NOV/DEC-’08/MG1351 – Answer key

B.E/B.Tech DEGREE EXAMINATION, NOVEMEBER/DECEMBER 2008

MG 1351 PRINCIPLES OF MANAGEMENT

KEY

PART-A

1. Management as a process:
 The process of designing and maintaining an environment in which individuals
working together in groups, achieve their objectives effectively.
 Functions like Planning, Organizing, Directing and Controlling.

2.Partnership:
 The relationship between persons who have agreed to share the profits of a
business concern carried on by all or any one of them acting for all.
 E.g: Maruti Suzuki

3. Planning:
The process of selecting the missions and objectives and putting down the actions
to achieve them.

Advantages:
a. Targets to achieve the objectives.
b. Coordinating all activities.

4. Generic strategies by Porter:

a. Overall cost leadership strategy
b. Differentiation strategy.
c. Focused strategy
d. Best value (or) best cost producer strategy

5. Programmed decisions:
The decisions applied to structured or routine problems.
E.g: Lathe operators

6. Recruitment:
Filling, and keeping filled, positions in the organization structure.
Methods:
Interviews and Tests.

7. Motivation:
* A psychological process.
* To create conditions in which people are willing to work with zeal, initiative
and interest.

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8. Creativity:
* Ability to develop new ideas.
* Just Knowledge.
Importance:
To manage people.
To develop new products/ideas.

9. Feed Forward Control:

 A control system, in which actual performance is measured and compared with
standards to find out deviation.
 Used to overcome the difficulties in the feedback control system.\

10. Types of Budgets:

 Revenue and Expense budgets
 Time, Space, Material and Product budgets
 Capital Expenditure budget
 Cash budget

PART-B

11. (a) Characteristics of Management: (16)

1. Universal:
Universal applicability.
Applies to all kinds of Organization.

2. Continuous activity:
Organized activity takes place on a continuous basis.
The Organized activity can take a variety of forms.

3. Purposeful:
Management is a goal-oriented organized activity.
Focus to achieve predetermined objectives.
Focus to bring out successful action.

4. Integrative process:
Management aims to integrate between
(i) Various resources of the Organization.
(ii) Objectives of the Organization.

5. Involves Decision making:

Evaluation and Selection of alternatives.
Exists in all the levels of management.

6. Emphasizes people and not things:

People are more important than things.

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Managers should be the leaders, whom people want to follow.

People to work through morale and motivation and not through fear and
threats.

7. Aims at productivity:
Using minimum resources and productive operations.
Total productivity = Total output / Sum of all input factors

(OR)

11. (b) Human relations approach to management: (16)

Hawthorne studies:
 Productivity varies because of the attitude of the workers toward
their work.
 Productivity increases with more freedom of work, responsibility
and self-discipline.
 Better supervision and communication helps in increasing output
and human relations.
 Recognizing social factors, groups and conflicts and handling them
tactfully avoids many problems. It increases the efficiency of the
Organization.
 A mere observation of a group tends to change it, that is, when
people are observed, they act differently.
 Workers respond positively to special attention.
12. (a) Nature of Planning: (8)
 Planning is the first function to develop a platform.
 It is a continuous process.
 It has two components: Objectives and Techniques
 Involves selecting from alternatives.
 It is done at all levels.
 It is an intellectual process.
 It is to improve efficiency.
 It focuses on getting ready for the future.
 It involves flexibility.

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 It involves no kind of guess-works.

Importance of Planning: (8)
 It targets to achieve objectives.
 To anticipate crisis and change.
 It is the reference for controlling function.
 It focuses on coordinating all activities.
 It relates decisions and objectives.
 It puts actions in an understandable manner.
 It improves effectiveness of all activities.

12. (b) Managerial decision making: (16)

Models of Managerial Decision making:

 Rational model
 Simon’s normative model
 The Garbage Can model
Assumptions of Rational model: (4)
 All available information concerning alternatives has been
obtained.
 Ranking of alternatives according to explicit criteria.
 The selected alternative will provide maximum gain possible for
Organization or decision makers.
 Ethical Dilemmas do not exist.
Steps in Rational mode: (2)
 Identifying the problem
 Generating solutions
 Selecting a solution
 Implementing and evaluating the solutions

Simon’s Normative model: (5)

 Limited information processing

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 Judgment heuristics
(i) Availability heuristic
(ii) Representative heuristic

The Garbage Can model: (5)

According to this model, decisions result from a complex interaction between four
independent streams of events.
 Problems
 Solutions
 Participants
 Choice opportunities
The interaction of these events creates a collection of
 Choices looking for problems, issues and feelings.
 Solutions looking for issues.
 Feelings looking for decision situation.
 Decision makers looking for work.

