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PART:A: Principles and Functions of Management: Unit - 1
PART:A: Principles and Functions of Management: Unit - 1
Definitions of Management
Following are the main definitions of management.
(1) According to Harold Koontz, "Management is the art of getting things done through
others and with formally organised groups. "
(2) According to George R. Terry, "Management is a distinct process consisting of
planning, organising, actuating and controlling; utilising in each both science and art, and
followed in order to accomplish pre-determined objectives."
(3) According to F.W. Taylor, "Management isthe art of knowing what you want to do
and then seeing that they do it in the best and the cheapest way."
(4) According to Peterson and Plowman, "Management may be defined asthe process by
means of which the purpose and objectives of a particular human group are determined,
clarified and effectuated.
Characteristics of Management
On the analysis of various definitions, the following characteristics of management emerge:
(1) Management is Goal Oriented Process: No goal in the hand-no need of management. In
other words, we need management when we have some goals to be achieved. A manager on
the basis of his knowledge and experience tries to achieve the goals which are already
decided. Hence, nothing is wrong to say that management is a goal oriented process.
(2) Management is all Pervasive: Anything minus management is nothing or zero. Here by
anything we mean all types of activities-business and non-business. If we deduct
management out of these activities, the result will be failure or zero. It means management is
necessary to conduct any type of -- activities. Hence, it is pervasive or universal.
(3) Management is Multidimensional: The management is a three dimensional activity:
(i) Management of Work: Every organisation is established for doing some work, like a
school provides education, a hospital treats patients, a factory produces, etc. Of these no work
can be completed satisfactorily without management. (ii) Management of People: Each
organization is established for doing some work and the same is conducted by people. Hence,
it is necessary to manage the people so that the work can be accomplished in a better way.
(iii) Management of Operations: To achieve the goals of an organisation many operations
or activities are need to be conducted, such as, production, sale, purchase, finance,
accounting, R&D, etc. Again, management is needed to make sure that operations are
accomplished efficiently and effectively.
(4) Management is a Continuous Process: The various managerial activities cannot be
performed once for all, but it is a continuous process. A manager is busy sometimes in doing
one managerial activity and at other time some other activity.
(5) Management is a Group Activity: It means that it is not a single person who
consummates all the activities of an organization but it is always a group of persons
(Managers). Hence, management is a group effort.
(6) Management is a Dynamic Function: Management isa dynamic activity as it has to
adjust itself to the regularly changing environment. In this context, it can be rightly said that
nothing is eternal in management.
(7) Management is an Intangible Force: Management is that power which cannot be seen.
It can only be felt-If any organization is heading toward higher levels of achievement, it
signifies existence of good management and vice-versa.
Objectives of Management
Objectives of management can be broadly divided into the following three categories:
(1) Organisational Objectives
(2) Social Objectives
(3) Personal or Individual Objectives.
(1) Organisational Objectives: It refers to ascertain objectives for the whole organisation.
While fixing these objectives, management keeps into consideration benefit of all related
parties (like owner, employee, customer, government, etc.). This also fulfil organisational
economic objective which are survival, profit and growth.
(i) Survival: Every business wants to survive for long. So, management by taking positive
decisions with regard to different business activities should ensure that business survives for
long.
(ii) Profit: Profit plays an important role in facing business hazards and successful running of
business activities. So, it must be ensured that adequate profit is earned by the business.
(iii) Growth: Every business wants to grow. Management must ensure growth of business.
Growth can be measured by sales, number of employees, products, capital investment, etc. If
all these show increasing trend then it can be concluded that business is heading towards
growth.
(2) Social Objectives: Itrefers to the consideration of the interest of the society during
managerial activities. An organisation is established in a society. It runs through the resources
made available by the society, That is why it becomes the responsibility of every organisation
to account for social benefits. Thus, social objectives are defined as the fulfillment of
responsibility of an organisation towards society. Under this objective manager promises to
assure health, safety and price control.
Main social objectives of management are included in the following list:
(i) To make available employment opportunities.
(ii) To save environment from getting polluted.
(iii) To contribute in improving living standard.
For example: Asian Paints has provided funds under its community development programme,
which made possible the effective utilisation of local resources by the farmers. In the same
manner, Steel Authority of India regularly provides services related to agriculture, industry,
education, health, etc. to the people living nearby to its steel plant.
(3) Personal or Individual Objectives: It refers to ascertainment of the objectives in reference
to the employees. Employee class is an initiative and empathetic resource of a company.
Thus, special attention needs to be given towards its feelings. If the company is able to satisfy
its employees it will be able to progress in 'leaps and bounds.
Main objectives of management towards employees are as follows:
(i) To give deserving remuneration, (ii) To provide good working environment, (iii) To
provide a share in profit.
Importance of Management
Anything - Management = Zero / Failure / Nothing
The above mentioned mathematical equation highlights the importance of significance of
management very well. Here by anything we mean all types of activities whether business or
non-business. If we are not going to manage these activities the result will be Zero or Failure
or Nothing. In short, the importance of management is explained through the following facts:
(1) Management helps in achieving Group Goals: In is the most important characteristic of
management that it is goal-oriented activity. A manager achieves these goals by giving the
proper direction to the efforts of all individuals.
(2) Management Increases Efficiency: A manager increases efficiency through the
optimum utilization of all the resources, such as, Man, Machine, Material and Money.
(3) Management Creates a Dynamic Organisation: Every organisation works in an ever
changing environment. To face the changing environment, many changes need to be made in
the organisation as well. But people resist changes. Manager creates a favourable
environment through introducing employees to the benefits arising by adapting changes.
(4) Management helps in achieving Personal Objectives: Every employee wants to get
suitable remuneration, a share in profit, participation in management, promotion, etc. in the
form of his personal objectives. This objective can only be achieved, if they work while using
their full abilities. Managers make employees able through motivation, good leadership and
open communication. As a result, they attain their individual objectives.
(5) Management helps in the Development of Society: Management has some
responsibility towards society. Managers by fulfilling their social responsibilities helps in the
development of society. These responsibilities are to provide employment opportunities, to
prevent environment from getting pollution, to make available good quality products at a
reasonable price, etc.
CONCEPTS
1. Meaning of Management: Management is the process of conducting a set of functions,
such as, planning, organizing, staffing, directing and controlling to get the work done in an
efficient and effective manner.
2. Characteristics of Management: (i) Management is a goal oriented process,
(ii)Management is all pervasive, (iii) Management is multidimensional, (iv)Management is a
continuous process, (v) Management is a group activity, (vi)Management is a dynamic
function, (vii)Management is an Intangible force.
3. Objectives of Management: (i) Organisational Objectives: It refers to the ascertainment of
objectives for the whole organisation. (ii) Social Objectives: It refers to the consideration of
the interest of the society during managerial activities. (iii) Personal or Individual Objectives:
It refers to the ascertainment of the objectives in reference to the employees.
4. Importance of Management: (i) Management helps in achieving group goals, (ii)
Management increases efficiency, (iii) Management creates a dynamic organisation, (iv)
Management helps in achieving personal objectives, (v) Management helps in the
development of society.
Assignments
Management: Concept
6 Marks
1. What is meant by Management? Explain any four characteristics.
2. 'Management is Multidimensional.' Explain.
4/5 Marks
3. Clarify the meaning of 'Group Efforts' in management.
4. Explain any four characteristics of Management.(CBSE 2005)
5. Explain any five features of management. (CBSE 2006)
3 Marks
6. Define management.
7. Clarify the following equation: 'Anything - Management = Zero'.
8. Explain in brief, 'management' as an activity. (C.B.S.E. 2004, 06)
9. Explain, in brief, 'Management' as a process.
10. How Management is a 'Goal Oriented Process'?
11. Management is not visible, it can only be felt. Explain.
12. How is management a Continuous Process?
13. 'Explain, in brief, management as a 'Dynamic Function.'
14. Explain 'Management of people' as a dimension of management.
15. Explain in brief, 'management' as a group of people having managerial responsibility for
an enterprise. (C.B.S.E. 2004)
16. State any two characteristics of management. (C.B.S.E. 2004)
1 Mark
17. What is meant by the term Management?
Ans. Management is the process of conducting a set of functions (planning, organizing,
staffing, directing and controlling) to get the work done in an efficient and effective manner.
18. What does a manager aspire while doing work?
Ans. A manager wants to make optimum utilisation of resources (manpower, money,
material, machines, etc.) in order to accomplish the work efficiently and effectively.
19. Clarify the terms efficiency and effectiveness in management.
Ans. Efficiency refers to do the job in a cost effective manner. Effectiveness refers to
complete the job on time, no matter whatever is the cost.
20. What is meant by 'Doing things Right' in management?
Ans. 'Doing things Right' refers to do the job in a cost effective manner.
21. What is the meaning of 'Doing the Right Things' in management?
Ans. 'Doing the Right Things' refers to complete the job, no matter whatever is the cost.
22. Why is it said that management is all pervasive? (C.B.S.E. 2009)
Ans. Because it is needed in all spheres say - business and non-business organisations.
23 'Management is uniformly needed at all places.' Explain.
Ans. It is needed throughout the world whether it is India, America or Japan.
24 'Management is multi-dimensional.' Enumerate any tow dimensions of management.
Ans. (i) Management of work. (ii) Management of people.
25 'Nothing is permanent in management.' Give an example.
Ans. For example, principles of management are changing according to the changing
business environment.
26 Management cannot be seen.' Explain.
Ans. Management cannot be seen, it can only be felt
27' In an organisation employees are happy and satisfied. there is no chaos and the effect of
management is noticeable.' Which characteristic of management is highlighted by this
statement? (CBSE 2008)
Ans. Management is an intangible force
28 Name the process of working with and through others to effectively achieve organisational
objectives by efficiently using its limited resources in the changing environment. (CBSE
2008)
Ans. Management.
29 , 'In order to be successful an organization must change its goals according to the needs of
the environment.' Which characteristic of management is highlighted in the statement?
(CBSE Sample Paper)
Ans. Management is dynamic.
30 Give any two characteristics of management. (CB.SE. Sample Paper)
Ans. (i)Management is goal-oriented process. (ii)Management is all pervasive
31 The management principles can be applied to all types of activities.' Which characteristic
of management is highlighted by this statement? (C.B.S.E. 2008)
Ans. Management is all pervasive.
32. Name the process of designing and maintaining an environment in which individuals
working together in groups, efficiently accomplish selected aims. (C.B.S.£. 2008)
Ans. Management.
33. Why is it said that management is a goal-oriented process? (CB.S.E. 2009)
Ans. Management said to goal oriented process as it helps in getting goals by coordinating
the efforts of various individuals.
34. Why is "management called a group activity"? (C.B.S.E2009)
Ans. It means that it is not a single person (manager) who consummates the whole process of
management but it is conducted by a group of persons (managers).
35. "Management creates a dynamic organisation." How? (Foreign 2009)
Ans. Management creates such type of organisation which is able to face the regularly
changing environment easily.
Objectives of Management
6 Marks
36. Explain the objectives of management.
4/5 Marks
37. Explain in brief the objectives of management.
38. Discuss the social objectives of management. (CB.S.E. 2007)
39. What are the three categories of objectives of management?
40. List the three examples of Social Objectives of management.
1 Mark
41. What are the organisational objectives of management?
Ans. It includes survival, profit and growth.
42. "Management helps in development of society." How? (C.B.S.E. 2009)
Ans. Management enables the organisation to make available employment opportunities,
hence helping in the development of society.
43 What do you mean by personal objectives of management?
Ans. It refers to the consideration of the interest of employees during managerial activities.
44 To meet the objectives of the firm the management of Angora Ltd. offers employment to
physically challenged persons. Identify the organization's objective it is trying to achieve.
(CB.S.E. Sample Paper)
Ans. It is social objective.
45. Management of any organization strives to attain different objectives. Enumerate any two
such objectives? (C.B.SE Sample Paper)
Ans. (i) Organisational objectives, (ii) Social objectives.
Importance of Management
6 Marks
46. 'Anything minus management is zero.' Explain the importance of management in the light
of this statement.
47. Explain the significance of management in running of modem enterprise. (CB.S. E. 2001)
48. 'Management is the art of getting things done through others.' Explain the importance of
management in the light of this statement.
49. How is management essential for the successful running of an enterprise?
50. 'Lack of proper management results in wastage of time, money and efforts.' Do you agree
with this statement? Give reasons in support of your answer. (CBSE 2003)
51. Explain any five reasons why management is essential in any organisation? (C.B.SE
2006)
4/5 marks
52. Explain by giving any four points why management is important in any organisation?
(CB.S.E. 2005)
53. 'In the absence of management' the productive resources will remain resources and shall
never become production.' Explain the importance of management in the light of the above
statement. (CB.SE 2006)
54. "Success of an organization largely depends upon its management." Explain any five
reasons to justify the above statement. (C.B.S.E. Sample Paper)
55. How does management help in the development of society?
1 Marks
56. ;Anything minus management is nothing.' What does this statement tell?
