MODULE 1: INTRODUCTION Management and entrepreneurship for it industry

MANAGEMENT AND ENTREPRENEURSHIP FOR IT INDUSTRY-17CS51

MODULE-1: INTRODUCTION

Topics:
Introduction : Meaning, nature and characteristics of management, scope and functional areas
of management, goals of management, levels of management, brief overview of evolution of
management. Planning- Nature, importance, types of plans, steps in planning.
Organizing- nature and purpose, types of organization,Staffing-meaning,process of recruitment and
selection.

Meaning

Management in business and organizations is the function that coordinates the efforts of
people to accomplish goals and objectives using available resources efficiently and
effectively.

 George R Terry defines Management can be defined as “The process consisting of

planning, organizing, actuating, and controlling performed to determine and
accomplish the objectives by the use of people and resources”.
 According to Peter Drucker, "Management is a multi-purpose organ that manages
business and manages managers and manages workers and work”.

 According to Mary Parker Follett Management is “art of getting things done through
people”.
 Two weakness of this definition are:

1. Management is not completely an art. Management is not merely application of

knowledge, but also acquisition of knowledge.
2. It doesn’t throw light on various functions of manager.

Importance of management:

1. Management is a critical element in the economic growth of a country.

By bringing together the four factors of production as men, money, material and
machines, management enables a country to experience a substantial level of economic
development. Peter Drucker rightly observes that without management, a country’s
resources of production remain resources and never become production.

2. Management is essential in all organized efforts, be it a business activity or any other

activity.
 Principles of management are not just for managing business organization; they
are also applied to various other types of organizations such as educational, social,
military and government.

3. Management is the dynamic, life-giving element in every organization.

Management is an element that co-ordinates current organizational activities and
plans future ones. It arbitrates disputes and provides leadership. it adapts the organization
to its environment and often shapes the environment to make it more suitable to the
organization.

Nature and

Characteristics Nature

of management:

1. Management is continuous process.

2. Management is a creative process.
3. Management applies to any kind of organization.
4. Management applies to managers at all organizational levels.
5. All the managers carry out the managerial functions of planning, organizing, staffing
leading and controlling.
6. Management is concerned with productivity, which implies effectiveness and efficiency.
7. Management attain the skills and knowledge to achieve the objective set by an
enterprise.

Characteristics of management:

1. Management is Intangible (not measurable and cannot be seen) but its presence can be
felt by efforts in the production of sales and revenues.
2. Management is group activity and it involves getting things done with and through
others.
3. Management is goal oriented and all actions of management are directed at achieving the
specific goals.
4. Management is science as well art and emerging now as a profession.
5. Management is multidisciplinary and it has contributions from engineering, sociology,
psychology, economics, anthropology etc.

Scope

The management is a must for every organization which encompasses for profit as well as non-
profit organizations, government as well as non-government organizations, and service as well as
manufacturing organizations. Important areas of life are:
 Developing management
  Distribution management
 Financial management
 Marketing management
 Personnel management
 Production management
 Office management
 Transport management
 Purchase management
 Sales management
 Supply chain management
 Business management( like Hospital management, Hotel management, Educational
institution management etc)

Functional areas of management OR Management functions OR the Process of

management

Different Authors classify the management activities as different types from 4 to 7 types. Mainly
we have 5 essential and well accepted functions. They are:

1. Planning
2. Organizing
3. Staffing
4. Directing(leading) and
5. Controlling.

Catch word “POSDCORB” stands for Planning, Organizing, Staffing, Directing, Coordinating ,
Reporting and Budgeting.

Planning: Is a function that determines in advance what should be done. It involves:

 Process of determining the objectives and charting out the methods of attaining those
objectives.
 Determination of what, where and how it is to be done and how the results are to be
evaluated.
 Done not only for the organization as a whole but every division, department or sub-
unit of the organization.
 A function which is performed by the managers at all levels-top (which may be as long
as five years), middle (shorter may be week) and supervisory.

Organizing: Organize a business is to provide it with everything useful to its functioning.

 Which may be divided into two main sections namely the human organization and
material organization.
  Once the plans have been developed and the objectives are established they must design
and develop a human organization to carry out plans successfully.
 Defined as a structure which results from identifying and grouping work, defining and
delegating responsibility and authority and establishing the relationships.

Staffing: Is a function involved in building the human organization.

 Involves building the right person for the right job.

 Fixes responsibility for a manager to find the right person for the right job and ensures
enough manpower for the various positions needed for the organization which involves
selection and training of future managers and suitable system of compensation
 Different objectives require different kinds of organizations.

Directing: directing or leading the people towards the defined objective.

 Is the next step after planning, organizing and staffing. Involves three sub-functions
namely communication ,leadership and motivation.
 Communication is the process of passing information from one person to another .
 Leadership is the process of guiding and influencing the work of his subordinates by the
manager.
 Motivation is the arousing the desire in the minds of the workers to give their best to
their enterprise.
 Two types of motivation: financial and non-financial
 Financial: takes the form of salary, bonus, profit-sharing etc.
 Non-financial:takes the form of job security, opportunity of advancement,
recognition, praise etc.

Controlling: Measuring and correcting the activities of sub-ordinates. It has 3 elements

 Establishing the standards of performance.

 Measuring current performance and comparing it against the established standards.
 Taking action to correct any performance that does not meet those standards.

Management and administration

1. Management involves doing which is a lower level function concerned with the execution
and direction of policies and operations. No two separate personnel are required. Each
manager performs both activities and spends part of his time in administering and part of
his time managing.
2. Administration involves thinking which is a top level function which centers around the
determination of plans, policies and objectives of a business enterprise.
 3. Management is a generic term which includes administration Manager is the term used in
the business enterprises.
4. Administration is a term used in the governance of non-business institutions (such as
government, army etc).

Characteristics Administration Management

1.Main functions Planning, Organizing and staffing Leading, motivation and
controlling
2.Status Acts as owner Acts as an agency
3.Skills Requires good administrative Requires more technical skills
skills
4.Level in the Top level Lower level
organization
5.Position Managing director, CEO etc Managers, Supervisors, foremen
etc
6. Objectives Makes the policies objectives and Implements the plans and
goals to be achieved. policies.
7.Involvement No direct involvement in Directly involves in the
production or services execution of plans and achieve
goals.

Roles of Management

Henry Mintzberg after a careful study has identified 10 different roles of managers under three
broad categories:

1. Interpersonal roles:

a) Figure head: performs duties of ceremonial nature such as greeting the touring
dignitaries, attending the wedding of an employee etc.
b) Leader: every manager must motivate and encourage their employees, try to reconcile
their individual needs with the goals of the organization.
c) Liaison: in this role, every manager must develop contacts outside the vertical chain of
command to collect information useful for the organization.

2. Informational roles:

a) Monitor: must perpetually scan his environment for information interrogates his
liaison and subordinates to get any solicited information useful for the organization.
b) Disseminator: manager passes the privileged information directly to the subordinates
who otherwise would not have access to it.
c) Spokesman: may require to spend a part of the time in representing the organization
before various outside groups having some stake in the organization such as
 government officials, labour unions, financial institutions.

3. Decisional roles:

a) Entrepreneur: in this role the manager proactively looks out for innovation to
improve the organization by means of means creating new ideas, development of new
products or services or finding new uses for the old ones.
b) Disturbance handler: must act like a fire-fighter to seek solutions to various
unanticipated problems.
c) Resource allocator: must divide work and delegate authority among his subordinates.
d) Negotiator: must spend considerable time in negotiations.

Example: the foreman negotiating with the workers for the grievance problems.

Levels of Management:

 In any organization, there are three levels of management the first-line, middle and top
level management.
 Top management: consists of board chairman, the company presidents, and the
executive vice-presidents.
 Middle management: consists of vast and diversified group consisting plant
managers, personnel managers and department heads.
 First-line management: is made up of foreman and white collared supervisors.

 The manager is required to possess 3 major skills: Conceptual skill which deals with
ideas, human relations skill which deals with people and technical skill which deals
with things.

1. Conceptual skill: deals with the ability of manager to take a broad and farsighted view
of organization and its future, ability to think in abstract, his ability to analyze the
forces working in a particular situation.
2. Technical skill: are managers understanding of the nature of the job that people under
him have to perform. Refers to the person’s knowledge and proficiency in any type of
process or technique. There are three things a manager must know about technical
skills. These are:

 Which skills should be employed in his particular enterprise?

 What is the role of each skill employed?
 How are different skills interrelated?

3. Human relations skill: is the ability to interact effectively with people at all levels and
the manager should have sufficient ability to
  To recognize the feelings and sentiments of others.
 To judge the possible reactions to and the outcomes of various courses of
action he may undertake.
 To examine his own concepts and values which may enable him to develop
more useful attitudes about himself.

Brief Overview Of Evolution Of

Management
Evolution of the management can be studies as

1. Early classical approaches represented by

1. Scientific management
2. Administrative management and
3. Bureaucracy
2. Neoclassical approaches represented by
1. Human relations movement and
2. Behavioural approach

3. Modern approaches represented by

1. Quantitative approach
2. Systems approach and
3. Contingency approach

Early classical approaches

1) Scientific management:

 Fredric Winslow Taylor (1856-1915) is considered as the Father of Scientific

Management.
 Conducted as a series of experiments in three companies Midvale steel,
Simonds Rolling machine and Bethlehem Steel while serving as a chief
engineer of Midvale steel company for a period of 26 years.
 Taylors contributions under scientific management

i. Time and motion study: started time and motion study under which each motion of
job was timed out with the help of stop watch of doing job was found and shorter
and fewer motions were developed and amongst these the best job was found which
replaced the old rule of thumb knowledge of the workman.

ii. Differential payment: new payment plan called the differential piece work was
introduced in which he linked incentives with production. Under this plan a worker
received low piece rate if he produced the standard number of pieces and high rate if he
 surpassed the standard which would motivate the workers to increase production .
iii. Drastic reorganization and supervision: introduced two new concepts (i) separation
of planning and doing and (ii) functional foremanship. Taylor suggested that the work
should be planned by the foreman and not by the worker and there should be as
many foreman as there are special functions involved in doing a job and each of these
foreman should give orders to the worker on his specialty.

iv. Scientific recruitment and training: Taylor emphasized the need for scientific
selection and development of the worker. He says that management should develop
and train every worker to bring out his best facilities and enable him to do a higher,
more interesting and more profitable class of work than he has done in past.

v. Intimate and friendly cooperation between the management and the workers:
Taylor argued that both the management and the workers both should try to increase
production rather than quarrel over profits which would increase the profits to such an
extent that labor and management would no longer have to compete for them and
should saw common interest in increasing productivity.

