Professional Documents
Culture Documents
1446370243
1446370243
Unit - 9
1. Financial Management, Financial Decisions and Financial
Planning ZZg
2. Capital Structure: Meaning and Determinants zbl
3. Fixed and Working Capital : Meaning and Determinants 262
Unit - l0
4. Concept of Financial Market 270
5. Stock Exchange: Meaning and Functions 281
Unit - tl
6. Marketing and Markering Mix 295
7. Advertising : Role, Limitations and Objections 328
8. Personal Selling : Meaning and Importance 336
9. Sales Promotion and Publicity 342
Unit - 12
10. Consumer Protection: Importance and Ways 349
. x CBSE Sample
Question Paper-2009 (Solved) 367
* Model Test Papers 381
CBSE Question Papers
+
Learning Obiectives
After studying this chapter, you will be acquainted with:
o Management: Concept
o Det'initions of Management
o Charocteristics of Management
o Objectiues of Management
c lmportance of Management
I Management: Concept
Detailed description about the Management concept has been given in the
following Analysis Box:
+
4
Business Studies
il
Managemenl An Introduction
+
Business Sfudies
Management: An Introduction
o Definitions of Management
Following are the main definitions of management.
(1) According to Harold Koontz, "Monagement is the
art ot' getting things done through others ond with
Jormally organised groups."
(2) According to George R. Terry, "Management is a
distinct process consisfing oJ planning, orgonising
actuating ond controlling; ufi/ising in eoch both
science and art, ond followed in order to occomplish
pr e- determined obj ectiu es. "
(3) Accordingto F.W. Taylor, "Manogementisthe artof
o knowing whot you want to do ond then seeing thot they do it in the
best and the cheapest way."
(4) According to Peterson and Plowman , "Manogement may be det'ined osthe
process by means oJ which
the purpose and objectiues of a porticular human group are determined,
clarified and et'Jectuated."
o 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 ties 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.
8
Business Studies
! Objectives of Management
objectives of management can be broadly divided into the following three
( 1 ) Organisational Objectives
(2) SocialObjectives
(3) Personal or Individual Objectives.
(1) Organisational Objectives: It refers to
for the whole organisation. While
ascertain objectives
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 groMh.
(i) Survival: Every business wanh to survive for long. So, management by
taking positive
decisions
with regard to different business activities should ensure that business survives
for long.
Management: An Introduction
(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)SocialObjectives:
Itreferstotheconsiderationoftheinterestofthesociet5rduringmanagerial
activities. An organisation is established in a society. It runs through the
resources made available by the
society. That is why it becomes the responsib;ility 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 contol.
Main social objectives of management are included in the following list:
(i) To make available employment opporhrnities.
(ii) To save environment from getting polluted.
(iii) To contibute in improving living standard.
For example: fuian 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 satisfu
its employees it will be
able to pro$ess in 'leaps and bounds'.
Main objectives of management towards employees are as follows:
(i) To give deserving remuneration, (ii) To provide good working environment,
(iii) To provide a
share in profit.
! lmpoitance of Management
I Management: Concept
6 Marks
1. What is meant by Management? Explain any four characteristics.
2.'Management is Multidimensional.' Explain.
4/5 Ma*s
3. Clarify the meaning of 'Group Efforb' in management.
4. Explain any four characteristics of Management.
(c.B.s,E.2005)
5. Explain any five feahrres of management.
(c.B.s.E.2006)
-$
6. Define management.
7. Clarifu the following equation : 'Anything - Management : Zero, .
g. 'Explain,inbrief,'Management'asaprocess.
(C.B.S.E.20U,06)
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.'
74. 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)
76. State any two characteristics of management.
(c.B.s.E.2004)
1'[{ark
77. 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 wanh to make optimum utilisation of resources (manpower,
money, material,
machlnes, etc.) in order to accomplish the work efficiently and
effectively.
79. 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.
27. 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 penrasive?
(c.8.s,E.2009)
Ans. Because it is needed in all spheres say - business and non-business
organisations.
23. 'Management is uniformty 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
27 'In an organisation employees are happy an
management is noticeable.' Which characteristic of management is
highlighted by this
statement?
(qB.s.E.2oo8)
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.
/-
(c.8.s.E.2008)
Ans. Management.
72
Business Studies
f Obiectives of Management
6 SIarks
36. Explain the objectives of management.
'4lE ftrarks
37. Explain inbrieftheobjectivesofmanagement.
(c.8.s.E.2007)
38. Discuss tlre social objectives of management.
$ [Iarks
39. What are the three categories of objectives of management?
N. List the three examples of Social Objectives of management.
f Mark
47. What are the organisational obJectives of management?
Ans. It includes survival, profit and groMh.
42. "Management helps in development of society." How?
(c.8.s.E.2009)
Ans. Management enables the organisatlon to make available employment
opporfunities, hence
helping in the development of society.
43. What do you mean by personal obiectives of management?
Ans. It refers to the consideration of the interest of employees during
managerial activities.
I To meet the obiectives of the firm the management of Angora Ltd. offers
employment to
J physically challenged petsons. Identifu the organization's obiective
it is trying to
achieve.
(C.B.S.E. Somplepaper)
Ans. It is social objective.
Management An Intoduction
13
I lmportance of Management
52. Explain by giving any four poinJs why management is important in any
organisation?
(c.B.s.E. 2005)
53. 'ln 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.
(c.B.s.E.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)
t\ Mr. Solution, who is an M.B.A., has been appointed at the post of General
Manager in Sa-re-ga-ma Ltd.
Company. Just after his appointment, he took a decision to set up a
chemical plant near a residential
colony. (The chosen location to set up the plant was favourable for many
reasons to the company). After
some time, an another important decision to the amount of charity been
given annually to educational
t4
Business Shrdies
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, he/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 obiectives by
establishing
coordination.
Sir, Thank U.
OIIAPTTR 2
Learning Objectives
After Studying this Chapter, you will be Acquainted with:
o Nlanqgement: As a Science
* Meaning of Science
* Testing of Management as a Science
a Nlanagement: As qn Art
* Meaning of Art
* Testing of Management as qn Art
o Nlanqgement: As a Profession
* Meaning of Prot'ession
* Testing of Manogement as Prolession
! Management as a Science
It is important to understand the meaning of science before accepting
management as a science.
o Meaning of Science
Science refers to that systematic body of knowledge which is acquired on the
basis of observation
and experiments and verification of this knowledge is possible. For example, a
person completes his sfudy
of engineering. During the course of his shrdy, he gets a complete theoretical
knowledge of the subject.
His acquiring of knowledge in this manner is a science.
76
Business Studies
! Management: As a Science
6 Marks
1. "Management is a science like physics or chemishy." Do you agree with
this statement? Give reasons in
support of your answer.
2. Is management a 'Science'? Explain.
3 Marks
5. State why management is not a Pure Science2
6. Explain through an example, how 'Universal Validity' one of the
feafures of Science exist in
Management?
7. Explain 'Management as a Science'.
l Mark
8. 'Management is a Soft Science'. How?
Ans. Management is a soft science as its principles are not very
rigid'
9. State two features of science.
Ans. (o) Systematic body of knowledge. (b) Universal validity'
10. Name the type of science to which management is related.
Applied science.
11. Why management is not called as perfect science?
Ans. Because it is related with human being.
12. "The Principle(s) of Management are different from those used in pure
science." Write any
one difference.
(C.8. S.E. Somple Poper )
Ans. The management principles are not as rigid as principles of pure
science.
13. "The
PrinciplesofManagementaredifferentfromthoseusedinpurescience."Writeanyonedifference
.
! Management: As an Art
6 Marks
14. Test the fact that 'management is an art'.
t A5. How management a social science as well as an art?
is
(c.8.s.E.2002)
16. Management is considered to be both an art and science. Explain
(N.C.E.R.T./
20
Business Studies
4/5 Marks
'Management is an art.' Do you agree? Give any three reasons in
support
of your answer.
'7'
(c.B.s.E.2006)
18' What is the meaning of management as an Art? Briefly describe any
three of its feafures.
3 Marks
19. Explain'Managementasanart'.
rc.8.5.E,2007)
20. Clarifi7, how management possesses the feature of Art namely the
'Personalised Application'?
27. "Management is both Science and Art." Explain this statement in brief.
l Mark
22. What is meant by art?
Ans. It refers to achieve the desired result through application of
skill.
23. Give any two points of the features of Art.
Ans. (o) Existence of rheoretical Knowredge, (b) personarised
Application.
24. ls management contains all the features of the art?
Ans. Yes, the management contains all the feafures of the art.
I Management: As a profession
6 Marks
25' "Management is a profession like medical or legal profession." Do you
agree
4/5 Marks
29. Discuss the basic feafures of management as aprofession.
(N.C.E.R.T.)
30. "Management is regarded as fully-developed profession." Do you agree?
Give reasons.
(c.8.s.E.2005)
31. "Management is a profession." Do you agree? Give reasons in support
of
your answer.
(c.8.s.E.2006)
32. "Management is profession." Give one argument in favour and against of
this
statement.
3 Marks
33. Write shortnote on'managementas aprofession'.
(c.B.s.E.2007)
34. Is 'Management' a profession?
35. Is management a profession on the basis of 'Ethical code of conduct,?
36. Name two feafures of profession which are not available in management.
l Mark
0rrry, Session
For this query session, questions from readers' side are invited.
GIIf,PTER $
lrurlsffi0 rultGrloils 0r
MAIIIGTMETT
All the functions of management are performed at allthe levels of management
but there is only a difference of degree.
Learning Objectives
After studying this chapter, you will be acuainted with:
a Leuels of Management
* Top Leuel Monagement
* Middle Leuel Manogement
* Lower Leuel or Superuisory Monagement
o Functions of Management
* Planning
* Orgonising
x Staffing
* Directing
o Superuision
o Communication
o Leadership
o Motiuation
* Controlling
After clarifuing meaning and nafure of management, now the question arises
what different
functions are pertormed by management? Apart from this, in order to successfully
accomplish pre-
determined 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.
I 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/instifution can be divided into
two categories.
(1) Managerial Members
(2) Non-Managerial Members
Levels and Functions of Management
23
.t
,,
Chief Executive Officer-CEO
.
\i
\1,,%_
ti
Departmental Managers
o..-^Y-^--
Suoervisors .)r
t
*.Lo
''
,,.f,'
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-urtrrragerial 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
platfolrn 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.
Business Studies
Levels of organisation along with its various components are shown in the
following
diagram:
t
Board of Directors
,/ \
Chief Execr ttive
Officer / \
Chairman, Managins
/ -toq l-evet
Director, General /
Management
Man ager /
Depa(mental Manage
Manager
Deputy Departmental
rtmental
Manager /
*,oo,"L"r"r v"nrg"r"n\
Operations/Functional
:tional Mgr
Supervisors
Foremen /
ro*.rlevet or Operation"t trrtrnrg"r"n\
Non-managerial
f Workers
I Non-managerial
platfor
Level
L members
I
r __l
Levels of Organisation
For
example' an objective can be set that in the following year the sales of the
company has to
cross Rs 1,000
crore.
(ii) Determining Policies: Only at this levelpolicies 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
fulfillment
of an objective
are fixed, such as sales, purchase, advertisement, production, research, etc.
(iv) Assembling Resources: Needed resources are assembled (ananged)
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
heads, plant
superintendents, and operations managers (Functional Managers) are included.
Levels and Functions of Management
25
! Functions of Management
Management has been defined in the form of a process. Under the management
process (planning,
organising, staffing, directing and controlling), many activities inter-related to
each other are included.
These activities are known as functions or elements of management.
26
Business Studies
Functions of Management
:tdj.l
5. controllins
j
g 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.
g 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 budgeh.
(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.
g 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.
g 4. Functions of Management:
(i) Planning: It refers to thinking before hand.
(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: It refers to instucting, guiding, communicating and
inspiring people in the
organisation.
(v) Controlling: It refers to bringing the actual results closer to
the desired results.
I 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.
Levels and Functions of Management
29
I Mark
18. Name the two categories in which all the employees of an organisation
can be divided.
Ans. (o) Managerial members. (b) Non-managerial members.
19. Which are the two main categories of levels of organisation.
Ans. (o) Managerial level. (b)Non-managerial level.
20. Workers are included at which level of management?
Ans. fu they are the non-managerial members, so they can't be the part
of any managerial level.
27. 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.
I Functions of Management
6 Marks
25. Discuss the functions of management in brief.
26. 'Management is a series of continuous intenelated 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.
l 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 filted the posts with people.
30
Business Studies
(c.B.s.E.2008)
Hint: He is working at Middte Level Management. Refer to any
four functions of Middte Level
Management.
try Dheeraj is working as 'Operations Manager' in Tifco Ltd. Name the
managerial level at which he is
. working. State any four functions he will perform as 'Operations
Manager' in this company.
(c.8.s.E.2008)
Hint: He is working at Middle Level Management. Refer to any
four functions of Middle tevel
Management.
Levels and Functions of Management
31
(lrrn, 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 stnrcture 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/Institution/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.
GO|INDIilAIIll]I:
]IAIU RE AlI II I M PllBIIlI GE
Coordination makes 2 + 2 = 5 possible
Learning Objectives
After studying this chapter, you will be acquainted with:
o Meoning of Coordination
o Definitions of Coordination
a Noture of Coordination
a Coordination is the Essence of Manogement
a Coordinotion is needed at all Leuels ol Monagement
o Importance of Coordination
! Meaning of Coordination
The dictionary meaning of coordination is rapport.
Coordination ?
Thus, coordination is to synchronize the various activities of
Coordination
is a process through which
an organisation. In the context of a business unit, the hormony is
established omong different
meaning of coordination is to balance its various activities actiuities
of an organisation, so that
(purchase, sales, production, finance, personnel, etc.) so orgonisotional
objecliues can be successfully
achieued.
that objectives of business can be easily achieved.
I 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, 'Coordinotion is the essence of
rtonagement t'or the
ochieuement of hormony of indiuidual et'lorts lowords the
or:cornplishn'tenl of group goo1s. '
(2) According to Mcfarland, "Coordinotion is the process uhereby on
execttiue deuelops an orderly
pottern of group ef.forts omong his subordinotes and secures unitgt ol
octior-t irt prrrsuit of comrnon
purposes '
Coordination: Nature and Importance
33
I 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 nafure:
(1) Coordination lntegrates 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 effortand 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 effortis 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 in a
business. Sometimes or the other, if
any one of the activity goes on flucfuating 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 nafure of
coordination is pervasive. Like making of time-table in an educational instifution
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 any one
particular managerial level or a manager.
(6) Coordination is a Deliberate Function:
Coordination is never established by itself but it is a
9tbsrut" effort. Only cooperation is not suffice but
Cooperation ?
coordination is also needed. For example, a teacher aspires Cooperation meons
the desire to work
to teach effectively (this is cooperation) but the time-table is collectiuely. It
originotes effoftlessly.
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
! lmportance 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
worktogether 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
contibution towards the attainment of
organisational goals.
36
Business Studies
6 Marks
1. Discuss the meaning and nature of coordination.
4/5 Marks
2. "Coordination is the orderly arrangement of group efforts to provide
unit5r of action in the pursuit of a
commonpurpose." Inthelightof thisstatement, explainthenafureof
coordination. (C.8.5.E.2009)
Coordination: Nafure and Importance
37
3 Marks
3. DefineCoordination.
4. How is coordination a 'Continuous Process'?
5. Clarifu that coordination does not get established spontaneously.
6. Coordination is more than cooperation. How? Give an example.
l Mark
7. To make t'he 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.
6 Marks
9. "Coordination is the essence of management." Do you agree? Give reasons.
10. "Coordination is the essence of management." Explain this statement with
the help of examples.
4/5 Marks
11. "Coordination is not a separate function of management. lt is the
essence of management." Explain with
the help of a suitableexample.
(C.8.S.E.2009)
72. "Coordination is needed at all levels of management and it is the
function of all managers." Explain.
(c.B.s.E.2ooe)
13. Write a note on the importance of coordination.
74. Explain the term 'Coordination' and its importance in management.
(C.B.S.E. SomplePaper)
3 Marks
15. 'Coordination is the essence of management.' Ctarifiy this point of
view of modern managementexperts.
l Mark
16. Why coordination is known as the essence of management?
Ans. Because it is not a separate function of management, rather it
forms a major part of all the other
functions of management.
77. 'Inter-dependence of different processes' is one point of the
importance of coordination.
Clarifu.
Ans. The higher the inter-dependence among the activities, the greater
is the need for coordination.
38
Business Studies
Mr' Question: Sir, there is still confusion between the meaning of words,
coordination
and cooperation. PIease 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
houser 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 houser 4
inches short by the time I retum from the office. Everybody
carefully listens to the
instmction. 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 refurned, 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 refurned from the office and tied the
trouser, he found that it
was now half the length. Just contemplate, why did this
happened?
All
- Mr. X's wife, son and daughter - loves
him and also want to keep him happy.
him dearly, have
full attachment with
That is why all three
hied 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.
GIIIPIEB 5
PRI]IGIPITS O] MAIIAGHNEilI:
]IATU Rt AII II SIG T I TIGA]IGT
"Principles of management are of universal nature and apply:to
every type of organisatiotl," - Henry Fayol
Learning Obiectives
After studying this chapter, you will be acquainted with:
o Principles ol Monagement : Meaning and Definitions
o How are Principles of Monagement deriued?
o Nature ot' Principles oJ Monagement
o lmportonce ot' Principles of Manogement
o Fundomentol Principles of Monagement
! 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 prirrciples 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
t'undomental stotement or truth prouiding a
guide to the thought or oction'' . Principles
and Techniques of '-----'
(2) Accordingto Edwin B' Flippo, "A principle
Management
is a t'undomentol truth ond it is generolly stated The principles of
monogement ore dfferent
in the t'orm of couse and et'fect relotionship." from the'techniques
oi *onog"^"ntlJhe
(3) According to Koontz and O'Donnell,
"manogement principles are t'undomental
truth oJ generol ualidity which haue ualue in
predicting the result ol monogement action" while produchon
with the help of modem
machines is a
technique. While making use of
o technique the
help ol a pnnciple is taken.
40
Business Studies
The definitions of these scholars show that principles are in the form of
that
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
it is necessary
to learn about the nafure and need for the principles of management.
institutions, government
offices, playgrounds, agricultural farms, army, clubs and other social
organisations),
in order to achieve
their objectives has to apply more or less the same principles.
(2) General
Guidelines: The principles of management are hot definite like the
principles of
physics and chemishy. The principles of physics and chemistry
arc very clear and
definite, and their
outcomes can be predicted. The principles of management, on the other hand,
are of
the nafure of
general guidelines, and they cannot be applied strictly.
Principles of Management: Nafure and Significance
47
l
following diagram:
In the first diagram, Sr, S,
and S. all the three subordinates
have one manager Mr. S, gets J1 J2
s2 vl
of Direction
plan of action for a group of activities having the same objective
Business Studies
divisions. fu each product has its own markets and problems therefore each
division
command to
an employee, while the unity of direction means that there should be only one
interest or the
interest of the organisation is above everything) If one is asked to place
individual interest
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.
Principles of Management: Nature and Significance
47
the
lowest ranks in a straight line.
(ii) Fayol's Opinion: This chain must be followed in a
strict manner. It means each
communication must move from top to bottom and vice-versa in a straight line. The
important condition
here is that no step (post) should be overlooked
during communication.
(iii) Fayol's Ladder: Fayol has explained
this principle with the help of a ladder or double
chain as shown in the diagram.
For example, in a company the employee ,F,
wants to have contact with the employee ,p,.
According to the principle of scalar chain ,F, shall
have to reach 'A' through the medium of E,D,C,B
and then having contact with L,M,N,O shall reach
'P'. Thus 'F'shall have to take the help of all the nine
steps (posts) to have business contact with 'p,.
(iv) Utility: Due to more clear system of authority
and communication, problems can be solved faster.
(u) Gang Plank: It is the exception of the principle of Gang
Plank: A Special Note
scalar chain. This concept was developed to establish a Gang Plonk
con onlg be estoblished with the
direct contact with the employee of equal rank in case of employees
of the equol or some leuel. For
example,
in the present example no gong
emergency to avoid delay in communication. For plonk can
be established between F ond O.
example, as shown in the diagram employee 'F, can have
direct contact with employee'P'. But for doing so employees 'F' and 'P' shall have
to seek the prior
permission of their immediate bosses 'E' and 'O'. The details of their talk also
shall have to
be given to
them.
Positive Effect * Flow of orderly information.
* Better relations because of absolute
respect for authority.
't Quick solution of problems.
Violating Effect :t
Disorderly flow of information
* Bittemess in relations because ignoring
of the close
superiors.
:t
Increase in problems because of non-availability of
information in time.
( I O) 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
different orders- Moterial Order for Physical Resources and S ocictl Order lor
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 anv need. It is, however, important to note that it is not sufficient to
have an alloted 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 tacing the resources in need of
time.
* Better discipline.
Violating Effect * Misuse of resources.
* Increase in the possibility of accidenb.
* Height of disorder.
(1 1) 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 attachrnent 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 is a 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 Effdct * The employees remain satisfied.
{.
Increases the sense of devotion to the organisation.
,k
Skilled employees ty to improve upon their skill.
* Unskilled employees try to achieve some skill,
Violating Effect :F
Creates dissatisfaction for the skilled workers.
't Skilled workers lose confidence in the organisation.
* Decline in the efficienry of the skilled workers.
* Increase in the carelessness of the unskilled
workers.
Forexample,itistruethatiftheworkers
inacompanyarenottreatedwell andtheatmosphereinthe
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.
p,:,i1:1'e []r{r,, r * Increase in the confidence of the employees.
i
i13)
lnitiativr::lnitiativemeansthecapacitSrtoworkwhileexpressingone'sthoughts.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
advenisement 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 nevervenfure to
offer any suggestion in fufure 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.
i.-sr+.'ile l'i.r,.'ct * 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.
Corrclusion
Clarifuing his principles of management, Fayol has pointed out that since
management is related to
human beings nothing can be said with a sense of finalig. What principles are to be
applied at what time, in
what situation and to what degree (or exltent) it all depends on the experience,
efficiency and
-
decision-making power of the manager. Thus, the principles advocated by Fayol have
an element of fleibility.
6 Marks
1. Explain the meaning and nahrre of management principles.
4/5 Marks
2. How are principles of management derived? Clarifu in detail'
3. Briefly discuss any four points of the nafure of the principles of
management'
3 Marks
4. What is meant by 'Principle of Management'.
5. Whatdo you understand by the universality of principle of management?
(c.8.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.
52
Business Shrdies
10 State and explain any three points which highlight the nafure of
principles of management.
(c.8.s,E.2004\
11 Explain the meaning of management principles and state how they are
derived?
(c.8.s.E.2004)
12. Principles of management are derived 'on the basis of Experimental
sfudies'. Explain.
l Mark
13. what is meant by 'Principles of Management'?
(c.B.s.E. 200g)
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 calted contingent?
(Foreign2a09)
Ans. Because principles of management are affected by sifuations.
15. Give any two points of the nature of principles of management.
Ans. (o) Universal Applicability. (b) General Guidelines.
16. State how the management principles are flexible?
(c.8.s.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?
(c.8.s.E,2008)
Ans. On the basis of observation and experimental studies.
18' "The principles of management are different from those of pure
sciences." State any one
difference.
(c,8.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?
6 Marks
20 Explain briefly the importance of management principles.
2L State any five reasons as to why proper understanding of management
principles is necessary.
4/5 Marks
22 Explain any four points regarding significance of principles of
management. (N.C.E.R.T.)
23 Explain any two reasons why proper understanding of management
principles is necessary.
(c.B.s E. 200e)
3 Marks
24. State any three reasons as to why proper understanding of
management principles is necessary.
(c,B.s.E.20ul
25. 'Principles of management provide useful insight to managers.'
Clarifu with the help of an example.
