2 Marks (Questions and Answers)

UNIT-I HISTORICAL DEVELOPMENT

1. Define Management.

Management is the process of designing and maintaining of an environment in which

individuals working together in groups efficiently accomplish selected aims”.
OR
“Management is the art of getting things through and with people in formally organized
groups”.

2. What are the characteristics of Management?

 Management is a continuous process
 Ensuring high performance standards
 Issue of timely instructions.
 They are closely linked with society
3. What are the roles of Management in organization?
 Management helps in determining the objectives of an organization
 Economic and social development takes place through Management
4. Mention the functions of Management.
Planning, Organizing, Staffing, Directing, Controlling

5. List the essential skills needed for managers.

Technical skill, Human skill, Conceptual skill

6. Name four principles of Management as per Taylor.

 Develop a standard method for performing a task and train workers to use these methods
 provide workers with proper tools needed to work
 Selected employees were chosen for specific tasks.
 Wage incentives were provided when output was increased.

7. What is Taylor’s principle of differential piece rate system?

It states that the workers should be paid on the basis of their degree of efficiency.

8. Write any two points that favor “Management is an art”.

 Management is creative
 Management includes the use of practical knowledge and personal skill

9. Write any two points that favor “Management is a science”.

  Management principles should be verifiable
 Reliable basis for predicting

10. What are the roles of a manager?

 Interpersonal roles- figurehead, leader, liason
 Informational roles- monitor, disseminator, spokesperson
 Decisional roles- entrepreneur, disturbance handler, resource
allocator, negotiator

11. Differentiate between Management and administration.

Administration Management

It is a higher level function It is a lower level function

It refers to the owners of the organization It refers to the employees

Administration is concerned with decision making Management is concerned with

execution of decisions

It acts through the management It acts through the organisation

Administration lays down broad policies and Management executes these policies into
principles for guidance practice

12. What are the different management levels?

 Top level management

 Middle level management
 Lower level management

13. Mention the functions of Top level management.

 To formulate goals and policies of the company

 To formulate budgets
 To appoint top executives

14. Mention the functions of lower level management.

 To train and develop the efficiency of workers

 To assign jobs to workers
 To give orders and instructions
 To maintain discipline and good human relations among workers.

15. Why it is important to study various management theories that have been developed?
  To make a unified global theory of management.
 To utilize the experiences of pioneers.

Part – B (16 Marks)

1. Explain Henry Fayol’s fourteen principles of management.

Henry Fayol’s fourteen principles of management:

• Division of Work
• Authority and Responsibility
• Unity of Command
• Line of Authority
• Centralization
• Unity of Direction
• Equity
• Order
• Initiative
• Discipline
• Remuneration of Personnel
• Stability of Tenure of Personnel
• Subordination of individual interest to the common interest
• Esprit de corps

1.Division of Work-

Henri believed that segregating work in the workforce amongst the worker will enhance the
quality of the product. Similarly, he also concluded that the division of work improves the
productivity, efficiency, accuracy and speed of the workers. This principle is appropriate for both
the managerial as well as a technical work level.

2. Authority and Responsibility-

These are the two key aspects of management. Authority facilitates the management to work
efficiently, and responsibility makes them responsible for the work done under their guidance or
leadership.

3. Discipline-

Without discipline, nothing can be accomplished. It is the core value for any project or any
management. Good performance and sensible interrelation make the management job easy and
comprehensive. Employees good behaviour also helps them smoothly build and progress in their
professional careers.

4. Unity of Command-
This means an employee should have only one boss and follow his command. If an employee has
to follow more than one boss, there begins a conflict of interest and can create confusion.

5. Unity of Direction-

Whoever is engaged in the same activity should have a unified goal. This means all the person
working in a company should have one goal and motive which will make the work easier and
achieve the set goal easily.

6. Subordination of Individual Interest-

This indicates a company should work unitedly towards the interest of a company rather than
personal interest. Be subordinate to the purposes of an organization. This refers to the whole
chain of command in a company.

7. Remuneration-

This plays an important role in motivating the workers of a company. Remuneration can be
monetary or non-monetary. However, it should be according to an individual’s efforts they have
made.

8. Centralization-

In any company, the management or any authority responsible for the decision-making process
should be neutral. However, this depends on the size of an organization. Henri Fayol stressed on
the point that there should be a balance between the hierarchy and division of power.

9. Scalar Chain-

Fayol on this principle highlights that the hierarchy steps should be from the top to the lowest.
This is necessary so that every employee knows their immediate senior also they should be able
to contact any, if needed.

10. Order-

A company should maintain a well-defined work order to have a favourable work culture. The
positive atmosphere in the workplace will boost more positive productivity.

11. Equity-

All employees should be treated equally and respectfully. It’s the responsibility of a manager that
no employees face discrimination.

12. Stability-
An employee delivers the best if they feel secure in their job. It is the duty of the management to
offer job security to their employees.

13. Initiative-

The management should support and encourage the employees to take initiatives in an
organization. It will help them to increase their interest and make then worth.

14. Esprit de Corps-

It is the responsibility of the management to motivate their employees and be supportive of each
other regularly. Developing trust and mutual understanding will lead to a positive outcome and
work environment.

2. What are the major functions of management? Discuss them in detail. (16)

• The functions of the management are:

 Planning
 Organizing
 Staffing
 Directing
 Controlling
 Planning

It is the basic function of management. It deals with chalking out a future course of action &
deciding in advance the most appropriate course of actions for achievement of pre-determined
goals.

According to KOONTZ, “Planning is deciding in advance - what to do, when to do & how to do.
It bridges the gap from where we are & where we want to be”. A plan is a future course of
actions. It is an exercise in problem solving & decision making.

Planning is determination of courses of action to achieve desired goals. Thus, planning is a

systematic thinking about ways & means for accomplishment of pre-determined goals. Planning
is necessary to ensure proper utilization of human & non-human resources. It is all pervasive, it
is an intellectual activity and it also helps in avoiding confusion, uncertainties, risks, wastages
etc.

