Thursday, March 23, 2017

Principles of Business Management Solved Papers - May' 2015 Exam

2015 (May) – Semester Exam
(General/Speciality)
The figures in the margin indicate full marks for the questions
1.       Write True or False:                                1x8=8
a)      Management is regarded as a perfect science.                           False
b)      Management by objectives is a clever device for the exploitation of labourers.          False
c)       Responsibility can be delegated but authority cannot be delegated.                                False
d)      Coordination and cooperation are used in the same sense.                  False                    
e)      Planning is a mental exercise.                                             True
f)       ‘Division of labour is an essential element of an organisation.                              True
g)      The theory of scientific management was propounded by F. W. Taylor.          True      
h)      Control is not applicable at all levels of management.                              False    

2.       (a) Evaluate the contribution made by F. W. Taylor and Henry Fayol to the growth of management thought.             14
Ans: CONTRIBUTION OF FAYOL AND TAYLOR
F.W. Taylor and Henry Fayol are generally regarded as the founders of scientific management and administrative management and both provided the bases for science and art of management.

Taylor's Scientific Management
F.W. Taylor is one of the founders (the other two are Max Weber and Henry Fayol) of classical thought/classical theory of management. He suggested scientific approach to management also called scientific management theory. Frederick Winslow Taylor well-known as the founder of scientific management was the first to recognize and emphasis the need for adopting a scientific approach to the task of managing an enterprise. He tried to diagnose the causes of low efficiency in industry and came to the conclusion that much of waste and inefficiency is due to the lack of order and system in the methods of management. He found that the management was usually ignorant of the amount of work that could be done by a worker in a day as also the best method of doing the job. As a result, it remained largely at the mercy of the workers who deliberately shirked work. He therefore, suggested that those responsible for management should adopt a scientific approach in their work, and make use of "scientific method" for achieving higher efficiency. The scientific method consists essentially of:
a)      Observation
b)      Measurement
c)       Experimentation and
d)      Inference.
He advocated a thorough planning of the job by the management and emphasized the necessity of perfect understanding and co-operation between the management and the workers both for the enlargement of profits and the use of scientific investigation and knowledge in industrial work. He summed up his approach in these words:
a)      Science, not rule of thumb
b)      Harmony, not discord
c)       Co-operation, not individualism
d)      Maximum output, in place of restricted output
e)      The development of each man to his greatest efficiency and prosperity.
Elements of Scientific Management: The techniques which Taylor regarded as its essential elements or features may be classified as under:
1. Scientific Task and Rate-Setting (work study): Work study may be defined as the systematic, objective and critical examination of all the factors governing the operational efficiency of any specified activity in order to effect improvement. Work study includes.
(a) Methods Study: The management should try to ensure that the plant is laid out in the best manner and is equipped with the best tools and machinery. The possibilities of eliminating or combining certain operations may be studied.
(b) Motion Study: It is a study of the movement, of an operator (or even of a machine) in performing an operation with the purpose of eliminating useless motions.
 (c) Time Study (work measurement): The basic purpose of time study is to determine the proper time for performing the operation. Such study may be conducted after the motion study. Both time study and motion study help in determining the best method of doing a job and the standard time allowed for it.
(d) Fatigue Study: If, a standard task is set without providing for measures to eliminate fatigue, it may either be beyond the workers or the workers may over strain themselves to attain it. It is necessary, therefore, to regulate the working hours and provide for rest pauses at scientifically determined intervals.
(e) Rate-setting: Taylor recommended the differential piece wage system, under which workers performing the standard task within prescribed time are paid a much higher rate per unit than inefficient workers who are not able to come up to the standard set.
2. Planning the Task: Having set the task which an average worker must strive to perform to get wages at the higher piece-rate, necessary steps have to be taken to plan the production thoroughly so that there is no bottlenecks and the work goes on systematically.
3. Selection and Training: Scientific Management requires a radical change in the methods and procedures of selecting workers. It is therefore necessary to entrust the task of selection to a central personnel department. The procedure of selection will also have to be systematised. Proper attention has also to be devoted to the training of the workers in the correct methods of work.
4. Standardization: Standardization may be introduced in respect of the following.
(a) Tools and equipment: By standardization is meant the process of bringing about uniformity. The management must select and store standard tools and implements which will be nearly the best or the best of their kind.
(b) Speed: There is usually an optimum speed for every machine. If it is exceeded, it is likely to result in damage to machinery.
(c) Conditions of Work: To attain standard performance, the maintenance of standard conditions of ventilation, heating, cooling, humidity, floor space, safety etc., is very essential.
(d) Materials: The efficiency of a worker depends on the quality of materials and the method of handling materials.
5. Specialization: Scientific management will not be complete without the introduction of specialization. Under this plan, the two functions of 'planning' and 'doing' are separated in the organisation of the plant. The `functional foremen' are specialists who join their heads to give thought to the planning of the performance of operations in the workshop. Taylor suggested eight functional foremen under his scheme of functional foremanship.
(a) The Route Clerk: To lay down the sequence of operations and instruct the workers concerned about it.
(b) The Instruction Card Clerk: To prepare detailed instructions regarding different aspects of work.
(c) The Time and Cost Clerk: To send all information relating to their pay to the workers and to secure proper returns of work from them.
(d) The Shop Disciplinarian: To deal with cases of breach of discipline and absenteeism.
(e) The Gang Boss: To assemble and set up tools and machines and to teach the workers to make all their personal motions in the quickest and best way.
(f) The Speed Boss: To ensure that machines are run at their best speeds and proper tools are used by the workers.
(g) The Repair Boss: To ensure tha7t each worker keeps his machine in good order and maintains cleanliness around him and his machines.
(h) The Inspector: To show to the worker how to do the work.
6. Mental Revolution: At present, industry is divided into two groups – management and labour. The major problem between these two groups is the division of surplus. The management wants the maximum possible share of the surplus as profit; the workers want, as large share in the form of wages. Taylor has in mind the enormous gain that arises from higher productivity. Such gains can be shared both by the management and workers in the form of increased profits and increased wages.
Henry Fayol's 14 Principles of Management:
The principles of management are given below:
a.       Division of work: Division of work or specialization alone can give maximum productivity and efficiency. Both technical and managerial activities can be performed in the best manner only through division of labour and specialization.
b.      Authority and Responsibility: The right to give order is called authority. The obligation to accomplish is called responsibility. Authority and Responsibility are the two sides of the management coin. They exist together. They are complementary and mutually interdependent.
c.       Discipline: The objectives, rules and regulations, the policies and procedures must be honoured by each member of an organisation. There must be clear and fair agreement on the rules and objectives, on the policies and procedures. There must be penalties (punishment) for non-obedience or indiscipline. No organisation can work smoothly without discipline – preferably voluntary discipline.
d.      Unity of Command: In order to avoid any possible confusion and conflict, each member of an organisation must received orders and instructions only from one superior (boss).
e.      Unity of Direction: All members of an organisation must work together to accomplish common objectives.
f.        Emphasis on Subordination of Personal Interest to General or Common Interest: This is also called principle of co-operation. Each shall work for all and all for each. General or common interest must be supreme in any joint enterprise.
g.       Remuneration: Fair pay with non-financial rewards can act as the best incentive or motivator for good performance. Exploitation of employees in any manner must be eliminated.
h.      Centralization: There must be a good balance between centralization and decentralization of authority and power. Extreme centralization and decentralization must be avoided.
i.         Scalar Chain: The unity of command brings about a chain or hierarchy of command linking all members of the organisation from the top to the bottom. Scalar denotes steps.
j.        Order: Fayol suggested that there is a place for everything. Order or system alone can create a sound organisation and efficient management.
k.       Equity: An organisation consists of a group of people involved in joint effort. Hence, equity (i.e., justice) must be there. Without equity, we cannot have sustained and adequate joint collaboration.
l.         Stability of Tenure: A person needs time to adjust himself with the new work and demonstrate efficiency in due course. Hence, employees and managers must have job security. Security of income and employment is a pre-requisite of sound organisation and management.
m.    Esprit of Co-operation: Esprit de corps is the foundation of a sound organisation. Union is strength. But unity demands co-operation. Pride, loyalty and sense of belonging are responsible for good performance.
n.      Initiative: Creative thinking and capacity to take initiative can give us sound managerial planning and execution of predetermined plans.
Or
(b) Describe the nature and objectives of business management.           7+7=14
Ans: Management - Introduction
Management is the coordination of all resources through the process of planning, organising, directing, staffing and controlling in order to attain stated objectives effectively and efficiently.  Effectively means doing the right task, completing activities and achieving goals and efficiently means to attain objectives with least amount of resources at a minimum cost. This process starts at the top and continues in more or less degree at every level of the organisation.
Nature or characteristics of Management:
On the basis of critical analysis of  various definitions of management, the main features of management may be stated as follows :
1)      Management is a process: Management is a continuous activity which aims at making optimum use of the available resources like men, machinery, materials, and money, for achieving organisational goals.
2)      Management deals with several functions: Management includes several functions such as planning, organising, staffing, directing co-ordinating, controlling, motivating or actuating, controlling, decision making, leadership and communication.
3)      Management is goal oriented: Every management activity is directed towards achieving predetermined objectives of the organiation.
4)      Management is a group of organized activities: Management plans, organizes, co-ordinates, directs and controls the group efforts so as to achieve organisational goals efficiently and effectively.
5)      Management is basically a factor of production: The factors of production include land, labour, capital and entrepreneurs.  A manager or entrepreneur mobilizes resources like land, labour and capital to produce’ output to satisfy needs of the society and earn profit.