Contributions and limitations of scientific management:

Contributions:
1) Time and motion studies have made us aware that the tools and physical
movements involved in a task can be made more efficient and rationale.

2) Scientific selection of workers has made us recognize that without ability and
training a person cannot be expected to do job properly.

3) The importance that scientific management has given to work design has
encouraged the mangers to do one best way of doing the job.

4) Taylor’s scientific management approach has evolved into what is now generally
called Job engineering. This is concerned with product, process and tool design,
plant layout, standard operating procedures, work measurement and standards,
work methods and human-machine interactions.

Limitations:

1) Taylors belief that economic incentives are strong enough to motivate workers for
increased production proved wrong as there are other needs such as security, social
needs, or egoistic needs rather than financial needs.

2) Taylors time and motion study is not accepted as entirely scientific as there is no
best way of doing the same job by two individuals as they may not have same
rhythm, attention and learning speed.

3) Separation of planning and doing the greater specialization inherent in the system
 tends to reduce the need for skill and greater monotony of work.

4) Advances in methods and better tools and machines eliminated some workers who
found it difficult to get other jobs and caused resentment among them.

2).Administrative management:

Henri Fayol’s 14 principles of management as general guides to the management process

and management practice.

1. Division of work: In the management process produces more and better work with the
same effort as the various functions of management like planning, organizing, directing
and controlling cannot be performed efficiently by a single proprietor or by a group of
directors .They must be entrusted to specialists in related fields.

2. Authority and responsibility: Implies that the manager should have the right to give
orders and power to exact obedience and the manager also may exercise formal
authority and also personal power.

3. Discipline: Absolutely essential for smooth running of the business and discipline means
the obedience of authority, observance of rules of rules of service and norms of
performance, respect for agreements, sincere efforts of completing the given job, respect
for superiors. Best means of maintaining discipline are
a. Good supervisors at levels.
b. Clear and fair agreements between the employees and the Employer.

4. Unity of command: This principle requires that each employee should receive
instructions about a particular work from one superior only if reported to more than one
superior would result in confusion and conflict of instructions.

5. Unity of direction: Means that there should be complete identity between individual
and organizational goals on the one hand and between the departmental goals on the
other hand and both should not pull in different directions.

6. Subordination of individual interest to general interest: In a business concern, an

individual is always interested in maximizing his own satisfaction through more
money, recognition, status etc. which is against the general interest which lies in
maximizing production and hence there is a need to subordinate the individual interest
to the general interest.

7. Remuneration: Remuneration paid to the personnel of the firm should be fair and
should be based on general business conditions such as cost of living, productivity of
the concerned employees and the capacity of the firm to pay and the fair remuneration
increases workers efficiency and morale and fosters good relations between them and
management.

8. Centralization: The degree of centralization or decentralization of authority must be

decided on the basis of nature of the circumstances, size of the undertaking, the type of
 activities and the nature of organizational structure.

9. Scalar chain: Scalar chain means the hierarchy of authority from the highest executive
to the lowest ones for the purpose of communication and states superior-subordinate
relationship and the authority of superiors in relation to subordinates at various levels and
the orders or the communications should pass through the proper channels of authority
along the scalar chain.

10. Order: Putting things in order needs effort and the management should obtain
orderliness in work through suitable organization of men and materials and the
principle of right place for everything and for every man should be observed by the
management which requires the need for scientific selection of competent personnel,
correct assignment of duties to personnel and good organization.

11. Equity: Means equality of fair treatment which results from a combination of kindness
and justice and employees expect management to be equally just to everybody which
requires managers to be free from all prejudices, personal likes or dislikes.

12. Stability of tenure of personnel: Is necessary to motivate workers to do more and

better work and they should be assured security of job by management which if not
provided they have fear of insecurity of job, their morale will be low and they cannot
give more and better work.

13. Initiative: Means freedom to think out and execute a plan which when provided to the
employees leads to innovation which is the landmark of technological progress.
Initiative is one of the keenest satisfactions for an intelligent man to experience and
hence mangers are required to give sufficient scope to show their initiative.

14. Esprit de corps: Means team spirit which should be created b y the management among
the employees and is possible only when all the employees pull together as a team and
there is scope for realizing the objectives of the concern and there should be harmony
and unity among the staff.

Contributions and limitations of administrative management:

Contributions:

1. Fayol’s principles met with wide spread acceptance among writers on management
and among managers and managers themselves.
2. Drawing inspiration from Fayol’s a new school of thought known as the
Management Process School came into existence.

Limitations:

1. Fayol’s principle of specialization lead to the following dysfunctional

consequences:
 Leads to the formation of small work groups with norms and goals with
each individual carrying out his own assigned part without bothering
about the overall purpose of the organization as a whole.
  Results in the dissatisfaction amongst workers as it does not provide them
the opportunity to use all their abilities.

2. Fayol’s principles are based on a few case studies only and have not been tested
empirically and whenever tested have fallen like autumn leaves.

3. These principles are often stated as unconditional statements of what should be

done in all circumstances when what is needed are conditional principles of
management.
4. The principles of Fayol’s such as the principles specialization, chain of command,
unity of direction and span of control result in the mechanistic organizational
structures which are insensitive to employees Social and psychological needs.

5. These principles are based on the assumption that the organization are closed
systems but in reality organizations are open systems and hence the rigid structures
so created do not work well under stable conditions.

3).Bureaucracy
German scientist Max Weber is considered to be the father of Bureaucracy. Made a study
on various business and government organizations and distinguished three types of
administration amongst them. Leader oriented tradition oriented and bureaucratic.

a) Leader oriented: Administration is one in which there is no delegation of

management functions and all employees serve as loyal subjects of a leader.
b) Tradition oriented: all managerial positions are handed down from generation to
generation and who are you rather than what you can do becomes the primary
function.
c) Bureaucratic oriented: is based on the persons demonstrated ability to hold the
position and no person can claim particular position either because of his loyalty to
the leader or because the position has been traditionally held by members of his
family and the people earn positions because they are presumed to be best capable
of filling them.

Important features of Bureaucratic Administration

1. There is an insistence on following standard rules: authority in an organization

should be governed by standard rules but not by personal preferences.

2. There is a systematic division of work: this increase production by improving

efficiency and saving time in changing over from one job to another.

3. Principle of hierarchy is followed: each lower officer should be under supervision

of higher officer.
 4. It is necessary for the individual to have knowledge of and training in the
application of rules: because these form the basis on which legitimacy is granted to
his authority.

5. Administrative acts, Decisions and rules are recorded in writing: this makes the
organization independent of people besides making people’s understanding more
accurate.

6. There is a rational personnel Administration: people are selected based on their

credentials and merit and also paid according to their position in the hierarchy.
Promotions are made systematically.
Contributions and limitations:
1. Over conformity to rules: stick to rules to avoid penalties.
2. Buck-passing: in this approach employee’s initiative is stifled. so they can shift
decisions or postpone.
3. Categorization of queries: here queries are categorized. On receiving query the
employee’s job is to determine category and tick the reply applicable to that
category.

4. Displacement of goals: this takes place when an organization substitutes for its
legitimate goal other goal for which it was not created due to some reasons.
5. No real right to appeal: clients of this approach are not satisfactory since they have
no real right to appeal.
6. Neglect of informal groups: this approach ignore the existence of informal groups
which usually carry out a big chunk of organizational work.
7. Rigid structure: precise description of roles and over conformity to rules leads this
approach rigid.
8. Inability to satisfy the needs of nature individuals: a mature individual wants
independence, initiative, self control, opportunity to use all his skills and
information to plan his future. But this approach controls individual to work against
these needs.

Neo-classical approach:

1). The human relations movement:

Emerged to achieve complete production efficiency and workplace harmony Was
developed in helping managers to deal more effectively with the people side of their
organizations. Came into existence due hawthorns experiments conducted by Elton Mayo
and his colleagues at the western electric company’s plant in Cicero, Illinois from 1927 to
1932 which employed 29,000 workers to manufacture telephone parts and equipment.
Elton Mayo’s experiments can be divided into following four parts:
1. Illumination experiments
2. Relay assembly test room
 3. Interviewing program
4. Bank wiring test room

1. Illumination Experiments: Was considered to be the first phase of study

Productivity was correlated with illumination, tested, experiments were done on a
group of workers and the productivity was measured at various levels of illumination for
the first time and two groups were formed and set up in different buildings for the second
time this time one group called the control group worked under the constant level of
illumination and the other group called the test group called worked changing levels of
illumination.
Results: When post-productivity of two groups were compared, it was found that
illumination affected production only marginally.

2. Relay assembly test room:

Was considered to be the second phase of study. In this phase, the object of study
being broadened, along with the impact of illumination on production, other factors such
as the length of the working day, frequency and duration of rest pauses and other physical
conditions were taken into consideration.
A group of six women workers, who were friendly with each other, were
selected for the experiment, were told about the experiment, were made to work in a
informal atmosphere with the supervisor researcher in a separate room who acted as a
friend, philosopher and guide. Several variations were made in the working conditions
during the study, to find the most ideal combination for production.
Results: the researchers found that the production group had no relation with the working
conditions which went on increasing and stabilized at a high level even when all the
improvements were taken away and the poor pre-test conditions were reintroduced and
something else was responsible for this.
 Feeling of importance among girls as result of participation in the research and the
attention they got.
 Warm informality, tension-free interpersonal and social relations amongst small
groups and relative freedom from strict supervision and rules lead to these results .
 High group cohesion among girls.