Ans. It tells about the importance of management.
57. 'Anything minus management is nothing.' Here what is the meaning of 'anything'?
Ans. It refers to all types of activities, such as, business and non-business activities.
58. 'Anything minus management is nothing'. Here what is the meaning of 'nothing'?
Ans. It refers to failure or loss.
59 Name the two points of the importance of management.
Ans. (i) It helps in achieving group goals. (ii) It increases efficiency.
60 "Management increases efficiency." How? (C.B.SE 2009)
Ans. A manager increases efficiency through the optimum utilisation of all the resources,
such as, man, machine, material and money
[2] Mr. PROBLEM is working at the post of Sales Manager in Surabhi Tel. Ltd. Last year,
the targeted sales increased to 20,000 units from earlier target of 18,000 units. This he
achieved very easily. To achieve this, he increased the expenditure on advertisement to
almost double.
(i)Did sales manager perform his duty efficiently and effectively?
(ii) If not, then how?
Ans. Mr. Problem is effective as he gets his job done but not efficient as the job is done at a
very high cost.
[3] Is there any difference in planning, organising, staffing, directing and controlling of
various organisations such as a school, a club, a restaurant and a steel plant. This case is
related to which characteristic of management?
ANS. No, there is no difference as far as the functions of management are performed by
various organisations. In other words, all the functions of management are performed in a
similar manner in all types of organisations, i.e., business or non-business. This case is
related with the characteristics of management, namely, 'management is all pervasive'.
QUERY Session
Mr. Question: Sir, a manager while performing his duty efficiently and effectively tries to
best utilise the resources. This is absolutely correct. However, while doing this what is his
focus of thinking?
Mr Answer. Right, a very nice question raised. The central focus of thinking of a manager is
'establishment of coordination'. In all ways, ne/she' wants to establish coordination.
Mr. Question; Sir, coordination among whom..:.?
Mr. Answer : * Coordination among objectives
* Coordination among activities
* Coordination among people
* Coordination among divisions
Mr. Question: O.K. sir, thus a manager can achieve his objectives by establishing
coordination.
Sir, Thank U.
CHAPTER 2
MANAGEMENT AS SCIENCE, ART AND PROFESSION
Different Management experts have described the nature of management differently in their
own time.
Learning Objectives
After Studying this Chapter, you will be Acquainted with:
• Management: As a Science
* Meaning of Science
* Testing of Management as a Science
• Management: As an Art
* Meaning of Art
* Testing of Management as an Art
• Management: As a Profession
* Meaning of Profession
* Testing of Management as Profession
CHAPTER 3
LEVELS AND FUNCTIONS OF MANAGEMENT
All the functions of management are performed at all the levels of management but
there is only a difference of degree.
Learning Objectives
After studying this chapter, you will be acuainted with:
• Levels of Management
* Top Level Management
* Middle Level Management
* Lower Level or Supervisory Management
• Functions of Management
* Planning
* Organising
* Staffing
* Directing •
Supervision
• Communication
• Leadership
• Motivation
* Controlling
After clarifying meaning and nature of management, now the question arises what
different functions are performed by management? Apart from this, in order to
successfully accomplish predetermined targets of an organisation, how does an idea pass
through various managerial levels to become a reality? Answer to both these questions are
duly replied in this chapter.
Levels of Management
It will be beneficial to first understand the levels of organisation and then the levels of
management.
All the employees working in an organisation/institution can be divided into two
categories.
(1) Managerial Members (2) Non-Managerial Members
On the basis of this division of employees, an organisation can be divided into two broad
levels:
(a) Managerial Levels or Levels of Management and (b) Non-Managerial Levels.
(1) Managerial Members: In this category, Chief Executive Officer (CEO), Departmental
Managers, Supervisors, etc. are included. They are called managers because they manage
some or the other person. Manager is that person who manages somebody). Thus they all
have subordinates. The CEO, ranks highest in the hierarchy. Departmental manager is
subordinate to the CEO. Supervisors work under the departmental managers and so they
are subordinate to them. In the same manner, workers are subordinate to supervisors.
Except workers, all others are called managers irrespective of their designation. He is the
manager only who builds managerial levels. Their link among themselves is clarified in
the following diagram.
It is uite evident from the above diagram that all the employees working in an organisation
builds a chain of hierarchy. This is known as chain of authority. Chain of authority
explains the link between superior - subordinate. In this chain one manager is linked to the
other in a vertical form. In this manner, this chain from top to bottom builds many
managerial posts, which are termed as managerial levels. The term 'Level of Management'
refers to a line of demarcation between various management positions in an organisation.
Levels of management decides the authority of managers. As we move from top to
bottom, the degree of authorities goes on decreasing.
(2) Non-managerial Members: In this category, workers are included. They are those
employees who work directly on the job. The place at which such employees work is
known as platform area. As they are at the lowest level of chain in an organisation, they do
not have any subordinates, that is why they cannot be called managers. For this reason,
they are not counted among 'Level of Management'. They form the non-managerial level.
Number of Levels of Management
Levels of management do not have a definite number. Its number is fixed according to the
nature, size, etc. of the business. Brech has divided levels of management into the
following three categories:
(1) Top Level Management
(2) Middle Level Management
(3) Lower Level or Supervisory Management
Levels of Organisation
(1) Top Level Management: In top level management, Board of Directors, Chief
Executive Officer, etc. are included. Chief Executive Officer can be a single person or a
committee of officers. Chief Executive officer can be called by many names, like
Managing Director, General Manager, President, etc. Top Management has all the
management authorities, and because of these authorities officers of these levels are
accountable to owners or shareholders of the company
TOOL KIT-1
Levels in The Form of Pyramid-<s>
Levels of Management are in the form of Pyramid. By this we get the information that as
we move down from top to bottom level, the number of employees go on increasing.
Following functions are included in the list for Top Level Management:
(i) Determining Objectives: Top level management sets objectives for the organisation.
For example, an objective can be set that in the followingyear the sales ofthe company has
to cross Rs 1,000 crore.
(ii) Determining Policies: Only at this level policies related to the realisation of objectives
are formed. For example, it can be a sales policy of a company to just make cash sales.
(iii) Determining Activities: Different activities to be performed for the fulfilment of an
objective are fixed, such as sales, purchase, advertisement, production, research, etc.
(iv) Assembling Resources: Needed resources are assembled (arranged) for the realisation
of an objective, like capital, raw-material, fixed assets, etc.
(v) Controlling the Work Performance: The work in progress is closely monitored in a
company to get desired results.
(vi) Approving Budgets: Budgets prepared by different managers are given final shape,
i.e., approval is given to the budgets.
(2) Middle Level Management: Middle level management lies between top level and
lower level management. Under this, divisional heads, departmental heads, deputy
departmental heads, plant superintendents, and operations managers (Functional
Managers) are included.
(1) Planning: It refers to thinking before hand. In other words, planning is the
determination of a future course of action to achieve a desired result. Under planning it is
ascertained that what should be done, how it should be done and who should do it. If
before the commencement of a job all these points are not contemplated than the objective
of a business cannot be achieved.
Planning is a long process, for the consummation of which following steps are taken:
i) Setting objectives
(ii) Developing premises
(iii) Identifying alternative courses of action
(iv) Evaluating alternative courses
(v) Selecting an alternative
(vi) Implementing the plan
(vii) Follow up action
(2) Organising: It refers to harmonious adjustment ofvarious parts to achieve common
objectives, In order to make the first function of management (i.e., planning) functional, 'a
structure of roles' needs to be famed and sustained. The process of creating this structure
of roles is known as organising. Planning is just to put some idea in writing, but to convert
that idea into reality, a group of people is needed. Further to streamline the activities of
this group of people, organising is required. Under this, the whole project is divided into
various small jobs, to assign these jobs to designated posts (which will clarify that a
particular job will be performed at which post), to unite various jobs into one department,
to clarify the rights and duties of employees to be appointed at various posts, and to define
relationship among various posts (employees).
Following steps are taken to culminate the organising function of management:
(i) Identification and Division of Work
(ii) Departmentalization
(iii) Assignment of Duties
(iv) Establishing Reporting Relations
(3) Staffing: It refers to filling and keeping filled the post with people. In planning, ideas
are given a written shape, on the other hand organising, with the objective of converting
these ideas into reality, prepares a structure of various posts. After organising comes
staffing which deploys people on these posts so that jobs can be performed. In view of the
fact that the success of an organisation is commensurate to how adroitly every employee
performs his job, the importance of staffing function increases even more.
KEY Concepts
1. Levels of Management:
(i) Top Level Management: It includes board of directors and chief executive officer.
(ii) Middle Level Management: It includes departmental manager, deputy departmental
manager and operations or functional managers.
(iii) Lower Level Management: It includes Supervisors and foremen.
2. Functions at different Levels:
(a) Top Level Management: (i) To fix objectives, (ii) To frame policies, (iii) To determine
activities, (iv) To arrange for resources, (v) Controlling the work performance, (vi)
Approving budgets.
(b) Middle Level Management: (i) Interpreting policies, (ii) Preparing organisational set-
up, (iii) Appointing employees, (iv) Issuing instructions, (v) Motivating employees, (vi)
Creating cooperation.
(c) Lower level Management: (i) Submitting workers' grievances, (ii) Ensuring proper
working environment, (iii) Ensuring safety of workers, (iv) Helping middle level
management, (v) Inviting suggestions, (vi) Creating better human relations.
3. Non-Managerial Level: In this level of management, workers are included. As workers
are not managers they are not the part of any managerial levels.
4. Functions of Management:
(i) Planning: It refers to thinking beforehand.
(ii) Organising: It refers to harmonious adjustment of various parts to achieve common
objectives.
(iii) Staffing: It refers to filling and keeping filled the posts with people.
(iv) Directing: Itrefers to instructing, guiding, communicating and inspiring people in the
organisation.
(v) Controlling: It refers to bringing the actual results closer to the desired results.
STUDY Assignments
Levels of Management
6 Marks
1. Describe, in brief, the functions of top level management in an organisation.
2. Describe, in brief, the functions of middle level management in an organisation.
3. Describe, in brief, the functions of lower level management in an organisation.
4. What are the functions of different levels of management?
4/5 Marks
5. What are the three levels of management? State any three functions of the middle level
management. (C.B.S.E. 2007)
6. Write the meaning of 'Level of Management'. What are the main functions of top level
management?
7. What are the three levels of management? State any three functions of top level
management. (C.B.S.E. 2007)
3 Marks
8. Enumerate any three functions of a General Manager.
9. Enumerate any three functions of a Departmental Manager.
10. State any three functions of lower level management.
11. Enumerate any three functions of middle level management. (CB.SE 2006)
12. Enumerate any three functions of top level management. (CB.SE 2006)
13. What do you mean by 'Levels of Management'?
14. Write names and two functions each of the levels or tenets of management engaged in:
(a) Overseeing the activities of the workers, (b) Taking key decisions.
15. Name any two designations and two functions given to the First Line Managers.
16. What does the pyramid form of levels of management indicate?
17. Name the Levels of management engaged in: (i) Determining Policies (ii) Assembling
Resources (iii) Interpreting Policies. 1 Mark
18. Name the two categories in which all the employees of an organisation can be divided.
Ans. (a) Managerial members. (b) Non-managerial members.
19. Which are the two main categories of levels of organisation.
Ans. (a) Managerial level. (b)Non-managerial level.
20. Workers are included at which level of management?
Ans. As they are the non-managerial members, so they can't be the part of any managerial
level.
21. Workers are included at which level of organisation?
Ans. At non-managerial level.
22. What is meant by levels of management?
Ans. It refers to a line of demarcation between various managerial positions in an
organisation.
23. To determine the policies is the function of which level of management?
Ans. Top Level Management.
24. Departmental managers are included at which level of management?
Ans. At middle level management.
Functions of Management
6 Marks
25. Discuss the functions of management in brief.
26. 'Management is a series of continuous interrelated functions.' Comment.
4/5 Marks
27. Explain Planning and Organising as functions of management.
3 Marks
28. Explain briefly any three functions of management.
29. What are the elements of direction?
30. Explain the meaning of staffing function of management.
31. Explain 'direction' as a function of management.
1 Mark
32. What is meant by planning? Ans. It refers to thinking before hand.
33. What is meant by organising as a function of management?
Ans. It refers to harmonious adjustment of various elements to achieve common
objectives.
34. What is meant by staffing? Ans. It refers to filling and keeping filled the posts with
people.
35. What is meant by directing?
Ans. It refers to instructing, guiding, communicating and inspiring people in the
organisation.