6)      Management is a discipline: Management , although borrows several concept for other social sciences, it has developed its own body of principles and theories so as to become a special discipline or subject of study for potential managers.
7)      Management is  a science and also an art: Science is defined as a systematized body of knowledge and it uses scientific methods of observation measurement, experimentation etc.  Its principles are exact and university applicable. Management has systematized body of knowledge and its principles are evolved on the basis of   observation. But management being a social science, it is not an exact science.  So management is a soft or inexact science.
Art refers to the way of doing specific things i.e. it indicates “ how an objective is to be achieved.  it is the know-how to achieve the desired results.  Art needs continuous practice to reach the level of perfection.  An art is application of science. Thus art and science are interrelated in the sense that putting scientific principles into practice requires art, which needs special knowledge and skills.
Management is both a science as well as an art.  The science of management provides certain principles that can guide managers in the professional efforts, while the art of management deals with tackling every situation in an effective manner.  Planning and organising emphasize the science of management while direction, communication motivation coordination and control emphasize art of management.  Getting work done through people is an art of management.
8)      Management is dynamic: Under dynamic environment management faces several challenges hence efforts are made to develop and use new techniques for managing the organisations effectively and efficiently.  as social change takes place, management also changes to overcome the problems whenever they arise.
9)      Management is a Profession: Profession is an occupation for which specialized skills and training are required and these skills are used not for private profit but for the larger interests of the society.  There is a professional body to control the behaviour of its members.  At present management is not a full fledged profession but it is heading towards becoming a profession.
OBJECTIVES OF MANAGEMENT
According to Drucker, management is the dynamic life giving element in every organisation. In its absence, an organisation is merely a collection of men, machines, money and material. The importance of management is:-
a)      Optimum Use of Resources: Management ensures optimum utilization of resources by attempting to avoid wastage of all kinds. It helps in putting the resources to the best advantage.
b)      Effective leadership and Motivation: In the absence of management, the working of an enterprise will become random and haphazard in nature. Management creates teamwork and motivates employees to work harder and better by providing guidance, counseling and effective leadership.
c)       Establish Sound Industrial Relations: Management minimizes industrial disputes and contributes to sound industrial relations in an undertaking. Industrial peace is an essential requirement for increasing productivity.
d)      Achievement of Goals: Objectives can be achieved only when the human and non human resources are combined in a proper way. Managers plan carefully, organize the resources properly, hire competent people, and provide necessary guidance. Thus management is goal oriented.
e)      Reduces Costs - It gets maximum results through minimum input by proper planning and by using minimum input & getting maximum output. Management uses physical, human and financial resources in such a manner which results in best combination. This helps in cost reduction.
f)       Establishes Equilibrium - It enables the organisation to survive in changing environment. It keeps in touch with the changing environment. With the change is external environment, the initial co-ordination of organisation must be changed. So it adapts organisation to changing demand of market / changing needs of societies. It is responsible for growth and survival of organisation.
3.       (a) Explain the concept of decisions making and its role in business management.  7+7=14
Ans: Decision Making - Introduction
Decision-making is an essential aspect of modern management. It is a primary function of management. A manager's major job is sound/rational decision-making. He takes hundreds of decisions consciously and subconsciously. Decision-making is the key part of manager's activities. Decisions are important as they determine both managerial and organisational actions. A decision may be defined as "a course of action which is consciously chosen from among a set of alternatives to achieve a desired result." It represents a well-balanced judgment and a commitment to action.
It is rightly said that the first important function of management is to take decisions on problems and situations. Decision-making pervades all managerial actions. It is a continuous process. Decision-making is an indispensable component of the management process itself.
The effectiveness of management depends on the quality of decision-making. In this sense, management is rightly described as decision-making process. According to R. C. Davis, "management is a decision-making process." Decision-making is an intellectual process which involves selection of one course of action out of many alternatives. Decision-making will be followed by second function of management called planning. The other elements which follow planning are many such as organising, directing, coordinating, controlling and motivating.
Decision-making has priority over planning function. According to Peter Drucker, it is the top management which is responsible for all strategic decisions such as the objectives of the business, capital expenditure decisions as well as such operating decisions as training of manpower and so on. Without such decisions, no action can take place and naturally the resources would remain idle and unproductive. The managerial decisions should be correct to the maximum extent possible. For this, scientific decision-making is essential.
Definitions of Decision-making
The Oxford Dictionary defines the term decision-making as "the action of carrying out or carrying into effect".
According to Trewatha & Newport, "Decision-making involves the selection of a course of action from among two or more possible alternatives in order to arrive at a solution for a given problem".
Significance of Decision Making
A decision is always related to some problem, difficulty or conflict. Decisions help in solving problems or resolving conflicts. There are always differences of opinions, judgements, etc. Managerial decision helps in maintaining group effectiveness. All problems may not require decision-making but merely the supply of information may be sufficient. For example, when will different groups report for re-orientation? The supply of information about training programme may be enough.
Decision problems necessitate a choice from different alternatives. A number of possibilities are selected before making a final selection. Decision-making requires something more than a selection. The material requiring a decision may be available but still a decision may not be reached. The effect of a decision is to be felt in future so it requires proper analysis of available material and a prediction for the future. If decision premises do not come true, then decision itself may be wrong. Sometimes decisions are influenced by adopting a follow-the-leader practice. The leader of the group or an important manager of a concern sets the precedent and others silently follow that decision.
From the above explanation, the following benefits of decision making are obtained:
a)      Basis of planning: Decision-making is an integral part of the planning process. Planning can be effective only through proper decision.
b)      Effective control: The function of control can be properly executed through an effective decision-making process. This is due to the fact that in case any deviation takes places between the standard result and the actual result, proper decisions has to be taken for the control process.
c)       Solution to hard problems: Proper and sound decisions can help to solve harsh and complicated problems.
d)      Best result: Decision-making is the right manner can give best result to a problem. The best alternative can be selected from among various alternatives.
e)      Basis of success: The decision-making process has its relation with other managerial functions. So, its effective implementation will provide the basis of success for other functions also.
Or
(b) Discuss the objectives and limitations of Management by Objectives (MBO) in detail.                           7+7=14
Ans: Introduction: Management by Objective (MBO)
The concept Management by Objectives was coined by Peter Drucker in 1954. As per this concept, the organisational goals are broken down to different level objectives and assigned to individuals at different level in order to have the organisational goal. It is a technique and philosophy of management based on converting an organisational objective into a personal   objective on the presumption that establishing personal objectives makes an employee committed, which leads to better performance.
Koontz defined MBO as follows: “MBO is a comprehensive managerial system that integrates many key managerial activities in a systematic manner, consciously directed towards the effective and. Efficient achievement of organisational objectives.”
Objectives of MBO
Objectives of MBO can be classified under the following heads:
1.       Primary Objectives: Primary objectives are related to the company and not to individuals. Earning of profits out of providing goods and services to the customers is the primary objective of a company.
2.       Secondary Objectives: These objectives help in achieving primary objectives. Secondary objectives, like primary objectives, are impersonal in nature. The goal of adding new products will be a secondary goal which will help in achieving the primary objective.
3.       Individual Objectives: These are the goals which individual members in an organization try to achieve no daily, weekly, monthly or yearly basis. These objectives are achievable as subordinate to primary and secondary goals.
4.       Social Objectives: These are the goals of an organization towards society. These include the obligations required by the community, government agencies etc. These also include goals intended to further social, physical and cultural improvement of the society.
Limitations of MBO
Although MBO is generally taken as the panacea for all the problems of an organisation, it is not without weaknesses or limitations. The following are the limitations of MBO:
1. MBO cannot be implemented effectively on account of difficulty in setting verifiable    objectives.
2. Open atmosphere for appropriate objective-setting is absent because of differences in the status of subordinates.
3. Managers may not get time to do even their normal work as MBO involves much paperwork and holding of many meetings.
4. There is a tendency on the part of the managers to emphasis’s short-term objectives and to become more precise in objective setting and accomplishment.
5. MBO is a philosophy of managing an organisation in a new way. However, many managers fail to understand and appreciate this new approach.
6. MBO represents the danger of inflexibility in the organisation, particularly when the objectives need to be altered. In a dynamic environment, a particular objective may not be valid for ever.
                 In spite of all these weaknesses, MBO is considered as one of the unique techniques of managing the organisation. However, the full benefits of it can only be derived if the following basic requirements are taken into account.
4.       (a) Explain the concept of ‘organisation’ and ‘organising’. Discuss elaborately the different techniques of organising.         3+3+8=14
Ans: Introduction of Organisation and organising
The term 'Organisation' can be used in different senses. It can be used as a group of person working together to as a structure of relationships or as a process of management.  When it is used to refer to a group of person working together, it means a concern, an undertaking or as enterprise.
When it is used to refer to a structure of relationships, it means the structural relationships among the positions and jobs and person (i.e., the framework of responsibility and authority) through which the enterprise functions, and it is called organisation structure.
On the other hand, Organising or Organizing in management refers to the relationship between people, work and resources used to achieve the common objectives (goals).
Definitions
In the words of
Allen – “An organisation is the process of identifying and grouping 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 accomplishing objectives.”
Mooney and Reily – “Organisation is the form of every human association for the attainment of a common purpose.”
Koontz & O’Donnel – Organising involves the establishment of an intentional structure of roles through determination and enumeration of the activities required to achieve the goals of an enterprise and each part f it, the grouping of these activities, the assignment of such groups of activities to manager, the delegation of authority to carry them out and provision for co-ordination of authority and informational relationships, horizontally and vertically in the organisation structure.
