Unit-2 Functional Management 2.

Unit

2
Functional Management
SI
A GROUP

Syllabus
Functional Management : Human Resource Management (HRM) Concepts of HRM, Basic Functions of HR Manager:
Manpower Planning, Recruitment, Selection, Training and Development, Wage and Salary Administration Performance
Appraisal, Grievance Handling and Welfare Administration, Job Evaluation and Merit Rating – Marketing Management:
Concepts of Marketing, Marketing Mix Elements and Marketing Strategies.

Learning Objectives

After Studying this unit, one would be able to understand,

 The Meaning, Objectives and Importance of HRM.

 The Concepts of HRM i.e., HRD, Personnel Management and Industrial Relations.

 Basic Functions of HR Manager – Manpower Planning, Recruitment, Selection, Training and Development,
Wage and Salary Administration, Performance appraisal, Grievance Handling and Welfare
Administration, Job Evaluation and Merit Rating.
 Marketing Management – Concepts of Marketing, Elements of Marketing Mix and Marketing
Strategies.

Introduction

Human Resource Management (HRM) is concerned with the human beings in an organization. It is a
managerial function which facilitates the effective utilization of people in achieving organizational
and individual goals. The concepts related to HRM are Human Resource Development (HRD), Personnel
Management and Industrial Relations (IR).

HR Manager has an important role to play in an organization. The functions of HR manager include
manpower planning, recruitment, selection, training and development, wage and salary administration,
performance appraisal, grievance handling, welfare administration, job evaluation and merit rating.

Marketing management is the process of performing business activities through management. Profit
maximization and customer satisfaction are the two main objectives of 'marketing management'. Marketing
mix is a mix of marketing components which are used by the company in achieving its marketing objectives.
The elements of marketing mix are product, place, promotion and price.
2.2 Management and Organisational Behaviour [JNTU-Kakinada]

2.1 Human Resource Management (HRM) – Definition, Objectives and

Importance
Q1. Define Human Resource Management (HRM). Discuss its objectives and importance.
Answer :
Definition of Human Resource Management (HRM)
According to Milkovich & Boudreau, “Human Resource Management is a series of decisions that affect the relationship
between employees and employers; it affects many constituencies and is intended to influence the effectiveness of employees and
employers”.
Human Resource Management (HRM) is concerned with the human beings in an organization. It is a managerial function
which facilitates the effective utilization of people (manpower) in achieving the organizational and individual goals. Earlier
HRM was called by different names like Personnel Management, Staff Management, Manpower Management, Labour Relations,
Industrial Relations, Labour Management, Employee-Employer Relations.
Objectives of HRM
The objectives of HRM are as follows,
1. To guide the organization in attaining its goals by providing well-trained and competent personnel.
2. To effectively utilize the available human resources according to the requirements.
3. To increase the job satisfaction and self-actualization of the personnel by encouraging them to realise their potential.
4. To develop, maintain and motivate productive and self-respecting working relationship among all the members of the
organisation.
5. To develop the individuals upto a maximum extent by providing them the necessary training and advancement.
6. To develop and maintain high morale and cordial relations within the organization.
7. To recognize and satisfy the individual needs and group goals by providing monetary and non-monetary incentives.
Importance of HRM
The importance of HRM can be understood from the following points,
1. HRM serves as a means for achieving organizational objectives.
2. HRM ensures the development of personnel. It provides them a good working atmosphere, motivates them and moulds
their attitude and behaviour according to organizational requirements.
3. It effectively utilizes the available resources to its full potential.
4. It creates hierarchy/structure in an organization.
5. It frames the policies of the organization.
6. It helps in creation of mission, vision and objectives of organization.
Q2. Define Human Resource Management. Explain the important functions of HRM.
Answer : [Model Paper-I, Q3 | April-18, Set-2, Q4(a)]

Definition of Human Resource Management (HRM)

According to National Institute of Personnel Management (NIPM), India, “The part of management which is concerned
with the people at work and with their relationship within an enterprise. It aims to bring together and develop into an effective
organization of the men and women who make up an enterprise and having regard for the well-being of the individuals and of
working groups, to enable them to make their best contribution to its success”.
Functions of HRM
The functions of Human Resource Management (HRM) are presented in the below figure,

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 Unit-2 Functional Management 2.3

HRM Functions HRM Functions HRM Functions

Operative Functions OperativeFunctions

Managerial Functions Managerial
Operative Functions Managerial Functions

Planning Organizing DirectingPlanning Organizing

Controlling DirectingPlanning
Controlling
Organizing Directing Controlling

Acquisition Acquisition
Development Development
Integration Acquisition Integration
Maintenance Development Maintenance
Compensation Integration Compensation
Maintenance Compensation
Motivation Motivation
Organizational Motivation
Organizational Organizational
Job Analysis Job Analysis Job Analysis Health Job Evaluation Job Evaluation Job Evaluation
Performance Performance Performance Health Health
Job Satisfaction Job Satisfaction Job Satisfaction
HRP AppraisalHRP AppraisalHRP HR Audit Appraisal Wage and HRsalary
Audit Wage and
HR salary
Audit Wage and salary
Grievance Grievance Administration Grievance Administration Administration
Training Recruitment Training Training
Recruitment Handling RecruitmentHR Accounting
Handling Incentives Handling
HR Accounting Incentives
HR Accounting Incentives
Collective Collective Collective
Selection Selection
Career Planning Career Selection
Planning Career Bonus
Planning Bonus Bonus
Bargaining Bargaining Bargaining
and
and
Placement Employee
Career Development Employeeand Employee
Placement Career Development Placement Career Development
Fringe Benefits Participation Fringe Benefits Fringe Benefits
Participation Participation

Induction Discipline Induction Discipline Discipline

Induction

Transfer Transfer Transfer

Promotion and demotion Promotion and demotion Promotion and demotion

Figure: Functions of HRM

1. Managerial Functions
The managerial functions are performed in general by each and every manager which are as follows,
(a) Planning
Planning is a predetermined course of action. It is concerned with determining organizational goals and formulating the
policies and procedures for attaining those goals. Planning is future-oriented and charts out the directions for attaining the
goals.
(b) Organizing
Organizing is the method of achieving the planned task. It is the process of allocating the jobs in the direction of achieving
the goals. Organizing includes the activities like allocation of tasks to the sub-ordinates, establishing departments, delegation
of authority, establishing channels of communication, co-ordination of work and so on.
(c) Directing
Directing is the process of activating and co-ordinating the individual and group efforts in order to achieve the goals and
objectives. Directing includes the activities such as maintaining morale, getting things done with sub-ordinates, motivating
the sub-ordinates etc., in accordance with goal achievement.
(d) Controlling
Controlling which is the process of checking the performance to confirm whether the activities are going according to the
plans made. Controlling involves the activities like setting performance standards, checking, verifying and comparing the
actual with the plans and taking corrective action if needed.
2. Operative Functions
The operative functions are the functions related to a particular department or section. Effectively performed operative
functions of HRM ensure placing right people on the right jobs at the right times. The operative functions include activities like,
(a) Acquisition
Acquisition involves acquiring right kind of people and placing them in right positions in tune with organizational
requirements. Acquisition includes these activities,
(i) Job Analysis
Job analysis is a method of collecting and analyzing the facts related to a particular job in order to identify the job
contents, job requirements, job related duties and responsibilities and the characteristics of the person intending to
do that job.
2.4 Management and Organisational Behaviour [JNTU-Kakinada]
(ii) Human Resource Planning/Manpower Planning
Manpower planning is forecasting the manpower (skills, knowledge, abilities, values, commitment, motivation and
the number of employees) requirements of an organization and the future supply of manpower.
(iii) Recruitment
It is the process of searching for prospective employees and encouraging them to apply for the jobs in the organization.
(iv) Selection
It is the process of choosing the best qualified and most suitable candidate for each vacant position.
(v) Placement
It is the process of determining the job which will be given to selected candidate.
(vi) Induction
It is the process of receiving and welcoming an employee when he first joins a company and giving him the basic
information he needs to settle down quickly and start the work.
(vii) Transfer
It is the moving of an employee to the same level of job where their potentialities can be more effectively utilized.
(viii) Promotion and Demotion
Promotion is the upward movement of an employee to occupy higher position. Demotion is the downward movement
of an employee in the organization.
(b) Development
Development is the process meant to improve the knowledge, skills, aptitudes and values of employees so that they can
better contribute to their job. Development includes the following activities,
(i) Performance Appraisal
It is the method of evaluating the behaviour of employees in the workspot including both quantitative and qualitative
aspects of performing the job.
(ii) Training
It is the act of improving the knowledge, skills and abilities of an employee to do a particular job.
(iii) Career Planning and Career Development
Career planning is the process by which one selects career goals and the path to these goals. Career development is
that personal improvement one undertakes to achieve his/her personal career plan.
(c) Integration
Integration is the process of reconciling and reuniting the organizational goals with it’s members. Integration involves the
activities like,
(i) Motivation
It is the act of stimulating and inspiring the subordinates to achieve the goals of the organization.
(ii) Job Satisfaction
Job satisfaction is the result of various attitudes the employee holds towards his job related factors.
(iii) Grievance Handling
Grievance is the sign of employee’s discontent/dissatisfaction with their job and its nature.
(iv) Employee Participation
It is the involvement of employees in organizational decision-making process.
(v) Discipline
It refers to a condition/attitude prevailing among the employees, with respect to rules and regulations of organization.

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Unit-2 Functional Management 2.5
(d) Maintenance
Maintenance includes the following activities,
(i) Organizational Health
It is studied through the result of employees contribution to the organization and the employee job satisfaction.
(ii) Human Resource Audit
It is the process of evaluating the policies, procedures and practices to determine the effectiveness of HRM.
(iii) Human Resource Accounting
It is the measurement of cost and value of human resources to the organization.
(e) Compensation
Compensation includes determining wages and salaries that match with contribution made by the employees to achieve
organizational goals. Compensation includes following activities,
(i) Job Evaluation
It is the process of determining the relative worth of jobs.
(ii) Wage and Salary Administration
It is the process of developing and operating a suitable wage and salary program.
(iii) Incentives
It is the additional payment to regular wages and salaries.
(iv) Fringe Benefits
It is the payment made by the management to motivate the employees and to meet their contingencies in life.

