B.ST XII Part-A Subhash Dey All Chapters PPTs (Teaching Made Easier)

 Management - concept, objectives, and
importance
 Management as Science, Art and Profession
 Levels of Management
 Management functions-planning,
organizing, staffing, directing and
controlling
 Coordination- concept and importance
Introduction
'Management at Tata Steel' is an example of a
successful organisation which is amongst the top
companies in India. It has risen to the top because of its
quality of management.
Let us take another example. Smita Rai is a 38-year old
entrepreneur who grew up in a rural district called
Namchi, South Sikkim. She was very good in art and
craft particularly, Wax moulds. She loved to make
candles, often she make into toys and small pieces of
art with wax and used it as a gift for her friends and
relatives. She was loved and appreciated for these.
Smita was never happy with the conditions of the
women in her district as most were poor and jobless,
so she planned to do something to solve their
problems because she knew that imparting skills for
livelihood is needed but she had no idea of how to
implement her idea. In August 2012, she met Abishek
Lama, the Branch Manager of NEDFI, Namchi
Branch, a financial corporation which support local
people with skills development programs and also
channelizes them into revenue generating activities.
Smita got interested. “I love making candles, then,
why not convert my hobby into a venture and involve
these rural women also”, she thought. This led to the
establishment of Namchi Designer Candles with the
help of NEDFI, some financial institutions and
support from different stakeholders in various
dimensions. Since then, the women have never
looked back, despite challenges.
The women also faced a lot of harassment but they
could overcome all those troubles. Namchi Designer
Candles has 100 per cent women as employees and
they also produce varieties of candles. During Diwali,
they produce customized candles meant for the
occasion. These Diwali themed candle has been a
success in Sikkim as its demand increases on a yearly
basis. Namchi Designer Candles has been receiving
numerous awards such as North East Women
Entrepreneur of the year 2015-2016 for Sikkim and
Sreemanta Shankar Mission of Guwahati on 26th
April 2018 at New Delhi. A typical day in Smita’s life
consists of a series of interrelated and continuous
functions. She has to plan a special festive collection
for Diwali. This means organising more funds and
recruiting more workers. She also has to regularly
communicate with her suppliers to ensure that
deadlines regarding delivery of goods are met. In the
course of the day, she meets customers for a general
feedback and any suggestions that they may have.
Successful organisations do not achieve their goals
by chance but by following a deliberate process
called ‘management’.
Management = Manage: men + t (things)
No matter what the organisation is or what its goals
might be, they all have something in common
management and managers.
Management is essential for all organisations big or
small, profit or non-profit, services or manufacturing.
Management is necessary so that individuals make
their best contribution towards group objectives.
Management – Concept, Function
1.1
and Characteristics
Concept of Management
Management is an activity which is necessary
wherever there is a group of people working in an
organisation. People in organisations are performing
diverse tasks but they are all working towards the
same goal. Management aims at guiding their efforts
towards achieving a common objective — a goal.
Thus, management has to see that tasks are
completed and goals are achieved (i.e., effectiveness)
with the least amount of resources at a minimum
cost (i.e., efficiency).
Management is defined as a process of getting things
done with the aim of achieving goals effectively and
efficiently.
Definitions of Management
 “Management is the process of working with and
through others to effectively achieve organisational
objectives by efficiently using limited resources in
the changing environment.” — Kreitner
 “Management is the process of designing and
maintaining an environment in which individuals,
working together in groups, efficiently accomplish
selected aims.” — Harold Koontz and Heinz Weihrich
 “Management is defined as the process of
planning, organising, actuating and controlling an
organisation’s operations in order to achieve
coordination of the human and material resources
essential in the effective and efficient attainment of
objectives.” — Robert L. Trewelly and M. Gene Newport
There are certain terms in the above definition of
management, which require elaboration. These are
(a) process, (b) effectively, and (c) efficiently.
1. Process
‘Process’ in the definition of management
means the primary function or activities that
management performs to get things done.
These functions are planning, organising, staffing,
directing and controlling.