Forms or Types or Techniques of Organisation
Organising function is basically concerned with the allocation of tasks and delegation of authority.  On account of different practices of distributing authority and responsibility among the members of the enterprise several types of organisational structures have been evolved. Along with formal organisations, non formal organisations also emerge spontaneously and naturally.  Such non-formal arrangement is psychologically and socially oriented.  When all the needs of the employees are not satisfied by the formal organisation, non-formal organisations tend to develop in the organisation. Organisation are mainly classified into two categories:
a)      Formal and
b)      Informal.
Formal organisations are further classified into the following categories
1)      Line Organisation
2)      Functional Organisation
3)      Line and staff organisation
4)      Committee Organisation
MEANING OF FORMAL ORAGANISATION: The formal organization refers to the structure of jobs and positions with clearly defined functions and relationships as prescribed by the top management. This type of organization is built by the management to realize objectives of an enterprise and is bound by rules, systems and procedures. Everybody is assigned a certain responsibility for the performance of the given task and given the required amount of authority for carrying it out.
In the words of Chester Barnard, "An organisation is formal when the activities of two or more persons are consciously co-ordinated towards a common objective".
Features of Formal Organisation: The main features of formal organisation are:
(a)    In a formal organisation, the position, authority, responsibilities, accountability of each level are clearly defined.
(b)   It prescribes the relationships amongst the people working in the organisation.
(c)    The formal relations in the organisation arise from the pattern of responsibilities that are created by the management.
(d)   The structure is consciously designed to enable the people of the organisation to work together for accomplishing the common objectives of the enterprise.
(e)   A formal organisation is bound by rules) regulation and procedures.
MEANING OF INFORMAL ORAGANISATION: Man is a social being and wants social interaction.  Formal organisations are jointed by people to satisfy their needs but these organisations cannot satisfy all the needs of people because of their nature.  Hence informal organisation emerges in all the formal organisations.
Informal organisation is natural or spontaneous network of personal and social relationships between individuals formed on the basis of personal attitudes values emotions, friendships prejudices, interest’s likes and dislikes, regional affinity, common work place etc.  Informal organisation is all pervasive and is found at all levels of management.  It consists of small informal groups with their own behavioral patterns, status systems, beliefs and goals.
According to Davis informal organisations is” that network of personal and social relations which is not established or required by formal organisation.  It is a shadow organisation”.
Causes of Emergence of informal Groups:
1)      To satisfy social needs which are not satisfied by formal organisations.
2)      To enjoy sense of belongingness and identification.
3)      To get knowledge of approved behaviour determined by the informal organisation.
4)      To get outlet of employees’ frustration.
Features of Informal Organisation: The chief features of informal organisation are:
1)      Informal Organisation is not established by any formal authority. It arises from the personal and social relations amongst the people working in the organisation.
2)      Informal Organisation arises spontaneously, and not by deliberate or conscious efforts.
3)      It is influenced by the personal attitudes, emotions, whims, likes and dislikes, etc. of the people in the organisation.
4)      It is based on rules, regulations and procedures.
TYPES OF INTERNAL OR INFORMAL ORGANISATION
The main types of integral organisation are:
1.       Line, military or scalar organisation.
2.       Functional Organisation.
3.       Line and staff organisation.
4.       Committee form of organisation.
1. LINE ORGANISATION, SCALAR ORGANISATION OR HIERARCHICAL ORGANISA TION: Line organisation is a direct type of internal organisation. It is the oldest and the simplest form of integral organisation. Line organisation is a type of internal organisation in which there are direct vertical authority relationships (i.e., superior-subordinate relationships), connecting the positions at each level with those above and those below in the hierarchy. In other word, it is a form of organisation in which the relationships between the various levels of management form a hierarchy of authority or chain of command.
Features of Line Organisation
The chief features of line organisation are:
1)      The line organisation forms a vertical line relationship from the top to the bottom of the organisation.
2)      There is authority relationship or superior-subordinate relationship in the line organisation. Each position in the organisation structure has authority over its subordinate, and is accountable to his superior.
3)      There is no provision for staff officers (i.e., experts or specialists) to offer advice to the line officers under this system.
2. FUNCTIONAL ORGANISATION: Functional organisation is a type of organisation in which the work of the whole enterprise is divided into a number of specialized functions like production, purchasing, marketing, office management, personnel relations, etc. and each of these spcci~11ised functions is entrusted to a functional expert or specialist.
Features of Functional Organisation: Functional organisation has certain characteristic features. The main features of functional organisation are:
1)      Functional organisation is a complex type of organisation when compared to line organisation and line and staffing organisation.
2)      In this type of organisation, the line executive receives instructions not only from his line boss but also from one or more specialists.
3)      Under this system, the principle of unity of command is not observed, as a single worker has to get instructions from more than one specialist.
3. LINE AND STAFF ORGANISATION: In line organisation, there is unity of command, hut there is no specialization. In functional organisation, there is extreme specialisation, hut there is no unity of command. To overcome the defects and to take advantage of the merits of both line organisation and functional organisation, line and staff organisation has been evolved. Line and staff organisation is the Usual form of organisation found in modern enterprise.
Line and staff organisation is a combination of line organisation and functional organisation. It is a type of organisation in which there arc two sets of officers for administration, viz., (1) line officers who have the authority and command over the subordinates and are responsible for the accomplishment of the results, and-(2) staff officers or specialists who render experts advice to the line officers to help them to discharge their functions efficiently.
4. Committee Form of Organisation: A number of persons may come together to take decision, decide a course of action, advise line officers on some matters, it is a committee form of organisation. It is a method of collective thinking, corporate judgment and common decision. A committee may be assigned some managerial functions or some advisory or exploratory service may be expected from it.
Need for Committee: The main reason for committee is to secure common judgment on administrative matters. The committees are set up for the following reasons.
1)      The committees provide a forum for exchanging ideas among organisational members.
2)      The exchange of ideas among members may generate some suggestions and recommendations which may be useful for the organisation.
3)      There can be proper discussion on present problems and efforts are made to find the solutions.
Or
(b) What do you mean by ‘departmentation’? Discuss in detail the various methods of departmentation. 4+10=14
Ans: Departmentation - Introduction
The process of dividing activities into units and subunits is referred to as departmentation. The term departmentation is used in a generic sense n is not only confined to the creation of such units as are called departments, but it includes divisions, sections and jobs also.
Dividing up work calls or identification of total activities and classification of such activities into units and subunits. There are three bases for primary grouping of activities at the second level of the organisation just below the top level. Units at the second level are commonly called departments when business functions are adopted as the pattern of grouping activities. Such units go by the name of divisions when either products manufactured or territories are adopted as the means of classifying activities.
There are, however, two approaches to departmentation- top down and bottom-up approaches. In the top-down approach, activities are divided step by step downward form the chief executive's job to the operating jobs. In the bottom-up approach, the division of activities is carried on in a reverse order. Starting form operating jobs, there arise sections form combining some correlated jobs, departments from combining some sections and finally the chief executive position form putting departments together. While the top-down approach gives emphasis on co-ordination and managerial action, the bottom-up approach gives emphasis on co-ordination and managerial action, the bottom-up approach focuses attention on employee performance. Although the top-down approach is easy for understanding the departmentation process, both the approaches are utilized in actual practice
Bases or Methods of departmentation
Departmentation provides motivation by developing feeling of autonomy to the extent possible. There are several bases of departmentation. The more commonly used bases are function, produt, territory, process, customer, time etc. Some of these bases are internal-operation – oriented like function, process, time while others like product, territory and customer are output-oriented.
a)      Functional Departmentation: The grouping of common or homogeneous activities to form an organisation unit is known as functional departmentation. Functional departmentation is the most widely used basis for organising activities and is present almost in every large organisation at some level.
Functional departmentation is most commonly used because it offers certain advantages which include advantages of specialization, ensuring performance of activities necessary for the achievement of organisational objectives, elimination of un-necessary activities, easier control over functions, easier way for pinpointing training need of the managers and maintaining the relative importance of functions in the organisation.
b)      Product wise departmentation: Product departmentation involves the grouping together of all activities necessary to manufacture a product or product line. Product departmentation is preferred for product expansion and diversification when manufacturing and marketing characteristics of each product are of primary concern. Product departmentation offers several advantages places attention to product lines, reduces problems of coordination for different products, provides opportunities for further diversification and expansion of organisation and provides product specialization necessary for managers specially when each product is different from other.
c)       Territory – wise Departmentation: Territorial or geographical departmentation is specially useful to large-sized organisations having activities which are physically  or geographically spread such as banking, insurance, transportation etc., Territorial departmentation provides certain efficiency in operation. Local factors such as customers, culture, styles, preferences etc., always affect organisational functioning.
d)      Production processes – wise departmentation: In  process departmentation, processes involved in production or various types of equipments used are taken as basis for departmentation. When the production activities involve the use of several distinctive processes, these can be used as the base for grouping of activities. Such activities may be textiles, oil production etc., The process are set in such a way that a series of operations is feasible making operations economic. It provides advantages of specialization required at each level of total processes, maintenance of plant can be done in better way, and manpower can be utilized effectively.
e)      Customer – wise departmentation: Customer based departmentation is  basically market – oriented in which departments are created around the markets served or around marketing channels. The basic idea of this departmentation is to provide services to clearly identified groups of customers. Each group of customers has different purchase behavior, payment schedule, demand pattern etc., Therefore they can be attracted to the organisation’s business by satisfying them by providing services, payment schedule demand pattern etc.