26. How do principles of management make possible 'effeclive
administration,?
l Mark
27 How principles of management are helpful for managers in fulfilling
their social
responsibilitlr?
Ans. The principles of management increase the efficiency of the
managers and enable them to fulfill
their social responsibility.
Principles of Management: Nature and Significance
53
6 Marks
29. Explain the principles of management given by Fayol with example:
(i) Unitv of Direction (ii) Equity
(iii) Esprit De Corps
(iv) Order (v) CenkalisationandDecentralisation (vi)
Initiative (N.C.E.R.T.)
30. What is the principle of 'scalar chain'? Explain briefly the utility
of 'gang plank' with the help of a
diagram.
4/5 Marks
31. Explain the principles of 'Discipline' and 'Esprit De Corps'.
(c.8.s.E.2001)
32. Explain the principles of 'Remuneration' and 'lnitiative'.
(c.8.s.E.2001)
33. Explain the principles of 'Stability of tenure of personnel' and 'Equity.'
(c.8.s.E.2001)
34. "Fayol's principles of Equity and Order can be applied in acfual work
sifuation." Do you agree? Explain
your viewpoint by giving examples.
(c.8.s.E.2003)
35. Explain the principle of 'Scalar Chain'. Explain your viewpoint by
giving example. (C.B.S.E. 2003)
36. Which principle of management envisages that each group of
activities having the same objectives must
have one head and one plan? Explain the principle with a suitable
example (c.8.s.E.2004)
37. Explain the principles of 'Unity of Direction' and 'Esprit De Corps'.
(C.B.S.E. 2006)
38. Explain briefly the principle of 'unity of command'. How does it differ
from the principle of 'unity o{
direction'?
39. What is 'Gang Plank'? Show it through a diagram.
(C.8.5,E.2002)
40. Which principle of management suggests that employees should be treated
with Justice and kipdness'?
Why is this principle essential in management?
41. Which principle of management suggests that employees should not leave
the organisation frequenfly?
Give tr,uo adverse effects if this principle is violated.
42. Explain the following principles in management:
(i) Discipline (ii) Harmony, not discord
(c.8.s.E.2008)
43. Explain the following principles of management:
(a) Scalar chain; (b)Science not Rule of Thumb.
(c.B.s.E.2008)
4. Name and explain that principle of Fayol which suggests that
communication from top to bottom should
follow the official lines of command.
fC.B.S.E. Sample Paper )
3 Marks
45. Explain the principle of'Equity'.
(C.8.5.E.2001)
46. Give the meaning of the principle 'Unity of Direction' with the help of
a suitable example.
(c.8.s.E.2001)
47. Give the meaning of the principle of 'Unity of Command' with the help of
a suitable example.
(c.8.s.E.2002)
48. Fayol points out the danger and costs of unnecessary labour hrrnover in
one of his principles. Name and
explain the principle
(c.8.s.E.2004)
49. An organisation follows the principles of management. What are the
positive effects of each of the
following principles of management on the organisation?
(i) Scalarchain, (ii) Equity, and (iii) Division of Work.
(c.8.s.E.2005\
54
Business Studies
each of the
following principles of management on the organisation?
(i) Unity of command, (ii) Order, and (iii)Stability of Tenure of
personnel
(c.8.s.E.2005)
51 How is principle of 'Unity of command' usefulfor management?
Explain briefly. (N. c E.R. T./
52 If an organisation does not provide the right place for physical
and human resources,
which principle is
violated?Whataretheconsequencesof it?
(N.C E.R.T.)
I Mark
53. State one violating effect of the principle of management
- namely the 'Division of Work,
Ans. Benefits of specialisation will not be available.
54. State one positive effect of the principle of management - namely the
'Authority and
Responsibility'.
Ans. Helpful in achieving the target.
55. State one violating effect of the principle of management - namely
the 'Discipline,.
Ans. Height of disorder.
56. State one positive effect of the principle of management - namely
the 'Unity of Command'.
Ans. The efficiency of the subordinates increases.
57 . State one violating effect of the principle of management
- namely the 'Unity of Direction,.
Ans. Decrease in the efficiency of the organisahon.
58' State one positive effect of the principle of management - namely
the 'Remuneration to
employees'.
Ans. Decline in the labour turnover rate.
59 Why did Fayol introduce the concept of 'Gang plank' in the principle
of .Scalar-
Chain'?
rc.B.S.E 2009)
Ans. This concept was developed to contact with the employees of
equal rank in case of emergency
to
avoid delay in communication.
state one positive effect of the principle of management - namely
the .Esprit De corps'.
Ans. Motivation to work with team-spirit.
61 What does the principle of 'lnitiative' indicate?
@.B.S.E. 2009)
Ans. According to this principle, it is the duty of a manager to
encourage the feeling of initiative among
his employees for doing some work or taking some decision
62. State the principle of 'Order'.
(Foreign2009)
Ans. The meaning of this principle is to provide the right
place for physical and human resources in an
organisation.
whereas the
marketing manager is insisting on fast selling to reach the target.
Which principte of management
is being
violated in this case? State any truo consequences of the violation
of this principle.
li.S.S.E. ZOOqi
Ans. The principle of 'Unity of Comrnand' is violated in this
case. The following are the violating effecb of it:
Rs.
3,000 per month and Harish Rs. 4,000 per month as salary for the
same working hours. Whic[ prinliple
of management is violated in this case? Name and explain the
principle (c.B.s.E.2006)
Hint: The principle of 'Equity' is violating. Hence, explain
this principle
Principles of Management: Nature and Significance
55
[}urru Se*sinn
For this query session, questions from readers' side are invited'
GHIPITil 6
Learning Objectives
After studying this chapter, you will be acquainted with:
o Meaning of Scientific Management
. Definitions ol Scientific Management
o Features of Scientific Management
o Principles of Scientific Manogement
o Techniques of Scientific Management
a Difference between Method Study and Motion Study
. Dilference between Time Study and Motion Study
o Comparatiue Study of Contribution of Taylor ond Foyol
1903, he published a research paper titled 'Shop Monagement' and in 1911 his book
'Principles ol
Scientific Management' created ripples in the field of management. Taylor died in
1915, but his
contribution to management will always remain immortal.
irr:1,-1i.rir'topelfoi'nr Ilpr;rr:rrcabii:1lre'wotlrolrrcrcltrna.,nlirtlre
:rianaqrrrit,nisiiouir.l tl,'cotittnr'ci i'.,r!-r.
r )(Jr-()lriLiirlcu c-,f a :;rnclie leaiinq tttnctii.rrr
Taylor has suggested the division of the work of factory manager into two
sub-departments:
(i) planning department, and (ii) production department. Four experts are appointed
in each
department. The experts in the planning department do planning and the experts in
the production
department help in production. Functional organisation has been clarified in the
following diagram:
Factory Manager I
Planning Officer
Production Officer I
Gang Boss
Speed Boss
Repair Boss I
lnspector
Workers
(b) Speed Boss: The main function of the speed boss is to ensure that all the
workers are
performing their job at the required or expected speed. If it is not so, the speed
boss tries to find out the
cause of slow speed and hence a solution for it.
(c) Repair Boss: The main function of the repair boss is to keep the machines
and tools in working
condition.
(d) Inspector: He inspects the things produced and compares their quality
with the standard
prescribed for them and hies to find out the difference. In case of unfavourable
result he initiates corrective
action.
o 2. Standardisation of work ,<1" h ? rb enoa ,lV "/
brfif^
(Standardisationmeanssettingstandardsion.F;[;;;pi;;
the amount of work to be done by a worker in a day may be standardised{ln other
words, the worker is
expected to do the standard amount of work everyday. In the same manner standards
may also be set for
raw materials, machines and tools, techniques, conditions of work, et) The
following is a brief description
of such standards:
(i) Standardised Material: By standardisation of material we mean that the
raw material
provided should be according to the quality of finished goods required. For
example, if for producing 'A'
quality of finished goods 'X' quality of raw materials are required (and the same
has been determined
after due deliberation), then we can say that for 'A' quality of finished goods 'X'
quality of raw materials
have been standardised. In the fufure whenever it is required to produce 'A'
quality of finished goods, 'X'
quality of raw materials will be used without any hesitation. By doing so good
quality of finished goods
can be produced in the least possible time.
(ii)StandardisedMachines andTools:
Standardisationofmachinesandtoolsensurethatthey
are of the required quantity and type to produce the desired finished goods. For
example, if for producing
'A' quality of finished goods 'X' machine and M, N and O tools are required. Once
this is determined,
whenever finished goods of 'A' quality are to be produced, it can be done with the
use of 'X' machine and
M,Nand O tools.Standardisationof machinesand tools will
reduceerrorsonthepartofworkersasto
which machine or tools are to be used. and hence work can proceed at a much faster
pace.
(iii) Standardised Methods: By standardising the optimum techniques of
doing work, the latter
can proceed at a faster pace and with much greater ease. The technique determined
for doing a particular
work is used uniformly whenever such work is performed.
(iv) Standardised Working Conditions: Working conditions have a very deep
impact on the
efficiency of workers. In standardising working conditions, it is noted that how
much temperature,
ventilation, lighting, cleanliness and safety is necessary at the work place. After
due studies, the working
conditions are standardised and efforts are made to maintain them at the work
place.
. 3. Simplification
Simplification means putting an end to the unnecessary types, qualities.
sizes/weights. etc. For-
examol
bllt if it
)Y-"C.
machines shall have to be installed, more stock shall have to be maintained and
increased labour costs
Scientific Management: Principles and Techniques
61
For example, let the standard output per day be 20 units and the two
wage rates be Rs. 5 per unit and
Rs. 4 per unit respectively. Worker 'A' produces 20 units in a day and in
doing so he earns Rs. 100 (20
unitsxRs.5 perunit).Another
worker'B'producesonlyl8unitsinadayandhencehewillearnonly
Rs.72 (18 units x Rs. 4 per unit). In this way, even though 'B' has produced only 2
units less than 'A' the
difference in theirwages will be Rs.28 (Rs. 100 -Rs.72). fu a result, less
efficientworkers will be
motivated to work more and efficient workers will be motivated to maintain their
efficiency.
o 6. Mental Revolution
Mental revolution calls for a change in the mind- set of both employers and
workers. fu per Taylor, a
revolution in mind-set of both the employers and the workers is required because it
will promote feelings
of cooperation, and will be beneficial to both the parties. Normally, it is seen
that conflict between
employers and workers results in division of profits, with both the parties
demanding a larger share of
profits. This is the main reason why a mental revolution is required. According to
Taylor, insiy;:ri iri
tightlrtg r.rvet'dir;ision of lrroiits. bc;ilr tlie l.)(il'ri(.'s should make
i:ilorts iot inr:reasing tJ're profits, Such a
situation will result in an increase in production, and as such a high increase in
profits that will make any
talk of division of profits meaningless.
(3) Stress on Good Industrial Relations: Both the experts are of the opinion
that if good
relations between the owner and the workers are established, the organisational
aims can be easily
achieved.
o Dissimilarities
Following are the dissimilarities in the ideas of Taylor and Fayol:
Difference between Taylor and Fayol
Basis of Difference Taylor
Fayol
6. Personality Scientific
Professional
In conclusion, it can be said that these days many changes have crept into
the world of management.
It is because of these changes that the principles of Taylor appear to be a little
old ones' On the other hand,
principles advocated by Fayol get credence in the modern context. Even then
Taylor's contribution
cannot be Considered insignificant as his principles certainly guide the managers
in some way or the other'
and
tools, (c) standardised methods, (d) standardised working
conditions.
(iii) Simplification
(iv)Scientificstudyof work:(a)Methodstudy, (b)MotionShrdy,
(c)Timestudy, (d)Fatigue
sh-rdy.
(v) Differential wage system.
(vi) Mental Revolution.
Z 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.
(B) Dissimilarities: (i) Perspective, (ii) Unity of Command,
(iii)Applicability, (iv)
Basis of
Formation, (v) Focus, (vi) Personality, (vii) Expression.
4/5 Marks
1. Write any four feafures of Scientific Management.
3 Marks
2. What does scientific management mean?
3. Write three feafures of 'scientific Management,.
l Mark
4. Name the petson 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.
6 Marks
7 . Explain the principles of Scientific Management given by Taylor.
(N.C.E.R.T./
4/5 Marks
8. Explain anytwoprinciplesofScientificManagement.
(Foreign 2009)
9. Explain the principles of scientific management.
(c.8.s.E.2009)
3 Marks
10. Describe Taylor's principle of 'Harmony, not discord' in about 50
words.
l Mark
11. State any two principles of 'scientific Management,.
Ans. (i) Science, not rule of thumb. (ii) Harmony, not discord.
Scientific Management: Principles and Techniques
65
6 Marks
14. Explain in brief the techniques of scientific management.
15. Explain the technique of 'Functional Foremanship' and the
concept of 'Mental Revolution' as
enunciated by Taylor.
(lJ.c.E.E.T.)
16. Discuss the following techniques of scientific work sfudy:
(a) Time Study (c) Fatigue Shrdy
(b) Motion Study (d) MethodStudy
(N.C.E.R.T.)
4/5 Marks
17. Explain 'Differential Piece Rate' and 'Functional Foremanship'as
techniques of scientific management
(c.8.s.E.2009)
18 Explain any five techniques of scientific management.
(c.8.s.E.2009)
19 Develop an imaginary plan of differential piece rates to be introduced
for the workers, engaged in sewing
shirts.
(c,8.s.E.2002)
20. What contradiction do you find in the principle of 'Unity of Command'
and the iechnique of 'Functional
Foremanship' and why?
(c.8.s.E.2002)
21,. Explain 'Time-Study' and 'Fatigue Shrdy' as techniques of scientific
management. (C.8.5.E.2004)
22. Explain 'Method Study' and 'Motion Str-rdy' as techniques of
scientific management. (C.8.5.E.2004)
3 Marks
23. How does the technique of 'Motion Sh-rdy' help to improve the
efficiency of workers. Give any two points
in support of your answer.
24. How does the technique of 'Time Shrdy' help to improve the efficiency
of workers? Give any two points
in support of your answer.
25. Which technique of Taylor suggests that each worker should be
supervised by specialists? Give the
designation of any two types of specialists suggested by Taylor.
(c.B.s.E.2005)
26. Name and explain the technique of Taylor which is the strongest
motivator for a worker to reach standard
performances.
(c.8.s.E.2006)
27. What do you mean by 'Differential Wage System'?
28. What does mental revolution imply in scientific management?
29. How does scientific management bring complete mental change?
30. What are the aims of 'time' and 'motion' study?
31. What do you mean by 'Simplification'?
32. Write a note on 'functional foremanship'.
I Mark
33. What is the job of 'Speed Boss' under functional foremanship?
Ans. He ensures that all the workers are performing their job at the
required speed
66
Business Studies
6 Marks
46. 'Taylor's principles of scientific management and Fayol's principle
of management are mutually
complementary.' Do you agree with this view? Give any four reasons in
support of your
answer.
(c.8.s.E.2003)
47 . Discuss the difference between the contribution of Taylor and Fayol.
(N.C.E.R.T.)
3 Marks
48. Write the similarities found in the views of Taylor and Fayol.
I Mark
49. Distinguish between Taylor and Fayol on the basis of 'unity
of command'.
Ans.
0rrrr, Session
For this query session, questions from readers' side are invited.
GHAPIER T
BUSTITESS rlrurn0ilMHtr
:
Learning Objectives
After studying this chapter, you will be acquainted with:
o Meaning o/Business Enuironment
a Characterisfics o/ Busi ness Enuironment
a lmportance ol Busirress Enuironment
o Componenh o/Business Enuironment
a Internal Enuironment
a External Enuironment
a Dimensions o/ Business Enuironrrtent
o Economic Enuironment in India
c Economic Reforms since 7997 or New Economic Policy or Changing Scenario of
Indian'Ecortomic Enuironment
a Impact of chcnges in Gouernment Policy on Business and Industry
AilAIYStS BOII
-: COMMENCE:-
Mr. Answer : Genflemen, let us talk about business environment today.
Mr. Question : Sir, we have heard about environment. but what is this business
environment?
Mr. Answer : Well, first of all you tell us, what do you think about
environment?
Mr. Question : Sir, in my opinion the forces present around us (e.g. air,
sunlight. noise. weather,
etc- ) form environment.
Contd...
Business Environment : Importance and Dimensions
69
words, a company which has the capacity to know the possibilities of the
opportunities
available can be
the greatest beneficiary. For example, the ASIAN PAINTS a leading company of the
paint industryr,
at
one stage lagged behind because of technology. This was smartly understood by
another company,
GOODLASS NEROIAC (GN). 1n order to exploit this situation, the latter company
entered with a
contract with a foreign company named KANSAI PAINTS (KP) with the purpose of
acquiring latest
technology. The KP made available to the GN the Cathodic Electro Depcsition (CED)
technology.
On
this very basis,theGNwasabletoobtain thecontractfor theentire
paintrequirementsoftheMARUTI
UDYOG. In this way, the GN earned huge profits by entering the market with the
latest
technology. It was
a first mover advantage of the company.
(2) Warning Signal: Along with the availability of opportunities provided
only by
regularly studying the changes taking piace in the business environment. For
example, there
was a time
when the customers got dissatisfied at the slow supply of cars in the market. The
Maruti Udyog Ltd.
was
sharp enough to recognise the threat of new companies entering the market in time.
Bef.orethe
other
companies could do anything, the Maruti Udyog Ltd. was able to increase the supply
of its
cars manifold
and was thus able to nullifu the effect of the possible threat. In this way, the
Maruti forestalled
the possible
danger by the study of business environment.
(3) Taping Useful Resources: An organisation needs a member
and services
are produced. A business gets resources from the environment and provides goods and
services to the
same environment. A study of business environment tells a business the requirements
of the environment
and what can it make available to get its needs fulfilled. Therefore, it is
possible to get useful resources
from
the business environment.
(4) Coping with Rapid Changes: These days business is being
run in a rapidly changing
environment. Various factors connected with business, e.g. competition, fashion,
number of customers,
technology, etc. are changing quickly. Changes do not affect business as much as
the rapidity
of the
changes. It means that if the speed of the change is a little less it can be faced
with comparativl
ease but to
face the rapidity of change is a very difficult task. This can be possible only by
constant vigil
over the
business environmeni and sfudying it simultaneously.
(5) Assisting in Planning and Policy: The knowledge of the business
environment presents the
basis for pianning and policy. For example, the ITC Hotels decided to establish
many
was the
biggest indusky in the worid. Its future was particularly bright in India. The
Government also has
a special
interest in the development of this industry because of many reasons (for example,
the receipt
of foreign
exchange, increase of employment, etc.). The ITC Hotels formulated their future
shategy onthe
basis of
this information. In this way, anyone can defeat their competitors by formulating
their plans.
(6) lmprovement in Performanc e: ln every organisation
the sfudy of business
environment has
an important role as far as its performance is concerned. Those organisation which
keep
a constant eye on
it and analyse it correctly definitely win the race and remain alive for a long
time.
close down.
Business Environment : Importance and Dimensions
73
Therefore, it can safely be asserted that an organisation can improve its present
as well as future with the
help of the sfudy of business environment.
!nternal Environment I
External
Environment I
Environment
etc.
I A. lnternal Environment
Internal ehvironment includes all those factors which influence business and
which are present
within the business itself. These factors are usually under the conhol of business.
The sfudy of internal
factors is really important for the shrdy of internal environment. These factors
are:
(i) Objectives of Business, (ii) Policies of
Business,
(iii) Production Capacity, (iv) Production
Methods,
(") Management Information System, (vi) Participation
in Management,
(vii) Composition of Board of Directors, (viii) Managerial
Attihrde,
(ix) Organisational Struchrre, (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.
I B. Externa! Environment
External environment includes all those factors which influence business and
exist outside the
business. Business has no conhol over these factors. The information about these
factors is important for
the sfudy of the external environment. Some of these factors are those with which a
particular company
74
Business Studies
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. If
a 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 localpublic, 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 sells its 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 haue alreody seen that the internal enuironment is under
the control of business, and therefore,
it cannot be wholly included in the business enuironment. Similorly, the
micro enuironment hos a uery close
relahonship urith business and, therefore, if not immediotely ot leost it
can be controlled to a large extent
within o short span ol time. On the contrary, there is remote relotionship
of macro enuironment with
business. In othei words, business hos n o control ouer it. ln foct, macro
enuironment is in reolity the business
enuironment.'lts foctors ore called Dimensions o/ Business Enuironment. We
shall now study these
dimensions.
Business Environment : Importance and Dimensions
75
All these policies influence business. For example, under the import-export
policy, restrictions on
imports will benefit the indigenous industry.
(iii) Economic Conditions: Economic conditions are those conditions which are
related with the
possibilities of economic development of a country. On the basis of the economic
conditions the
government starts various programmes for the welfare of the people. These
programmes influence
business. Businessmen are influenced by these programmes and they start their own
programmes like the
advertisement policy, discovery of new market, bringing new products in the market,
new methods of
production, etc. Some of the examples of economic conditions are as under:
(a) Foreign Capital, (b) Supply of Natural Resources, (c) Level of Economic
Development,
(d) Rate of Interest, (e) National Income, (f) Industrial
Development.
(g) Foreign Trade, (h) General Price Level.
Impact of Economic Environment on Business
The following are the chief examples of the impact of economic environment on
business:
(i) After reforms were introduced in the banking sector. the bank loans
were allowed on easy terms. lt also
led to better services. It helped really fast development of
business.
(ii) Thechange intheeconomic environmentresulted inthe
establishmentofLeasingCompanies.Mufual
Funds and Venture Capital Business.
o (2) Political Environment
Political environment is the outcome of a combination of various idealogies
advocated by different
political parties. Factors connected with the activities of the government are
included in it, e.g.. the type of
government (single party government or multi party government), the attitude of the
governmenttowards
different industries, progress in passing different laws, the platforms of the
political parties, the tendency of
the applicants for different posts, efforts by various groups to get effective
support for themselves, etc.
Every politicalparty has a different attitude towards business community. A living
example of this can be
seen during elections in the shape of fluctuations in the share market. It is quite
possible that the mere
possibility of a particular political party coming into power can make the prices
of share rise sky high. It is
true conversely when the possibility of some other political party coming into
power may bring the price of
shares really nose-diving. It clearly shows that the attitude of the first
political party towards business is
positive which gets reflected in the positive effect on the share market. On the
other hand, the negative
attifude of the second political party towards business is reflected in the nose-
diving of prices of shares in
the share market merely on the possibility of its coming to power.
lmpact of Political Environment on Business
The following are some of the examples of the impact of the political
environment on business:
(i) In the year 1977, the Janata Government adopted a stringent attifude
towards the multinational
companies. As a result of this attitude the multinational companies
tike the IBM and the Coca-Cola had
to ignore India.
(ii) The new government encouraged the multinational companies for
investment in India. This led to the
opening of the doors of the Indian marketforthe multinational
companies. Consequently, the Coca-Cola
entered the Indian market once again.
(iii) lt was only because of the political interest that Hyderabad came to
be known as Cyberabad In other
words, it came to be recognised as the centre of Information
Technology (lT). fu a result of it many I.T.
Companies came to be established there.
Business Environment : Importance and Dimensions
77
Under the New Industrial Policy, the industries have been freed to a large
extent from the licences
and other controls. In order to encourage modernisation, stress has been laid upon
the use of latest
technology. A great reduction has been affected in the role of the public sector.
Efforts have been made to
encourage foreign investment. Investment decision by companies has been facilitated
by ending
restrictions imposed by the M.R.T.P. Act. Similarly, Foreign Exchange Regulation
Act (FERA) has been
replaced by Foreign Exchange Management Act (FEMA).
Some important points of the New Industrial Policy have been highlighted in
the following detaiis:
(i) Abolition of Licensing: Before the advent of the New Industrial Policy,
the Indian industries
were operating under strict licensing system. Now, rnostly the industries have been
freed from licensing
and other restrictions.
