Prashanth B N

Assistant Professor
Mechanical Department
Amrita School of Engg.
Bangalore
 Manipulation of resources (7Ms namely Money, Machine,
Men, Market, Materials, Measurements, Methods) to achieve
objectives.
Is the process by which managers create, direct, maintain, and
operate purposive organizations through coordinated,
cooperative human effort.
The attainment of organizational goals in an effective and
efficient manner through planning, organizing, leading, and
controlling organizational resources.
It is a process of designing and maintaining an environment in
which individuals, working together in groups, efficiently
accomplish selected aims.
The process of getting activities completed efficiently and
effectively with and through other people.
Efficiency?
Using resources wisely and in a cost-effective way

Means doing the thing correctly; refers to the relationship

between inputs and outputs; seeks to minimize resource costs
Using minimal resources to produce the desired volume of
output
Operating in such a way that resources are not wasted
Effectiveness?
Making the right decisions and successfully implementing
them
Means doing the right things; goal attainment

The degree to which goals are achieved

Doing the right things in the right way at the

right times
Efficiency (Means) Effectiveness (Ends)

Resource Goal
Usage Attainment

Low Waste High Attainment

Management Strives For:

Low resource waste (high efficiency)
High goal attainment (high effectiveness)
 Managers play an activating role in organizations.
The success of organization depends on the successful
functioning of management.
The management is responsible for planning, organizing,
integrating and interrelating organizational activities and
resources for achieving common objectives.

The Classic Definition (Art)

The art of getting things done through people.
Mary Parker Follett
A Broader Definition (Science)
The process of administering and coordinating resources
effectively, efficiently, and in an effort to achieve the goals
of the organization.
Who are Managers?
A Manager is the person responsible for planning and directing
the work of a group of individuals, monitoring their work, and
taking corrective action when necessary. First line managers
are often referred to as supervisors and comprise the lowest
level of management.

What is Management and What Managers do?

Management is the process of getting activities done efficiently
with and through other people.

Henri Fayol proposed that managers perform five management

functions: POCCC (Plan, organize, command, coordinate,
control). However the functions have been condensed to four.
Function: A classification referring to a group of similar
activities in an organization like marketing or operations.

Functional Managers: A manager responsible for just one

organizational activity such as accounting, human resources,
sales, finance, marketing, or production.
Focus on technical areas of expertise
Use communication, planning and administration,
teamwork and self-management competencies to get work
done
 General Managers: responsible for the operations of more
complex unitsfor example, a company or division
Oversee work of functional managers
Responsible for all the activities of the unit
Need to acquire strategic and multicultural competencies
to guide organization
Many Other types of managers
 Management Functions: Most useful conceptualization of the
managers job
Planning - Defining goals, establishing strategies for
achieving those goals, and developing plans to integrate and
coordinate activities
Organizing - Determining what tasks are to be done, who is
to do them, how the tasks are to be grouped, who reports to
whom, and where decisions are made
Leading - Directing and motivating all involved parties and
dealing with employee behavior issues
Controlling - Monitoring activities to ensure that they are
going as planned
 Organizing
Planning Determining what
Defining goals and needs to be done, in
establishing what order, and by
action plans whom

Effective
Management

Controlling Leading
Monitoring activities Guiding and
to ensure that they motivating all
are achieving involved parties
results
 Planning

Select goals and

ways to attain
them Performance
Resources
Human Attain goals
Controlling Organizing
Financial Products
Monitor activities and Services
Raw Materials Assign responsibility
make corrections
for task Efficiency
Technological accomplishment
Information Effectiveness

Leading
Use influence to
motivate employees
 Planning is determining in advance:
What is to be done?
How it is to be done?
When it is to be done?
Who will do it?
 Organizing is the establishment of relationship between the
Activities, Persons and Physical factors. Organizing includes:
What tasks are to be done? (Activity)
Who is to do them? (People)
What physical resources are required? (Resources)
And who reports to whom. (Structure)
 Leading involves:
Motivating subordinates
Influencing individuals or teams as they work
Selecting the most effective communication channels or
Dealing with any employee behavior issues
 Control activity generally related to the measurement of
achievement. Some means of controlling like the budget for
expenses, inspection, record of labors hours lost are common.
Controlling process consist of
Measuring
Comparing
Correcting
Managers who:
Are no longer the boss, rather they act as sponsors, team
leaders, or internal consultants.
No longer control from the top of the pyramid; nor try to
control the action from the sidelines.
Empower individual employees to do what is necessary to
achieve goals.
Make sure that employees have the resources to get the job
done.
Functions Roles
Planning the work Director