5.       (a) Compare and contrast A. Maslow’s and F. Herzberg’s theory of motivation.                         14
Ans: Maslow's Hierarchy of Needs: Maslow Abraham proposed his theory in the 1940s. This theory, popularly known as the Hierarchy of Needs assumes that people are motivated to satisfy five levels of needs: physiological, security, belongingness, esteem and self-actualization needs. The figure 9.1 shows Maslow's hierarchy of needs

Maslow suggested that the five levels of needs are arranged in accordance with their importance, starting from the bottom of the hierarchy. An individual is motivated first and foremost to satisfy physiological needs. When these needs are satisfied, he is motivated and 'moves up' the hierarchy to satisfy security needs. This 'moving up process continues until the individual reaches the self-actualization level.
Critical Analysis of Maslow’s Theory
A number of research studies have been undertaken to see the validity of hierarchy of needs. Lawler and Suttle collected data on 187 Managers in two different organisations for a period of six months to one year. No evidence was found to support Maslow's theory. They found there were two levels of needs-biological and other needs- and that other needs would emerge only when biological needs were reasonably satisfied. A survey conducted in India of 200 factory worker revealed that they give top priority to job security, earnings and personal benefits-all lower other needs.
It is generally seen that needs do not follow Maslow's hierarchy. The hierarchy is determined by individuals differently. They proceed to follow their own pattern of needs satisfaction. Some people may try for self-actuating needs rather than lower needs. For some persons esteem needs are more important than social needs.
There is no cause effect relation between and need and behavior. A particular need may cause behavior in different ways in different person. Similarly, one particular behavior may result due to different needs. It is said that higher needs motivate a person when lower needs are reasonably satisfied. The word 'reasonably satisfied' is a subjective matter. The level of satisfaction may be different for persons.
Herzberg theory of Motivation
Another popular need-based approach to motivation is the dual-structure approach developed by Frederick Herzberg. This is also known as Two-factor Theory. Herzberg developed this approach after interviewing 200 accountants and engineers in Pittsburg. He asked them to recall such occasions when they had been dissatisfied and less motivated. He found that entirely different sets of factors were associated with satisfaction and dissatisfaction. For instance, an individual who identified 'low pay' as causing dissatisfaction did not necessarily mention 'high pay' as a cause of satisfaction. Instead, several other factors, such as recognition or accomplishment, were cited as causing satisfaction.
This finding suggests that satisfaction and dissatisfaction are at opposite ends of a single scale. Employees would, therefore, be satisfied, dissatisfied or somewhere in between. Herzberg argued that attitudes and motivation consists of a dual structure. One structure involves a set of factors that result in feelings ranging from satisfaction to no satisfaction. The other structure involves a set of factors that result in feelings ranging from dissatisfaction to no satisfaction.
Criticism
                Although widely accepted by managers, Hertzberg’s dual structure approach however suffers from certain drawbacks. Other researchers who measured satisfaction and dissatisfaction based on different aspects reached very different conclusions. They have also criticized Herzberg's theory for its inability to define the relationship between satisfaction and motivation and to pay enough attention to differences between individuals. Hence, at present Herzberg's theory is not held in high esteem by researchers in the field of motivation. The theory, however, had a major impact on managers and has played a key role in increasing their awareness of motivation and its importance in type work place.
Difference between Maslow’s Need Hierarchy theory and Herzberg’s motivation Hygiene Theory
1. Meaning:
Maslow's theory is based on the concept of human needs and their satisfaction.
Hertzberg's theory is based on the use of motivators which include achievement, recognition and opportunity for growth.
2. Basis of Theory:
Maslow's theory is based on the hierarchy of human needs. He identified five sets of human needs (on priority basis) and their satisfaction in motivating employees.
Hertzberg refers to hygiene factors and motivating factors in his theory. Hygiene factors are dissatisfies while motivating factors motivate subordinates. Hierarchical arrangement of needs is not given.
3. Nature of Theory:
Maslow's theory is rather simple and descriptive. The theory is based long experience about human needs.
Hertzberg's theory is more prescriptive. It suggests the motivating factors which can be used effectively. This theory is based on actual information collected by Hertzberg by interviewing 200 engineers and accountants.
4. Applicability of Theory:
Maslow's theory is most popular and widely cited theory of motivation and has wide applicability. It is mostly applicable to poor and developing countries where money is still a big motivating factor.
Herzberg's theory is an extension of Maslow's theory of motivation. Its applicability is narrow. It is applicable to rich and developed countries where money is less important motivating factor.
5. Descriptive or Prescriptive
Maslow's theory or model is descriptive in nature.
Herzberg's theory or model is prescriptive in nature.
6. Motivators
According to Maslow's model, any need can act as motivator provided it is not satisfied or relatively less satisfied.
In the dual factor model of Hertzberg, hygiene factors (lower level needs) do not act as motivators. Only the higher order needs (achievement, recognition, challenging work) act as motivators.
Or
(b) Briefly discuss the traditional techniques of managerial control.       14
Ans: Techniques of Control or Methods of Establishing Control
A number of techniques or tools are used for the purpose of managerial control. Some of the techniques are used for the control of the overall performance of the organisation, and some are used for controlling specific areas or aspects like costs, sales, etc. The various techniques of control can be classified into categories, viz.,
(1) Traditional or Conventional techniques and
(2) Modern or Contemporary techniques.
Traditional Techniques
a.      Budgetary Control: According to J.A. Scott, “Budgetary control is the system of management control and accounting in which all operations are forecasted and so far as possible planned ahead, and the actual results compared with the forecasted and planned ones”.
b.      Standard Costing: According to the ICMA, England, “Standard cost is a pre-determined cost which is calculated from management’s standards of efficient operation and the relevant necessary expenditure”.
c.       Break-even Analysis or Cost-Volume-Profit Analysis: Cost-Volume-Profit Analysis or Break-even Analysis is the study of the interrelationship between the cost (i.e., cost of production), volume (i.e., the volume of production and sales), the prices and the sales value, and the profits. In other words, it is the study of the inter-relationship between the cost (i.e., cost of production), volume (i.e., volume of production and sales), prices (i.e., selling prices) and profits.
d.      Inventory Control: Inventory is the stock of raw materials, work-in-progress, finished goods, consumable stores and spare parts and components at any given point to time. So, inventory control means control over different items of inventory or stock. “It is defined as physical control of stock items and implementing the principles and policies relating thereto”.
e.       Internal Audit: Internal audit is a continuous and systematic review of the accounting, financial and other operations of a concern by the staff specially appointed by the management for the purpose. In other words, it is the auditing for the management conducted by the staff specially appointed for the purpose to ensure that the work of the concern is going on smoothly, efficiently and economically.
f.        Statistical Data Analysis: It is a technique under which statistical data of the past and the present relating to the important aspects of the business are used for managerial control. The statistical data are collected from books and registers of the concern and presented to the management in a systematic manner in the form of tables, charts, graphs, etc.,
g.      Personal Observation: Under the technique of personal observation, the managers keep a close personal observation of the employees. In other words, the manager observes whether the workers are doing what they are expected to do.
h.      Production Planning and Control: According to S. Elon, “Production planning and control may be defined as the direction and co-ordination of the firm’s material and physical facilities towards the attainment of pre-specified production goals in the most efficient and valuable way”.
6.       Write short notes on (any four):       4x4=16
a)      Span of management.
b)      Limitations of planning.
c)       Democratic leadership.
d)      Return on investment.
e)      Long-term planning.
Ans: a) SPAN OF MANAGEMENT OR SPAN OF CONTROL
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.
Type of span of supervision: Broadly speaking there are two types, of span of supervision:
(a)    Wider Span of Supervision: 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. This type of supervision is favored at higher levels of management where all the other activities of planning, organising, directing, and controlling are also to be performed. But more the levels of supervision, more difficult are the task of coordinating the activities of various groups of people.
The Span of control should not be too wide (large) or too narrow (small). If the span is too wide, then the personal supervision is difficult and the control will be ineffective. On the other hand, if the span is too narrow, then there will be excessive (too much) supervision of the subordinates. This will affect their work. So it is desirable to select an appropriate (proper) span of control.
b) Limitations of Planning: Planning is essential for a business organisation. It is difficult to manage operations without formal planning. It is important for the organisation to move towards achieving goals. But often things to not always go according to plan. Unforeseen events and changes, rise in costs and prices, environmental changes, government interventions, legal regulations, all affect our business plans. Plans then need to be modified. Therefore, planning might fail due to the following limitations:
a.       Planning does not work in dynamic environment: The business environment is dynamic, nothing is constant. The environment consists of a number of dimensions— economic, political, technological, legal and social dimensions. The organisation has to constantly adapt itself to the changes in business environment. However, it is not always possible to accurately assess future trends in the environment.
                     i.            Competition in the market can upset financial plans.
                   ii.            Sales targets have to be revised and according is cash budgets also need to be modified since then are based on sales figures.
b.      Thus, planning cannot foresee everything and thus these are obstacles to effective planning.
c.       Planning is a time consuming process: Planning is a time consuming process. It requires collection of information, its analysis and interpretation. These activities may take considerable time. Sometimes plans to be drawn up take so much of time that there is not much time left for implementation of plans.
d.      Planning involves huge costs: Planning is an expensive process in terms of money. When plans are drawn up, huge costs are involved in the formulation of plans. If the costs are not justified by the benefits derived from the plan, it may have adverse effect on the enterprise. There are a number of incidental costs as well, like expenses on Board’s meetings, discussions with professional experts and preliminary investigations to find out the Viability of the plan.
e.      Planning creates rigidity: Planning leads to rigid mode of functioning for managers. This has adverse effect on the initiative to be taken by them.
f.        Planning does not guarantee success: The success of an enterprise is possible only when plans are Properly drawn up implemental. Managers have a tendency to rely on previously tried and tested successful plans. But it is not always true that a plan which has worked before, will work effectively again.
g.       Planning reduces creativity: Planning is an activity which is done by top management. Usually the rest of the organisation just implements these plans. As a consequence, middle management and other decision makers are neither allowed to deviate from plans nor are they permitted to act on their own. They only carry out orders.
c) Democratic Leadership: The democratic or participative style of leadership implies compromise between the two extremes of autocratic and laissez-fair style of leadership. Under this style, the supervisor acts according to the mutual consent and the decisions reached after consulting the subordinates. Subordinates are encouraged to make suggestions and take initiative. It provides necessary motivation to the workers by ensuring their participation and acceptance of work methods. Mutual trust and confidence is also created resulting in job satisfaction and improved morale of workers. It reduces the number of complaints, employee's grievances, industrial unrest and strikes. But this style of leadership may sometimes cause delay in decisions and lead to indiscipline in workers.
d) Return on Investment: Profits are the measure of overall efficiency of business. Profit earned in relation to the capital employed in a business is an important control device. ROI is used to measure the overall efficiency of a concern. It reveals how well the resources of a concern are used, higher the return better are the results.