2.2 Concepts of HRM

Q3. What are concepts related to HRM? Explain.
Answer :
The various concepts of Human Resource Management (HRM) are,
1. Human Resource Development (HRD)
2. Personnel Management
3. Industrial Relations (IR)
1. Human Resource Development (HRD)
According to Leonard Nadler “HRD is a learning experience which is organised for a specific time, and designed to bring
about the possibility of behavioural change”.
According to Talam Venkateswara Rao (T.V.Rao) “HRD is a process by which the employees of an organisation are helped
in a continuous and planned way to develop their general capabilities as individuals and to effectively perform the present or future
roles and to develop a sound organisational culture, wherein harmonious superior-subordinate relations, team collaborations,
motivation, employee pride etc., exists.
2. Personnel Management
“Personnel Management is that phase of management, which deals with the effective control and use of manpower as
distinguished from other sources of power”.
E. Dale Yoder
“Personnel Management is that part of management’s process, which is primarily concerned with the human relationship
in an organization”.
E.F.L. Breach
3. Industrial Relations (IR)
“Industrial relations is that part of management which is concerned with the manpower of the enterprise whether operate,
skilled worker or manager”.
Bethel & Smith
“Industrial relations may be defined as the relations and interactions in the industry, particularly between labour and the
management as a result of their composite attitudes and approaches in regard to the management affairs of the industry not only
for the betterment of the management and worker but also to the industry and national economy”.
B.C. Memoria
2.6 Management and Organisational Behaviour [JNTU-Kakinada]
Q4. Distinguish between,
(a) Personnel Management and HRM.
(b) HRM and IR
(c) HRM and HRD.
OR
Compare and contrast HRM and HRD.
(Refer Only Topic: HRM and HRD)
Answer : [Model Paper-II, Q3(a) | April/May-19, Set-1, Q4(a)]

(a) Personnel Management and HRM

Differences between Personnel Management and Human Resource Management (HRM) are as follows,

S.No. Personnel Management Human Resource Management (HRM)

1. Personnel management is the management of people HRM is the management of employee’s skills, knowledge,
employed. abilities, talents, aptitudes, creative abilities etc.
2. Employee in personnel management is viewed as a commodity. Employee in HRM is considered as a resource.
3. Personnel management is a daily routine administrative HRM is a developmental process of the workforce over long
function. periods.
4. Personnel management takes a narrow view. It is reactive HRM takes a broader view. It is proactive and concerned with
and responds only when need arises. present and anticipates the future needs.
5. Personnel management believes that job satisfaction will HRM approves that good performance will lead to high
lead to improved performance. morale and satisfaction of employees.

(b) HRM and IR

Differences between Human Resource Management (HRM) and Industrial Relations (IR) are as follows,

S.No. Human Resource Management (HRM) Industrial Relations (IR)

1. Human resource management involves only two parties Industrial relations involves four parties i.e., employees,
i.e., employee and employer. employer, trade unions and government.
2. In HRM, grievance and disciplinary procedures are Collective bargaining and different types/forms of industrial
used for solving the employer and employee issues. conflicts are used for solving the problems.
3. The individual employee has an easy access over its The individual employee can directly contact the top level
superior. management.
(c) HRM and HRD
The term HRM (Human Resource Management) and HRD (Human Resource Development) are used interchangeably
sometimes but there are differences between HRM and HRD. Some of the differences between HRM and HRD are as follows,
S.No. Basis HRM HRD
1. Definition According to ‘Milkovich and Boundreau’ “HRM According to ‘Leonard Nadler’ “HRD is a learning
is a series of decisions that affect the relationship experience which is organized for a specific time and
between employees and employers, it affects designed to bring about the possibility of behavioural
many constituencies and is intended to influence change”.
the effectiveness of employees and employers”.
2. Scope The scope of HRM is wider. It includes HRD. The scope of HRD is narrow when compared to
HRM. HRD is a part of HRM.
3. Functions HRM includes functions like recruitment and HRD includes functions like training and
selection, compensation, placement, HR appraisal development, performance appraisal, career
and HRD activities. planning, quality of work life and employee welfare.
4. Nature HRM is a reactive function. HRD is a proactive function.
5. Focus HRM focuses on success and growth of an HRD focuses on adding value to teams, individuals
organization. and organization.

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Unit-2 Functional Management
2.3 Basic Functions of HR Manager Objectives of Manpower Planning
Q5. D escribe the functions of HR manager in an
organization. are as follows,
[Model Paper-III, Q3(a) | May/June-14, Set-1, Q3]
OR
Write a brief note on changing role of human
resource manager in the contemporary business
environment.
Answer : Jan./Feb.-15, Set-1, Q3
The functions of HR manager are as follows,
1. Training the employees for job which may be new to
them.
2. Placing the right person on the right job.
3. Developing the individual to realize his potential as an
individuals to a maximum extent.
4. Developing the capabilities of the individuals to help
them perform their present job in a better way.
5. Developing and maintaining high motivation level of
employees.
6. Appraising the individuals performance.
7. Selecting and recruiting new employees in the
organization.
8. Strengthening superior-subordinate relationship.
9. Strengthening team spirit among different teams.
10. Training and developing managers.
11. Promoting inter-team collaboration.
12. Promoting healthy relationship among the individual
employees of the organization.
13. Dealing with the issues related to promotion, demotion
and transfer of employees.
14. Managing wages and salaries.
15. Planning labour needs.
By observing the above roles of the Human Resource
Manager in any organization, we can say that his job is related to
the human resource needs of the organization and without efficient
and effective human resources no organization can survive.
2.3.1 Manpower Planning
Q6. What is Manpower Planning? What are its
objectives? What is the need and importance
of manpower planning?
Answer : The profile of the manpower in terms of age, sex,
Manpower Planning/HR Planning
Manpower planning is a process of analysing the present
and future vacancies that may occur as a result of retirements,
discharges, transfers, promotions, sick leave, leave of absence or
other reasons and an analysis of present and future expansion in
the various departments. Plans are then formulated for internal
shifts or cutbacks in manpower, for the training and development
of present employees, for advertising opening or for recruiting
and hiring new personnel with appropriate qualifications.
2.7
The objectives of manpower planning or HR planning
1. To maintain and improve the organisation's ability to
achieve its goal by developing strategies that will result
in optimum contribution of human resources.
2. To identify the areas where there are surplus personnel
or areas where there is a shortage of personnel.
3. To deduct the workforce if there are surplus personnel
and to add manpower if there is a shortage.
4. To meet the needs of the expansion programmes of the
organisation.
5. To meet the challenges of new and changing technology
and to adopt new technologies of production.
Need and Importance of Manpower Planning
In recent years, the need and importance of manpower
planning has increased for the following reasons.
1. Increasing Unemployment
Day after day, the number of educated unemployed are
increasing and there has been a shortage of skills, knowledge
and capabilities to do work. This situation demands for more
effective recruitment. Therefore, need for manpower planning
arises.
2. Technological Changes
The rapid changes in production technology, marketing
methods and management techniques have an impact on
the contents and contexts of jobs. These changes create
problems related to redundancies and retaining of personnel.
A systematically organized manpower planning reduces these
problems.
3. Organisational Changes
In recent years, the size of the firms are increasing and
the business environment is becoming unstable. These require
changes in organisational structure, organisational activities
and new human resource strategies. Thus, there is a need for
manpower planning arises.
4. Demographic Changes
education, social background and technical skills is changing.
These changes demand for a systematic manpower planning.
5. Legal Control
Law related to working conditions, working hours,
weaker sections, women and child labour, casual and contract
labour does not permit the management to follow hire and fire
policy. To overcome these problems, manpower planning is
essential.
2.8 Management and Organisational Behaviour [JNTU-Kakinada]
Q7. Explain the process of human resource planning.
Answer : In this step, a human resource plan is developed that
Process of formulating Human Resource Planning
involves following steps,
Decide Goals and Objectives
Estimate Future Requirements
Audit Human Resources
Conduct Job Analysis
Develop an HR Plan
Figure: Process of HR Planning
Step-1: Decide Goals and Objectives
Determining the objectives of a company is the basic
step. The objectives such as expansion, merger, capacity
enhancement, area of operations, technology of future operations
or processes etc., are clearly determined.
Step-2: Estimate Future Requirements
The next step is to estimate the number and type of
employees needed at a given point of time. The estimation includes
business forecasts, expansion and growth, design and structural
changes, management policy, competition etc. The future needs
can be forecasted on the basis of production and sales, budgets,
workload analysis and workforce analysis and based on objectives
of the organization. The future manpower requirements should be
estimated qualitatively and quantitatively.
Step-3: Audit Human Resources
In this step, we take into account the available manpower
and assess their skills, abilities, work performance and other
items of information about the overall worthiness of existing
manpower. Based on this data, we establish the future manpower
or additional manpower required. By auditing we will have a
clear picture of what is available today and by anticipating the
technological improvements and organizational requirements
effective manpower planning can be done.
Step-4: Conduct Job Analysis
This is a process which includes the techniques of job
description, job identification and job requirements. After having
decided how many persons would be needed, the job analysis
is prepared. In job analysis, we record details of training, skills,
qualifications, abilities, experience and responsibilities etc.,
which are needed for a job.
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Step-5: Develop an Human Resource (HR) Plan
indicates the source of labour supply such as hired persons,
outside sources, inside sources where existing manpower can be
promoted to occupy the vacancies on higher positions through
labour markets. The development of human resource plan is
dependent on the company policy.
2.3.2 Recruitment
Q8. Define Recruitment. What are its objectives?
Explain the sources of recruitment.
Answer :
Definitions of Recruitment
“Recruitment is a process to discover the source of
manpower to meet the requirements of the staffing schedule
and to employ effective measures for attracting manpower in
adequate numbers to facilitate effective selection of an efficient
working force”.
– Dale Yoder
“Recruitment is the development and maintenance of
adequate manpower resources. It involves the creation of a pool
of available labour upon whom the organization can depend
when it needs additional manpower”.
– Dale.S.Beach
Objectives of Recruitment
Objectives of recruitment are as follows,
1. To provide the organization with a pool of potential and
skilled human resources.
2. To forecast the human resource requirements of the
organization using various statistical and other tools.
3. To use effective recruitment tools and techniques so
that more number of aspirants can be recruited which
helps in increasing the efficiency of selection process.
4. To reduce the attrition rate by recruiting the right
candidate at the right place.
5. To periodically appraise the recruitment process, to
keep it upto date and effective as per the organizational
requirements.
Sources of Recruitment
The various sources of recruitment are,
1. Internal Sources
Internal sources of recruitment include,
(a) Employee Referrals
In this method of recruitment, employees who are
currently employed refer their family members or friends
to their company. The advantages of this source is that
the employee can acquaint the applicants with details or
working conditions of the company. The companies may
offer a reward for a successful referral.
This is a low cost source of recruitment but it has a
downside also, where groupies may be encouraged
leading to future problems.
Unit-2 Functional Management 2.9
(b) Previous Applicants
This method is also an inexpensive source of recruitment wherein previous applicant are contacted again for different
openings.
2. External Sources
External sources of recruitment are,
(a) Advertisements
Advertisements placed in the newspaper is also another way of recruitment. These ads appear in the classified section
of the newspaper under want ads or ‘situation vacant’. These ads usually carry details of the company and the specific
requirements. Sometimes there is no reference to the company, this is a blind ad. This approach is adopted to avoid publicity.
(b) Contractors
Recruitment could be through contractors who have records for casual workers.
(c) Other Sources of Recruitment
(i) Other public undertakings
(ii) Central training institutes
(iii) Introduction by the basion officer of a corporation
(iv) Deputing personnel
(v) Employment exchanges
(vi) Temporary help services
(vii) School placement.
Q9. Explain the general procedure for recruitment of employees in an enterprise.
Answer :
The process of recruitment consists of five steps as shown in the following figure,

