters
symbols or messages, and is a way that the organization members shares meaning and
understanding with another".

11. What is Non verbal communication?

Nonverbal communication: communication transmitted without words.
Body language refers to gestures, facial expressions, and other body movements that convey
meaning. A person frowning “says” something different from one who’s smiling. Hand motions,
facial expressions, and other gestures can communicate emotions or temperaments such as
aggression, fear, shyness, arrogance, joy, and anger.
Verbal intonation refers to the emphasis someone gives to words or phrases in order to convey
meaning. To illustrate how intonations can change the meaning of a message, consider the
student who asks the instructor a question

12. Differetiate between formal and informal communication.

Formal communication refers to communication that takes place within prescribed

organizational work arrangements. For example, when a manager asks an employee to complete
a task, that’s formal communication. Another example of formal communication occurs when an
employee communicates a problem to his or her manager.
Informal communication is organizational communication not defined by the organization’s
structural hierarchy. When employees talk with each other in the lunch room, as they pass in
hallways, or as they’re working out at the company wellness facility, they engage in informal
communication. Employees form friendships and communicate with each other. The informal
communication system fulfills two purposes in organizations: (1) it permits employees to satisfy
their need for social interaction, and (2) it can improve an organization’s performance by
creating alternative, and frequently faster and more efficient, channels of communication.

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13. Discuss the merits and demerits of grapevine communication?

14. What are the essentials of good communication system?

 Clarity of messages
 Completeness of message
 Consistency of message
 proper timing
 Credibility
 Empathy
 Follow-up
 Economy

15. State the communication process?

16. What are the types of communication network?

In the chain network, communication flows according to the formal chain of command, both
downward and upward. The wheel network represents communication flowing between a clearly
identifiable and strong leader and others in a work group or team. The leader serves as the hub
through whom all communication passes. Finally, in the all-channel network, communication
flows freely among all members of a work team.

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17. What are the direction of communication flow?
Downward communication is communication that flows from a manager to employees. It’s
used to inform, direct, coordinate, and evaluate employees. When managers assign goals to their
employees, they’re using downward communication.
Upward communication is communication that flows from employees to managers. It keeps
managers aware of how employees feel about their jobs, their coworkers, and the organization in
general. Communication that takes place among employees on the same organizational level is
called lateral communication.
Diagonal communication is communication that crosses both work areas and organizational
levels. A credit analyst who communicates directly with a regional marketing manager about a
customer’s problem—note the different department and different organizational level—uses
diagonal communication. Because of its efficiency and speed, diagonal communication can be
beneficial. Increased e-mail use facilitates diagonal communication. In many organizations, any
employee can communicate by e-mail with any other employee, regardless of organizational
work area or level, even with upper-level managers.

18. What are the guidelines for effective communication?

(i) Senders of message must clarify in their minds what they want to communicate. Purpose of
the message and making a plan to achieve the intended end must be clarified.
(ii) Encoding and decoding be done with symbols that are familiar to the sender and the receiver
of the message.
(iii) For the planning of the communication, other people should be consulted and encouraged to
participate.
(iv) It is important to consider the needs of the receivers of the information. Whenever
appropriate, one should communicate something that is of value to them, in the short run as well
as in the more distant future.
(v) In communication, tone of voice, the choice of language and the congruency between what is
said and how it is said influence the reactions of the receiver of the message.
(vi) Communication is complete only when the message is understood by the receiver. And one
never knows whether communication is understood unless the sender gets a feedback.

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(vii) The function of communication is more than transmitting the information. It also deals with
emotions that are very important in interpersonal relationships between superiors, subordinates
and colleagues in an organization.
(viii) Effective communicating is the responsibility not only of the sender but also of the receiver
of the information.

19. How Technology Affects Managerial Communication?

IT has radically changed the way organizational members communicate. For example, it has
significantly improved a manager’s ability to monitor individual and team performance, has
allowed employees to have more complete information to make faster decisions, and has
provided employees more opportunities to collaborate and share information. In addition, IT has
made it possible for people in organizations to be fully accessible, any time, regardless of where
they are.
NETWORKED SYSTEMS. In a networked system, an organization’s computers are linked.
Organizational members can communicate with each other and tap into information whether
they’re down the hall, across town, or halfway across the world. We’re not looking at the
mechanics of how a network system works, but some of its communication applications include
e-mail; instant messaging; social media such as blogs, wikis, and Twitter; webinars; voice-mail;
fax; teleconferencing and videoconferencing; and intranets.
WIRELESS CAPABILITIES. At Seattle-based Starbucks Corporation, district managers use
mobile technology, giving them more time to spend in the company’s stores. A company
executive says, “These are the most important people in the company. Each has between 8 to 10
stores that he or she services. And while their primary job is outside of the office—and in those
stores—they still need to be connected.” As this example shows, wireless communication
technology has the ability to improve work for managers and employees. Even Internet access is
available through Wi-Fi and WiMax hot spots, which are locations where users gain wireless
access.
Communication and the exchange of information among organizational members are no longer
constrained by geography or time. Collaborative work efforts among widely dispersed
individuals and teams, sharing of information, and integration of decisions and work throughout
an entire organization have the potential to increase organizational efficiency and effectiveness.
And while the economic benefits of IT are obvious, managers must not forget the psychological
drawbacks. For instance, what is the psychological cost of an employee always being accessible?
Will it lead to increased pressure for employees to “check in” even during their off hours? How
important is it for employees to separate their work and personal lives? These questions don’t
come with easy answers, and managers will have to face these and similar issues.

