Friday, January 10, 2014


Course Code: ECO-03
Course Title: Management Theory
Assignment Code: ECO-03/TMA/2015-16
Coverage: All Blocks
Maximum Marks: 100
Attempt all questions.
1. “Management Principles focus on one of the best way of doing things and are prescriptive”. Do you agree? Give reasons and explain various principles of management.                                                               (6+14)
Ans. Principles of Management: The word principles mean a fundamental truth that can establish relationship between cause and effect and also helps in thinking out a plan for an action. The principles help in predicting the results expected to follow through set actions undertaken and thus provide basis for a scientific action plan. Meaning of management principles in simple word is that they form the basis of all managerial actions through which desired goals needs to be achieved. By nature these principles are flexible and are more or less based on experiences and can adopt to changing situations and problems and thus became the pillars of management as scientific process.
Need for Management Principles: Management principles are needed for successful practice of managerial process. They help the managers to use the basic principles for decision making. They help the art of management by suggesting as to how the things should be done to obtain the optimum benefits. These principles simplify management practice by bringing out the core aspects of management activities for the good of the organization. The management principle of “science, not rule of the thumb” suggests that every task should be done with minimum effort and energy and additional work can be done with the saved energy. By saving time, efforts and energy activities can be made economical and enhance the productivity of the resources. From the above explanation we can say that management principles focuses on the best way of doing things and it is prescriptive in nature.

Various Principles of  Management: Different management experts have explained different principles on the basis of their research. Henry Fayol, a famous industrialist of France, has described fourteen principles of management in his book General and Industrial Management. While presenting the principles of management Fayol has kept two things in mind. Firstly, the list of the principles of management should not be long but should be suggestive and only those principles should be explained which become applicable in most of the situations. Secondly, the principles of management should be flexible and not rigid so that changes can be made in them in case of need.
Fayol suggested the following 14 principles:
a)      Division of work: Division of work is important for reducing work burden of an employee and improves his skills. This helps an individual to get specialization in his area of expertise. This helps to increase the productivity of an individual.
b)      Authority and Responsibility: Authority is the right to issue command and make decisions. Responsibility is obligation towards organization and decisions made. There must be balance in authority and responsibility. If there is no authority, he cannot fulfill his responsibility and if an individual has an authority he must have equal responsibility.
c)       Discipline: Discipline is important for the success of an organization. There must be good employee-employer relationship. Employees must obey orders and employer must provide good leadership.
d)      Unity of command: According to this principle of Fayol, every employee should receive orders and instructions from one boss and he should be responsible and accountable to him only.
e)      Unity of Direction: One objective and one plan. There must be one plan for an organization at a time and should be directed by one manager using the same plan.
f)       Subordination of individual interests to the general interest: The interests of any one employee or group of employees should not take precedence over the interests of the organization as a whole.
g)      Remuneration: Fair wage for the service is important. Every worker should be paid fair remuneration.
h)      Centralization: Centralization refers to the degree to which subordinates are involved in decision making. Whether decision making is centralized (to management) or decentralized (to subordinates) is a question of proper proportion.
i)        Scalar Chain: The line of authority from top management to the lowest ranks represents the scalar chain. There should be a chain for the flow of communication. Authority must flow from top management to lower and responsibility must flow vice-versa.
j)        Order: There must be an order for everything. Material and people must be placed in right place. Right person at right place and right material at right time and in right place.
k)      Equity: manager should treat all his subordinates equally. There should be no difference or should not show special attention or kind to any particular subordinate.
l)        Stability of tenure of personnel: There must be stability and job security. High employee turnover affects organization adversely.
m)    Initiative: The successful management provides an opportunity to its employees to suggest their new ideas, experiences and more convenient methods of work. It is the duty of the manager to encourage the feeling of initiative among the employees for doing some work
n)      Esprit de Corps: Promoting team spirit will build harmony and unity within the organization.

2. What is meant by morale? Outline the factors that influence the morale of employees in an organization. What is the significance of leadership vis-a-vis morale?                                                       (4+8+8)
Ans: Morale is a state of mind or willingness to work which in turn affects individuals and organizational objectives.