Recruitment
HR Number of candidates,
planning types of candidates

Strategic Where and how to call,

Development when to call

Searching Using various sources,

media selling

Screening for Knock out round,

candidates Biographical information blanks

Evaluating and Cost benefit analysis

controlling ROI method

Figure: Five Step Process of Recruitment

Step-1: Recruitment Planning
The first step of the recruitment process is planning. The HR department must collect the data about the number and type
of vacancies available. Planning involves setting of specific targets, for a specific job depending upon the number and types of
applications.
2.10 Management and Organisational Behaviour [JNTU-Kakinada]
Step-2: Strategic Development
The second step of the recruitment process is strategic
development. This step provides answer to the following
questions,
(i) Where to look for? (campus job fairs etc.)
(ii) How to look for? (Internal and external sources)
(iii) When to look for? (perfect timing).
The company studies, whether to “make or buy” (i.e.,)
is it better to hire and train (make) fresh graduates at a lower
pay or to select experienced and trained candidates. Technical
advancement have provided many alternatives for the selection
of potential candidates. An efficient recruitment strategy
suggests the best time for recruitment.
Step-3: Searching
This is the third step of recruitment process. The search
for a candidate begins only after the line manager communicates
that there is a vacancy or there would be a vacancy in the
future. Searching involves selecting and screening of potential
candidates. It is also important to select the right medium as it
reflects the company’s image.
Step-4: Screening for Potential Candidates
Screening is the fourth step in the recruitment process.
Some researcher considered screening as the first step of
selection. Whereas, others argue that the selection process begins
only after the candidates are short listed through recruitment.
For screening, recruiters mostly use “multiple hurdle
process”. For this, they use tools like “Biographical information
blank” and “Knockout round”. In knockout round, applicants
have to fill an application form consisting of 2-3 key questions
if they are found to be capable of performing a task.
Step-5: Evaluating and Controlling
This is the last step in the recruitment process. It involves
cutting and controlling costs of recruitment and evaluating the
effectiveness of the companies recruitment policy. Recruitment
mostly involves costs like,
(a) Cost of advertising in newspapers, magazines, on-line
agencies. Example: Naukri.com, Monster.com etc.
(b) Salaries paid to the recruiters.
(c) Cost of outsourcing the job till the post is filled.
(d) Administrative and overhead expenses.
Evaluation is done to modify and make recruitment more
effective. Mostly companies use the cost benefit and ROI method
for evaluation purpose.
2.3.3 Selection
Q10. Define Selection. Explain the process of selection.
Answer : Step-7: Employment Offer
Definition of Selection
“Selection is the process in which candidates for
employment are divided into two classes those who are to be
offered employment and those who are not”.
Dale Yoder
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Selection is a process by which qualified personnel are
chosen from the applications secured through different sources
of recruitment.
Process of Selection
The steps involved in selection process are,
Step-1: Initial Screening/Shortlisting
This is a shortlisting process. The applicants are expected
to possess the necessary qualifications and aptitude and are
encouraged to make a formal application. The applications of
those who do not have necessary qualifications are eliminated
at this stage.
Step-2: Biodata Screening
Here, the organization provides an application form to the
applicants and asks them to fill it. If the information provided
is incomplete or irrelevant, then such applications are dropped
at this stage.
Step-3: Aptitude Tests
Organizations rely on intelligence, aptitude, ability and
interest tests to provide a major input to the selection process.
Its main purpose is to predict how the candidates are likely to
perform to a given job.
Step-4: Group Discussion
Candidates are shortlisted after the aptitude test. In group
discussion, abilities like communication skills, presence of mind,
reacting to other’s view points, ability to convince, leadership
skills and others are assessed and candidates are shortlisted for
the next selection stage based on their performance in the group
discussion.
Step-5: Personal Interview
The candidates who are shortlisted in group discussion
are invited for attending a personal interview. The interview
board consists of the personnel manager, one or two senior
managers and a psychologist to assess the candidate. Here the
personnel manager should ensure that, the interviewer assesses
the performance of the interviewee in an objective, unbiased
and dispassionate manner.
Step-6: Medical Examination
Shortlisted candidates have to undergo a medical
examination. This is intended to ensure that the candidate is in good
health and has enough capacity to cope with the requirements of the
job. Only those who pass the medical examination are considered
for the next stage of the selection process.
Candidates who are considered medically fit are offered
employment in the organization. The terms and conditions
of the employment are mentioned in the offer letter. Some
organizations insist the candidate to sign a contract for a
minimum period.
Unit-2 Functional Management
2.3.4 Training and Development
Q11. What is Training and Development? Why is
training needed? How can managers ensure
that training is working?
Answer : to both employers and employees.
Training
“Training is an act of increasing the knowledge and skill
of the employee for doing a particular job”.
Edwin . P. Flippo
“Training is a process by which the aptitude, skills and
abilities of employees to perform specific jobs are increased”.
Michael J. Jucius
Development
Development of training or training and development is
the process through which employees knowledge and skills are
developed for performing the given job efficiently.
Need or Importance of Training
The need/importance of training to an organization is
discussed as follows,
1. To increase productivity and performance.
2. To reduce complaints and dissatisfaction.
3. To reduce learning time.
4. To benefit the employee and the organization.
5. To minimize accidents and wastage.
Ways to Know Whether Training is Working Well
It is very important for the managers to know whether
the training program is working or not because if the program
doesn't yield better results, it will be a waste of resources and
time. In order to ensure that training is working effectively,
managers can adopt number of ways,
1. Firstly, the various managers, a group of workers and
HRM representatives who have just completed a training
program are asked to give their opinion regarding how
well the program worked. If their opinions turned out to
be positive, the program will be continued until someone
decides to stop the program.
2. Secondly, the trainees or participants are asked to provide
feedback on the effectiveness of training program.
3. The effectiveness of training is also evaluated based on
factors such as,
(i) How much the trainees have learned from the
program?
(ii) How effectively they're able to use their skills on
the job?
(iii) Did training program bring any results in terms of
increased customer service and reduced turnover?
2.11
Q12. Analyze the advantages of training and
development programmes.
Answer : [Model Paper-IV, Q4(a) | April/May-17, Set-4, Q4(b)]
Training and development programmes are advantageous
Advantages/Benefits to Employer
Training is advantageous to the organization in the
following ways,
1. Improved Productivity
Training helps the employees to improve their
performance level. This improvement in manpower performance
helps the organization to achieve high and improved productivity.
2. Cost and Wastage Reduction
Trained employees perform less functional/operational
mistakes and make more economical use of materials and
machinery. This reduces wastages and results in increased
productivity with high quality and reduction in cost per unit.
3. Reduced Supervision
A well trained employee tends to be self-supportive,
highly motivated and requires less assistance and control. This
reduces the supervisor's burden and in turn increases the span
of supervision.
4. Improved Organizational Climate
A sound training programme improves the organizational
climate including harmonious industrial relations, improved
discipline, decentralized authority, participative management,
reduced resistance to change and organizational stability.
Advantages/Benefits to Employees
Training is beneficial to employees in the following ways,
1. Personal Growth
Training improves the employees attitude, aptitude,
knowledge and skills and guides to grow faster in career.
Training develops positive attitude among employees and builds
a high morale.
2. Self Confidence
Training improves the self confidence of an employee,
enabling him to perform his job with enthusiasm.
3. Higher Earnings
Training facilitates an employee to improve his/her
performance level thereby increased earning.
4. Safety and Reduced Accidents
Training helps an employee to use various safety
measures and methods to perform activities. This reduces the
frequency of accidents.
2.12 Management and Organisational Behaviour [JNTU-Kakinada]
Q13. Explain different methods of training in an organization.
Answer : [Model Paper-IV, Q3 | April/May-13, Set-3, Q3]

There are various methods of training the employees are presented in the figure below,
Training Methods

On-the-Job Training (OJT) Off-the-Job Training

– Job Rotation – Vestibule Training
– Committee Assignments – Programmed Instructions
– Job Instruction Training (JIT) – Role playing
– Internship Training – Lecture methods
– Coaching and Mentoring – Conference/Discussion
– Under Study – Incident Training
– Apprenticeship Training – Inbasket Training
Method Method
– Case Study Method