Management is described as the process of planning,
organising, directing and controlling the efforts of
organisational members and of using organisational
resources to achieve specific goals.
2. Effectiveness
Being effective or doing work effectively basically
means finishing the given task.
Effectiveness in management is concerned with
doing the right task, completing activities and
achieving goals.
In other words, it is concerned with the end result.
3. Efficiency
It is not enough to just complete the tasks. There is
another aspect also, i.e., being efficient or as we say
doing work efficiently.
Efficiency means doing the task correctly and
with minimum cost.
There is a kind of cost-benefit analysis involved and
the relationship between inputs and outputs.
 If by using less resources (i.e., the inputs) more
benefits are derived (i.e., the outputs) then
efficiency has increased.
 Efficiency is also increased when for the same
benefit or outputs, fewer resources are used and
less costs are incurred. Input resources are money,
materials, equipment and persons required to do
a particular task.
Obviously, management is concerned with the
efficient use of these resources, because they reduce
costs and ultimately lead to higher profits.
Effectiveness versus Efficiency
These two terms are different but they are interrelated.
For management, it is important to be both effective and
efficient. Effectiveness and efficiency are two sides of the
same coin. But these two aspects need to be balanced.
 Management at times, has to compromise with
efficiency. For example, it is easier to be effective
and ignore efficiency i.e., complete the given task
but at a high cost. Suppose, a company’s target
production is 20,000 units in a year. To achieve
this target the manager has to operate on double
shifts due to power failure most of the time. The
manager is able to produce 20,000 units but at a
higher production cost. In this case, the manager
Therefore, it is important for management to achieve
goals (effectiveness) with minimum resources i.e., as
efficiently as possible while maintaining a balance
between effectiveness and efficiency.
 Top Tip
Usually high efficiency is associated with high effectiveness
which is the aim of all managers. But undue emphasis on
high efficiency without being effective is also not desirable.
Poor management is due to both inefficiency and
ineffectiveness.
was effective but not so efficient, since for the same
output, more inputs (labour cost, electricity costs)
were used.
 At times, a business may concentrate more on
producing goods with fewer resources i.e., cutting
down cost but not achieving the target
production. Consequently, the goods do not reach
the market and hence the demand for them
declines and competitors enter the market. This is
a case of being efficient but not effective since the
goods did not reach the market.
Functions of Management
Management consists of a series of continuous, but
interrelated and inter-dependent functions, that are
performed by all managers. These functions are
planning, organising, staffing, directing and
controlling.
1. Planning
Planning is the function of determining in advance
what is to be done and who is to do it. This implies
setting goals in advance and developing a way of
achieving them efficiently and effectively.
Planning is defined as setting objectives for a
given time period, formulating various courses
of action to achieve them, and then selecting the
best possible alternative from among the
various courses of action available.
It must be noted that planning cannot prevent
problems, but it can predict them and prepare
contingency plans to deal with them if and when
they occur.
2. Organising
Organising is the management function of assigning
duties, grouping tasks, establishing authority and
allocating resources to carry out a specific plan.
 Once a specific plan has been established for the
accomplishment of an organisational goal, the
organising function examines the activities and
resources required to implement the plan. It
determines what activities and resources are
required. It decides who will do a particular task,
where it will be done, and when it will be done.
 Organising involves the grouping of the required
tasks into manageable departments or work units
and the establishment of authority and reporting
relationships within the organisational hierarchy.
3. Staffing
Staffing simply means –"finding the right people for
the right job".
Staffing function of management is concerned
with obtaining, utilising and maintaining a
satisfactory and satisfied workforce.
A very important aspect of management is to make
sure that the right people with the right qualifications
are available at the right places and times to
accomplish the goals of the organisation. This is also
known as the human resource function and it
involves activities such as recruitment, selection,
placement and training of personnel.
4. Directing
Directing involves leading, influencing and
motivating employees to perform the tasks
assigned to them.
This requires establishing an atmosphere that
encourages employees to do their best.
Directing has four elements –
(i) Motivation (ii) Leadership
(iii) Communication (iv) Supervision.
Motivation and leadership are two key components of
direction.