16marks

1.Explain motivation theories?

Maslow’s Hierarchy of Needs Theory:
Abraham Maslow’s hierarchy of needs theory.8 Maslow was a psychologist who proposed that
within every person is a hierarchy of five needs:
1. Physiological needs: A person’s needs for food, drink, shelter, sex, and other physical
requirements.
2. Safety needs: A person’s needs for security and protection from physical and emotional harm,
as well as assurance that physical needs will continue to be met.

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3. Social needs: A person’s needs for affection, belongingness, acceptance, and friendship.
4. Esteem needs: A person’s needs for internal esteem factors such as self-respect, autonomy,
and achievement and external esteem factors such as status, recognition, and attention.
5. Self-actualization needs: A person’s needs for growth, achieving one’s potential, and self-
fulfillment; the drive to become what one is capable of becoming.

Maslow argued that each level in the needs hierarchy must be substantially satisfied before the
next need becomes dominant. An individual moves up the needs hierarchy from one level to the
next. In addition, Maslow separated the five needs into higher and lower levels. Physiological
and safety needs were considered lower-order needs; social, esteem, and self-actualization needs
were considered higher-order needs. Lower-order needs are predominantly satisfied externally
while higher-order needs are satisfied internally.

McGregor’s Theory X and Theory Y

Douglas McGregor is best known for proposing two assumptions about human nature: Theory X
and Theory Y.11Very simply, Theory X is a negative view of people that assumes workers have
little ambition, dislike work, want to avoid responsibility, and need to be closely controlled to
work effectively. Theory Y is a positive view that assumes employees enjoy work, seek out and
accept responsibility, and exercise self-direction. McGregor believed that Theory Y assumptions
should guide management practice and proposed that participation in decision making,
responsible and challenging jobs, and good group relations would maximize employee
motivation.

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Herzberg’s Two-Factor Theory
Frederick Herzberg’s two-factor theory (also called motivation-hygiene theory) proposes that
intrinsic factors are related to job satisfaction, while extrinsic factors are associated with job
dissatisfaction. Herzberg wanted to know when people felt exceptionally good (satisfied) or bad
(dissatisfied) about their jobs. (These findings are shown in Exhibit ) He concluded that the
replies people gave when they felt good about their jobs were significantly different from the
replies they gave when they felt badly. Certain characteristics were consistently related to job
satisfaction (factors on the left side of the exhibit), and others to job dissatisfaction (factors on
the right side). When people felt good about their work, they tended to cite intrinsic factors
arising from the job itself such as achievement, recognition, and responsibility. On the other
hand, when they were dissatisfied, they tended to cite extrinsic factors arising from the job
context such as company policy and administration, supervision, interpersonal relationships, and
working conditions.

Goal-Setting Theory
Research provides substantial support for goal-setting theory, which says that specific goals
increase performance and that difficult goals, when accepted, result in higher performance than
do easy goals. First, goal-setting theory assumes that an individual is committed to the goal.
Commitment is most likely when goals are made public, when the individual has an internal
locus of control, and when the goals are self-set rather than assigned. Next, self-efficacy refers to
an individual’s belief that he or she is capable of performing a task.The higher your self-efficacy,
the more confidence you have in your ability to succeed in a task. So, in difficult situations, we
find that people with low self-efficacy are likely to reduce their effort or give up altogether,
whereas those with high self-efficacy will try harder to master the challenge. In addition,
individuals with high self-efficacy seem to respond to negative feedback with increased effort
and motivation, whereas those with low self-efficacy are likely to reduce their effort when given
negative feedback. Finally, the value of goal-setting theory depends on the national culture. It’s
well adapted to North American countries because its main ideas align reasonably well with
those cultures. It assumes that subordinates will be reasonably independent (not a high score on
power distance), that people will seek challenging goals (low in uncertainty avoidance), and that
performance is considered important by both managers and subordinates (high in assertiveness).
Don’t expect goal setting to lead to higher employee performance in countries where the cultural
characteristics aren’t like this.

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Reinforcement Theory
Reinforcement theory says that behavior is a function of its consequences. Those consequences
that immediately follow a behavior and increase the probability that the behavior will be repeated
are called reinforcers. Reinforcement theory ignores factors such as goals, expectations, and
needs. Instead, it focuses solely on what happens to a person when he or she does something

Equity Theory:

Equity theory, developed by J. Stacey Adams, proposes that employees compare what they get
from a job (outcomes) in relation to what they put into it (inputs), and then they compare their
inputs–outcomes ratio with the inputs–outcomes ratios of relevant others . If an employee
perceives her ratio to be equitable in comparison to those of relevant others, there’s no problem.
However, if the ratio is inequitable, she views herself as under rewarded or over rewarded. When
inequities occur, employees attempt to do something about it.The result might be lower or higher
productivity, improved or reduced quality of output, increased absenteeism, or voluntary
resignation.

Expectancy Theory
The most comprehensive explanation of how employees are motivated is Victor Vroom’s
expectancy theory. Although the theory has its critics, most research evidence supports it.
Expectancy theory states that an individual tends to act in a certain way based on the expectation

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that the act will be followed by a given outcome and on the attractiveness of that outcome to the
individual. It includes three variables or relationships.
1. Expectancy or effort–performance linkage is the probability perceived by the individual that
exerting a given amount of effort will lead to a certain level of performance.
2. Instrumentality or performance–reward linkage is the degree to which the individual believes
that performing at a particular level is instrumental in attaining the desired outcome.
3. Valence or attractiveness of reward is the importance that the individual places on the
potential outcome or reward that can be achieved on the job. Valence considers both the goals
and needs of the individual.