Decision maker Motivator

Delegating authority Guide

Problem solver Planner

Coordinator Supervisor

Target setter Reporter

Guiding the subordinates

Arranging the facilities

Control the deviations

Organization
A deliberate arrangement of people to accomplish some
specific purpose
Elements of definition
Each organization has a distinct purpose
Each organization is composed of people
All organizations develop some deliberate structure
Todays organizations have adopted:

Flexible work arrangements

Open communications
Greater responsiveness to changes
The management of a large organization may have three levels:
Senior Management (or Top Management" or Upper
Management")
Middle Level Management

Lower Level Management, such as Supervisors or Team-

Leaders
Top Level Management
Senior executives responsible for overall management of an
organization
Require an extensive knowledge of management roles & skills.

Concerned with the interaction between the organization and its

external environment
Focus on long-term issues

They have to chalk out the plan and see that plan may be
effective in the future.
Emphasize the survival, growth, and effectiveness of the firm
Middle Level Management
Located between top-level and frontline managers in the
organizational hierarchy
Mid-level managers have a specialized understanding of certain
managerial tasks.
Responsible for carrying out the decisions made by top-level
management.
Responsible for translating strategic goals and plans into more
specific objectives and activities
Traditional role was that of an administrative controller who
bridged the gap between higher and lower levels
Evolving role is that of a developmental coach to the people
who report to them
Lower Level Management
This level of management ensures that the decisions and plans
taken by the other two are carried out.
Lower-level managers decisions are generally short-term ones.

Lower-level managers who supervise the operational activities

of the organization
Directly involved with non-management employees

Increasingly being called on to be innovative and

entrepreneurial
 Technical Skills
The ability to utilize the knowledge of tools, techniques,
and procedures that are specific to a particular field.
Human Skills
The ability to work effectively with ones own work group
as well as others within the organization.
Conceptual Skills
The ability to process information about the
internal/external environment of the organization and
determine its implications.
 Technical skills tend to be most important for first line
managers.
Human skills are most important for middle managers because
these managers must coordinate the efforts of members of
ones work group as well as coordinate with other work group
within the organization.
The top level managers need to have strong conceptual skills if
they are to effectively accomplish their jobs.
 A small rabbit saw the "Can I also sit like you and
crow, and asked him, do nothing all day long?"
The crow answered "Sure, why not."

All of a sudden, a fox appeared, jumped on the rabbit and ate it.

Moral of the story:

TO BE SITTING AND DOING NOTHING -
YOU MUST BE SITTING VERY, VERY HIGH !!!
 I would love to be able to get to the top of that tree,
sighed the turkey, but I haven't got the energy.

Well, why don't you nibble on some of my droppings?

replied the bull They're packed with nutrients.

The turkey pecked at a lump of dung and found that it actually gave him enough
strength to reach the first branch of the tree. The next day, after eating some more
dung, he reached the second branch. Finally after a fortnight, there he was
proudly perched at the top of the tree.

Soon he was spotted by a farmer, who shot the turkey out of the tree.

Moral of the story:

BULLSHIT MAY GET YOU TO THE TOP BUT IT
WONT KEEP YOU THERE !!!
 A little bird was flying south for the winter. It was so cold,
that the bird froze and fell to the ground in a large field.

While it was lying there, a cow came by and dropped some

dung on it. As the frozen bird lay there in the pile of cow dung,
it began to realize how warm it was.
The dung was actually thawing him out! He lay there all warm & happy and
soon began to sing for joy.!!
A passing cat heard the bird singing and came to investigate.
Following the sound, the cat discovered the bird under the pile of cow dung
And promptly dug him out and ATE him !!!

Morals of the story:

1. NOT EVERYONE WHO DROPS SHIT ON YOU IS
YOUR ENEMY !
2. NOT EVERYONE WHO PULLS YOU OUT OF SHIT
IS YOUR FRIEND !!
3. MOST IMPORTANT WHEN YOU ARE IN DEEP
SHIT, KEEP YOUR MOUTH SHUT !!!
 When the body was first made, all the parts wanted to be boss !