36. What is meant by supervision?
Ans. It refers to monitoring the progress of work of one's subordinates and guiding them
properly.
37. What is meant by communication?
Ans. It refers to the process of passing information from one person to another.
39. What is meant by leadership?
Ans. Leadership means that uality which influences people for the attainment of a goal.
39. What is meant by motivation?
Ans. Motivation means a process which excites people to work for the attainment of a
desired object.
40. What is meant by controlling?
Ans. It refers to bring the actual results closer to the desired results.
QUERY Session
Mr. Question: Sir, at one place, you are calling organisation as the second function of
management but at another place you have used the word 'company organisation'? Sir,
does this mean organisation is a function of management and even a company can be
called an organisation? How is this possible?
Mr. Answer: A very good uestion. Listen carefully. The word organisation can be used
synonymously for two meanings:
(i) In the form of Function of Management: Organising means to decide about the
structure of roles. Thus to decide about how many posts are needed to culminate the
different activities .and what will be the authorities and responsibilities of these posts, etc.
(ii) In the form of Company/lnstitution/Enterprise: Organisation means 'Group of people.'
In this context, a company, a school and a club, etc., all are organisations. To conclude, we
can say that organising is a function of management and even a company or a 'group of
people' can be called an organisation as well.
Mr. Question: Ok, thank you sir.
CHAPTER 4
COORDINATION: NATURE AND IMPORTANCE
Coordination makes 2 + 2 = 5 possible
Learning Objectives
After studying this chapter, you will be acquainted with:
• Meaning of Coordination
• Definitions of Coordination
• Nature of Coordination
• Coordination is the Essence of Management
• Coordination is needed at all Levels of Management
• Importance of Coordination
Meaning of Coordination
The dictionary meaning of coordination is rapport. Thus, coordination isto synchronize the
various activities of an organisation. In the context of a business unit, the meaning of
coordination is to balance its various activities (purchase, sales, production, finance,
personnel, etc.) so that objectives of business can be easily achieved.
TOOL KIT-1
Coordination?
Coordination is a process through which harmony is established among different activities
of an organisation, so that organisational objectives can be successfully achieved.
Definitions of Coordination
Different management experts have defined coordination from different points of view. A
few of such definitions have been reproduced below in order to make clear the meaning of
coordination:
(1) According to Koontz and O'Donnell, "Coordination is the essence of management for
the achievement of harmony of individual efforts towards the accomplishment of group
goals. "
(2) According to Mcfarland, "Coordination is the process whereby an executive develops
an orderly pattern of group efforts among his subordinates and secures unitv of action in
pursuit of common purposes
In conclusion, coordination can be appropriately defined as the process which establishes
harmony among the various activities being performed in an organisation in order to
achieve the objectives of the organisation in an effective manner.
Nature of Coordination
Coordination is a process to establish harmony among the different activities of an
organisation, so that the desired objectives can be achieved. Definitions of coordination
present the following facts about its nature:
(1) Coordination Integrates Group Effort: The need for coordination is felt when group
effort is needed for the accomplishment of an objective. In short, it can be said that
coordination is related to group effort and not individual effort. The question of
coordination does not arise, if the job is done by one person only.
(2) Coordination Ensures Unity of Action: The nature of coordination is of creating unity
in action. It means during coordinating process an effort is made to create unity among the
various activities of an organisation. For example, the purchase and sale departments have
to coordinate their effort so that supply of goods takes place according to purchase orders.
(3) Coordination is a Continuous Process: It is not a job which can be performed once and
for all, but its need is felt at every step. Many activities are performed ina business.
Sometimes or the other, if anyone of the activity goes on fluctuating either for more or less
than required, the whole organisational balance is disrupted. Thus, a close watch has to be
kept on all the activities to maintain the balance.
(4) Coordination is an All-Pervasive Function: Pervasiveness refers to that truth which is
applicable to all spheres (business and non-business organisations) and places uniformly.
The nature of coordination is pervasive. Like making of time-table in an educational
institution is an apt example of establishing coordination. In the game of cricket, the
placement of players at pre-determined positions is nothing but coordination. In the same
manner, to synchronize the activities of different departments, like purchase, sales,
production, finance, etc. in a business organisation is coordination.
(5) Coordination is the Responsibility of All Managers: Coordination is needed at all the
three, i.e., top, middle and lower managerial levels. Different activities performed at all the
levels are equally important. Thus it is the responsibility of all the managers that they
make efforts to establish coordination. That is why, it could not be said that coordination is
of more importance to anyone particular managerial level or a manager.
(6) Coordination is a Deliberate Function: Coordination is never established by itself but it
is a deliberate effort. Only cooperation is not suffice but coordination is also needed. For
example, a teacher aspires to teach effectively (this is cooperation) but the time-table is not
prepared in the school (this is lack of coordination). In this situation, classes cannot be
arranged for. Here, the effort made by the teacher is meaningless, in the absence of
coordination. On the other hand, in the absence of cooperation, coordination dissatisfies
the employees. Thus, both are required at a given point of time.
TOOL KIT-2
Cooperation?
Cooperation means the desire to work collectively. It originates effortlessly.
Coordination is the Essence of Management
An important question that arises in relation to coordination is whether or not it is to be
recognised as the sixth function in the chain of management functions (e.g. planning,
organising, staffing, directing and controlling). Some management experts (e.g. Fayol,
L.A. Allen, Ordway Tead) consider coordination to be a separate function of management.
However, modern management experts are of the view that coordination is not a separate
function of management, rather it forms a major part of all the other functions of
management. In other words, management cannot be accomplished without proper
coordination and hence management has to concentrate its efforts on the establishment of
coordination. Modern management experts Koontz and O 'Donnell are also the supporters
of this line of thinking, and it is only in this relation that they have stated, .'Coordination is
the essence of management" . It means when a manager diligently performs all the
management functions, he or she remains busy in establishing coordination. This fact is
highlighted through the following discussion.
TOOL KIT-2
Coordination and Functions of Management
There is no function of management which can be accomplished in the absence of
coordination or which does not make effort to establish coordination.
(1) Coordination and Planning: While performing the function of planning, coordination
forms the centre or focus of the thinking of a manager. Planning is undertaken keeping in
mind the various activities being performed by the different departments in an
organisation. For example, when a sales manager is making a plan to increase his sales
target, he also consults the production manager, the purchase manager, the finance
manager, etc. in order to avoid any problem that may arise in the future. This clearly
shows that coordination is very essential while performing the function of planning.
(2) Coordination and Organising: While performing the function of organising, the main
work of the organisation is divided into various sub-functions, and the relationships
between the various people performing those sub-functions are defined, with the aim of
accomplishing all the activities of the business in a systematic manner. While performing
the function of organising, the manager has to make efforts to establish coordination
among the various departments as well as the various people working in the same
department. For example, work is divided among the people working in the production
department in such a manner that where the work of one person ends, the work of the next
person begins. Since any deficiency in the work of one person also affects the work of
others, everybody makes efforts to complete his work on time, and the workers do not
create hurdle in each other's work.
(3) Coordination and Staffing: Organising results in the establishment of various
positions in the organisation while staffing breathes life into such positions, i.e., the
various positions established during organising are filled with people. Even while
performing the function of staffing, the manager is also concerned about coordination. It is
his effort to fill all the positions with capable and experienced people so that the various
activities of the business may proceed without any hindrance.
(4) Coordination and Directing: While performing the function of directing, a manager
gives due priority to coordination. While issuing orders and instructions to a subordinate,
he has to keep in mind the effect they will have on other people, and he should make all
efforts to avoid any such adverse effect. Such a line of thinking is nothing else but an
effort to establish coordination. For example, two people performing the same work are
treated equally in order to avoid any animosity among them.
(5) Coordination and Controlling: Controlling is the constant evaluation of progress of
work, so that adverse results can be avoided and corrective action can be taken in time. In
the context of coordination, controlling results in the harmonisation of the objectives of
the organisation, the resources available to achieve those objectives and the human efforts
required.
From the above discussion, it can be seen that coordination is concerned with all the
functions of management. Therefore, it can be stated without any doubt that coordination
is not a separate function of management, rather it is the essence of management.
Coordination is Needed at all Levels of Management
There are three different levels of management - Top Level, Middle Level and
Supervisory or Low Level. If the various levels of management are evaluated from the
point of view of coordination, it can be seen that it is not concerned with a particular
management level, rather its need and importance is the same at all managerial levels. If
any work is being done solely by one person, then the problem of coordination does not
arise at all since everything is being done by that one person only. Therefore, it can be said
that coordination is mainly concerned with group efforts. The work at every level of
management is performed by a group of people and hence, coordination is required in
order to complete the work successfully. Therefore, it can be said that coordination is
required at all levels of management.
Not only this, if all the levels of management are looked at together, they become a group
in themselves ,and as in the case of every group, they also require coordination among
themselves. Thus, coordination is required at each level of management individually and
also by all of them collectively as a group.
Importance of Coordination
The following reasons bring out the need and importance of coordination:
(1) Size of the Organisation: These days, the scale of doing business is increasing day by
day. Any increase in the scale of the business also results in an increase in the number of
people employed in the organisation, with each person having different interests, way of
working, mutual understanding, objective of working, tolerance, etc. However, all these
people have to work together as a group despite these differences, which is not a very easy
task. Therefore, it is very necessary that through coordination a proper environment is
created so that everybody gives in his full contribution towards the attainment of
organisational goals.
(2) Functional Differentiation: There may be a clash of interests among the various
departments in an organisation. Such a situation becomes a very big hindrance in the
achievement of organisational goals. There is only one way to avoid clashes, and that is by
establishing proper coordination between the departments.
(3) Specialisation: In every organisation, in order to avail the benefits of specialisation,
one main activity is divided into various sub activities, and each of these are alloted to
different persons who are experts in their particular sub-activity. Every person wants to do
his work in his own way, without having any regard for the 'total work' to be performed. In
such a situation, in order to complete the activities being performed by various people
successfully, it is very necessary to establish coordination among them. It is only upon the
establishment of coordination that everyone completes his or her own work on time
keeping in view the 'total work' to be performed.
(4) Inter-dependence of Different Processes: The next major point which delineates the
importance of coordination is that the various units in an organisation are inter-dependent.
The higher the inter-dependence among the units, the greater is the need for coordination.
KEY CONCEPTS
1. Meaning of Coordination: It refers to establish harmony among various parts of a
system.
2. Nature of Coordination: (i) Coordination integrates group effort, (ii) Coordination
ensures unity of action, (iii)Coordination is a continuous process, (iv)Coordination is an
all-pervasive function, (v) Coordination is the responsibility of All managers, (vi)
Coordination is a deliberate function.
3. Coordination is the Essence of Management: Asper modern management experts,
coordination is not a separate function of management, but it is the essence of
management.
4. Coordination is needed at all Levels of Management: The work at every level of
management is performed by a group of people, that is why, coordination is required at
every level to complete the work successfully.
5. Importance of Coordination: (i) Size of the organisation, (ii) Functional Differentiation,
(iii)Specialisation, (iv)Inter-dependence of different processes
STUDY Assignments
Meaning and Nature of Coordination
6 Marks
l. Discuss the meaning and nature of coordination.
4/5 Marks
2. "Coordination is the orderly arrangement of group efforts to provide unity of action in
the pursuit of a common purpose." In the light of this statement, explain the nature of
coordination. (C.B.S.E.2009)
3 Marks
3. Define Coordination.
4. How is coordination a 'Continuous Process'?
5. Clarify that coordination does not get established spontaneously.
6. Coordination is more than cooperation. How? Give an example.
1 Mark
7. To make the time-table in an educational institution is the example of coordination.
Comment.
Ans. Through it harmony is established among various classes.
8. The coordination is required at which level of management?
Ans. At all the three levels.
Query Session
Mr. Question: Sir, there is still confusion between the meaning of words, coordination and
cooperation. Please clarify it with the help of an example from daily routine.
Mr. Answer: OK, Listen carefully . The difference has already been clarified in the given
chapter, but for more clarification, let us take up an example. Suppose Mr. X gets a trouser
stitched. On trying it, he finds it is 4 inches longer in length. Next morning, while all the
four members of the family are sitting on the breakfast table Mr. X says, get this trouser 4
inches short by the time I return from the office. Everybody carefully listens to the
instruction. After this Mr. X leaves for office, son for school and the daughter for college,
respectively. After some time, when Mrs.X remembered about the work, she took the
trouser to the tailor and got it short by 4 inches and kept it in the almirah. When the son
returned from his school, he recalled the job assigned by his father. Without
communicating with any other member of the family, he took the trouser to the tailor, got
it short by 4 inches and kept it at its previous place (assuming that everybody had different
tailors). Then daughter came. As soon as she returned, she also recalled of the work,
assigned by her father. She repeated the same action, as had already been performed by
her mother and brother. In the evening, when Mr.X returned from the office and tried the
trouser, he found that it was now half the length. Just contemplate, why did this happened?