2. Explain leadership theories?

Trait Theories of Leadership:

Researchers wondered whether something unique in what effective leaders did—in other words,
in their behavior—was the key.
1. Drive. Leaders exhibit a high effort level. They have a relatively high desire for achievement,
they are ambitious, they have a lot of energy, they are tirelessly persistent in their activities, and
they show initiative.
2. Desire to lead. Leaders have a strong desire to influence and lead others. They demonstrate the
willingness to take responsibility.
3. Honesty and integrity. Leaders build trusting relationships with followers by being truthful or
non deceitful and by showing high consistency between word and deed.
4. Self-confidence. Followers look to leaders for an absence of self-doubt. Leaders, therefore,
need to show self-confidence in order to convince followers of the rightness of their goals and
decisions.
5. Intelligence. Leaders need to be intelligent enough to gather, synthesize, and interpret large
amounts of information, and they need to be able to create visions, solve problems, and make
correct decisions.
6. Job-relevant knowledge. Effective leaders have a high degree of knowledge about the
company, industry, and technical matters. In-depth knowledge allows leaders to make well-
informed decisions and to understand the implications of those decisions.
7. Extraversion. Leaders are energetic, lively people. They are sociable, assertive, and rarely
silent or withdrawn.

THE MANAGERIAL GRID

The Managerial Grid is based on two behavioral dimensions:

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  Concern for People – This is the degree to which a leader considers the needs of team
members, their interests, and areas of personal development when deciding how best to
accomplish a task.
 Concern for Results – This is the degree to which a leader emphasizes concrete
objectives, organizational efficiency and high productivity when deciding how best to
accomplish a task.

Impoverished Management – Low Results/Low People

This leader is mostly ineffective. He/she has neither a high regard for creating systems for
getting the job done, nor for creating a work environment that is satisfying and motivating. The
result is disorganization, dissatisfaction and disharmony.
Country Club Management – High People/Low Results
This style of leader is most concerned about the needs and feelings of members of his/her team.
These people operate under the assumption that as long as team members are happy and secure
then they will work hard. What tends to result is a work environment that is very relaxed and fun
but where production suffers due to lack of direction and control.
Authority-Compliance Management – High Results/Low People
Also known as Authoritarian or "Produce or Perish" Leaders, people in this category believe that
employees are simply a means to an end. Employee needs are always secondary to the need for
efficient and productive workplaces. This type of leader is very autocratic, has strict work rules,
policies, and procedures, and views punishment as the most effective means to motivate
employees.
Middle-of-the-Road Management – Medium Results/Medium People
This style seems to be a balance of the two competing concerns, and it may at first appear to be
an ideal compromise. Therein lies the problem, though: When you compromise, you necessarily
give away a bit of each concern, so that neither production nor people needs are fully met.
Leaders who use this style settle for average performance and often believe that this is the most
anyone can expect.
Team Leadership – High Production/High People
According to the Blake Mouton model, this is the best managerial style. These leaders stress
production needs and the needs of the people equally highly.

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The Fiedler Model
The Fiedler contingency model proposed that effective group performance depended upon
properly matching the leader’s style and the amount of control and influence in the situation. The
model was based on the premise that a certain leadership style would be most effective in
different types of situations. The keys were to (1) define those leadership styles and the different
types of situations, and then (2) identify the appropriate combinations of style and situation.
Fiedler proposed that a key factor in leadership success was an individual’s basic leadership style,
either task oriented or relationship oriented. To measure a leader’s style, Fiedler developed the
least-preferred coworker (LPC) questionnaire. This questionnaire contained 18 pairs of
contrasting adjectives—for example, pleasant–unpleasant, cold–warm, boring–interesting, or
friendly–unfriendly. Respondents were asked to think of all the coworkers they had ever had and
to describe that one person they least enjoyed working with by rating him or her on a scale of 1
to 8 for each of the 18 sets of adjectives (the 8 always described the positive adjective out of the
pair and the 1 always described the negative adjective out of the pair).
If the leader described the least preferred coworker in relatively positive terms (in other words, a
“high” LPC score—a score of 64 or above), then the respondent was primarily interested in good
personal relations with coworkers and the style would be described as relationship oriented. In
contrast, if you saw the least preferred coworker in relatively unfavorable terms (a low LPC
score—a score of 57 or below), you were primarily interested in productivity and getting the job
done; thus, your style would be labeled as task oriented. Fiedler did acknowledge that a small
number of people might fall in between these two extremes and not have a cut-and-dried
leadership style. One other important point is that Fiedler assumed a person’s leadership style
was fixed regardless of the situation. In other words, if you were a relationship- oriented leader,
you’d always be one, and the same for task-oriented.
After an individual’s leadership style had been assessed through the LPC, it was time to evaluate
the situation in order to be able to match the leader with the situation. Fiedler’s research
uncovered three contingency dimensions that defined the key situational factors in leader
effectiveness.
_ Leader–member relations: the degree of confidence, trust, and respect employees had for
their leader; rated as either good or poor.
_ Task structure: the degree to which job assignments were formalized and structured; rated as
either high or low.
_ Position power: the degree of influence a leader had over activities such as hiring, firing,
discipline, promotions, and salary increases; rated as either strong or weak.

