UNIT – I INTRODUCTION

1. What is Management?Management is the process of giving direction and controlling the various activities of the people to achieve the objectives of an organization.

2. Define Management.According to Knootz and Weihrich “Management is the process of designing and maintaining of an environment in which individuals working together in groups, efficiently accomplish selected aims”.

3. Write some characteristics of Management. Management is a continuous process. Manager use the resources of the organization both physical as well as human to achieve goals. Management aims act achieving the organization goals by ensuring effective use of Resources.

4. What are the roles of management in organization?1. Management helps in determination of the objectives of an organization.2. Economic and social development takes place through management.

5. Write any 2 points favor for management as a science.1) Management principles should be verifiable.2) Reliable basis through management.

6. Write any 2 points favor for management as an art. i. Management is creative.ii. Management includes the use of practical knowledge and personal skill.

7. Who is the father of scientific management? Frederick Winslow Taylor.

8. What is Time Study? The movement which takes the minimum time is the best one.

9. What is Motion Study?Taylor suggested that eliminating wasteful movements and performing only necessary movements.

10. Write Fayol’s 14 principles of management. Division of work Authority and Responsibility Discipline Unity of Command Unity of direction Individual interest to general interest Remuneration Centralization Scalar chain

Order Equity Stability Initiative Esprite de crops.

11. What is Authority?It is the power given to a person to get work from the subordinates.

12. What is Responsibility?It is the amount of work expected of from a man by his superior.

13. Comment: Management is both- A science and an art.Management is a science because it contains general principles. It is also an art because it requires certain personal skills to be achieve desired results. 14. What is Centralization?The organization is centralized when the power is concentrated with one person.

15. What is Decentralization?If the power is fully distributed to the subordinates of the organization.

16. What is Esprit – de- crops?This means union is strength. In organization employees should be harmony and unity.

17. What are Management Levels?Top levelMiddle levelLower level

18. Write the functions of management. Planning Organizing Staffing Coordinating Controlling

19. What are the essential skills need for the managers? Technical skill Human skill Conceptual skill.

20. Define Sole trading.The sole proprietorship is that form of business organization which is owned and controlled by a single individual.

21. What is Partnership?A partnership is an association of two or more persons to carry on business and to share its profit and lossess.

22. What is Joint stock company?A private limited company is a company which has a minimum paid up capital destroyed be prescribed.

24. What is a Co-operative society?It is a voluntary association of persons for mutual benefit and it aims accomplished through self help and collective effort.

25. What is a social responsibility?Society is the parts of the management to interact actions wither to protect social interest a society.

16 – Marks

1. Explain the principle of F.W. Taylor theory.Scientific Management tries to increase productivity by increasing efficiency and wages of the

workers. It finds out the best method for performing each job. It selects employees by using Scientific Selection Procedures. It provides Scientific Training and Development to the employees. It believes in having a close co-operation between management and employees. It uses Division of Labour. It tries to produce maximum output by fixing Performance Standards for each job and by having a Differential Piece-Rate System for payment of wages.

1. Performance Standards

F.W. Taylor found out that there were no scientific performance standards. No one knew exactly how much work a worker should do in one hour or in one day. The work was fixed assuming rule of thumb or the amount of work done by an average worker. Taylor introduced Time and Motion Studies to fix performance standards. He fixed performance standards for time, cost, and quality of work, which lead to uniformity of work. As a result, the efficiency of the workers could be compared with each other.

2. Differential Piece Rate System

Taylor observed that workers did as little work as possible. He felt that under existing wage system, an efficient worker gained nothing extra. So, Taylor used the differential piece (unit) rate system.

Under differential piece rate system, a standard output was first fixed. Then two wage rates were fixed as follows :-

1. Low wage rate was fixed for those workers who did not produce the standard output.

2. Higher wage rate was fixed for those workers who produced the standard output or who produced more than the standard output.

Differential piece-rate system can be explained with following example :-

The standard output for a day is 10 units. The wage rate for producing less than 10 units is $ 5 per unit, and for producing 10 or more units is $ 8 per unit. If Mr. X produces 7 units, and Mr. Y produces 12 units, then their wages will be as follows :-

Mr. X's wage is 7 x 5 = $ 35

Mr. Y's wage is 12 x 8 = $ 96

Because of this system, the inefficient workers will try to improve their efficiency, and the efficient workers will be motivated to maintain or improve their production capacity.

3. Functional Foremanship

Taylor started "Functional Foremanship". Here, 8 foremen (lower level manager or supervisor) are required to supervise the workers. This is because one foremen cannot be an expert in all the functions.

Taylor's functional foremanship consists of two groups of supervisors :-

1. At the Planning Level or Office Level.2. At the Doing Level or Factory Level.

(a) At the Planning Level :-

Taylor separated planning from doing. At the planning level there were four supervisors. They are :-

1. Time and Cost Clerk : This boss prepares the standard time for completing the work and cost of doing that work.

2. Route Clerk : This boss makes the exact route (way) through which each product has to travel from a raw-material to a finished product.

3. Discipline Clerk : This boss looks after the discipline and absenteeism problems in the organisation.

4. Instruction Card Clerk : The boss gives instructions about how to do a particular work.

(b) At the Doing Level :-

At the doing level there were also four supervisors. They are :-

1. Gang Boss : He is responsible for setting up the machines and tools and for direct supervision of workers.

2. Speed Boss : He is responsible for maintaining a proper speed of work.

3. Repair Boss : He is responsible for the repairs and maintenance of machines.

4. Inspector Boss : He is responsible for maintaining the quality of production.

4. Mental Revolution

Taylor introduced the concept of "Mental Revolution". He said that the management and workers should have a positive attitude towards each other. This will result in close cooperation between them. This will increase productivity and profits.

5. Time Study

Time study means to record the time taken for doing each part of a job. The full job is first observed and analysed. Then it is divided into different elements (parts). Later the time taken for doing each part of the job is recorded. This is done by using a stop clock. Time study helps the management to know exactly how much time it will take to do a particular job. This helps the management to fix the amount of work to be done by each worker in one hour or in one day. That is, management can fix a standard output of work for a certain period of time.

Taylor advised all managers to do time study. This will prevent the workers from passing time, working slowly and doing less work. Time study helps to increase the productivity of the organisation.

6. Fatigue and Motion Study

Frank and Lillian Gilbreth (Husband and Wife) introduced fatigue and motion studies. Fatigue and motion studies find out and remove unnecessary and wasteful movements while doing the job.

According to the Gilbreths, fatigue (tiredness) and motion (movements or actions) are interlinked. Every motion that is removed will reduce fatigue. Using cameras, they studied workers (masons) doing common jobs like bricklaying. They found that the workers do many wasted motions while doing their work. This resulted in fatigue. So, the Gilbreths asked the workers to stop all unnecessary motions and to do only the motions which were necessary for doing the job. They reduced the bricklayers' motions from 18 to 5. This also reduced the fatigue of the bricklayers. Therefore, productivity of workers increased.

7. Gantt Charts

Henry Gantt invented the Gantt chart. This chart shows the planned work and the completed work at each stage of production. It also shows the time taken to do the work.

Gantt chart is the basis for following two concepts :-

1. The Critical Path Method (CPM), and

2. The Program Evaluation Review Technique (PERT).

2.Explain the Henry Fayol management theory

Management Principles developed by Henri Fayol: 1. DIVISION OF WORK: Work should be divided among individuals and groups to ensure  that

effort and attention are focused on special portions of the task. Fayol presented work specialization as the best way to use the human resources of the organization.                            

2. AUTHORITY: The concepts of Authority and responsibility are closely related. Authority was defined by Fayol as the right to give orders and the power to exact obedience. Responsibility involves being accountable, and is therefore naturally associated with authority. Whoever assumes authority also assumes responsibility.                                                              

3. DISCIPLINE: A successful organization requires the common effort of workers. Penalties should be applied judiciously to encourage this common effort.                                                  

4. UNITY OF COMMAND: Workers should receive orders from only one manager.                  

5. UNITY OF DIRECTION: The entire organization should be moving towards a common objective in a common direction.                                                                                                    

6. SUBORDINATION OF INDIVIDUAL INTERESTS TO THE GENERAL INTERESTS: The interests of one person should not take priority over the interests of the organization as a whole.                                                                                                                                        

7. REMUNERATION: Many variables, such as cost of living, supply of qualified personnel, general business conditions, and success of the business, should be considered in determining a worker’s rate of pay.                                                                                                  

8. CENTRALIZATION: Fayol defined centralization as lowering the importance of the subordinate role. Decentralization is increasing the importance. The degree to which centralization or decentralization should be adopted depends on the specific organization in which the manager is working.                                                                                                      

9. SCALAR CHAIN: Managers in hierarchies are part of a chain like authority scale. Each manager, from the first line supervisor to the president, possess certain amounts of authority. The President possesses the most authority; the first line supervisor the least. Lower level managers should always keep upper level managers informed of their work activities. The existence of a scalar chain and adherence to it are necessary if the organization is to be successful.                                                                                                    

10. ORDER: For the sake of efficiency and coordination, all materials and people related to a specific kind of work should be treated as equally as possible.                                                      

11. EQUITY: All employees should be treated as equally as possible.                                              

12. STABILITY OF TENURE OF PERSONNEL: Retaining productive employees should always be a high priority of management. Recruitment and Selection Costs, as well as increased product-reject rates are usually associated with hiring new workers.                            

13. INITIATIVE: Management should take steps to encourage worker initiative, which is defined as new or additional work activity undertaken through self direction.                                          

14. ESPIRIT DE CORPS: Management should encourage harmony and general good feelings among employees.

3. What are the major functions of management explain

Henri Fayol was one of the first theorists to define functions of management in his 1916 book “Administration Industrielle et Generale”. Henri Fayol identified 5 functions of management, which he labelled: planning, organizing, commanding, coordinating and controlling. Henri Fayol theorized that these functions were universal, and that every manager performed these functions in their daily work.

Henri Fayol also identified 14 general principles of management and organizing, which can be read about in the article: In part, these 14 principles give normative guidance on how managers might master and execute their 5 managerial functions effectively.

Below, a short description of the five functions is presented.

Planning Managers must plan for future conditions, develop strategic objectives and secure the achievement of future goals. Therefore, managers must evaluate future contingencies affecting the organization, and shape the future operational and strategic landscape of the company.

Organizing Managers must organize the workforce in an efficient manner and structure and align the activities of the organization. Managers must also train and recruit the right people for the job, and always secure a sufficiently skilled and educated workforce.

Commanding Managers must supervise subordinates in their daily work, and inspire them to achieve company goals. Likewise it is the responsibility of managers to communicate company goals and policies to subordinates. The commanding of subordinates should always be consistent with company policies, and every manager should treat subordinates in line with the standards of the company.

Coordinating Managers must harmonize the procedures and activities performed by the company, meaning that every activity of each organizational unit should complement and enrich the work of another.

Controlling Managers must control that company activities are in line with general company policies and objectives. It is also the responsibility of the manager to observe and report deviations from plans and

objectives, and to make initiatives to correct potential deviations.

The five functions theory of Henri Fayol is a very normative and functional view on management, and the theory might not fully convey the managerial complexities faced by managers in their daily work. As such, Henry Fayol’s five functions focus very little on informal relationships between managers and subordinates, and do not touch very much upon how to develop and maintain a motivated workforce.

The 5 functions put forward by Henri Fayol may therefore not completely represent the total complexity faced by managers, and the normative approach may be too rigid to illustrate which functions managers need to perform in modern contemporary companies and organizations. However, the 5 functions presented by Henri Fayol give a structured overview of several tasks needed to be performed by all managers, which gives managers an initial overview of which main functions they should be focusing on in their daily work.

Other theorist such as Frederick Herzberg and Elton Mayo focused more of their attention to trying to explain how people are motivated, and on which motivational factors can secure a satisfied and motivated workforce.

3. Indicate the levels and skills of management.

Levels of management

Most organizations have three management levels: low-level, middle-level, and top-level managers These managers are classified in a hierarchy of authority, and perform different tasks. In many organizations, the number of managers in every level resembles a pyramid. Each level is explained below in specifications of their different responsibilities and likely job titles.[9]

Top-level managers

Consists of board of directors, president, vice-president, CEOs, etc. They are responsible for controlling and overseeing the entire organization. They develop goals, strategic plans, company policies, and make decisions on the direction of the business. In addition, top-level managers play a significant role in the mobilization of outside resources and are accountable to the shareholders and general public.

According to Lawrence S. Kleiman, the following skills are needed at the top managerial level.[10]

Broadened understanding of how: competition, world economies, politics, and social trends effect organizational effectiveness.

Middle-level managers

Consist of general managers, branch managers and department managers. They are accountable to the top management for their department's function. They devote more time to organizational and directional functions. Their roles can be emphasized as executing organizational plans in conformance with the company's policies and the objectives of the top management, they define and discuss information and policies from top management to lower management, and most importantly they inspire and provide guidance to lower level managers towards better performance. Some of their functions are as follows:

Designing and implementing effective group and intergroup work and information systems. Defining and monitoring group-level performance indicators.

Diagnosing and resolving problems within and among work groups.

Designing and implementing reward systems supporting cooperative behavior.

low-level managers

Consist of supervisors, section leads, foremen, etc. They focus on controlling and directing. They usually have the responsibility of assigning employees tasks, guiding and supervising employees on day-to-day activities, ensuring quality and quantity production, making recommendations, suggestions, and upchanneling employee problems, etc. First-level managers are role models for employees that provide:

Basic supervision. Motivation.

Career planning.

Performance feedback.

Supervising the staffs.

3.Explain management is an art or science both science and art.

The concept of management is universal and very old. That is why different views have been expressed about its nature by different writers from time to time. The continuous and rapid development of management principles and practices in organization has changed the nature of management. The main points of view about the nature of management are given below:

Management as an Inborn or Acquired Ability

In the pre-scientific management period, i.e., prior to 1880 there has been a leading concept that management is an inborn ability. It is a traditional approach. The supporters of this concept believe that the hereditary characteristics, inborn talents and natural aptitudes of a man make him an efficient manager. Some people are so efficient and talented since their birth that they lead and get success in the field of business. To our mind, this concept was used when the ownership and management were not separated. But later on the researches and development in the field of science, technology and training etc. changed this old concept. Today management is considered not only as an inborn ability

but also as an acquired ability. In the words of Ordway Tead, "Managers are both born and made." Today, in large-sized business organizations, ownership and management are separate identities. The management lies in the hands of professional managers who are educated and trained. Thus, now the management can be considered as an acquired ability.

Management as an Art, Science or Both

A lot of controversy arises whether management is an art or science or both. It is said that the management is the oldest of arts and youngest of science. This explains the changing nature of management. But to have an exact answer to this question, it is necessary to understand both these aspects separately and combinedly, as given below:

Management as an Art:

Art refers to the way of doing specific things; it indicates how an object can be achieved. In the words of George R. Terry, "Art is bringing about of a desired result through the application of skill." Art is, thus, skilful application of knowledge which entirely depends on the inherent capacity of a person which comes from within a person and is learned from practice and experience. In this sense, management is certainly an art as a manager uses his skill, knowledge and experience in solving various problems, both complicated and non-complicated that arise in the working of his enterprise successful. In the words of Ernest Dale, "Management is considered as an art rather than science mainly because managerial skill is a personnel possession and is intuitive."

Management as a Science:

Science may be described as a systematized body of knowledge based on proper findings and exact principles and is capable of verification. It is a reservoir of fundamental truths and its findings apply safely in all the situations. In this sense, management is a science as it has also developed some systematized knowledge. Like other sciences, management has also developed certain principles, laws, generalization, which are universal in nature and are applicable wherever the efforts of the people are to be coordinated. But management is not as exact science as other physical sciences like physic, chemistry, biology, astronomy etc. The main reason for the inexactness of science of management is that it deals with the people and it is very difficult to predict their behavior accurately. In this way, management falls in the area of 'social sciences'. Thus, it is a social science.

Conclusion- Management is an Art and Science Both

From the above study, we conclude that management is an art and science both. According to American Society of Mechanical Engineers. "Management is the art and science of preparing, organizing and directing human efforts to control the forces and utilize the material of nature for the benefit of men. "Thus, it has now been accepted that management is an art as well as science. It has

the elements of both arts and science. In the words of Dean Stanley, "Management is a mixture of an art and science - the present ratio is about 80% art and 20% science."

6. Describe the social responsibilities of management. Social responsibility is defined as the obligation and commitment of managers to take steps for protecting and improving society’s welfare along with protecting their own interest. The managers must have social responsibility because of the following reasons:

1. Organizational Resources - An organization has a diverse pool of resources in form of men, money, competencies and functional expertise. When an organization has these resources in hand, it is in better position to work for societal goals.

2. Precautionary measure - if an organization lingers on dealing with the social issues now, it would land up putting out social fires so that no time is left for realizing its goal of producing goods and services. Practically, it is more cost-efficient to deal with the social issues before they turn into disaster consuming a large part if managements time.

3. Moral Obligation - The acceptance of managers’ social responsibility has been identified as a morally appropriate position. It is the moral responsibility of the organization to assist solving or removing the social problems

4. Efficient and Effective Employees - Recruiting employees becomes easier for socially responsible organization. Employees are attracted to contribute for more socially responsible organizations. For instance - Tobacco companies have difficulty recruiting employees with best skills and competencies.

