Lecture Notes

Fundamentals of Management
and organization

Instructor
Professor Nesma Ahmed Heshmat
Vice-Dean for Graduate Studies & Research
Faculty of commerce, Assiut University

2022 - 2023

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 Contents
TOPIC Page

FUNDAMENTALS OF
CHAPTER 1 3
MANAGEMENT

THE ENVIRONMENT OF
CHAPTER 2 34
ORGANIZATIONS AND MANAGERS

CHAPTER 3 THE PLANNING FUNCTION 56

CHAPTER 4 THE ORGANISING FUNCTION 90

THE DIRECTING
CHAPTER 5 115
FUNCTION/LEADING

CHAPTER 6 CONTROLLING 134

CHAPTER 7 DECISION MAKING 146

CHAPTER 8 MOTIVATION 159

CHAPTER 9 COMMUNICATION 180

BUSINESS ETHICS AND SOCIAL

CHAPTER 10 197
RESPONSIBILITY

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 CHAPTER 1
FUNDAMENTALS OF MANAGEMENT

An organization is a collection of people working together in a

coordinated and structured fashion to achieve one or more goals.
Organizations exist to allow accomplishment of work that could not
be achieved by people alone. As long as the goals of an organization
are appropriate, society will allow them to exist and they can
contribute to society. Organizations use management to accomplish
the work that is required to achieve the goals.

1.1 What do We Mean by Management?

Management is the art of getting things done through and with
people. There are many definitions of management many definitions
are relatively concise and simplistic.
Management involves coordinating and control the activities of
others so that their activities are accomplished efficiently and
effectively.
Frederick Taylor define management as knowing exactly what you
want people to do and then seeing that they do it in the best
acceptable way.
Henry Fayol – “To Manage is to forecast, to plan, to organise, to
command, to co-ordinate and to control”.
Peter F.Drucker –”Management is work and as such it has its own
skills, its own tools and its own techniques”.
Management is a complex process. Managers are responsible for
combining and coordinate resources to achieve the organisation’s
goals. But how do managers combine and coordinate the various
kinds of resources? They do so by carrying out the four basic

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managerial functions or activities of planning, organising, directing,
and controlling.
Management can also define as:
“ the process undertaken by one or more individuals to coordinate
the activities of others to achieve results not achievable by one
individual acting alone”.
“an integrating discipline of human values and conduct of social
order and intellectual inquiry. It is an art that feeds off economics,
psychology, mathematics, political history and philosophy”
Management is the process of getting things done,
effectively and efficiently, with and through other people.

Efficiency means doing a task correctly (“doing things right”) and

getting the most output from the least amount of inputs. Because
managers deal with scarce inputs—including resources such as
people, money, and equipment—they’re concerned with the
efficient use of those resources. Managers want to minimize
resource usage and thus resource costs.
It’s not enough, however, just to be efficient. Managers are also
concerned with completing activities. In management terms, we call
this effectiveness.
Effectiveness means “doing the right things” by doing those work
tasks that help the organization reach its goals. Whereas efficiency

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is concerned with the means of getting things done, effectiveness is
concerned with the ends, or attainment of organizational goals
MANAGEMENT AND ADMINISTRATION

Management and administration may seem the same, but there are
differences between the two. Administration has to do with the
setting up of objectives and crucial policies of every organization.
Management is the act or function of putting into practice the
policies and plans decided upon by the administration. The
following table summarize the basic difference.

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Basis Management Administration

Meaning Management is an art It is concerned with

of getting things done formulation of broad
through others by objectives, plans &
directing their efforts policies.
towards achievement of
pre-determined goals.

Nature Management is an Administration is a

executing function. decision-making
function.

Process Management decides Administration decides

who should as it & how what is to be done &
should he dot it. when it is to be done.

Function Management is a doing Administration is a

function because thinking function because
managers get work plans & policies are
done under their determined under it.
supervision.

Skills Technical and Human Conceptual and Human

skills skills

Level Middle & lower level Top level function

function

Applicability It is applicable to It is applicable to non-

business concerns i.e. business concerns i.e.
profit-making clubs, schools, hospitals
organization. etc.

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Influence The management The administration is
decisions are influenced by public
influenced by the opinion, govt. policies,
values, opinions, religious organizations,
beliefs & decisions of customs etc.
the managers.

Status Management Administration

constitutes the represents owners of the
employees of the enterprise who earn
organization who are return on their capital
paid remuneration (in invested & profits in the
the form of salaries & form of dividend.
wages).

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The Figure above clearly shows the degree of administration and
management performed by the different levels of management

1.2 Why Study Management?

Learning about management is important for two reasons:
a) All societies depend on institutions and organisations which
are guided and directed by the decisions of one or more
individuals designated as “managers” . It would not be
difficult to find one whom neither a manager nor affected by
the decisions of manager.
b) Individuals not trained as managers often find themselves in
managerial positions. Many individual presently being
trained to be teachers, accountants, salespersons, etc will one
day earn their livings as managers. They will manage
schools, accounting firms, or sales organisations.

1.3 The Evolution of Management as a Field of Study

The construction of a single pyramid occupied more than 100,000
workers for 20 years. Who told each worker what to do? Who
ensured that there would be enough stones at the site to keep

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workers busy? The answer to such questions is managers.
Regardless of what managers were called at the time, someone had
to plan what was to be done, organize people and materials to do it,
lead and direct the workers, and impose some controls to ensure that
everything was done as planned.
This example from the past demonstrates that organizations have
been around for thousands of years and that management has been
practiced for an equivalent period. However, two pre twentieth-
century events played particularly significant roles in promoting the
study of management.
The most important, pre-twentieth-century influence on
management was the Industrial Revolution. The major contribution
of the Industrial Revolution was manufacture goods in factories
rather than at home. These large, factories required managerial
skills. Why? Managers were needed to forecast demand, ensure that
enough material was on hand to make products, assign tasks to
people, direct daily activities, coordinate the various tasks, ensure
that the machines were kept in good working condition and work
standards were maintained, find markets for the finished products,
and so forth. Planning, organizing, leading, and controlling became
necessary
Early management theorists regarded organisations as machines in
which the human element was just an extra complication or
destabilizing factor, which need to neutralize through job design and
work processes. Their objective was thus to break these work
processes into their simplest components and then to stipulate
precisely how each component task had to be carried out. The
Hawthorn studies led to enlargement or development of established
theories. Their shock results led to more concern to human needs,

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which motivate people to work. The next subsection will discuss
some of the management theories.

1.3.1 Scientific management

Scientific Management theory arose in part from the need
to increase productivity. Scientific management focuses on
worker and machine relationships. Organizational productivity can
be increased by increasing the efficiency of production processes.
The efficiency perspective is concerned with creating jobs that
economize on time, human energy, and other productive resources.
Jobs are designed so that each worker has a specified, well-
controlled task that can be performed as instructed. Specific
procedures and methods for each job must be followed with no
exceptions.
Frederick Taylor (1856‐ 1915) F.W. Taylor who was an engineer
and manager was one of the first to introduce the process of
maximizing output through observing human behavior at work and
formulating a specific set of rules to operate and utilize human
skills. He studied the work of individual workers to discover exactly
how they performed their job. He identified each aspect of each job
and measured everything measurable.
Taylor published his famous book, “Principles of Scientific
Management” which brought a revolution in shaping the early
twentieth century factory system. Taylor
had identified serious flaws while
observation of operations at factories.
Some of them were:
1) management lacked clear understanding
of worker-management responsibilities;
2) lack of effective standards of work;
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3) restricted output and failure to design jobs properly;
4) unscientific decisions by management;
5) lack of proper studies about division of work among
departments.
Taylor argued that flaws in a given work process could be
scientifically solved through improved management methods and
that the best way to increase labor productivity was to optimize the
manner in which the work was done. Taylor’s methods for
improving worker productivity can still be seen today at companies,
in modern militaries, and even in the world of professional sports.

Taylor principles:
1. Develop a science for each element of an individual’s work to
replace the old rule-of thumb method.
2. Scientifically select and then train, teach, and develop the worker.
3. Cooperate with the workers so as to ensure that all work is done
in accordance with the principles of the science that has been
developed.
4. Divide work nearly equally between managers and workers, so
that the managers apply scientific management principles to
planning the work and the workers actually perform the
tasks.
Taylorism, as developed by Frederick Taylor (the father of scientific
management) and other scholars of the scientific management
school, introduced and popularised the concept to the field of
management in the early 20th century.
Frank and Lillian Gilbreth, (1868 – 1924) a husband and wife
team, both were engineers and had an interest in scientific
management, found that the work could be simplified and

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production could be increased by combining and eliminating body
movements.
The Gilbreths made use of scientific insights to develop a study
method based on the analysis of work motions, consisting in part of
filming the details of a worker's activities while recording the time it
took to complete those activities. The films helped to create a visual
record of how work was completed, and emphasized areas for
improvement. The films also served the purpose of training workers
about the best way to perform their work.
The Gilbreth theory held that there was a “one best way” to do any
task. Efficiency, according to the Gilbreth business management
theory, could therefore be improved by finding this “one best way”
and replicating it throughout the manufacturing process.
The management theory of Frank and Lillian Gilbreth can be
summed up by the following:
1. Reduce the number of motions in a task to increase
efficiency.
2. Focus on the incremental study of motions and time to
understand an entire task.
3. The goal of increased efficiency is both increased profit
and greater worker satisfaction.

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Their method (Time and Motion) came to be known as the Gilbreth
System and was one of the most important works in the space at the
time.

Henry Gantt (1861 – 1919)

Like Taylor, Gantt believed that it was only the application of
scientific analysis to every aspect of work which could produce
industrial efficiency, and that improvements in management came
from eliminating chance and accidents. Gantt made a chart showing
the relationship between work planed and completed on one axis
and time on the other. The Gantt chart is still used in industry as a
method for scheduling work.

There are four important uses of these charts.

1. Planning and scheduling – who’s going to do what, when do
we start, how much time it will take to complete the job.
2. Better visualization and explanation – every person involved
will understand what’s going on without training.

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 3. Monitoring – to see if the project is on schedule or not.
There’s no better tool out there for monitoring project
progress.
4. Adjustments – the initial plan will probably need many
adjustments, and the Gantt Chart excels in allowing to make
these adjustments easily.

1.3.2 General administrative theory

Theorists focused more on what managers do and what constituted
good management practice. The two most prominent theorists
behind the general administrative approach were Henri Fayol and
Max Weber.
Fayol (1841-1925)
Fayol wrote during the same time period as Taylor. While Taylor
was concerned with first-line managers and the scientific method,
Fayol’s attention was directed at the activities of all managers. He
wrote from his personal experience as the managing director of a
large French coal-mining firm.
Fayol proposed 14 principles to guide the thinking of managers in
managing organisations.
These principles are:
1. Division of Work. Specialization increases output by making
employees more efficient.
2. Authority. Managers must be able to give orders, and authority
gives them this right.
3. Discipline. Employees must obey and respect the rules that
govern the organization.
4. Unity of command. Every employee should receive orders from
only one superior.

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5. Unity of direction. The organization should have a single plan of
action to guide managers and workers.
6. Subordination of individual interests to the general interest. The
interests of any one employee or group of employees should not
take precedence over the interests of the organization as a whole.
7. Remuneration. Workers must be paid a fair wage for their
services.
8. Centralization. This term refers to the degree to which
subordinates are involved in decision making. The amount of
decision making should be properly balanced throughout the
organization, and not just at the top.
9. Scalar chain. The line of authority from top management to the
lowest ranks is the scalar chain. There should be a direct line of
authority from the top of the hierarchy to the bottom, so that any
employee can contact a manager in the line of authority if an
issue arises that needs a decision.
10. Order. People and materials should be in the right place at the
right time.
11. Equity. Managers should be kind and fair to their subordinates.
12. Stability of tenure of personnel. Organizations need low
turnover. This allows employees time to learn their jobs, develop
skills, and acquire loyalty.
13. Initiative. Employees who are allowed to originate and carry out
plans will exert high levels of effort.
14. Esprit de corps. Promoting team spirit will build harmony and
unity within the organization.
Max Weber (1864-1920) Developed the principles of bureaucracy-
a formal system of organization and administration designed to
ensure efficiency and effectiveness.
The principles of bureaucracy:
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 1) In a bureaucracy, a manager’s formal authority derives from the
position he or she holds in the organization. Where, Authority is the
power to hold people accountable for their actions and to make
decisions in reference to the use of organizational resources.
2) In a bureaucracy, people should occupy positions because of
their performance, not because of their social standing.
3) The extent of each position’s formal authority and task
responsibilities, and its relationship to other positions in the
organization should be clearly specified. When the task and
authority associated with various positions in the organization are
clearly specified, managers and workers know what is expected of
them and what to expect from each other.
4) Authority can be exercised effectively in an organization when
positions are arranged hierarchically, so employees know whom to
report to and who reports to them. Managers must create an
organizational hierarchy of authority that makes it clear who reports
to whom and to whom managers and workers should go if conflicts
or problems arise.
5) Managers must create a well defined system of rules, standard
operating procedures, and norms so that they can effectively control
behavior within an organization. Standard Operating Procedures
(SOPs) are specific sets of written instructions about how to
perform a certain aspect of a task.

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1.3.3 Behavioral Management Theory
Human relations approach brought attention to the important role
played by individuals in determining the success or failure of an
organisation. It is concerned with social environment surrounding
the job. It is concerned with individual dignity.

The Hawthorne studies:

The Hawthorne studies are a series of studies conducted at the
Western Electric Company Works in Cicero, Illinois. These studies,
started in 1924 and continued through the early 1930s, were initially
designed by Western Electric industrial engineers as a scientific
management experiment. They wanted to examine the effect of
various illumination levels on worker productivity. Control and
experimental groups were set up with the experimental group being
exposed to various lighting intensities, and the control group
working under a constant intensity.
They found that as the level of light was increased in the
experimental group, output for both groups increased. Then, much
to the surprise of the engineers, as the light level was decreased in
the experimental group, productivity continued to increase in both
groups. In fact, a productivity decrease was observed in the
experimental group only when the level of light was reduced to that
of a moonlit night.
The results were surprising, as output rose, even though some
changes were made which made the working conditions poorer. The
researchers conclude that the working conditions have little or no
effect on productivity.
The Hawthorne Studies played a significant role in changing the
dominant view at the time that employees were no different from
any other machines that the organization used.
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1.3.4 The Behavioral approach
This approach refer to:
 Psychology (the study of human behavior).
 Social psychology (deals with behavior as it relates to other
individuals).
 Sociology (define human behaviour in groups).
 Anthropology.

The quantitative approach

The quantitative approach evolved from mathematical and statistical
solutions developed for military problems during World War II.
After the war was over, many of these techniques used for military
problems were applied to businesses.
It involves applying statistics, optimization models, information
models, computer simulations, and other quantitative techniques to
management activities.
Total quality management, or TQM, is a management philosophy
devoted to continual improvement and responding to customer
needs and expectations.

1.3.5 The systems approach

During the 1940s and World War II, systems analysis emerged. This
viewpoint uses systems concepts and quantitative approaches from
mathematics, statistics, engineering, and other related fields to solve
problems. Managers find optimal solutions to management
problems by using scientific analysis which is closely associated
with the systems approach to management. A system is an
interrelated and interdependent set of elements functioning as a
whole.

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The two basic types of systems are closed and open. Closed systems
are not influenced by and do not interact with their environment. In
contrast, open systems are influenced by and do interact with their
environment. Today, when we describe organizations as systems,
we mean open systems.
The organization is an open system that interacts with its
environment. It is composed of inputs from the environment
(material or human resources), transformation processes of inputs to
finished goods (technological and managerial processes), outputs of
those finished goods into the environment (products or services),
and feedback (reactions from the environment). Subsystems are
systems within a broader system. Interdependent subsystems (such
as production, finance, and human resources) work toward synergy
in an attempt to accomplish an organizational goal that could not
otherwise be accomplished by a single subsystem. Systems develop
synergy. This is a condition in which the combined and coordinated
actions of the parts of a system achieve more than all the parts could
have achieved acting independently.
The systems approach stress that organisations must be viewed as
total systems. It views the organisation as a grope of interrelated
parts with a single purpose. Figure (1-1) presents a systems model
that illustrates inputs, transformation, outputs, and control.
Organization can be viewed as a resource conversion machine that
takes inputs (labour, money, materials and equipment) from the
external environment (i.e., the outside world), converts them into
useful products, goods, and services, and makes them available to
customers as outputs.

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 Inputs Transformation Outputs

Feedback
Control

Fig. (1-1) the systems approach.

1.3.6 The contingency approach

In the mid-1960s, the contingency view of management or
situational approach emerged. This view emphasizes the fit between
organization processes and the characteristics of the situation. It
calls for fitting the structure of the organization to various possible
or chance events. It questions the use of universal management
practices and advocates using traditional, behavioural, and systems
viewpoints independently or in combination to deal with various
circumstances. The contingency approach assumes that managerial
behaviour is dependent on a wide variety of elements. Thus, it
provides a framework for integrating the knowledge of management
thought.
The basic idea of the contingency approach is that there is no best
way to plan, organize, or control. Rather the managers must find
different ways to fit different situations. A method highly effective
in one situation may not work in other situations.

1.4 What do Managers do?

What is managerial work? What do managers do? Managers create
and maintain an internal environment, commonly called the
organization, so that others can work efficiently in it. A manager's
job consists of planning, organizing, directing, and controlling the
resources of the organization. These resources include people, jobs
or positions, technology, facilities and equipment, materials and
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supplies, information, and money. Managers work in a dynamic
environment and must anticipate and adapt to challenges.
Managers at all levels perform a variety of tasks. As show in figure
(1-2) managers do the following:

Fig. (1-2) The functions of management.

1) Planning:
Planning include identifying goals, objectives, methods, resources
needed to carry out methods, responsibilities and dates for
completion of tasks. Examples of planning are strategic planning,
business planning, project planning, staffing planning, advertising
and promotions planning, etc.

2) Organizing resources:
Organizing can be viewed as the activities to collect and configure
resources in order to implement plans in a highly effective and
efficient fashion. . Examples are organizing new departments,
human resources, office and file systems, re-organizing businesses,
etc.

3) Directing (Leading):
Leading is establishing direction for the organization, groups and
individuals and also influence people to follow that direction.
Examples are establishing strategic direction (vision, values,
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mission and/or goals) and championing methods of organizational
performance management to pursue that direction.

4) Controlling:
Organizational control (or the term coordination) is assessing if the
organization's systems, processes and structures effectively and
efficiently reach goals and objectives. This includes ongoing
collection of feedback, and monitoring and adjustment of systems,
processes and structures accordingly. Examples include use of
financial controls, policies and procedures, performance
management processes, measures to avoid risks etc.
Another common view is that "management" is getting things done
through others. Yet another view, quite apart from the traditional
view, asserts that the job of management is to support employee's
efforts to be fully productive members of the organizations and
citizens of the community.

All managers manage and interact with people, they spend most of
their time coping with people issues in their jobs. Coaching low
performances to improve their work, organizing job tasks, settling
disputes and developing career for individual employees.

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To most employees, the term "management" probably means the
group of people (managers) who are primarily responsible for
making decisions in the organization.

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1.5 Questions
1. Define: management.
2. Discuss why the study of management can be important to
almost any one.
3. Describe:
a) The system approach.
b) The contingency approach.
4. Explain the various theories in the classical approach.
5. Describe total quality management
Indicate whether each of the following statement is true or false:
a) The contingency approach stress that in any situation, the same
management methods will work equally will.
b) A manager's job consists of planning, organizing, directing, and
controlling the resources of the organization.
C) The planning function is the process of conversion inputs
(labour, money, materials and equipment) from the external
environment (i.e., the outside world), into useful products, goods,
and services, and makes them available to customers as outputs.

Choose the correct answer:

1) Human skills are required at each level, but they are most crucial
to the effectiveness of ----
a) the lower level of management
b) the middle managers
c) the top managers
d) workers
Answer: the lower level of management

2) ------- focuses on worker and machine relationships

a) Scientific management
b) discipline
c) efficiency
d) quantitive
Answer: Scientific management

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3) Which of the following is not an aspect of Fayol's scientific
management?
a) Division of work
b) Unity of direction
c) Discipline.
d) Decentralisation
Answer: Decentralisation

4) Frederick Taylor and Fayol were advocates of an approach to

management involving the use of scientific method, known as:
a) Management science.
b) Scientific management
c) The quantitative approach
d) The contingency approach.
Answer: Scientific management

5) What is the significance of division of labor to an organizational

manager?
a) Allows the manager to identify production errors
b) Allows the manager to break down tasks into smaller ones
c) Allows the manager to determine production quotas
d) Allows the manager to complete projects ahead of time
Answer: Allows the manager to break down tasks into
smaller ones

6)The main schools of management thought are:

A. objectives , human resources, systems, contingency
B. classical, human resources, systems, contextual
C. scientific , human relations, systems, contingency
D. creative, human relations, systems, contingency
Answer: scientific , human relations, systems, contingency

7)"It all depends on the variables of a situation" best describes the

a. classical approach
B. human relations approach
C. systems approach
D. contingency approach

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8) The observation of people at work that would reveal the one best
way to do a task is known as
A. scientific management
B. classical management
C. human relations management
D. creative management

9) The founder of scientific management was

A. Frederick Taylor
B. Henri Fayol
C. Elton Mayo
D. Chester Barnard

10) Authority, discipline, unity of command, and unity of direction

are:
a) Taylor's four principles of management.
b) Principles of the human relations movement.
c) Elements of Weber's ideal bureaucratic structure.
d) Four of Fayol's fourteen principles of management.

11) Division of labor, authority hierarchy, formal selection,

formal rules and regulations, impersonality, and career
orientation are all features of:
a) Weber's ideal type bureaucracy.
b) General administrative theory.
c) Fayol's principles of management.
d) Taylor's principles of management

12) The main influence on the behavioral science theories were:

a) Psychology and sociology.
b) Sociology and bureaucracy.
c) Sociology and science.
d) Bureaucracy and psychology

13) ---------is the capacity to affect the behaviors of others.

a) Leadership
b) Power
c) Trait

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 d) Aggression

14) The vertical flow of communication from lower level to one or

more higher levels is _________.
a) Upward communication
b) Downward communication
c) Formal Communication
d) Horizontal communication

15) Who studied the nature of specific jobs, and broke the tasks into
basic work units with the end result providing the one right way to
perform the job?
a) Douglas M. McGregor
b) Frederick W. Taylor
c) Henry L. Gantt
d) Henry L. Gantt

17) …………..school of thought has developed on the idea that

there is no single best method to find solutions to Managerial
problems
a) System approach
b) Empirical
c) Contingency
d) Operational

18)……….approach is based on the idea that an organization is

studied in detail and decisions are taken for each sub system, which
in turn is in conformity with the total system.
a) Empirical
b) Management science
c) Contingency
d) System

19)………….approach attempts to understand managerial problems

and to provide suitable solutions by the application of
scientificmethodology
a) Empirical
b) Management science

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 c) Contingency
d) Operational

20) The advocates of................. approach view management as the

direction of the activities of a group of people towards the
accomplishment of common objectives
a) Empirical
b) Management science
c) Contingency
d) Human behaviour

21) ……………….approach of management heavily concentrates

on ‘People’ aspect of management.
a) Human relations
b) System
c) Empirical
d) Management science
22) ……………is the art of knowing exactly what you want men to
do and then seeing that how they do it in the best and cheapest way.
a) General management
b) Scientific Management
c) Administration
d) None

23) What were the original assumptions that the Hawthorne

researchers started with?
a)That the optimum heating levels could be discovered to maximize
output
b) That the optimum lighting levels could be discovered to
maximise output
c) That better pay increases worker output
d) That workers formed social groups impacting their performance

24) What was the key finding of the Hawthorne studies?

a)The power of the social group in influencing individual behaviour,
particularly group norms
b) That people work better when they are being watched all the time

28
c) That workers are irrational and need stronger management
control
d) That Taylorism is completely wrong

25) What is the Hawthorne effect?

a)Where the act of observing someone changes their behaviour.
b)The social side of the organization is not important for good
management.
c)It is important to watch people to make them more productive.
d)Workers feel alienated due to distant management.

26) What is the Hawthorne Effect?

a)The behavior of someone when they are in a group of people
b)The behavior of animals in a group
C)The response of someone when given a reward
d) People’s tendency to behave differently when they are being
studied

27)The purpose of scientific research in the Hawthorne studies was

to test the degree of lighting associated with optimum productivity
a)True
b) False

28) The human relations movement was influenced by

a) The study of scientific management.
b) The Hawthorne studies .
c) The time and motion studies
d) The study of the system

29) Management and administration are.

A. same
B. different
C. partly same and partly different
D. same and different

03) The chain of command from the highest authority to the lowest
level in the organization is _________.
A. Unity of direction.

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B. Unity of command.
C. Centralization.
D. Scalar chain.

31) Study of the movements of both the workers and the machine to
eliminate wasteful movement is__________.
A. fatigue study.
B. time study.
C. motion study.
D. work-study.

32) The first and foremost function of management is ___________.

A. planning.
B. organizing.
C. controlling.
D. coordination.

30) --------- is concerned with the laying down of basic objectives

and broad policies of an organisation, while ------------is concerned
with performing various functions for attaining organisational
objectives.
a) Administration, management
b) Management, administration
c) Management, MBO
d) MBO, management

34) Henry Fayol laid down_____________.