3. Interviewing programme:
The knowledge about the informal group processes which were accidentally
acquired in the second phase made researchers design the third phase. They wanted to
know about the basic factors responsible for human behaviour at work Method used to
know the basic factors: More than 20000 workers were interviewed. Questions were asked
relating to the type of supervision, working conditions, living conditions and so on.
Indirect questions were asked to the workers and the workers were free to talk about their
favourite topics related to their work environment.
Results: the study revealed that the workers social relations inside the organization had an
unmistakable influence on their attitudes and behaviour and about the all-pervasive nature
of informal groups on their culture and the production norms which the members were
forced to obey.

4. Bank wiring observation room:

Can be considered as the fourth phases of experimentation. Involved in-depth observation
of 14 men making terminal banks of telephone wiring assemblies, to determine banks of
telephone wiring assemblies, to determine the effect of informal group norms and formal
economic incentives on productivity.
Results: Study revealed that group evolved its own production norms for each
individual worker which were much lower than the those set by the management and the
workers would produce that much and no more thereby defeating the incentive system.
This artificial restriction of production saved workers from a possible cut in their piece
rates and protected weaker and slower workers from being reprimanded or thrown out of
jobs. Class of workers-production rate Called foolish-was more than the group norm were
isolated, harasses or punished by the group in the several ways and were called rate
busters. Those who were too slow were nicknamed as chisellers. Those who complained
to the supervisor against their co-workers were called squealers.

Contributions and limitations of the human relations movement:

Contributions:
The contributions can be summarized as follows:
1. A business organization is not merely a techno-economic system but is also a social
system and hence it is important to provide social satisfaction to the workers to
produce goods.
2. There is no correlation between improved working conditions and high production.
3. A workers production norm is set and enforced by his group and not by the time and
motion study done by the industrial engineer and those deviating from the group
were penalized by the co-workers.
4. Worker does not work for money only and also nonfinancial awards affect his
behaviour and limit the economic incentive plan.
5. Employee centred, democratic and participative style of supervisory leadership is
more effective than task centred leadership.

Limitations:
1. Is swing in the opposite direction and is as much s incomplete as the scientific
management and administrative management. The human relations writers saw only
the human variable as critical factor and ignored other variables.
2. The implicit belief that every organization can be turned down into one big happy
family which could satisfy everybody was not correct as every organization is made
 up of a number of diverse social groups with incompatible values and interests.
3. This approach emphasizes the importance of symbolic rewards and underplays the
role of material rewards.
4. Approach provides an unrealistic picture about informal groups by describing them
as major source of satisfaction for industrial workers and it is assumed that many
workers do not come to the factory to seek affiliation and affection.
5. Approach is in fact production oriented and not employee oriented as it claims to be.
Many of its techniques (running canteens, social groups) trick workers into false
sense of happiness.
6. The leisurely process of decision making of this approach cannot work during
emergency,
7. Makes unrealistic demand on the superior and wants him to give up is desire.
8. Approach is based on wrong assumption that satisfied workers are more productive
workers because attempts to increase output by improving working conditions and
the human relations skills of a manager generally in the dramatic productivity
increases that are expected.

2).Behavioral approach:

 This version is an improved and a more mature version of the human relation
approach management. Douglas McGregor, Abraham Maslow, Kurt Levin, Chester
Bernard, Mary Parker Follett, George Humans, Renis Likert, Chris Argyris, and
warren Bennis are some of the foremost behavioral scientists who made significant
contributions to the development of the behavioral approach to management.
 These scientists were rigorously trained and used more sophisticated research
methods. These people came to be regarded as the behavioral scientists rather than the
members of the human relations school.
 The findings of these people have enormously helped in understanding the
organizational behavior.
 These do not believe in the highly classical organization structures which were built
around the traditional concepts of hierarchical authority, unity of command, line and
staff relationships and narrow spans of control.
 They believe that lot of domination takes place by the managers which causes
subordinates to become passive and dependent on them.
 These scientists prefer more flexible organization structures and jobs built around the
capabilities and aptitudes of average employees.
Modern approaches
1) Quantitative approach:
Gained momentum during the second world war when UK and USA were desperately
trying to seek the solutions to a number of few, complex problems in warfare.

Interdisciplinary group of scientists were engaged for this purpose were known as
operations research(OR) teams because their work consisted of analyzing operations and
carrying out applied scientific research which were the same which were used for solving
problems in the industry.

Solving problems in the industry using OR techniques

1. A mixed team of specialists from relevant disciplines is called to analyze he

problem and to propose a course of action to the management.
2. The team constructs the a mathematical model t simulate the problem which in
symbolic terms all relevant factors that bear the problem, and the interrelationship
amongst them
3. By the changing the values of the variables in the model generally with a computer
and they team can determine the effect of each change. Thus we can conclude that
the focus is on quantitative approach is based on decision making with quantitative
tools and techniques for making objectively rational decisions.
2) Systems approach:
 A system is a set of independent parts: Which together works as a single unit and
performs some function. Similarly an organization can also be considered to be
composed of 4 independent parts namely task, structure, people and technology.

1. Structure subsystem: refers to the formal division of authority and

responsibility, communication channels and workflow.
2. People subsystem: refers to the employees with their motives, attitudes
and values and the informal organization.
3. Technology subsystem: refers to the tools and equipment as well as
techniques which are used by the organization to perform the task.

 Concept of considering the system as a whole: Means that no part of the system
can be analyzed and understood apart from the whole system and conversely, the
whole system cannot be accurately perceived without understanding all its parts.
Each part bears a relation of interdependence to every other part which rather than
dealing separately with the various parts of the organization as a whole. The above
concept facilitates more effective diagnosis of complex situations and increases the
likelihood of appropriate managerial functions.
  System can be either open or closed: Open system is one which interacts with its
environment and closed system is one which is independent of the environment.
Inputs of a business organization: raw materials, power, finance, equipment,
human effort, technology, information about market, new products, government
policies and the changes these inputs into output of goods, services and satisfaction
and the transformation process is known as throughput.

 The transformation process can be categorized as follows:

 Physical(as in manufacturing)
 Location(as in transportation
 Exchange(as in retailing)
 Storage(as in warehousing)
 Physiological(as in telecommunications)
 The output of a system is always more than the combined output of its parts
which is called synergy.
 Every system has a boundary: boundaries can be clearly observed and therefore
more precisely defined in the case of physical and biological systems than in case
of social systems.
3) Contingency approach:
 There is no best way of doing things under all conditions Methods and techniques
are highly effective in one situation may not work in other situations and results
differ because the situations differ.
 The task of a manger is to try to identify which technique will in a particular best
contribute to the attainment of the management goals and managers have therefore
to select the situational sensitivity and practical selectivity.

Nature, Importance and Purpose of planning

Nature of Planning

1. Planning is an intellectual process which requires manager to think before acting. It is

thinking in advance.

2. Planning that managers the organization to decide:

(i) What is to be done

(ii) When it is to be done.
(iii) How it is to be done and
(iv) Who has to do it
3. Decision making is an integral part of planning. It is the process of choosing among
alternatives.

4. Planning is a continuous process like a navigator constantly checks where his ship in
going in the vast ocean, a manger must constantly watch his plans must constantly
monitor the conditions, both within and outside the organization to determine if changes
are required in his plans.

5. A plan must be flexible. By flexibility of a plan is meaning its ability to change direction
to adapt to changing situations without undue cost. It needs to possess a built in flexibility
in at least major areas technology, market, finance, personal and organization.
(i) Flexibility in technology means the mechanical ability of a company to change
and vary its product-mix according to changing needs of its customers.
(ii) Flexibility in market means the company’s ability to obtain additional funds on
favourable terms whenever there is need for them.
(iii)Flexibility in personnel means the company’s ability to shift individuals from
one job to another.
(iv)Flexibility in organization means the company’s ability to shift individuals from
one job to another.
(v) Flexibility in organization means the company’s ability to change the
organization structure.
6. Flexibility is possible only within the limits. it is almost invariably true that it involves
extra cost. Sometimes it may e so expensive that it benefits may not be worth the cost.
7. Planning is important to all managers regardless of their level in the organization.
There are however some differences in involvement by managers at different levels. One
major difference concerns the time period covered.
(i) Top level managers are generally months to five years later, or even after that.
(ii) Middle level managers are concerned with planning activities for the week or
month.
(iii)First line supervisors, for example plan the work activities for their people for
the day.

Importance of Planning

1. Minimizes risk and uncertainty

Planning allows managers and organizations to minimize risk and uncertainty. Planning
does not deal with future decisions, but with the futurity of present decisions. For
instance, if the manager does not make any provision for the replacement of plant and
machinery, the problems he will have to face after ten years can well be imagined.

2. Leads to success:
Planning does not guarantee success but studies have shown that, companies which plan
not only outperform the non-planners but also their past results. Planning leads to
success by doing beyond mere adaption to market fluctuations. With the help of a
sound plan, management can act proactively and not simply react. It involves to attempt
 to shape the environment on the belief that business is not just the creation of
environment but its creator as well.

3. Focus attention on the organizations goals:

Planning helps the manger to focus attention on the organizations goals and activities. It
is easier to apply and coordinate the resources of the organization more economically.
It enables the manager to chalk out in advance an orderly sequence of steps for the
realization of organizations goals and to avoid needless overlapping of activities.

4. Facilitates control:
Goals and plans then become standards against which performance can be measured.
The function of control is to ensure that activities conform to the plans. Thus control can
be exercised only if there are plans.

