P. 1
Session 1

Session 1

|Views: 124|Likes:
Published by Mayur Jain

More info:

Published by: Mayur Jain on Sep 13, 2010
Copyright:Attribution Non-commercial


Read on Scribd mobile: iPhone, iPad and Android.
download as PPT, PDF, TXT or read online from Scribd
See more
See less






  • Certain Characteristics of Profession
  • Missing in Management
  • Management Functions at Different
  • Organisational Levels
  • ii.Leader Role
  • iii.Liaison Role
  • ii. Disseminator Role
  • iii.Spokesperson Role
  • ii. Disturbance-Handler Role
  • iii. Resource Allocator Role
  • Complexity of managing business has
  • increased because :-
  • Administrative Theory
  • Demerits of Weber·s Bureaucratic Model
  • Criticisms of Hawthorne Experiments
  • Contributions of Barnard
  • Douglas McGregor
  • Arguments For Social Involvement of
  • Arguments Against Social Involvement of
  • Hierarchy of Organizational Objectives
  • Limitations of MBO
  • Environmental Analysis by TOWS Matrix
  • Effective Implementation of Strategies
  • Making Premising Effective
  • Features of Formal Organisation
  • Features of Informal Organisation
  • Factors Affecting Span of Management
  • Organisation Chart showing Product
  • Advantages of Effective Delegation
  • Guidelines for Effective Delegation
  • Selection Process-Techniques &
  • Instruments
  • Different Approaches to Appraising
  • Appraisal of Manager as Manager


INTRODUCTION What is the need to have Management in organisations ? ‡ Members of one organisation or another


‡ ‡ 

A college  A Sports team  a business, etc. Basic element of any organisation-GOAL OR PURPOSE. Some programs or methods for achieving goals - a PLAN. Allocate and acquire the resources necessary to achieve goals. Need people responsible for helping in achieving the goals-


DEFINITION I For the purpose of study³ Management is the process of planning, organizing, leading, and controlling the resources of an organisation in the efficient and effective pursuit of specified organisational goals.´ - Burton & Thakur 

EFFICIENCY- Ability to maximize the use of resources in achieving organisational objectives- ³doing things right´ Input- output concept. EFFECTIVENESS- Ability to determine appropriate objectives: ³doing the right things´ Involves choosing right goals.

Surplus is created through productive operations. Definition: ³Productivity is the output-input ratio within a time period with due consideration for quality.´ Productivity = output inputs (within a time period and quality considered) 

³ Management is the process of designing and maintaining an environment in which individuals , working together in groups, efficiently accomplish selected aims.´ - Harold Koontz & Heinz Weihrich

Management As A Science   

Systematized body of knowledge covering general truths or the operation of general laws. Better work by using the organized knowledge about management. Organized knowledge underlying the practice.


Managing as practice. Learning from mistakes and polishing managing art.

³Science and art are not mutually exclusive; they are complementary.´

skills. and training are required. Success is measured not in terms of money alone.MANAGEMENT AS A PROFESSION    Occupation for which specialized knowledge. Use of these skills for larger interests of the society not for self. .satisfaction.

No common body of knowledge required for understanding someone to be a manager. 3. .Certain Characteristics of Profession Missing in Management 1. 4. No clear code of managerial ethics. No formal education requirements for entry into management. Managers do not have specific clients. Thus. 5. 2. Management is moving closer to the state of professionalism. No system of accreditation or licensing for managers.

Canakya Sutras .

Rajyatantram (Management)  a-labdha-labhah na alasasya ³Gaining that which not in possession is not for the lazy´ .

Continued«  alasasya labdham api raksitum na sakyate ³The lazy cannot even protect that which is gained.´ .

´ .Continued«  na ca alasasya raksitam vivaradhate ³Neither does the lazy person¶s protected (gains) grow.

´ .Continued«  na bhrtyan presayati ³ (The lazy) does not deploy employees (servants).

starting from gaining the nonpossessed. together constitute the technology of enterprise (management).´ .Continued«  a-labdha-labhadi catustayam rajya-trantram ³ These four.

First. µFirst¶ or lowest level managers in the organisational hierarchy.Management Functions at Different Organisational Levels Management Levels 1. .Line Managers: Responsible for the work of operating employees only and do not supervise other managers.

.2. Report to more senior managers. Middle Managers: Managers in the midrange of the organisational levels. Responsible for other managers and sometimes for some operating employees.

Top Managers: Responsible for the overall management of the organisation. Guide the organization's interaction with its environment. Establish operating policies.3. .

.´  Actions are based on some method. Members of the organisation carry on activities consistent with the chosen objectives and procedures. PLANNING ³Process of establishing goals and a suitable course of action for achieving those goals.Management Functions 1.  Plans are the guides by which ±    The organisation obtains and commits the resources. Progress toward the objectives is monitored and measured to take corrective actions. plan or logic.

2.´  Different goals require different structures. ORGANIZING ³Process of engaging two or more people in working together in a structured way to achieve a specific goal or set of goals.  Bridge connecting the conceptual idea in creating and planning to the specific means for accomplishing ideas. .

 Management of organizational power.  Motivate the work unit.´  Management of human resources.  Management of organizational communication processes. LEADING ³Process of directing and influencing the taskrelated activities of group members or an entire organisation. political forces and organizational culture.  Interpersonal task of motivating the individual employee. .3. work group or department as a complexity of individuals.

CONTROLLING ³Process of ensuring that actual activities conform to planned activities. .´ Main Elements:     Establishing standards of performance. Comparing this performance to the established standards. Measuring current performance.4. Taking corrective actions if deviations are detected.

authority. ORGANIZNG Managers arrange & allocate work. and resources to achieve organizational goals.PLANNING Managers use logic & methods to think through goals and actions. LEADING Managers direct. THE INTERACTIVE NATURE OF THE MANAGEMENT FUNCTIONS . CONTROLLING Managers make sure an organisation is moving towards organizational objectives. influence and motivate employees to perform essential tasks.

90 80 70 60 50 40 30 20 0 0 Planning Organizing Leading Controlling Middle managers Top managers First line Managers IMPORTANCE OF MANAGEMENT FUNCTIONS AT DIFFERENT LEVELS .

Surgeons. methods and techniques which are used in doing a work.  . E. Henry Fayol Identified three basic skills:TECHNICAL SKILL Ability to use procedures.  Pertain to knowledge and proficiency in processes.  Also called as µhard skills¶. techniques and knowledge of a specialized field.Management Levels and Skills  1. musicians.etc. procedures.g. engineers.

and motivate other people as individuals or in groups. No manager can be effective without suitable human skills irrespective of being technically and conceptually competent. . understand. Management is a process of getting things done with and through people. HUMAN SKILL Ability to work with.2.

Anticipating how a change in any of its parts will affect the whole.3. CONCEPTUAL SKILL Ability to co-ordinate and integrate all of an organization's interests and activities. Involves seeing the organization as a whole. .

Role is defined as the pattern of behaviour which is defined for different positions. . Mintzberg identified three major categories of roles of a manager each of which has different defined roles.MANAGERIAL ROLES    Henry Mintzberg discussed ten activities of managers in his book ³The Nature of Managerial Work´.

I.  . both the organizational members and outsiders. Figurehead: Perform activities which are of ceremonial and symbolic nature. Three types of interpersonal roles:i.  INTERPERSONAL ROLES Concerned with interaction with other persons. handing out merit certificates and other awards to outstanding employees.  These include greeting the visitors. attending social functions involving employees.

Leader Role  Involves leading the subordinates and motivating them for willing contributions.  These include‡ staffing ‡ maintaining a productive work force.  Requires those leadership and motivational activities that are essential for the management of people.ii. .etc.

iii.to maintain a link between the organisation and its external environment.  Manager serves as a connecting link between his organisation and outsiders or between his unit and other organisational units.  Major objective. . Liaison Role  Includes activities by which the executive develops and maintains a network of contacts outside the organization.

Three types of informational roles: i. Include communication. Monitor Role (or Recipient Role): Involves constantly collecting information about those factors which affect a manager¶s activities. both inside and outside the organisation.  Factors may be within the organisation or outside it. .   INFORMATIONAL ROLES  Mainly involve management of information.giving and receiving information.both within and outside the organisation.II.  Manager uses interpersonal roles to seek information from many sources.

Dissemination may be written or oral. formal or informal.  .  Disseminator Role Distributes the information to his subordinates who may otherwise not be in a position to collect it.ii.

etc. actions. the manager represents his organization or unit while interacting with outsiders. policies.  Information is related to corporate plans. performances.  Transmitting information to those outside the organisation. Spokesperson Role  As a spokesperson. strategies. .iii.

 Since these actions can be affected by dynamic and constantly changing factors.  DECISIONAL ROLES Involves choosing the most appropriate alternative out of the available ones. A manager performs four roles:  i. Entrepreneur Role: Process by which manager seeks and identifies opportunities to promote improvement and needed change.  Manager assumes certain risk which is involved in terms of the outcomes of an action. . manager is required to bring suitable changes.III.

 Disturbances can be in the form of strike by employees. unexpected disturbances. employee complaints and grievances. .ii. Disturbance-Handler Role  Equips the manager to take corrective actions needed to resolve important. shortage of raw materials. etc. natural disasters.

etc. Resource Allocator Role  Manager allocates resources ± human. forecasting future resource problems. .to various organisational units according to their needs. physical and financial.  Specific activities might include developing and monitoring budgets.iii. predicting future resource needs.

. Negotiator Role  Manager negotiates with various interest groups in the organisation. employees and outside agencies.  For example. or a trade agreement.  Such interest groups are ± shareholders.iv. a joint venture.a manager might represent the corporation to negotiate a trade union contract.

organizing. . Type of roles identified by Mintzberg are not applicable to all types of managers. leading and controlling. Managers have to do some work that is not purely managerial. Many of the activities Mintzberg found are evidences of planning.Limitations of Mintzberg Approach     Sample of five executives used in his research is far too small.


.EVOLUTION OF MANAGEMENT THOUGHT Study of how managers achieve results is predominantly a 20th century phenomenon. World War II added further problem. Growing competition and complexity of managing large business organisation forced to develop systematic management concepts and principles. World War I compelled people to think of solution to the problem of how limited resources could be applied in better way.

.Increase in competition has come from factors as:     Technological innovations and their dissemination in business. Increasing buyers¶ sovereignty in the markets. Increase in capital investment. Freedom at national and international markets. Growing technological obsolescence.

Increased government regulations and controls to make business more socially-oriented. Pressure of various conflicting interest groups to meet their demands from the organizations.Complexity of managing business has increased because :     Increasing size of business organisations. Organized union activities to put pressures on management. . High degree of division of labour and specialisation.

mobilisation. cardinal and local priest. property. organizing and coordination of natural and especially human resources in the building of the pyramids. Code of Hammurabi stipulating guidelines and procedures in respect of trade. income. Simple hierarchy of authority with a ranking order of pope. taxes and property. Application of the span of management and creation of line organisation structure by Moses. families and labour. Creation of chain of command by delegating authority to 100 provinces. Centralisation of command and decentralisation of military operations. Written records in respect of control of herds.Management Contributions by Earlier Civilisations CIVILIZATION Egyptians (4500 BC) Sumerians (3000) BC Babylonians (2000 BC) Hebrews Romans (AD 284) Roman Catholic Church (AD 200) Military organisation al structures CONTRIBUTION Planning. .

. training and motivating workers.that sought to determine scientifically the best methods for performing any task. Generally acknowledged as ³the Father of Scientific Management´. Published many papers and books and compiled all his contributions in his book ³Scientific Management´. and for selecting.THE SCIENTIFIC MANAGEMENT SCHOOL     Formulated by Frederick W. Taylor & others between 1890 & 1930. Concerned essentially with improving the operational efficiency at the shop-floor level.

b) Emphasis on scientific method which denotes precision in determining any aspect of work. Replacing rule of thumb with science a) Application of organized knowledge.PRINCIPLES OF SCIENTIFIC MANAGEMENT 1. . c) Should not be based on mere estimates (rule of thumb).

Harmony in Group Action a) Attempts should be made to obtain harmony in group action rather than discord. Maximum Output Involves continuous increase in production and productivity instead of restricted production either by management or by workers.2. b) Mutual give and take situation and proper understanding should exist so that group as a whole contributes to the maximum. 3. .

. Cooperation a) Involves achieving cooperation rather than chaotic individualism. b) Cooperation between management and workers can be developed through mutual understanding and a change in thinking. c) Based on mutual confidence.4. cooperation and goodwill.

5. b) Training should be provided to workers to keep them fully fit according to the new methods of working. Development of Workers a) All workers should be developed to the fullest extent possible for their own and for the company¶s highest prosperity. .

.Taylor¶s compensation system involving the payment of higher wages to more efficient workers which was interpreted by trade unions as a new method of exploiting workers by the industrialists. Most crucial element under contention was Differential rate system. Lack of scientific standardization of work and whatever standards used to be set by the management. Work used to be performed under close and strict supervision based on authoritarian approach.OPPOSITION OF SCIENTIFIC MANAGEMENT Many followers took aggressive mechanical view of production and sidelined human aspect at the workplace. workers had to follow strictly.