A. 12 principles.
B. 13 principles.
C. 14 principles.
D. 15 principles.

35) Espirit de corps means______________.

A. union is strength.
B. service is our motto.
C. buyer beware.
D. product is our strength.

30
36) Every subordinate should receive orders from and be
accountable to only one superior is __________.
A. Unity of direction.
B. Unity of command.
C. Centralization.
D. Scalar chain.

37) The process of establishing a time sequence for the work is

known as ______.
A. objective.
B. schedules.
C. procedures.
D. budgets.

38) An identified group of people contributing their efforts towards

the attainment of goals is called an _____________.
A. organization.
B. business.
C. management.
D. department.

39) What lessons did researcher’s draw from the Hawthorne studies
concerning informal relations in the workplace?
a. That changing lighting in a workplace increased productivity
of workers
b. That the interior design of a workplace is critical to worker
productivity
c. That when workers form social relations at work, their
productivity increases
d. That if workers are allowed to become too social their
productivity decreases

43) If a manager selects an employee to fit the task, trains that

employee so she learns the best way of doing things, and then
monitored her closely to ensure she is performing, that manager
would be adhering to the principles of ______________.
a. Human relations
b. Scientific management

31
 c. Autocratic management
d. Transactional management

41) This theory states the best way to motivate staff in the
workplace is to simplify tasks, divide work equally and provide
monetary incentives.
a)Scientific Theory
b)Administrative Theory
c)Bureaucratic Theory
d)Human Relations Theory

42) A systems management approach divides the organisation into

what key components?
a)Finance, operations, human resources,
b)Inputs, products, outputs
c)Leadership, management and operations
d)Inputs, processes, outputs and feedback

40) ------ means doing a task correctly (“doing things right”) and
getting the most output from the least amount of inputs.
A. effectiveness
B. role
C. efficiency
D. strategy
E. organizing

44) Organizational performance __________ in direct proportion to

__________ in efficiency and effectiveness.
A. increases; increases
B. increases; decreases
C. decreases; decreases
D. decreases; increase

45) In what order do managers typically perform the managerial

functions?
A. organizing, planning, controlling, leading
B. organizing, leading, planning, controlling
C. planning, organizing, leading, controlling

32
D. planning, organizing, controlling, leading
E. leading, organizing, planning, controlling

33
 CHAPTER 2

THE ENVIRONMENT OF
ORGANIZATIONS AND MANAGERS

34
 CHAPTER 2
THE ENVIRONMENT OF ORGANIZATIONS AND
MANAGERS

2.1 Organizational Environment

A manager is someone skilled in knowing how to analyse and
improve the ability of an organization to survive and grow in a
complex and changing world. This means that managers have a set
of tools that enable them to grasp the complexity of the
organization's environment.
The limit perspective of an organisation looks to its elements and
activities that exist within the organisation: employees, managers,
equipment, tools, procedures, and other elements that combine to
create the organisation’s products or service. This is called the
internal environment. Internal environment includes all of the
elements within an organization's boundaries that under the control
of management.
 Owners: The owners of the organization are those who have
legal property rights to it. Owners can be a single individual
who establishes and runs a small organization, partners who
jointly own the organization, Individual investors who buy
stock in a corporation, or other organizations. These sets of
people have a stake in the Taylor and are mindful of how the
organization is being managed.
 Board of Directors: A board of directors is only required of
organizations that are incorporated; however, many other
firms have them. The board of directors is elected by the
stockholders and is charged with overseeing the general

35
 management of the firm to ensure that it is being run in a way
that best serves the stockholders' interests.
 Employees: When the organization's employees hold the
same values and goals as its management, everyone wins.
However, when managers and employees work toward
different goals everyone suffers. The composition of the
organization's employees is changing, and managers must
learn how to deal effectively with these changes.
 Physical work environment: An important part of the internal
environment is the actual physical environment of the
organization and the work that people do. Some firms have
their facilities in downtown skyscrapers, usually spread
across several floors. Others locate in suburban or rural
settings and may have facilities resembling a college campus.
Some facilities have long halls lined with traditional offices.
The complete picture of any organisation must include its external
environment. Managers deal with external environment and internal
environment.
The knowledge of external environment would assist management
in planning the organization's future. Organizations scan the
environment in order to understand external forces of change so that
they may develop effective responses that secure or improve their
position in the future. To the extent that an organization's ability to
adapt to its outside environment depends on knowing and
interpreting the external changes that are taking place,
environmental scanning constitutes a primary mode of
organizational learning.

36
2.2 The External Environment
Environmental scanning analyses information about every sector of
the external environment that can help management to plan for the
organization's future. Scanning covers not only competitors,
suppliers and customers, but also includes technology, economic
conditions, political and regulatory environment, and social and
demographic trends.
The external environment includes all the forces acting on the
organisation from the outside. These forces could be direct forces,
which provide an immediate and direct impact on the organisation.
Direct forces include:
 customers,
 competitors,
 suppliers, and
These forces could also be Indirect forces which influence the
climate in which the manager functions and often have the potential
of becoming direct forces. Indirect forces include:
 technology,
 the economy,
 the political, legal, and regulatory forces,
 culture and social forces,
 international forces.

2.2.1 Direct forces

Customers:
Customers purchase the products or services of the organisation.
Customers are vital to organisations because their decisions to buy
or not a firm’s output directly determines the company’s sales
revenues and its survival. Organisations typically respond to

37
customer forces in the external environment by conducting
customer research that focuses on both present and potential
customers.
There are two basic strategies for monitoring customers: reactive
and proactive.
 Reactive customer monitoring is identifying and addressing
customer trends and problems after they occur. For example:
listening closely to customer complaints and responding to
complaints.
 Proactive monitoring of customers means trying to sense
events, trends, and problems before they occur (or before
customers complain).

Competitors:
Competitors are an organisation’s opponents. The companies
against which the organisation competes for customers and needed
resource (employee, raw materials,…) in the external environment.
An organisation comes to understand its competitors by performing
competitor analysis. It reviews and evaluate information from many
sources (the media, suppliers, wholesalers,…etc) to obtain
understanding of a competitor’s (objectives, strategies, and
competitive advantages).
The objective of competitor analysis, is "to develop a profile of the
nature and success of the likely strategy changes each competitor
might make, each competitor's probable response to the range of
feasible strategic moves other firms could initiate and each
competitor's probable reaction to the array of industry changes and
broader environmental shifts that might occur." Competitor analysis
is therefore focused on the actions, behaviours and options of one or
more existing or potential competitors.
38
Suppliers:
All organisations require resources- funds, energy, equipment,
services, and materials- to produce a product or service that
succeeds in the marketplace.
Suppliers are organisations that provide these resources. Their
outputs are the buyer organisation’s inputs and can therefore,
significantly affect the quality, cost, and timeliness of the buyer’s
product or service.
A key factor influencing the relationship between companies and
their suppliers is how dependent they are on each other.
 Supplier dependence is the degree to which a company relies
on a supplier because of the importance of the supplier’s
product to the company and the difficulty of finding other
sources of that product.
 Buyer dependence is the degree to which a supplier relies on
a buyer because of the importance of that buyer to the
supplier and the difficulty of selling its products to other
buyers

2.2.2 Indirect forces

As mentioned previously indirect forces influence the climate in
which the manager functions and often have the potential of
becoming direct forces. The following discussion will focus on the
most important indirect forces in the external environment.

Technological:
Technology is the knowledge, tools, and techniques used to
transform inputs (raw materials, information, etc.) into outputs
(products and services).

39
Changes in technology can help companies provide better products
or produce their products more efficiently. The technological force
is the developments in technology in the external environment that
can have an impact on an organisation. Organisation must keep up
with technological changes.

Economic:
Changes in the economy reflected by indicators like: inflation rates,
gross domestic product, unemployment rates, the value of the
currency, interest rates, etc. Changes in the economy pose both
opportunities and problems for managers. Organisations must be
aware with changes in the economy.

Political, legal, and regulatory:

The political/legal component of the general environment includes
the legislation, regulation, and court decisions that govern and
regulate business behaviour. The political, legal, and regulatory
forces have indirect but strong influence on the organisation.
Legislation affects wages, taxes, the right of the employee,
workplace safety, …etc. The political, legal, and regulatory forces
can act as both constraint and opportunity for the organisation.
Many managers are also unaware of the potential legal risks
associated with traditional managerial decisions such as recruiting,
hiring, and firing employees.

Cultural and social:

Every nation has a social and cultural system comprising certain
beliefs and values. Managers need to take cultural and social forces
in account because these external forces are important in their
effect.

40
Organizational culture refers to a system of shared assumptions,
values, and beliefs that show people what is appropriate and
inappropriate behaviour. These values have a strong influence on
employee behavior as well as organizational performance.
It is important to have a culture that fits with the demands of the
company’s environment. company performance may benefit from
culture for example, if a company is in the high-tech industry,
having a culture that encourages innovativeness and adaptability
will support its performance. However, if a company in the same
industry has a culture characterized by stability, a high respect for
tradition, and a strong preference for upholding rules and
procedures, the company may suffer because of its culture. In other
words, just as having the “right” culture may be a competitive
advantage for an organization, having the “wrong” culture may lead
to performance difficulties, may be responsible for organizational
failure, and may act as a barrier preventing the company from
changing and taking risks.
An organization's culture, especially a strong one, constrains a
manager's decision-making options in all management functions.

International:
International forces apply when;
 Organisation relays on foreign supplier for resource.
 Compete with international competitors.
 Internationalise and expand products or services into an
international market.

2.3 How the Environment Affects Managers

The environment affects managers through the degree of
environmental uncertainty that is present and through the various

41
 stakeholder relationships that exist between the organization and
its external constituencies.
Environmental uncertainty is determined by two dimensions: degree
of change and degree of complexity in an organization's
environment.
The first of these dimensions is the degree of change. If the
components in an organization's environment change frequently,
we call it a dynamic environment. If change is minimal, we call it
a stable one. A stable environment might be one in which there are
no new competitors, no new technological breakthroughs by
current competitors, little activity by pressure groups to influence
the organization.
The other dimension of uncertainty describes the degree of
environmental complexity. The degree of complexity refers to the
number of components in an organization's environment and the
extent of the knowledge that the organization has about those
components. Complexity is also measured in terms of the
knowledge an organization needs to have about its environment.
For instance, managers at the online brokerage must know a great
deal about their Internet service provider's operations if they want
to ensure that their Web site is available, reliable, and secure for
their stock-trading customers. On the other hand, managers of
grocery stores have a minimal need for sophisticated knowledge
about their suppliers.

2.4 Who Are Stakeholders?

A stakeholder is any person, organization, social group, or society at
large that has a stake in the organization. Thus, stakeholders can be
internal or external to the organization. A stake is a vital interest in
the organization or its activities. It can include ownership and
42
property interests, legal interests and obligations, and moral rights.
A legal obligation may be the duty to pay wages or to honor
contacts. A moral right may include the right of a consumer not to
be intentionally harmed by the organization activities. Stakeholders
can:
 Affect the organization
 Be affected by the organization
 Be both affected by the organization and affect the
organization

43
Fig. (2-1) Organizational Stakeholders

2.3 The Management Levels

Most organisations function on at least three distinct but
overlapping levels which are:
 Operations level.
 Technical level.
 Strategic level.

Operations level:
The operations level focuses on effective performance, whether the
organisation produces something or performs a service. The main
task of this level is to develop the best allocation of resources to
produce the desired output.

44
Technical level:
The technical level focuses on coordinating the activities at the
operations level as well as decide which products or services to
produce. The main managerial tasks of this level are:
a) Managing the operations functions.
b) Serving as a link between those who produce the product or
service and those who use it.

Strategic level:
The strategic level determines the long-run objectives and direction
of the organisations. In other words, how the organisation interacts
with its environment.
The extent to which managers perform the functions of management
- planning, organizing, directing, and controlling - varies by level in
the management hierarchy. The term supervisor could be applied at
all management levels of the organization to those who direct the
work of others. In common usage, however, the title tends to be
used only in the first level of the management hierarchy. If an
organization were divided into top, middle, and lower managerial
levels, the term generally applies to the lower level.
Supervisors are managers whose major functions emphasize
directing and controlling the work of employees in order to achieve
the team goals. They are the only level of management managing
non-managers. Thus, most of the supervisor's time is allocated to the
functions of directing and controlling. In contrast, top managers
spend most of their time on the functions of planning and
organizing. The top manager determines the mission and sets the
goals for the organization. His or her primary function is long-range
planning. Top management is accountable for the overall

45
management of the organization. Middle management implements
top management goals. Supervisors direct the actual work of the
organization at the operating level this is illustrated in fig. (2-1).

2.4 Skills of Managers

Three basic skills are required for effective managerial performance,
which are:

Human skills:
Human skills mean the ability to work with, communicate with, and
understand other people. Managers need to motivate their
subordinate, resolve their problems to improve their performance.
Humans’ skills also mean the ability to work well with others both
as a member of a group and as a leader who gets things done
through others.

Fig. (2-2) The levels of management

46
Technical skills:
The technical skills refer to the ability of the manager to use specific
knowledge, techniques, and resources in performing work. It is the
understanding of and proficiency in the performance of specific
tasks.
Accounting supervisors, engineering directors, etc must have a
technical skills of the people they mange to perform their
management jobs.

Conceptual skills:
The conceptual skills refer to the ability of the manager to see the
overall organisation and to integrate all parts of the system.
Conceptual skills depend on the manager’s ability to think in
abstract. Managers need the mental capacity to understand various
cause and effect relationships in the organisation to grasp how all
parts of the organisation fit together. It is the ability to coordinate
and integrate all of an organisation’s activities, especially in the
long- term decisions.
All three skills are essential for the manager, however human skills
are critical at the lower level of management. Technical skills are
required at each level of management, but they are most crucial to
the effectiveness of the middle managers. The conceptual skills are
most critical for top managers.

Management Roles
Managerial functions are different from managerial roles.
Managerial functions inform the ways that managers meet the
requirements of their duties. Managerial roles encompass the types
of skills necessary to successfully complete those duties.
There are four fundamental functions of management :
47
 Planning: To decide how best to achieve desired outcomes.
Organizing: To determine which resources are required to meet the
goals outlined during planning.
Leading: To direct employees toward the business goals.
Controlling: To monitor and evaluate how well the outcomes are
aligned with the business goals.
In carrying out the responsibilities of planning, organizing, leading,
and controlling, managers take on many different roles. A role is a
set of behavioral expectations, or a set of activities that a person is
expected to perform.
There are 10 managerial roles that were first identified by Henry
Mintzberg. These roles serve to help simplify the complexities that
managers often encounter. The 10 managerial roles are divided into
three broader categories: interpersonal, informational and
decisional.
Interpersonal roles: This category covers behaviors and
responsibilities related to interactions with employees and other
stakeholders. Through these interactions, the manager can achieve
organizational goals. The managerial roles included in this category
are figurehead, leader and liaison.
 Figurehead: The managerial role of performing
ceremonial duties that represent the organization.
 Leader: The managerial role of taking responsibility
for subordinates, such as motivating employees.
 Liaison: Managers must communicate with internal
and external contacts. They need to be able to network
effectively on behalf of their organization.
Informational roles: This category represents situations
when a manager generates, receives or shares knowledge
with employees and higher-level colleagues to accomplish
48
objectives. The managerial roles included in this category are
monitor, disseminator and spokesperson.
 Monitor: The managerial role of seeking information
to improve outcomes and operations.
 Disseminator: The managerial role of relaying
information and delegating to subordinates.
 Spokesperson: includes representing the organization
and providing information about the organization to
outsiders.
Decisional roles: This category describes a manager's
responsibility to use the information they gain to form
business and strategic decisions. The managerial roles
included in this category are entrepreneur, disturbance-
handler, resource-allocator and negotiator.
 Entrepreneur: The managerial role of inspiring
change or innovation and implementing new ideas.
 Disturbance handler: The managerial role of
removing roadblocks and impediments to work.
 Resource allocator: The managerial role of
ensuring that proper resources are provided where
needed.
 Negotiator: The managerial role of participating in
and directing negotiations internally and
externally.

49
50
2.5 Questions
1. Discuss:
 “Manager must deal with both the external and the internal
environment”
 Types of managers and levels of management.
 Basic management skills.
 The major elements of internal environment, and how they
effect management process.
2. Indicate whether each of the following statement is true or
false, then justify your answer:
a) Human skills are required at each level, but they are
most crucial to the effectiveness of the top managers.
b) The important of technical skill increases as one rise
in hierarchy.
c) The importance of the management skills to a specific
manager depends on his or her level in the
organisation.
d) The external environment includes all the forces
acting on the organisation from the outside.
e) Managers with conceptual skills understand all
activities and interests of the organisation and how
they interrelate.
f) Technological forces have a direct influence on an
organisation. Technological developments can
influence an organisation’s use of knowledge and
techniques in producing a product or service.
h) The human skills refer to the ability of the manager to
see the overall organisation and to integrate all parts
of the system.
51
3. Complete:
a) Customers are perhaps the most vital to organisations. Their
decision to by or not buy a firm’s output directly determines
the company’s sales revenue and ultimately its survival.
Organisations respond to customer forces by……………….
b) Companies that product the same or similar products/services
as the organisation called…………….
c) Direct forces which provide an …….…...and …………...
impact on the organisation include
……………,…..……,……, and…………..

Choose the correct answer:

1) The resources within an organization, used to achieve its goal,
make up the _________ of a business.
a) External environnent
b) Internal environment
c) Social responsibility
d) Workers motivation
2 A company is affected by two broad set of factors are ________
A. Local and regional
B. Regional and national
C. Internal and external
D. Financial and non-financial

3. Economic environment refers to all forces which have a

_______impact on business
A. Political
B. Natural
C. Economic
D. Social

4._______ environment is beyond the control of the business

A. Internal
B. External
C. Micro
52
 D. Macro
5. External factors affecting a business environment also be referred
to ____factors
A. Controllable
B. Uncontrollable factors
C. Relevant
D. Global
6.What are the three interpersonal roles of managers?
a) Figurehead, leader and liaison
b) Spokesperson, leader, coordinator
c) Director, coordinator, disseminator
d) Communicator, organiser, spokesperson
7. He developed a set of ten managerial roles and behaviors within a
business environment.
a) Frank Gilbreth
b) Henry Mintzberg
c) Henry Gnatt
d) Fredrick Taylor
8. What are the three categories of managerial roles according to
Mintzberg
a) Informational, Interpersonal, Directional
b) Interpersonal, Informational, Decisional
c) Interpersonal, Intrapersonal, Decisional
d) Informational, Introspective, Directional

9) According to Mintzberg, one of management’s interpersonal

roles is .
A. spokesperson
B. leader
C. negotiator
D. monitor

10) According to Mintzberg the leader of an organization performs

__________,
A. An Interpersonal role
B. An Informational role
C. A Decisional role
D. All the Above

53
11) According to Mintzberg, monitor, disseminator, and
spokesperson activities are all
a. interpersonal roles.
b. informational roles.
c. decisional roles.
d. planning roles.

12) According to Mintzberg, which management role includes

entrepreneur, disturbance handler, resource allocator, and
negotiator?
a. interpersonal
b. informational
c. decisional
d. planning

13) Ahmed is representing his company at the local Chamber of

Commerce Annual Business Recognition luncheon. He is
performing which managerial role?
a. negotiation
b. monitor
c. figurehead
d. liaison
14) Ahmed is involved with discussions among employees,
management, and the union to which his employees belong. They
are discussing wage issues. Management is interested in keeping the
wages at minimum wage. The employees/union want $.50 plus
minimum wage. Ahmed is performing which managerial role?
a. monitor
b. entrepreneur
c. negotiator
d. organizer
15) Ramy is well known for his skills in using the advanced
programming software of the engineering field. In fact, it was his
specialized knowledge that led to his promotion as manager. Which
managerial skill is Ramy demonstrating?
a. conceptual b. interpersonal
c. technical d. political

54
16) According to Mintzberg’s management roles, the______ roles
are those that involve people and other duties that are ceremonial
and symbolic in nature.
a. informational b. interpersonal
c. technical d. decisional

17) Which of the following is not an example of a decisional role

according to Mintzberg’s management roles?
a. spokesperson
b. entrepreneur
c. disturbance handler
d. resource allocator

18) All of the following are examples of informational roles

according to Mintzberg except ____________.
a. liaison b. monitor
c. disseminator d. spokesperson

19) nvironmental _____ refers to the degree of change and

complexity in an organization’s environment.
a)friendly
b)uncertainty
c) certainty
d) balance

20) External environment is defined as factors, forces, situations,

and events _____ the organization that affect its performance.
external
internal
inside
outside

55
 CHAPTER 3
THE PLANNING FUNCTION

56
 CHAPTER 3
THE PLANNING FUNCTION

3.1 Introduction
Management is an art and a science. It is the art of making people
more effective than they would have been without it, and the
science of effectively accomplishing a project or a task. Business
management is the process of getting tasks done efficiently along or
while working with others. Management functions include,
planning, organizing, directing, and controlling.
Planning is a vital part of managing. You need to plan in order to
avoid problems as you go along. However, before your start to plan,
set a goal and then create a plan that will help you achieve those
goals. How can you manage your employees to get the best, most
efficient output from them? Plan for possible pitfalls, obstacles and
bumps in the road. Perhaps one of the best ways to make a plan is to
do it in conjunction with your team. Get their input and implement
their suggestions into your plan.

3.2 What do We Mean by Planning?

Planning is traditionally considered to be one of the four major
functions of management, along with organizing, directing, and
controlling. Planning is identifying:
1. Where you want to go,
2. Why you want to go there,
3. How you will get there,
4. What you need in order to get there and
5. How you will know if you're there or not.

57
Definition of Planning
Planning function includes the managerial activities that determine
objectives and the appropriate means for achieving those
objectives.
Planning is deciding in advance what to do and how to do. It is one
of the basic managerial functions. Planning therefore involves
setting objectives and developing an appropriate course of action to
achieve these objectives.
According to Koontz and O' Donnell, "Planning is an intellectual
process, conscious determination of course of action, the basing of
decision on purpose, facts and considered estimates.“
According to Alford and Beatt, "Planning is the thinking process,
the organized foresight, the vision based on fact and experience that
is required for intelligent action."
According to Theo Haimann, "Planning is deciding in advance
what is to be done. When a manager plans, he projects a course of
action for further attempting to achieve a consistent co- ordinate
structure of operations aimed at the desired results”.

Reasons for Planning

Managers should plan for the following reasons
1) Planning provides directions:
Planning ensures that the goals or objectives are clearly stated so
that they act as a guide for deciding what action should be taken and
in which direction. If goals are well defined, employees are aware of
what the organisation has to do and what they must do to achieve
those goals. Departments and individuals in the organisation are
able to work in coordination. If there was no planning, employees

58
would be working in different directions and the organisation would
not be able to achieve its desired goals.

2) Planning reduces the risks of uncertainty:

Planning is an activity which enables a manager to look ahead and
anticipate changes. By deciding in advance the tasks to be
performed, planning shows the way to deal with changes and
uncertain events. Changes or events cannot be eliminated but they
can be anticipated and managerial responses to them can be
developed.

3) Planning reduces overlapping and wasteful activities:

Planning serves as the basis of coordinating the activities and efforts
of different divisions, departments and individuals. It helps in
avoiding confusion and misunderstanding. Since planning ensures
clarity in thought and action, work is carried on smoothly without
interruptions. Useless and redundant activities are minimised or
eliminated. It is easier to detect inefficiencies and take corrective
measures to deal with them.

4) Planning promotes innovative ideas:

Since planning is the first function of management, new ideas can
take the shape of concrete plans. It is the most challenging activity
for the management as it guides all future actions leading to growth
and prosperity of the business.

5) Planning facilitates decision making:

Planning helps the manager to look into the future and make a
choice from amongst various alternative courses of action. The
manager has to evaluate each alternative and select the most viable

59
proposition. Planning involves setting targets and predicting future
conditions, thus helping in taking rational decisions.

6) Planning establishes standards for controlling:

Planning involves setting of goals. The entire managerial process is
concerned with accomplishing predetermined goals through
planning, organising, staffing, directing and controlling. Planning
provides the goals or standards against which actual performance is
measured. By comparing actual performance with some standard,
managers can know whether they have actually been able to attain
the goals. If there is any deviation it can be corrected. Therefore, we
can say that planning is a prerequisite for controlling. If there were
no goals and standards, then finding deviations which are a part of
controlling would not be possible. The nature of corrective action
required depends upon the extent of deviations from the standard.
Therefore, planning provides the basis of control.

Benefits of Planning
 Allows decisions to be made ahead of time.
 Permits anticipation of consequences.
 Provides direction and a sense of purpose.
 Provides a unifying framework; avoiding piecemeal decision
making.
 Improves competitive strength
 Achieves better coordination
 Helps identify threats and opportunities and reduces risks.
 Facilitates managerial control through the setting of
standards for monitoring and measuring performance.
 Encourages innovation & creativity

60
Types of Plans
 Strategic plans are plans that apply to the entire organization
and establish the organization’s overall goals.
 Operational plans specify the details of how the overall goals
are to be achieved
 Long-term used to mean anything over five years. We define
long-term plans
 Short-term plans cover one year or less. Any time period in
between would be an intermediate plan.
 Specific plans are clearly defined and leave no room for
interpretation. A specific plan states its objectives in a way
that eliminates ambiguity and problems with
misunderstanding.
 Directional plans are flexible plans that set out general
guidelines. They provide focus but don’t lock managers into
specific goals or courses of action.
 A single-use plan is a one-time plan specifically designed to
meet the needs of a unique situation. For instance, wanted to
expand the number of its stores, top-level executives
formulated a single-use plan as a guide.
 Standing plans are on-going plans that provide guidance for
activities performed repeatedly.