5. Trains executives:
Planning is also an excellent means for training executives. They become involved in the
activities of the organization and the plans arouse their interest in the multifarious aspects
of planning.

Purpose of Planning

1. To select from many available alternatives so as to achieve the objectives of the

enterprise, economically, effectively and efficiently.
2. To direct all other functions of management.
3. To set up the goals of an enterprise in perspective, within the environment.
4. To help planned goals of an enterprise to break-up into more easily handalable additive
segmented goals.
5. To form the basis for the budget.
6. To forecast the future to avoid uncertainty and change.
7. To provide effective control.
8. To search for alternatives and adopt the best way of accomplish the work.
9. To focus the vision on the objectives and goals.

Forms of Plans
 Planning can take many forms and styles in practice. Planning can be comprehensive or
limited in scope. There are organizations that plan to the last detail. Others rest content,
simply broad targets for the next financial period.

 Thus there are many forms and styles of planning, and planning practices are likely
to vary from organization to organization. One useful way of classifying them is to
distinguish between strategic planning and tactical planning.

Strategic Planning Tactical Planning

1 It decides the major goals and policies 1 It decides the detailed use of resources for
of allocation of resources to achieve
 these goals. achieving each goal.

2 It is done at higher levels of 2 It is done at lower levels of management.

management. Middle managements
sometimes are not even aware that
strategic planning is being
considered.

3 It is long-term. 3 It is short-term.

4 It is generally based on long-term 4 It is generally based on the past

forecasts about technology. Political performance of the organization and is less
environment, etc. and is more uncertain.
uncertain.

5 It is less detailed because it is not 5 It is more detailed because it is involved

involved with the day-to-day with the day-to-day operations of the
operations of the organization. organization.

Types of Plans or Hierarchy of Organizational plans.

Vision

Mission

Objectives

Strategies

(For non-repetitive activities) Operational plans (For repetitive activities)

Single use plans Standing Plans (Policy,

(Programmes and Budgets) Procedure, Methods and Rules)

I. Vision
  This is a dream an entrepreneur creates about the direction that his business should
pursue in future.

 A vision should be brief, focused, clear and inspirational to an organization’s

employees. It should be linked to customer needs and convey a general strategy for
achieving the mission.
II. Mission
 Which is the unique aim of an organization that sets it apart from others of its type?
 It is an organisation’s specialization in some area-service, product or client, which
decides the organisation’s scope of business.
III. Objectives
 Objectives are goals or aims which the management wishes the organization to
achieve. These are the end points or pole-star towards which all business activities like
organizing, staffing, directing and controlling are directed.

 Objectives should be distinguished from three other words “vision”, “purpose” and
“mission”. The “vision” is the dream that an entrepreneur creates in his waking hours of
his preferred future. It is the root of all objectives. The “purpose” of an organization is its
primary role defined by the society in which it operates.
Characteristics of objectives

1. Objectives are multiple in numbers

This implies that every business enterprise has a package of objectives set out in various key
areas. As pointed out by Peter Drucker, there are eight key areas in which objectives of
performance and results have to be set. These are:

 Market standing
 Innovation
 Productivity
 Physical and financial resources
 Profitability
 Manager performance and development
 Worker performance and attitude
 Public responsibility
Thus, for example, a fertilizer manufacturing and marketing company may have the following
objectives:

 Specified capacity utilization

 Specified costs and return on capital
 Specified quality of the product
 Specified marketing services
 Extension and market development
 Serving remote and virgin areas
 Maintaining the desired network of retail outlets
  Extension of warehouse facilities and ex-warehouse sales to small retailers and farmers
close to consumption points.

2. Objectives are either tangible or intangible

For some of the objectives (such as in the areas of market standing, and physical and financial
resources) there are quantifiable values available. Other areas of objectives are not
quantifiable they are called intangible, such as manager’s performance, worker’s morale, public
responsibility, etc.

3. Objectives have a priority

Priority of goals says something about the relative importance of certain goals regardless of
time. For example, the survival of the organization is the necessary condition for the realization
of all other goals. The establishment of priorities is extremely important in that the resources of
any organization must be allocated by rational means. For university teaching is first reference
and research is next and other activities like sports, cultural activities are next important. Etc…..

4. Objectives are generally arranged in a hierarchy

This means that we have corporate objectives of the total enterprise at the top, followed by
divisional or departmental objectives. Next come objectives of each section and finally
individual objectives. Objectives at all levels (except at the top) serve both as an end and as
means. They are the ends of a unit and they are also the means of a higher unit.

5. Objectives sometimes clash with each other

The process of allocating objectives among various units of an enterprise creates the problem of
potential goal conflict and sub optimisation, wherein achieving the goals of one unit may
jeopardize achieving the goals of another. For example, the production goal of low unit cost
achieved through mass production of low quality products may conflict with the sales goal of
selling high quality products. The resolution of this balance is a careful balance of the goal for
each unit with the recognition that the goal of neither unit can be maximized. The result is a
situation known as sub optimisation of goals. The exact form and relative weight to be given to
any particular unit of interest group is precisely the nature of management’s dilemma; yet is
precisely management’s responsibility to make these kinds of judgements.

Requirements of sound objectives (manager should keep in mind)

1. Objectives must be both clear and acceptable

i. Unambiguous communication is helpful in ensuring clarity of understanding. The

objectives must also be acceptable to the people, that is, they should be compatible with
their individual goals.
 ii. As Barnard pointed out, each participant in an organization determines for himself the
range of acceptable behaviour, and if the activities required by him are outside this range,
he will not pursue the objective.

2. Objectives must support one another

i. Objectives could interlock or interfere with one another. For example, the goals of the
production department in a company may be operating at cross purposes with those of the
marketing department.
ii. Further, there should be close-knit relationship between short-range and long-range
objectives. What is to be done the first year should provide a foundation for what is to be
done each successive year, and this can be guaranteed only if the short-range plans are a
part of the long-range plans.

3. Objectives must be precise and measurable

The various reasons for this are:
(i) The more precise and measureable the goal, the easier it is to decide how to achieve
it. For example, the goal of “becoming more active in the community” leaves
managers in doubt as to how to proceed. If instead, managers select as their goal
“increasing profits by 10 percent”, they have described their goals in much more
meaningful terms.
(ii) Precise and measurable goals are better motivators of people than general goals.

(iii) Precise and measurable goals make it easier for lower level managers to develop their
own plans for actually achieving these goals. For example, if a General Manager is
aiming for a 15 percent growth rate over the next four years, the sales manager can
determine how sales must increase in order to meet his goal.

(iv)It is easier for managers to ascertain whether they are succeeding or failing if their
goals are precise and measurable.

4. Objectives should always remain valid

The managers should constantly review, reassess and adjust the objectives according to
changed conditions. With the passage of time stakeholders’ preferences change and it becomes
necessary for the manager to work out a new common minimum program.

Advantages of objectives

i. They provide a basis for planning and for developing other type of plans such as
policies, budgets and procedures.

ii. They act as motivators for individuals and departments of an enterprise inbeing their
activities with a sense of purpose.

iii. They eliminate haphazard action which may result in undesirable consequences.
 iv. They function as a basis of managerial control by serving standards against which
actual performance can be measured.

v. They facilitate coordinated behaviour of various groups which otherwise may pull in
different directions.

vi. They facilitate better management of the enterprise by providing a basis for leading,
guiding, directing and controlling the activities of people of various departments.

vii. They lessen misunderstanding and conflict and facilitate communication among people
by minimizing jurisdictional disputes.

viii. They provide legitimacy to organization’s activities.

IV. Strategies

i. In a competitive situation, it is not enough to build plans logically from goals unless the
plans take into account the environmental opportunities and threats and the
organizational strengths and weaknesses.

ii. A corporate strategy is a plan which takes these factors into account and provides an
optimal match between the firm and the environment. Two important factors involved in
strategy formulation are environmental appraisal and corporate appraisal.

1. Environmental Appraisal

An analysis of the relevant environment results in the identification of threats and

opportunities. Andrews defines the environment of a company as the pattern of all external
influences that affect its life and development. Some key environment factors are:

a. Political and legal factors

i. Stability of the government and its political philosophy.

ii. Taxation and industrial licensing laws.
iii. Monetary and fiscal policies.
iv. Restrictions on capital movement, repatriation of capital, state trading, etc.

b. Economic Factors

i. Level of economic development and distribution of personal income.

ii. Trend in prices, exchange rates, balance of payments, etc.
iii. Supply of labour, raw material, capital, etc.

c. Competitive Factors
i. Identification of principal competitors.
ii. Analysis of their performance and programmes in major areas such as market
penetration, product life-cycle, product mix, distribution channels and sales
organization, servicing, credit and delivery, advertising and promotion, pricing and
 branding, labour unions, training of personnel, technological development,
productivity and efficiency in manufacturing, financial strength, profitability and rate
of return on sales and investment.

iii. Anti-monopoly laws and rules of competition.

iv. Protection of patents, trademarks, brand names and other industrial property rights.
d. Social and cultural factors
i. Literacy levels of population
ii. Religious and social characteristics
iii. Extent and rate of urbanization
iv. Rate of social change

2. Corporate Appraisal

This involves an analysis of the company’s strengths and weaknesses. A company’s

strengths may lie in its outstanding leadership, excellent product design, low-cost manufacturing
skill, efficient distribution, efficient customer service, and personal relationship with customers,
efficient transportation and logistics, effective sales promotion, high turnover of inventories,
and/or capital, ability to influence legislation, ownership of low-cost or scarce raw materials and
so on. The company must plan to exploit these strengths to the maximum. The other mode are
entrepreneurial also called inside-out mode is a proactive and adoptive also called outside-in-
mode is reactive and timid.

V. Operational Plans

These plans act as means of implementing the organisation’s strategy. There are two type of
Operational Plans they are Standard Plans and Single Use Plans.

1. Standing Plans

These plans are designed for situations that recur often enough to justify a standardized
approach.

