PRINCIPLES OF MANAGEMENT

First Internal Assessment Test -2018

Part – A(2X10=20)

1. Define Management.

2. What is Organization?

3. What is Scientific Management?

4. What is International Business?

5. What do you mena by Strategies?

6. Define Planning.

7. What is MBO?

8. What is Policy?

9. What is Decision Making?

10. What is Programmed Decision?

Part – B(5X13=65)

11. ) Explain the principle of F.W.Taylor theory.

12) What are the major functions of management explain.

13) Explain the types of business organization.

14) Write the nature and purpose of planning.

15) Is Management as Art or Science.Comment

Part – A(1X15=15)

16.a)Give an account of various steps involved in planning?

b)Describe the different objectives of planning?

 PRINCIPLES OF MANAGEMENT

First Internal Assessment Test -2018 – KEY

Part – A (2X10=20)

1. Define Management.
Management defined as all the activities and tasks undertaken for archiving goals by
continuous activities like; planning, organizing, leading and controlling.
Management is a process of planning, decision making, organizing, leading, motivation
and controlling the human resources, financial, physical, and information resources of an
organization to reach its goals efficiently and effectively.
2. What is Organization?
Definition: Organization refers to a collection of people, who are involved in pursuing
defined objectives. ... It can also be referred as the second most
important managerial function that coordinates the work of employees, procures
resources and combines the two, in pursuance of company's goals.
3. What is Scientific Management?
Scientific management is a theory of management that analyzes and synthesizes
workflows. Its main objective is improving economic efficiency, especially labor
productivity. It was one of the earliest attempts to apply science to the engineering of
processes to management.
4. What is International Business?
International business refers to the trade of goods, services, technology, capital and/or
knowledge across national borders and at a global or transnational scale. It involves
cross-border transactions of goods and services between two or more
countries. ... International business is also known as globalization.

5. What do you mean by Strategies?

Strategy is an action that managers take to attain one or more of the organization’s goals.
Strategy can also be defined as “A general direction set for the company and its various
components to achieve a desired state in the future. Strategy results from the detailed
strategic planning process”.
A strategy is all about integrating organizational activities and utilizing and allocating the
scarce resources within the organizational environment so as to meet the present
objectives. While planning a strategy it is essential to consider that decisions are not
taken in a vaccum and that any act taken by a firm is likely to be met by a reaction from
those affected, competitors, customers, employees or suppliers.
6. Define Planning.
Planning is the fundamental management function, which involves deciding beforehand,
what is to be done, when is it to be done, how it is to be done and who is going to do it. It
 is an intellectual process which lays down an organisation’s objectives and develops
various courses of action, by which the organisation can achieve those objectives. It
chalks out exactly, how to attain a specific goal.
7. What is MBO?
MBO is a management practice which aims to increase organizational performance by
aligning goals and subordinate objectives throughout the organization.

MBO requires all levels of management to agree on clearly defined quantitative and/or
qualitative objectives. These targets then need to be periodically reviewed by higher
levels of management.
8. What is Policy?
A policy in Management is a general statement which is formulated by an organization
for the guidance of its personnel. The objectives are first formulated and then policies are
planned to achieve them. Policies are a mode of thought and the principles underlying the
activities of an organization or an institution.
9. What is Decision Making?
Decision making is the process of making choices by identifying a decision, gathering
information, and assessing alternative resolutions. Using a step-by-step decision-making
process can help you make more deliberate, thoughtful decisions by organizing relevant
information and defining alternatives.
10. What is Programmed Decision?
Programmed decisions are those that are repeated over time and for which an existing set
of rules can be developed to guide the process. ... For programmed decisions, managers
often develop heuristics, or mental shortcuts, to help reach a decision.

Part – B(5X13=65)

11) Explain the principles of F.W.Taylor theory.

Principles of Scientific Management by Taylor:

F.W. Taylor or Fredrick Winslow Taylor is also known as the ‘father of scientific management’
proved with his practical theories that a scientific method can be implemented to management.
Taylor gave much concentration on the supervisory level of management and performance of
managers and workers at an operational level. Let’s discuss in detail the five(5) principles of
management by F.W Taylor.