5. Better Organizational Environment - The organization that is most responsive to the betterment of social quality of life will consequently have a better society in which it can perform its business operations. Employee hiring would be easier and employee would of a superior quality. There would be low rate of employee turnover and absenteeism. Because of all the social improvements, there will be low crime rate consequently less money would be spent in form of taxes and for protection of land. Thus, an improved society will create a better business environment.

But, manager’s social responsibility is not free from some criticisms, such as -

1. High Social Overhead Cost - The cost on social responsibility is a social cost which will not instantly benefit the organization. The cost of social responsibility can lower the organizational efficiency and effect to compete in the corporate world.

2. Cost to Society - The costs of social responsibility are transferred on to the society and the society must bear with them.

3. Lack of Social Skills and Competencies - The managers are best at managing business matters but they may not have required skills for solving social issues.

4. Profit Maximization - The main objective of many organizations is profit maximization. In such a scenario the managers decisions are controlled by their desire to maximize profits for the organizations shareholders while reasonably following the law and social custom.

Social responsibility can promote the development of groups and expand supporting industries.

7. Explain the different types of Business organization. Business concerns are established with the objective of making profits. They can be established either by one person or by a group of persons in the private sector by the government or other public bodies in the public sector. A business started by only one person is called sole proprietorship. The business started by a group of persons can be either a Joint Hindu Family or Partnership or Joint Stock Company or a Co-operative form of organization.

Thus there are various forms of business organization

1. Sole Proprietorship 2. Joint Hindu Family Firm

3. Partnership Firm

4. Joint Stock Company

5. Co-operative Society

Forms of business organization are legal forms in which a business enterprise may be organized and operated.

These forms of organization refer to such aspects as ownership, risk bearing, control and distribution of profit. Any one of the above mentioned forms may be adopted for establishing a business, but usually one form is more suitable than other for a particular enterprise. The choice will depend on various factors like the nature of business, the objective, the capital required, the scale of operations, state control, legal requirements and so on.

Out of the forms of private ownership listed above the first three forms (1, 2, and 3) may be described as non-corporate and the remaining ( 4 and 5 ) as corporate forms of ownership. The basic difference between these two categories is that a non-corporate form of business can be started without registration while a corporate form of business cannot be set up without registration under the laws governing their functioning.

Characteristics of an ideal form of organization

Before we discuss the features, merits and demerits of different forms of organization, let us know the characteristics of an ideal form of organization. The characteristics of an ideal form of organization are found in varying degrees in different forms of organization. The entrepreneur, while selecting a form of organization for his business, should consider the following factors.

Ease of formation: It should be easy to form the organization. The formation should not involve many legal formalities and it should not be time consuming.

Adequacy of Capital: The form of organization should facilitate the raising of the required amount of capital at a reasonable cost. If the enterprise requires a large amount of capital, the

preconditions for attracting capital from the public are a) safety of investment b) fair return on investment and c) transferability of the holding.

Limit of Liability: A business enterprise may be organized on the basis of either limited or unlimited liability. From the point of view of risk, limited liability is preferable. It means that the liability of the owner as regards the debts of the business is limited only to the amount of capital agreed to be contributed by him. Unlimited liability means that even the owners’ personal assets will be liable to be attached for the payment of the business debts.

Direct relationship between Ownership, Control and Management: The responsibility for management must be in the hands of the owners of the firm. If the owners have no control on the management, the firm may not be managed efficiently.

Continuity and Stability: Stability is essential for any business concern. Uninterrupted existence enables the entrepreneur to formulate long-term plans for the development of the business concern.

Flexibility of Operations: another ideal characteristic of a good form of organization is flexibility of operations. Changes may take place either in market conditions or the states’ policy toward industry or in the conditions of supply of various factors of production. The nature of organization should be such as to be able to adjust itself to the changes without much difficulty.

Sole Proprietorship

Meaning: A sole proprietorship or one man’s business is a form of business organization owned and managed by a single person. He is entitled to receive all the profits and bears all risk of ownership.

Features: The important features of sole proprietorship are:

1. The business is owned and controlled by only one person.2. The risk is borne by a single person and hence he derives the total benefit.

3. The liability of the owner of the business is unlimited. It means that his personal assets are also liable to be attached for the payment of the liabilities of the business.

4. The business firm has no separate legal entity apart from that of the proprietor, and so the business lacks perpetuity.

5. To set up sole proprietorship, no legal formalities are necessary, but there may be legal restrictions on the setting up of particular type of business.

6. The proprietor has complete freedom of action and he himself takes decisions relating to his firm.

7. The proprietor may take the help of members of his Family in running the business.

Advantages

1. Ease of formation: As no legal formalities are required to be observed.2. Motivation: As all profits belong to the owner, he will take personal interest in the business.

3. Freedom of Action: There is none to interfere with his authority. This freedom promotes initiative and self-reliance.

4. Quick Decision: No need for consultation or discussion with anybody.

5. Flexibility: Can adapt to changing needs with comparative ease.

6. Personal Touch: comes into close contact with customers as he himself manages the business. This helps him to earn goodwill.

7. Business Secrecy: Maintaining business secrets is very important in today’s competitive world.

8. Social Utility: Encourages independent living and prevents concentration of economic power.

Disadvantages

1. Limited resources: one man’s ability to gather capital will always be limited. 2. Limited Managerial Ability

3. Unlimited Liability: Will be discouraged to expand his business even when there are good prospects for earning more than what he has been doing for fear of losing his personal property.

4. Lack of Continuity: uncertain future is another handicap of this type of business. If the sole proprietor dies, his business may come to an end.

5. No Economies of Large Scale: As the scale of operations are small, the owner cannot secure the economies and large scale buying and selling. This may raise the cost of production.

Suitability of Sole Proprietorship Form

From the discussion of the advantages and disadvantages of sole proprietorship above, it is clear that this form of business organization is most suited where:

1. The amount of capital is small2. The nature of business is simple in character requiring quick decisions to be taken

3. Direct contact with the customer is essential and

4. The size of demand is not very large.

These types of conditions are satisfied by various types of small business such as retail shops, legal or medical or accounting profession, tailoring, service like dry cleaning or vehicle repair etc. hence sole proprietor form of organization is mostly suitable for these lines of businesses. This form of

organization also suits those individuals who have a strong drive for independent thinking and highly venturous some in their attitude.

Joint Hindu Family

Meaning

The Joint Hindu Family, also known as Hindu Undivided Family (HUF) is a non-corporate form of business organization. It is a firm belonging to a Joint Hindu Family. It comes into existence by the operations of law and not out of contract.

In Hindu Law, there are two schools of thought viz Dayabhaga which is applicable in Bengal and Assam, and Mitakshara which is applicable in the rest of India. According to Mitakshara school, the property of the Joint Hindu Family is inherited by a Hindu Family from his father, grandfather and great grandfather, thus three successive generations in male line (son, grandson and great grandson ) can simultaneously inherit the ancestral propriety. They are called coparceners in interest and the senior most member of the Family is called karta. The Hindu succession act 1956, has extended to the line of co-parceners interest to female relatives of the deceased co-parcener or male relative climbing through such female relatives. Under the Dayabagha law the male heirs become members only on the death of the father.

Features

Some of the important features of the Joint Hindu Family are as follows

1. The business is generally managed by the father or some other senior member of the Family he is called the Karta or the manager.

2. Except the Karta, no other member of the family has any right of participation in the management of a Joint Hindu Family firm

3. The other members of the family cannot question the authority of the Karta and their only remedy is to get the family dissolved by mutual agreement.

4. If the Karta has misappropriated the funds of the business, he has to compensate the other co-parceners to the extent of their share in the Joint property of the family

5. For managing the business, the Karta has the power to borrow funds, but the other co-parceners are liable only to the extent of their share in the business. In other words the authority is limited.

6. The death of any member of the family does not dissolve the business of the family

7. Dissolution of the Joint Hindu Family can take place only though mutual agreement

Advantages

1. Stability: The existence of the HUF does not come to an end with the death of any co-parcener, hence there is stability.

2. Knowledge and experience: There is scope for younger members of the family to get the benefit of the knowledge and experience of the elder members of the family.

3. No Interference: The Karta has full freedom to take decisions without any interference by any member of the family.

4. Maximum Interest: As the Karta’s liability is unlimited, he takes maximum interest in running the business.

5. Specialization: By assigning work to the members as per their knowledge and experience, the benefits of specialization and division of work may be secured.

6. Discipline: The firm provides an opportunity to its members to develop the virtues of discipline, self-sacrifice and co-operation.

7. Credit Worthiness: Has more credit worthiness when compared to that of a sole proprietorship.

Disadvantages

1. No Encouragement: As the benefit of hard work of some members is shared by all the members of the family, there is no encouragement to work hard.

2. Lazy and Inactive: The Karta takes the responsibility to manage the firm. This may result in the other members becoming lazy.

3. Members Initiative: The Karta alone has full control over the business and the other members cannot interfere with the management of the firm. This may hamper members initiative.

4. Duration: The life of the business is shortened if family quarrels take precedence over business interest.

5. Abuse of Freedom: There is scope for the Karta to misuse his full freedom in managing the business for his personal benefit.

Conclusion

This form of business organization which at one time was popular in India is now losing its popularity. The main cause for its decline is the gradual dissolution of the Joint Hindu Family system, it is being replaced by sole proprietorship or partnership firm.

Partnership Form of Organization

Generally when a proprietor finds it’s difficult to handle the problems of expansion, he thinks of taking a partner. In other words, once a business grows beyond the capacity of a sole proprietorship and or a Joint Hindu Family, it becomes unarguably necessary to form partnership. It means that partnership grows out of the limitations of one-man business in terms of limited financial resources, limited managerial ability and unlimited risk. Partnership represents the second stage in the evolution f ownership forms.

In simple words, a Partnership is an association of two or more individuals who agree to carry on business together for the purpose of earning and sharing of profits. However a formal definition is provided by the Partnership Act of 1932.

Definition

Section 4 of the Partnership Act, 1932 defines Partnership as “the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all”

Features of Partnership

1. simple procedure of formation: the formation of partnership does not involve any complicated legal formalities. By an oral or written agreement, a Partnership can be created. Even the registration of the agreement is not compulsory.

2. Capital: The capital of a partnership is contributed by the partners but it is not necessary that all the partners should contribute equally. Some may become partners without contributing any capital. This happens when such partners have special skills, abilities or experience. The partnership firm can also raise additional funds by borrowing from banks and others.

3. Control: The control is exercised jointly by all the partners. No major decision can be taken without consent of all the partners. However, in some firms, there may partners known as sleeping or dormant partners who do not take an active part in the conduct of the business.

4. Management: Every partner has a right to take part in the management of the firm. But generally, the partnership Deed may provide that one or more than one partner will look after the management of the affairs of the firm. Sometimes the deed may provide for the division of responsibilities among the different partners depending upon their specialization.

5. Duration of partnership: The duration of the partnership may be fixed or may not be fixed by the partners. In case duration is fixed, it is called as “partnership for a fixed term. When the fixed period is over, the partnership comes to an end.

6. Unlimited Liability: The liability of each partner in respect of the firm is unlimited. It is also joint and several and, therefore any one of the partner can be asked to clear the firm’s debts in case the assets of the firm are inadequate for it.

7. No separate legal entity: The partnership firm has no independent legal existence apart from that of the persons who constitute it. Partnership is dissolved when any partner dies or retires. Thus it lacks continuity.

8. Restriction on transfer of share: A partner cannot transfer his share to an outsider without the consent of all the other partners.

Advantages

1. Ease of formation: partnership can be easily formed without expense and legal formalities. Even the registration of the firm is not compulsory.

2. Large resources: when compared to sole-proprietorship, the partnership will have larger resources. Hence, the scale of operations can be increased if conditions warrant it.

3. Better organization of business; as the talent, experience, managerial ability and power of judgment of two or more persons are combined in partnership, there is scope for a better organsation of business.

4. Greater interest in business: as the partners are the owners of the business and as profit from the business depends on the efficiency with which they manage, they take as much interest as possible in business.

5. Prompt decisions: as partners meet very often, they take decisions regarding business policies very promptly. This helps the firm in taking advantage of changing business conditions.

6. balance judgment: as partners possesses different types of talent necessary for handling the problems of the firm, the decisions taken jointly by the partners are likely to be balanced.

7. Flexibility: partnership is free from legal restriction for changing the scope of its business. The line of business can be changed at any time with the mutual consent of the partners. No legal formalities are involved in it.

8. Diffusion of risk; the losses of the firm will be shared by all the partners. Hence, the share of loss in the case of each partner will be less than that sustained in sole proprietorship.

9. Protection to minority interest: important matters like change in the nature of business, unanimity among partners is necessary hence, the minority interest is protected.

10. Influence of unlimited liability: the principle of unlimited liability helps in two ways. First, the partners will be careful in their business dealings because of the fear of their personal properties becoming liable under the principle of unlimited liability. Secondly, it helps the firm in raising loans for the business as the financers are assured of the realization of loans advanced by them.

Disadvantages.

1. Great risk; as the liability is joint and several, any one of the partners can be made to pay all the debts of the firm. This affects his share capital in the business and his personal properties.

2. Lack of harmony: some frictions, misunderstanding and lack of harmony among the partners may arise at any time which may ultimately lead to the dissolution.

3. Limited resources: because of the legal celing on the maximum number of partners, there is limit to the amount of capital that can be raised.

4. Tendency to play safe: because of the principle of unlimited liability, the partners tend to play safe and pursue unduly conservative policies.

5. No legal entity: the partnership has no independent existence apart from that of the persons constituting it, i.e it is not a legal entity.

6. Instability: the death, retirement or insolvency of a partner leads to the dissolution of the partnership. Further even any one partner if dissatisfied with the business, can bring about the dissolution of partnership. Hence partnership lacks continuity

7. Lack of public confidence: no legal regulations are followed at the time of the formation of partnership and also there is no publicity given to its affairs. Because of these reasons, a partnership may not enjoy public confidence.

Sustainability: the advantages and drawbacks of partnership stated above indicate that the partnership form tends to be useful for relatively small business, such as retail trade, mercantile houses of moderate size, professional services or small scale industries and agency business.

But when compared to sole proprietorship partnership is suitable for a business bigger in size and operations.

UNIT –II PLANNING

1.Define planning.Planning is the process of selecting the objectives and the determining the course of action required to

achieve these objectives.

2. What are the objectives of planning? Planning is the primary function of an organization It helps in achieving objectives It is done to cope with uncertainty and change It helps in facilitating control It helps in coordination It increases organizational effectiveness. It guides in decision making.

3. List out the features of planning. Planning –a primary function Planning – a dynamic process Planning – based on objectives and policies Planning – a selective process Pervasiveness of planning.

4. What are the different types of planning?STANDING PLANS SINGLE USE PLANSMission or purpose ProgrammersObjectives BudgetsStrategies SchedulesPolicies MethodsProcedures projectsRules 5.Define Mission.Mission may be defined as “as a statement which defines the role that an organization plays in the society ”.

6. Define objectives.The term objectives or goals are often used interchangeably. Objectives are the end results towards which the activities of firm are aimed or directed.

7.What is meant by strategy?Strategy of an organization is the programmes of action and deployment of resources to attain its objectives.

8. What are the factors to be considered while formulating strategies? 1. Mission and objectives of an organization.2. Values, aspirations and prejudices of top level management3. Opportunities and threads of the external environment.4. Strength and weakness of the firm in various aspects such as funds, organization structure, human talent, technology, etc.

9.Define policies.Policies are general statements or understandings which provide guidance in decision making to various managers.10. What is procedure?Procedure is a chronological order of actions required to implement a policy and to achieve an objectives.

11. How rules can be defined?Rules are plans in which they suggest the required course of action .

12. What is programme?Programme is a broad term which includes goals, policies, procedure, rules, task assignment, steps to be taken, resources to be employed to carry out a given course of action.

13. Define Budgets.A budget is a statement of expected results in numerical terms and therefore, it may be referred as a numerical programme.

14. Classify budgets.i. Variable budgets or Flexible budgetsii. Programme budgetsiii. Zero-base budget

15. Give the flow diagram of planning steps. SERIAL NUMBER PLANNING STEPS1 Identification of opportunities2 Establishment of objectives3 Developing planning premises4 Identification of alternatives5 Evaluation of alternatives6 Selecting an alterative7 Formulating derivative plans8 Establishing sequence of activities

16. What is objective?Objectives are the aims, purposes or goals that an organization wants to achieve over varying periods of time.

17. List down the guidelines for the objective setting.1. objective should cover the main features of the job2. objectives must be clearly specified in writing3. The list of objectives should not be too long. Wherever it is possible, combine some objectives to make the list reasonable.4. objectives should be verifiable.

18. Mention the different areas of an organization towards objective setting.

Market standing Innovation Productivity Resources- physical and financial Profitability Manager performance and development Public responsibility Worker performance, attitude and development.

19. What are the benefits of objective setting?i. It sets specific targets for the employee to achieve which are liked to business/ development plan.ii. It states how the performance of the employee is to be measured to assess progress.iii. It provides direction of the employee.iv. It allows progress, targets, and successes to be monitored and measured by the manager.v. It helps build working relationships between the employee and the manager and improves overall communications.

20. What is MBO?MBO is a process where by the superior and the subordinate managers of an enterprise jointly identify its common goals, define each individual’s major areas of responsibility in terms of results expected of him, and use these measures as guides for operating the unit and the contribution of each of its members is assessed.

21. What are the benefits of MBO?o Improvement of managingo Clarification of organizationo Personnel satisfactiono Team worko Development of effective control.