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62
Business planning is often conducted when:
 Starting a new venture (organization, product or service)
 Expanding a current organization, product or service.
 Buying a current organization, product or service.
 Working to improve the management of a current
organization, product or service.
There are a wide variety of formats for a business plan. The
particular format and amount of content included in a plan depends
on the complexity of the organization, product or service and on the
demands of those who will use the business plan to make a decision,
like investors, managers, directors, etc.
Overall, the contents of a business plan typically aim to:
1. Describe the venture (new or current organization, product or
service), often including its primary features, advantages and
benefits
2. What the organization wants to do with it (buy it, expand it,
etc.)
3. Justification that the plans are credible (results of research
that indicate the need for what the organization wants to do)
4. Marketing plans, including research results about how the
venture will be marketed. For example,
 who the customers will be, any specific groups (or
targets) of customers,
 why they need the venture (benefits they seek from
the venture),
 how they will use the venture,
 what they will be willing to pay, how the venture will
be advertised and promoted, etc.)

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 5. Staffing plans, including what expertise will be needed to
build and provide the venture on an ongoing basis.
6. Management plans, including how the expertise will be
organized, coordinated and led.
7. Financial plans, including costs to build the venture costs to
operate the venture, expected revenue, budgets for each of
the first several years into the future.

The Elements Of Planning

The essential elements of planning are Vision, Mission;
goals, Objectives; strategy; and action.

Vision (THE DREAM):

A vision statement is a statement of what the future looks
like if the organization is successful.
A vision is an image without great detail. It acts as a flag
around which the troops will rally
(Hammer &Champy, 1993)

The vision statement of an organization is an aspirational

description of what an organization would like to achieve or
accomplish in the future. It is intended to serve as a clear guide for
choosing current and future courses of action.
The vision of an organization must possess the following
characteristics:
 It is created by consensus.
 It forms a company’s future mental image.
 It forms the basis for formulating the mission statement.

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Examples:
Company Vision
Boeing “Best in Aerospace and Enduring Global
Industrial Champion.”
Stokes Eye Our vision is to take care of your vision
Clinic
General Motors “to become the world’s most valued automotive
company.”

Boeing offers a strong example of a vision statement a lot of

information is packed into that tiny statement. It’s obvious that their
aspiration is to be the best aerospace company in the world. They
also aspire to position the company as a leader of industry (not just
aerospace) now and for the foreseeable future. This statement helps
Boeing’s leadership focus their efforts in the right direction.

Mission (THE WHAT AND WHY):

The mission statement is A brief statement of why an

organisation exists; in other word, what the organization aims to
accomplish for its customers,… and other stakeholders. It refers
to the purpose of the organization which is expressed in a
few words. The mission is a general statement of how the
organization will achieve the vision. So if the vision
statement answers what the world is going to look like in the
future, the mission on the other hand answers the question
“how?” as in “how are we going to make that vision a reality?”

65
 Examples:
Company Mission Statement
Boeing "Connect, Protect, Explore and Inspire the World
through Aerospace ."
General to earn customers for life by building brands
Motors that inspire passion and loyalty through not
only breakthrough technologies but also by
serving and improving the communities in
which we live and work around the world.”

Goals – A goal is a general statement of what you want to

achieve. More specifically, a goal is a milestone(s) in the
process of implementing a strategy. Examples of business goals
are:
 Increase profit margin
 Increase efficiency
 Capture a bigger market share
 Provide better customer service
 Improve employee training
Objectives: Objective is a purpose that each and every
employee or department or division needs to fulfill in a way as
is expected. Attaining the specific objectives leads the
employees to contribute greatly to the common goals of a
business entity.
Objectives may be of various types. Some of these are explained as
below:
Profit Objective – It is the most important objective for any business
enterprise. In order to earn a profit, an enterprise has to set multiple
objectives in key result areas such as market share, new product

66
development, quality of service etc. These may also be termed as
performance objectives.
Marketing Objective may be expressed in terms of percentage
increase or decrease in market share. They are related to a
functional area.
Productivity Objective may be expressed in terms of ratio of input to
output. This objective may also be stated in terms of cost per unit of
production. Product Objective may be expressed in terms of product
development, product diversification, branding etc.
Social Objective may be described in terms of social orientation.
Financial Objective relate to cash flow, debt equity ratio, working
capital, new issues, stock exchange operations, collection periods,
debt instruments etc.
Human resources objective may be described in terms of
absenteeism, turnover, number of grievances, strikes and lockouts
etc. For example: the objective may be to decrease the rate of
absenteeism.

STRATEGIES (THE HOW)

Strategies explain how the initiative will reach its objectives.
Generally, organizations will have a wide variety of strategies
that include people from all of the different parts, or sectors, of
the community. These strategies range from the very broad,
which encompass people and resources from many different
parts of the community, to the very specific, which aim at
carefully defined areas.

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A C TI O N P LA N ( WH A T C H A N G E WI L L
H A P P E N; WH O WI L L D O WH A T B Y WH E N T O
M A K E I T H AP P E N )
Finally, an organization's action plan describes in great detail
exactly how strategies will be implemented to accomplish the
objectives developed earlier in this process. The plan refers to: a)
specific (community and systems) changes to be sought, and b) the
specific action steps necessary to bring about changes in all of the
relevant sectors, or parts, of the community.
Action steps are developed for each component of the
intervention or (community and systems) changes to be sought.
These include:
 Action step(s): What will happen
 Person(s) responsible: Who will do what
 Date to be completed: Timing of each action step
 Resources required: Resources and support (both what is
needed and what's available )
 Barriers or resistance, and a plan to overcome them!
 Collaborators: Who else should know about this action

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Examples of action plans within the context of goals and
objectives are:

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3.3 Phases of Planning
Whether the system is an organization, department, business,
project, etc., the basic planning process typically includes similar
nature of activities carried out in similar sequence. The complexity
of the various phases depends on the scope of the system. For
example, in a large corporation, the following phases would be
carried out in the corporate offices, in each division, in each
department, in each group, etc. however it must be noted that
different groups of planners might have different names for the
activities and groups them differently. However, the nature of the
activities and their general sequence remains the same.

The phases of planning:

1. The determination of the mission

The nature of an organisation is often expressed in terms of its
Mission which indicates the purposes of the organisation, its reason
for being. For example, “to design, develop, manufacture and
market specific product lines for sale on the basis of certain features
to meet the identified needs of specified customer groups via certain
distribution channels in particular geographic areas”. The mission
statement should be a definition of what the organisation is striving
to become in the long run and should take into account the
organisation’s history, distinctive competencies, and environment.
A statement along these lines indicates what the organisation is
about and is infinitely clearer than saying, for instance, “we’re in
electronics” or worse still, “we are in business to make money”.
Also, some people confuse mission statements with value
statements. The Values governing the operation of the business and

70
its conduct or relationships with society at large, customers,
suppliers, employees, local community and other stakeholders.
During planning, planners have in mind some overall purpose or
result that the plan is to achieve. For example, during strategic
planning, it’s critical to reference the mission, or overall purpose, of
the organization.

2. Analysing the situation

Planners often conduct analysis for considering the organization’s
strengths and weaknesses, and the opportunities and threats faced by
the organization (SWOT Analysis). During SWOT analysis,
planners also can use a variety of assessments, or methods to
“measure” the health of systems.
The primary objective of a SWOT analysis is to help organizations
develop a full awareness of all the factors involved in making a
business decision. This method was created in the 1960s by Albert
Humphrey of the Stanford Research Institute, during a study
conducted to identify why corporate planning consistently failed.
Since its creation, SWOT has become one of the most useful tools
for business owners to start and grow their companies.

Strengths and weaknesses refer to internal factors. Strengths are the

characteristics that give the business its competitive advantage,
while weaknesses are characteristics that a company needs to
overcome in order to improve its performance.
External factors are the opportunities and threats to the company.
Opportunities are elements that the company sees in the external
environment that it could pursue in the future to generate value.
Threats are elements in the external environment that could prevent

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the company from achieving its goal or its mission or creating
value.

It is important to assess the strengths and weaknesses of the

organization. What makes the organization distinctive? How skilled
is workforce? What is market share? What financing is available?
Organisation must Analyse opportunities and threats and comprise
the external assessment of the environment. Identify opportunities.
In which areas is the competition not meeting customer needs?
(What are the possible new markets? What is the strength of the
economy? What are the emerging technologies? Is there a
possibility of growth of existing market?) Identify threats. In which
areas does the competition meet customer needs more effectively?
(Are there new competitors? Is there a shortage of resources? Are
market tastes changing? What are the new regulations? What
substitute products exist?) The best strategy is one that fits the
organization’s strengths to opportunities in the environment.

3. Establish goals and objectives

Based on the analysis and alignment to the overall mission of the
system, planners establish a set of goals and objectives that build on
strengths to take advantage of opportunities, while building up
weaknesses and warding off threats.
Goals and objectives are developed to bridge the gap between
current capability and the mission. They are aligned with the
mission and form the basis for the action plans. Objectives are
sometimes referred to as performance goals. Generally,
organizations have long-term objectives for such factors as return on
investment, earnings per share, or size. Furthermore, they set
minimum acceptable standards or common-sense minimums. In
addition, certain limitations, either explicit or implicit, such as
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“must provide jobs for existing employees” may exist. Objectives
elaborate on the mission statement and constitute a specific set of
policy, programmatic, or management objectives for the programs
and operations covered in the strategic plan. They are expressed in a
manner that allows a future assessment of whether an objective has
been achieved.

4. Establish strategies to reach goals

The particular strategies or methods to reach the goals chosen
depend on matters of affordability, practicality and efficiency.

1. Associate responsibilities and time lines with each

objective
Objectives are selected to be timely and indicative of progress
toward goals. Responsibilities are assigned, including for
implementation of the plan, and for achieving various goals and
objectives. Ideally, deadlines are set for meeting each
responsibility.

2. Write the Plan

The above information is organized and written in a document,
which is distributed around the system.

3.4 Successful Planning and Implementation

A common failure in many kinds of planning is that the plan is
never really implemented. Instead, all focus is on writing a plan
document. Too often, the plan sits collecting dust on a shelf.
Therefore, most of the following guidelines help to ensure that the
planning process is carried out completely and is implemented
completely or, deviations from the intended plan are recognized and
managed accordingly.

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1. Involve the Right People in the Planning Process
It’s critical that all parts of the system continue to exchange
feedback in order to function effectively. This is true no matter what
type of system. When planning, get input from everyone who will
responsible to carry out parts of the plan, along with representative
from groups who will be affected by the plan. Of course, people
also should be involved in they will be responsible to review and
authorize the plan.

2. Write Down the Planning Information and Communicate

it Widely
Managers often forget that others don’t know what these managers
know. Even if managers do communicate their intentions and plans
verbally, chances are great that others won’t completely hear or
understand what the manager wants done. Also, as plans change, it’s
extremely difficult to remember who is supposed to be doing what
and according to which version of the plan. Employees may request
copies of various types of plans. Therefore, it’s critical to write
plans down and communicate them widely.

3. Goals and Objectives Should be specific, Measurable,

Acceptable, Realistic, and Have a Time Frame Specific:
For example, it’s difficult to know what someone should be doing if
they are to pursue the goal to “work harder”. It’s easier to recognize
if it is determine a specific task.

Measurable:
It’s difficult to know what the scope of “Writing a paper”
really is. It’s easier to appreciate that effort if the goal is
“Write a 30-page paper”.
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 Acceptable:
If the employees take responsibility for pursuit of a goal, the
goal should be acceptable to them. For example, they are not
likely to follow the directions of someone telling them to
write a 30-page paper when they also have other papers to
write. However, if they are involved in setting the goal so
they can change their other commitments or modify the goal,
they are much more likely to accept pursuit of the goal as
well.

Realistic:
Even if the employees do accept responsibility to pursue a
goal that is specific and measurable, the goal won’t be useful
if it is, for example, the goal is to “Write a 30-page paper in
the next 10 seconds”.

Time frame:
It may mean more if the goal determined as “Write a 30-page
paper in one week”. However, it’ll mean more if the goal
specified as that “write one page a day for 30 days

4. Specify Who’s Doing What and by When?

Plans should specify who is responsible for achieving each result,
including goals and objectives. Dates should be set for completion
of each result, as well. Responsible parties should regularly review
status of the plan. Be sure to have someone of authority “sign off”
on the plan, including putting their signature on the plan to indicate
they agree with and support its contents. Include responsibilities in
policies, procedures, job descriptions, performance review
processes, etc.

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5. Note Deviations from the Plan and Re-plan
Accordingly it is acceptable to deviate from the plan. The plan is not
a set of rules. It’s an overall guideline. As important as following
the plan is noticing deviations and adjusting the plan accordingly.

6. Evaluate Planning Process and the Plan

During the planning process, it is important to collect feedback from
participants. Do they agree with the planning process? If not, what
don’t they like and how could it be done better? In large, ongoing
planning processes (such as strategic planning, business planning,
project planning, etc.), it’s critical to collect this kind of feedback
regularly.
During regular reviews of implementation of the plan, assess if
goals are being achieved or not. If not, were goals realistic? Do
responsible parties have the resources necessary to achieve the goals
and objectives? Should goals be changed? Should more priority be
placed on achieving the goals? What needs to be done?
Once you have a plan, you need to be ready to put it into action.
Make sure everyone involved is ready to move ahead and do his or
her part. Make sure your workers are trained and motivated, and that
the materials are ordered and in place. Have a schedule and stick to
it. Check back to make sure everyone understands his or her role in
achieving the goal.

Limitations of Planning
Unfortunately, things do not always go according to plan.
Unforeseen events and changes, rise in costs and prices,
environmental changes, government interventions, legal regulations,
all affect the plans of the organisations. Plans then need to be
modified. The major limitations of planning are given below:
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Limitations of Planning
1. Planning leads to rigidity: most of the times planning leads to
rigidity I n functioning because it is not easy to make changes in
them. When the circumstances change, following the pre-decided
plan may no be in the interest of the organization.
2. Planning may not work in dynamic environment: Business
environment is dynamic. The organization has to constantly adapt
itself to the changes. For example, if economic policies are
modified, or political conditions change, or there is a natural
calamity. All these changes may not be predicted by planners and so
there may be an obstacle to effective planning.
3. Planning reduces creativity: Planning is an activity done by the
top management. Rests of the members just implement it. They are
not permitted to deviate from the plans. So the creativity in them
gets lost. For them, there is nothing new or innovative.
4. Planning involves huge cost: planning involves a lot of cost in
terms of time, money and accuracy. A lot of calculations are
required to be done and professional experts are to be hired in order
to plan. When the cost of planning exceeds the value of benefits
derived from it, it becomes uneconomical to plan.
5. Planning is time consuming: Sometimes plans to be drawn up
take so much of time that there is not much time left for their
implementation.
6. Planning does not guarantee success: The success of an
organization depends upon properly drawn plans. Managers
generally have a tendency to rely on previously tried and tested
successful plan. However, it is not always true that just because a
plan has worked before it will work again. It may lead to failure
instead of success.

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Management by Objectives (MBO)
Management by Objectives (MBO) is a management technique
where managers and employees work together to set, record and
monitor goals for a specific period of time. Organizational goals and
planning flow top-down through the organization and are translated
into goals for organizational members.
The technique was first used by management expert Peter Drucker
and became commonly used in the 1960s. Management by
Objectives is now a popular and widely used management theory.
The core concept of MBO is planning, which means that an
organization and its members are not merely reacting to events and
problems but are instead being proactive. MBO requires that
employees set measurable personal goals based upon the
organizational goals. For example, a goal for a civil engineer may
be to complete the infrastructure of a housing division within the
next twelve months. The personal goal aligns with the
organizational goal of completing the subdivision.
MBO is a supervised and managed activity so that all of the
individual goals can be coordinated to work towards the overall
organizational goal. You can think of an individual personal goal as
one piece of a puzzle that must fit together with all of the other
pieces to form the complete puzzle: the organizational goal. Goals
are set down in writing annually and are continually monitored by
managers to check progress. Rewards are based upon goal
achievement.
The objectives must meet five criteria: they must be "SMART"
objectives are:
 Specific - Target a specific area for improvement.
 Measurable - Quantify or suggest an indicator of progress.

78
  Agreed-upon – Between the two sides (who sets it and who
will achieve this)
 Realistic - State what results can realistically be achieved,
given available resources.
 Time-bound - Specify when the result(s) can be achieved

Steps in Management by Objectives Process

There are several steps to the MBO process:
1. Identify organizational goals - Goals must be realistic and
achievable, which helps to guarantee the best results.
2. Define employee objectives - Translate organizational goals
to employees. The purpose is to make sure each employee is
aware of the objectives and willing to participate in the
process.
3. Monitor progress - management needs to provide proper
resources and support so employees can follow through with
their action plans. The superiors and subordinates have
regular meetings and review the progress of objectives. The
review meetings concentrate on improving the work so that
stated organisational objectives are achieved. These meetings
make the subordinates conscious that their progress is
regularly reviewed and helps them to keep their performance
as per the schedules decided earlier.
4. Performance evaluation and feedback - MBO traditionally
uses positive recognition.
5. Reward Performance - After a performance evaluation,
your employee should be rewarded for high performance.

Advantages of Management by Objectives

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1 . Since Management by objectives (MBO) is a result-oriented
process and focuses on setting and controlling goals, if encourages
managers to do detailed planning.
2. Both the manager and the subordinates know what is expected of
them and hence there is no role ambiguity or confusion.
3. The managers are required to establish measurable targets and
standards of performance and priorities for these targets. In
addition, the responsibilities and authority of the personnel is
clearly established.
4. It makes individuals more aware of the company goals. Most
often the subordinates are concerned with their own objectives and
the environment surrounding them. But with MBO, the
subordinates feel proud of being involved in the organizational
goals. This improves their morale and commitment.
5. Management by objectives (MBO) often highlights the area in
which the employees need further training, leading to career
development.
6. The system of periodic evaluation lets the subordinates know how
well they are doing. Since MBO puts strong emphasis on
quantifiable objectives,the measurement and appraisal can be more
objective, specific and equitable.
7. It improves communication between management and
subordinates.

Disadvantages of Management by Objectives

1. MBO can only succeed if it has the complete support of the top
management.
2. Management by Objectives (MBO) may be resented by
subordinates. They may be under pressure to get along with the
management when setting goals and objectives and these goals
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may be set unrealistically high. This may lower their morale and
they may become suspicious about the philosophy behind MBO.
They may seriously believe that MBO is just another of the
management’s ploys to make the subordinates work harder and
become more dedicated and involved. The emphasis in the MBO
system is on quantifying the goals and objectives. It does not leave
any ground for subjective goals. Some areas are difficult to
quantify and even more difficult to evaluate.
3. There is considerable paperwork involved and it takes too much
of the manager’s time. Too many meetings and too many reports
add to the manager’s responsibility and burden. Some managers
may resist the program because of this increased paperwork.
4. The emphasis is more on short-term goals. Since the goals are
mostly quantitative in nature, it is difficult to do long-range
planning because all the variables affecting the process of planning
cannot be accurately forecast due to the constantly changing socio-
economic and technological environment which affect the stability
of goals.
5. Most managers may not be sufficiently skilled in interpersonal
interaction such as coaching and counseling, which is extensively
required.
6. Group goal achievement is more difficult. When the goals of one
deportment depend on the goals of another department, cohesion is
more difficult to obtain. For example, the production department
cannot produce a set quota if it is not sufficiently supplied with
raw materials and personnel.

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3.5 Questions
1. Provide the definition of each of the following:
 the planning function.
 the organisation mission.
2. Indicate whether each of the following statement is true or false,
then justify your answer:
 Planning function includes the managerial activities that
determine objectives and the appropriate means for achieving
those objectives.
 Setting the organization’s objective is the only element
included in the planning process.
 During planning, planners should specify Goals and
Objectives. These goals and objectives should be specific,
Measurable, Acceptable, Realistic, and Have a Time Frame
 During the planning process, it is important to review the
implementation of the plan, and assess if goals achieved or
not.
3. Write notes on the following topics:
 The phases of the planning function.
 Guidelines which can help to ensure that the planning
process is carried out completely and is implemented
completely or, deviations from the intended plan are
recognized and managed accordingly.

Multiple Choice
1) -------- function includes the managerial activities that determine
objectives and the appropriate means for achieving those objectives.
a) planning b) organizing c) directing d) controlling

2) Managers should plan for the following reasons

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a) provides directions and reduces the risks of uncertainty
b) promotes innovative ideas and reduces overlapping and wasteful
activities
c) facilitates decision making and establishes standards for
controlling
d) All of these

3) One of the following is not an importance of planning

a) Provides direction
b) Promotes innovation
c) Primary function
d) Establishes standards

4) Which on is/are not the importance of planning

a) Planning is pervasive
b) Planning is continuous
c) It is a mental exercise.
d) All of these

5) Planning serves as the basis of coordinating the activities of

different divisions, departments and individuals. It means planning
a) Provides direction
b) Reduces overlapping and wasteful activities
c) Facilitates decision making
d) None of these

6) If there was no planning, employees would be working in

different directions and the organisation would not be able to
achieve its desired goals. It means
a) provides directions,
b) facilitates decision making,
c) reduces overlapping and wasteful activities
d) establishes standards for controlling

7) Which of the following is not a benefit of planning?

(a) Planning reduces overlapping and wasteful activities.
(b) Planning is a mental exercise.
(c) Planning provides directions.

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(d) Planning reduces the risks of uncertainty.

8) new ideas can take the shape of concrete plans. It means planning
a)provides directions.
b)promotes innovative ideas.
c)reduceso overlappingand wasteful activities
d) reduces risks of uncertainty

9)The SWOT approach assesses an organization's

a) Speed, Wants, Order, Timing
b) Structure, Workforce, Organization, Types
c) Strengths, Weaknesses, Opportunities, Threats.
d) Signs, Worries, Objectives, Techniques

13)A decision made before the occurrence of an external or internal

change is called a _________ decision.
a. reactive.
b. proactive.
c. intuitive.
d. systematic.

11) The word MBO stands for……………..

a) Management by Organisation
b) Management by Operation
c) Management by Objectives
d) None of these

12) MBO gives emphasis on…………….

a) Top Management
b). Middle Management
c) Objectives
d) Lower Management

10) Strategic planning is ___________.

A. long term planning.
B. medium term planning.
C. short term planning.
D. annual planning.

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14) Which of the following SWOT elements are internal factors for
a business?
A. Strengths and Weaknesses
B. Opportunities and Threats
C. Strengths and Opportunities
D. Weaknesses and Threats

15) Which of the following could be a strength?

A. Weather
B. A new international market
C. A price that is too high
D. The location of a business

16) Which of the following could be a weakness?

A. A developing market such as the Internet
B. Competitors with access to better channels of distribution
C. Poor quality of goods and services
D. Special marketing expertise

17) Which of the following could be an opportunity?

A. Having quality processes and procedures
B. Moving into new market segments that offer improved profits
C. Damaged reputation
D. A new competitor in your home market

18) Which of the following could be a threat?

A. Changes in technology
B. A market vacated by an ineffective competitor
C. Location of your business
D. Lack of marketing expertise

19) SMART rules stand for :

a) Specific, Measurable, Agreed, Realistic, and Time
b) Strategy, Measurable, Arranged, Realistic, and Time
c) Strategy, Mental, Arranged, Realistic, and Training
d) Strategy, MBO, Arranged, Routine, and Training

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20) What does the S in SMART stand for?
a) simple b) strong c) sample d) specific

21) What does the M in SMART stand for?

a) Maximum b) Memorable c) Mental d) Measurable

22) Type of plan that produces fundamental decisions and actions

that shape and guide what an organization is, who it serves, what it
does, and why it does it, with a focus on the future
a)Strategic Planning
b)Tactical Planning
c) Single-Use Plans
d)Directional Plans

23)Planning is the beginning process of management

a) True b)False

24) The following are the advantages/benefits of planning to an

organization except for ONE.
a) Planning helps the organization to focus on their goals
b) It maximizes risk and uncertainty.
c) Permits anticipation of consequences
d) It helps facilitate control

25) ------ are plans that are flexible or give general guidelines only,
and ------- are plans that are clearly stated and which have no room
for interpretation.
a) Directional plans, Specific Plans
b) Long-term plans, Short-term plans
c) Standing Plans, Single Use Plans
d) Tactical Plan, operational

26) Type of plan that is only relevant for specified time and will be
formulated again for the next period.
a) Standing Plans
b) Single Use Plans
c) Tactical Plan
d) Short-Term Plan

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27) This plan have ongoing meaning and applications for an
organization. It is something that's being reused every year or is
repetitive.
a)Standing Plans
b)Repetitive Plans
c)Long-Term Plans
d)Operational Planning

28) These are plans that are flexible or give general guidelines only.
Directional plans
Specific plans
Long-term plans
Short-term plans

29) These are plans that are clearly stated and which have no room
for interpretation.
Directional Plans
Specific Plans
Long-term plans
Short-term plans

30) It provides guidance for different activities done repeatedly.