(ii) Freedom to lmport Technology: The use of latesttechnology has been given
prominence in
the New Indushial Folicy. Therefore, foreign technology coilaboration has been
allowed.
(iii) Contraction of Public Sector: A policy of not expanding unprofitable
industrial units in the
public sector has been adopted. Apart from this. the government is following the
course of disinvestment
in such public sector undertaking. (Selling some shares of public sector
enterprises to private sector
enhepreneurs is called disinvestment. This is a medium of privatisation).
(iv) Free Entry of Foreign Investment: Many steps have been
taken to attract foreign
investment, such as:
(a) In the year \991,517" of foreign investment in 34 high priority
industries was allowed without seeking
government permission.
(b) Non-Resident Indians (NRIs) were allowed to irrvest 100% in the export
houses, hospitals, hotels, etc.
(c) Foreign Investment Promotion Board (FIPB) was established with a view to
speedily clear foreign
investment proposals.
(d) Restrictions which were previously in operation to regulate dividends
repatriation by the foreign
investors have been removed. They can now take dividends to their native
counkies.
(v) MRTP Restrictions Removed: Monopolies and Restrictive Trade Practices Act
has been done
away with. Now the companies do not need to seek government permission to issue
shares, extend their
area of operation, and establish a new unit.
(vi) FERA Restrictions Removed: Foreign Exchange Regulation Act (FERA) has
been replaced
by Foreign Exchange Management Act (FEMA). It regulates the foreign transactions.
These transactions
have now become simpler.
(vii) Increase in the Importance of Small lndustries: Efforts have been made
to give
importance to the small industries in the economic development of the countn;.
(2) New Trade Policy
Trade policy means the policy through which the foreign trade is controlled
and regulated. fu a result
of liberalisation, trade policy has undergone tremendous changes. Especially the
foreign hade has been
freed from the unnecessary controls. The age-old restrictions have been eliminated
at one go. Sorne of the
chief characteristics of the New Trade Policy are as follows:
(i) Reduction in Restrictions of Export-Import: Restrictions on the exports-
imports have
almost disappeared leaving only a few items.
82
Business Studies
(ii)
Reduction in Export-lmport Tax: Export-import tax on some items has been
completely
abolished and on some other items it has been reduced to the minimum level.
(iii) Easy Procedure of Export-tmport: Import-export procedure has
been simplified.
(iv) Establishment of Foreign Capitat Market: Foreign capital market
has been established for
sale and purchase of foreign exchange in the open market.
(v) Full Convertibility on Current Account: In the year lgg4-95,
full
convertibility became
applicable on cunent account.
Here it is important to clarifu the meaning of cunent account and full
convertibility. Therefore, this
has been done as follows:
Current Account: Transactions with the foreign counties are placed in two
categories: (i) tansaction
with cunent account, for example, import-export. (ii) Capital account tansactions,
like investnent.
Full Conttertibilitgt: In short, full convertibility means unrestricted sale
and purchase of foreign
exchange in the foreign exchange market for the purpose of payments and receipts on
the
items
connected with current account. It means that there is no government restriction on
the
by the Reserve
Bank of India (RBI).
(vi) Providing Incentive for Exp.rt: Many incentives have been allowed to
Export
Oriented
Units (Eou) and Export Processing zones (EpZ) for increasing export trade.
(3) Fiscal Reforms
The policy of the government connected with the income and expenditure is
called fiscal policy.
The
greatest problem confronting the Indian government is excessive fiscal
deficit.
In the year 1990-91, the
fiscal deficit was 87o of the GDP. (lt is important to understand the meaning of
fiscal deficit
and GDp.)
(i) Fiscal Deficit: A fiscal deficit means that the countryr is spending
more than its income.
(ii) Gross Domestic Product (GDP): The GDP is the sum total of the financial
value of
all the
produced goods and services during a year in a country.
Generally, the financial deficit is calculated in the form of GDP's percentage.
presently, the
government of India is making efforts to take it to 3%.
o Solutions of Fiscal Deficit
In order to handle the problem of fiscal deficit, basic changes were made in
the tax system.
The
following are the major steps taken in this direction:
(i) The rate of the individual and corporate tax have been reduced in order
to bring more people in the tax
net.
(ii) Tax procedure has been simplified.
(iii) Heavy reduction in the import duties has been implemented.
(4) Monetary Reforms
Monetary policy is a sort of control policy through which the Central Bank
controls the supply of
money with a view to achieving the objectives of the general economic policy.
Reforms
below:
Business Environment : Importance and Dimensions
83
(i) Statutory Liquidity Ratio (SLR) has been lowered. (A commercial bank
has to maintain a definite
percentage of liquid funds in relation to its net demand and time
liabilities. This is called SLR. In liquid
funds, cash investment in permitted securities and balance in current
account with nationalised banks
are included.)
(ii) The banks have been allowed freedom to decide the rate ol interest on
the amount deposited.
(iii) New standards have been laid down forthe income recognition for the
bank. (By recognition of income,
we mean what is to be considered as the income of the bank? For
example, should the interest on the
bad debt be considered as the income of the bank? Directions have
been issued in this context.)
(iv) Permission to collect money by issuing shares in the capital market
has been granted to nationalised
bank.
(v)Permission to open bank in the private sector has also been
granted.
(5) Capital Market Reforms
The market in which securities are sold and bought is known as the capital
market. The reforms
connected wlth it are known as capital market reforms. This market is the pivot of
the economy of a
country. The government has taken the following steps for the development of this
market:
(i) Under thePortfoliolnvestmentScheme,thelimit forinvestmentbythe NRIs
andforeigncompaniesin
the shares and debenhrres ofthe Indian companies has been raised.
(Portfolio Investment Scheme means investing in securities.)
(ii) In order to control the capital market, the Securities and Exchange
Board of India (SEBI) has been
established.
(iii) The restriction in respect of interest on debenfures has been lifted.
Now, it is decided on the basis of
demand and supply.
(iv) The office of the Controller of Capital Issue which used to determine
the price of shares to be issued has
been dispensed with. Now. the companies are free to determine the
price of the shares.
(v) Private sector has been permitted to establish Mutual Fund.
(vi) The registration of the sub-broker has been made mandatory.
(6) Phasing out Subsidies
Cash Compensatory Support (CCS) which was earlier given as export subsidy has
been stopped.
(CCS can be understood with the help of an example. If an exporter wants to import
some ravv material
which is available abroad for Rs. 100, but the same material is available in India
for Rs. 120 and the
governments wants the raw material to be purchased by the exporter from India
itself for the protection of
indigenous industries, the government is ready to pay the difference of Rs. 20 to
the exporter in the form
of subsidy. The payment of Rs. 20 will be considered as CCS). In addition to this,
the CCS has been
reduced in case of fertilizers and petro products.
(7) Dismantling Price Control
The government has taken steps to remove price control in case of many products.
(Price Control
means that the companies will sell goods at the prices determined by the
government). The efforts to
remove price control were mostly in respect of fertilizers, steel and iron and
petro products. Restrictions on
the import of these products have also been removed.
out subsidies. We have now to find out the effect of this policy of revitalising
the economy on the
business and industry. Some important points in this respect are the following:
(i ) lncr+:asing Cc-,rnpetition: Today, business is facing all round
competition. The competition
for Indian companies has increased especially in service industries like:
Telecommunication, Airlines,
Banking, insurance, etc. Competition has crossed the national boundaries and
assumed a global shape.
The following are the chief competitors:
(i) New and old Indian companies, (ii) Multinationalcompanies, (iii) Import.
Increasing competition has adversely affected many companies. For example, once
a popular
Westem Coloured Television has lost much ground in the TV market and its
contribution to the market is
almost negligible.
(2) More Demandin5; (lustomers: fu a result of the economic reforms, the
customers have
complete information about the goods available in the market. Earlier, they used to
purchase goods and
services without much inquiry because of the lack of information. But these days
because of the
availability of enough information the area of customers' demand has increased
considerably. Now, they
have started buying good quality goods and services.
(3) Rapidl-v Changing T<rchnological Environment: Rapid changes are taking
place in the
technological environment as compared to other factors in respect of business
environment. The reason is
increase in competition. These days only that particular company can remain
steadfast in the market
which markets, products of better convenience. This is possible only by using
latest technology. latest
technology makes modern machinery and production process available. Big firms are
grappling with this
environment but for the smaller firms it is an alarm bell.
('4) Necessity for Clrange: Before the implementation of economic reforms
(before 1991) the
businesses were more stable. Policies once laid down used to continue for a long
time. However, these
days because of the free economic environment the various factors of business
environment are
undergoing rapid changes. Consequenfly, the businesses have become unstable and the
policies have to
be changed quickly.
(5) Need for Developing Human Resource: It is a big challenge to achieve
success in business
these days. It is not easy for the ordinary employees to face this challenge. It
needs a thoroughly
accomplished human resource equipped with the latest information. There has been a
shortage of trained
human resource in India. That is the reason that their demand is now rapidly
increasing.
t6) Market Orientation.There are two points of view with regard to the
marketing activities-
Production Oriented and Market Oriented. According to the production oriented view
point first the
goods are manufacfured and then the market is visited for marketing the
manufactured goods. On the
other hand, according to the market oriented viewpoint, first of all the market is
surveyed and then
production is undertaken. In other words, previously it was thought that whatever
was the quality of the
product, the customers would accept it. But now this thinking has changed and it is
now accepted that the
production should caterto the demand ortaste of the customers. These days the
latterthought is in vogue.
(7) Loss of Budgetary Support to the Public Sector: fu a result of economic
reforms, the
importance of public sector has declined. This is evident in the reduction of
budgetary support by the
government to the public sector enterprises. These days the public sector
enterprises have clearly
understood that in order to make their development possible and to remain alive for
a long time, they shall
have to create their own resources.
Business Environment : Importance and Dimensions
85
Business Studies
4/5 Marks
1. what do you mean by Business Environment? Explain any four
characteristics of it.
2. Discuss any five points of the importance of Business Environment.
3 Marks
3. clarifiy 'warning Signal' as an importance of Business
Environment.
4. How business environment is helpful in the 'improvement of
performance,?
5' How 'first mover advantage' is made available by the business
environment?
Give an example.
I Mark
6. What is business environment?
Ans' It refers to the sum total of those factors which influence
the business and over
of the business
environment.' Why?
Ans. Because they continue to change quickly.
10 Is the effect of various factors of business environment on
business can
be recognised
separately?
Ans. No, as all the factors of business environment are related to
each other.
11' Explain 'Relativity' as one of the characteristics of busiess
environment.
Ans. It means that business environment is related to the local
conditions.
12. Govt' of lndia seriously thinking to allow oil marketing public
sector undertakings to fix
their own price for Petrol and diesel. Which economic ..Jo.- is the
reason
of this change in
government policy.
Ans. The reason for the change in the government's policy is
'Liberalisation'.
13 State any two impacts of change of government policy on business
and industry.
Ans- (i) Increasing competition. (ii) More demanding customers
environment.
4/5 Marks
14. Explain any five cornponents of macro environment.
15. What is micro environment? Explain any four components of it.
3 Marks
L6. What are the components of internal environment? Write any six.
Business Environment : Importance and Dimensions
87
(c.B.s.E. 2004)
21. Give any two examples of the impact on business organisations due to
change in economic
environment'
rc'B's'E' 2004)
22. Write two impact of legal-regulatory environment on business.
23 . What is meant by 'poliiical environment' of business?
(c.8.s.E.2005)
24. Write three impact of political environment on business.
25. Write three impact of technological environment on business'
(1 Mark Questions)
26. What is internal environment?
Ans. It refers to all those factors which influence the business and
present within the business itself and
are under the control of the business.
27. What is external environment?
Ans. It refers to all those factors which influence business, exist
outside the business and business has no
control over these factors.
28. What is micro environment?
Ans. It refers to all those external factors whcih are closely related
with business and influence each
industrial unit differentlY.
29. What is macro environment?
Ans. It refers to all those external factors which have a distant
relation with business and influence all
business units almost in the same way.
30. Give two examples of marketing intermediaries.
Ans. These are traders and agents.
31. Why economic policies are framed?
Ans. The economic policies are laid down to direct the economic
activities.
32. Write any one effect of economic environment on business'
Ans. After reforms were introduced in the banking sector. the bank
loans were allowed on easy terms.
33. Write any one effect of legal-regulatory environment on business.
Ans. By removing control on the capital market, a huge amount of
capital was collected by issuing
various new issues in the primary market'
34. Just after declaration of Lok Sabha Elections 2009 results, the Bombay
stock exchange's
price index (Sensex) rose by 2100 points in a day. Identifu the
environmental factor which
led to this rise.
G'B'S'E' SamplePaper)
Ans. Environment of Politics
I Economic Et'lvironment in lndia
4/5 Marks
35. Explain the economic environment of India.
3 Marks
36. Explain any three economic conditions of India..
l Mark
37. Which economic system is followed in India?
Ans. It is mixed economic sYstem'
88
Business Studies
4/5 Marks
40. Explain, in brief, any five economic changes that have been initiated
by the Government
of India since
1991.
(c.8.s.E.2004)
4r. Explain briefly any five major changes initiated by the Government of
India since 1991
to modernise
India's Industrial System.
rc.8.5.E.2005)
42. Discuss in brief, the various aspects of 'New Industrial policy.,
43. What changes were made in the industrial policy in the recent past?
44. Explain the impact of changes of government policy on business and
industry.
3 Marks
45. What is new h.ade poticy?
46. What are the salient features of New lndustrial policy?
47. Write a brief note on 'Capital Market Reforms,.
48. Whar is Monetary Reforms? Write its two main points.
I Mark
49. What is meant by Liberalisation?
Ans. It refers to utrshackle the economy from bureaucratic cobweb to
make it more competitive.
50. What is meant by Globalisation?
Ans. It refers to integrate the economy with ihe rest of the world.
51. What is meany by privatisation?
Ans' It refer to such an economic process through which some public
sector undertaking is brought
either
partially or completely under private ownership.
52. What is'Irade policy?
Ans. It refers to the poticy through which the foreign hade is
regulated.
53. What is Fiscal Policy?
Ans. It refers to the policy of the government connected with the
income and expendifure of the country.
54. What is Fiscal Deficit?
Ans. It means that the county is spending more than its income.
55. What is Gross Domestic product?
Ans' It refers to the sum total of the financial value of all the
produced goods and services during year
a in
a country.
56. What is Price Control?
Ans. It means that companies will selt goods at the prices determined
by the government.
57. What is Markef Orientation Concept?
Ans. Under this concept, first of all market is surveyed and then
production is undertaken.
0rrry Session
For this query session, questions from readers' side are invited.
CHIPIIR 8
Learning Objectives
After studying this chapter, you will be acquainted with:
o Meaning ond Definitions of Planning
o Features of Planning
. Importance ol Plonning
. Limitotions of Plonning
o PlanningProcess
. Types of Plans
Planning is the basic function of management and with it start the other
functions of management.
So long, planning does not determine the objectives and the methods of achieving
those objectives, the
other functions like organising, staffing, directing and controlling are
meaningless
I Meaning of Planning
Plannin! forms that part of management which lays down the objectives and
varicus activities to be
done for the attainment of those objectives. Under this it is ciecided what is to
be done, how it is to be
done, when it is to be done and by whom it is to be done.
-
Deciding about all these aspects is called planning. A
problem about taking decisions on these matters arises
Planning?
when there are more than one possible answers. It refers to
thinking before hond.
Therefore, it can be said to be a process of choosing.
I Definitions of Planning
Some of the important definitions of planning are as under:
(1) Accordingto Koontz aridO'Donnell,
"Planningisdecidinginoduancewhattodo,howtodoit.when
to do it. ond u;ho is to do it "
(2) According to Haimann, "Plonning is deciding in odoonce ttrhot is lo be
done"
(3) According to M.E. Harley, "Plaruting is deciding in oduance whot is to be
done. lt inuolues the selection
of objectioes, policies. procedures and programmes from omong
alternatiues"
90
Business Sfudies
The above mentioned definitions tell us that planning involves choosing and
its chief objective
is to
anticipate the fufure course of events and give it a desired direction. In reality
planning becomes necessary
when there are many alteratives to choose from.
! Features of Planning
After studying various definitions of planning, the following facts come to
light about its nature and
feafures:
(l) Planning focuses on Achieving Objectives: Management begins with
planning and
planning begins with the determining of objectives. In the absence of objectives
no organisation
can ever
be thought about. With the determining of objective, the way to achieve the
objective is decided in the
planning. In case, it is necessary to change the previously decided course of
action for the attainment
of
objectives, there is no hesitation to do so. It is thus clear that planning is
helpful in the attainment
of
objectives.
For example, a company decides to achieve annual sales of Rs 12 crores. After
deciding upon
this
objective, planning to achieve this objective shall immediately come into force. It
was thought to
achieve
this objective by giving advertisement in the newspapers. After sometime it comes
to be known
that the
medium of advertisement appeared to be incapable of achieving the target. In such a
sifuation the
medium of advertisement can be changed and it can be shifted from newspapers to
television In this
way,
every possible change is made through the planned action for the purpose of
achieving the objective.
(2) Planning is Primary Function of Management: Planning is the first
important
function of
management. The other functions, e.g., organising, staffing, directing and
controlling come later. In the
absense of planning no other function of management can be performed. This is the
base of
other
functions of management.
For example, a company plans to achieve a sales target of Rs 72 crores
ayear.ln order to achieve
this
target the second function of management, i.e., organising comes into operation.
Under it the purchase,
sales, production and financial activities are decided upon. In order to complete
these activities,
different
departments and positions are decided upon. The authority and responsibility of
every position are
decided upon' After the work of organising, information about the number of
different people at different
levels required to achieve the objective shali have to be provided. This job will
be performed
under
staffing. Similarly, planning is the base of other functions like directing and
controlling.
(3) Planning is Pervasive: Since the job of planning is performed by the
managers at
different
levels working in the enterprise, it is appropriate to call it all pervasive.
Planning is an important function
of
every manager, he may be a managing director of the organisation or a foreman in a
factory. The time
spent by the higher level managers in the process of planning is comparatively more
than the time
spent by
the middle-level and lower-level managers. It is, therefore, clear that all the
managers working in an
enterprise have to plan their activities.
For example, the decision to expand business is taken by the higher-level
managers. The decision to
sell products is taken by the middle-level and lower-level managers.
(4) Planning is Continuous: planning is a continuous process because:
(a) Plans are prepared for a particular period. Hence, there is need for a
new plan
! lmportance of Planning
Planning is the first and most important function of management. It is needed
al every level of
management. In the absence of planning all the business activities of the
organisation will become
meaningle-ss. The importance of planning has increased all the more in view of the
increasing size of
organisations and their complexities. Planning has again gained importance because
of uncertain and
constantly changing business environment. In the absence of planning, it may not be
impossible but
certainly difficult to guess the uncertain events of future.
The following facts show the advantages of planning and its importance for
abusiness organisation:
(1) Planning provides Direction: Under the process of planning the objectives
of the
organisation are defined in simple and clear words. The obvious outcome of this is
that all the employees
get a direction and all their efforts are focussed towards a particular end. In
this way, planning has an
important role in the attainment of the objectives of the organisation.
For example, suppose a company fixes a sales target under the process of
planning. Now all the
departments, e.g., purchase, personnel, finance, etc., will decide their objectives
in view of the sales
target. In this way, the attention of all the managers will get focussed on the
attainment of their objectives.
This will make the achievement of sales target a certainty. Thus, in the absence of
objectives an
organisation gets disabled and the objectives are laid down under planning.
92
Business Sfudies
be
discovered. While making such an effort of discovery, many new ideas emerge and
they are studied
intensively in order to determine the best out of them. In this way, planning
imparts a real power of
thinking in the managers. It leads to the birth of innovative and creative ideas.
For example, a company wants to expand its business. This idea leads to the
beginning of the
planning activity in the mind of the manager. He will think like this:
x should some other varieties of the existing products be manufacfured?
x should retail sales be undertaken along with the wholesales?
x should some branch be opened somewhere else for the existing or old
product?
x should some new product be launched?
In this way, many new ideas will emerge one after the other. By doing so, he
will become habifuated
to them. He will always be thinking about doing something new and creative. Thus,
it is a happy situation
for a company which is born through the medium of planning.
(5) Planning facilitates Decision Making: Decision making means the process
of taking
decisions. Under it, a variety of alternatives are discovered and the best
alterative is choien. The planninl
sets the target for decision making. It also lays down the criteria for evaluating
courses of action. In this
way, planning facilitates decision making.
(6) Planning establishes Standards for Controlling: By determining the
objectives of the
organisation through planning all the people working in the organization and all
the ciepartments are
informed about 'when', 'what' anC 'how' to do things. Standards are laid down about
their work, time
and cost, etc. Under controlling, at the time of completing the work, the acfual
work done is compared
with the standard work and deviations are found out and if the work has not been
done as desired the
person concerned is held responsible.
Planning and Types of Plans
93
I Limitations of Planning
Planning is needed both in the business and non-business organisations. Some
people think that
planning is based on the fuhrre anticipations and nothing can be said with
certaint5r about fuhrre.
Therefore, it is a useless process. In fact, these people point towards the
difficulties in the way of planning.
If planning has to be successful and purposeful, the managers should be aware of
these difficulties and
limitations of planning. Following are the limitations of planning:
(1) Planning Creates Rigidity: Although the quality of flexibility is
inherent in planning, meaning
thereby that in case of need changes can be brought in, but it must be admitted
that only small changes are
possible. Big changes are neither possible nor in the interest of the organisation.
Since it is not possible to
introduce desired changes according to the changed situations, the organisation
loses many chances of
earning profits. For this limited flexibilit-v in planning, both the internal as
well as external factors are
responsible. These facts are called internal and external inflexibitity. They are
the following:
(i) Internal Inflexibility: At the time of planning the objectives of the
organisation, its policies,
procedures, rules, programmes, etc. are determined. It is very difficult to bring
in changes time and again.
It is known internal inflexibility.
(ii) External lnflexibility: External inflexibility means various external
factors that cause limited
flexibility in planning. These factors are beyond the control of the planners. The
chief among them are:
political climate, economic changes, technical changes, natural calamities,
policies of the competitors, etc.
For example, in political context, as a result of change, a new government brings
up a new hade policy,
policy of taxation, import policy, etc. All these changes make every sort of
planning- a meaningless waste.
Similarly, a change in the policies of the competitors suddenly make all type of
planning ineffective.
(2) Planning does not work in a Dynamic Environment: Planning is based on
the anticipation
of fufure happenings. Since future is uncertain and dynamic, therefore, the future
anticipations are not
always true. Therefore, to consider planning as the basis of success is like a leap
in the dark. Generally, a
longer period of planning, makes it less effective.Therefore, it can be said that
planning does not work in
dynamic environment.
For example, a company anticipated that the government was thinking about
allowing the export of
some particular product. With this hope the same company started manufacturing that
product. But the
government did not allow the export of this product. In this way, the rvvrot-lg
anticipation proved all
planning wrong or incorrect. It brought loss instead of profit.
(3) Planning Reduces Creativity: Under planning allthe activities connected
v;ith the attainment
of objectives of the organisation are pre-determined. Consequently, everybody work
as they have been
directed to do and as it has been made clear in the plans. Therefore, it checks
their incisiveness. It means
that they do not think about apprcpriate ways of discovering new alternatives.
According to Terry,
"Planning strangulates the initiative of the employees and compels them to work in
an inflexible manner. "
94
Business Sfudies
(4) Planning Involves Huge Costs: Planning is a small work but its process is
really big. Planning
becomes meaningful only after haversing a long path. It takes a lot of time to
cover this path. During this
entire period the managers remain busy in collecting a lot of information and
analysing it. In this way,
when so many people remain busy in the same activity, the organisation is bound to
face huge costs.