Figure: Training Methods

1. On-the-Job Training
This is the most commonly used method of training the employees. In this method, the employee is placed on his regular
job and taught the skills necessary to do that job under the guidance of a supervisor. On-the-job training is advantageous by
providing first hand knowledge under the actual working conditions.
The different on-the-job training methods are,
(a) Job Rotation
Job rotation is the movement of an employee from one job to the other of same nature. This method provides an opportunity
to enhance the knowledge and skills of an employee and make him competent in several jobs rather than one.
(b) Committee Assignments
In committee assignments method, a group of employees are given an actual organisational task/problem and are asked
to solve it. The group members collaborate and cooperate with each other to solve the problem. This method of training
develops the team work and intergroup collaborations.
(c) Job Instruction Training (JIT)
In this method, the trainer explains the trainee the job knowledge and skills, method of performing the job and allows him
to do the job. At the same time, the trainer analyzes the employee performance and provides him the feedback.
(d) Internship Training
In this method, the educational institutes and business firms cooperate with each other and select a group of candidates.
The selected candidates carry on with their regular studies for a period of time and at the same time, they work in a office
or factory to acquire the practical knowledge.
(e) Coaching and Mentoring
In this method, the trainee is placed under the guidance of a supervisor. The supervisor assesses the employee performance,
provides him the feedback and offers some suggestions of improvement.
(f) Under Study
Under study is a method in which an employee is trained to take in future the full responsibility of the position of his
superior. This method helps an organisation to acquire an employee of equal competence as his superior and prevents the
recruitment of a new unknown personnel.
(g) Apprenticeship Training
This method of training is used in those trades, crafts and technical fields in which proficiency is acquired after a long
period of time in direct association with work under direct supervision of experts.
2. Off-the-Job Training
In this method of training, the trainee is separated from his actual job and trained for his future job performance. Contrary
to on-the-job training where the trainee is disturbed by his actual job requirements, off-the-job training facilitates him to cater
his entire interest on the training only. This method provides an opportunity to the trainees to have a freedom of expression. The
different off-the-job training methods are,

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Unit-2 Functional Management 2.13
(a) Vestibule Training
In this method, training is provided by the simulation or creation of actual working conditions in a classroom. The classroom
exactly represents the actual working conditions with same kind of machines, files, equipments etc. Vestibule training in
general is used to train clerical and semi-skilled jobs.
(b) Programmed Instructions
In this method, the theory or the subject-matter to be learned is presented in a series of carefully planned sequential units
ranging from simple to more complex levels of instruction. The subject matter is presented in the form of multiple choice
and fill in the blanks and then trainee passes through each unit by answering these questions.
(c) Role Playing
Role playing is a realistic behaviour in an imaginary situation. The participant/trainee plays the role of certain characters
like production manager, mechanical engineer etc. This method includes doing action and practice and is generally used
to improve interpersonal skills.
(d) Lecture Method
In this method, the trainer/instructor prepares a material and delivers it to a group of trainees in the form of a lecture. The
lecture prepared by the trainer should motivate the trainees and create interest in them.
(e) Conference/Discussion
In conference method, group of people meet and pose ideas, share the facts, test the assumptions and draw conclusions to
improve the job performance. Unlike lecture method which involves only one way communication, discussion involves
dyadic communication and it also provides feedback.
(f) Incident Training
The main aim of this method is to develop the trainee in areas of practical judgement, intellectual ability and social
awareness. This method involves development of an employee in a group, i.e., a group of employees who require training
are selected and are trained. For training the employees, incidents are prepared based on the actual situations that happened
in other organizations. Each trainee in the group is given the incident and asked to make short-term decisions. Later, the
group discusses on the incident and takes decisions through group interactions.
(g) Inbasket Training Method
Under this method, the trainee is given a basket or pile of papers and files related to his functional area. The trainee is then
asked to study and analyze the situation and make necessary recommendations. The recommendations provided by all the
trainees are compared and conclusions are made.
(h) Case Study Method
In case study method, a real business problem is presented to the trainees in the form of writing. The trainees are asked to
analyze the problem and suggest the alternative courses of action.