Types of standing plans are

I. Policies,
II. Procedures,
III. Methods and
IV. Rules.
I. Policies
i. A policy is a general guideline for decision-making. It sets up boundaries around
decisions, including those that can be made and shutting out those that cannot.
ii. It channelizes the thinking of the organization members so that it is consistent with the
organizational objectives.
 iii. In the words of George R Terry, “policy is a verbal, written or implied overall guide,
setting up boundaries that supply the general limits and directions in which
managerial action will take place”.
iv. Policies provide framework within which decisions must be made by the management in
different spheres. It should be noted that both policies and objectives guide thinking and
action, but with difference.
v. Objectives are endpoints of planning while policies channelize decisions to these ends;
or, to put it another way, policies lead to objectives in a way a series of alternate highway
routes lead to a city.

Advantages of policies

i. Ensure uniformity in action in respect of various matters at various organizational

points. This makes actions more predictable.

ii. Policies speed up decisions at lower levels because subordinates need not consult their
superiors frequently.

iii. Policies make it easier for the superior to delegate more and more authority to his
subordinates without being unduly concerned because he knows that whatever decision
the subordinates make will be within the boundaries of the policies.

iv. Policies give a practical shape to the objectives by elaborating and directing the way in
which the predetermined objectives are to be attained.

Types of policies
1. Classification on the basis of sources
i. Originated policies: these are the policies which are usually established formally and
deliberately by top managers for the purpose of guiding the actions of their
subordinates and also their own. These policies are generally set down in a print and
embodied in a manual.
ii. Appealed policies: they arise from the appeal made by the subordinate to the
superior regarding the manner of handling a given situation. When decisions are
made by the superior on appeals made by the subordinates, they become precedents
for future action.
iii. Implied policies: they are neither stated in writing nor verbally but their presence is
ascertained only by watching the actual behaviour of various superiors in specific
situations. For example, if the office space is repeatedly assigned to individuals on the
basis of seniority, this may become an implied policy of the organization.
iv. Externally imposed policies: policies are sometimes imposed on the business by
external agencies such as government, trade associations, and trade unions.

2. Classification on the basis of functions

On this basis of business functions, policies may be classified into production, scales, finance,
personal polices etc… every one of these functions will have a no. of polices.

Ex: Production functions have polices like method of production, output, investment, research
etc. Scales function have polices related to market, price, packaging, distribution channel,
commission of middle man etc. Finance functions have polices related to capital structure,
working capital, internal financing, dividend payment etc. Personnel function have polices
related to recruitment, training, working conditions, welfare activities etc.

3. Classification on the basis of Organizational level.

Policies range from major company policies through major departmental policies to minor or
derivative policies applicable to the smaller segment of the organization.

Guidelines on effective policy-making

1. Policies should, as far as possible, be stated in writing and should be clearly understood
by those who are supposed to implement them.

2. Policies should reflect the objectives of the organization, define the appropriate methods
of action, and delineate the limits of freedom of action permitted to those whose actions
are to be guided by them.

3. A policy must strike a reasonable balance between stability and flexibility.

4. Different policies in the organization should not pull in different directions and should
support one another. They must be internally consistent.

5. Policies should not be detrimental to the interest of society. They must conform to the
canons of ethical behaviour which prevail in the society.

6. Participation from the top managers to the subordinates (who are supposed to
implement the policies) is the best assurance of loyalty to a policy.

7. Policies must be comprehensive to cover as many contingencies as possible.

8. Policies should be periodically reviewed in order to see whether they are to be modified,
changed or completely abandoned and new ones put in their place.

II. Procedures

 Policies are carry out by means of more detailed guidelines are called procedures.

 They provide a set of instructions for performing a sequence of actions involved in doing
a certain piece of work. The same steps are followed each time that activity is performed.
For example, the procedure for purchasing raw material maybe:

i. Requisition from the storekeeper to the purchasing department.

 ii. Calling tenders for purchase of materials

iii. Placing orders with the suppliers who are selected

iv. Inspecting the materials purchased by the inspecting department

v. Making payment to the supplier of materials by the accounts department, and so on.

Differences between policy and procedure

i. Policies are general guidelines to both thinking and action of people at higher levels.
Procedures are general guides to action only usually for people at lower levels.

ii. Policies help in fulfilling the objectives of the enterprise. Procedures show us the way
to implement policies.

iii. Policies are generally broad and allow some latitude in decision making. Procedures
are specific and do not allow latitude.

iv. Policies are often established without any study and analysis. Procedures are always
established after thorough study and analysis of work.

Advantages of procedures

i. They indicate a standard way of performing a task ensuring a high level of uniformity
of performance in the enterprise.

ii. They result in work simplification and elimination of unnecessary steps and
overlapping.

iii. They facilitate executive control over performance. By laying down the sequence and
timing of each task, executive’s dependence on the personal attributes of his subordinates
is reduced, supervision becomes more routine and discipline is externalized.

iv. They enable employees to improve their efficiency by providing them with knowledge
about the entire range of work.

Limitations of procedures

i. By prescribing one standard way of performing a task, they limit the scope for
innovation or improvement of work performance.

ii. By cutting across department lines and extending into various other departments, they
sometimes result into duplication, overlapping and conflict.

III. Methods

i. A method is a prescribed way in which one step of a procedure is to be performed.

The specified technique to be used in screening the applications or conducting a written
 test is a method, whereas a sequence of steps involved in the recruitment of personnel
constitutes a procedure.
ii. Methods help in increasing the effectiveness and usefulness of the procedure. By
improving the methods, reduced fatigue, better productivity and lower costs can be
achieved. Methods can be improved in a number of ways.
iii. Manual methods of performing a task can be replaced by mechanical means, or the
existing machined process maybe improved, or work simplified and unproductive efforts
removed by conducting “motion study”.

IV. Rules

i. Rules are detailed and recorded instructions that a specific action must or must not be
performed in a given situation.
ii. A rule is different from a policy, procedure or method.
 It is not a policy because it does not give a guide to thinking and does not leave
any discretion to the party involved.
 It is not a procedure because there is no time sequence to a particular action.
 It is not a method because it is not concerned with anyone particular step of a
procedure.

2. Single-use Plans

As their name suggests, are developed to achieve a specific end, when that end is achieved
that plan is dissolved.

Types of Single –Use plans are

I. Programmes
II. Budgets
I. Programmes

i. Programmes are precise plans or definite steps in proper sequence which need to be taken
to discharge a given task.
ii. They are drawn in conformity with the objectives and are made up of policies,
procedures, budgets, etc. the essential ingredients of every programme are time phasing
and budgeting.
iii. Often a single step in a programme is setup as a project, the chief virtue of which lies in
identifying a relatively separate and clear cut work package within a bewildering array of
activities involved in a programme.
iv. A schedule specifies the time when each of a series of actions should take place.

II. Budgets

According to the Institute of Costs and Works Accountants, London, a budget is “a financial
and/or quantitative statement prepared prior to a definite period of time, of the policy to be
pursued during that period, for the purpose of obtaining a given objective”.
Budgets are very useful for an enterprise. Being expressed in numerical terms, they facilitate
comparison of actual results with the planned ones and thus, serve as a control device and
yardstick for measuring performance.

Steps in Planning

1. Establishing verifiable goals or set of goals to be achieved

i. The first step in planning is to determine the enterprise objectives, most often set by top
managers, usually after a number of possible objectives have been carefully considered.
There are many types of objectives managers may select: a desired sales volume or
growth rate, the development of a new product or service, or even a more abstract goal
such as becoming more active in the community.
ii. The type of goal selected will depend on a number of factors: the basic mission of the
organization, the values its managers hold, and the actual and potential abilities of the
organization.
iii. The values and beliefs held by top men are very important in the selection of goals.

2. Establishing planning premises

i. It includes certain assumptions about the future on the basis of which the plan will be
ultimately formulated.
ii. They are vital to the success of planning as they supply pertinent facts and information
relating to the future such as population trends, the general economic conditions,
production costs and prices, probable competitive behaviour, capital and material
availability, government control and so on.
iii. Planning premises can be variously classified under:

(a) Internal and external premises

Premises may exist within and outside the company. Important internal premises
include sales forecasts, policies and programmes of the organization, capital investment
in plant and equipment, competence of management, skill of the labour force, other
resources and abilities of the organization in the form of machines, money and methods,
and beliefs, behaviour and values of the owners and employees of the organization.

External premises maybe classified into three groups:

a. Business environment,
b. Factors which influence the demand for the products of the enterprise and
c. Factors which affect the resources available to the enterprise.

Some external premises are general business and economic environment, technological
changes, government policies and regulations, population growth, political stability,
sociological factors and demand for industry’s product etc.

(b) Tangible and intangible premises

 Tangible premises are those which can be quantitatively measured while intangible
premises are those which being qualitative in nature cannot be so measured. Population
growth, industry demand, capital and resources invested in the organization are all
tangible premises whose quantitative measurement is possible. On the other hand,
political stability, sociological factors, business and economic environment, attitudes,
philosophies and behaviour of the owners of the organization are all intangible premises
whose quantitative measurement is not possible.

(c) controllable and non-controllable premises

It is because of the presence of the uncontrollable factors that there is need for the
organization to revise the plans periodically in accordance with current developments.
Some of the examples of uncontrollable factors are strikes, wars, natural calamities,
emergency, legislation, etc. Controllable factors normally cannot upset well thought-out
calculations of the organization regarding the plan. Some of the examples of controllable
factors are: the company’s advertising policy, competence of management members, skill
of the labour force, availability of the resources in terms of capital and labour, attitude
and behaviour of the owners of the organization, etc.