Directional plans
Specific plans
Single - use plans
Standing plans

31) Types of Plans under Frequency of use.

Directional and Specific plans
Strategic and operational plans
Long - term and short - term plans
Single use and standing plans
32) Types of plans under Specificity:
Directional and Specific plans
Long - term and short - term plans
Strategic and operational plans
Single use and standing

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33) This plan is considered to be more focused, short term, and
specific. It translates the broad concepts of the strategic plan into
clear numbers, specific steps, and measurable objectives for the
short term.
a)Specific Plans
b)Tactical Planning
c)Operational Planning
d) Directional Planning

34) This plan is considered to be comprehensive, long term, and

general. It focus on broad, enduring issues for ensuring a firm's
effectiveness over a long period of time.
a)Strategic Goal
b)Strategic Planning
c)Standing Goal
d)Standing Planning

35) Type of plan that is done only by the top management

a) on-going Planning
b) Startegic Planning
c)Tactical Planning
d)Strategic Planning

36) A mission statement contains an organisation's

deadlines and targets
identity and purpose
operational plan
diversity policy

37) A vision statement focuses on tomorrow and what an

organisation wants to ultimately become.
a) True b) False

38) ------ is a statement of what the future looks like if the

organization is successful.
a) Vision
b) Targets

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c) Policy
d) Action plan
39) ___________ plan describes in great detail exactly how
strategies will be implemented to accomplish the objectives
developed earlier in this process.
a) Mission b) Single use Plane c) Strategy d) Action
plan

40) The major limitations of planning are

a) rigidity, not work in dynamic environment, reduces creativity,
and involves huge cost
b) futuristic, continuous, pervasive, and involves huge cost
c) overlapping and wasteful activities, time consuming, and involves
huge cost
d) all of these

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 CHAPTER 4
THE ORGANISING FUNCTION

90
 CHAPTER 4
THE ORGANIZING FUNCTION

4.1 Introduction
Management includes crucial parts: plan, organize, direct, and
control.
Organizing is establishing the internal organizational structure of
the business. The focus is on division, coordination, and control of
tasks and the flow of information within the organization. Managers
distribute responsibility and authority to job holders in this function
of management.
Organizing define in a number of ways. In the study of
management, it can refer to:
- The structure of relationships among individuals.
- Organizations are groups of people, with ideas and resources,
working toward common goals.
- Organizing refers to the way in which the work of a group of
people is arranged and distributed among group members.
The function of organising includes the determination of the
activities to be performed; creation of departments, sections and
positions to perform those activities; and establishing relationships
among the various parts of an organisation.
The purpose is to create a framework for the performance of the
activities of an organisation in a systematic manner to make the best
use of the organization's resources to achieve organizational goals.

Organizational structure
An organizational structure is a visual diagram of a company that
describes what employees do, whom they report to, and how
decisions are made across the organization.
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Organizational structure is the formal decision-making framework
by which job tasks are divided, grouped, and coordinated.
Formalization is an important aspect of structure. It is the extent to
which the units of the organization are explicitly defined and its
policies, procedures, and goals are clearly stated. It is the official
organizational structure conceived and built by top management.
The formal organization can be seen and represented in chart form.
An organization chart displays the organizational structure and
shows job titles, lines of authority, and relationships between
departments.
The informal organization is the network, unrelated to the firm's
formal authority structure, of social interactions among its
employees. It is the personal and social relationships that arise
spontaneously as people associate with one another in the work
environment. The supervisor must realize that the informal
organization affects the formal organization. The informal
organization can pressure group members to conform to the
expectations of the informal group that conflict with those of the
formal organization. This can result in the generation of false
information or rumors and resistance to change desired by
management. The supervisor should recognize the existence of
information groups, identify the roles member play within these
groups, and use knowledge of the groups to work effectively with
them. The informal organization can make the formal organization
more effective by providing support to management, stability to the
environment, and useful communication channels.

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Another important element of a company’s structure is the number
of levels it has in the hierarchy. Tall structures have several layers
of management between frontline employees and the top level,
while flat structures consist of few layers.

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Steps in the process of organising
1. Determining the activities to be performed to achieve the
objectives of the organisation: Business organisations
undertake economic activities with a view to earning profit.
They may perform manufacturing, trading or service activity.
In a manufacturing organisation, production and sales are the
two major activities. In a trading organisation, purchases and
sales are the two main activities. Service organisations provide
services such as transportation to their customers. In carrying
out these major activities, business units have to perform a
number of other activities such as producing, financing,
marketing, accounting, recruiting employees, etc.
2. Identification of major functions to which these activities relate:
The next step is to identify the major functions to which these
activities relate. In a manufacturing organisation, production,
selling, finance and personnel are the major functions. If the
amount of work to be done in connection with each of these
functions is large, separate departments may be created for
each of these functions. Managerial positions will have to be
created to supervise the activities of these departments. At this
stage, a list of activities relating to each function must be
prepared.
3. Grouping and sub-dividing the work within each function: In
this step, it is decided how best the activities can be grouped
on the basis of similarity or relatedness. The activities of a
production department, for example, can be divided into a
number of workshops where production will actually take
place. Besides, separate sections may be created for such
production related activities as quality control and repairs. The
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 activities of other departments can similarly be sub-divided.
This division and subdivision of activities goes on till
individual positions have been Organising created for
performing all types of work in an organisation.
The reasons of dividing and sub-dividing functions and activities
are as follows
(i) The total work may be so large that it cannot be done by a
single individual or by a few persons.
(ii) If the work is divided into smaller units, it becomes easy to
assign work to individuals who have the necessary skill and
knowledge to perform the work efficiently.
4. Establishing relationship among individuals and groups:
Managers divide activities to increase efficiency and to ensure that
work is properly done. The activities which are performed by
persons holding different positions must be related. The
responsibility, authority and accountability of each person must be
well defined. This is necessary to avoid conflict and confusion and
to ensure that work is performed as planned. Establishing
relationships among individuals and groups is, therefore, an
important aspect of the organising process.
It would be useful at this stage to explain the meaning of
responsibility, authority, and accountability.
Responsibility: Responsibility is the obligation of a subordinate to
perform the assigned duties. When a subordinate accepts duties, he
has to perform those duties in the manner desired by the superior.
Duties are assigned to subordinates when a manager has to share the
work with them.
Authority: When a person is given certain duties to perform, he must
be given necessary authority also. Otherwise, he will not be able to
do the work. A typist, for example, cannot do the typing job if he is
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not given the right to use facilities such as a place to sit in, a table, a
chair, a typewriter, typing and carbon papers. etc.
Authority includes the right to take decision, right to issue orders
and the right to take action if orders are not carried out. An engineer
responsible for the construction of a bridge has the authority to
command his subordinates, procure the needed material, seek
assistance of architects and other experts in the completion of the
project. No person should be given any authority unless certain
duties have been assigned to him. Authority should always follow
responsibility
Accountability is a situation in which someone is responsible for
things that happen and can give a satisfactory reason for them.
Accountability is an assurance that an individual or an organization
will be evaluated on their performance or behavior related to
something for which they are responsible.

The main difference between responsibility and accountability is

that responsibility can be shared while accountability cannot. Being
accountable not only means being responsible for something but
also ultimately being answerable for your actions. Also,
accountability is something you hold a person to only after a task is
done or not done. Responsibility can be before and/or after a task.

4.2 Organizational Structure

Organization structure is concerned with relationships among tasks
and the authority to do the tasks. Eight kinds of relationships can be
captured in an organization chart:
1. . Division of work
2 . Delegation of authority
3. Departmentation.
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4. Span of control.
5. The levels of management.
6. Coordination centres.
7. Formal communication channels.
8. Decision responsibility.
Organization charts display the organizational structure and show
job titles, lines of authority, and relationships between departments.
Organization charts have important weaknesses that should be of
concern to managers developing and using them:
1. They may imply a formality that doesn't exist.
2. They may be inconsistent with reality.
3. Their usual top down perspective often minimizes the role of
customers, front-line managers and employees without
management responsibilities.
4. They fail to capture the informal structure and informal
communication.
5. They often imply that a pyramidal structure is the best or
only way to organize.
6. They fail to address the potential power and authority of staff
positions compared with line positions.

4.2.1 Division of work

Division of labour is captured in an organization chart, a pictorial
representation of an organization's formal structure.

4.2.2 Delegation of authority

Authority is legitimized power. Power is the ability to influence
others. Delegation is distribution of authority. Delegation frees the
manager from the tyranny of urgency. Delegation frees the manager

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to use his or her time on high priority activities. However,
delegation of authority does not free the manager from
accountability for the actions and decisions of subordinates.
Delegation of authority is guided by several key principles and
concepts:
Exception principle - Someone must be in charge. A person higher
in the organization handles exceptions to the usual. The most
exceptional, rare, or unusual decisions end up at the top
management level because no one lower in the organization has the
authority to handle them.
Scalar chain of command - The exception principle functions in
concert with the concept of scalar chain of command - formal
distribution of organizational authority is in a hierarchical fashion.
The higher one is in an organization, the more authority one has.
Decentralization – Centralization is the degree to which decision
making takes place at upper levels of the organization.
Decentralization refers to the extent to which decision-making
power and authority is dispersed to lower levels. It also refers to the
degree of delegation of duties, power and authority to lower levels
of an organization.
Centralization-decentralization is not an either-or concept.
Rather, it’s a matter of degree. What we mean is that no
organization is completely centralized or completely decentralized.
Managers often choose the amount of centralization or
decentralization that will allow them to best implement their
decisions and achieve organizational goals.

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Centralization Decentralization
High degree of retention of High degree of delegation of
duties, power and authority by duties, power and authority to
top management lower levels of the organization
- suitable in stable environments - occurs when environment is
hence few people can make changing rapidly
decisions - top level managers are
- culture of control by top comfortable with leadership
managers, lack of training for styles
people at lower levels - emphasizes delegation
- need for uniformity is crucial - uniformity is not critical

Parity principle - Delegated authority must equal responsibility.

With responsibility for a job must go the authority to accomplish the
job.
Span of control - The span of control is the number of people a
manager supervises. The organizational structure decision to be
made is the number of subordinates a manager can effectively lead.
The typical guideline is a span of control of no more than 5-6
people. However, a larger span of control is possible depending on
the complexity, variety and proximity of jobs.
Unity principle - Ideally, no one in an organization reports to more
than one supervisor. Employees should not have to decide which of
their supervisors to make unhappy because of the impossibility of
following all the instructions given them.
Line and staff authority - Line authority gives the right of the
manager to issue orders. The line authority has the power to issue
orders to subordinates or employees within an organization. For
example, production and sales managers have empowered with line
authority. Line authority is based primarily on legitimate power. A
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manager with line authority gives instructions to the subordinate or
other managers to perform the task.
Staff authority is "the right to advise, but not command, others who
are not subordinates in the chain of command"
Staff authority is based primarily on expert power. Staffs offer line
managers planning advice through research, analysis and options
development. Staff can also assist in policy implementation,
monitoring and control in legal and financial matters; and in the
design and operation of data processing systems.

Examples :
 "A market researcher who gathers and analyses data on
marketing problems and advises the marketing manager on
demand for new products,
 An industrial engineer who prepares layout plans of plant
equipment, production methods and operating standards
based on time studies and forwards them for the acceptance
of the production manager,
 A personnel officer who advises the personnel manager on
all dealings with unions".

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4.2.3 Departmentation
After reviewing the plans, usually the first step in the organizing
process is departmentalization. Once jobs have been classified
through work specialization, they are grouped so those common
tasks can be coordinated.
Departmentation is the grouping of jobs under the authority of a
single manager, according to some rational basis, for the purposes
of planning, coordination and control. The number of departments
in an organization depends on the number of different jobs, i.e., the
size and complexity of the business.
Farm businesses are most likely to have departments reflecting
commodities and services. For example, a large dairy farm might be
organized into dairy, crop, equipment and office departments. The
dairy department might be further divided into milking, mature
animal and young stock departments.

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Departmentalization is the basis on which work or individuals are
grouped into manageable units. There are five traditional methods
for grouping work activities.
Departmentalization by function organizes by the functions to be
performed. The functions reflect the nature of the business. The
advantage of this type of grouping is obtaining efficiencies from
consolidating similar specialties and people with common skills,
knowledge and orientations together in common units.
Departmentalization by product assembles all functions needed to
make and market a particular product are placed under one
executive. For instance, major department stores are structured
around product groups such as home accessories, appliances,
women's clothing, men's clothing, and children's clothing.
Departmentalization by geographical regions groups jobs on the
basis of territory or geography. Departmentalized by regions such as
Northeast, Southeast, Midwest, Southwest, and Northwest.
Departmentalization by process groups jobs on the basis of product
or customer flow. Each process requires particular skills and offers a
basis for homogeneous categorizing of work activities.
Departmentalization by customer groups jobs on the basis of a
common set of needs or problems of specific customers. For
instance, a firm may group its work according to whether it is
serving private sector, public sector, government, or not-for-profit
organizations. A current departmentalization trend is to structure
work according to customer. Figure (4-1) shows the
deparmentalization.

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 Fig. (4-1) The departmentalization

Departmentation by Time:
This method is one of the oldest forms of departmentation and is
used at the lower levels of management. It involves the grouping of
activities on the basis of the time of their performance. For example,
the use of shifts is very common in many manufacturing concern
and to look after the work relating to each shift, a separate
department may be created. Generally, this type of the
departmentation is found in the production function of the
enterprise.

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This basis of departmentation can be advantageously applied by
firms which cannot cope with the volume of work within the normal
working hours. But the disadvantage of this system is that there is
the problem of co-ordination among the workers of different shifts.

Matrix Departmentation
Matrix organizational structures are so named because reporting
relationships resemble a grid (or matrix) rather than the typical
hierarchy. This structure can be thought of as a combination of the
functional and projectized approaches . A matrix organisation is a
structure in which there is more than one line of reporting managers.
Effectively, it means that the employees of the organisation have
more than one boss! Employees at these companies are generally
divided into different departments but often work with other teams
to complete specific projects. The matrix organisation structure is
complex but helps in achieving the ultimate goal.
Many substantial business organizations, especially the ones
engaged in the engineering, architectural, construction, e-commerce
and large-scale manufacturing businesses, prefer the matrix
structure.

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Advantages of Matrix Organizational Structure
 Enhances Formal Lateral Communication: The matrix
structure promotes progressive interaction among the
individuals at the same corporate level.
 Exchange of Information: A vertical and horizontal
interaction provides for a streamlined flow of the
constructive ideas in the organization.
 Higher Motivation: It also boosts the morale of the
employees as they are free to share their ideas and
knowledge.
 Resource Sharing: It ensures efficient human resource
management by adequately allocating managerial
responsibilities.
 Builds Cooperation: The interpersonal relations improve
when there is a matrix form of communication in the
organization. Thus, employees also learn to cooperate.

Disadvantages of Matrix Organizational Structure

 Higher Ambiguity or Confusion: The team members may not
be apparent on whom to report, whose orders to follow, and
who will provide them guidance.
 Increases Workload and Accountability: When the managers
are overburdened with responsibilities, the employees have
to bear with a higher amount of accountability, i.e., being
answerable to both the managers.
 Coordination Issue: The conflicts and misunderstanding
between the functional manager and the project manager can
result in their poor coordination.

105
 Overlooks Functional Responsibilities: In most of the matrix
organizations, the project manager overtakes the charge of
handling the team, thus underestimating the functional roles
or responsibilities of the employees.
 Provokes Workplace Politics and Conflicts: In a matrix
structure, as we know that there are two bosses. If anyone of
them turns out to be dominant, there will be a negative work
environment full of conflicts.
 Delay in Decision-making: When there are two managers
involved in decision-making, it is undeniable that they may
not agree on each others opinion, delaying the decision-
making process.
 Bureaucracy and Complexity: It is a complicated network
where each employee needs to report and follow the orders
of two bosses.
 Expensive: The organization has to employ more managers
than required, ultimately increasing the managerial salary
overheads.

106
4.3 Questions
Chose the correct answer:
1) Delegation is…………………..
1) Distribution of authority.
2) Centralisation.
3) Equal responsibility.
4) None of the above.
2) …………………..is the grouping of jobs under the authority of a
single manager.
1) Organizing function.
2) Departmentalization.
3) Delegation.
4) Specialization.
3) ……………..principle indicate that no one in an organization
reports to more than one supervisor.
1) Unity.
2) Centralization.
3) Span of control
4) Parity.
4) Responsibility always flows from :
(A) Superior to subordinate
(B) Subordinate to superior
(C) A and B both
(D) None of these
5) Authority always flows from :
(A) Superior to subordinate
(B) Subordinate to superior
(C) A and B both
(D) None of these

6) No one on the organization should have more than one boss’ is a

statement of :
(A) Principle of specialization
(B) Principle of authority
(C) Principle of unity of command
(D) Principle of a span of control

107
7) The process of dividing the work and then grouping them into
units and subunits for the purpose of administration is known as :
(A) Departmentation
(B) Organization structure
(C) Committee
(D) All of these
8) Departmentation is a process where :
(A) Tasks are grouped into jobs
(B) Jobs are grouped into effective workgroups
(C) Workgroups are grouped into identifiable segments
(D) All of these
9) The department can be created :
(A) By function
(B) By product
(C) By process
(D) All of these
10) In hospitals, the following type of departmentation in common:
(A) By function
(B) By committee
(C) By geographical region
(D) All of these
11) Design engineers at Ford advise production personnel about
what products to use in making a product. This is an example of
____________ authority.
a. staff.
b. group.
c. line.
d. line & staff.
12) Determining the number of people who are accountable to a
single manager refers to:
a. chain of command.
b. degree of centralization.
c. span of control.
d. degree of specialization.
13)Which form of departmentalization would be most appropriate in
companies that have distinctly different product lines?
a. functional departmentalization.
b. product departmentalization.

108
 c. customer departmentalization.
d. geographical departmentalization.

14)A position to which decision-making authority has been

delegated within the chain of command from senior managers to
front line production or service employees is called.
a. line position.
b. staff position.
c. departmentalization.
d. line & staff positions.

15) Which type of organization has no place in the organization

chart?
A. formal organization.
B. informal organization.
C. business or organisation.
D. strategic organization.

16) Which one of the following is not a method of

departmentalization?
a. By function
b. By competitor
c. By product
d. By geography
17) ______ organization structure combines the elements of
functional and product-based departmentalization.
a)Divisional
b)Simple
c)Matrix
d)Learning

18) A company divides employees into eastern, southern, western

and central regions. Which of the following describes such
departmentalization?
a)Geographic departmentalization
b)Product departmentalization
c)Target market departmentalization
d)Process departmentalization

109
19)Authority is shared between two supervisors in which of the
following types of business structures ?
a) Matrix organization
b) Employee-based structure
c) Divisional structure
d) Customer-based structure

20) When a manager groups workers into departments based on the

tasks that they perform, this is called:
A. planning
B. organizing
C. leading
D. demonstrating
E. controlling

21) When a manager lays out the lines of authority and

responsibility between different individuals and groups, the
manager is:
A. organizing
B. leading
C. controlling
D. planning

22) A formal system of reporting relationships that coordinates

workers so that they work together to attempt to achieve
organizational goals is called:
A. a leading strategy
B. a controlling strategy
C. an organizational structure
D. a low-cost strategy

23) -----have several layers of management between frontline

employees and the top level
a) Tall structures b) flat structures
c) formal structures d) informal structures

24) A tall organizational structure would be:

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a)Many levels in hierarchy + wide spans of control.
b)Few layers in hierarchy + narrow spans of control.
c)Few levels in hierarchy + wide span of control.
d)Many levels in hierarchy + narrow span of control.

25) Matrix organization suffers from which of the following

disadvantages
a) Increases Workload
b) Delay in Decision-making
c) Ambiguous responsibilities
d) All of the three.

26) The basis by which jobs are grouped together is termed ___.
a) Hierarchy
b) Specialization
c) Centralization
d) Departmentalization

27) A visual diagram of a company that describes what employees

do, whom they report to, and how decisions are made across the
organization.
a) a leading strategy
b) a controlling strategy
c) an organizational structure
d) a low-cost strategy

28) ---- is the obligation of a subordinate to perform the assigned

duties.
a) Accountability b) Authority
c) division of work d) Responsibility

29) ---- high degree of retention of power and authority by top

management, ---- high degree of delegation of duties, power and
authority to lower levels.
a) decentralization, centralization b) centralization,
decentralization
c) formalization, in formalization d) delegation, in delegation

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30) The parity principle states that:
A) each employee should have only one boss.
B) personnel must have equal amounts of authority and
responsibility.
C) authority should flow from one level of management to the next.
D) power should be concentrated only at the hands of supervisors

31) -------- authority is advisory authority, ---- authority has the

power to issue orders to subordinates
a) Line , staff b) Staff , line c) Delegated , centralized
d) Formal, informal

32) What is the division of work?

a) divide profit of work among departments
b) work has to be divided among the members for limited set of job
c) tasks has to do as a whole set
d) divided the unit in the organization

33) Which term covers grouping jobs into logical units?

A) specialization
B) accountability
C) authorization
D) departmentalization

34) What do the solid lines on an organization chart show in

reporting relationships within a
company?
A) mission statement
B) chain of command
C) job specialization
D) grapevine activity

35) What is the power to make the decisions necessary to complete

a task called?
A) delegation
B) specification
C) authority
D) responsibility

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36) With relatively few layers of managers, what do decentralized
organizations tend to reflect?
A) tall organizational structure
B) short organizational structure
C) flat organizational structure
E) triangular organizational structure

37) In tall organizations, which feature describes the span of

control?
A) short
B) tall
C) wide
D) narrow

38) Which of the following best describes responsibility?

A) the power to make the decisions necessary to complete a task
B) the liability of subordinates for accomplishing tasks assigned by
managers
C) the number of people supervised by one manager
D) the duty to perform an assigned task

39) Which of the following best describes authority?

A) the power to make the decisions necessary to complete a task
B) the number of people supervised by one manager
C) the ability to take on new responsibility
D) the duty to perform an assigned task

40) ABCD Designs is a high-end clothing manufacturer. They have

three divisions producing clothes for men, women, and teens. What
is this an example of?
A) functional departmentalization
B) process departmentalization
C) customer departmentalization
D) product departmentalization

41) At Ace Products, three vice presidents report to the CEO,

including the VP for Finance, the

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VP for Marketing, and the VP for Operations. What type of
structure does Ace Products have?
A) divisional
B) matrix
C) regional
D) functional

42) Which of the following is not true of (organizational structure)

a) They may imply a formality that doesn't exist.
b) They may be inconsistent with reality
c) They capture the informal structure
d) They often imply that a pyramidal structure is the best or only
way to organize.

43) Matrix organization suffers from which of the following

disadvantages
a) Higher Ambiguity or Confusion
b) Delay in Decision-making
c) Expensive
d) all of the above

44) delegation of authority does free the manager from

accountability for the actions and decisions of subordinates.
A) True B) False
45) The number of departments in an organization depends on the
number of different jobs, i.e., the size and complexity of the
business.
A) True B) False

114
 CHAPTER 5
THE DIRECTING FUNCTION
LEADING

115
 CHAPTER 5
THE DIRECTING FUNCTION
LEADING
5.1 Introduction
Directing is influencing people's behaviour through motivation,
communication, group dynamics, leadership and discipline. The
purpose of directing is to channel the behaviour of all personnel to
accomplish the organization's mission and objectives while
simultaneously helping them accomplish their own career
objectives.
Managers give this function a variety of names leading, influencing,
coaching, interpersonal relations, and human relations.
The directing function gives the manager an active rather than a
passive role in employee performance, conduct and
accomplishments. Managers accomplish their objectives through
people. In blaming others for her or his human resource problems, a
manager is denying the management responsibilities inherent in the
directing function.
The directing function gives managers a second responsibility:
helping people in the organization accomplish their individual
career goals. Organizations do not succeed while their people are
failing. Helping people in the organization with career planning and
professional development is an integral part of the directing
function.
The directing function included: motivation, performance appraisal,
communication, and discipline and conflict management.

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5.2 Motivation
Motivation, the inner force that directs employee behaviour, also
plays an important role. Highly motivated people perform better
than unmotivated people. Motivation covers up ability and skill
deficiencies in employees.
Three ways of looking at motivation are: needs, rewards and
effort.
The needs approach stems from the notion that peoples' unsatisfied
needs drive their behaviour. Figure out a person's needs, satisfy the
needs and the person will be motivated. For example, a person with
a high need to satisfy goals is motivated by production targets.

The reward approach is based on the expectation that rewarded

behavior is repeated. Giving a person a bonus for excellent
performance during a difficult harvest period encourages the person
to make a special effort during the next difficult harvest.

The effort approach to motivation is based on the expectation that

effort brings the worker what he or she wants. The thought that
working hard leads to advancement and new career opportunities is
consistent with the effort approach. The effort approach includes a
presumption that the employer is fair, i.e., effort is recognized and
rewarded.