 Organizing

It is the process of bringing together physical, financial and human resources and developing
productive relationship amongst them for achievement of organizational goals.

According to Henry Fayol, “To organize a business is to provide it with everything useful or its
functioning i.e. raw material, tools, capital and personnel’s”. To organize a business involves
determining & providing human and non-human resources to the organizational structure.
Organizing as a process involves:

 Identification of activities.
 Classification of grouping of activities.
 Assignment of duties.
 Delegation of authority and creation of responsibility.
 Coordinating authority and responsibility relationships.

 Staffing

It is the function of manning the organization structure and keeping it manned. Staffing has
assumed greater importance in the recent years due to advancement of technology, increase in
size of business, complexity of human behavior etc.

The main purpose of staffing is to put right man/woman on right job i.e. square pegs in square
holes and round pegs in round holes. According to Kootz & O’Donell, “Managerial function of
staffing involves manning the organization structure through proper and effective selection,
appraisal & development of personnel to fill the roles designed un the structure”. Staffing
involves:

 Manpower Planning (estimating man power in terms of searching, choose the person and
giving the right place).
  Recruitment, Selection & Placement.
 Training & Development.
 Remuneration.
 Performance Appraisal.
 Promotions & Transfer.

 Directing

It is that part of managerial function which actuates the organizational methods to work
efficiently for achievement of organizational purposes. It is considered life-spark of the
enterprise which sets it in motion the action of people because planning, organizing and staffing
are the mere preparations for doing the work.

Direction is that inter-personnel aspect of management which deals directly with influencing,
guiding, supervising, motivating sub-ordinate for the achievement of organizational goals.
Direction has following elements:

 Supervision
 Motivation
 Leadership
 Communication

Supervision- implies overseeing the work of subordinates by their superiors. It is the act of
watching & directing work & workers.

Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to work.
Positive, negative, monetary, non-monetary incentives may be used for this purpose.

Leadership- may be defined as a process by which manager guides and influences the work of
subordinates in desired direction.

Communications- is the process of passing information, experience, opinion etc from one
person to another. It is a bridge of understanding.

 Controlling

It implies measurement of accomplishment against the standards and correction of deviation if

any to ensure achievement of organizational goals. The purpose of controlling is to ensure that
everything occurs in conformities with the standards. An efficient system of control helps to
predict deviations before they actually occur.

According to Theo Haimann, “Controlling is the process of checking whether or not proper
progress is being made towards the objectives and goals and acting if necessary, to correct any
deviation”.
According to Koontz & O’Donell “Controlling is the measurement & correction of performance
activities of subordinates in order to make sure that the enterprise objectives and plans desired to
obtain them as being accomplished”. Therefore, controlling has following steps:

a. Establishment of standard performance.

b. Measurement of actual performance.
c. Comparison of actual performance with the standards and finding out deviation if any.
d. Corrective action.

3. Discuss in detail the evolution of management thought.

This evolution of management thought can be studied in the following
broad stages:
The Classical Theory of Management (Classical Approach):
It includes the following three streams of thought:
(i) Bureaucracy,
(ii) Scientific Management; and
(iii)Administrative Management

A. The Neo-classical theory of Management:

It includes the following two streams:
(i) Human Relations Approach
(ii) Behavioral Sciences Approach.
B. The Modern Theory of Management: It includes the following three streamsof thought:
(i) Quantitative Approach to Management (Operations Research);
(ii) Systems Approach to Management and
(iii) Contingency Approach to Management.

It is rather difficult to state the exact period of each stage in the evolution
of management thought. Experts, in general, agree with the following period for each
thought/school.
a. Classical School/thought: 1900 to 1930.
b. Neo-classical School/thought: 1930 to 1960.
c. Modern School/thought: 1960 onwards.

The development of management thought is the result of contributions made by

pioneering management thinkers and experts from other social sciences such as
economics and psychology.

OR
 Scientific Management theory
 Administrative Management Theory
 Behaviorial Management Theory
 Management Science Theory
 Organizational Environment Theory
Under each theory contributions by different people
OR
 1. Early Classical Approach
-F.W.Taylor’s Scientific Management
- Fayol’s Contribution
2. Neo -Classical Approaches
-The Human Relations Movement
- Behavioural Approach
3. Modern Approach
-Quantitative Approach
-System Approach
-Contingency Approach
OR
In terms of contributions by people like:
Peter Drucker
F.W. Taylor
Elton Mayo
Henri Fayol
Max Weber
Henry Gantt -
Frank & Lillian Gilbreth.

Explanation of the points by following any one style

Evolution of Management Thought - Introduction

There is a long history behind the evolution of management thought. Management is considered
as the significant feature of economic life of mankind throughout ages. Management thought is
regarded as an evolutionary concept. It has developed along with it and in line with social,
cultural, economic and scientific institutions. Management thought has its origin in ancient
times. It is developed along with other socio economic development. The contributors to
management theory include management philosophers, management practitioners, and scholars.
Modern management is based on the strong foundation laid down by the management thinkers
from the past events.
What Does Management Thought Means?
Management thought refers to the theory that guides management of people in the organization.
Initially management theories were developed out of the practical experience of the managers in
the industrial organization. Later on, managers borrowed ideas from several other fields of study
like science, sociology, anthropology, etc.

The Concept of Evolution of Management Thought

To understand the entire concept of evolution of the management thought, the topic is divided
into 4 major stages, which are as follows:

 Pre-scientific management period

  Classical theory
 Neo-classical theory ( or behavior approach)
 Bureaucratic Model of Max Weber
Pre-Scientific Management Period
As the industrial revolution occurred in the 18th century, there was a huge impact on
management. The scenario changed the method of raising capitals, organizing labor, and
goods’ production for the individuals and businesses. Entrepreneurs then had access to
production factors like land, labor, and capital. The final step was only to make some effort to
combine these factors to achieve the target successfully.
But, after the industrial revolution, the newer dimension taken by management is because of
the involvement of certain notable personalities who introduced some effective ideas and
approaches for giving management an acceptable and precise direction. Here is a brief on
some of the personalities and their theories:

Professor Charles Babbage of United Kingdom (1729 to 1871)

Prof. Babbage was a renowned Mathematics professor at Cambridge University. He
discovered that manufacturers rely on guessing and suggesting and advised them for utilizing
science and mathematics to be more productive and accurate.