A large number of companies have adopted it as their key measure of overall performance. This yardstick is the rate of return that a company or a division can earn on the capital allocated to it. This tool, therefore, regards profit not as an absolute but as a return on capital employed in the business. The goal of a business is seen, accordingly, not necessarily as optimizing profits but as optimizing returns from capital devoted to business purposes.
This standard recognizes the fundamental fact that capital is a critical factor in almost any enterprise and, through its scarcity, limits progress. It also emphasizes the fact that the job of managers is to make the best possible use of assets entrusted to them.
e) Long Term Planning: Business owners develop plans to reach their overall goals, and they usually find it useful to separate planning into phases. This allows us to track immediate improvements while evaluating progress toward eventual goals and targets. 
In the long term, companies want to solve problems permanently and to reach their overall targets. Long-term planning reacts to the competitive situation of the company in its social, economic and political environment and develops strategies for adapting and influencing its position to achieve long-term goals. It examines major capital expenditures such as purchasing equipment and facilities, and implements policies and procedures that shape the company's profile to match top management's ideas. When short-term and medium-term planning is successful, long-term planning builds on those achievements to preserve accomplishments and ensure continued progress.

[ Old Course ]
Full Marks: 80
Pass Marks: 32
1.       Answer the following:
a) Write down any two functions of a manager.                                 2
Ans: Planning and Controlling
b) Who first propounded the principle of Unity of Command?    1
Ans: Henry Fayol
c) Mention two limitations of planning.                  2
Ans: Planning does not work in dynamic environment and Planning is a time consuming process.
d) Write two differences between formal organisation and informal organisation.                            2
Ans: Difference between formal and Informal organisation:

FORMAL
INFORMAL
1.Structure
It is official, so it has prescribed structure of roles and relationships.  It is planned and deliberately created by management
It is in unofficial or natural having no specific structure.  It arises spontaneously without official sanction by management
2.Base
It is based on delegation of authority & may grow to very big size.  It is mechanistic and brings order in the organisations.
It arises through social interactions between employees.  It usually remains small is size.  It is humanistic and gives satisfaction to employees.
e) Write the full form of ROI.                      1
Ans: Return on Investment
2.       (a) What do you mean by business management? Explain its significance. 3+8=11
Ans: Management - Introduction
Management is the coordination of all resources through the process of planning, organising, directing, staffing and controlling in order to attain stated objectives effectively and efficiently.  Effectively means doing the right task, completing activities and achieving goals and efficiently means to attain objectives with least amount of resources at a minimum cost. This process starts at the top and continues in more or less degree at every level of the organisation.
According to Harold Koontz, “Management is an art of getting things done through others and with formally organised groups."
According to F.W. Taylor, “Management is an art of knowing what do you want to do and then seeing that is is done in the best and cheapest way.”
According to Henry Fayol, “To manage is to forecast, to plan, to organize, to command to co-ordinate and control.
George R. Terry, “Management is a distinct process consisting of planning, organising, actuating and controlling performance t determine and accomplish the objectives by the use of people and resources,”
Thus management may be defined as a process including various activities like planning, organising , directing, controlling  co-ordination etc in order to make optimum use of men machinery, materials and money by way of preparing plans, policies and purposes, for achieving organisational goals under healthy internal environment.
IMPORTANCE/SIGNIFICANCE/OBJECTIVES OF MANAGEMENT
According to Drucker, management is the dynamic life giving element in every organisation. In its absence, an organisation is merely a collection of men, machines, money and material. The importance of management is:-
a)      Optimum Use of Resources: Management ensures optimum utilization of resources by attempting to avoid wastage of all kinds. It helps in putting the resources to the best advantage.
b)      Effective leadership and Motivation: In the absence of management, the working of an enterprise will become random and haphazard in nature. Management creates teamwork and motivates employees to work harder and better by providing guidance, counseling and effective leadership.
c)       Establish Sound Industrial Relations: Management minimizes industrial disputes and contributes to sound industrial relations in an undertaking. Industrial peace is an essential requirement for increasing productivity.
d)      Achievement of Goals: Objectives can be achieved only when the human and non human resources are combined in a proper way. Managers plan carefully, organize the resources properly, hire competent people, and provide necessary guidance. Thus management is goal oriented.
e)      Reduces Costs - It gets maximum results through minimum input by proper planning and by using minimum input & getting maximum output. Management uses physical, human and financial resources in such a manner which results in best combination. This helps in cost reduction.
f)       Establishes Equilibrium - It enables the organisation to survive in changing environment. It keeps in touch with the changing environment. With the change is external environment, the initial co-ordination of organisation must be changed. So it adapts organisation to changing demand of market / changing needs of societies. It is responsible for growth and survival of organisation.
g)      Essentials for Prosperity of Society - Efficient management leads to better economical production which helps in turn to increase the welfare of people. Good management makes a difficult task easier by avoiding wastage of scarce resource. It improves standard of living.
Or
(b) Write a brief note on the development of management thoughts.                  11
Ans: Evolution of management thoughts
The practice of management is as old as human civilization. The ancient civilizations of Egypt (the great pyramids), Greece (leadership and war tactics of Alexander the great) and Rome displayed the marvelous results of good management practices. The origin of management as a discipline was developed in the late 19th century. Over time, management thinkers have sought ways to organize and classify the voluminous information about management that has been collected and disseminated. These attempts at classification have resulted in the identification of management approaches. The approaches of management are theoretical frameworks for the study of management. Each of the approaches of management are based on somewhat different assumptions about human beings and the organisations for which they work. The different approaches of management are:
a) Early management approaches represented by scientific management (Classical approach or Theories)
b) Modern management approaches represented by behavioral science movement, quantitative approach, systems approach and Contingency approach (Neo-classical approach or theories)
a) THE CLASSICAL APPROACH: The classical approach is the oldest formal approach of management thought. Its roots pre-date the twentieth century. The classical approach of thought generally concerns ways to manage work and organisations more efficiently. Three areas of study that can be grouped under the classical approach are scientific management, administrative management, and bureaucratic management.
(i) Scientific Management: Frederick Winslow Taylor is known as the father of scientific management. Scientific management (also called Taylorism or the Taylor system) is a theory of management that analyzes and synthesizes workflows, with the objective of improving labor productivity. In other words, Traditional rules of thumb are replaced by precise procedures developed after careful study of an individual at work.
(ii) Administrative Management: Administrative management focuses on the management process and principles of management. In contrast to scientific management, which deals largely with jobs and work at the individual level of analysis, administrative management provides a more general theory of management. Henri Fayol is the major contributor to this approach of management thought.
(iii) Bureaucratic Management: Bureaucratic management focuses on the ideal form of organisation. Max Weber was the major contributor to bureaucratic management. Based on observation, Weber concluded that many early organisations were inefficiently managed, with decisions based on personal relationships and loyalty. He proposed that a form of organisation, called a bureaucracy, characterized by division of labor, hierarchy, formalized rules, impersonality, and the selection and promotion of employees based on ability, would lead to more efficient management. Weber also contended that managers' authority in an organisation should be based not on tradition or charisma but on the position held by managers in the organisational hierarchy.
b) Neo-classical approach: It can be studied under the following headings:
a) THE BEHAVIORAL Or SITUATIONAL APPROACH: The behavioral approach of management thought developed, in part, because of perceived weaknesses in the assumptions of the classical approach. The classical approach emphasized efficiency, process, and principles. Some felt that this emphasis disregarded important aspects of organisational life, particularly as it related to human behavior. Thus, the behavioral approach focused on trying to understand the factors that affect human behavior at work.
(i) Human Relations: The Hawthorne Experiments began in 1924 and continued through the early 1930s. A variety of researchers participated in the studies, including Elton Mayo. One of the major conclusions of the Hawthorne studies was that workers' attitudes are associated with productivity. Another was that the workplace is a social system and informal group influence could exert a powerful effect on individual behavior. A third was that the style of supervision is an important factor in increasing workers' job satisfaction.
