New Notes Mgt. Principles Nep 2023 1st Year

Set tough goals and do not stop until you get there.
मींद़िल उन्ी ीं को दमलती है , दजनके सपनोीं में जान होती है !!

पींख से कुछ नही ीं होता , हौसलोीं से उडान होती है !
NOTES-MANAGEMENT PRINCIPLES & APPLICATIONS-NEP-2023

BY
PROF. CA ABHA MATHUR
FCA, M. Com., PGD [BM], DIP [Comp. Prog.], Ph. D
Professor, Commerce Department
Satyawati College, University of Delhi
Idea
Goal
Strategy
Quality
HRM Planning
HRD Organizing
OD Staffing
Management
Money Coordinating
Management Controlling
Risk
Uncertainty
“जो हमारे दिल को छूता है, उसे हम कभी नहीीं भू लते।” Prof. CA Abha Mathur
B.Com (H) – Semester-I, Management Principles & Applications
Unit I: Introduction
Meaning and importance of management; Coordination mechanism in organisations;
Management theories – classical, neo-classical and modern constructions of management;
Managerial functions; Managerial roles (Mintzberg); Managerial competencies.
Unit 2: Planning
Organizational objective setting; Decision making environment (certainty, risk, uncertainty);
Techniques for individual and group decision-making; Planning vis-à-vis Strategy – meaning
and elements of business firm environment – micro, meso, and macro; Industry structure,
Business-level strategic planning.
Unit 3: Organizing
Decentralization and Delegation; Factors affecting organizational design; Departmentalization;
Organizational structures and organograms: traditional and modern, comparative suitability
and changes over time: formal – informal organisations’ interface.
Unit 4: Directing and Controlling

Motivation – meaning, importance and factors affecting motivation; Leadership – meaning,
importance and factors affecting leadership, leadership styles, and followership.
Controlling – Principles of controlling; Measures of controlling and accountability for
performance.
Unit 5: Salient Development and Contemporary Issues in Management

Management challenges of the 21st Century; Factors reshaping and redesigning management
purpose, performance and reward perceptions – Internationalisation Digitalization,
Entrepreneurship & innovation, Values & ethics, Workplace diversity, Democracy and
Sociocracy, Subaltern management ideas from India.
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Practical Exercises:
The learners are required to:
1. Participate in role play activity for describing the various levels of management and
applicability of management principles in defining the policies of the chosen
organization.
2. Identify a company and evaluate its competitive landscape as per Porter’s Five-force
model.
3. a) Prepare a comparative analysis of organization structures of various companies.
b) Create a simulation exercise in class to demonstrate various types of authority,
delegation and decentralization in authority.
4. Demonstrate various types of leadership styles in form of role play and identity the
motivation techniques used by leaders.
5. Discuss the impact of emerging issues in management.
Unit I: Introduction
Meaning and importance of management; Coordination mechanism in
organisations; Management theories – classical, neo-classical and modern
constructions of management; Managerial functions; Managerial roles
(Mintzberg); Managerial competencies.
1.1-Business-Meaning, Concept and Nature

The etymology of "Business" relates to the state of being busy either as an individual or
society, as a whole, doing commercially viable and profitable work. Human beings are
continuously engaged in some activity or the other, in order to satisfy their unlimited wants.
Business has become essential part of the modern world. The term business means
continuous production and distribution of goods and services with the aim of earning
profits under uncertain market conditions. Business is an economic activity, which is related
with continuous and regular production and distribution of goods and services for satisfying
human wants. The basic requirements such as food, clothing, shelter and many other
household requirements are satisfied through the shopkeeper. The shopkeeper gets supplies
from wholesaler. The wholesaler gets the same from manufacturers. The shopkeeper, the
wholesaler, the manufacturer are doing business and therefore they are called as
Businessman. A business also known as enterprise or firm is an organization which is
involved in the trade of goods, services, or both to consumers. Business plan and Business
model determine the outcome of an active business operation.
The term "business" has at least three usages, depending on the scope
 The singular usage to mean a particular organization

 The generalized usage to refer to a particular market sector,
 The broadest meaning, which encompasses all activity, is suppliers of goods and
services.
However, the exact definition of business, like much else in the philosophy of business, is a
matter of debate and complexity of meanings.
1.2-NEED & CONCEPT OF MANAGEMENT

Management can be defined as the process of achieving organizational goals through
planning, organizing, leading, and controlling the human, physical, financial, and information
resources of the organization in an effective and efficient manner. Every business needs
planning for the future for a successful business and the person who is in the authority, has to
take decisions and he will be responsible for the consequences of his decisions whether
favourable and unfavourable. Management is what a manager does within the organization.
All the activities whether related to decision making or implementation of such decisions are
performed by the managers with the purpose of achieving common goals such as the
following:
[i]-Managing human resources- for carrying on a successful business venture, it is very
important to manage human resources efficiently.
[ii]-Social obligations-Modern business is service oriented. Modern businessmen are
conscious of their social responsibility. Today's business is service-oriented rather than
profit-oriented.
1.2.1-Definitions
F W Taylor Management is the art of knowing what you want to do in
the best & cheapest way
Henry Fayol To manage is to forecast, to plan, to organize, to command,
to coordinate, to control, to focus and to provide means to
examine the future and drawing up the plan of action.
G.R. Terry Management is a distinct process consisting of planning,
organizing, actuating and controlling, utilizing in each, both
Science & Art and followed in order to accomplish
predetermined objectives.
Louis Allen Management is what a manager does
Peter F. Drucker Whatever a manager does ,he does through decision making
Mary Parker Follet Management is the art of getting things done through others
Harold Koontz Management is the Art of getting things done through and
with formally organized groups.
Sir Charles Renold Management is the process of getting things done through
the agency of a community.
Lawrence Abbley Management is the development of people and not direction
of things.
Rose Moore Management means decision making
Professor Donald J. Management is the art & science of Decision Making &
Clough Leadership
Spreigal Management means decision making.
New Man Management is a multipurpose organ that manages men and
manages workers and work.
1.2.2-Features of Management
(i) It is a social process
(ii) It is universal
(iii)It is activity based and continuous
(iv) It is purposeful
(v) It involves decision making
(vi) Its emphasis & main purpose is on & for people and not on things.
1.2.3- Significance/Importance of management

[i]-Optimal use of resources: – A manager eliminates wastage of resources that leads to
efficiency in all business functions.
[ii]-Effective leadership and motivation: – It helps employees to work in harmony and
achieve goals in a coordinated manner. It provides effective leadership and motivation for
employees to work hard.
[iii]-Sound industrial relations: – A manager maintains a balance between employee’s
demands and organizational needs, helping to reduce industrial disputes.
[iv]-Achievement of goals: – It helps in realizing goals with maximum efficiency by
minimizing unnecessary deviations, overlapping efforts and waste motions.
[v]-Improvement in living standards: – It improves the standard of living of people by
ensuring optimum utilization of scarce resources and survival of the firm in a dynamic
environment.
[vi]-Establishing a sound organization: – Managers help to establish a sound organization
through effective authority and responsibility relationships.
[vii]-Reduces Cost: – A manager uses cost-effective techniques to reduce production costs
and increase production.
1.2.4-Essence of Managership by Peter Drucker

(i) Essence of Manager’s job is that he/she is responsible for the efforts of his/her
subordinates whereas a non-manager is responsible for his/her own efforts.
(ii) Manager has to provide effective and supportive leadership, foster team spirit,
activate bilateral and multilateral communication channels with them, and remove
obstacles and directions to provide feedback.
(iii)A responsible manger focuses and builds on the strengths of his subordinates and
makes them as productive as possible.
1.3 -Coordination- as Essence of Management
Ordway Tead “The efforts to ensure the smooth interplay of the functions and forces of all
the different components and parts of organization to the end that its purpose will be realized
with a minimum of functions and maximum of collaborative effectiveness”. It is the binding
force or the ‘Glue’ that keeps the functions and functionaries together.
1.3.1-Need and Significance
 It is Core of group efforts.
 Brings unification of activities.
 Brings interdependence of work units.
 It Integrates goals.
 It is key to other managerial functions.
 It resolves conflicts
 It brings about Harmonizing of organizational flows.
1.3.2-Techniques of achieving Coordination

 Define Authority relationships
 Clearly defined and well understood objectives
 Use of standing plan
 Efficient Communication network
 Committees and group decision making
 Defined Horizontal relationship.
 Coordination through leadership
 Appointment of Special coordinator.
1.3.3-Principles of Coordination
Mary Parker Follett has pointed out four broad rules or principles, which may be used as a
guideline by the managers for achieving coordination.
[i]-The principle of Direct Control- Direct personal contact between the members should be
encouraged.
[ii]--Principle of early stage of coordination- Effort should be made to achieve coordination
at early stage of planning and policy making.
[iii]--Principle of Reciprocal Relations- All factors in a situation are reciprocally related
example: A works with B who also works with C & D, then in this situation, each of the four
would find influenced by each other and influence by all the persons in the total situation.
[iv]-.-Principle of coordination as a Continuous Process- It must go on all the time. It
should not be left to chance. It is the duty of manger to make efforts for achieving it
constantly so that organizational goals can be achieved effectively.
1.4-Management Thought
Management as a practice has been in existence ever since man started combining his efforts
with others for achievement of common explicit goals. However management as a systematic
body of knowledge and a distinct and identifiable discipline is the product of 20th century.
Rapid industrialization gave way to the development of management theories and the early
contributions to this discipline were made by practicing managers such as Tayler, Fayol,
Moorey, Reiley Sheldon etc. In the early stages of development of management as a body of
knowledge contributions made by academicians were few and far between. This has been
made the deluge of research during last few decades. The variety of approaches develop by
various scholars have led to a kind of confusion which Koontz called as “Confused and
destructive warfare”. Harold Koontz was the first academician to have attempted to
classify the various approached into the schools of management theory. His work was
advanced by other experts who attempted to classify management thought in nine “Schools
of Management theories”.
[A]- CLASSICAL THEORIES
1.4.1-The Scientific Management School
The basic components of scientific management throughput proposed by Taylor as:
- Determination of standards of performance.
- Functional foremanship.
- Responsibilities of management.
- Differential piecework system of wage payment.
- Mental revolution.
[i]-Criticism
- Separation of planning from actual results.
- Mental revolution never materialized.
- Based on the assumption that man has a rational behaviour.
1.4.2- Management Process School

This was developed by Fayol. It aims at an overall analysis of Management Process. Fayol
identified the following functions of management: Planning, Organizing, Commanding,
Coordinating and Controlling. He further substituted directing in place of commanding. He
later gave five functions of management which were as follows:
Planning Organizing Staffing Coordinating Control
The main features of the Management Process School or the Operational Approach
School are:
i. Management is the study of functions of managers.
ii. The functions of managers are the same irrespective of the type of organization.
iii. The conceptual frame work of management can be built through an analysis of the
processes of management and identification of principles.
1.4.3- Bureaucracy Theory of Management
This was developed by Max Weber. He stated that a bureaucratic organization is

characterized by:
- Assignment of fixed duties.
- Hierarchy of authority and chain of command.
- Administration through rules.
- Impersonalized decision making.
- Employment and promotion on the basis of experience and not merit.
- Fixed salary for employees.
[i]-Limitations of Classical Theories:

- They viewed organization as a machine.
- They assumed that employees could be motivated through financial incentives
only.
- Social and psychological needs were ignored.
- They believed that productivity is the only criterion of efficiency.
- Their overall approach was mechanical.
1.4.4-Hawthorne Experiments
What causes workers to be more productive? Researchers have asked this question for years.
In fact, pioneering work began in the 1920s as an attempt to discover ways to increase
production efficiency and then led both to the founding of the human relations school of
management, and to the development of many of the motivational tools that are used today.
The Hawthorne experiments clearly showed that a man at work is motivated by more than the
satisfaction of economic needs. Management should recognize that people are essentially
social beings and not merely economic beings. As a social being, they are members of a
group and the management should try to understand group attitudes and group psychology.
At the center of this work was Elton Mayo, a Harvard researcher. He looked at the
results of early motivation experiments and concluded that psychological and social factors
played a larger role in productivity than physical elements. Some of the major phases of
Hawthorne experiments are as follows:
[i]. Experiments to determine the effects of changes in illumination on productivity,
illumination experiments, 1924-27- Illumination experiments were undertaken to find out
how varying levels of illumination (amount of light at the workplace, a physical factor)
affected the productivity. The hypothesis was that with higher illumination, productivity will
increase. In the first series of experiments, a group of workers was chosen and placed in two
separate groups. One group was exposed to varying intensities of illumination. Since this
group was subjected to experimental changes, it was termed as experimental group.
[ii]- Experiments to determine the effects of changes in hours and other working
conditions on productivity, relay assembly test room experiments, 1927-28- These
experiments were designed to determine the effect of changes in various job conditions on
group productivity as the illumination experiments could not establish relationship between
intensity of illumination and production. For this purpose, the researchers set up a relay
assembly test room and two girls were chosen.
[iii]- Mass Interviewing Programme -During the course of experiments, about 20,000
interviews were conducted between 1928 and 1930 to determine employees’ attitudes
towards company, supervision, insurance plans, promotion and wages. Initially, these
interviews were conducted by means of direct questioning such as “do you like your
supervisor?” or “is he in your opinion fair or does he have favorites?” etc. this method has
disadvantage of stimulating antagonism or the oversimplified ‘yes’ or ‘no’ responses which
could not get to the root of the problem, the method was changed to non- directive
interviewing where interviewer was asked to listen to instead of talking, arguing or advising.
The interview programme gave valuable insights about the human behavior in the company.
[iv]- Bank Wiring Observation Room Experiment- Determination and analysis of social
organization at work, bank wiring observation room experiments, 1931-32. These
experiments were conducted to find out the impact of small groups on the individuals. In this
experiment, a group of 14 male workers were formed into a small work group. The men were
engaged in the assembly of terminal banks for the use in telephone exchanges The work
involved attaching wire with switches for certain equipment used in telephone exchanges.
Hourly wage for each worker was fixed on the basis of average output of each worker. Bonus
was also payable on the basis of group effort. It was expected that highly efficient workers
would bring pressure on less efficient workers to increase output and take advantage of group
incentive plan. However, the strategy did not work and workers established their own
standard of output and this was enforced vigorously by various methods of social pressure.
The workers cited various reasons for this behavior viz. fear of unemployment, fear of
increase in output; desire to protect slow workers etc.
The following were the main conclusions drawn by Prof. Mayo on the basis of
Hawthorne studies:
[a]- Social Unit: - A factory is not only a techno-economic unit, but also a social unit. Men
are social beings. The output increases due to effectively functioning of a social group with a
warm relationship with its supervisors.
[b]- Group Influence: - The workers in a group develop a common psychological bond
uniting them as group in the form of informal organization.
[c]- Group Behavior: - Management must understand that a typical group behavior can
dominate or even supersede individual propensities.
[d]-Motivation: - Human and social motivation can play even a greater role than mere
monitory incentives in moving or motivating and managing employee group.
[e]-Supervision: - The style of supervision affects worker’s attitude to work and his
productivity.
[f]- Working Conditions: - Productivity increases as a result of improved working
conditions in the organization.
[g]- Employee Morale: - Mayo pointed out that workers were not simply cogs, in the
machinery, instead the employee morale (both individual and in groups) can have profound
effects on productivity.
[h]- Communication: - Experiments have shown that the output increases when workers are
explained the logic behind various decisions and their participation in decision making brings
better results.
[i]-Balanced Approach: - The problems of workers could not be solved by taking one factor
i.e. management could not achieve the results by emphasizing one aspect. A balanced
approach to the whole situation can show better results.
B-1.5- NEO- CLASSICAL THEORIES:

1.5.1.-The Human Relations Approach: The HRA was developed as a result of the findings
of the Hawthrone experiments. It emerged from there researches that productivity, motivation
to work and morale are related to the social organization at work and psychological factors
and not the physical factors. It also showed that organization is indeed a social system of
cliques, grapevine informal states system ritual and a mixture of logical, non-logical and
illogical behaviour. The Hawthorne experiments clearly showed that a man at work is
motivated by more than the satisfaction of economic needs. Management should recognize
that people are essentially social beings and not merely economic beings. As a social being,
they are members of a group and the management should try to understand group attitudes
and group psychology.
[a]-The main features of this school are:
i. The school draws its concept from psychology, sociology, human relations, inter-personal
relationships, satisfaction of worker’s needs etc.
ii. Since management is getting things done through people, the managers must have a basic
under-standing of human behaviour and human relations in all its aspects, particularly in the
context of work groups and organizations.
iii. Management must study inter-personnel relations among people.
iv. Greater production and higher motivation can be achieved only through good human
relations.
v. Motivation, leadership, communication, participative management and group dynamics are
the core of this school of thought.
[b]-Various limitations of this School of Thought are:

i. This approach talks about organization and organizational behaviour in vague terms.
ii. If the study of management were to be confined to human behaviour or human relations, it
would be unduly restricting the scope of technical aspects of job etc., which are equally
important.
iii. McGregor, Likert etc. within the ground rules laid down by classical theory. They
primarily tried to fit in, its relatives in human behaviour, as they saw them.
1.5.2- The Decision Theory

The decision theory school, propounded by Simon and others, focuses on the decision, the
decision making process, the decision maker and the environment of the decision maker. It
looks at management through this Keyhole and includes in it the entire field of enterprise
operation and its environment.
[i]-Need for Decision Making
 Decision-making is the best selective process, it gives the best possible alternative.
 Decision-making calculates risk and analysis the all possible alternatives.
 Decision-making is a continuous process which runs until the organizations run.
 Decision-making is a mental process it involves deep thinking.
 Decision-making’s main aim to achieve organizational goals.
 Decision-making also involves a certain commitment.
 Decision -making improves the efficiency of the manager.
[ii]-Criticism:
Decision making, though central to managing, is only an aspect of management and not the
totality of management.
1.5.3- The Management Science School

The Management Scientists hold that since management is a logical and rational process, it
can be expressed in terms of mathematical models and processes. The basic assumption was
that an organization is a system with its part in interactional & interdependent relationship.
This would lend exactness to management process and substitute certainty for guesswork,
knowledge for judgment and hard facts for experiences.
[i]-Criticism:
In fact mathematical/statistical equations used in operational research, probability random
selection are mere tools and not management.
1.5.4- The System Theory (Developed in 1950):

This theory views organization as organic and open system which is composed of several sub
systems. The various sub-system or parts of an organization are linked with each other
through its communication network, decision, authority, responsibility, relationship,
objective, policies and procedures of coordinating mechanisms. Organization as a system has
variety of goals, chief among them are survival integration and adaption with environment
and growth.
1.5.5-Contingency Theory School:
The contingency theory rejects the universality thesis and emphasizes that there is no best
way to manage. If focuses on the inter-relationship within and among the sub-systems as well
as between the organization and its environment. Its emphasis is on the multivariate nature of
organization and attempts to understand how organization operates under varying conditions
and in specific situations. It regards management as situational.
1.5.6-The Behavioral Approach

[a]-Human behavior is learned, thus all behavior can be unlearned and new behaviors learned
in its place. Behaviorism is concerned primarily with the observable and measurable aspects
of human behavior. Therefore when behaviors become unacceptable, they can be unlearned.
Behaviorism views development as continuous process in which children play a relatively
passive role. It is also a general approach that is used in a variety of settings including both
clinical and educational.
[b]-Behaviorists assume that the only things that are real are the things we can see and
observe. We cannot see the mind, the id, or the unconscious, but we can see how people act,
react and behave. From behavior we may be able to make inferences about the minds and the
brain, but they are not the primary focus of the investigation
[c]-The behavioral researcher is interested in understanding the mechanisms underlying the
behavior of both normal individuals and those with problems that might be referred as
"mental illness". When the behavioral model is applied to mental illness, it tends to be used
for a wide variety of presenting problems. It is perhaps most effective in treating behavioral
disorders and disorders of impulse control, such as excessive drinking, obesity etc.
Behavioral approaches may be quite useful in treatment of anxiety and have occasionally
been helpful in the management of more severe mental disorders such as schizophrenia.
1.5.7- Management by Objectives

Management by objectives (MBO), also known as management by results (MBR), was first
popularized by Peter Drucker in his 1954 book The Practice of Management. Management
by objectives is the process of defining specific objectives within an organization that
management can convey to organization members, then deciding on how to achieve each
objective in sequence.
According to George S. Odiorne, the system of management by objectives can be described
as a process whereby the superior and subordinate jointly identify its common goals, define
each individual's major areas of responsibility in terms of the results expected of him or her,
and use these measures as guides for operating the unit and assessing the contribution of each
of its members.
[i]-Features and advantages
The principle of MBO is for employees to have a clear understanding of their roles and the
responsibilities expected of them, so they can understand how their activities relate to the
achievement of the organization's goals. MBO also places importance on fulfilling the
personal goals of each employee.
1- Motivation to employees in the whole process of goal setting and increasing employee
empowerment.
2- Better communication and coordination – Frequent reviews and interactions between
superiors and subordinates help to maintain harmonious relationships within the
organization and also to solve problems
3- Clarity of goals.
4- Subordinates tend to have a higher commitment to objectives they set for themselves
than those imposed on them by another person.
5- Managers can ensure that objectives of the subordinates are linked to the
organization's objectives.
6- Common goal for whole organization means it is a unifying, directive principle of
management.
In the MBO paradigm, managers determine the mission and the strategic goals of the
enterprise. The goals set by top-level managers are based on an analysis of what can and
should be accomplished by the organization within a specific period of time.
The mnemonic S.M.A.R.T. is associated with the process of setting objectives in this
paradigm. "SMART" objectives are:
Specific Measurable Agreed/ Achievable/ Realistic/ Time-bound
Attainable Responsible
1.5.8-Business Process Reengineering

Business process re-engineering is a business management strategy, originally pioneered in
the early 1990s, focusing on the analysis and design of workflows and business processes
within an organization. BPR aimed to help organizations fundamentally rethink how they do
their work in order to dramatically improve customer service, cut operational costs, and
become world-class competition. BPR seeks to help companies radically restructure their
organizations by focusing on the ground-up design of their business processes. According to
Davenport (1990) a business process is a set of logically related tasks performed to achieve a
defined business outcome. Re-engineering emphasized a holistic focus on business objectives
and how processes related to them, encouraging full-scale recreation of processes rather than
iterative optimization of sub-processes.
Business Process Reengineering is also known as business process redesign, business
transformation, or business process change management.
Re-engineering recognizes that an organization's business processes are usually fragmented
into sub-processes and tasks that are carried out by several specialized functional areas within
the organization. Often, no one is responsible for the overall performance of the entire
process. Reengineering maintains that optimizing the performance of sub-processes can result
in some benefits, but cannot yield dramatic improvements if the process itself is
fundamentally inefficient and outmoded.
15.9-The Porter's Five Forces Framework