Frank Gilbreth gave up his contracting career in1912 to study scientific management after hearing Taylor speak at a professional meeting. studied work to eliminate wasteful hand-and-body motions. Frank and his wife Lillian. . Focused on ways of promoting the individual worker¶s welfare.THE GILBRETHS     A construction contractor by trade. Ultimate aim of scientific management was to help workers reach their full potential as human beings. a psychologist.

    First researchers to use motion pictures to study hand-and-body motions. Devised a classification scheme to label 17 basic hand motions (search.) which they called therbligs.grasp.hold. . Invented a device called microchronometer that recorded a worker¶s motions and amount of time spent doing each motion.etc. Wasted motions missed by the naked eye could be identified and eliminated.

GANTT    Worked with Taylor on several projects and began to reconsider Taylor¶s incentive system when he went out on his own as a consulting industrial engineer.  This would spur supervisors to train their workers to do a better job. plus an extra bonus if all the workers reached it. Came up with new idea Every worker who finished a day¶s assigned work load would win a 50-cent bonus. Abandon the differential rate system.HENRY L.  Second motivation.the supervisor would earn a bonus for each worker who reached the daily standard. .

Red .originated by Du Pont). he originated a charting system production scheduling ± ³the Gantt Chart´ which is still in use today. Beyond this.When he or she fell below it.  PERT (Program Evaluation & Review Technique developed by Navy). Formed the basis for two charting devices which were developed to assist in planning.   Every worker¶s progress was rated publicly and recorded on individual bar chartsBlack ± Days the worker made the standard. managing and controlling complex organisations ±  CPM ( Critical Path Method. .

.How Do Today·s Managers Use Scientific Management? Principles of Scientific management which are used today : Analysing the basic work tasks that must be performed.  Design incentive systems based on output.  Use time and motion study to eliminate wasted motions.  Hire the best qualified workers for a job.

HENRI FAYOL Real father of modern operational management theory ± French industrialist Henri Fayol. to identify the principles and skills that underlie effective management. . Contributions are termed as operational management or administrative management.MODERN OPERATIONAL MANAGEMENT THEORY/ CLASSICAL ORGANISATION THEORY SCHOOL      Attempt pioneered by Henri Fayol. Contributions were first published in book form titled µAdministration Industrielle at Generale¶ in French language in 1916. Its English version was published in 1949 in the United States of America.

FAYOL·S GENERAL PRINCIPLES OF MANAGEMENT   Gave fourteen principles of management. . Gave emphasis on two things: The list of management principles is not exhaustive but suggestive and has discussed only those principles which he followed on most occasions.  Principles of management are not rigid but flexible.

2. Authority and Responsibility: The right to issue commands. and to continuously improve his skills . but this is twosided: employees will only obey orders if management play their part by providing good leadership. Thereby he can be more productive. . 3. Division of Work: Specialisation allows the individual to build up experience. Discipline: Employee must obey. along with which must go the balanced responsibility for its function.Fayol·s Fourteen Principles of Management 1.

. Unity of Direction: People engaged in the same kind of activities must have the same objectives in a single plan. 5. This is essential to ensure unity and coordination in the enterprise. 6. Subordination of Individual Interest to General Interest: Common interest is above the individual interest. Individual interest must be subordinate to general interest when there is a conflict between the two. Unity of Command: Each worker should have only one boss with no other conflicting lines of command.4.

7. Remuneration of Personnel: Payment is an important motivator although by analyzing a number of possibilities. 8. Centralisation: He refers the extent to which authority is centralised or decentralised. 9. Scalar Chain: A hierarchy is necessary for unity of direction. It refers to the number of levels in the hierarchy from the ultimate authority to the lowest level in the organisation.

10. Order: Principle relating to the arrangement of people and things. Material Order- Place for everything and everything should be in its place. Social order- There should be the right man in the right place. 11. Equity: It is the combination of justice and kindness. Equity in treatment and behavior is liked by everyone and it brings loyalty in the organisation.

12. Stability of Tenure: No employee should be removed within short time. There should be reasonable security of jobs. 13. Initiative: Within the limits of authority and discipline, managers should encourage their employees for taking initiative. It increases zeal and energy on the part of human beings. 14. Esprit de Corps: This is the principle of µunion is strength¶ and extension of unity of command for establishing team work. The manager should encourage esprit de corps among his employees.

Dissimilarity between contributions of Taylor and Fayol
Basis of Difference Perspective Focus Taylor Shop-floor level Fayol Higher management level Overall efficiency by observing certain principles. Managerial functions. Personal experiences translated into universal truths. Systematic theory of management

Efficiency through work simplification and standardisation Production and engineering Scientific observation & measurement Basis for accomplishment on production line.

Orientation Results

Overall Contribution

Administrative Theory
MAX WEBER (1864-1920)  A German sociologist who studied organizational activity.  Developed a theory of authority structures and relations in the early 1900s.  Any goal oriented organisation consisting of thousands of individuals would require carefully controlled regulation of its activities.


Developed a theory of bureaucratic management that stressed the need for a strictly defined hierarchy governed by clearly defined regulations and lines of authority. Bureaucracy- A form of organisation characterized by division of labor, a clearly defined hierarchy, detailed rules and regulations, and impersonal relationships. Believed that technical competence should be emphasized and that performance evaluations should be made entirely on the basis of merit.

Features of Weber·s Ideal Bureaucratic Structure
Recognized that this ³ideal bureaucracy´ did not exist in reality.  A basis for theorizing about work and how work could be done in large groups. 1. Administrative Class:  Responsible for maintaining co-ordinative activities of the members.  People are paid and are whole time employees.  Receive salary and other perquisites normally based on their positions.  Their tenure in the organisation is determined by the rules and regulations of the organisation.  Selected for the purpose of employment based on their competence. 

2. Authority Hierarchy: 
There is a hierarchy of positions in the organization.  Hierarchy is a system of ranking various positions in descending scale from top to bottom of the organization.  Each lower office is subject to control and supervision by a higher office.

3. Division of Labor: 
Work is divided on the basis of specialization to take the advantages of division of labor.  Tries to ensure that each office has a clearly defined area of competence within the organization.  No work should be left uncovered.

 Rules provide the benefits of stability. 5. continuity.  Concept used in dealing with organizational relations as well as relations between the organisation and outsiders.  Each official knows precisely the outcome of his behavior in a particular manner. .  Official positions are free from personal involvement. and predictability. emotions and sentiments. Official Rules:  Administrative process is continuous and governed by official rules.4. Impersonal Relationships:  Relationships among individuals are governed through the system of official authority and rules.

Official Records:  Maintenance of proper official records.  An official record is almost regarded as encyclopedia of various activities performed by the people in the organization. .6.  Decisions and activities of the organization are formally recorded and preserved for future reference.

Total impersonal approach cannot be adopted while dealing with people. ii. 2. Rules often become source of inefficiency.Demerits of Weber·s Bureaucratic Model 1. ii. Invalidity of Bureaucratic Assumptions: i. People may be judged on the basis of observance of rules not results. iii. Following of rules may become the objective of the organisation and organisational objectives may become secondary. Resources are used for a purpose other than for the organisational goals. . iii. Goal Displacement: i. Rigid organisational hierarchy works against hierarchy.

Conflict between organisation and individuals. Unintended Consequences: i. Excessive specialisation may lead to trained incapacity in the organisation which refers to a phenomenon where a person does not see beyond his training and tries to correlate the matter with total situation on the basis of his training. Bureaucrats try to emphasize rules and regulations. iii. .3. Conflicts between professionals and bureaucrats. Professionals try to work according to their discipline for efficiency. ii.

Innovation and new knowledge are stifled. It does not consider the informal organisation and interpersonal difficulties. v. Inhuman Organisation: i.4. Behavioural scientists criticized the most. iii. It is incompatible with the development of a mature personality. The hierarchy interferes with communication. It promotes conformity. emphasizing on human behaviour in the organisation. ii. iv. . vi.

. Self maintaining. Closed-System Perspective: i. ii. Bureaucratic organisation can work well when environment is highly static and predictable.5. Closed System is :      Self contained. iii. Ignores external conditions. Rigid. An open-system perspective is more suitable for the management of modern day organisations where more interaction between organisation and environment is required. Does not allow for adapting to changes in the environment. Static.

was manufacturing telephone system bell.BEHAVIORAL APPROACH HAWTHORNE STUDIES  Hawthorne plant of Western Electric Company. .  Most progressive company with pension and sickness benefits and other recreational facilities.  Employed about 30. Chicago.000 employees at the time of experiments.  Great deal of dissatisfaction among the workers and productivity was not up to the mark.  A team was constituted to investigate the real causes behind this phenomenon.

Control and experimental groups were set up.  i. output for both groups increased. iii. Experimental group being exposed to various lighting intensities. First set of experiment was to investigate the relationship between the level of lighting in the workplace and worker productivity. Control group working under a constant intensity. ii. . As the light level was decreased in the experimental group. A productivity decrease was observed in the experimental group only when the level of light was reduced to that of a moonlight. Findings: As the level of light was increased in the experimental group. productivity continued to increase in both groups.

New Set of Experiment :  A small group of workers was placed in a separate room and a number of variables were altered:     Wages were increased. Rest periods of varying length were introduced. Researchers also allowed the groups to choose their own rest periods and to have a say in other suggested changes.The engineers couldn¶t explain what they had witnessed but concluded that illumination intensity was not directly related to group productivity and something else must¶ve contributed to the results. The work day and work week were shortened.  In 1927. . the Western Electric engineers asked Harvard professor Elton Mayo and some associates to join the study as consultants.

both the groups have developed a group pride that motivated them to improve their work performance. This phenomenon was labeled as the Hawthorne Effect.Findings:     Because of special attention.the social environment of employees. . Informal work groups.have a positive influence on productivity. Employees would work harder if they believed management was concerned about their welfare and supervisors paid special attention to them. Sympathetic supervision had further reinforced their motivation.

. There was bias and preconception on the part of the Harvard researchers. Therefore. the results could not be valid for others. Insufficient attention was given to the attitudes that people bring with them to the workplace. It assumed acceptance of management¶s goals and look on the worker as someone to be manipulated by management.Criticisms of Hawthorne Experiments     The Hawthorne plant was not a typical plant because it was a thoroughly unpleasant place to work.

His analysis of management is truly a social systems approach. He was author of Functions of the Executive.e.CHESTER IRVING BARNARD    Chester Barnard (1886-1961) was an American Executive and an early organisational theorists. which presents a theory of organisation and the functions of executives in the organisation. an organisation is essentially a cultural system composed of people who work in cooperation.. an influential 20th century management book.i. .

 They are willing to contribute to the action. .Contributions of Barnard 1. An organisation exists when the following three conditions are fulfilled: There are persons able to communicate with each other. Defined formal organisation as a system of consciously coordinated activities of two or more persons. ii. Concept of Organisation: i.  They attempt to complete the common purpose.

An organisation can be divided into two parts:Formal: Consciously coordinated interactions which have a deliberate and common purpose. Formal and Informal Organisations: i.2. ii. A manager should take into account both types of organisations. iii. Informal: Refers to those social interactions which do not have consciously coordinated joint purpose. . Executives should encourage the development of Informal organisation.

.  A system of effective and efficient incentives so as to induce people to contribute to group action. departmentation.3.that is. Elements of Organisation: i.  A system of power which will lead group members to accept the decisions of the executives  A system of logical decision making. There are four elements of a formal organisation: A system of fictionalization so that people can specialise.

Gave a new concept of authority which is termed as µacceptance theory of authority¶ or µbottom-up authority¶. A person will accept a communication as being authoritative only when four conditions are met simultaneously: He can understand the communication. Authority: i.  He is mentally and physically able to comply with it.  He believes that it is not inconsistent with the organisational purpose.  He believes it to be compatible with his personal interest as a whole. .4. ii.

Formulation and definition of organisational purpose. Motivation: i. pleasant organisation. that is.5. Functions of the Executive: i. Maintenance of organisational communication through a system of organisation. Some of them are: opportunity of power and distinction. pride of workmanship. iii. ii. Securing of essential services from individuals so as to achieve organisational purpose. ii. through formal interactions. Apart from financial incentives. . participation and feeling of belonging-ness. 6. he suggested a number of non-financial techniques for motivating people.

Executive Effectiveness: i. 8. Organisational Equilibrium: i. Leadership is the most strategic factor in securing cooperation from the people. technological competence. iii.7. It requires high calibre. Matching of individual efforts and organisational efforts to satisfy individuals. ii. ii. other organisations. It requires a high level of responsible leadership. iii. and technical and social skills. and the society as a whole. . Demands and aspirations of individuals change and the organisation has to cope with the dynamic situation. Equilibrium of the organisation depends on the individuals working in it.

. money or praise.  Assumes that workers have little ambition. dislike work. THEORY X:  Presents an essentially negative view of people.Douglas McGregor  Distinguished two alternative basic assumptions about people and their approach to work.  Presented a traditional view of motivation that holds that work is distasteful to employees. and need to be closely controlled to work effectively. who must be motivated by force. want to avoid responsibility.