3. Deciding the planning period Businesses vary considerable in their planning periods. There
is always some logic in selecting a particular time-range for planning. The factors that
influence the choice of a period are:

i. Lead time in development and commercialization of a new product :

For Ex: A heavy engineering company planning to start a new project should have
planning period of five years with one or two years of conception, engineering and
development and as many more years for production and sale.
ii. Time required to recover capital investments or the pay-back period:
For Ex: If a machine costs Rs 10 lakhs and generates cash of Rs 2 lakhs a year, its
pay-back period is five years.
iii. Length of commitments already made.
For Ex: if a company has agreed to supply goods to the buyers for five years or has
agreed to work out mines for ten years it need also plan for the same period to fulfil
its commitments.

4. Finding alternative courses of action

Technical know-how maybe secured by engaging a foreign technician or by training staff

abroad. Similarly, products maybe sold directly to the consumer by the company’s salesmen
or through exclusive agencies. There is seldom a plan for which reasonable alternatives do
not exist, and quite often an alternative that is not obvious proves to be the best.

5. Evaluating and selecting a course of action

 Having sought alternative courses, evaluating them in the light of the premises and goals and
selecting the best course of courses of action is done with the help of quantitative techniques
and operations research.

6. Developing derivative Plans

Once the plan has been formulated, its broad goals must be translated into day-to-day
operations of the organization. Middle and lower level managers must draw up the
appropriate plans, programmes and budgets for their subunits. These are described as
derivative plans, in developing of which lower level managers take steps similar to those
taken by upper level managers- selecting realistic goals, assessing their subunits’ particular
strengths and weaknesses and analyzing those parts of the environment that may affect them.

7. Establishing and deploying action plans

The action plan identifies particular activities necessary for the purpose and specifies who,
what, when, where and how of each item.

8. Measuring and controlling the progress

Managers need to check the progress of their plans so that they can take whatever remedial
action if necessary for the plan to work, or change the original plan if it is unrealistic.

Definition, Nature and purpose of organization

Definition:
An organization can be defined as a social unit or human grouping deliberately structured for
the purpose of attaining specific goals.

An organization can also be defined as the process of identifying and grouping of the work to
be performed, defining and delegating responsibility and authority and establishing
relationships for the purpose of enabling people to work most effectively together in the
accomplishment of their objectives.

Nature:

1. An organization basically consists of group of people who form the dynamic human
element of the organization.
2. Organization helps in identifying the various tasks to be performed which are assigned
to the individuals to perform to achieve the common objectives or common purpose of
the organization.
3. It ensures to achieve coordination amongst the people working in various departments
of the organization and ensures integrated efforts to achieve organizational objectives or
goals.
 4. It delegates authority to the managers with commensurate responsibility and
accountability for the discharge of their duties and also amongst different hierarchical
levels in an organization.
5. It also aides in achieving financial, physical material and human resources.
6. Organizations are part of the larger environment and hence they are influenced by the
external environment.
7. Organization helps in the realization of the plans made by the managers.
8. It helps in nurturing and growing special skills and talents by the virtue of division of
labour.
9. It facilities seamless communication
.
Purpose of Organization:

The basic purpose of having organization is to formulate a frame or structure of an enterprise

with a view to fulfill the enterprise tasks. The purpose includes the following logical
components:

1. Establishes the pattern of relationship by giving duties and responsibilities to an

individual or group.
2. Demarcates the authority, responsibility and duties of each individual or group.
3. It tells each manager where his accountability lies and, who are in sphere of command.

4. Provides adequate communication.

5. Coordinates or integrates and controls the activities of individuals or groups to achieve
common objectives or objectives of the enterprise.

Principles of Organization:

The principles of organization are as follows:

1. Objectives: objectives of the enterprise should first be clearly defined. Then every part of
the organization should be geared to the achievement of these objectives.

2. Specialization: Effective organization must promote specialization. The activities of the

enterprise should be divided according to functions and assigned to persons according to
their specialization.
3. Span of control: As there is a limit to the number of persons that can be supervised
effectively by one boss, the span of control should be as far as possible, the minimum.
That means, an executive should be asked to supervise a reasonable number of
subordinates only.
4. Exception: As the executives at the higher levels have limited time, only exceptionally
complex problems should be referred and routine matters should be dealt with by the
 subordinates at lower levels. This will enable the executives at higher levels to devote
time to more important and crucial issues.

5. Scalar Principle: This Principle is sometimes known as the “chain of command”. The
line of authority from the chief executive at the top to the first-line supervisor at the
bottom must be clearly defined.
6. Unity of command: Each subordinate should have only one superior whose command he
has to obey. Multiple-subordination must be avoided for it causes Uneasiness, disorder,
indiscipline and undermining of authority.
7. Delegation: Proper authority should be delegated at the lower levels oh manager of the
organization also. The authority delegated should be equal to responsibility that is each
manager should have enough authority to accomplish the task assigned to him.
Inadequate delegation often results into multiplication of staff and service activity.
8. Responsibility: The superior should be held responsible for the acts of his subordinates.
No superior should be allowed to avoid responsibility by delegating authority to his
subordinates
9. Authority: The authority is the tool by which a manager is able to accomplish the desired
objective. Hence, the authority of each manager must be clearly defined. Further, the
authority should be equal to responsibility.
10. Efficiency: The organization structure should enable the enterprise to function efficiently
and accomplish its objectives with the lowest possible cost.

11. Simplicity: The Organization structure should be as simple as possible and the
organization levels should as far as possible, be minimum. A large number of levels of
organization mean difficulty of effective communication and coordination. Too many
committees and excessive procedures also unduly complicate the structure.
12. Flexibility: The organization should be adaptable to changing circumstances and permit
correction of demonstrated deficiencies in the existing structure without dislocation and
disruption of the basic design.
13. Balance: There should be a reasonable balance in the size of various departments,
between centralization and decentralization, between the principle of span of control and
the short chain of command, and among all types of factors such as human, technical and
financial.
14. Unity of direction: There should be one objective and one plan for a group of activities
having the same objective. Unity of direction facilitates unification and coordination of
activities at various levels.
15. Personal Ability: As people constitute an organization, there is need for proper selection,
placement and training of staff. Further the organization structure must ensure optimum
use of human resources and encourage management development programmers.
16. Acceptability: The structure of the organization should be acceptable to the people who
constitute it. Two things generally happen if people oppose the structure: it is modified
gradually by the people, or it is used ineffectively.
Types of Organization:
The term organization is used in two different senses.

1. First scene is used to denote the process of organizing and

2. The second is used to denote the result of that process called organization structure.

The process is organization defining and grouping the activities of the enterprise and establishing
the authority relationship among them. In the second step is to prepare an organization structure.

There are two types of organizations: Formal and Informal

1. Formal Organization

i. There are various Levels in any Organization, right from President or Chairman or
Managing Director or Chief Executive Officer at the top to Foremen/Supervisors
down the line.

ii. Formal means the Intentional Structure of Roles in a Formally Organized

Enterprise.

iii. This doesn’t mean there is anything inherently inflexible. If a Manager is to

organize well, the structure must furnish an environment in which individual
performance, both present & future contributes most effectively to Group Goals.

iv. Formal Organizations should be flexible; there should be room for advantageous
utilization of creative talents for recognition of individual likes & capacities in the
most formal of Organizations. Yet, individual efforts in a Group situation should be
directed towards Group & Organization Goals.

2. Informal Organization

i. Organization is a Joint Personal Activity without conscious joint purpose, even

though contributing to joint results.

ii. Thus, the Informal Relationships established in the Group of people during
morning Tea Break or Playing Cricket in the Evening etc., may aid in the
achievement of Organization Goals.

iii. It may be easier to ask for help in an Organization Problem from someone you
know personally, even if he may be in a different section, than by passing thru the
Organization Structure.

Differences between formal and informal organization

Basis for
Formal Organization Informal Organization
Comparison
Meaning An organization type in which the An organization formed within the
 Basis for
Formal Organization Informal Organization
Comparison
job of each member is clearly formal organization as a network of
defined, whose authority, interpersonal relationship, when people
responsibility and accountability are interact with each other, is known as
fixed is formal organization. informal communication.
Creation Deliberately by top management. Spontaneously by members.
To fulfill, the ultimate objective of To satisfy their social and psychological
Purpose
the organization. needs.
Nature Stable, it continues for a long time. Not stable
Communication Official communication Grapevine
Control
Rules and Regulations Norms, values and beliefs
mechanism
Focus on Work performance Interpersonal relationship
Members are bound by hierarchical
Authority All members are equal.
structure.
Size Large Small

Organization Structure (by Organization Chart)

Organization Structure is more or less permanent arrangement of the parts of a whole, permanent
arrangement of its horizontal and vertical parts.

The usual way of depicting the apparent structure of the formal organization is by means of
Organization Chart.

Following are the patterns of arrangement which commonly describe the situation in most
enterprises. They are:

1. Line or vertical or tall: Line, Military or Scalar Organization

2. Functional or horizontal or flat Organization
3. Line and Staff Organization
4. Matrix or Grid or combined base Organization
5. Product / Project Organization or Departmentation
6. Committee Organization

1. Line or vertical or tall: Line, Military or Scalar Organization

 It is simplest form of organisation structure. Authority flows from man at the top to
lowest man vertically.
 It is this authority which channels and directs the response of others and require them to
conform to decisions, plans, policies and procedure and goals.
 Figure: Line Organization

Advantages

1. Simple and easy to understand

2. Flexible, easy to expand and contract.
3. Makes clear division of authority
4. Clear channel of communication with no confusion.
5. Encourages speedy action
6. Strong in discipline as it fixes responsibility on an individual.
7. Capable of developing the all round executive at the higher levels of authority.

Disadvantages

1. Neglects specialists.
2. Overloads a few key executives.
3. Requires high type of supervisory personnel to meet the challenges imposed in the
absence of specialists as advisors.
4. Limited to very small concerns.
5. Encourages doctorial way of working.
6. Provisions are seldom made to train, develop and replace top executives.