22. Explain the term decision and decision making.A decision may be a direction to other to do or not to do. Decision making is defined as the process of choosing a course of action from among alternatives to achieve a desired goal. It is one of the functions of management and also a core process of planning. The management executive takes a number of decisions every day. Thus, a decision may be rational or irrational. There are number of alternatives available to the management. The best one is selected out of the available alternatives.

23. Write down the process followed in decision – making process.SERIAL NUMBER DECISION MAKING PROCESS- STEPS1 Identification of problem2 Diagnosis and analysis the problem3 Search for alternatives4 Evaluation of alternatives5 Selecting an alternatives6 Implementation and follow up

7 Feed back

24. What is planning premises?The assumptions about future derived from forecasting and used in planning are known as planning premises.

25. How would you evaluate the importance of a decision?Decision making is a selection process. The best alternative is selected out of many available alternatives.Decision-making is a goal –oriented process.Decision making is the end process.Decision making is a human and rational process involving the application of intellectual abilities.Decision making is a dynamic process.

16 –Marks

1. What is mean by responsibilities & Explain the kinds of Responsibilities?

In determining a firm’s social responsibility, managers must identify the groups that are influenced by its actions and what are their expectations out of the business. In a broad sense, such groups may include owners, employees, customers, the community, the government, suppliers, and society in general.1. Responsibility to owners:· Utilising funds in the best possible manner. · Ensure a fair rate of return regularly.· Fair and honest reporting of business operations from time to time.2. Responsibility to employees:· Recognise the social needs of workers and provide adequate participation to employees in matters affecting their life. · Fair and reasonable rates of pay.· Creating a healthy work climate, improving working and living conditions and making the work place safe and pleasant.· Improving the quality of working life of employees.

3. Responsibility to customers:· Providing goods of superior quality at reasonable prices.· Avoiding deceitful, false, and highly exaggerated advertisements and high pressure publicity gimmicks aimed at wooing the customers away from competitors.· Management should not indulge in anti-social activities like black marketing, hoarding, etc.4. Responsibility to creditors and suppliers:· Provide accurate information regarding the financial health of the organisation.· Ensure a reasonable price for the articles supplied, and make prompt repayments (involving interest on borrowings); there should be fairness in transactions.· Promote a healthy atmosphere where creditors, suppliers and other interest groups are treated as partners in a cooperative endeavour.5. Responsibility to community:· Develop constructive relationship with members of the community.

· Participate in community activities and promote community welfare. Renovating neighbourhoods surrounding the company’s headquarters, building public parks with playground equipment, and granting employees paid leave of absence to work in social programmes.· Offer good housing and efficient transportation to own employees and to poorer sections of the community.6. Responsibility to government:· Follow fair trade policies and practices. · Pay taxes to the government honestly.· Obey the laws.· Discourage unhealthy practices like bribing the government officials to curry favours, obtain licences in order to kill the competition, etc.7. Responsibility to society:· Elimination of poverty and provision of quality health care.· Preservation of the environment by reducing the level of pollution.· Providing equal employment and educational opportunities to all, regardless of race, colour, creed or sex.· Providing sufficient number of jobs and career opportunities and facilities for all members of society.· Improving the physical environment and developing human resources fully. Some of the examples in this regard may be; conducting educational programmes to combat drug abuse,provision of seed money to minority suppliers, urban rehabilitationloans to construct low-cost houses, providing managerial trainingto small entrepreneurs, establishing manufacturing plants ineconomically backward regions, etc.

2. Explain the features of planning?Planning has a number of characteristics:i. Planning is goal-oriented:All plans arise from objectives. Objectives provide the basic guidelines forplanning activities. Planning has no meaning unless it contributes in somepositive manner to the achievement of predetermined goals.ii. Planning is a primary function:Planning is the foundation of management. It is a parent exercise inmanagement process. It is a preface to business activities. The idea of primacy of planning emphasises the fact that planning takes precedence over other managerial functions like organising, directing and controllingbecause none of these functions can come into being until there is a plan.iii. Planning is all-pervasive:Planning is a function of all managers. It is needed and practised at all managerial levels. Planning is inherent in everything a manager does. Managers have to plan before launching a new business. They have to plan whenever things change. Even when they decide to close down a plant, they to plan meticulously to avoid problems from employees. The scope of planning, however, differs at different levels and among different departments.iv. Planning is a mental exercise:Planning is a mental process involving imagination, foresight and sound judgment. Planning compels managers to abandon guesswork and wishful thinking. It makes them think in a logical and systematic manner. Plans are based on a careful study of internal and external factors influencing business activities.

v. Planning is a continuous process:Planning is continuous. It is a never-ending activity. Once plans for a specific period are prepared, they are translated into action. At the end of that period, there is a need for a new plan to be drawn based on new situations and conditions. Planning, is thus, an ongoing process ofadjustment to change. There is always need for a new plan to be drawn on the basis of new demands and changes in the circumstances.vi. Planning involves choice:Planning essentially involves choice among various alternative courses of action. If there is one way of doing something, there is no need for planning. The need for planning arises only when alternatives are available. Planning presupposes the existence of alternatives. From out ofthese alternatives, a manager would select the best alternative, after careful analysis and evaluation.vii. Planning is forward looking:Planning means looking ahead and preparing for the future. It means peeping into the future, analysing it and preparing for it. Managers plan today with a view to flourish tomorrow. Without planning, business becomes random in nature and decisions would become meaningless,adhoc choices.viii.Planning is flexible:Planning is based on a forecast of future events. Since future is uncertain, plans should be reasonably flexible. The onset of colour television sets forced many a manufacturer in the West to abandon production of black and white television sets long back. When market conditions change, planners have to make necessary changes in the existing plans.ix. Planning is an integrated process:Plans are structured in a logical way wherein every lower-level plan serves as a means to accomplish higher level plans. They are highly interdependent and mutually supportive.x. Planning includes efficiency and effectiveness dimensions:Plans aim at deploying resources economically and efficiently. They also try to accomplish what has been actually targeted. The effectiveness of plans is usually dependent on how much it can contribute to the predetermined objectives.

3. Define planning and discuss briefly about steps in planning?Planning is a vital managerial function. It is intellectually demanding. It requires a lot of time and effort on the part of planners. They must adopt a systematic approach so as to avoid pitfalls, errors and costly mistakes which may upset the whole business later on. Such a systematic approach may consist of the following steps:

i. Establishing objectives:The first step in the planning process is to identify the goals of the organisation. The internal as well as external conditions affecting the organisation must be thoroughly examined before setting objectives. The objectives so derived must clearly indicate what is to be achieved, whereaction should take place, who is to perform it, how it is to be undertaken and when is it to be accomplished. In other words, managers must provide clear guidelines for organisational efforts, so that activities can be kept on the right track.ii. Developing premises:

After setting objectives, it is necessary to outline planning premises. Premises are assumptions about the environment in which plans are made and implemented. Thus, assumptions about the likely impact of important environmental factors such as market demand for goods, cost of rawmaterials, technology to be used, population growth, government policy,etc. on the future plans are made.iii.Evaluating alternatives and selection:After establishing the objectives and planning premises, the alternative courses of action have to be considered. Liberalisation of imports and the use of high technology in recent times has encouraged manufacturers to produce colour television sets, electronic sets, electronic equipments, videos, computers, fuel-efficient vehicles, etc. Thus, changes in governmentpolicy, technology, competition, etc. pose several alternatives before manufacturers, from time to time, regarding the product they should manufacture. Such alternatives have to be carefully evaluated against factors like costs, associated risks involved, benefits likely to arise, availability of spare capacity, etc. The pros and cons as well as the consequences of each alternative course of action must be examined thoroughly before a choice is made.iv. Formulating derivative plans:After selecting the best course of action, the management has to formulate the secondary plans to support the basic plan. The plans derived for various departments, units, activities, etc., in a detailed manner are known as ‘derivative plans’. For example, the basic production plan requires a number of things such as availability of plant and machinery, training of employees, provision of adequate finance, etc. To ensure the success of a basic plan, the derivative plans must indicate the time schedule and sequence of performing various tasks.v. Securing cooperation and participation:The successful implementation of a plan depends, to a large extent, on the whole-hearted cooperation of the employees. In view of this, management should involve operations people in the planning activities. Suggestions, complaints and criticisms from operating personnel help managementrectify the defects in plans and set things right in the beginning itself. Involvement of subordinates in planning has the unique advantage of getting a practical view of those closer to the scene of operations.vi. Providing for follow-up:Plans to be reviewed continually to ensure their relevance and effectiveness. In the course of implementing plans, certain facts may come to light that were nor even thought of earlier. In the light of these changed conditions, plans have to be revised. Without such a regular follow-up, plans may become out-of-date and useless. Moreover, such a step ensures the implementation plans along right lines. Management can notice shortcomings in time and initiate suitable remedial steps. A continuous evaluation of plans also helps to develop sound plans in future, avoiding mistakes that have surfaced while implementing the previous plans.

4. What are all the step needed for effective planning? Explain.1. Climate:Planning must not be left to chance. Additionally, conducive climate must be provided so that activities proceed smoothly and systematically. Top managers should remove obstacles to planning, by establishing clear cut goals, realistic planning premises and offering required information and appropriate staff assistance at various levels.2. Top management support:

Planning must start at the top. It must receive attention of the top management continually. They must be willing to extend a helping hand, whenever required.3. Participation:Plans are implemented by people. So, it is necessary to secure acceptance and commitment from them. One way to increase commitment is to solicit subordinates’ participation in the planning process. Planning comes alive when employees are involved in setting goals and determining the means to reach them.4. Communication:Goals, premises and policies must be properly communicated to people. People must know what they are supposed to do, when, how and where.The time limits must also be communicated in advance.5. Integration:Different plans must be properly balanced and integrated. They must support each other and should not work at cross purposes. Every attempt should be made to ensure that the pay-offs of planning are more than the costs involved.6. Monitoring:Plans must be subjected to regular appraisal and review, so as to take note of internal as well as external changes. Better to keep the plan flexible tothe extent possible.

5. What do you mean by objectives & Explain its importance?Objectives are essential to organisations. Organisations produce and market economic products and services, universities provide teaching and research, governments provide welfare and security and so on. Organisations are instruments to attainment. Without some purpose, there is no need for the organisation. All organisations are goal-seeking, that is, they exist for the purpose of achieving some goals efficiently and effectively. Objectives affect the size, shape, and design of the organisation, and they are important in motivating and directing personnel. Objectives serve the following functions:1. Legitimacy:Objectives describe the purpose of the organisation, so that people know what it stands for and will accept its existence and continuance. Thus, Ford ‘sells American transportation’, Chrysler ‘sells knowhow’ and Godrej ‘sells quality products’. Objectives help to legitimise the presence of the organisation in its environment. The organisation can, then emphasise its uniqueness, identity and its raison d’être.2. Direction:Objectives provide guidelines for organisational efforts. They keep attention focused on the common purpose. Once objectives are formulated, they become the Polar Star by which the voyage is navigated. Every activity is directed towards the objectives, every individual contributes to meet the goals. ‘Without seeing the target, a manager would be like ablindfolded archer-expending useless effort and creating havoc.’

Coordination:Objectives keep activities on the right track. They make behaviour in organisations more rational, more coordinated and thus more effective,because everyone knows the accepted goals to work towards. In settingeffective goals managers help members at all levels of the rganisation tounderstand how they can ‘best achieve their own goals by directing their behaviour toward the goals of the organisation.’3. Benchmarks for success:

Objectives serve as performance standards against which actual performance may be checked. They provide a benchmark for assessment. They help in the control of human effort in an organisation.4. Motivation:Goals are motivators. The setting of a goal, that is both specific and challenging, leads to an increase in performance because it makes it clear to the individual what he is supposed to do. He can compare how well he is doing now versus how well he has done in the past and in someinstances how well he is performing in comparison to others.

6. What are all the area need for objectives? Explain.1. Market standing:Market standing and innovation are foundation areas in management. Essentially, an organisation exists to obtain results in these areas only.Market standing is an answer to the question regarding optimum marker share which the firm should try to capture ultimately. This requires a careful analysis of (i) customers and products or services; (ii) market segments (what groups are buying the product or service); and (iii) distribution channels (who is getting the product to the customers).2. Innovation:In every business, there are three kinds of innovations: Innovation in product or service; innovation in market place, consumer behaviour and value; and innovation in the various skills and activities needed to make the products and services and to bring them to the market. The chief problem in setting innovation objectives is the difficulty of measuring the importance of various innovations. Management must, first of all, anticipate the innovation goals needed to reach marketing goals. It must also find out the technological developments in all areas of business. For example, the survival of an insurance company depends on: the development of new forms of insurance, the modification of existing policies, finding out cheaper ways of selling policies and settling claims etc. Operating in a competitive world forces business firms to placeemphasis on innovation goals.3. Productivity:Productivity is the ratio of an organisation’s inputs to its outputs. All business have the same resources to work with; it is the quality of management that differentiates one business from another. It must decides as to what inputs of labour, equipment and finances are necessaryto produce the firm’s outputs.4. Physical and financial resources:Every business must be able to attract resources-physical, financial and human – and put them to productive use for effective performance. Resource mobilisation is a two-step process: anticipating the needs of thebusiness and planning to obtain the resources in an economical fashion.After mobilising resources, one also has to say “This is what is available; what do we have to be, how we have to behave to get the fullest benefit?”

5. Managerial performance and development:In order to ‘stay in’ and remain profitable, every business needs strong, innovative managers. So, it is highly important, especially in the case of large organisations, to set objectives relating to the quality of management performance, the development of managers at various levels in theorganisation.6. Worker performance and attitudes:

Organisations must provide tangible benefits to the individuals working for its continued growth. Thus, workers want wages, managers want salaries, owners want profits. These are the inducements that an organisation must provide, in order to obtain performance (contributions)from various groups. Most of the routine or normal work is performed by operative level employees in every organisation. Unless goals are established in terms of output per employee, quality of product etc. The organisational activities may be disrupted by labour strife, unionproblems etc.7. Profitability:(i) Profit objectives are important for accomplishing other objectives like covering risks in the business; (ii) ensuring supply of future capital for modernisation and expansion; and (iii) satisfying customer needs. “Afundamental objective of the business firm is to produce and distribute products and services that the customer is willing to buy. Its reason for being is to create value. Utility must be created or consumers will spend their money elsewhere. Profits are essential for the survival and growth of the firm.” They are the rewards for the effective utilisation of resources in creating value for consumers. Instead of trying to maximise profits, thefirm must try to create utilities for consumers.8. Public and social responsibility:To achieve the economic objective, a firm must produce the goods the consumer wants. If a firm is not able to create economic value for society, it may not stay in business long enough to make a profit. In recent years, social responsibility of business has become a matter of concern for many business undertakings. Here ‘responsibility’ implies a sense of obligation on the part of the business towards the general public.

7. Explain the process of MBO?1. Goal-setting:Any MBO programme must start with an absolute enthusiastic support of top management. It must be consistent with the philosophy of the management.The long-term goals of the organisation must be outlined initially, like: What is the basic purpose of the organisation? What business are we in and why? What are the long-term prospects in other areas? After these long-term goalsare established, management must be concerned with determining specific objectives to be achieved within a given time capsule.ExternalEnvironmentSetting specific performance objectives is a multistep process, MBO is based on two concepts: (i) let people know what is expected of them and (ii) allow employee in participation setting goals. It is believed that participation in the goal-setting process is needed to strike a happy balance between individual and organisational goals. MBO gives the subordinates, a voice in what goes onin the organisation. It emphasises the ‘jointness’ of the objectives and indicatesthat both superiors and subordinates can play a dynamic role.

a. Know your own goals: Before meeting the subordinates, the superior should identify his own objectives, the relevant group goals and theperformance goals which must be achieved. He must report back tohis immediate superior to ensure congruence the goals of your immediate superior.b. Meeting with your subordinates: In this meeting, the superior meets his immediate subordinates and explains his objectives and plans forthe group. The focus is on transmitting information, only.DevelopAppraise

Takec. Climate for goal-setting: Once the subordinate understands what is expected of him by his superior, a proper climate for goal-settingdevelops. It provides an authentic opportunity to the subordinate tocheck the goals and question them against certain criteria, likemeasurability etc. Now, the subordinate can schedule a meeting withhis operating and staff personnel. He can inform the group about thegoals and the action plans that he has formalised with his superior.d. Second meeting with subordinates: The superior now holds anothermeeting with subordinates, to arrive at a set of actual goals that aremutually acceptable. The emphasis is on arriving at measurable goals.For example, goals might be defined in terms of specific increase inrupee sales volume, production output or quality improvement.2. Action plan:The action plan is the means by which an objective is achieved. The actionplan gives direction and ensures unity of purpose to organisational activities.It will state in detail, exactly what is to be done, how the subordinate willproceed, what steps will be taken, and what activities will be engaged in as thesubordinate progresses. It provides a specific answer to the question: ‘What isto be done?’ Questions like who is responsible for each activity, what resources are needed, what the time requirements are would also be nswered.3. Appraising performance (Final Review):This is the last phase of the MBO programme. In this step, the actual resultsare measured against predetermined standards. Mutually agreed-on objectivesprovide basis for reviewing the progress. While appraising the performance ofsubordinates, the manager should sit with his subordinates and find out theproblems encountered while accomplishing the goals. The subordinate, as inthe periodic sessions, should not be criticised for failure to make sufficientprogress; the atmosphere should not be hostile or threatening. A give-and-takeatmosphere should prevail and the appraisal should be based on mutual trustand confidence between managers and subordinates. In actual practice, thistype of give-and-take session is extremely difficult to achieve and arelyreaches its potential value, unless managers are gifted with necessaryinterpersonal skills. Often, appraisal takes place for the purpose ofdetermining rewards and punishments; judging the personal worth of subordinates and not the job performance. As a result, appraisal sessions become awkward and uncomfortable to the participants and intensify the pressure on subordinates while giving them a limited choice of objectives. Insecure subordinates may come to ‘dread’ the sessions and they may nor feel free to communicate honestly and openly, without fear of retaliation.Appraisals can be really useful, if the person being evaluated knows and accepts in advance the grounds upon which he is being appraised.