1. Science, not the Rule of Thumb-

This rule focuses on increasing the efficiency of an organisation through scientific analysis of
work and not with the ‘Rule of Thumb’ method. Taylor believed that even a small activity like
loading paper sheets into boxcars can be planned scientifically. This will save time and also
human energy. This decision should be based on scientific analysis and cause and effect
relationships rather than ‘Rule of Thumb’ where the decision is taken according to the manager’s
personal judgement.
2. Harmony, Not Discord-
Taylor indicated and believed that the relationship between the workers and management should
be cordial and complete harmony. Difference between the two will never be beneficial to either
side. Management and workers should acknowledge and understand each other’s importance.
Taylor also suggested the mental revolution for both management and workers to achieve total
harmony.

3. Mental Revolution-
This technique involves a shift of attitude of management and workers towards each other. Both
should understand the value of each other and work with full participation and cooperation. The
aim of both should be to improve and boost the profits of the organisation. Mental Revolution
demands a complete change in the outlook of both the workers and management; both should
have a sense of togetherness.

4. Cooperation, not Individualism-

It is similar to ‘Harmony, not discord’ and believes in mutual collaboration between workers and
the management. Managers and workers should have mutual cooperation & confidence and a
sense of goodwill. The main purpose is to substitute internal competition with cooperation.

5. Development of Every Person to his Greatest Efficiency-

The effectiveness of a company also relies on the abilities and skills of its employees. Thus,
implementing training, learning best practices and technology, is the scientific approach to brush
up the employee skill. To assure that the training is given to the right employee, the right steps
should be taken at the time of selection and recruiting candidates based on a scientific selection.

12) What are the major functions of management explain.

Management has been described as a social process involving responsibility for economical and
effective planning & regulation of operation of an enterprise in the fulfillment of given purposes.
It is a dynamic process consisting of various elements and activities. These activities are
different from operative functions like marketing, finance, purchase etc. Rather these activities
are common to each and every manger irrespective of his level or status.
Different experts have classified functions of management. According to George & Jerry, “There
are four fundamental functions of management i.e. planning, organizing, actuating and
controlling”.
According to Henry Fayol, “To manage is to forecast and plan, to organize, to command, & to
control”. Whereas Luther Gullick has given a keyword ’POSDCORB’ where P stands for
Planning, O for Organizing, S for Staffing, D for Directing, Co for Co-ordination, R for reporting
& B for Budgeting. But the most widely accepted are functions of management given by
KOONTZ and O’DONNEL i.e. Planning, Organizing, Staffing, Directing and Controlling.
For theoretical purposes, it may be convenient to separate the function of management but
practically these functions are overlapping in nature i.e. they are highly inseparable. Each
function blends into the other & each affects the performance of others.
1. Planning

It is the basic function of management. It deals with chalking out a future course of action
& deciding in advance the most appropriate course of actions for achievement of pre-
determined goals. According to KOONTZ, “Planning is deciding in advance - what to do,
when to do & how to do. It bridges the gap from where we are & where we want to be”.
A plan is a future course of actions. It is an exercise in problem solving & decision
making. Planning is determination of courses of action to achieve desired goals. Thus,
planning is a systematic thinking about ways & means for accomplishment of pre-
determined goals. Planning is necessary to ensure proper utilization of human & non-
human resources. It is all pervasive, it is an intellectual activity and it also helps in
avoiding confusion, uncertainties, risks, wastages etc.
2. Organizing

It is the process of bringing together physical, financial and human resources and
developing productive relationship amongst them for achievement of organizational
goals. According to Henry Fayol, “To organize a business is to provide it with everything
useful or its functioning i.e. raw material, tools, capital and personnel’s”. To organize a
business involves determining & providing human and non-human resources to the
organizational structure. Organizing as a process involves:

 Identification of activities.
 Classification of grouping of activities.
 Assignment of duties.
 Delegation of authority and creation of responsibility.
 Coordinating authority and responsibility relationships.
3. Staffing

It is the function of manning the organization structure and keeping it manned. Staffing
has assumed greater importance in the recent years due to advancement of technology,
 increase in size of business, complexity of human behavior etc. The main purpose o
staffing is to put right man on right job i.e. square pegs in square holes and round pegs in
round holes. According to Kootz & O’Donell, “Managerial function of staffing involves
manning the organization structure through proper and effective selection, appraisal &
development of personnel to fill the roles designed un the structure”. Staffing involves:

 Manpower Planning (estimating man power in terms of searching, choose the

person and giving the right place).
 Recruitment, Selection & Placement.
 Training & Development.
 Remuneration.
 Performance Appraisal.
 Promotions & Transfer.
4. Directing

It is that part of managerial function which actuates the organizational methods to work
efficiently for achievement of organizational purposes. It is considered life-spark of the
enterprise which sets it in motion the action of people because planning, organizing and
staffing are the mere preparations for doing the work. Direction is that inert-personnel
aspect of management which deals directly with influencing, guiding, supervising,
motivating sub-ordinate for the achievement of organizational goals. Direction has
following elements:

 Supervision
 Motivation
 Leadership
 Communication

Supervision- implies overseeing the work of subordinates by their superiors. It is the act

of watching & directing work & workers.
Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to
work. Positive, negative, monetary, non-monetary incentives may be used for this
purpose.
Leadership- may be defined as a process by which manager guides and influences the
work of subordinates in desired direction.
Communications- is the process of passing information, experience, opinion etc from one
person to another. It is a bridge of understanding.
5. Controlling

It implies measurement of accomplishment against the standards and correction of

deviation if any to ensure achievement of organizational goals. The purpose of
controlling is to ensure that everything occurs in conformities with the standards. An
efficient system of control helps to predict deviations before they actually occur.
According to Theo Haimann, “Controlling is the process of checking whether or not
 proper progress is being made towards the objectives and goals and acting if necessary, to
correct any deviation”. According to Koontz & O’Donell “Controlling is the
measurement & correction of performance activities of subordinates in order to make
sure that the enterprise objectives and plans desired to obtain them as being
accomplished”. Therefore controlling has following steps:

 Establishment of standard performance.

 Measurement of actual performance.
 Comparison of actual performance with the standards and finding out deviation if
any.
 Corrective action.

13) Explain the types of business organization.

Sole Proprietorship

The vast majority of small businesses start out as sole proprietorships. These businesses usually
are owned by one person, aka the individual who has day-to-day responsibility for running the
business. Sole proprietors can be independent contractors, freelancers or home-based businesses.

Sole Proprietorship Advantages

- The owner receives all profits.

- Profits are taxed only once.
- The owner makes all decisions and is in complete control of the company (but this could also
be a disadvantage).
- It is the easiest and least expensive form of ownership to organize.

Sole Proprietorship Disadvantages

- There is unlimited liability if anything happens in the business. Your personal assets are at risk
(including your home in Kansas City).
- It is limited in raising funds and the owner might have to acquire consumer loans.
- There is no separate legal status.

Tip: When looking at setting up a sole proprietorship, assess what type of liability you have. If
you’re selling advice or services, you may need an errors and omissions insurance policy to
cover yourself against claims for negligence. Determine what you have to lose. Do you own a
home or savings account? Your personal assets could be at risk in the case of a lawsuit.

PARTNERSHIPS

In a partnership, two or more people share ownership of a single business. Like proprietorships,
the law does not distinguish between the business and its owners. The partners should have a
legal agreement that establishes how decisions will be made, how profits will be shared, how
disputes will be resolved, how future partners will be admitted to the partnership, how partners
can be bought out or what steps will be taken to dissolve the partnership when needed.

Disclaimer: If you’re establishing a partnership, it is extremely important to make sure

everything is outlined in case things go sour, especially when starting a business with a loved
one or friend. Seek legal advice to create a partnership operating agreement to hash out all
business decision possibilities, including succession or exit plans. Several legal services in
Kansas City are ready to help you every step of the way.

Partnership advantages

- It is easy to establish (with the exception of developing a partnership agreement).

- Separate legal status gives liability protection.
- Profits are taxed only once.
- Partners may have complementary skills.

Partnership disadvantages

- Partners are jointly and individually liable for other partners’ actions.
- Profits must be shared with the partners.
- Decision making is divided.
- Business can suffer if the detailed partnership agreement is not in place.

CORPORATIONS

A corporation is considered by law to be a unique entity, separate from those who own it. A
corporation can be taxed, sued and enter into contractual agreements. The corporation has a life
of its own and does not dissolve when ownership changes.

There are three types of corporations: C-corporation, S-corporation and Limited Liability
Company.