Robert Owens of United Kingdom (1771 to 1858)

Sir Robert is often regarded as personnel management’s father as his approach focuses on
employee welfare. He also introduced cooperation and trade unions. He mainly believed that
employee welfare might determine the performance to a larger extent. Sir Robert also
encouraged the workers’ training, children’s education, ensuring canteens in the workplaces,
shorter working durations, and others.

The Classical Theory

Robert Owens, Charles Babbage, and other prominent personalities are regarded as
management’s pioneers. However, their contribution to the evolution of management is lower.
Further, by the last decade of the 19th century, the science of management began, and with it,
some professionals like H. L. Grant, F. W. Taylor, Emerson, and others entered for the
establishment of scientific management.

Further, during the classical period, management thought focused on standardization, job
content, labor division, and scientific approaches for the organization. It also related closely to
the industrial revolution and the rise of large-scale enterprises.
The Neo-Classical Theory
This duration of the evolution of management thought is a better version of classical theory. It
is a modified version of classical theory with several improvements. The classical theory
focused mainly on the areas of job including physical resources and their management, but
Neoclassical theory focuses on employee relationships in the work ecosystem.
The Bureaucratic Model
Max Weber, a German sociologist, proposed the bureaucratic model. This includes a system of
labour division, rules, authority hierarchy, and employees’ placement based on their technical
capabilities.

Evolution of Management Theories

Organizations were shaped effectively and the writings of some prominent writers consisted of
the management and governance of various kingdoms. These descriptions formed the literature
that helped develop the management theories. Several heads of religions, political affairs, and
military also gave the management models. For example, the books like Sun Tzu’s “The Art of
War” and Chanakya’s Arthashastra used some managerial purposes and the governance of the
kingdom concerning the policy formulations respectively.

The Evolution of Management Science

Management evolution started with civilization, and the evolution of management science is
the entire concept involving several theories behind it. Whatever we presently have gets
refined and improved as management thoughts and theories. This helps people in improving
the knowledge of the process and utilizes the management principles for enhancing the overall
organization.

4. Enumerate and explain the types of business organizations. (16)

• Individualistic Institutions
 Sole trades
 Partnership
 Co-operative
 Joint stock company
 Multinational companies
• Government Institutions
 Departmental undertaking
 Public corporation
 Government company
 Board organization

Sole Proprietorship

The simplest and most common form of business ownership, sole proprietorship is a business
owned and run by someone for their own benefit. The business’ existence is entirely dependent
on the owner’s decisions, so when the owner dies, so does the business.

Advantages of sole proprietorship:

 All profits are subject to the owner

 There is very little regulation for proprietorships
 Owners have total flexibility when running the business
  Very few requirements for starting—often only a business license

Disadvantages:

 Owner is 100% liable for business debts

 Equity is limited to the owner’s personal resources
 Ownership of proprietorship is difficult to transfer
 No distinction between personal and business income

Partnership

These come in two types: general and limited. In general partnerships, both owners invest their
money, property, labor, etc. to the business and are both 100% liable for business debts. In other
words, even if you invest a little into a general partnership, you are still potentially responsible
for all its debt. General partnerships do not require a formal agreement—partnerships can be
verbal or even implied between the two business owners.

Limited partnerships require a formal agreement between the partners. They must also file a
certificate of partnership with the state. Limited partnerships allow partners to limit their own
liability for business debts according to their portion of ownership or investment.

Advantages of partnerships:

 Shared resources provides more capital for the business

 Each partner shares the total profits of the company
 Similar flexibility and simple design of a proprietorship
 Inexpensive to establish a business partnership, formal or informal

Disadvantages:

 Each partner is 100% responsible for debts and losses

 Selling the business is difficult—requires finding new partner
 Partnership ends when any partner decides to end it

Corporation

Corporations are, for tax purposes, separate entities and are considered a legal person. This
means, among other things, that the profits generated by a corporation are taxed as the “personal
income” of the company. Then, any income distributed to the shareholders as dividends or
profits are taxed again as the personal income of the owners.

Advantages of a corporation:

 Limits liability of the owner to debts or losses

 Profits and losses belong to the corporation
 Can be transferred to new owners fairly easily
  Personal assets cannot be seized to pay for business debts

Disadvantages:

 Corporate operations are costly

 Establishing a corporation is costly
 Start a corporate business requires complex paperwork
 With some exceptions, corporate income is taxed twice

Limited Liability Company (LLC)

Similar to a limited partnership, an LLC provides owners with limited liability while providing
some of the income advantages of a partnership. Essentially, the advantages of partnerships and
corporations are combined in an LLC, mitigating some of the disadvantages of each.

Advantages of an LLC:

 Limits liability to the company owners for debts or losses

 The profits of the LLC are shared by the owners without double-taxation

Disadvantages:

 Ownership is limited by certain state laws

 Agreements must be comprehensive and complex
 Beginning an LLC has high costs due to legal and filing fees

5. Write notes on contribution of F.W.Taylor to scientific management.

Principles of Scientific Management: -

The five principles of management by F.W Taylor.are

 Replacing Rule of thumb with science

 Harmony in group action
 Cooperation
 Maximum output and
 Development of workers.

1. Science, not the Rule of Thumb-

This rule focuses on increasing the efficiency of an organisation through scientific analysis of
work and not with the ‘Rule of Thumb’ method. Taylor believed that even a small activity like
loading paper sheets into boxcars can be planned scientifically. This will save time and also
human energy. This decision should be based on scientific analysis and cause and effect
relationships rather than ‘Rule of Thumb’ where the decision is taken according to the manager’s
personal judgement.