Each leadership situation was evaluated in terms of these three contingency variables, which
when combined produced eight possible situations that were either favorable or unfavorable for
the leader. (See the bottom of the chart in Exhibit 17-3.) Situations I, II, and III were classified as
highly favorable for the leader. Situations IV, V, and VI were moderately favorable for the leader.
And situations VII and VIII were described as highly unfavorable for the leader.

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Hersey and Blanchard’s Situational Leadership Theory:
Paul Hersey and Ken Blanchard developed a leadership theory that has gained a strong following
among management development specialists. This model, called situational leadership theory
(SLT), is a contingency theory that focuses on followers’ readiness. Before we proceed, two
points need clarification: Why a leadership theory focuses on the followers, and what is meant by
the term readiness. readiness, as defined by Hersey and Blanchard, refers to the extent to which
people have the ability and willingness to accomplish a specific task.
SLT uses the same two leadership dimensions that Fiedler identified: task and relationship
behaviors. However, Hersey and Blanchard go a step further by considering each as either high
or low and then combining them into four specific leadership styles described as follows:
_ Telling (high task–low relationship): The leader defines roles and tells people what, how, when,
and where to do various tasks.
_ Selling (high task–high relationship): The leader provides both directive and supportive
behavior.
_ Participating (low task–high relationship): The leader and followers share in decision making;
the main role of the leader is facilitating and communicating.
_ Delegating (low task–low relationship): The leader provides little direction or support.

Path-Goal Model:
Path-goal theory, which states that the leader’s job is to assist followers in attaining their goals
and to provide direction or support needed to ensure that their goals are compatible with the
goals of the group or organization.
Developed by Robert House, path-goal theory takes key elements from the expectancy theory of
motivation. The term path-goal is derived from the belief that effective leaders remove the
roadblocks and pitfalls so that followers have a clearer path to help them get from where they are
to the achievement of their work goals.
House identified four leadership behaviors:
_ Directive leader: Lets subordinates know what’s expected of them, schedules work to be done,
and gives specific guidance on how to accomplish tasks.
_ Supportive leader: Shows concern for the needs of followers and is friendly.

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_ Participative leader: Consults with group members and uses their suggestions before making a
decision.
_ Achievement oriented leader: Sets challenging goals and expects followers to perform at their
highest level.

3. Explain the barriers of communication and how to overcome it.

Barriers of communication:

FILTERING. Filtering is the deliberate manipulation of information to make it appear more

favorable to the receiver. For example, when a person tells his or her manager what the manager
wants to hear, information is being filtered.
EMOTIONS. How a receiver feels when a message is received influences how he or she
interprets it. Extreme emotions are most likely to hinder effective communication. In such
instances, we often disregard our rational and objective thinking processes and substitute
emotional judgments.
INFORMATION OVERLOAD. A marketing manager goes on a week-long sales trip to Spain
where he doesn’t have access to his e-mail, and he faces 1,000 messages on his return. It’s not
possible to fully read and respond to each message without facing information overload, which
is when information exceeds our processing capacity. Today’s employees frequently complain of
information overload.
DEFENSIVENESS. When people feel they’re being threatened, they tend to react in ways that
hinder effective communication and reduce their ability to achieve mutual understanding. They
become defensive—verbally attacking others, making sarcastic remarks, being overly
judgmental, or questioning others’ motives.
LANGUAGE. Conservative author/journalist Ann Coulter and rapper Nelly both speak English,
but the language each uses is vastly different. Words mean different things to different people.
Age, education, and cultural background are three of the more obvious variables that influence
the language a person uses and the definitions he or she gives to words.

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NATIONAL CULTURE. For technological and cultural reasons, the Chinese people dislike
voice mail. This general tendency illustrates how communication differences can arise from
national culture as well as different languages. For example, let’s compare countries that value
individualism (such as the United States) with countries that emphasize collectivism (such as
Japan).
LACK OF PLANNING: Good communication seldom happens by chance. Too often people
start talking and writing first thinking, planning and stating the purpose of the message.
UNCLARIFIED ASSUMPTIONS: often overlooked are the uncommunicated assusmptions
that underline messages.
SEMANTIC DISTORTION: words may evoke different responses.
POORLY EXPRESSED MESSAGES.

Overcoming the Barriers:

USE FEEDBACK. Many communication problems are directly attributed to misunderstanding

and inaccuracies. These problems are less likely to occur if the manager gets feedback, both
verbal and nonverbal.
SIMPLIFY LANGUAGE. Because language can be a barrier, managers should consider the
audience to whom the message is directed and tailor the language to them. Remember, effective
communication is achieved when a message is both received and understood.
LISTEN ACTIVELY. When someone talks, we hear, but too often we don’t listen. Listening is
an active search for meaning, whereas hearing is passive. In listening, the receiver is also putting
effort into the communication.
CONSTRAIN EMOTIONS. It would be naïve to assume that managers always communicate in
a rational manner. We know that emotions can cloud and distort communication. A manager
who’s upset over an issue is more likely to misconstrue incoming messages and fail to
communicate his or her outgoing messages clearly and accurately.
WATCH NONVERBAL CUES. If actions speak louder than words, then it’s important to
make sure your actions align with and reinforce the words that go along with them. An effective
communicator watches his or her nonverbal cues to ensure that they convey the desired message.

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UNIT V CONTROLLING 9
System and process of controlling – budgetary and non-budgetary control techniques – use of
computers and IT in Management control – Productivity problems and management – control
and performance – direct and preventive control – reporting.

2marks

1. Define Control.
Koontz and O'Donnell - "Managerial control implies measurement of accomplishment against
the standard and the correction of deviations to assure attainment of objectives according to
plans”. It’s the process of monitoring, comparing, and correcting work performance.