Corporation Advantages

- It is limited liability.
- In regards to transfer of ownership, shareholders can sell their shares.
- Capital is easier to raise through the sale of stock.
- The company pays fringe benefits.
- There are tax benefits.

Corporation Disadvantages

- It is subject to double taxation. (Corporation and shareholder earnings are taxed.)

- It can be costly to form.
- There are more administrative duties. This entity type is required by law to have annual
meetings, notify stockholders of the meeting and keep minutes of meetings.
- C-corps pay corporate taxes at a different time than other forms of business.

Corporation

An S-corporation, also known as subchapter S-corporation, offers the owners limited liability. S-
corporations do not pay income taxes; the earnings and profits are treated as distributions. The
shareholders must report their income on individual income tax returns.

Corporation advantages

- It enjoys limited liability.

- It avoids double taxation.
- Profits are taxed only once.
- Capital is easier to raise through the sale of stock.
- It offers transfer of ownership.

Corporation disadvantages

- It can be costly to form.

- Stockholders are limited to individuals, estates or trustees.
- It is subject to required administrative duties.
- It cannot provide company paid fringe benefits.
- Stockholders are limited to citizens or resident aliens of the United States.

Limited Liability Company

A limited liability company or LLC is a hybrid business structure that provides the limited legal
liability of a corporation and the operational flexibility of a partnership or sole proprietorship.
However, the formation is more complex and formal than that of a general partnership.

Tip: Forming an LLC requires the business owner to file legal paperwork. You may want to
consult an attorney to help you with the process. Here is a list of service providers in Kansas City
that provide legal assistance.

Limited liability company advantages

- It is the most common business structure and is specifically created for small businesses.
- This entity type requires insurance in case of a suit.
- It is a separate legal entity.
- LLCs are usually taxed as a sole proprietorship.
- LLCs can have an unlimited number of owners.

Limited liability Company disadvantages

- It can be costly to form.
- It requires yearly administrative costs.
- LLCs have a personal tax liability.
- Legal and accounting assistance is recommended for LLCs.

14) Write the nature and purpose of planning.

Nature and Purpose of Planning

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

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

15. Give an account of various steps involved in planning

The various steps involved in planning process are as follows:

1. Awareness of opportunities and problems:

The first step in planning process is the awareness of business opportunity or the problems to
provide for in future. Present and future opportunities must be found out so that planning may be
undertaken to take advantage of them.

2. Collecting and analysing information:

The next step is to gather adequate information and data relating to the planning to be made. The
facts and figures collected will help in framing realistic plans. Further, the information gathered
has to be analysed for proper interpretation.

3. Establishment of clear-cut objectives:
After collecting and analysing information, the management should lay down in clear-cut terms,
the objectives of the enterprise as a whole as well as objectives of every section of the enterprise.

4. Determining planning premises and constraints:

Planning is always based on certain assumptions regarding the future which are known as
planning premises. Thus it is a forecast of conditions like trends in population, political and
economic environment, production costs, advertisement policy, availability of labour, material,
power, etc. Further there will be constraints like Government control which affect the plans.
Plans should be formulated by the management in the backdrop of such premises and constraints.

5. Finding out the alternative courses of action

Generally, in every situation there is more than one possible course of action. As such, in the
light of the analysis of the information gathered, the possible alternative course of action should
be ascertained.

6. Evaluation of alternatives and selection

The next step is to evaluate all possible alternatives with reference to cost, speed, quality, etc.,
and selecting best course of action.

7. Determinig secondary plans:
After selecting the best course of action, the management has to formulate the secondary plans to
support the basic plan. For example, after developing the basic production plan, a number of
secondary plans for the purchasing of raw materials, acquisition of plant and machinery, training
of workers, arranging for adequate finance etc. have to be prepared for the successful operation
of the basic plan.

Part – A(1X15=15)

16. Is Management as Art or Science. Comment

Management – Art or Science?

The controversy with regard to the nature of management, as to whether it is an art or a science,
is very old. This controversy, however, is not very much in the air now though the controversy is
yet to be settled.
It is to be noted that the learning process in art differs from that of science. Learning of art
involves its continuous practice while learning of science basically involves the assimilation of
principles.