. accept and actually seek out responsibility. and consider work to be a natural activity.   THEORY Y: Offers a positive view of people. People are inherently motivated to work and do a good job. Assumes that workers can exercise selfdirection.

Approach give managers a way of looking at the organisation as a whole and as a part of the larger. . the activity of every other segment. purposeful system composed of interrelated parts. Activity of any segment of an organisation affects. in varying degrees. the systems approach to management views the organisation as a unified. external environment.SYSTEMS APPROACH     Rather than dealing separately with the various segments of an organisation. Mangers cannot function wholly within the confines of the traditional organisation chart.

synergy means that departments that interact co-operatively are more productive than they would be if they operated in isolation.The situation in which the whole is greater than its parts. 2+2=5 . Parts and sub-parts of a system are mutually related to each other. In organisational terms.Features of a System     A system is basically a combination of partssubsystems. A system is not merely the totality of parts and subparts but their arrangement is more important. Synergy:.

Boundary classifies it into two parts:Closed System: A system that does not interact with its environment. Open System: A system that interacts with its environment. .    A system can be identified because it has a boundary that separates it from its environment. Three aspects are involved in this transformation process:. outputs. mediator. System transforms inputs into outputs. System works as a mediator.inputs.

It is the part of system control in which the results of actions are returned to the individual. Feedback is the key to system controls. . allowing work procedures to be analyzed and corrected.

 Its contribution to managing is limited. but not suitable for small organisation.  E.g. An organisation is a social system and therefore. Abstract Approach: It is not of much use of a practicing manager. Lack of Universality: It cannot be applied to all organisation as it is suitable for large and complex organisation. is related with other organisation in the society. . Managers have been doing their jobs seeing the problems as a network of interrelated element with interaction between environment inside and outside of their organisation.. This approach fails to spell out the relationship among these. This approach does not offer anything new.Limitations of Systems Approach 1. 3. 4. 2.

in a particular situation. and at a particular time. best contribute to the attainment of management goals. because it portrays each set of organizational relationships in its unique circumstances. It represents an important turn in modern management theory . A manager¶s task is to identify which technique will. Also known as situational approach. . under particular circumstances.CONTINGENCY APPROACH     Extension of systems approach.

. Because of the specific organisationenvironment relationship. Organisational action should be based on the behavior of action outside the system so that organisation should be integrated with the environment.Features of Contingency Approach    Management action is contingent on certain action outside the system or subsystem as the case may be. It varies from situation to situation. no action can be universal.

   Management is entirely situational and there is nothing like universal principles of management. neither the organisation nor any of its subsystems are free to take absolute action. It suggests that since organisation interacts with it environment. The approach suggests suitable alternatives for those managerial actions which are generally contingent upon external and internal environment. or one best way of doing a particular thing. .

this approach becomes very complex. Complex: When put into practice. Inadequate Literature: It has not adequately spelled out various types of actions which can be taken under different situations. . 2.Limitations of Contingency Approach 1.  It is not sufficient to say that µmanagerial action depends on the situation.  Determination of situation in which managerial action is to be taken involves analysis of a large number of variables with multi-dimensions.

.  Managers are supposed to take actions based on the situation.  It cannot be adopted to managerial actions. Reactive not Proactive: It does not suggest what managers can do in a given situation. Difficult Empirical Testing: Methodology available for testing consists of too many factors which makes testing difficult.3. 4.

Align departments and processes during a merger or acquisition. Examine the likely effects of future changes within a company. the basic premise of the model is that there are seven internal aspects of an organization that need to be aligned if it is to be successful.Mckinsey 7-S Framework Developed in the early 1980s by Tom Peters and Robert Waterman. . two consultants working at the McKinsey & Company consulting firm. Following are the uses:    Improve the performance of a company. or Determine how best to implement a proposed strategy.

Systems: the daily activities and procedures that staff members engage in to get the job done.   .Seven Elements  Strategy: the plan devised to maintain and build competitive advantage over the competition. Structure: the way the organization is structured and who reports to whom.

Style: the style of leadership adopted. these are the core values of the company that are evidenced in the corporate culture and the general work ethic.Continued«  Shared Values: called "superordinate goals" when the model was first developed. Staff: the employees and their general capabilities. Skills: the actual skills and competencies of the employees working for the company    .


William G. describes the major postulates of Japanese management practices and how these practices can be adopted to the environment of United States and other countries. Ouchi is among those who have studied Japanese business in the hope that it might provide solutions to some American problems. .Japanese Management System   Also known as Theory Z.

 Slowing down of evaluation and promotion. 2. supervisors. and government. Strong Bond between Organisation and Employees: Encouraging life-time employment. Ouchi has suggested five broad features:Trust: Trust between employees. work groups. unions. the chances of conflict are automatically reduced to the minimum. management. Based on the Japanese management practices and motivational pattern.Features of Theory Z  1. . and giving more emphasis to horizontal movement which reduces stagnation.  When trust and openness exist.

 There can be some decisions which are taken without consulting employees but they are informed later. 4.  It places emphasis on rotational aspect of employee placement which provides opportunities to him to understand how his work affects others or is affected by others. resources and plans. No formal Structure: There should be a perfect team-work with cooperation along with sharing of information. .  Idea is not to slow down decision-making process but to involve employees for their commitment and giving due recognition to them.3. Employee Involvement: Involvement comes through meaningful participation.

 Purpose is to achieve commitment of employees to the development of a less-selfish-more-cooperative approach to work. Coordination of Human Beings: Leader¶s role is to coordinate people and not technology to achieve productivity.5. .  Leader must develop trust which requires a complete openness in the relationship.  This develops a common culture and no class feeling in the organisation.

2. Common culture and no class feeling within an organisation is very difficult as people come from a wide variety of environments. . if there is a relative rise in the income or other nonmonetary benefits.  An employee will not hesitate to switch over.Limitations of Theory Z 1. Provision of life-time employment to develop strong bond between the organisation and the employees seems to be difficult because of two reasons: Employer cannot retain an employee who is unproductive because of easy availability of substitutes.

does not seem feasible where most of the organisations believe in low level of social responsibility.  Degree of horizontal movement is limited to the extent to which skills needed for one job can be transferred to other jobs.3. Proposition that shareholders will accept less profit or accept losses to avoid lay-off. Following operational problems may come while implementing Theory Z: Organisation without structure has been emphasised but how actually it works is yet unanswered. 4. .

Temporary Staffing University Recruiting Mid-Career Hiring   Preference for promotions from within. Life-time employment. . General preference to inexperienced fresh graduates from schools and colleges.Pertinent Features of Japanese Management System   Company wide union or House union.

Compensation.Continued«      Quality Control Circles (QCCs). Decision making and consultation practices. Settlement of conflict through negotiations. . Training Practices.


´ .DEFINITION ³ Social responsibilities refer to the businessman¶s decisions and actions taken to reasons at least partially beyond the firm¶s direct economic or technical interest.

. Responsibility towards consumers.Social Responsibility of Managers         Responsibility towards shareholders. Responsibility towards employees. Responsibility towards creditors. Responsibility towards suppliers. Responsibility towards the government. Responsibility towards general public. Responsibility towards competitors.

Avoidance of Government regulations. Long-run self-interest of business.Arguments For Social Involvement of Business       Business: A part of the society. Social involvement may be in the interest of stakeholders. Internal activities impact on the external environment. . Profitably re-utilisation of wasteful items.

Incomplete support for involvement in social actions. Lack of accountability of business to society. Lack of social skills needed to deal with the problems of society. .Arguments Against Social Involvement of Business      Contrary to basic function of Business. It would create excessive cost for business.


Goals are desired outcomes for individuals. and developing a comprehensive set of plans to integrate and co-ordinate organizational work. hence various sub-activities. schedules. Ongoing process that reflects and adapts to changes in the environment surrounding each organization. Planning is an activity consisting of a process. establishing an overall strategy for achieving those goals. Plans are the documents that outline how goals are going to be met including resource allocations. . and other necessary actions to accomplish the goals.WHAT IS PLANNING?      A process that involves defining the organisation¶s goals. groups or entire organizations.

and develop appropriate responses. Planning reduces uncertainty by forcing managers to look ahead.WHY DO MANAGERS PLAN?     Planning gives direction to managers by establishing coordinated effort. . consider the impact of change. Planning reduces overlapping and wasteful activities by coordinating activities around established plans. anticipate change. Planning establishes goals or standards that are used in controlling.

going in clearly defined directions.  Basic objective of an organisation is accomplished by undertaking activities. Plans can be classified as:1. . fail to do. A plan can be effective only if properly understood which managers. generally. Purpose or Mission:  Basic function or task of an organisation.TYPES OF PLANS    A plan is a commitment of resources to a particular course of action believed necessary to achieve specific purpose. achieving goals and accomplishing a mission.

 A department may also have its own objective.  Represents not only the end point of planning but the end toward which other functions of management are aimed.  They furnish a framework of guiding. thinking and action.Objectives: Objectives or goals are the ends toward which activity is aimed. Strategies:  General programs of action and deployment of resources to attain comprehensive objective. 2.  . 3.  They do not attempt to outline exactly how the enterprise is to accomplish its objectives.

and contribute to. Not all policies are ³statements´. . an objective. It defines an area within which a decision is to be made and ensure that the decision will be consistent with. E. Policies:      General statements or understandings that guide thinking in decision making. they are often merely implied from the actions of the managers. They are the means of encouraging discretion and initiative. but within the limits.4.g. Hiring only university affiliated management graduates.

6. 5.  Chronological sequences of required actions.  Guides to action.Procedures:  Plans that establish a required method of handling future activities. . Rules:  Specific required actions or non-actions.  Essence of a rule is that it reflects a managerial decision that a certain action must-or must not be taken. allowing no discretions.  Often cut across department lines.

Programs:  Set of clear instructions in a clear and logical   8. . Capital Expenditure budget that reflect capital outlays. Supported by budgets.7. Explain how to carry out a given course of action.   sequence to perform a particular task. Budgets: Statement of expected results expressed in numbers. Cash Budget that shows cash inflows and outflows. It may beExpense Budget that deals with operations.

 A preliminary look at possible opportunities. Perception of Opportunities:   Not strictly a planning process.  It takes the advantages of opportunities and avoids threats.STEPS IN PLANNING The sequences of various steps in planning are in such a way that they lead to the translation of an idea into action by reaching to the state of establishing of sequences of activities.  Each stage contributes to plan formulation in following ways: 1. .  It leads to formulation of plans by providing clue whether opportunities exist for taking up particular plans.

 Planning premises are planning assumptions.  Establishing objectives for the entire enterprise and then for each subordinate work unit. .the expected environmental and internal conditions. Developing Premises:  Conditions under which planning activities will be undertaken.2. 3.  The nature of planning premises differs at different levels of planning.  Forecasting plays a major role in planning premises. Establishing Objectives:  Major organisational and unit objectives are set.  Objectives specify the results expected and indicate the end points.

 It is affected by a large number of factors making the evaluation work quite complex. Determining Alternative Courses:  This concept suggests that a particular objective can be achieved through various actions. Evaluation of Alternatives:  An attempt is made to evaluate how each alternative contributes to the organisational objectives in the light of its resources and constraints.4.  The most common problem is to reduce the number of alternatives so that most promising ones may be taken for detailed analysis. 5.  There is no certainty about the outcome of any alternative. .

 Alternative course of action is to be undertaken in future which is not constant.6. various plans are derived so as to support the main plan. Formulation of Supporting Plan:  After formulating the basic plan.  Derivative plans in no way reflect the main focus of the business.  It is the real point of decision-making. . Choice of Alternative:  This is the point at which the plan is adopted.  Evaluation may show more than one alternative good. but they are formulated out of the main plan. 7.

Establishing Sequence of Activities:  Sequence of activities are determined so that plans are put into action.  Each department of a business can have its own budgets. which tie into the overall budget. usually of expenses and capital expenditures.8.  Budgets for various periods can be prepared to give plans more concrete meaning of implementation.  The overall budgets of an enterprise represent the sum total of income and expenses. . with resultant profit or surplus.


.´ FEATURES:  Organisations or groups are created for certain objectives.OBJECTIVES  Definition: ³ Intended end result that an organisation desires to achieve over varying periods of time.  Objectives may be broad or specific.  Objectives are clearly defined and provide clear direction for managerial action.  Objectives have hierarchy.  An organisation may have multiple objectives. short-term or long-term.

HIERARCHY OF OBJECTIVES    Organisational objectives form a hierarchy ranging from the broad aim to specific individual objectives. . Process of assigning a part of a mission to a particular department and then further sub dividing the assignment among sections and individuals creates a hierarchy of objectives. Objective of each subunit contribute to the objectives of the larger unit of which it is a part.

Division Objectives 6. Individual objectives . Mission 3.Hierarchy of Organizational Objectives 1.economic purpose 2. Department and unit objectives 7. Overall objectives of the organization 4. Socio. More specific overall objectives 5.