13. (a) (i) Formal and informal organization: (8)

Formal organization
Formal organization is a fixed set of rules of intra-organization procedures and
structures. As such, it is usually set out in writing, with a language of rules that ostensibly
leave little discretion for interpretation. In some societies and in some organization, such
rules may be strictly followed; in others, they may be little more than an empty formalism
 To facilitate the accomplishment of the goals of the organization: In a formal
organization the work is delegated to each individual of the organization. He/She
works towards the attainment of definite goals, which are in compliance with the
goals of the organization.
 To facilitate the co-ordination of various activities: The authority, responsibility
and accountability of individuals in the organization is very well defined. Hence,
facilitating the co-ordination of various activities of the organization very
effectively.

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 To aid the establishment of logical authority relationship: The responsibilities of

the individuals in the organization are well defined. They have a definite place in
the organization due to a well defined hierarchical structure which is inherent in
any formal organization.
 Permit the application of the concept of specialization and division of Labour,
division of work amongst individuals according to their capabilities helps in
greater specializations and division of work.
 Create more group cohesiveness
Characteristics of a formal organization
 Well defined rules and regulation
 Arbitrary structure
 Determined objectives and policies
 Status Symbol
 Limitation on the activities of the individual
 Strict observance of the principle of Co-ordination
 Distinction from informal organization

Formal rules are often adapted to subjective interests — social structures within an
enterprise and the personal goals, desires, sympathies and behaviors of the individual
workers — so that the practical everyday life of an organization becomes informal.
Practical experience shows no organization is ever completely rule-bound: instead, all
real organizations represent some mix of formal and informal.
Consequently, when attempting to legislate for an organization and to create a formal
structure, it is necessary to recognize informal organization in order to create workable
structures. However, informal organization can fail, or, if already set in order, can work
against mismanagement.

Formal organizations are typically understood to be systems of coordinated and

controlled activities that arise when work is embedded in complex networks of technical
relations and boundary-spanning exchanges.

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But in modern societies, formal organizational structures arise in highly institutional

contexts. Organizations are driven to incorporate the practices and procedures defined by
prevailing rationalized concepts of organizational work and institutionalized in society. \
Organizations that do so increase their legitimacy and their survival prospects,
independent of the immediate efficacy of the acquired practices and procedures. There
can develop a tension between on the one hand, the institutionalized products, services,
techniques, policies, and programs that function as myths (and may be ceremonially
adopted), and efficiency criteria on the other hand.
To maintain ceremonial conformity, organizations that reflect institutional rules tend
to buffer their formal structures from the uncertainties of the technical activities by
developing a loose coupling between their formal structures and actual work activities. -
(John Meyer and Brian Rowan, 1976)

The Hawthorne Experiments

The deviation from rulemaking on a higher level was documented for the first
time in the Hawthorne studies (1924-1932) and called informal organization. At first this
discovery was ignored and dismissed as the product of avoidable errors, until it finally
had to be recognized that these unwritten laws of work of everyday life often had more
influence on the fate of the enterprise than those conceived on organizational charts of the
executive level.
Numerous empirical studies in sociological organization research followed, ever
more clearly proving this, particularly during the Human Relations Movement. It is
important to analyze informal structures within an enterprise to make use of positive
innovations, but also to be able to do away with bad habits that have developed over time.

Reasons for informal organization

There are many different reasons for informal organization:
 Informal standards: personal goals and interests of workers differ from official
organizational goals.
 Informal communication: changes of communication routes within an enterprise
due to personal relations between coworkers.

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 Informal group: certain groups of coworkers have the same interests, or (for
example) the same origin.
 Informal leaders: due to charisma and general popularity, certain members of the
organization win more influence than originally intended.
 Different interests and preferences of coworkers.
 Different status of coworkers.
 Difficult work requirements.
 Unpleasant conditions of work.

Managerial organization theory often still regards informal organization as rather

disturbing, but sometimes helpful. In the opinion of systems theory and cybernetics,
however, formal organization fades into the background and only serves, if necessary, to
supplement or to correct.
Changes in structure always redevelop because of the conduct and differences among
coworkers, and the ability of self-organization is recognized as a natural characteristic of
a social system.

13. (a) (ii) Factors determining effective span of control: (8)

 Capacity of superior
 Capability of sub-ordinates
 Nature of work
 Degree of decentralization
 Level of planning
 Communication technique
 Use of staff assistance by manager
 Degree of team work

(OR)

13. (b) Process of Selection with reference to IT professionals: (16)

 Call for applications through advertisements

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- Through newspapers or websites.