2. State the control process?

1. Fixation of Standard
2. Measurement of Performance
3. Comparing performance with standards
4. Correction of Deviations

3. What are the essentials of ideal control system?

a. Suitable b. Flexible c. Economical
d. Simple e. Objective f. Prompt
g. Forward looking h. Suggestive i. Strategic point control j. Motivational

4. What are the requirements of effective control system?

The requirements for effective control are
a) Control should be tailored to plans and positions
b) Control must be tailored to individual managers and their responsibilities
c) Control should point up exceptions as critical points
d) Control should be objective
e) Control should be flexible
f) Control should be economical
g) Control should lead to corrective actions.

5. What are the three types of control systems?

a) Feed forward controls: They are preventive controls that try to anticipate problems and take
corrective action before they occur. Example – a team leader checks the quality, completeness
and reliability of their tools prior to going to the site.
Requirements of feed forward control:
make a thorough and careful analysis of the planning and control system and identify the
more important input variables.
- develop a model of the system
- take care to keep the model up to date, in other words, the model should be reviewed
regularly to see whether the input variable identified and their interraltionbship continue
to represent realitie.
- collect data on input variables regularly and put them into the system.

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 regularly assess the variations of actual input data from planned for inputs and evaluate
the impact on expected end results.
- take action.
b) Concurrent controls: They (sometimes called screening controls) occur while an activity is
taking place. Example – the team leader checks the quality or performance of his members
while performing.
c) Feedback controls: They measure activities that have already been completed. Thus
corrections can take place after performance is over. Example – feedback from facilities
engineers regarding the completed job.

6. Define budgetary control.

Budgetary Control is defined as "the establishment of budgets, relating the responsibilities of
executives to the requirements of a policy, and the continuous comparison of actual with
budgeted results either to secure by individual action the objective of that policy or to provide a
base for its revision.

7. Define productivity.
Productivity refers to the ratio between the output from production processes to its input.
Productivity is the amount of goods or services produced divided by the inputs needed to
generate that output. Organizations and individual work units want to be productive. They want
to produce the most goods and services using the least amount of inputs. Output is measured by
the sales revenue an organization receives when goods are sold (selling price _ number sold).
Input is measured by the costs of acquiring and transforming resources into outputs.

8. Define Organisational effectiveness.

Organizational effectiveness is a measure of how appropriate organizational goals are and how
well those goals are being met. That’s the bottom line for managers and it’s what guides
managerial decisions in designing strategies and work activities and in coordinating the work of
employees.
/
9. What is an balanced scorecard?

The balanced scorecard approach is a way to evaluate organizational performance from more
than just the financial perspective. A balanced scorecard typically looks at four areas that
contribute to a company’s performance: financial, customer, internal processes, and

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people/innovation/growth assets. According to this approach, managers should develop goals in
each of the four areas and then measure whether the goals are being met.

10. Explain the use of computers in management control?

A management information system (MIS) is a system used to provide managers with needed
information on a regular basis. In theory, this system can be manual or computer- based,
although most organizations have moved to computer-supported applications. The term system in
MIS implies order, arrangement, and purpose. Further, an MIS focuses specifically on providing
managers with information (processed and analyzed data), not merely data (raw, unanalyzed
facts).

Because information is critically important to everything an organization does, managers must

have comprehensive and secure controls in place to protect that information. Such controls can
range from data encryption to system firewalls to data backups, and other techniques as
well.Problems can lurk in places that an organization might not even have considered, like blogs,
search engines, and Twitter accounts. Sensitive, defamatory, confidential, or embarrassing
organizational information has found its way into search engine results.

Benchmarking should identify various benchmarks, which are the standards of excellence
against which to measure and compare. For instance, the American Medical Association
developed more than 100 standard measures of performance to improve medical care. Carlos
Ghosn, CEO of Nissan, benchmarked Walmart operations in purchasing, transportation, and
logistics.
Corporate governance, the system used to govern a corporation so that the interests of
corporate owners are protected, failed abysmally at Enron, as it has at many companies caught in
financial scandals. In the aftermath of these scandals, corporate governance has been reformed.

11. Explain the impact of computers on managers at different organizational levels and
challenges created by information technology?

At supervisory level, activities are usually higly programmable and repetitive. Consequently, the
use of computers is widespread at this level. Scheduling daily planning and controlling of the
operation are just a few examples.
Middle level managers, such as department heads or plant managers are usually responsible for
administration and coordination.
Top level managers are responsible for the strategy and overall policy of the organization. In
addition to determining the general direction of the company, they are responsible for the
appropriate interaction between the enterprise and its environment.

The following are the challenges created by information technology:

- Resistance to computer application
- Speech recognition devices.
- Telecommuting
- Computer networks

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16-marks
1. Define productivity, causes for productivity problems and techniques for enhancement of
level of productivity.

Productivity is the input-output ratio within a time period with due consideration for quality.
The causes for productivity problems are: greater proportion of less skilled workers in respect in
respect to the total labour force, emphasis on immediate results at the cost of R&D , breakdown
in family structure, the workers attitudes and government policies and regulations.