Objectives should be rational and realistic rather than idealistic. Objectives should be achievable but must provide challenge to those responsible for achievement. Objectives should be consistent with organisational mission. Objectives must be set taking into account the various factors affecting their achievements.GUIDELINES FOR OBJECTIVE SETTING      Objectives must be clearly specified. .

Objectives should be consistent over the period of time. Objectives should be periodically reviewed.     Objectives should yield specific results when achieved. Objective should start with the word µto¶ and be followed by an action verb. Objectives should be desirable for those who are responsible for the achievement. .

´ .´  ³Our objective is to offer best and cheapest product.´ EXAMPLE OF POOR OBJECTIVE SETTING  ³Our objective is to maximize our profit.EXAMPLE OF GOOD OBJECTIVE SETTING  ³We want to make our product number selling brand in its field in terms of units sold.´  ³We strive to become leader in product innovation in our field by investing five per cent of our sales revenue on research and development.

consciously directed towards the effective and efficient achievement of organisational objectives. Definition: ³ A comprehensive managerial system that integrates many key managerial activities in a systematic manner.´ .MANAGEMENT BY OBJECTIVES   Approach was first proposed by Peter Drucker in his 1954 book µThe Practice of Management¶.

Heart of MBO is the objectives.FEATURES OF MBO     It is an approach and philosophy to management and not merely a technique. It is characterized by the participation of concerned in objective setting and performance reviews. Refers to a formal set of procedures that begins with goal setting and continues through performance review. which spell out the individual actions needed to fulfill the unit¶s functional strategy and annual objectives. .

Effective MBO programs usually start with the top managers. . the individual enjoys wide discretion in choosing the means for achieving them.   Periodic review of performance is an important feature as it emphasises initiative and active role by the manager who is responsible for achieving objectives. who determines the organization's strategy and set preliminary goals. Once the objectives have been agreed upon.

 Goals are tentative and entire chain of verifiable objectives is worked out by the subordinates. . Setting of Organisational Purpose and Objectives:  Questions which provide guidelines for the statement of purpose are:Why does the organisation exist? What business are we in? What should be our business?  Top managers has to determine what he or she perceives to be the purpose or mission and the more important goals of the enterprise for a given period ahead.  Companies strengths and weaknesses should be taken into account in the light of available opportunities and threats while setting the goals.PROCESS OF MBO 1.

Identification of Key Result Areas (KRAs):  These are those aspects of a unit or organisation that must function effectively if the entire unit or organisation is to succeed. . KRAs of marketing can be sales volume.  Organisation¶s objectives and planning premises together provide the basis for identification of KRAs.g. sales expense.  E.2. individual sales-person¶s performance..  KRAs indicate the present state of an organisation¶s health and the top management perspective for the future. advertising expenditure.

Setting Subordinates¶ Objectives:  Organisational objectives are achieved through individuals.  Process begins with superior¶s proposed recommendations for his subordinate¶s objectives. .  Each individual manager must know in advance what he is expected to achieve.  Final objectives are set by the mutual negotiation between superior and subordinate.  Subordinate states his own objectives as perceived by him.3.

 Helps in identifying the problems and the ways to overcome them. . Appraisal:  Tries to measure whether the subordinate is achieving his objective or not.  Allocation and movement of resources should be done in consultation with the subordinate manager.  It is taken to ensure that everything is going as planned and the organization is able to achieve its objectives. Matching Resources with Objectives:  Objectives should indicate the resource requirement.  There should be matching between objectives and resources.4.  Proper application of resources ensures objective achievement. 5.  On-going process so as to find out deficiency in the working and also to remove it promptly.

 What happens at each level may affect other levels also. is used as an input for recycling objectives and other actions. Recycling:  Appraisal. .6. being the last aspect of MBO.  Outcome of appraisal at one level is recycled to see if the objectives have been set properly at the level concerned and also at the next higher level.

Benefits of MBO 1.  Clarity of objectives.  Periodic feedback of performance. .  Participation by managers in the management process.  MBO forces managers to think about planning for results. Better Managing:  Resources and activities are put in such a way that they result in better performance.  Clarity of roles.  Realization that there is always scope for improvement. rather than merely planning activities or work.

 While implementing MBO.  This is possible because of two closely related phenomena: participation in objective setting and rational performance appraisal. Personal Satisfaction:  Encourages people to commit themselves to their goals.  People become enthusiastic when they work for the objectives set by themselves. Clarity in Organisational Action:  Tends to provide the key result areas (KRAs) where organizational efforts are needed. 3. .  Helps in defining the organisation properly in the environmental context as well as in the context of its various competitors. the deficiencies in the organization get discovered and appropriate remedial measures can be initiated.2.

 It aids in developing effective controls. direct and control the change. . Basis for Oraganisational Change:  It provides a framework and guidelines or planned change. enabling the top management to initiate.4. plan.  Change process becomes easier because of application of MBO.

2. . which are aimed at making managers professionals.  It generates paper work because large number of forms are to be designed and put into practice. Time and Cost:  Requires large amount of time of the senior managers.  Managers have doubt MBO like what purpose it serves. how the performance is to be appraised and how organisation will benefit. Failure to Teach Philosophy of MBO:  Philosophy is built on concepts of self-control and self-direction.Limitations of MBO 1.

3.  It is difficult. to quantify the objectives because of dynamic environment. Failure to Give Guidelines to Goal Setters:  Managers must know about their corporate goals and how their own activity fits in with these goals.  No guidelines are being given for managers regarding future assessment. understanding of the policies affecting their areas of operations. 4. etc. . Problems in Objective Setting:  MBO requires verifiable objectives against which performance can be measured. sometimes.

7. changed premises or modified policies. there is a tendency to emphasize short term goals usually for a year or even less as it helps in performance appraisal. Emphasis on Short-run Goals:  In order to be precise. . Danger of Inflexibility:  It is useless to follow old objectives in the context of revised corporate objectives. Managers may downgrade the important goals that are difficult to state in terms of end results.  Managers hesitate to change objectives during a period of time.5. 6.


Cola: To put a Coke within µarm¶s reach¶ of every consumer in the world. Coca. It may be defined as a comprehensive plan guiding resource allocation to achieve long-term organisation goals.STRATEGY      Strategy is the broad program for defining and achieving an organisation¶s objectives. . Strategic Intent is focusing and applying organisational energies on a unifying and compelling goal. the organisation¶s response to its environment over time. Term µstrategy¶ has been derived from Greek word µstrategos¶ which means general.

Strategy concerns the direction in which human and material resources will be applied in order to increase the chance of achieving selected objectives.STRATEGY AND POLICY    Policies are general statements or understandings that guide managers¶ thinking. . Essence of policy is discretion.

.SRATEGY AND TACTICS   Strategy determines what major plans are to be undertaken and allocates resources to them. Tactics is means by which previously determined plans are executed.

Corporate ±Level Strategy Business-Level Strategy Business.Level Strategy Marketing Strategy Production Strategy R&D Strategy Finance Strategy Advertising Strategy LEVELS OF STRATEGY .

. divestitures. Major questions at this level are What kinds of businesses should the company be engaged in?  What are the goals and expectations for each business?  How should resources be allocated to reach these goals?  It sets long term direction for the total enterprise. new business development.  Typical strategic decisions at corporate level relate t the allocation of resources for acquisitions.CORPORATE-LEVEL STRATEGY   Strategy formulated by top management to oversee the interests and operations of multiline corporations. etc.


 They do not produce much profits but compete in rapidly growing markets.BCG MATRIX(BOSTON CONSULTING GROUP) 1. . QUESTION MARK  They are low-market-share businesses in high growth markets.  Usually require cash investment so that they can become ³stars´.  They are the source of difficult strategic decisions.

and further resource investments in them are recommended.2. STARS  They are the high-market-share businesses in high growth markets. .  Preferred strategy for stars is growth.  If properly handled. they can turn out to be the firm¶s ³cash cows´ of the future.  They produce large profits through substantial penetration of expanding markets.

 Such businesses are in a position of making the products at low cost.  They produce large profits and a strong cash flow.3. and harvest.  Preferred strategy is stability or modest growth. CASH COWS  They are high-market-share businesses in lowgrowth markets.  ³Cows´ should be ³milked´ to generate cash that can be used to support investments in stars and question marks. .

DOGS  They are the low-market-share businesses in low growth markets. .  They do not produce much profits.  These businesses are usually not profitable and generally should be disposed off.  Preferred strategy is divest (retrenchment by divestiture).4. and they show little potential for future improvement.

BUSINESS-LEVEL STRATEGY    It is the strategy for single business unit or product line. Applicable in those organizations which have different businesses and each business is treated as Strategic Business Unit (SBU). . SBU describes a single business firm or a component that operates with a major business line within a larger enterprise.

. etc.   It could be termed as a sub strategy of corporate where for each line of business. facilities location. new technologies. a separate strategy is formulated. Selection of strategy at the business level involves answering the strategic question:³How are we going to compete for customers in this industry and market?´ Typical business strategy decisions include choices about product/service mix.

. Market Scope ± ask: ³ How broad or narrow is your market or target market? 2. business-level strategic decisions are driven by two basic factors:1. Source of Competitive Advantage ± ask: ³ Will you compete for competitive advantage by lower price or product uniqueness?´  These factors combine to create the following three generic strategies that organisations can pursue.PORTER·S GENERIC STRATEGIES  According to Porter.


This offers a customer appeal to the buyers and also a competitive advantage to the firm over its competitors. . shape.1. DIFFERENTIATION    Organisation¶s resources and attention are directed toward making its products appear different from those of the competition. It aims at increasing the firm¶s share of the market by bringing about some changes in the basic features of its products like the colour. design or size of the product.

2. It aims at increasing the firm¶s share of the market by minimizing the per unit cost of its products and reducing the selling price. OVERALL COST.) below the costs of the competing firms. .etc. R&D. Sales volume is increased in the present market by cutting down the company¶s overall costs (production. thereby increasing its sales volume.LEADERSHIP    Organisation¶s resources and attention are directed toward minimizing costs to operate more efficiently than the competition. advertising.

Its focus may be on a specified group of customers.3. or a specified product. . or a specified area. They seek competitive advantage in that market segment through product differentiation. FOCUSED STRATEGY    Organisations concentrate on a special market segment with the objective of serving its needs better than anyone else.

FUNCTIONAL-LEVEL STRATEGY     It guides activities within one specific area of operations. It guides the organisational resources to implement business strategy. product or service quality. The strategic question to be answered in selecting functional strategies is: ³How can we best utilize resources to implement our business strategy?´ Typical strategic decisions include the choice of management practices within each function that improves operating efficiency. customer service or innovativeness. .

 Combination of these factors require distinct strategic choices. WT Strategy:   Company aims at minimising its internal weaknesses and the environmental threats. and thus give rise to four alternative strategies:1.g.  It may require a complete restructuring of the firm. .. retrench or even liquidate.e.Environmental Analysis by TOWS Matrix It aims at matching the organization's internal strengths and weaknesses (company profile) with its external threats and opportunities (environmental analysis). form a joint venture.

 T take advantage of opportunities. e.. WO Strategy:  Company minimises its weaknesses by developing its internal strengths and maximises the environmental opportunities.etc.2. functional. ST Strategy:  Company maximises its strengths (technological.) to be able to minimise the environmental threats. 3.  Company can make use of its technological developments to face the threat of stiff competition with its competitor. persons with needed skills. managerial. .g. a firm with certain weaknesses in some areas may either develop those areas within the enterprise or acquire needed competencies.etc. technology.

are overcome and converted into strengths.  Most desirable strategy where the organisations use their strengths to exploit the opportunities offered by the environment and are also able to face the threats and convert them into opportunities.  Weaknesses.  Environmental threats are overpowered by opportunities. SO Strategy:  Company uses its strengths to take advantage of environmental opportunities. .4. if any.

Climate. Development of an organisation structure. Review.Effective Implementation of Strategies         Communication of strategies. Communication of planning premises. Reflection of overall objectives. Need to spread the importance of strategies. . Develop contingency strategies.

PLANNING PREMISES ³Planning premises are the anticipated environment in which plans are expected to operate.´ . They include assumptions or forecasts of the future and known conditions that will affect the operation of plans.

 Managers should be ready with alternative premises and align their plans accordingly. 2. PREMISES FOR CONTINGENCY PLANNING  Planning premises are not constant but dynamic. SELECTION OF PREMISES  Managers have to identify the most critical and high priority factors which should be later analysed intensively.Making Premising Effective 1. .

3. . VERIFICATION OF THE CONSISTENCY OF PREMISES  Managers should ensure that premises are consistent with the objective of the organisation. COMMUNICATION OF THE PREMISES  It should be communicated to those who are involved in planning process at different levels of the organisation. 4.


or in a practical sense. . Plans get translated into action only when a decision has been made.MAKING     The word µdecision¶ has been derived from the Latin word µdecidere¶ which means a cutting away or a cutting off.DECISION . A decision represents a judgment. Decision-making is defined as selection of a course of action from among alternatives.

Managers collect facts and information which have led to the occurrence of the problem. . Identification of the Problem:  Problem may be defined as any deviation from a set of expectations.Scanning of the current set up of an organisation to ascertain as to whether or not it is in accordance with the requirements of the internal and external environment.Areas of operation which can be responsible for the deviation are categorised.DECISION MAKING PROCESS 1.  This is done in three stages: Scanning:.  Diagnosis:.  Categorisation:.