- Periodical advertisements
 Short listing the eligible candidates
- Based on academic eligibility criteria
- Based on previous work experience
 Written/Aptitude test
- To test the logical reasoning
- To test the time management
 Technical interview
- Questions based on software languages / tools
- To test the skill possessed by the candidate
 Personal / HR interview.
- Verification of Certificates
- To test the candidate’s personal attitude, etc.
 Selection and Orientation
- Issuing appointment order
- Training on a specific platform

14. (a) Maslow’s Hierarchy of needs theory and Herzberg’s motivation Hygiene
theory: (16)
Physiological needs
For the most part, physiological needs are obvious - they are the literal requirements
for human survival. If these requirements are not met (with the exception of clothing and
shelter), the human body simply cannot continue to function.

Physiological needs include:

 Breathing
 Food
 Sexual activity

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Lack of air and food will kill an individual. A lack of sexual activity would mean the
extinction of humanity, probably explaining the strength of the sexual instinct in
individuals.
Safety needs
With their physical needs relatively satisfied, the individual's safety needs take over
and dominate their behavior. These needs have to do with people's yearning for a
predictable, orderly world in which injustice and inconsistency are under control, the
familiar frequent and the unfamiliar rare.
In the world of work, these safety needs manifest themselves in such things as a
preference for job security, grievance procedures for protecting the individual from
unilateral authority, savings accounts, insurance policies, and the like.

These have been lacking for most of human history, but at this point are mostly
satisfied in the "First World" -- although the poor, both those who are poor as a class and
those who are temporarily poor (university students would be an example), must often
still address these needs.

Safety and Security needs include:

 Personal security
 Financial security
 Health and well-being
 Safety net against accidents/illness and the adverse impacts
Social needs
After physiological and safety needs are fulfilled, the third layer of human needs is
social. This psychological aspect of Maslow's hierarchy involves emotionally-based
relationships in general, such as:
 Friendship
 Intimacy
 Having a supportive and communicative family

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Humans need to feel a sense of belonging and acceptance, whether it comes from a
large social group, such as clubs, office culture, religious groups, professional
organizations, sports teams, gangs ("Safety in numbers"), or small social connections
(family members, intimate partners, mentors, close colleagues, confidants).
They need to love and be loved (sexually and non-sexually) by others. In the absence
of these elements, many people become susceptible to loneliness, social anxiety, and
clinical depression. This need for belonging can often overcome the physiological and
security needs, depending on the strength of the peer pressure; an anorexic, for example,
may ignore the need to eat and the security of health for a feeling of control and
belonging.
Esteem
All humans have a need to be respected, to have self-esteem, self-respect. Also
known as the belonging need, esteem presents the normal human desire to be accepted
and valued by others. People need to engage themselves to gain recognition and have an
activity or activities that give the person a sense of contribution, to feel accepted and self-
valued, be it in a profession or hobby.
Imbalances at this level can result in low self-esteem or an inferiority complex.
People with low self-esteem need respect from others. They may seek fame or glory,
which again depends on others. It may be noted, however, that many people with low
self-esteem will not be able to improve their view of themselves simply by receiving
fame, respect, and glory externally, but must first accept themselves internally.
Psychological imbalances such as depression can also prevent one from obtaining self-
esteem on both levels.
Most people have a need for a stable self-respect and self-esteem. Maslow noted two
versions of esteem needs, a lower one and a higher one. The lower one is the need for the
respect of others, the need for status, recognition, fame, prestige, and attention.
The higher one is the need for self-esteem, strength, competence, mastery, self-
confidence, independence and freedom. The last one is higher because it rests more on
inner competence won through experience. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.