The brain said, "I should be Boss because I control the whole
body's responses and functions."

The feet said, " We should be Boss as we carry the brain

about and get him to where he wants to go."

The hands said, " We should be the Boss because we do all

the work and earn all the money."

And so it went on and on with the heart, the lungs and the eyes until
finally the ASSHOLE spoke up !
All the parts laughed at the idea of the ASSHOLE being the Boss !!!

So the asshole went on strike,

blocked itself up and refused to work !!!
 Within a short time ..

The eyes became crossed,

The hands involuntarily clenched,
The feet uncontrollably twitched,
The heart and lungs began to panic and
The brain got warped up !!!

Eventually they all decided that the asshole should be the Boss
and so the motion was passed accordingly.

All the other parts did all the work while ..

The Boss just sat and passed out the shit !!!

Moral of the story:

YOU DONT NEED BRAINS TO BE A BOSS !!!
ANY ASSHOLE WILL DO !!!
DO NOT TRY HARD YOU WILL BE A BOSS ANYWAY !!!!
 Role is the basic behavior that is expected in a particular
situation.
The work of Henry Mintzberg is widely used to explain the
roles that managers typically perform.
There are three categories of roles that have been found:
1. Interpersonal roles
2. Informational roles

3. Decisional roles
Category Role Sample Activities

Interpersonal Figurehead Attending ribbon-cutting ceremony for new plant

Leader Encouraging employees to improve productivity
Liaison Coordinating activities of two projects

Informational Monitor Scanning industry reports to stay abreast of

developments
Disseminator Sending memos outlining new organizational
initiatives
Spokesperson Making a speech to discuss growth plans

Decisional Entrepreneur Developing new ideas for innovation

Disturbance Resolving conflict between two subordinates
handler
Resource allocator Reviewing and revising budget requests
Negotiator Reaching agreement with a key supplier or labor
union
Interpersonal Roles
The managers responsibility for managing relationships with
organizational members and other constituents:
Figurehead (perform certain duties that are primarily
ceremonial in nature, e.g attend social event).
Leader (they work with and through their employees to
ensure that the organizations goal are met).
Liaison (they coordinate the activities between
individuals and work groups within the organization and
develop favorable relationship with outside organization,
e.g social responsibility)
Informational Roles
The managers responsibility for gathering and disseminating
information to the stakeholders of the organization
(communication center and source)
Monitor (managers continually scan the internal and
external environments of their organizations for useful
information opportunities and threats)
Disseminator (managers share and distribute the
information so that the employees can perform their
work)
Spokesperson (managers must often communicate
information to individual outside their units and their
organization).
Decisional Roles
The managers responsibility for processing information and
reaching conclusions:
Entrepreneur (managers initiates projects that capitalizes
on opportunities that have been identified)
Disturbance handler (they must cope with conflict and
handle disturbances)
Resource allocator (managers determine which projects
will receive organizational resources)
Negotiator (managers spend a good portion of their time
negotiating with employees, suppliers and others.
Nature of Work
Administration: It is concerned about the determination of
objectives and major policies of an organization.
Management: It puts into action the policies and plans laid
down by the administration.

Scope
Administration: It takes major decisions of an enterprise as
a whole.
Management: It takes decisions within the framework set
by the administration.
Level of Authority
Administration: It is a top-level activity.

Management: It is a middle level activity.

Nature of Status
Administration: It consists of owners who invest capital in
and receive profits from an enterprise.
Management: It is a group of managerial personnel who use
their specialized knowledge to fulfil the objectives of an
enterprise.
Nature of Usage
Administration: It is popular with government, military,
educational, and religious organizations.
Management: It is used in business enterprises.

Decision Making
Administration: Its decisions are influenced by public
opinion, government policies, social, and religious factors.
Management: Its decisions are influenced by the values,
opinions, and beliefs of the managers.
Main Functions
Administration: Planning and organizing functions are involved
in it.
Management: Motivating and controlling functions are
involved in it.

Abilities
Administration: It needs administrative rather than technical
abilities.
Management: It requires technical activities

Management handles the employers.