2. Harmony, Not Discord-

Taylor indicated and believed that the relationship between the workers and management should
be cordial and completely harmonious. Difference between the two will never be beneficial to
either side. Management and workers should acknowledge and understand each other’s
importance. Taylor also suggested the mental revolution for both management and workers to
achieve total harmony.

3. Mental Revolution-

This technique involves a shift of attitude of management and workers towards each other. Both
should understand the value of each other and work with full participation and cooperation. The
aim of both should be to improve and boost the profits of the organisation. Mental Revolution
demands a complete change in the outlook of both the workers and management; both should
have a sense of togetherness.

4. Cooperation, not Individualism-

It is similar to ‘Harmony, not discord’ and believes in mutual collaboration between workers and
the management. Managers and workers should have mutual cooperation and confidence and a
sense of goodwill. The main purpose is to substitute internal competition with cooperation.

5. Development of Every Person to his Greatest Efficiency-

The effectiveness of a company also relies on the abilities and skills of its employees. Thus,
implementing training, learning best practices and technology, is the scientific approach to brush
up the employee skill. To assure that the training is given to the right employee, the right steps
should be taken at the time of selection and recruiting candidates based on a scientific selection.

The Features of Scientific Management:-

 Separation of planning and working
 Functional foremanship
 Job analysis
o Time study or Work measurement
o Motion study
o Fatigue study
 Standardization
 Scientific selection and training of workers
 Financial incentives
 Economy and
 Mental revolution.
 5.Discuss in detail the various roles of a manager. (16

Henry Mintzberg has identified ten roles for managers.

The ten roles are divided into three groups:-
 Interpersonal
o Figurehead role
o Liaison Role
o The leader Role
 Informational
o Monitor Role
o Disseminator Role
o Spokesperson Role
 Decisional
o Entrepreneur Role
o Disturbance Handler Role
o Resource Allocator Role
o Negotiator Role

1. Figurehead Role of Manager

Managers perform the duties that are ceremonial and symbolic in nature such as welcoming
official visitors, signing legal documents etc as head of the organization or strategic business unit
or department.

Duties of interpersonal roles include routine, involving little serious communication and less
important decisions. However, they are important for the smooth functioning of an organization
or department.

2. Leadership Role of Manager

All managers have a leadership role. The manager, as in charge of the organization / department,
coordinates the work of others and leads his subordinates.
This role includes hiring, training, motivating and disciplining employees. Formal authority and
functional authority provides greater potential power to exercise and get the things done.

3. Liaison Role of Manager

As the leader of the organization or unit, the manager has to perform the functions of motivation,
communication, encouraging team spirit and the like. Further, he has to coordinate the activities
of all his subordinates, which involves the activity of liaison.

This role also requires the manager to interact with other managers outside the organization to
secure favours and information. In this role, the manager represents his organization in all
matters of formality.

4. Monitoring Role of Manager

As a result of the network of contacts, the manager gets the information by scanning his
environment, subordinates, peers and superiors.

The manager seeks and receives information concerning internal and external events so as to
gain understanding of the organization and its environment. Typically, this is done through
reading magazines and talking with others to learn the changes in the public’s tastes, what
competitors may be planning, and the like.

Managers, mostly collect information in verbal form often as gossip, hearsay, speculation and
through grapevine channels.

5. Disseminator Role of Manager

Manager disseminates the information; he collects from different sources and through various
means. He passes some of the privileged information directly to his subordinates, peers and
superiors who otherwise have no access to it. This information is gathered by him from his
environments and from his own equals in the organization.

The manager will play an important role in disseminating the information to his subordinates,
when they don’t have contact with one another.

6. Spokesman Role of Manager

Managers also perform a spokesperson role when they represent the organization to outsiders.
Manager is required to speak on behalf of the organization and transmit information on
organization’s plan, policies and actions.
The manager has to keep his superior informed of every development in his unit, who in turn
inform the insiders and outsiders. Directors and shareholders must be informed about the
financial performance, customers must be informed about the new product developments, quality
maintenance, government officials about implementation of law etc.

7. Entrepreneurial Role of Manager

As an entrepreneur, the manager is a creator and innovator. He initiates and oversee new
products that will improve their organization’s performance.

He seeks to improve his department, adapt to the changing environmental factors. The manager
would like to have new ideas, initiates new projects and initiates the developmental projects.

8. Disturbance Handler Role of Manager

As a disturbance handler, managers take corrective action to response to previously unforeseen

problems. Disturbance handler role presents the manager as the involuntarily responding to
pressures. Pressures of the situation are severe and highly demand the attention of the manager
and as such the manager cannot ignore the situation.

For example, worker strike, declining sales, bankruptcy of a major customer etc. The manager
should have enough time in handling disturbance carefully, skilfully and effectively.

9. Resource Allocator Role of Manager

The most important resource that a manager allocates to his subordinates is his time. As a
resource allocator, managers are responsible for allocating human, physical and monetary
resources. Accordingly, setting up of a time schedule for the completion of an operation or
approval of expenditure on a particular project, etc., are the functions which the managers
perform in the role of a resource allocator.

The manager should have an open-door policy and allow the subordinates to express their
opinions and share their experiences. This process helps both the manager and his subordinates
in making effective decisions. In addition, the manager should empower his subordinates by
delegating his authority and power.

10. Negotiator Role of Manager

In this tole, the manager represents the organization in bargaining and negotiations with outsiders
and insiders, in order to gain advantages for his own unit. He negotiates with the subordinates for
improved commitment and loyalty, with the peers for cooperation, coordination and integration,
with workers and their unions regarding conditions of employment, commitment, productivity,
with the government about providing facilities for business expansion etc.

These negotiations are integral part of the manager’s job for only he has authority to commit
organizational resources and has nerve centre of information
 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. List out the features of planning.

Planning is a primary function

Planning is a dynamic process
Planning is based on objectives and policies
Planning is a selective process
Planning is pervasive.