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Maslow stresses the dangers associated with self-esteem based on fame and outer
recognition instead of inner competence. Healthy self-respect is based on earned respect.
Self-actualization
The motivation to realize one's own maximum potential and possibilities is
considered to be the master motive or the only real motive, all other motives being its
various forms. In Maslow's hierarchy of needs, the need for self-actualization is the final
need that manifests when lower level needs have been satisfied. Classical Adlerian
psychotherapy promotes this level of psychological development, utilizing the foundation
of a 12-stage therapeutic model to realistically satisfy the basic needs, leading to an
advanced stage of "meta-therapy," creative living, and self/other/task-actualization.
Maslow's writings are used as inspirational resources.
Self-transcendence
Near the end of his life Maslow proposed that there was a level on the hierarchy that
was above self-actualization: self-transcendence. "[Transcenders] may be said to be much
more often aware of the realm of Being (B-realm and B-cognition), to be living at the
level of Being… to have unitive consciousness and “plateau experience” (serene and
contemplative B-cognitions rather than climactic ones) … and to have or to have had
peak experience (mystic, sacral, ecstatic) with illuminations or insights.
Analysis of reality or cognitions which changed their view of the world and of
themselves, perhaps occasionally, perhaps as a usual thing." Maslow later did a study on
12 people he believed possessed the qualities of Self-transcendence. Many of the
qualities were guilt for the misfortune of someone, creativity, humility, intelligence, and
divergent thinking. They were mainly loners, had deep relationships, and were very
normal on the outside. Maslow estimated that only 2% of the population will ever
achieve this level of the hierarchy in their lifetime, and that it was absolutely impossible
for a child to possess these traits.
Marketing
Maslow's hierarchy is one of the first theories taught to marketing students as a basis
for understanding consumers' motives for action. Marketers have historically looked
towards consumers' needs to define their actions in the market.

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If producers design products meeting consumer needs, consumers will more often
choose those products over those of competitors. Whichever product better fulfills this
void will be chosen more frequently, thus increasing sales. This makes the model relevant
to Transpersonal business studies.

(OR)

14. (b) Barriers to effective communication (16)

D.E. McFarland has defined Communication as the process of meaningful

interaction among human beings. More specifically, it is the process by which meanings
are perceived and understandings are reached among human being. But there may be
some faults /barriers in the communication system that prevents the message from
reaching the receiver, these barriers are as follows:-

1. Language Barrier: -

Different languages, vocabulary, accent, dialect represents a national/ regional

barriers. Semantic gaps are words having similar pronunciation but multiple meanings
like- round; badly expressed message, wrong interpretation and unqualified assumptions.
The use of difficult or inappropriate words/ poorly explained or misunderstood messages
can result in confusion.

2. Cultural Barriers: -

Age, education, gender, social status, economic position, cultural background,

temperament, health, beauty, popularity, religion, political belief, ethics, values, motives,
assumptions, aspirations, rules/regulations, standards, priorities can separate one person
from another and create a barrier.

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3. Individual Barrier: -

It may be a result of an individual's perceptual and personal discomfort. Even

when two persons have experienced the same event their mental perception may/may not
be identical which acts as a barrier. Style, selective perception, halo effect, poor attention
and retention, defensiveness, close mindedness, insufficient filtration are the Individual
or Psychological barrier.

4. Organizational Barrier: -

It includes Poor Organization's culture, climate, stringent rules, regulations,

status, relationship, complexity, inadequate facilities/ opportunities of growth and
improvement; whereas; the nature of the internal and external environment like large
working areas physically separated from others, poor lightening, staff shortage, outdated
equipments and background noise are Physical Organizational Barrier.

5. Interpersonal Barrier: -

Barriers from Employers are :- Lack of Trust in employees; Lack of Knowledge

of non-verbal clues like facial expression, body language, gestures, postures, eye contact;
different experiences; shortage of time for employees; no consideration for employee
needs; wish to capture authority; fear of losing power of control; bypassing and
informational overloading, while Barriers from Employees includes Lack of Motivation,
lack of co-operation, trust, fear of penalty and poor relationship with the employer.

6. Attitudinal Barrier: -

It comes about as a result of problems with staff in the organisation. Limitation in

physical and mental ability, intelligence, understanding, pre-conceived notions, and
distrusted source divides the attention and create a mechanical barrier which affects the
attitude and opinion.

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7. Channel Barrier: -

If the length of the communication is long, or the medium selected is

inappropriate, the communication might break up; it can also be a result of the inter-
personal conflicts between the sender and receiver; lack of interest to communicate;
information sharing or access problems which can hamper the channel and affect the
clarity, accuracy and effectiveness.

To communicate effectively one need to overcome these barriers. Working on

breaking the barrier is a broad-brush activity and here are certain measures.

15. (a) Requirements of a good control system: (16)

 Control over policies
 Control over organizational structure
 Control over personnel
 Control over costs
 Control over methods and manpower
 Control over capital expenditure
 Control over service department
 Control over line of product
 Control over research and development
 Control over foreign operations
 Overall control
(OR)

15. (b) Managerial Control tools: (16)

 Budgetary control
 Standard costing
 Management audit
 Internal audit
 Quality audit

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 Management by Objectives (MBO)

 Employee discipline system
 Information and financial analysis
 Break even analysis
 Techniques of operations management
 Statistical quality techniques

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