Managers cannot reduce motivation to a simple choice of one of

these approaches. Each of the three approaches contributes to an
understanding of motivation and how motivation varies person to
person and over time.

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Threats have only limited usefulness in changing behaviour. More
effective employer action responds to employee needs, making their
work useful to satisfying their needs, helping employees understand
the relationship between their contribution to success and rewards
received, and creating an atmosphere of equity and fairness.

5.3 Performance Appraisal

No employee escapes performance appraisal. As a minimum, each
employee receives informal messages from his or her supervisor and
co-workers. The messages may be carefully calculated or emotional
outbursts, frequent or infrequent, helpful or hurtful, understood or
misunderstood, consistent or inconsistent, fair or unfair. They may
improve performance or cause additional performance problems.
They may motivate an employee or leave the employee discouraged
and disgruntled.
Turning performance appraisal into a positive force challenges.
Three steps are necessary:
1. Establish written standards for employee performance.
2. Develop both supervisor and employee understanding of these
standards.
3. Regularly inform employees of how they are performing relative
to the established standards
Effective performance appraisal moves beyond informal
communication but does not exclude it. Planned and formal
performance evaluation interviews complement spontaneous
informal employer-employee interaction about performance.
In the short-run, the following statements and questions can guide
performance evaluation, counselling and planning discussions with
each employee:
1. I see the following three things as your most important strengths.
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2. I see the following two things for us to work on improving during
the next six months.
3. What do you see as your most important strengths?
4. What would you like to learn or work on improving?
5. How should I work on improving?
Intermediate steps could include clear communication of
expectations for employees, regular feedback to employees about
their performance, providing employees opportunity to respond to
their supervisor's comments and additional training for employees
based on needs identified through performance appraisal. The
notion of catching people doing things right should be an important
part of employee evaluation and improving performance appraisal.

5.4 Communication
Communication means understanding each other as individuals and
as members of larger groups.
Often communication is not effective because of barriers such as
poor communication skills, distortion or omission of information,
wrong interpretation and lack of trust between the sender and the
recipient.
Successful organizations are associated with leaders who are able to
communicate effectively their vision and strategy.

5.5 Discipline
Discipline is the regulation and modulation of human activities to
produce a controlled performance. The real purpose of discipline is
to encourage employees to confirm to established standards of job
performance and to behave sensibly and safely at work.
According to Richard D. Calhoon’, “Discipline may be considered
as a force that prompts individuals or groups to observe the rules,

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regulations and procedures which are deemed to be necessary for
the effective functioning of an organisation”.
Discipline is a procedure that corrects or punishes a subordinate
because a rule of procedure has been violated.· —Dessler,2001
Managers must deal with employees' deviation from rules,
procedures and expected behaviors. Employees coming late to
work, not following safety procedures when working alone, not
properly cleaning equipment in their rush to get home, and using
wrong or wrong amounts of medication are examples of
unacceptable behaviour that should be addressed rather than
ignored. A cautionary note is in order. Employers can easily confuse
discipline problems with selection, training and communication
problems. This discussion of discipline applies to those cases in
which the employee can reasonably be expected to perform or
behave according to established standards, norms or rules, i.e., they
have been carefully selected, well trained and are regularly
evaluated.
A disciplined person exhibits the self-control; dedication and
orderly conduct consistent with successful performance of job
responsibilities. This discipline may come through self-discipline,
co-workers or the supervisor/employer. Self-discipline is best and
most likely to come from well-selected, trained, and motivated
people who regularly have feedback on their performance.
An employee not performing up to the agreed upon standards or not
following the understood rules is subject to punishment, i.e.,
disciplinary action. Punishing or disciplining employees falls among
the least pleasant activities in human resource management. In the
short-run, doing nothing or ignoring errant actions and behavior
almost always comes easier than taking the needed action. Not
disciplining when needed sends confusing messages to the errant
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employee, other employees and other managers in the business. If
starting work at 6:30 a.m. rather than 6:00 a.m. draws no reaction
from the employer, does this mean the starting time has been
changed to 6:30?
Several guidelines help reduce the compounding of discipline
problems with problems in disciplining. Both employers and
employees need to know the rules and performance expectations.
An employee handbook or other form of written statement provided
each employee is basic. Rules should be uniformly enforced among
all employees. If special rules apply to a certain employee, e.g., use
of the pickup truck without asking permission, other employees
need to be so informed. Punishment should be based on facts. All
parties should be heard rather than depending on one person only
for facts. Action should be taken promptly. "Saving up" a series of
minor problems and infractions for a grand explosion is poor
disciplinary practice. All discipline other than discharge should have
the objective of helping the employee. Permit the employee to
maintain self-respect by disciplining the employee's behaviour or
act. Do not berate the person.
Keeping punishment consistent with the severity of an offence
challenges all labour managers. Being thirty minutes tardy for work
the fourth time in two weeks has to be handled differently from
being thirty minutes tardy for the first time in two years. Theft of
tools has to be handled differently than tardiness for work.
Progressive discipline provides a formal structure within which
errant employees can be handled. In progressive discipline, the
severity of punishment increases in relation to the seriousness of the
offence or the number of times an offence is repeated. Typical
levels in progressive discipline are: informal talk and counselling,

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oral warning or reprimand, written warning, disciplinary layoff and
discharge.

5.6 Conflict Management

Organizational conflict refers to the condition of misunderstanding
or disagreement that is caused by the perceived or actual opposition
in the needs, interests and values among people who work together.
Organizational conflict may also be termed as workplace conflict.
The conflicts occur during situations where there is an interaction
between two or more members of an organization involving
contradictory opinions.
Conflict management is the practice of being able to identify and
handle conflicts sensibly, fairly, and efficiently. Since conflicts are a
natural part of the workplace, it is important that there are people
who understand conflicts and know how to resolve them.

LEADERSHIP
Leadership is an important aspect of management and the ability to
lead is one of the keys to being an effective manager. The difference
between success and failure whether in war, business, a protest
movement or a soccer game can be attributed largely to leadership.

DIFFERENCE BETWEEN LEADERSHIP AND

MANAGEMENT
Leadership and management are closely related activities but
distinguishable. Leaders and managers are not different people, but
can be the same individual performing both roles. In recent years,
theorists and practitioners in management have noted that, “to

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survive in the 21st century, organizations need a new generation of
leaders, not managers”.
The fundamental difference between leaders and managers is that a
manager focuses on the implementation of company policy while
the leader tries to lead and inspire people to do their best for the
company.

Management characteristics Leadership

 Administers and problem-
solves.
 Works within a system.
 Focuses on control.
 Short range view.
 Accepts the status quo.
 Sets things in motion by
means of methods and
techniques.
 Attitude of doing.
Characteristics
 Innovates- means alertness
to opportunities, uses
imagination and vision to
capitalize on them.
 Works on the system
 focuses on people.
 Inspires trust.
 Long range view.
 Challenges the status quo.
 Is a natural unforced ability
to inspire people.
 Attitude of serving

TYPES OF LEADERS
Charismatic Leaders – These are those whose influence is derived
form the personality e.g. Napoleon, Kenyatta, Billy Graham, Nelson
Mandela, Desmond Tutu etc. This type resides only in a few people
and cannot be acquired by training – it is natural.

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Traditional Leaders –These are those whose position is assured by
birth e.g. Kings, Queens, tribal chieftains etc. It is limited and not
applicable to workplaces except in family businesses.
Situational Leaders -Their influence is effective by being in the
right place at the right time – It is impromptu and temporary eg.
One who steps to direct traffic in a jam.
Appointed Leaders –Refers to those whose influence arises from
position e.g. managers and supervisors. It is a bureaucratic
type of leadership where legitimate power comes from the
position in the hierarchy.
Functional Leaders – Are those whose influence comes from the
work done rather than position such as experts

APPROACHES TO LEADERSHIP STUDIES

Three approaches have been used in the study of leadership. These
are:
(i) Trait
(ii) Behavioural
(iii) Situational/contingency

(i) Trait Approach

The earliest studies on leadership focused on the qualities of
effective leaders such as bravery, loyalty, honesty, and compassion.
However, as traits are many, research findings often disagreed on
which are the most important traits. Keith Davis (1972), in human
behaviour at work, summarized the traits and gave four general
characteristics namely:-
(i) Intelligence – leaders tend to have higher intelligence
than their followers.

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 (ii) Social maturity and breadth – leaders tend to be
emotionally mature and have broad range of interests.
(iii) Inner motivation and achievement drives – leaders
want to accomplish things, achieve goals and are
intrinsically motivated.
(iv) Human Relations attitudes - leaders are able to work
with others, and tend to respect others.
Not all leaders have these traits, and followers can also have them
(they are not exclusive to leaders). Although positive correlations
have been found between the above traits and effective leaders,
examples of effective leaders exist who do have these traits.
The trait approach was used before 1949, when the ‘Great Man’
theory of ‘leaders are born not made’, a belief originating from the
Greeks and Romans was in vogue. However, this school of thought
was no longer acceptable after the rising influence of the
behaviourist school of Psychology which emphasized that people
are not born with traits, but made.

Criticisms of the Trait Approach

- Not all leaders possess all the traits.
- Many non-leaders possess most of the traits.
- The trait approach gives no guidance as to how much of
any trait a person should have.
- Research findings do not agree as to which are leadership
traits and what their relationships are to instances of
leadership.
- The so called traits are nothing but patterns of behaviour.

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(ii) Behaviourist Approach
As a result of the failure of the trait approach to leadership, the
focus shifted on the individual behaviours of leaders. The main
concern was on the leadership styles of leaders. Leadership styles
refer to the way a leader typically behaves towards his
followers/group members. These styles have been classified into:
(i) Autocratic Leadership – This approach refers to
where all authority centers around the leader. The
manager enforces decisions by use of rewards and
punishments (ability to withhold or give rewards and
punishment), communication is in one direction - from
manager to subordinate and conformity and obedience
on the part of followers is expected.

leader

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 Advantages:
 Decisions are made speedily as leader does not have to
obtain group’s approval.
 Useful where decision is unfavourable.
 Useful in cases where followers are incompetent.

Disadvantages:
 Has negative effect on group morale – decisions may not be
supported.
 Can create ‘yes’ mentality among group members.

(ii) Democratic/Participative Leadership.

Considers the suggestions of members and leader. It is a
human relations approach where all group members are seen
as important contributors to decision.

Democratic
communication which
leader allows an interchange of
ideas between all persons
involved.

Advantages:
- increased morale of members.
- support for final decision.
- better decisions through shared ideas.

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Disadvantages:

- Slower decision.
- Diluted accountability for decisions.
- Possible compromises designed to please all.

(iii) Laissez- Faire Leadership (Delegative leadership)

Loosely translated from its French origins, laissez-faire means "let it
be" or "leave it alone." In practice, it means leaders leave it up to
their subordinates to complete responsibilities in a manner they
choose, without requiring strict policies or procedures.
Laissez-faire leadership, also known as delegative leadership, is a
type of leadership style in which leaders are hands-off and allow
group members to make the decisions. Members are given a goal
and left alone to decide how to achieve it. Role of leader is
facilitative.

leader

Organizations or departments run by laissez-faire leaders frequently

are either in the incubator phase of product development or they're
engaged in highly creative businesses. This leadership style is
particularly relevant to startup firms, where innovation is crucial to
a company's initial success.
Examples of businesses where laissez-faire leadership works well:
 Product design firms

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  Research and development departments
 Venture capital investment companies
 High-end architectural and specialized engineering firms
These businesses tend to prosper under leaders with laissez-faire
characteristics. They hire experts and allow them autonomy to make
decisions. The end goal is perfecting products, systems and services
through trial and error.

Advantages
 Increased opportunity for individual development.
 All persons are given a chance to express themselves and
function independently.

Disadvantages
 Lack of group cohesion and unity toward org. goals.
 Low accountability
 Lack of direction and control.
 Inefficiency.

WHICH IS THE BEST LEADERSHIP APPROACH?

It is not possible to say which style is best as it depends on the
situation. A leader may be autocratic in one situation and
democratic in another.

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Questions
1) The purpose of directing is to channel the behaviour of all
personnel to accomplish the organization's mission and objectives
while simultaneously helping them accomplish their own career
objectives.
A) True B) False
Answer: True

2) When managers motivate and assist workers to achieve

organizational goals, this is an important aspect of:
A. planning
B. leading
c. controlling
d. organizing

3) __ aims at instructing, guiding, motivating people to achieve the

desired results.
(a) Communication
(b) Directing
(c) Motivating
(d) Organising

4) If an organization has a hard-working, committed workforce, this

is most likely to be a result of managers' abilities to:
A. organize
B. plan
C. lead
D. control

5) Which one of the following is an element of directing?

(a) Delegating authority
(b) Designing organisation structure
(c) Communication
(d) Designing control system

6) Which one of the following is not an element of directing?

a) performance appraisal
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b) motivation
c) Communication
d) Designing control system

7) ----- refers to the condition of misunderstanding or disagreement

that is caused by the perceived or actual opposition in the needs,
interests and values among people who work together
a) Agency problem
b) Conflict of interest
c) Organizational structure
d) Organizational conflict

8)The three key elements in the definition of organizational

motivation are
a) needs, rewards and personality
b) need , ability, and discipline
c) tenure, need, effort
d) needs, rewards and effort

9) In leadership trait theory, what is a trait?

a) A list of the key things that a leader should do to be great.
b) The list of key behaviours a leader exhibits.
c) A list of key characteristics that makes a leader great
d)None of these

10) If trait research had been successful, we would _______

whereas if behavioral studies were correct, we would _______.
a) only hire women, hire either men or women
b) teach people managerial principle, teach people certain behaviors
c) change job to suit people, change people to suit jobs
d) select the right person for the job, train leaders

11) A strength of the trait approach is that leader traits are available
and learnable by anyone.
a) True False

12) The trait approach focuses on ______.

a)what leaders do

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b)who leaders are
c)the outcomes of leadership
d)the role of the organization

13) What is the fundamental assumption of trait theory?

a) Leaders are born and not made
b) Leaders are made and have to learn how to be a leader
c) That everyone can become a leader
d) Leaders need to be trained

14) Leaders who do not listen to others and make all the decisions
a) themselves.
b) democratic
c) autocratic
d) laissez-faire

15) This leader encourages group members to participate

a) Autocratic
b) Democratic
c) Laissez-Faire

16) Leader makes decisions independently with little or no input

from others.
a) Autocratic
b) Democratic
c) Laissez-Faire

17) This leader offers little or no guidance and leaves decision-

making up to the group.
a) Autocratic
b) Democratic
c) Laissez-Faire

18) known as delegative leadership

a) Autocratic
b) Democratic
c) Laissez-Faire
d) None of the above

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19) Are those whose influence comes from the work done rather
than position such as experts
a. Functional leaders b. Situational leaders
c. charismatic leaders d. Traditional leaders

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CHAPTER 6
CONTROLLING

134
 CHAPTER 6
CONTROLLING

6.1 Introduction
Controlling is one of the most important functions of management.
Control is the process of monitoring activities to ensure that they are
being accomplished as planned and of correcting any significant
deviations. The purpose of the control function is to ensure that the
organization makes progress towards the established goals.
Controlling is a four-step process of establishing performance
standards based on the firm's objectives, measuring and reporting
actual performance, comparing the two, and taking corrective or
preventive action as necessary.
Performance standards come from the planning function. Standards
should be established for every important task. Lowering standards
to what has been attained is not a solution to performance problems.
On the other hand, a manager does need to lower standards when
they are found to be unattainable due to resource limitations and
factors external to the business.
Corrective action is necessary when performance is below
standards. If performance is anticipated to be below standards,
preventive action must be taken to ensure that the problem does not
recur. If performance is greater than or equal to standards, it is
useful to reinforce behaviours that led to the acceptable
performance.

6.2 Control Process

The control process is a continuous flow between measuring,
comparing and action. There are four steps in the control process:
1. establishing performance standards.
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 2. measuring actual performance.
3. comparing measured performance against established
standards.
4. taking corrective action.

6.2.1 Step 1. Establish performance standards

Standards are created when objectives are set during the planning
process. A standard is any guideline established as the basis for
measurement. It is a precise, explicit statement of expected results
from a product, service, machine, individual, or organizational unit.
It is usually expressed numerically and is set for quality, quantity,
and time. Tolerance is permissible deviation from the standard.
What is expected? How much deviation can be tolerated?
Examples for standards are:
 Time controls relate to deadlines and time constraints.
 Material controls relate to inventory and material-yield
controls.
 Equipment controls are built into the machinery, imposed on
the operator to protect the equipment or the process.
 Cost controls help ensure cost standards are met.
 Employee performance controls focus on actions and
behaviours of individuals and groups of employees.
 Budgets control cost or expense related standards. Financial
controls facilitate achieving the organization's profit motive.
 Operations control methods assess how efficiently and
effectively an organization's transformation processes create
goods and services.

136
6.2.2 Step 2. Measure actual performance
The measurement of performance can be done in several ways,
depending on the performance standards, including financial
statements, sales reports, production results, customer satisfaction,
and formal performance appraisals. Managers at all levels engage in
the managerial function of controlling to some degree. Supervisors
collect data to measure actual performance to determine variation
from standard.

6.2.3 Step 3. Compare measured performance against

established standards.
Comparing results with standards determines variation. Some
variation can be expected in all activities and the range of variation -
the acceptable variance - has to be established. Deviations or
differences that exceed this range would alert the supervisor to a
problem.

6.2.4 Step 4. Take corrective action

The supervisor must find the cause of deviation from standard.
Then, he or she takes action to remove or minimize the cause. If the
source of variation in work performance is from a deficit in activity,
then a supervisor can take immediate corrective action and get
performance back on track. Also, the supervisors need to determine
how and why performance has deviated and correct the source of
the deviation.

137
6.3 Characteristics of the Control Process
The control process is cyclical which means it is never finished.
Controlling leads to identification of new problems that in turn need
to be addressed through establishment of performance standards,
measuring performance etc.
Employees often view controlling negatively. By its very nature,
controlling often leads to management expecting employee behavior
to change. No matter how positive the changes may be for the
organization, employees may still view them negatively.
Control is both anticipatory and retrospective. The process
anticipates problems and takes preventive action. With corrective
action, the process also follows up on problems.
Ideally, each person in the business views controls as his or her
responsibility. The organizational culture should prevent a person
walking away from a small, easily solvable problem because "that
isn't my responsibility." In customer driven businesses, each
employee cares about each customer. In quality driven dairy farms,
for example, each employee cares about the welfare of each animal
and the wear and tear on each piece of equipment.
Controlling is related to each of the other functions of management.
Controlling builds on planning, organizing and leading.

Timing of Control
Managers can implement controls before an activity begins, during
the time the activity is going on, and after the activity has been
completed.

Feed forward controls are also known as Proactive, preliminary,

preventive or pre-action controls. As the name implies, these
controls take place before a process to make sure bad things do not
138
happen in the first place. The controls identify actions to be taken
before a problem occurs. Feedforward control focuses on the
regulation of inputs (human, material, and financial resources that
flow into the organization) to ensure that they meet the standards
necessary for the transformation process. An example of proactive
control is when an engineer performs tests on the braking system
of a prototype vehicle before the vehicle design is moved on to be
mass produced.

Concurrent controls, Concurrent control takes place while an

activity is in progress. It involves the regulation of ongoing
activities that are part of transformation process to ensure that they
conform to organizational standards. Concurrent control is
designed to ensure that employee work activities produce the
correct results. As an example, many manufacturing operations
include devices that measure whether the items being produced
meet quality standards. Employees monitor the measurements; if
they see that standards are not being met in some area, they make a
correction themselves or let a manager know that a problem is
occurring.

Feedback controls, also known as post-action controls, are

controls that occur after a process to gain feedback or information
that can determine whether performance standards, sales quotas or
other measurable criteria are being met. This type of control
focuses on the outputs of the organization after transformation is
complete.

139
Feed forward, concurrent, and feedback control methods are not
mutually exclusive. Rather, they usually are combined into a
multiple control system. Management normally design control
systems to define standards of performance and acquire
information feedback at strategic control points.

6.4 Management Control Strategies

Managers can use one or a combination of three control strategies or
styles: market, bureaucracy and clan. Each serves a different
purpose. External forces make up market control. Without external
forces to bring about needed control, managers can turn to internal
bureaucratic or clan control. The first relies primarily on budgets
and rules. The second relies on employees wanting to satisfy their
social needs through feeling a valued part of the business.
Self-control, sometimes called adhocracy control, is complementary
to market, bureaucratic and clan control. By training and
encouraging individuals to take initiative in addressing problems on
their own, there can be a resulting sense of individual
empowerment. This empowerment plays out as self-control. The
self-control then benefits the organization and increases the sense of
worth to the business in the individual.

6.5 Designing Effective Control Systems

Effective control systems have the following characteristics:
1. Control at all levels in the business
2. Acceptability to those who will enforce decisions
3. Flexibility. Controls should be flexible and economical in
operation
4. Accuracy

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 5. Timeliness
6. Cost effectiveness
7. Understandability. Controls should be simple to understand
and should indicate corrective action
8. Balance between objectivity and subjectivity
9. Coordinated with planning, organizing and leading.
10. Control must be set according to nature of the job to be
performed. Small firms need different systems of control
from large firms.
11. Deviations should be reported immediately.
12. Controls must conform to the pattern of the organisation. If
the organisation pattern is clear and responsibility for work
done is well defined, control becomes more effective and it is
simpler to isolate persons responsible for deviations.
13. Controls should show expectations at selected points. The
expectation principle should be adopted. Note must be taken
of the varying nature of expectations, as small expectations
in certain areas may be greater significance than larger
expectations elsewhere.

6.6 Dysfunctional Consequences of Control

Managers expect people in an organization to change their
behaviour in response to control. However, employee resistance can
easily make control efforts dysfunctional. The following behaviours
demonstrate means by which the manager's control efforts can be
frustrated:
1. Resisting control: a reaction to too much control
2. Providing inaccurate information: a lack of understanding of
why the information is needed and important leading to "you
want numbers, we will give you numbers."
141
3. Following rules to the letter: people following dumb and
unprofitable rules in reaction to "do as I say."
4. Stealing, discrediting other workers, chasing customers
away, gossiping about the firm to people in the community
5. Playing one manager off against another, exploiting lack of
communication among managers, asking a second manager if
don't like the answer from the first manager.

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6.7 Questions
Chose the correct answer:
1)…………………..is a four-step process of establishing
performance standards based on the firm's objectives, measuring
and reporting actual performance, comparing the two, and taking
corrective or preventive action as necessary.
1) Planning
2) Organizing
3) Directing
4) Controlling
2) A standard is any guideline established as the basis for
measurement. Standards are created when objectives are set during
the ……………… process.
1) Planning
2) Organizing
3) Directing
4) Controlling
3)………………..is permissible deviation from the standard.
1) Measuring
2) non-standards
3) Controlling
4) Tolerance
4) Which of the following is not an aspect of control?
a. to evaluate actual performance.
b. to compare actual performance with goals.
c. to define objectives.
d. to take corrective action.

5) Name the function of management which is concerned with

monitoring organisational performance towards the attainment of
organisational goals.
a)Planning
b)Organising
c)Controlling
d)None of the above

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6) Which management function involves measuring results,
comparing results to expectations, and taking corrective action?
A) planning B) organizing C) leading D) controlling

7) Mary, a manager, monitors the work performance of workers in

her department to determine if the quality of their work is "up to
standard." She is engaging in which function?
A. planning
B. demonstrating
C. organizing
D. leading
E. controlling

8) The CEO of ABC Company reviews the performance of her

company in the past month's Profit & Loss Statement to determine
if the company is "on track" in terms of its sales and profitability
goals. This CEO is engaged in which function?
A. planning
B. organizing
C. demonstrating
D. controlling

9) Resisting control: a reaction to ------- control.

a) no b) low c) too much d) no or low

10) All of the following are Dysfunctional Consequences of

Control, EXCEPT:
a) Resisting control
b) Providing accurate information
c) Following rules to the letter
d) Playing one manager off against another

11) Effective control systems

a) should be objective
b) should be subjective
c) Contrasted with objective
d) Balance between objectivity and subjectivity

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12) Employees often view control --------.
a) positively
b) negatively
c) neutrally
d) subjectively

13) Time controls relate to ----

a) deadlines b) timetable
c) Budgets control d) Operations control

14) Under the process of controlling, employees might object when

they are kept under a strict watch with the help of closed circuit
televisions (too much control). Which limitation of controlling
highlighted
a) little control on external factors
b) resistance from employees
c) difficult in setting quantitative standards
d) time consuming

14) The control process is cyclical which means it is never finished.

a) True b) False

15) Controlling is related to each of the other functions of

management. Controlling builds on planning, organizing and
leading.
a) True b) False

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 CHAPTER 7
DECISION MAKING

146
 CHAPTER 7
DECISION MAKING

7.1 Introduction
All managers must sooner or later make decisions. That is, they face
several alternatives, and their decision involves a comparison
between the alternatives and an evaluation of the outcome. The
quality of the decisions managers make is the true measure of their
performance. Each operational decision influences future actions,
which in turn, require further decisions. Errors in decision making,
therefore, tend to be cumulative.
Decision making is the major responsibility of a manager,
regardless of his or her functional area or level in the organization.
Some of these decisions may have a strong impact on the
organization, while others will be important but less crucial. The
important point, however, is that all will have some sort of effect.