Quantitative and Qualitative Factors:  Fixed and operating costs. 4.  Quality of labor relations. Evaluation of Alternatives:  Three ways of evaluating alternatives:i. the risk of technological changes and the domestic or international political climate.  This resolution of managers forms the objective of decision-making. 3. Establishment of Objectives:  Aim is to solve the problems identified. . Generating Alternatives:  Alternative solutions refer to two or more ways of dealing with a particular problem.2.

Cost-Effectiveness Analysis:  Also known as Cost Benefit Analysis. Marginal Analysis:  Refers to comparing additional revenues associated with the acceptance of an alternative with its additional costs. the proposed alternative should be accepted. iii. .  Refers to comparing the future expected benefits with the potential costs of alternative solutions and selecting the one which gives the maximum benefit generated in terms of difference between the potential revenues and costs.ii.  If the additional benefits are more than the additional costs associated with an alternative.

Each available alternative is put to practice and the one which is most suitable is selected. Selection of an Alternative:  Most suitable alternative is selected by adopting any of the following three approaches:i.  Problem is broken into its component parts and various quantitative and qualitative factors are studied. Experience:. Research and Analysis:.  Solving a problem by first comprehending it. iii. Experimentation:.Post experience serves as a guide for future.Most effective technique when major decisions are involved. ii.5.  A model simulating the problem is developed. .

7.6.  Other major area of concern is the acceptance of the alternative by those who are actually affected by it. Implementation of the Alternative:  Planning for the application of the selected alternative is required. Monitoring the Implementation:  Implementation process. should be regularly monitored to know the degree of acceptance by the organisational members. . once initiated.

TYPES OF DECISIONS PROGRAMMED DECISIONS     Decisions related to structured situations.g. where the problem is more or less of routine and repetitive in nature. . Managers take recourse to the pre-established criteria for taking decisions. Ordering of fresh inventory when the existing level of inventory reaches the re-order point. E. schedules and procedures laid down by the management provide a guideline for taking these decisions.. Various policies.

ill-defined and complex problems. E. .NON-PROGRAMMED DECISIONS    Decisions are taken in unstructured situations which are reflective of novel. Increase in advertising expenditure.. They are non-recurring or exceptional in nature and require brainstorming by managers.g.

CERTAINTY  It exists when managers can obtain complete and reliable information about future. .  Such decisions normally relate to very near future and are taken by lower-level or middle level managers. the managers face three types of situations or conditions:1.SITUATIONS OF DECISION MAKING While making decisions.  Future is predictable.

legal or political scenario in future. Potential of new entrants in the market.g.  E.  Normally such situations do not occur and very few decisions are made under such conditions.  Impact of present decisions on future outcomes can be predicted with a fair degree of certainty. RISK  It occurs when information is available about future but it may be incomplete. 3. Change in the economic. the exact degree not always known. UNCERTAINTY  It exists where almost no information is available about future .  E.g.  Past experience and current economic scenario help in predicting the future... .2.

Modern Approaches to Decision-Making Under Certainty
It is important to know the size and nature of the risk involved in choosing a course of action.  New techniques have been developed to give a more precise view of risk.  It is important to analyse the interaction of important variables, many of which have an element of uncertainty.

Some decisions involve a series of steps, the second step depending on the outcome of the first, and so on.  It is a graphical method for identifying alternative actions, estimating probabilities, and indicating the resulted expected payoff.  Decision trees depict the decision points, chance events and probabilities involved in various courses that might be undertaken.  Graphical form visually helps the decision makers view his alternatives and outcomes.

Also known as Utility Theory, explains the individual attitude toward risk, i.e., risk averters and gamblers.  Assumed that the decision makers follow the statistical probabilities, as applied to decision making.  Attitudes toward risk vary not only with the individual, but also with the level of the manager in an organisation and the source of the funds involved.

DECISION SUPPORT SYSTEM  They use computers to facilitate the decision-making process of semi-structured tasks.  Designed not to replace managerial judgement but to support it to make the decision process more effective. LIMITING FACTOR  Factors that stand in the way of accomplishing a desired objective.  Help in choosing the best alternative.  It is possible to narrow the search for alternative that are required in overcoming the limiting factors.  By recognizing and overcoming those factors that stand critically in the way of a goal, the best alternative course of action can be selected.



Organising is the process of arranging people and other resources to work together to accomplish a goal. Once plans are created, the manager¶s task is to see to it that they are carried out. Organising begins the process of implementation by clarifying jobs and working relationships.


Organisation structure is the system of tasks, workflows, reporting relationships and communication channels that link together the work of diverse individuals and groups.


A formal organisation is a well-defined structure of authority and responsibility that defines delegation of authority and inter-relationships amongst various organisational members. It works on the basis of pre-defined set of policies, plans, procedures, schedules and programs. Some degree of formalisation is a must for any organisation to function effectively. Excessive reliance can lead to loss of initiative and innovative capacities of employees.

.Features of Formal Organisation      It is a job-oriented concept which allocates jobs amongst people for the attainment of a common objective. Coordination among members and their control are well specified through processes. The structure of relationships is depicted through lines and boxes on the organisation chart. procedures. It is based on the principles of division of labor and efficiency in operations. rules. etc. People enjoy the authority and power by virtue of their position in the organisational hierarchy.

Chester Barnard. even though contributing to joint results. Such relationships may be more complex the the officially prescribed ones. author of ³The Functions of the Executive´ described informal organisation as any joint personal activity without conscious joint purpose. .INFORMAL ORGANISATION    It refers to the natural grouping of people on the basis of some similarity in an organisation.

They are created on the basis of some similarity among its members. A person may become member of several informal organisations at the same time. It enables informal learning that takes place while working and interacting together throughout the work day. .Features of Informal Organisation      It is a natural outcome at the work place. They can be very helpful in getting work accomplished.

Social interaction.S.No. Nature 1. Purpose . It is attached to a person and given by group. 4. 3. Emphasis Positions Power It is attached to position and is institutional in nature. Informal Organisation Spontaneous reaction to formally structured organisations People and their relationships. 2. Well ± set goals. Structure Formal Organisation Formally structured.

6. Change in members can lead to instability. 8. 7. Guidelines Rules & for behavior procedures.S. Flexibility Not flexible. Nature 5.No. Highly flexible. Stable. Chain of Command Formal Organisation Chain is respected and the authority is delegated by the top management. . Informal Organisation Authority comes from personal knowledge & skill and given by group. Stability Group norms.not affected by incomings and outgoings of organisational members.

Magic number for an effective span was never found but this span of control principle evolved: ³There is a limit to the number of people one manager can effectively supervise.´ . It is the number of subordinates directly reporting to the manager. care should be exercised to keep the span of control within manageable limits.SPAN OF MANAGEMENT    Also known as Span of Control.

It results in creation of a large number of levels in an organisation. It gives rise to a Tall Structure.NARROW SPAN     When only few people are under a manager¶s immediate supervision. then the span of control is said to be narrow. . Manager is in a position to exercise tight control over their activities.

Narrow Span / Tall Structure .

Control can also be tightened. 2. There can be better communication between superiors and subordinates. Managers can maintain a close supervision on their employees. .Advantages of Narrow Span 1. 4. It results into personalised relationship between managers and subordinates. 3.

. Too many hierarchial levels are created which makes coordination complicated. There is need for more number of managers to supervise the given number of workers resulting in an increase in the overhead expenditure. Supervisors are engaged in the routine jobs of supervising their subordinates and have less time to look after other important matters. 5. 3.Disadvantages of Narrow Span 1. Decision making becomes difficult. Increasing gap between the top-level managers and workers can result in slow communication process. 4. 2.

then the span of control is said to be wide.WIDE SPAN    When many people are under a manager¶s immediate supervision. It is created with lesser number of hierarchial levels. It gives rise to a Flat Structure. .

Wide Span / Flat Structure .

There is reduction in cost. Decision-making process is made more effective as superiors delegate the authority to their subordinates and are relieved of dealing with the routine matters. 3. It results in a better system of communication as the number of levels is less.Advantages of Wide Span 1. 2. . Clear policies can be made. 4.

3. There is the risk of superiors losing track of the activities being actually performed by the employees. 2. It requires exceptional quality of managers to perform in this structure. . It can give rise to a situation of decisive bottlenecks because of overloaded superiors.Disadvantages of Wide Span 1.

Nature of Work If all the employees are doing work of similar and repetitive nature. Level of Competence of Managers If the managers are competent in their jobs. 2. . the managers can supervise a large number of subordinates and thus have a wider span of control. they can afford to have a wider span of management.Factors Affecting Span of Management 1.

a wider span of control can be thought of. Clarity of Delegation of Authority  If the authority ± responsibility structure of an organisation is well-defined and understood by everyone clearly.3. . the superiors can afford to supervise a large number of subordinate. 4. Subordinate Training  If subordinates have a strong educational background and can manage their jobs without much assistance from their superiors.

.5.  If the authority to undertake them has been delegated.  If they are workable. Clarity of Plans and Policies  A manager can control more subordinates If the plans are well-defined.  If the subordinate understands what is expected of him.

.  At lower levels. and therefore. the span has to be narrow. the span can be wide. since the supervisors are mainly concerned with routine jobs. Variation by Organisation Level  Top executives have to look after many important and specialised activities.6.

System of Control Prevalence of effective techniques of control in an organisation shall enable a manager to supervise a larger number of subordinates. . Effectiveness with which communication technique are used also influence the span of management.7. An ability to communicate plans and instructions clearly and concisely also tends to increase a manager¶s span.

.8. Use of Objective Standards Good objective standards enable managers to avoid many time-consuming activities. A manager must find out whether subordinates are following plans.

DEPARTMENTATION    Departmentation refers to division of work into smaller units and their re-grouping into bigger units on the basis of similarity of certain features. It is the basis of providing structure to an organizational unit. or branch of an organization over which a manager has authority for the performance of specified activities. . The word department designates a distinct area division.

It is grouping of activities on the basis of similarities of functions. .´ Departments are created along the various activities or functions of an organization.Functional Departmentation    ³It is the grouping of jobs and resources within the company in such a way that employees who perform the same or similar activities are in the same department.

Organization Chart showing Functional Departmentation Board of Directors GM Production Production Control Manufacturing GM Finance Capital Budgeting Current Assets Budgets GM Personnel Recruitment GM Marketing Advertisement Sales Promotion R&D Placement Training & Promotion Purchasing .

Training and Control. Co-ordination.ADVANTAGES       Simple and logical basis of creating departments. Specialisation. Supervision. . Suitable for small organisations.

DISAVANTAGES       Neglected overall organisational goals. Delayed decisions. Unsuitable for dynamic organisation. Reduces coordination between functions. Holding of accountability. . Responsibility for profits is at the top only.

. Focus of attention is the product line and all functional activities associated with that product line.PRODUCT DEPARTMENTATION    It is the grouping of jobs and resources around the products or product lines that a company sells. Each department is headed by a product manager who is given necessary authority by the top manager to carry out the functional activities associated with the department.

Organisation Chart showing Product Departmentation Board of Directors GM Production Manager Product A Production Finance Accounting R&D GM Finance GM Personnel Manager Product B Production Finance Accounting R&D GM Marketing Manager Product C Production Finance Accounting R&D .

Places responsibility for profits at the division level. Easy to coordinate. East to exercise control. Flexibility. . Facilitates use of specialized capital. skills and knowledge.ADVANTAGES        Better performance. Faster decisions.

DISADVANTAGES    Different departments focus excessive attention on the activities of their departments only without actually linking their performance with those of other departments. Expensive as it requires more persons with general manager abilities. Presents increased problem of top management control. .

Particularly in manufacturing organisations. . People and materials are brought together in order to carry out a particular operation. Each stage of production is designated as a different process and departments are created on the basis of respective processes.PROCESS DEPARTMENTATION     Also known as Equipment Departmentation.

Organisation chart showing Process Departmentation Board of Directors GM Production GM Finance GM Personnel GM Marketing Manager Crushing Manager Making Pulp Manager Purifying Pulp Manager Paper Rolls Manager Cutting .

ADVANTAGES     Encourages and uses specialization. Achieves economic advantage due to specialisation in terms of time. money and managerial skills. Uses specialized skills. Facilitates training for employees to efficiently carry out the processes. .

Responsibility for profits is at the top only. Repeated handling of the same job leads to boredom.DISADVANTAGS    Output of one process department is the input for the other which creates coordination problems. .

´ Clear identification of the customers and their needs is the basis of this type of departmentalization. .CUSTOMER DEPARTMENTATION   It is defined as ³the organizing of jobs and resources in such a way that each department can carefully understand and respond to the different needs of specific customer groups.

Organisation Chart Showing Customer Departmentation Board of Directors Managing Director Manager Car Loans Manager Housing Loans Manager Electronics Loans Manager Commercial Loans .


Companies stand an edge over their competitors and have better chance of survival and growth. Customer orientation. Gives customers feeling that they have an understanding supplier.