A11- Mr.X's wife, son and daughter -loves him dearly, have full attachment with him and
also want to keep him happy. That is why all three tried to fulfil the task assigned. Their
this feeling is called cooperation. Thus, they want to cooperate with Mr. X. This feeling
does not arises because of any pressure but comes on its own. On the other hand, this
error, shows the lack of coordination among all. If at the time of breakfast, decision had
been taken as to who will perform this job, then this error could have been avoided. Thus,
coordination does not originate by itself but for this effort has to be made.
Mr. Question: Sir, quite right, thank you.
CHAPTER 5
PRINCIPLES OFMANAGEMENT: NATURE AND SIGNIFICANCE
"Principles of management are of universal nature and apply to every type of
organisation." - Henry Fayol
Learning Objectives
After studying this chapter, you will be acquainted with:
• Principles of Management: Meaning and Definitions
• How are Principles of Management derived?
• Nature of Principles of Management
• Importance of Principles of Management
• Fundamental Principles of Management
Principles of Management
These days business has assumed wider dimensions as a result of which numerous
problems arise in day to day activities and the manager of the enterprise has to solve these
problems. A manager needs guidelines to grapple with the problems and run the
organisation efficiently. The principles of management guide the manager. Before entering
into a detailed discussion about the principles of management, it is necessary to know the
meaning of 'Principle'. Different scholars have defined 'principle' in the following manner:
(1) According to G.R. Terry, 'Principle is a fundamental statement or truth providing a
guide to the thought or action".
(2) According to Edwin B. Flippo, "A principle is a fundamental truth and it is generally
stated in the form of cause and effect relationship." (3) According to Koontz and
O'Donnell, "management principles are fundamental truth of general validity which have
value in predicting the result of management action" .
The definitions of these scholars show that principles are in the form of that basic truth
which explains the relationship between cause and effect and experts play an important
role in their preparation.
TOOL KIT-1
Principles and Techniques of Management
The principles of management are different from the techniques of management The
principles of management guide the decisions while the techniques are the methods
employed for the attainment. For example 'Unity of Command' is a principle while
production with the help of modem machines is a technique. While making use of a
technique the help of a principle is taken.
How are Principles of Management Derived?
Like all other social sciences management too, has its certain definite principles. These
principles have been developed by the management experts. These principles are the
outcome of the various problems faced by the managers. First the problems were born,
then efforts were made to solve them and these efforts resulted in a lot of research and
finally, the solutions were found out. We know these solutions in the form of principles of
management.
The principles of management are derived in the following two ways:
(1) On the basis of Observation: Under this method, a manager observes and analyses a
particular event which he faces in actual practice. For example, the principle of 'division of
work tells us that as far as possible the whole work should be divided into different parts
and each individual should be assigned work according to his ability and taste. If we do so,
it will lead to increase the efficiency. This principle was stated when it was observed by
some managers that dividing the work in a proper manner leads to better performance.
(2) On the basis of Experimental Studies: Under this method, an experimental study is
conducted by a researcher(s) to derive a principle of management. For example, the
performance of two groups of people, in which one is headed by a single boss whereas the
second is headed by two bosses may be compared. When it is found that the performance
of the first group is higher, principle of 'Unity of Command' was derived.
After having understood the meanings of 'Principle' and 'Principles of management', it is
necessary to learn about the nature and need for the principles of management.
TOOL KIT-2
Principles of Management and Values
The principles of management are in the form of basic truth while values are the general
rules of an individual’s common conduct. For example, 'division of labour' is a principle ot
management which provides advantages of specialisation. On the other hand, not making
the secrets of the company pub/ids a matter of value which reflects the character of the
manager.
In the first diagram, SI' S2 and S3 all the three subordinates have one manager M1, S1 get
orders only from M, and the same is the case with S2 and S3' Here the principle of unity of
command is being followed. Therefore, it is the right approach.
In the second diagram, all the three subordinates S1, S2and S3 get their orders from two
managers M1 and M2.S1 gets orders from both M1 and M2 simultaneously. (Same is the
position of S2 and S3 also.) He is unable to understand as to which order is to be given
priority. Both the managers would like their orders to be given priority. There is likely to be
heart burning between the two. Here the principle of unity of command is being violated.
Therefore, this is a wrong approach.
Positive Effect * There is no confused situation for the subordinates. * The efficiency of the
subordinates increases. * The efficiency of the superiors increases. * It is easy to fix
responsibility. * An atmosphere of coordiality prevails.
Violating Effect * It creates a confused situation for the subordinates. * It reduces the
efficiency of the subordinates. * It reduces the efficiency of the superiors. * Conflicts due to
the injured ego of the superiors. * It is difficult to fix accountability. * Height of disorder.
(5) Unity of Direction: Unity of Direction means that there should be one head for one plan
for a group of activities having the same objective. In other words, there should be one plan
of action for a group of activities having the same objective and there should be one manager
to control them. For example, suppose an automobile company is manufacturing two
products, namely, scooters and cars, hence having two divisions. As each product has its own
markets and problems therefore each division must have its own targets. Now each division
must plan its target as per its environmental conditions to get better results.
It is necessary to distinguish between the meaning of the unity of command and the unity of
direction. Unity of command means that there should be only one manager at a time to give
command to an employee, while the unity of direction means that there should be only one
manager exercising control over all the activities having the same objective.
TOOL KIT-3
Unity of Command & Unity of Direction
In this connection Fayol feels that for the efficient running of an organisation the unity of
direction is important, while the unity of command is important to enhance the efficiency of
the employees.
Positive Effect *Advantage of specialisation is obtained due to a manager’s association With
the same kind of activity. * Increase in the efficiency of the organisation. * Easy to achieve
objectives. * It helps in coordination due to the unity in activities.
Violating Effect * Advantage of specialisation is not obtained. * Decrease in the efficiency of
the organisation. * Difficulty in achieving the objectives. ,* Difficulty in achieving
coordination in the absence of unity of activities.
Difference between Unity of Command and Unity of Direction
Basis of difference Unity of Command Unity of Direction
1. Meaning According to this principle, According to this principle,
every employee should get all activities having similar
orders only from one objective should be
manager at a time and he completed under the
should be responsible for that supervision of one person
manager alone. and there should be one plan
of action for such type of
activities.
2.Aim It prevents dual It prevents overlapping of
subordination various activities
3. Implications It affects an individual It affects the entire
employee. organisation
(6) Subordination of Individual Interest to General Interest: This principle can be named
'Priority to General Interest over Individual Interest.' according to this principle, the general
interest or the interest of the organisation is above everything}If one is asked to place
individual interest and the general interest in order of priority, definitely the general interest
will be placed at the first place. For example, if a manager takes some decision which harms
him personally but results in a great profit to the company, he should certainly give priority to
the interest of the company and take the decision accordingly. On the contrary, if some
decision helps the manager personally but results in a great loss to the company, then such a
decision should never be taken.
For example, a purchase manager of a company has to purchase 100 tonnes of raw material.
His son happens to be a supplier along with other suppliers in the market. The manager
purchases the raw material from the firm of his son at a rate higher than the market rate. This
will profit the manager personally, but the company will incur heavy loss. This situation is
undesirable.
Positive Effect * Observing humanity. * Everybody profits in the profit of the company. *
Organisational objectives are obtained. * Coordination between the individual and
organisational objectives.
Violating Effect * Humanity violated. * Increase in jealousy. * Hindrance in achieving
organisational objectives. * Lack of coordination between the individual and organisational
objectives.
(7) Remuneration to Employees: Fayol is of the opinion that the employees should get a fair
remuneration so that the employees and the owners find equal amount of satisfaction. It is the
duty of the manager to ensure that everybody is being paid remuneration according to their
work. If however, they are not paid properly for their work, they will not do their work with
perfect dedication, honesty and capacity. As a result of this the organisation shall have to face
failure. Proper remuneration depends on some factors like the cost of living, demand of
labour and their ability' Fayol feels that in order to motivate the employees, apart from
general remuneration, they should be given some monetary and non-monetary incentives.
For example, suppose that the things are getting dearer and dearer and the company is getting
good profits. In such a situation, the remuneration of the employees should be increased even
without their asking. If this is not done, the employees will leave the company at the first
opportunity. Expenses shall have to be incurred on new recruitment which shall bring loss to
the company.
Positive Effect * Increase in the encouragement and satisfaction of the employees. *
Development of the spirit of dedication among the employees. * Decline in the labour
turnover rate.
Violating Effect * Decline in the encouragement and satisfaction of the employees. *
Encouragement to dishonesty. * Increase in the labour turnover rate.
(8) Centralisation and Decentralisation: According to this principle, the superiors should
adopt effective centralisation instead of complete centralisation and complete
decentralisation. By effective centralisation, Fayol does not mean that authority should be
completely centralised. He feels that the superiors should keep the authority of taking
important decisions in their own hands, while the authority to take daily decisions and
decisions of less importance should be delegated to the subordinates. The ratio of
centralisation and decentralisation can differ in different situations. For example, it is
advantageous to have more centralisation in a small business unit and more decentralisation
in a big business unit.
For example, the decisions in respect of determining the objectives and policies, expansion of
business, etc. should remain in the hands of the superiors. On the other hand, authority for the
purchase of raw material, granting leave to the employees, etc. should be delegated to the
subordinates.
Positive Effect * Decrease in the work-load of superiors. * Better and quick decisions. *
Increase in the encouragement to the subordinates.
Violating Effect * Unnecessary increase in the work-load of the superiors in case of
centralisation and of the subordinates in case of decentralisation. * Impatient and wrong
decisions by the superiors in case of complete centralisation and weak decisions by the
subordinates in case of complete decentralisation. * Decline in the encouragement to
subordinates in case of complete centralisation.
TOOL KIT -4
Gang Plank: A Special Note
Gang Plank can only be established with the employees of the equal or same level. For
example, in the present example no gang plank can be established between F and O.
Positive Effect * Flow of orderly information. * Better relations because of absolute respect
for authority. * Quick solution of problems.
Violating Effect * Disorderly flow of information. * Bitterness in relations because of
ignoring the close superiors. * Increase in problems because of non-availability of
information in time.
(10) Order: According to the principle of order, a right person should be placed at the right
job and a right thing should be placed at the right place. Accordingly to Fayol every
enterprise should have two different orders- Material Order for Physical Resources and Social
Order for Human Resources. Keeping the physical resources in order means that 'a proper
place for everything and everything in its right place'. Similarly, keeping the human resources
in order means 'a place for everyone and everyone in his appointed places'. Maintaining these
two orders properly will ensure that everybody knows his workplace, what he is to do and
from where he would get his required material. Consequently, all the available resources in
the organisation will be utilised properly.
For example, an employee working in a factory should know the place or source from where
he can get his tools in case of need. Similarly, he should know the place where his supervisor
will be available in case of any need. It is, however, important to note that it is not sufficient
to have an quoted place for a tool-box and for the supervisor but the availability of both at
their decided place is absolutely important. If this is not the case, it can lead to a heavy loss as
a result of damage to the machines.
Positive Effect * Complete utilisation of material and human resources. * No loss of time in
tracing the resources in need of time. * Better discipline.
Violating Effect * Misuse of resources. * Increase in the possibility of accidents. * Height of
disorder.
(11) Equity: This principle tells that the managers should treat their subordinates in a just and
kind manner so that they develop a feeling of dedication and attachment for their work. All
the employees should be treated equally and impartially. Fayol tells us in connection with this
principle that there should not be any equality of treatment between a person whose work is
really good and a person who isa shirker by nature. Rather the latter should be treated sternly.
Doing so would be equitable. It is because of this point of view that Taylor has presented his
differential remuneration method. For example, a labourer completes 10 units of goods in a
day. Another labourer who happens to be a relative of the supervisor completes 8 units but
both get equal remuneration. This violates the principles of equality. The second labourer
should get less remuneration than the first one.
Positive Effect * The employees remain satisfied. * Increases the sense of devotion to the
organisation. * Skilled employees try to improve upon their skill. * Unskilled employees try
to achieve some skill.
Violating Effect * Creates dissatisfaction for the skilled workers. * Skilled workers lose
confidence in the organisation. * Decline in the efficiency of the skilled workers. * Increase
in the carelessness of the unskilled workers.