2.3.5 Wage and Salary Administration

Q14. What do you mean by "Wage and Salary Administration"? What are its objectives? What approaches
are used to determine compensation?
Answer :
Wage and Salary Administration
Wage and salary administration is also called as compensation management. It is a systematic approach of ensuring
employees that they are paid logically and fairly with an equitable sense, for the work they accomplished.
Objectives of Wage and Salary Administration
The objective of Wage and salary administration is,
1. To acquire competent and qualified employees by developing attractive pay packages.
2. To retain the employees by providing good salary/wage levels in comparison with that of similar organisations.
3. To motivate the employees by providing rewards for loyalty, good performance, discipline etc.
4. To maintain labour and administrative expenses within the availability of organisational funds.
5. To develop a pay plan based on legislative background.
6. To base the salary on perfect job evaluation and avoid misinterpretations by labour.
2.14 Management and Organisational Behaviour [JNTU-Kakinada]
Approaches to Determine Compensation
The approaches used to determine compensation are,
1. Competency-based pay system
2. Variable pay systems.
1. Competency-Based Pay System
Competencies refers to knowledge, skills and personal
traits which help the employees in performing effectively.
In competency-based compensation system, employees are
compensated on the basis of their competencies. People
with good competencies usually show superior performance.
Competency-based pay systems are usually framed to
compensate the top-level employees who are at the professional
and managerial levels.
2. Variable Pay System
Variable pay is also called as pay for performance or
contingent pay. In variable pay system, an employee is paid
on the grounds of his/her total performance. Performance here
is inclusive of the sum of individual performance, business
unit performance and organizational performance. Variable
pay system aims at giving tangible rewards to the employees
who performs more than their ability. Variable pay system was
traditionally known as the incentive pay system.
Q15. What factors need to be considered by a
personnel manager for administering wage and
salary? Explain briefly the factors influencing
wage fixation and compensation policy.
Answer : The wage rate is also affected by the productivity of
Factors to be Considered for Administering Wage and Salary
It is the responsibility of personnel manager to consider
the following factors/aspects for administering wage and salary,
1. Fair Compensation Package
Personnel manager should introduce a flexible and
rational compensation package that suits the interest of
employees as well as management. A fair compensation package
helps in attracting new applicants, retaining the existing staff,
satisfying the employees and rewarding the good performance.
2. Wage Differentials
Different industries offer different wages for same
positions. Wage differential is the magnitude of difference in
wages. Basically, wage differentials exist due to the differences
in employee characteristics like productivity level, inter-industry
differences etc. The personnel manager should have knowledge
about the factors influencing wage differentials.
3. Balanced Compensation Package
The personnel manager must follow a balanced
compensation package. A balanced compensation package is the
one which is employee welfare oriented, unbiased and rewards
employee’s efforts. An unbalaned compensation package may
cause frequent conflicts, disturbance in the employee relations
and there by results in break down of the organisation.
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4. Wage Negotiations and Agreements
The personnel manager is accountable to administer the
wage agreements between unions and management. Deciding
the pay scales for different positions, related prerequisites,
incentives (monetary and non-monetary) is a part of wage
administration undertaken by personnel manager.
Factors Influencing Wage Fixation and Compensation Policy
The following are the different factors that affect wage
fixation and compensation policy,
1. Company’s Ability to Pay
‘Firm’s ability to pay’ is an important factor that greatly
influences wages fixation. It is necessary to consider the financial
position, paying capacity and profitability of the company.
2. Remuneration in Comparable Companies
Wage rates in the comparable organization is also an
essential factor to be considered while fixing the wages to attract
and retain the talented employees.
3. Cost of Living
Wage rates can be determined by the cost of living in the
area where the firm is situated.
4. Union Pressure
Generally, trade unions exert pressure on the management
of a company. These demands of trade unions also have a
significant influence over the wages.
5. Employee Productivity
employee. Better productivity would be reflected in the wage
rates.
6. Labour Laws
Wage fixation is influenced by the current labour law in
the Country/State regarding wage and salary administration.
2.3.6 Performance Appraisal
Q16. Define Performance Appraisal. What is the need
for appraising the performance? Briefly explain
the methods of performance appraisal.
OR
What is Performance Appraisal? Why is it
necessary to carryout performance appraisal?
(Refer Only Topics: Definition of Performance Appraisal,
Need for Performance Appraisal)
Answer : [Model Paper-I, Q4 | April/May-17, Set-4, Q4(a)]
Definition of Performance Appraisal
Dale S. Beach defines "Performance Appraisal as the
system of evaluation of the individual with regards to his/her
performance on the job and potential for development".
Edwin B.Flippo says that "Performance Appraisal is
a systematic, periodic and an impartial rating of employee’s
excellence in matter pertaining to his/her present job and
potential for a better job".
Unit-2 Functional Management 2.15
Need for Performance Appraisal
Performance appraisal is needed for the following reasons,
1. To guide HR activities like recruitment, selection, placement, orientation and training of employees in the organisation.
2. To identify training needs by identifying the people who require training.
3. To identify individuals with high potential for higher positions.
4. To provide appropriate feedback, counselling, performance appraisal and to improve the performance of an employee.
5. To create a positive working environment that increases productivity.
6. To motivate employees and create competitive spirit in them to improve their performance.
7. To help reduce employee grievances.
Methods of Performance Appraisal
The various methods of performance appraisal are,
1. Critical incident method
2. Management By Objectives (MBO)
3. Behaviourally Anchored Rating Scales (BARS)
4. 360 Degree Appraisal.
1. Critical Incident Method
In this method, the rater lays emphasis on those key behaviours that make the difference in performing a job in note worthy
manner. In this method, the employee’s performance is appraised in three basic steps.
(a) Preparing a list of note worthy on-the-job behaviour of specific incidents.
(b) Group of experts assign weightage to these incidents, depending on their degree of desirability to perform a job.
(c) Finally constructing a 'CheckList' indicating incidents describing workers as ‘good’ or ‘bad’. Then, the check-list is
given to the rater to evaluate the workers.
The advantage of this method is that it focuses on behaviour and judges performance rather than personality. The main
drawback of this method is that, it is time-consuming and burdensome for evaluators to regularly write down the critical incidents.
2. Management By Objectives (MBO)
Management by objectives method was developed by Peter F. Drucker in 1954. According to him, MBO is a process
whereby the superior and subordinate managers of an organisation jointly identify common goals, define each individual’s major
areas of responsibility in terms of results expected from him and use these measures as guide for operating the unit and assessing
the contributions of each of its members. The advantage of this method is that it is result-oriented and focuses on end goals.
However, it suffers from the limitation that it is time-consuming.
3. Behaviourally Anchored Rating Scales (BARS)
Developed during 1960s, Behaviourally Anchored Rating Scales are descriptions of various degrees of behaviour with
regard to a specific performance dimension. It combines the functions of narratives, critical incidents and quantified ratings by
anchoring a quantified scale with specific behavioural examples of good or poor performance.
The following are the steps followed in developing Behaviourally Anchored Rating Scales (BARS)
(a) Generating the critical incidents
(b) Developing performance dimensions
(c) Reallocating the incidents
(d) Scaling the incidents
(e) Finally, developing the BARS instrument.
The advantages of BARS method is that it is accurate, has clear standards, better feedback and consistency in evaluation.
However, it is not easy to develop measures and conducting BARS is a time-consuming process.
4. 360 Degree Appraisal
The 360-degree appraisal method was first developed and used by General Electric Company of USA in 1992. Today,
the Indian companies like Wipro Corporation, Infosys, Reliance Industries, Thermax etc., follow this method. In this method,
an employee is appraised by his supervisors, subordinates, peers and customers with whom he interacts in the course of his
job performance. All these appraisers provide feedback on the employee by completing a survey questionnaire designed for
this purpose. All the information so gathered is then compiled through the computerized system to prepare individualized
reports. These reports are then presented to the employees who were rated. The advantage of 360-degree method is that
it provides a detailed evaluation of employee's performance and the limitation is that it takes long time for performance
appraisal.
2.16 Management and Organisational Behaviour [JNTU-Kakinada]
Q17. What are the steps involved in performance
appraisal?
Answer : agreed period of 6 months or a year, measures his own present
The various steps involved in performance appraisal
process are,
Set Objectives for
Step 1
Personnel Appraisal
Step22
Step Define Job Expectations
Design an Appropriate
Step 3 Appraisal Program
Step 4 Appraise Performance
Step 5 Appraise Interview
Appraisal Data Used by
Step 6
HRM
Step 1: Set Objectives for Personnel Appraisal
In this step, the person to be appraised is asked to prepare
the performance standards for himself, i.e., the employee lists
down the various improvements, contributions and goals that
he can achieve by himself for a period of one year. This method
results in the higher contribution to the organization by the
employee.
Step 2: Define Job Expectations
This step includes the dialogue between the superior and
subordinate in which the employee is informed what is expected
out of him on the job. Normally, the superior reviews the major
duties contained in the job description and sets the expectations
and goals to be attained by the subordinate.
Step 3 : Design an Appropriate Appraisal Programme
In designing the appraisal programme, the manager/
superior considers whether the appraisal programme should be
formal or informal.
(a) Formal Appraisal
These type of appraisals take place at specific time period
say once or twice a year. It is formalised process of rating
the performance of the subordinate.
(b) Informal Appraisal
Informal appraisal occurs whenever the superior feels
the need. It is a process of continuous feedback to
subordinates regarding their work performance. It is
conducted at regular intervals or day-to-day basis.
This system encourages desirable performance and
discourages undesirable performance.
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Step 4 : Appraise Performance
The employee whose appraisal is to be evaluated after an
performance and compares it to what he has achieved in his
objectives and SMART goals. This analysis is written along the
side of the same appraisal form in which objectives have been
written.
Step 5 : Appraise Interview
An appraise interview is the interview in which the
supervisor and subordinate review the appraisal and make plans
to remove deficiencies and increase strengths.
Step 6 : Appraisal Data Used by HRM
The information and data along with the recommendations
and suggestions made by superior is sent to the human resource
department which decides about various aspects of payment
such as promotion, increments or demotion.
Q18. Who will appraise the performance of employees
and what is the basis of performance appraisal?
Answer :
People Who Appraise Employee's Performance
The employee's performance may be appraised by any
of the following,
1. Supervisors
Supervisor evaluates his subordinate’s performance
on numerous aspects. He is the best person to evaluate his
subordinates because he has clear knowledge regarding
subordinate activities. He knows the capabilities lacking in his
subordinates and how they can be developed or improved. The
chances of bias are more in supervisor appraisal and sometimes
supervisor may not have thorough knowledge regarding his
subordinates behaviour.
2. Peers
Peers are the colleagues/team members of an appraise.
As team members are the persons who directly interact with the
employee, they can evaluate him more effectively. Evaluations
may be in terms of his communication abilities, interpersonal
skills, activities performed, innovativeness and so on.
3. Managers by Themselves (Self Appraisal)
In self appraisal, employee is appraised by himself rather
than his superior or other appraisers. Appraisee identifies his
own strengths and weaknesses, activities undertaken by him,
his contributions, targets achieved etc. Bias may occur in self
appraisal because usually appraisee focuses on his strengths and
achievements rather than his weaknesses and failures.
4. Users of Services or Customers
Customers are the ones who can appraise the performance
of an employee on the basis of his initiativeness, quality services,
politeness, reliability, coordination etc.
5. Consultants
Most of the times, the employee's performance is
appraised or evaluated by outside consultants so that the bias
problem doesn't arise in the appraisal process.
Unit-2 Functional Management
Basis of Performance Appraisal
The basis for measuring performance appraisal are as
follows,
(i) The time and costs saved by the employee
(ii) Sales volume increased by the employee
(iii) Revenue generated by the employee
(iv) Level of customer satisfaction as a result of employee
performance
(v) Production volume generated by the employee
(vi) Number of complaints attended by the employee
(vii) Number of projects completed by the employee
(viii) Return on investment as a result of employee performance.
2.3.7 Grievance Handling and Welfare management present their case and proofs at a hearing within a
Administration
Q19. Define the terms "Grievance" and "Grievance
Handling". How will you setup machinery for
redressing the grievance? what are the steps
in handling a grievance?
Answer : Steps in Grievance Handling
Grievance
Grievance refers to the dissatisfaction of employee
relating to any aspect of his/her employment within the
organisation. It is a feeling, where employee thinks that
something is happening unfair or unjust or inequitable to him/
her.
Grievance Handling
The procedure to resolve grievances of employees is
known as “grievance handling”.
Steps in Setting Up Machinery for Grievance Redressal
The various steps involved in setting up a machinery for
grievance redressal,
Step-1
In the first step of the grievance handling, an employee
informs the steward or supervisor about his grievance. The
grievance should be communicated/registered with the
supervisor as soon as possible, say, within five working
days of its occurrence. The steward is the labour contract
who ascertains whether the grievance is valid or not. If the
grievance is valid, then the steward tries to work along with
the employees supervisor in order to find out an optimal
solution for it. Usually, about 75% of the grievances are
solved in this first step itself. If in case, the grievance is not
settled in the first step, the grievance is written down and is
moved towards the second step.
Step-2
In the second step of grievance procedure, the grievance
is written down and a business representative or department
or plant manager is given some additional working days.
For example, five working days for solving the grievance. A
formal meeting is also conducted in this step for discussing the
grievance. If the grievance is not settled in this step, also, then
the parties proceed towards the third step.
2.17
Step-3
The organizational managers and a local and national
union representatives play an important role in this step. The time
given for solving the grievance in this step is usually 10 days.
The grievances which have the ability to set actions influencing
the employment policies usually moves to this level as it is not
possible for plant supervisors or managers to settle them. In
this step, the management has the responsibility to negotiate a
settlement with the union.
Step-4
The last step of grievance procedure is ‘Arbitration’.
Almost all the grievances are solved in the earlier steps and only
1 percent of grievances reach this step. In this step, both the
parties select the arbitrator and in front of him, the union and
quasi-judicial format. Then, the arbitrator analyses the proof and
takes a decision. Some of the arbitrators also give their opinions
specifying their analysis and labour contract sections which
affected their decisions. This opinion acts as a principle or a
general rule for handling future disputes. The decision taken by
the arbitrator is final which both the parties have to abide by it.
The below steps are followed in handling employee
grievance,
1. Receive the Employee's Complaint in Writing
In the first step, the complaint is received from the
aggrieved employee regarding their dissatisfaction. The
complaint received with detailed information is used to carryout
further investigation.
2. Clearly Describe the Nature of Dissatisfaction
The reason for employee's dissatisfaction is identified
in this step. There could be several sources of dissatisfaction
including poor working conditions, mis communication among
employees in the shop floor, irregular wages etc.
3. Collect the Information
This step involves collection of information regarding
the complaint and consulting different parties to inquire about
the same.
4. Give Reply to the Aggrieved Employee
The aggrieved employee is informed about the decision
taken within a specific time limit.
5. Follow up
The final step is to check whether the decided disciplinary
actions are taken to resolve the grievance.
Q20. Discuss in detail about welfare administration.
Answer :
A personnel manager is accountable for executing, the
legal obligations under the factories Act which are concerned
with welfare, safety and health of workers in the industry. There
exists certain legal enactments to administer minimum wages,
payment of bonus, compensation and governance of different
benefits like sickness beneifit etc. In order to manage these
issues, the personnel manager is responsible to make sure that
the provisions concerning the following enactments are obeyed.
2.18 Management and Organisational Behaviour [JNTU-Kakinada]
1. The Payment of Wages Act, 1936
The payment of wages Act 1936, monitors the payment
of wages to specific groups of individuals who are employed in
the industry. This act was introduced for assuring that the wages
payable to the employees who are included by the act are paid
by the employer within the specified time period and there must
not be any deductions except those entitled by law on 1st January
1996, the law was lastly amended by the Payment of Wages Act
1982 which was later enforced on 15-October-1982.
2. The Minimum Wages Act, 1948
The main aim of the Minimum Wages Act, 1948 is to
protect labour from the expansion by the payment of minimum
wages. This act generally outlines the methods for fixing the
minimum rates of wages for specific employments which are
described in the schedule. The national commission on labour
has suggested the expansion of the principle of minimum wages
to non-scheduled employments. It was observed that wage
determination doesn't depend completely on market forces such
as supply of and demand for labour.
3. The Workmen’s Compensation Act, 1923
The Workmen’s Compensation Act is considered as
the oldest and the most significant part of the social security
legislation. The main aim of this Act is to develop provisions for
paying the compensation to a workman. This legislation benefits
the workmen by maximising the significance of suitable safety
devices and decreasing number of accidents. This Act is basically
concerned with the workers and ensures that the weaker section
of the community particularly the working class is not exploited.
4. The Employee State Insurance Act, 1948
The Employee State Insurance Act, (ESIC) 1948, is a
part of social-welfare legislation which is approved mainly with
the aim of offering benefits to the employees during sickness,
maternity and employment injury and also to make provision
for some others matters. The main objective of ESI act is to give
security to employees during uncertainties which effect their
earning capacities both temporarily and permanently.
5. The Employee Provident Fund Act, 1952
The employees provident funds and Miscellaneous
provisions Act, 1952 was enforced for giving social security to the
industrial workers. It acts as a social measure which encourages
the employees to save a part from their present earning for future.
The employees provident funds and miscellaneous provisions
Act offers retirement or old-age benefits like provident fund,
superannuation, pension, invalidation, pension, family pension
and deposit linked insurance.
2.3.8 Job Evaluation
Q21. Define Job Evaluation. What are its objectives
and principles?
OR
What do you understand by job evaluation?
What are the principles of job evaluation?
(Refer Only Topic: Definition of Job Evaluation,
Principles of Job Evaluation)
Warning: Xerox/Photocopying of this book is a criminal act. Anyone found guilty is LIABLE to face LEGAL proceedings.
Answer : [Model Paper-II, Q3(b) | April-18, Set-1, Q4(a)]
Definition of Job Evaluation
Job evaluation is the process of determining the
relative worth of different categories of jobs by analysing their
responsibilities, and fixing their remuneration.
“Job evaluation is a systematic and orderly process of
determining the worth of a job in relation to other jobs”.
Edwin B.Flippo
“Job evaluation is a practice which seeks to provide a
degree of objectivity in measuring the comparative value of jobs
within an organization and among similar organizations”.
Dale yoder
Objectives of Job Evaluation
The following are some of the objectives of job
evaluation,
1. Developing standardized procedures for determining the
relative worth of each job.
2. Determining equitable wage differentials between
different jobs in an organisation.
3. Removing the wage/salary inequalities.
4. Developing a basis for fixing incentives and bonus.
5. Providing necessary information for solving the
grievances regarding wage rates.
6. Serving as a useful reference for work organisation,
employee selection, placement etc.
7. Facilitating career planning in the organisation.
Principles of Job Evaluation
The principles of job evaluation are as follows,
1. Supervisors should involve in the ratings of jobs in their
own departments.
2. Excessive overlapping or duplication should be avoided.
3. The job evaluation scheme must be selected cautiously.
It should be implemented and managed based on
employment market, demand for labour, job conditions
and bargaining power of parties.
4. Job evaluation results must be rational, fair and unbiased
for all the individuals.
5. It is important to publicize every stage of programme
through notice boards, publications, departmental
meetings and letter to homes of employees.
6. The supervisors should have the complete knowledge of
the programme such that they should be able to explain
it to people.
7. Maintaining separate pay structures is essential for major
groups of employees like office workers, factory workers
and salesmen.
Unit-2 Functional Management 2.19
Q22. What are the essentials of successful job evaluation system? Explain the importance of job evaluation.
OR
Discuss the essentials of successful job evaluation system. [Model Paper-II, Q4 | April-18, Set-1, Q4(b)]