(5) Planning is a Time Consuming Process: Planning is a blessing in facing a
definite
situation
but because of its long process it cannot face sudden emergencies. Sudden
emergencies can be in the
form of some unforeseen problem or some opportunity of profits and there has been
no planning for all
these situations before hand and which now requires immediate decision. In such a
situation, if the
manager thinks of completing the planning process before taking some decision, it
may be possible that
the sifuations may worsen or the chance of earning profit may slip away. Thus,
planning is time
consuming and it delays action.
(6) Planning does not Guarantee Success: Sometimes the managers think that
planning
solves
all their problems. Such a thinking makes them neglect their real work and the
adverse effect of such an
attitude has to be faced by the organisation. In this way, planning offers the
managers a false sense of
security and makes them careless. Hence, we can say that mere planning does not
ensure success, rather
efforts have to be made for it.
o Conclusion
After having studied the limitatlons of planning, it cannot be concluded
that planning is unnecessary
or it is only a luxury which only big organisations can afford. But the reality is
different . It is an important
part of management and it deserves sufficient attention. It is not a question of
whether plans should be
formulated or not, but how well they should be planned. The plans can be made
effective after removing
the hurdles coming in their way.
I Flanning Process
When we look at planning in the context of management process, it is called
activity, it being a part of
management. But on the other hand, when it is studied separately it is called a
process because to
complete this one has to clear many steps one after the other. So far as the number
of steps included in the
planning process are concerned it depends on the size of the organisation.
Different organisations can
have different planning process.
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
of the enterprises. This analysis keeps in mind the internal and
external environment of the enterprise. For example, if the
3.
ldentifying Alternative Courses ofAction
government is thinking of establishing a factory for the
development some rural area an intelligent manager would 4.
Evaluating Alternative Cou6es
5. Selecting an Allernative
starts from this very point. The following steps are generally
taken in the business organisations during the planning
6. lmplementing the Plan
process.
7. follow up Action
Planning and Types of Plans
95
(1) SettinS 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 planing 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 indushial 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) ldentifying 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 Minimum
Preliminary Criteria?
some collaboration with some other organisation and ln t'act it is not
as difficultto Jind out alternatiue
start a new business; (iv) by taking over some other courses os it is to reduce the
list of olternatiue
business enterprise, etc. courses. Alternotiue
courses should be the
minimum
possible so thot they can be deeply
(4) Evaluating Alternative Courses: All those
onolysed. To
reduce the size of the list ol
alternative courses which are upto the expectations of the olternotiue
courses o minimum preliminarg
minimum preliminary criteria are selected for intensive criterio should
be decided upon and those
sfudy. It will be seen as to what extent a particular alternatiues
which do not fuffil the minimum
alternative course can help in the attainment of the criterio,
should be deleted from the list in the
objectives of the organisation. There is, however, one uery beginning.
For example, if the minimum
capital limit
is rupees ten crores all the
problem which confronts us while analysing these olternatiue
courses less than that will be left
out.
96
Business Studies
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
capitai 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 alternatlve course by a rnixfure of different alternative
courses.
(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 fufure 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 reserye one can immediately be brought into
operation and failuie 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 fufure which is uncertain. It is of great importance that
there is a 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 movrng process.
I 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 cental goal which is also called rnission. 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
shategy to convert objectives into reality is
formulated. Policies are put forward to bring
unanimity in the decisions of different
h:randg€rs. 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 highJevel 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.
Planning and Types of Plans
97
o (1) Objectives
Objectives are those end points for the attainment of
Purpose?
which all the activities are undertaken. Purpose is the
chief role of the organisahon
Following are the examples of objectives: which is
determined by the society where it
urorfts. Such os
the purpose of a school is to
(i) To improve the communication system to giue education.
Orgonisotions similar in noture
hold regular staff meeting and publish a haue the some
purpose.
newsletter.
(ii) To cross the 20,000 crore mark in turnover of
soaps.
Mission?
(iii) To make available the employment to 100
Mission or goal
tells us thot how an
people everyyear. organisotion is
diflerent from the organisations
(iv) To reduce quality rejects to 37". of the same
type. This is difJerent in case ol
The objectives should have the following features: euery
organisotion, e.9., aschool can hauethe
(i) They should be unambiguous. i mission to
impofi educotion only in the subjed
Objectivb?
(iv) Time limit should be prescribed to achieve Objectiue is a
speciol torget to be ochieued by
them. an orgonisation,
e.g., it can be the objediue of
(v) They should be achievable. a school to
impart education in the subject of
commerce to 700
students
. (2) Strategies
Shategies refer to those plans which are prepared in
view of the move of the competitors and whose objective is
to make possible the optimum utilisation of resources. For
Strategy?
example; if a rival organisation in an effort to increase the It refers to a
plon which tokes into occount
sale of its product is going to reduce the price of its product the
enuironmental oppoftunities ond threots
or is thinking about new methods of advertisement or is and the
orgonisational strengths ond
weaknesses and
prouides on optimol match
going to introduce some gift scheme to attract the between the
orgonisation and the
consumers, we shall have to plan our strategy accordingly in enuironment.
the light of all these things.
Strategy is both external and internal. When we formulate our plans keeping
in view the plans of our
rivals, it will be external strategy. If, however, there is a possibility of a
problem within the organisation
because of some change, preparing to face such an evenfuality in advance is called
internal strategy. For
example, installing computer in the office can result in reduction of the staff. On
implementing such a plan,
there will be the opposition of the employees, and efforts will have to be made in
advance to face such a
sifuation so that the new policy is implemented and the employees are also not
dissatisfied.
o (3) Policies
Policies are tho-se generai statements'"^,,hich are decitied for-ihe quitlar-
rt:e r>f thrz ernployees while
taking decision. Their purpose is to lay down a limit within which a particular
work can be done or a
98
Business Sfudies
Budget?
resources for the achievement of pre-determined
It relers to the
quantitatiue
expression of the
objectives of various departments. For example, the sales
action.
department's budget gives estimated figures about the
type of material thatwill be purchased, its quantit5r. the time of purchase and the
amountto be spenton 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.
Sales Budget
(For the Year Ending Dec., 31, 2009)
Product Area Sales (in Units) Selling Price (Per
Unit) Total Sales
(Rs.)
lRs )
Total
.54 00 000
East Zone 1,00,000 30
30,00,000
West Zone 2,00,000 30
60,00,000
Y
North Zone 1,00,000 30
30,00,000
South Zone i oo ooo 3n
qo oo ooo
Total
2.10.00.000
100
Business Studies
o (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
Programme?
managers are informed in advance about various needs It refers to a
plon thot couers a relotiuely large
so that there is no problem in future. The progrmmes can organisational
actiuities and specilies main
be of different types, e.g., production programme, steps, their order
ond timing and the
depoftment
responsible for eoch step.
training programme, sales promotion programme,
managementdevelopmentprogramme, etc. In case of sales promotion progrname, the
what, how, who,
when of everything right from the purchase of the raw material to the manufacfuring
of the product is
defined. The moment a work is completeC for which the programme has been designed,
its utility ends. In
other words, a new programme is designed ior every new work.
6 Marks
1. planning.
Explain briefly any six features of
G.B.S'E' 2004' 05,06)
2. six.
What are the features of planning? Explain any
(C.8.5.E.2007)
3. What are the main featuresto be considered by the managementwhile
planning? (N.C.E.R.T./
4/5 Marks
4. Explainanyfivefeaturesof planning.
G.B'5.E.2009)
3 Marks
5. Define Planning.
6. 'Planning is the basic function of management.' Explain.
(c.8.s.E.2001)
7. Explain any two feafures of planning.
(c.8.s.E.2002)
8. State any six feafures of planning.
(c.8.s.E.2004)
9 . What are the main points in the definition of planning?
(N.C.E.R.T.)
10. Explain, how'planningisamentalexercise'.
(c.8.s.E.2008)
11. Explain how "planning is a continuous process."
(c.8.s.E.2008)
12. Explain how 'planning is futuristic'?
(c.8.s.E.2008)
13. Why is planning an all-pervasive function of management?
l Mark
74. 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 urhich 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. Somple Paper)
Ans. It is planning.
I lmportance of Planning
6 Marks
19. Explain briefly any sixpoints which highlightthe importance of planning.
(c.8.s.E.2004)
20. Define planning. State any four reasons, why planning is important?
(c.8.s.E.2004)
702
Business Sfudies
4/5 Marks
26. Explainanyfivepointsof
importanceofplanningforalargebusinessenterprise. (C.8.5.E.2009)
3 Marks
27. Explain how 'planning facilitates decision making'.
(N.C.E.R.l C.B.S.E. 2008)
28. Explain how planning reduces the risk of uncertainty.
(c.8.s.E.2008)
29. Explain how planning facilitates decision making.
(c.8.s.E.2008)
30. How does planning facilitate control? Justify your answer with the
help of a suitable example.
l Mark
31. State any two points of the importance of planning.
Ans. (a) It provides direction. (b) It reduces risks of uncertain!.
32. How the happening of 'Overlapping and wasteful activities' can be
reduced?
Ans. Through planning.
f Limitations of Planning
6 Marks
33. Explain in brief any six limitations of theplanning.
(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.
(c.8.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.
(c.8.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.
(c.8.s.E.2001)
47. How does planning restrict creativity?
(c.8.s.E.2002)
42. Explain any two limitations of planning.
(c.8.s.E.2002)
43. State any six limitations of planning.
(c.8.s.E.2004)
M. Briefly explain 'rigidity' as a limitation of planning.
45. How 'costs' create hurdle in planning?
Planning and Types of Plans
103
Mark l
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.
O.B.S.E' SomPlePaPer)
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.8.s.E.2006)
50. What are the steps taken by management in the planning process?
(N.C.E.R.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.S.E. Somple Paper)
l Mark
53. What is meant by 'selecting an alternative' as a step in the
planning process? (C.8.5.E.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. (o) Govt. policies (b) Business competition.
56. What step is taken to reduce the list of alternative courses duting
planning ptocess?
Ans. A minimum preliminary criteria is determined.
57 . State first two steps in the process of planning-
(c.8.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 fufure.
I 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.8.s.E.2008)
61. Explain'method' and'rule' astypesofplan.
(c.8.s.E.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.8.s.E,2008)
3 Marks
64. What is meantby 'Policy' as a type of Plan?
(c.8.s.E.2004)
104
Business Studies
l Mark
70. State any two types of plans.
Ans. (i) Objectives (ii) Strategy.
7l' 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
Ma1,.
Whattypeofptanisit?
(C.B.S.E. Simptepoper)
Ans. It is a programme.
75. What is meant by'Policy'as a tgrpe of plan?
G.B.S.E.200))
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.
(c.8.s.E.2009)
Ans. Policies are guide to thinking while procedures are guide to
action.
77. Define'obiectives'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,.
Whattypeofplanisit?
(C.B.S.E. Simptepoperl
Ans. The company will prepare .programme'.
0rrrr, $ession
For this query session, questions from readers' side are invited.
0RGAlilSHG:
IMP||RIATGT IIIII PRI|
GESS
"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 lhis chapter, you will be acquainted with:
o Meaning of Orgonising
. Delinitions of Organising
o Characteristics o/ Orgonising
. Intportance of Organising
o Orgonising Proces.s
o Meaning, Charocteristics, Aduantages and Lirnifofions of Formal Organisotion
o Meaning, Characteristics, Aduantages ond Limitations of lnt'ormal
Orgonisation
. Difference between Formol ond Int'ormal Organisation
! Meaning of Organising
After having decided about the first function of management, i.e.,
planning, managers are
responsible for designing an organisation stmcture. We call
this function 'Organising'. It includes the process ol
determining what activities are to be conducted, how the
Organising?
activities are to be grouped, how responsibility and authory, It relers to
harmonious odjustment of vonous
paftsto
achieue common objediues.
are to be delegated and who reports to whom.
I Definitions of Organising
Different scholars have given different views about the meaning of
organisation:
(1) According to Haney, "Orgonisotion is hornror-rious od.iustnrent o.f
specialised parts Jor the
accomplishtnent of sonte conlmon purpose or purposes
106
Business Sfudies
! Characteristics of Organising
From the sfudy of the various definitions given by different management
experts, we get the
following information about the characteristics or nafure of organisation:
(l) Division of Work: Division of work is the basis of an organisation. In
other 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:
Underorganisationdifferentpersonsareassigneddifferentworksbuttheaimof
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 bther
words, if the division of work is not done properly or posts are not
created,conecfly the whole system of
management collapses.
! lmportance of Organising
The importance of organising becomes clear with the help of the following
points:
(1) Benefits of Specialisation: Under organising allthe activities are sub-
divided into various
work or jobs. For all the sub-worls, 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
eff.ective.lt 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.
Consequenfly, there is optimum utilisation of all the available resources (e.g.
material, machine, financial,
human resource, etc.) in the organisation.
Organising: Importance and Process
107
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 divisioir 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.9., 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 responsibilitgr 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.
Organising: Importance and Process
i09
I 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 orgonisotion is lormal tuhen the octilifies
of tu:o or more
persons are consciotrs/v coordinoted towards ct common objectitte"
o Main Characteristics of Formal Organisation
Following are the main characteristics of formal organisation:
(f) lt has Defined lnter-relationship: Formal
organisation is a sort of arrangement which clearly defines
mutual relationship. Everybody knows their authority and
Formal
Organisation?
It refers to
theorgonisotion structure which is
responsibilities. This clearly shows who willbe reporting to de-signed by the
monogementto accomplish
whom. a pafticular tosk.
(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) lt is Deliberately Created: It is deliberately created in order to
achieve the objectives of the
organisation in an easy manner.
(5) It is lmpersonal: 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 intoduced because of the
needs of individuals
and their wishes. Therefore, it is more stable.
o Advantages of Formal Organisation
Following are the advantages of formal organisation:
(1) Easy to Fix Accountability: Since the authorilr and responsibility of
allthe 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 chian 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.
110
Business Sfudies
(5) Stabitlty 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.
o 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 lnitiative: 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.
I B. lnformal Organisation
An informal organisation is that organisation which is
not established deliberately but comes into existence
because of common interests, tastes, and religious and Informal
Organisation?
communal relations. The chief quality of this organisation It refers to the
natural groupings of people in
lies in friendly relationship and cooperative nature. In this the work situation to
meet Dersonol needs.
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
also
have informal relations. (lt means first of all the formal organisation is
established and then informal
organisation is created out of it.)
(2) lt 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
communi$ form a separate
group in an informal way. Gradually some norrns 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.
Organising: Importance and Process
111
very easily, but on the other hand, the informal organisation is not less important
if used properly. In short,
informal relations among the employees are complementary to formal relationship. In
this context i1 is;
si;lrl 1'r.'ilr l',-rt'ri1i c'.ci rrlrrr;rrrjl oi-i.rn;,r.'l;1ion.s dre necessaru
tor enu qroLtp aclion just os fri,o blc-iies art:
llsse,rlio/ to n;uke a p,cit oj scis.soi.s work,.tt'tlt' In this context, it will
also be appropriate to say that, the
attitude of the management towards informal organisation should be positive.
I Difference Between Forma! and lnformal Or.ganisation
The difference between both the organisations is clear in the diagram
and table ahead.
i\
\\
Manager
"l I
Purchase Production
Manaoer ' Finance Manager
I
I
2l
i:. ,
PurchaseSuperintendent Production
Sunerintendent FinanceSuperintendent
I
I I
Formal Organisation
.'- - -) lnformal Oroanisation
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 conhary, 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:
iigt-1TlDi8f:Ig-]-----!11,,1|()r.ganisatio" i lnformal
organisation
I Nleanirrg j An orgunisation created by the i en e, orgu,iration
born out .f
U"r" of ,mutual
I management in the form of strucfure of "r*ro--u,*
"r*organisation
^r.f
i relations is called
informal
L I authorifu is called formal orqanisation.
authority
I and it
I 2. Origin i It is established because of the rules and
It is established because of social
i i policies of the orqanisation.
6 Marks
1 Describe the steps involved in the process of 'Organising'.
(C.B.S.E. Sample Poper)
2 Explain the importance of organising as a function of management.
4/5 Marks
3. Aman, Avneesh and Amrish have decided to start a business of
manufacfuring 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) Anangement of finance
(v) Sale of toys
(vi) Identifuing 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) Identifu the function of management involved in the above mentioned
para.
(2) Quote the lines from the above para which help you in identifuing
this function.
(3) state the steps followed in the process of this function of
management. (c.B.s,E. 20og)
3 Marks
4. Defi ne'Organising' as a function of management.
(c.8.s.E.2003)
5. State three steps in the process of organising.
(C,B,S,E,2OO4)
6. "Organisation is a machine of management." Comment.
7. How effective administration is possible through organisation?
l Mark
8 'Organisation is a mechanism of management.' What does this statement
indicate?
Ans. It indicates about the importance of organisation.
How'effective administration' is possible through organising?
Ans. It makes clear the activity ol 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. 'Identifuing and dividing the work' is the first step in the process of
one of the functions of
management. Identifo the function.
(c.8.s.E.2008)
Ans. Organising function of management.
72. Name the functions of management urhich co-ordinates the physical,
financial and human
resources and establishes productive relations among them for
achievement of specific
goals.
(c.8.s.E.2008)
Ans. Organising function of management.
Organising: Importance and Process
115
fr Fornra! Organisation
6 Marks
13. What is meant by formalorganisation? Explain any five features of
formal organisation. (C.8.5.E.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)
(C.B,S,E,2OO8\
16. State any three advantages of 'Formal Organisation'
77. What is meant by 'formal organisation'? List any two limitations of
'formal organisation'.
(c.B.s.E.20081
18. What is meant by 'formal organisation'? List any two advantages of
formal organisation.
(c.8.s.E.20081
I 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.
t lnforrnalOrganisation
6 Marks
23. What is meant by 'lnformal 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.
(c.8.s.E.2002)
26 The employees of Manik Ltd., a software company, have formed a Dramatic
group for their recreation.
Namethetypeoforganizationsoformedandstateitsthreefeatures.
(C.B.S.E. SamplePoper)
3 Marks
27. Explain the meaning of informal organisation.
28. What is meant by 'informal organisation'? List any two limitations of
informal organisation.
(c.B.s.E.2oo8l
,C'B'S'E' 2008)
29. State any three advantages of informal organisation.
l Mark
30. Out of fornral rod informal organisations which one is established
first?
Ans. Formal organisation.
116
Business Sfudies
established
in the organisation.
34. What 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.
6 Marks
37 ' How will it be appropriate to say that the attitude of management
towards
4/5 Marks
40. Distinguish between 'Formal' and 'rnformal' organisations (any
fourpoints). (c.8.s.E.2007)
3 Marks
4l' "Formal Organisation is Impersonal while informal organisation
is
Personal." ClarifiT this statement.
I Mark
42' Distinguish between formal and informal organisations on the
basis of .leadership,.
Ans.
Q,rry, $ssion
For this query session, questions from readers' side are invited.
llBGA]I ISAIIOil SINUGIUBE:
MEA]II]IG AilII TYPTS
"The wrong organisation structure will seriously impair business
performance and may even destroy it."- Peter F. Drucker
Learning Objectives
After studying this chapter, you will be acquainted with:
o Meaning ol Organisotion Structure
. Definitions of Organisotion Structure
o DesignlFormslTypes of Organisation Structure
o Meoning, aduantages, limitations ond utilities of Functional Organisation
o Meoning, aduantages, limitations ond utilities of Diuisional Organisation
o Functionol ond Diuisional Organisotion : A comparatiue Study
Span of ManagemOnt?
ut'gQt i:sdt utldi rit [ir ler, ]re I ll ii: Cr, Cr rir'tpt iSc.
:
Market Research
Dept.
amonl
the various departmental heads.
(4) Hurdle in Complete Development: This system is a hurdle in the way of the
complete
development of the employees. Each employee specialises only in a small part of
the whole
iob.
. Suitability of Functionat Organisation
The functional organisation stucfure is suitable in the sifuations given below:
(i) where the size of the business unit is large; (ii) where specialisation is
required; (iii) where
decentalisation of authority is needed and; (iv) where there is only one product
that is sold.
I ll. Divisional Organisation Structure
Divisional organisation structure mear_-rs division of
the rvhole enterprise according tc the major.products to be
manufactured by it. If in a business enterprise many types
Divisional Organisation Structure?
of goods are manufacfured, departmentation is done on the
It refers to the diuision of the whole
basis of product instead of function. If it is not so, there is a
enterpnse according to the major products to
constant fear that the production of some products and their
marketing will consume much time while some other products will get only a
little attention.
Consequently, some products will be sold in greater numbei while the others will
iind little market. To
avoid such a situation the whole enterprise is divided on the basis of products and
various divisions are
established. The head of the division looks after all the functions connected with
that product, that
is,
purchase, sale, advertisement, production, financial, etc. All these functions are
performed
separately by
different divisions. This process has been made clear in the following diagram:
(2) Divisional results can be Assessed: All the activities of each division
are carried out
independently. Hence, the dlvisional results (profiflloss) can be assessed easily.
On this basis, an
unprofitable division can be closed.
(3) Quick Decision-making: Every division in independent in itself. The
divisionalmanager can
take any decision regarding his division independently without consulting other
divisional managers.
Hence, decisions are quick and effective.
(4t Easy Expansion: For every product a separate division is opened. If a
company wants to
introduce a new product, it can be inhoduced easily without disfurbing the existing
division. Hence, it is
easy to expand the concern.
o Disadvantages of Divisional Organisation
The following are the main disadvantages of divisional organisation
structure:
( l) Conflicts between Divisional Heads: Every divisional head wants to
become a divisional
empire. To satisfy their ego each demand maximum resources for their division. This
sifuation leads to
conflicts among the various divisional heads.
(2) Duplicity of Functions: The entire set of functions (e.g. production,
marketing, financial,
personnel, etc.) is required for all divisions. It gives rise to duplicity of
efforts among divisions. Hence,
resources are mis-used and cost of operations is unnecessarily increased.
(3) Selfish Attitude: Every division tries to display better performance
sometimes even at the cost
of other divisions. This shows theirselfish attifude. Consequently, it hits the
interest of the concem as a whole.
o Suitability of Divisional Organisation
The divisional organisation structure is suitable in the following
situations:
(i) where the number of main products is more than one;
(ii) where different manufacfuring technologies and marketing methods
are required and;
(iii) where the size of the concern is large enough.
imnlinifh r aciahlichad
7. Suitability Where there is only one main product that Where
the number of main products is
is sold. more
than one.
t22
Business Studies
organisation,
(ii) Divisional organisation, (iii) Line organisation, (iv)
Line and staff organisation.
i4 3. [:urir-iiutral Orgorrisalir-rn Structure: It refers to
the division of the whole enterprise
according to the major functions /activities to be
performed by it.
Flvaluatiou: iA) Atlr,rrrttages: (i) Benefits of
Specialisation, (ii) Coordination is
Established, (iii) Managerial Efficiency is Increased, (iv)
Minimal Duplication of Efforts,
(v) Training is Facilitated, (vi) Equal Weightage to all
Functions.
(B) Disadvantages: (i) Ignorance of Organisational
Objectives, (ii) Difficulty in
Inter-departmental Coordination, (iii) Conflict of
Interest, (iv) Hurdle in Complete
Development.
ul Suitabiiiry: It is useful for single product large-sized
enterprises.
r1
lIl 4. [iivisioni:l Organisatiotr Structure: It refers to the
division of the whole enterprise
according to the major products to be manufacfured by it.
Flvaltiatian: rA) Advantages: (i) Development of Divisional
Heads, (ii) Divisional results
can be Assessed, (iii) Quick Decision-making, (iv) Easy
Expansion.
(Rj DisarJvatrtagies: (i) Conflicts between Divisional
Heads, (ii) Duplicity of Functions,
(iii) Selfish Attitude.
Srritahility: It is useful for multi-products large-sized
enterprises.
i,.']r 5. t:trnctiorral and Ditrisional organisation structure: A
Comparative siudy
(i) formation, (ii)specialization, (iii) Responsibility,
(iv) Managerial development, (v) CosL
(vi) Coordination, (vii) Suitability.
l Mark
1. Define the term 'Organisation Siructure'.
Ans' According to Hurley, "Orgonisation structures are
patterns of relationship omong the uorious
posifions in a lirm and among the uorious people occupying the
positions."