Much of the controversy of management being as art or science is on account of the fact that the
earlier captains of industry and managers have used intuition, hunches, commonsense, and
experience in managing organizations. They were not trained professional managers, although
they were very brilliant and had developed commonsense through which they managed well.
However, commonsense and science differ considerably in solving the problems.

Management as an Art
Art is defined as the use of skills to bring a desired result. Skills refer to one’s proficiency to do a
specific work. Thus, art has the following features:

1. Practical Knowledge
Knowledge refers to possession of facts and techniques of a particular field. Knowledge can be
acquired through study and/or practical experience. Generally, in art, more emphasis is given on
acquiring knowledge through practical experience. In management, knowledge is acquired both
through study and experience. Thus, management is an art.

2. Personalized Application of Knowledge

In art, there is personalized application of knowledge to achieve the desired results. This is
possible because the same set of results can be achieved through a number of alternative ways.
This is done in management too; each manager has his own way of achieving results. Thus,
management is an art.

3. Improvement through Continuous Practice

In art, improvement is made through continuous practice. This practice eliminates those activities
which are not relevant for achieving the desired results and improving those activities that are
relevant. Through this way, the person engaged in any art tends to move towards perfection. This
is exactly done in management.

4. Situational Application
Art has situational application. This implies that an art which is appreciated in one situation may
not be appreciated in another situation. This is true for management too. Thus, a particular
management practice which is quite effective in an organization may not be effective in another
organization because of change in situational context.

Further, in the same organization, management practices may change over the period of time
because of change in contextual variables.

5. Emphasis on Creativity
Art puts emphasis on creativity through which new things or ways of working are created. This
is done in management too; managers create new products, new ways of working, new means of
financing, new ways of marketing and so on.

The above discussion shows that management is an art.

Management as a Science
Science is a body of systematized knowledge generated through logical consistency, critical
evaluation and experimental study. Thus, science has the following features:

1. Systematized Body of Knowledge:

Science is a systematized body of knowledge. Its principles are based on cause-effect
relationship, that is, a particular factor has been caused by what factor can be explained in a
definite way.

For example, if you throw a ball up, after going upward the ball will ultimately come back on the
ground because of earth’s gravitational force. In management, there is lack of such a cause-effect
relationship; cause-effect relationship is defined in flexible way, not in definite way. Thus,
management is not a true science.

2. Principles Based on Experimentation

In science, principles are evolved on the basis of experiments conducted in laboratories. Such
principles are tested again and again for final approval. In management, this is not done in all
cases; in many cases, management principles are based on personal observations and
experiences.

Though experiments are conducted under controlled conditions, their findings are not tested like
science. From this point of view, management is not a true science.

3. Verifiable Principles
Scientific principles can be verified by any one. Such verification will give the same results
again and again. Management principles are not verifiable in many cases. In fact, in many cases,
it is difficult to appreciate the bases on which management principles have been evolved. Thus,
management is not a true science.

4. Universal Application
Principles of science have universal application, that is, they remain true irrespective of the
conditions in which these are applied. As against this, management principles are situation
bound. It implies that a management principle which works well in one country may not work
equally well in another country. This is because of situational differences between the two
countries.

The above discussion shows that management is not a true science. Therefore, management is
called an ‘inexact science‘ or ‘pseudo-science‘.
Management: Both Art and Science
Thus, to be a successful manager, a person requires the knowledge of management principles and
also the skills of how the knowledge can be utilized. Absence of either will result in inefficiency.

A comparison between art and science is presented in the below table which suggests that a
manager requires both aspects of management to be successful.

Comparison between art and science as used in management

Art Science
Advances by practice Advances by knowledge
Feels Proves
Guesses Predicts
 Describes Defines
Opines Measures
Expresses Impresses
It can be seen that management uses both scientific knowledge and art in managing an
organization. As the science of management increases so should the art of management. A
balance between the two is needed. Neither should be over-weighed or slighted.

Some feel that further gains in science of management will restrict art more and more. This is
true to a limited extent only. The fact remains that to be useful, knowledge of science must be
applied, that is, art must be present. Therefore, the old saying that ‘knowledge is power‘ is
partially true.
The correct saying should be ‘applied knowledge is power‘. People having abundant knowledge
may have little use if they do not know how to use knowledge. This is particularly true for
management which is a situational phenomenon.