2. Functional or horizontal or flat Organization

 The whole task of manufacturing an direction of subordinates it should be divided

according to the type of work involved
 For example almost all business organisations have separate department to look after
production, sales and the general office
 It helps to get a thorough knowledge of exact procedure or great effectiveness in a
particular area or field
Advantages

1. It ensures a greater division of labour and enables the concern to take advantages of
specialisation of functions.
2. It makes for a higher degree of efficiency.
3. It facilitates mass production.
4. Quality of work is improved.

Disadvantages
1. Co-ordination of the efforts of various functional foremen is difficult.
2. It makes it difficult for the management to fix responsibility for unsatisfactory results.
3. Responsibility for profit is at the top only.
4. Makes economic growth of company difficult.

3. Line and Staff Organization

 The line organization gradually developed to shape as the line and staff organisation.
 The line Executives could not perform properly all the functions, this necessitated the
employing of special executives to assist line executives and they were known as staff
and they were recruited to perform specialist function.
 Staff officers or assigned an ‘authority of ideas’ and line officer an ‘authority of
command’.
 Figure: staff and line organisation
Advantages

1. Line Executives are relieved of their loads and can show attention toward production.
2. Expert advice from specialist staff executives can be made used.
3. It processes all the advantages of line and functional organisation.

Disadvantages
1. Product cost will increases because of high salaries of staff executives.
2. Complex in nature.
3. If line executives start depending too much on staff executives, they may lose their
initiative.
Matrix or Grid or combined base Organization

 Some organizations follow different types of departmentalization methods at different

levels of manufacturing.
 E.g. Agricultural machinery organization may follow “product” based as the base at the
primary level. And “territory” as the base at the intermediate level, “function” at the last
level.
 E.g-2. another form of combined base organization is matrix organization. here two types of
departmentalization-functional and product-exist simultaneously as shown below.

 Here functional departments retain authority for the overall operation of their respective
units.

 Product departments are created as the need for them is arises.

 Members of the project team are assembled from the functional departments and are
placed under the direction of a project manager.

 On the completion of the project members, project manager revert back to their
respective departments until the next assignment.

Advantages:

1. Reduces problems of communication and coordination

2. It increases the ability to innovate around specific customers’ needs.
3. Stress on optimization of the total projects eliminates chances of sub optimization of goals.
4. Assignment of specific jobs to employees make passing of buck difficult.
5. Change of project promotes intellectual growth and development of employees.
Disadvantages:

1. Members show more loyalty to their main departments rather to the project organization in
which they are working.
2. Members feel frustrated due to the lack of formal rules and procedures leading to
ambiguity.

Departmentation

 The horizontal differentiation of tasks or activities into discrete segments is called

departmentalization.

 Departmentalization is one important step of building an organization.

 There are several bases for departmentalization, each of which is suitable for particular
corporate sizes, strategies and purposes. Following is a brief description of these bases.

1. Departmentation based on products:

 This suits to large organisations manufacturing a variety of products.

 Here, for each major product, a separate semi-autonomous department is created and
is put under the charge of manager who may also be made responsible for producing a
profit of a given magnitude.
 Within each department, all the needed manufacturing, engineering, marketing,
manpower and other facilities are assembled. E.g.: Hindustan lever, Johnson and Johnson
companies.

Figure: Departmentation based on products

Advantages:

1. It relieves top management of operating task responsibility. And hence can concentrate on
finance and R & D.
2. This form enables top management to compare the performances of different products
and invest more resources in profitable products.
3. Performance improvement
4. Natural team work develops, as each worker sees that his contribution is needed to make
the whole product.

Disadvantages:

1. It leads to duplication of staff and facilities.

 2. Extra expenditure is incurred in maintaining a sales force for each product line.
3. Employment of a large number of managerial personnel is required.
4. Equipment in each department may not be used fully.

2. Departmentation based on Functions

 The most widely used base for departmentalization is function. Each major function of
the enterprise is grouped into a department.

 Example: finance and marketing departments in a manufacturing company.

Figure: Departmentation based on Functions

Advantages:

1. It is a simple form of grouping activities for small organizations which manufacture

only a limited number of Products or render only a limited number of services.
Everybody in this form of organization understands and feels highly secure both in his
work and in relationships.

2. It promotes excellence is performance because of development of expertise in only a

narrow range of skills.

3. It leads to improved planning and control of the key functions.

4. It ensures economy, there is only one department related to one function for the entire
function.

5. Manpower and Other resources of the company are effectively utilized by time-sharing
then across products or projects.

Disadvantages:

1. It fosters sub-goal loyalties. It is difficult for anyone to understand the task of the whole
and to relate his own work to it. Each manager thinks only in terms of his own
departmental goals and does not think in terms of the company as a whole. Example: the
manufacturing department may concentrate on meeting cost standards and delivery dates,
and neglect quality control Result: the sales or marketing department may be flooded
 with complaints lead to inter-departmental conflicts and disagreements, feuds,
misunderstandings etc.

2. Does not offer a good training ground for the overall development of manager who gains
expertise in handling problems of his particular department only

3. Unsuitable for organizations which are large in size, complexity or innovative scope.

4. In this form the customer needs evoke conflicting interpretations from each department
heads.

5. In this form the procedures are overly complicated, wasteful and time consuming
weakness called organizational arthritis develops where the structure is rigid and resists
adaptation.

6. It is difficult to judge whether the activities of a particular department are worth their
cost.

3 Departmentation based on customers

 An enterprise may be divided in to a number of departments on the basis of the

customers that it serves.

 E.g.: an electronics firm may have separate departments for military, industrial and
consumer customers.

Advantage:

1. It attains full attention to major customer groups which have a very separate set of criteria
governing their decisions to purchase.

Disadvantages:

1. It may result in un utilization of resources or facilities in some departments.

2. There may be duplication of facilities.

4 Departmentation based on Regions of Territory:

 When several production or marketing units of an organization are geographically

dispersed in various locations, it is logical to departmentalize those units on a E.g.: the
Indian railways (northern, southern, eastern, central railways etc.)
  Food Corporation of India has also geographical organization with several zonal offices
at different places and head office in New Delhi.

Figure: Departmentation based on Regions of Territory:

Advantages:

1. Motivates each divisional head to show high performance.

2. Provides each regional head an opportunity to adapt to his local situation and customer
need with speed and accuracy.
3. Affords valuable top management training and experience to middle-level executives.
4. Enables the organisation to take advantage of location factors, such as availability of raw
materials, labour, market etc.
5. enables the organisation to compare regional performances and invest more resources in
profitable regions and withdraw resources from unprofitable ones

Disadvantages:

1. Gives rise to duplication of various activities and many of the routine and service
functions carried out by the regional offices can be carried out centrally by the head
office very economically.
2. Many regional units may forget the overall interest of the total organisation

5 Departmentation based on Time:

 Here in this method, activities are grouped on the basis of timing of their performance.
.as a small machine shop grows in size; its owner has the choice of either adding
extra shifts or renting two more shops

Figure: Departmentation based on Time

Advantages:
 1. Services can be rendered, that goes beyond the normal 8 hours/day.
2. Facilities use of processes that cannot be stopped or interrupted.
3. Expensive capital equipment can be better utilized.
4. Provides part time jobs for people who are otherwise busy during time.
5. Higher and continuous production per day.

Disadvantages:

1. Lacks good and efficient supervision during night shifts.

2. Inconvenient for people to work in night shifts and more difficult during shift
changes from day to night.
3. Lack of effective coordination and communication from people of one shift to next
shift.

6 Departmentation based on Process:

 In this method departmentalization is done on the basis of several discrete stages in the
process or technologies involved in the manufacture of a product. Eg: a cotton textile mill
may have separate departments for ginning, spinning, weaving, dyeing and printing and
packing and sales.

Figure: Departmentation based on Process

Advantages:

1. Is allows proper utilization of costly equipments.

2. It follows the principle of specialization, as each department will be doing special and
unique work.
3. This method is suitable for companies involving many processes in the development of
product.

Disadvantages:

1. Here, workers feel less responsible for the whole product.

2. It does not provide good training ground and opportunity for the overall development of
managerial talent.
3. When process is sequential, a breakdown in one department slows the work of all other
departments.
4. Difficult to compare performance of departments except some notional way like checking
profits etc
 5. Top management needs to develop extra attention to maintain inter department co-
operation.

7 Departmentation based on Divisional structures:

 When large, multi-product companies segment themselves in to several independent

profit centers on the basis of product, territory or customer. These units are called
divisions.

 Each division is smaller than organization; the problems created by fictionalization are
reduced to a more manageable size.

 A division can be dropped or added with little disruption to the rest of the organization.

Figure: Departmentation based on Divisional structures

Choice of suitable base

Some factors which affect in selecting the base of departmentalization are

1. Specialisation: the base should ensure maximum specialization of skill and effort.
2. Coordination: the base should ensure proper coordination and control of. The activities
of different departments.
3. Economy: the expenditure involved in introducing departmentalization is another
important point which should be considered.
4. Whole task: depending on the nature of the task, “wholeness” can be achieved either by
technological departmentalization or by combination of these. Thus, here the department
heads have a realistic accountability and those who work within the departments, derive
satisfaction from identification with in a recognizable goal.
Committees

A committee is a group of people who have been formally assigned some task or some
problem for their decision and implementation.
Committees are broadly classified into
1. Advisory committee
2. Executive committee
3. Standing or permanent committee
4. Ad hoc or Temporary committee

Principles:

 The number in a committee should depend upon need(about 5 to 10 persons)

 Responsibility, authority, objectives, duties of the committee should be clearly defined.
 Agenda of the committee should be proposed or communicated to the committee at least
a week before they meet for discussions.
 Problems which can be taken care by an individual should not be included in the agenda
of the committees.
 Committee meeting should begin and end on prefixed timings.
 Problems not related to the subject matter at hand should not be discussed because it will
simply be waste of time.
 The recommendation made by committee should be published and circulated to interested
and concerned persons.
 The committee should be appraised, if this action is taken based upon its
recommendation.
 The committee must be dissolved after its purpose is over.
Types of committees

1. Advisory committees:

 Whenever committees are vested with staff authority they are advisory committees.
 These committees have only a recommendatory role and cannot enforce
implementation of their advice.