Techniques for enhancement of level of productivity: ( Refer other material also)

- Plant layout techniques(minimize the material handling cost)
- Quality control techniques such as process control ( to control quality during production
process and acceptance sampling to ( to identify quality when the products are available
for sale /purchase)
- Work study techniques ( in identifying the unnecessary movements in the process of
doing the job and also ascertain the minimum time required to do a given job)
- Linear programming( to focus on either profit maximization or cost minimization in a
given situation)
- Product development and value analysis( to identify the value of each process in the
course of manufacturing a given product or service.
- Assignment method( to assign jobs to proper machines in a scientific maner)
- Simulation method ( to finalize optimum allocation of complex resonance under
stochastic conditions)
- Investments in the latest technologies such as computer aided manufacturing.
- Human resource management techniques such as job design, job rotation, job
simplification, job enrichment, flexi time, job sharing, employee participation, quality
circles, incentives team building and time management.

2. Explain budgetary and non budgetary control techniques?

BUDGETARY CONTROL TECHNIQUES

The various types of budgets are as follows
i) Revenue and Expense Budgets:
The most common budgets spell out plans for revenues and operating expenses in rupee terms.
The most basic of revenue budget is the sales budget which is a formal and detailed expression
of the sales forecast. The revenue from sales of products or services furnishes the principal
income to pay operating expenses and yield profits. Expense budgets may deal with individual
items of expense, such as travel, data processing, entertainment, advertising, telephone, and
insurance.
ii) Time, Space, Material, and Product Budgets:
Many budgets are better expressed in quantities rather than in monetary terms. e.g. direct-labor-
hours, machine-hours, units of materials, square feet allocated, and units produced. The Rupee
cost would not accurately measure the resources used or the results intended.
iii) Capital Expenditure Budgets:
Capital expenditure budgets outline specifically capital expenditures for plant, machinery,
equipment, inventories, and other items. These budgets require care because they give definite
form to plans for spending the funds of an enterprise. Since a business takes a long time to
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recover its investment in plant and equipment, (Payback period or gestation period) capital
expenditure budgets should usually be tied in with fairly long-range planning.
iv) Cash Budgets:
The cash budget is simply a forecast of cash receipts and disbursements against which actual
cash "experience" is measured. The availability of cash to meet obligations as they fall due is the
first requirement of existence, and handsome business profits do little good when tied up in
inventory, machinery, or other noncash assets.
v) Variable Budget:
The variable budget is based on an analysis of expense items to determine how individual costs
should vary with volume of output. Some costs do not vary with volume, particularly in so short
a period as 1 month, 6 months, or a year. Among these are depreciation, property taxes and
insurance, maintenance of plant and equipment, and costs of keeping a minimum staff of
supervisory and other key personnel. Costs that vary with volume of output range from those that
are completely variable to those that are only slightly variable. The task of variable budgeting
involves selecting some unit of measure that reflects volume; inspecting the various categories of
costs (usually by reference to the chart of accounts); and, by statistical studies, methods of
engineering analyses, and other means, determining how these costs should vary with volume of
output.
vi) Zero Based Budget:
The idea behind this technique is to divide enterprise programs into "packages" composed of
goals, activities, and needed resources and then to calculate costs for each package from the
ground up. By starting the budget of each package from base zero, budgeters calculate costs
afresh for each budget period; thus they avoid the common tendency in budgeting of looking
only at changes from a previous period.
Advantages
There are a number of advantages of budgetary control:
• Compels management to think about the future, which is probably the most important feature
of a budgetary planning and control system. Forces management to look ahead, to set out
detailed plans for achieving the targets for each department, operation and (ideally) each
manager, to anticipate and give the organization purpose and direction.
• Promotes coordination and communication.
• Clearly defines areas of responsibility. Requires managers of budget centre’s to be made
responsible for the achievement of budget targets for the operations under their personal control.
• Provides a basis for performance appraisal (variance analysis). A budget is basically a yardstick
against which actual performance is measured and assessed. Control is provided by comparisons
of actual results against budget plan. Departures from budget can then be investigated and the
reasons for the differences can be divided into controllable and non-controllable factors.
• Enables remedial action to be taken as variances emerge.
• Motivates employees by participating in the setting of budgets.
• Improves the allocation of scarce resources.
• Economises management time by using the management by exception principle.

NON-BUDGETARY CONTROL TECHNIQUES

There are, of course, many traditional control devices not connected with budgets, although some
may be related to, and used with, budgetary controls. Among the most important of these are:
statistical data, special reports and analysis, analysis of break- even points, the operational audit,
and the personal observation.

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i) Statistical data: Statistical analyses of innumerable aspects of a business operation and the
clear presentation of statistical data, whether of a historical or forecast nature are, of course,
important to control. Some managers can readily interpret tabular statistical data, but most
managers prefer presentation of the data on charts.
ii) Break- even point analysis: An interesting control device is the break even chart. This chart
depicts the relationship of sales and expenses in such a way as to show at what volume revenues
exactly cover expenses.BEP, break even point establishes a level of production where total
revenue equals the total costs and there is neither profit nor loss.

iii) Operational audit: Another effective tool of managerial control is the internal audit or, as it
is now coming to be called, the operational audit. Operational auditing, in its broadest sense, is
the regular and independent appraisal, by a staff of internal auditors, of the accounting, financial,
and other operations of a business.
iv) Personal observation: personal observation means merely observing the performance
whether it is going according to the standards or not.It is the direct and undistorted method of
control.
v) PERT: Program Evaluation and Review Technique, commonly abbreviated PERT, is a is a
method to analyze the involved tasks in completing a given project, especially the time needed to
complete each task, and identifying the minimum time needed to complete the total project.
vi) GANTT CHART: A Gantt chart is a type of bar chart that illustrates a project schedule.
Gantt charts illustrate the start and finish dates of the terminal elements and summary elements
of a project. Terminal elements and summary elements comprise the work breakdown structure
of the project. Some Gantt charts also show the dependency (i.e., precedence network)
relationships between activities.
Vii) Financial statements and Ratio analysis: financial statements such as profit and loss
account and balance sheet are used for control the organization performance. Ratio analysis is
helpful in evaluation of financial data. Financial ratios such as liquidity ratio, solvency ratio are
expressed in mathematical terms.