(12) Stability of Personnel: From the point of view of management it is absolutely harmful to
change the employees frequently as it is a reflection of inefficient management. Therefore,
according to this principle there should be stability of tenure of the employees so that the
work continues efficiently. Fayol thinks that instability in the tenure of employees is a cause
of poor management and results. High rate of labour turnover will result in increased
expenses because of selecting them time and again, and giving hem training afresh. It also
lowers the prestige of the organisation and creates a feeling of insecurity among the
employees which keeps them busy in finding out new avenues of work. Consequently, the
sense of dedication cannot be created among them.
For example, it is true that if the workers in a company are not treated well and the
atmosphere in the company is also unhealthy, the employees will not stay for a long time. In
other words, they will leave the company at the first opportunity available. This situation is
absolutely harmful.
Positive Effect * Increase in the confidence of the employees. * Increase in the reputation of
the company. * Skilled workers are inclined towards the company. * Less expenses on
training.
Violating Effect * An atmosphere of disbelief for the employee* Decline in the reputation of
the company * Company is left by good employees * Heavy recruitment and training
expenses.
(13) Initiative: Initiative means the capacity to work while expressing one's thoughts.
According to Fayol it is the duty of the manager to encourage the feeling of initiative among
his employees for doing some work or taking some decision but within the limits of authority
and discipline. It will be possible only when the manager will welcome the thoughts of
his/her subordinates. By doing so the subordinates will present new and useful ideas time and
again and gradually they will become an integral part of the organisation. In order to make
this process a success a manager will have to abandon his false sense of prestige.
For example, a salesman suggests to his sales manager to implement a new advertisement
technique. The sales manager sends him away by telling him that it is not possible and
ignores the suggestion altogether. In such a situation the salesman, who has been admonished
and belittled, will never venture to offer any suggestion in future because his desire of taking
initiative has been suppressed. On the contrary, if his suggestion had been listened to
carefully (even though not to be implemented) he could have taken the courage to offer some
suggestion in future. Such an action would simply have encouraged his initiative.
Positive Effect * Increase in the thinking power of the employees. * Cooperation of the
employees in implementing decisions. * Increase in the sense of attachment to the
organisation.
Violating Effect * Decline in the thinking power of the employees. * An atmosphere of non-
cooperation. * Decline in the employees' attachment to the company.
(14) Esprit De Corps: As per this principle, a manager should continuously make efforts to
develop a team spirit among the subordinates. To do this, he/she should use the word 'We'
instead of 'I' during the conversation with subordinates.
For example, a manager should always say that 'we will do this work' instead of 'I will do it'.
This behaviour of a manager will keep alive the spirit of cooperation among the subordinates.
Positive Effect * Motivation to work with team-spirit. * Easy to achieve objective. * Sweet
relationship
Violating Effect
* Kills team spirit. * Difficulty in achieving objective. *Bitterness in relationship
Conclusion
Clarifying his principles of management, Fayol has pointed out that since management is
related to human beings nothing can be said with a sense of finality. What principles are to be
applied at what time, in what situation and to what degree (or extent) - it all depends on the
experience, efficiency and decision-making power of the manager. Thus, the principles
advocated by Fayol have an element of flexibility.
Key Concepts
1. Meaning of Principle of Management: Management principles are those basic truths which
have the ability to predict the results of managerial activities.
2. How are Principles of Management Derived? (i) On the basis of Observation, and (ii) On
the basis of Experimental Studies.
3. Nature of Principles of Management: (i) Universal Applicability, (ii) General Guidelines,
(iii) Formed by Practice and Experimentation, (iv) Flexibility, (v) Mainly Behavioural, (vi)
Relationship between Cause and Effect, (vii) Contingent.
4. Significance of Principles of Management: (i) Provides Useful Insight to Managers, (ii)
Optimum Utilisation of Resources and Effective Administration, (iii) Scientific Decisions,
(iv) Meeting Changing Environmental Requirement, (v) Fulfilling Social Responsibility, (vi)
Management Training, Education and Research.
5. Fundamental Principles of Management: Principles advocated by Henry Fayol: (i) Division
of work, (ii) Authority and responsibility, (iii) Discipline, (iv) Unity of command, (v) Unity
of direction, (vi) Subordination of Individual to General Interest, (vii) Remuneration to
employees, (viii) Centralisation and Decentralisation, (ix) Scalar Chain, (x) Order, (xi)
Equity, (xii) Stability of personnel, (xiii) Initiative, and (xiv) Esprit de corps .
STUDY Assignments
Principles of Management: Meaning and Nature
6 Marks
1. Explain the meaning and nature of management principles.
4/5 Marks
2. How are principles of management derived? Clarify in detail.
3. Briefly discuss any four points of the nature of the principles of management.
3 Marks
4. What is meant by 'Principle of Management'.
5. What do you understand by the universality of principle of management? (C.B.S.E. 2003)
6. Explain in brief, the meaning of 'Universal Applicability of Management Principles'.
7. What do you understand by the 'Flexibility' of principle of management?
8. 'Principles of management are general guidelines.' Explain.
9. 'Principles of management are contingent.' Explain
10. State and explain any three points which highlightthe nature ofprinciples ofmanagement.
(CBSE. 2004)
11. Explain the meaning of management principles and state how they are derived? (CBSE.
2004)
12. Principles of management are derived 'on the basis of Experimental studies'. Explain.
1 Mark
13. What is meant by 'Principles of Management'? (CB.S.E 2008)
Ans. Management principles are thhose basic truth which have the ability to predict the
results of managerial activities.
14. Why are the principles of management called contingent? (Foreign 2009)
Ans. Because principles of management are affected by situations.
15. Give any two points of the nature of principles of management.
Ans. (a) Universal Applicability. (b) General Guidelines.
16. State how the management principles are flexible? (CBS.E. 2008, 2009)
Ans. They are not in the form of final truth and can be changed any time.
17. How have the management principles been derived? (CB.S.E2008)
Ans. On the basis of observation and experimental studies.
18. "The principles of management are different from those of pure sciences." State anyone
difference. (CB.S.E. 2008)
Ans. The principles of management are not definite like the principles of pure science.
19. Why is it said that management principles are universal?
(CB.S.E. Sample Paper, 2008, 2009)
Ans. Because these are applicable in both business and non-business spheres in a similar
manner.
Query Session
For this query session, questions from readers' side are invited.
CHIPTER6
SCIENTIFIC MANAGEMENT: PRINCIPLES AND TECHNIQUES
Scientific management attempts to eliminate wastes to ensure maximum
production at minimum cost.
Learning Objectives
After studying this chapter, you will be acquainted with:
• Meaning of Scientific Management
• Definitions of Scientific Management
• Features of Scientific Management
• Principles of Scientific Management
• Techniques of Scientific Management
• Difference between Method Study and Motion Study
• Difference between Time Study and Motion Study
• Comparative Study of Contribution of Taylor and Fayol
KEY Concepts
1. Meaning of Scientific Management: To discard the traditional approaches to management
and adopt newer and more scientific approaches in their place is called scientific
management.
2. Features of Scientific Management: (i) Systematic approach, (ii) Brings complete mental
change, (iii)Discards the traditional management, (iv)Requires strict observance of rules, (v)
Improves the efficiency of workers, (vi) Gives due weightage to specialisation, (vii)Useful
for large organisations, (viii)Attempts to minimise wastes.
3. Principle of Scientific Management: (i)Science, not rule of thumb, (ii)Harmony, not
discord, (iii) Cooperation, not individualism, (iv) Development of each and every person to
his/her greatest efficiency and prosperity.
4. Techniques of Scientific Management: (i) Functional Foremanship: (a) Experts of
Planning Department: Route Clerk, Instruction Card Clerk, Time and Cost Clerk, Discipline
Officer;(b) Experts of Production Department Gang Boss, Speed Boss, Repair Boss,
Inspector. (ii] Standardisation of work: (a) Standardised material, (b) Standardised machines
and tools, (c) Standardised methods, (d) Standardised working conditions. (iii) Simplification
(iv)Scientific study ofwork: (a) Method study, (b) Motion Study, (c)Timestudy, (d) Fatigue
study. (v) Differential wage system. (vi) Mental Revolution.
5. Comparative study of the Contribution of Taylor and Fayol: (A) Similarities: (i) Solution
of Managerial Problems, (ii) Stress on practical aspect (iii) Stress on good industrial relations.
(8) Dissimilarities: (i) Perspective, (ii) Unity of Command, (iii)Applicability, (iv) Basis of
Formation, (v) Focus, (vi) Personality, (vii) Expression.
STUDY Assignments
Meaning and Features of Scientific Management
4/5 Marks
1. Write any four features of Scientific Management.
3 Marks
2. What does scientific management mean? 3. Write three features of 'Scientific
Management'.
1 Mark
4. Name the person who has propounded 'Scientific Management'. Ans. Fredrick Winslow
Taylor.
5. State any two features of scientific management.
Ans. (a) It is a systematic approach. (b) It brings complete mental change.
6. Scientific management is useful for which type of organisations?
Ans. It is useful for larger organisations.
A. Internal Environment
Internal environment includes all those factors which influence business and which are
present within the business itself. These factors are usually under the control of business. The
study of internal factors is really important for the study of internal environment. These
factors are: (i) Objectives of Business, (ii)Policies of Business, (iii) Production Capacity, (iv)
Production Methods, (v) Management Information System, (vi) Participation in Management,
(vii) Composition of Board of Directors, (viii)Managerial Attitude, (ix) Organisational
Structure, (x) Features of Human Resource, etc.
Note: All the above factors do influence the decisions of business, but since all these factors
are usually under the control of business, they cannot be wholly included in the business
environment.
• B. External Environment
External environment includes all those factors which influence business and exist outside the
business. Business has no control over these factors. The information about these factors is
important for the study of the external environment. Some of these factors are those with
which a particular company has very close relationship. However, there are some other
factors which influence the entire business community. On this very basis, the external
environment can be divided into two parts:
(1) Micro Environment or Operating Environment: Micro environment means that
environment which includes those factors with which business is closely related. These
factors influence every industrial unit differently. These factors are as under: (i) Customers
(ii)Suppliers (iii)Competitors (iv) Public (v) Marketing Intermediaries.
(i) Customers: Customers of an industrial unit can be of different types. They include
household, government, industry, commercial enterprises, etc. The number of different types
of customers highly influence a firm. For example, suppose a firm supplies goods only to the
government. It means that firm has only one customer. If because of some reason their
relations get soured, the supply of goods will stop and in that case the closure of that firm is
certain. This clearly indicates that the customers do influence business. Therefore, a firm
should make efforts to have different kinds of customers. (
ii) Suppliers: Like the customers, the suppliers also influence business. Ifa business has only
one supplier and he gets annoyed because of some reason, the supply of goods can be stopped
and the very existence of the business can be threatened or endangered. Hence, efforts should
be made to have various suppliers.
(iii) Competitors: The competing firms can influence business in a number of ways. They can
do so by bringing new and cheap products in the market, by launching some sale promotion
scheme or other similar methods.
(iv) Public: Public has different constituents like the local public, press or media, etc. The
attitude or behaviour of these constituents can affect business units. For example, the local
population can oppose some established firm whose business is excessively noisy. Similarly,
if the media gives some favourable report about a particular company the price of its share
can register an increase on this count.
(v) Marketing Intermediaries: The marketing intermediaries play a significant role in
developing any business unit. They are those persons who reduce the distance between the
producers and agents. For example, a company sell sits goods with the help of agents and if
because of some reason all the agents get annoyed with the company and refuse to sell its
goods, there can be a crisis for the company.
(2) Macro Environment or General Environment: Macro environment means that
environment which includes those factors which have a distant relation with business. A
prominent feature of these factors is that they influence all the business units almost in the
same way.
NOTE: We have already seen that the internal environment is under the control of business,
and therefore, it cannot be wholly included in the business environment. Similarly, the micro
environment has a very close relationship with business and, therefore, if not immediately at
least it can be controlled to a large extent within a short span of time. On the contrary, there is
remote relationship of macro environment with business. In other words, business has no
control over it. In fact, macro environment is in reality the business environment. Its factors
are called Dimensions of Business Environment. We shall now study these dimensions.
Planning is needed in order to solve a problem or take advantage of some profitable situation.
In this context, a manager makes an analysis of the strengths and weaknesses ofthe
enterprises. This analysis keeps in mind the internal and external environment of the
enterprise. For example, if the government is thinking of establishing a factory for the
development some rural area an intelligent manager would certainly like to take advantage of
this situation. Planning starts from this very point. The following steps are generally taken in
the business organisations during the planning process.
(1) Setting Objectives: Objectives are those end points for whose attainment all the activities
are undertaken. In the planning process objectives are determined and defined first of all so
that all the employees concerned can be informed about them to get their complete
cooperation. Objectives have a hierarchy of their own, e.g., organisational objectives,
departmental objectives, and individual objectives. They are determined and defined in the
same hierarchical order.