3. What are the different types of plans?

1. STANDING PLANS 2.SINGLE USE PLANS

-Mission or purpose -Programmes
-Objectives - Budgets
-Strategies
-Policies
-Procedures
-Rules

4.Define Mission.
Mission may be defined as “as a statement which defines the role that an organization plays
in the society”.
or
It is the unique aim of an organization that sets it apart from others of its type. It is an
organization’s specialization in some area.

5. 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.

6. What is meant by strategy?

Strategy of an organization is the determination of long term objectives and the
adoption of the course of action and allocation of resources to achieve those objectives. It takes
into account the environmental opportunities and threats and the organizational strength and
weaknesses (SWOT).

7. What are the factors to be considered while formulating strategies?

i. Mission and objectives of an organization.

ii. Inputs, internal environment, external environment, enterprise profile, orientation of top
managers
iii. Opportunities and threats of the external environment.
iv. Strength and weakness of the firm in various aspects such as funds, organization
structure, human talent, technology, etc.
8. Define policy.
Policies are general statements or understandings which provide guidance in decision
making to various managers.

9. What is a procedure?
Procedure is a chronological order of actions required to implement a policy and to
achieve an objectives.

10. Define Budget.

A budget is a statement of expected results in numerical terms and therefore, it may be
referred as a numerical programme.
OR
A budget is defined as a numerical statement expressing the plans, policies, and goals of an
organization for a definite period in future.

11. List out few guidelines for setting of objective.

 i. Objective should cover the main features of the job
ii. Objectives must be clearly specified in writing
iii. The list of objectives should not be too long. Wherever it is possible, combine some
objectives to make the list reasonable.
iv. Objectives should be verifiable.
12. Define MBO.
MBO is a process whereby 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.

13. List out the benefits of MBO.

o Improvement of managing
o Clarification of organization
o Personnel satisfaction
o Team work
o Development of effective control.

14. What is decision making?

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.

15. What are planning premises?

Planning premises are the anticipated environment in which plans are expected to operate.
Or
Planning premises are planning assumptions- the expected environmental and internal
conditions.

PART-B
1. Give an account of various steps involved in planning process.

Steps involved in planning process.

 Steps involved in planning process:
• Perception of opportunities
• Establishing objectives
• Planning premises
• Identification of alternatives
• Evaluation of alternatives
• Choice of alternative plans
• Formulating support plans
• Establishing sequence of activities

Step # 1. Perception of Opportunities:

Perception of opportunities is not strictly a part of the planning process. But this awareness of
opportunities in the external environment as well as within the organisation is the real starting
point for planning. It is important to take a preliminary look at possible future opportunities and
see them clearly and completely.

All managers should know where they stand in the light of their strengths and weaknesses,
understand the problems they wish to solve and know what they gain. Setting objectives depends
on the awareness. Planning requires realistic diagnosis of the opportunity situation.

Step # 2. Establishing Objectives:

This is the second step in the planning process. The major organisational and unit objectives are
set in this stage. This is to be done for the long term as well as for the short range. Objective
specify the expected results and indicate the end points of what is to be done, where the primary
emphasis is to be placed and what is to be accomplished by the various types of plans.
Organisational objectives give direction to the major plans, which by reflecting these objectives
define the objective of every major department. Major objectives, in turn, control the objectives
of subordinate departments and so on down the line. In other words, objectives from a hierarchy.

The objectives of lesser departments will be more accurate if subdivision managers understand
the overall enterprise objectives and the derivative goals. Managers should also have the
opportunity to contribute their ideal to setting their own goals and those of the organisation.

Step # 3. Planning Premises:

After determination of organisational objectives, the next step is establishing planning premises
that is the conditions under which planning activities will be undertaken. Planning premises are
planning assumptions the expected environmental and internal conditions.

Thus planning premises are external and internal. External premises include total factors in task
environment like political, social, technological, competitors, plans and actions, government
policies. Internal factors include organisation’s policies, resources of various types, and the
ability of the organisation to withstand the environmental pressure. The plans are formulated in
the light of both external and internal factors.

The nature of planning premises differs at different levels of planning. At the top level, it is
mostly externally focused. As one moves down the organisational hierarchy the composition of
planning premises changes from external to internal. The major plans both old and new will
materially affect the future against which the managers at lower units must plan.

Step # 4. Identification of Alternatives:

The fourth step in planning is to identify the alternatives. Various alternatives can be identified
based on the organisational objectives and planning premises. The concept of various
alternatives suggests that a particular objective can be achieved through various actions.

For example, if an organisation has set its objectives to grow further, it can be achieved in
several ways like expanding in the same Field of business or product line diversifying in other
areas, joining hands with other organisations, or taking over another organisation and so on.
Within each category, there may be several alternatives.

The most common problem is not finding alternatives but reducing the number of alternatives so
that the most promising may be analysed. Even with mathematical techniques and the computer,
there is a limit to the number of alternatives that can be thoroughly examined. The planner must
usually make a preliminary examination to discover the most fruitful possibilities.

Step # 5. Evaluation of Alternatives:

The various alternative course of action should be analysed in the light of premises and goals.
There are various techniques available to evaluate alternatives. The evaluation is to be done in
the light of various factors. Example, cash inflow and outflow, risks, limited resources, expected
pay back etc., the alternatives should give us the best chance of meeting our goals at the lowest
cost and highest profit.

Step # 6. Choice of Alternative Plans:

This is the real point of decision-making. An analysis and evaluation of alternative courses will
disclose that two or more are advisable and beneficial. The fit one is selected.

Step # 7. Formulation of Supporting Plan:

After formulating the basic plan, various plan are derived so as to support the main plan. In an
organisation there can be various derivative plans like planning for buying equipment, buying
raw materials, recruiting and training personal, developing new product etc. These derivative
plans are formulated out of the basic or main plan and almost invariably required to support the
basic plan.