Administration handles the business aspects such as finance.

 Competency A combination of knowledge, skills,
behaviors, and attitudes that contribute to personal
effectiveness.

Managerial Competencies Sets of knowledge, skill,

behaviors, and attitudes that a person needs to be effective in a
wide range of positions and various types of organizations
Six Core Managerial Competencies:
What It Takes to Be a Great Manager
Communication Competency

Planning and Administration Competency

Teamwork Competency

Strategic Action Competency

Multicultural Competency

Self-Management Competency
 Communication Competency
Ability to effectively transfer and exchange information
that leads to understanding between yourself and others
Informal Communication
Used to build social networks and good
interpersonal relations
Formal Communication
Used to announce major events/decisions/
activities and keep individuals up to date
Negotiation
Used to settle disputes, obtain resources,
and exercise influence
Planning & Administration Competency
Deciding what tasks need to be done, determining
how they can be done, allocating resources to enable
them to be done, and then monitoring progress to
ensure that they are done
Information gathering, analysis, and problem solving
from employees and customers

Planning and organizing projects with agreed

upon completion dates
Time management

Budgeting and financial management

 Team Work Competency
Accomplishing tasks through small groups of
people who are collectively responsible and
whose job requires coordination
Designing teams properly involves having
people participate in setting goals

Creating a supportive team environment gets

people committed to the teams goals

Managing team dynamics involves settling

conflicts, sharing team success, and assign tasks
that use team members strengths
 Strategic Action Competency

Understanding the overall mission and values of

the organization and ensuring that employees
actions match with them

Understanding how departments or divisions of

the organization are interrelated

Taking key strategic actions to position the firm

for success, especially in relation to concern of
stakeholders

Leapfrogging competitors
 Snapshot

Sony must sell off businesses that dont fit

its core strategy of fusing gadgets with films,
music, and game software. That means
selling off its businesses in its Sony Financial
Holdings, which are very profitable.

Howard Stringer, CEO, Sony

 Understanding, appreciating and responding to
diverse political, cultural, and economic issues
across and within nations

Cultural knowledge and understanding of the

events in at least a few other cultures

Cultural openness and sensitivity to how others

think, act, and feel

Respectful of social etiquette variations

Accepting of language differences

 Self-Management Competency

Developing yourself and taking responsibility

Integrity and ethical conduct

Personal drive and resilience

Balancing work and life issues

Self-awareness and personal development

activities
 Self-Management Competency

Snapshot

My strengths and weaknesses havent

changed a lot in 51 years. The important
thing is to recognize the things you dont do
well and build a team that reflects what you
know the company needs.

Anne Mulcahy, CEO, Xerox

Learning Framework for Managing
Part I: Overview of Management
Part II: Managing the Environment
Part III: Planning and Control
Part IV: Organizing

Part V; Leading
Whats the System Approach?
The system approach defines a system as a set of interrelated
and interdependent parts arranged in a manner that produces a
unified whole. Societies are systems and so, too, are
computers, automobiles, organizations, and animal and human
bodies.
Two basic types of the system:

Closed Systems are not influenced by and do not interact

with their environment.
Open Systems dynamically interacts with its environment.

An organization is an open system

The operating model in organizational systems

An Organization Is an Open System
An organization is a system that interacts with and depends
upon its environment.
Organizations Stakeholders: Any group that is affected
by organizational decisions and policies. The managers
job is to coordinate all stakeholders to achieve the
organizations goals.
Organizational survival often depends on successful
interactions with the external environment.
The Operating Model in Organizational System
 A system is an organized combination of parts, which forms
interactions between the parts and between the system and the
environment.
Gives managers a way of looking at organizations as a
complete whole.
Systems can be divided into two categories:
Deterministic: Behavior can be determined
Probabilistic: Behavior can only be estimated
A system includes different elements or systems called sub-
systems: Sensing system, Information coding system,
Physical processing system, Regulating and controlling
system, Information and storage system, Goal setting or policy
making system.
 The Systems approach is based on the concept that an
organization is a system.
A system is defined as a number of interdependent parts
functioning as a whole for some purpose.
A system has 5 components: inputs, a transformation process,
outputs, feedback, and the environment.
Systems Concepts - System Boundaries and Subsystems
Systems consist of numerous subsystems.
Each subsystem has elements, interactions with other
subsystems, and objectives.
Subsystems perform specialized tasks for the overall system.
 Inputs and Outputs
Outputs are a result of changed inputs

Outputs of one subsystem become inputs to another

subsystem.
Outputs must adhere to standards to be useful or
acceptable to the next subsystem.