The Porter's Five Forces tool is a simple but powerful tool for understanding where power
lies in a business situation. This is useful, because it helps you understand both the strength of
your current competitive position, and the strength of a position you're considering moving
into. Conventionally, the tool is used to identify whether new products, services or businesses
have the potential to be profitable. However it can be very illuminating when used to
understand the balance of power in other situations.
[i]-Understanding the Tool
Five Forces Analysis assumes that there are five important forces that determine competitive
power in a business situation. These are:
1-Supplier Power
2-Buyer Power
3-Competitive Rivalry
4-Threat of Substitution
5-Threat of New Entry
1.5.10-Learning Organization
A learning organization is the business term given to a company that facilitates the learning
of its members and continuously transforms itself. The concept was coined through the work
and research of Peter Senge and his colleagues.
Learning organizations develop as a result of the pressures facing modern organizations and
enables them to remain competitive in the business environment.
[i]-Characteristics
1-Systems thinking- The idea of the learning organization developed from a body of work
called systems thinking. This is a conceptual framework that allows people to study
businesses as bounded objects.
2-Personal mastery- The commitment by an individual to the process of learning is known
as personal mastery. There is a competitive advantage for an organization whose workforce
can learn more quickly than the workforce of other organizations.
Individual learning is acquired through staff training, development and continuous self-
improvement;
3-Mental models- The assumptions held by individuals and organizations are called mental
models. In creating a learning environment it is important to replace confrontational attitudes
with an open culture that promotes inquiry and trust.
4-Shared vision- The development of a shared vision is important in motivating the staff to
learn, as it creates a common identity that provides focus and energy for learning
5-Team learning- The accumulation of individual learning constitutes team learning. The
benefit of team or shared learning is that staff grow more quickly and the problem solving
capacity of the organization is improved through better access to knowledge and expertise
1.5.11-The Fortune at the Bottom of the Pyramid

The concept of The Fortune at the Bottom of the Pyramid originally appeared as an article by
C. K. Prahalad and Stuart L. Hart in the business journal Strategy Business. The article
was followed by a book with the same title that discusses new business models targeted at
providing goods and services to the poorest people in the world. It makes a case for the
fastest growing new markets and entrepreneurial opportunities being found among the
billions of poor people 'at the bottom of the [financial] pyramid'. According to Bill Gates, it
"offers an intriguing blueprint for how to fight poverty with profitability." The book consists
of a number of case studies, one to a chapter, about businesses that have thrived with such
models. These include the businesses Casas Bahia, Patrimonio Hoy, Bank of Madura,
Aravind Eye Hospital, Jaipur rugs and Project Shakti and how they were founded.
The world's most exciting, fastest-growing new market is where you least expect it: at the
bottom of the pyramid. Collectively, the world's billions of poor people have immense
untapped buying power. They represent an enormous opportunity for companies who learn
how to serve them. Not only can it be done, it is being done--very profitably. What's more,
companies aren't just making money: by serving these markets, they are helping millions of
the world's poorest people escape poverty
1.5.12-Excellence Approach
A modern unconventional approach developed by Thomasn T. Peter and Robert H.
Waterman, management consultants of USA in 1982 – A book was also published by them
known as “In search of excellence” which helped companies to solve productivity related
problems. The theory focused attention of the managers on to customers, employees and new
ideas. Tools did not substitute for Thinking. Intellect did not overpower wisdom.
[i]-Eight attributes according to them are:

1. A base for action.
2. Close to the customer
3. Autonomy and entrepreneurship
4. Productivity through people.
5. Hands on value drivers.
6. Stick to the knitting
7. Simple form lean staff
8. Simultaneous Loose, tight properties.
1.6-OVERVIEW OF MANAGERIAL FUNCTIONS

[i]-According to Henry Fayol, who is popularly known as Father of Modern Management,
was the first one to provide a conceptual framework of Management and identified following
function of management.
Planning Organizing Commanding Coordinating Controlling
[ii]-Luther Gulick: Another significant researcher identified following functions of

management.
PODSCORB
P Planning
O Organizing
D Directing
S Staffing
CO Coordinating
R Reporting
B Budgeting
However, Gulick’s division of functions, received criticism because, directing was a part of
staffing and reporting and budgeting, were considered as, aspects of control.
[iii]-Henry Fayol : gave following Five Functions of Management.

Planning Is considered as the supreme and primary function of Management. It
is forward looking.
Organizing This function consists of organizing all activities from formation of an
entity to its smooth functioning.
Staffing Includes activities from attracting of personnel to directing, guiding,
motivating, training, and grooming and from recruitment to exit
interviews.
Coordinating It is the essence of effective management. In fact, it is the binding
force, invisible glue or thread that binds the organization together.
Control It is a function which ensures that the targets and actuals match. It
brings about corrections in case of deviations.
[iv]-Functions of management are being discussed in brief, as follows
A- Planning
Planning Process in Management has following Steps
[i]-Recognizing Need for Action: The first step in planning process is the awareness of
business opportunity and the need for taking action. Present and future opportunities must be
found so that planning may be undertaken for them.
[ii]-Gathering Necessary Information: Before actual planning is initiated relevant facts and
figures are collected. All information relating to operations of the business should be
collected in detail
[iii]-Laying Down Objectives: Objectives are the goals which the management tries to
achieve. The objectives are the end products and all energies are diverted to achieve these
goals
[iv]-Determining Planning Premises: Planning is always for uncertain future. Though
nothing may be certain in the coming period but still certain assumptions will have to be
made for formulating plans. Forecasts are essential for planning.
Forecasts will generally be made for the following:
 The expectation of demand for the products.
 The likely volume of production.
 The anticipation of costs and the likely prices at which products will be marketed.
 The supply of labor, raw materials etc
 The economic policies of the government.
 The changing pattern of consumer preferences.
 The impact of technological changes on production processes.
 The sources for supply of funds.
[v]-Examining Alternative Course of Action: The next step in planning will be choosing
the best course of action. The planner should study all the alternatives and then a final
selection should be made.
[vi]-Evaluation of Action Patterns: After choosing a course of action, the next step will be
to make an evaluation of those courses of actions.
[vii]-Determining Secondary Plans: Once a main plan is formulated then a number of
supportive plans are required. In fact secondary plans are meant for the implementation of
principal plan.
[viii]-Implementation of Plans: The last step in planning process is the implementation
part. The planning should be put into action so that business objectives may be achieved.
[ix]-Review & modifications- the last step is to continuously review & modify plans from
time to time.
B- Organizing
Following is the Importance of Organizing in Business
(i) Benefits of Specialization: Under organizing all the activities are subdivided into various
works or jobs. For all the sub works, competent people are appointed who become experts by
doing a particular job time and again.
(ii) Clarity in Working Relationship: Organizing clarifies the working relations among
employees. It specifies who is to report to whom. Therefore, communication becomes
effective. It also helps in fixing accountability.
[iii) Optimum Utilization of Resources: Under the process of organizing the entire work is
divided into various small activities. There is a different employee performing every different
job.
(iv) Adaptation to Change: Organizing process makes the organization capable of adapting
to any change connected with the post of the employees.
(v) Effective Administration: The process of organizing makes a clear mention of each and
every activity of every manager and also of their extent of authority.
(vi) Development of Personnel: Under the process of organizing, delegation of authority is
practiced. This is done not because of the limited capacity of any individual, but also to
discover new techniques of work.
(vii) Expansion and Growth: The process of organizing allows the employees the freedom
to take decisions which helps them to grow.
C-Staffing
The term ‘Staffing’ relates to the recruitment, selection, development, training and
compensation of the managerial personnel. Staffing, like all other managerial functions, is
the duty which the apex management performs at all times. In a newly created enterprise, the
staffing would come as a. third step, next to planning and organizing, but in a going
enterprise the staffing process is continuous. In order to define and clarify the group of
employees included in the staffing concept, it must be stated that ‘the staffing function is
concerned with the placement, growth and development of all of those members of the
organization whose function it is to get things done through one effort of other individuals’.
This definition includes all levels of management because those who will occupy positions in
the top two or three levels of management fifteen or twenty years from now are likely to be
found in the lower levels today.
According to Koontz and O’Donnell ‘’The managerial function of staffing involves
manning the organizational structure through effective and proper selection, appraisal,
and development of personnel to fill the roles designed into the structure.”
D- Coordinating
Features of Coordination in Management are as follows:
[i]-Coordination Integrates Group efforts: The concept of coordination always applies to
group efforts. There is no need for coordination when only single individual is working.
[ii]-Ensures Unity of efforts: Coordination always emphasizes on unifying the efforts of
different individuals because conflicting efforts may cause damage to organization. The main
aim of every manager is to coordinate the activities and functions of all individuals to
common goal.
[iii]-Continuous process: Coordination is a non-ending function. It is a continuous function

although its degree may vary. The managers work continuously to achieve coordination and
maintain coordination because without coordination companies cannot function efficiently.
[iv]-Coordination is a pervasive function: Coordination is a universal function; it is
required at all the levels, in all the departments and to perform all the functions due to
interdependence of various activities on each other
[v]-Coordination is the responsibility of all managers: Coordination is not the task of only
top level managers but managers working at different levels try to coordinate the activities of
organization. The top level try to coordinate the overall plans and policies of organization,
middle level try to coordinate departmental activities and lower level coordinate the activities
of workers.
[vi]-Coordination is a deliberate function:. Without coordination efforts of individuals
cannot be united and integrated; that is why while performing various activities in the
organization managers deliberately perform coordination function.
E- Controlling
Control is a continuous process. It is not applied when be everything else is done. There may
be some in-built controls in the exercise of managerial techniques. In spite of this there may
be a difference in standards to be achieved and actual performance. This may be due to
human limitations. Some control methods may have to be applied to improve performance.
There are four steps in Control Process:
(i) Setting of control standards,
(ii) Measurement of actual performance,
(iii) Comparing actual and standard performance and
(iv) Taking corrective action.
1.7--Characteristics of a good Manager

A Manager is an ‘organization builder’. It can be viewed as a quality or a trait of a manager.
Entrepreneurs have many of the same character traits as leaders, similar to the great man
theories of leadership. A vast number of certain traits seem to be associated with
entrepreneurs and are commonly seen in most of them. Some characteristics even include
negative traits such as -they are cunning, opportunistic, creative, and unsentimental.
(i) Independence & achievement- they are tough, pragmatic people driven by needs of
independence and achievement
(ii) Optimism- they are Extreme optimists in their decision-making processes.
(iii)Desire to learn-They have the ability to prioritize ideas over data, to be nomadic and
to learn endlessly.
(iv) Urge to build-They are primarily motivated by an overwhelming need for
achievement and strong urge to build.
(v) Initiative-An entrepreneur takes actions that go beyond job requirements or the
demand of the situation. Opportunity seeking.
(vi) Persistence-An entrepreneur is not discouraged by difficulties and once the goal is
set, he/she is committed to the goal and will become completely absorbed in it.
(vii) Information seeking-An entrepreneur undertakes personal research on how to

satisfy customers and solve problems. He/she always wants to learn things which will
help the business to grow.
(viii) Demand for quality and efficiency-An entrepreneur is always competing
with others to do things better, faster, and at less cost he/she strives to achieve
excellence.
(ix) Risk taking-They place themselves in situations involving moderate risk so they are
moderate risk takers.
(x) Goal setting-An entrepreneur sets meaningful and challenging and realistic goals for
him/herself.
(xi) Hard working-An entrepreneur will work long hours, just to be able to keep his/her
commitment to his/her client.
(xii) Systematic planning and monitoring-Since and entrepreneur knows what to
expect at any time he/she is able to change plans and strategies to achieve what he/she
aims at.
(xiii) Persuasion and networking-An entrepreneur acts to develop and maintain
business contacts by establishing good working relationship. Uses deliberate
strategies to influence others.
(xiv) Self-confidence-Most entrepreneurs start business because they like to be
their own boss. They are responsible for their own decisions.
1.8-Roles of Managers, as given by Mintzberg

Mintzberg published his Ten Management Roles in his book, "Mintzberg on Management:
Inside our Strange World of Organizations," in 1990.
The ten roles are:
Figurehead Spokesperson Liaison Disseminator Resource Allocator
Leader Entrepreneur Monitor Negotiator Disturbance Handler
The ten roles are further divided up into three categories, as follows:
[i]-Interpersonal Category
The managerial roles in this category involve providing information and ideas.
 Figurehead – As a manager, there are social, ceremonial and legal responsibilities.
Manager is expected to be a source of inspiration. People look up to him/her, as a
person with authority, and as a figurehead.
 Leader – This is where the manager provides leadership for the team.
 Liaison – Managers must communicate with internal and external contacts, by being
able to network effectively on behalf of the organization.
[ii]-Informational Category
The managerial roles in this category involve processing information.
 Monitor – In this role, manager regularly seeks out information related to the
organization and industry, looking for relevant changes in the environment. He/she
also monitors the team, in terms of both their productivity, and their well-being.
 Disseminator – This is where he/she communicates potentially useful information to
the colleagues and team.
 Spokesperson – Managers represent and speak for their organization. In this role,
he/she is responsible for transmitting information about the organization and its goals
to the people outside it.
[iii]-Decisional Category
The managerial roles in this category involve using information.
 Entrepreneur – As a manager, he/she creates and controls change within the
organization. This means solving problems, generating new ideas, and implementing
them.
 Disturbance Handler – When an organization or team hits an unexpected roadblock,
it is always the manager who must take charge.
 Resource Allocator – manager also needs to determine where organizational
resources are best applied. This involves allocating funding, as well as assigning staff
and other organizational resources.
 Negotiator – manager may be needed to take part in, and direct, important
negotiations within the team, department, or organization.
1.8.1-A Manager is an ‘organization builder’. It can be viewed as a quality or a trait of a

manager. Entrepreneurs have many of the same character traits as leaders, similar to the great
man theories of leadership. A vast number of certain traits seem to be associated with
entrepreneurs and are commonly seen in most of them.
(i) Independence & achievement oriented- they are tough, pragmatic people driven by
needs of independence and achievement
(i) Optimism- they are Extreme optimists in their decision-making processes.
(ii) Desire to learn-They have the ability to prioritize ideas over data, to be nomadic and
to learn endlessly.
(iii)Urge to build-They are primarily motivated by an overwhelming need for
achievement and strong urge to build.
(iv) Initiative-An entrepreneur takes actions that go beyond job requirements or the
demand of the situation. Opportunity seeking.
(v) Persistence-An entrepreneur is not discouraged by difficulties and once the goal is
set, he/she is committed to the goal and will become completely absorbed in it.
(vi) Information seeking-An entrepreneur undertakes personal research on how to satisfy
customers and solve problems. He/she always wants to learn things which will help
the business to grow.
(vii) Demand for quality and efficiency-An entrepreneur is always competing
with others to do things better, faster, and at less cost he/she strives to achieve
excellence.
(viii) Risk taking-They place themselves in situations involving moderate risk so
they are moderate risk takers.
(ix) Goal setting-An entrepreneur sets meaningful and challenging and realistic goals for
him/herself.
(x) Hard working-An entrepreneur will work long hours, just to be able to keep his/her
commitment to his/her client.
(xi) Systematic planning and monitoring-Since and entrepreneur knows what to expect
at any time he/she is able to change plans and strategies to achieve what he/she aims
at.
(xii) Persuasion and networking-An entrepreneur acts to develop and maintain
business contacts by establishing good working relationship. Uses deliberate
strategies to influence others.
(xiii) Self-confidence-Most entrepreneurs start business because they like to be
their own boss. They are responsible for their own decisions.
Some characteristics even include negative traits such as:

Cunning, Opportunistic Unsentimental. Selfish
Conceited Self-opinionated Ruthless Street smart
1.8.2-The role of the top management can be summarized as follows:

[i]- Top management lays down the objectives and broad policies of the enterprise.
[ii]-It issues necessary instructions for preparation of department budgets, procedures,
schedules etc.
[iii]- It prepares strategic plans & policies for the enterprise.
[iv]- It appoints the executive for middle level i.e. departmental managers.
[v]-It controls & coordinates the activities of all the departments.
[vi]- It is also responsible for maintaining a contact with the outside world.
[vii]-It provides guidance and direction.
[viii]-The top management is also responsible towards the shareholders for the performance
of the enterprise
1.8.3-Middle Level of Management

The branch managers and departmental managers constitute middle level. They are
responsible to the top management for the functioning of their department. They devote more
time to organizational and directional functions. In small organization, there is only one layer
of middle level of management but in big enterprises, there may be senior and junior middle
level management.
Their role can be summarized as follows:
[i]-They execute the plans of the organization in accordance with the policies and directives
of the top management.
[ii]-They make plans for the sub-units of the organization.
[iii]- They participate in employment & training of lower level management.
[iv]-They interpret and explain policies from top level management to lower level.
[v]-They are responsible for coordinating the activities within the division or department.
[vi]-It also sends important reports and other important data to top level management.
[vii]-They evaluate performance of junior managers.
[viii]-They are also responsible for inspiring lower level managers towards better
performance.
1.8.4-Lower Level of Management

Lower level is also known as supervisory / operative level of management. It consists of
supervisors, foreman, section officers, superintendent etc. According to R.C. Davis,
“Supervisory management refers to those executives whose work has to be largely with
personal oversight and direction of operative employees”. In other words, they are concerned
with direction and controlling function of management.
Their activities can be summarized as follows:
[i]-Assigning of jobs and tasks to various workers.
[ii]-They guide and instruct workers for day to day activities.
[iii]-They are responsible for the quality as well as quantity of production.
[iv]-They are also entrusted with the responsibility of maintaining good relation in the
organization.
[v]-They communicate workers problems, suggestions, and recommendatory appeals etc. to
the higher level and higher level goals and objectives to the workers.
[vi]-They help to solve the grievances of the workers.
[vii]-They supervise & guide the sub-ordinates.
[viii]-They are responsible for providing training to the workers.
[ix]-They arrange necessary materials, machines, tools etc. for getting the things done.
[x]-They prepare periodical reports about the performance of the workers.
[xi]- They ensure discipline in the enterprise.
[xii]-They motivate workers.
[xiii]-They are the image builders of the enterprise because they are in direct contact with the
workers.
1.9-Competencies of Managers
SN BROAD CORE COMPETENCIES
HEAD
1 Self- Integrity/Honesty, ethical behaviour, consistency in words and
Management actions, high morals, Treats others with courtesy, sensitivity,
and respect. Considers and responds appropriately to the needs
and feelings of different people in different situations.
Follows continual Learning & pursues self-development, has
Resilience, Deals effectively with pressure; remains optimistic
and persistent, even under adversity, Recovers quickly from
setbacks, Makes clear and convincing oral presentations,
Listens effectively, Writes in a clear, concise, organized, and
convincing manner
Is open to change and new information, rapidly adapts to new
information, Identifies and analyses problems; weighs
relevance and accuracy of information, generates and evaluates
alternative solutions & makes recommendations.
2 Projects Inspires and fosters team commitment, spirit, pride, and trust,
Management Facilitates cooperation and motivates team to accomplish group
goals, Anticipates and meets the needs of both internal and
external customers, Delivers high-quality products and
services; is committed to continuous
Improvement, Understands and applies principles, procedures,
requirements, regulations, and policies related to specialized
expertise, Holds self and others accountable for measurable
high-quality, timely, and cost effective results. Determines
objectives, sets priorities, and delegates work, Accepts
responsibility for mistakes, Complies with established control
systems and rules, Makes well-informed, effective, and timely
decisions, Persuades others; builds consensus through give and
take, gains cooperation from others to obtain information and
accomplish goals.
3 People Builds and manages workforce, budget considerations, and
Management staffing needs. Ensures employees are appropriately recruited,
selected, appraised, and rewarded, takes action to address
performance problems, Manages workforce diversity and a
variety of work situations, Encourages creative tension and
differences of opinions.
Anticipates and takes steps to prevent counter-productive
confrontations. Manages and resolves conflicts and
disagreements in a constructive manner, Develops the ability of
others by providing opportunities to learn through formal and
informal methods
4 Program Keeps up-to-date on technological developments, Makes
Management effective use of technology, Ensures access to, and security of,
technology systems. Understands the organization’s financial
processes. Prepares, justifies, and administers the program
budget. Oversees procurement and contracting to achieve
desired results. Monitors expenditures and uses cost-benefit
thinking to set priorities. Develops new insights into situations;
questions conventional approaches; encourages new ideas and
innovations; designs and implements new or cutting edge
programs/processes. Develops networks and builds alliances,
collaborates across boundaries to build strategic relationships
and achieve common goals. Identifies the internal and external
politics that impact the work of the organization. Perceives
organizational and political reality and acts accordingly.
5 Leading the Understands and keeps up-to-date on local, national, and
Organization international policies and trends, is aware of the organization’s
impact on the external environment. Takes a long-term view
and builds a shared vision with others; acts as a catalyst for
organization change. Influences others to translate vision into
action. Formulates objectives and priorities, and implements
plans consistent with the long-term interest of the organization
in a global environment, Capitalizes on opportunities and

manages risks. Positions the organization for future success by
identifying new
Opportunities & builds the organization by developing or
improving products or services. Takes calculated risks to
accomplish organizational objectives.
Unit II: Planning

Organizational objective setting; Decision making environment
(certainty, risk, uncertainty); Techniques for individual and group
decision-making; Planning vis-à-vis Strategy – meaning and elements of
business firm environment – micro, meso, and macro; Industry
structure, Business-level Strategic Planning.
2.1-Organizational objective Setting

To start with, following concepts have to be made clear:
Every organization has short-term, medium-term, and long-term goals. These are the goals
organizations seek to accomplish and are otherwise known as organizational development
objectives. Objectives play a significant role in determining policies and allocation of
resources in the future.
PURPOSE
Organizational Objective
Why the Organization is set-up
MISSION
Setting
An emotional or psychological
reason or a ‘do or die’ situation, having a
tagline.
OBJECTIVES
Relate to all broad areas of
performance.
GOALS Narrower than Objectives. A set of
multiple Goals are required to achieve one
Objective.
2.1.1-Method to set Organizational Objectives

Many modern organizations are adopting the OKR methodology for goal setting as it takes
care of the individual, team, and company goals together. The definition of “OKRs” is
“Objectives and Key Results.” It is a collaborative goal-setting tool used by teams and
individuals to set challenging, ambitious goals with measurable results. By setting transparent
goals, it’s easier to show employees a better sight of how their role is key to the company’s
success. More clarity means motivated and engaged employees.
[i]- Vision - The vision of any organization should reflect in its objectives and goals.
Objectives can be short-term or long-term in nature. The best way is to start with a big aim
and work backward. Think about the strategies in the shorter term that help you achieve your
grand vision.
[ii]-SMART Goals
The SMART framework help to set better individual goals that are aligned with
organizational objectives.
SMART stands for:
S- Specific
M- Measurable
A- Achievable or Attainable
R- Relevant
T- Time-Bound or Time-limited
[iii]-Managing the Stakeholders - Organizations with a flatter hierarchy can have

difficulties in deciding stakeholders for a particular set of tasks. However, this is important to
avoid any confusion, it is necessary to identify as to
 Who will contribute to the success of that objective
 Measure the success of that objective
 Track and assess the key results
[iv]-Take the opinion of employees - Many companies leave the implementation part of an
organizational objective to their top management or managers. Employee feedback adds
insights to the strategies of the leaders. Customer Feedback, Information on internal and
external processes are some of the specific areas that matter while planning objectives for the
company.
[v]-Consistent channel of communication for review and assessment- Keeping the
employees engaged towards the vision and mission of the company help in objective setting.
Success is only possible with a workforce cares and is cared for.
2.2-Decision Making
Decision making in management is the process of making a choice between two or more
options. This involves evaluating the pros and cons of various choices and choosing the best
option to achieve a desired outcome. In management, decision making is about acting in a
way that meets organizational goals and objectives.
[i]-Peter F. Drucker: “whatever a manger does he does through decision making”.
[ii]-Allen: “The work a manager performs to arrive at conclusion & judgment”.
[iii]-Shull, Delberg and Cummings “ A conscious and human process involving both
individual and social phenomena, based upon factual and value premises which concludes
with a choice of one behavioral activity from among one or more alternatives with the
intention of moving towards some desired state of affairs”.
2.2.1-Characteristics of Decision Making:

 It is integral part of planning.
 It aims at choosing suitable course of action from amongst alternatives.