7.2 Types of Managerial Decisions

The managers as decision maker is a problem solver, charged with
either selecting from available alternatives or inventing an
alternative different in meaningful ways from any that now exist.
There are two major categories of decisions programmed and non-
programmed:
a. Programmed decision: repetitive, well defined, procedures
exist to find a solution.
 A procedure is a series of interrelated sequential steps
that can be used to respond to a structured problem.
 A rule is an explicit statement that tells managers what
they ought or ought not to do.

147
  A policy is a guide that establishes parameters for
making decisions.
b. Non programmed decision: novel, poorly defined, no
procedure exists for finding a solution.

7.3 Types of Decisions and Level of Management

Lower-level managers typically confront familiar and repetitive
problems and rely on programmed decisions. As managers move up
the levels of the organization, the problems tend to become more
unstructured. Problems that come up infrequently and have a great
deal of uncertainty surrounding them are often of a strategic nature
and should be the concern of top management.
Middle managers in most organisations concentrate mostly on
programmed decisions. Figure (7-1) indicates the relation between
the types of the decisions and the management level in the
organisation.
7.4 Steps in Decision Making
In order to make decisions under non-routine, emergency
circumstances, the following steps should be taken:
1. Define the problem and the decision to be made. Clarify the
problem and try to eliminate irrelevant or unnecessary issues.
In identifying problems is sometimes symptoms are
identified and not the actual cause of the problem. Decisions
can end up biased against the wrong aspects of a process.

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Fig. (7-1) The types of the decisions and management level
in the organisation.
2. Gather and collate all the information about the problem. Put
all the information in a logical form and sequence.
3. Extract the relevant information.
4. Evaluate the information. Assess the quality and accuracy of
the information and estimate the unknowns and variables that
may influence the outcome of the decision.
5. Identity alternatives. Determine the alternatives and the
possible outcomes of each. a. At this point, it's useful to keep
others involved (unless you're facing a personal and/or
employee performance problem). Brainstorm for solutions to
the problem. Very simply put, brainstorming is collecting as
many ideas as possible, then screening them to find the best
idea. It's critical when collecting the ideas to not pass any
judgment on the ideas -- just write them down as you hear
them
6. Make the decision. The process of decision-making does not
end with the selection of a solution. Its success depends on
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 the implementation of the solution, which necessitates
envisaging the future. This vision must be translated
effectively into action through others involved in the process.
Identifying each task to be completed and resources required
for the completion of the objective is critical for the success
of a decision-making process.
7. Evaluate the choice. Even after the successful
implementation, the effectiveness of the decisions taken need
to be monitored and evaluated periodically. The criteria
developed in the first step are used for evaluation.

7.5 Group Decision Making

The first part of this chapter focused on individuals making
decisions. In most organisations, however a great deal of decision
making is achieved through committees, team, and other groups.
Managers frequently face situations in which they must seek and
combine judgements in group meetings. This is especially true for
non-programmed decisions. The increased complexity of many of
these problems requires specialized knowledge in numerous fields,
usually not possessed by one person. There fore many decisions in
organizations are made in groups.
There has been considerable debate over the relative effectiveness
of individual versus group decision making. Individual and group
decisions each have their own set of strengths and drawbacks.

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7.5.1 The advantages of group decisions
The advantages that group decisions have over individuals include
the following:
1. Provide more complete information.
2. Generate more alternatives.
3. Increase acceptance of a situation.
4. Increase legitimacy.

7.5.2 The drawbacks

The drawbacks include the following:
a. Time consuming.
b. Minority domination.
c. Pressures to conform, which can lead to groupthink.
d. Ambiguous responsibility.

7.5.3 Techniques for improving group decision making:

There are four ways to make group decisions more creative. These
ways are:
1. Brainstorming is an idea-generating process that encourages
alternatives while withholding criticism. Brainstorming
involves group members verbally suggesting ideas or
alternative courses of action. The "brainstorming session" is
usually relatively unstructured. The situation at hand is
described in as much detail as necessary so that group
members have a complete understanding of the issue or
problem. The group leader or facilitator then solicits ideas
from all members of the group. Usually, the group leader or
facilitator will record the ideas presented on a flip chart or
marker board. The "generation of alternatives" stage is
clearly differentiated from the "alternative evaluation" stage,
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 as group members are not allowed to evaluate suggestions
until all ideas have been presented. Once the ideas of the
group members have been exhausted, the group members
then begin the process of evaluating the utility of the
different suggestions presented. Brainstorming is a useful
means by which to generate alternatives, but does not offer
much in the way of process for the evaluation of alternatives
or the selection of a proposed course of action. One of the
difficulties with brainstorming is that despite the prohibition
against judging ideas until all group members have had their
say, some individuals are hesitant to propose ideas because
they fear the judgment or ridicule of other group members.
2. Nominal group technique is a decision-making technique in
which group members are physically present but operate
independently. The nominal group technique is a structured
decision making process in which group members are
required to compose a comprehensive list of their ideas or
proposed alternatives in writing. The group members usually
record their ideas privately. Once finished, each group
member is asked, in turn, to provide one item from their list
until all ideas or alternatives have been publicly recorded on
a flip chart or marker board. Usually, at this stage of the
process verbal exchanges are limited to requests for
clarification—no evaluation or criticism of listed ideas is
permitted. Once all proposals are listed publicly, the group
engages in a discussion of the listed alternatives, which ends
in some form of ranking or rating in order of preference. As
with brainstorming, the prohibition against criticizing
proposals as they are presented is designed to overcome
individuals' reluctance to share their ideas. Empirical
152
 research conducted on group decision making offers some
evidence that the nominal group technique succeeds in
generating a greater number of decision alternatives that are
of relatively high quality.
3. Delphi technique is a group decision-making technique in
which members never meet face to face. The Delphi
technique is a group decision-making process that can be
used by decision-making groups when the individual
members are in different physical locations. The technique
was developed at the Rand Corporation. The individuals in
the Delphi "group" are usually selected because of the
specific knowledge or expertise of the problem they possess.
In the Delphi technique, each group member is asked to
independently provide ideas, input, and/or alternative
solutions to the decision problem in successive stages. These
inputs may be provided in a variety of ways, such as e-mail,
fax, or online in a discussion room or electronic bulletin
board. After each stage in the process, other group members
ask questions and alternatives are ranked or rated in some
fashion. After an indefinite number of rounds, the group
eventually arrives at a consensus decision on the best course
of action.
4. Electronic meetings are decision-making groups that interact
by way of linked computers.

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7.6 Questions
1. Compare between :
 programmed decision
 non programmed decision.
2. Write notes:
The process of the decision making.
3. Multiple choice:
1)The people in an organisation who should be the most concerned
with non programed decision are:
a) Line supervisors
b) Top managers
c) First level manager
d) Middle managers
2) If a decision maker has no knowledge of the likelihood of the
outcome of any alternative, then the decision is being made under
the conditions of
a) Certainty
b) risk
c) Probability
d) uncertainty.
3) The difference between the Nominal Group technique and the
Delphi technique is
a) One is a verbal approach, one is written
b) One is a short term group, the other is long term
c) One is visual, the other is verbal
d) One is face-to-face, the other members never meet
face to face.

4)A ------------ is a series of interrelated sequential steps that can be

used to respond to a structured problem.
a) procedure b) rule c) policy d) organizing

5) ……… is a group creativity technique by which efforts are made

to find a conclusion for a specific problem by gathering a list of
ideas spontaneously contributed by its members.
a) Muddled b) stereotyping c) brainstorming d)channel

154
6) Group decision making achieved through –
a) first level manager b) supervisor c) committees d)
employee

7) What is the FIRST step of the decision-making process?

a) make a plan!
b) make a decision
c) evaluate choices
d) identify the problem

8) Last step in the decision-making process is...

a) gather information
b) make a decision
c) plan how to reach the goal
d) evaluate the choice

9) The decision-making process starts with gathering information.

False
True

10) All of the following are disadvantages of group decision

making, Except
a) Time consuming.
b) Minority domination.
c) Increase legitimacy.
d) Ambiguous responsibility.

11) Which of the following is a solution that is chosen from among

alternatives?
A. Decision- making
B. Problem
C. Uncertainty
D. Decision

12) All of the following are advantages of group decision making,

Except
a) Generate more alternatives.
b) Increase acceptance of a situation.

155
c) Increase legitimacy.
d) Minority domination .

13) Novel, poorly defined, no procedure exists for finding a solution

a) Procedure b) Rational decision
c) Programmed decision d) Non programmed decision

14) A ------------ is an explicit statement that tells managers what

they ought or ought not to do..
a) procedure b) rule c) policy d) organizing

15) The decision taken by lower-level management is a

_____________.
A. programmed decision .
B. non-programmed decision.
C. major decision.
D. minor decision.

16) Opening of new branch is an example of ___________.

A. programmed decision.
B. non-programmed decision.
C. individual decision.
D. non-economic decision.

17) The decision taken by high level of management is__________.

A. programmed decision.
B. non-programmed decision.
C. individual decision.
D. non-economic decision.

18) Decision taken by a committee formed by the top management

for specific purpose is ____.
A. group decision.
B. organisational decision.
C. personal decision.
D. operative decision.

19)Decision making is

156
a. finding the answer to a question.
b. choosing one alternative from among several.
c. staffing positions within the organizational hierarchy.
d. motivating employees to pursue organizational goals.

20)Which of the following statements about brainstorming is

FALSE?
a. It's used in the idea generation phase of decision making.
b. Members present ideas and clarify them.
c. Ideas are recorded in secret.
d. Ideas are recorded on a flip chart

21)The Delphi technique is designed for use by groups

a. that are very large
b. that are very small.
c. that do not meet face-to-face.
d. that have suffered from groupthink in the past.

22) The difference between nominal group technique and

brainstorming is that
a. nominal groups allow members to work alone first.
b. brainstorming allows criticism, nominal group doesn’t.
c. nominal groups seek quantity, brainstorming seeks quality.
d. brainstorming involves ranking ideas; nominal groups don’t
rank.

23) Which of the following statements about brainstorming is

FALSE
a. no criticism.
b. idea-generating.
c. alternative evaluation.
d. Ideas are recorded on a flip chart

24)------ requires group members to spend time writing down their

ideas privately before sharing them.
a) brainstorming b) Nominal group technique c) Delphi
technique d) Uncertainty

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25) Decision making is the major responsibility of top manager.
they face several alternatives, and their decision involves a
comparison between the alternatives and an evaluation of the
outcome.
a) True b) False

26) Lower-level managers typically confront familiar and repetitive

problems and rely on programmed decisions.
a) True b) False

27) problems that come up infrequently and have a great deal of

uncertainty surrounding them are often of a strategic nature and
should be the concern of top management.
a) True b) False

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CHAPTER 8
MOTIVATION

159
 CHAPTER 8
MOTIVATION

8.1 Introduction
Since motivation influences productivity, supervisors need to
understand what motivates employees to reach peak performance. It
is not an easy task to increase employee motivation because
employees respond in different ways to their jobs and their
organization's practices. Motivation has been defined as, “ all those
inner-striving conditions described as wishes, desire, drives, etc.
Motivation is the set of processes that moves a person toward a
goal. Thus, motivated behaviours are voluntary choices controlled
by the individual employee. The supervisor (motivator) wants to
influence the factors that motivate employees to higher levels of
productivity.
In other words motivation can be defined as: “a process of arousing
and sustaining goal-directed behaviour induced by the expectation
of satisfying individual needs”
From a manager’s perspective, a person who is motivated:
 Works hard.
 Sustains a pace of hard work.
 Has self-directed behaviour toward important goals.

8.2 The Motivation Process

The purpose of behaviour is to satisfy needs. A need is anything that
is required, desired, or useful. A want is a conscious recognition of a
need. A need arises when there is a difference in self-concept (the
way I see myself) and perception (the way I see the world around
me). The presence of an active need is expressed as an inner state of
tension from which the individual seeks relief.
160
In other words, you have certain needs or wants (these terms will be
used interchangeably), and this causes you to do certain things
(behaviour), which satisfy those needs (satisfaction), and this can
then change which needs/wants are primary (either intensifying
certain ones, or allowing you to move on to other ones).
In other words, you have certain needs or wants (these terms will be
used interchangeably), and this causes you to do certain things
(behaviour), which satisfy those needs (satisfaction), and this can
then change which needs/wants are primary (either intensifying
certain ones, or allowing you to move on to other ones). Figure (8-
1) shows the motivation progress.

8.3 Historical Views of Motivation

Motivation Process
Evolution can be traced from scientific management, through the
human relations movement, to the human resource approach.

Learning
Learning

Unfulfilled
Unfulfilled Goal
needs Goaloror
needs Tension
Tension Drive
Drive Behavior
Behavior need
need
wants,
wants,and
and fulfillment
desires fulfillment
desires

Cognitive
Cognitive
processes
processes

Tension
Tension
reduction
reduction

Fig. (8-1) The motivation process.

161
  Scientific management: The assumptions of scientific
management were that work is inherently unpleasant for
most people and the money they earn is more important to
employees than is the nature of the job they are performing.
 Human relations movement: This school of thought
emphasised the role of social processes in organisations and
assumed that the need for belongingness and the need to feel
useful are more important than money in motivating
employees.
 Human resource approach: This view assumes that people
want to contribute to organisational effectiveness and are
able to make genuine contributions. The organisation's
responsibility is to create a work environment that makes full
use of available human resources. The human resource
approach guides most thinking about motivation today, but
three integrative approaches conceptualise motivation more
completely: needbased, processbased, and reinforcement-
based approaches.

8.3.1 Need based approaches to motivation

Need based approaches to motivation focus on what motivates
employees to choose certain behaviours. Two need based
approaches are need hierarchies and the dual structure approach.

Need Hierarchies:
Two of the most popular need hierarchies are Abraham Maslow's
hierarchy and Clayton Alderfer's ERG theory of motivation.
. Maslow's hierarchy of needs assumes that people are motivated to
satisfy five levels of needs:

162
  Physiological needs are the most basic human needs. They
include food, water, and comfort. The organization helps to
satisfy employees' physiological needs by a paycheck.
 Safety needs are the desires for security and stability, to feel
safe from harm. The organization helps to satisfy employees'
safety needs by benefits.
 Social needs are the desires for affiliation. They include
friendship and belonging. The organization helps to satisfy
employees' social needs through sports teams, parties, and
celebrations. The supervisor can help fulfil social needs by
showing direct care and concern for employees
 Esteem needs are the desires for self-respect and respect or
recognition from others. The organization helps to satisfy
employees' esteem needs by matching the skills and abilities
of the employee to the job. The supervisor can help fulfil
esteem needs by showing workers that their work is
appreciated.
 Self-actualization needs are the desires for self-fulfillment
and the realization of the individual's full potential. The
supervisor can help fulfil self-actualization needs by
assigning tasks that challenge employees' minds while
drawing on their aptitude and training.
The hierarchical arrangement suggests that the five levels of needs
are arranged in order of increasing importance, starting with
physiological needs. According to the theory, when needs at one
level are satisfied, they are no longer motivators and the individual
"moves up" the hierarchy to satisfy needs at the next level.
Maslow's view of motivation provides a logical framework for
categorising needs, but it does not supply a complete picture. This
illustrated in fig. (8-1).
163
 Fig. (8-1) Maslow’s hierarchy of needs

Clayton Alderfer developed the ERG theory (Existence,

Relatedness and Growth) of motivation in response to criticisms
of Maslow's hierarchy.

164
Alderfer classifies needs into three categories, also ordered
hierarchically:
 Existence Needs are survival needs that correspond with
Abraham Maslow’s physiological and safety needs. To exist,
every individual needs extrinsic values such as food, drink,
and warmth. Alderfer thinks these Existence Needs are
obvious and that they form the basis for human existence
 Relatedness needs refer to social needs and interpersonal
relationships. This category explains the human tendency to
relate with other people through interactions and
relationships and getting recognition and fame. It states that
people need to have positive interactions with family,
friends, peers, and superiors to feel happy and satisfied in
life.
 Growth needs in Alderfer’s ERG Theory of motivation are
the same as esteem and self-actualization needs by Maslow’s
Theory. It refers to the human desire for self-development,
advancement, and personal growth. Growth needs explain

165
 that people have to perform meaningful work and be creative
to explore their potential because only then can they fulfill
their needs for growth. In an organization, if employees are
doing repetitive work then they will lack motivation but if
the job is interesting and challenging they will be motivated
by various growth opportunities.
Frustration-Regression Principle: Alderfer’s ERG Theory of
motivation explains the Frustration-Regression Principle and how it
works. The theory explains the relationship between frustration
regression and states that when a person is unable to achieve higher-
level needs then he might regress and try to fulfill lower-level
needs.
For example, if an employee does not find growth opportunities in
his organization then he will not be motivated and with time become
frustrated. This will force him to fulfill relatedness needs for
example he might start having more interactions with other team
members. If the person is unable to satisfy even his relatedness
needs then he will try to satisfy Existence needs. Thus as his
frustration level increases, he will be more regressed.

The Similarities Between Maslow’s Theory and the ERG

Theory
Maslow’s theory and the ERG theory both seek to explain human
motivation and how it affects behavior. Both theories are rooted in
the idea that there are basic needs that drive people to do certain
things and to behave in certain ways. Another similarity is that both
theories have a hierarchical framework, with primitive needs at the
bottom, and more refined needs at the top.
The Differences Between Maslow’s Theory and the ERG Theory

166
ERG theory, like Maslow's theory, assumes that motivated
behaviour follows a hierarchy, but it has two important differences:
- Maslow’s theory has five ascending levels, and the ERG theory
only has three levels. In fact, in the ERG theory, existence equates
to Maslow’s first two levels of physical and security needs,
relatedness equates to Maslow’s next two levels of social needs and
ego needs, and growth equates to Maslow’s final level of self-
actualization.
- ERG theory suggests that more than one level of needs can cause
motivation at the same time;
- ERG theory has a frustration regression element that suggests
that if needs remain unsatisfied at some high level, the individual
will become frustrated, regress to a lower level, and begin to
pursue lower level needs again.
Alderfer believed that as you start satisfying higher needs, they
become more intense (e.g., the power you get the more you want
power), like an addiction.

167
These theories are useful for managing businesses as they suggest
that:
 Not everyone is motivated by the same things. It depends
where you are in the hierarchy (think of it as a kind of
personal development scale)
 The needs hierarchy probably mirrors the organizational
hierarchy to a certain extent: top managers are more likely to
motivate by self-actualization/growth needs than existence
needs.

Frederick Herzberg's Studies:

Frederick Herzberg's studies of accountants and engineers led him
to suggest that entirely different sets of factors are associated with
satisfaction and with dissatisfaction.

168
Motivation factors, relating to the job itself, result in feelings
ranging from satisfaction to no satisfaction.
Hygiene factors, relating to the work environment, result in feelings
ranging from dissatisfaction to no dissatisfaction. Hygien factors
produced an acceptable working environment but did not increase
satisfaction their absence did however cause job dissatisfaction.
Motivators Hygienes
Responsibility Supervision
Recognition Salary
Promotion Work environment
Achievement Company policies
Intrinsic aspects of the job Relationship with colleagues

Acquired Needs:
Other need based perspectives on motivation focus on acquired
needs:
 need for achievement, accomplish something difficult. as
kids encouraged to do things for themselves.
 need for affiliation, form close personal relationships. as kids
rewarded for making friends.
 need for power, control others. as kids, able to get what they
want through controlling others.
This approach is concerned not about the ordering of needs but
rather about the needs themselves. David McCleland first identified
the need for achievement, which reflects an individual's desire to do
something more effectively than in the past. The need for power is
the desire to be influential in a group and to control one's
environment.

169
8.3.2 Process based approaches to motivation
These approaches to motivation are concerned with how motivation
takes place. They focus on why people choose certain behavioural
options to fulfil their needs and how they evaluate their satisfaction
after they have attained their goals. Two useful process based
approaches are expectancy theory and equity theory.

Expectancy Theory:
Expectancy is the belief that effort will lead to first-order outcomes,
any work-related behaviour that is the direct result of the effort an
employee expends on a job.

Equity Theory:
Equity theory, developed by J. Stacy Adams, suggests that once an
individual has chosen an action that is expected to satisfy his or her
needs, the individual assesses the equity or fairness of the outcome.
Equity is an individual's beliefs that he or she is being treated fairly
relative to the treatment of others.
Three attitudes are possible: an individual may feel equitably
rewarded, underrewarded, or overrewarded. When individuals feel
underrewarded or overrewarded, they will do something to reduce
the inequity. The single most important thing to remember about
equity theory is that if rewards are to motivate employees, they must
be perceived as being equitable and fair.

170
8.3.3 Reinforcementbased approaches to motivation
These approaches to motivation explain the role of rewards as they
cause behaviour to change or remain the same. Behaviour that
results in rewarding consequences is likely to be repeated.

Reinforcement Contingencies:
Reinforcement contingencies are the possible outcomes that an
individual may experience as a result of his or her choice of
behaviour. There are four of these : positive reinforcement,
avoidance, punishment, and extinction.
 Positive reinforcement is a reward or a positive outcome
after a desired behaviour is performed; it serves to
strengthen behaviour.
 Avoidance occurs when the individual chooses behaviour
to avoid unpleasant consequences; it can strengthen
desired behaviour.
 Punishment is unpleasant consequences used to weaken
undesired behaviour.
 Extinction is ending undesired behaviour by ignoring and
not reinforcing it.

8.3.4 New approaches to motivation in organisations

Two promising new approaches to motivation are goal setting
theory and the Japanese approach.

GOAL SETTING THEORY:

This approach suggests that managers and subordinates should set
goals for the individual on a regular basis and that rewards should
be tied to the accomplishment of goals. Research support for

171
goalsetting theory is more consistently favourable than any other
single approach to employee motivation.

8.3.5 The Japanese approach to motivation

The Japanese approach is not a theory or model but a philosophy of
management. The basic tenet is that managers and workers should
come together as partners as one group.

172
8.4 Questions
1. Define: motivation.
2. Complete:
 Maslow's hierarchy of needs assumes that people are
motivated to satisfy five levels of needs: a)…… b)………
c)………… d)…………
 …………………….. developed by J. Stacy Adams,
suggests that once an individual has chosen an action that
is expected to satisfy his or her needs, the individual
assesses the equity or fairness of the outcome.
 …………………… needs are the most basic human
needs. They include food, water, and comfort.
 …………………. needs are the desires for security and
stability, to feel safe from harm.
 ……………………. needs are the desires for affiliation.
They include friendship and belonging. The organization
helps to satisfy these needs through sports teams, parties,
and celebrations. Furthermore, the supervisor can help
fulfil these needs by showing direct care and concern for
employees.
 ………………… needs are the desires for self-respect
and respect or recognition from others. The organization
helps to satisfy these needs by matching the skills and
abilities of the employee to the job. The supervisor can
help fulfil these needs by showing workers that their
work is appreciated.