2 What do you mean by organisation slructure?
Ans. Organisation strucfure means establishing posts in an
enterprise and defining relations among
them. In this process, authority and responsibility are
divided among different offices.
3. What does the term 'Span of Management' reler to?
Ans. Span of management means that number of employees on
whom a superior can successfully put
his control. Often, a superior can successfully conhol 5-6
subordinates. Thus, in an organisation no
officer should be such, who is either controlling very high or
very low number of subordinates. In both the
sifuations work performance will be adversely affected.
4 Give the reason that why all organisations do not have
similar type of organisation
structure?
Ans. Because of different nahrre of all the organisations.
Organisation Strucfure: Meaning and Types
723
' 6 Marks
6. What is meant by 'Functional Stucture' of an organisation? Explain
any two advantages and two
limitationsof it.
(c, B. s.E. 2006, 2008, 20091
7. What is meant by 'Functional organizational structure'? State any
two advantages and two
disadvantages of such strucfures.
(C.B.S.E. Somple Poper)
4/5 Marks
8. In an electrical goods manufacfuring company, there are four main
activities- production, marketing,
finance and personnel. The general manager is planning to struchrre
the organisation. Which type of
organisation stucfure should he adopt and why? Give two reasons.
9. Explain four disadvantages of functional organisation strucfure.
10. A Fashion Design House has the following main jobs:
(i) Manufachrring (ii) Finance (iii) Marketing (iv) Personnel (v)
Research and Development
Which organisational skucfure will you prefer for this type of a
company and why?
3 Marks
11. What is functional organisation strucfure? Give two advantages of
this structr.rre.
72. Under what circumstances would functional strucfure prove to be an
appropriate choice?
l Mark
13. What is meant by'Functional Organisation Structure'.
Ans. Itrefersto the division of whole organisation accordingtothe
majorfunctionstobeperformedby it.
74. Give two advantages of functional organisation.?
Ans. (a) Benefits of specialisation. (b) Coordination is
established.
15. 'Difficulty in inter-departmental coordination' is one of the
limitations of which
organisation sfoucture?
Anc. It is the limitation of functional organisation strucfure.
ffi lJivisional Organisation Structure
6 Marks
16. What is meant by 'Divisional Skuchrre' of an organisation? Explain
any two advantages and any two
limitationsof it.
(c.B.s.E. 2006, 2008, 2009 )
17 . What is meant by Dlvisircnal Organisation Structure? How is it
beneficial for multi-product companies?
4/5 Marks
18. Explain the divisional strucfure of organisation.
(c.8.s.E.2001)
3 Marks
19. Discuss three disadvantages of divisional organisation structure.
l Mark
20. What is meant by Divisional Organisation Structure?
Ans. To divide the whole enterprise according to the major products
(such as metal products, plastic
products etc.) manufacfured by it, is known as divisional
organisation strucfure.
124
Business Studies
6 Marks
22. How is a functional strucfure disparate from a divisional skuchrre?
23. Explain the term Organisational Structure. Distinguish between
Functional and Divisional shucture on
the following bases:
(i) Formation (ii) Managerial development
(iii)Responsibility (iv)Suitability
(C.B. S.E. Sample Poper)
4/5 Marks
24. State the difference between Functional and Divisional Skucfure on
the following basis:
(i) Formation, (ii) Specialization, (iii) Managerial Development, and
(iv) cost.
3 Marks
25. State three differences between functional and divisionar strucfure.
l Mark
26. Distinguish between functional structure and divisional structure on
the basis of 'formation'.
rc.8.5.E.2005)
Hint: Functional organisational strucfure is most suitable for such
type of company. Also explain any
three advantages of functional organisation strucfures.
l2l Sahil Ltd. is manufacfuring shirts and has production, marketing,
finance and personnel departments in
the organisation. Name the type of organisational strucfure Sahil
Ltd. is following. State any three
advantages of this organisation structure.
(c.8.s.E.2006)
Hint: Sahil Ltd. is following the functional organisation struchrre.
Also explain any three advantages of
functional organisation structure.
t3] Surekha runs a shoe manufacfuring factory. She wants to expand her
business. For expansion she
contemplates to enter into the manufacturing of leather bags and
western formal wear apart from the
running business of shoes. By doing this her company will be able to
provide many products to working
women under one roof. Which organisation structure will you suggest
her and why?
Hint: In this sifuation, divisionaI organisation structure willbe
suitable as it provides equal importance to
all products. Also describe the advantages of divisional organisation
shucture.
Qrrry Session
For this query session, questions from readers' side are invited.
GIIIPITB TI
Learning Objectives
After studying this chapter, you will be acquainted with:
o Meaning and definitions of Delegation ot' Authority
. Elements of Delegation ot' Authority
. Dtference between Authority ond Responsibility
. Difference between Responsibility ond Accountability
. Con Accountobility be Delegoted?
. Diuision of Labour is the bosis ol Delegation of Authority
o Process of Delegation ot' Authority
o Importance ol Delegotion of Authority
a Meaning, definition ond charocteristics ol Decentrolisation
a Importonce of Decentrolisation
a Dillerence between Delegation ot' Authority ond Decentralisation
I Meaning of Delegation of Authority
Delegation of authority is an important part of the
organising process. Its need is felt when due to excessive
workload on a manager, he is unable to perform all jobs
Delegation of Authority?
independently. In this sifuation, he divides his work among It refers to the
process of entrusting
the subordinates. But, just mere division of work does not responsibilitg ond
outhoritg, and creoting
guarantee success. For the successful work performance, occountability of
the person to whom
work or
responsibility hos been handed
authority should be given to the subordinates to take work
ouer.
related decisions. Thus, division of work and assigning
authority for the successful work performance is called delegotion of outhority.
126
Business Sfudies
meons accountobility
properly perform the assigned duty. When a superior assigns a
of a subordinate his work performonce
for
job to his subordinate it becomes the responsibility of the
in relation to the authonty giuen to him.
subordinate to complete that job.
This means that the word responsibility comes into play only after the job has
been assigned. Thus,
to assign job can be called to assign responsibility.
Features
(i) Responsibility can be assigned to some other person.
(ii) The essence of responsibilitgr is to be dutiful.
(iii) It gets originated because of superior-subordinate
relationship.
Delegation of Responslbility:
. (2) Authority
A Confusion
It
originates because of senior-subord;;l
relationship.
The
essence of responsibility is to obey the I
duties.
-J I
o (3) Accountability
Accountability means the answerability of the
subordinate to his superior for his work performance. In
Delegation of
other words, when a superior assigns job/work or the
Responsibillty: Conclusion
responsibility to his subordinates, simultaneously he gives (l)
Responslblltty can be delegated: This
authority to them which makes workers (subordinates) meons
the delegotion of operationol
accountable to their superior for the work-performance.
responsibility.
(tt)
Responslblllty cannot be delegoted:
Featrrres
This
refers to the ultimate responsibility which
(i) Accountability cannot be delegated to some other cannot
be delegated.
person.
(ii) It is only towards the delegators.
(iii) Its base is senior-subordinate relationship.
(iv) It originates because of delegation of authority.
Difference between Responsibility and Accountabilit-u
Basis of Difference Responsibility
Accorrntability
l. Meaning The assigned job
Answerable to the superior for the work
performed.
DECENTRALISATTON
! Meaning of Decentralisation
' Decentralisation is an expansion of delegation of
authority. Under decentralisation number of decision taking
Decentralisation?
point increases because authority is delegated to middle level It
refers to the situotion uhich exists os o
and lower level managers to take significanVmomentous/
result of the systematic delegation oJ
I Definitions of Decentralisation
(1) According to Henry Fayol, "Everything that goes to increase the
importance of the subordinates' role is
decenhalisation and eve4rthing which goes to reduce it is
centralisation".
l2l According to Keith Davis, "Decentrolisotion is wide distribution of
outhority and responsibility to the
.
smo//est unit, thot is practicol throughout the orgonisotion".
(3) AccordingtoLouisA.
Allen,"Decentrolisationrelerstothesystematiceflorttodelegatetothelowest
leuels all authoritg, except that, which can only be exercised at
centrol points".
On the basis of aforesaid definitions it can be said that the importance of
subordinates can be
increased by delegating authority to the lowest possible level in an organisation.
! Characteristics of Decentralisation
Following are the salient characteristics of decenralisation:
(1) It is an expanded version of delegation of authority.
(2) It increases the significance of the role of subordinates.
(3) It is a process which is applicable to the organisation as a whole.
(4) It reduces the workload of senior officers.
(5) In this decisions are taken by those employees who are going to
implement them.
(6) In this along with the authority even accountability is delegated.
! lmportance of Decentralisation
In relation to the importance of decentralisation, it is said that, "The
question is not whether there
should be decentralisation, but decentralisotion to what degree". Thus, regarding
decentralisation their is
no need to contemplate whether it is to be implemented or not but to decide how
many authorities are to
be delegated to the subordinates and how many are to be reserved for the higher
officials. This is
absolutely true in the context of large organisations. The basis of its tmth is the
importance of
decentralisation, which is highlighted through the following points:
--l-
Delegation of Authority and Decentralisation
131
132
Business Studies
DELEGATION OF AUTHORITY
g 1. Meaning of Delegation of Authority: Delegation of authority is the
process of
entrusting responsibility and authority and creating
accountability of the person to whom
the work or responsibility has been handed over.
g 2. Elements of Delegation of Authority: There are three
elements of delegation of
authority:
(i) Responsibility: It refers to assignment of job to a
subordinate.
(ii) Authority: It refers to the power to take decision.
(iii) Accountability: It refers to the answerability of the
subordinate to his superior for his
work performance.
g 3. Difference between Authority and Responsibility:
(i) Meaning, (ii) Direction or flow, (iii) Origin, (iv) Essence.
g 4. Difference between Responsibility and Accountability:
(i)Meaning, (ii) Delegation, (iii) Origin.
g 5. Can Accountability be Delegated? Only authority can be
delegated but not the
accountability.
V 6. Division of Labour is the basis of Delegation of Authority:
Authority comes into
picfure after Division of labour. Without assigning duties
authority is non-existent. Thus, it
can be said that delegation of authority is based on division of
labour.
g 7. Process of Delegation of Authority :
(i) fusigning responsibility, (ii) Granting authority, (iii)
Fixing accountability
g 8. Importance of Delegation of Authority:
(i) Effective management, (ii) Employee development, (iii)
Motivation of employees,
(iv) Facilitation of growth, (v) Basis of management hierarchy,
(vi) Better coordination.
DECENTRALISATION
g 9. Meaning of Decentralisation: It refers to the sifuation which
exists as a result of the
systematic delegation of authority throughout the organisation.
g lO. Characteristics of Decentralisation: (i) An
expanded version of delegation of
authorit5r, (ii) More importance of subordinates, (iii) Applicable
to the organisation as a
whole, (iv) Reduces the workload of senior officers, (v) Along
with authority even
accountability is delegated.
g 11. Importance of Decentralisation:
(i) Develops initiative among subordinates, (ii) Develops
managerial talent for future,
(iii) Quick decision making, (iv) Relief to top managment, (v)
Facilitates growth, (vi) Better
conhol.
g 12. Difference between Delegation of Authority and
Decentralisation:
(i) Nature, (ii) Freedom in action, (iii) Status, (iv) Scope, (v)
purpose.
Delegation of Authority and Decentralisation
133
6 Marks
1. Explain the meaning and process of delegation of authority.
2. Explain the three important elements of 'Delegation of Authority'.
(c.B.s.E. 2006,2009)
3. "Delegation of authority is based on the elementary principle of
division of labour." Explain this
statement.
(c.B.s.E.2005)
4. What is meant by 'delegation of authority'? Explain any three
elements of delegation of authority'
(c.8.s.E.2007)
5. "Authority can be delegated but accountabiliiy cannot." Explain this
statement' (c.8.s.E.2005)
4/5 Marks
6. "A manager is of the view that he is not responsible for the quality
of work, that he has delegated to hls
subordinate." Do you agree with his view point? Justifu your answer
by giving proper arguments.
7. "Authority can be delegated but responsibility cannot." Explain.
(C.B'S.E, 2003,04)
8. "Can accountability be delegated?" Explain in brief.
9. Can an overburdened manager take help from his subordinates? How?
Explain the three important
thlngs which he should keep in mind while taking such help.
(C.B.S.E. 2006)
10. Discussthe elements of delegatron.
N.C.E'R.T./
11. "Delegation of authority provides the mean whereby a manager
multiplies himself." Comment.
3 Marks
12. Explain delegation of authority.
13. How is accountability related to authority? Explain.
14. Write any three differences between Responsibility and
Accountability.
l Mrirk
15 What is delegation of authority?
Ans. Delegation of authority is the process of entrusting
responsibility and authority, and creating
accountability of the person to whom work or responsibility has been
handed over'
16 What is meant by 'Responsibility for'?
Ans. 'Responsibility for' means obligation of a subordinate to
complete the assigned job.
t7 What is meant by 'Responsibility to'?
Ans. 'Responsibility to' means accountability of a subordinate for
his work performance in relation to the
authority given to him.
18 What is meant by 'Authority'?
Ans. It refers to power to take decislon.
19 State the essence of authority.
Ans. Its essence is to get decisions implemented.
20 Which tgrpe of responsibility can be delegated?
Ans. 'Responsibility for' can be delegated.
2t Which type of responsibility cannot be delegated?
Ans. 'Responsibility to' cannot be delegated.
22 Can accountability be delegated?
Ans. No, it cannot be delegated.
23 What is the basis of delegation of authority?
Ans. Division of Labour.
------}
734
Business Studies
6 Marks
25. Explain, in brief, any six points which highlight the
importance of delegation of authority.
26. why is delegation considered essentialfor effective organising?
N.c.E.R. T./
27 . What is meant by 'Delegation'? Explain any four points which
highlight the importance
of delegation in
an organisation
(c.8.s.E.2008)
28- 'Delegation of Authority is necessary in all types of
organisations.' Explain any four reasons in support ol
your answer.
(C.B.S. E, Somple Poper)
4/5 Marks
29 . Why is delegation of authority considered important?
(c.B.s.E.2002)
3 Marks
30. Why is it necessary to delegate authority? Give three
reasons
l Mark
31. Why 'effective management' is possible through delegation
of authorityr?
Ans. Because it reduces the workload of a manager.
32. Why 'employee development' is possible through delegation
of authority?
Ans. Because it provides the authority to take decision
to subordinates.
33. How employees get motivated through deregation of
authority?
Ans. By exhibiting their talent and skill.
34. What is meant by'Diversification'?
Ans. It refers to deal in the business of many products
instead of a single product.
6 Marks
35. Explain, in brief, any six points which highlight the
importance of decenhalisation in an organisation.
(c.B.s.E.20u)
36. Explain any four points which highlight the importance of
decentralisation in an organisation.
(Foreign 2009)
37. What is meant by 'decentralisation'? Explain any four
points which highlight the importance of
decentralisation in an organisation.
38. Decentralisation is an optional policy. Explain why an
organisation would choose to be decentralised?
(N.C.E.B.T.)
4/5 Marks
39. "The concept of decentralisation is related to the
concept of delegation." Explain this statement,
in brief.
(c.8.s.E.2004)
40. "Decenhalisation is an extension of delegation of
authority.,, Explain.
Or
Decentralisation is extending delegation to the lowest
level. Comment. (N.C.E.R.T.)
3 Marks
47. Explain the term 'Decentralisation'
(c.8,s.E.2001)
Delegation of Authority and Decentralisation
135
l Mark
44. 'If we delegate authority, we multiply it by two; if we decentralise
it, we multiply it by many.'
Name the two concepts to which this statement is related?
Ans. (a) Delegation of authority (b) Decenkalisation.
45. Name the activity which increases the importance of the role of
subordinates.
Ans. Decentralisation.
46. 'The question is not whether there should be decentralisation, but
decentralisation to what
extent?' What this statement indicates about decentralisation?
Ans. It is about the importance of decentralisation.
47. State any two points of importance of decentralisation.
Ans. (a) Quick decision making (b) Better control.
6 Marks
48. Explain the meaning of 'Delegation of Authority' and
'Decentralisation'. Differentiate between the two
on the basis of (i) Freedom in Action and (ii) Purpose.
4/5 Marks
49. Define 'delegation' and differentiate it with 'decentralisation'. Give
any three points.
50. Distinguish between delegation and decentralization of authoriiy on the
following bases:
(i) Nature (ii) Purpose
(iii) Freedom of action (iu) Level of authority
(C.B.S.E. Sample Poper)
3 Marks
51. Differentiate between Delegation of Authority and Decentralisation on
the basis of
(i) Freedom in Action and (ii) Purpose.
l Mark
52. Distinguish between delegation of authority and decentralisation on the
basis of 'Purpose'.
Ans: The purpose of delegation of authority is reduction of workload
of an officer, while the purpose of
decentralisation is expansion of authority in an organisation.
rs working
marketing
le for it.
Orrry Session
Mr' Question: Sir, it is essential for decentralisation that authority
is
delegated to every
departmental/divisional manager?
Mr. Answer: No, not at all.
Listen .....
delegation of
' authority' If divisional manager delegates his authorifu
further to his subordinate
this will be
called decentralisation. If the same process is repeated
for two divisions
then expansion of
decenhalisation takes place. If this process is implemented
on the
organisation as a whole
then decentalisation will be at its peak.
Mr' Question: Sir, tf a CEO delegates the authoritgr to alt divisional
heads but
the same is not
further delegated then ...........
Mr. Answer: This is also decentalisation. Because this may be the case
that a
company is able to
decentalise at one level but not at the other level.
Mr' Question: Sir, the,following statements seem to be confusing. Which
one
of them is correct?
(i) "Authority can be delegated, but responsibility
cannot.,,
(ii) "Authority can be deregated, but accountability
cannot.,,
Mr. Answer: Listen......
Both the statements are conect. But the second statement out
of these
leaves no confusion
whereas first one demands some explanation.
In the first one, it is said that responsibilitgr cannot be
delegated. Here
responsibility means
'Responsibility to' or the 'Ultimate Responsibilityr' and
not the 'Responsibility
for' or
'Operating Responsibility,.
'Responsibility to' is another name for accountability.
Thus,
Learning Objectives
After studying this chapter, you will be acquainted with:
o Meoning of Staffing
. Definitions of Stalfing
o Characteristics ot' Stot'fing
o Importance of Sffiing
o Meaning ond Definition ot' Humon Resource Manogement
o Euolution of Human Resource Monagement
o Sffiing os a part ot' Human Resource Manogement
o SffiingProcess
. Elements of Stat'fing
After having sfudied the first and second functions of management, i.e.,
planning and organising, it
is now important to take care of the third important function, i.e, staffing. Under
the organisational
strucfure various posts are created to achieve the objectives of the enterprise,
while those posts conre aiiver
and get .rctir.ratec-l by staffing In other words, all the posts created in the
organisation are meaningless
unless they are staffed by competent indivlduals. This function of management is
more important than all
the other functions because any mistake committed in planning and organising may
not be as harmful as
the mistake committed in staffing. A single wrong appointment can vitiate the whole
atmosphere in the
enterprise.
I Meaning of Staffing
Staffing means appointing competent persons according to the importance of the
post in the
organisation.It means that more capable persons are appointed on more important
posts, and
comparatively less competent persons can be appointed on
less important posts. In other words, all the functions
undertaken to establish coordination between the post and the
Staffing?
individual come under staffing. The chief among these are It refers to
filling and keeping filled posts
(i) Recruitment, (ii) Selection, (iii) Training, with people.
(iv) Promotion, (v) Transfer, etc.
138
Business Studies
I Definitions of Staffing
(1) According to Theo Haimann, "The sLot't'ing function
pertoirrs to the recruitntent. selcction.
deuelopment, troining and compensotion of subordinote monogers"
.
! Characteristics of Staffing
The following facts clearly bring out the characteristics of staffing as a
function of management:
(l) Related to Human Beings: The first important characteristic of
staffing is its relationship with
human beings. It means that unlike planning and organising it is not mere paper
work but involves the
appointment of competent persons on various posts. All the activities done to
accomplish this work are
connected with human beings-they may be recmitment, selection, training, promotion,
etc.
(2) Separate Managerial Function: The second important characteristic of
staffing is that it is a
separate managerial function. Separate managerial function means that far from
being a major part of
some function, it is in itself a major function.
(3) Essential at all Managerial Levels: Staffing is essential at all
managerial levels. It must be
clarified here that the establishment of a separate personnel department does not
free the concemed
managers from this all-important function. The aim of establishing this department
is to assist the
managers at every level in the performance of their function of staffing.
(4) Related to Social Responsibility: Staffing deals with human beings and
man is a social
animal. Since it is connected with human beings, the social responsibility of this
function is bom. In order
to discharge this responsibility the managers should take care and be impartial
while going through the
allied functions of recruitment, selection, promotion, etc.
(5) Effect of Internal and External Environment: The perforrnance of
staffing is affected by the
internal and extemal environment of the enterprise. The ir.rternal environment of
the enterprise includes
policies connected with the employees promotion policy. demotion
policy. transfer policy. etc.
- like the
If as a matter of policy the vacant posts are to be filled up by promotion, the
employees already working in
the enterprise will have the opporhrnity to reach higher posts, and the people from
outside will be
appointed only on lower posts. In this way the intemal policy of the organisation
does affect the function
of staffing. The external environment affecting the enterprise includes government
policies and
cducational environment.
Itcanbethepolicyofthegovernmentthatinaparticularenterpriseemployees
should be recruited only through employment exchange. Educational institutions can
help in the
development of the employees by organising special haining camps. In this way,
external environment
also affects the function of staffing.
Staffing: Meaning and Importance
139
! lmportance of Staffing
Following facts highlight the importance of staffing:
(l) Helpful in Discovering and Obtaining Competent Personnel:
Under staffing latest
techniques are used for recruiting and selecting the employees. As a result, it
becomes possible to search
for and to select able employees for different posts. Under the recruitment
process, search for employees is
conducted and through selection they are got selected.
(2) Helpful in Better Performance: Through the medium of staffing, right
people are posted at
right places. Thus, suitable people are selected, keeping into mind the importance
of organisational posts.
As a result, it increases the efficiency and effectiveness of
(3) Helpful in Continuous Survival and Growth of
the Enterprise: Every enterprise aspires for its continuous
Human Asset?
survival and growth. This is possible only when it has human
A business
has mang ossefs, like land,
asset of supreme quality. This, aspiration of an enterprise can
-
furniture,
building, etc. These ore shown
be fulfilled through staffing. Under this planning is done for the in the
Balonce-sheet ond are long term
development of managers. They are made able to face income
generating sources. Apai from
the
olorementioned resources, business
contingent complexities. These managers do planning for the has one more
impofiant asset, from which
development of an organisation and ensure its survival. income is
generated for long term but is
(4) Helpful in Optimum utilization of the Human not shown in the
balonce-sheet, this asset
Resource: Under staffing all the activities related to human is knonrn as Man
Power.
resource are performed systematically. By doing this the
situation of overmanning never arises. As a result, optimum utilization of
employees takes place and
subsequently, labour cost is reduced. Apart from this, by making employees
available at the right time, the
probable hurdles which can arouse during the course of work, can easily be
overcome.
(5) Helpful in Improving Job Satisfaction and Morale of Employees: Under
staffirig, by
sfudying human behaviour, their preference for the type of environment, promotion
policy, training and
remuneration policy known for. The effort is made to provide them with allthe
desired facilities. Special
care is taken for, that in no way the pay package of employees is reduced. In this
situation, they get total
job satisfaction and their morale is boosted.
Conclusion:
Fromtheaforementionedreasonsitisquiteevidentthattodayhumanresourceisthe
base for the success of an organisation. This is more important then other physical
resources. Thus,
staffing has a significant role to play among the management functions, so it
becomes very important to
focus on this function of management.