Difficult to coordinate operations between competing customer demands. It is not an easy task to identify consumer groups. Change in consumer behavior. Requires managers and staff expert in customers¶ problems.


Territorial departmentation is followed in cases where An organisation creates departments close to its customers.  Organisation sets up its units or departments at places near the source of deposits.

Each geographical unit has resources assigned to it so that it can effectively cater to the needs of consumers of that area.


Places emphasis on local markets and needs of the customers. Takes advantage of economies of local operations. Better face-face communication with local interests. Improves coordination in a region.


Since different departments are widely dispersed, coordination problems may arise. Method proves to be costly as each department sets up its auxiliary departments. Requires more persons with general manager abilities.

Departmentation by Time   

This is the traditional method of departmentation still in use. Generally used at lower levels of organisations where activities are grouped on the basis of time. Following are some of the situations where work has to be done round the clock:   

The machine cannot be stopped. The demand is high and machine has to work overtime. Services provided are essential in nature. The nature of the work entrusted to the organisation is such.


Optimum utilization of machines which can work on a continuous basis. Advantageous for those who prefer evening or night shifts. Service can be rendered extending to 24 hours a day.


Coordination and supervision of employees who are working in different shifts. Payment of overtime rates can increase the cost of the product or service.

) and product managers( individual product lines) report to a matrix manager. engineering. etc.MATRIX ORGANISATION STRUCTURE     Also known as Grid or Lattice Pattern. Instead of reporting to separate higher level managers. . manufacturing. Functional managers (e.g. sales. they report to one general matrix manager who consolidates and integrates their activities. It is the combination of functional and product patterns of departmentation in the same organization structure.

FEATURES     Functional departments are a permanent fixture of the matrix organization. Members of a project team are assembled from the functional departments and are placed under the direction of a project manager. Manager for each project is responsible and accountable for its success and he has authority over the other team members for the duration of the project. they retain authority for the overall operation of their respective units. . Functional and product managers need to work closely with each other to make a matrix design work well.

A Typical Matrix Orgnisation Board of Directors R&D Engineering Manufacturing Administration Group Group Group Project Manager A Project Manager B Project Manager C .

Change of projects promotes the intellectual growth and development of employees. It helps in achieving coordination to meet the dual demands of efficiency and changing customer expectations.Benefits of Matrix Structure     Permits the flexible sharing of employees across product lines. . It is oriented towards end result.

Members generally show greater loyalty to their parent departments than to the project organization in which they are working.Drawbacks of Matrix Structure     Maintenance of two management hierarchies (functional and product) is expensive. Conflict exists between functional and project managers. . Employees may fall in confusion and ambiguity as they have two bosses.a functional and a product boss.

. relies extensively on standardized rules. Mechanistic organization is one in which management breaks activities into separate.FORMS OF ORGANISATIONAL STRUCTURE      MECHANISTIC STRUCTURES Also known as Classical Organization Structure. and centralizes decision making at the top. highly specialized tasks. It is usually pyramid shaped. Most appropriate when an organization's environment is stable and predictable. Generally give rise to a tall structure with narrow span of control.

. Generally give rise to flat form with wider span of control. Well suited for changing environment. responsibility and accountability flow to employees having the expertise required to solve problems as they arise.ORGANIC STRUCTURE      It encourages managers and subordinates to work together in teams and to communicate openly with each other. Authority. Decision-making tends to be decentralized.


ii. Coercive Power: Power of A over B as B feels that A can deliver punishment if B fails to respond to A¶s influence attempt. which is the ability to influence or to cause a person to perform an act.POWER   Authority is different from power. There are five types of Power:i. . Reward Power: Power of A over B as B feels that A can deliver reward to him.

´ .Continued« iii. Legitimate Power: It exists when B perceives that A has the legal right to determine B¶s behavior. v. Expert Power: It exists when B sees that A has some expertise in a given subject. iv. ³Legitimate power is same as Authority. Referent Power: Power of A over B as B desires more and more to identify with or imitate A.

managers should take care to match the responsibility they confer with authority and then insists on accountability for results. . Authority implies both responsibility and accountability.AUTHORITY       Henri Fayol defines authority as ³ the right to give orders and power to exact obedience. Responsibility is an employee¶s obligation to perform assigned tasks.´ It is the right to make a decision and act. When delegating tasks to others. Accountability is the expectation that employees will accept credit or blame for their performance.

It is related to the person. . POWER It is not a formal right but only the ability of a person to issue orders and instructions to his subordinates. It cannot be depicted on the organisation chart. his qualities.Difference Between Authority and Power AUTHORITY It is the formal right of an individual to issue orders and instructions to his subordinates. It is related to the position that a person holds in a organizational hierarchy. experience and expertise that enables him to influence the behavior of others. It can be depicted on the organisation chart.

. Power being attached to the person can be both formal and informal. It is formal in nature as it is derived by virtue of the position. POWER It cannot be delegated as it is the personal abilities of a person. There is no such parity maintained between power and responsibility. Parity between authority and responsibility is maintained.Continued« AUTHORITY It can be delegated to people at lower levels.


according to the scalar principle³The clearer the line of authority from the ultimate management position in an enterprise to every subordinate position.´ . the clearer will be the responsibility for decision making and more effective will be the organisation communication.LINE AUTHORITY   Line authority belongs to managers who have the right to direct and control the activities of employees who perform tasks essential to achieve organizational goals. Line authority flows down the organisation through the primary chain of command.

g. recommendations. Information which a staff officer furnishes or the plans he recommends flow upward to his line superior who decides whether they are to be transformed into action. a marketing department (line unit) might have to adhere to the mandates of human resources (staff unit) on how annual performance reviews are to be conducted. E. technical expertise and specialized services. ..STAFF AUTHORITY    Staff authority belongs to those who support line functions through advice. research.

gather data and analyze. These specialists get time to think.Benefits of Staff    Advice of well-qualified specialists in various areas of an organisation¶s operations can be utilized. They help line managers to carry out the managerial functions. whereas their superiors. cannot do so. busy managing operations. .

It may give rise to problems when staff advisors forget that they are there to counsel not to order. Too much staff activity may complicate a line executive¶s job of leadership and control. loss of morale and even sabotage. Managers may find problems in maintaining unity of command. . Staff people do not implement what they recommend which may result in friction.Limitations of Staff      Lack of staff responsibility for the failure of their proposed plan.

FUNCTIONAL AUTHORITY     Each departmental head exercises control over subordinates of his department. Each departmental head is assisted by various staff specialists. . Staff specialists exercise some authority which is formalized on account of their expertise and competence. Each of the functional heads exercises direct authority (line authority) over the people of his department and also exercises authority over people of other departments.

a finance manager holds direct authority over the people of finance department (line authority) and can also control the financial activities of other departments (functional authority). also has the formal authority over the line managers of different departments.Continued«   E.g. the accounting manager. .. Staff specialists.

purchasing.Features of Functional Authority     It may be exercised by line. It is delegated by the line superior. . service or staff department heads. Line superiors may delegate the authority to the staff executive over the line organizations with respect to procedures in the fields of accounting. public relations. Restricting the area of authority is must to avoid role conflict and role ambiguity. etc. personnel. more often by service and staff departments.

Generally it exists in departments that have a common superior only in the office of the presidents.SPLINTERED AUTHORITY   It exists when a problem cannot be solved or decision cannot be made without pooling the authority delegations of two or more managers. .


Delegation of Authority     Delegation is the process of giving authority to a person (or group) to make decisions and act in certain situations. . It is the downward pushing of authority to make decisions. Authority and responsibility are delegated by the superiors to the subordinates but not the accountability of the work assigned. Delegation of authority by managers does not mean that he/she is surrendering authority.

It speeds up decision-making. It serves as compensation to those employees who face the prospect of limited advancement. . It helps train subordinates and builds morale.Advantages of Effective Delegation       It relieves the manager of his heavy workload. It helps create a formal organization structure. It leads to better decisions.

Barriers to Effective Delegation Fear of loss of power. On the subordinate¶s side ±  Lack of confidence.  Lack of incentives.  The µI Can Do it Better Myself´ Fallacy.  Fear of making mistakes.  Fear of being exposed.  Difficulty in briefing.  Lack of adequate information and resources.  .  Lack of confidence in subordinates.

make the nature and scope of the task clear.Guidelines for Effective Delegation      Before delegating authority. Make subordinate clearly understand the limits of his authority. Give the subordinate some positive incentive for accepting responsibility. Assign authority proportionate to the task. . Train the subordinate properly.

. Overlapping of delegation and responsibility should be avoided. Do not make the subordinate accountable to more than one superior.Continued«    Create a climate of mutual trust.


CENTRALISATION OF AUTHORITY    Centralization is the concentration of authority at the top of an organization or department. . Managers may delegate the work to people at lower levels but the necessary authority to carry out those tasks is vested with the top managers only. except in a one-man enterprise. Absolute centralization is not possible.

 All activities related to one particular area are centralized in one department. .KINDS OF CENTRALISATION i. Centralization of Performance:  All the operations of the company are carried out in a single geographical location. ii. Centralization of Departments:  This is the way a functional organization is structured.

. Centralization as an Aspect of Management:  Certain decisions are always reserved at the top levels and others are delegated down the organizational levels.Continued« iii.

It is essential but how much should the managers decentralize depends on various factors.DECENTRALISATION OF AUTHORITY    Decentralization is disposal of a high degree of authority to lower levels of an organization or department. Absolute decentralization of authority is not possible because the manager cannot delegate all his authority without surrendering his position as a manager. .

Difference between Delegation & Decentralization DELEGATION Delegation is a process which refers to the granting of authority and creation of responsibility as between one individual and another. DECENTRALISATION It is the end result of delegation and dispersal of authority which exists as a result of the systematic delegation of authority throughout the organization. Superior is relieved from his responsibility for the work decentralized and the subordinate becomes liable for that. . Superior continues to be responsible for the work delegated to his subordinates.

DECENTRALISATION Decentralization is not possible without delegation. Lower levels managers carry Managers of each unit frame out the plans framed by their their own plans. superiors. Power to control the delegated tasks vests with the delegator. The process to control is also delegated to lower level managers.Continued« DELEGATION Delegation is possible without decentralization. .

Flexibility.ADVANTAGES OF DECENTRALISATION        Reduction in the burden of top management. It facilitates diversification of products. It permits quicker and better decision-making. It ensures development of employees. It reduces problem of communication and red tape. It leads to a competitive climate within the organization. . activities and markets.

It might prove to be expensive since each department handles its activities in its own way. Difficulty for top managers to exercise control over different organizational activities. Makes it more difficult to have a uniform policy.DISADVANTAGES OF DECENTRALISATION      High degree of decentralization makes it difficult for top managers to coordinate the overall organizational activities. Can be limited by the availability of qualified managers. .

Philosophy of top management. .HOW MUCH DECENTRALISATION?      Size of the organization. Cost and significance of decisions. Abilities of lower level managers. History and age of the organization.

. Avoiding conflict by clear understanding of the assignment. Line-staff problem should be dealt with care for the effective working of the organization. Avoid organizational inflexibility so as to adapt to a changing environment and meet new contingencies.GUIDELINES FOR EFFECTIVE ORGANISATION     Establishment of objectives and orderly planning of organization structure.

Organization culture should be appropriate so that managerial functions are carried out ina proper way. . Value-driven corporate leaders are needed to create an effective climate.Continued«    All the members should understand the structure of their organization so that structure can work well (Grapevine).

Supporting Objectives.Grouping of activities in light of resour-ces & situations 5.Feasibility Studies & Feedback 1.Identification & classifica-tion of required activities 4. policies & plans 3.Delegation of authority 6. Staffing 8.6 (Other Functions) ORGANIZING PROCESS .5. Controlling Part 2 (Planning) Part 3 (Organizing) Parts 4.Horizontal & vertical coordi-nation of autho-rity & informa-tion relationships 7.Enterprise Objectives 2. Leading 9.


placing and retaining individuals at the various jobs to achieve organisational goals. positions in the organisation structure.STAFFING   Staffing is defined as filling. . and keeping filled. It is related to performing a set of activities which aim at inviting. selecting.

. Development of potential managers. Increase in overall efficiency. Facilitates leadership. Motivation to work.IMPORTANCE OF STAFFING        Emphasis on human element. Facilitates control. Enables the organisation to face competition.

MANAGEMENT INVENTORY    Assess available human resource. It is done by Inventory Chart ± Organisation chart of a unit with managerial positions indicated and keyed as to the promotability of each incumbent. . Finds out required number of competent managers.

Sinha Promotable now Promotable in 1 yr Potential for further promotion Satisfactory but not promotable Dismiss 45 = age 6 = Yrs in position MANAGER INVENTORY CHART .General Manager Manager General Accounting 45 M.K.N. N. Suresh 7 J. Singh 6 Manager Cost Accounting 52 2 Manager Contract Pricing 42 G. Madhav 1 Manager Budget analysis 43 C.Y.