173
 Multiple choice questions
1) What does "E", "R" and "G" stand for in the ERG theory?
a. Export, Risk and Guarantee
b. Exponential, Reliability and Growth
c. Existence, Relatedness and Growth
d. None of the above

2) Who propounded the Need's Theory

a. Frederick Herzberg
b. Alderfer
c. Abraham Maslow
d. None of the above

3) The two factor theory is based on which factors?

a. Hygiene and behavioural
b. Safety and self - esteem
c. Self - actualisation and status quotient
d. None of the above

4)Which among the following is the highest level need under Need
Hierarchy Theory of Motivation?
1. Physiological Need
2. Safety and Security Needs
3. Social Needs
4. Self-esteem Needs
5. Self Actualization Needs

5)Which among the following is the lowest level need under Need
Hierarchy Theory of Motivation?
1. Physiological Need
2. Safety and Security Needs
3. Social Needs
4. Self-esteem Needs
5. Self Actualization Needs

6))According to Maslow’s need hierarchy theory motivation, the

lower level of human needs emanates from _____
1. Needs like food, clothing, shelter, air, water
174
2. Need of individuals to associate, belong with others
3. Need for power, self respect, autonomy, self confidence,
4. Need of sense of achievement

7) Which among the following is the correct order of Maslows’

Need Hierarchy Theory of Motivation starting from lower to higher
level need?
1. Safety and Security Needs, Physiological Need, Social
Needs, Self-esteem Needs, Self Actualization Needs
2. Social Needs, Physiological Need, Safety and Security
Needs, Self-esteem Needs, Self Actualization Needs
3. Physiological Need, Safety and Security Needs, Social
Needs, Self-esteem Needs, Self Actualization Needs
4. Self Actualization Needs , Physiological Need, Safety and
Security Needs, Social Needs, Self-esteem Needs
5. Safety and Security Needs, Physiological Need, Social
Needs, Self Actualization Needs, Self-esteem Needs

8)Which among the following is correct expansion of ‘ERG’ in

ERG theory of motivation?
1. E – Existence, R – Religion, G – Growth
2. E – Experience, R – Related, G – Growth
3. E – Existence, R – Related, G – Growth
4. E – Existence, R – Requirement, G – Growth

9) Which among the following is true about ERG theory of motivation?

a) Lower level need must be satisfied before moving to next higher
level of need
b) Higher level need must be satisfied before moving to next lower
level of need
c) Middle level needs are most important
d) A person may seeks to satisfy any level of need per his
circumstances

10)The belief that effort will lead to first-order outcomes, any work-
related behaviour that is the direct result of the effort an employee
expends on a job
a) Expectancy Theory b) Equity Theory
c) Hygienes Theory d) Maslow's Theory
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11) Equity theory of motivation focuses on:
a) peoples expectation of the different outcomes for a given action
b) people’s perception of how fairly they have been treated in
comparison with others
c) people’s perception of how they should perform in a given
situation at work
d) a satisfied need is no longer a motivator

12) When you study for a test to get a good grade, you are doing so
because of:
1. Positive Reinforcement
2. Negative Reinforcement
3. Positive Punishment
4. Negative Punishment

13)When you persist in talking during class, looking at your phone

and texting and coming in late, and the professor asks you to leave
the class, the professor is using:
Positive Reinforcement
Negative Reinforcement
Positive Punishment
Negative Punishment

14) In reinforcement, the likelihood that a behavior will occur again

is always:
a) Decreased
b) Increased
c) It depends on whether negative or positive reinforcement is used
d) All of the above

15) ------- is ending undesired behaviour by ignoring and not

reinforcing it.
a) Positive Reinforcement
b) Negative Reinforcement
c) Punishment
d) Extinction

176
16) ------- factors, relating to the job itself, result in feelings ranging
from satisfaction to no satisfaction.
a) Progression
b) Hygiene
c) Motivation
d) Leadership

17)Which one theory of David McClelland

Theory of Power
Theory of need
Theory of x & y
Theory of organization

18) Which one of the following is not one of the needs identified in the
acquired needs theory?
a. Need for power
b. Need for safety
c. Need for satisfaction
d. Need for affiliation

19) According to Herzberg, which of the following may regarded as

hygiene/maintenance factors?
a) working condition
b) salary
c) company policy
d) all of the above

20) According to David McClelland`s Acquired Needs theory , a

person acquired three types of needs. These three types of needs are
a) need for satisfaction, need for affiliation, and need for power
b) need for achievement, need for affiliation, and need for power
c) need for Existence, need for affiliation, and need for power
d) need for achievement, need for Esteem, and need for Self-
actualization

21)Which out the following needs represents Existence need of a

person as per ERG theory of motivation?
a)Esteem and Social needs
b)Physiological and Safety, Security needs
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c) Safety and Security Needs
d) Physiological and Self-Actualisation needs

22) Which among the following is true about ERG theory of

motivation?
1. Lower level need must be satisfied before moving to next
higher level of need
2. Higher level need must be satisfied before moving to next
lower level of need
3. Esteem is most important needs that must be satisfied first
4. A person may seeks to satisfy any level of need per his
circumstances

23) Name the motivation theory that is based on Frustration-

regression?
1. Alderfer – ERG theory
2. Maslow – hierarchy of needs theory
3. Herzberg – Two factor theory
4. Skinner’s reinforcement theory

24) The ___ of ERG theory holds that an already satisfied, lower-
level need becomes reactivated and can influence behaviour when a
higher-level need cannot be satisfied.
A) frustration-regression principle
B) deficit principle
C) progression principle
D) contingency principle

25) ----- states that when a person is unable to achieve higher-level needs
then he might regress and try to fulfill lower-level needs.
A) Frustration-regression principle
B) Deficit principle
C) Progression principle
D) Needs fulfilling principle

26)____ asserts that individuals are likely to compare the ratios of inputs
to outcomes they receive against the ratios of other people, such as
colleagues or acquaintances.
a. Acquired needs theory

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b. Equity theory
c. Expectancy theory
d. Two-factor theory

27) The order of Maslow's hierarchy of needs, from bottom to top, is...
a)Safety, Belonging-Love, Self-Actualization, Self-Esteem, and
Physiological
b) Psychological, Security, Happiness, Ego, and Self-Realization
c) Physiological, Safety, Belonging-Love, Self-Esteem, and Self-
Actualization
d) Physiological, Love, Self-Actualization, Esteem, Safety

28) -------- factors, relating to the job itself, result in feelings ranging from
satisfaction to no satisfaction. ----- factors, relating to the work
environment, result in feelings ranging from dissatisfaction to no
dissatisfaction
a) Hygiene, behavioural b) Motivation , Hygiene
c) Self - actualisation and status quotient d) None of the above

29) The growth needs of ERG theory are represented by various needs in
Maslow’s model :
a) Physiological and social needs
b)Physiological and Safety needs
c) Safety and social Needs
d) Esteem and Self-Actualisation needs

30) The Differences between Maslow’s Theory and the ERG Theory
a) Unlike Alderfer, Maslow believed that self –actualization forms the
base of the needs –hierarchy.
b) Unlike Maslow, Alderfer believed that a person can be motivated by
needs from multiple levels at a time
c) Unlike Maslow , Alderfer believed that as lower –level needs become
satisfied , people seek to satisfy h higher- level needs.
d) Unlike Maslow , Alderfer believed that Middle level needs are most
important

31) ------- concerned not about the ordering of needs but rather about the
needs themselves.
a) ERG theory b) Expectancy Theory
c) Acquired Needs approach d) Maslow's Theory

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 CHAPTER 9
COMMUNICATION

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 CHAPTER 9
COMMUNICATION
9.1 Introduction
Communication can best be summarized as the transmission of a
message from a sender to a receiver in an understandable manner.
The importance of effective communication is immeasurable in the
world of business and in personal life. From a business perspective,
effective communication is an absolute must, because it commonly
accounts for the difference between success and failure or profit and
loss. It has become clear that effective business communication is
critical to the successful operation of modern enterprise. Every
business person needs to understand the fundamentals of effective
communication.
Many of the problems that occur in a organization are the direct
result of people failing to communicate. Faulty communication
causes the most problems. It leads to confusion and can cause a
good plan to fail. Communication is the exchange and flow of
information and ideas from one person to another. It involves a
sender transmitting an idea to a receiver. Effective communication
occurs only if the receiver understands the exact information or idea
that the sender intended to transmit.
9.2 The Communication Process
The communication process involves six basic elements:
1. sender (encoder),
2. message,
3. channel,
4. receiver (decoder),
5. noise, and
6. feedback.
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 Supervisors can improve communication skills by becoming aware
of these elements and how they contribute to successful
communication. Communication can break down at any one of
these elements. Figure (9-1) shows the communication process.

Fig. (9-1) The communication process.

Sender Encodes:

The sender initiates the communication process. When the sender

has decided on a meaning, he or she encodes a message, and selects
a channel for transmitting the message to a receiver. To encode is to
put a message into words or images.

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The message:
The message is the information that the sender wants to transmit.

The medium:
The medium is the means of communication, such as print,
electrical, and digital. As a sender, the supervisor should define the
purpose of the message, construct each message with the receiver in
mind, they select the best medium, time each transmission
thoughtfully, and seek feedback. Words can be verbal - written and
spoken. Words are used to create pictures and stories (scenarios) are
used to create involvement.
Verbal or spoken communication includes informal staff meetings,
planned conferences, and mass meetings. Voice and delivery are
important. Informal talks are suitable for day-to-day liaison,
directions, exchange or information, progress reviews, and the
maintenance of effective interpersonal relations. Planned
appointments are appropriate for regular appraisal review and
recurring joint work sessions. Planning for an appointment includes
preparing, bringing adequate information, and limiting interruptions.
Telephone calls are used for quick checkups and for imparting or
receiving information.
Nonverbal messages include images, actions and behaviours used to
communicate. Images include photographs, film, charts, tables,
graphs, and video. Nonverbal behaviours include actions, body
language, and active listening. Actions and body language include
eye contact, gestures, facial expressions, posture, and appearance.
The effective communicator maintains eye contact for four to five
seconds before looking away. Gestures should be natural and well
timed. Grooming and dress should be appropriate for the situation.

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Listening requires good eye contact, alert body posture, and the
frequent use of verbal encouragement.

The Channel:
The channel is the path a message follows from the sender to the
receiver. Supervisors use downward channels to send messages to
employees. Employees use upward channels to send messages to
supervisors. Horizontal channels are used when communicating
across departmental lines, with suppliers, or with customers. An
informal channel is the grapevine. It exists outside the formal
channels and is used by people to transmit casual, personal, and
social interchanges at work.

Receiver Decodes:
The receiver is the person or group for whom the communication
effort is intended. The sending of a message by an appropriate
channel to a receiver appears to have completed the communication
process or at least the sender's responsibility.

Noise:
Noise is anything that distorts a message by interfering with the
communication process. Noise can take many forms it can
be external or internal factors. Noise as a barrier may originate from
the source or the receiver, from the channel used in sending the
message, or outside the source and receiver’s control.
Internal factor: Involves mental forces within a receiver or sender
that might affect his or her ability to either encode or decode a
message correctly. Eg: Daydreaming, fatigue, exhaustion.
External factors: Anything around the person that disturbs the
communication process. Eg: Sights, sounds, smell.

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Feedback:
Feedback ensures that mutual understanding has taken place in a
communication. It is the transfer of information from the receiver
back to the sender. The receiver decodes or makes out the meaning
of the message. Thus, in the feedback loop, the receiver becomes
the sender and the sender becomes the receiver.
In other words, after sending the message, the sender becomes a
receiver and the receiver becomes a sender through the process of
feedback. Feedback is the receiver's response to the attempt by the
sender to send the message. Feedback is the key to determination by
the sender of whether or not the message has been received in the
intended form.
Feedback involves choice of channel by the receiver of the original
message. The channel for feedback may be quite different from the
original channel chosen by the sender.
Effect on the receiver completes the communication process.
Effective communication is the original sender having the desired
effect on the receiver. Communication at its best minimizes
misunderstanding between sender and receiver. The sender cannot
transplant a message or idea. Ineffective communication means
there was no effect on the receiver or the effect was unexpected,
undesired and/or unknown to the sender.
This simplified version of a complex process can be a powerful tool
for thinking about one's communication skills, diagnosing
communication problems and developing plans for improvement of
communication. The good news about communication is that
improvement is almost always possible. The bad news is that
perfection in communication escapes everyone.

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9.3 Barriers to Communication
At any point in the communication process a barrier can occur.
Barriers keep us from understanding other’s ideas and thoughts.
Barriers can appear at any point of the communication. Anything
that prevents understanding of the message is a barrier to
communication.
Communication barriers include:
 Culture, background, and bias - We allow our past
experiences to change the meaning of the message. Our
culture, background, and bias can be good as they allow us
use our past experiences to understand something new, it is
when they change the meaning of the message then they
interfere with the communication process.
 Noise - Equipment or environmental noise impedes clear
communication. The sender and the receiver must both be
able to concentrate on the messages being sent to each other.
 Ourselves - Focusing on ourselves, rather than the other
person can lead to confusion and conflict. The "Me
Generation" is out when it comes to effective
communication. Some of the factors that cause this are
defensiveness (we feel someone is attacking us), superiority
(we feel we know more that the other), and ego (we feel we
are the center of the activity).
 Perception - If we feel the person is talking too fast, not
fluently, does not articulate clearly, etc., we may dismiss the
person. Also our preconceived attitudes affect our ability to
listen. We listen uncritically to persons of high status and
dismiss those of low status.
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  Message - Distractions happen when we focus on the facts
rather than the idea. Our educational institutions reinforce
this with tests and questions. Semantic distractions occur
when a word is used differently than you prefer. For
example, the word chairman instead of chairperson may
cause you to focus on the word and not the message.
 Environmental - Bright lights, an attractive person, unusual
sights, or any other stimulus provides a potential distraction.
 Smothering - We take it for granted that the impulse to send
useful information is automatic. Not true! Too often we
believe that certain information has no value to others or they
are already aware of the facts.
 Stress - People do not see things the same way when under
stress. What we see and believe at a given moment is
influenced by our psychological frames of references - our
beliefs, values, knowledge, experiences, and goals.
Another way to look to the barriers is to look to the Problems with
any one of the components of the communication model which can
become a barrier to communication. These barriers suggest
opportunities for improving communication.

1. Muddled messages - Effective communication starts with

a clear message.
Muddled messages are a barrier to communication because the
receiver is left unclear about the intent of the sender. Muddled
messages have many causes. The sender may be confused in his or
her thinking. The message may be little more than a ambiguous
idea.
Feedback from the receiver is the best way for a sender to be sure
that the message is clear rather than muddled. Clarifying muddled
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messages is the responsibility of the sender. The sender hoping the
receiver will figure out what was really meant does little to remove
this barrier to communication.
2. Stereotyping - Stereotyping causes us to typify a person, a group,
an event or a thing on oversimplified conceptions, beliefs, or
opinions. Thus, basketball players can be typed as tall, green
equipment as better than red equipment, football linemen as dumb,
Ford as better than Chevrolet, Vikings as handsome, and people
raised on swine farms as interested in animals. Stereotyping can
substitute for thinking, analysis and open mindedness to a new
situation.
Stereotyping is a barrier to communication when it causes people to
act as if they already know the message that is coming from the
sender or worse, as if no message is necessary because "everybody
already knows." Both senders and listeners should continuously
look for and address thinking, conclusions and actions based on
stereotypes.
3. Wrong channel - "Good morning." An oral channel for this
message is highly appropriate. Writing "GOOD MORNING!" on a
chalkboard in the machine shed is less effective than a warm oral
greeting. On the other hand, a detailed request to a contractor for
construction of a farrowing house should be in writing, i.e., non-
oral. A long conversation between a pork producer and a contractor
about the farrowing house construction, with neither taking notes,
surely will result in confusion and misunderstanding. These simple
examples illustrate how the wrong channel can be a barrier to
communication.
Variation of channels helps the receiver understand the nature and
importance of a message.

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Simple rules for selection of a channel cause more problems than
they solve. In choosing a channel, the sender needs to be sensitive to
such things as the complexity of the message (good morning versus
a construction contract); the consequences of a misunderstanding;
knowledge, skills and abilities of the receiver.
4. Language - Words are not reality. Words as the sender
understands them are combined with the perceptions of those words
by the receiver. Language represents only part of the whole. We fill
in the rest with perceptions. Trying to understand a foreign language
easily demonstrates words not being reality. Being "foreign" is not
limited to the language of another country. It can be the language of
another job.
Each new member and employee needs to be taught the language of
the organization.
5. Lack of feedback - Feedback is the mirror of communication.
Feedback mirrors what the sender has sent. Feedback is the receiver
sending back to the sender the message as perceived. Without
feedback, communication is one-way.
Feedback happens in a variety of ways. Asking a person to repeat
what has been said, e.g., repeat instructions, is a very direct way of
getting feedback. Feedback may be as subtle as a stare, a puzzled
look, a nod, or failure to ask any questions after complicated
instructions have been given. Both sender and receiver can play an
active role in using feedback to make communication truly two-
way.
Feedback should be helpful rather than hurtful. Prompt feedback is
more effective that feedback saved up until the "right" moment.
Feedback should deal in specifics rather than generalities. Approach
feedback as a problem in perception rather than a problem of
discovering the facts.
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6. Poor listening skills - Listening is difficult. A typical speaker
says about 125 words per minute. The typical listener can receive
400-600 words per minute. Thus, about 75 percent of listening time
is free time. The free time often sidetracks the listener. The solution
is to be an active rather than passive listener.
One important listening skill is to be prepared to listen. Tune out
thoughts about other people and other problems. Search for meaning
in what the person is saying. A mental outline or summary of key
thoughts can be very helpful. Avoid interrupting the speaker. "Shut
up" is a useful listening guideline. "Shut up some more" is a useful
extension of this guideline. Withhold evaluation and judgement
until the other person has finished with the message. A listener's
premature frown, shaking of the head, or bored look can easily
convince the other person there is no reason to elaborate or try again
to communicate his or her excellent idea.
Providing feedback is the most important active listening skill. Ask
questions. Nod in agreement. Look the person straight in the eye.
Lean forward. Be an animated listener. Focus on what is being said.
Repeat key points.
Active listening is particularly important in dealing with an angry
person. Encouraging the person to speak, i.e., to vent feelings, is
essential to establishing communication with an angry person.
Repeat what the person has said. Ask questions to encourage the
person to say again what he or she seemed most anxious to say in
the first place. An angry person will not start listening until they
have "cooled" down. Telling an angry person to "cool" down often
has the opposite effect. Getting angry with an angry person only
assures that there are now two people not listening to what the other
is saying.

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7. Interruptions - A farm is a lively place. Few days are routine.
Long periods of calm and quiet rarely interrupt the usual hectic
pace. In this environment, conversations, meetings, instructions and
even casual talk about last night's game are likely to be interrupted.
The interruptions may be due to something more pressing, rudeness,
lack of privacy for discussion, a drop-in visitor, an emergency or
even the curiosity of someone else wanting to know what two other
people are talking about.
No matter the cause, interruptions are a barrier to communication.
In the extreme, there is a reluctance of employees and family
members even to attempt discussion with a manager because of the
near certainty that the conversation will be interrupted. Less
extreme but nevertheless serious is the problem of incomplete
instructions because someone came by with a pressing question.
8. Physical distractions - Physical distractions are the physical
things that get in the way of communication. Examples of such
things include the telephone, a pick-up truck door, a desk, an
uncomfortable meeting place, and noise.
These physical distractions are common on farms. If the phone
rings, the tendency is to answer it even if the caller is interrupting a
very important or even delicate conversation. A supervisor may give
instructions from the driver's seat of a pick-up truck. Talking
through an open window and down to an employee makes the truck
door a barrier. A person sitting behind a desk, especially if sitting in
a large chair, talking across the desk is talking from behind a
physical barrier. Two people talking facing each other without a
desk or truck-door between them have a much more open and
personal sense of communication. Uncomfortable meeting places
may include a place on the farm that is too hot or too cold. Another
example is a meeting room with uncomfortable chairs that soon
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cause people to want to stand even if it means cutting short the
discussion. Noise is a physical distraction simply because it is hard
to concentrate on a conversation if hearing is difficult.

9.4 Removing Barriers to Communication

Communication plays a major role in business. It affects the
relationships among members on the management team and their
relationships with employees. Although effective communication
does not guarantee the success of organisation, its absence usually
assures problems. A communication problem may soon become a
crisis or it may linger on for years.
More specifically, communication influences the day-to-day
relations among the organisation’s members. Communication also
affects the willingness of the organisation’s members to provide
useful suggestions. Making employees feel a part of the
organisation requires communication. In fact, for employees to
make the important evolution from "workers" to "working
managers" requires effective communication between supervisors
and employees.
Organisation’s members are typically hesitant to state their goals,
their concerns and their disappointments. Of course, they may be a
complainer and share views to the point others silently beg for less
"communication." Much more common is the need to understand
better what they are "really thinking."
Removing barriers to communication is one of the easiest ways to
improve communication. Removing these barriers starts with an
understanding of a communication model.

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9.5 Facilitating Communication
Beyond removal of specific barriers to communication, the
following general guidelines may also help communication.
1. Have a positive attitude about communication. Defensiveness
interferes with communication.
2. Work at improving communication skills. It takes knowledge and
work. The communication model and discussion of barriers to
communication provide the necessary knowledge. This increased
awareness of the potential for improving communication is the first
step to better communication.
3. Include communication as a skill to be evaluated along with all
the other skills in each person's job description. Help other people
improve their communication skills by helping them understand
their communication problems.
4. Make communication goal oriented. Relational goals come first
and pave the way for other goals. When the sender and receiver
have a good relationship, they are much more likely to accomplish
their communication goals.
5. Approach communication as a creative process rather than simply
part of the chore of working with people. Experiment with
communication alternatives. What works with one person may not
work well with another person. Vary channels, listening techniques
and feedback techniques.
6. Accept the reality of miscommunication. The best communicators
fail to have perfect communication. They accept miscommunication
and work to minimize its negative impacts.

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9.6 Questions
3. Complete:
a. The communication process involves six basic
elements:
i. ……………………
ii. ……………………
iii. ……………………
iv. ……………………
v. ……………………
vi. ……………………
1. …………………….. is the information that the sender
wants to transmit.
2. The channel is the path a message follows from the
sender to the receiver. Supervisors use ……………
channels to send messages to employees. Employees
use …………… channels to send messages to
supervisors. …………… channels are used when
communicating across departmental lines, with
suppliers, or with customers.
3. ………………… is the person or group for whom the
communication effort is intended.
4. Communication barriers include:
a) ……………………
b) ……………………
c) ……………………
d) ……………………
e) ……………………

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 4. Chose the correct answer:
1. Communication can be defined as:
a. The bestowing of a material thing.
b. The use of one object or thing to represent
another.
c. The process of creating meaning through
symbolic interaction.
d. The channel by which a message is sent.
Answer: C
1. Any force that interferes with effective communication is
known as:
b. Feedback
c. Noise
d. Channel
e. Message
Answer: B
2. ……………..is the key to determination by the sender of whether
or not the message has been received in the intended form, thus after
sending the message the sender becomes a receiver and the receiver
becomes a sender
a) Feedback.
b) Channel.
c) Media.
d) Sender.
3…………….messages are a barrier to communication because the
receiver is left unclear about the intent of the sender. they have
many causes. The sender may be confused in his or her thinking.
The message may be little more than a ambiguous idea.
a) Muddle.
b) Effective.
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 c) Clear.
d) Missed.
4.Helen's boss observes that her employees are generally
engaged in a marginally restricted dialogue with each other
during team meetings. What type of communication does
Helen seem to be utilizing with her team?
a) Verbal
b) Nonverbal
c) Written
d) Interpersonal
5.What is an important component that helps an organization
meet its objectives and serves as the glue that holds everything
together?
a) Organizational Communication
b) The Communication Process
c) Increased Productivity
d) Leadership

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 CHAPTER 10
Business Ethics and Social Responsibility

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 CHAPTER 10
Business Ethics and Social Responsibility
Any business decision may be judged as right or wrong, ethical or
unethical, legal or illegal. Ethics are beliefs about what’s right and
wrong or good and bad. An individual’s values and morals, plus the
social context in which his or her behavior occurs, determine
whether behavior is regarded as ethical or unethical. In other words,
ethical behavior is behavior that conforms to individual beliefs and
social norms about what’s right and good. Unethical behavior is
behavior that conforms to individual beliefs and social norms about
what is defined as wrong and bad.
Business ethics , also called corporate ethics, is the principles
and standards that determine acceptable conduct in business
organizations. The acceptability of behaviour in business is
determined by customers, competitors, government regulators,
interest groups, and the public, as well as each individual’s personal
moral principles and values.
It can also be defined as the written and unwritten codes of
principles and values, determined by an organization’s culture, that
govern decisions and actions within that organization. It applies to
all aspects of business conduct on behalf of both individuals and the
entire company. In the most basic terms, a definition for business
ethics boils down to knowing the difference between right and
wrong and choosing to do what is right.
Business ethics are important for a variety of reasons. First and
foremost, it keeps the business working within the boundaries of the
law, ensuring that they aren't committing crimes against their
employees, customers, consumers at large, or other parties.

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However, the business also has a number of other advantages that
will help them succeed if they are aware of business ethics.
Businesses can also build trust between the business and consumers.
If consumers feel that a business can be trusted, they will be more
likely to choose that business over its competitors. Some businesses
choose to use certain aspects of business ethics as a marketing tool,
particularly if they decide to highlight a popular social issue.
Leveraging business ethics wisely can result in increased brand
equity overall.
Being an ethical business is also highly appealing to investors and
shareholders. They will be more likely to sink money into the
company, as following standard ethical business practices and
leveraging them properly can be a path to success for many
businesses.
Following business ethics can also be beneficial for the business'
employees and operations. Attracting top talent is significantly
easier for ethical businesses. Employees not only appreciate a
socially aware employer, but will also perceive them as the kind of
business that will act in the best interest of their employees. This
produces more dedicated employees and can also reduce
recruitment costs.

ETHICS IN THE WORKPLACE

Ethical decisions in an organization are influenced by three key
factors: individual moral standards, the influence of managers and
co-workers, and the opportunity to engage in misconduct.
The activities and examples set by coworkers, along with rules and
policies established by the firm, are critical in gaining consistent
ethical compliance in an organization. If the company fails to
provide good examples and direction for appropriate conduct,
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confusion and conflict will develop and result in the opportunity for
misconduct. If your boss or coworkers leave work early, you may be
tempted to do so as well. If you see coworkers making personal
long-distance phone calls at work and charging them to the
company, then you may be more likely to do so also.
Business ethics as a field of study is incredibly diverse, but many
concepts can be divided into a few basic principles.