 It involves judgment and decision.
 It Involves commitment of organization for the decisions taken by Managers.
 Decisions involve social and human implications.
 It is purposeful.
 Decisions are made to solve problems, resolves crises and conflicts and for tackling
situations.
2.2.2-Type of Decisions
[i]-Programmed Decisions- These decisions are also known as routine or scheduled
decisions which take place on a daily. They are the ones that you know would occur at the
workplace and you do not have to seek expert advice to tackle this. However, even though
this is executed regularly, it still requires a set amount of policy, rule, and procedure of the
organization.
[ii]-Non-Programmed Decisions- These decisions that do not take place regularly are
usually unprecedented and do not come under any policy or protocols. They are unforeseen
and must be decided considering the conditions and consequences. This is how managers and
top tier officials decide over sensitive issues.
[iii]-Strategic Decisions- These decisions are important ones for the firm, usually taken by
the higher authorities of the organization as well as the middle level. These revolve around
the policies and protocols of the firms.
[iv]-Routine Decisions- As the name suggests, they are taken in the daily operational
activities of the organization which is in the routine. Such decisions do not require an in-
depth study as it follows the same pattern and difficulty level of getting solved.
[v]-Policy Decisions- Policies have to be in writing, these must be taught and transmitted
down the line. Policy decisions are made at every level but major policies are made by the top
level management.
[vi]-Operating Decisions- The decisions followed by policy decisions are operating
decisions. These decisions relate to how the policies should run and operate under these
functions. Since the brainstorming is executed by the top management, the labor or the
manual work is left for the middle and lower management
[vii]-Organizational Decisions- The decisions taken by the head or the executive for the
organization on behalf of everyone is referred to as organizational decisions. It is considered
for the betterment of the firm. These are the ones, which are delegated.
[viii]-Personal Decisions- These decisions are taken by the leaders or executive for their
personal benefit, which is not for everyone. If decision is taken by the executive in the
personal capacity, such as the decision to leave the organization, it may affect the
organization adversely.
[ix]-Environmental Decisions -These types of decisions have their primary objective as the
integration of internal, intermediate and external environment into a cohesive whole.
[x]-Out-Put Evaluation Decisions -Such decisions need to be made thoughtfully, keeping in
view they do not bring any difficulty and harm to anybody. However, analysis of the output
of each individual with the standard output is done and deviations, if any, are timely
corrected.
[xi]-Objective Decisions – Decisions as a result of due deliberation and careful consideration
of factors and forces pertinent to the issue or the problem to be solved, are known as
objective decisions. These are made objectively, that is, decisions which are challenging from
a broader perspective, and discerning what would be the wisest decision overall.
[xii]-Subjective Decisions- Subjective decisions are those decisions, which are subject to
their own personal preferences. There are decisions which are made in an organization
without conscious mental effort. They are generally random in nature.
[xiii]-Individual and Group Decisions - Individual decision mean decisions made by an
executive, Manager or Director, this category also includes decision of the Board of Directors
as individual Decisions. Group Decisions are made by a team of consciously constituted
group, which is considered well equipped for taking a decision.
2.2.3-Steps in Decision Making Process [DMP]

 Perception or identification of decision problem.
 Diagnosis and definition of the decision problem.
 Specification of objectives.
 Collection of relevant information.
 Filtration of information.
 Search for alternative course of action.
 Evaluation of alternative courses factors
 Selecting best few courses of actions
 Making the final choice.
 Implementation of the decision.
 Review & control
 Modification, if need be
2.2.4-Perfect Rationality
In economics and game theory, the participants are sometimes considered to have perfect
rationality: that is, they always act in a way that maximizes their utility, and are capable of
arbitrarily complex deductions towards that end. They will always be capable of thinking
through all possible outcomes and choosing that course of action which will result in the best
possible outcome.
Perfect rationality is very similar to the concept of homo economics but is more commonly
used in the field of game theory. It depends less heavily on agents being self-interested (since
the utility function could take any form) but rather focuses more on the notion of
mathematical perfection in making complex deductions.
Perfect rationality is often compared to bounded rationality, which assumes that practical
elements such as cognitive and time limitations restrict the rationality of agents.
2.2.5-Bounded Rationality
Bounded rationality is when individuals make decisions; their rationality is limited by the
available information, the tractability of the decision problem, the cognitive limitations of
their minds, and the time available to make the decision.
Decision-makers in this view act as satisfiers, seeking a satisfactory solution rather than an
optimal one. Herbert A. Simon proposed bounded rationality as an alternative basis for
the mathematical modeling of decision-making, as used in economics, political science and
related disciplines. It complements "rationality as optimization", which views decision-
making as a fully rational process of finding an optimal choice given the information
available. Simon used the analogy of a pair of scissors, where one blade represents "cognitive
limitations" of actual humans and the other the "structures of the environment", illustrating
how minds compensate for limited resources by exploiting known structural regularity in the
environment.
2.3-Techniques for individual and group Decision-Making

[i]-Heuristic Technique - This technique is based on the assumption that the process of
decision-making with regard to complex and strategic problems cannot be too rational and
scientific. Besides, when a gigantic problem appears insurmountable it would be better to
break it into small fragments and then locate solutions for each single fragment. By adopting
this approach the possibility of finding whole or part solution is greater.
[ii]-Scientific Method Technique – This technique is used to explore scientific questions.
This problem solving technique can also be used to make decisions.
[iii]-Brainstorming Synectics Technique by Gordon (1961) -. The term "synectics" is
derived from the Greek word "synectikos," which means to bring different things into
unified connection. Synectics is an approach to problem-solving, which focuses on
cultivating creative thinking, often among small groups of individuals with diverse
experience and skills. It retains new and abstract information to develop creative solutions, by
breaking from existing mindsets.
[iv]-Participative Techniques- In order to encourage industrial democracy and to make the
role of employees more meaningful and contributive, the need for ‘workers’ participation in
management and decision-making’ has become relevant. Normally decisions are made at top
level and are imposed at lower levels but under this technique, the ideas are mooted at all
level and good ideas are absorbed by TLM to arrive at more meaningful decisions. It
enhances employee motivation and Morale.
[v]-Trial and Error Technique - Trial and error is the process of determining the best
method to obtain the desired outcome by recognizing and removing errors or failures through
various experimental techniques. There are multiple situations in which an individual can use
this method, whether at work, at home, or even in a relationship. This approach has provided
the basis for decision making from our childhood. Main limitations are that consequences for
decision failure should be small, and proper reflection must be done after the trial and error to
ensure that correct cause/effect relationships are identified in the learning.
[vi]-Creativity Technique – It is a human faculty which helps the managers in solving
complex and non-repetitive problems. Managers who make good use of innovative talent,
generate new, novel, improved ideas and approaches to a problem. Creativity is the ability to
think originally and come out with some novel idea. It is a part of a genuine human thinking
process. Every manager has a different creativity level and capacity.
[vii]-Linear Programming (LP) Technique- This technique is generally used to optimize
limited resources, linear programming is a mathematical technique, where requirements are
represented by linear equations. Useful problems in operations research can be addressed
using this technique.
[viii]-Decision Making Tree - This technique helps in visualizing the multistage decision
problems, while addressing uncertain outcomes. It can be useful in deciding between
strategies or investment opportunities with constrained resources.
[ix]-Cost/Benefit Analysis - This is limited to financial decisions or can provide the data for
evaluation of financial criteria in other decision making techniques. An evaluation of the
costs attached to the decision are compared with the quantified benefits. If benefits
outnumber the costs, the decision is accepted, conversely it is rejected.
[x]-Net Present Value (NPV) Technique - Net present value and present value calculations
are often used for capital budgeting and investment decisions. NPV is sometimes considered
a single criteria decision technique.
[xi]-Paired Comparison Analysis - Options are compared against one another in pairs to
establish relative importance. A drawback in this technique is that little or no information is
exposed that identifies the criteria supporting each alternative.
[xii]-Pros/Cons Technique/T-Chart Analysis/Force Field Analysis - This is the age old
approach of looking at the pros and cons of two options. A key limitation is that these
decision making techniques look at only two options at a time. However, while carrying out
the force field analysis, all forces against the decision can be considered.
[xiii]-Game Theory - For complex strategic decisions, where it is beneficial to take into
account the likely response of outside participants, such as customers, competitors,
government etc., Game Theory provides a potentially valuable decision making technique.
Game Theory approaches can be considered extensions to Influence Diagrams.
[xiv]-Multi-Voting [MV] Technique- This technique is used for group decisions to choose
fairly between many options. It is best used to eliminate lower priority alternatives before
using a more rigorous technique to finalize a decision on a smaller number of options.
2.4-Planning vis-à-vis Strategy – Meaning

Strategic planning is the art of creating specific business strategies, implementing them, and
evaluating the results of executing the plan, in regard to a company’s overall long-term goals
or desires. It is a concept that focuses on integrating various departments (such as accounting
and finance, marketing, and human resources) within a company to accomplish its strategic
goals. The term strategic planning is essentially synonymous with strategic management. The
concept of strategic planning originally became popular in the 1950s and 1960s. However,
enthusiasm for strategic business planning was revived in the 1990s and strategic planning
remains relevant in modern business.
2.4.1-Strategic Planning Process

The strategic planning process requires considerable thought and planning on the part of a
company’s upper-level management. Before settling on a plan of action and then determining
how to strategically implement it, executives may consider many possible options.
[i]-Strategy Formulation- In the process of formulating a strategy, a company will first

assess its current situation by performing an internal and external audit. The purpose of this is
to help identify the organization’s strengths and weaknesses, as well as opportunities and
threats (SWOT Analysis).
[ii]-Strategy Implementation- After a strategy is formulated, the company needs to establish
specific targets or goals related to putting the strategy into action, and allocate resources for
the strategy’s execution.
[iii]-Strategy Evaluation- It is important for managers to evaluate the performance of a
chosen strategy after the implementation phase. Strategy evaluation involves three crucial
activities: reviewing the internal and external factors affecting the implementation of the
strategy, measuring performance, and taking corrective steps to make the strategy more
effective.
2.4.2-Benefits of Strategic Planning

[i]-It helps to formulate better strategies using a logical, systematic approach
[ii]-Strategic planning process itself makes a significant contribution to improving a
company’s overall performance, regardless of the success of a specific strategy.
[iii]-It leads to enhanced communication between employers and employees
[iv]-Strategic planning also helps managers and employees show commitment to the
organization’s goals.
[v]-Both employees and managers tend to become more innovative and creative, which
fosters further growth of the company.
[vi]-It empowers individuals working in the organization
2.5-Environment (certainty, risk, uncertainty)

Environment analysis is managerial decision making based on the assessment of
opportunities and threats in the environment.
The step in environmental analysis are:
1) Scanning: It involves information gathering for assessing the nature of the environment in
terms of uncertainty, complexity and dynamism it identifies early signs of future
environmental changes. They are indicated by trends and events, Detects changes already
underway
2) Monitoring: It involves tracking environmental trends and events. It is auditing of
environment. The likely impact of environment is that it influences Environmental analysis
process on business performance.
3) Forecasting: This step forecast what is likely to happen. It lays out of path for anticipated
changes. This step provides Key force at work in the environment. They can be political,
legal, economic, social cultural, technological.
4) Assessment: This step identifies key opportunities and threats. The competitive position of
business analyzed in terms of how the organization stands in relation to other organizations
competing for some resources of customers.
5] Threat is an unfavorable condition which strengthens organization's competitive position
of the organization.
6] Opportunities is a favorable condition which creates risks and weakens the competitive
position.
Environmental analysis identifies competitive position of a business organization.
2.5.1-Factors affecting the Competitive Position are

[i]- Competitors: Current and positional competitive and their objectives and strategies.
[ii]- Strategic groups: Other firms in the industry following similar competitive approaches.
[iii]- Market factors: Customer needs, market segments, market power, market share and
growth.
[iv]- Market attractiveness: The degree of market attractiveness for the products.
2.5.2-Techniques of Environmental Analysis

[i]--SWOT/ TOWS/ WOTS-UP
The SWOT analysis has been helpful as a tool to identify positive and negative factors within
organizations. It is used as a preliminary resource, assessing strengths, weaknesses,
opportunities, and threats in an organization. WOTS-UP, is used for SWOT analysis.
WOTS-UP stands for Weaknesses, Opportunities, Threats and Strengths Underlying
Planning. Strengths and Weaknesses are items that are internal to the company, while
Opportunities and Threats are external to the company. The WOTS-UP process requires a
thorough internal assessment by your leadership team, as well as an external assessment of
your markets and competition.
[a]-These are the internal factors within an organization for both Strengths and
Weaknesses
[i]-Human resources - staff, board members, trade union etc.
[ii]-Physical resources - your location, building, equipment

[iii]-Financial - grants, funding agencies, other sources of income
[iii]-Activities and processes - programs you run, systems you employ
[iv]-Past experiences - building blocks for learning and success, your reputation
[b]-Opportunities and Threats: These are external factors stemming from societal
forces.
[i]-Future trends in your field or the culture
[ii]-The economy - local, national, or international
[iii]-Funding sources - foundations, donors, legislatures
[iv]-Demographics - changes in the age, race, gender, culture of those you serve or in your
area
[v]-The physical environment- the current and the future infrastructure
[vi]-Legislation- Local, national or international events or laws
[ii]-TOWS ANALYSIS
A TOWS analysis involves the same basic process of listing strengths, weaknesses,
opportunities and threats as a SWOT analysis, but with a TOWS analysis, threats and
opportunities are examined first and weaknesses and strengths are examined last. After
creating a list of threats, opportunistic, weaknesses and strengths, managers examine ways
the company can take advantage of opportunities and minimize threats by exploiting
strengths and overcoming weaknesses.
[iii]-SWOT vs. TOWS

SWOT and TOWS analysis involve the same basic steps and likely produce similar results.
The order in which managers think about strengths, weaknesses, threats and opportunities
may, however, have an impact on the direction of the analysis.
Michael Watkins of the "Harvard Business Review" says that focusing on threats and
opportunities first helps lead to productive discussions about what is going on in the external
environment rather than getting bogged down in abstract discussions about what a company
is good at or bad at.
Considerations
SWOT and TOWS use the same factors for analysis, and the terms are sometimes used
interchangeably without regard to the order that strengths, weaknesses, threats and
opportunities are examined.
[iv]--BCG Growth Matrix

Boston Consulting Group (BCG) Matrix is a four celled matrix (a 2 * 2 matrix) developed
by BCG, USA. It is the most renowned corporate portfolio analysis tool. It provides a
graphic representation for an organization to examine different businesses portfolios on the
basis of their related market share and industry growth rates. It is a two dimensional analysis
on management of SBU’s (Strategic Business Units). In other words, it is a comparative
analysis of business potential and the evaluation of environment. According to this matrix,
business could be classified as high or low according to their industry growth rate and
relative market share.
Relative Market Share = SBU Sales this year - leading competitors sales this year.
Market Growth Rate = Industry sales this year - Industry Sales last year.
[a]-The analysis requires that both measures be calculated for each SBU.
[b]-The dimension of business strength, relative market share, will measure comparative
advantage indicated by market dominance.
[c]-The key theory underlying this is existence of an experience curve and that market share
is achieved due to overall cost leadership.
[d]-BCG matrix has four cells, with the horizontal axis representing relative market share and
the vertical axis denoting market growth rate. The mid-point of relative market share is set at
1.0. If all the SBU’s are in same industry, the average growth rate of the industry is used.
While, if all the SBU’s are located in different industries, then the mid-point is set at the
growth rate for the economy.
[e]-Resources are allocated to the business units according to their situation on the grid. The
four cells of this matrix have been called as stars, cash cows, question marks and dogs. Each
of these cells represents a particular type of business.
10 x 1x 0.1 x
Figure: BCG Matrix
1. Stars- Stars represent business units having large market share in a fast growing
industry. They may generate cash but because of fast growing market, stars require
huge investments to maintain their lead. Net cash flow is usually modest. SBU’s
located in this cell are attractive as they are located in a robust industry and these
business units are highly competitive in the industry. If successful, a star will become
a cash cow when the industry matures.
2. Cash Cows- Cash Cows represents business units having a large market share in a
mature, slow growing industry. Cash cows require little investment and generate cash
that can be utilized for investment in other business units. These SBU’s are the
corporation’s key source of cash, and are specifically the core business. They are the
base of an organization. These businesses usually follow stability strategies. When
cash cows lose their appeal and move towards deterioration, then a retrenchment
policy may be pursued.
3. Question Marks- Question marks represent business units having low relative market
share and located in a high growth industry. They require huge amount of cash to
maintain or gain market share. They require attention to determine if the venture can
be viable. Question marks are generally new goods and services which have a good
commercial prospective. There is no specific strategy which can be adopted. If the
firm thinks it has dominant market share, then it can adopt expansion strategy, else
retrenchment strategy can be adopted. Most businesses start as question marks as the
company tries to enter a high growth market in which there is already a market-share.
If ignored, then question marks may become dogs, while if huge investment is made,
and then they have potential of becoming stars.
4. Dogs- Dogs represent businesses having weak market shares in low-growth markets.
They neither generate cash nor require huge amount of cash. Due to low market share,
these business units face cost disadvantages. Generally retrenchment strategies are
adopted because these firms can gain market share only at the expense of
competitor’s/rival firms. These business firms have weak market share because of
high costs, poor quality, ineffective marketing, etc. Unless a dog has some other
strategic aim, it should be liquidated if there is fewer prospects for it to gain market
share. Number of dogs should be avoided and minimized in an organization.
[a]-Limitations of BCG Matrix

The BCG Matrix produces a framework for allocating resources among different business
units and makes it possible to compare many business units at a glance. But BCG Matrix is
not free from limitations, such as-
1) BCG matrix classifies businesses as low and high, but generally businesses can be
medium also. Thus, the true nature of business may not be reflected.
2) Market is not clearly defined in this model.
3) High market share does not always leads to high profits. There are high costs also
involved with high market share.
4) Growth rate and relative market share are not the only indicators of profitability. This
model ignores and overlooks other indicators of profitability.
5) At times, dogs may help other businesses in gaining competitive advantage. They can
earn even more than cash cows sometimes.
6) This four-celled approach is considered as to be too simplistic.
[v]--Competitor Analysis
Competitor analysis in marketing and strategic management is an assessment of the strengths
and weaknesses of current and potential competitors. This analysis provides both an offensive
and defensive strategic context to identify opportunities and threats. Profiling coalesces all of
the relevant sources of competitor analysis into one framework in the support of efficient and
effective strategy formulation, implementation, monitoring and adjustment. Competitor
analysis is an essential component of corporate strategy. It is argued that most firms do not
conduct this type of analysis systematically enough. Instead, many enterprises operate on
what is called "informal impressions, conjectures, and intuition gained through the tidbits of
information about competitors every manager continually receives." As a result, traditional

environmental scanning places many firms at risk of dangerous competitive blind spots due
to a lack of robust competitor analysis.
2.6-Elements of business Environment

The term “Business environment” represents the sum of all the individuals, institutions,
competing organisations, government, courts, media, investors, and other factors outside the
power of the business organisations but affects the business performance. Hence, changes in
government economic policies, rapid changes in technology, changes in consumer tastes and
preferences, increasing market competition, etc. are outside the business organisations' power
but affect the business performance immensely.
[a]-Dimensions of Business Environment