Step # 8. Establishing Sequence of Activities:

After formulating basic and derivative plans, the sequence of activities is determined so those
plans are put into action. After decisions are made and plans are set, budgets for various periods
and divisions can be prepared to give plans more concrete meaning for implementation.

The overall budgets of an enterprise represent the sum total of income and expenses, with
resultant profit or surplus, and budgets of major balance sheet items such as cash and capital
expenditures. Each department or programme of a business or other enterprise can have its own
budgets, usually of expenses and capital expenditures, which tie into the overall budget.

2. Explain in detail the concept of MBO. (16)

Definition – 2 Marks
Management By Objectives (MBO) is a comprehensive managerial system that integrates
many key managerial activities in a systematic manner; concisely directed towards the
effective and efficient achievement of organizational objectives.
OR
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.
Features: 4 marks
• It is an approach and philosophy to management
• Emphasis is on objectives
• Periodic review of performance
• Participation of concerned managers in objective setting and performance review
 Steps in Management by Objectives Process

• Setting of organizational purpose and objectives

• Key result areas
• Setting Subordinates objectives
• Matching resources with objectives
• Appraisal
• Recycling
-Objective setting
- Action planning
-Performance review

1. Define organization goals

Setting objectives is not only critical to the success of any company, but it also serves a variety
of purposes. It needs to include several different types of managers in setting goals. The
objectives set by the supervisors are provisional, based on an interpretation and evaluation of
what the company can and should achieve within a specified time.

2. Define employee objectives

Once the employees are briefed about the general objectives, plan, and the strategies to follow,
the managers can start working with their subordinates on establishing their personal objectives.
This will be a one-on-one discussion where the subordinates will let the managers know about
their targets and which goals they can accomplish within a specific time and with what resources.
They can then share some tentative thoughts about which goals the organization or department
can find feasible.

3. Continuous monitoring performance and progress

Though the management by objectives approach is necessary for increasing the effectiveness of
managers, it is equally essential for monitoring the performance and progress of each employee
in the organization.

4. Performance evaluation

Within the MBO framework, the performance review is achieved by the participation of the
managers concerned.

5. Providing feedback

In the management by objectives approach, the most essential step is the continuous feedback on
the results and objectives, as it enables the employees to track and make corrections to their
actions. The ongoing feedback is complemented by frequent formal evaluation meetings in
which superiors and subordinates may discuss progress towards objectives, leading to more
feedback.

6. Performance appraisal

Performance reviews are a routine review of the success of employees within MBO
organizations.

Benefits of Management by Objectives

 helps employees appreciate their on-the-job roles and responsibilities.

 The Key Result Areas (KRAs) planned are specific to each employee, depending on their
interest, educational qualification, and specialization.
 Results in better teamwork and communication.
 It provides the employees with a clear understanding of what is expected of them.
 Every employee is assigned unique goals..
 Managers help ensure that subordinates’ goals are related to the objectives of the
organization.

Limitations of Management by Objectives

 Ignores the organization’s existing ethos and working conditions.

 More emphasis is given on goals and targets.
 The managers sometimes over-emphasize the target setting,
 The MBO approach does not emphasize the significance of the context wherein the goals
are set.
 .The overdependence may impose problems on the MBO system that it is not prepared to
tackle, and that frustrates any potentially positive effects on the issues it is supposed to
deal with.
 3. Discuss in detail on strategy formulation and implementation process. (16)
Definition:
Strategy of an organization is the determination of long term objectives and the adoption of the
course of action and allocation of resources to achieve those objectives.

Steps in strategy formulation and implementation process

• Organisational mission and objectives
• Environmental analysis
• Corporate analysis
• Identification of alternatives
• Choice of strategy
• Implementation
• Review and control

1. Determining Organizational Objectives

The primary purpose of strategic formulation is to set down certain objectives that an
organization tries to meet. Objectives may be ambitious or modest, but in either case, they must
be spelt out with the help of a detailed plan that shows how these objectives can be realized by
the organization. When determining organizational objectives, strategy formulation also takes
care of the time periods when particular objectives have to be met or discarded, in case they’re
no longer feasible within the scope of the industry concerned.

2. Assessing The Organizational Environment

The second step of strategy formulation involves assessing the industrial and economic
environment in which an organization operates. This means that competitors within an industry
need to be observed, tracked and analyzed. In addition to that, regular qualitative and
quantitative reviews of an organization’s products or services must be carried out.

3. Fixing Quantitative Targets

This step requires organizations to fix quantitative targets that they must meet in a particular
quarter or financial year. These targets provide useful information about the long-term value of
customers to an organization as well as the performance trajectories of various product or service
zones and operating departments across an organization.

4. Divisional Plans and Contributions from Different Departments

For this step, each department or division or product or service category present in an
organization is identified and evaluated for its performance and adherence to strategic planning.
This is done not only for the department in question but also for each of the sub-units under a
single department.

5. Performance Analysis
As part of this step, organizations are required to identify and analyze the gap between desired
performance and actual performance. This is done on the basis of performance data, customer
feedback, employee suggestions as well as a general survey of the trends and patterns present in
an organization. This step is vital to build connections between what an organization has done in
the past, how it’s faring in the present and what it can accomplish in the future.

6. Choice of Strategy

The previous five steps of strategy formulation are supposed to culminate in the sixth and final
step of deciding the actual strategy for an organization. To pick the best course of action, this
step requires active and careful consideration of organizational strengths and weaknesses,
potential, limitations as well as the presence of internal and external opportunities for that
organization.

4. Explain the process of decision making in detail and discuss on the rationality and
conditions in decision making.

Decision making is defined as selection of a course of action from among alternatives.

Steps in decision making process:
 • The 7 steps of the decision making process
• Specific Objectives
• Identification of problems
• Search for alternatives
• Evaluation of alternatives
• Choice of alternatives
• Action
• Results

Step 1: Identify the decision that needs to be made

When you're identifying the decision, ask yourself a few questions:

 What is the problem that needs to be solved?

 What is the goal you plan to achieve by implementing this decision?
 How will you measure success?