8. Explain principles/steps of MBO? Merits & Limitations.Principles of MBO (or) Steps in MBO:1. Establishment of objectives.2. Performance3. Appraisal of performance based on the objectives.I. Establishment of objectives:a. Hierarchy of objectives: In an organisation first they achieve the lower level objectives andthen it reach to the higher level objectives as a hierarchy one.b. Objectives under MBO: Objectives should be based on the organisation policies &

procedures. Objectives may be quantitative or qualitative & it may be oflong or short range. Two types of goal must be considered beforeMBO.a. Departmental goalb. Personal development goal.c. Clear goal: Firstly clear objectives should be established for managerialpositions. There are two approaches for setting the objectives in MBO.i. Top – downii. Bottom – upTop – Down: It provides clear guidelines to the subordinates in framing their ownobjectives.Bottom – up: It means participation by subordinates who are to perform theoperations. The establishment of objectives must be in both the directions.II. Performance: Performance is mainly based on the top mgt. Managers should beefficient & well trained so that they can operate mgt by objectivessuccessfully.III. Appraisal of performance: Evaluating the employees performance on the work spot.Merits of MBO:1. MBO forces the manager not simply to plan but activities plan forresults.2. It encourage the managers to concentrate on really important andprofit influencing tasks.3. MBO makes clear organisational goal and structure & also encouragethe person who are responsible for that goal.4. Employees know their objectives clearly and also know how to moretowards its achievements.5. It helps to develop effective control involves establishing standardsmeasuring performance & taking corrective action of any deviation.6. It helps in better management training programmes.Limitations of MBO:1. The manager must understand the objectives otherwise philosophy of MBO fails.2. The attainable goal should be realistic not in uncertain.3. Setting up of verifiable goals is not an easy taks.

UNIT-III – ORGANISING

1. Define organizing.Organizing is the process of identifying and grouping of activities required to attain the objectives, delegating authority, creating the responsibility and establishing relationships for the people to work effectively.

2. What do you understand by effective organizing?Effective organizing focuses on finding mistakes in present organizing and avoiding such mistakes by proper planning. Effective organizing avoids organizational inflexibility and makes the staff work effectively by avoiding conflicts by clarification.

3. Mention any 4 characteristics of an organization. Common objectives Specialization or division of labor Authority of structure Group of persons.

4. State the kinds of organizational charts. Vertical chart Horizontal or left to right chart Circular or concentric chart.

5. What is Span of control?Span of control means the number of people managed effectively by a single superior in an organization. The term “span of control” is also known as “SPAN OF MANAGEMENT”, “SPAN OF AUTHORITY” and “SPAN OF RESPONSIBILITY.” But span of management is a better term because control and supervision are elements of management.

6. Mention the 3 categories of span of management.1. Direct single relationship2. Direct group relationship3. Cross relationship.

7. State the important factors in determining an effective span.SERIAL NUMBER FACTORS DETERMINING AN EFFECTIVE SPAN1 Capacity of superior2 Capacity of subordinate3 Nature of work4 Type of technology5 Delegation of authority

8. What are the types of Departmentation?SERIAL NUMBER TYPES OF DEPARTMENTATION1 Departmentation by numbers2 Departmentation by time3 Departmentation by Enterprise function4 Departmentation by Territory5 Departmentation by Customers6 Departmentation by equipment or process7 Departmentation by product or service

9. What is a matrix structure?

Matrix structure is a hybrid organizational form, containing characteristics of both project and functional structures.

10. How can we define power?“power is the probability that one actor within the relationship will be in a position to carry out his own despite resistance”.

11. What is Staff authority?The relationship between a staff manager and the line manager with whom he works depends in part on the staff duties.

12. Define Staffing.Staffing is the part of the management process which is concerned with the procurement utilization, maintenance and development of a large satisfied work force on the organization.

13. Define HRP.“HRP is the process by which an organization ensures that it has the right number and kind of people at the right place at the right time, capable of effectively and efficiently completion, those tasks that will help the organization achieve its overall objectives”.

14. What are the steps involved in man power planning? Forecasting man power needs Forecasting man power inventory Identifying man power gaps Man power programme.

15. What is job analysis?Job analysis is a detailed study of job to identify the skills, experience and aptitude required for the job.

16. What is job design?The job design is usually broad enough to accommodate people’s, need and desires.

17. What is job rotation?The job rotation refers in the movement of an employee from the job to another.

18. Define Recruitment.B. FIPPO defined recruitment as “the process of searching for prospective employees and stimulating to apply for jobs in the organization”.

19. What is selection?Selection is the process of finding out the most suitable candidate to the job out of the candidates attached.

20. What are the steps involved in selection process?SERIAL NUMBER SELECTION PROCESS

1 Screening of applications2 Selection tests3 Preliminary interview4 Reference check5 Medical examination6 Final interview7 Approved by appropriate authority8 Placement

21. What is performance appraisal?Performance appraisal evaluates the performance of worker also his potential for development.

22. What is Halo effect?It is tendency of rather to depend excessively on the rating of one. Trait or behavioral consideration in rating all other traits or behavioral considerations.

23. What is assessment centre?In this approach individuals from various departments are brought together to spend two or three days working on an individual or group assignment similar to the ones they would be handling when promoted.

24. Define Training.According to B.FIPPO “training is the act of increasing the knowledge and skills of an employee for doing a particular job”.

25. What are the methods of Training?SERIAL NUMBER ON THE JOB TRAINING SERIAL NUMBER OFF THE JOB TRAINING1 Job rotation 1 Lecture2 Apprenticeship and coaching 2 Seminars3 Committee assignments 3 Case studies4 Experience 4 Business game5 Temporary promotions 5 In basket method

26. What is basket training method?Basket contains a number of correspondences like memo, circulars, lectures and reports. The trainees are required to solve ach problem and to record their decisions within a specified tie period. This training is promotes the skills like logical thinking, time management skill and decision making skill.

16 – Marks:

1. Define organization. Explain the nature of an organization.

Organizing (also spelled organising) is the act of rearranging elements following one or more rules. Anything is commonly considered organized when it looks like everything has a correct order or placement. But it's only ultimately organized if any element has no difference on time taken to find it.

In that sense, organizing can also be defined as to place different objects in logical arrangement for better searching.

Nature of organizationThe following are the important characteristics of organization.

Specialization and division of workThe entire philosophy of organization is centered on the concepts of specialization and division of work. The division of work is assigning responsibility for each organizational component to a specific individual or group thereof. It becomes specialization when the responsibility for a specific task lies with a designated expert in that field. The efforts of the operatives are coordinated to allow the process at hand to function correctly. Certain operatives occupy positions of management at various points in the process to ensure coordination.Orientation towards goalsEvery organization has its own purposes and objectives. Organizing is the function employed to achieve the overall goals of the organization. Organization harmonizes the individual goals of the employees with overall objectives of the firm.Composition of individuals and groupsIndividuals form a group and the groups form an organization. Thus,organization is the composition of individual and groups. Individuals are grouped into departments and their work is coordinated and directed towards organizational goals.Differentiated functionsThe organization divides the entire work and assigns the tasks to individuals in order to achieve the organizational objectives; each one has to perform a different task and tasks of one individual must be coordinated with the tasks of others. Collecting these tasks at the final stage is called integration.ContinuityAn organization is a group of people with a defined relationship in which they work together to achieve the goals of that organization. This relationship does not come to end after completing each task. Organization is a never ending process.Purpose of organizationHelps to achieve organizational goalOrganization is employed to achieve the overall objectives of business firms. Organization focuses attention of individuals objectives towards overall objectives.Optimum use of resourcesTo make optimum use of resources such as men, material, money, machine and method, it is necessary to design an organization properly. Work should be divided and right people should be given right jobs to reduce the wastage of resources in an organization.

To perform managerial function

Planning, Organizing, Staffing, Directing and Controlling cannot be implemented without proper organization.

Facilitates growth and diversification

A good organization structure is essential for expanding business activity. Organization structure determines the input resources needed for expansion of a business activity similarly organization is essential for product diversification such as establishing a new product line.

Human treatment of employeesOrganization has to operate for the betterment of employees and must not encourage monotony of work due to higher degree of specialization. Now, organization has adapted the modern concept of systems approach based on human relations and it discards the traditional productivity and specialization approach.

2. Discuss about the factors determining an effective span of control.

The span of control is otherwise known as span of supervision or span of management the span of control should be short and care should be taken to see that executives are not overloaded with too many subordinates.An effective span of control includes six subordinates. While deciding the span of subordinates to be managed, the following factors are to be kept in mind:(a) The skill and capacity of the manager.(b) The skill and the capacity of the subordinates.(c) The nature and types of operation.(d) The extent to which there is a distinction of managerial and operational activities.

3. Define Departmentation. Explain the various Departmentation. The word departmentation refers to the division of the labor, instead of the individuals, of the group of the various types of the activities that are involved. The departments are formed from the related activities that have the ability to form various semi independent units.The process of the departmentation generally follows no stiff rules but the main purpose of carrying on with the process of the departmentation is to provide the level of the convenience to each of the organization.The whole or the total business activity is divided in to the work units as per the convenience of all the organizations.But the basis on which the Departmentation may be or can be done, can be summarized as the follows

1. Departmentation by the time – a. The main point here, on which the departmentation is based, is the ‘time’.b. People can be easily supervised.c. Working as the exemplified by the shift working in the factories, acts as a great example for explaining the departmentation by the time.

2. Departmentation by the location or the place – a. A really good example of this type of the departmentation depending on the location can be the regional offices spread over the number of the places, branch offices etc.b. One of the possibilities includes the presence of the manufacturing activity at one place and the marketing activity at a different place.3. Departmentation by the functions –

a. A separate department can be formed depending on the nature of the activity that is to be performed.b. The various activities that are closely related can be brought together in this type of the departmentation.4. Departmentation by the processes – a. Different processes are converted to the different departments in this type of the departmentation.b. For example, various processes like the spinning, the weaving, the dyeing etc are involved in a textile mill and depending on these processes only, new departments have come up.5. Departmentation by the divisions – a. Before going any further, it is very important to understand the meaning of the word ‘divisions’.b. The divisions can be defined as the extensions of the concept of the departments.c. In this type of the departmentation, the departments act as the cost centers.d. The divisions act as the profit centers.e. The divisions are accountable to the income as well as the expenditure.6. Strategic Business Units (SBU) – a. During the engagement of the organization in the multiple businesses, there is a dire need for treating each of the business unit as a strategic unit and for fulfilling this purpose, an independent competitive business approach is very essential and here these units are referred to as the strategic business units.Advantages of the process of the Departmentation1. The departmentation is greatly based on the logics.2. With the help of the departmentation, proper attention can be given to the various activities and hence, resulting in the growth of the organization.3. Synergy can be brought in to the various results.4. The departmentation results in establishing the team spirit and the co–operative culture.

4. Explain the line organization.Line organization is the most oldest and simplest method of administrative organization. According to this type of organization, the authority flows from top to bottom in a concern. The line of command is carried out from top to bottom. This is the reason for calling this organization as scalar organization which means scalar chain of command is a part and parcel of this type of administrative organization. In this type of organization, the line of command flows on an even basis without any gaps in communication and co- ordination taking place.Features of Line Organization

1. It is the most simplest form of organization. 2. Line of authority flows from top to bottom. 3. Specialized and supportive services do not take place in these organization. 4. Unified control by the line officers can be maintained since they can independently take

decisions in their areas and spheres. 5. This kind of organization always helps in bringing efficiency in communication and bringing

stability to a concern. Merits of Line Organization

1. Simplest- It is the most simple and oldest method of administration. 2. Unity of Command- In these organizations, superior-subordinate relationship is maintained

and scalar chain of command flows from top to bottom. 3. Better discipline- The control is unified and concentrates on one person and therefore, he can

independently make decisions of his own. Unified control ensures better discipline.

4. Fixed responsibility- In this type of organization, every line executive has got fixed authority, power and fixed responsibility attached to every authority.

5. Flexibility- There is a co-ordination between the top most authority and bottom line authority. Since the authority relationships are clear, line officials are independent and can flexibly take the decision. This flexibility gives satisfaction of line executives.

6. Prompt decision- Due to the factors of fixed responsibility and unity of command, the officials can take prompt decision.

Demerits of Line Organization1. Over reliance- The line executive’s decisions are implemented to the bottom. This results in

over-relying on the line officials. 2. Lack of specialization- A line organization flows in a scalar chain from top to bottom and

there is no scope for specialized functions. For example, expert advices whatever decisions are taken by line managers are implemented in the same way.

3. Inadequate communication- The policies and strategies which are framed by the top authority are carried out in the same way. This leaves no scope for communication from the other end. The complaints and suggestions of lower authority are not communicated back to the top authority. So there is one way communication.

4. Lack of Co-ordination- Whatever decisions are taken by the line officials, in certain situations wrong decisions, are carried down and implemented in the same way. Therefore, the degree of effective co- ordination is less.

5. Authority leadership- The line officials have tendency to misuse their authority positions. This leads to autocratic leadership and monopoly in the concern.

5. Briefly explain the factors determining the degree of decentralization of authority. DecentralizationConcentration of decision-making authority in the hands of a few at the top level is known as ‘Centralization’. In decentralization, there is dispersal of decision-making authority at different levels of the organization structure. Subordinates have a greater role to play under decentralization. Delegation of authority is essential for decentralization. But delegation takes place when a superior transfers his authority to his immediate subordinate. Decentralization takes place when the top management favors the dispersal of decision-making authority in all the departments and divisions of the enterprise.Factors Determining the Degree of Decentralization:1.     Attitude of Top Management: If the top management wants all the decision-making authority to be confined to itself and to a few key executives, it may prefer centralization. On the other hand, if the top management wants to have only overall control over the organization and prefers decision-making authority to be dispersed at different levels of the organization, it may prefer the idea of decentralization. 2.     Size of the Enterprise/Scale of Operations: If the size of the concern or the scale of its operations is small, centralization can prove to be effective. On the other hand, if there are a number of operations to be performed through many departments or divisions, decentralization can be ideal.3.     Nature of Functions: In a manufacturing concern, production and marketing are the basic functions. Such basic functions may be decentralized for better results. Functions such as personnel and finance, meant to facilitate the performance of the basic functions, may be centralized to derive greater

4.     Extent of Diversification: If the business enterprise is producing and marketing different types of products, decentralization will be more beneficial.5.     Availability of capable managers: The decision on decentralization is very much influenced by the availability of efficient managers. In fact, decentralization will be successful only if the top management is able to find capable managers to effectively manage the different departments or divisions of the enterprise.

6. Define HRP. Explain the steps involved in HRP.

Human Resource Planning is understood as the process of forecasting an organization's future human resource demand for, and supply to meet the objectives such as the right type of people in the right number. After this process only the HRM department can initiate recruitment and selection process. HRP is a sub-system in the total organizational planning.

The five main steps in Human Resource Planning can be set out in the following list:•Designing a management system to deal with the corporate goals and objectives. This will be designed based on determining the workload needed to achieve these goals. The overall aim is to ensure the Human Resource systems are being managed in line with the main objectives and goals of the organization as a whole. •Studying the current workforce and assessing its effectiveness and potential needs. For instance, the Human Resource department should determine whether roles need to be filled in specific departments in order to meet working quotas or targets. It is then the responsibility of the department to advertise the role and getting it filled within a set period of time. This will also include writing up job descriptions and specifications suitable to the role.•Looking at the current workforce and making forecasts on any future operational needs. This may include restructuring the workforce or outsourcing specific departments. By looking at the types of skills needed to fill the roles, the organization will be able to get the best suited candidates for specific jobs. This trend forecasting can be achieved by looking at past experiences and looking at other case studies within their sector.•Making improvements to plans that are already in place. By taking employee feedback on board, make changes to make all processes more accessible and user friendly. Also make sure staff members are aware of their rights when it comes to maternity leave or booking annual leave. •Making changes and improvements to procedures such as reporting grievances within the workplace. Maintaining confidentiality in all cases and ensuring employees are treated fairly and with the utmost respect at all times. Make sure there are effective action plans in place to deal with all eventualities that could occur within the organization.

UNIT- IV - DIRECTING

1. What is meant by the term directing?Directing may be defined as the process of instructing, guiding and inspiring human factors in the organization to achieve organization objectives. It is not only issuing orders and instruction by a superior to his subordinates but also including the process of guiding and inspiring them to work

effectively.

2. List down the human factors in managing.Multiplicity of rolesIndividualityPersonal dignity

3. Define creativity.Creativity is defined as the ability to produce new and useful ideas through the combination of know principles and components in novel and non obvious ways. Creativity exists throughout the population, largely independent of age, sex, and education.

4. What are the steps involved in creative process? Saturation Preparation Frustration and incubation Inspiration or illumination Verification.