For example, a company wants to raise its sales to rupees 2000 crore. (This is the
organisational objective). This objective can be defined in this way -say the company has
four major products and their expected sales are rupees 1000 crores, 500 crores, 300 crores
and 200 crores respectively. In this context the objectives of different departments will be
determined. For example, the Production Department will come to know the amount of
production of each product. In the end, all the employees of different departments will be told
about it and what is expected of them.
(2) Developing Premises: The basis of planning are those factors/assumptions which
influence the possible results of different alternatives. Before taking a final decision about
any alternative a forecast of these assumptions is made. The rate of success of planning will
be in direct proportion to the rate of the success of forecasting. The assumptions/premises of
planning are of two types:
(i) Internal Premises: Capital, labours, raw material, machinery, etc.
(ii) External Premises: Governmental policies, business competition, tastes of customers, rate
of interest, rate of taxes, etc.
For example, a company wants to expand its business. It has an alternative to establish a
factory in rural area. In this case its internal premises can be capital, raw material and
availability of labour and the external premises can be the industrial policy of the
government. The manager shall have to make a forecast of all these assumptions. In other
words, it shall have to be considered that necessary capital, raw material and labour will
become available. It shall also be necessary to find out whether the government policy will
not oppose the establishment of such a factory.
(3) Identifying Alternative Courses of Action: Generally, there is no work which has no
alternative method of doing it. On the basis of the objectives of the organisation and the
limitations of planning, alternative courses of doing a particular work can be discovered. For
example, if an organisation has the object of expanding its business, it can be done in many
ways like: (i)by expanding the existing business, for example, if a company is engaged in
producing particular size of T.V. sets, it can start producing T.V. sets of different sizes; (ii)by
entering other area of production, for example, a T.V company can start producing
refrigerators; (iii) by entering into some collaboration with some other organisation and start
a new business; (iv) by taking over some other business enterprise, etc.
(4) Evaluating Alternative Courses: All those alternative courses which are upto the
expectations of the minimum preliminary criteria are selected for intensive study. It will be
seen as to what extent a particular alternative course can help in the attainment of the
objectives of the organisation. There is, however, one problem which confronts us while
analysing these alternative courses. Every alternative course has its merits and demerits. For
example, a particular alternative course can be highly profitable but it requires investment of
more capital and has a long gestation period to yield profits. Similarly, another alternative
course needs less capital investment, has a short gestation period to yield profits but the
profits are not sufficient. In such a situation the planners should evolve a new alternative
course by a mixture of different alternative courses.
TOOL KIT-2
Minimum Preliminary Criteria?
In fact it is not as difficult to find out alternative courses as it is to reduce the list of
alternative courses. Alternative courses should be the minimum possible so that they can be
deeply analysed. To reduce the size of the list of alternative courses Q minimum preliminary
criteria should be decided upon and those alternatives which do not fulfil the minimum
criteria, should be deleted from the list in the very beginning. For example, if the minimum
capital limit is rupees ten crores al1 the alternative courses less than that will be left out.
(5) Selecting an Alternative: After a careful analysis of different alternatives the best one is
selected. Sometimes the analysis yields more than one alternative course with similar merits.
Keeping in view the uncertainties of future it is justifiable to select more than one good
alternative course. One of such alternatives is adopted and the other is kept in reserve. In case
the future forecast proves wrong and the first alternative course fails, the reserve one can
immediately be brought into operation and failure can be averted.
(6) Implementing the Plan: After having decided the chief plan and the subsidiary plans, they
are to be implemented. After implementing the plans the sequence of different activities has
to be decided. In other words, it is decided as to who will do a particular job and at what time.
(7) Follow Up Action: The process of planning does not end with the implementation of
plans. Plans are formulated for future which is uncertain. It isof great importance that there
isa constant review of plans so as to ensure success in the uncertain future. The moment there
appears to be changes in the assumptions on which the plans are based, there should be
corresponding changes in the plans also. In this way we can say planning is a continuously
moving process.
Types of Plans
Planning is a process and a plan is its outcome. Plan is a sort of commitment to accomplish
all the activities needed for the attainment of special results. From this point of view there are
many plans. The following study will help in understanding different kinds of plans.
Every organisation has a central goal which is also called mission. A business organisation is
considered meaningful only if it has some goal. Goal is that standing plan which justifies the
establishment of the organisation. It shows the significance of the business of the organisation
and it tells us in what ways the organisation is different from other similar organisations. For
example, the goal of an educational organisation can be the education of girls. Similarly the
goal of a hospital can be to serve only heart patients.
In the context of achieving the goal many plans are prepared. First of all the objectives of the
organisation are determined. Competition is boldly faced and strategy to convert objectives
into reality is formulated. Policies are put forward to bring unanimity in the decisions of
different managers. After having laid down policies the sequence of activities is determined
which is called a procedure. In this way, methods, rules, budget, programmes, etc. are chief
factors of planning. All these are called plans. A high-level plan gives birth to a lower-level
plan and therefore, they are shown in the form of a hierarchy. This is shown here in a
triangle.
(1) Objectives
Objectives are those end points for the attainment of which all the activities are undertaken.
Following are the examples of objectives:
(i) To improve the communication system to hold regular staff meeting and publish a
newsletter.
(ii) To cross the 20,000 crore mark in turnover of soaps.
(iii) To make available the employment to 100 people every year.
(iv) To reduce quality rejects to 3%.
TOOL KIT -3
Purpose?
Purpose is the chief role of the organisation which is determined by the society where it
works. Such as the purpose of a school is to give education. Organisations similar in nature
have the same purpose.
TOOL KIT-4
Mission?
Mission or goal tells us that how an organisation is different from the organisations of the
same type. This is different in case of every organisation, e.g., a school can have the mission
to impart education only in the subject of Commerce.
TOOL KIT-5
Objective?
Objective is a special target to be achieved by an organisation, e.g., it can be the objective of
a school to impart education in the subject of commerce to 100 students during a year.
TOOL KIT-6
Strategy?
It refers to a plan which takes into account the environmental opportunities and threats I and
the organisational strengths and weaknesses and provides an optimal match between the
organisation and the environment.
TOOL KIT-7
Policy?
It refers to those general statements which are decided for the guidance of the employees
while taking decision
(4) Procedures
Procedures are those plans which determine the sequence of any work performance. For
example, the recovery of money from the debtors can be done in the following order:
(i) Writing letters. (ii) Contacting on telephone (iii) Meeting personally. (iv) Taking legal
action.
This is the procedure of collecting money from all the debtors. There is a difference between
policies and procedures. There can be two policies of the organisation regarding the recovery
of money from the debtors: (i) Tight Collection Policy, and (ii) Lenient Collection Policy.
Under the first policy an effort is made to recover money from the debtor is by treating him
harshly. Under the second policy the debtor will be given enough time for the payment of
money while treating him leniently. In both these policies the above-mentioned procedures
will remain the same. In other words, the steps taken for the recovery of money from the
debtors remain the same.
TOOL KIT-8
Procedure?
It refer to the plan that determine the sequence of any work performance.
• (5) Methods
Method is that plan which determines how different activities of the procedure are completed,
A method is not related to all steps but only to one step of the procedure. It is more detailed
than procedure. There may be many methods to do a particular work. After extensive study, a
method has to be selected from which a worker feels minimum fatigue, increase in
productivity and there is reduction in costs. A method selected like this is put in routine and it
is called the standard method. The efforts are continuously made to improve this selected
method so that unnecessary or unproductive activities can be deleted.
TOOL KIT-9
Method?
It refers to that plan which determines how different activities of the procedure are completed
• (6) Rules
Rules tell us what is to be done and what is not to be done in a particular situation, In the
presence of rules there is no need to take any decision. Whatever is said in the rules has to be
followed without any thinking. For example, the rule 'No Smoking in the Factory' is
applicable to everybody and it must be observed. Provision for punishment in case of non-
observing of the rule can also be made.
There is a difference between rule and policy. Policy only guides and gives an authority to
the officer to take decision within a certain limit. For example, goods can be sold on credit is
a question of policy. But who is to be given goods on credit or who is not to be given this
facility depends on the sales manager. In other words, he shall have to make use of his
reasoning. On the other hand, rules are static and there is no reasoning involved. For
example, a definite percentage of interest will be charged on the amount of money payable on
account of credit sales after the lapse often days. This is a rule which is applicable to all
customers without distinction.
There is a difference between rule and procedure. Rules tell us what should be done and what
should not be done? On the other hand procedures lay down the manner to complete a
particular work. For example, it is a rule that no interest will be charged if the payment is
received within ten days of the sale. But after ten days, writing letters, contacting through
telephone, having personal meeting and taking legal action is a procedure through which
balance amount is sought to be collected.
TOOL KIT-10
Rule?
It refers to the plan that tells us what is to be done and what isnot to be done in a particular
situation.
(7) Budgets
Budgets describe the desired results in numerical terms A budget is that planning which
provides details about estimated money, material, time and other resources for the
achievement of pre-determined objectives of various departments. For example, the sales
department's budget gives estimated figures about the type of material that will be purchased,
its quantity, the time of purchase and the amount to be spent on it. Similarly, budget of other
departments are also prepared. A budget is related both to planning and controlling. When we
prepare a budget it is related to planning and when we use it as a tool to measure the
deviations, it gets connected with controlling. In this way the manager compares the actual
progress with the figures given in the budget and the information about success and failure is
obtained.
TOOL KIT-11
Budget?
It refers to the quantitative expression of the plan of action.
Sales Budget (For the Year Ending Dec., 31, 2009)
Product Area Sales (in Units) Selling Price Total Sales (Rs.)
(Per Unit) (Rs)
X East Zone 50,000 20 10,00,000
West Zone 1,00,000 20 20,00,000
North Zone 80,000 20 16,00,000
South Zone 40,000 20 8,00,000
Total 54,00,000
Y East Zone 1,00,000 30 30,00,000
West Zone 2,00,000 30 60,00,000
North Zone 1,00,000 30 30,00,000
South Zone 3,00,000 30 90,00,000
2,10,00,000
(8) Programmes
A programme means a single-use comprehensive plan laying down the what, how, who and
when of accomplishing a specific job. Through programme the managers are informed in
advance about various needs so that there is no problem in future. The programmes can be of
different types, e.g., production programme, training programme, sales promotion
programme, management development programme, etc. In case of sales promotion
programme, the what, how, who, when of everything right from the purchase of the raw
material to the manufacturing of the product is defined. The moment a work is completed for
which the programme has been designed, its utility ends. In other words, a new programme is
designed for every new work.
TOOL KIT-12
Programme?
It refers to a plan that covers a relatively large organisational activities and specifies main
steps, their order and timing and the department responsible for each step.
Key Concepts
1. Meaning of Planning: It refers to thinking beforehand.
2. Features of Planning: (i) Planning focuses on achieving objectives, (ii) Planning is primary
function of management, (iii)Planning is pervasive: , (iv) Planning is continuous, (v)Planning
is futuristic, (vi) Planning involves decision making, (vii)Planning is a mental exercise.
3. Importance of Planning: (i) Planning provides direction, (ii)Planning reduces risks of
uncertainty, (iii) Planning reduces overlapping and wasteful activities, (iv) Planning promotes
innovative ideas, (v) Planning facilitates decision making, (vi) Planning establishes standards
for controlling.
4. Limitations of Planning: (i)Planning creates Rigidity, (ii)Planning does not work in a
dynamic environment, (iii)Planning reduces creativity, (iv) Planning involves huge costs, (v)
Planning is a time consuming process, (6) Planning does not guarantee success.
5. Planning Process: (i) Setting objectives, (ii) Developing premises, (iii) Identifying
alternative courses of action, (iv) Evaluating alternatives courses, (v) Selecting an alternative,
(vi) Implementing the plan, (vii)Follow up action.
6. Types of Plans:
(i) Objective: It refers to that end point for the attainment of which all the activities are
undertaken.
(ii) Strategy: It refers to a plan which takes into account the environmental opportunities and
threats and the organisational strengths and weaknesses and provides an optimal match
between the organisation and the environment.
(iii) Policy: It refers to that general statement which is decided for the guidance of the
employees while taking decision.
(iv) Procedure: It refers to that plan which determine the sequence of any work performance.
(v) Method: It refers to that plan which determines how different activity of the procedure
will be completed.
(vi) Rule: It tells us what is to be done and what is not to be done in a particular situation.
(vii) Budget: It refers to the quantitative expression of the plan of action.
(viii) Programme: It refers to a plan that curves a relatively large organisational activities and
specifies main steps, their order and timing and the department responsible for each step
STUDY Assignments
Meaning and Characteristics of Planning
6 Marks
1. Explain briefly any six features of planning. (C.B.S.E. 2004, 05, 06)
2. What are the features of planning? Explain any six. (C.B.S.E. 2007)
3. What are the main features to be considered by the management while planning?
(N.C.E.R.T.)