(Refer Only Topic: Essentials of Successful Job Evaluation system)

OR
Discuss the importance of job evaluation.
(Refer Only Topic: Importance of Job Evaluation)
Answer : April/May-19, Set-1, Q4(b)

Essentials of Successful Job Evaluation System

The essentials of successful job evaluation system are,
1. Each and every employee of the organization should be given a clear and complete information about the objectives,
methods and process of job evaluation.
2. The methods used in job evaluation should be simple and easily understandable to the employees.
3. The job evaluation programme should receive proper guidance from top level management and acceptance from trade
unions.
4. Job evaluation programme should include each and every group and grade of job. The jobs having same duties, working
conditions etc., should be grouped together.
5. Job evaluation programme must be used as an addition/supplement to collective bargaining.
6. The unfavourable impact of job evaluation on the terms and conditions of employees working in the organization should
be avoided.
7. The knowledge, assessment and expertise of HR department, line managers and external experts should be used in the job
evaluation process.
8. Job evaluation programme should concentrate on rating the jobs instead of job holders.
Importance of Job Evaluation
The following points highlight the importance of job evaluation,
1. Job evaluation helps the organization to objectively determine the relative worth of each job.
2. It helps to determine a fair and equitable pay for all jobs in the organization.
3. It helps to reduce the rate of employee turnover as the employees are paid fair and equitable wages.
4. It helps in reducing the cost of recruitment and selection of workers.
5. It replaces many accidental factors, occurring in a less systematic procedure.
6. It leads to greater uniformity in wage rates, thus simplifying wage administration.
7. Job evaluation includes job description and job analysis. The information collected in job description and job analysis may
be used for the improvement of selection, transfer and promotion procedures on the basis of comparative job requirements.
8. Job evaluation helps in identifying the workers who are engaged in jobs requiring less skill and other qualities than what
they possess, thereby pointing to the possibility of making more efficient use of the plant’s labour.
Q23. What are the different techniques of job evaluation? Explain each with merits and demerits.
OR
Explain the point rating method and factor comparison method of job evaluation.
(Refer Only Topics: Point Rating Method, Factor Comparison Method)
Answer : [Model Paper-III, Q3(b) | April-18, Set-3, Q4(a)]

The job evaluation methods/techniques are classified into two broad categories.
2.20 Management and Organisational Behaviour [JNTU-Kakinada]

Methods
Job Evaluation Techniques

Non-Quantitative Methods Quantitative Methods

Ranking Grading Point Factor

Method Method Rating Comparison

Figure: Job Evaluation Techniques

1. Non-quantitative Methods
Non-quantitative methods are also called as non-analytical or summary systems. They are simple and utilise non-quantitative
techniques for listing the jobs in order of their difficulty. These include two methods namely,
(a) Ranking Method/Job Comparison Method.
(b) Grading Method/Job Classification Method.
(a) Ranking Method/Job Comparison Method
Ranking method involves comparison of each job as a whole with other jobs and arranging them in the order of their
importance from highest to lowest. The ranking criteria involves judging the duties, responsibilities and demands of the
job holder.
Merits of Ranking Method
Following are the merits/advantages of ranking method,
(i) It is the simplest and the oldest method.
(ii) It is economical to be adopted and consumes less time.
(iii) There is no wastage of material and involves less paper work.
Demerits of Ranking Method
The demerits/disadvantages of ranking method are,
(i) Ranking method just shows the importance of one job from the other but does not specify the degree of difference
between the jobs.
(ii) It involves subjective judgement and therefore it is less accurate and not fully reliable.
(iii) The rater should be familiar with all the jobs to be rated.
(b) Grading Method/Job Classification Method
This method is also called as ‘Job Classification Method’. This method involves the following procedure,
(i) Developing job grades or job classes. A job grade is a group of different jobs requiring similar skills to perform.
(ii) A written description is used to define each job grade.
(iii) Classifying each job into an appropriate grade depending on the degree to which its characteristics match the grade
definitions.
Merits of Grading Method
The grading method has the following merits,
(i) It is simple and easy to understand.
(ii) It is more systematic and accurate when compared to ranking method.
(iii) It simplifies wage administration and facilitates in developing a systematic organisational structure.
Demerits of Grading Method
The demerits/limitations of grading method are,
(i) Writing an accurate and precise job grades description is very difficult.
(ii) It is difficult to classify the jobs that involve tasks which overlap.
(iii) It is a rigid system.

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Unit-2 Functional Management 2.21
2. Quantitative Methods
These methods use quantitative techniques for listing the jobs. They are very complex and are time consuming. They are
also called as analytical systems. These include two methods namely,
(a) Point rating method and
(b) Factor comparison method
(a) Point Rating Method
This is the most commonly used technique of job evaluation. In this method, the jobs are divided into component factors
and each factor is assigned some points/weights depending upon its importance in a particular job. Thus, the total points
obtained for a job gives its relative worth.
Merits of Point Rating Method
The following are the merits/advantages of point rating method,
(i) It facilitates in determining system wage differentials according to job content.
(ii) It is most comprehensive and accurate as factors are divided into sub-factors.
(iii) It reduces bias and human judgement as uniform point scores and money values are assigned.
Demerits of Point Rating Method
The demerits/limitations of point rating method are,
(i) It is complicated and therefore difficult for an average worker to understand it.
(ii) It is expensive and time consuming.
(iii) Managerial jobs cannot be measured by using this technique.
(b) Factor Comparison Method
This method follows the following procedure,
(i) Selecting and Defining the Factors
Factors like skills, responsibilities, working conditions common to all the jobs are selected and defined clearly.
(ii) Selecting the Key/Representative Jobs
The key jobs in the organisation are selected and they are used as standards for comparing other jobs.
(iii) Ranking the Key Jobs by Factors
The key jobs are carefully analyzed and are rated in terms of selected factors.
(iv) Deciding the Key Job Rates
Fair and equitable wage rates are determined.
(v) Assigning the Wage Rate
Allocating the wage rate for a job depending on identified and ranked factors.
(vi) Comparing the Other Jobs
The remaining jobs are compared with the key jobs in terms of each factor.
Merits of Factor Comparison Method
Merits of factor comparison method are,
(i) It is relatively more analytical and objective method.
(ii) The chances of overlap are less because only few factors are utilized.
(iii) More reliable and valid.
Demerits of Factor Comparison Method
The demerits of factor comparison method are,
(i) It is expensive and time consuming.
(ii) It is difficult to understand and operate.
2.22 Management and Organisational Behaviour [JNTU-Kakinada]
Q24. What do you mean by job analysis? What is the
need for job analysis? Explain the relationship
and differences between job description and job
specification.
OR
Explain the need for job analysis in an
organization. minimum qualities (both physical and mental) required
[Model Paper-IV, Q4(b) | April/May-17, Set-2, Q4]
(Refer Only Topic: Need for Job Analysis)
OR
What is job description and job specification? (ii) Experience
April/May-19, Set-4, Q4(b)
(Refer Only Topics: Job Description, Job Specification)
OR
What is job specification? How is job description
related to job specification?
(Refer Only Topics: Job Specification, Relationship
Between Job Description and Job Specification)
Answer : April/May-17, Set-3, Q4(b)
Job Analysis
Job analysis may be understood as a process or method
of collecting information related to a particular job.
“Job analysis is the process of determining, by
observation and study and reporting pertinent information
relating to the nature of a specific job. It is the determination of
the tasks which comprise the job and of the skills, knowledge,
abilities and responsibilities required of the worker of a
successful performance and which differentiate one job from
all others”.
U.S. Department of Labour
Job analysis consists of two sets of data which are as
follows,
Job Analysis
Job Description Job Specification
1. Job Description
Job description is defined as an organised statement
which represents the duties and responsibilities of a job.
It is an important document which is basically descriptive
in nature and contains a statement of job analysis. Job
description tells us what should be done, why it should be
done and where it should be performed. Job description
statement consists of,
(i) Job identification
(ii) Job summary
(iii) Materials used
(iv) Machines, tools and equipments
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(v) Working conditions
(vi) Supervision received
(vii) Hazards
2. Job Specification
Job specification is defined as statement consisting of the
for doing a job. Job specification consists of the following
human qualifications required for performing the job,
(i) Education
(iii) Training
(iv) Judgement
(v) Initiative
(vi) Creativity
(vii) Physical abilities
(viii) Responsibilities
(ix) Communication skills
(x) Emotional characteristics.
Need for Job Analysis
The need of job analysis can be understood from the
benefits served by job analysis. Some of the benefits of job
analysis are as follows,
1. Planning the Human Resources
For planning the human resources required for performing
the job, job analysis statement acts as a foundation for deciding
the number and type of the personnel required.
2. Recruiting and Selecting the Personnel
Job analysis guides the recruitment and selection of
personnel by providing the information about characteristics,
qualifications, experiences required for performing the job.
3. Job Analysis and Training
Job analysis aids in bridging the gap between the job
requirements and individual capabilities and providing training
(induction training) if required in order to close the gap, if any.
4. Performance Appraisal
Job analysis facilitates performance appraisal by fixing
the standards of job performance in relation to which the actual
performance of an employee is assessed and compared.
5. Wage and Salary Administration
Job analysis information plays a vital role in fixing the
salaries and wages of the employees in accordance with their
skills, knowledge, capabilities etc.
6. Maintaining Harmonious Industrial Relations
The job description information acts as a standard in
settling the disputes if any, arising with regard to working
conditions, duties and responsibilities, salaries, wages etc.
Unit-2 Functional Management 2.23
Relationship Between Job Description and Job Specification
Job description and job specification are inter-related with each other because they are the major components of ‘Job
Analysis’. The following table shows the relationship between job description and job specification,