Managers ready for promotion can be easily identified. .ADVANTAGES OF INVENTORY CHART       Give overview of staffing situation. Shows future internal supply of managers. Shows when recruitment/replacement and training plans can be initiated. Prompt action may avoid such managers to look for better opportunity. Identification of those who are not performing well and satisfactory.

 Strengthen weak departments. .  Broaden manager¶s experience.Continued«   Preparation can be made for retirement cases. Managers can counsel subordinates about their career paths. Transfer of managers wherever required.

. Information not sufficient for a fair assessment. Not suitable to share this information with all employees. Upper level managers may be afraid to loose competent subordinates to other organisation units. Takes time and effort to keep the chart up-to-date.LIMITATIONS OF INVENTORY CHART      Does not show to what position manager may be promotable.

kinds of managers required External sources Analysis of Present & future needs for manager Internal sources Recruitment Selection Placement Promotion Separation Appraisal Career strategy Leading and controlling Training and development Manager Inventory Internal environment Personnel policies Reward system SYSTEMS APPROACH TO STAFFING .External Environment Enterprise Plans Organization plans Number.

It is carried out within the enterprise and linked to the external environment. Organisational climate. . Reward System External factors: High technology demands well-trained. well educated and highly skilled managers.SYSTEMS APPROACH TO HRM: STAFFING     Staffing requires open system approach. Internal factors: Personnel Policies.

What has to be done? How is it done? Is there any better way? What background. knowledge and skills are required? . Job design is to meet organisational and individual needs.JOB DESIGN    Before selection. clear understanding of the nature and purpose of the position is to be filled.

Establish direct relationship with customer or client.FOCUS OF JOB DESIGN     Individual Job Enrichment: assigning an individual to carry out a group of similar tasks. Prompt and specific feedback. Vertical job loading. .

Factors Affecting Job Design      Individual differences. Costs associated with restructuring the jobs. Internal climate (not in autocratic top-down approach). Technology involved. Organisation structure (centralised / decentralised). .


both inside and outside the organisation. . Selection involves deciding which of the recruits should be hired and for which positions.SELECTION / RECRUITMENT   Recruitment is the process of searching. for people to fill vacant positions.

 Physical conditions in which it is done. Reveals ³What is Actually Required?´ Purpose is to show how at the moment constituent parts are being carried out.Job Analysis  It consists of:  Present methods and procedures of doing a job. .  Relation of the job to other jobs.  Other conditions of employment.

. Interviews Questionnaires responses. Bulletin. etc.Continued«  Sources of information: Observation by workers. Published manuals.

Job Description & Specification Job Description  Result of job analysis are set down. .  Defines complete role.  Abilities and qualities that a should possess. Job Specification  Statement of the minimum acceptable human qualities necessary to perform a job satisfactorily.

Techniques & Instruments         Establishment of selection criteria Filling up of application form Screening interview Testing the candidates skills Formal interviews Verification of information is checked Physical examination Either selected or rejected .Selection Process.

Weaknesses of Interviews     Different interpretation by different interviewers Interviewers do not often ask the right questions Interviewer may be influenced by interviewee¶s general appearance Interviewer¶s make up their minds early in the interview .

references & recommendations . How to improve interviewing & overcome weaknesses Train interviewers Ask the right questions  Structured interview.mix of structured & loose questions asked  Unstructured ± open-ended vague question Conduct multiple interviews & compare evaluations Supplement by data from application form.pre-determined set of questions which are specific  Semi-structured. result of tests.

scientific. leadership ability & ambitions . mathematical. naturedominant. test memory. self-confidence.Tests   Tests aim to obtain data about the applicants to have the best person for the job Type of tests Intelligence tests: mental capacity.out-door activities. reasoning Aptitude & Proficiency tests: skills & potential to acquire new skills Vocational tests: interests of the person. introvert. patience. literary Personality tests: interpersonal competence. artistic. agility.

ASSESSMENT CENTERS      An approach to measure how a potential manager will act in typical managerial situation. Technique used for selecting and promoting managers which may be used in combination with training. Inappropriate for top-executives. . First corporate use in United States was in American Telephone and Telegraph Company in the 1950s. Used by the German and British military in World War II and the American Office of Strategic Services.

 ³In-basket´ exercises.  Preparing a written report.  Management games in small groups. .Continued« Exercises in a typical assessment center:  Psychological tests.handle a variety of matters that they might face in a managerial job.  Oral presentation on a particular topic or theme.

Advantages of Assessment Centers:  Encouraging and reliable. .  Training assessors is a problem. Limitations of Assessment Centers:  Costly in terms of time.line managers / trained psychologists.  Exercises used may not be the best criteria for evaluation.

its functions.ORIENTATION   Introduction of new employees to the enterprise. tasks & people Formal orientation programs are conducted :  Company history  Businesses  Policies & Practices  Organization Structure  Benefits .


Performance Appraisal  Importance Basis of determining who is promotable to a higher position To determine whether development efforts are going in the right direction Appraisal is an integral part of a system of managing .

 Purpose/Aim Assess the employee¶s current level of performance Identify the strength & weakness of employees Provide feedback to the employee so that he can improve his performance To have a basis for rewarding the employees To motivate To identify gaps & assess training & development needs. Employee¶s potential To provide for database for succession strategies Take decisions related to rewards. punishments .

leadership. initiative Also includes work-related characteristics as job knowledge.Different Approaches to Appraising     TRAIT Appraisal: the oldest method of appraisal It is based on personal traits and behavioral patterns of an employee towards work It appraises the ability to get along with people. analytical competence. judgment. assignments finished. implementation of plans & instructions carried out .

 Weaknesses Managers cannot & won¶t evaluate Leaves some employees dissatisfied Many look at it as another work or paperwork .

Appraisal by Objectives    Appraisals are done on the basis of the verifiable objectives set. Evaluator checks Whether goals were reasonably achievable. Whether any change in the goals was made or not. Reasons that may have helped or hindered in accomplishing goals. . Supervisors determine how well managers set objectives and how well they have performed against them.

open communication.    . Review and change in objectives. To be supplemented by progress & periodic review. Continuous monitoring : immediate corrective actions to be taken to prevent a major problem. Help pinpoint problems that hinder performance.Kinds of appraisals in ABO Comprehensive review: once a year or as required. Progress or Periodic review: short & informal.

Persons may miss or meet the goals through no fault of their own . Strengths : Improves managing Advantage of being operational Appraisals are done in cooperative and conducive manner  Weaknesses : .Managerial abilities are not appraised .

The programs involve designing a series of questions related to each function of management.   .Appraisal of Manager as Manager  It focuses attention on what should be expected of a manager as a manager. It uses the fundamentals of management as the standards to evaluate a manager.

 Rating the checkpoints take time. Weaknesses  Applies only to managerial aspects not to technical qualifications.  Subjectivity involved.Advantages  Supplement & a check on appraisal of managers effectiveness in setting & achieving goals. .

Stress in Managing  Physical sources Workload Irregular work hours Loss of sleep Loud noises Bright & insufficient light .

Psychological sources Boring job  Inability to socialize  Lack of autonomy  Responsibility without authority  Unrealistic objectives  Role ambiguity  Dual-career marriages Effects -losing interest -inordinate food consumption -absenteeism -drug or alcohol abuse  .

Preparation of a Personal Profile. Development of long-term personal & professional goals.Formulating Career Strategy 1. Attitude towards work & other things. Analyzing the environment ± threats & opportunities. 2.identify the strengths & weaknesses. . 3.

Implementation of career plan. 8. Development of contingency plans. 7. 10. . Monitoring. 9. 5. Consistency testing & strategic choices. Development of short-term career objectives and action plans. 6. Analysis of personal strengths & weaknesses.4. Develop strategic career alternatives.


Definitions   ³Process of instructing. guiding. motivating & leading the human resources to achieve organisational objectives´ ³A managerial function that involves the responsibility of managers for communicating to others what their roles are in achieving the company plans´ . counseling.

Features       On-going process Not supported by rules Directing is situational Behavioral science Understanding of the group behavior Participative in nature .

Importance of Direction        Creation of sound working environment Development of managers Behavioral satisfaction Increase in productivity Achieves coordination Facilitates control Facilitates growth .

Components of Directing    Leadership Motivation Communication .


³Leadership is the lifting of man¶s visions to higher sights, the raising of man¶s performance to a higher standard, the building of man¶s personality beyond its normal limitations.´ Peter Drucker ³Leadership is the ability to persuade others to seek defined objectives enthusiastically.´ Keith Davis

Model by Edgar H. Schein: Developed four
conceptions about people:-

1. Rational-economic assumptions: People are primarily motivated by economic incentives. (Theory X) 2. Social assumptions: People are motivated by social needs. (Elton Mayo)

3. Self-actualizing assumptions: Motives fall into five classes in a hierarchy (simple need of survival-highest need of selfactualization). People are self-motivated. 4. Complex assumptions: People are complex, variable and have many motives which combine into a complex motive pattern. (Schein¶s own view point)


Existence of followers. Involves a community of interest between the leader and his followers. Involves an unequal distribution of authority among leaders and group members. Develop a climate conducive to responding to and arousing motivations. Comprehend that human beings have different motivation forces at different times and in different situations. Leaders can influence followers in addition to being able to give legitimate directions.




Attempts to identify the traits that leaders possess. ³Great Man´ Theory- Leaders are born, not made. Not a fruitful approach to explain leadership. Do not reveal which traits are leadership traits. Implies that training cannot make a man a leader if he is devoid of certain inborn qualities.


Tried to find answer to the question ³What determines leadership?´ Prominent belief ± ³ Leaders are not born but can be trained.´ Studied leadership behavior from three points of view:  

Motivation Authority Supervision


Leadership behavior can be positive or negative. Positive behavior- leader¶s emphasis is on rewards to motivate the subordinates. Negative behavior- leader¶s emphasis is on penalties and punishments. Leader tries to frighten the subordinates into higher productivity. Time is lost in protecting themselves against management. Involves useless documentation, recording and filing of letters and papers.

Leader commands and expects compliance. Demands strict obedience and relies on power. Formula used ± ³Do what I say or else«´ Determines policies and makes plans. Tells others what to do and how to do it. Can be paternalistic or benevolent also. Formula ± ³Do what I say because I am good to you.´

Paternalistic form works well with employees who thrive under clear. . detailed and achievable objectives.MERITS    If appropriate. Chain of command and division of work are clearly and fully understood by all. can increase efficiency in a crisis or an emergency situation.

DEMERITS    One-way communication often becomes a false efficiency. Receives little information and ideas from his people as inputs into his decision-making. Most people resent authoritarian rule. .

Entire group is involved in and accepts responsibility for goal setting and achievement. Leader¶s task is to encourage and reinforce constructive inter-relationships among members.2. . DEMOCRATIC LEADERSHIP     Also known as Participative or Personoriented leadership. Leader shows greater concern for his people than for high production.

ideas. and operating experience of his people. Encourages people to develop. grow and rise in the organisation . suggestions.MERITS    Built-in-personal motivation working for him. Benefit of receiving best information. talent.

DEMERITS   Can take enormous amount of time and may lead to a complete loss of leader¶s control. . Some leaders may use this style as a way of avoiding responsibility.

materials and facilities to his men to enable them to accomplish group objectives.3. FREE-REIN LEADERSHIP    Leader exercises absolutely no control. Provides only information. Can be a disaster if the leader does not know well the competence and integrity of his people and their ability to handle freedom. .

SUPERVISION  Leadership style can be ±  Employee .Leader cares more for production than for the welfare of subordinates.Leader cares for the welfare of his subordinates.oriented :. .  Production ± oriented :.

MANAGERIAL GRID   Developed by Robert Blake and Jane Mouton. . Grid has two dimensions: Concern for People ( Vertical Axis)  Concern for Production ( Horizontal Axis) Dimensions are plotted on a 9-point scale on two separate axis. Author¶s main emphasis is on the styles in the 4 corners and at the middle of the grid.


Impoverished Management (1. hear no evil.1. see no evil´ approach. .1): Management shows least concern both for production as well as people.  It is ³speak no evil.

9): Management shows maximum concern both for people as well as production.2. . Team Management (9.  Assumption is ³one plus one can add up to three´.  Able to mesh the production needs of the enterprise with the needs of individuals.

 It is the ³love conquers all´ approach. Country-Club Management (1.9): Management shows maximum concern for people and least concern for production. .3.  Assumption is that contented people will produce the most.

1): Management shows maximum concern for production and least concern for people. Task Management (9. .4.  Autocratic in their style of leadership.  Also called authority-obedience approach.

 Leaders do not set goals too high.³Get results but do not kill yourself´ .  Manager follows the middle position.5. Dampened Pendulum or the Middle-ofRoad style (5.  Likely to have a benevolently autocratic attitude toward people.5): Management shows a balanced concern for production and people.

ease and difficulty with which the leader can influence the subordinate. Situational favorableness can be defined as the degree to which a given situation enables a leader to exert influence over a group.. i.e. . Effectiveness of leadership styles depend on situational favorableness. Fiedler and his associates and the university of Illinois suggested contingency theory of leadership. FIEDLER¶S MODEL: Fred E.CONTINGENCY APPROACH 1.