(ii) Behavioral Science: Behavioral science and the study of organisational behavior emerged in the 1950s and 1960s. The behavioral science approach was a natural progression of the human relations movement. It focused on applying conceptual and analytical tools to the problem of understanding and predicting behavior in the workplace. The behavioral science approach has contributed to the study of management through its focus on personality, attitudes, values, motivation, group behavior, leadership, communication, and conflict, among other issues.
b) THE QUANTITATIVE APPROACH: The quantitative approach focuses on improving decision making via the application of quantitative techniques. Its roots can be traced back to scientific management.
(i) Management Science: Management science (also called operations research) uses mathematical and statistical approaches to solve management problems. It developed during World War II as strategists tried to apply scientific knowledge and methods to the complex problems of war. Industry began to apply management science after the war. The advent of the computer made many management science tools and concepts more practical for industry
 (ii) Production And Operations Management: This approach focuses on the operation and control of the production process that transforms resources into finished goods and services. It has its roots in scientific management but became an identifiable area of management study after World War II. It uses many of the tools of management science. Operations management emphasizes productivity and quality of both manufacturing and service organisations. W. Edwards Deming exerted a tremendous influence in shaping modern ideas about improving productivity and quality. Major areas of study within operations management include capacity planning, facilities location, facilities layout, materials requirement planning, scheduling, purchasing and inventory control, quality control, computer integrated manufacturing, just-in-time inventory systems, and flexible manufacturing systems.
c) SYSTEMS APPROACH: The systems approach focuses on understanding the organisation as an open system that transforms inputs into outputs. The systems approach began to have a strong impact on management thought in the 1960s as a way of thinking about managing techniques that would allow managers to relate different specialties and parts of the company to one another, as well as to external environmental factors. The systems approach focuses on the organisation as a whole, its interaction with the environment, and its need to achieve equilibrium.
d) CONTINGENCY APPROACH: The contingency approach focuses on applying management principles and processes as dictated by the unique characteristics of each situation. It emphasizes that there is no one best way to manage and that it depends on various situational factors, such as the external environment, technology, organisational characteristics, characteristics of the manager, and characteristics of the subordinates. Contingency theorists often implicitly or explicitly criticize the classical approach for its emphasis on the universality of management principles; however, most classical writers recognized the need to consider aspects of the situation when applying management principles.
3.       (a) Discuss briefly the various techniques of decision making.                           11
Ans: Decision Making - Introduction
Decision-making is an essential aspect of modern management. It is a primary function of management. A manager's major job is sound/rational decision-making. He takes hundreds of decisions consciously and subconsciously. Decision-making is the key part of manager's activities. Decisions are important as they determine both managerial and organisational actions. A decision may be defined as "a course of action which is consciously chosen from among a set of alternatives to achieve a desired result." It represents a well-balanced judgment and a commitment to action.
It is rightly said that the first important function of management is to take decisions on problems and situations. Decision-making pervades all managerial actions. It is a continuous process. Decision-making is an indispensable component of the management process itself.
The effectiveness of management depends on the quality of decision-making. In this sense, management is rightly described as decision-making process. According to R. C. Davis, "management is a decision-making process." Decision-making is an intellectual process which involves selection of one course of action out of many alternatives. Decision-making will be followed by second function of management called planning. The other elements which follow planning are many such as organising, directing, coordinating, controlling and motivating.
Decision-making has priority over planning function. According to Peter Drucker, it is the top management which is responsible for all strategic decisions such as the objectives of the business, capital expenditure decisions as well as such operating decisions as training of manpower and so on. Without such decisions, no action can take place and naturally the resources would remain idle and unproductive. The managerial decisions should be correct to the maximum extent possible. For this, scientific decision-making is essential.
Definitions of Decision-making
The Oxford Dictionary defines the term decision-making as "the action of carrying out or carrying into effect".
According to Trewatha & Newport, "Decision-making involves the selection of a course of action from among two or more possible alternatives in order to arrive at a solution for a given problem".
Techniques of Decision-making
Decision taken must be accurate and should not lead to confusion; the decisions taken must also be scientific and available for accuracy and verification. The important techniques that aid the manager in decision making are operations research and other quantitative techniques.
1. Operations Research: Operations Research is the application of methods of science to complex problems arising in the direction and management of large system of men, machines, materials and money in industry, business, government and defense. Operations Research helps the decision maker to make objective decisions. OR does this by providing factual basis to guide and support judgment, easing the burden of effort and time on the executive. Some of the managerial problems usually subjected to operations research analysis include production scheduling, inventory control, sales policies, expansion of plant etc.
2. Models: Model building is the central concept in the application of OR while making use of quantifying models. Models are simple convenient and relatively economic resource conservation device for testing hypothesis.  Mathematical models help the optimization concept in decision making. This is very important in the calculation and choice of best possible alternative solutions for a given problem.
3. Simulation: This technique is used to test the feasibility and possible outcome of various decision alternatives. "Simulation is a quantitative technique for evaluating alternative courses of action based upon facts and assumptions with a computerized mathematical model in order to represent actual decision making under conditions of uncertainty.
4. Linear Programming: This is defined as "How could a company with limited resources make optimum use with their resources, combination for the achievement of the desired objective, or goal was, the central idea of this mathematical technique". A linear or straight line relationship exists between variables and that the limits of variation can be determined. It adopts an analytical instead of intuitive approach in decision making.
5. Games Theory: Games theory attempts to work out optimum solution in which an individual in a given situation can develop a strategy irrespective of what a competition does with maximizing gains or minimizing losses. It involves mathematical study of tactics under conditions of uncertainty.
6. PERT and CPM: Programme Evaluation and Review Technique is useful to analyze and control the timing aspects of programmes. In planning and controlling a programme, PERT helps in obtaining lower costs and reducing programme time, bringing about better utilization of human and physical resources.  Critical Path Method (CPM) is a commonly used term for all network analysis and for a particular version of these techniques. PERT relies on three estimates, an optimistic, most likely and pessimistic of the time each activity may take. CPM relies only one 'most likely'.
7. Probability Theory Analysis: Probability refers to a chance that a particular event will occur. The events must be random and be effected by chance and not by design. The probability of success is defined as the number of successful outcomes divided by the total number of outcomes. It cannot be denied that some element of probability does exist in all decision making.
Or
(b) Describe the role of planning in a modern business organisation.     11
Ans: Role of Planning in a modern business organisation
Planning is the primary function of management.  Planning concentrates on setting and achieving objectives through optimum use of available resources.  Planning is necessary for any organisation for its survival growth and prosperity under competitive and dynamic environment.  Planning is a continuous process to keep organisation as a successful going concern,
In the words of:
Koontz and O’Donnel – “Planning is deciding in advance, what to do, how to do it, when to do it, and who is to do it.  It bridges the gap from where we are to where we want to go.”
Allen – “Management planning involves the development of forecasts, objectives, policies programmes, procedures, schedules and budgets.”
Haynes and Massie - Planning is a decision making process of a special kind.  It is an intellectual process in which creative thinking and imagination is essential.”
Alfred and Beatty - “Planning is the thinking process, the organized foresight, the vision based on fact and experience that is required for intelligent action.
Objectives of Planning
Planning in an organisation is essential for achieving the following objectives.
a)      To reduce uncertainty about future conditions.
b)      To promote co-ordination and co-operation among various activities of the organisation.
c)       To achieve economy in operation through making optimum use of available resources.
d)      To achieve predetermined objectives efficiently and effectively.
e)      To enable the organisation to survive and grow under competitive and dynamic environment.
Importance and Advantages of Planning
Planning is of vital importance in the managerial process. No enterprise can achieve its objectives without systematic planning. “Planning is the heart of management” The following points highlight the importance of planning function of management:
a)      Planning provides directions: By stating i n advance how work is to be done, planning provide direction for action. If goals are well defined, employees are aware of what the organisation has to do and what they must do to achieve those goals. Departments and individuals in the organisation are able to work in coordination. Planning keeps the organisation on the right path.  If there was no planning, employees would be working in different directions and the organisation would not be able to achieve its goals efficiently.
b)      Planning reduces the risks of uncertainty: Business enterprises operate in an uncertain environment and face several types of risks. Planning enables these enterprises to predict future events and prepare to face the unexpected events. With the help of planning, managers can identify potential dangers and take steps to overcome them. Thus, planning helps risk and uncertainty.
c)       Planning facilitates decision-making: Decision-making involves searching for various alternative courses of action, evaluating them and selecting the best course of action. Under planning, targets are laid down. With the help of these targets, managers can better evaluate alternative courses of action and select the best alternative. Plans lay down in advance what is to be done and how it is to be done. Therefore, decisions can be taken with greater confidence.
d)      Planning reduces overlapping and wasteful activities: Since planning ensures clarity in thought and action, work is carried on smoothly without interruptions. There is no confusion and misunderstanding. Useless and redundant activities are minimized or eliminated. It is easier to detect inefficiencies and take corrective measures to deal with them.
e)      Planning promotes innovative ideas: Planning is thinking in advance and, therefore, there is scope of finding better ideas and better methods and procedures to reach the objectives/goals of the enterprise. This forces managers to think differently about the future of the organisations from the present. Thus, planning makes the managers innovative and creative.
f)       Planning establishes standards for controlling: Planning provides the goals or standards against which the actual performance can be measured and evaluated. A comparison of actual performance with the standards helps to identify the deviations and to take corrective action. Planning makes control meaningful and effective. ‘Control is blind without planning.” Thus, planning provides the basis of control.

4.       (a) What do you mean by departmentation? Explain briefly the determinants of departmentation.    3+8=11
Ans: Departmentation - Introduction
The process of dividing activities into units and subunits is referred to as departmentation. The term departmentation is used in a generic sense n is not only confined to the creation of such units as are called departments, but it includes divisions, sections and jobs also.