4/5 Marks
4. Explain any five features of planning. (C.B.S.E. 2009)
3 Marks
5. Define Planning.
6. 'Planning is the basic function of management.' Explain. (C.B.S.E. 2001)
7. Explain any two features of planning. (C.B.S.E. 2002)
8. State any six features of planning. (C.B.S.E. 2004)
9. What are the main points in the definition of planning? (N.C.E.R. T.)
10. Explain, how 'planning is a mental exercise'. (C.B.S.E. 2008)
11. Explain how "planning is a continuous process." (C.B.S.E. 2008)
12. Explain how 'planning is futuristic'? (C.B.S.E. 2008)
13. Why is planning an all-pervasive function of management?
1Mark
14. What is meant by 'Planning'?
Ans. It refers to thinking before hand.
15. Why planning is known as 'Futuristic'?
Ans. Because it is related with future.
16. The planning function of management is conducted at which level of management?
Ans. At all the three levels of management.
17. At which level of management more time is consumed on planning as compared to other
levels?
Ans. At top level of management.
18. One of the functions of Management is considered a base for all other functions. Name
that function. (C.B.S.E. Sample Paper)
Ans. It is planning.
• Importance of Planning
6 Marks
19. Explain briefly any six points which highlight the importance of planning. (C.B.S.E.
2004)
20. Define planning. State any four reasons, why planning is important? (C.B.S.E. 2004)
21. "Planning is an important function of management." . Explain by giving any six points.
(CB S.E. 2006)
22. Explain why planning is necessary for effective management? (CB.S.E. 2007)
23. Is planning actually worth the huge costs involved? Explain. (N.C.E.R. T.)
24. "Planning is beneficial for all." Explain in brief the benefits of planning as a function of
management.
25. 'Planning is of vital importance in the managerial process.' Do you agree? Explain, in
brief, any five reasons in support of your answer. (CB.S.E. 2005)
4/5 Marks
26. Explain any five points of importance of planning fora large business enterprise.
(C.B.S.E. 2009)
3 Marks
27. Explain how 'planning facilitates decision making'. (N.C.E.R. T; CB.S.E. 2008)
28. Explain how planning reduces the risk of uncertainty. (CB.S.E. 2008)
29. Explain how planning facilitates decision making. (C.B.S.E. 2008)
30. How does planning facilitate control? Justify your answer with the help of a suitable
example.
1 Mark
31. State any two points of the importance of planning.
Ans. (a) It provides direction. (b) It reduces risks of uncertainty.
32. How the happening of 'Overlapping and wasteful activities' can be reduced?
Ans. Through planning.
• Limitations of Planning
6 Marks
33. Explain in brief any six limitations of the planning. (C.B.S.E. 2005, 06)
34. Though planning is an important tool of management, yet it is not a remedy for all types
of problems' .Do you agree with this statement? Give any five reasons in support of your
answer. (C.B.S.E. 2003)
35. Does planning have limitations? Explain any five such limitations. (CB.S.E. 2007)
36. Why does planning sometimes fail inspite of the best efforts of management?
37. "Planning is not a guarantee of success of business." Comment.
4/5 Marks
38. Explain any five limitations of planning. (CB.S.E. 2009)
39. In spite of best efforts of managers sometimes planning fails to achieve desired results
due to its limitations. Explain any four limitations of planning.
3 marks
40. Explain briefly any three limitations of Planning. (CB.S.E. 2001)
41. How does planning restrict creativity? (CB.S.E. 2002)
42. Explain any two limitations of planning. (CB.S.E. 2002)
43. State any six limitations of planning. (CB.S.E. 2004)
44. Briefly explain 'rigidity' as a limitation of planning.
45. How 'costs' create hurdle in planning?
1 Mark
46. 'Planning strangulates the initiative of the employees and compels them to work in an
inflexible manner.' What does it mean?
Ans. It refers to - planning reduces creativity.
47. Does mere planning ensures success? Ans. No, efforts have to be made to get success. 48.
'Planning eliminates changes/uncertainties'. Do you agree? Give reason in support of your
answer. (C.B.SE Sample Paper)
Ans. No, I do not agree because planning only anticipates not eliminates changes/
uncertainties .
• Planning Process
6 Marks
49. Explain the process of planning. (C.B.SE 2006)
50. What are the steps taken by management in the planning process? (N.CER. T.)
4/5 Marks
51. Explain any four steps of planning process
3 Marks
52 Explain the steps involved in the process of planning (C.B.SE Sample Paper).
1 Mark
53. What is meant by 'selecting an alternative' as a step in the planning process? (C.B.SE
2009)
Ans. It means choosing the best possible alternative after a careful analysis of various
alternatives.
54. Give two examples of internal premises of planning.
Ans. (a) Capital (b) Raw Material.
55. Give two examples of external premises of planning.
Ans. (a) Govt. policies (b) Business competition.
56. What step is taken to reduce the list of alternative courses during planning process?
Ans. A minimum preliminary criteria is determined.
57. State first two steps in the process of planning. (C.B.S.E.2009)
Ans. (a) Setting objectives, (b) Developing premises.
58. What is meant by 'follow-up action' as the step involved in the planning process? (Foreign
2009)
Ans. It means a constant review of plans so as to ensure success in the uncertain future.
52. Explain the steps involved in the process of planning.
• Types of Plans
6 Marks
59. Explain, in brief, any six types of plans.
4/5 Marks
60. Explain 'objective' and 'policy' as types of plans using suitable examples. (C.B.SE 2008)
61. Explain 'method' and 'rule' as types of plan. (C.B.SE 2008)
62. What is budget? Give an example of a sales budget.
63. Explain 'Procedure' and 'Programme' as types of plans, with a suitable example. (C.B.SE
2008)
3 Marks
64. What is meant by 'Policy' as a type of Plan? (C.B.SE 2004)
65. What is meant by 'Procedure' as a type of Plan? (C.B.SE 2004)
66. "No Smoking in the Factory" is a rule. Comment on it.
67. What is meant by 'Programme' as a type of Plan?
68. What kind of strategic decisions are taken by business organisations? (N.CER.T.)
69. Why are rules considered to be plans? (N.CER.T.)
1 Mark
70. State any two types of plans.
Ans. (i)Objectives (ii)Strategy.
71. Name the type of plans in which the move of competitors is considered.
Ans. It is strategy.
72. In which type of plans the sequence of activities to complete a job is determined?
Ans. Under procedure.
73. 'No Smoking in the factory'. This statement is related to which type of plans?
Ans. It is related with rule.
74. A Company needs a detailed plan for its new project 'Construction of a Shopping Mall'.
What type of plan is it? (CB.SE Sample Paper)
Ans. It is a programme.
75. What is meant by 'Policy' as a type of Plan? (C.B.SE 2009)
Ans. Policies are those general statements which are decided for the guidance of employees
while taking decisions.
76. Give one difference between Policy and Procedure. (CB.SE 2009)
Ans. Policies are guide to thinking while procedures are guide to action.
77. Define 'objectives' as types of plans. (Foreign2009)
Ans. Objectives are those end points for the attainment of which all the activities are
undertaken.
78. A company needs a detailed plan for its new project, 'Construction of a Shopping Mall'.
What type of plan is it? (CB.SE Sample Paper]
Ans. The company will prepare 'Programme
Query Session
For this query session, questions from readers' side are invited
CHAPTER 9
ORGANISING: IMPORTANCE AND PROCESS
"A poor organisation could run a good product into the ground and that a good
organisation which has comparatively poor product could run a good product out of the
market." - Kenneth C. Towe
Learning Objectives
After studying this chapter, you will be acquainted with:
• Meaning of Organising
• Definitions of Organising
• Characteristics of Organising
• Importance of Organising
• Organising Process
• Meaning, Characteristics, Advantages and Limitations of Formal Organisation
• Meaning, Characteristics, Advantages and Limitations of Informal Organisation
• Difference between Formal and Informal Organisation
Meaning of Organising
After having decided about the first function of management, i.e., planning, managers are
responsible for designing an organisation structure. We call this function 'Organising'. It
includes the process of determining what activities are to be conducted, how the activities are
to be grouped, how responsibility and authory, are to be delegated and who reports to whom.
TOOL KIT-1
Organising?
It refers to harmonious adjustment of various parts to achieve common objectives.
Definitions of Organising
Different scholars have given different views about the meaning of organisation:
(1) According to Haney, '"Organisation is harmonious adjustment of specialised parts for the
accomplishment of some common purpose or purposes”
(2) According to Haimann, "Organisation is the structural framework within which various
efforts are coordinated and related to each other ..
(3) According to McFarland, "An identifiable group of people contributing their efforts
towards the attainment of goals is called organisation”
A study of the above-mentioned definitions makes it clear that organisation is a process of
determining and grouping of activities and creating formal relationship among employees of
an enterprise.
• Characteristics of Organising
From the study of the various definitions given by different management experts, we get the
following information about the characteristics or nature of organisation:
(1) Division of Work: Division of work is the basis of an organisation. Another words, there
can be no organisation without 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 sub-works.
(2) Coordination: Under organisation different persons are assigned different works but the
aim of all these persons happens to be the same -the attainment of the objectives of the
enterprise. Organisation ensures that the work of all the persons depends on each other's work
even though it happens to be different. Hence, it helps in establishing coordination.
(3) Plurality of Persons: Organisation is a group of many persons who assemble to fulfil a
common purpose. A single individual cannot create an organisation.
(4) Common Objectives: There are various parts of an organisation with different functions to
perform but all move in the direction of achieving a general objective.
(5) Organisation is a Machine of Management: Organisation is considered to be a machine of
management. It is that machine in which no part can afford to be ill-fitting or non-functional.
In 'other words, if the division of work is not done properly or posts are not created correctly
the whole system of management collapses.
• Importance of Organising
The importance of organising becomes clear with the help of the following points:
(1) Benefits of Specialisation: Under organising all the activities are sub-divided into
various works or jobs. For all the sub-works, competent people are appointed who become
experts by doing a particular job time and again. In this way, maximum work is accomplished
in the minimum span of time and the organisation gets the benefit of specialisation.
(2) Clarity in Working Relationship: Organising clarifies the working relations among
employees. It specifies who is to report whom. Therefore, communication becomes effective.
It also help in fixing accountability.
(3) Optimum Utilisation of Resources: Under the process of organising the entire work is
divided into various small activities. There is a different employee performing every job. By
doing so, there is no possibility of any activity being left out or any possibility of unnecessary
duplicating any job. Consequently, there is optimum utilisation of all the available resources
(e.g. material, machine, financial, human resource, etc.) in the organisation.
(4) Adaptation to Change: Organising process makes the organisation capable of adapting
to any change connected with the post of the employees. This becomes possible only because
of the fact that there is a clear scalar chain of authority for the managers right from the top to
the lower level. Whenever, a managerial post falls vacant, it is immediately filled up by
promotion. Since every subordinate is well aware of the working of his boss, there is no
difficulty for his taking up the new post.
(5) Effective Administration: It has generally been observed that there is always a condition
of doubt about the authority of the managers among themselves. The process of organising
makes a clear mention of each and every activity of every manager and also of their extent of
authority. It is also made clear as to whom a manager order for a particular job shall.
Everybody also knows to whom they are accountable. In this way, the confusion about
authority is put to end. Consequently, effective administration becomes possible.
(6) Development of Personnel: Under the process of organising, delegation of authority is
practised. This is done not because of the limited capacity of any individual, but also to
discover new techniques of work. It provides opportunities of taking decisions to the
subordinates. By taking advantage of this situation, they try to find out the latest techniques
and implement them. Consequently, it helps them to grow and develop.
(7) Expansion and Growth: The process of organising allows the employees the freedom to
take decisions which helps them to grow. They are always ready to face new challenges. This
situation can help in the development of the enterprise. This helps in increasing the earning
capacity of the enterprise which in turn helps its development.
Conclusion: The above analysis makes it clear that the process of organising by clearly
defining the posts, roles, authorities and relations creates a structure with the help ofwhich the
objectives defined under planning are turned into reality. It is said that the organising has the
same importance for management as a structure of bones in a human body. Itmeans that
organising is a very important function of management.
• Organising Process
In order to complete the organising function of management, following steps are taken:
(1) Identification and Division of Work
(2) Departmentalisation
(3) Assignment of Duties
(4) Establishing Reporting Relations
(1) Identification and Division of Work: The first step of organising is the identification
and division of work. At this step, the total work is divided into various activities. For
example ,the various activities of a mobile phone manufacturing company can be like this-
(i)purchase of raw material, (ii)purchase of manufactured parts, (iii) production, (iv) stocking
of goods, (v) research, (vi) advertisement, (vii)sales, (viii)financial arrangement, (ix)
maintenance of accounts, (x)correspondence, (xi) arrangement of employees, etc.