Ethical Behaviors in The Workplace

1. Transparency. Transparency involves accurately representing
facts, telling a truth in its entirety and communicating clearly and
openly about everything a company does and says. It is the
foundation of a strong relationship with customers, which directly
impacts the success and stability of a company.
2. INTEGRITY. Ethical executives demonstrate personal integrity
and the courage of their convictions by doing what they think is
right even when there is great pressure to do otherwise; they are
principled, honorable and upright; they will fight for their beliefs.
3. TRUSTWORTHINESS. Achieving trustworthiness typically
involves being transparent and honest in all actions and
communications. Being trustworthy can have a positive impact both
internally and externally. Consumers appreciate openness, as it
provides them with insight into how a business operates and
conceptualizes the work that they do. Employees also appreciate
this quality in a business that they work for.
4. LOYALTY. They demonstrate fidelity and loyalty to persons
and institutions, support and devotion to duty; they do not use or
disclose information learned in confidence for personal advantage.
5. FAIRNESS. It is important to treat all people equally. Fair
persons manifest a commitment to justice, the equal treatment of
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individuals, tolerance for and acceptance of diversity, they are open-
minded and willing to admit they are wrong.
6. CONCERN FOR OTHERS. Caring, compassionate,
benevolent and kind, help those in need.
7. RESPECT FOR OTHERS. Showing respect for employees and
customers involves following through on all promises and providing
sincere apologies and appropriate compensation if anything falls
through. Showing a lack of respect will lower a business' reputation.
It will also do significant damage to employee morale and increase
turnover.
8. LAW ABIDING. Business ethics also include abiding by legal
regulations and obligations regarding their business activities like
taxes, worker safety and labor laws.
9. COMMITMENT TO EXCELLENCE. Ethical organizations
strive to provide excellence by always working to deliver the
greatest quality of service or products to their clients and
customers.
10. ACCOUNTABILITY. Ethical businesses accept responsibility
for all decisions made as a company and admit its mistakes to all of
those who may be affected by a misstep including shareholders,
employees and the public. In addition to taking accountability, they
also accept any consequences that result and do so transparently.

Unethical Workplace Behaviors

1. Misuse of company time. Whether it is covering for someone
who shows up late or altering a time sheet, misusing company time
tops the list. This category includes knowing a co-worker is
conducting personal business on company time. Misuse of
company time is unethical.

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2.Discrimination Discrimination is unlawful conduct that is based
upon an individual’s age, race, religion, color, gender, national or
ethnic origin, familial status, pregnancy, disability, or any other
status protected by law.
3. Abusive Behavior. leaders who use their position and power to
mistreat others. Unfortunately, unless the situation involves race,
gender or ethnic origin, there is often little to no legal protection
against abusive behavior in the workplace. Abusive behavior is
unethical.
4. Employee Theft. Employees should always act to protect
company assets, including physical, intellectual, and electronic or
digital properties. Whether its check tampering, not recording sales
in order to skim, or manipulating expense reimbursements,
employee theft is a crime and unethical.
5. bribery and corruption.
A company's integrity is essential for maintaining trustworthiness
and reputation. Employees should always do their work fairly,
honestly, and legally.
5.Harassment
Organizations should commit to providing a work environment free
of discrimination and unlawful harassment. Actions, words, jokes,
or comments based on an individual’s sex, race, ethnicity, age,
religion, or any other legally protected characteristic are not
tolerated.
6. Violating Company Internet Policies. Employees may use the
Internet when appropriate to access information
needed. Cyberloafers are terms used to identify people who surf the
internet when they should be working. Who would have thought
that checking your Facebook or Twitter account is becoming an
ethical issue? It is. Violating company internet policies is unethical.
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MANAGING ETHICS IN THE WORKPLACE
At the organizational level, ethics management is concerned with
the way ethical issues are handled within business operations. It has
been defined as a process where ethical issues are managed
through management tools with the goal to improve the
decision-making process, to make organizational operations more
geared towards ethical principles or to balance conflicting
expectations of stakeholders in an adequate way. ethics
management involves the systematic, coherent, and iterative
determination of what the ethical criteria of an organization
should be, and the development, implementation, and monitoring
of the interventions to meet these criteria.
Moving to the individual level of the ethics component of
responsible management, ethical management implies that
managers need to display ethical leadership and to make
ethically sound decisions.
Organizations can manage ethics in their workplaces by establishing
an ethics management. Ethics programs convey corporate values,
often using codes and policies to guide decisions and behavior, and
can include extensive training and evaluating, depending on the
organization.
An effective ethics policy will be based on a set of values or
principles. Values express beliefs about the ‘good’ and the ‘right’ in
the context of the organisation; they are commonly derived from
wider cultural and societal value systems. When identifying the
organisation’s core values, it may help to think of some values as
business values and others as ethical values, although the distinction
can be blurred and business and ethical values are often interrelated.
Some commonly found values are shown below:

203
Business values may include Ethical values may include
Customer service Integrity
Quality Honesty
Innovation Openness
Reliability Respect
Efficiency Fairness
Value for money Responsibility

A code of ethics is the main tool for implementing an ethics policy.

Codes of ethics are formalized rules and standards that describe
what a company expects of its employees. A code of ethics is a
formal document that states an organization’s primary values and
the ethical rules it expects managers and nonmanagerial employees
to follow. Ideally, these codes should be specific enough to guide
organizational members in what they’re supposed to do.
The effectiveness of such codes depends heavily on whether
management supports them and ingrains them into the corporate
culture, and how individuals who break the codes are treated. If
management considers them to be important, regularly reaffirms
their content, follows the rules themselves, and publicly reprimands
rule breakers, ethics codes can be a strong foundation for an
effective corporate ethics program.

CONCEPT OF SOCIAL RESPONSIBILITY

While organizations are using all facilities available in the society
for their growth, they need to reciprocate by doing something for
the societies where they exist and benefit from. This need is
reflected in the concept of corporate social responsibilities.
Corporate social responsibility (CSR) is a company’s commitment
to operating in an economically, socially and environmentally

204
sustainable manner, while recognizing the interest of its
stakeholders, including employees, government, investors,
customers, business partners, local communities and society.
Social responsibility of business refers to its obligation to take those
decisions and perform those actions which are desirable in terms of
the objectives and values of our society. Social responsibility refers
to the overall way in which a business attempts to balance its
commitments to relevant groups and individuals in its social
environment. These groups and individuals are often called
organizational stakeholders—those groups, individuals, and
organizations that are directly affected by the practices of an
organization and, therefore, have a stake in its performance.

THE NATURE OF SOCIAL RESPONSIBILITY

There are four dimensions of social responsibility: economic, legal,
ethical, and voluntary.
The economic dimension is the basis that the firm demands profits
and being profitable assures its endurance. A firm is accountable to
its shareholders, to its employees and to the customers in the
economic sense. It has the responsibility to make profit for the
investors that trusted the corporation with their funds and have a
reasonable and acceptable return on their investment for them.
Furthermore the corporation has the duty to have fair compensation
for the employees employed by it. To the customers the
responsibility is to provide product and services for a fair price.
Thus, meeting the economic responsibility is the foundation of
responsibilities and the basis for the subsequent responsibilities.
Legal dimension of CSR The legal dimension of corporate social
responsibility thus refers to obeying local, national and international
law regulating competition (procompetitive legislation) and
205
protecting: workers' human rights (equity and safety legislation); the
consumer (consumer protection legislation); and the natural
environment (environmental protection laws).
Ethical dimension of CSR refers to behaviors and activities that are
permitted or prohibited by organization members, community,
society, even if they are not codified by law.
Voluntary dimension of CSR, are those behaviours and/or
activities desired of business by society and referring to business
contributions to society in terms of quality of life and society's
welfare - for example, giving to charitable organizations and/or
supporting community projects. Voluntary responsibilities are left to
the individual judgments and preferences of business managers.

The Pyramid of Social Responsibility

206
AREAS OF SOCIAL RESPONSIBILITY
1. Responsibility toward the Environment
Environmental responsibility initiatives aim at reducing pollution
and greenhouse gas emissions, and the sustainable use of natural
resources.

2. Responsibility toward Customers

The primary expectation of consumers towards the corporations is a
stable supply of goods and services. So, companies must meet that
expectation by delivering the right product or service with desirable
quality at the right time, right place, and fair price.

3. Responsibility toward Employees

Employees are human resource that must be treated with dignity and
respect. The employees should be provided with good working
conditions. Organizations must pay adequate wages and other
incentives like bonus, overtime allowance etc and should protect
health and hygiene of employees. Business should offer adequate
opportunities of promotion to their talented employees.

4. Responsibility toward Shareholders.

Shareholders who are the owners of business should be provided
with correct information about company to enable them to give
them true and fair position of the company to enable them to decide
about further investments.
Company should provide a fair return on the investment made by
shareholders. If shareholders do not get proper dividend then they
will hesitate to invest additional funds in the concern. Shareholders
should be kept fully informed about the working of the company for
healthy growth of the business.
207
BUSINESS BENEFITS OF CSR
The business benefits of corporate social responsibility include the
following:
1. Stronger brand image, recognition, and reputation
2. Increase productivity and profitability. When employees
follow ethical codes of conduct, they do not act inappropriately, cut
corners or short-change customers. Effort is put into productive
activities instead of being diverted to questionable practices.
3. Increased customer loyalty and sales. Customers of a firm that
practices CSR feel that they are helping the firm support good
causes.
4. Retaining key and talented employees. Employees often stay
longer and are more committed to their firm knowing that they are
working for a business that practices CSR.
5. Reduced regulatory burden. Reduce the number of legal
issues. When everyone is working systematically in accordance with
a clear code of conduct, then the business is far less likely to face
any problems of legal liability.

208
Choose the correct answer:
1) What exactly are "Ethics"?
a) Impossible to define because they are different for each of us.
b)Standards for behavior based on common values.
c) A system for determining guilt.
d)Any code of laws.

2) The term …… refers to principles, values and beliefs that define

right and wrong behaviour.
a)Customer satisfaction b)Empowerment c) Innovation d) Ethics

3) What is Ethics to do with?

a)The wider community
b) Business
c) Right and wrong
d) Nothing

4) Accepted principles of right or wrong governing the conduct of

businesspeople are called:
a. business values.
b. business conduct.
c. business ethics.
d. business principles

5) The moral principles, standards of behaviour, or set of values that

guide a person’s actions in the workplace is called-
a) Office place ethics
b) factory place ethics
c) behavioural ethics
d) work place ethics

6) Which of the following factors encourage good ethics in the

workplace?
a) Transparency
b) fair treatment to the employees of all levels
c) both (a) and (b)
d) bribe

209
7)What is the definition of good Ethics?
a)Doing the right thing
b) Doing the wrong thing
c) Being right
d)Being wrong

8) You are a person with a high level of ______________ if you

stand by your values even if others put pressure on you to do
something that is wrong or if they make fun of you.
a)Communication
b)Cooperation
c)Honesty
d)Integrity

9) It is always important to show ___________ for yourself, others

and the place where you work.
a)Appearance
b)Cooperate
c)Communicate
d)Respect

10) If you have ___________________, you will be a trusted

person because they will see that you are committed to your
company.
a)Loyalty
b)Organizational Skills
c)Productivity
d)Respect

11) Formalized rules and standards that describe what a company

expects of its employees.
a)code of ethics
b) word of ethics
c) ethical dilemma
d) None of the above

12) A written statement of policies and principles that guides the

behaviour of all employees is called

210
 a)code of ethics
b) word of ethics
c) ethical dilemma
d) None of the above

13) Which of the following factors shapes the ethical behaviour of

the members of an organization?
The supervisor’s behaviour
organizational culture
code of ethics
All of the above

14) Teaching Ethics in Business schools will

(a) Increase awareness about ethics
(b) Make managers sensitive to ethical issues
(c) Make future manager aware of implications of unethical
practices
(d) Guide managers when they face ethical dilemmas
(e) All of the Above

15)What is meant by the phrase CSR?

a) Corporate Social Responsibility
b) Company Social Responsibility
c) Corporate Society Responsibility
d) Company Society Responsibility

16) When leaders are using their position and power to treat other
employees in a bad way, this is called ………………
a) misuse of company time b) employee theft
c) abusive behavior d) corruption

17) When employees are checking their Facebook or Twitter

account during the work, this is refer to ……………..
a) violating Company Internet Policies
b) misuse of company time
c) employee theft
d) Discrimination

211
18) There are four dimensions of social responsibility
a) Environment, legal, ethical, and Voluntary
b) Environment, Customers, Ethical, and Employees
c) Economic, Customers, Ethical, and Voluntary
d) Economic, legal, Ethical, and Voluntary

19) A business is responsible to ensure that it produces

goods/services that an be sold at a profit from which employees and
shareholders will benefit.
a) ethical responsibility
b) discretionary responsibility
c) economic responsibility
d) none of the above

20) Areas of social responsibility include responsibility toward

a) Suppliers , Customers, Employees, and Shareholders
b) Competitors, Customers, Employees, and Shareholders
c) Directors, Customers, Employees, and Shareholders
d) Environment, Customers, Employees, and Shareholders

212
 SAMPLE EXAM
EXAM (1)

Choose the most correct answer for each of the following

Questions:
1) Which of the following is not an aspect of Fayol's
scientific management?
a) Division of work
b) Unity of direction
c) Discipline.
d) Decentralisation
2) The ___________ view emphasizes the fit between organization
processes and the characteristics of the situation. It calls for fitting
the structure of the organization to various possible or chance
events.
a) systems
b) behavioural
c) contingency
d) equity
3) __________ found that the work could be simplified and
production could be increased by combining and eliminating body
movements.
a) Taylor
b) Gilbreth
c) Fayol
d) Gantt

4) _____________made a chart showing the relationship between

work planed and completed on one axis and time on the other.
a) Taylor
b) Gilbreth
c) Fayol
d) Gantt
5) Frederick Taylor and Fayol were advocates of an approach to
management involving the use of scientific method, known as:
a) Management science.
213
 b) Scientific management
c) The quantitative approach
d) The contingency approach.

6) According to Fayol’s 14 principles of management, ‘esprit de

corps’ refers to which of the following?
(a) Being treated fairly and kindly.
(b) Spirit of the corporation.
(c) Team work and harmony.
(d) Spirit of work.
7) The __________ environment includes human resource.
a) internal
b) external
c) capital
d) market

8) The environment direct forces include:

a) technology
b) culture
c) suppliers
d) managers
9) Indirect forces include all of the following forces except:
a) economic
b) political
c) international
d) competitors

10) An organisation comes to understand its competitors by

performing_______
a) competitor analysis
b) competitive advantages
c) competitor study
d) market research
11) The ________ level determines the long-run objectives and
direction of the organisations
a) operations
b) technical
c) strategic

214
 d) management

12) The _________ level focuses on effective performance, whether

the organisation produces something or performs a service. The
main task of this level is to develop the best allocation of resources
to produce the desired output.
a) operations
b) technical
c) strategic
d) management

13) The conceptual skills are most critical for the__________ level
of management.
a) first
b)middle
c) top
d) third
14) The resources within an organization, used to achieve its goal,
make up the _________ of a business.
a) Internal environment
b) External environment
c) Social responsibility
d) Workers motivation
15)___________ indicates the purposes of the organisation
a) Value
b) Plane
c) Strategy
d) Mission

16) The phases of planning include all of the following

except
a) The determination of the mission
b) Analysing the situation
c) Compare actual to expected situation
d) Write the Plan
17) Goals and objectives should be specific,
measurable, acceptable, realistic, and have a time
frame

215
 a) True b) False

18) It’s difficult to know what someone should be

doing if they are to pursue the goal to “work harder”
because it`s not
a) specific
b) acceptable
c) realistic
d) achievable
19) It is the personal and social relationships that arise
spontaneously as people associate with one another in
the work environment.
a) management
b) organization
c) formal organization
d) informal organization

20) ……… is distribution of authority

a) Delegation
b) Centralisation
c) Specialisation
d) Span of control
21) ___________means authority must equal responsibility
a) Unity principle
b) Exception principle
c) Parity principle
d) Decentralization
22)___________ is the number of people a manager supervises.
a) Scalar chain of command
b) Parity principle
c) Line authority
d) Span of control
23) Assume that the president has an accountant who prepares
monthly financial summaries with recommendations for corrective
action. The accountant has_____
a) no authority
b) staff authority
c) line authority

216
 d) expertise authority

24) ……..is the grouping of jobs under the authority of a single

manager.
a) Organizing function.
b) Departmentalization.
c) Delegation.
d) Specialization.
25) What kind of departmentalization would be in
place in a government organization where different
public service responsibilities are divided into
activities for employers, children, and the disabled?
a) product
b) geographic
c) outcome
d) customer
26) Managers give directing function a variety of
names like
a) Planning
b) organizing
c) influencing
d) controlling
27) The inner force that directs employee behaviour
a) motivation
b) need
c) Empowerment
d) influencing

28) The three key elements in the definition of

organizational motivation are needs, rewards
and___________.
a) personality
b) ability
c) effort
d) tenure
29) If a decision maker has no knowledge of the
likelihood of the outcome of any alternative, then the

217
decision is being made under the conditions of
………………
a) Certainty
b) Risk
c) Probability
d) Uncertainty
30) What is the first step in a control process?
a) Allocate resources
b) Set standards
c) Choose key personnel for the task
d) Select a strategy
31) ………………..is permissible deviation from the
standard.
a) Measuring.
b) Non-standards.
c) Controlling.
d) Tolerance.
32) The control process is cyclical which means it is
never finished.
A) true
b) false
33) What are the main characteristics of an effective
control system?
a) Flexibility, accuracy, and timeliness
b) Flexibility, measurability, and
timeliness
c) Accuracy, relevance and objectivity
d) Cost effectiveness and relevance
34) Which of the options below is an example of a
stereotype?
a) Jack has the opinion that women are
sensitive people
b) Jack has the opinion that feedback is the
mirror of communication.
c) Jack feels that Michelle is behaving like a
little child
d) Jack has the opinion that no subordinate
should report to more than one boss.

218
35) Communication barriers include:
a) brainstorming
b) stress
c) mission
d) decodes
36) ______ is a group creativity technique by which
efforts are made to find a conclusion for a specific
problem by gathering a list of ideas spontaneously
contributed by its members.
a) Muddled
b) stereotyping
c) brainstorming
d)channel
37) Group decision making achieved through –
a) first level manager
b) supervisor
c) committees
d) employee
38) Maslow`s hierarchy of needs includes all of the
following categories Except_____
a) safety
b)relatedness
c) physiological
d) self actualization
39) _________relating to the work environment, result in feelings
ranging from dissatisfaction to no dissatisfaction
a) hygiene factors
b) motivating factors
c) economic factors
d) environmental factors

40) The process by which a sender transmits content is known as

a) Encoding
b) Decoding
c) Feedback
d) Receiver
41) Scientific Management were more concerned with the problems
at the ...................................... levels

219
 a) Higher levels
b) Middle
c) Operating
d) None
42). ………….suggests that each communication going up or
coming down must
flow through each position in the line ofauthority
a) Communication Pattern
b) Horizontal communications
c) Scalar chain
d) None of these

220
EXAM (2)
Question one:
Chose the correct answer:
1) Which of the following is not an aspect of Fayol's scientific
management?
a) Division of work
b) Unity of direction
c) Discipline.
d) Decentralisation

2) Frederick Taylor and Fayol were advocates of an approach to

management involving the use of scientific method, known as:
a) Management science.
b) Scientific management
c) The quantitative approach
d) The contingency approach.

3) The resources within an organization, used to achieve its goal,

make up the ______ of a business.
a) Internal environment
b) External environment
c) Social responsibility
d) Workers motivation
4) An organisation comes to understand its competitors by
performing_______
a) competitor analysis
b) competitive advantages
c) competitor study
d) market research

5) The ________ level determines the long-run objectives and

direction of the organisations
a) operations
b) technical
c) strategic
d) management

221
6) Indirect forces include all of the following forces except:
a) economic
b) political
c) international
d) competitors

7) Communication barriers include:

a) brainstorming
b) stress
c) mission
d) decodes

8) ……… is a group creativity technique by which efforts are made

to find a conclusion for a specific problem by gathering a list of
ideas spontaneously contributed by its members.
a) Muddled
b) stereotyping
c) brainstorming
d)channel
9) Group decision making achieved through –
a) first level manager
b) supervisor
c) committees
d) employee

10)The process by which a sender transmits content is known as

a) Encoding
b) Decoding
c) Feedback
d) Receiver

11) It’s difficult to know what someone should be doing if they are
to pursue the goal to “work harder” because it`s not
a) specific
b) acceptable
c) realistic
d) achievable
12)___________ indicates the purposes of the organisation

222
 a) Value
b) Plane
c) Strategy
d) Mission
13) The three key elements in the definition of organizational
motivation are needs, rewards and___________.
a) personality
b) ability
c) effort
d) tenure
14) The conceptual skills are most critical for the__________ level
of management.
a) first
b) middle
c) top
d) third

15) Assume that the president has an accountant who prepares

monthly financial summaries with recommendations for
corrective action. The accountant has_____
a) no authority
b) staff authority
c) line authority
d) expertise authority
16) Larry is an employee at XYZ company. He observed that his
company has a rigid chain of management where authority is
channeled from top to bottom. Larry believes that his
organization is a centralized organization. What other
characteristic would support Larry's viewpoint concerning a
centralized organization?
a) Operations are kept close to top management
b) Employees are not obligated to follow a uniform set of
policies
c) Middle managers have a comparative level of authority
as top managers
d) Operations are dividing between top, middle
and lower management

223
17) Who researched the managerial roles of various CEOs and
classified those roles into three competencies namely:
Interpersonal, informational, decisional?
a) Bernard Bass
b) Max Weber
c) Bill Gates
d) Henry Mintzberg

18) All definitions of Corporate Social Responsibility recognize

that:
a) companies have a responsibility for their impact on
society and environment.
b) the natural environment should be the main focus of
CSR activities.
c) business ethics is a complex issue.
d) companies must pay equal attention to business ethics
and sustainability.
19) What is meant by the phrase CSR?
a) Corporate Social Responsibility
b) Company Social Responsibility
c) Corporate Society Responsibility
d) Company Society Responsibility
20) Who are organisational stakeholders?
a) Government
b) Employees
c) Customers
d) All of the above

Question two:
Complete:
1) The basic idea of the ------------- approach is that there is no best
way to plan, organize, or control. Rather the managers must find
different ways to fit different situations.

2) The six basic elements of the communication process: 1…., 2…..,

3……, 4……, 5……, 6……….
3) The functions of Management are
1)-------------,
224
 2) --------,
3)-------------,
4)-------------
4) The management function that involves setting goals and
deciding how best to achieve them is known as…………….

5) ………………..is permissible deviation from the standard.

6) Three basic skills are required for effective managerial

performance, which are:
1…………,
2 ………….,
3…………

Question three:
First: Write short notes in the following topics:
1) The system approach.
2) Departmentation
3) Control process.
Second: What is the different between programmed and
non-programmed decision?

Quiz (3)
Chose the correct answer:
1)……..has defined the basic problem of managing as the art of
“knowing exactly what you want men to do and then see that
they do it in the best and cheapest way”
a) Henry Fayol
b) F.W. Taylor
c) Mary parker Follet
d) None ofthese
2)…..is undertaken to find out the one best way of doing the thing
a) Job Analysis
b) Merit rating
c) Job enrichment
d) None
225
3) The principle of Unity of command is contrary
to……………………..
a) Rule of thumb
b) Unity of Direction
c) Matrix organizations
d) None of these
4) According to …………..principle, each group of activities with
the same objective must have one head and one plan
a) Unity of Direction
b) Unity of command
c) Either of these
d) None
5) Everything which goes to increase the importance of subordinates
role is……………….
a) Decentralization
b) Centralization
c) Either A or B
d) None
6) school of Management recognizes the existence of a centralized
body of knowledge for the Management.
a) System approach
b) Empirical
c) Contingency
d) Operational
7) The main objective of ……………..study is to determine and
eliminate unnecessary and wasteful movements
a) Work study
b) Time study
c) Motion study
d) All of these

8) According to Fayol , the principles of Management

are……………….
a) Rigid
b) Flexible
226
 c) A or b
d) None
9) ……………..is the right of a superior to give orders to
subordinates, take decisions etc.
a) Authority
b) Responsibility
c) Accountability
d) None

10) Authority and responsibility are....................to each other

a) Supplementary
b) Complementary
c) Contradictory
d) None
11) ………….principle states that an employee should receive
orders form one superior only
a) Unity of direction
b) Unity of command
c) Esprit de corps
d) None

12) According to................ principle, there should always exist one

head and one plan for a group of activities having the same
objective
a) Unity of direction
b) Unity of command
c) Esprit de corps
d) None
13) ------- is defined as a chain of superiors ranging from the
ultimate authority to the lowest ranks
a) Matrix Structure
b) Scalar chain
c) Both of these
d) None of these
14) Authority flows from
a) Top to Bottom
b) Bottom to top
227
 c) Horizontally
d) All of these
15)………..refers to the maximum number of subordinates a
superior can effectively manage?
a) Scalar chain
b) Unity of direction
c) Accountability
d) Span of control

16) .……….is the obligation of a subordinate to perform the duty

assigned by his superior
a) Authority
b) Responsibility
c) Divisionof labour
d) Accountability

228
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Ebert, R.J., Griffin, R.W., Starke, F.A. and Dracopoulos, G.,
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Griffin, R. (2021). Fundamentals of management. Cengage
Learning.
Morden, T., 2017. Principles of management. Routledge.
Murugesan, G., 2014. Principles of Management. Laxmi
Publications.
Prasad, L. M. (2020). Principles and practice of management.
Sultan Chand & Sons.
Ramesh, B.R., 2013. Principles of Management/Ramesh B.
Rudani.
Robbins, S.P. and Coulter, M., 2019. Management 14E. Pearson
India.
Rudani, R.B., 2020. Principles of management. McGraw-Hill
Education.
Stephen, P., ROBBINS, C., Mary, A. and DE CENZO, D.A.,
2019. FUNDAMENTALS OF MANAGEMENT.
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Whetten, D.A. and Cameron, K.S., 2016. DEVELOPING
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