S.No. Basis Job Description Job Specification

1. Component It is a component of job analysis.
2. Information It provides description about a job. Thus, it is
related with job information.
3. Objective Its main objective is to assist candidate in
understanding the job requirements. Thus,
it is indirectly concerned about effective job
performance.
4. Measurement It measures the job responsibilities.
Differences Between Job Description and Job Specification
The following are the differences between job description and job specification,
It is also a component of job analysis.
It provides the specification of a job. Thus, it is also
related with job information.
Its main objective is to assist management in
finding appropriate candidate for job. Thus, it is also
concerned about effective job performance.
It measures the responsibilities performed by a
person i.e., how he is handling.

S.No. Job Description Job Specification

1. Job description is an organized statement containing
the facts about the duties and responsibilities of a
specific job.
2. Job description focuses on job characteristics
3. Job description measures the duties and
responsibilities.
4. Job description assists the candidate to understand
the requirements of the job which are to be fulfilled
by him/her.
Job specification is a statement consisting of the minimum level
of qualifications, skills, talents, physical abilities, experience
etc., required for performing a job properly.
Job specification focuses on individual characteristics.
Job specification measures the responsibilities performed by
a person.
Job specification assists the management in finding an
appropriate candidate for the job.

2.3.9 Merit Rating

Q25. Define Merit Rating. What are its objectives and methods? Explain.
OR
Define merit rating and describe its methods elaborately.
(Refer Only Topics: Definition of Merit Rating, Methods of Merit Rating)
Answer : [Model Paper-III, Q4(a) | April/May-17, Set-3, Q4(a)]

Definition of Merit Rating

“Merit rating is a systematic, periodic and so far as humanly possible, an impartial rating of an employee’s excellence in
matters pertaining to his present job and to his potentialities for a job”.
Edwin B.Flippo
“Merit rating of an employee is the process of evaluating the employee’s performance on the job in terms of the requirement
of the job”.
Scot, Clothier and Spriegal
Objectives of Merit Rating
The objectives of merit rating are,
1. To recognise and reward the employees by determining their worthiness.
2 To evaluate the employee performance regularly in order to decide their promotion, transfer or demotion.
3. To identify training needs.
4. To guide the employees who lack in performance.
5. To judge whether or not the employee is suitable for the given task.
2.24 Management and Organisational Behaviour [JNTU-Kakinada]
Methods of Merit Rating
The merit rating methods that are used to determine the employee’s performance are,
1. Straight Ranking Method
In straight ranking method, the rater ranks the employee in order of their merit with the best on the top and poorest employee
at the bottom of the ranking table. This method does not take into account the various components of performance and it does not
indicate the degree of difference between the employees. It is best suited where the number of employees are less.
2. Paired Comparison Method
As the name indicates, each person is compared with other person in pairs. Each employee is paired with other employees
working on similar type of jobs, the result of these decisions are tabulated and a rank is allotted from the number of times each
person is considered to be superior.
3. Man-to-Man Comparison Method
It is commonly called “Factor comparison method”. Under this method, certain factors such as leadership, initiative dependability,
reliability etc., are selected. Thereafter a five point master scale is designed to each factor by the rater. The five point scale would be
excellent, good, satisfactory, average and poor and the weightage could be 5, 4, 3, 2 and 1, respectively. The indications are recorded
by marking the relevant number representing the degree to which the individual satisfies the standard.
4. Grading Method
In this method, certain categories of worth similar to five point scale of person-to-person comparison method is made such
as excellent, very good, average, poor, very poor etc., are established. The actual performance of each employee is compared with
the grades established and the person is allocated to the grade which best describes his performance.
5. Graphic Scale Method
In this method, there are two types of factors,
(a) Employee Characteristics: Employee characteristics refers to the qualities of the persons such as dependability,
initiative leadership, reliability etc.
(b) Employee Contributions: Employee contributions are those which denote what the person produces such as quality
and quantity of work, responsibilities assumed etc.
Each of these factors will have three to five degrees. The indications are recorded and rest is similar to person-to-person
comparison method.
6. Check List Method
This method is also referred as “questionnaire method” as it uses a checklist questionnaire which contains a series of “yes”
or “no” questions concerned with the employee and his behaviour. The employee answers these questions in “yes” or “no” on
the basis of checklist and the personnel department ranks the employees.
7. Forced Choice Description Method
In this method, employees are given a set of alternatives for a problem and they have to choose one. This method helps
in assessing the employees judgement skills, analytical and reasoning skills. It is called forced choice, because the employee is
forced to choose one from the set of answers and explain why he thinks that alternative is the right answer.
8. Selection of Critical Incidents
This method or approach is based on the human behavioural concept. The employee exhibits a particular behavioural pattern
while performing his job. This behavioural pattern makes the difference between success and failure of a job. In this method the
employee is ranked based on his reactions to a particular situation.
9. Descriptive Evaluation Method
In this method, the rater prepares a consolidated report describing the performance of employee on the job. The report
reflects the personality, behaviour, quantity and quality of work performed by the employee. The report is prepared by rater purely
based on observation.
10. Interview Method
In this method, instead of directly interacting with employees, the experts from personnel department interview the
concerned supervisor to obtain all the information about each employee and also ask them about the possible methods of improving
performance of employees. Based on the interview, the report is prepared and submitted to top management.

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Unit-2 Functional Management 2.25

2.4 Marketing Management – Concepts of Marketing

Q26. Define Marketing. How is it different from selling? Briefly explain the core concepts of marketing.
OR
Distinguish between selling and marketing.
(Refer Only Topic: Differences Between Selling and Marketing)
Answer : [Model Paper-III, Q4(b) | April/May-19, Set-4, Q4(a)]

Definition of Marketing
“Marketing is the process of determining consumer demand for a product or service, motivating its sales and distributing
it into ultimate consumption at a profit”.
– EFL Brech
“It is an art of selling product and services”.
– Peter F. Drucker
Differences Between Selling and Marketing
Some of the differences between selling and marketing are,

S.No. Basis Selling Marketing

1. Point of beginning Selling process begins from the production Marketing process begins from the target market.
floor.
2. Orientation It is product-oriented. It is customer-oriented.
3. Objective It’s objective is only to sell the products. It’s objective is customer satisfaction.
4. Function Selling functions are concerned with Marketing functions are concerned with
transformation of the product into cash. transforming customer requirements into
products.
5. Techniques It uses selling and promoting techniques. It is a combined responsibility so, it adopts
integrated marketing techniques.
6. Final stage Selling process ends with the product sale. Marketing process goes on as it intends to
develop and maintain long-term relation with
customers.