According to Flippo “morale is a mental condition or attitudes of individuals and groups which determine their willingness to co-operate. Good morale is evidenced by employee enthusiasm, voluntary conformance with regulation and orders, and a willingness, to cooperate with others in the accomplishment of an organization’s objectives. Poor morale is evidenced by surliness, insubordination, a feeling of discouragement and dislike of the job, company and associates. ” 
In the words of Yoder, “morale is a feeling, somewhat related to esprit de corps, enthusiasm or zeal. For group of workers, morale, according to a popular usage of the word, refers to the over-all tone, climate or atmosphere of work, perhaps vaguely sensed by the members.’
Factors Affecting Morale: The employee morale is a very complex phenomenon and is influenced by many factors. Different authors like McFarland. Bradshaw and Krugman. Roach and Apple white name given different criterion for the determination of morale. On the basis of all these classifications, the important factors in the determination of levels of morale are as describe below: 
1. The Organization: The first factor affecting the employee morale is the organization itself. The organization influences the worker’s attitudes to their jobs. The public reputation of an organization may build up for better or worse, their attitudes towards it.
2. The Nature of Work: The nature of the work, the worker is expected to perform also affects his attitude towards the job as well as his morale. If the employee is expected to perform routine or specialized jobs, he will feel bored and alienated. Repetition of the same task again and again makes the working situation worse for the employees. Another factor is the large impersonal organizational structure. Sometimes, if the employee feels that he is just a cog in the machine instead of a person, his morale will become very low. Lack of understanding of organizational goals may also affect the morale. Another factor which causes low morale is the assembly line operations moving at a constant speed.
3. The Level of Satisfaction: The level of satisfaction, a worker derives from his job is another determinant of morale. If the job factors and the satisfaction they bring is perceived to be favourable by the employee morale will tend to be higher than if there factors seem to be unfavourable. The job factors include the factors such as opportunities for promotions, job security, steadiness of employment, opportunities to learn the job and to use his own ideas, pay working conditions, recognition, cooperativeness of co-workers, group relationship etc.
4. The Level of Supervision: The level of supervision received by an employer has a tremendous influence on his morale. High rate of employee turnover indicates that the leadership is ineffective. On the other hand, if employees are given freedom to do the job, their morale will be high. Nobody likes to be supervised all the time.
5. Concept of Self: What is the employee’s concept of himself? The answer to this question influences the attitudes of the employees to the organizational environment. How an employee perceives himself, is a very important question. The morale of persons who have lots of self confidence or who enjoy good mental and physical health is generally high as compared to those who lack self confidence or suffer from poor physical or mental health.
6. Worker’s Perception of Rewards System: The worker’s perception of past rewards and future opportunities for rewards affect their morale to a substantial extent. If the workers regard the rewards as fair and satisfactory, their morale will tend to by higher than if the perception is in the opposite direction. Moreover, if the rewards and opportunities for the future tend to be bleak, morale will tend to be low as compared to the situation where the worker perceives opportunities for satisfaction and for attainment in the rewards that lie ahead in the future.
7. The Employee’s Age: Studies have reported that age and morale are directly related. Other things being equal, elder employees seem to have higher morale. This is because of the reason that perhaps younger workers are more dissatisfied with higher expectations than their elders. The older employees have more stability which comes with maturity, a serious attitude towards job. more reliability, less absenteeism, proven steady work habits, a sense of responsibility and loyalty and less tendency to be distracted by outside interest as influences.
8. The Employee’s Educational Level: Studies have concluded an inverse relationship in the educational level of the employee and his morale. Higher the educational level lower will be the job satisfaction and vice versa. The higher he thinks he should be the more dissatisfied he will be.
9. The Employee’s Occupational Level: The occupational level of the employee also influences his level of morale. The higher up in organisational hierarchy an employee is higher will be his morale. The morale of the people who are lower in the levels of hierarchy is generally low because they compare their own attainments with those of others.
Importance of Leadership in relation to Morale:
Leadership is an important function of management which helps to maximize efficiency and to achieve organizational goals. The following points justify the importance of leadership in a concern.
a)      Initiates action- Leader is a person who starts the work by communicating the policies and plans to the subordinates from where the work actually starts.
b)      Motivation- A leader proves to be playing an incentive role in the concern’s working. He motivates the employees with economic and non-economic rewards and thereby gets the work from the subordinates.
c)       Providing guidance- A leader has to not only supervise but also play a guiding role for the subordinates. Guidance here means instructing the subordinates the way they have to perform their work effectively and efficiently.