Examples of advisory committees formed in business enterprises: works committees,

sales committees, finance committees etc.

2. Executive committees:

 Whenever committees are vested with line authority, they are called executive
committees or plural executives.
 These committees take decision as well as enforce decisions and thus perform a
double role of taking a decision and ordering its execution.

Example: Board of directors is an example of an executive committee.

3. Standing committees:
 Are formed to deal with recurrent organisational problems.
  Members of these committees are chosen because of there position, instead of
individual qualifications or skills.

Example: finance committees in a company or loan approval committee in a bank

or the admission committee in a college.

4. Ad hoc or Temporary committee:

 They are short. They dissolve after the task gets over.

Advantages:

1. When committees are formed with all department heads, people are more beneficial.
2. They provide a forum for pooling of knowledge and experience of many persons with
different skills, ages, backgrounds.
3. It provides many people to involve in decision making
4. They are excellent means of transmitting information and ideas, both upward and
downward.
5. Committees are impersonal in action and hence decision made is unbiased and are based
on facts.

Disadvantages:

1. Committees keep minutes and wastes hours.

2. In case of a wrong decision, no member of a committee is made responsible.
3. Time waste in meetings and giving allowances to members.
4. Members regard themselves as appointed to protect the interest of their departments
rather than to find the more appropriate solution.
5. Committees have tendency to perpetuate themselves and it is generally difficult to
dissolve them.
6. Decisions are arrived based on some compromise and hence they are not the best
decisions.(log-rolling).
7. Maintain secrecy in decisions is difficult as committees consist of many people.
8. As chairman gets changed, influence accumulated only in the hands of secretary or some
other persons who may dominate on decisions.
4.1 Nature and importance of proper staffing
The process of recruiting, retaining, developing and nurturing the workforce is called
staffing
Advantages (Importance) of proper and efficient staffing
1. It helps in discovering talented and competent workers and developing them to move
up the corporate ladder.
2. Ensures greater production by putting the right man in the right job.
3. It helps to avoid a sudden disruption of an enterprises production run by indicating
shortages of personal if any in advance.
4. Helps to prevent underutilization of personnel through over manning and the resultant
high labor cost and low profit margins.
5. Provides information to management for the internal succession of managerial
personnel in the event of unanticipated turnover.

4.2 Process of Selection & Recruitment

Recruitment
 Recruitment is the generating of applications or applicants for specific positions.
  According to Dalton E. McFarland, it is process of attracting potential employees
to the company.

Source of Recruitment
 The sources of recruitment can be broadly classified into 2 categories they are
Internals and Externals.
 Internals source refers to the present working force of a company.
  Externals source refers to the selecting individuals from amongst the existing
employee of the company.

More commonly used External source of recruitment are as below

1. Re-employing former employees: Former employees who have been laid-off or have left
for personal reasons may be re-employed.
2. Friends and relatives of present employees: Some industries with good personal
relations encourage their employees to recommend their friends and relatives for
appointment of particular post or position in organisation.
3. Applicants at the gate: Unemployed persons who call at the gates of the factories are
interviewed by the factory representative and those who are found suitable for existing
vacancies are selected.
4. College and technical institutes: Many big companies remain in touch with the colleges
and technical institutions from where young and talented persons may be recruited.
5. Employment exchanges: An employment exchange is an office set up by the government
for bringing together those men who are in search of employment and those employers who
are looking for men.
6. Advertising the vacancy: Advertising the vacancy in leading newspapers may be used as
a source in case the company requires the services of persons possessing certain special skills
or if there is an acute shortage of labour force.
7. Labour unions: In Companies with strong labour unions, persons are sometimes
recommended for appointment by their labour unions.
 Advantages and Disadvantages of Internal Recruitment
Advantages:
1. A sense of security develops among the employees
2. Employees remain loyal to the organization
3. People recruited from within the organization do not need induction training.
4. Employee in the lower ranks is encouraged to look forward to rising to higher positions
in the concern.
5. Labour turnover is reduced
6. People are motivated to become efficient and customers remain intact
7. A better employee-employee relationship is established.
Disadvantages:
1. This method limits the choice of selection to the few candidates available within the
enterprise.
2. It may lead to inbreeding resulting in promotion of people who have developed a respect
for the traditional and who have no ideas of their own.
3. If a concern is extending its activities into new lines, internal candidates may prove
unsuitable for new positions.

Advantages and Disadvantages of External Recruitment

Advantages:
1. New blood brings with it a fresh outlook, originally and new ideas.
2. Old habits are replaced by new ones and concern becomes more dynamic.
3. The field of choice becomes very wide. Hence there is the possibility of select people
with rich and varied experience.
Disadvantages:
1. Employee generally feels frustrated and their morale is adversely affected.
2. The present employees may lose their sense of security and become disloyal to the
employer.
3. There is a greater turnover of labour.
4. There is deterioration in the employee-employee relationship, resulting in industrial
unrest, strikes and lock-outs.
Selection
Under selection manager compares their qualifications with the requirements of a job and
eliminates all those who do not stand up to this comparison.
Steps in the Selection process
1. Job Analysis
Job analysis is the process by means of which a description is developed of the present
methods and procedures of doing a job, physical conditions in which the job is done,
relation of the job to other jobs and the other conditions of employment. The information
concerning the job can be obtained from a number of sources such as observation.
2. Job Description
The results of job analysis are set down in job description. The two types of job
description differ from each other in many ways
 The lower-level job descriptions are generally written by the personnel
department but managerial job descriptions are written by the incumbent’s
executive himself or by his superior.
 The lower-level job description are written by wage and salary administration
and so centre directly around tangible duties and day-by-day assignments.
 While higher level descriptions are more closely related to organization
planning and so naturally are descriptions of intangible interrelationships, over all
responsibilities and line of authority.
 Prof. Ishwar Dayal suggests the use of Role Analysis Technique which includes
the following steps:
1) The manager lists his activities consisting of the prescribed and
discretionary elements. Other role incumbents, and his immediate superior
question him on the definition of his task and if any confusion ten clear the
ambiguity.
2) The manager lists his expectations from each of those other roles in the
group which he feels most directly affected his own work. other in a group
also state their expectations and after a most directly affect his own work,
all of them are arrive at an agreement among themselves in their mutual
expectations.
3) The manager then writes up his role which consists of all aspects of his work.

3. Job Specification
A job specification also called man specification is a statement of the
minimum acceptable
human qualities necessary to perform a job satisfactorily.
There is no standard procedure followed by all organizations.
1. Application blank
2. Initial interview of the candidates
3. Employment tests
4. Checking references
5. Physical or medical examination
6. Final interview
1. Application Bank:
Filling of the application bank by the candidate is the first in the process of
selection. The applicant gives relevant personal information as his
qualification, specification, experience, firms in which he has worked etc.
Company will carefully go through about candidate qualification and the
company requirements.
2. Initial Interview:
Those who are selected for interview on the basis of particulars furnished
in the application blank are called for initial by the company. The interview
must be properly planned and the interviewers, consisting of specialists in
different fields, must make the applicants feel at ease, discount personal
prejudices and notes their applicants interviewed.
3. Employment tests:
There are several types of tests that are used in selection
procedure.
i. Aptitude test: This test measures the applicant’s capacity to learn the
skill required for a job. It helps in finding out whether a candidate is
suitable for a clerical or a mechanical job.
ii. Interest test: This is used to find out the type of work in which the
candidate has an interest. Interest tests are generally used for vocational
counselling. Usually well –prepared questionnaires are used in interest
tests.
iii. Intelligence test: This test is used to find out the candidate’s
intelligence. By
using this test, the candidate’s mental alertness, reasoning ability, power of
understanding, etc are judged. Some examples of intelligence tests are:
reading and summarising a paragraph in the allotted time, writing 10 to 15
 words that begin with the same letter in one minute and so on.
iv. Trade or performance or achievement test: This test is used to
measure the candidate’s level of knowledge and skill in the particular trade
or occupation which he will be appointed. For example, a candidate for a
driver’s post may be asked to drive the vehicle to assess his proficiency or
a typist may be asked to type out some letters to find out his speed and
accuracy.
v. Personality test: This test is used to measure those characteristics of a
candidate
which constitute his personality, e.g., selfconfidence, temperament,
initiative,
Judgement, dominance, integrity, originality, etc. Very important
particularly in
the case of appointments to the posts of supervisors and higher executives.
4. Checking References:
If the candidates has been found satisfactory at the interview and his
performance is good
in employment or proficiency tests, the employer would like to get some
important
personal details about the candidates, such as his character, past history,
background etc.
5. Physical or medical examination:
Physical or medical examination is another step in the selection procedure.
It objectives
are
i. To check the physical fitness of the applicant for the job applied for
ii. To protect the company against the unwarranted claims for
compensation under
certain legislative enactments, such as Workmen Compensation Act
iii. To prevent communicable disease entering the business concern.
6. Final Interview:
This interview is conducted for those who are ultimately selected for
employment. The selected candidates are given an idea about their future
prospects within the organization.
Questions
Subject Code: 17CS51

1) Define ‘Management’. Explain the characteristics of management? Explain the functional

areas of management.
2) Describe the Roles and Levels of Management.
3) What is scientific management? Explain Taylor's scientific principles of management and
his contributions
4) What is planning? Discuss the nature and Importance of Planning.
5) Differentiate between strategic planning and tactical planning.
6) Explain the Hierarchy of plans.
7) Briefly explain the steps involved in planning.
8) Describe the Principles of Organization.
9) Explain the Organizational Structure (Organization Chart)? Discuss the advantages and
Disadvantages of each.
10) What is departmentalization? Explain the departmentalization based on products,
functions, customers, regions and time. Also discuss the advantages and disadvantages of
each.