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3. Explain the classification of budgets?

a) BASED ON TIME PERIOD:

(i) Long Term Budget
Budgets which are prepared for periods longer than a year are called LongTerm Budgets. Such
Budgets are helpful in business forecasting and forward planning. Eg: Capital Expenditure
Budget and R&D Budget.
(ii) Short Term Budget
Budgets which are prepared for periods less than a year are known as ShortTerm Budgets. Such
Budgets are prepared in cases where a specific action has to be immediately taken to bring any
variation under control.
Eg: Cash Budget.
b) BASED ON CONDITION:
(i) Basic Budget
A Budget, which remains unaltered over a long period of time, is called Basic Budget.
(ii) Current Budget
A Budget, which is established for use over a short period of time and is related to the current
conditions, is called Current Budget.
c) BASED ON CAPACITY:
(i) Fixed Budget
It is a Budget designed to remain unchanged irrespective of the level of activity actually attained.
It operates on one level of activity and less than one set of conditions. It assumes that there will
be no change in the prevailing conditions, which is unrealistic.
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(ii) Flexible Budget
It is a Budget, which by recognizing the difference between fixed, semi variable and variable
costs is designed to change in relation to level of activity attained. It consists of various budgets
for different levels of activity
d) BASED ON COVERAGE:
(i) Functional Budget
Budgets, which relate to the individual functions in an organization, are known as Functional
Budgets, e.g. purchase Budget, Sales Budget, Production Budget, plant Utilization Budget and
Cash Budget.
(ii) Master Budget
It is a consolidated summary of the various functional budgets. It serves as the basis upon which
budgeted Profit & Loss Account and forecasted Balance Sheet are built up.

4. Explain control process and the barriers of control?

CONTROL PROCESS
The basic control process involves mainly these steps as shown in Figure
a) The Establishment of Standards:
Because plans are the yardsticks against which controls must be revised, it follows logically that
the first step in the control process would be to accomplish plans. Plans can be considered as the
criterion or the standards against which we compare the actual performance in order to figure out
the deviations.
Examples for the standards
• Profitability standards: In general, these standards indicate how much the company would like
to make as profit over a given time period- that is, its return on investment.
• Market position standards: These standards indicate the share of total sales in a particular
market that the company would like to have relative to its competitors.
• Productivity standards: How much that various segments of the organization should produce is
the focus of these standards.
• Product leadership standards: These indicate what must be done to attain such a
position.
• Employee attitude standards: These standards indicate what types of attitudes the company
managers should strive to indicate in the company’s employees.
• Social responsibility standards: Such as making contribution to the society.
• Standards reflecting the relative balance between short and long range goals.
b) Measurement of Performance:
The measurement of performance against standards should be on a forward looking basis so that
deviations may be detected in advance by appropriate actions. The degree of difficulty in
measuring various types of organizational performance, of course, is determined primarily by the
activity being measured. For example, it is far more difficult to measure the performance of
highway maintenance worker than to measure the performance of a student enrolled in a college
level management course. These are the Sources of information for measuring the performance.

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c) Comparing Measured Performance to Stated Standards:
When managers have taken a measure of organizational performance, their next step in
controlling is to compare this measure against some standard. A standard is the level of activity
established to serve as a model for evaluating organizational performance. The performance
evaluated can be for the organization as a whole or for some individuals working within the
organization. In essence, standards are the yardsticks that determine whether organizational
performance is adequate or inadequate. From the diagram, Deviations outside the range need
attention.

d) Taking Corrective Actions:

After actual performance has been measured compared with established performance standards,
the next step in the controlling process is to take corrective action, if necessary. Corrective action
is managerial activity aimed at bringing organizational performance up to the level of
performance standards. In other words, corrective action focuses on correcting organizational
mistakes that hinder organizational performance. Before taking any corrective action, however,
managers should make sure that the standards they are using were properly established and that
their measurements of organizational performance are valid and reliable. At first glance, it seems

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a fairly simple proposition that managers should take corrective action to eliminate problems -
the factors within an organization that are barriers to organizational goal attainment. In practice,
however, it is often difficult to pinpoint the problem causing some undesirable organizational
effect.Diagram for the managerial decision control process.

BARRIERS FOR CONTROLLING

There are many barriers, among the most important of them:
• Control activities can create an undesirable overemphasis on short-term production as opposed
to long- term production.
• Control activities can increase employees' frustration with their jobs and thereby reduce morale.
This reaction tends to occur primarily where management exerts too much control.
• Control activities can encourage the falsification of reports.
• Control activities can cause the perspectives of organization members to be too narrow for the
good of the organization.
• Control activities can be perceived as the goals of the control process rather than the means by
which corrective action is taken.

5. Define budgetary control, benefits, dangers/problems and how to make budgetary

control effective.?

Budgetary control is the establishment of budget relating the responsibility of executives to the
continuous comparison of actual with budgeted results either to secure by individual action of the
objective of that policy or to provide a basis for revision.