5. How are problems solved by creative tool?Creativity tools are designed to help you devise, creative and imaginative solutions to problems. It helps you spot opportunities that you might otherwise miss.

6. What does SCAMPER stand for? S - Substitute C - Combine A - Adapt M - Modify P - Put to another use E - Eliminate R - Reverse

7. What are the steps involved in simplex tool?1. problem finding2. fact finding3. problem identification4. idea finding5. selection and evaluation6. planning7. sell data8. Action.

8. How can be harmonizing objectives achieved?1. Mutual trust2. Cooperation and understanding.3. Workers participation in management, and

4. Balancing the objectives of the organization with those of individuals.

9. Define “multiplicity of roles”.Individuals are not only the productive factor in management’s plans. They are members of social system of many organizations.

10. What is meant by brain storming?Brain storming is an excellent way of developing many creative solutions to a problem. It works by focusing on a problem, and then coming up with very many radical solutions to it. The essence of brainstorming is a creative conference, ideally of 8 to 12 people meeting for less than an hour to develop a long list of 50 or more ideas. Suggestions are listed without criticism on a black board or news print as they are offered.

11. Define Motivation.Motivation is a general term applying to the entire class of drives, desires, needs wishes and similar forces that induce an individual or a group of people to work.12. What are the steps involved in motivation process? Analysis of situation Preparing, selecting and applying a set of appropriate motivating tools. Follow up.

13. What are the types of motivation? Positive motivation Negative motivation Extrinsic motivation Intrinsic motivation

14. List out the basic needs in a hierarchy.1. Physiological needs2. Safety needs3. Social needs4. Esteem needs5. Self- actualization needs.

15. What is job enrichment?Job enrichment is therefore based on the assumptions that in order to motivate personnel, the job itself must provide opportunities for achievement, recognition, responsibility, advancement and growth.

16. Define leadership.Leadership is the process of influencing the behavior of others towards the accomplishment of goals in a given situation.

17. Mention the importance of leadership.i. Motivating employeesii. Leader develops team workiii. Better utilization of manpower

iv. Creating confidence to followersv. Directing group activitiesvi. Building moralevii. Maintaining discipline.

18. List out few leadership traits.• The Michigan studies• The ohio state university studies• The managerial grid.

19. Name the various leadership styles.• Autocratic or Dictatorial leadership• Participative or Democratic leadership.• Laissez- faire or Free- rein leadership.

20. What is communication?Communication is the passing of information from one person to another person.

21. Mention the various elements in the process of communication?1. sender2. communication channels3. symbols4. receiver5. noise and feedback in communication.

22. Name the various types of communication.1. Down ward communication2. Upward communication3. Horizontal or lateral communication.

23. Note down the various communicating networks.1. simple chain2. wheel3. circular4. free flow5. inverted v

24. What are the physical barriers involved in effective communication.1. physical barriers2. socio-psychological or personal barriers3. organizational barriers4. semantic barriers5. mechanical barriers.

25. List out the various effective media in communication. A large bank supplies hardware and software to its customers

Several banks now make bank – by – phone services available even to individuals. E- mail service making easy delivery of documents.

16 marks 1. Discuss the scope of directing. DIRECTING is said to be a process in which the managers instruct, guide and oversee the performance of the workers to achieve predetermined goals. Directing is said to be the heart of management process. Planning, organizing, staffing have got no importance if direction function does not take place.Directing initiates action and it is from here actual work starts. Direction is said to be consisting of human factors. In simple words, it can be described as providing guidance to workers is doing work. In field of management, direction is said to be all those activities which are designed to encourage the subordinates to work effectively and efficiently. According to Human, “Directing consists of process or technique by which instruction can be issued and operations can be carried out as originally planned” Therefore, Directing is the function of guiding, inspiring, overseeing and instructing people towards accomplishment of organizational goals.Direction has got following characteristics:

1. Pervasive Function - Directing is required at all levels of organization. Every manager provides guidance and inspiration to his subordinates.

2. Continuous Activity - Direction is a continuous activity as it continuous throughout the life of organization.

3. Human Factor - Directing function is related to subordinates and therefore it is related to human factor. Since human factor is complex and behaviour is unpredictable, direction function becomes important.

4. Creative Activity - Direction function helps in converting plans into performance. Without this function, people become inactive and physical resources are meaningless.

5. Executive Function - Direction function is carried out by all managers and executives at all levels throughout the working of an enterprise, a subordinate receives instructions from his superior only.

6. Delegate Function - Direction is supposed to be a function dealing with human beings. Human behaviour is unpredictable by nature and conditioning the people’s behaviour towards the goals of the enterprise is what the executive does in this function. Therefore, it is termed as having delicacy in it to tackle human behaviour.

2. Discuss the various steps involved in creative process.

Creativity refers to the invention or origination of any new thing (a product, solution, artwork, literary work, joke, etc.) that has value. "New" may refer to the individual creator or the society or domain within which novelty occurs. "Valuable", similarly, may be defined in a variety of ways.

The most striking feature is the bipartite division that separates the Using stage from the Identity stage and cuts the insight stage in half. The model "starts" with the Identity stage and the purpose of the first half is creating the problem. The second half has the job of solving the problem which the first half created, thereby producing a new Condition in the Using stage, out of which the first half will again have to create a new problem. Well, after all, it's a cycle--no beginning and no end, with one stage feeding the next.

The first half of the process is individual and the last half collective. This is so because until an idea has a physical manifestation, it cannot be perceived in a useful collective manner. Ideas have no value merely as ideas; they must be expressed in specific form. Likewise, manifestations have no value unless they can be translated into ideas to be transported, improved and evolved. In the mid 80's one iteration of the Creative Process model had the following phrase forming a circle around its periphery: "A model is a representation of reality is a manifestation of a model is a representation of reality is a manifestation..."

Consider the process of writing a song, for example. Until the tracks are laid down in the studio, the musicians, songwriters and lyricists have different ideas [Vision], regardless of how they have struggled [Intent] to communicate them to one another. But once the song begins to materialize digitally [Insight], the process becomes necessarily collective and the fields of visions collapse into the various takes [Engineering], one of which will be packaged [Building] for distribution and

consumption [Using]. This doesn't necessarily mean that the artists are satisfied with the fidelity of the finished product to the original vision. Constraints of ability, budget, timelines, and other factors will have modified the vision and the finished product may be quite different.

This doesn't imply that the first half excludes collaboration, for quite the opposite is the case. Collaboration is a necessary component of every stage of the model. So is independent work.

It has already been mentioned that the second half of the creative process creates a new Condition for the first half to act upon. The term "Condition" is key to understanding the significance of what we mean when we say "creating the problem." Many of us equate conditions with problems. The United States has a "problem" with students meeting educational testing standards, or a problem with drug abuse. Companies have cash flow "problems" or a problem with low sales or low productivity. But these are not problems; they are conditions. Nor are they symptoms of problems. This is more than just semantics, and in a sense it embodies much of the philosophy of MG Taylor Corporation. Stafford Beer, the organizational cyberneticist coined the phrase, "the purpose of a system is what it does." Low educational testing results are therefore a product of some system, whose purpose (by virtue of the way it's assembled and the interactions between its components) includes such results. It's hard for us to grasp this because we bristle at the use of the word "purpose" with unpalatable conditions. After all, it seems a harsh accusation of the hard working teachers, parents and administrators in the education system. But it is no such thing. It's not an accusation at all. It's an invitation to discover how the system generates the result that seems so undesirable. An invitation for understanding. If we cannot discern how the result is created, we shall never hope to support the evolution of the system into a different channel, and our interventions may cause more harm than good or perpetuate a system that ought not to be supported.

The whole purpose of the first half of the creative process is to investigate, discover and discern the operating mechanics, cybernetic connections, and principles of self-organization of the existing system. Then--maybe--we can act upon the system with intelligence. Or at least envision a new system that produces different conditions more in line with our vision.

We generally lack the patience to do this, however. We label the condition as a problem, automatically designating individuals in the system as the cause, thus alienating them from effective collaboration, and then begin hacking away at it and grafting new subsystems onto it. We call these subsystems solutions, even though they are only new subsystems. Meanwhile, war has erupted between the guardians of the system and the interventionists. The best possible outcome of such a zero-sum game is that each side thwarts the efforts of the other (a draw is the overall best outcome of a zero-sum game). All along, the system continues to churn out its conditions because we have failed to work together to understand how it does what it does (not "why" it does what it does).

4. Describe theory X and theory Y. Theory X and Theory Y are theories of human motivation created and developed by Douglas McGregor at the MIT Sloan School of Management in the 1960s that have been used in human resource management, organizational behavior, organizational communication and organizational development. They describe two contrasting models of workforce motivation.

Theory X

In this theory, which has been proven counter effective in most modern practice, management assumes employees are inherently lazy and will avoid work if they can and that they inherently dislike work. As a result of this, management believes that workers need to be closely supervised and comprehensive systems of controls developed. A hierarchical structure is needed with narrow span of control at each and every level. According to this theory, employees will show little ambition without an enticing incentive program and will avoid responsibility whenever they can. According to Michael J. Papa, if the organizational goals are to be met, theory X managers rely heavily on threat and coercion to gain their employees' compliance. Beliefs of this theory lead to mistrust, highly restrictive supervision, and a punitive atmosphere. The Theory X manager tends to believe that everything must end in blaming someone. He or she thinks all prospective employees are only out for themselves. Usually these managers feel the sole purpose of the employee's interest in the job is money. They will blame the person first in most situations, without questioning whether it may be the system, policy, or lack of training that deserves the blame. A Theory X manager believes that his or her employees do not really want to work, that they would rather avoid responsibility and that it is the manager's job to structure the work and energize the employee. One major flaw of this management style is it is much more likely to cause diseconomies of scale in large businesses.

Theory Y

In this theory, management assumes employees may be ambitious and self-motivated and exercise self-control. It is believed that employees enjoy their mental and physical work duties. According to them work is as natural as play[1]. They possess the ability for creative problem solving, but their talents are underused in most organizations. Given the proper conditions, theory Y managers believe that employees will learn to seek out and accept responsibility and to exercise self-control and self-direction in accomplishing objectives to which they are committed. A Theory Y manager believes that, given the right conditions, most people will want to do well at work. They believe that the satisfaction of doing a good job is a strong motivation. Many people interpret Theory Y as a positive set of beliefs about workers. A close reading of The Human Side of Enterprise reveals that McGregor simply argues for managers to be open to a more positive view of workers and the possibilities that this creates. He thinks that Theory Y managers are more likely than Theory X managers to develop the climate of trust with employees that is required for human resource development. It's human resource development that is a crucial aspect of any organization. This would include managers communicating openly with subordinates, minimizing the difference between superior-subordinate relationships, creating a comfortable environment in which subordinates can develop and use their abilities. This climate would include the sharing of decision making so that subordinates have say in decisions that influence them.

Theory X and Theory Y combined

For McGregor, Theory X and Y are not different ends of the same continuum. Rather they are two different continua in themselves.

McGregor and Maslow's hierarchy

Theory X and Theory Y relates to Maslow's hierarchy of needs in how human behavior and motivation is the main priority in the workplace in order to maximize output. In relations to Theory Y the organization is trying to create the most symbiotic relationship between the managers and workers which relates to Maslow's hierarchy of needs of Self Actualization and Esteem. For Self Actualization the manager needs to promote the optimum workplace through morality, creativity, spontaneity, problem solving, lack of prejudice, and acceptance of facts. It can relate to Esteem when the manager is trying to promote self esteem, confidence, achievement, respect of others, and respect by others.

5. Define Motivation. Explain the maslow’s hierarchy needs. Maslow's hierarchy of needs is a theory in psychology, proposed by Abraham Maslow in his 1943 paper "A Theory of Human Motivation."[2] Maslow subsequently extended the idea to include his observations of humans' innate curiosity. His theories parallel many other theories of human developmental psychology, all of which focus on describing the stages of growth in humans. Maslow use the terms Physiological, Safety, Belongingness and Love, Esteem, and Self-Actualization needs to describe the pattern that human motivations generally move through.

Maslow studied what he called exemplary people such as Albert Einstein, Jane Addams, Eleanor Roosevelt, and Frederick Douglass rather than mentally ill or neurotic people, writing that "the study of crippled, stunted, immature, and unhealthy specimens can yield only a cripple psychology and a cripple philosophy."[3] Maslow studied the healthiest 1% of the college student population.

5.Maslow's theory was fully expressed in his 1954 book Motivation and Personality.

Hierarchy

Maslow's hierarchy of needs is often portrayed in the shape of a pyramid, with the largest and most fundamental levels of needs at the bottom, and the need for self-actualization at the top.While the pyramid has become the de facto way to represent the hierarchy, Maslow himself never used a pyramid to describe these levels in any of his writings on the subject.

The most fundamental and basic four layers of the pyramid contain what Maslow called "deficiency needs" or "d-needs": esteem, friendship and love, security, and physical needs. With the exception of the most fundamental (physiological) needs, if these "deficiency needs" are not met, the body gives no physical indication but the individual feels anxious and tense. Maslow's theory suggests that the most basic level of needs must be met before the individual will strongly desire (or focus motivation upon) the secondary or higher level needs. Maslow also coined the term Metamotivation to describe the motivation of people who go beyond the scope of the basic needs and strive for constant betterment.Metamotivated people are driven by B-needs (Being Needs), instead of deficiency needs (D-Needs).

The human mind and brain are complex and have parallel processes running at the same time, so many different motivations from different levels of Maslow's pyramid usually occur at the same time. Maslow was clear about speaking of these levels and their satisfaction in terms such as "relative" and "general" and "primarily", and says that the human organism is "dominated" by a certain need[8], rather than saying that the individual is "only" focused on a certain need at any given time. So Maslow

acknowledges that many different levels of motivation are likely to be going on in a human all at once. His focus in discussing the hierarchy was to identify the basic types of motivations, and the order that they generally progress as lower needs are reasonably well met.

Physiological needs

For the most part, physiological needs are obvious – they are the literal requirements for human survival. If these requirements are not met, the human body simply cannot continue to function.

Physiological needs are the most prepotent of all the other needs. Therefore, the human that lacks food, love, esteem, or safety would consider the greatest of his/her needs to be food.

Air, water, and food are metabolic requirements for survival in all animals, including humans. Clothing and shelter provide necessary protection from the elements. The intensity of the human sexual instinct is shaped more by sexual competition than maintaining a birth rate adequate to survival of the species.

Safety needs

With their physical needs relatively satisfied, the individual's safety needs take precedence and dominate behavior. In the absence of physical safety – due to war, natural disaster, or, in cases of family violence, childhood abuse, etc. – people (re-)experience post-traumatic stress disorder and trans-generational trauma transfer. In the absence of economic safety – due to economic crisis and lack of work opportunities – these safety needs manifest themselves in such things as a preference for job security, grievance procedures for protecting the individual from unilateral authority, savings accounts, insurance policies, reasonable disability accommodations, and the like. This level is more likely to be found in children because they have a greater need to feel safe.

Safety and Security needs include:

Personal security Financial security

Health and well-being

Safety net against accidents/illness and their adverse impacts

Love and belonging

After physiological and safety needs are fulfilled, the third layer of human needs are interpersonal and involve feelings of belongingness. The need is especially strong in childhood and can over-ride the need for safety as witnessed in children who cling to abusive parents. Deficiencies with respect to this aspect of Maslow's hierarchy – due to hospitalism, neglect, shunning, ostracism etc. – can impact individual's ability to form and maintain emotionally significant relationships in general, such as:

Friendship Intimacy

Family

Humans need to feel a sense of belonging and acceptance, whether it comes from a large social group, such as clubs, office culture, religious groups, professional organizations, sports teams, gangs, or small social connections (family members, intimate partners, mentors, close colleagues, confidants). They need to love and be loved (sexually and non-sexually) by others. In the absence of these elements, many people become susceptible to loneliness, social anxiety, and clinical depression. This need for belonging can often overcome the physiological and security needs, depending on the strength of the peer pressure; an anorexic, for example, may ignore the need to eat and the security of health for a feeling of control and belonging.[citation needed]

Esteem

All humans have a need to be respected and to have self-esteem and self-respect. Esteem presents the normal human desire to be accepted and valued by others. People need to engage themselves to gain recognition and have an activity or activities that give the person a sense of contribution, to feel self-valued, be it in a profession or hobby. Imbalances at this level can result in low self-esteem or an inferiority complex. People with low self-esteem need respect from others. They may seek fame or glory, which again depends on others. Note, however, that many people with low self-esteem will not be able to improve their view of themselves simply by receiving fame, respect, and glory externally, but must first accept themselves internally. Psychological imbalances such as depression can also prevent one from obtaining self-esteem on both levels.

Most people have a need for a stable self-respect and self-esteem. Maslow noted two versions of esteem needs, a lower one and a higher one. The lower one is the need for the respect of others, the need for status, recognition, fame, prestige, and attention. The higher one is the need for self-respect, the need for strength, competence, mastery, self-confidence, independence and freedom. The latter one ranks higher because it rests more on inner competence won through experience. Deprivation of these needs can lead to an inferiority complex, weakness and helplessness.

Maslow also states that even though these are examples of how the quest for knowledge is separate from basic needs he warns that these “two hierarchies are interrelated rather than sharply separated” (Maslow 97). This means that this level of need, as well as the next and highest level, are not strict, separate levels but closely related to others, and this is possibly the reason that these two levels of need are left out of most textbooks.