. Position .Continued«  Situational Favourableness depends on three critical factors: i. iii. follow and like their leader. Extent to which group member accept.Power: Power arising from organisational hierarchy. ii. Leader Member Relations: Most important since position power and task structure may be largely under the control of an enterprise. Task-structure: Extent to which tasks can be clearly spelled out and people held responsible for them.

people will work best with those who are similar to them. Assumption. .  Scores on the Assumed Similarity between Opposites (ASO): Rating based on the degree to which leader see group members to be like themselves.Continued«  Used a testing technique to determine leadership styles: Scores on the Least Preferred Coworker (LPC): Rating for those with whom they would least like to work.

.Continued« FINDINGS: i. ii. Building an organisational environment in which leader can perform well is important to increase organisational and group effectiveness. Leader can be effective in one situation and ineffective in the other.


A proper understanding of information is one very important aspect of communication.COMMUNICATION    Communication is an exchange of facts. ideas. It is the transfer of information from a sender to a receiver with the information being understood by the receiver. opinions or emotions by two or more persons. .

Enable employees to perform their functions effectively. Organize human and other resources in the most effective and efficient ways.PURPOSES OF COMMUNICATION       Recruitment process to persuade potential employees. . Establish and disseminate goals. Develop plans for achievement of goals. Needed in Orientation programs.

.Continued«    Select. Lead. develop and appraise members of the organization. Control performance. motivate and create a climate in which people want to contribute. direct.

Information is transmitted over a channel ± oral or written. Language skills are important at the encoding phase.COMMUNICATION PROCESS      Communication starts in the mind of sender who has a thought or an idea. Sender develops a message to convey the idea (Encoding). Once developed. . message is then transmitted (Transmission).

transmission. telegram or television. Sender and receiver should attach the same or at least similar meanings to the symbols that compose the message. Once transmitted. message is received and the receiver attaches meaning to it (Decoding). or the receiver.Continued«     It may be transmitted through a memorandum. Communication is affected by ³noise´ which can be with any one ± sender. a computer. telephone. .

Without feedback. Communication is not complete unless it is understood. Understanding is in the minds of both sender and receiver. . any distortion in meaning can be corrected by another communication.Continued«      Final step is action taken by receiver which is known as Feedback. With feedback. the sender cannot get the certainty of the message received.


. Diagonal flow among persons at different levels who have no direct reporting relationships.  Crosswise Communication :Includes horizontal flow of information among people on the same or similar levels.  Upward Communication: Flow from the subordinates to superiors.COMMUNICATION FLOW IN THE ORGANISATION  Communication flows in various directions:  Downward Communication: Flow from superiors to the subordinates.

. Distrust of communicator. Restricting communication.holding back a part of information due to some reasons. Faulty organization ± Too long chain of command or too wide span of control. Poor retention.BARRIERS TO COMMUNICATION       Badly expressed message. Different backgrounds.

. Inattention ± selective listening ± block out information that conflicts with what we believe.Continued«     In-group language ± terminology of occupational or social groups. Physical barriers ± environmental factors ± physical distance. Poor understanding ± semantic distortion. distracting noises. etc.


activates or moves & that directs behavior towards goals Motivation refers to the way in which urges. control or explain the behavior of human beings´ . desires.Definitions   Motive ± is an inner state that energises . drives. strivings or needs direct. aspirations.

Features   Motivation involves a chain reaction.a needwant-satisfaction chain Complexity of motivation .

Various approaches & theories     Maslow¶s hierarchy of needs Motivation-Hygiene theory by Herzberg Mcclelland¶s theory Alderfer¶s ERG theory .

advancement and growth in job . challenging work. working conditions. job security. interpersonal relations. supervision. salary.Herzberg·s two-factor theory   Dissatisfiers ±needs like company policy & administration. status. Satisfiers ±achievement. recognition. personal life.

McClellands need theory of motivation  Three types of basic motivating needs Need for Power (n/PWR) Need for affiliation (n/AFE) Need for achievement (n/ACH) .

hardheaded. demanding & argumentative conversationalists They enjoy teaching and public speaking . outspoken.Need for Power     People having a high need for power have a great concern for exercising influence & control People seek positions of leadership They are forceful.

Need for Affiliation   People like to be loved and avoid being rejected by social group Concerned with maintaining pleasant social relationships. help people in trouble .

assume responsibility for getting a job done They like to run their own shows .Need for Achievement     People have a high desire for success & equally intense fear of failure They want challenges and set difficult goals for themselves Analyse & assess risk rationally.

ERG Theory by Alderfer   Extension of Maslow¶s & herzberg¶s theory Categorized the needs into 3 categories Existence needs Relatedness needs Growth needs .

Existence needs   Include all needs related to physiological & safety aspects of an individual. Clubbed the physiological needs & safety needs of Maslow into one category as these have similar impact on the behavior of the individuals .

Relatedness needs   Needs that induce people to make efforts to achieve full potential It covers Maslow¶s social needs & that part of esteem needs which is derived from the relationship with other people .

Growth needs  These include Maslow¶s self actualization need as well as that part of the esteem need which is internal to the individual like feeling of being unique. feeling of personal growth etc .

Progression of need satisfaction ± most concrete to abstract needs.Features of ERG theory     Decreasing concreteness in the hierarchy of three need categories ± become abstract. Rise in the level of satisfaction of any lowerlevel need may result in decrease in its importance. . Satisfaction-progression may become frustration-regression.

Motivational Techniques  Money As money Means of keeping organisation adequately staffed Motivator As a reward for good performance   Participation Quality of work life (QWL) .

Giving workers more freedom in performing their jobs Encouraging participation & interaction between workers Feeling of personal responsibility for their tasks Feedback on their job performance Involving workers in laying down the physical aspects of work environment .Job Enrichment       Attempts to make a job more varied by removing the dullness associated with performing repetitive operations.

Dissatisfied attitude among workers. (Applies mainly to jobs of low skill levels.Limitations of Job Enrichment     Technology.) . Difficulty in enriching those jobs which require low levels of skill. Cost.

Participative. Workers should know what they are doing and why.Effective Job Enrichment      Better understanding of what employees want. It should clearly convey the benefits of the employees. . Workers should get feedback and recognition by managers .


It is a process through which managers assure that actual activities conform to planned activities. .CONTROLLING     It is the measurement and correction of performance in order to make sure that enterprise objectives and the plans devised to attain them are accomplished. Planning and controlling may be viewed as the blades of a pair of scissors. Control is not possible without objectives and plans as performance has to be compared against some established criteria.

a list of key result areas for the purpose of control should be developed.  Standards should be in quantitative terms and flexible in order to adapt to changing conditions.  Standards ± criteria of performance. .  Managers should establish special standards which they desire to obtain in KRAs.CONTROL PROCESS There are 3 basic steps :1. ESTABLISHING STANDARDS  Entire operations cannot be observed.

durability of a fabric. etc. common at operating level. Cost Standards: Monetary measurements. Reflect quality also ± hardness of bearings. common at operating level. etc. Physical Standards: Non-monetary.Continued«  Following are the types of standards :i. units of production per machine hour.g. reflect quantity such as labor hours per unit of output. ii. etc. E. . machine hour cost. direct and indirect cost per unit produced.

v. E. Competence of managers and employees. iv.Continued« iii. . most difficult to set.g. average sale per customer. etc. Intangible Standards: Not expressed in either physical or monetary measurements. E.g. Revenue Standards: Monetary values to sales are attached. Capital Standards: Arise from application of monetary measurements to physical items. success of a public relation program.

.g. a program to improve the quality of sales force. vii. a program for formally following the development of a new product.Continued« vi. Goals as Standards: Define goals that can be used as performance standards. can be quantitative and qualitative ± training sales people in accordance with a plan with specific characteristics. etc. Program Standards: E. .

.Strategic Plans as Control Point for Strategic Control: Systematic monitoring at strategic control points as well as modifying the organisation¶s strategy on the basis of this evaluation.Continued« viii.

reports. undesirable ± variation in delivery schedule agreed upon with the customer.2. MEASUREMENT OF PERFORMANCE    Performance is compared with predetermined standards. Reveal variations which can be desirable like output above the standard/expenses below the standard. Can be done by ± personal observation. charts and statements. . or by a study of various summaries of figures.

. Standards should reflect the various positions in an organisation structure. CORRECTION OF DEVIATIONS     Correct the deviations reflected. Control is seen as a part of the whole system of management.3. Correct causes for deviation should also be determined.

inspection of goods and services. CONTROL AS A FEEDBACK SYSTEM  Post action control and measures results after the process.. .  Examined what has happened in a particular period in the past. accounting records.  E.  Managers measures actual performance.TYPES OF CONTROL METHODS 1. etc.g. compare this measurement against standards and identify and analyse deviations.

E. FEEDFORWARD CONTROL     Designed to measure results during the process so that action can be taken before the job is done or the period is over. Cash flow and funds flow analysis. .2. Technique in use is network planning with the help of PERT.g. Serve as warning posts to direct attention rather than to evaluate.

Begins when top management sets the strategies and goals for the organisation. A part of the step of establishing standards and involves use of cost standards.BUDGETING AS A CONTROL TECHNIQUE     Budget is a statement of anticipated results during a designated time period expressed in financial and non-financial terms. . Cover a time period ± usually a year.

. Reviewed by the superior of these managers.Continued«   Usually lower level managers will then devise budgets for their sub-units within the guidelines. integrate lower-level budgets into their own budget and send it up the chain of command for review.

2.  Includes advertising cost. SELLING AND DISTRIBUTION COST BUDGET  Lays down the cost of selling and distribution of product during budget period. research and development cost. SALES BUDGET  Comprehensive sales program and plan for developing sales.  Sales forecasting is the basis. period.TYPES OF BUDGETS 1. etc.  Lays down sales potential in terms of quantity. product. value. etc. .

Continued« 3.  Lays down quantity of units to be produced during the budget period. PRODUCTION BUDGET  Based on sales budget. . production and inventory position of the firm.  Purpose is to maintain an optimum balance between sales.

 Sub divided into various sub-budgets ± Raw materials budget. labor budget. PRODUCTION COST BUDGET  Based on production budget. . production overhead budget.  Lays down the estimated cost of carrying out production plans.Continued« 4.

inventories. equipments.  Shows the cash position arising from it. . 6. CAPITAL EXPENDITURE BUDGET  Outlines capital expenditure for plants. expansion.Continued« 5. growth.  Indicates the requirement of cash at various points of time. CASH BUDGET  Anticipated receipt and disbursements for the budget period. etc.  Plans concerning investment. etc.

fixed assets. etc.  Provides detailed particulars regarding production. cash.Continued« 7. . sales. MASTER BUDGET  Summary of all the functional budgets and shows how they affect the business as a whole.

provide the fruit of combined wisdom. .ADVANTAGES OF BUDGETARY CONTROL    Different functional budgets clearly indicate the limits for expenses and also the results to be achieved in a given period. Prepared with the consultation of managers at different levels. Make it possible to coordinate the work of entire organisation.

Continued«     Promotes co-operation and team-spirit. Helps people learn from past experience. . Improves communication. Deviations from the pre-determined standards are found out.

A good manager is discouraged from taking initiative and undertaking activities for which provision has not been made in the budget. . People want to spend their current budget to the maximum so that their budget for next financial year is not reduced. do not respond to internal or external environmental changes.LIMITATIONS     Inflexible and rigid. µPerformance¶ in the budget-based organisation means the ability to maintain or increase one¶s budget.


. It is the process of linking the activities of the various departments of the organisation. in order to attain a common goal. It is the orderly synchronisation or fitting together of the interdependent efforts of individuals.INTRODUCTION    Coordination is defined as ³the process of integrating the objectives and activities of the separate units (departments or functional areas) of an organisation in order to achieve organisational goals efficiently.

Ensures that the activities of each department are directed towards the common goal. departmental and the overall organisational goals.ELEMENTS OF COORDINATION    Integrates the individual efforts of units with each other so that all the units work as a group. Strives to achieve a balance between the individual. .

which are carried out by different work groups. towards a common goal. greater is the need for coordination between departments. either for resources or for information.Advantages of Coordination      Helps in effectively carrying out non-routine jobs which need a constant flow of information. . Directs specialised activities. Greater the interdependence. Managers attempt to coordinate the various activities to achieve high performance standards. Helps in integrating activities which constantly change according to changes in the environment.

Higher interdependence among various units lead to more difficulty in coordination. . lockouts. Uncertainty about future will make coordination difficult.Limitations of Coordination     Most difficult to coordinate the various activities where there is higher degree of specialisation. Different approach towards the same problem will lead to problem of coordinating their functioning. Internal uncertainties ± strikes. External uncertainties ± political or technological changes. etc.

.Continued«   Coordination becomes a problem if managers do not possess the requisite knowledge. Existence of informal groups which are strongly bonded by the forces of culture. skill and competence to do so. social values and ethics can hinder effective coordination.

Effective leadership and supervision. . Simplified organisation. Clear definition of Authority and Responsibility. Continuity. Clear cut objective. Early start.Requisites for Excellent Coordination         Direct contact. Effective communication.

You're Reading a Free Preview

/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->