d)      Creating confidence- Confidence is an important factor which can be achieved through expressing the work efforts to the subordinates, explaining them clearly their role and giving them guidelines to achieve the goals effectively. It is also important to hear the employees with regards to their complaints and problems.
e)      Building morale- Morale denotes willing co-operation of the employees towards their work and getting them into confidence and winning their trust. A leader can be a morale booster by achieving full co-operation so that they perform with best of their abilities as they work to achieve goals.
f)       Builds work environment- Management is getting things done from people. An efficient work environment helps in sound and stable growth. Therefore, human relations should be kept into mind by a leader. He should have personal contacts with employees and should listen to their problems and solve them. He should treat employees on humanitarian terms.
g)      Co-ordination- Co-ordination can be achieved through reconciling personal interests with organizational goals. This synchronization can be achieved through proper and effective co-ordination which should be primary motive of a leader.

3. Distinguish between the following:                   (4×5)
i) Strategic and Tactical Planning
Ans: Basic differences between strategic planning and tactical planning:
a)      Since upper managers generally have a better understanding of the organization as a whole than lower level managers do, upper management generally develops the strategic plans and because lower level managers generally have better understanding of the day to day organizational operations, generally the lower level managers develop the tactical plans.           
b)      Because Strategic  Planning emphasizes analyzing the future and tactical planning emphasizes analysing the everyday functioning of the organization,facts on which to base strategic plans are usually more difficult to gather than are facts on which to base tactical plans.                                                                                                                       
c)       Because strategic plans are based primarily on a prediction of the future and tactical plans on known circumstances that exist within the organization, strategic plans are generally less detailed than tactical plans.                                                                             
d)      Because strategic planning focuses on the long term and tactical planning on the short term, strategic plans cover a relatively long period of time whereas tactical plans cover a relatively short period of time.
Despite their differences, tactical and strategic planning are integrally related. Manager need both tactical and strategic planning program, and these program must be closely related to be successful.
ii) Autocratic Style and Authoritative Style
Ans: Autocratic leadership is a leadership style characterized by individual control over all decisions and little input from group members. Autocratic leaders typically make choices based on their ideas and judgments and rarely accept advice from followers. Autocratic leadership involves absolute, authoritarian control over a group.
An authoritarian leadership style is being used when a leader dictates policies and procedures, decides what goals are to be achieved, and directs and controls all activities without any meaningful participation by the subordinates.
iii) Formal Communication and Informal Communication
Ans: Difference between Formal and Informal Communication Channel
Formal Communication
Informal Communication
01. Rules
In Formal communication, Organizational rules are strictly followed.
It does not generally follow the rules of organization
02. Recognition
Such communication requires official’s recognition.
In informal communication, It does not require any official’s recognition.
03. Flexibility
It is inflexible in nature as it cannot be changed when desired.
Being flexible, It can be changed easily.
04. Secrecy
Such Communication is not free and open to all. So, Secrecy is maintained here.
It is free and open to all, So it is very difficult to maintain secrecy here. i.e. Grapevine communication which spread informally. 
05. Time & Cost
It follows various rules of organization. So, It requires much time and cost.
Informal communication does not bother for the formalities of organization and therefore it requires less time and cost.

iv) PERT and CPM
Ans: Difference between PERT and CPM
1.The Program Evaluation and Review Technique (PERT) is a project management technique or tool which is suitable for projects that have unpredictable activities while the Critical Path Method (CPM) is a project management tool which is suitable for projects that have predictable activities.
2.CPM uses a single estimate for the time that a project can be completed while PERT uses three estimates for the time that it can be completed.
3.CPM is a deterministic project management tool while PERT is a probabilistic project management tool.
4.CPM allows project management planners to determine which aspect of the project to sacrifice when a trade-off is needed in order to complete the project while PERT does not.
4. Briefly comment on the following:                     (4×5)
i) Individual behaviour is closely liked with group behaviour.
Ans. Individual behaviour is closely linked with the behaviour of the group to which he belongs. The group dictates changes in his behaviour. Individuals observe those work standards which are prescribed by the group. Informal leadership, rather than formal authority of managers is more important for setting and enforcing group standards of performance. A a leader, a manager may be more effective and acceptable to subordinates, if he adopts the democratic style of. Behavioural scientists maintain that by nature most people enjoy work and are motivated by self-control and self-development. Managers should try to identity and provide necessary conditions conducive to the proper and sufficient use of human potential. The managers attitude towards human behaviour should positive. They should know that average man is not lazy by nature. But he is ambition. Every man likes to work and prefers to assume responsibilities. MacGregor maintains that employees favour self-direction and self-control. Behaviouralists believe that in place of the concept of social man the concept of self-actualizing man would be more appropriate to explain human motivations.
ii) Medium range plans have duration of more than one year.