Environment
Environment consists of people, organizations and other
systems that supply data to or that receive data from the
system
Managers at different levels perceive Environment
differently
Inputs: 5 Ms of Management
Inputs (resources managers deal with):
Man: human resources, both inside and outside
Materials: raw material, goods (hard & software,
processed or semi-finished) and services required to create
the sellable end product
Machines: technology and expertise deployed towards the
transformation process
Methods: systems, procedures and processes seamlessly
put together for the transformation;
Measurement: score-keeping and in-process monitoring
continuously with due feedback to keep on-course on time.
Money is required for generating all these Ms managers
need to acquire, deploy, generate and distribute money as a
primary need for business.
Output for Stake-holders in Business:
Stake-holders:

Shareholders: are the owners. They have put in their

money in the enterprise, expecting better returns from it
than from other ventures
Society: includes the State and local governments for the
improvement of quality of life of its citizens
Suppliers: continuity of their enterprise depends on the
success of the customer enterprise
Customers

Employees: livelihood depends on the success of the

enterprise
Output for Stake-holders in Business:
There is a freedom of choice (for association) between each
of these stake-holders and the enterprise in the longer term:
But they sink or swim together in the shorter term

Length of term definition varies with individuals

Management as a system transforms inputs:

by the process of Planning, Organizing, Staffing, Leading &
Controlling
to accomplish pre-determined goals or objectives (based on
stakeholders needs)
Systems Approach to Management
 Case approach: Experiences in an organization are analyzed
with the help of cases. Based on these successes and failures
are identified.
Interpersonal behavior approach: This approach is based on
individual psychology. It lays emphasis on interpersonal
behavior, human relations and motivation.
Group behavior approach: This approach is based on the
theories of Sociology and Social Psychology. The focus of this
approach is on the study of group behavior patterns.
Cooperative social system approach: This approach is
concerned with interpersonal relations and group behavior.
Decision theory approach: This approach is concerned with
the decision making process, that involves individuals or
groups.
 Social-technical systems approach: This approach highlights
about the relationships among people and their ability in the
utilization of technical systems. (personal attitudes, group
behavior etc.)
Systems approach: The systems approach is a study about the
inter-relationship between planning, organizing and
controlling among the sub-systems in organizations.
Mathematical approach: This approach views management as
a purely logical process, expressed in mathematical symbols
and relationships.
Managerial roles approach: It involves the study of
managerial roles that are based on interpersonal, informational
and decision roles.
 Situational approach: This approach recognizes the influence
of the given solutions, regarding organizational behavior
patterns.
McKinsey's 7-S framework: 7-S's structured by McKinsey are
strategy, structure, systems, style, staff, shared values and
skills.
Operational approach: This approach draws together the
different concepts, principles, techniques and knowledge from
other fields and from different types of managerial approaches.
 The Increasing Importance of Customers
Customers: The reason that organizations exist
Managing customer relationships is the responsibility
of all managers and employees.
Consistent high quality customer service is essential
for survival.

Innovation
Doing things differently, exploring new territory, and
taking risks
Managers should encourage employees to be aware of
and act on opportunities for innovation.
 The universality of management
Good management is needed in all organizations.

The reality of work

Employees either manage or are managed.

Rewards and challenges of being a manager

Management offers challenging, exciting and creative
opportunities for meaningful and fulfilling work.
Successful managers receive significant monetary
rewards for their efforts.
Management comes from
Management" (from Old French management "the art of
conducting, directing", from Latin Manu agere "to lead by
the hand").
One can also think of management functionally, as the action
of measuring a quantity on a regular basis and of adjusting
some initial plan, and as the actions taken.
4000 BC BC years (Before Capitalization) Slave Labor.
1-500 AD Classical Era (Greeks & Self production.
Alexander) Artisan Production.

500 1300 AD. Early ages of Capitalism. Crafts & Guilds.