(2) Departmentalisation: After various activities have been designed in order to achieve the
objectives of the company, starts the departmentalisation of activities. The activities of the
same nature are grouped together and assigned to a particular department (It is known as
grouping), e.g., purchase of raw material, purchase of manufactured parts, etc. are given to
the purchase department. And production, stocking the goods, research activities are given to
the production department. Similarly, advertisement and sales can be given to the marketing
department and the financial arrangements, maintenance of accounts and correspondence can
be put in the charge of finance department. The grouping of activities and departmentalisation
has been shown in the following diagram where the objective of the company is to produce
mobile phones.
Note: (i) If the said mobile phone producing company has its own textile business also, first
of all two divisions of the company will be created, e.g., Mobile Phone Division and Textile
Division. Then in every division the activities will be determined and later on the work of
grouping activities and departmentalisation will be completed. (ii) The above process
undertaken in respect of the manufacturing for single product is called functional and for
more products it is called divisional departmentalisation.
(3) Assignment of Duties: At this stage, the responsibility of each individual or post is
decided, e.g., the purchase manager will be given the task of purchasing goods, the sales
manager will be given the work of sale of goods, the advertising manager will be given the
work of advertisement and in the same way the finance manager will be given the
responsibility of making financial arrangements. While assigning these duties, it is important
to match the nature of the work and the capabilities of the person to whom the work is given.
(4) Establishing Reporting Relations: When two or more than two persons work for the
attainment of common goals their inter-relationship must be defined very clearly. Everybody
should know who is his superior and who is his subordinate? For example, the purchase
manager will be the superior for all the employees of the purchase department; they will
receive orders from him and will also be responsible to him.
Formal and Informal Organisation
The structure of an organisation is both formal and informal. In other words, two kinds of
relationship can be established among the employees -firstly, the relationship that is definite
and defined before hand, and secondly, those relations which are not definite and defined
before hand. We will now study them in detail.
• A. Formal Organisation
A formal organisation means an organisation in which the responsibilities, authority, and
mutual relationships among all the employees working in an enterprise are clearly defined.
According to Chester Bernard, "An organisation is formal when the activities of two or more'
persons are consciously coordinated towards a common objective"
• Main Characteristics of Formal Organisation
Following are the main characteristics of formal organisation:
(1) It has Defined Inter-relationship: Formal organisation is a sort of arrangement which
clearly defines mutual relationship. Everybody knows their authority and responsibilities.
This clearly shows who will be reporting to whom.
(2) It is Based on Rules and Procedures: It is important to observe all the pre-determined
rules and procedures in the formal organisation. The objectives laid down under planning are
thus achieved.
(3) It is Based on Division of Work: The chief basis of formal organisation is the division of
work. It is this that connects the efforts of different departments with each other.
(4) It is Deliberately Created: It is deliberately created in order to achieve the objectives of
the organisation in an easy manner.
(5) It is Impersonal: Under it, personal feelings are ignored and strict discipline is observed. It
is not the person but the work that happens to be important.
(6) It is More Stable: Under this changes cannot be introduced because of the needs of
individuals and their wishes. Therefore, it is more stable .
• Advantages of Formal Organisation
Following are the advantages of formal organisation:
(1) Easy to Fix Accountability: Since the authority and responsibility of all the employees
have been already fixed, inefficient employees can easily be apprehended and in this way
their accountability can be fixed.
(2) No Overlapping of Works: In the formal organisation, everything moves in an orderly
manner. Therefore, there is no possibility of any work being left out or unnecessarily
duplicated.
(3) Unity of Command Possible: It is possible to observe the principles of unity of
command in view of the presence of scalar chain of authority.
(4) Easy to Get Goals: Under the formal organisation, it is easy to achieve the goals of the
organisation because there is an optimum use of all the material and human resources.
TOOL KIT-2
Formal Organisation?
It refers to the organisation structure which is designed by the management to accomplish a
particular task.
(5) Stability in Organisation: All the people work by observing rules and remain confined
within the domain of their authority. This leads to the establishment of good relationship
which in turn leads to stability to the organisation .
• Limitations of Formal Organisation
Following are the limitations of formal organisation:
(1) Delay in Work: Every activity is bound by rules which causes unnecessary delay in the
completion of work.
(2) Lack of Initiative: In this organisation, the employees have to do what they are asked to
do and they do not have a chance of some independent thinking. This, therefore, kills
initiative.
(3) Mechanisation of Relations: The relationship of all the people are defined. This leaves
no chance of any mutual interplay and thus the knowledge of other people and their
experience cannot be exploited.
B. Informal Organisation
An informal organisation is that organisation which is not established deliberately but comes
into existence because of common interests, tastes, and religious and communal relations.
The chief quality of this organisation lies in friendly relationship and cooperative nature. In
this organisation, an individual does not help another individual in his activities simply
because he is responsible for it but because it is his personal liking. For example, in a formal
organisation a supervisor in a purchase department consults only the manager of his
department regarding all his problems connected with his activities, but in an informal
organisation any manager of any department or supervisor can be consulted. Not only this, a
supervisor can talk directly to the general manager.
According to Chester Bernard, "That organisation is informal where the mutual relations nrc
established unconsciously for common objectives .
• Main Characteristics of Informal Organisation
Following are the main characteristics of informal organisation:
(1) Based on Formal Organisation: This is based on formal organisation where people also
have informal relations. (It means first of all the formal organisation is established and then
informal organisation is created out of it.)
(2) It has no Written Rules and Procedures: In this organisation, there are no written rules
and procedures to govern inter-relationship. But there are group norms which have to be
observed. For example, employees working in an organisation and belonging to a particular
community form a separate group in an informal way. Gradually some norms do emerge -
like helping the member of their group to find solution to the problems related to his work or
his own self. Similarly, they protect the members of their community from the managerial
exploitation. In this way, all the persons joining this informal group will be bound to observe
the norms of the group.
(3) Independent Channels of Communication: In this organisation relations among
different people are not defined because a person at the lowest rank can have direct contact
with the person at the highest level. The flow of communication cannot be specified.
(4) It is not Deliberately Created: Informal organisation is not deliberately created. It
emerges out of mutual relationship and tastes.
(5) It has no Place on Organisation Chart: Informal organisation has no place on the
properly prepared organisation chart. Moreover, there is no information about it even in the
organisation manual.
(6) It is Personal: It is being personal means that under this the feelings of individuals are
kept in mind and nothing is imposed upon them.
(7) It lacks Stability: There is generally a lack of stability insuch an organisation. For
example, an individual mixes with one group of people today but can cross over to another
group tomorrow. Not only this, an individual can be a member of more than one group at a
time.
TOOL KIT-4
Organisation chart
Organisation chart is a drawing which shows the relationship among the various posts
established in the organisations.
TOOL KIT-5
Organisation Manual
In the organisation manual the authorities and responsibilities of various posts established in
the organisation are explained. It also gives other relevant details.
It is clear from the above diagram that in a formal organisation the General Manager,
Purchase Manager and Purchase Superintendent have a chain relationship and they have to
conduct themselves within the limitations of this chain. In other words, a purchase
superintendent has to convey his ideas only to the purchase manager. Similarly, this chain
shall operate in the production and finance departments also. On the contrary, in an informal
organisation a purchase superintendent can have talk with the production manager on the
strength of his personal relationship. Similarly, a finance superintendent can place his
problem before the General Manager.
The difference between the formal and informal organisations can be easily understood from
the following table:
Basis of Difference Formal Organisation Informal Organisation
1 Meaning An organisation created by the An organisation born out of
management in the form of mutual relations is called
structure of authority is called informal organisation and it
formal organisation. emerges automatically.
2. Origin It is established because of the It is established because of
rules and policies of the social relationship.
organisation
3 Authority Authority is born out of the post Authority comes into existence
established in the organisation because of individual virtues.
an moves downwards Authority moves downwards or
it can be horizontal.
4. Behaviour Behaviour is pre-detrmined. It Behaviour depends on
means that it is known individual attachment which
beforehand who will do what means it is not pre-determined.
and how will he do it; who will
be the boss and who will be the
subordinate.
5. Flow of Communication Communication is defined. It Communication is not defined.
moves according to the scalar It can move in any direction.
chain of authority
6 Nature It is more stable. Forecasting is It is temporary and less stable.
possible in it. Forecasting is not possible in it.
7 Leadership Because of their high ranks, the The leader is elected.
managers are the leaders.
Key Concepts
STUDY Assignments
Meaning, Importance and Process of Organising
6 Marks
1. Describe the steps involved in the process of 'Organising' .
2. Explain the importance of organising as a function of management. (C.B.SE Sample
Paper)
4/5 Marks
3. Aman, Avneesh and Amrish have decided to start a business of manufacturing toys. They
identified the following main activities which they have to perform:
(i)Purchase of raw materials
(ii)Purchase of machinery
(iii)Production of toys
(iv)Arrangement of finance
(v)Sale of toys
(vi)Identifying the areas where they can sell their toys
(vii)Selection of employees
In order to facilitate the work they thought that four managers should be appointed to look
after:
(a) Production (b) Finance (c)Marketing (d) Personnel.
(1) Identify the function of management involved in the above mentioned para.
(2) Quote the lines from the above para which help you in identifying this function.
(3)State the steps followed in the process of this function of management. (C.B.S.E. 2009)
3 Marks
4. Define 'Organising' as a function of management. (CB.SE. 2003)
5. State three steps in the process of organising. (C.B.SE. 2004)
6. "Organisation is a machine of management." Comment.
7. How effective administration is possible through organisation?
1 Mark
8. 'Organisation is a mechanism of management.' What does this statement indicate?
Ans. It indicates about the importance of organisation.
9. How 'effective administration' is possible through organising?
Ans. It makes clear the activity of every employee and also of their extent of authority.
10. What is meaning of 'Departmentalization' as a step of organising process?
Ans. At this stage, the activities of similar nature are assigned to a particular department.
11. 'Identifying and dividing the work' is the first step in the process of one of the functions
of management. Identify the function. (C.B.S.E.2008)
Ans. Organising function of management.
12. Name the functions of management which co-ordinates the physical, financial and human
resources and establishes productive relations among them for achievement of specific goals.
(C.B.S.E. 2008)
Ans. Organising function of management.
Formal Organisation
6 Marks
13. What is meant by formal organisation? Explain any five features of formal organisation.
(CB.SE 2009)
14. Explain the merits and limitations of formal organisation.
4/5 Marks
15. State two advantages and two limitations of formal organisation.
(3 Marks)
16. State any three advantages of 'Formal Organisation'. (CB.SE 2008)
17. What is meant by 'formal organisation'? List any two limitations of 'formal organisation'.
(C.B.SE 2008)
18. What is meant by 'formal organisation'? List any two advantages of formal organisation.
(C.BSE 2008)
1 Mark
19. Name the organisation which is based on rules and procedures.
Ans. Formal organisation.
20. Name the organisation which is deliberately created. Ans. Formal organisation. 21. Name
the organisation which has the benefit of 'Easy to Fix Responsibility'. Ans. Formal
organisation.
22. Formal organisation has the limitation of 'Delay in Work'. Comment.
Ans. Under it every activity is bounded by rules which causes unnecessary delay in work.
Informal Organisation
6 Marks
23. What is meant by 'Informal Organisation'? Explain any five features of informal
organisation. (Foreign 2009)
24. Explain the advantages and limitations of informal organisation.
4/5 Marks
25. Give the meaning of informal organisation with the help of a suitable example. (CB. SE
2002)
26. The employees of Manik Ltd., a software company, have formed a Dramatic group for
their recreation. Name the type of organization so formed and state its three features. (CB.SE
Sample Paper)
3 Marks
27. Explain the meaning of informal organisation. 28. What is meant by 'informal
organisation'? List any two limitations of informal organisation. (CB.SE 2008) 29. State any
three advantages of informal organisation. (CB. SE 2008)
1 Mark
30. Out of formal and informal organisations which one is established first?
Ans. Formal organisation.
31 Name the organisation which is directed by 'Group Norms'.
Ans. Informal organisation.
32 Informal organisation is not deliberately created. Then how it is created?
Ans. It emerges out of mutual relations and tastes.
33 What is organisation chart?
Ans. Organisation chart is a drawing which shows the relationship among the various posts
established in the organisation.
34What is organisation manual?
Ans. In the organisation manual the authorities and responsibilities of various posts
established in the organisation are explained. It also gives other relevant details.
35 Name the organisation which has the advantage of 'Effective Communication'.
Ans. Informal organisation.
36 Name the organisation which has the limitation of 'resisting Change'.
Ans. Informal organisation