The dimension of the business environment refers to the sum of all factors, enterprises, and
forces that constitute direct or indirect influence over business activities. Such five key
elements are listed below.
[i]-Social Environment - It implies the tradition, culture, customs, and values of a society in
which the business exists. In India, festivals like Diwali, Christmas, and Holi provide a
financial opportunity for several market segments like sweet manufacturers, gifting products
suppliers, etc. A company that follows long-held values like social justice, freedom, equal
opportunities, gender equality, etc. excels in that given society.
[ii]-Legal Environment - It includes the laws, rules, regulations, and acts passed by the
government. A company has to operate by abiding by the rules and regulations of laws like
the Consumer Protection Act 1986, Companies Act 1956, etc. A proper understanding of
these laws assists in the smooth operations of a company. Example: A cigarette-selling
company compulsorily has to put the slogan “smoking is injurious to health” on every
packaging.
[iii]-Economic Environment -It involves market conditions, consumer needs, interest rate,
inflation rate, economic policies, etc. For example, interest rates of fixed-income instruments
prevalent in an economic environment impact the interest rate it will offer on its debentures.
A rise in the inflation rate leads to a price hike; hence, it limits businesses. If the income of
customers increases, the demand for goods and services will rise too.
[iv]-Political Environment - It consists of forces like the government's attitudes towards
businesses, ease-of-doing-business policies, the stability of the governing body, and peace
within the country. All of these factors are extremely crucial for a company to sustain itself.
If the central and local government sanctions, policies, or acts are in favour of businesses, the
nation's overall economy strengthens due to increasing employment, productivity, and import
and export of various products. Example - A pro-business government will make foreign
investments more attractive in that country.
[v]-Technological Environment- It comprises the knowledge of the latest technological

advancements and scientific innovations to improve the quality and relevance of goods and
services.
2.6.1-Micro Environment
Micro-environment includes the factors or elements in a firm's immediate environment which
affect its performance and decision-making; these elements include the firm's suppliers,
competitors, marketing intermediaries, customers and publics. These are organizational level
forces that address the internal environment of the firm, such as vision, mission, strategy,
resources, processes, products and services.
2.6.2-Meso Environment
Meso Environment is specific environment that includes workplace policies, processes, and
procedures. The meso environment is the setting between the macro and micro opportunities.
It shapes the framework of a business or organisation and can be considered as its
infrastructure: policies, standard operating procedures, rules and guidelines. The meso
concept is a difficult one to understand, there is very little research relating to the idea. The
meso environment is rarely considered. In reality however, most companies are actually using
it. Quality systems or staff hand-books are good examples of the meso. Meso environment
basically decides the competitive position of the industry vis-a-vis the organisation.
2.6.3-Macro Environment
The Company is not alone in its business environment. It is surrounded by and operates in a
larger context. This context is called the Macro Environment. It consists of all the forces that
shape opportunities, but also pose threats to the company. The Macro Environment consists
of 6 different forces. These are: Demographic, Economic, Political, Ecological, Socio-
Cultural, and Technological forces. This can easily be remembered: the DESTEP model, also
called DEPEST model, helps to consider the different factors of the Macro Environment.
2.7-Industry Structure
The role of industry structure is of particular interest as industry structure has consistently
been found to influence new ventures, in terms of new venture formation, performance, and
their strategic behavior. Industry structure analysis is a corporate planning tool. Its purpose is
to help business leaders develop their competitive strategy by relating the company to its
environment, the core of which lies in the industry in which the organization competes.
According to industrial economics, the structure of an industry influences both the rules of
the competition and the strategies that are potentially available to the company to help it
improve a weak competitive position or take advantage of a strong one. It’s critical for a
company to identify the structural characteristics of industries, as these determine the strength
of the competitive forces acting upon the company and, consequently, the profitability of the
industry as a whole.
2.7.1-Michael Porter named five competitive forces:

 Competition and rivalries in the industry
 Risk of new market entrants
 Bargaining power of customers
 Bargaining power of suppliers
 Threat from substitutes
However, there are, following Main Components of the Industry Structure:

1-Competitors: The intensity of competition from existing competitors will depend on
several factors including:
 The number of competitors
 Their relative size
 Whether their product offering and strategies are similar
 The existence of high fixed costs
 The commitment of competitors and
 The size and nature of exist barriers
2. Potential Competitors: Potential competitors who might have an interest in entering an
industry. Whether potential competitors, identified or not, actually do enter, however,
depends in large part upon the size and nature of barriers to entry. Thus, an analysis of
barriers to entry is important in projecting the likely competitive intensity and profitability
levels in the future.
Entry barriers include:
 Capital investment required.
 Industries like mining, refinery or automobiles require huge investments and larger
gestation periods that increase the risk.
3-Economies of Scale: If scale economies exist in production, advertising, distribution, or
other areas, it becomes necessary to obtain a large volume quickly. Such an effort not only
increases the investment but it also increase the risk of retaliation from existing competitors.
Reliance Fresh opted this strategy for reducing the price of fruits and vegetables in its retail
outlets.
4. Distribution Channels: - Gaining distribution in some industries can be extremely
difficult and costly. Even large established firms that sell products with substantial marketing
budgets have trouble obtaining space on the supermarket shelf Competition between Pepsi
and Coke limit the customers’ choice on cola as most of the retail outlets have a policy of
eliminating one cola product (either Coke or Pepsi brands) from their shelves.
5. Product Differentiation: - Established firms may have high levels of customer loyalty
caused and maintained by protected product features, a brand name and image, advertising,
and customer service. Industries in which product differentiation barriers are particularly high
include soft drinks, beer, cosmetics, over-the-counter drugs, and banking. Just look at the
story board of Bajaj Pulsar in March 2008. It is an attempt to lure the adventurous motorist.
6. Substitute Products: Substitute products are represented by those sets of competitors that
are identified as competing with less intensity than the primary competitors.
7. Customer Power: When customers have relatively more power than sellers do, they can
force prices down or demand more services, thereby affecting profitability. A customer’s
power will be greater when its purchase size is a large proportion of the seller’s business,
when alternative suppliers are available, and when the customer can integrate backward and
make all or part of the product.
8. Supplier Power: When the supplier industry is concentrated and sells to a variety of
customers in diverse industries, it will have relative power that can be used to influence
prices. Power will also tend to be enhanced when the costs of customers to switch suppliers is
high.
2.8-Business-level Strategic Planning

The strategic planning process requires considerable thought and planning on the part of a
company’s upper-level management. Before settling on a plan of action and then determining
how to strategically implement it, executives may consider many possible options.
[i]-Strategy Formulation- In the process of formulating a strategy, a company will first

assess its current situation by performing an internal and external audit. The purpose of this is
to help identify the organization’s strengths and weaknesses, as well as opportunities and
threats (SWOT Analysis).
[ii]-Strategy Implementation- After a strategy is formulated, the company needs to establish
specific targets or goals related to putting the strategy into action, and allocate resources for
the strategy’s execution.
[iii]-Strategy Evaluation- It is important for managers to evaluate the performance of a
chosen strategy after the implementation phase. Strategy evaluation involves three crucial
activities: reviewing the internal and external factors affecting the implementation of the
strategy, measuring performance, and taking corrective steps to make the strategy more
effective.
2.8.1-Benefits of Strategic Planning

[i]-It helps to formulate better strategies using a logical, systematic approach
[ii]-Strategic planning process itself makes a significant contribution to improving a
company’s overall performance, regardless of the success of a specific strategy.
[iii]-It leads to enhanced communication between employers and employees
[iv]-Strategic planning also helps managers and employees show commitment to the
organization’s goals.
[v]-Both employees and managers tend to become more innovative and creative, which
fosters further growth of the company.
[vi]-It empowers individuals working in the organization
Unit 3: Organizing
Decentralization and Delegation; Factors affecting organizational design;
Departmentalization; Organizational structures and organograms:
traditional and modern, comparative suitability and changes over time:
formal – informal organisations’ interface.
3.1-Organizing
Organizing implies pattern of ways in which large number of people engaged in complexity
of task, relate themselves to each other in the conscious and systematic establishment for
accomplishment of mutually agreed upon purposes. Organization refers to the basic
framework created by systematic arrangement of various wealth producing resources such as:
Men Money Machine
Material Market Management
For making available the goods and services needed by the customers
[i]-According to Chester Barnard: “It is a system of consciously coordinated activities of
two or more persons”.
[ii]-According to Etzioni: “Organization is a planned unit deliberately structured for the
purpose of attaining specific goals.”
[iii]-Oliver Sheldon “A process of combining the work which individuals or a group have to
perform with the facilities necessary for its execution that the duties so performed provide the
best channels for efficient, systematic, positive and coordinated application of the available
efforts.
3.1.1-Meaning and Nature of Organization
[i]-It is manmade.
[ii]-Members have their own needs, goals, sentiments and values.
[iii]-It enjoys independent identity.
[iv]-It is characterized by activities and processes which involve use of skill, resources and
technology.
[v]-It determines activities and relationships.
[vi]-Organization is goal oriented and purposeful.
[vii]-It is ‘ongoing’ and ‘continuous’.
3.1.2-Need and Significance:

[i]-It is a social innovation to overcome limitations of men.
[ii]-It helps in carrying out smooth activities with more order and convenience.
[iii]-The growing complexities of business have led to greater degree of standardization,
centralization and control.
[iv]-These quasi-living and quasi-human beings have significant implication on society and
economy.
[v]-It is greatly influenced by both external as well as internal environment.
3.1.4-Principles of Organizing
1-Principle of objective: The organizational goal should be formulated for the business as
whole and organization should be framed to achieve that goal. Departmental goals should be
developed so that ultimate common goal should be attained. If the common
organizational goal is not decided, departments may set their own goals and there may be
occurrence of conflict about the common objective.
2- Principle of Division of Work: the organization should be framed in a manner such that
every individual should get work according to his ability, skills and knowledge. The
employees should do that work continuously to achieve specialization that particular work.
This will increase his efficiency.
3- Principle of Authority and Responsibility: The amount of authority decreases as we go
downward in the organizational level. For every given work or responsibility there must be
provision of authority to get that work done. The manager can delegate his authority to his
subordinates to complete the task but responsibility to complete that work cannot
be delegated, only manager would be answerable for the given work not his subordinates.
4- Principle of Unity of Command: There should be unity of command in the organization.
An employee should be controlled by one boss. He should get orders from one superior and
should report to the same superior. If a person is under the control of more than one person
then there would be confusions and conflicts. Unity of command would lead to better
coordination and controlling.
5- Principle of Span of Control: There should be proper span of control. Span of control is
the number of subordinate reporting directly to a manger. The number of subordinates should
be in such manner so that supervision can be done effectively. If span is not planned
appropriately efficiency of workers will be affected.
6- Principle of Scalar Chain: There should be proper chain of supervisor from top level to
lower level in vertical direction. This also shows the direction of communication in the
organization. This suggests that communication should pass through each position placed in
the chain.
3.2-Decentralization and Delegation

When an authority or responsibility is entrusted to the subordinate by a superior is known as
Delegation. Decentralization refers to the final result which is attained when the authority is
delegated to the lowest level, in an organized and consistent manner. Delegation is the
technique of management.
Span of Management: it is defined as “Number of subordinates who report directly to the
managers”.
He was a famous behavioral researcher who, for the first time, determined span of control on
the basis of relationships that a manager handles while managing subordinates. He even
derived a formula to establish it, which is as follows.
n[2n/2+n-1] = where n = no. of subordinates

Accordingly, the number of relationships, multiplied immensely as the number of
subordinates grew, For example:
No. of Subordinates No. of Relationships

6 222
7 490
18 2353602
However, this scenario has changed due to the new information communication technologies,
which have made interaction between Manager and his subordinates easier and at any given
time and place. Therefore the span of control has widened.
3.2.1-Concept of Authority
Authority is a fundamental concept associated with formal organization.
According to Henry Fayol- “Right to give orders and power to exact obedience”.
Koontz O’Donnel “Authority is the power to command others, to act or not to act in a
manner deemed by the processors of the authority to further enterprise or departmental
purpose”.
Max Weber the famous German Social Scientist divided authority into following types
[i]-Charismatic authority is possessed by those who have magnetic power like Gandhi ji,
Napolean, Abraham Linkin etc. They have a natural propensity to influence people.
[ii]-Traditional Authority- It is rooted in tradition or customs of the society. Elders, teachers
etc.
[iii]-Rational Legal Authority- It is a formal right vested in a position. It is an institutional
right and is regarded as legitimate. Rational legal authority is vested in managerial positions
is not personalized but positional authority. This is why it basically differs from power.
3.2.2-Delegation of Authority
It is a process by which a manager assigns some of the tasks within his work jurisdiction to
his subordinate managers on a selective bases, allows them to exercise authority on his behalf
to accomplish the tasks and makes them accountable for performance.
Steps in delegation:
 To size up work load
 Assignment of work
 Granting authority
 Creation of accountability
3.2.3-Authority, Responsibility and Accountability

Responsibility refers to those obligations which a person is expected to perform to the best of
his ability in a given direction.
Theo Haimen “It is an obligation of subordinate to perform the duty as required by his
superior”.
Mc Farland “it is the duties and activities assigned to a position or to an executive”.
Accountability is also an obligation of the subordinates and it arises out of exercises of
authority by subordinate given to them by his superior.
In other words authority is delegated, responsibility is assumed and accountability is
imposed. Responsibility arises out of division and assignment of work. Authority
arises out of responsibility and accountability arises out of authority.
[i]-Need and significance of Delegation

 Crucial for creating managerial hierarchy.
 Permits manager to concentrate on key activities.
 Facilitates prompt action.
 Delegation causes subordinates to accept responsibility.
[ii]-Guidelines for Effective Delegation

 Establish objectives
 Evaluate competence
 Define authority and responsibility clearly
 Motivate subordinate
 Establish communication channels.
 Impart proper training
 Supportive supervision
 Standard performance
 Unity of command principle
 Establish feedback system.
3.2.4-Power vs Authority
Not synonymous but different, though these may be overlapping at times.
Power is a wider term and may be defined as ability to exert influence. Power is not
positional and institutional rather it is personal and political in nature.
Types of Power:
 Reward Power
 Coercive power
 Expert power
 Legitimate Power
 Referent power – desire of the people who are being influenced to emulate/imitate the
style of the boss.
3.3-Centralization & Decentralization

Centralization means concentration of management authority in a relatively few key
management positions at the nerve centre of the organizational structure which is usually the
TOP.
Advantages Disadvantages
Permits unified single handed Top sided structure.
determination and direction.
Structure is simple and neat. May lead to abuse of power.
Makes TLM strong and powerful. Excessive work at the TOP.
“TLM is the one which has more Fosters assigned bureaucratic, autocratic
wisdom and accordingly can take better atmosphere.
decisions”, is the usual belief and many
Communication system is week.
times the truth also.
Hampers growth.
3.3.1-Decentralization
Means partial devolution of management authority from central top management to lower
operational management levels in a formal and purposeful manner.
Need for Decentralization
 Growth & development both in terms of volume and size necessitates
decentralization.
 TLM must concentrate on strategic matters rather than routine matters.
 Diversification of activities also calls for decentralization.
Advantages Disadvantages
Reduction in workload of TLM Reduced management control
Prompt decision and action Increased cost
Increased organizational effectiveness. Lack of coordination
Development and training of managers Rivalry among autonomous costs
Growth and diversification strategies Communication gap
Effective communication Lack of adaptability.
High morale and motivation. Lack of consistency and uniformity.
Balanced organizational structure Craze for authority
Effective control Paucity of general management talent.
Improved performance
3.3.2-Differences between Delegation and Decentralization
SN Basis Delegation Decentralization

1 Responsibility A superior delegates or Decentralization relieves
transfers some rights and him/her from responsibility and
duties to a subordinate but the subordinate becomes liable
his/her remains responsible. for that work.
2 Process Delegation is process Decentralization is the end
result of delegation of authority
to the lowest levels in
managerial hierarchy.
3 Need Delegation is essential for Decentralization may or may
getting things done in the not be practiced as a systematic
organization and performance policy in the organization.
of work assigned.
4 Control The final control over the The power of control is
activities of organization lies exercised by the unit head to
with the top executive whom authority is delegated.
5 Authority Delegation represents Decentralization signifies the
selecting dispersal of creation of autonomous & self-
authority sufficient units or divisions.
6 Scope Delegation hardly poses any Decentralization poses a great
problem of coordination to problem due to extreme
the delegator of authority. freedom of action, by creating
self-sufficient units.
7 Good Results Delegation gives good results Decentralization is effective
in all types of organizations only in big organizations, as
irrespective of their size. small one do not require it.
8 Nature Delegation is the result of Decentralization is the result of
human limitation to the span the big size and multi-various
of management. functions of the enterprise.
3.3.3- Difficulties in Delegation of Authority
There may arise certain difficulties in the process of delegation. The difficulties may be due
to the attitude of either superiors or subordinates or both. There may be certain defects in
organizational structure which hamper proper delegation of authority.
Some of the difficulties involved in delegation are as such:
1- Over Confidence of Superior: The feeling in a superior that only he can do certain work
effectively than others is the main difficulty in delegation.
2. Lack of Confidence in Subordinate: The superior may be of the view that subordinates
are not competent to carry out certain things of their own.
3. Lack of Ability in Superior: A superior may lack the ability to delegate authority to
subordinates. The manager may not be able to identify the areas where delegation is required
4. Lack of Proper Controls: There may not be proper controls in the organization which
help the manager to keep in touch with performance of subordinates.
5. Lack of Proper Temperament of Superior: The chief executive may be over-cautious or
conservative by nature. He will not like to take the risk of delegating authority.
6. Inability of Subordinates: There may also be shyness on the part of subordinates in
assuming additional responsibility. The fear of committing mistakes or lack of confidence on
the part of subordinates may also act as a barrier in delegation of authority.
7. Fear of being exposed-The superior may be afraid of a subordinate that he/she may do a
better job than him/her, if delegated.
OR
Barriers to Delegation
 If you want to do right do it yourself, many superiors have this motto.
 Failure to size up work load.
 Failure to divide work.
 Lack of trust and required confidence in subordinates.
 Fear of competition from subordinates.
 Low self-confidence or over confidence.
 Lack of trained subordinate.
 Lack of cooperation from subordinates.
 Conservatives are very fond of authority and do not like to part with it.
 Managers with weakness have a fear of being exposed by the subordinates.
3.3.4-Importance of Delegation
Delegation is a universally accepted principle. It has been practiced since time immemorial
and in every field. Delegation is necessary not only for a business undertaking but also for
running a government. An industrial undertaking benefits by delegation in the following
ways:
1. Relieving Top Executives: Top executives cannot perform and supervise each and every
work. Delegation helps executives in delegating their work to subordinate officers.
2. Improved Functioning: In the absence of delegation some persons may be burdened with
more tasks while others may not have sufficient work to do. Delegation helps in rationalizing
the functioning of an organization.
3. Use of Specialists: Delegation enables the use of specialists for taking up different
functions.
4. Helps in Employee Development: When subordinates are given independent assignments
then they will be able to use their initiative and experience. This will also give them
confidence in taking up further responsibilities.
5. Helps in Expansion and Diversification: The expansion and diversification of an
enterprise needs the services of more and more persons. The assignment of various tasks to
subordinates will prepare them for undertaking new assignments.
3.4.-Organizational Forms (Mintzberg)

An organizational structure helps companies assign duties and responsibilities to various staff
and departments. It also helps everyone understand where they fit in to a business operation
and who they report to. Mintzberg's Five Types of Organizational Structures are as follows:
[i]-The Entrepreneurial or Simple Organization- An entrepreneurial organization usually
assigns most of the major decision-making to one or a few leaders. This is the way many
companies begin because founders are usually risking their own money and are nervous
about delegating important decisions to anyone else. This can lead to micromanagement and
reduced productivity and efficiency because an owner usually is not an expert at all of these
functions, and managers are nervous about moving ahead without permission every step of
the way.
[ii]-The Machine Organization- This type of organization has rigid roles, policies,
guidelines, operating methods and reporting procedures. The positives of this type of
organization is clear communication, as everyone knows exactly what they are supposed to
be doing and how to do it. One of the problems with this type of organization is that instead
of setting goals and letting talented people figure out how to best reach these goals, the
management orientation creates a machine bureaucracy that can lead to stifled creativity,
longer production and problem-solving times and lack of interdepartmental and team
communication.
[iii]-The Professional Organization- When a business is reliant on more than a few experts
in their fields, the company might go with a professional organizational model. Examples of
these types of companies might include law firms, schools, consulting firms or innovative
tech companies. This type of model gives experts more autonomy to create and reach their
goals. Each professional who leads an area often has staff under him/her, who follow a more
traditional organizational “totem pole” type of hierarchy. [a pole or pillar carved and painted
with a series of totemic symbols representing family lineage and often mythical or historical
incidents and erected by Indian tribes of the northwest coast of North America]
[iv]-The Divisional Organization- Some companies have so many different business lines,
or sell products or services that are so different, that each different unit operates
independently. In some divisional organizations, the different business units share certain
functions provided by the corporate office, such as insurance, telecommunications, real estate
and even HR, IT and accounting support.
[v]-The Innovative Organization- An innovative organization differs from an
entrepreneurial organizational model in that the former refers to more control by new
founders, while the latter refers to an emphasis on continuing new product development.
Innovative organizations often bring in temporary staff to create a new product or service,
explains business management website. The people brought in are experts at what they do,
and they often do work for multiple companies.
3.4.1-Factors affecting Organizational Design

The choice of an appropriate organization design is dependent on a number of factors. These
factors can be internal or external. Following are the primary factors to consider when
designing an organizational structure:
[i]-Strategy and Organization Design- Organizational strategy means the way the business
positions itself in its setting in relation to its stakeholders, given the organization’s resources,
capabilities, and mission. When strategy changes, structures must change. All strategy
attempts to fulfill the vision, and the organizational structure needs to support that effort.
[ii]-Size and Organization Design- Size is one of the primary contingency factors that affect
organizational design. The size and operational scale of a business is crucial to take into
consideration when determining the ideal organization structure. It is noticed that giant
companies differ structurally from small ones when it comes to division of labour, rules and
regulations, performance appraisal and budgeting procedures.
[iii]-Environment affects Organizational Design- Organizations are open systems so they
have to receive different inputs from the environment and to sell a variety of outputs to their
environment. The environment of an organization could be described as general or specific.
The general environment consists of cultural, economic, legal-political, and societal
conditions within the areas where the business functions. The specific environment comprises
its owners, company’s market, industry standards, competition, suppliers, distributors and
government agencies with which an organization will have to interact to grow and survive.
[iv]-Technology Influences Organization Design- Technology affects organizational
structure and productivity by improving the efficiency of communication and resource flow.
It is a major contingency factor. Two essential technological contingencies which affect the
type of organizational structure are the variety and analyzability of work activities. A good
example of an organizational structure which has surfaced from newer technological
developments is the virtual organization that links a network of organizations via the internet.
[v]-Customers and Markets- The organization structure is also influenced by the type of
market and customers it serves, and in a customer-responsive environment this will be one of
the primary determining factors of structure. If the organization provides services to a wide
variety of clients at numerous locations, it will need to have several branch officers, as do
Banks, the Post Office and so on.
[vi]-Age of the organization- As it ages and grows, a business starts to mechanize, adding
rules, procedures and policies; closely defined tasks; extensive internal systems of control
and command chains. In a nutshell, maturity brings about bureaucracy. In the maturity stage,
rules, regulations, budgets, a refined division of labour and control systems have established.
[vii]-Products and Services- The structure could also be based on the specific services and
products offered. Large and diverse businesses have independent divisions since they are
working with very different products and services.
[viii]-Geography- The geographical spreading of a business influences its structure primarily
due to the need to be close to raw materials or consumers. Where there is a considerable
degree of geographical distribution, there is likely to be more need for careful co-ordination
and control compared to a single site location.
[ix]-People- This is an internal factor. Individuals within the company affect the design in
many ways. Structures do not simply appear, they are the result of people’s views and beliefs,
as well as their way of managing the organization. The structure is also influenced by the
kinds of jobs and individuals in the company.
3.5- Departmentalization
Departmentalization is defined as a process that groups activities into different departments.
These departments are created so that tasks can be performed by specialization within the
organization.
Departmentalize also refers to an organization’s formal structure that includes several
departments and positions and their respective relationship with each other.
It groups individuals as per the functions and activities they will be performing in a single
department. If you see a corporate ladder, you will find that all the levels that come under the
top and all the subsequent ones have been departmentalized.
3.5.1-Objectives of Departmentalization
 To maintain control
 To simplify the operational process in the company
 To group the specialized activities under one umbrella
 To increase the efficiency of management and ultimately the organization
 To fix responsibilities and of course accountability
3.5.2-Types of Departmentalization
[i]-Functional Departmentalization- In this kind of departmentalization, the company
creates departments based on the functions; Functional departmentalization is beneficial for
the company as it integrates expertise and maximizes efficiency and productivity.
[ii]-Geographic Departmentalize- When a company organizes departments along
geographic lines, it is called geographic departmentalization. Multinational firms have their
offices all around the world, and they have created departments based on the regions to
handle company activities.
[iii]-Product Departmentalize- This type of departmentalization is perfect for a large-scale
company that deals with multi-products. It groups all the activities related to the delivery and
development of products in a specific department.
[iv]-Process Departmentalize- When a company groups activities by the production
processes, it is known as Process Departmentalization. The departments will need adequate
material and manpower to conduct their operations and tasks smoothly.
[v]-Customer Departmentalization- When a company puts its focus on customer needs and
wants, it creates departments in accordance with different class or type of clients and
customers. This is known as customer departmentalization.
[vi]-Divisional Departmentalize- When a corporation starts independent lines that operate as
separate entities, it is known as divisional departmentalization.
[vii]-Matrix Departmentalize- This type of departmentalization integrates project and
functional departmentalization to improve economies of scale.
3.5.3-Advantages of Departmentalization
The numerous advantages of departmentalization are as follows-
 Departmentalization is an effective grouping that enables meaningful work