1300 1500 AD. Protestant Capitalism Rise of Trade.
1500 1776. Mercantilism. Rise of Trade.
1776 1890 Industrial Capitalism New World Factory Production.
1890 1933 Financial Capitalism Revolution in England.
1933 1950 National Capitalism American Contribution.
1950 To Date Managerial Capitalism Second Revolution
The Classical ERA Contributors are:
Frederick Taylor

Max Weber

Frank Lillian Gilbert

Henri Fayol

Chester Barnard
Scientific Management focuses on ways to
improve the performance of individual workers.
Some of the major contributors are:
1856 - 1912

Frederick W. Taylor designed a 4-step Method

It begins with breaking the job into its smallest pieces.
The second step is to select the most qualified employees
to perform the job and train them to do it.
Next, supervisors are used to monitor the employees to be
sure they are following the methods prescribed.
Finally, continue in this fashion, but only use employees
who are getting the work done.
 Henry Gantt developed the Gantt Chart, which is used for
scheduling multiple overlapping tasks over a time period.
He focused on motivational schemes, emphasizing the
greater Effectiveness of Rewards for Good Work (rather
than penalties for poor work).
He developed a Pay Incentive System with a guaranteed
Minimum wage and Bonus Systems for people on Fixed
Wages. Also, Gantt focused on the importance of the
qualities of leadership and management skills in building
effective industrial organizations
 Max Weber (1864-1920), known as the Father of
Modern Sociology, analyzed Bureaucracy as the most
logical and rational structure for large organizations.
Bureaucracies are founded on legal or Rational Authority
which is based on law, procedures, rules, and so on.
Efficiency in bureaucracies comes from:
Clearly defined and specialized functions.

Use of legal authority, Technically trained bureaucrats.

Hierarchical form, Written rules and procedures.

Appointment to positions based on technical expertise.

Promotions based on competence.

Clearly defined career paths.
 Frank Gilbert, known as the Father of Time and Motion
Studies, filmed individual physical labor movements. This
enabled the manager to break down a job into its component
parts and streamline the process.

Lillian Gilbert, was a psychologist and author of The

Psychology of Work. In 1911, Frank Gilbreth wrote Motion
Study and in 1919 the couple wrote Applied Motion Study.
 Administrative Management emphasizes the manager and
the functions of management.
Henri Fayol (1841--1925), known as the Father of Modern
Management, was a French industrialist who developed a
framework for studying management.
He wrote General and Industrial Management. His five
functions of managers were Plan, Organize, Command,
Coordinate, and Control.
His Fourteen Principles of Management included:
Authority and Responsibility Centralization
Division of Work Scalar Chain
Discipline Order
Unity of Command Equity
Unity of Direction Stability of Tenure of Personnel
Subordination Initiative
Remuneration of Personnel Esprit De Corps (Union is Strength)
 Authority & Responsibility: Here, Fayol finds authority
and responsibility to be related, with the later arising from
the former. He sees authority as a combination of official
factors, deriving from the manager position and personal
factors.
Division of Work: This is the specialization that economists
consider necessary for efficiency in the use of labor. Fayols
applies the principle to all kinds of work, managerial as well
as technical.
Discipline: Seeing discipline as respect for agreements
which are directed at achieving obedience, application,
energy, and the outward marks of respect. Fayol declares
that discipline requires good superiors at all levels.
 Unity of Command: This means that employees should
receive orders from one superior only.
Unity of Direction: According to this principle, each group
of activities with the same objective must have one head
and one plan.
Subordination of individual to general interest: This is
self explanatory when the two are found to differ,
management must reconcile them.
Remuneration and Methods: of payment should be fair
and afford the maximum possible satisfaction to employees
and employer.
 Centralization: Without using the term Centralization of
authority. Fayol's refers to the extent to which authority is
concentrated or dispersed. Individual circumstances will
determine the degree that will give the best overall yield.
Scalar Chain: Fayol thinks of this as a chain of superiors
from the highest to the lowest ranks, which, while not to be
departed from need lessly, should be short circuited when to
follow it scrupulously would be detrimental.
Order: Breaking this into material and social order, Fayol's
follows the simple adage of a place for everything and
everything in its place.
 Equity: Loyalty and devotion should be elicited from
personnel by a combination of kindliness and justice on the
part of managers when dealing with subordinators.
Stability of tenure: Finding unnecessary turnover to be both
the cause and the effect Of bad management, Fayol points out
its dangers and costs.
Initiative: Initiative is conceived of as the thinking out and
execution of a plan. Since it is one of the keenest satisfactions
for an intelligent man to experience.
Esprit de corps: This is principle that in union there is
strength as well as an extension of the principle of unity of
command, emphasizing the need for teamwork and the
importance of communication in obtaining it.
 Sole Trader
Partnership