These questions are all common goal setting techniques that will ultimately help you come up
with possible solutions. When the problem is clearly defined, you then have more information to
come up with the best decision to solve the problem.

Step 2: Gather relevant information

Gathering information related to the decision being made is an important step to making an
informed decision. Does your team have any historical data as it relates to this issue? Has
anybody attempted to solve this problem before?

It's also important to look for information outside of your team or company. Effective decision
making requires information from many different sources. Find external resources, whether it’s
doing market research, working with a consultant, or talking with colleagues at a different
company who have relevant experience. Gathering information helps your team identify different
solutions to your problem.

Step 3: Identify alternative solutions

This step requires you to look for many different solutions for the problem at hand. Finding more
than one possible alternative is important when it comes to business decision-making, because
different stakeholders may have different needs depending on their role. For example, if a
company is looking for a work management tool, the design team may have different needs than
a development team. Choosing only one solution right off the bat might not be the right course of
action.

Step 4: Weigh the evidence

This is when you take all of the different solutions you’ve come up with and analyze how they
would address your initial problem. Your team begins identifying the pros and cons of each
option, and eliminating alternatives from those choices.

There are a few common ways your team can analyze and weigh the evidence of options:

 Pros and cons list

 SWOT analysis
 Decision matrix

Step 5: Choose among the alternatives

The next step is to make your final decision. Consider all of the information you've collected and
how this decision may affect each stakeholder.

Sometimes the right decision is not one of the alternatives, but a blend of a few different
alternatives. Effective decision-making involves creative problem solving and thinking out of the
box, so don't limit you or your teams to clear-cut options.

One of the key values at Asana is to reject false tradeoffs. Choosing just one decision can mean
losing benefits in others. If you can, try and find options that go beyond just the alternatives
presented.
Step 6: Take action

Once the final decision maker gives the green light, it's time to put the solution into action. Take
the time to create an implementation plan so that your team is on the same page for next steps.
Then it’s time to put your plan into action and monitor progress to determine whether or not this
decision was a good one.

Step 7: Review your decision and its impact (both good and bad)

Once you’ve made a decision, you can monitor the success metrics you outlined in step 1. This is
how you determine whether or not this solution meets your team's criteria of success.

Here are a few questions to consider when reviewing your decision:

 Did it solve the problem your team identified in step 1?

 Did this decision impact your team in a positive or negative way?
 Which stakeholders benefited from this decision? Which stakeholders were impacted
negatively?

If this solution was not the best alternative, your team might benefit from using an iterative form
of project management. This enables your team to quickly adapt to changes, and make the best
decisions with the resources they have.

Types of decision making models

While most decision making models revolve around the same seven steps, here are a few
different methodologies to help you make a good decision.

Rational decision making models

This type of decision making model is the most common type that you'll see. It's logical and
sequential. The seven steps listed above are an example of the rational decision making model.

When your decision has a big impact on your team and you need to maximize outcomes, this is
the type of decision making process you should use. It requires you to consider a wide range of
viewpoints with little bias so you can make the best decision possible.

Intuitive decision making models

This type of decision making model is dictated not by information or data, but by gut instincts.
This form of decision making requires previous experience and pattern recognition to form
strong instincts.

This type of decision making is often made by decision makers who have a lot of experience
with similar kinds of problems. They have already had proven success with the solution they're
looking to implement.
Creative decision making model

The creative decision making model involves collecting information and insights about a
problem and coming up with potential ideas for a solution, similar to the rational decision
making model.

The difference here is that instead of identifying the pros and cons of each alternative, the
decision maker enters a period in which they try not to actively think about the solution at all.
The goal is to have their subconscious take over and lead them to the right decision, similar to
the intuitive decision making model.

This situation is best used in an iterative process so that teams can test their solutions and adapt
as things change.

Decision making conditions

- Certainty
- Risk
- Uncertainty

5. Define policy. What are the different types of policies? Explain in detail the policy
formulation process. (16)

Policies are general statements or understandings which provide guidance in

decision making to various managers. -1Mark
Types: - 4 Marks (with definition)
• Formulated policy
• Implied policy
• Imposed policy
• Appealed policy

Types of Policies

Policies may be classified as originated, implied, appealed and externally imposed policies. Let
us discuss them briefly.

1. Originated Policies: Originated policies are formulated by top level management, by

reference to the objectives of the organization and their achievement. The purpose of these
policies is to guide the actions of their subordinates. Sometimes, these policies are formulated in
active consultation with managers at lower levels.

2. Implied Policies: Implied policies are those evolved by themselves when a series of decisions
are made by managers over a period of time. These policies exist in an unwritten form. They are
not consciously formulated but emerge from recurring managerial decisions.
3. Appealed Policies: Appealed policies are formulated at the higher managerial level in
response to appeals made by lower managerial levels. These policies may also exist in the form
of precedents and serve as guides for decisions in future.

4. Externally Imposed Policies: Externally imposed policies are those policies which are
influenced by the policies of the Government and other public agencies, trade unions, trade
associations, etc

Policy formulation process steps: -11 Marks (with explanation)

 Definition of policy area
 Definition of policy alternatives
 Evaluation of policy alternatives
 Choice of policy
 Communication of policy
 Implementation of policy
 Review of policy
8 steps in policy formulation