I Evolution of HRM
The kind of role today HRM is playing was not the same since inception. Various
phases of its
development are as follows:
(1) Labour Welfare Stage: Earlier businesses used to be on small scales. That
was the era of
establishment of Trade Unions. By its effect the need for a person is felt who can
act as a mediator between
the employer and the employees. For this labour Welfare Officer was appointed. His
role was limited to
provide least welfare facilities to the employees.
(2) Personnel Management Satge: With the expansion of business, factory
system came into
existence. Many people start getting employment under one roof. As a result, the
need for a person is felt,
whose job is to make employees available for a company. With this approach,earlier
Personnel Officers
and later on Personnel Managers were appointed. Their role was limited to recruit,
select and place the
employees.
(3) HRM Stage: The business further expanded end simultaneously the
technology was
developing at a fast pace. In this sifuation, the need was felt for the haining and
development of
employees. Human resource was now considered to be an important part of
organisation and was felt that
it can be developed. With this cult, Personnel Manager was replaced by Human
Resource Manager. His
job is to effectively manage the people so that they remain to be a part of the
organisation for all.
(2) Providing Expert Services: Human resource manager renders certain services
which require
special knowledge, e.g., iob evaluation. perfonrance appraisal and negotiating with
trade unions
(3) Developing Compensation and Incentive Plans: Human resource manager
conducts
research from time to time with the aim of improving upon the policies concerning
personnel. On the basis
of his research, he brings to the notice of top-level management new techniques in
different fields of
human resource management, such as, new compensation and incentive plans.
(4) Handling Grievances and Complaints: It is the responsibility of the human
resource
manager to establish cordial relations between the employers and the employees. To
do this, he informs
both the parties about the expectations of each other. In the event of disputes
arising between them
occasionally, he serves as a pacifier.
(5) Providing for Social Security and Welfare of Employees: It is a
responsibility of the
human resource management to formulate policies to provide social security and
welfare of employees.
These policies cover different aspects of employeeS, €.g., recruitment policy.
selection policy, promotion
polica. retirenrenl pr-,lica. etc. While formulating these policies, human resource
manager keeps in mind
the interests of both of the organisation and the employees. Moreover, he also
ensures proper
implementation of these policies.
(6) Defending the Company in Law Suits: In India, government has passed
several legislative
measures relating to the employees, such as, Wcrkmen's Compensation Act. Employees
State Insurance
Act. etc. It is the function of the human resource manager to enforce the
provisions of such acts in his
organisation.
(7) Keeping Personnel Records: Human resource manager maintains records
regarding
recruitment, selection, training, promotion, transfer, remuneration, etc. of all
employees working in the
organisation. These records are used as reference in future.
(8) Developing the Organisational Stru,:ture: Human resource manager reviews
the
organisational shrcfure and offers suggestions to make it more effective.
f Staffing Process
The scope of the function of staffing or functions included in it or the
various activities included in this
process can be divided under the following heads:
(1) Estimating the Marrpower Flequirements: At the first step of staffing the
need for required
number of employees is estimated. Under this it is ensured that able employees are
available in adequate
number in an organisation to be placed in right position at the right time. At the
time of determining the
number of persons required, the possibilities regarding internal promotions,
retirements, resignations and
dismissals etc. are also taken into consideration.
(2) Recruitment: The process of recruitment includes the search of the
various sources of
employees, and encouraging them to send their applications to the enterprise. In
other words, recruitment
means making available the employees in order to fill various posts. There are
mosfly two sources for the
recruitment of employees: (a) lnternal Sources, and (b) External Sources. In the
form of interna[
source, the employees already working in the enterprise are selected to fill other
posts; while the chief
external sources are the following:
(a) Waiting List (b) Recommendation of the Present Employees
(c) Jobbers and Conhactors (d) EducationalInstitutions (e) Media Advertising
(3) Selection: Under the process of selection, competent applicants are
selected out of a large
number of them. It is important to keep in mind that the ability of the applicant
and the nature of work
must match. The closest matching will bring the best results. To complete the
selection process many tests
are conducted. Finally, an applicant is selected if helshe declares pass in the
interview.
(4) Placement and Orientation: Placement means to join the post for which
helshe has been
selected. Appointment letter is offered to the employees after they are selected.
After getting the
appointment letter, an employee gives Joining Report to the officer of the
concerned department,
confirming that he/she is willing to work in the organisation. On doing this the
candidate becomes an
employee of the organisation.
Orientation means to acquaint the employees with their job and the
organisation. This is also known
as socialization. Under this new employees are introduced both to their superiors
and subordinates so that
they can work with them as a team. Apart from this, helshe is informed about the
objectives and policies of
the organisation. Helshe is also informed about their own authorities and
responsibilities. In short, the
purpose of orientation is to accommodate new employees in the new environment
expeditiously.
Staffing: Meaning and Importance
143
I Components of Staffing
In the modern form of staffing, following three elements are included:
(l) Recruitrnent: Recruitment means the process under which different
sources for fufure
employees are searched for, and they are motivated to apply by sending application-
forms for their
selection in the organisation. In this process, effort is made to receive
maximum number of
application-forms. That is why it is known as a positiue process.
(2) Selection: Selection means to select pre-determined number of able
applicants from the pool of
applicants with the help of various tests. Its nafure is negatiue because in this
effort is made to reduce the
number of applications.
(3) Training: Training is a process through which effort is made to increase
efficiency in the
employees for a particular job, so that their knowledge and skill both are
increased.
6 Marks
;f" Whictr function of management helps in obtaining right people and
putting them on the right jobs?
Explain any five points of importance of thisfunction.
(c.8.s.E.2008)
2. 'Staffing is an important function of management in all
organisations.' Why? Explain any four reasons.
(c.8.s.E.2009)
4/5 Marks
3. Explain briefly the meaning and importance of staffing.
(c.8.s.E.2001)
(3 Marks
4. Explaintheterm'staffing'.
(c.8.s.E.2002)
5. Explain 'Helpful in higher performance' in relation to importance of
staffing.
6. Explain any three points of the importance of staffing.
l Mark
7 What is staffing?
Ans. It refers to filling and keeping filled posts with people.
'Staffing is a separate managerial function'. Explain.
Ans. It means that staffing activity is not a part of some function
but it is in itself a major function of
management.
6 Marks
15. Clarifu, how 'staffing' is termed as a part of 'human resource
management'
4/5 Marks
16. How staffing is a line as well as staff function?
77. Define HRIvt. Explain the various stages of the evolution of HRM.
18. 'Human Resource Management includes many specialised activities and
duties.' State any four such
activities.
(c.B.s.E.20081
Staffing: Meaning and Importance
145
3 Marks
19. Explain staffing as a part of human resource management.
(C.8.5.E.2003\
20. Explain HRM.
21. Explain the various stages of the evolution of HRM.
1 Mark
22. Name the first two stages of the evolution of HRM.
Ans. (a) Labour Welfare Stage (b) Personnel Management Stage.
23. Out of Human Resource Management and Staffing which one is wider?
Ans. Human Resource Management.
24. State the role of personnel manager as staff manager.
Ans. In this role he gives advice to other departmental managers
so that they can resolve problems of the
employees.
6 Marks
25. Define the staffing process and the various steps involved in it.
(N. C.E.E. T. )
4/5 Marks
.
27 procedure.
Explain, in brief, the various steps in the staffing
(C.B.S.E. 2001,02,03)
28. What do you mean by staffing? Explain its elements.
3 Marks
29. What do you mean by 'Placement' and 'Orientation'?
1 Mark
30. state the first step of staffing process.
Ans. Estimating the manpower requirement.
31. What is the meaning of 'Orientation' as a step of staffing process?
Ans. It refers to acquaint the empioyees with their job and the
organisation.
32. State any two elements of staffing.
Ans. (i) Recruitment (ii) Selection.
cAsE sruDy/ApPLrcATroN oRTENTED QUESTIONS
t1] "There is no need of human resource planning as so many people are
available in the market these
days." Do you agree with this statement? Give reasons.
Hint: No, I do not agree with this statement. Mention the need of
staffing.
t2) You are a personnel manager of Alfa Co. What is your opinion about the
need of staffing function of
management?
Hint: Yes, the staffing function of management is essential. Mention
the need of staffing.
t3l A newly appointed personnel manager is of the view that staffing is the
least important function of
management in an established organisation. Do you agee with this
statement? Give five reasons in
support of your answer.
Hint: No, I do not agree with the opinion of Personnel Manager. Mention
the importance of staffing.
0rrry Session
For this query session, questions from readers' side are invited.
REGRUIIMTilI: mEAilll{G A1{ll
SlIURGES
"The extent of success of an enterprise in getting and retaining suitable
person-
ne! depends on how efficiently it is engaged in recruitment effotts."
Learning Objectives
After studying this chapter, you will be acquainted with:
o Meaning of Recruitment
a Definitions of Recruitment
o Process of Recruitment of Employees
o Sources ol Recruitment of Employees
o Types, Merits and Limitations ol Internol Sources
o Types, Merits and Limitations of External Sources
I Meaning of Recruitment
Recruitment means making available persons to fill
different vacant posts in the organisation. Efforts are made
in this process to ensure that more and more people submit
Recruitment?
applications so that selection becomes easy. It is on account It
refers to the process of seorching for
of the efforts to attract more and more people that the pr
ospectiu e employees and stimuloting them
to applg
for job in the
process of recruitment is called a positive process.
I Definitions of Recruitment
Main definitions of recruitment are as under:
(1) According to Flippo, "Recrttitntent is the process of
searching t'or prospectiue emplogees and
'
stintulating them to opplg Jor jobs in an orgonisotion
(2) According to Dalton E. McFarland, 'lt is the process of
atrrcrcting potential emplogees to the
cornpon\'"
Recruitment: Meaning and Sources
147
to the other department or branch on the same post. This procedure is usually
followed when some
employees are surplus in one department and there is shortage of similar types of
employees in another
department.
148
Business Studies
is
appointed to the upper rank where his responsiblity increases, his stafus and
salary are also enhanced.
A post can be filled by sending an inefficient employee at some lower
position. It is known as
recruitment by demotion
(3 ) Lay-off: It refers to the temporary separation of the emplo yeefromthe
is boosted when
recruitment is made by internal sources, particularly by promotion. If they know
before hand that their
promotion is possible, they willfeel inspired. Ambition to occupy post of higher
rank willadd to their
morale and they will perform their existing duty with utmost care and efficiency.
(2) Industrial Peace: Because of promotional avenues employees get satisfied
and hence,
industrial peace is established. The promotion process continues from top to bottom
in the
whole
organisation. This motivates the employees to enhance their performance through
learning and practice.
(3) Easy Selection: Organisation has full information about the employees
working there.
fu
such, their selection for the higher post involves no risk.
(4) No Need of Induction: Induction means to acquaint the employees with
their job
and the
organisation. In this source of recruitment, this information is already available
to the employees. Hence,
there is no need of induction in this case.
(5) Adjustrnent of Surplus Employees: Under this method, the employees from
the
departments where they are in surplus transferred to those where there is shortage
of staff. In this way, the
deficiency of staff is meet out. Hence, no hardle in the work is takes place.
(6) Economical Source: It is the most economical source because
the
organisation does not have
to spend any amount on search for sources of recruitment. Nor does it have waste
time on long selection
process. Moreover, such employees do not require much training. They are already
old
people run the organisation with the help of their out-dated ideas and no new idea
can develop.
(2) Employees become Lethargic: Internal source of recruitment creates a
definite feeling
of
promotion among the employees. This feeling makes them lethargic and it affects
their performance.
(3) Not Available in New Organisations: Recruitmentthrough this source is
possible
only in the
previously established organisations. The new organisations have to make use of the
external
source.
Moreover, it is not essential that the entire recruitment need of the old
organisations may be fulfilled
through this source.
Recruitment: Meaning and Sources
t49
source is
mostly used for appointing lower level employees.
(9) Labour Contractors: They are the link between labourers and managers.
They remain
in
contact with both the labourers and the managers. As and when managers put up
demand for labourers,
these contractors make available their supply in no time. This system of labour
recruitment is very much
popular in road construction, building construction and plantation industry.
(10) Telecasting: These days some big organisations give precedence to
telecasting their job
requirements. During the course of telecasting information about vacant posts,
required qualifications
and experience, possible remuneration and the special characteristics of the
company are displayed.
(11) Web Publishing: These days internet has become an important medium for
recruitment.
Special websites have been created for the purpose of recruitment through internet.
The applicants get
information through them about the vacant posts and required qualifications. People
having the required
qualifications can get in touch with the company needing their services. Some of
the very popular
websites are www.naukri.com, www.Jobsheet.com, and www.clickjobs.com. etc.
Recruitment: Meaning and Sources
151
(3) Fresh Talent: The external source of recruitment helps the people with new
and modern ideas
to enter an organisation which certainly helps the organisation.
(4) Competitive Spirit: When the existing employees in an organisation come in
contactwith the
new employees recruited through the process of external recruitment, a spirit of
competition is born.
Consequenfly, their work performance is improved
(5) Less Chances of Favourtism: External recruitment brings in new faces and
all the applicants
happen to be new for the managers. This eliminates any possibility of favourtism.
6 Marks
1. workers.
Explain briefly any six external sources of recruitment of
(C.B.S.E. 2004, 0S)
2. What is meantby 'Recruitment'? Explain any four external sources of
recruitment. (C.8.5.E.2009)
3. Explain 'Management Consultants'. 'Employment Exchanges' and 'Media
Advertising' as external
sources of recruitment.
4/5 Marks
4. Horv does recruitment take place through 'Placement Agencies' and
'Recommendation'?
3 Marks
5. What is the meaning of recruitment?
6. Make a list of the important sources of recruitment.
7. write short note on 'Direct Recruitment' as a source of recruitment.
8. State how recruitment takes place through employment exchanges?
Recruitment: Meaning and Sources
153
l Mark
11. What is meant by Recruitment?
Ans. It refers to the process of searching for prospective employees
and stimulating them to apply for job
in an organisation.
72. State two internal sources of recruitment.
Ans. (a) Transfer (b) Promotion
13. What is meant by recruitment by demotion?
Ans. It refers to fill the post by sending an inefficient employee at
some lower-position.
14. What is meant by Lay-ofP
Ans. It referstothe temporary separation of the employee from the
employeron the initiative of the later.
15. What do you mean by External Sources of Recruitment?
Ans.
It refers to invite applications for filling up the vacancies from
candidates outside the organisation.
16. Name the source of recruitment in which newspapers, employment news,
television, etc.
are used.
Ans. Media Advertising.
17. Name the type of staff which is generally recruited through Management
Consultants.
Ans. Managerial Staff.
18. What do you mean by Campus Recruitment?
Ans. lt refers to recruitment from educational instifutions.
19. Why is it said that recruitment is a positive step in the process of
staffing.
6 Marks
21. 'Filling vacancies from within the organisation has some advantages as
well as limitations.' Explain any
three such advantages and any three limitations.
\C.8.5.E.2008)
22. Which source of recruitment is needed io bring new blood in the
organisation? Explain any three
advantages and any two limitations of this source.
(C.B.S.E.2008)
23. What is the meant of Internal Source of Recruitment? Why do
organisations prefer recruitment through
internalsources? Explain.
(C.8.5.E.2009)
4/5 Marks
24. Explain any five merits of external sources of recruitment.
25. State any four limitations of using internal sources of recruitment.
(C.8.5.E.2008)
154
Business Studies
3 Marks
27 . "External sources of recruitment are better than internal sources of
recruitment." Do you agree
with this
statement? Give any three reasons in support of your answer.
28. How can internal sources of recruitment be better than external sources
of recruitment? Give three
reasons in support of your answer.
29. In which source of recruitment employees become lethargic and why?
30. 'Competitive Spirit' is an advantage derived through external sources
of recruitment. Explain the
statement.
31 . why are internal sources of recruitment considered to be more
economical? (N.C.E.R.r.)
l Mark
32 List two advantages of internal sources of recruitment.
Ans. (i) Increase in Motivation (ii) lndustrial Peace.
33 why 'lnduction' is not required in the internal sources of recruitment?
Ans. Because the employees are already well familiar with the
organisation.
34 Name the source of recruitment which stops the entry of young blood.
Ans. Internal source of Recruitment.
35 Which source of recruitment has the benefit of .wider choice'?
Ans. External Source.
36 Which source of recruitment has the disadvantage of
increase in labour turnover'?
Ans. External Source.
(lrrrn Session
Mr. Question: Sir, why is recruitment called a positive process?
Mr. Answer: Because through the process of recruitment an effort is made to
obtain the maximum
number of applications. This shows the human resource manager's
thinking positive. It is on
this basis that it is called a positive process.
Mr. Question: O.K. Sir.
Please tell me, whether demotion along with promotion is also a
source of
recruitment?
o.
Marketing Manager Finance
Manager
c (Mr. A) (Mr.
B)
.9
o
E
o
Supervisor
ct Supervisor
(Vacant Post) (Mr.
C)
Mr. Answer: Look at the following diagram carefully and try to understand:
The above diagram shows that Mr. B is a more efficient manager
and, therefore, he has been
appointed the Chief Executive Officer. This is recruitnent
through promotion. On the other
hand, Mr. A is an inefficient manager and, therefore, he is sent
to the vacant post of
supervisor. This is recruitment through demotion.
It is important to note that the need for recruitment does not
end with this process. It only
- changes the level of the post. The diagram makes it clear that
although the posts of the Chief
Executive Officer and the Supervisor have been filled up yet the
posts of Marketing Manager
and the Finance Manager have become vacant. These two posts will
need recruitment.
Mr. Question: Thank U, Sir.
GIIIPrERI4
Learning Objectives
After studying this chapter, you will be acquainted with:
o Meaning of Selection
. Definitions of Selection
o Steps inuolued in the Selection Process
a EmploymentTests
Process of selection begins once the need of the employees is determined and
the process of
recruitment has been completed. Under the process of recruitment different sources
of prospective
employees are searched and the condidates are stimulated to send in their
applications
to the
organisation. By the time the process of recruitment is over, applications of all
the willing persons
have
been received. Thereafter it is the selection process that is initiated. In this
process, qualifications
of the
applicants are compared with the qualifications essential for the job. Those
applicants who
fulfil the
essential qualifications required for the job are selected. In case of recruitment,
efforts are
made to athact
more and more of the applicants towards the organisation and so it is called a
positive process.
On the
other hand, the nafure of selection process is negative because under it efforts
are made to reduce
the
number of applicants.
! Meaning of Selection
Selection refers to the process by which qualified applicants
are selected by means of various tests in pre-determined numbers,
out of large number of applicants.
Selection?
test
is to enquire about the technical aspect of that field. For instance, asking the
computer operator about
different parts of the computer and knowing whether he can put right the computer
in case it breaks
down? Practical knowledge test is to get the work done in respect of the
specialised field by the candidate.
For instance, asking a candidate for the job of computer operator to operate the
computer.
(ii) Dexterity Test: Those jobs where physicallabour is called for, there the
ability of the candidate
is known by putting him on dexterity test. Such a test throws light on how quickly
and efficiently the
candidate moves his body and other limbs while on work. For instance, to test the
speed of the rnovement
of fingers on the key board of a comprrter by the computer operator. There is a
difference between
practical knowledge test and dexterity test. Practical knowledge test is concerned
with knowing whether
the candidate has knowledge about operating the computer; while dexterity test
measures the speed of
operating the computer.
B. Psychological Tests: Some selection tests are of psychological nafure. These
tests inform
about the conduct and efficiency of the candidate. Although two or more persons may
have equal
specialization in a given field, yet there may be difference in their personality,
intelligence, conduct, taste,
Selection: Meaning and Process
759
etc. This difference is made clear with the help of psychological tests. Such tests
are helpful in the
comparative appraisal of different persons. Objective of psychological tests is to
examine the mental
ability, interest in work, maturityr, etc. of the candidate. Main psychological
tests are as under:
(i) lnterest Test: The objective of this test is to examine the interest of
the candidate in a special
work. On the basis of such a test it becomes easy to appoint the candidate on the
job of his interest. As a
result, applicant gets maximum job satisfaction and he plays significant role in
the success of the
organisation.
(ii) Intelligence Test: The assumption behind this test is that a more
intelligent person can learn
work quickly and easily and the organisation does not spend much on his training.
In order to test the
intelligence of the candidates, their reception power, memory power and reasoning
power, etc. are
examined. For this test, a long list of questions is prepared and the candidates
are asked to answer the
same in a given time period. On this basis their level of intelligence is known.
(iii) Aptitude Test: Through this test, efforts are made to know the hidden
qualities of the
candidate, so that it is ensured if he can be taught by training or not. In other
words, the test that measures
the learning capacity of a candidate is called aptitude test. Thus, aptitude test
looks for the learning
capacity of a person to do a particular job.
(iv) Personality Test: By this test it is seen how much ability
a person has to
interact with others,
how much he can influence and motivate them. It is also seen whether or not he has
the power to remove
the obstacles that may arise in the job on which he is appointed. For instance, a
person who does not
understand the sufferings of the others, cannot become a good doctor. Similarly, a
person who does not
like to mix with others cannot become a good salesman.
C. Other Tests: Main objectives of these tests are to know the
understanding of the candidate, his
communication ability, his mental maturity, writing ability, alertness, etc. These
tests are of two typesl
(i) Knowledge of Language Test: In this test, thoughts of the candidates are
seen. How he puts his
thoughts in black and white, what is his style of language, how is his handwriting
and what is his speed of
writing?
(ii) General Knowledge Test: Candidate's wisdom, memory power, alertness,
general taste, etc.
are known by way of this test. Written tests are usually conducted when the number
of applicants is very
large for limited posts and their academic level is different.
(3) Employment Interview: Having successfully cleared all tests related to
employment by the
candidate, he is called for final interview. Its objectives are to see the look of
the candidate, his way of
talking, his conduct and temperament, his interest, presence of mind, and maturity,
etc.
Maininformationsgatheredduringthecourseof intervieware: (i) physical qu.ility.
(ii) verificationof
academic degrees as filled in the application forms. (iii) interest in work. (iv)
quick wittedness. (v) generai
intelligence. (vi) memory power, etc.
Mosfly there are two types of interviews in a selection process. (i)
Preliminary lnterview: In it
candidate is physically and mentally examined. Those found deficient are not
included in subsequent
process. It is the first stage of selection process. Which has already been
explained. (ii) Final Interview: It
is mostly conducted in two stages. In the first stage, personnel manager collects
detailed information
regarding candidates. Those found suitable on the basis of appraisal are directed
for interview with those
departmental managers who had put up demand for their services. Departmental
manager converses
face to face with the candidate on the basis of nature of work and having satisfied
himself, declares the
latter successful in the interview.
160
Business Sfudies
6 Marks
1. Explainthestepsintheprocessof selectionof employees.
rc.8.5'E'2009)
2. Explain, in brief. any six steps involved in the process of selection of
employees. (C.B.S.E. 2004,05)
3. Explain, in brief, first six steps in the selection process'
G.B.S'E' 2006)
4. What is meant by 'selection'? Explain any five steps involved in the
process of selection of employees'
(c.8.s.E.2007)
5. You are the Personnel Manager of Anoop Ltd. You want to appoint staff
for your company. Explain the
'selectionProcedure'youshouldfollowforthis.
(C.B.S.E. SamplePoper)
4/5 Marks
6. How are candidates short-listed through preliminary and selection
interviews?
7. Explain briefly any four tgpes of employment tests.
3 Marks
8. What is an aptitude test?
G.8.5,E.2001)
9. What is meaniby 'recruitment' and 'selection' of employees in the process
of staffing? (C.8.5.E.2006)
10. Define selection.
11. I-ist the steps in selection process.
12. Explain briefly how prelirninary screening is done in the selection
process?