Hindu Undivided Family

Joint Stock Company

Cooperatives

Government in Business
Departmental
Public Corporation
Government Companies
Sole Trader
Oldest form of Organization

Features: Merits:
One man Ownership and Easy Formation
Control Flexibility
Capital Contribution Quick Decision
Unlimited Liability
Enjoyment of Entire Profit Demerits:
No separate Legal Entity Limited Capital
Lack of Specialization
 Partnership Firm
Acc. to Sec. 4 of Indian Partnership Act, 1932, Partnership
is the relation between persons who have agreed to share the
profits of a business carried on by all or any of them acting
for all
Features: Merits:
Agreement Flexibility
Sharing of Profits More Credit Standing
Unlimited Liability Quicker and Better
No separate Legal Entity Decisions
Non-Transferability of Interest Sharing of Risk
Registration
Agency Relationship Demerits:
Unlimited Liability
Hindu Undivided Family
Unique in India

Based on Hindu Law

Head of family : Karta

Members : Coparceners

System is declining as the current concept is Nuclear

Families.
 Joint Stock Company
Haney : A company is an incorporated association; It is an
artificial person created by law, having separate identity,
with a perpetual succession and a common seal.
Features: Merits:
Separate Legal Entity Flexibility
Perpetual Succession Availability of Credit
Common Seal Easy Expansion
Limited Liability
Easy Transferability of Shares Demerits:
Professionalism of Separation of Ownership and
Management Control
Economies of Large Scale Not Flexible
Neglecting Minority Interest
Delay in Decision Making
Cooperative Society
Principles : Merits:
Voluntary Organization Easy Formation
Equality Limited Liability
Democratic Management Social Benefit
(1 person- 1 vote)
Pooling of Resources Demerits:
Spirit of service Inefficient Management
Membership : min. 25 & max. no Limited Capital
limit Non Transferability of
Registration Compulsory Interest
(Cooperative Societies Act, 1912)
Liability
Separate Legal Entity
Limited Liability
Government in Business
Objectives
Helping all round industrialization
Developing Basic Industries
Establishing Enterprises requiring heavy investment
To provide Necessities
To run Monopoly sectors
For Balanced Economic growth
Making Full Employment
To Increase Government Resources
Forms
Department of the Government
Separate Corporation
Joint Stock Company
 Departmental Organization
Eg.: Railways, Post & Telegraph, Defense
Features:
Wholly dependant on
Government
Management in Govt. hands
(Minister is responsible &
answer to Parliament)
Financed through Budget
Legal Immunity (action not
taken without Government
permission)
Employees are civil servants
Merits:
Complete Govt. Control
Source of income for
Government
Secrecy
Demerits:
Excessive Govt. Interference
Delay and Red-tapism
Inefficiency
Tax Burden on Public
Political Changes
 Public Corporation
Autonomous body created by a special statute of a State or
Central Government. Eg: LIC, PF, ESIC, FCI etc.
Features: Merits:
Separate Legal Entity Internal Autonomy (Free
Perpetual Existence from Govt.)
Government Investments Protect Public Welfare
wholly
Management (Board of Demerits:
Directors) Difficulty in making changes
Service Motive Misuse of powers
Accountability (to Inefficient
Parliament) Lack of Interest (Ownership
Employees not civil servants & Control indifferent hands)
 Government Companies
Company in which not less than 51%of shares are held by
Central or State Government and registered under
Companies Act, 1956.
Started in fields where investment is heavy and also take
over private sick units
Eg. Air India, Tamil Nadu Newsprint and Papers Ltd., BSNL

Merits: Demerits:
Participation with public Return on Investment is
Technical know-how low
Flexibility (like a Company) Operational Efficiency