 It is easy to coordinate different work in the same department
 Departmentalization results in the integration of work
 Achieves economic advantage
 Departmentalization enables utilization of local conditions via low operational costs
 Simplifies training
 Utilizes special skills and specialized training to increase personal as well as company
productivity
 Departmentalization helps the company to gain the benefit of specialization
 There is a feeling of autonomy as the manager is granted the power to take
independent decisions
 It increases the chance of growth and expansion
 Departments are created to fix the role of every person involved.
 Responsibilities are clear and precise, and every person is now accountable for his/her
action
 All departments are specific, and workers within it have a greater chance of uplifting
and further learning of the skills.
 It actually acts as on-the-job training. If the manager comes across someone in his
group who he thinks to need specialized training, he/she can easily arrange for it.
 It becomes easy to evaluate managerial performance as tasks are allotted department
wise.
 Departmentalization results in better administrative control.
3.5.4-Disadvantages of Departmentalization
The disadvantages of departmentalization are as follows-
 As departments continue to grow it creates less adaptability within the organization
 When a company groups activities and people in one specific department there is little
room for flexibility
 Difficulty in coordination between different departments
 Less responsibility and accountability as the departments are concerned with their
own space and not the company as a whole.
 Too much emphasis on specialization
 Rising conflicts between different departments
3.5.5-Factors to be considered in Departmentalization
1. Specialization- Specialization helps the workers to become experts in their field so that it
can maximize efficiency. It is important to group employees and activities in such a way that
it can result in work specialization and thus ensure economy of operations.
2. Control- Effective control will help a company to achieve the objectives of a company
inefficient and economic Create departments in such a way that timely action can be taken to
ensure optimal performance.
3. Co-ordination- Several activities are in urgent need of coordination and should be
grouped together in one department
4. Proper Attention- Proper attention is an important factor in creating departments. It
ensures special attention to vital areas and no duplication of any activities
5. Human Consideration- Departments should be created after giving emphasis to human
consideration like aspiration, attitude and cultural pattern of the employees
6. Local Condition- Attention to local conditions and make adjustments as per the available
resources is important before creating necessary departments. The conditions of geographical
areas vary from one to another hence be aware of local conditions beforehand.
7. Economy- The number one priority of an organization is to utilize its physical amenities to
achieve maximum economy while creating necessary departments.
3.6- Organograms
An organogram is a graphical representation of an organization’s structure. It’s used to show
hierarchical relationships between managers and the people who report to them, as well as
departments. An organogram is a useful tool for organizations to both visualize reporting
relationships and communicate employees’ names, skills, and contact information. The term
"organogram" is used most often in the UK and is synonymous with "organizational chart."
3.6.1- Types of Organizational Charts

1) Hierarchical Structure- The hierarchical model is the most popular organizational chart
type. In a hierarchical organization structure, employees are grouped with every employee
having one clear supervisor. The grouping is done based on a few factors, hence many
models derived from this. Below are few of those factors
 Function – employees are grouped according to the function they provide.
 Geography – employees are grouped based on their region.
 Product – If a company is producing multiple products or offering different services it
can be grouped according to the product or service.
2) Matrix Structure- In a Matrix organizational structure, the reporting relationships are set
up as a grid, or matrix, rather than in the traditional hierarchy. It is a type of organizational
management in which people with similar skills are pooled for work assignments, resulting in
more than one manager to report to.
3) Horizontal/Flat Structure- This is an organizational chart type mostly adopted by small
companies and start-ups in their early stage. The most important thing about this structure is
that many levels of middle management are eliminated.
4) Network Structure- Network organizational structure helps visualize both internal and
external relationships between managers and top-level management. Using a Network
organizational structure is sometimes a disadvantage because of its complexity.
5) Divisional Structure- Within a divisional types of organizational charts has its own
division which corresponds to either products or geographies. Each division contains the
necessary resources and functions needed to support the product line and geography.
6) Line Organizational Structure- Line organizational structure is one of the simplest types
of organizational structures. Its authority flows from top to bottom.
7) Team-based Organizational Structure- Team-based organizational structures are made
of teams working towards a common goal while working on their individual tasks.
3.7-TYPES OF ORGANIZATIONAL STRUCTURES

There are various Types of Organizational Structures. All managers must bear that there are
two organizations they must deal with-one formal and the other informal.
The formal organization is depicted by an organizational chart and job descriptions. The
official reporting relationships are clearly known to every manager. Alongside the formal
organization exists are informal organization which is a set of evolving relationships and
patterns of human interaction within an organization that are not officially prescribed.
Formal organizational structures are categorized as:
(i) Line organizational structure.
(ii) Staff or functional authority organizational structure.
(iii) ) Line and staff organizational structure
(iv) Divisional organizational structure.
(v) Project organizational structure.
(vi) Matrix organizational structure and
(vii) Hybrid organizational structure.
3.7.1--Line Organizational Structure: A line organization has only direct, vertical

relationships between different levels in the firm. There are only line departments-
departments directly involved in accomplishing the primary goal of the organization. For
example, in a typical firm, line departments include production and marketing. In a line
organization authority follows the chain of command
[a]--Advantages
[i]-Tends to simplify and clarify authority, responsibility and accountability relationships
[ii]- Promotes fast decision making
[iii]-Simple to understand.
[b]--Disadvantages
[i]-Neglects specialists in planning
[ii]-overloads key persons.
3.7.2--Staff or Functional Authority Organizational Structure

The jobs or positions in an organization can be categorized as:i) Line positions, (ii) Staff
position, which is A position intended to provide expertise, advice and support for the line
positions. The staff officers or managers have staff authority (i.e., authority to advice the line)
over the line. This is also known as functional authority.
An organization where staff departments have authority over line personnel in narrow areas
of specialization is known as functional authority organization. In the line organization, the
line managers cannot be experts in all the functions they are required to perform. But in the
functional authority organization, staff personnel who are specialists in some fields are given
functional authority (The right of staff specialists to issue orders in their own names in
designated areas). While this type of organizational structure overcomes the disadvantages of
a pure line organizational structure, it has some major disadvantages: They are: (i) the
potential conflicts resulting from violation of principle of unity of command and (ii) the
tendency to keep authority centralized at higher levels in the organization.
3.7.3--Line and Staff Organizational Structure: - Most large organizations belong to this
type of organizational structure. These organizations have direct, vertical relationships
between different levels and also specialists responsible for advising and assisting line
managers. Such organizations have both line and staff departments. Staff departments
provide line people with advice and assistance in specialized areas (for example, quality
control advising production departments
Some Advantages are:
[i]-Even through a line and staff structure allows higher flexibility and specialization it may
create conflict between line and staff personnel.
[ii]-Line managers may not like staff personnel telling them what to do and how to do it even
though they recognize the specialists’ knowledge and expertise.
[iii]-Some staff people have difficulty adjusting to the role, especially when line managers are
reluctant to accept advice.
[iv]-Staff people may resent their lack of authority and this may cause line and staff conflict.
[a]-Features
1. Line and staff have direct vertical relationship between different levels.
2. Staff specialists are responsible for advising and assisting line managers/officers in
specialized areas.
3. These types of specialized staff are (a) Advisory, (b) Service & (c) Control
[b]-Disadvantages:
1. Committees may delay decisions, consume more time and hence more expensive.
2. Group action may lead to compromise and indecision.
3. ‘Buck passing’ may result.
4. Divisional Organizational Structure:
3.7.4- Divisional Organizational Structure: - In this type of structure, the organization can
have different basis on which departments are formed. They are:
[a]- Function,
[b) Product
[c]-process
[d]-customer
(e) Geographic territory
[f]-hybrid form
[g]-project form
[h]-matrix form
[i]-free form
3.7.5-- Project Organizational Structure: - The line, line and staff and functional authority
organizational structures facilitate establishment and distribution of authority for vertical
coordination and control rather than horizontal relationships. In some projects (complex
activity consisting of a number of interdependent and independent activities) work process
may flow horizontally, diagonally, upwards and downwards. The direction of work flow
depends on the distribution of talents and abilities in the organization and the need to apply
them to the problem that exists. The cope up with such situations, project organizations and
matrix organizations have emerged. A project organization is a temporary organization
designed to achieve specific results by using teams of specialists from different functional
areas in the organization. The project team focuses all its energies, resources and results on
the assigned project. Once the project has been completed, the team members from various
cross functional departments may go back to their previous positions or may be assigned to a
new project. Some of the examples of projects are: research and development projects,
product development, construction of a new plant, housing complex, shopping complex,
bridge etc.
[a]-Importance of Project Organizational Structure: - Project organizational structure is

most valuable when:
i]-Work is defined by a specific goal and target date for completion.
[ii]-Work is unique and unfamiliar to the organization.
[iii]- Work is complex having independent activities and specialized skills are necessary for
accomplishment.
[iv]-Work is critical in terms of possible gains or losses.
[v]-Work is not repetitive in nature.
[b]-Characteristics of Project Organization

[i]-Personnel are assigned to a project from the existing permanent organization and are
under the direction and control of the project manager.
[ii]-The project manager specifies what effort is needed and when work will be performed
whereas the concerned department manager executes the work using his resources.
[iii]-The project manager gets the needed support from production, quality control,
engineering etc. for completion of the project.
[iv]-The authority over the project team members is shared by project manager and the
respective functional managers in the permanent organization.
[v]-The services of the specialists (project team members) are temporarily loaned to the
project manager till the completion of the project.
[vi]-There may be conflict between the project manager and the departmental manager on the
issue of exercising authority over team members.
[vii]-Since authority relationships are overlapping with possibilities of conflicts, informal

relationships between project manager and departmental managers (functional managers)
become more important than formal prescription of authority.
[viii]-Full and free communication is essential among those working on the project.
3.7.6- Matrix Organizational Structure - It is a permanent organization designed to achieve

specific results by using teams of specialists from different functional areas in the
organization. In matrix structures, there are functional managers and product (or project or
business group) managers. Functional manager are in charge of specialized resources such as
production, quality control, inventories, scheduling and marketing. The problem with this
structure is the negative effects of dual authority similar to that of project organization. The
functional managers may lose some of their authority because product managers are given the
budgets to purchase internal resources.
[a]-Feature- Superimposes a horizontal set of divisions and reporting relationships onto a

hierarchical functional structure
[b]-Advantages
[i]-Decentralized decision making.
[ii]-Strong product/project co-ordination.
[iii]-Improved environmental monitoring.
[iv]-Fast response to change.
[v]-Flexible use of resources.
[vi]-Efficient use of support systems.
[c]-Disadvantages:
[i]-High administration cost.
[ii]-Potential confusion over authority and responsibility.
[iii]-High prospects of conflict.
[iv]-Overemphasis on group decision making.
[v]-Excessive focus on internal relations
[vi]-This type of organization is often used when the firm has to be highly responsive to a
rapidly changing external environment.
3.7.7-- Hybrid Organizational Structure: - it is a cross between the Project & Matrix
structures
[a]-Advantages:
[i]-Alignment of corporate and divisional goals.
[ii]-Functional expertise and efficiency.

[iii]-Adaptability and flexibility in divisions.
[b]-Disadvantages:
[i]-Conflicts between corporate departments and units.
[ii]-Excessive administration overhead.
[iii]-Slow response to exceptional situations.
3.8- Formal Organization: When the managers are carrying on organizing process, then
organizational structure is created to achieve systematic working and efficient utilization of
resources. This type of structure is known as formal organizational structure.
3.8.1--Features of Formal organization:
(i) The formal organizational structure is created intentionally by the process of organizing.
[ii) The purpose of formal organization structure is achievement of organizational goal.
(iii) In formal organizational structure each individual is assigned a specific job.
(iv) In formal organization every individual is assigned a fixed authority or decision-making
power.
(v) Formal organizational structure results in creation of superior-subordinate relations.
(vi) Formal organizational structure creates a scalar chain of communication in the
organization.
3.8.2-Advantages of Formal Organization:

[i]-Systematic Working: Formal organization structure results in systematic and smooth
functioning of an organization.
[ii]-Achievement of Organizational Objectives: Formal organizational structure is
established to achieve organizational objectives.
[iii]-No Overlapping of Work: In formal organization structure work is systematically
divided among various departments and employees. So there is no chance of duplication or
overlapping of work.
[iv]-Co-ordination: Formal organizational structure results in coordinating the activities of
various departments.
[v]-Creation of Chain of Command: Formal organizational structure clearly defines
superior subordinate relationship, i.e., who reports to whom.
[vi]-More Emphasis on Work: Formal organizational structure lays more emphasis on work
than interpersonal relations.
3.8.3-Disadvantages of Formal Organization:

[i]-Delay in Action: While following scalar chain and chain of command actions get delayed
in formal structure.
[ii]- Ignores Social Needs of Employees: Formal organizational structure does not give
importance to psychological and social need of employees which may lead to de-
motivation of employees.
[ii]-Emphasis on Work Only: Formal organizational structure gives importance to work
only; it ignores human relations, creativity, talents, etc.
3.9--Informal Organization
In the formal organizational structure individuals are assigned various job positions. While
working at those job positions, the individuals interact with each other and develop some
social and friendly groups in the organization. This network of social and friendly groups
forms another structure in the organization which is called informal organizational structure.
The informal organizational structure gets created automatically and the main purpose of
such structure is getting psychological satisfaction. The existence of informal structure
depends upon the formal structure because people working at different job positions interact
with each other to form informal structure and the job positions are created in formal
structure. So, if there is no formal structure, there will be no job position, there will be no
people working at job positions and there will be no informal structure.
3.9.1-Features of informal organization & characteristics

(i) Its members are joined together to satisfy their personal needs (needs for affiliation,
friendship etc.)
(ii) It is continuously changing & is dynamic.
(iii) It involves members from various organizational levels.
(iv) It is affected by relationship outside the firm.
[v]-It has a pecking order: certain people are assigned greater importance than others by the
informal group.
[vi]-Even though an informal organizational structure does not have its own formal
organizational chart, it has its own chain of command:
[vii]-Informal organizational structure gets created automatically without any intended efforts
of managers.
(viii) Informal organizational structure is formed by the employees to get psychological
satisfaction.
(ix) Informal organizational structure does not follow any fixed path of flow of authority or
communication.
(x) Source of information cannot be known under informal structure as any person can
communicate with anyone in the organization.
(xi) The existence of informal organizational structure depends on the formal organization
structure.
3.9.2-Advantages of Informal Organization:
[i]-Fast Communication: Informal structure does not follow scalar chain so there can be faster
spread of communication.
[ii]-Fulfils Social Needs: Informal communication gives due importance to psychological and
social need of employees which motivate the employees.
[iii]-Correct Feedback: Through informal structure the top level managers can know the real
feedback of employees on various policies and plans.
3.9.3--Strategic Use of Informal Organization

Informal organization can be used to get benefits in the formal organization in the following
way:
[i]-The knowledge of informal group can be used to gather support of employees and
improve their performance.
[ii]-Through grapevine important information can be transmitted quickly.
[iii]- By cooperating with the informal groups the managers can skillfully take the advantage
of both formal and informal organizations.
3.9.4- Disadvantages of Informal organization:

[i]-Spread Rumors: According to a survey 70% of information spread through informal
organizational structure are rumors which may mislead the employees.
[ii]-Un- Systematic Working: Informal structure does not form a structure for smooth
working of an organization
[iii]-May Bring Negative Results: If informal organization opposes the policies and changes
of management, then it becomes very difficult to implement them in organization.
[iv]-More Emphasis to Individual Interest: Informal structure gives more importance to
satisfaction of individual interest as compared to organizational interest.
Unit 4: Directing and Controlling

Motivation – meaning, importance and factors affecting motivation;
Leadership – meaning, importance and factors affecting leadership,
leadership styles, and followership.
Controlling – Principles of controlling; Measures of controlling and
accountability for performance.
4.1-Motivation – Meaning, Importance

Motivation is the word derived from the word ’motive’ which means needs, desires, wants or
drives within the individuals. It is the process of stimulating people to actions to accomplish
the goals. In the work goal context the psychological factors stimulating the people’s behavior
can be called as motivation. It is the scientific word used to represent the reasons for our
actions, our desires, our needs, etc. A motive is what prompts a person to act in a certain way
or at least develop an inclination for specific behavior. For example, when someone eats food
to satisfy the need of hunger, or when a student does his/her work in school for good grade.
Both show a similar connection between what we do and why we do it.
[i]According to Maehr and Meyer, "Motivation is a word that is part of the popular
culture as few other psychological concepts are
[ii]-Fred Luthans defined motivation as a “process that starts with a physiological or
psychological deficiency or need that activates behaviour or a drive that is aimed at a goal or
incentive”.
[iii]-According to Stephen P. Robbins “motivation is the willingness to exert high levels of
efforts toward organizational goals, conditioned by the effort ability to satisfy some individual
need”.
4.1.1-Push and Pull Motivation

[a]-Push motivations are those where people push themselves towards their goals or to
achieve something, such as the desire for escape, rest, and relaxation, prestige, health and
fitness, adventure, and social interaction.
[b]- Pull motivations is another type of motivation that is much stronger than push
motivation. "Some of the factors are those that emerge as a result of the attractiveness of a
destination as it is perceived by those with the propensity to travel. They include both
tangible resources, such as beaches, recreation facilities, and cultural attractions, and
traveler’s perceptions and expectation, such as novelty, benefit expectation, and marketing
image
4.1.2-The process of Motivation consists of three stages

[i]-A felt need or drive
[ii]-A stimulus in which needs have to be aroused
[iii]-When needs are satisfied, the satisfaction or accomplishment of goals.
Therefore, we can say that motivation is a psychological phenomenon which means needs and
wants of the individuals have to be tackled by framing an incentive plan.
4.1.3-Importance of Motivation:
The need for and importance of motivation can be imbued with multiplicity of justifications
as follows:
[1.]- Organizations are run by people. Hence, mangers cannot afford to avoid a concern with
human behavior at work. This is because the motivated employees are more productive and
quality- conscious than apathetic ones.
[2.] Motivation as a pervasive concept affects and is also affected by a host of factors in the
organizational milieu. It enables managers to understand why people behave as they behave.
[3. ]Organizational effectiveness becomes, to some extent, the question of management’s
ability to motivate its employees. Hence, an appreciation of motivation helps the managers
how to motivate their employees.
[4.] Machines become necessary in case of complex technology. However, these remain
inefficient vehicles of effective and efficient operations without man to operate them.
Therefore, organizations need to have employees with required capability and willingness to
use the advanced complex technology to achieve the organizational goal.
[5]. With the realization that organizations will run in more complex milieu in future, an
increasing attention has been given to develop employees as future resources (a ‘talent
bank’). This facilitates the managers to draw upon them as and when organizations grow and
develop.
In sum and substance, the need for and significance of motivation for an organization can be
put as follows:
“If we compare management with driving, while the organization is the vehicle, then
motivation is the power or fuel that makes the vehicle moving”.
4.1.4-Types of Motivation
[A]-Extrinsic Motivation
Extrinsic motivation occurs when we are motivated to perform a behavior or engage in an
activity to earn a reward or avoid punishment.
Examples of behaviors that are the result of extrinsic motivation include:
[i]-Studying because you want to get a good grade
[ii]-Cleaning your room to avoid being reprimanded by your parents
[iii]-Participating in a sport to win awards
[iv]-Competing in a contest to win a scholarship
In each of these examples, the behavior is motivated by a desire to gain a reward or avoid an
adverse outcome.
4.1.5-[B]-Intrinsic Motivation
Intrinsic motivation involves engaging in a behavior because it is personally rewarding;
essentially, performing an activity for its own sake rather than the desire for some external
reward.
Examples of actions that are the result of intrinsic motivation include:
[i]-Participating in a sport because you find the activity enjoyable
[ii]-Solving a word puzzle because you find the challenge fun and exciting
[iii]-Playing a game because you find it exciting
In each of these instances, the person's behavior is motivated by an internal desire to
participate in an activity for its own sake.
4.1.6-Extrinsic vs. Intrinsic Motivation

So, the primary difference between the two types of motivation is that extrinsic motivation
arises from outside of the individual while intrinsic motivation arises from within.
Researchers have also found that the two type of motivation can differ in how effective they
are at driving behavior.
Some studies have demonstrated that offering excessive external rewards for an already
internally rewarding behavior can lead to a reduction in intrinsic motivation, a phenomenon
known as the over justification effect. In one study, for example, children who were rewarded
for playing with a toy they had already expressed interest in playing with became less
interested in the item after being externally rewarded.
4.2-Factors affecting Motivation

One of the most important functions of management is to create willingness amongst the
employees to perform in the best of their abilities. Therefore the role of a leader is to arouse
interest in performance of employees in their jobs. Following factors affect Motivation:
Some individual Needs may be
[i]-Desire for money
[ii]-Success
[iii]-Recognition
[iv]-Job-satisfaction
[v]-Team work, etc
4.3-Theories of Motivation
4.3.1--Maslow's Hierarchy of Needs
Content theory of human motivation includes both Abraham Maslow's hierarchy of needs and
Herzberg's two-factor theory. Maslow's theory is one of the most widely discussed theories of
motivation. Abraham Maslow believed that man is inherently good and argued that
individuals pose a constantly growing inner drive that has great potential. The needs
hierarchy system, devised by Maslow (1954), which is a commonly used scheme for
classifying human motives.
[a]-Maslow's Hierarchy of Needs theory can be summarized as follows:

[i]-Human beings have wants and desires which influence their behaviour. Only unsatisfied
needs influence behaviour, satisfied needs do not.
[ii]-Needs are arranged in order of importance to human life, from the basic to the complex.
[iii]-The person advances to the next level of needs only after the lower level need is at least
minimally satisfied.
[iv]-The further the progress up the hierarchy, the more individuality, humanness and
psychological health a person will show.
4.3.2-Herzberg's Two-Factor Theory

Frederick Herzberg's two-factor theory concludes that certain factors in the workplace
result in job satisfaction, but if absent, they don't lead to dissatisfaction but no
satisfaction. The factors that motivate people can change over their lifetime, but "respect for
me as a person" is one of the top motivating factors at any stage of life.
He distinguished between:
[a]-Motivators- challenging work, recognition, responsibility, which give positive
satisfaction, and
[b]-Hygiene factors-these factors include status, job security, salary and fringe benefits that
do not motivate if present, but, if absent, result in demotivation.
Herzberg concluded that job satisfaction and dissatisfaction were the products of two separate
factors: motivating factors (satisfiers) and hygiene factors (dis-satisfiers). Some motivating
factors (satisfiers) were: Achievement, recognition, work itself, responsibility, advancement,
and growth. Some hygiene factors (dis-satisfiers) were: company policy, supervision,
working conditions, interpersonal relations, salary, status, job security, and personal life.
The name ‘hygiene factors ‘is used because, like hygiene, the presence will not improve
health, but absence can cause health deterioration.
Herzberg's theory has found application in such occupational fields as information
systems and in studies of user satisfaction such as computer user satisfaction.
4.3.3-Douglas McGregor - Theory X, Theory Y
Douglas McGregor, an American social psychologist, proposed his famous X-Y theory
in his 1960 book 'The Human Side of Enterprise'. Theory X and theory Y are still referred
to commonly in the field of management and motivation, and whilst more recent studies have
questioned the rigidity of the model, McGregor’s X-Y Theory remains a valid basic principle
from which to develop positive management style and techniques. McGregor's XY Theory
remains central to organizational development, and to improving organizational culture.
[i]-Theory X ('Authoritarian Management' Style) - Components of this theory are

 The average person dislikes work and will avoid it he/she can.
 Therefore most people must be forced with the threat of punishment to work towards
organizational objectives.
 The average person prefers to be directed; to avoid responsibility; is relatively not
ambitious, and wants security above all else.
[ii]-Theory Y ('Participative Management' Style) - Components of this theory are

 Effort in work is as natural as work and play.
 People will apply self-control and self-direction in the pursuit of organizational
objectives, without external control or the threat of punishment.
 Commitment to objectives is a function of rewards associated with their achievement.
 People usually accept and often seek responsibility.
 The capacity to use a high degree of imagination, ingenuity and creativity in solving
organizational problems is widely, not narrowly, distributed in the population.
 In industry the intellectual potential of the average person is only partly utilized.
4.3.4-Ouchi’s Theory
Theory Z of Ouchi is Dr. William Ouchi's so-called "Japanese Management" style
popularized during the Asian economic boom of the 1980s.
For Ouchi, Theory Z focused on increasing employee loyalty to the company by providing a
job for life with a strong focus on the well-being of the employee, both on and off the job.
According to Ouchi, Theory Z management tends to promote stable employment, high
productivity, and high employee morale and satisfaction.
Professor Ouchi spent years researching Japanese companies and examining American
companies using the Theory Z management styles. By the 1980s, Japan was known for the
highest productivity anywhere in the world, while America had fallen drastically.
One of the most important pieces of this theory is that management must have a high degree
of confidence in its workers in order for this type of participative management to work. This
theory assumes that workers will be participating in the decisions of the company to a great
degree.
Ouchi first wrote about Theory Z in his 1981 book, "Theory Z: How American
Management Can Meet the Japanese Challenge." He created the theory after conducting
research designed to help American companies compete with Japanese businesses. It takes
the best of the Japanese management philosophy, and the best of traditional US management
philosophy, and combines the two.
According to Ouchi, the benefits of using Theory Z include reducing employee
turnover, increasing commitment, improving morale and job satisfaction, and
drastically increasing productivity.
To realize these benefits, he argued that an organization should have the following:
[a]-A Strong Company Philosophy and Culture: The company philosophy and culture
needs to be understood and embodied by all employees, and employees need to believe in the
work they're doing.
[b]-Long-Term Staff Development and Employment: The organization and management
team has measures and programs in place to develop employees. Employment is usually
long-term, and promotion is steady and measured. This leads to loyalty from team members.
[c]-Consensus in Decisions: Employees are encouraged and expected to take part in
organizational decisions.
[d]-Generalist Employees: Because employees have a greater responsibility in making
decisions, and understand all aspects of the organization, they should be "generalists."
However, employees are still expected to have specialized career responsibilities.
[e]-Concern for the Happiness and Well-Being of Workers: The organization shows
sincere concern for the health and happiness of its employees, and for their families. It puts
measures and programs in place to help foster this happiness and well-being.
[f]-Informal Control with Formalized Measures: Employees are empowered to perform
tasks the way they see fit, and management is quite "hands off." However, there should be
formalized measures in place to assess work quality and performance.
Individual Responsibility: The organization recognizes the contributions of individuals, but
always within the context of the team as a whole.
[a]-Features
Theory Z is a hybrid system which incorporates the strengths of American management
(individual freedom, risk taking, quick decision-making, etc.) and Japanese management (job
security, group decision-making, social cohesion, holistic concern for employees, etc.)
systems. Japanese companies operating in the United State have successfully used Theory Z.
After collaboration between Japanese and Indian companies, some experts have suggested
application of this theory in India, in Maruti Udyog, which has collaboration with Suzuki
motors of Japan an attempt has been made to apply Theory Z.
The distinguishing features of Theory Z are as follows:
1. Mutual Trust- According of Ouchi, When trust and openness exist between employees,
work groups, union and management, conflict is reduced to the minimum and employees
cooperate fully to achieve the organization’s objectives.
2. Strong Bond between Organization and Employees:- Employees may be granted
lifetime employment which leads to loyalty towards the enterprise. A career planning for
employees should be done so that every employee is properly placed. This would result in a
more stable and conducive work environment.
3. Employee Involvement: - Theory Z suggests that participation generates a sense of

responsibility and increases enthusiasm in the implementation of decisions, Top managers
serve as facilitators rather than decision-makers.
4. Integrated Organization: - An integrated organization puts emphasis on job rotation
which improves understanding about interdependence of tasks. Such understanding leads to
group spirit.
5. Coordination- In order to develop common culture and class feeling in the organization,
the leader must use the processes of communication, debate and analysis.
6. Informal Control System: - Organizational control system should be made informal. For
this purpose emphasis should be on mutual trust and cooperation rather than on superior-
subordinate relationships.
7. Human Resource Development: - Managers should develop new skills among
employees. Under Theory’ Z, potential of every person is recognized and attempts are made
to develop and utilize it through job enlargement, career planning, training, etc.
[b]-Limitations of Theory Z: - Theory Z suffers from the following limitations:

(i) Provision of lifetime employment to employees to develop a strong bond between
organization and employees may fail to motivate employees with higher level needs.
(ii) Participation of employees in the decision-making process is very difficult.
(iii) Theory Z suggests organization without any structure. But without structure there may be
chaos in the organization as nobody will know who is responsible to whom.
(iv) It may not be possible to develop a common culture in the organization because people
differ in their attitudes, habits, languages, religions, customs, etc.
(v) Theory Z is based on Japanese management practices. Therefore, the theory may not be
applicable in different cultures.
[vi]- Theory Z does not provide complete solution to motivational problems of all
organizations operating under different types of environment. However, it is not merely a
theory of motivation but a philosophy of managing.
4.4-Morale
Morale (also known as esprit de corps) is the capacity of a group's members to maintain
belief in an institution or goal, particularly in the face of opposition or hardship. Morale is
often referenced by authority figures as a generic value judgment of the willpower,
obedience, and self-discipline of a group tasked with performing duties assigned by a
superior. According to Alexander H. Leighton, "morale is the capacity of a group of people to
pull together persistently and consistently in pursuit of a common purpose”. Morale is
important in the military, because it improves unit cohesion. Without good morale, a force
will be more likely to give up and surrender. Morale is usually assessed at a collective, rather
than an individual level. In wartime, civilian morale is also important. Esprit de corps is
considered to be an important part of a fighting unit. Workplace environments influence
employee morale.
In short Morale is ‘’the state of mind’’
[i]-Advantages
The relationship between employee morale and organizational performance is
straightforward. Here are a list of advantages and disadvantages:
 When employees are satisfied with their jobs, they are motivated to work harder and
contribute the best of their abilities toward the achievement of organizational goals.
 They feel appreciated, important and significant members of the organizational chain
and as such, they are ready to maintain a positive action with their colleagues, clients
and anyone they come in contact with.
 By putting their best face forward, not only they are more attractive, but they are also
able to complete their tasks more efficiently.
 Compared to employees who are motivated, disengaged workers are less efficient,
miss more workdays and cost their employers thousands of dollars in lost
productivity.
 Keeping employee morale high is one of the best things you can do to instill
 Loyalty and maintain a productive workplace.
4.5- Leadership – Meaning & Importance

Leadership has been described as "a process of social influence in which, one person can
enlist the aid and support of others, in the accomplishment of a common task". For example,
some understand a leader simply as somebody whom people follow or as somebody who
guides or directs others, while others define leadership as "organizing a group of people to
achieve a common goal". Leadership is inspiring others to pursue your vision within the
parameters you set, to the extent that it becomes a shared effort, a shared vision, and a
shared success. Steve Zeitchik, CEO of Focal Point Strategies
4.5.1-LEADERSHIP- CONCEPT & MEANING

Leadership may be defined as a position of power held by an individual in a group, which
provides him with an opportunity to exercise interpersonal influence on the group members
for mobilizing and directing their efforts towards certain goals. The leader is at the centre of
group’s power structure, keeps the group together, infuses life into it, moves it towards its
goals and maintains its momentum.
[i]-Webster's Dictionary defines leadership as "the power or ability to lead other people,"
[ii]-Leadership is the quality of behavior of individuals whereby they guide people or their
activities in organizing efforts” — Chester I. Barnard
[iii]-“Leadership is the ability of a superior to influence the behavior of a subordinate or
group and persuade them to follow a particular course of action.” — Chester Bernard
[iv]-“Leadership occurs when one person induces others to work toward some predetermined
objectives.” — Massie
[v]-“Leadership is the ability of a superior to induce subordinates to work with confidence

and I zeal” — Koontz and ‘Donnell
[vi]-“Leadership is the process by which an executive imaginatively directs, guides and
influences the work of others in attaining specified goals.” — Theo Haimann
4.5.2-Qualities essential for a Great Leader

1-Honesty-Whatever ethical plane you hold yourself to, when you are responsible for a team
of people, it’s important to raise the bar even higher. Your business and its employees are a
reflection of yourself, and if you make honest and ethical behavior a key value, your team
will follow suit.
2-Ability to Delegate-The key to delegation is identifying the strengths of the team, and
capitalizing on them. Find out what each team member enjoys doing most.
3-Communication-Being able to clearly and succinctly describe what you want done is
extremely important. If you can’t relate your vision to your team, you won’t all be working
towards the same goal. Training new members and creating a productive work environment
all depend on healthy lines of communication. Whether that stems from an open door policy
to your office, or making it a point to talk to your staff on a daily basis, making yourself
available to discuss interoffice issues is vital.
4-Sense of Humor-Morale is linked to productivity, and the job of the leader to instill a
positive energy. That’s where sense of humor will finally pay off. Encourage your team to
laugh at the mistakes instead of crying. It’s these short breaks from the task at hand that help
keep productivity levels high and morale even higher.
5-Confidence-Keep up your confidence level, and assure everyone that setbacks are natural
and the important thing is to focus on the larger goal. As the leader, by staying calm and
confident, you will help keep the team feeling the same.
6-Commitment-If you expect your team to work hard and produce quality content, you’re
going to need to lead by example. There is no greater motivation than seeing the boss down
in the trenches working alongside everyone else, showing that hard work is being done on
every level. By proving your commitment to the brand and your role, you will not only earn
the respect of your team, but will also instill that same hardworking energy among your staff.
7-Positive Attitude-to keep your team motivated towards the continued success of the
company, keep the energy levels up. Whether that means providing snacks, coffee,
relationship advice, or even just an occasional beer in the office, remember that everyone on
your team is a person. Keep the office mood a fine balance between productivity and
playfulness.
8-Creativity-Some decisions will not always be so clear-cut. This is where creativity will
prove to be vital. It is during these critical situations that the team will look to you for
guidance and you may be forced to make a quick decision. As a leader, it’s important to
learn to think outside the box and to choose which of two choices the best option is.
9-Intuition-When leading a team through uncharted waters, there is no roadmap on what to
do. Everything is uncertain, and the higher the risk, the higher the pressure. That is where
your natural intuition has to kick in. Guiding your team through the process of your day-to-
day tasks can be honed down to a science.
10-Ability to Inspire- Acknowledge the work that everyone has dedicated and commend the
team on each of their efforts. It is your job to keep spirits up, and that begins with an
appreciation for the hard work.
4.5.3-Importance of Leadership
[i]-Good leadership is essential to business, to government and to the numerous groups and
organizations that shape the way we live, work and play.
[ii]-Leadership is an important factor for making an organization successful
[iii]- Leadership transforms potential into reality.
[iv]-Leaders are a key human resource in any organization.
[v]-Better leaders develop better employees and the two together develop better products.
[vi]-The importance of leadership in management cannot be over-emphasized. To get things
done by people, management must supply leadership in the organization. Team-work is
essential for realizing organizational goals.
[vii]- Leadership aids authority. Authority alone cannot generate a favorable attitude for
improved performance. Because of its main reliance on influence, leadership is essential for
obtaining successful work accomplishment.
[viii]- if management fails to provide able leadership, informal leadership will develop which
will eventually regulate the behavior of the employees and may come into conflict with
managerial leadership.
[ix]-It is the social skill of leadership which accomplishes organizational goals by utilizing
the potential of the people. The leader must be a ‘hero’.
4.5.4-Need for Leadership

Leadership is an important function of management which helps to maximize efficiency
and to achieve organizational goals. The following points justify the importance of
leadership in a concern.
 Initiates action- Leader is a person who starts the work by communicating the
policies and plans to the subordinates from where the work actually starts.
 Motivation- A leader proves to be playing an incentive role in the concern’s working.
He motivates the employees with economic and non-economic rewards and thereby
gets the work from the subordinates.
 Providing guidance- A leader has to not only supervise but also play a guiding role
for the subordinates. Guidance here means instructing the subordinates the way they
have to perform their work effectively and efficiently.
 Creating confidence- Confidence is an important factor which can be achieved
through expressing the work efforts to the subordinates, explaining them clearly their
role and giving them guidelines to achieve the goals effectively. It is also important to
hear the employees with regards to their complaints and problems.
 Building morale- Morale denotes willing co-operation of the employees towards

their work and getting them into confidence and winning their trust. A leader can be a
morale booster by achieving full co-operation so that they perform with best of their
abilities as they work to achieve goals.
 Builds work environment- Management is getting things done from people. An
efficient work environment helps in sound and stable growth. Therefore, human
relations should be kept into mind by a leader. He should have personal contacts with
employees and should listen to their problems and solve them. He should treat
employees on humanitarian terms.
 Co-ordination- Co-ordination can be achieved through reconciling personal interests
with organizational goals. This synchronization can be achieved through proper and
effective co-ordination which should be primary motive of a leader
4.6-Factors affecting Leadership

Before we dive into the Factors Affecting Leadership, we will first define what Leadership is.
Leadership is the art of guiding and inspiring individuals or groups towards a common goal. It
involves the ability to influence and motivate others, fostering collaboration and achieving
collective success. Effective Leadership empowers people to reach their full potential and
drives positive change within organisations and communities. Now, we will expand on the
different factors that affect Leadership.
4.6.1-Internal factors
Internal factors have a profound impact on the Types of Leadership Styles within organisations.
These factors are closely tied to the company's internal workings and culture, shaping how
leaders lead their teams
1) Organisational Culture: Organisational culture plays a pivotal role in defining Leadership
styles. A supportive and empowering culture fosters participatory Leadership, encouraging
open communication and collaborative decision-making. In contrast, a hierarchical culture may
lead to a more autocratic Leadership style, centralising decision-making authority with the
leader.
2) Team Dynamics: Team dynamics also influence Leadership approaches. A cohesive and
aligned team might benefit from a democratic Leadership style, where collaboration and mutual
respect drive decision-making. However, in teams facing conflicts, a more directive Leadership
style might be necessary to restore harmony and provide clear direction.
3) Company Values: Company values serve as a moral compass, guiding leaders' actions.
Effective leaders align their styles with these core values, inspiring trust and ethical decision-
making among their team members.
4) Communication Channels: Communication channels significantly impact Leadership
effectiveness. Leaders who maintain open lines of communication and encourage feedback
often adopt a democratic style, fostering an inclusive work environment. Conversely, relying
on top-down communication can lead to a more autocratic approach, reducing team

engagement.
5) Resource Allocation: Resource allocation decisions can also shape Leadership styles. Fair
and transparent resource allocation reflects a democratic Leadership approach, enhancing team
ownership and commitment. However, a more centralised allocation may indicate an autocratic
Leadership style, prioritising swift decisions over team involvement.
4.6.2-External factors
External factors play a crucial role in shaping the Leadership style of individuals leading
organisations or teams. These factors are beyond the direct control of the leader and are often
influenced by the external environment in which the organisation operates.
1) Economic Environment: The prevailing economic conditions significantly impact
Leadership styles. During times of economic prosperity, leaders may focus on growth,
expansion, and innovation. They are more likely to take calculated risks and invest in new
opportunities. On the other hand, in times of economic downturn, leaders may adopt a more
cautious approach, emphasising cost-cutting, efficiency, and risk management.
2) Industry Trends: Every industry experiences ongoing changes and trends that demand
adaptability from leaders. Leaders need to stay abreast of the latest developments and
innovations within their industry. Adapting to emerging trends and technologies is essential for
maintaining a competitive edge and sustaining growth.
3) Technology Advancements: Rapid advancements in technology have transformed the
business landscape. Leaders need to be tech-savvy and willing to embrace new digital tools
and solutions to enhance efficiency and productivity. Technologically competent leaders can
better navigate the complexities of the digital age and drive digital transformation within their
organisations.
4) Competitive Landscape: The level of competition in an industry also influences Leadership
styles. In highly competitive markets, leaders may adopt a more aggressive approach, striving
for market dominance and continuous improvement. In contrast, leaders in niche markets may
emphasise relationship-building, customer service, and specialisation.
5) Cultural Factors: Leaders operating in diverse cultural environments need to be sensitive
to cultural nuances. Different cultures may value different Leadership attributes and
communication styles. Effective leaders adapt their Leadership approach to align with the
cultural norms and expectations of the workforce.
4.7- Leadership styles

1-Autocratic/dictatorial/Hitler like leadership style- Under this style of leadership style,
the leader does not give any opportunity to the subordinates of being heard. He creates a
‘’take it or leave it situation’’. The subordinates feel stifled and suppressed under this
leader.
2-Authoritarian- The authoritarian leadership style or autocratic leader keeps strict, close
control over followers by keeping close regulation of policies and procedures given to
followers. To keep main emphasis on the distinction of the authoritarian leader and their
followers, these types of leaders make sure to only create a distinct professional relationship.
Examples of authoritarian communicative behaviour: a police officer directing traffic, a
teacher ordering a student to do his or her assignment, and a supervisor instructing a
subordinate to clean a workstation.
3-Paternalistic- The way a Paternalistic leader works is by acting as a father figure by taking
care of their subordinates as a parent would. In this style of leadership the leader supplies
complete concern for his followers or workers. In return he receives the complete trust and
loyalty of his people. Workers under this style of leader are expected to become totally
committed to what the leader believes and will not strive off and work independently. The
relationship between these co-workers and leader are extremely solid. One of the downsides
to a paternalistic leader is that the leader could start to play favourites in decisions.
4-Democratic- The democratic leadership style consists of the leader sharing the decision-
making abilities with group members by promoting the interests of the group members and
by practicing social equality. This style of leadership encompasses discussion, debate and
sharing of ideas and encouragement of people to feel good about their involvement. The
boundaries of democratic participation tend to be circumscribed by the organization or the
group needs and the instrumental value of people's attributes (skills, attitudes, etc.). Research
has found that this leadership style is one of the most effective and creates higher
productivity, better contributions from group members and increased group morale.
Democratic leadership can lead to better ideas and more creative solutions to problems
because group members are encouraged to share their thoughts and ideas.
5-Laissez-faire- The laissez-faire leadership style is where all the rights and power to make
decisions is fully given to the worker. This was first described by Lewin, Lippitt, and
White in 1938, along with the autocratic leadership and the democratic leadership styles. The
laissez-faire style is sometimes described as a "hands off" leadership style because the leader
delegates the tasks to their followers while providing little or no direction to the followers.
Laissez-faire leaders allow followers to have complete freedom to make decisions concerning
the completion of their work. It allows followers a high degree of autonomy and self-rule,
while at the same time offering guidance and support when requested.
6-Transactional- The transactional style of leadership was first described by Max
Weber in 1947 and then later described by Bernard Bass in 1981. Mainly used by
management, transactional leaders focus their leadership on motivating followers through a
system of rewards and punishments. There are two factors which form the basis for this
system, Contingent Reward and management-by-exception. This type of leader identifies the
needs of their followers and gives rewards to satisfy those needs in exchange of certain level
of performance. Transactional leaders focus on increasing the efficiency of established
routines and procedures. They are more concerned with following existing rules than with
making changes to the organization.
A transactional leader establishes and standardizes practices that will help the
organization reach:
 Maturity
 Goal-setting
 Efficiency of operation
 Increasing productivity
7-Transformational- A transformational leader is a type of person in which the leader is not

limited by his or her followers' perception. The main objective is to work to change or
transform his or her followers' needs and redirect their thinking. Leaders that follow the
transformation style of leading, challenge and inspire their followers with a sense of purpose
and excitement. They also create a vision of what they aspire to be, and communicate this
idea to others (their followers). According to Schultz and Schultz, there are three
identified characteristics of a transformational leader:
8-Charismatic Leadership- Charismatic leadership has a broad knowledge of field, has a
self-promoting personality, high/great energy level, and willing to take risk and use irregular
strategies in order to stimulate their followers to think independently
9-Entrepreneurial leader- This is a modern style of leadership where the leader is dynamic
and a ‘go-getter’’. This leader is constantly on the move and achieves his goals.
10-Conservative Leader- This leader believes in ‘’we will cross our bridges when we come
to them’’ philosophy. He is lazy anf shirks taking decisions.
11-Methodical Leader- This leader is a perfectionist and carries out all tasks in a very
organized manner. He follows all rules and expects the workers to go by thru rule book as
well.
12-Quasi-Professional Style- This style is adopted by a professionally qualified person, who
blends reality with rationality. This leader is best suited for fast growing organizations.
13-Empirical Style- This is a redundant style and should not be followed by a leader. Here
the leader behaves like a king and does not carry out tasks rationally. His rewards and
punishments do not match with the deed.
4.8-Followership
Followership will always be in the shadow of leadership. But there are no leaders without
followers and on-going success with weak followers will usually prove elusive. It is true that
an organization is only as good as its leaders. It is also only as good as its followers.
Followership is the actions of someone in a subordinate role. The study of followership is an
emerging area within the leadership field that helps explain outcomes. Specifically, followers
play important individual, relational, and collective roles in organizational failures and
successes. The link between leadership, management and enterprise performance is widely
understood and accepted. Improving leadership improves management and raises the
probabilities of better performance. That boards often change leaders when enterprises are
slipping confirms the importance placed on leadership. The flip side of leadership is
followership. It stands to reason that if leadership is important to performance, followership
must have something to do with it too. But curiously, followership gets only a small fraction
of the attention that leadership does.
4.8.1-Qualities of good Followers