Dividing up work calls or identification of total activities and classification of such activities into units and subunits. There are three bases for primary grouping of activities at the second level of the organisation just below the top level. Units at the second level are commonly called departments when business functions are adopted as the pattern of grouping activities. Such units go by the name of divisions when either products manufactured or territories are adopted as the means of classifying activities.
There are, however, two approaches to departmentation- top down and bottom-up approaches. In the top-down approach, activities are divided step by step downward form the chief executive's job to the operating jobs. In the bottom-up approach, the division of activities is carried on in a reverse order. Starting form operating jobs, there arise sections form combining some correlated jobs, departments from combining some sections and finally the chief executive position form putting departments together. While the top-down approach gives emphasis on co-ordination and managerial action, the bottom-up approach gives emphasis on co-ordination and managerial action, the bottom-up approach focuses attention on employee performance. Although the top-down approach is easy for understanding the departmentation process, both the approaches are utilized in actual practice
Choice of bases for departmentation Or DETERMINANTS OF DEPARTMENTATION
The selection of bases for departmentation involves a consideration of the relative advantages of each base for the organisation. Ideally speaking, a suitable basis of departmentation is one which facilitates the performance of organisational functions efficiently and effectively so that its objective are achieved.
1)      Specialization: While assigning activities into departments, care must be taken to ensure that the benefits of specialization are achieved.
2)      Control: One of the primary aims of departmentation is to facilitate control. Departments should be so created as to fix clear responsibilities so as to enable effective control.
3)      Coordination: Coordination involves that all the related activities are performed in a way that their performance is synchronized so that each activity contributes to others.
4)      Economy: A balance should be maintained between the cost of creating a department and its contribution. The existence of a department is desirable only when it contributes more than its cost.
5)      Focus on Result: Those activities which contribute to the achievement to these results should be given proper attention.
6)      Human Considerations: Departments should be created on the basis of availability of personnel, their aspirations and value systems, informal work groups and attitudes of people towards various forms of organisation structure.
7)      Emphasis on Local Conditions: while assigning activities proper emphasis should be given to local conditions at the places concerned, viz. the personality of the individuals who may be given the responsibilities, the nature of informal relationship among the people, the attitude of the people, etc.
8)      Economy: Another important factor to be considered while creating separate departments is the expense involved and economy in its operations.
9)      Key Activities: there are certain activities which are very crucial. Such activities should be placed in separate divisions.
Or
(b) Discuss the different aspects of line and staff organisation.                   11

5.       (a) Explain Abraham Maslow’s theory of motivation.
Ans:  Abraham Maslow's Hierarchy of Needs
Maslow Abraham proposed his theory in the 1940s. This theory, popularly known as the Hierarchy of Needs assumes that people are motivated to satisfy five levels of needs: physiological, security, belongingness, esteem and self-actualization needs. The figure 9.1 shows Maslow's hierarchy of needs

Maslow suggested that the five levels of needs are arranged in accordance with their importance, starting from the bottom of the hierarchy. An individual is motivated first and foremost to satisfy physiological needs. When these needs are satisfied, he is motivated and 'moves up' the hierarchy to satisfy security needs. This 'moving up process continues until the individual reaches the self-actualization level.
a)      Physiological needs: Physiological needs represent the basic issues of survival such as food, sex, water and air. In organisational settings, most physiological needs are satisfied by adequate wages and by the work environment itself, which provides employees with rest rooms, adequate lighting, comfortable temperatures and ventilation.
b)      Security or safety needs: Security or safety needs refer to the requirements for a secure physical and emotional environment. Examples include the desire for adequate housing and clothing, the need to be free from worry about money and job security and the desire for safe working conditions. Security needs are satisfied for people in the work place by job continuity, a grievance resolving system and an adequate insurance and retirement benefit package.
c)       Social needs: Belonging or social needs are related to the, social aspect of human life. They include the need for love and affection and the need to be accepted by one's peers. For most people these needs are satisfied by a combination of family and community relationships and friendships on the job. Managers can help ensure the 'satisfaction of these important needs by allowing social interaction and by making employees feel like part of a team or work group.
d)      Esteem needs: Esteem needs actually comprise of two different sets of needs:
1)      The need for a positive self-image and self-respect.
2)      The need for recognition and respect from others.
3)      Organisations can help address esteem needs by providing a variety of external symbols of accomplishment such as job titles and spacious offices. At a more fundamental level, organisations can also help satisfy esteem needs by providing employees with challenging job assignments that can induce a sense of accomplishment.
e)      Self-actualization needs: At the top of the hierarchy are those needs, which Maslow defines the self-actualization needs. These needs involve realizing one's potential for continued: growth and individual development. Since these needs are highly individualized and personal, self-actualization needs are perhaps the most difficult for managers to address. Therefore, an employee should try to meet these needs on his own end.
However, an organisation can help his employee by creating a climate for fulfillment of self-actualization needs. For instance, an organisation can help in fulfillment of these needs by encouraging employee’s participation in decision-making process and by providing them with an opportunity to learn new things about their jobs and organisation. This process of contributing to actual organisational performance helps employees experience personal growth and development associated with self-actualizing.
Critical Analysis of Maslow’s Theory
A number of research studies have been undertaken to see the validity of hierarchy of needs. Lawler and Suttle collected data on 187 Managers in two different organisations for a period of six months to one year. No evidence was found to support Maslow's theory. They found there were two levels of needs-biological and other needs- and that other needs would emerge only when biological needs were reasonably satisfied. A survey conducted in India of 200 factory worker revealed that they give top priority to job security, earnings and personal benefits-all lower other needs.
It is generally seen that needs do not follow Maslow's hierarchy. The hierarchy is determined by individuals differently. They proceed to follow their own pattern of needs satisfaction. Some people may try for self-actuating needs rather than lower needs. For some persons esteem needs are more important than social needs.
There is no cause effect relation between and need and behavior. A particular need may cause behavior in different ways in different person. Similarly, one particular behavior may result due to different needs. It is said that higher needs motivate a person when lower needs are reasonably satisfied. The word 'reasonably satisfied' is a subjective matter. The level of satisfaction may be different for persons.
Or
(b) “None of the leadership styles is fault proof.” Comment and explain.
Ans: Introduction to Leadership
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.
Koontz and 0' Donnel “Leadership is the ability of a manager to induce subordinates to work with confidence and zeal”.
George R Terry “Leadership is the activity of influencing people to strive willingly for group objectives”.
Likert’s Leadership Styles or Types of Leaders
1)      Autocratic or Authoritarian Style leader: An autocratic also known as authoritarian style of leadership implies wielding absolute power. Under this style, the leader expects complete obedience from his subordinates and all decision-making power is centralized in the leader. No suggestions or initiative from subordinates is entertained. The leader forces the subordinates to obey him without questioning. An autocratic leader is, in fact, no leader. He is merely the formal head of the organisation and is generally disliked by the subordinates who feel comfortable to depend completely on the leader.
Advantages:
a)      Reduced stress due to increased control
b)      A more productive group ‘while the leader is watching’
c)       Improved logistics of operations
d)      Faster decision making
Disadvantages:
a)      Short-termistic approach to management.
b)      Manager perceived as having poor leadership skills
c)       Increased workload for the manager
d)      People dislike being ordered around
e)      Teams become dependent upon their leader
2)      Laissez-faire or Free-rein Style Leader: Under this type of leadership, maximum freedom is allowed to subordinates. They are given free hand in deciding their own policies and methods and to make independent decisions. The leader provides help only when required by his subordinates otherwise he does not interfere in their work. The style of leadership creates self-confidence in the workers and provides them an opportunity to develop their talents. But it may not work under all situations with all the workers, may bring problems of indiscipline. Such leadership can be employed with success where workers are competent, sincere and self-disciplined.
Advantages:
a)      No work for the leader
b)      Frustration may force others into leadership roles
c)       Allows the visionary worker the opportunity to do what they want, free from interference
d)      Empowers the group
Disadvantages:
a)         It makes employees feel insecure at the unavailability of a manager.
b)         The manager cannot provide regular feedback to let employees know how well they are doing.
c)          Managers are unable to thank employees for their good work.
d)         The manager doesn’t understand his or her responsibilities and is hoping the employees can cover for him or her.
3)      Democratic or Participative Style leader: The democratic or participative style of leadership implies compromise between the two extremes of autocratic and laissez-fair style of leadership. Under this style, the supervisor acts according to the mutual consent and the decisions reached after consulting the subordinates. Subordinates are encouraged to make suggestions and take initiative. It provides necessary motivation to the workers by ensuring their participation and acceptance of work methods. Mutual trust and confidence is also created resulting in job satisfaction and improved morale of workers. It reduces the number of complaints, employee's grievances, industrial unrest and strikes. But this style of leadership may sometimes cause delay in decisions and lead to indiscipline in workers.
Advantages
a)      Positive work environment
b)      Successful initiatives
c)       Creative thinking
d)      Reduction of friction and office politics
e)      Reduced employee turnover
Disadvantages:
a)      Takes long time to take decisions
b)      Danger of pseudo participation
c)       Like the other styles, the democratic style is not always appropriate. It is most successful
d)      when used with highly skilled or experienced employees or when implementing operational changes or resolving individual or group problems.
4)      Paternalistic Style leader: This style of leadership is based upon sentiments and emotions of people. A paternalistic leader is like a father to these subordinates. He looks after the subordinates like a father looks after his family. He helps guides and protects all of his subordinates but under him no one grows. The subordinates become dependent upon the leader.

