SSN College of Engineering, Kalavakkam, Chennai – 603 110

Department of Mechanical Engineering

Unit Test- II (Date: 04.02.19)

Subject: MG6851 Principles of Management Class: 6thSem (III year-B) Mechanical Engg.
Duration: 2 periods Max. Marks: 50
Remembering (R); Understanding (U); Applying (Ap); Analyzing (An); Evaluating (E);
Creating (C)

Part - A (5 x 2 = 10 marks) – Answer all the questions

1. State the purpose of planning (R)

1. Reduces uncertainty and risks
2. Provides sense of direction
3. Encourages Innovation & creativity
4. Helps in Co-ordination
5. Facilitates control.

2. Define Risk (R)

Risk is the potential of gaining or losing something of value. Values can be gained or
Lost when taking risk resulting from a given action or inaction, foreseen or unforeseen
3. Determine the Characteristics of Programmed Decision (R)
1. Decision making is goal oriented
2. The decision maker has freedom to choose an alternative
3. Decision making may not be completely rational but may be judgmental
and emotional

4. Define strategy and policy (R)

Strategy is a course of action through which an organization tries to relate
itself with its environment to develop certain advantages which help in
achieving its objectives
Policies are generally statements or understandings that guide managers
thinking in decision making. They usually do not require action but are
intended to guide managers in their commitment to the decision they
ultimately make
5. List any four types of error in Decision making process(R)
Decision-Making Biases and Errors
Managers use different styles and “rules of thumb” (heuristics) to simplify their decision
making.
1. Overconfidence bias
2. Immediate gratification bias
3. The anchoring effect
4. Selective perception bias
5. Confirmation bias
6. Framing bias
7. Availability bias
9. Randomness bias
10. The sunk costs
11. Self-serving bias
 12. Hindsight bias

Part – B (16 x 2 = 32 marks) Answer all the questions

6. Explain the process of planning with a suitable flowchart and List the different types of
plan (12+4)(U)

*The Formal Planning process (Large or Small organisation)

Planning is a process; therefore it contains number of steps within it. It is not

necessary that a particular planning process or steps are valid for all organisations
and for all types of plans. The planning process or steps given here is mostly
applicable for major programmes. But with minor modifications, the process is
applicable for all types of plans.

FORMAL PLANNING PROCESS

1. IDENTIFYING OPPORTUNITIES

(STRENGTH & WEAKNESS)

2. ESTABLISHING OBJECTIVES

(Organisation goals and key result area)

3. PLANNING PREMISES

(External & internal environment)

4. IDENTIFICATION OF ALTERNATIVES

(CHOICES/ OPTIONS)

5. EVALUATION OF ALTERNATIVES

(positive & negative- cost, time)

6. CHOICE OF ALTERNATIVE

(Most fit one selected- changing situation )

7. FORMULATION OF SUPPORTING PLANS

(Various plan made to support main plan)

 8. Establishing sequence of activities

(Budget)

TYPES OF PLANS / COMPONENTS OF PLANNING (4)

7. a. Explain SWOT and Business portfolio matrix (8) (R)

SWOT – Explanation 4 Mark/ Business portfolio matrix- Explanation 4 Mark
b. Outline the process of MBO and discuss them briefly (8) (R)
 Part – C (8 x 1 = 8 marks) Answer all the questions

8. Operational plans specify the details of how the achievement of the overall objectives is
to be obtained. State True or False

9. Formal planning involves which of the following aspects?

a) Developing general objectives
b) Planning for up to one year
 c) Writing objectives
d) Distributing the plan to all managerial employees

Imagine that you are the owner of a small company that sells typewriters, business
equipment, and computer hardware. You employ about 40 people. You know that the
organization needs to move in a different direction, and you want to set some long-term goals
for the company. You want to write a plan that will cover the next three years only, knowing
that business needs change somewhat frequently. Your goal is to write a plan that provides
direction but does not contain extremely well-defined, potentially restrictive objectives

10.) The fact that your plan covers three years suggests that your plan is most consistent with
what type of plan?
a) specific
b) long term
c) operational
d) strategic

11.) Your plan will cover the entire organization. This characteristic is most consistent with
type of plan?
a) specific
b) long term
c) standard
d) strategic

Robert Downs has just completed a master of science degree in computer science at Major
State University. He now wants to begin a new Internet business selling his services as a Web
site maker for companies in his home city, St. Louis. He estimates that, if his business idea is
a success, within one year he will be employing at a minimum 10 programmers and 2
analysts.

12) To make his business successful, Robert will first have to develop what type of plan?
a) operational
b) specific
c) directional
d) strategic

13) To clarify how the overall goals are to be achieved, Robert will have to develop a(n)
a) operational plan
b) specific plan
c) directional plan
d) strategic plan

14) To ensure that the organization's objectives are clearly defined and do not leave room
forinterpretation, he will have to develop what type of plan?
a) operational
b) specific
c) directional
d) strategic

15.) In the first step of strategic management, the mission of the firm answers the question,
a) what business should we be in?
b) what is our reason for being in business?
c) who are our customers?
d) who are our creditors?