1. Problem Identification: The first step in policy formulation is identifying the problem or
issue that requires attention. This can be done through research, data analysis, stakeholder
consultations, or monitoring emerging trends. Clearly defining the problem helps in
setting the policy's goals and objectives, ensuring a targeted and effective approach.
2. Policy Research and Analysis: Once the problem is identified, policymakers gather
relevant information and conduct thorough research to understand its causes, impacts,
and potential solutions. This may involve analyzing existing policies, conducting surveys,
consulting experts, and reviewing best practices from similar contexts. The research
phase provides policymakers with a solid foundation for making informed decisions.
3. Goal Setting and Objective Development: Based on the research findings,
policymakers establish clear goals and objectives for the policy. These goals should be
specific, measurable, achievable, relevant, and time-bound (SMART). Setting realistic
and well-defined objectives helps guide the subsequent stages of policy formulation.
4. Option Generation and Evaluation: This stage involves brainstorming and generating
various policy options to address the identified problem. Policymakers consider different
approaches, strategies, and alternatives. Each option is evaluated based on its feasibility,
cost-effectiveness, potential impacts, and alignment with the policy goals. Robust
evaluation methods, such as cost-benefit analysis, stakeholder feedback, and impact
assessments, assist in identifying the most viable options.
5. Decision-Making and Policy Selection: After evaluating the policy options,
policymakers make decisions regarding the preferred course of action. This decision-
making process involves weighing the pros and cons of each option, considering political
and societal factors, and ensuring the policy's compatibility with existing legal
frameworks. Transparency, accountability, and stakeholder engagement are crucial
during this stage to foster public trust and legitimacy.
6. Policy Implementation Planning: Once a policy option is selected, a detailed
implementation plan is developed. This plan outlines the specific steps, resources,
 timelines, and responsibilities necessary for effective policy execution. Policymakers
collaborate with relevant stakeholders to ensure a coordinated approach, and potential
challenges or risks are anticipated and addressed proactively.
7. Policy Implementation and Monitoring: Implementation marks the transition from
policy formulation to action. Policymakers oversee the execution of the policy, ensuring
that the planned activities are carried out according to the established timeline and
allocated resources. Continuous monitoring and evaluation help assess the policy's
progress, identify any deviations or bottlenecks, and make necessary adjustments to
enhance its effectiveness.
8. Policy Review and Revision: Periodic policy reviews are essential to evaluate the
policy's impact, identify areas for improvement, and adapt to evolving circumstances.
Feedback from stakeholders, data analysis, and evaluation reports contribute to evidence-
based policy revisions. Flexibility and responsiveness are crucial in ensuring policies
remain relevant and effective in achieving their intended outcomes.

6. Write short notes on the following:

a. Forecasting (10)
Forecasting includes both assessing the future and making provisions for it.
- 1 Mark
Features of Forecasting: - 2 Marks
It relates to future events
It defines the probability of happening of future events.
Need for forecasting: - 3 Marks (Any 6 points)
Forecasting helps in
 Promotion of organization
 Key to planning
 Coordination and control
 Success in organization
 Steps in forecasting:
 Developing groundwork for forecasting
 Estimating future business
 Comparing actual and projected results
 Refining the forecasting process

Forecasting methods: - 4 Marks ( with brief explanation)

 Historical Analogy
 Survey methods
 Opinion poll
 Business Barometers
 Time series analysis
 Extrapolation
 Regression analysis
 Input-output analysis
 Econometric models
Regression Analysis Method:

In this method two or more inter-related series are used to disclose the relationship between the
two variables. A number of variables affect a business phenomenon simultaneously in economic
and business situation. This analysis helps in isolating the effects of various factors to a great
extent.

For example- there is a positive relationship between sales expenditure and sales profit. It is
possible here to estimate sales on the basis of expenditure on sales (independent variable) and
also profits on the basis of projected sales, provided other things remain the same.

(v) Economic Input Output Model Method:

This is also known as “End Use Technique.” The technique is based on the hypothesis of various
sectors of the economy industry which are inter-related. Such inter-relationship is known as co-
efficient in mathematical terms. For example—Cement requirements of a country may be well
predicted on the basis of its rate of usage by various sectors of economy, say industry, etc. and
by adjusting this rate on the basis of how the various sectors behave in future.

(vi) Econometric Model:

Econometric refers to the science of economic measurement. Mathematical models are used in
economic model to express relationship among various economic events simultaneously. To
arrive at a particular econometric model a number of equations are formed with the help of time
series. These equations are not easy to formulate. However, the availability of computers has
made the formulation of these equations relatively easy. Forecasts can be solved by solving this
equation.

b. Planning premises (6 marks)

Planning premises are basic assumptions about the environment. – 2 Marks
Types: - 4 Marks (with definition and example)
• Internal and external
• Controllable, semi-controllable and uncontrollable
• Tangible and intangible
• Constant and variable

Planning premises may be classified as:

(a) Internal and external

(b) Tangible and Intangible

(c) Controllable, semi-controllable and uncontrollable

(d) Constant and variable

(e) Foreseeable and unforeseeable

(a) Internal and External Premises:

Internal premises are those which exist within the business enterprise. This may include men,
material, money and methods. Competence of managerial personnel and skill of labour force are
some of the important internal premises.

External premises centre round the markets and derived from the external environment
surrounding the business. Examples: Product market, money market, population growth,
government policies, business cycles technological changes.

(b) Tangible and Intangible Premises:

Tangible premises are those which can be measured quantitatively. They may be quantified in
terms of money, time and units of production. Intangible premises are those which cannot be
measured quantitatively. Examples are: Reputation of the business, Public relations, employee
morale, motivation etc. Planning is to consider both tangible and intangible premises.

(c) Controllable, Semi-Controllable and Uncontrollable Premises:

There are certain factors which are well within the control of the management to a great extent.
Factors like materials, money and machines are areas where management has maximum control
over their future commitments. The management can decide what policies, procedures, rules and
strategies are to be followed in the organisation for achieving the objectives.

Semi-controllable premises are those assumptions about future which are under the partial
control of a business. Examples of such premises are demand for the product, Trade union
relations.

Non-controllable premises are entirety beyond the scope of business like government policy,
international trade agreements, wars, natural calamities new discoveries and inventions etc. Such
events cannot be predicted or controlled. These factors disturb all well thought-out calculations.
All intangible premises also fall in this category as human behaviour also cannot be predicted
accurately.

(d) Constant and Variable Premises:

Constant premises are those which behave in similar fashion irrespective of action taken. They
are definite, well known and well-understood. The behaviour of constant premises is not subject
to changes these are ignored in planning. Such factors are men, machine and money.

Variable premises are those which vary in relation to the course of action.