Self-actualizationMain article: Self-actualization“What a man can be, he must be.”[9] This forms the basis of the perceived need for self-actualization. This level of need pertains to what a person's full potential is and realizing that potential. Maslow describes this desire as the desire to become more and more what one is, to become everything that one is capable of becoming.[10] This is a broad definition of the need for self-actualization, but when applied to individuals the need is specific. For example one individual may have the strong desire to become an ideal parent, in another it may be expressed athletically, and in another it may be expressed in painting, pictures, or inventions.[11] As mentioned before, in order to reach a clear understanding of this level of need one must first not only achieve the previous needs, physiological, safety, love, and esteem, but master these needs.

Self-transcendenceViktor Frankl later added Self-transcendence [12] to create his own version of Maslow's Hierarchy.

. What are the various types of motivation and explain each in detail. Types of MotivationBefore discussing the various types of motivation it's important to acknowledge a few things. First of all, if our main goal in life is to be as happy as possible...what's it going to take for each of us to achieve that?Secondly, as we have seen in other pages on this site... we all have our own map of reality. We see the world according to what's important to us. We see things through our unique mental filters...

Our Spirituality Our Identity Our Values and Beliefs Our Memories and Experiences

Our Programs Our Survival Needs

Out of seven billion people in the world - no two of us has exactly the same filters. For example, we may share a value such as spirituality...but your cognitive map of what spirituality means is not likely to match mine completely. In fact, there may be major differences even though we both value the concept and practice of spirituality.So there are six billion unique maps of reality out there. This is important to understand whether we are trying to motivate ourselves or someone else. Third, we cannot keep the knowledge of what's important to us in our conscious awareness because there's too much information. That's why when you ask someone to identify the eight most important values in their life most of us can't do it - not unless we've previously taken some time to sit down and do some digging... Even then we would need to refer to our list. Think about it... Many of us would put "family" in our list of values. When we start asking ourselves what's important about family we find a whole list of secondary values about that one value...and a whole list of beliefs about each of those secondary values. Way too much information to keep in our conscious awareness... so these most important things in our lives are stored in a database in our subconscious mind - in our Explicit Memory banks to be more specific. We can retrieve most of the information consciously but not without some real contemplation.

These filters are the primary motivators in our lives. Without knowing what they are we are flying blind.

If you want to motivate yourself start by making that list and exploring whats important about each of the items on the list. If you want to find out how to motivate someone else, then help them discover their own filters.

Types of Motivation - Extrinsic There are two primary types of motivation... Intrinsic and Extrinsic Motivation. Extrinsic Motivation is geared toward external rewards and reinforcer's.

Some examples of external rewards are money, praise, awards, etc. Some examples of external reinforcer's are policy and procedures, disciplinary action, speeding tickets, boundary-setting, etc.Extrinsic Motivation is said to be less effective because it comes from outside the person. External reinforcer's, for instance, are usually in the form of control.Laws are there for social control...Policies and procedures are there for internal controls and regulations... household rules are in place to provide limits and consequence for stepping over the line.People don't usually like to feel controlled. It's an invitation to rebel, or dig in our heels, or become defiant. Most of use prefer to use our own map of the world...not have to conform to someone else's ideas about how it should be. According to Herzberg's Two-Factor Theory many external rewards (e.g, salary, job security, benefits) don't really motivate but if they're not there the person can become de-motivated. Herzberg calls these "hygiene factors". Types of Motivation - Intrinsic

Intrinsic Motivation is geared toward internal rewards and reinforcer's. We can celebrate our success when we do well and we can beat ourselves up when we don't. Some examples of internal rewards are enjoyment, achievement, a sense of competence. Some examples of internal reinforcer's are "Shoulds", "Musts", & "Oughts", a guilty conscience, and Toxic Shame.Internal rewards are associated with high academic and occupational achievement. It seems motivation is strongest when we do it for the fun of it...or for the feeling of accomplishment. Maybe it's a hobby, or a career path, or our purpose in life.Types of Motivation - Addiction When it's something we really like we can even feel driven to do it. Or get addicted to it, whatever "it" is... In other words, motivation does not always lead in a positive direction. Remember that an addiction is an unhealthy "love-and-trust" relationship with an object or an activity. Love and trust are very strong intrinsic rewards that are tied into our neural networks for survival.

Survival needs, such as the need to eat, is an internal reinforcer because it causes pain in the form of hunger when we don't eat. We get a internal reward when we enjoy what we are eating.

The same is true when we resist something we are addicted to. The pain is in the form of cravings or withdrawal symptoms and the reward is in the feeling we get when we engage. However, in the late stages of addiction we no longer get the reward but the reinforcer gets stronger.

Types of Motivation - Subconscious Motivations

Addiction is an example of subconscious motivation...we may not know "why we do it" or "how that could happen" when we find ourselves in trouble again.

This is because it would be too uncomfortable for us to know that we are dependent on an object or activity so our faithful servant - the subconscious mind - "protects us" from that reality with a system of defense mechanisms we refer to as denial.

Other subconscious types of motivations might include various neural networks created early in life which are now part of Implicit Memory - such as...

An accident-prone person may have a subconscious desire to hurt or punish himself for guilt over some long-past misdeed or mistake.

A person who uses food for comfort may have a subconscious "part" of themselves...a neural network...that learned early in life to substitute food for the nurturing that wasn't available.

Someone who pushes others away may have a part of themselves that sabotages opportunities for intimacy in order to protect from abandonment.

It has long been known that the subconscious mind uses defense mechanisms to ward off pain and anxiety. These defensive strategies are learned programs that run automatically from neural networks that we intuitively refer to as "parts". All of us can remember explaining that "one part of me wants to do X... but another part of me holds me back". These "parts" are programs installed on conflicting neural networks. There are various forms of therapy for "integrating" these parts to resolve subconscious conflicts.

Types of Motivation - "Toward" or "Away From" Orientation

Most of us have heard of the "Carrot-or-Stick" types of motivation. Conventional wisdom suggests that some people are motivated more by the stick and others by the carrot."Stick People" respond better to external and internal reinforcer's while "Carrot People" respond better to external and internal rewards.Another way to look at this is the "Toward or Away From" orientation. Stick people are oriented to move away from pain. Carrot people move toward pleasure.There are times when each orientation is necessary. For example, if your goal is to manage your weight it's more effective to adopt a "toward pleasure" orientation because the closer you get to your goal (e.g.,a healthy lifestyle), the stronger your motivation becomes. If you take the "away from" orientation...the further you get away from a weight you don't like, The weaker your motivation becomes.In the case of Risk Management in a hospital it's better to have "Away From" pain people running the show because they are better at identifying potential hazards. Carrot People tend to be idealists who can set the course, but Stick People are good at seeing the bumps in the road.

UNIT-V – CONTROLLING

1. Define Control.According to koontz “controlling to the measurement and correction of performance in order to make sure that enterprise objectives and the plans devised to attain them are accomplished”.

2. What are the characteristics of control?

Control process is universal Control is a continuous process Control is action based Control is forward looking.

3. Why need of control in the organization? Control can minimize the mistakes To discover the deviations in the management To minimize dishonest behavior of employees.

4. Give some critical point standards of control. Cost standards Revenue standards Goals standards Program standards.

5. What are the types of control? Feedback control Concurrent control Feed forward control

6. What are the requirements for effective control?i. The control should be economicalii. It must be simpleiii. It should be flexibleiv. It should be clear objectives.

7. What is management by exception?Actual performance compare with the standard performance deviations which cannot significant should be avoid.

8. What are traditional techniques of control?i. Personal observationii. Break –even analysisiii. Statistical reportsiv. Budgetary control.9. What are modern techniques of control?i. Management auditii. Return on investmentiii. PERT& CPMiv. MIS

10. Define Budgetary control.According to J. Batty “A system which uses budgets as a means of planning and controlling all aspects of producing and or selling commodities and services”.

11. What are the different types of Budgets?FUNCTIONAL BUDGET TIME CLASSIFICATION ACTIVITY LEVEL Short term budgeti. Sales budget Fixed budget Current term budgetii. Production budget Flexible budget Long term budgetiii. Purchase budget iv. personnel budgetv. Cash budgetvi. Research and Development budget vii. Capital budgetviii. Master budgetix. Profit budgetx. Cost budget

12. Define MIS.“A system of obtaining abstracting , storing and analyzing data, to productions information for use in planning, controlling and decision making by managers at the time they can most effectively use it”.

13. What are the MIS Resources?Computer hardwareSoftwareDataPeople.

14. Define productivity.Productivity is a measure of how much input is required to produce a given output i.e. the ratio(output/input ) is called productivity.

15. What are the factors consider for product design?MarketingGovernment policyProductionTechnologyProduct quality

16. Define OR.OR is a systematic analysis of a problem through scientific methods, carried out by appropriate specialists, working together as a team, finding an optimum and the most appropriate solution to meet the given objective under a given set of constraints.

17. What is Inventory control?The inventory control refers to the control of raw materials, and purchased materials in store and regulation of investment in them.

18. What is Economic order Quantity?

Formula , EOQ = 2DS/ CWhere,D- Demand per yearC- Annual carrying cost of one unit.S- Ordering cost.

19. What is JIT?Just In Time inventory system. In this method the suppliers delivers the materials to the production spot just in time to be assembled. This method reduces cost of inventory.

20. What are the objectives of value engineering? Modify and improve product design Reduce the product cost Increase the profit Simplify the product.

21. What is quality circle?To improving productivity and quality everyone in the organization. The circles presents the solutions to the top management.

22. What are the steps in value engineering? Blast Create Refine.

23. What is Gantt chart?It involves the representation of work progress over a period of time in the form of a bar chart.

24. Define MNC.“An enterprise which own or control production or service facilities outside the country in which they are based”.

25. What are the attitudes need by MNC manager? Ethnocentric attitude Polycentric attitude Geocentric attitude

26. What are global theory of Management?1. situational and contingency approach2. motivation and leadership theory3. organizational behavior.

16 - Marks

1. What is controlling? Discuss its needs. What do you think about the characteristics of good control system?

Controlling is one of the managerial functions like planning, organizing, staffing and directing. It is an important function because it helps to check the errors and to take the corrective action so that deviation from standards are minimized and stated goals of the organization are achieved in a desired manner.

According to Henri Fayol,

Control of an undertaking consists of seeing that everything is being carried out in accordance with the plan which has been adopted, the orders which have been given, and the principles which have been laid down. Its object is to point out mistakes in order that they may be rectified and prevented from recurring.

Characteristics of Control

Control is a continuous process Control is a management process

Control is embedded in each level of organizational hierarchy

Control is forward looking

Control is closely linked with planning

Control is a tool for achieving organizational activities

Control is an end process

The elements of control

The four basic elements in a control system —

(1) the characteristic or condition to be controlled(2) the sensor(3) the comparator(4) the activator

— occur in the same sequence and maintain a consistent relationship to each other in every system.[3]

The first element is the characteristic or condition of the operating system which is to be measured. We select a specific characteristic because a correlation exists between it and how the system is performing. The characteristic can be the output of the system during any stage of processing or it may be a condition that is the result of the system. For example, it may be the heat energy produced by the furnace or the temperature in the room which has changed because of the heat generated by the furnace. In an elementary school system, the hours a teacher works or the gain in knowledge demonstrated by the students on a national examination are examples of characteristics that may be selected for measurement, or control.

The second element of control, the sensor, is a means for measuring the characteristic or condition. For example, in a home heating system this device would be the thermostat, and in a quality-control system this measurement might be performed by a visual inspection of the product.

The third element of control, the comparator, determines the need for correction by comparing what is occurring with what has been planned. Some deviation from plan is usual and expected, but when variations are beyond those considered acceptable, corrective action is required. It involves a sort of preventative action which indicates that good control is being achieved.

The fourth element of control, the activator, is the corrective action taken to return the system to expected output. The actual person, device, or method used to direct corrective inputs into the operating system may take a variety of forms. It may be a hydraulic controller positioned by a solenoid or electric motor in response to an electronic error signal, an employee directed to rework the parts that failed to pass quality inspection, or a school principal who decides to buy additional books to provide for an increased number of students. As long as a plan is performed within allowable limits, corrective action is not necessary; however, this seldom occurs in practice.

Information is the medium of control, because the flow of sensory data and later the flow of corrective information allow a characteristic or condition of the system to be controlled. To illustrate how information flow facilitates control, let us review the elements of control in the context of information.

Relationship between the elements of control and information

Controlled Characteristic or Condition

The primary requirement of a control system is that it maintain the level and kind of output necessary to achieve the system's objectives.[5] It is usually impractical to control every feature and condition associated with the system's output. Therefore, the choice of the controlled item (and appropriate information about it) is extremely important. There should be a direct correlation between the controlled item and the system's operation. In other words, control of the selected characteristic should have a direct relationship to the goal or objective of the system.

Sensor

After the characteristic is sensed, or measured, information pertinent to control is fed back. Exactly what information needs to be transmitted and also the language that will best facilitate the communication process and reduce the possibility of distortion in transmission must be carefully considered. Information that is to be compared with the standard, or plan, should be expressed in the same terms or language as in the original plan to facilitate decision making. Using machine methods (computers) may require extensive translation of the information. Since optimal languages for computation and for human review are not always the same, the relative ease of translation may be a significant factor in selecting the units of measurement or the language unit in the sensing element.

In many instances, the measurement may be sampled rather than providing a complete and continuous feedback of information about the operation. A sampling procedure suggests measuring some segment or portion of the operation that will represent the total.[2]

Comparison with Standard

In a social system, the norms of acceptable behavior become the standard against which so-called deviant behavior may be judged. Regulations and laws provide a more formal collection of information for society. Social norms change, but very slowly. In contrast, the standards outlined by a formal law can be changed from one day to the next through revision, discontinuation, or replacement by another. Information about deviant behavior becomes the basis for controlling social activity. Output information is compared with the standard or norm and significant deviations are noted. In an industrial example, frequency distribution (a tabulation of the number of times a given characteristic occurs within the sample of products being checked) may be used to show the average quality, the spread, and the comparison of output with a standard.

If there is a significant and uncorrectable difference between output and plan, the system is "out of control." This means that the objectives of the system are not feasible in relation to the capabilities of the present design. Either the objectives must be reevaluated or the system redesigned to add new capacity or capability. For example, the traffic in drugs has been increasing in some cities at an alarming rate. The citizens must decide whether to revise the police system so as to regain control, or whether to modify the law to reflect a different norm of acceptable behavior.

Implimentor

The activator unit responds to the information received from the comparator and initiates corrective action. If the system is a machine-to-machine system, the corrective inputs (decision rules) are designed into the network. When the control relates to a man-to-machine or man-to-man system, however, the individual(s) in charge must evaluate (1) the accuracy of the feedback information, (2) the significance of the variation, and (3) what corrective inputs will restore the system to a reasonable degree of stability. Once the decision has been made to direct new inputs into the system, the actual process may be relatively easy. A small amount of energy can change the operation of jet airplanes, automatic steel mills, and hydroelectric power plants. The pilot presses a button, and the landing gear of the airplane goes up or down; the operator of a steel mill pushes a lever, and a ribbon of white-hot steel races through the plant; a worker at a control board directs the flow of electrical energy throughout a regional network of stations and substations. It takes but a small amount of control energy to release or stop large quantities of input.[4]

The comparator may be located far from the operating system, although at least some of the elements must be in close proximity to operations. For example, the measurement (the sensory element) is usually at the point of operations. The measurement information can be transmitted to a distant point for comparison with the standard (comparator), and when deviations occur, the correcting input can be released from the distant point. However, the input (activator) will be located at the operating system. This ability to control from afar means that aircraft can be flown by remote control, dangerous manufacturing processes can be operated from a safe distance, and national organizations can be directed from centralized headquarters.

Process of Controlling Setting performance standards. Measurement of actual performance.

Comparing actual performance with standards.

Analysing deviations.

Correcting deviations.

Kinds of control

Control may be grouped according to three general classifications: [3]

(1) the nature of the information flow designed into the system (open- or closed-loop control)(2) the kind of components included in the design (man or machine control systems)(3) the relationship of control to the decision process (organizational or operational control).

Open- and Closed-Loop Control

A street-lighting system controlled by a timing device is an example of an open-loop system. At a certain time each evening, a mechanical device closes the circuit and energy flows through the electric lines to light the lamps. Note, however, that the timing mechanism is an independent unit and is not measuring the objective function of the lighting system. If the lights should be needed on a dark, stormy day the timing device would not recognize this need and therefore would not activate energy inputs. Corrective properties may sometimes be built into the controller (for example, to modify the time the lights are turned on as the days grow shorter or longer), but this would not close the loop. In another instance, the sensing, comparison, or adjustment may be made through action taken by an individual who is not part of the system. For example, the lights may be turned on by someone who happens to pass by and recognizes the need for additional light.

If control is exercised as a result of the operation rather than because of outside or predetermined arrangements, it is a closed-loop system. The home thermostat is the classic example of a control device in a closed-loop system. When the room temperature drops below the desired point, the control mechanism closes the circuit to start the furnace and the temperature rises. The furnace-activating circuit is turned off as the temperature reaches the preselected level. The significant difference between this type of system and an open-loop system is that the control device is an element of the system it serves and measures the performance of the system. In other words, all four control elements are integral to the specific system.