13. What is interview?
14. Explain the importance of interview in the selection process.
l Mark
15 What is meant by Selection?
Ans. Selection refers to the process by which qualified applicants are
selected by means of various tests in
pre-determined numbers, out of large number of applicants.
16 Give first two stages of selection process.
Ans. (i) Preliminary Screening (ii) Selection Tests.
17 What is the obiective of selection tests?
Ans. To measure the ability and skill of the applicants.
18 What information we get through Aptitude Test?
Ans. Through this test, an effort is made to know wheiher an applicant
can be taught through haining or
not.
19 What is the objective of 'emplogrment interview' as one of the steps of
selection process?
Ans. To see the looks of the candidate, his way of talking, presence of
mind, etc.
What is the objective of 'Medical Examination' as one of the steps of
selection process?
Ans. To protect the business organisation from infectious diseases'
27 Determine the right sequence of setection and recruitment in the
staffing process.
Ans. (i) Recruitment (ii) Selection.
Qrrry Session
For this query session, questions from readers' side are invited.
GHIPIER 15
Learning Objectives
After studying this chapter, you will be acquainted with:
o Troining and Deuelopment : An Introduction
o Meaning of Training
o Definitions of Training
o Chorocteristics o/ Troining
o Need ot'Troining
o Methods ot'Training: (i) On-the-Job and (ii) Off-the-Job
o Meaning ond choracteristics of Employee Deuelopment
o Need ot' Employee Deuelopment
o Difference between Troining ond Deuelopment
After recruitment and selection being done under the Staffing Process, the
next phase is of Training.
Among the different factors of production, like-capital, material, machinery,
people etc., Human
Resource is the most important. As the efficient utilization of all other resources
depends upon the
efficiency of human resource, that is why, special attention need to be given to
make human resource
efficient. In this chapter we will sfudy about Training and one other related term
Development.
Development ?
make them expert in their respective fields, to which they are directly
I Meaning of Training
Training is a process, by which effort is made to
increase the knowledge and skill of employees for the
successful accomplishment of a specific job.
Compulsion of Training
This
must be understood ouer here thot
I Definitions of Training training
is on unouoidable expense. For
example,
il on organisotion neglects the
Different scholars have given different definitions training
need of the employees this does not
relating to training. Main among them are as under:
meonthatthe organisation is obleto saoethe
I Characteristics of Training
Following facts are presented with regard to characteristics or nature of
training on the basis of
definitions given by different scholars:
( I ) Expense on Training is Investment and not the Wastage: Most important
characteristic of
training is that expenses incurred on it constifute investment and not wastage. In
other words, expenses
incurred on tralning today will provide benefit to the organisation for a long time
in the form of increased
efficiency of the employees.
(2) Relates to a Special Job: Training does not mean increase in the general
knowledge of the
employees, rather it is meant to increase the skills of the employees to perform
specific job.
(3) Beneficial to both the Organisation and the Employees: Training
is a process that is as
much beneficial to the employees as to the organisation. On the one hand, the
organisation can realize its
dream of more production at low cost and on the other, increased efficiency of
employees enables them to
produce more and qualitatively better goods in less time and thus earn more wages.
Besides, there will be
few accidents and their lives will remain safe and secure.
lt-
764
Business Sfudies
(4) Continuous Process: Training is not a process that will impart full
knowledge about the job in
one go. Whenever a new method, or a new technology, etc. is adopted in an
organisation, training
becomes imperative. Thus, whenever there is any change in business, there is
need for training and in
business changes do occur continuously. Training is, therefore, a continuous
process.
(5) Training and Development are Different: Training aims at making
employees skilful in a
specific job while development aims at imparting knowledge in respect of all
fields. Training is essential for
all levels of employees while need for development is relatively more for
managerial class.
(6) Training and Education are Different: Knowledge and skill of an
employee are increased, to
perform a specific job, by imparting relevant training while his general
knowledge and understanding are
increased by imparting education. For instance, when a worker is taught to
make a machine by
assembling some parts, it is called training. On the contrary, when a person
joins an engineering course, it
is called education.
(7) Essential for both the New and the Old Employees: So far as new
employees are
concerned training is a must but even the old hands need be taught new
techniques and their knowledge
is to be brushed up regularly.
(8) Necessary for all the Managerial Levels: (i) Superuisory Staff need
training for
preparing budget, daily production record, purchases, maintenance of records
etc. (ii) Middle Level
Managers need theoretical training instead of practical training. They are
given latest informations
regarding planning, organising, staffing, directing, controlling, etc. and
(iii) Top Level Managers need
training in respect of labour relations, financial management, production
management, public and
government relations, etc. Besides, even ordinary workersare given training
to perform their job in a
better way.
! Need of Training
Now-a-days, when business environment is continuously facing changes,
the need for training is
increasing. Day by day, new techniques are developed for doing different
jobs. New techniques, enable
us to be more productive and qualitative, but to use them training is
required. Training, on the one hand,
benefits the organisation by improving the quality and increasing the volume
of the production, with the
right use of machinery. On the other hand, it provides opportunity to the
employees for promotion and
better job security. Hence, training is important for both employees and
organisation.
o A. Benefits to the Organisation
Main advantages of training to the organisation are as follows:
(l) Most economical and the best use of Material and
Equipments: Each employee
working at any level makes use of machine and material. For instance, at
lower level machine and
material are used, at middle and higher level, computers, type machines and
writing material are used.
Trained employees use these machines and material properly and minimise
wastage.
(2) Improvement in Quality and Quantity of Output:Training makes it
possible to improve
the quality and quantity of output. Consequently, cost of production per unit
falls. It is important to note
here that output does not mean goods rnanufacfured by machines alone but it
refers to all jobs performed
at all managerial levels. It is therefore evident that training improves
knowledge and skill of all levels of
employees and their performance furns excellent.
r-!
job
whatever job he is performing he should be fully satisfied with it. One gets full
satisfaction from one's
when one is proficient in that job. Training is essential to acquire
proficiency in the job. Training,
therefore, gives job satisfaction to the employee and he gains self-confidence.
Above facts make it clear that training has advantages both for the enterprise
and the employees. In
other words, it has importance for both.
! Methods of Training
As is obvious, training is essential at all levels of organisation. Different
methods are used to hain
employees of different levels. It is so because the nature of job of different
levels of employees is different.
For instance, a worker needs training to learn how to operate a machine, a
supervisor needs training to
know how to get work from the subordinates, how to give commands and directions to
them. Similarly,
managers (top-level and middle-level) need training to familiarise themselves with
functions like
planning, organising, staffing, directing and controlling; financial management;
labour relations; etc.
Following are the main methods of training:
Business Sfudies
experienced employee or a special supervisor. In this way, the trainees learn job
of work. This
training is given in special seminars, classes, etc. During the course of this
he is called upon to
find solutions to complex problems and sometimes he has to do the work
of the
entire department all by
himself in the absence of the senior manager. In this way, he gradually
acquires
full managerial ability.
(3) Internship Training: Under internship training, technical institutions
and business
organisations joinfly impart haining to their members. The objective
of this
training is to strike a balance
between theoretical and practical knowledge. Educational institutions impart
theoretical knowledge to
their students but for practical knowledge they are sent to business organisations.
Likewise, employees
already working in business organisations are sent to educational institutions
from
time to time to get latest
theoretical knowledge' In this way, both kind of institutions render mutual
I B. Off-the-Job Training
(1) Class Room Lectures/Conferences: Under this method, theoretical knowledge
of the
managers is brushed up. They are informed of the latest techniques for tackling
different problems. In
large organisation, permanent experts are appointed to pass on such informations to
the managers. As
required they deliver lecturer on different subjects from time to time. Small
organisations which cannot
afford to appoint permanent experts, invite experts from educational instifutions
to deliver lectures.
(2)^Films: Films can be very efrective technique particularly where
demonshation of skill is
requirid. It is widely used in conference discussions.
(3) Case Study Method: Under this method, trainee managers are called upon by
senior
managers to solve a special problem. All trainees try to solve the problem on the
basis of their individual
knowledge and experience and tally it with others. There are arguments and counter-
arguments among
them when different solutions are presented for a problem. Each one presents
evidence in support of his
solution. These arguments and counter-arguments are heard by the senior manager. On
the basis of
arguments and counter-arguments and by using his own personal experience, the
senior manager
presents a suitable solution and points out the shortcomings in the efforts made by
them in suggesting
solution to the problem.
($pomputer Modelling: It is a computer-based training where the
trainee uses computer to
increase his or her skills. This method is used where training is imparted for a
high risk or high cost
involved situations, such as, imparting training for defusing a time-bomb
(5) Vestibule Training: Under this method, with a view to imparting training
to new employees, a
separate training centre is set up. An experienced and trained trainer is appointed
as an incharge of the
cenhe. Machines, tools and other equipments are so arranged in this cenhe as to
present a look of a
workshop. When the employees are trained they are put on the real job.
(6) Programmed Instruction:Thismethodisevolvedby Paul and
Pigorswhoweredissatisfied
with case study method. Under case sfudy, all aspects of a big problem are
considered simultaneously, as
against it under programmed Instruction, a brief incident is taken into
consideration. Trainer and students
seek appropriate solution to the problem on the basis of arguments and counter-
arguments among them.
Main advantage of this method is that students get important informations by
putting questions to the
trainer.
Business Studies
all the
managerial levels.
Training and Development
169
6 Marks
1. Why is employees' training necessary in an organisation? Explain in
brief any six reasons.
(c.8.s.E.2005)
2. What is the meaning of 'training'? Explain any four needs of
training. (C.8.5.E.2007)
3. "Training is beneficial both for the organisation, as well as for
the employee." Explain any three benefits
of training towards the organisation and any three towards the
employees. (c.8.s.E.2008)
4/5 Marks
4. State any four reasons why training is needed in any organisation?
(C.B.S.E. 2008)
5. State any four reasons why training is needed for employees.
(C.B.S.E. 2008)
6. State any four reasons how training is beneficialfor employees
of an organisation. (C.8.5.E.2008)
3 Marks
7. "Training is imparted even when it is not intended." Comment.
8. "Expense on training is investment and not the wastage." Clarify
this feature of training.
l Mark
9. What is meant by training?
Ans. A process designed to maintain and improve current job
performance is called training
10 ls expense on training a wastage?
Ans. No, it constifutes investment and not wastage.
170
Business Studies
! Methods of Training
6 Marks
11. Explain any four methods of 'On-the-Job Training'.
12. Explain 'Off-the-Job Training' methods.
13. Explain the following methods of training the workers:
(i) Apprenticeship Programme
(ii) Vestibule Training
(iii) Internship
Foreign 2009)
74. Describe the following methods of training:
(i) Apprenticeship training (ii) Job Rotation (iii) Vestibule
Training. (C.B.S.E. SomplePaper)
3 Marks
15. Explain the Job rotation training.
76. In which situations Vestibule Training is suitable? Give three points.
l Mark
17. What is meant by On-the-iob training?
Ans. It refers to the process of learning by doing.
18. Name any turo methods of training.
Ans. (o) Job Rotation Training
(b) Apprenticeship Programme.
19. What is the objective of Job Rotation Training?
Ans. Its objective is to provide full knowledge of all the departments
to a manager.
20. Give one advantage ofJob Rotation Training.
Ans. Employees gain multidimensional talent.
21. Name the training method in which the knowledge of many departments is
imparted.
Ans. It is Job Rotation.
6 Marks
22. What is meantby 'Training' and 'Development'? Explain any fourpoints of
distinction between them.
4/5 Marks
23. "Some learning opporhrnities are designed and delivered to improve
skills and abilities of employees
whereas some others are designed to help in the growth of the
individuals in all respects."
IdentifiT and explain the two concepts explained above.
(c.B.s.E.2009)
24. What do you mean by employee development? Why it is needed?
3 Marks
25. What is meant by Employee Development?
l Mark
26. Out of Training and Development which one is knoum as future oriented
process?
Ans. Development.
r-t
For this query session, questions from readers' side are invited.
GHIPTER IO
IIIREGIIilG:
ffi PllRTIlIGE AlI II PRI lIG I PltS
"Directing provides movement to the organisation."
Learning Objectives
After studying this chapter, you will be acquainted with:
o Meoning of Directing
. Definitions ol Directing
o Features of Directing
o Importance of Directing
. Principles of Directing
. Elemenb of Directing
I Meaning of Directing
Directing refers to inshucting, guiding, communicating
and inspiring people so that the objectives can be achieved. It
is that part of management process which ensures the
Directing ?
I Definitions of Directing
(1) According to Koontz and O'Donnell, "Direction is the executiue
t'unction ol guiding ond obseruing
subordinotes"
(2\ According to Earnest Dale, "Direction is telling people what to do ond
seeing thot they do it to the best
oftheirobility. ltincludesmokingossignment
exploiningprocedures,seeingthotmistokesorecorrected.
prouiding on-the-job instructions ond ot' course, issuing orders"
I Features of Directing
Based on the above discussion, the following points stand out regarding the
nafure or features of
directing:
(1) Directing lnitiates Action: After completing the 'staffing' function of
management the
important question that arises is as to how the entire human machinery will move.
The answer of this
question is inherent in the Directing function of management. While other functions
prepare ground for
action, it initiates action.
(2) Directing takes place at Every Level of Management: Directing is required
aleverylevel
of management. The top-level managers direct their subordinates who are the middle-
level managers. In
the same manner, the middle-level managers direct their subordinates who are the
supervisory-level
managers, and the supervisory-level managers further direct and guide their
subordinates, i.e., the
people who actually do the work.
(3) Directing is a Continuous Process: Directing is a continuous process. The
work of a
manager is not merely accomplished by issuing directions and instruciions. He has
to constantly review
the work of his subordinates, guide them correcfly and also motivate them from time
to time. He has to
constantly ensure that work is progressing as per the plans, and in case of any
negative deviation, he has
to take corrective action immediately.
(4) Directing Flows from Top to Bottom: Direction flows from top to bottom. It
starts from the
top-level management and ends at the supervisory-level of management.
I lmportance of Directing
The importance of direction is highlighted through the following facts:
(1) lt lnitiates Action: The employees are appointed up to the first
three functions of
management (planning, organising and staffing). But they cannot commence their job
until they are not
informed about what to do? and how to do? This job manager performs through
direction. Thus, it is
evident that it is direction which initiates action in an organisation.
(2) It Integrates Employees Efforts: Many employees work in an organisation.
The activities of
all are co-related. Success of an organisation is possible only when everybody does
his job efficienfly. If
any one of employees in the employees-chain does not perform up to the mark, it
adversely affects the
performance of remaining employees. Thus, it is essential to establish coordination
among all the
activities. Manager establishes this coordination by supervising, providing good
leadership, motivating
and exchanging ideas with his subordinates.
For example; an employee welcomes customers at a ready made garments showroom.
Second
employee shows products to them, third is engaged in packing, fourth takes the
payment and fifth says
174
Business Studies
goodbye to them. Customer willbe satisfied when all the five employees perform
of belongingness.
Now the question is how can the employees be motivated? The work of motivating
employees
can be
accomplished through the Directing function of Management.
For example, under Directing function of Management the problems of employees
technology. He also
takes them into confidence that they wil be shifted to some other departmenvjob
and this relaxes them
from the fear of losing the job. As a result, the employees do notshow resistance
to
a balance in the
organisation. On the one hand, a person works in an organisation for the
fulfillment
of his objectives
like-higher salary, promotion, etc. On the other hand, the objectives of a company
in addition to
the fixed salary' To earn more commission he wants to make more and more
officials considering it to
be a costly affair declined the same. This is a situation of clash between
individual and
organisational
objective. Here rightful direction is needed. Sales Manager by playing the role of
director
suggests ways to
sales representative how he can increase sales and thus settles down the clash
which subsequently,
establishes balance in the organisation. Sales manager can suggest for more
advertising, better
services-after-sales, sales on credit, etc.
! Principles of Directing
Following are the main principles of Directing:
(1) Principle of Maximum Individual Contribution:
According to this
principle, management
should adopt that directing policy through which employees get motivated and give
their maximum
individual contribution for the achievement of organisational objective.
Directing: Importance and Principles
175
! Elements of Directing
It has been made clear in the nafure of leading that it is not a single
activity but a group of functions.
On the same basis, the following functions are included in its scope:
(1 ) Supervision. (2) Communication. (3) Leadership. and (4) Motivation.
(1) Supervision: It refers to monitor the progress of routine work of one's
subordinates and guiding
themproperly
Supervisionisanimportantelementofthedirectingfunctionofmanagement.Supervision
has an important feature that face to face contact between supervisor and his
subordinate is a must.
(2) Communication: It refers to an art of transferring facts. ideas, feeling,
etc. from one person to
another and making him understand them A manager has to continuously tell his
subordinates about
t76
Business Studies
what to do, how to do, and when to do various things. Also, it is very essential to
know their reactions. To
do all this it becomes essential to develop effective telecommunication facilities.
Communication by
developing mufual understanding inculcates a sense of cooperation which builds an
environment of
coordination in the organisation.
(3) Leadership: It refers to influence others in such a manner to do work
what the leader wants
them to do. Leadership plays an important role in directing. Only through this
quality, a manager can
inculcate trust and zeal among his subordinates.
(4) Motivation: It refers to that process which excites people to work for
attainment of desired
objective. Among the various factors of production, it is only the human factor
which is dynamic and
provides mobility to other physical resources. If hrrman resource goes static then
other resources
automatically furn immobile. Thus, it becomes essential to motivate human resource
to keep them
dynamic, aware and eager to perform their duty. Both monetary and non-monetary
incentives are given
to employees for motivation.
3 Marks
Directing: Importance and Principles
777
l Mark
10. Which function of management is knoum as 'Management-in-action'?
Ans. Directing.
11. Out of managing and directing which term has the wider scope?
Ans. The scope of managing is wider as directing is a
component of it.
72. Directing is related to which factor of production?
Ans. Human factor.
13. What is meant by directing?
(c.8.s.E.2009)
Ans. It refers to instructing, guiding, communicating and inspiring
people to achieve common objectives.
6 Marks
14. Explain the principles of directing.
N'C.E.R'T.)
15. Explain the elements of directing function of management.
16. 'Good and effective directing should be based upon certain principles.'
Explain any three principles of
Directing.
(C.B.S.E. Sample Paper)
3 Marks
. Explain, in brief, the term 'supervision' as an element of directing.
17
(c.8.s.E.2004)
18. Explain, in brief, the term 'motivation' as an element of direction'
(c.B.s.E. 2004,06)
19. Explain, in brief, the term 'leadership' as an element of directing.
(c.8.s.E.2006)
20. Briefly state any three elements of 'directing'.
(c.8.s.E.2007)
l Mark
21. List two principles of directing.
Ans. (i) Principle of individual maximum contribution.
(ii) Principle of harmony of objectives.
22 What is the meaning of 'Principle of Follow Through' of directing?
Ans. To see to what extent the employees are following the management.
23. Give any two elements of directing.
(c.8.s.E.2009)
Ans. (i) Supervision (ii) Leadership
24. What is the total number of elements of directing?
Ans. Four.
OrrryS,*ion
For this query session, questions from readers' side are invited.
suPrRUl$t0il:
MTA]II]IG A]ID IMPIIRIA]IGE
Supervlsion translates plans into action
Learning Objectives
After studying this chapter, you will be acquainted with:
o Meaning of Superuision
. Delinitions o/ Superuision
a Charocteristics o/Superuision
o Role of Superuisor
o Impoftance of Superuision
a Diflerence between Direction and Superuision
I Meaning of Supervision
The word'supervision' is formed by joiningtwo words
'super'and 'vision' The fornrer means bestand the latter
means view Hence, the literal meaning of supervision is
best view. i.e., maintaining the best view possible on the
Supenrision ?
work of one's subordinates. Supervision includes both It
refers to monitor the progress of routine
looking into the work of subordinates as well as guiding work
of one's subordinates ond guiding
them
properly.
them properly.
I Definitions of Supervision
Various management experts have defined supervision as
follows:
(1) According to Davis. "strperui.sior,- is the
t'unction ol
os.suring that tl-te u,ork is being dorrc as per plan and
insfructiorr-s
(2) According to Viteles, "superrri.siorr re.fers
Supervisor ?
to the
direct ond intntediote guidonce ortd control oi It
relers to a person who ouersees whot is
subordinote.s in the performonce ol fhei;. tosk "
being done by subordinotes ond giue
res,ources.
Supervision: Meaning and Importance
179
I Characteristics of Supervision
The following are the main characteristics or features of supervision:
(1) It is a universal activity performed at all levels of management.
(2) It is an important part of the directing function of management.
(3) It is a continuous process since supervision is required at all times.
(4) It is very necessary to have face to face contact between the supervisor
and his
subordinates. In other words, supervision cannot take place in abshact
form.
(5) It ensures that work is proceeding as per the required level of
performance.
(6) It aims at ensuring optimum utilisation of human and other resources.
(7) As we move down the various levels of management, supervision keeps
growing in
importance. It has special importance for lower level managers, i.e.,
the managers on
the firing line.
Business Studies
etc.
takes place. The problem is at once solved because the employees are always
them a
lesson of discipline. when special attention is given to the ernployees durin
r every
problem is solved at the first instance, this builds pressure o., ih"i, mind to
(5) Feedback: During supervision, a supervisor is always in
direct contactwith his subordinates. As
a result, ideas, suggestions, complaints, etc. of employees with regard to
managerial decisions are
continuously received by the supervisor. This facilitates the process of receiving
feedback and helps to
take better managerial decisions.
(6) lmproves Communication: Whenever a sifuation of dispute arises between
any two parties,
the main reason for it is lack of communication. Under supervision, supervisor
gives orders
and directions
to his subordinates. Also he in turn receives feedback from them. On the Lther
hand, subordinates
communicate their ideas, suggestions, complaints, etc. to the supervisor. In this
manner, a friendly
atmosphere is created between both the parties. This strengthens fiee
communication.
(7) Improves Motivation: Every employee aspires to see himself as an
important part of the
organisation. During supervision, a supervisor divides the work in a manner that
every person
feels the
responsibility for an important job in the organisation. By getting this kind of
importancl,
an employee
feels motivated and renders his responsibility with more diligeni'e.
(Note: All the 7 points of importance can be seen in form of job of a
supervisor
as well.)
! Difference between Direction and Supervision
Basis of Difference Direction
Supervision
(1)Meaning It refers to instructing, guiding,
It refers to monitoring the progress of
communicating and inspiring people
routine work of one's subordinates
so that the objective can be achieved.
and quidinq them orooerlv.
(2)Scope Its scope is wider as supervision is one
Its scope is nanower as it is one of the
of the elements of it.
elements of direction.
6 Marks
1. A supervisor is not at all required in an organisation. Do you agree?
Give reasons in support of your
answer.
2. "Thepostof supervisorshouldbeabolishedinthehierarchyof managers."
React. (C,8.5.E,2001)
3. "Supervision is an important element of directing function." Explain
any four reasons in support of the
above statement.
(C.8. S.E. Sompl e Paper)
4/5 Marks
4. How supervision is helpful in the improvement of communication and
motivation?
5. 'Supervision is not at all required in an organisation.' Do you agree?
Give two reasons in support of your
answer.
(c.8.s.E.2008)
3 Marks
6. Define the term supervision.
(c.8,s.E.2001)
7. "The post of supervisor should be abolished in the hierarchy of
managers. " Do you agree? Give any
three reasons in support ofyour answer.
(c.8.s.E.2004)
8. What is meant by 'supervision'?
(c.8.s.E.2004,06)
9. State three characteristics of supervision.
10. Enumerate any two functions of a supervisor.
(c.8.s.E..2005)
1 1. Explain how supervision facilitates control.
(c.8.8.E.2006)
12. Explain how supervision helps in optimal utilization of resources.
(c.8.s.E.2006)
13. Distinguish between 'Direction' and 'Supervision'.
(c.8.s.E.2007)
l Mark
14. What is meantby'supemision'?
(Foreign2009)
Ans. Supervision means to monitoring the progress of work of one's
subordinates and guiding them
properly.