Good followers have a number of qualities.
[i]-Judgment -Followers must take direction but they have an underlying obligation to the
enterprise to do so only when the direction is ethical and proper.
[ii]-Work ethics- Good followers are good workers. They are diligent, motivated,
committed, pay attention to detail and make the effort. Leaders have a responsibility to
create an environment that permits these qualities but regardless, it is the responsibility of the
follower to be a good worker.
[iii]-Competence- The follower cannot follow properly unless competent at the task that is
directed by the leader. It is the obligation of the leader to assure that followers are
competent.
[iv]-Honesty- The follower owes the leader an honest and forthright assessment of what the
leader is trying to achieve and how.
[v]-Courage-Followers need to be honest with those who lead them. They also need the
courage to be honest.
[vi]-Discretion-A favourite saying in World War II was “Loose lips sink ships.” Sports
teams are fond of the expression “What you hear here, let it stay here.” Followers owe their
enterprises and their leader’s discretion. Everybody who works at an enterprise has a duty of
care; indiscretion is not care, it is careless.
[vii]-Loyalty-Good followers respect their obligation to be loyal to their enterprise. Loyalty
to the enterprise and its goals is particularly important when there are problems, interpersonal
or otherwise, with a particular leader.
[viii]-Ego management-Good followers have their egos under control. They are team
players in the fullest sense of the concept. They have good interpersonal skills.
4.9-Controlling
Controlling is one of the managerial functions and it is an important element of the
management process. After the planning, organizing, staffing and directing have been carried
out, the final managerial function of controlling assures that the activities planned are being
accomplished or not. So the function of controlling helps to achieve the desired goals by
planning. Management must, therefore, compare actual results with pre-determined standards
and take corrective action of necessary.
Control can be defined as the process of analyzing whether actions are being taken as planned
and taking corrective actions to make these to confirm to planning.
[i]-According to E.F.L. Brech: “Controlling is checking performance against predetermined

standards contained in the plans with a view to ensuring adequate progress and satisfactory
performance.”
[ii]-Ernest. Dale defines as “The modern concept of control envisages system that not only
provides a historical record of what has happened and provides data that enable the chief
executive or the departmental head to take corrective steps if he finds he is on the wrong
track.”
[iii]-Controlling is defined by Koontz and O’Donnell,” As the measurement and correction
to the performance of activities of subordinates in order to make sure that enterprise
objectives and the plans devised to attain them are being accomplished.”?
[iv]-George R. Terry defined “Controlling is determining what is being accomplished, that
is evaluating the performance and, if necessary, applying corrected measures so that the
performance takes place according to plans.”
4.9.1-Objectives of Controlling:
[i]-To find out the progress of the work already completed and the work in progress.
[ii]-To compare the actual performance of the work at different stages with the particulars
indicated in the plans and policies.
[iii]-To ascertain the time within which the work is completed.
[iv]-To verify quantity and testing quality of the products.
[v]-To know the delays or interruptions, if any, in the performance of work and trace the
cause of such delay or breakdown.
[vi]-To see that causes of delay are eradicated and operations are suitably re-scheduled.
[vii]-To ensure that variations in the contents and methodology of work are remedied by
appropriate adjustments.
[viii]-To assess the cost of materials and labour used and ensure that direct costs and indirect
costs do not exceed the budget provisions.
[ix]-To pinpoint the responsibility of individuals at different levels for slackness,
indifference, or negligence, in the expected levels of performance.
[x]-To evaluate the value of the work performed and recognize the contributions of the staff
towards realization of the goals of the enterprise.
[xi]-To maintain discipline and morale in the organization.
4.9.2--Benefits of Controlling
Following are the advantages of an effective s system of control:
[i]-Control provides the basis for future action in the organization.
[ii]-Control reduces the chances of mistakes being repeated in future by suggesting
preventive methods.
[iii]-Control facilities decision making in the organization.
[iv]-It results in corrective measures being taken in the organization.
[v]- Control facilitates follow up action being taken while controlling.
[vi]-An effective system of control facilities decentralization of authority
[vii]-Control and planning go hand in hand in the organization. Control is the only means to
ensure that the plans are being implemented in real sense.
[viii]-Control points out the shortcomings of not only planning but also other functions of
management such as organizing, staffing and directing in the organization.
[ix]-The existence of a control system has a positive impact on the behaviour of the
employees in the organization.
[x]-Employees perform better as they are cautious when performing the duties in the
organization as they know that they are being watched.
[xi]-Control helps in coordination of the activities of the various departments in the
organization of the enterprise by providing them unity of direction.
4.9.3--Limitations of Controlling
A control system may be faced with the following limitations:
[i]-An organization cannot control the external factors such as government policy,
technological changes, fashion changes etc.
[ii]-Control is an expensive process
[iii]-Control system loses its effectiveness in the organization when standards of performance
cannot be defined in quantitative terms.
[iv]-The effectiveness of control mainly depends on the acceptance of subordinates in the
organization.
[v]-Employees resist control because they may feel that it will reduce or curtail their freedom
while in duty.
[vi]- Control loses its significance when it is not possible to fix the accountability of the
subordinates.
4.9.4-Principles of Controlling
The Broad functions of Control are “Get the job done despite entrepreneurial organizational
behaviour obstacles & uncertainties’’. Controlling is regarded as the core of management
process and usually considered a process which begins where all other functions end. It is
important to note that human beings have an inbuilt dislike for control, which makes it a
difficult function to manage.
The basic control principles are as follows:
[i]-Principle of setting performance standards: Managers must translate plans into
performance standards. These performance standards can be in the form of goals, such as
revenue from sales over a period of time. The standards should be attainable, measurable, and
clear.
[ii]-Principle of measuring actual performance: If performance is not measured, it cannot
be ascertained whether standards have been met.
[iii]- Principle of comparing actual performance with standards or goals: Accept or
reject the product or outcome if the key factors are not met.
[iv]-Principle of Analysing deviations: Managers must determine why standards were not
met. This step also involves determining whether more control is necessary or if the standard
should be changed.
[v]-Principle of corrective action: After the reasons for deviations have been determined,
managers can then develop solutions for issues with meeting the standards and make changes
to processes or behaviours.
[vi]- Principle of conformity with Objectives: Controls must positively contribute to the
achievement of group goals by promptly and accurately detecting deviations from plans with
a view to making corrective action possible.
[vii]- Principle of Interdependence of Plans and Controls: The principles of
interdependence states that more the plans are clear, complete and integrated, and the more
that controls are designed to reflect such plans, the more effectively controls will serve the
need of managers.
[viii]- Principle of Responsibility: According to this principle, the primary responsibility for
the exercise of controls rests in the manager charged with the performance of the particular
plans involved.
[ix]-Principal of Controls being in Conformity to Organization Pattern: Controls must be
designed so as to reflect the character and structure of plans. If the organization is clear and
responsibility for work done is well defined, control becomes more effective and it is simple
to isolated persons responsible for deviations.
[x]- Principle of Efficiency of Controls: Control techniques and approaches are effectively
detect deviations from plans and make possible corrective actions with the minimum of
unsought consequences.
[xi]- Principle of Future-oriented Control: It stresses that control should be forward
looking. Effective controls should be aimed at preventing present and future deviations from
plans.
[xii]- Principle of Individuality of Control: Control should be designed to meet the
individual requirements of managers in the organization. Although some control techniques
and information can be utilized in the same form by various types of enterprises and
managers as a general rule controls should be tailored to meet the specific requirements.
[xiii]- Principle of Strategic Point Control: Effective and efficient control requires that
attention to be given to those factors which are strategic to the appraisal of performance.
[xiv]- Principle of Exception: The exception principles whereby exceptions to the standards
are notified, should be adopted. Note must be taken of the varying nature of exceptions, as
“small” exceptions in certain areas may be of greater significance than ‘larger’ exceptions
elsewhere.
[xvi]-Principal of Review: The control system should be reviewed periodically. The review
exercise may take some or all the points emphasized in the above stated principles. Besides,
flexibility and economical nature or controls, should not be lost sight of while reviewing
controls.
4.9.5-Measures of controlling & Accountability for Performance

[i]-Accountability is a concept in ethics; it provides a framework for thinking about ethical
matters associated with responsibility and commitment. In the corporate world, accountability
occurs when a manager takes responsibility for organizational goals. The term originates in
the money lending industry of ancient Greece and stems from the word ‘reckon’. Strong
accountabilities are usually present in high-performing organizations. When managers feel
accountable for results, they are more likely to deliver results. There is a presumption of a
causal relationship; building strong accountabilities enables better performance. Nevertheless,
accountabilities are weak in many organizations, particularly in the public sector. Most
organizations find it difficult to embed the four critical pre-requisites of real accountability.
In its work with public and private sector organizations.
Accountability cannot exist without the following four:
[ii]- Clarity of goals- Managers must know what they are expected to deliver before they can
become responsible for delivery. This requires that goals be clearly specified, so that the
accountable manager and the person holding him/her responsible have a shared and agreed
understanding of what these are. In the achievement of goals it is difficult to escape the need
for measures of performance, and clear specification of targets of ‘how much’ performance
is required.
[iii]-The ability to deliver- Accountability for goal achievement can only be assumed by a
manager if they have the ability to deliver. Generally, ability relates to having the resources
required to deliver against accountabilities and these include money, time, skills and physical
capacity. A less tangible but equally important category of resource is ‘authority’. Authority
refers to the power and span of control to ‘make things happen’, both formally and
informally.
[iv]-Measurement- A manager’s performance in goal achievement must be subject to
monitoring, to confirm that the specified accountabilities are being met. Naturally, the earlier
discussed ‘clarity’ pre-requisite is an important input here, but also important is a context
(systems, structures, infrastructure, a performance management system) in which routine and
easy monitoring and measurement of performance against objectives can take place. Once a
goal has been clearly defined, translating it into something measurable is relatively easy.
However, the reality is that goals usually need to be deconstructed into short and medium
term goals - with associated measures and targets - so that performance can be regularly
monitored and kept on track. Without the capacity to evaluate performance routinely and
regularly, the person charged with holding a manager to account has no means of doing so.
Under these conditions, accountability cannot exist.
[v]-Acceptance of responsibility- Finally, managers must accept their accountabilities,
recognizing their responsibility as the person who can, must and will deliver. In nearly a
decade of observing organizations embed these pre-requisites, we note that overall
performance levels are higher when there is such ‘ownership’ of goals and objectives. Where
managers do not feel accountable, they will not act accountably. Generally, where the first
three conditions of; clarity, ability and measurability are met, this final condition emerges
naturally.
Unit 5: Salient Development and Contemporary Issues in Management

Management challenges of the 21st Century; Factors reshaping and
redesigning management purpose, performance and reward perceptions –
Internationalisation Digitalization, Entrepreneurship & innovation, Values
& ethics, Workplace diversity, Democracy and Sociocracy, Subaltern
management ideas from India.
5.1-Management challenges of the 21st Century

The future manager shall have to perform following tasks to meet future challenges:
1) Forecasting of trends
2) Management of information
3) Creativity & Innovation
4) Strategic Planning
5) Use of M.B.O & MBE
6) Use of interpersonal skills
7) Management of human relations.
8) Fulfilment of Social responsibilities.
9) Development of integrated system
10) Adoption of contingency approach
11) Art to deal with High Potentials Individuals [HIPOs]
Manager’s Success Mantras today

Managers today play a crucial role in the financial well-being of an organization and play a
bigger crucial role in success and growth of an organization, therefore, their success mantra
today are as follows:
[i]-‘’Lead by examples; Do not expect others to do what you do no practice’’.
[ii]-Go by Gut feel-‘’If you have 60 – 70% of facts right, go by your gut feel or intuition,
as by the time you have 100% facts clear, it may be too late’’.
[iii]-‘’Always look for better “Mouse trap” as it exists all the time, only that you are
unable to see it’’.
[iv]- Enhance effectivity ‘’ Managers must enhance effectivity of subordinates by tapping
their untapped potential’’.
[v]’’Values are more important than Competence, as competence can be developed but
not values’’.
5.1.1-Emerging Principles of Management

[i]-Management by Perception – Should have ability to perceive future, economic, political
and social trends and determine their impact on the organization so as to improve the future
performance.
[ii]-Principle of Social Responsibilities: - Identify and analyze the social factors which have
an impact on the organization.
[iii]-Principle of effective Organizational Development- To try and create or make a more
benign, working environment.
[iv]-Principle of effective Management Information System utilization- Should try and
exact timely and accurate information from the management information system to control
present and future operation.
[v]-Principle of effective Employee Utilization- To tap untapped potential
5.1.2-New Horizons of Management arising out of the following

Modern Managers have the responsibility to devise the management practices to meet the
new challenges and make use of the opportunities for growth of the organization.
The important areas which would create challenges for the management are as follows:
 Social Environment
 Economic Environment
 Technological Environment
 Physical Environment
 Political Environment
 International Environment
 Natural environment
5.2-Factors reshaping and redesigning Management Purpose

Factors that are Reshaping and Redefining Management are following:
[i]-Digitization, automation, and changing views of jobs/careers are disrupting the way
employees earlier viewed this.
[ii]-“NextGen work’’, is defined as part-time, freelance, contract, temporary, or independent
contract work, is predicted to continue to rise. Most Individuals and organizations are looking
for alternative ways to get work done.
[iii]-Sexual harassment allegations and accusations of workplace misconduct have dominated
the news and triggered much-needed calls for action.
[iv]- ‘Work from Home’ and issues related to security of data are major concerns for both
Management and Employees.
5.3-Performance and Reward Perception
 Performance management programs to be perceived as fair.

 They should communicate performance expectations and employee goals regularly.
 They should also give employees a sense of ownership in the goal-setting process.
 They should be able to Link goals to compensation, rewards and recognition.
5.3.1-Perceived fairness of Employee Rewards

Perceived fairness of employee rewards (or the lack thereof) is often at the root of why
employees leave organizations. The idea of fairness also determines if an employee will make
an extra effort to reach organizational goals or even the objectives of his or her own job. For
these reasons, it is vital for organizations to ensure that their employee rewards are rooted in
principles of fairness. Research demonstrates that employees’ perception of fairness and
equitable treatment is a core driver of retention, engagement and performance. In fact, unfair
treatment is corrosive. Just the perception that treatment is unfair can have devastating effects
on the organization because it:
 Creates a climate of distrust and hostility
 Erodes performance and employee commitment to the organization
 Increases counter-productive work behaviour
 Reduces the willingness of employees to help each other
 Increases unionizing activity
 Increases voluntary turnover and absenteeism
5.3.2-Variables that drive employees out of Organizations are as follows:

Most of these involve perceptions of unfair treatment relative to other employees.
 Career development opportunities
 Compensation
 Work climate
 Manager/supervisory conflict
 Lack of challenging work
 Direction of organization
 Lack of recognition
5.4-Internationalisation
Internationalization describes the process of designing products to meet the needs of users in
many countries or designing them so they can be easily modified, to achieve this goal.
Internationalization might mean designing a website so that when it is translated from
English to any language, the aesthetic layout still works properly. This may be difficult to
achieve because many words in different languages of the world, have more characters than
their English counterparts. They may thus take up more space on the page in other languages
than in English. In the context of economics, internationalization can refer to a company that
takes steps to increase its footprint or capture greater market share outside of its country of
domicile by branching out into international markets. The global corporate trend toward
internationalization has helped push the world economy into a state of globalization, in which
economies throughout the world become highly interconnected due to cross-border
commerce and finance. As such, they are greatly impacted by each other’s national activities
and economic well-being.
5.4.1-Features
[i]-Internationalization describes designing a product in a way that it may be readily
consumed across multiple countries.
[ii]-This process is used by companies looking to expand their global footprint beyond their
own domestic market understanding consumers abroad may have different tastes or habits.
[iii]-Internationalization often requires modifying products to conform to the technical or
cultural needs of a given country, such as creating plugs suitable for different types of
electrical outlets.
5.4.2-Concept of Internationalization
When a company seeks to sell its goods abroad, it may find that there are several roadblocks
in the way. Some may be technical barriers that need to be overcome; for instance, different
voltages of household electricity or different plug shapes found around the world. These may
be remedied via technological adaptations. Other barriers may be cultural, for instance in
India many Hindus do not eat beef. This means that to internationalize, McDonalds must
focus on chicken, fish, and other non-beef menu items that better conform to local custom
and culture. Being able to flexibly adapt lends itself to greater internationalization.
There are many incentives that might inspire companies to strive for internalization. For
example, in the United States companies that pay exorbitant overhead costs can shave
expenses by selling products in nations with relatively weaker currencies or in countries that
have lower costs of living. Companies may also benefit from internationalization by reducing
the cost of business via reduced labour costs that are outsourced to foreign markets where
goods will be sold. Internationalization can thus lead to product internationalization since
products sold by multi-national companies are now often used in several different countries.
5.5-Digitalization
Digitalization is not just another buzzword. It is an evolving topic of serious discussion in
society, academia, and industry. However, digitalization is often misinterpreted and
misapplied to digitization. Despite the terms being highly specialized and fundamentally
different, they are often indistinguishably used, broadly defined and inconsistently applied.
Furthermore, many business leaders mistakenly believe that digitizing processes will result in
digitalization or digital transformation. Disambiguating these concepts is not just a semantic
exercise, it is an exercise in grasping the full transformative potential of a digital mind-set
and strategy.
5.5.1-Meaning of Digitalization
Brennen and Kriess define digitalization through digital communication and digital media’s
impact on contemporary social life.
In Gartner’s IT glossary, digitalization is “the use of digital technologies to change a
business model and provide new revenue and value-producing opportunities; it is the process
of moving to a digital business.” They argue that a digital business is the result of a multitude
of digitalization processes and an essential step towards digital transformation.
5.5.2-Different Terms used

When one considers that ‘digital transformation’ once referred to ‘digitization’ and
‘digitalization’ was once called ‘computerization,’ nomenclature matters when discussing
phenomena where the terminology changes as fast as the technology does. If business leaders
think they can digitize a business or digitalize enough processes to digitally transform they
are misunderstanding the terms and missing out on opportunities to evolve, gain competitive
advantage, respond to consumer and employee expectations and demands, and become agile
businesses.
5.5.3-Difference between Digitization and Digitalization

[i]-Digitalization cannot occur without digitization.
[ii]-Digitization is the conversion of analogue to digital, whereas digitalization is the use of
digital technologies and digitized data to impact how work gets done, transform how
customers and companies engage and interact, and create new (digital) revenue streams.
[iii]-Digitization refers to the internal optimization of processes (e.g., work automation, paper
minimization) and results in cost reductions. Conversely, digitalization is a strategy or
process that goes beyond the implementation of technology to imply a deeper, core change to
the entire business model and the evolution of work.
5.5.4-Difference between Digitalization and Digital Transformation

[i]- Although business leaders often use digitalization as an umbrella term for digital
transformation, the terms are very different.
[ii]-Digital transformation requires a much broader adoption of digital technology and
cultural change.
[iii]-Digital transformation is more about people than it is about digital technology. It requires
organizational changes that are customer-centric, backed by leadership, driven by radical
challenges to corporate culture, and the leveraging of technologies that empower and enable
employees.
5.6-Entrepreneurship & Innovation

Entrepreneurship is the dynamic process of creating incremental wealth. This wealth is
created by individuals who assume the major risks in terms of equity, time, and/or career
commitment of providing value for some product or service. The product or service itself
may or may not be new or unique but value must somehow be infused by the entrepreneur by
securing and allocating the necessary skills and resources. Also, it was generally recognized
that entrepreneurs serve as agents of change, provide creative, innovative ideas for business
enterprises and help businesses grow and become profitable. Whatever the specific activity
they engage in, entrepreneurs in the twenty-first century are considered the heroes of free
enterprise. Many of them have used innovation and creativity to build huge enterprises.
Entrepreneurship is now regarded as "pioneer ship" of business. According to Peter F.
Drucker ‘’Entrepreneurship is defined as ‘a systematic innovation, which consists in the
purposeful and organized search for changes, and it is the systematic analysis of the
opportunities such changes might offer for economic and social innovation’’ The concept of
Entrepreneurship refers to a special skill or ability to mobilize the factors of production -
Land, labour & capital and use them to produce new goods and services. The history of the
early industrial development and trade and subsequent innovation in any country is largely
the history of its entrepreneurs. It describes people with the pioneering spirit, intuitive and
inspiration and a willingness to work hard and take risks. They are the energetic self-starters
who make it their mission to meet business challenges, independently and are restless in
working for someone else, for a salary
Entrepreneurship and innovation are increasingly important in all areas of business and
government. Entrepreneurial start-ups galvanise the economy by identifying new
opportunities and redirecting resources to them. Established firms innovate in order to
outmanoeuvre or respond to their competition. And in the public sector, the need for effective
policies to deal with new challenges and for increasing service delivery with declining
budgets also places a premium on innovative thinking.
5.6.1-Innovation
The concept of creativity and innovation are often used interchangeably. Although, creativity
mainly focuses on the nature of thought processes and intellectual activity used for generating
new insights / solutions to a given problem, whereas innovation broadly focuses on
implementation of ideas for restructuring, or saving of costs, improved communication, new
technology, new organizational structure and new personnel plans or programmes.
5.6.2-Factors that promote Creativity and Innovation