Benefits of budgetary control

1. The budget help management to look at the success or failure of the past budget, isolate
errors, analyze their causes, establish the steps to be taken and to avoid repetition of such
errors.
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 2. Budget sereves as a means of coordination. Budget intergrates the various activities of the
organization.
3. Budgets help to minise waste and unproductive use of financial and other resources. They
help to keep expense under control and to increase profit. Thus budget serves as a profit
plan.
4. Budgets motive employees because employees know their responsibility and standards by
which their performance can be evaluated.
5. Budget force top level managers to anticipate future and forecast changes in external
environment.

Dangers /Problems in budgeting:

- Over budgeting: There is a danger in over-budgeting through spelling out minor expense
in detail and depriving managers of needed freedom in managing their departments.In
one department, expenses were budgeted in such useless detail that the actual budgeting
cost of many items exceeded the expenses.
- Overriding enterprise goals: Another danger lies in allowing budgetary goals to
become more important than enterprise objectives.
- Hiding inefficiencies: Budgets have a way of growing from precedent, the fact that a
certain expenditure was made in the past can become evidence to its reasonableness in
the present. Thus, if a department once spent a given amount for supplies, this cost
becomes minimum for future budgets.
- Causing inflexibility: even if budgeting is not used to replace managing, the reduction of
plans to numerical terms gives them a kind of misleading definiteness.

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

Making budgetary control effective:

1. Top management support: To be most effective ,budget making and administration must
receive the wholehearted support of top management.

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 2. Participation: Related to the participation of top management, another means of making
budgets work is to make sure that all mangers expected to operate and live under budgets
have a part in their preparation.
3. Standards: many budgets fail for lack of such standards and some upper level managers
hesitate to allow subordinates to submit budget plans for fear that they may have no
logical basis for reviewing budgets request.
4. Information: Managers need ready information about actual and forecast performance
under budgets by their departments.
5. Budgets should be treated as tools only and not as substitutes of management. It means
that managers should make proper evaluation using budgets and they should understand
the limitations of budgetary control.
6. To be effective, budget preparation and budget control should receive top level
management support. The budget officer must assist them.
7. Budgets should be in consistent with organizational objectives.
8. Budgets targets or standards are quantifiable and clear and in precise terms so that
accurate measurement and evaluation of results can be possible.
9. Top level managers should allow subordinates to review the budget and budget plans
should be modified accordingly.

6. Differentiate between direct control and preventive control?

The normal procedure is to trace the cause of an unsatisfactory result back to the persons
responsible for it and get them to correct their practices is called direct control.

Managers who skillfully apply concepts, techniques and principles and who will look at
managing and managerial problems from a system point of view, thus eliminating
undesirable results caused by poor management. This is called preventive control.

7. Define a report and different types of reports?

.

DEFINITION:

A report is a formal communication written for a specific purpose; it includes a description of

procedures followed for collection and analysis of data, their significance, the conclusions drawn
from them, and recommendations, if required.

Different types of Reports:

Generally business reports are categorized into two ways. They are oral and written. An oral
report is a piece of fact-to-face communication about something seen or observed. Though it
saves the reporter’s time, it is more time-consuming for the receiver as he has to listen to every
word of the report.

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Reports:

Oral Written Formal Informal

Informational Interpretive Routine

A written report is relatively more accurate and permanent. In certain cases the reader may just
skim through it, or read the abstract or the conclusions or recommendations only. It can be
referred to again and again and is by its very nature more formal than an oral report. written
report is then divided into two types. They are as follows:

· Formal report.
1. Informational.
2. Interpretive.
3. Routine.
· Informal report.

Formal reports vary a great deal according to their purposes and contents, and different
organizations have different ways of classifying them. some classify them according to their
source or frequency of appearance, others by their length or degree of formality or physical form.

Informational report:

An informational report contains only the data collected or the facts observed in an organized
form. It presents the situation as it is and not as it should be. It does not contain any conclusions
or recommendations. It is useful because it presents relevant data put together in a form in which
it is required by the management to take decisions.

Interpretive report:

An interpretive report, like an informational report, contains facts but it also includes an
evaluation or interpretation or analysis of data and the reporter’s conclusions. It may have
recommendations for actions. An interpretive report which consists principally of
recommendations is also called a recommendation or recommendatory report.

Routine report:

All that the report writer has to do is to put a tick mark against certain items listed in the form or
write very brief remarks against them. These reports are written usually for recording routine
matters at regular intervals, e.g. confidential reports on employees, periodic reports on the
progress of projects, reports on inspection of equipmendations also, they are called as Routine
reports. Routine reports are further divided into many types. They are as follows:

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· Progress reports,
· Laboratory reports,
· Inspection reports,
· Inventory reports.

Progress reports:

The frequency of progress reports depends upon the practice followed in an organization. They
may be written and circulated at the end of each phase or a specified period of time or
completion of a stage of work. If they are prepared at regular intervals, they are called as
periodic reports. They contain the following information:

· Date, Total work to be completed.

· Work completed to date, work to be completed.

Laboratory reports:

A laboratory report is an account of various steps, findings and conclusions put together in a
logical order. As a matter of fact, no scientific experiment can be considered valid unless it is
presented in terms intelligible to other scientists. Thus, writing laboratory reports is considered to
be an essential part of scientific investigation and experimentation. These reports contain the
following elements:
· Heading, Experiment No.,
· Date,
· Statement of analysis,
· Apparatus used.
Inventory reports:

It is customary for every organization to take stock of equipment, furniture, stationery, etc. at
regular intervals. The person who checks the stock fills in his findings in a prescribed form.

2.Explain the content of a business Report? ( 16 marks)

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