Ans: Medium-term plans outline the company's direction for several years into the future. Unlike long-term plans, which may set goals that take decades to complete, medium-term plans deal with time frames that typically span two to eight years into the future. For example, an auto manufacturer may have a short-term plan that outlines what needs to happen in the accounting department during the next fiscal year, a medium-term plan that outlines new vehicle goals for the next five years, and a long-term plan that addresses the car needs of a new generation of buyers. A company's medium-term plan typically contains important management directives regarding the direction of the company that may take a few years to complete. For example, if a leading computer company wants to create a workforce that's more autonomous and self-directed, it may specify certain steps in its medium-term plan that must be followed to attain that goal. This may include eliminating managers and flattening the company bureaucratic structure --- processes that likely can't happen in the short term. Medium-term objectives are generally those that relate to a period from 18 months to three years or sometimes five years (whichever is appropriate for the organisation and people setting the objectives). These objectives will therefore be broader, can be reviewed and may need to be amended with time.
iii) Delegation is essential for management but decentralization is optional.
Ans: Delegation of authority is a process in which the authority and powers are divided and shared amongst the subordinates. When the work of a manager gets beyond his capacity, there should be some system of sharing the work. This is how delegation of authority becomes an essential tool in organization function. Through delegation, a manager, in fact, is multiplying himself by dividing/multiplying his work with the subordinates. Decentralization is the systematic delegation of powers of decision-making to the lower level where the work is to be performed. It is concerned with the placement of authority. When the organization is large and complex, management cannot centrally control the total activities. So, the management and organization divide the activities into different units and accordingly delegates authority for decision making in decentralization. Thus, decentralization of authority means the systematic distribution of authority and power to the lowest level of organization for decision making in order to get the works done successfully. But, Decentralisation is an optional policy because it is on the top management of an organisation how much power and work they want to share with the lower levels.
iv) Organizational efficiency is ensured with the help of controls.
Ans: The term control has different connotations depending upon the context of the use of the term. In manufacturing it refers to a Device or mechanism installed or instituted to guide or regulates the activities or operation of an apparatus, machine, person, or system; in law it refers to controlling interest and in management as an authority to order and manage the workings and management of an entity. Control is a management process to aim at achieving defined goals within an established timetable, and comprises of three components: (1) setting standards, (2) measuring actual performance, and (3) taking corrective action.
The control system helps in improving organizational efficiency. Various control devices act as motivators to managers. The performance of every person is regularly monitored and any deficiency if present is corrected at the earliest. Controls put psychological pressure on persons in the organization. On the other hand control also enables management to decide whether employees are doing right things. That is why controlling is the key in improving performance.
5. Write Short Notes on the following:                  (4×5)
i) Span of Control
Ans: In the words of Spriegal, "Span of control means the number of people reporting directly to an authority. The principle of span of control implies that no single executive should have more people looking to him for guidance and leadership than he can reasonably be expected to serve. The span of supervision is also known as span of control, span of management, span of responsibility, span of authority and span of direction.
Factors influencing the span of control: There are number of factors that influence or determine the span of supervision in a particular organisation, the most important of these are as follows:
a)      The capacity and ability of the executive.
b)      Competence and training of subordinates.
c)       Nature of Work.
d)      Time available for supervision.
e)      Degree of Decentralization and Extent of Delegation
Type of span of control: Broadly speaking there are two types, of span of control:
a) Wider Span of control: In this type of span, the supervisor controls and guides the activities of subordinates directly under his control. Wider span or supervision is favoured where workers are competent and trained.
b) Narrow Span of Supervision: under this type of supervision, there are many levels and more supervisors are required to perform the job of guidance and control for different activities. It increases the efficiency of supervision but the cost of supervision is very high as compared to wider span of supervision.
ii) Recruitment
Ans: Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in the organization. When more persons apply for job then there will be a scope for recruiting better persons. The job-seekers too on the other hand, are in search of organizations offering them employment. Recruitment is a linkage activity bringing together those with jobs and those seeking jobs.