6.       (a) Explain the importance of a good control system in business management.                         12
Ans: Role of good control system in business management
Control is one of the managerial functions. These functions start with planning and end at controlling. The other functions like organising, staffing, directing act as the connecting like between planning and controlling. Planning will be successful only if the progress planning and controlled, Planning involves setting up of goals and objectives while controlling seeks to ensure.
In the words of Koontz and O'Donnel, “The measurement and correction of the performance of activities of subordinates in order to make sure that enterprise objectives and plan devised to attain them are being accomplished." The accomplishment of organisational goals is the main aim of every management. The performance of subordinates should be constantly watched to ensure proper implementation of plans. Co-ordination is the channel through which goals can be achieved and necessary.
According to Henry Fayol, “In an undertaking, control consists in verifying whether everything occurs in conformity with the plan adopted, the instructions issued and principles established. It has to point out weakness and errors in order to rectify them and prevent recurrence”.
Thus, controlling implies determining and stating specifically what is to be accomplished, then checking performance against such standards prescribed with a view to supplying the corrective action required to achieve the planned objectives. The end objective of controlling is, therefore, to ensure that the people’s   effort   in   the   organisation   is   continuously   directed   towards   the attainment of the predetermined objectives.
Advantages (Importance) of Controlling:
(i) Accomplishing organisational goals: The controlling function measures progress towards the organisational goals and brings to light the deviations, if any, and indicates corrective action.
(ii) Judging accuracy of standards: A good control system enables management to verify whether the standards set are accurate or not. An efficient control system keeps a careful check on the changes taking place in the organisation and in the environment and helps to review and revise the standards in light of such changes.
(iii) Making efficient use of resources: By exercising control, a manager seeks to reduce wastage and spoilage of resources. This ensures that resources are used in the most effective and efficient manner.
(iv) Improving employee motivation: A good control system ensures that employees know well in advance what they are expected to do and what are the standards of performance on the basis of which they will be appreciated.
(v) Ensuring order and discipline: Controlling creates an atmosphere of order and discipline in the organisation. It helps to minimize dishonest behaviors on the part of the employees by keeping a close check on their activities.
(vi) Facilitating coordination in action: Controlling provides direction to all activities and efforts for achieving organisational goals.
(vii) Adjustments in Operations: A control system acts as an adjustment in organisational operations. Every organisation has certain objectives to achieve which becomes the basis for control. It is not only sufficient to have objectives but also to ensure that these objectives are being achieved by various functions.
(viii) Policy Verification: Various policies on the organisation generate the need for control. For organisational functioning, managers set certain policies and other planning elements, which later become the basis and reason for control. They become basis in the sense that organisational performance is reviewed in these lights.
Or
(b) “Planning without control is meaningless and control without planning is a waste.” Elucidate the statement.           12
Ans: Relationship between Planning and Controlling
Planning is the primary function of management.  Planning concentrates on setting and achieving objectives through optimum use of available resources.  Planning is necessary for any organisation for its survival growth and prosperity under competitive and dynamic environment.  Planning is a continuous process to keep organisation as a successful going concern,
In the words of:
Koontz and O’Donnel – “Planning is deciding in advance, what to do, how to do it, when to do it, and who is to do it.  It bridges the gap from where we are to where we want to go.”
Allen – “Management planning involves the development of forecasts, objectives, policies programmes, procedures, schedules and budgets.”
Control is one of the managerial functions. These functions start with planning and end at controlling. The other functions like organising, staffing, directing act as the connecting like between planning and controlling. Planning will be successful only if the progress planning and controlled, Planning involves setting up of goals and objectives while controlling seeks to ensure.
In the words of Koontz and O'Donnel, “The measurement and correction of the performance of activities of subordinates in order to make sure that enterprise objectives and plan devised to attain them are being accomplished." The accomplishment of organisational goals is the main aim of every management. The performance of subordinates should be constantly watched to ensure proper implementation of plans. Co-ordination is the channel through which goals can be achieved and necessary.
Planning and Controlling are closely related with each other: Managerial planning seeks consistent and integrated while managerial control seeks to compel events to conform to plans. As a matter of fact, planning is based on control and control is based on planning. The process of control uses certain standards for measuring performance, which are laid down by planning. The control process, in turn, may reveal the deficiency of planning and may lead to the revision of planning. It may also lead to setting of new goals, changing the organisational structure, improving staffing and making major changes in the techniques of directing.
The relationship between planning and controlling can be divided into the following two parts.
(i) Interdependence between Planning and Controlling.
(ii) Difference between Planning and Controlling.
(i) Interdependence between Planning and Controlling. Planning is meaningless without controlling and controlling is blind without Planning. Both the aspects of the interdependence of planning and control have been discussed below:
(a) Planning is meaningless without Controlling: if the process of controlling is taken away from management no person working in the enterprise will take it seriously to work according to the plans and consequently, the plans will fail.
(b) Controlling is blind without Planning: Under the system of controlling actual work performance is compared with the standards. Hence, if the standards are not determined there is no justification left for control and the standards are determined under planning.
(ii) Difference between Planning and Controlling: Yes, planning and controlling are incomplete and ineffective without each other but it doesn’t mean that both are not independent. Reasons are:
(a) Planning is looking Ahead whereas Controlling is Looking Back: Plans are always formulated for future and determined the future course of action for the achievement of objectives laid down. On the contrary, controlling is looking back because under it a manager tries to find out, after the work is completed, whether it has been done according to the standards or not.
(b) Planning is the first function and Controlling is the last function of Managerial Process: the managerial process moves in a definite sequence- like planning, organising, staffing, directing and controlling happens to be the last step.
7.       Write short notes on (any four):       4x4=16
a)      Management of objectives.
b)      Span of Management.
c)       Process of organising.
d)      Management information system.
e)      Division of work.
Ans: a) Management by objectives: The concept Management by Objectives was coined by Peter Drucker in 1954. As per this concept, the organisational goals are broken down to different level objectives and assigned to individuals at different level in order to have the organisational goal. It is a technique and philosophy of management based on converting an organisational objective into a personal   objective on the presumption that establishing personal objectives makes an employee committed, which leads to better performance.
Koontz defined MBO as follows: “MBO is a comprehensive managerial system that integrates many key managerial activities in a systematic manner, consciously directed towards the effective and. Efficient achievement of organisational objectives.”
A careful study of the above definitions brings out the following features of MBO:
a.       Management by Objectives is a philosophy or a system, and not merely technique.
b.      It emphasizes participative goal setting.
c.       It clearly defines each individual responsibility in terms of results.
d.      It focuses attention on what must be accomplished (goals) rather than on how it is to be accomplished.
e.      It converts objective needs into personal goals at every level in the organisation.
b) SPAN OF MANAGEMENT: 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 Management: There are number of factors that influence or determine the span of Management in a particular organisation, the most important of these are as follows:
1.       The capacity and ability of the executive: The characteristics and abilities such as leadership, administrative capabilities; ability to communicate, to judge, to listen, to guide and inspire, physical vigour, etc. differ from person to person. A person having better abilities can manage effectively a large number of subordinates as compared to the one who has lesser capabilities.
2.       Competence and training of subordinates: Subordinates who are skilled, efficient, knowledgeable, trained and competent require less supervision, and therefore, the supervisor may have a wider span in such cases as compared to inexperienced and untrained subordinates who requires greater supervision.
3.       Nature of Work: Nature and importance of work to be supervised is another factor that influences the span of supervision. The work involving routine, repetitive, unskilled and standardized operations will not call much attention and time on the part of the supervisor.
4.       Time available for supervision: The capacity of a person to supervise and control a large number of persons is also limited on account of time available at his disposal to supervise them. The span of control would be generally narrow at the higher level of management because top manager have to spend their major time on planning, organising, directing and controlling and the time available at their disposal for supervision will be less.
c) Steps or Process of Organising
a) Determination of Objectives: It is the first step in building up an organization. Organization is always related to certain objectives. Therefore, it is essential for the management to identify the objectives before starting any activity.
b) Enumeration of Objectives: If the members of the group are to pool their efforts effectively, there must be proper division of the major activities. The first step in organising group effort is the division of the total job into essential activities. Each job should be properly classified and grouped. This will enable the people to know what is expected of them as members of the group and will help in avoiding duplication of efforts.
c) Classification of Activities: The next step will be to classify activities according to similarities and common purposes and functions and taking the human and material resources into account. Then, closely related and similar activities are grouped into divisions and departments and the departmental activities are further divided into sections.
d) Assignment of Duties: Here, specific job assignments are made to different subordinates for ensuring a certainty of work performance. Each individual should be given a specific job to do according to his ability and made responsible for that.
e) Delegation of Authority: Since so many individuals work in the same organization, it is the responsibility of management to lay down structure of relationship in the organization. Authority without responsibility is a dangerous thing and similarly responsibility without authority is an empty vessel.
d) Management Information System: Management Information System (MIS) is an approach of providing timely, adequate and accurate information to the right person in the organisation which helps in taking right decisions. These are integrated programs for the collection, analysis and dissemination of information to support management decision making. The total MIS network is more than a machine; it contains human resources, hardware, software and intricate processes. Most MIS networks are computer based due to vast amount of number crunching to be done. That is why the ideal MIS provides accurate, condensed informational analysis to the appropriate manager in a timely manner.

e) Division of Work: This is the principle of specialization which, according to Fayol, applies to all kinds of work, managerial as well as technical. It helps a person to acquire an ability and accuracy with which he can do more and better work with the same effort. Therefore, the work of every person in the organization should be limited as far as possible to the performance of a single leading function.

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