All organizations, talk about creativity and innovation, some actually attempt and only a few
succeed in the endeavour. Following factors help in promoting creativity and innovation:
[i]-Freedom to act and decide
[ii]-Freedom from rules
[iii]-Participative and informal management.
[iv]-Focus on face to face communication
[v]-Emphasis on regular and creative interaction
[vi]-Adoption of Delphi technique
[vii]-Flexibility for changing needs
[viii]-Free flow of information
[ix]-Decentralized procedures
[x]-Rewards and recognition
[xi]-Upward communication in the organization
[xii]-Promoting open door policy of the top level management
[xiii]-Public appreciation and acceptance of novel ideas is the specific tool of entrepreneurs,
the means by which they exploit change as an opportunity for a different business or a
different service. Entrepreneurs need to search innovation
Innovation purposefully for the sources of innovation, the changes and their symptoms that
indicate opportunities for successful innovation.
5.6.3-Benefits of learning Entrepreneurship & Innovation

[i]-It helps to define, explain and illustrate theories of business innovation and
entrepreneurship, the evolution of industries and economies, and the roles of entrepreneurs;
[ii]-Managers can develop a comprehensive and well-structured business plan for a new
venture;
[iii]-Entrepreneurs can present a persuasive business plan to potential investors or to internal
stakeholders and effectively answer probing questions on the substance of the plan; and,
[iv]-Managers learn to work effectively in multidisciplinary, cross-cultural teams,
communicating, negotiating and contributing shared contributions towards the development
of a team project.
5.7-Values & Ethics

Workplace values and ethics are established at the helm of the organization. Values and
ethics define what the company perceives as important regarding the behaviour of everyone
from the top-level executive to the employees working with consumers. Companies, large
and small, find themselves in public relations nightmares when ethical lines are crossed. The
most problematic areas are fraud, discrimination and sexual misconduct.
Ethical values and Business ethics include Honesty; Integrity; Responsibility; Quality; Trust;
Respect; Teamwork; Leadership; Corporate Citizenship; Shareholder Value; social ethics,
moral modes, a customer-centric focus, employee satisfaction, customer satisfaction and
finally leading to sustainable business.
5.7.1-Methods of Defining an Organization's Values and Ethics

The values and ethics of a business are the moral code by which the business operates. While
no business can control the actions of every employee, it can define expectations and develop
procedures for violations. Many organizations have similar areas of focus when it comes to
values and ethics.
[i]-Internal Business Practices- When it comes to internal business practices, values and
ethics refer to the expectations among employees. These practices apply to both
manager/subordinate relationships and co-worker interactions. People who work together
often develop friendships, but co-workers can also develop negative feelings about others on
the team.
[ii]-Defining Appropriate and Acceptable Behaviour- Internal business practices must

define appropriate and acceptable behaviour. Some companies explicitly forbid dating among
co-workers. Other companies have policies that prohibit alcohol at any company party or
internal function. These rules are designed to avert potential problems.
[iii]-Employee Education and Training- Some employers hold mandatory diversity or
sexual harassment training to educate employees on the most common types of inappropriate
behaviour. Education and coaching policies are growing as pre-emptive actions.
[iv]-Protocol to Deal with Problems- Should problems arise, protocol must be outlined to
deal with it. A company's values might dictate the amount of tolerance regarding
inappropriate behaviour. Where one company may have a series of warnings, additional
training and support, another company might set hard lines where disciplinary action is swift
and often severe.
[v]-Consumer Interaction with the Organization- Consumers are affected by how an
organization presents itself and its people daily. This often starts with initial contact with
consumers. The way a receptionist answers the phone at a law firm sets the tone for clients.
[vi]-Advertising Values and Ethics- Advertising has one job, which is to get consumers in
the door or to the website of a business. There are a lot of tactics advertising can use to
achieve this. Companies that stand by their values and ethics don't allow misleading
advertising. Other ways that businesses draw the line is with content.
5.8-Workplace Diversity
We live in times when global corporations and their reach across the world bring benefits in
terms of innovative HR policies as well as challenges in terms of managing the workforce
composed of diverse races and ethnicities. Further, the issue of gender diversity in terms of
more women and third gender participating in the workforce has been a trend that has
accelerated in the last two decades in India and much earlier in the developed countries.
When an organization has people of different caste, creed, religion, minorities and different
genders, then, naturally the question arises as to how to reconcile the differences between
these employees without causing too much friction in everyday interactions.
Managing diversity is important as otherwise the performance of the organization suffers and
there can be possible lawsuits and cases filed with minority cells and women’s commission
from disgruntled employees, who feel aggrieved because of instances of discrimination and
harassment based on their ethnicity or gender.
Work force diversity also means the varied personal characteristics that make the work
force of an organization heterogeneous. Organization in the past took a “Melting Pot”
approach to differences in organizations. It was assumed that people who were from different
background would automatically want to adjust with the workforce in organization but now a
day’s employees come with a set life style, values and preferences when they come to work.
The challenge for HR manager therefore, is to make their organizations more
accommodating to divers groups of people by addressing different life styles, needs, values
and work styles.
Melting Pot
The melting pot is a metaphor for a heterogeneous society becoming more
homogeneous, the different elements "melting together" into a harmonious whole.
Historically, it is often used to describe the assimilation of immigrants to the United
“जो
States. हमारे
The दिल को छूता है, उसे
melting-together हम कभीwas
metaphor नहीींinभूuse ” the
लते।by Prof. CA The
1780s. Abha Mathur
exact term
"melting pot" came into general usage in the United States after it was used as a
metaphor describing a fusion of nationalities, cultures and ethnicities in the 1908 play of
the same name.
5.8.1-Issues in Managing Diversity

One of the central issues in managing diversity is to do with the majority and the minority
perspective. Usually, it is the case in organizations that there is a predominant majority of a
particular race or ethnicity and various others in minority groups. And considering that the
most pressing issue in managing diversity arises out of the treatment of women and the
third gender, we get a sense of the issues of race and gender as the primary drivers in
managing diversity. In recent times, these issues have come to the forefront of the debate
because of greater awareness among the minority groups about their rights as well as stricter
enforcement of laws and regulations that govern workplace behaviour. Hence, it is in the
interest of the management of any firm to sensitize their workforce towards race and gender
issues and ensure that the workplace is free of discrimination against minority groups as well
as women.
5.8.2-Gender Sensitization
Gender sensitization, when compared to other issues in managing diversity, is the most
pressing issue because of the preponderance of women in the workforce as well as recent
trends that point to the emergence of this single issue as the dominant issue that is taking the
mind space of managers. The worrying aspect about this issue is that despite policies and
rules governing gender specific issues in most organizations, there is little evidence to show
that they are being followed. Hence, what is needed is a mindset change rather than more
policies and this can only be done if the workforce is sensitized to the needs of women.
5.8.3-Advantages of Workforce Diversity

[a]-Well managed diversity solves problems of conflicts in the organization as the opposing
points of view of different groups are given innovative solutions.
[b]-These diversities open up a lot of opportunities for employees to learn from each other these
skills and talents.
[c]-Organization with diverse workforce is able to cater to diverse customers with their
products and service better.
[d]-Organizations with effective diversity management programs enjoy the healthiest
organizational climate.
[e]-Finally, today we are working in the global village where the need of the hour is to
understand culturally practices, language and skills across the globe.
5.8.4-Challenges of Workforce Diversity

[a]-There are too many Cultural differences due to which conflicts and arguments arise
[b]-Gender differences also lead to discord amongst employees, particularly when the third
gender has been accepted and therefore, care should be taken that neither woman are harassed
nor transgender, at work place.
[c]-Religion/ Racial differences are also a big reason of quarrels over petty issues, which, if not
resolved in time, assume a bitter feud.
[d]-There is always Resistance to Change by employees. When there is diverse workforce, then
the resistance becomes fierce, at times.
[e]-Where employees are parochial, there is a danger that they may form close groups having
same caste, community or religion.
5.8.5-Managing Workforce Diversity

To manage the workforce diversity, the following principles should be followed by
management:
[a]-Total involvement and commitment of Top Level Management
[b]-Developing training programs for employees
[c]-Changing the employment rules to suit diverse workforce.
[d]-Developing Diversity Monitoring Mechanism
[e]-Creation of a diversity support group.
Though the situation in Indian companies has not yet reached the stage where lawsuits are
routinely brought against management for discriminatory practices, nonetheless, the trend in
recent years is towards a more vocal disapproval of such practices from industry leaders and
management consultants who repeatedly emphasize the importance of a non-discriminatory
workplace. Hence, the onus is on the management, senior and middle, to ensure that they
follow the norms that is required of them. In our opinion, the middle management and the
managers who directly interact with the teams of people have a greater role as they are the
“Sandwich” between the upper management and the workforce and hence are in a
position to follow the policies as well as enforce them.
5.9-Democracy and Sociocracy

The last place we can expect equal and humane treatment is in the workplace. In difficult
situations, equality and fairness disappear and the autocratic order returns. The workers at the
top overrule decisions made by workers below. Sociocracy, however, developed in
workplaces. Its principles and practices are designed to guarantee democracy in the most
competitive businesses and associations. These entries discuss how sociocratic democracy
ensures democracy in the workplace.
Workplace Democracy is the application of democracy in various forms such as voting
systems, debates, democratic structuring, due process, adversarial process, systems of appeal
to the workplace. Workplace democracy is implemented in a variety of ways, dependent on
the size, culture, and other variables of an organization. Workplace democracy can be
anything from direct democracy to employers asking opinions of employees without taking
into consideration their beliefs and opinions.
5.9.1-Advantages of Workplace Democracy
 Economic reason- From as early as the 1920s, scholars have been exploring the idea
of increasing employee participation and involvement. They sought to learn if
whether including employees in organizational decision-making would lead to
increased effectiveness and productivity within the organization. According to Lewin,
individuals who are involved in decision-making also have increased openness to
change. Different participative techniques can have either a stronger impact on morale
than productivity, while others have the reverse effect. Success of the employee-
owned and operated Mondragon suggests economic benefits from workplace
democracy.
 Citizenship -Workplace democracy acts as an agent to encourage public participation
in a government's political process. Skills developed from democracy in the
workplace can transfer to improved citizenship and result in a better functioning
democracy. Workers in a democratic environment may also develop a greater concern
from the common good, which also transfers to fundamental citizenship.
 Ethical justification- Making workplaces more democratic is the "right" thing to do.
Philosopher Robert Dahl claims that 'if democracy is justified in governing the state,
it must also be justified in governing economic enterprises'.
 Employee power and representation- Workers working for democratic leaders
report positive results such as group member satisfaction, friendliness, group
mindedness, 'we' statements, worker motivation, creativity, and dedication to
decisions made within an organization.
According to Buck and Villines “Sociocracy, also known as dynamic governance or
dynamic self-governance, is a method of organizing and governing ourselves using the
principle of consent.”
5.9.2-Governing Principles of Sociocracy

In a sociocratic system people are organized into groups and make decisions by consent
based on four governing principles. These are:
1. Decision Making by Consent. Decisions are made when there are no remaining
“paramount objections.” Objections must be reasoned and argued and based on the
ability of the objector to work productively toward the goals of the organization.
2. Circle Organization. The sociocratic organization is composed of a hierarchy of
semiautonomous circles. This hierarchy, however, does not constitute a power
structure as autocratic hierarchies do. Each circle has the responsibility to execute,
measure, and control its own processes in achieving its goals. It governs a specific
domain of responsibility within the policies of the larger organization. Circles are also
responsible for their own development and for each member’s development.
3. Double-Linking. Circles are connected to the next higher circle by a double link
composed of the operational leader and a circle representative. These linking circle
members function as full members in the decision-making of both their circle and the
next higher circle. The operational leader of a circle is selected by the next higher
circle and represents the larger organization in the circle’s decision-making. A
representative is selected by the circle to represent the circle interests in the next
higher circle.
At the highest level of the organization, there is a “Top Circle,” similar to a traditional
board of directors that connects the organization to its environment. Typically, these
members include representatives with expertise in law, government, finances
(including investors), community, and the organization’s mission. The top circle also
includes the CEO and representatives of general management circle. Each of these
circle members participates fully in decision-making.
4. Elections by Consent. Individuals are elected to roles and responsibilities in open
discussion using the same consent criteria used for other policy decisions. Members
of the circle nominate themselves or other members of the circle and present reasons
for their choice. After discussion, people can (and often do) change their nominations,
and the discussion leader will suggest the election of the person for whom there are
the strongest arguments. Circle members may object and there is further discussion.
For a role that many people might fill, this discussion may continue for a few rounds.
For others, this process is short when fewer people are qualified for the task. The
circle may also decide to choose someone who is not a current member of the circle.
5.9.3-Sociocracy upholds two Fundamental Principles

[i]-Organizational effectiveness, i.e. realising the organization’s aim and purpose effectively
and efficiently; and,
[ii]-The equivalence/equality between organizational members, honoring everyone’s voice.
No-one is silenced, no-one is ignored, no-one is oppressed, and no-one holds power over
another. In sociocracy there is safe, protected time for everyone to speak and to have their
voice respected and their views considered.
[a]-Features
1) Decision-making by consent, as opposed to autocracy, hierarchical authority, majority
voting and consensus;
2) Working groups / organizational units / departments are organized in circles. Separate
circles are organized in a fractal-like, nested hierarchy. This is a hierarchy of domains
of authority and not of power, control or coercion.
3) Feedback is an integral principle of all organizational activities and roles at all levels.
5.10-Subaltern Management Ideas from India.

 Subaltern is a person holding a subordinate position.
 A subaltern is someone with a low ranking in a social, political, or other hierarchy. It
can also mean someone who has been marginalized or oppressed.
 From the Latin roots sub- ("below"), and alternus ("all others"), subaltern is used to
describe someone of a low rank (as in the military) or class (as in a caste system).
 Subalterns occupy entry-level jobs or occupy a lower rung of the "corporate ladder."
But the term is also used to describe someone who has no political or economic
power, such as a poor person living under a dictatorship.
Antonio Gramsci coined the term subaltern to identify the cultural hegemony that excludes
and displaces specific people and social groups from the socio-economic institutions of
society, in order to deny their agency and voices in colonial politics. Historically
marginalized groups learnt to become professional managers. A manager in a colonial work
setting, focused specifically on the aspirational quality of professional identity, and on the
forms of subordination enmeshed in organizational work. The autobiography of Prakash
Tandon in a book titled ‘Beyond Punjab’ describes the career of Prakash Tandon in the
multinational Lever Brothers India. He eventually became its first Indian Chief Executive and
a respected public figure. This concept provided a full understanding of how managerial
identity was constituted in colonial work settings. Implications for contemporary
organizations and professional identity in postcolonial societies such as India.
"This is a golden period for Subalterns because of the new market economy, material
markers are replacing social markers. Subalterns can buy rank in the market economy.
India is moving from a caste-based to a class-based society, where if you have all the
goodies in life and your bank account is booming, you are acceptable."
5.10.1-Some Success Stories of Subalterns

[i]-Kalpana Saroj – from a child bride to $112-million CEO
Serial entrepreneur Kalpana Saroj has tried her hand at producing films, real estate, and is
currently the Chairperson of Kamani Tubes, a Mumbai-based company. Born in a village in
Vidarbha to a police constable, Kalpana got married at the age of 12. Living in a Mumbai
slum, she was subjected to physical abuse by her husband’s family members. She left her
husband and returned to her village with her father, only to face social ostracisation.
Undeterred, Kalpana returned to Mumbai and started working while living with her uncle.
With some saving and seed funding she ventured into a small furniture business. This was the
beginning of her entrepreneurial journey, which continues even today. In 2001, she took over
Kamani Tubes, and turned it into a profitable company. According to estimates, her personal
assets are worth $112 million.
[ii]- Raja Nayak – from running away from home to helming Rs 60-crore businesses
Raja Nayak was born to Subaltern parents, who had migrated from a remote village in
Karnataka to Bengaluru. His family lived in poverty, with his father’s unsteady income and a
family comprising four siblings. When Raja was 17, he got inspired by an Amitabh Bachchan
film and ran away to Mumbai with the hopes of becoming a real-estate baron. While that
venture did not end well with Raja returning home heartbroken, it also gave Raja the courage
to keep trying.
He dropped out of school and started with selling t-shirts, and later diversifying into
Kolhapuri chappals and footwear. With an ample appetite for risks and diversification, today
Raja has a total turnover of Rs 60 crore from enterprises across diverse sectors including
international shipping and logistics, corrugated packaging, packaged drinking water,
wellness, and chia rice products. He currently serves as President of the Karnataka chapter of
Dalit Indian Chamber of Commerce and Industries (DICCI), and runs schools and a college
under the banner of Kalaniketan Educational Society for the underprivileged and
disadvantaged sections of society.
5.10.2-Summary of comprehensive Competencies required by Subalterns

Quality Systematic Business Strategic The ability to
performance Planning storytelling thinking skills build trust
Management Strong Delegation and Creativity and Leadership
skills communication Empowerment Innovation Qualities
skills
Decision The competency Management of Active listening The ability to
Making to turn Information make work
Capabilities information into explosion by meaningful
action filtration
The ability to The ability to The ability to The ability to The ability to
align the transform dust inspire and share clear assess
employees with into gold by convince others messages and employees’
the company discovering to perform make complex strengths and
values and novel ideas ideas easy weaknesses
goals
Initiative Persistence Problem solving Recruiting skill Creativity
Risk Taking Risk Influencing Vision and Persuasion

Management abilities Purpose skills
5.10.3-Desired Attitudes required by Subalterns

[i]-Strong Work Ethic
[ii]-Sense of accomplishment
[iii]-Passion
[iv]-Flexibility
[v]-Bravery
[vi]-Innovation & Creativity

[vii]-Integrity, Honesty and Dignity
[viii]- Timely decisions
[ix]- Admitting mistakes
[x]-Capacity to rebound quickly from setbacks
[xi]-Moving out of comfort zone
CASE STUDY METHOD
A brief note for the benefit of students, to enable them to solve the case studies
methodically.
Case study method was for the first time introduced by Christopher Longdell in year
1871 at Harvard Law School. It came to be used by Management Institutes after World-
War -II.
Method to read & comprehend a case study:
1- Simply read what is given in the black and white, as a warm-up for grasping the
problem situation.
2- Read in between lines, as everything cannot be stated in the case study, in black &
white.
3- Make assumptions, deductions and intuitive assessment of the case. Only then,
begin to follow the case study format, once a blue print is ready in your mind.
Following format is followed for solving case studies: -

[A]-Identification of Problem Situation- The case is read out carefully to identify the
problem[s] that surround[s] the case. All those should be listed and intelligently analyzed
in the light of the case.
[B]-Central Issue- Effort should be made to find out if there is a big enough issue to be
taken as the central issue due to which all other problems exist.
[C]-Related Issues- Around the central issue, there will always be very many related
issues that complicate the situation more and more. All those should also be listed properly.
[D]-Analysis of Central and Related Issues – Now the central and all related issues
should be examined and analyzed, in depth to understand the crux of the matter.
[E]-Recommendation and Solutions- In the light of the, in depth, analysis made in the
step-D, appropriate recommendations and solutions should be given.
DOs & DON’Ts

1- Never write in first person, even if the question states ‘’If you were the concerned
person’’.
2- Case study is always answered in third person.
3- Never make general statements, which are a mere opinion.
4- Include as many as Management related issues, as possible.
5- Give your case study answer a professional touch.

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Set tough goals and do not stop until you get there.

मींद़िल उन्ी ीं को दमलती है , दजनके सपनोीं में जान होती है !!

NOTES-MANAGEMENT PRINCIPLES & APPLICATIONS-NEP-2023

B.Com (H) – Semester-I, Management Principles & Applications

Unit 4: Directing and Controlling

Unit 5: Salient Development and Contemporary Issues in Management

1.1-Business-Meaning, Concept and Nature

 The singular usage to mean a particular organization

1.2-NEED & CONCEPT OF MANAGEMENT

1.2.3- Significance/Importance of management

1.2.4-Essence of Managership by Peter Drucker

1.3 -Coordination- as Essence of Management

1.3.2-Techniques of achieving Coordination

1.4.2- Management Process School

1.4.3- Bureaucracy Theory of Management

This was developed by Max Weber. He stated that a bureaucratic organization is

[i]-Limitations of Classical Theories:

B-1.5- NEO- CLASSICAL THEORIES:

[b]-Various limitations of this School of Thought are:

1.5.2- The Decision Theory

1.5.3- The Management Science School

1.5.4- The System Theory (Developed in 1950):

1.5.6-The Behavioral Approach

1.5.7- Management by Objectives

1.5.8-Business Process Reengineering

15.9-The Porter's Five Forces Framework

1.5.11-The Fortune at the Bottom of the Pyramid

[i]-Eight attributes according to them are:

1.6-OVERVIEW OF MANAGERIAL FUNCTIONS

[ii]-Luther Gulick: Another significant researcher identified following functions of

[iii]-Henry Fayol : gave following Five Functions of Management.

[iii]-Continuous process: Coordination is a non-ending function. It is a continuous function

1.7--Characteristics of a good Manager

(vii) Information seeking-An entrepreneur undertakes personal research on how to

1.8-Roles of Managers, as given by Mintzberg

1.8.1-A Manager is an ‘organization builder’. It can be viewed as a quality or a trait of a

Some characteristics even include negative traits such as:

1.8.2-The role of the top management can be summarized as follows:

1.8.3-Middle Level of Management

1.8.4-Lower Level of Management

in a global environment, Capitalizes on opportunities and

Unit II: Planning

2.1-Organizational objective Setting

Why the Organization is set-up

2.1.1-Method to set Organizational Objectives

[iii]-Managing the Stakeholders - Organizations with a flatter hierarchy can have

2.2.1-Characteristics of Decision Making:

 It aims at choosing suitable course of action from amongst alternatives.

2.2.3-Steps in Decision Making Process [DMP]

2.3-Techniques for individual and group Decision-Making

2.4-Planning vis-à-vis Strategy – Meaning

2.4.1-Strategic Planning Process

[i]-Strategy Formulation- In the process of formulating a strategy, a company will first

2.4.2-Benefits of Strategic Planning

2.5-Environment (certainty, risk, uncertainty)

2.5.1-Factors affecting the Competitive Position are

2.5.2-Techniques of Environmental Analysis

[ii]-Physical resources - your location, building, equipment

[iii]-SWOT vs. TOWS

[iv]--BCG Growth Matrix

Figure: BCG Matrix

[a]-Limitations of BCG Matrix

information about competitors every manager continually receives." As a result, traditional

2.6-Elements of business Environment