15. Who is a supervisor?
(N.C.E.R.T./
Ans. A supervisor is a person who oversees what is being done by
subordinates and gives instructions to
ensure optimum utilisation of resources.
16. Supewision is related to which leveVs of management?
Ans. To all the three levels.
17. State two points of importance of supenrision.
Ans. (i) Ensures issuing instructions. (ii) Facilitates control.
18. How supervision is helpful in maintaining discipline?
Ans. Through close eye and timely guidance of the employees.
79. How does a supervisor act as a linking pin between
management and the operatives?
(c.B.s.E.2009)
Ans. The supervisor is a link between management and the
operatives as he conveys management ideas
to the operatives (workers) on one hand and operatives problems to the
management on the other.
Qrr,, Session
For this query session, questions from readers' side are invited.
MIlTIUAIIllil:
MTIII I lIG A1{ D I M PII NTAil G T
'rPoorly motivated people can nultify the soundest organisation.,,- Allen
Learning Objectives
After studying this chapter, you will be acquainted with:
. Meoning ol Motiuation
a Definitions of Motiuation
a Characteristics of Motiuation
a Motiuation Process
o Importonce of Motiuation
o Maslow's Need-Hierachy Theory
o Monetary and Non-Monetary Incentiues
a Dtlerence between Monetary and Non-Monetary Incentiues
of the organisation by
organising the activities of various persons working in the organisation. By
various p".ron,
we mean
humon factor in production on whose efficiency the utility of nin,hun-ian
the
willingness to do the work. So far a*s the first factor is concerned it can be
! Meaning of Motivation
Whenever a person does some work there is always a Fire-Butter-
Flame Relationship
need behind it which motivates him in doing so. This In order to
utilize completely the copacitg of
impelling need is called motive Under motivation, the will the workers the
late.nt (hidden) lire of their
to do a work is aroused among the people by making them capacity or
ability has to be fed with the
butter of
motiuation. This resufts in a brilliant
feel the motive behind their work. Motivation is derived
flome ol work
efficiency and the manager
from the word 'motive' which means that latent power in a succeeds in his
objectiue.
Motivation: Meaning and Importance
183
vyDepends
q9
Created
Motivation
1. Moneytary lncentives
1. Non-Monetary lncentives I
I
, Examoles
\-7 ,
e9
1. Pay and Allowances
2. Productivity Linked 2.
Organisational Climate
Wage lncentives 3.
Career Advancement Opportunity
3. Bonus 4.
Job Enrichment
4 Profit Sharing 5.
Employee Recognition Programmes
5. Co-partnership 6.
Job Security
6. Retirement Benefits 7.
Employee Participation
T.Perquisites 8.
Employee Empowerrnent
an intemol etcpefience.
Many scholars have given different definitions on the basis of
their experience from time to time. Some of the prominent definitions are the
following.
(1) AccordingtoKoontzandO'Donnell,'Tomotiuate
is to induce people to ocr ilt o desire:ci rllorlner
(2) According to W.G. Scott, 'Nlotilotiort nreorr.s .r
Motivation?
process ol stintttlating people to octiot-t to ttccomplish
desirecJ -qon/s " It
refersto thot process which ucitespeople
to
work for the attainment of o desired
784
Business Studies
! Characteristics of Motivation
On the basis of opinions expressed by various
Motivators?
scholars, the chief characteristics of motivation are the It refers to
that technique which is employed
following: to motiuote
people, such os, bonus, job
(1) Motivation is an Internal Feeling: Motivation security, etc.
is a technique of
motivation. The employees who desire to be promoted definitely improve
! Motivation Process
The objective of motivation process is to know as to where from does it
start
and where does it end.
This is a work that cannot be finished at one go. It is a combination of
various
steps. Robbins and
Coulter have presented the following ,Need-Satisfuing process,:
( 1) Unsatisfied Need:
At the first step of motivation a person feels the
need of something or there
is
a feeling that he lack something.
(2) Tension: The person concerned gets tensed at the very
idea of his need
not being satisfied.
(3) Drives: Drive signifies some sort of fumult in the mind
of the person
concerned. At this step the
person concerned endeavours to fulfil his need. The fulfilment
of need depends on
the direction and
intensity of the drive.
(4) Search Behaviour: At this step, a person tries to
discover different
options to fulfil his need. He
puts the best option into operation.
(5) Need Satisfied: If the option really happens to be
a correct one,
satisfaction is obtained.
Motivation: Meaning and Importance
185
(6) Reduction of Tension: The person concerned gets his tension relieved when
his need is
satisfied.
Conclusion: The above motivation process shows that when a person gives a good
work
performance, there is some need lurking in the background which is continuously
exerting pressure on
him. Therefore, needs continuously motive a person.
f Importance of Motivation
Rensis Likert, while pointing out the importance of motivation, has called it
the 'core of
management'. Similarly, Allen while stressing the need and importance of motivation
has observed
that 'poorly motiuated people can nullify the soundest organisation.' The
importance of motivation is
brought out by the following facts:
(1) Improves Performance Level: The ability to do work and willingness to do
work both affect
the efficiency of a person. The ability to do work is obtained with the help of
education and training and
willingness to do work is obtained with the help of motivation. Willingness is
more important in
comparison to ability. For example, a person is highly educated and he is recruited
on this very basis. But
it is not essentialthat he willdo outstanding work. He shall have to be motivated
to do good work. This is
possible only through motivation. Therefore, motivation improves efficiency. The
efficiency of a person is
reflected through increase in productivity and decrease in costs.
(2) Helps to change Negative or Indifferent Attitudes of Employees: Some
employees of an
organisation have a negative attitude. They always think that doing more work will
not bring any credit. A
manager uses various techniques to change this attifude. For example, if the
financial situation of such an
employee is weak, he gives him a raise in his remuneration and if his financial
condition is satisfactory he
motivates him by praising his work.
(3) Reduction in Employee Turnover: The reputation of an organisation is
affected by the
employee turnover. This creates a lot of problems for the managers. A lot of time
and money go waste in
repeatedly recruiting employees and giving them education and training. Only
motivation can save an
organisation from such a wastage. Motivated people work for a longer time in
the organisation and there is
a decline in the rate of furnover.
(4) Helps to Reduce Absenteeism in the Organisation: In some of the
organisations, the rate
of absenteeism is high. There are many causes for this - poor work conditions, poor
relations with
colleagues and superiors, no recognition in the organisation, insufficient reward,
etc. A manager removes
all such deficiencies and motivates the employees. Motivated employees do not
remain absent from work
as the work place becomes a source of joy for them
(5) Reduction in Resistance to Change: New change continue taking place in the
organisation.
Normally workers are not prepared to accept any changes in their normal routine.
Whereas it becomes
essential to bring in some changes because of the demands of time. Employees can be
made to accept
such changes easily with the help of motivation. Motivated people accept these
changes enthusiastically
and improve their work performance.
186
Business Studies
Abraham Maslow
/s\
Self-Actualisation
(1908-1970)
Needs
/ esteerlueeds \
z\
Safety or Security Needs \
t.\
Physiological Needs \
(i) Physiological Needs: In this category, those needs are included which need
to be satisfied to
keep a man-alive. These needs include food, shelter, clothing and sleep, etc.
(ii) Safety or Security Needs: After physiological needs are satisfied, a
man thinks about his
safety. Safety needs include physical and economic needs. Physicol Safety refers to
def.ence against
accidents, attacks, diseases and other unexpected problems. Economic Sofety means
safety of
livelihood and arrangement for old age.
(iii) Affiliation or Social Needs: Man is a socialanimal and wanh to live in
society honourably. It
is, therefore, necessary that he should have friends and relatives with whom he can
share his joys and
sorrows. Maslow has placed social needs at number three in order of priority.
(iv) Esteem Needs: These needs are called ego needs of man. This means every
human being
wants to attain a higher stafus so that his power increases and he gets authority.
(v) Self Actualisation Needs: Self-actualisation needs refer to the disire to
maximize whatever
potential an individual possesses. For example, a musician wants to be proficient
in music. Similarly, a
poet wants to be a specialist in his field.
Motivation: Meaning and Importance
787
(Table - 1)
(Table - 2)
(1) Individual Need Hierarchy: An individual's needs outside the
organisation which motivate
him have been shown in Table 1.
(2) Organisation Related Need Hierarchy: The order of needs motivating
an individual in the
organisation have been shown in Table 2.
. Conclusion
The above analysis shows that an individual has many needs and that
their order can be determined.
The moment an individual's one need is satisfied, he gets worried about his next
need. After the
satisfaction of the second need comes the third and this order continues till all
his needs are satisfied. It is,
therfore, clear that needs can be motivators. In order to satisfy needs an
individual himself wants to work
with vigour and full capacity.
o Criticisms
If the special study is not undertaken, Maslow's theory of hierarchy of needs
will appear to be right.
However, many researchers have opposed this theory and given their own criticisms
which are as under:
(i) Maslow's hierarchy of needs is not permanent. This changes according to
the sifuation.
(ii) It is not necessary that the needs of only one category be strong at a
time and the remaining remain
unimportant.
At the time of
makes his
contribution.
are also the partners in the equity capital. Consequently, the retirement the
employee gets the
employees get dividend as well as participation in accumulated amount
olongwith interest.
Gratuity?
ln ol the
seruices rendered by the
token
equity shares of the company may be issued to the employee, the
emploger makes some
employees in two ways: poyment to employ
r.uhich is called gratuity.
Motivation: Meaning and Importance
189
The rank of an employee is directly linked with his authorip, responsibility and
other facilities (e.g. a
separate cabin, costly furnifure, car, peon, P.A. etc. ) . Everybody has a wish for
a higher stafus. Therefore,
the employees can be motivated by raising their rank or position. The attainment of
a higher status fulfils
the psychological, social and esteem related needs.
6 Marks
1. Define 'Motivation'. Explain how motivation conhibutes to the success
of an organisation.
(c.8.s.E.2001)
2. Explain the term 'Motivation'. Why is it important to motivate
employees in an organisation?
(c.8.s.E.2002)
3. "lt is through motivation the managers can inspire their subordinates
to give their best to the
organisation."Inthelightofthisstatement,giveinbrief,theimportanceofmotivation.
(C.8.5.E.2003)
4. To create a desire among employees to perform at the highest level of
their abilities is an important aspect
of directing. Explain how this work in the success of an
organisation.
5. Explain the process of motivation
(N.C.E.R.T.)
4/5 Marks
6. State any four characteristics of motivation.
7. 'lt is only motivation through which the managers can inspire their
subordinates to give their best to the
organisation.' In the light of this statement explain any four points
of importance of motivation.
(c.8.s.E.2008)
3 Marks
8 Define Motivation.
(N,C.E,R,T,)
9 State the meaning of motive, motivation and motivators.
10 Motivation helps to reduce absenteeism in the organisation. Clarifiy.
r92
Business Sfudies
l Mark
11. The level of ability to do certain work of a person depends on what?
Ans. On education and training.
12. The willingness to do the certain work of a person depends on what?
Ans. On motivation.
13. What do you mean by 'motive'?
Ans. Motive refers to the latent power of a person which impels him
to do a work.
14. What is meant by'motivation' as an element of directing?
(Foreign2009)
Ans. It means a process which excites people to work for the
attainment of a desired objective.
15. Name the first step of motivation process.
Ans. Unsatisfied need.
76. Give any two points of the importance of motivation.
Ans. (a) Improves performance level (b) Reduction in employees
furnover.
6 Marks
77 . Discuss Maslow's Need-Hierarchy theory of motivation.
(N.C.E.R.T.)
4/5 Marks
18. Maslow's need-hierarchy is considered fundamental to understanding
of motivation. Explain the role of
need-hierachy in motivation.
(C.8.5.E.200g)
3 Marks
19. Explain 'Esteem Needs' of an employee.
20. On which two bases Maslow's Hierarchy of Needs can be criticised?
27. Give an example of Individual Need Hierarchy.
22. What is meant by Need Hierarchy?
l Mark
23. Narhe the need which is satisfied first of all.
Ans. Physiological needs.
24. Food, clothing and Shelter are the examples of which type of needs?
Ans. Physiological needs.
25. What is meant by Physical Safety?
Ans. It refers to defence against accidents, attack, diseases and
other unexpected problems.
26. What is Economic Safety?
Ans. It refers to safety of livelihood and arrangement for old age.
27. What is Physical Safety?
Ans. It refers to defence against accidents, attacks, diseases and
other emergencies.
28. Give one assumption of Maslow's Theory.
Ans. There are many needs of people and their order can be made.
29. Give one criticism of Maslow's Theory.
Ans. Maslow's hierarchy of needs is not permanent.
Motivation: Meaning and Importance
193
6 Marks
30. What is meant by 'Monetary Incentives'? State any five types of
monetary incentives which contribute to
the performance of employees.
(C.8.5.E.2004)
31. What is meant by 'Non-monetary lncentives'? State any five of non-
monetary incentives which
contribute to the performance of employees.
(C.B.S.E. 2004)
32. Explain 'Bonus', 'Profit Sharing' and 'Co-partnership' as monetary
incentives.
33. "Human beings cannot be motivated only through monetary incentives;
non-monetary incentives are
also necessary to motivate them." Explain any four such non-monetary
incentives. (C.8.5.E.2009)
3 Marks
35. Enumerate any six non-monetary incentives.
(C.8.5.E.2002)
36. Give three examples to establish employee recognition.
37 . Distinguish between'monetary'and 'non-monetary' incentives.
(C.8.5.E.20071
l Mark
38. Give the types of Incentives.
Ans. (a) Monetary lncentives (b) Non-monetary Incentives.
39. What is meant by'Financial Incentives'?
Ans. It refers to those incentives which are evaluated in terms of
money.
40. What is meant by'Bonus' as a type of monetary incentive?
Ans. It refers to that payment to employees in addition to their
regular remuneration which is paid as a
reward of their good services.
41. What is meant by'Profit Sharing'?
Ans. It refers to providing share in profit of the organisation io the
employees besides their regular
remuneration.
42. Give two examples of Retirement Benefits.
Ans. (o) Provident Fund (b) Gratuity.
43. What is meant by 'Job Enrichment' as a type of non-monetary incentive?
Ans. It refers to increasing the importance of work.
t4] Rajat a sales manager, achieved his sales targeb one month in advance.
This
the
company.
1. Name the incentive provided to Rajat. 2.ldennfu the type of
incentive.
3. List two other incentives of the type identified in part (2).
Ans: (i) Non-financial incentive (ii) Employee-recognition programme
(iii) (o) Career advancement opportunity (b) Employee
participation
For this query session, questions from readers, side are invited.
rs
ltADtRSlllP:
M EA]I I 1I G A1I II
IM Pll RIA]I GT
Learning Obiectives
After studying this chapter, you will be acquainted with:
o Meaning ol Leadership
o Definitions ol Leadership
. Chorocter'stia ol Leadership
a Woys to lnfluence Subordinotes
o Monogership ond Leodership
. lmportonce of Leadership
o Qualities ol a Good Leader
! Meaning of Leadership
According to one estimate, employees use only 60% of their
capacity. However, it is essential to utilise the remaining40% ot
their capacity for the easy attainment of the pre-determined
Leadership?
objectives of the enterprise. This is possible only when they are It relers to
influence others in such a
inspired to work with greater dedication and fuller enthusiasm. manner to
do work what the leoder
Such inspiration or guidance can be given by an executive who is wants them
to do.
not only an efficient manager but a good leader also. A leader is
an individual who exercises his influence on all the persons in a group in such a
manner as to make them
work with complete enthusiasm and confidence and to their fullest capacity for the
attainment of the
objectives of the enterprise. Such qualities of a leader are called leadership.
I Definitions of Leadership
Following are the opinions of various scholars in respect of
leadership:
(1) According to Koontz and O'Donnell, ''Leadership may'
Leader?
be det'ined os the obility' to exert interpersonol influence b'''
meons ot' commtrnicotion tou,ard the ochieuement of a
It referc to that Wrson who hos the
I Characteristics of Leadership
After analysing the definitions of leadership, the
following major characteristics become quite apparent:
(1) lnfluencing Process: Leadership is in the Some Companies
and their
form of an influencingprocess. Here influencingmeans
Leaders
bringing others under one's own influence. A leader
* Microsoft
Bill Gates
* Reliance Industries
Dhirubhai Ambani
behaves with his followers in such a way that they
* Infosl,s
Narayana Murlhy
automatically come under his influence, They start
working as they are told by their leader. It is said that * Tata
J.R.D. Tata
the excrcise of irtfiuencre is the essence of leadership. * Wipro Azim P
(2) Behaviour Changing Process: Leadership
has the power to change the behaviour of their followers. A manager who has this
ability gets a better
work performance from his subordinates.
(3) Interpersonal Relations between Leader and Fotlowers: The chief
requirement of
leadership is the presence of followers. One cannot think of leadership without
followers. Without
followers a leader has no existence. In order to make leadership meaningful, it is
imperative to have
followers (or employees) to work with him. Therefore, leadership indicates
interpersonal relations
between the leader and the followers.
(4) Common Goals Achieving: A prominent f.eature of leadership is the
achievement of common
goals. It means it achieves not only the objectives of the organisation but also
individual goals.
(5) Continuous Process: A manager has to use his leadership ability
continuously. It means that it
is needed not on any particular occasion but is needed all the time.
the followers.
Formal authority
lnformal authority. The followers
f lmportance of Leadership
Leadership plays an important part in the success of any organisation. In the
absence of effective
leadership no organisation can work efficiently. An organisation is created with
the purpose of achieving
certain objectives through a human group, it becomes essential to control this
human group.
Koontz and O'Donnell have clarified the importance of leadership in the
following diagram:
lnduced by
40%
Leadership
Social Pressure
Need for a Job
Authority of Superior
The above mentioned facts clearly show that the employees utilise 607o of
their capability without
any additional effort as has been shown in the lower part of the diagram. The upper
part of the diagram
shows that if the manager uses his leadership abilip and motivates his subordinates
the remaining 40% of
their capability can also be utilised. According to this view, leadership is the
key to the success of any
business enterprise.
The importance of leadership is highlighted by the following facts:
(1) Helps in Influencing the Behaviour of People: A manager influences his
subordinates with
his leadership ability. He brings them under his control in such a way that they
put in their best effort to
achieve the goals of the organisation. Good leaders always get good results
through their followers.
198
Business Studies
relationship with
his followers and tries to fulfil their needs. Why does a human group follow a
particular person? It can be
said in reply to this question - because that particular person provides them
security, provides them the
opportunities to earn wealth, gives them the right to work and tries to understand
their feelings. That is
why people follow him. A person who takes care of the above mentioned needs of the
employees, they
willingly accept him. Consequently, they work with complete dedication and
enthusiasm.
(3) Helps in I ntroducing Required Changes: These days the business
environment
is changing
rapidly. In order to face the changing environment, many changes have got to be
inhoduced in the
organisation. Since the people already happen to be under the influence of the
leader, he readily makes
them agree to implement these changes. In this way, the possible opposition to the
change is eliminated
with the strength of leadership ability.
(4) Helps in Solving Conflicts Effectively: A leader can solve every tyrpe
of conflict (employees
vs employees and employees vs employer) eff.ectively under the weight of his
influence. A leader always
allows his followers the freedom to express their views. That is the reason that he
easily understands the
reality of the conflict. In this way, by understanding the nature of the conflict
he tries to provide timely
solution and minimises the possibility of adverse results.
(5) Helps in Training and Development of Subordinates: A leader proves
helpful in the
training and development of his subordinates. He provides them the information
about the modern
techniques of work. Not only this, he makes it possible for them to be good leaders
in future.
Conclusion: It is , therefore, clear that it is not only difficult but
impossible to achieve the goals of
the organisation in the absence of the leadership ability in spite of the good
organisational strucfure and
trained officers.
of a
leader. It is clear that only a healthy body possesses a healthy mind. On this
basis, it can be said that a
leader should be physically healthy so that he can influence his followers
effectively. Mental health
signifies that he should be a person of sound and clear thoughts. In other words,
he should quickly
understand others and make others understand him easily.
(2) Knowledge:Aleaderhastofacevarious problems. Itrequiresalotof
knowledgeand
wisdom
to handle problems successfully. A leader can face the problems successfully and
with the help of his
wisdom and knowledge can solve them quickly and impartially.
(3) Integrity: It is of vital importance that a leader has integrity.
Integrity signifies the fact that
a
leader's working method should reflect goodwill, huth, unmalice and morality. A
leader is a link between
the employer and the employees. He should, therefore, work with total dedication.
For example, the
employer should be made aware of any possible loss before hand and simultaneously,
he should not hold
any false promises to the employees.
(4) Initiative: It is important for a leader to have initiative. A leader
possessed
give
should not do anything that can injure the feelings of his followers. In addition
to this, he should not
lecture to others but should behave in a manner that he expects from
others.
6 Marks
1. What do you mean by 'Leadership'? Explain four characteristics of it.
2. "Leadership is considered as the most important element of the
directing function of management." In
the light of this statement, explain the importance of leadership.
(c.B.s.E.2003)
4/5 Marks
3. "Leadership is considered as the most important element of directing."
In the tight of this statement
explain any four points of importance of [eadership.
(Foreign2009)
4. "Leadership is required only for less efficient subordinates." Do you
agree? Explain any four reasons in
support ofyour answer.
(c.8.s.E.2009)
5. "All managers are leaders, but all leaders are not managers." Do you
agree with this statement? Give any
three reasons in support of your answer.
G.B.S.E.200S)
6. "All managers are leaders but all leaders are not managers." In the
light of this statement differentiate
between leadership and management.
(c.8.s.E.2009)
3 Marks
7. 'Leadership is an essential element of directing ' State any three
reasons why it is essential.
(c.8.s.E.2008)
8. Distinguish between L-eaders and managers.
(N.C.E.R.T.)
Or
Differentiate between'Leadership' and'Management
(c.8.s.E.2007)
l Mark
What is meant by 'Leadership'?
Ans. Leadership means that quatity which influences people for the
attainment of a goal.
10 Define the term Leadership.
Ans. According to George R. Terry, "Leadership is the
obility of int'luencing people to striue willingly
for mutuol objectiues."
11 What is meant by'Leader'?
Ans. Person who has the ability to influence others.
72 Bill Gates is a leader of which company?
Ans. Microsoft.
13 'Leadership is a part of management but not all of
it.' Clarify.
Ans. Leadership is an element of directing function of management.
t4 'Leadership transforms potential into reality.' How?
Ans. Through influencing subordinates.
15 Distinguish between Managership and Leadership on the basis of 'scope'.
Ans. The scope of managership is wider than leadership.
16 State one point of the importance of leadership.
Ans. It helps in influencing the behaviour of subordinates.
Leadership: Meaning and Importance
207
6 Marks
. Which qualities willyou, as a manager, like to have of a good leader?
17
(C.8.5.E.2001)
18. "Effectiveness of a manager depends on his ability to communicate
effectively." Explain how?
(c.8.s.E.2009)
19. In an organisation there are many leaders. But a good leader must be a
distinguished one. Suggest any
four qualities that a good leader must possess.
(C.B.S.E. Sample Paper)
3 Marks
20. State any three qualities of a good leader.
(c.8,s,E,2006)
27. List any six qualities of good leader.
(c.8.s.E.2006)
22. To be a successful leader, one must possess some qualities. State any
three such qualities of a
leader.
(c.8.s.E.2008)
l Mark
'A healthy body possesses a healthy mind.' This statement is related to
which quality of a
good leader?
Ans. Physical features.
Why should a leader has the quality of 'knowledge'?
Ans. To face various problems.
25 What is meant by'Integrity'.
Ans. Integrity refers to the fact that a leader's working method
should reflect tuth, unmalice and morality.
26 'A leader does not wait for opportunities but creates them.' This
statement is related to
which quality of a good leader?
(C, B. S.E. Somple Paper)
Ans. Initiative.
(lrrry Session
For this query session, questions from readers' side are invited.