Core Concepts of Marketing

The core marketing concepts are as follows,
1. Needs, Wants and Demands
A human need is a state of feeling deprived of some basic satisfaction. Basic needs include the need for food, clothing
and shelter. Wants constitute the specific forms of human needs. They are designed based on cultural and individual personality
characteristics. The only difference which between needs and wants is that human needs are limited while wants are unlimited.
Demands are wants for any product or a service that are supported by an ability and willingness to purchase it. While estimating the
demand for a product, a marketer needs to consider both the preferences as well as the willingness/ability of a buyer to purchase it.
2. Target Markets and Segmentation
These are defined as the particular type or segment of customers which the marketer wants to target. For example, a coach
who wants to undertake coaching for common entrance examinations, would look for students studying chemistry, physics and
mathematics in XII class.
3. Market Offerings
Market offerings refer to the collection of products, services, information or experiences that can be offered in a market
to satisfy a need, or a want.
4. Marketing Environment
Philip Kotler defined marketing environment as "external factors and forces that affect the company's ability to develop
and maintain successful relationship with its target customers".
2.26 Management and Organisational Behaviour [JNTU-Kakinada]
5. Competition
Competition is a significant environmental factor which includes various products/services offered by rival firms and there
are chances that the customer would consider them.
6. Supply Chain
According to Mohanty & Deshmukh, "A supply chain is a network of facilities and distribution options that are engaged in
the procurement of raw materials, transformation of these materials into intermediate and finished products and finally distributing
them among the ultimate customers".
7. Customer Value and Satisfaction
Every customer selects products and services based on his/her perceptions and satisfaction about the firm’s offerings.
Basically customer satisfaction depends on the firm’s ability to effectively fulfill the expectations of customers.
Customer value is denoted as,
Customer value = Benefits that customer obtained from his purchases – Cost of products.
8. Exchanges, Transactions and Relationships
Exchange is a process of obtaining an object by offering another in return. An exchange process involves two or more
people, who possess the products/services and carry a certain value to the other. A transaction takes place when two or more
parties agree upon certain terms and conditions. A transaction includes the value exchange among two or more parties and even
the shifting of ownership from the seller to the buyer. A marketer does not restrict its business to a single transaction which occurs
between him and the customer, but he also tries to maintain a long term relationship with their customers by optimally satisfying
their needs.
9. Marketing Channels
The marketing intermediary used to transfer the goods from one place to another is called "channel of distribution" or
"marketing channel". The marketing channels include distributors, wholesalers and retailers.
Q27. What is Marketing Management? What are its objectives and functions?
Answer :
Marketing Management
Marketing management is the combination of two words i.e., marketing and management.
In the words of ‘William J. Santon’ – “Marketing is a total system of interacting business activities designed to plan, price,
promote and distribute wants satisfying products and services to present and potential consumers”.
In the words of ‘Stanley Vance’ – “Management is simply the process of decision making and control”.
If we combine the above two definitions, we get the definition of marketing management.
In the words of ‘William J. Stantom’ – “Marketing management is the marketing concept in action”.
Objectives of Marketing Management
The objectives of marketing management are discussed below,
1. Identifying customers needs and wants is an important and foremost objective of marketing management.
2. It aims at dividing the entire market into various segments. The market is segmented depending upon age, sex, location,
income and so on.
3. Growth of the organization is the third main objective of marketing management. In order to achieve organizational growth,
an organization must focus on increasing its sales volume and net profits.
4. It aims to improve the satisfaction levels of customers so as to maximize profits.
Functions of Marketing Management
The functions of marketing management are as follows,
1. Planning of Marketing Activities
Market planning is carried out to develop and define objectives and then derive strategies and design programmes that
enable the firms to achieve these preset aims/goals. In case of planning, marketer needs to define the ways, timings, location and
persons through/at which different marketing activities can be performed.
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Unit-2 Functional Management 2.27
2. Organizing of Marketing Activities
Organizing is a function of classifying similar activities into the same group. The basic element of organizing in marketing
management is to carry out the function of each personnel effectively.
3. Staffing for Marketing Activities
Staffing function deals with the appointment of different personnel for marketing department. Nowadays, a separate
personnel department has been introduced in organizations with an intention of recruiting, selecting and placing qualified personnel
for filling its vacant posts.
4. Directing the Marketing Staff
Marketing is essentially an art/a process of getting things done by others. The marketing manager is not only responsible for
planning and organizing the activities but also for guiding and supervising his subordinates. He should motivate the subordinates
through his leadership abilities so that subordinates function efficiently for the attainment of marketing goals.
5. Controlling the Marketing Activities
Controlling is an important function of marketing management. The extent of its effectiveness determines the success of
any programme or any policy of business unit. Even the best efforts cannot produce any result, if it is not controlled properly.

2.4.1 Marketing Mix Elements

Q28. What is Marketing Mix? Describe the various elements of marketing mix.
Answer : April/May-13, Set-4, Q3

Marketing Mix
Marketing mix is a mix of marketing components which are used by the company in achieving its marketing objectives.
These components can be considered as “marketing tools” because they are used as a weapons for attaining success in marketing
activities.
Elements of Marketing Mix
The four P’s of marketing mix focusing on target market customers is depicted through the following figure,
n

P ro
io
ot
om

duc
Pr

Target
t

market
customers
Pr
ce

ice
a
Pl

Figure: Elements of Marketing Mix

1. Product
The first “P” of marketing mix is product. A product is produced by the company to fulfill the needs and requirements of
the target market audience. Product might include a tangible good or intangible service or a mixture of both.
The various sub-components of the component ‘product’ are – product attributes, product quality, warranty, packaging,
branding, product benefits, tangible goods, intangible services, installation etc.
2. Place
A product can be made available to the target market customers through distribution channels. The various decisions to be
taken pertaining to place are – type of distribution channels to be setup, types of intermediaries, place of storage etc. The objective
is to make sure that the right products and services are accessible in right quantities, at the right time and in the right place.
The distribution channel may be very short, where manufacturer sell its products to the ultimate consumers directly. On
the other hand, distribution channel may include wholesalers and retailers who act as intermediaries in the channel of distribution.
2.28 Management and Organisational Behaviour [JNTU-Kakinada]
3. Promotion

The third ‘P’ – promotion is related to communicating with the target customers and other participants of the distribution
channel regarding the product offered by the company. Promotion is nothing but promoting the product in the market. The four
main sub-components of promotion are – Advertising, public relations, sales promotion and personal selling. Through all these
sub-elements, the target customers are made aware of the products and services available to them in the market. Promotion
activities in some situations aim at retaining existing customers and in some other situations aim at attracting new customers.

4. Price

Price is the amount paid by the customer as an exchange to product/service purchased by them. While deciding the price
of a product, the aspects like – type of competition prevailing in the market place and cost involved in marketing mix have to be
taken into consideration. The price of the product has to be decided very carefully because all marketing activities of the company
will fail in their attempts, when customers do not accept the product price.

Thus, the four P’s of marketing play an equally significant role in the marketing mix of the company. No one element is
considered more significant than others.

2.4.2 Marketing Strategies

Q29. Define Marketing Strategy. Explain in detail various strategies of marketing.
OR
Explain various strategies of marketing with suitable examples.
(Refer Only Topic: Strategies of Marketing)
Answer : April-18, Set-4, Q4(b)

Marketing Strategy
“Marketing strategy is a set of objectives, policies and rules that guide overtime firm’s marketing efforts”.
– Philip Kotler
Marketing strategy refers to a plan which helps the company in retaining its competitive position in the market place. The
product, price, place and promotion strategies are combined together to develop a company-wide marketing strategy.

Strategies of Marketing

The various core strategies of marketing are,

1. Segmentation
Segmentation is one of the basic marketing strategies. Market segmentation helps the firm to allocate its resources to only
a particular segment of the market, thereby focusing on the satisfaction of the needs of only those customers belonging to such
segment.
Example
For instance, airframe producers like Boeing and Mc Donnell- Douglas have few buyers only. Thus, they consider them
as distinct markets.
2. Value Addition
In customer-based marketing strategy, value is created and delivered to the customers. Successful companies are not only
required to add value but also to focus on their renovation by forming effective tie ups with suppliers, channel members and
customers and also by improving their knowledge and awareness. The objective may be to create value in new forms and by new
actors because of innovations in technology and a reduction in trade barriers.

Example
The best example for value addition is ‘1KEA’ which is the world's largest retailer of home furnishings, french concessionaires,
danish pharmacies and Automated Teller Machines (ATM’s).

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Unit-2 Functional Management 2.29
3. Mass Customization
Mass customization is one of the marketing strategies wherein the firm’s offerings are tailor-made i.e., based on the
requirements of an individual customer. Today with the advancement in technology, firms are able to use computers to design
the product as per the needs and requirements of the customer. In a mass customization strategy, computer-based systems are
integrated, with new production systems such as JIT (Just-In-Time) and Flexible Manufacturing. Such integration is used to make
attractive and tailor-made offers to the customers at economical prices.
Example
For example, Motorola is providing more than 29 million various combinations of pager features and each pager is designed
by considering the specific requirements of customers.
4. Product Market Fit
Another important marketing strategy is fitting product ranges into appropriate markets. Product market fit is possible by
assessing the product’s usage in both existing and new markets. The following figure depicts the matrix of strengthening product
market fit,

Figure: Matrix of Strengthening of Product Market

The matrix requires a marketer to compare their product attributes with the usage behaviour of customers. According to
Sheth, the in-depth analysis of customer’s (needs and requirements) and their usage behaviour assists the firm in developing the
new marketing strategies which inturn help them in gaining huge amount of market share and also in achieving the competitive
position in the markets.
Example
(a) Existing Users-Existing Users
In case of making consumption mandatory, the Indian government has instructed all the officials to use only state air carriers
and to stay in India Tourism Development Corporation (ITDC) only or various state owned hotels. By doing this, Indian
Airlines, Air India and government owned hotels can penetrate the executive markets.
(b) Existing User-New Users
In case of Internationalization, numerous engineering organizations, specially light engineering organizations are
manufacturing products such as fans, sewing machines, hand tools etc.
(c) New User- Existing Users
In case of modification in packaging, sachet packing in the shampoo market is introduced by Hindustan Lever.
(d) New User-New Markets
In new user-new markets strategy, Sony Corporation has introduced walkman by realizing that there is a need to introduce
a personal portable music system.
5. Customer Service
In the process of value creation, the deviation between tangibles and intangibles gets reduced and the emphasis of marketer
shifts from profit generation to the delivery of quality service to customers. Usually, customers have certain expectations from
the firm’s offerings which makes them to compare firm’s offerings against their expectations.
Example
For example, Now-a-days, Indian Airlines is providing great customer service.
2.30 Management and Organisational Behaviour [JNTU-Kakinada]

Important Questions

Q1. Define Human Resource Management. Explain the important functions of HRM.

Ans : (Important Question | April-18, Set-2, Q4(a))

For answer refer Unit-II, Q2.

Q2. Describe the functions of HR manager in an organization.

Ans : (Important Question | May/June-14, Set-1, Q3)

For answer refer Unit-II, Q5.

Q3. Analyze the advantages of training and development programmes.

Ans : (Important Question | April/May-17, Set-4, Q4(b))

For answer refer Unit-II, Q12.

Q4. Explain different methods of training in an organization.

Ans : (Important Question | April/May-13, Set-3, Q3)

For answer refer Unit-II, Q13.

Q5. What is Performance Appraisal? Why is it necessary to carryout performance appraisal?

Ans : (Important Question | April/May-17, Set-4, Q4(a))

For answer refer Unit-II, Q16.

Q6. Explain the point rating method and factor comparison method of job evaluation.

Ans : (Important Question | April-18, Set-3, Q4(a))

For answer refer Unit-II, Q23.

Q7. What is job description and job specification?

Ans : (Important Question | April/May-19, Set-4, Q4(b))

For answer refer Unit-II, Q24.

Q8. Distinguish between selling and marketing.

Ans : (Important Question | April/May-19, Set-4, Q4(a))

For answer refer Unit-II, Q26.

Q9. What is Marketing Mix? Describe the various elements of marketing mix.

Ans : (Important Question | April/May-13, Set-4, Q3)

For answer refer Unit-II, Q28.

Q10. Explain various strategies of marketing with suitable examples.

Ans : (Important Question | April-18, Set-4, Q4(b))

For answer refer Unit-II, Q29.

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