Flippo: “Recruitment is the process of searching prospective employees and stimulating them to apply for the jobs in the organization”
Dale Yoder: Recruitment is “the process of discovering the sources of manpower to meet the requirements of staffing schedule and to employ effective measures for attracting that manpower in adequate numbers to facilitate effective selection of an efficient working force”
Thus recruitment may be considered as a positive action as it involves attracting the people towards organization.  The main purpose is to have a rich inventory of eligible persons from amongst whom the most suitable candidates can be selected for employment in the organization.
Process of Recruitment: Recruitment process passes thought the following stages:
1.       Finding out the sources where suitable person will be recruited. Ex.: colleges
2.       Developing the techniques to attract the desired candidates. The goodwill of an organization in the market may be one technique. The publicity about the company being a good employer may also help in stimulating candidates to apply.
3.       Employing of techniques to attract candidates. There may be offers of attractive salaries, proper facilities for development, etc.
4.       The next stage in this process is to stimulate as many candidates as possible and ask them to apply for jobs. In order to increase the selection ratio, there is a need to attract more candidates.
iii) Process of control
Ans: In order to perform his control functions, a manager follows four basic steps. First of all, he establishes the standards of performance to ensure that performance is in accordance with me plan. After this, the manager will appraise the performance and compare it with predetermined standards. This step will lead the manager to know whether the performance has come up to the expected standard or if there is any deviation. If the standards are not being met, the manager will take corrective actions, which is the final step in controlling.
Establishing standards: A standard acts as a reference line or basic of comparison of actual performance. Standards should be set precisely and preferably in quantitative terms. It should be noted that setting standards is also closely linked with and is an integral part of the planning process. Different standards of performance are set up for various operations at the planning stage, which serve as the basis of any control system. Establishment of standards in terms of quantity, quality or time is necessary for effective control. Standards should be accurate, precise, acceptable and workable. Standards should be flexible, i.e., capable of being changed when the circumstances require so.
Measurement of performance: This step involves measuring of actual performance of various individuals, groups or units and then comparing it with the standards, which have already been set up at the planning stage. The quantitative measurement should be done in cases where standards have been set in quantitative terms. In other cases, performance should be measured in terms of quantitative factors as in case of performance of industrial relations manager. Comparison of performance with standards is comparatively easier when the standards are expressed in quantitative terms.
Comparison: This is the core of the control process. This phase of control process involves checking to determine whether the actual performance meets the predetermined or planned performance. Manager must constantly seek to answer, “How well are we doing?” When a production supervisor checks the actual output or performance of his department with the production schedule, he is performing comparison aspect of control. When-an executive calculates the performance of his subordinates once in six months or   annuity, he is performing comparison aspect of control. Checking return on in investment is a comparison phase of control.
Taking corrective action: The final step in the control process is taking corrective actions so that deviations may not occur again and the objectives of the organization are achieved. This will involve taking certain decision by the management like re-planning or redrawing of goals or standards, assignment of clarification of duties. It may also necessitate reforming the process of selection and the training of workers. Thus, control function may require change in all other managerial functions. If the standards are found to be defective, they will be modified in the light of the observations.
iv) Leadership Effectiveness
Ans: Leadership is the ability to build up confidence and deal among people and to create an urge in them to be led. To be a successful leader, a manager must possess the qualities of foresight, drive, initiative, self-confidence and personal integrity. Different situations may demand different types of leadership.
Leadership means influencing the behaviour of the people at work towards realizing the specified goals. It is the ability to use non-coercive (no force) influence on the motivation, activities and goals (MAG) of others in order to achieve the objectives of the organisation. To be a effective leader, one must have the following qualities:
1.       Patience: A good leader must show patience while waiting for expected results, facing difficult situations and taking important decisions. He must avoid taking hasty decisions and actions.
2.       Good Personality: A good personality is a combination of physical, mental and social qualities. Good personality helps a leader to influence his followers. Attractive physique and good manners add an advantage to the leader's personality.
3.       Self-confidence: A good leader must have self confidence. This quality is necessary for facing challenging situations and for solving problems easily and effectively.
4.       Human Skills: A good leader must have essential social and human skills. That is, he must understand people. This quality is necessary for dealing with different types of persons and social groups.
5.       Judgment skills: A good leader should be able to examine problems in right perspective. His judgment and decision making abilities should be superior to others. He should be able to form opinions and judge based on facts and not be prejudiced.