An essential part of a closed-loop system is feedback; that is, the output of the system is measured continually through the item controlled, and the input is modified to reduce any difference or error toward zero. Many of the patterns of information flow in organizations are found to have the nature of closed loops, which use feedback. The reason for such a condition is apparent when one recognizes that any system, if it is to achieve a predetermined goal, must have available to it at all times an indication of its degree of attainment. In general, every goal-seeking system employs feedback.[3]'

Man and Machine Control

The elements of control are easy to identify in machine systems. For example, the characteristic to be controlled might be some variable like speed or temperature, and the sensing device could be a

speedometer or a thermometer. An expectation of precision exists because the characteristic is quantifiable and the standard and the normal variation to be expected can be described in exact terms. In automatic machine systems, inputs of information are used in a process of continual adjustment to achieve output specifications. When even a small variation from the standard occurs, the correction process begins. The automatic system is highly structured, designed to accept certain kinds of input and produce specific output, and programmed to regulate the transformation of inputs within a narrow range of variation.[6]

For an illustration of mechanical control: as the load on a steam engine increases and the engine starts to slow down, the regulator reacts by opening a valve that releases additional inputs of steam energy. This new input returns the engine to the desired number of revolutions per minute. This type of mechanical control is crude in comparison to the more sophisticated electronic control systems in everyday use. Consider the complex missile-guidance systems that measure the actual course according to predetermined mathematical calculations and make almost instantaneous corrections to direct the missile to its target.

Machine systems can be complex because of the sophisticated technology, whereas control of people is complex because the elements of control are difficult to determine. In human control systems, the relationship between objectives and associated characteristics is often vague; the measurement of the characteristic may be extremely subjective; the expected standard is difficult to define; and the amount of new inputs required is impossible to quantify. To illustrate, let us refer once more to a formalized social system in which deviant behavior is controlled through a process of observed violation of the existing law (sensing), court hearings and trials (comparison with standard), incarceration when the accused is found guilty (correction), and release from custody after rehabilitation of the individual has occurred.[6]

The speed limit established for freeway driving is one standard of performance that is quantifiable, but even in this instance, the degree of permissible variation and the amount of the actual variation are often a subject of disagreement between the patrolman and the suspected violator. The complexity of our society is reflected in many of our laws and regulations, which establish the general standards for economic, political, and social operations. A citizen may not know or understand the law and consequently would not know whether or not he was guilty of a violation.

Most organized systems are some combination of man and machine; some elements of control may be performed by machine whereas others are accomplished by man. In addition, some standards may be precisely structured whereas others may be little more than general guidelines with wide variations expected in output. Man must act as the controller when measurement is subjective and judgment is required. Machines such as computers are incapable of making exceptions from the specified control criteria regardless of how much a particular case might warrant special consideration. A pilot acts in conjunction with computers and automatic pilots to fly large jets. In the event of unexpected weather changes, or possible collision with another plane, he must intercede and assume direct control.[4]

Organizational and Operational Control

The concept of organizational control is implicit in the bureaucratic theory of Max Weber. Associated with this theory are such concepts as "span of control", "closeness of supervision", and "hierarchical

authority". Weber's view tends to include all levels or types of organizational control as being the same. More recently, writers have tended to differentiate the control process between that which emphasizes the nature of the organizational or systems design and that which deals with daily operations. To illustrate the difference, we "evaluate" the performance of a system to see how effective and efficient the design proved to be or to discover why it failed. In contrast, we operate and "control" the system with respect to the daily inputs of material, information, and energy. In both instances, the elements of feedback are present, but organizational control tends to review and evaluate the nature and arrangement of components in the system, whereas operational control tends to adjust the daily inputs.

The direction for organizational control comes from the goals and strategic plans of the organization. General plans are translated into specific performance measures such as share of the market, earnings, return on investment, and budgets. The process of organizational control is to review and evaluate the performance of the system against these established norms. Rewards for meeting or exceeding standards may range from special recognition to salary increases or promotions. On the other hand, a failure to meet expectations may signal the need to reorganize or redesign.[7]

In organizational control, the approach used in the program of review and evaluation depends on the reason for the evaluation — that is, is it because the system is not effective (accomplishing its objectives)? Is the system failing to achieve an expected standard of efficiency? Is the evaluation being conducted because of a breakdown or failure in operations? Is it merely a periodic audit-and-review process?

When a system has failed or is in great difficulty, special diagnostic techniques may be required to isolate the trouble areas and to identify the causes of the difficulty. It is appropriate to investigate areas that have been troublesome before or areas where some measure of performance can be quickly identified. For example, if an organization's output backlog builds rapidly, it is logical to check first to see if the problem is due to such readily obtainable measures as increased demand or to a drop in available man hours. When a more detailed analysis is necessary, a systematic procedure should be followed

In contrast to organizational control, operational control serves to regulate the day-to-day output relative to schedules, specifications, and costs. Is the output of product or service the proper quality and is it available as scheduled? Are inventories of raw materials, goods-in-process, and finished products being purchased and produced in the desired quantities? Are the costs associated with the transformation process in line with cost estimates? Is the information needed in the transformation process available in the right form and at the right time? Is the energy resource being utilized efficiently?

The most difficult task of management concerns monitoring the behavior of individuals, comparing performance to some standard, and providing rewards or punishment as indicated. Sometimes this control over people relates entirely to their output. For example, a manager might not be concerned with the behavior of a salesman as long as sales were as high as expected. In other instances, close supervision of the salesman might be appropriate if achieving customer satisfaction were one of the sales organization's main objectives.

The larger the unit, the more likely that the control characteristic will be related to some output goal. It also follows that if it is difficult or impossible to identify the actual output of individuals, it is better to measure the performance of the entire group. This means that individuals' levels of motivation and the measurement of their performance become subjective judgments made by the supervisor. Controlling output also suggests the difficulty of controlling individuals' performance and relating this to the total system's objectives.[7]

Problems of control

The perfect plan could be outlined if every possible variation of input could be anticipated and if the system would operate as predicted. This kind of planning is neither realistic, economical, nor feasible for most business systems. If it were feasible, planning requirements would be so complex that the system would be out of date before it could be operated. Therefore, we design control into systems. This requires more thought in the systems design but allows more flexibility of operations and makes it possible to operate a system using unpredictable components and undetermined input. Still, the design and effective operation of control are not without problems.

The objective of the system is to perform some specified function. The objective of organizational control is to see that the specified function is achieved. The objective of operational control is to ensure that variations in daily output are maintained within prescribed limits.

It is one thing to design a system that contains all of the elements of control, and quite another to make it operate true to the best objectives of design. Operating "in control" or "with plan" does not guarantee optimum performance. For example, the plan may not make the best use of the inputs of materials, energy, or information — in other words, the system may not be designed to operate efficiently. Some of the more typical problems relating to control include the difficulty of measurement, the problem of timing information flow, and the setting of proper standards.[7]

When objectives are not limited to quantitative output, the measurement of system effectiveness is difficult to make and subsequently perplexing to evaluate. Many of the characteristics pertaining to output do not lend themselves to quantitative measurement. This is true particularly when inputs of human energy cannot be related directly to output. The same situation applies to machines and other equipment associated with human involvement, when output is not in specific units. In evaluating man-machine or human-oriented systems, psychological and sociological factors obviously do not easily translate into quantifiable terms. For example, how does mental fatigue affect the quality or quantity of output? And, if it does, is mental fatigue a function of the lack of a challenging assignment or the fear of a potential injury?

Subjective inputs may be transferred into numerical data, but there is always the danger of an incorrect appraisal and transfer, and the danger that the analyst may assume undue confidence in such data after they have been quantified. Let us suppose, for example, that the decisions made by an executive are rated from 1 to 10, 10 being the perfect decision. After determining the ranking for each decision, adding these, and dividing by the total number of decisions made, the average ranking would indicate a particular executive's score in his decision-making role. On the basis of this score, judgments — which could be quite erroneous — might be made about his decision-making effectiveness. One executive with a ranking of 6.75 might be considered more effective than another who had a ranking

of 6.25, and yet the two managers may have made decisions under different circumstances and conditions. External factors over which neither executive had any control may have influenced the difference in "effectiveness".[7]

Quantifying human behavior, despite its extreme difficulty, subjectivity, and imprecision in relation to measuring physical characteristics is the most prevalent and important measurement made in large systems. The behavior of individuals ultimately dictates the success or failure of every man-made system.

2. Explain the steps in the process of controlling. Process control is a statistics and engineering discipline that deals with architectures, mechanisms and algorithms for maintaining the output of a specific process within a desired range. See also control theory.

Process control is extensively used in industry and enables mass production of continuous processes such as oil refining, paper manufacturing, chemicals, power plants and many other industries. Process control enables automation, with which a small staff of operating personnel can operate a complex process from a central control room.

For example, heating up the temperature in a room is a process that has the specific, desired outcome to reach and maintain a defined temperature (e.g. 20°C), kept constant over time. Here, the temperature is the controlled variable. At the same time, it is the input variable since it is measured by a thermometer and used to decide whether to heat or not to heat. The desired temperature (20°C) is the setpoint. The state of the heater (e.g. the setting of the valve allowing hot water to flow through it) is called the manipulated variable since it is subject to control actions.

A commonly used control device called a programmable logic controller, or a PLC, is used to read a set of digital and analog inputs, apply a set of logic statements, and generate a set of analog and digital outputs. Using the example in the previous paragraph, the room temperature would be an input to the PLC. The logical statements would compare the setpoint to the input temperature and determine whether more or less heating was necessary to keep the temperature constant. A PLC output would then either open or close the hot water valve, an incremental amount, depending on whether more or less hot water was needed. Larger more complex systems can be controlled by a Distributed Control System (DCS) or SCADA system.

Types of control systems

In practice, process control systems can be characterized as one or more of the following forms:

Discrete – Found in many manufacturing, motion and packaging applications. Robotic assembly, such as that found in automotive production, can be characterized as discrete process control. Most discrete manufacturing involves the production of discrete pieces of product, such as metal stamping.

Batch – Some applications require that specific quantities of raw materials be combined in specific ways for particular durations to produce an intermediate or end result. One example is

the production of adhesives and glues, which normally require the mixing of raw materials in a heated vessel for a period of time to form a quantity of end product. Other important examples are the production of food, beverages and medicine. Batch processes are generally used to produce a relatively low to intermediate quantity of product per year (a few pounds to millions of pounds).

Continuous – Often, a physical system is represented through variables that are smooth and uninterrupted in time. The control of the water temperature in a heating jacket, for example, is an example of continuous process control. Some important continuous processes are the production of fuels, chemicals and plastics. Continuous processes in manufacturing are used to produce very large quantities of product per year (millions to billions of pounds).

Applications having elements of discrete, batch and continuous process control are often called hybrid applications.

Statistical process control

Statistical process control (SPC) is an effective method of monitoring a process through the use of control charts. Much of its power lies in the ability to monitor both the current center of a process and the process's variation about that center. By collecting data from samples at various points within the process, variations in the process that may affect the quality of the end product or service can be detected and corrected, thus reducing waste as well as the likelihood that problems will be passed on to the customer. It has an emphasis on early detection and prevention of problems.

Multivariable Process Control is a type of Statistical Process Control where a set of variables (manipulated variables and control variables) are identified and the joint variations within this set are captured by a step test. The Dynamics captured in the model curves are used to control the plant

3.Explain the types of control.

Types of the Controls1. Direct controls

a. Called as the direct controls as the people here get so well tuned to the job that there are very less chances for the deviations to take place.b. Also called as the preventive controls.c. Aims at the saving on the cost of the control.d. Also aims at the zero defects from the initiation.e. Great emphasis is given on the prevention of the need of the controls; to build the systems, the procedures, the culture, the discipline etc.f. But with time these types of the controls also get older and outdated.g. For the proper functioning of the direct controls, assistance of the indirect controls is very much needed.

2. Feed forward controls

a. Whenever a process is performed, two factors are very critical namely the inputs and the outputs.b. Here we take into account the various deficiencies of a process well in advance, so that these can be cured or controlled at the initial stages.c. The shape of the feedback controls is taken by almost all the controls.d. It is advised by the various experts to have the both feed forward and the feed backward controls on the process.e. Helps in the establishment of a right direction and control right from the beginning.

3. Feed backward controls

a. Here the controls are put at the output end as the deviations that occur are not known to us till the moment of the output.b. Very heavy cost is involved.c. Results into the customer dissatisfaction.

4. Real time controls

a. Involve the instantaneous feedback almost in the real time, (real time can defined as the time when both the creation of a report and its transmission is done almost with no gap that one can almost read it at the time it is being sent) for e.g. the fax or the telephone.

5. Automation in the controls

a. Here, mainly for the development of the control systems involving very less human power, building of the instrumentation takes place.b. Computers are used for the feedback systems and for the automatic corrections.

4. Explain the steps involving the implementations of Budgetary control.There are two types of control, namely budgetary and financial. This chapter concentrates on budgetary control only. This is because financial control was covered in detail in chapters one and two. Budgetary control is defined by the Institute of Cost and Management Accountants (CIMA) as:

"The establishment of budgets relating the responsibilities of executives to the requirements of a policy, and the continuous comparison of actual with budgeted results, either to secure by individual action the objective of that policy, or to provide a basis for its revision".

Chapter objectives

This chapter is intended to provide:

· An indication and explanation of the importance of budgetary control in marketing as a key marketing control technique · An overview of the advantages and disadvantages of budgeting · An introduction to the methods for preparing budgets · An appreciation of the uses of budgets.

Structure of the chapter

Of all business activities, budgeting is one of the most important and, therefore, requires detailed attention. The chapter looks at the concept of responsibility centres, and the advantages and disadvantages of budgetary control. It then goes on to look at the detail of budget construction and the use to which budgets can be put. Like all management tools, the chapter highlights the need for detailed information, if the technique is to be used to its fullest advantage.

Budgetary control methods

a) Budget:

· A formal statement of the financial resources set aside for carrying out specific activities in a given period of time.

· It helps to co-ordinate the activities of the organisation.

An example would be an advertising budget or sales force budget.

b) Budgetary control:

· A control technique whereby actual results are compared with budgets.

· Any differences (variances) are made the responsibility of key individuals who can either exercise control action or revise the original budgets.

Budgetary control and responsibility centres;

These enable managers to monitor organisational functions.

A responsibility centre can be defined as any functional unit headed by a manager who is responsible for the activities of that unit.

There are four types of responsibility centres:

a) Revenue centres

Organisational units in which outputs are measured in monetary terms but are not directly compared to input costs.

b) Expense centres

Units where inputs are measured in monetary terms but outputs are not.

c) Profit centres

Where performance is measured by the difference between revenues (outputs) and expenditure (inputs). Inter-departmental sales are often made using "transfer prices".

d) Investment centres

Where outputs are compared with the assets employed in producing them, i.e. ROI.

Advantages of budgeting and budgetary control

There are a number of advantages to budgeting and budgetary control:

· Compels management to think about the future, which is probably the most important feature of a budgetary planning and control system. Forces management to look ahead, to set out detailed plans for achieving the targets for each department, operation and (ideally) each manager, to anticipate and give the organisation purpose and direction.

· Promotes coordination and communication.

· Clearly defines areas of responsibility. Requires managers of budget centres to be made responsible for the achievement of budget targets for the operations under their personal control.

· Provides a basis for performance appraisal (variance analysis). A budget is basically a yardstick against which actual performance is measured and assessed. Control is provided by comparisons of actual results against budget plan. Departures from budget can then be investigated and the reasons for the differences can be divided into controllable and non-controllable factors.

· Enables remedial action to be taken as variances emerge.

· Motivates employees by participating in the setting of budgets.

· Improves the allocation of scarce resources.

· Economises management time by using the management by exception principle.

Problems in budgeting

Whilst budgets may be an essential part of any marketing activity they do have a number of disadvantages, particularly in perception terms.

· Budgets can be seen as pressure devices imposed by management, thus resulting in: a) bad labour relationsb) inaccurate record-keeping.

· Departmental conflict arises due to:

a) disputes over resource allocationb) departments blaming each other if targets are not attained.

· It is difficult to reconcile personal/individual and corporate goals.

· Waste may arise as managers adopt the view, "we had better spend it or we will lose it". This is often coupled with "empire building" in order to enhance the prestige of a department.

Responsibility versus controlling, i.e. some costs are under the influence of more than one person, e.g. power costs.

· Managers may overestimate costs so that they will not be blamed in the future should they overspend.

Characteristics of a budget

A good budget is characterised by the following:

· Participation: involve as many people as possible in drawing up a budget.· Comprehensiveness: embrace the whole organisation.· Standards: base it on established standards of performance.· Flexibility: allow for changing circumstances.· Feedback: constantly monitor performance.· Analysis of costs and revenues: this can be done on the basis of product lines, departments or cost centres.

Budget organisation and administration:

In organising and administering a budget system the following characteristics may apply:

a) Budget centres: Units responsible for the preparation of budgets. A budget centre may encompass several cost centres.

b) Budget committee: This may consist of senior members of the organisation, e.g. departmental heads and executives (with the managing director as chairman). Every part of the organisation should be represented on the committee, so there should be a representative from sales, production, marketing and so on. Functions of the budget committee include:

· Coordination of the preparation of budgets, including the issue of a manual· Issuing of timetables for preparation of budgets· Provision of information to assist budget preparations· Comparison of actual results with budget and investigation of variances.

c) Budget Officer: Controls the budget administration The job involves:

· liaising between the budget committee and managers responsible for budget preparation· dealing with budgetary control problems· ensuring that deadlines are met· educating people about budgetary control.

d) Budget manual:

This document:

· charts the organisation· details the budget procedures· contains account codes for items of expenditure and revenue· timetables the process· clearly defines the responsibility of persons involved in the budgeting system.

Budget preparation

Firstly, determine the principal budget factor. This is also known as the key budget factor or limiting budget factor and is the factor which will limit the activities of an undertaking. This limits output, e.g. sales, material or labour.

a) Sales budget: this involves a realistic sales forecast. This is prepared in units of each product and also in sales value. Methods of sales forecasting include:

· sales force opinions· market research· statistical methods (correlation analysis and examination of trends)· mathematical models.

In using these techniques consider:

· company's pricing policy· general economic and political conditions· changes in the population· competition· consumers' income and tastes· advertising and other sales promotion techniques· after sales service· credit terms offered.

b) Production budget: expressed in quantitative terms only and is geared to the sales budget. The production manager's duties include:

· analysis of plant utilisation· work-in-progress budgets.

If requirements exceed capacity he may:

· subcontract· plan for overtime· introduce shift work· hire or buy additional machinery· The materials purchases budget's both quantitative and financial.

c) Raw materials and purchasing budget:

· The materials usage budget is in quantities.· The materials purchases budget is both quantitative and financial.

Factors influencing a) and b) include:

· production requirements· planning stock levels· storage space· trends of material prices.

d) Labour budget: is both quantitative and financial. This is influenced by:

· production requirements· man-hours available· grades of labour required· wage rates (union agreements)· the need for incentives.

e) Cash budget: a cash plan for a defined period of time. It summarises monthly receipts and payments. Hence, it highlights monthly surpluses and deficits of actual cash. Its main uses are:

· to maintain control over a firm's cash requirements, e.g. stock and debtors

· to enable a firm to take precautionary measures and arrange in advance for investment and loan facilities whenever cash surpluses or deficits arises

· to show the feasibility of management's plans in cash terms

· to illustrate the financial impact of changes in management policy, e.g. change of credit terms offered to customers.

Receipts of cash may come from one of the following:

· cash sales· payments by debtors· the sale of fixed assets

· the issue of new shares· the receipt of interest and dividends from investments.

Payments of cash may be for one or more of the following:

· purchase of stocks· payments of wages or other expenses· purchase of capital items· payment of interest, dividends or taxation.

Steps in preparing a cash budget

Step 1: set out a pro forma cash budget month by month. Below is a suggested layout. Step 2: sort out cash receipts from debtors Step 3: other income Step 4: sort out cash payments to suppliers Step 5: establish other cash payments in the month

5. Explain the classification of Budget. In every business planning is the most important function to perform. Planning of different firms depends upon so many factors. Planning is done for comparing the actual performance with standard performance. Budgets are also prepared in advance. Budgets are prepared to check the availability of finance according to the demand of project. So budgetary control is also essential tool of management to control cost and maximizes profits.

Meaning of budget: A budget is a detail plan of operations for a specific period of time. In the present era everyone is with the term budget because it essential in life. A budget is prepared for the effective utilization of resources, which will help in achieving the set objectives. Budgets are also very important in individual life, as it is important in business firms. The following are the essential of budget:

(a) It is prepared in advance and is based on future plan of action.(b) It relates to a future period and is based on objectives to be attained.(c) It is a statement expressed in monetary or physical unit prepared for the formulation of policy.Types of budgets.

1. Functional basis of budgets.

a. Sales budget: Sales budget is the primary budget. It is the most important budget to prepare and the other budgets are prepared on the basis of sales budget. In this budget the in charge or expert forecast the future expected sales of the firm. The sales manager is responsible for the accuracy of the budget. The sales budgets may prepare on basis of product, type of customers, salesman, locality etc. for the preparation of sales budget the following things should be take under care like past sales, sales man estimates, plant capacity, raw material, orders in hand, seasonal fluctuations, competition etc.

b. Production budget: After preparing sales budget the next budget will be production budget. In this budget works manager prepare schedule of production by breaking large production in small units to fulfill the target production. A properly operated budgets leads to inventory control, improved maintenance of production schedules and production targets. Suppose, if the estimated opening stock is 5000 units and estimated sales are 25000 units and closing stock of the product is 3000 units the estimated production will be 25000 + 3000 – 5000 =23000 units (sales + closing stock – opening stock).

c. Material budget: In the production budget material is the first requirement to be considered. Materials are basically divided into two categories as direct and indirect material. It includes the preparation of estimates of different types of the raw material needed for various products and purchasing raw material in required number at a required time. There are few factors which should be taken under care like requirement of raw material; company’s stocking policies, price trend, and cost of raw material.

d. Labour budget: labour is an important factor in every production organization. Labour plays an important role in converting raw material into finished product. The labour requirement budgets prepared on basis of production budget. Labour may be of two types direct and indirect labour. In this budget company has to budget the required number of hours and the expected pay scales of the employees. This budget gives information about personnel specifications for the job for which workers are to be recruited, the degree of skill and experience required and rates of pay.

e. Manufacturing Overhead budgets: this budget gives the works overhead expenses to be incurred in a budget period to achieve the production target. The cost of indirect material, indirect labour etc can be calculated with the help of this budget. For making proper control it can be divided into departmental overhead budget. Variable expenses are estimated on the basis of the budgeted output because these expenses are bound to change with the change in output.

f. Administration Expenses budget: The budget covers the expenses incurred in framing policies, directing the organization and controlling the business operations. In budget an estimate of expenses is prepared regarding central office and of management salaries. The budget may be prepared at department level for effectiveness in budgeting system. The budget can be prepared with the past experience and anticipated changes.

G. Selling and Distribution budgets: This expense is related to the selling and distribution of material. In this budget experts have to plan for the expected selling and distribution expenses of the firm. Certain items of selling and distribution costs as cost of transportation, salesman salaries etc.

h. Cash budget: this budget is prepared to predict the inflow and outflow of cash during the budget period. In cash receipt we consider cash sales, credit collection and other receipts in cash payments we consider cash payments, tax payable, dividend payable etc. Without cash organizations cannot work so prediction about cash is very important. A cash budget makes provision for a minimum cash balance which will be available at all times.

2. On the basis of flexibility

a. Fixed budget: This is the rigid budget and it is drawn on the assumption that there will be no change in the budgeted time period. A fixed budget will be helpful only when actual level of

activity is equal to budgeted level of activities. According to charted institute of management accountants.” A fixed budget is defined as a budget designed to remain unchanged irrespective of activity actually attained.

b. Flexible budget: It is also called as variable budget. A flexible budget gives different budgeted costs for different budgeted costs for different levels of activities. This budget is applicable in where activity levels vary from period to period. Where the business is new and it is difficult to predict. Where industry is influenced by change in fashion. Where there are changes in sales.

3. On the basis of period:

a. Long time budgets: long-term budgets are prepared for those organizations, which deal in regular product line. Here organizations are not suppose to change their proceedings in short time periods.

b. Short time budgets: Short-term budgets are prepared for small time periods which work for seasonal product line. Here products may change in near future.

6. Explain the role of MIS play at various levels of management.

A management information system (MIS) is a system that provides information needed to manage organizations effectively. Management information systems are regarded to be a subset of the overall internal controls procedures in a business, which cover the application of people, documents, technologies, and procedures used by management accountants to solve business problems such as costing a product, service or a business-wide strategy. Management information systems are distinct from regular information systems in that they are used to analyze other information systems applied in operational activities in the organization. Academically, the term is commonly used to refer to the group of information management methods tied to the automation or support of human decision making, e.g. Decision Support Systems, Expert systems, and Executive information systems. An 'MIS' is a planned system of the collection, processing, storage and dissemination of data in the form of information needed to carry out the management functions. In a way, it is a documented report of the activities that were planned and executed. According to Philip Kotler "A marketing information system consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers." Applications of MIS ---------With computers being as ubiquitous as they are today, there's hardly any large business that does not rely extensively on their IT systems. However, there are several specific fields in which MIS has become invaluable. Strategy Support While computers cannot create business strategies by themselves they can assist management in understanding the effects of their strategies, and help enable effective decision-making. MIS systems can be used to transform data into information useful for decision making. Computers can provide financial statements and performance reports to assist in the planning, monitoring and implementation of strategy. MIS systems provide a valuable function in that they can collate into coherent reports unmanageable volumes of data that would otherwise be broadly useless to decision makers. By studying these reports decision-makers can identify patterns and trends that would have remained unseen if the raw data were consulted manually.

MIS systems can also use these raw data to run simulations - hypothetical scenarios that answer a range of ‘what if’ questions regarding alterations in strategy. For instance, MIS systems can provide predictions about the effect on sales that an alteration in price would have on a product. These Decision Support Systems (DSS) enable more informed decision making within an enterprise than would be possible without MIS systems.Data Processing Not only do MIS systems allow for the collation of vast amounts of business data, but they also provide a valuable time saving benefit to the workforce. Where in the past business information had to be manually processed for filing and analysis it can now be entered quickly and easily onto a computer by a data processor, allowing for faster decision making and quicker reflexes for the enterprise as a whole. Management by Objectives While MIS systems are extremely useful in generating statistical reports and data analysis they can also be of use as a Management by Objectives (MBO) tool. MBO is a management process by which managers and subordinates agree upon a series of objectives for the subordinate to attempt to achieve within a set time frame. Objectives are set using the SMART ratio: that is, objectives should be Specific, Measurable, Agreed, Realistic and Time-Specific.The aim of these objectives is to provide a set of key performance indicators by which an enterprise can judge the performance of an employee or project. The success of any MBO objective depends upon the continuous tracking of progress.In tracking this performance it can be extremely useful to make use of an MIS system. Since all SMART objectives are by definition measurable they can be tracked through the generation of management reports to be analyzed by decision-makers. Benefits of MIS The field of MIS can deliver a great many benefits to enterprises in every industry. Expert organisations such as the Institute of MIS along with peer reviewed journals such as MIS Quarterly continue to find and report new ways to use MIS to achieve business objectives. 1. Core Competencies Every market leading enterprise will have at least one core competency - that is, a function they perform better than their competition. By building an exceptional management information system into the enterprise it is possible to push out ahead of the competition. MIS systems provide the tools necessary to gain a better understanding of the market as well as a better understanding of the enterprise itself.

2. Enhance Supply Chain Management Improved reporting of business processes leads inevitably to a more streamlined production process. With better information on the production process comes the ability to improve the management of the supply chain, including everything from the sourcing of materials to the manufacturing and distribution of the finished product.

3. Quick Reflexes As a corollary to improved supply chain management comes an improved ability to react to changes in the market. Better MIS systems enable an enterprise to react more quickly to their environment, enabling them to push out ahead of the competition and produce a better service and a larger piece of

the pie.

4. Significant cost benefits, time savings, productivity gains and process re- engineering opportunities are associated with the use of data warehouse for information processing. 5. Data can easily be accessed and analysed without time consuming manipulation and processing.

6. Decisions can be made more quickly and with confidence that the data are both time-relevant and accurate. 7. Integrated information can be also kept in categories that are meaningful to profitable operation Further information about MIS can be found at the Bentley College Journal of MIS and the US Treasury’s MIS handbook, and an example of an organisational MIS division can be found at the Department of Social Services for the state of Connecticut. MIS in Banking Sector (AXIS BANK) Axis Bank, previously called UTI Bank, was the first of the new private banks to have begun operations in 1994, after the Government of India allowed new private banks to be established. The Bank was promoted jointly by the Administrator of the Specified Undertaking of the Unit Trust of India (UTI-I), Life Insurance Corporation of India (LIC), General Insurance Corporation Ltd., National Insurance Company Ltd., The New India Assurance Company, The Oriental Insurance Corporation and United Insurance Company Ltd. UTI-I holds a special position in the Indian capital markets and has promoted many leading financial institutions in the country. For example, using MIS strategically can help a company to become a market innovator. By providing a unique product or service to meet the needs of customers, a company can raise the cost of market entry for potential competitors and thus gain a competitive advantage. Another strategic use of MIS involves forging electronic linkages to customers and suppliers. This can help companies to lock in business and increase switching costs. Finally, it is possible to use MIS to change the overall basis of competition in an industry. For example, in an industry characterized by price wars, a business with a new means of processing customer data may be able to create unique product features that change the basis of competition to differentiation. Relevance of Data Warehousing and Data Mining for banks in India. Banking being an information intensive industry, building a Management Information System within a bank or an industry is a gigantic task. It is more so for the public sector banks which have a wide network of bank branches spread all over the country. At present, banks generate MIS reports largely from periodic paper reports/statements submitted by the branches and regional/zonal offices. Except for a few banks which have been using technology in a big way, MIS reports are available with a substantial time lag. Reports so generated have also a high margin of error due to data entry being done at various levels and the likelihood of varying interpretations at different levels. Though computerization of bank branches has been going on at a good pace, MIS requirements have not been fully addressed to. It is on account of the fact that most of the Total Branch Computerization (TBC) software packages are transaction processing oriented. They have been designed primarily for day-to-day operations at the branch level and day-end balancing of books Need for building MIS The need for building MIS at the corporate level has increased considerably during the last few years because of the following reasons: Regulatory requirements indicated by the RBI for preparation of Off-site Monitoring Surveillance (OSMOS) Reports on a regular basis in electronic format

Regulatory requirement of filing of statutory returns such as the one under Section 42 of the Reserve Bank of India Act, 1934 for working out Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) obligations in electronic format Asset Liability Management (ALM) guidelines for banks being implemented by the RBI w.e.f. April 1, 1999 with the stipulation that the banks should capture 100 percent of their business through the ALM system by April 1, 2000. Need for timely submission of Balance Sheets and Profit & Loss Accounts Focus on transaction costing and a need for relating the service charges levied on the customers to be based on cost of servicing Need for Inter-Branch Reconciliation of Accounts within a definite time frame Need to meet the stipulations made by the Central Vigilance Commission (CVC) to computerise at least 70 percent of banking business by January 1, 2001. Need to undertake risk management strategies and for this purpose build up appropriate sets of data and market intelligence reports

Application of data warehousing and data mining techniques Implication of adopting such technology in a bank would be as under 1. All transactions captured at the branch level would get consolidated at a central location. Such a central location could be called the Data Warehouse of the concerned bank 2. For banks with large number of branches, it may not be desirable to consolidate the transaction details at one place only. It can be decentralised by locating the services on regional basis. 3. By way of data mining techniques, data available at various computer systems can be accessed and by a combination of techniques like classification, clustering, segmentation, association rules, sequencing, decision tree (described in detail at Annexure-15), various ALM reports such as Statement of Structural Liquidity, Statement of Interest Rate Sensitivity etc. or accounting reports like Balance Sheet and Profit & Loss Account can be generated instantaneously for any desired period/date ORGANISATION COMPUTING RESOURCES SOFTWARE RESOURCES RisKompass : A software system for derivatives valuation and risk management, RisKompass enables clients to manage derivative trades in a further controlled way from the front to back office. Supporting the industry standard FpML (Financial Product Markup Language) protocol, it can manage valuation and risk management of a broad range of derivatives instruments. The system will handle derivatives such as interest rates and foreign exchange for Bank. ORGANISATION COMPUTING RESOURCES 1. The implementation will provide the bank with an automated system that reduces manual effort to streamline its operations. 2. The benefit envisaged by the bank is that everybody being on the same system, it can be accessed by anyone on the different locations of the bank. 3. The users at the bank would include traders, dealers and risk managers. 4. The solution will result in smoother deal processing, with verifying and online risk monitoring mechanism. 5. It will streamline all operations and the risk mechanism can be monitored centrally Electronic Clearing Service (ECS Credit) •Electronic Clearing Service (ECS Credit)ECS Credit is an electronic clearing system that facilitates paperless transaction through an offline system. Bank facilitates ECS Credit at all ECS designated locations. We accept the electronic file and

arrange abstention of settlement date (date of credit to beneficiary account) from RBI/SBI/Local Clearing House as the case may be. The funds gets debited from a centralized account and credit is accorded to the respective beneficiaries as per settlement cycle. A detailed MIS about the transactions is provided to the customer.

NEFT To establish an Electronic Funds Transfer System to facilitate an efficient, secure, economical, reliable and expeditious system of funds transfer and clearing in the banking sector throughout India. The customer willing to avail the NEFT facility offered by us shall submit an "NEFT Application Form" authorising the sending bank to debit the sender's account and transfer funds to the beneficiary specified in the NEFT Application Form. The Beneficiary's account will be credited on the same day by crediting the specified account of the beneficiary or otherwise placing funds at the disposal of the beneficiary. Centralised Service Desk A dedicated service desk has been started at our Centralised Collection and Payment HUB (CCPH) to ensure that your queries are resolved quickly and efficiently. The Customers can contact CCPH regarding any query about the MIS or the process flow.• Web CMS Web CMS provides you with all the information at a click. Detailed MIS Like location wise collection and return, product-wise pooling, pooling in pipeline (due credit report) etc. can be viewed and downloaded from web interface through internet Comprehensive MIS We provide comprehensive MIS reports like daily report, transaction report future credits reports and cheque returned unpaid report. On the payments side we provide daily paid - unpaid status for the demand drafts, cheques or warrants issued by your Organisation.

Mobile Alert Service The CMS clients availing our collection products now have the facility to subscribe to Mobile Alert Service for receiving alerts on registered mobile phone numbers instantly after the funds are pooled. To avail this facility, please visit nearest CMS designated branch or log on to our Web CMS to download the form online and send it to our branch where your account is maintained.