 Motivating workers means simply creating an
environment that makes them want to work.
 Leadership is influencing others to do what the
leader wants them to do. A good manager directs
through praise and criticism in such a way that it
brings out the best in the employee.
Directing also involves communicating effectively as
well as supervising employees at work.
5. Controlling
Controlling is the management function of
monitoring organisational performance towards
the attainment of organisational goals.
The task of controlling involves establishing standards
of performance, measuring current performance,
comparing this with established standards and taking
corrective action where any deviation is found. Here
management must determine what activities and
outputs are critical to success, how and where they
can be measured and who should have the authority
to take corrective action.
 Top Tip
The various functions of a manager are usually discussed in
the order given above, suggesting that a manager first
plans, then organises, puts staff in position, then directs,
and finally controls. In reality, managers are rarely able to
carry out these functions in isolation. The activities of a
manager are interrelated and it is often difficult to pinpoint
where one ended and the other began.
Characteristics/Features of
Management
1. Management is a goal-oriented process.
An organisation has a set of basic goals which are the
basic reason for its existence. These should be simple
and clearly stated. Different organisations have
different goals. For example, the goal of a retail store
may be to increase sales, but the goal of a school is to
impart education to children.
Management unites the efforts of different
individuals in the organisation towards achieving
organisational goals.
2. Management is a continuous process.
The process of management is a series of
continuous, composite, but separate functions
(planning, organising, directing, staffing and
controlling).
These functions are simultaneously performed by all
managers all the time. The time spent by managers
in different functions, however, is different.
Managers at the top level spend more time in
planning and organising than managers at lower
levels of the organisation.
3. Management is all pervasive.
Management is pervasive as it is required in all
organisations, in all the departments and at all
levels.
The activities involved in managing an enterprise are
common to all organisations whether economic,
social or political. A petrol pump needs to be
managed as much as a hospital or a school. What
managers do in India, the USA, Germany or Japan is
the same. How they do it may be quite different. This
difference is due to the differences in culture,
tradition and history.
4. Management is an intangible force.
Management is an intangible force that cannot be
seen but its presence can be felt or its effect is
noticeable when targets are met according to plans,
employees are happy and satisfied, and there is
orderliness instead of chaos.
5. Management is a group activity.
An organisation is a collection of diverse individuals

with different needs. Every member of the group has a
different purpose for joining the organisation but as
members of the organisation they work towards
fulfilling the common organisational goal.
This requires team work and coordination of individual
effort in a common direction. At the same time
management should enable all its members to grow
and develop as needs and opportunities change.
6. Management is a dynamic function.
Management is a dynamic function and has to
adapt itself to the changing environment.
An organisation interacts with its external environment
which consists of various social, economic and political
factors. In order to be successful, an organisation must
change itself and its goals according to the needs of the
environment. For example, McDonalds, the fast food
giant made major changes in its menu to be able to
survive in the Indian market , e.g. it offers Aloo Tikki
burger.
7. Management is multi-dimensional.
Management is a complex activity that has three main
dimensions. These are:
(i) Management of work: All organisations exist
for the performance of some work. In a factory, a
product is manufactured, in a garment store a
customer’s need is satisfied and in a hospital a
patient is treated. Management translates this
work in terms of goals to be achieved and assigns
the means to achieve it. This is done in terms of
problems to be solved, decisions to be made,
plans to be established, budgets to be prepared,
responsibilities to be assigned and authority to be
delegated.
(ii) Management of people: Human resources or
people are an organisation’s greatest asset.
Despite all developments in technology “getting
work done through people” is still a major task
for the manager. Managing people has two
dimensions:
— dealing with employees as individuals with
diverse needs and behaviour; and
— dealing with employees as a group of people.
The task of a manager is to make people work
towards the achievement of the organisational
goals by making their strengths effective and
their weaknesses irrelevant.
(iii) Management of operations: Every organisation
has some basic product or service to provide in
order to survive. This requires a production
process of transforming input material and the
technology into the desired output for
consumption. This is interlinked with both the
management of work and the management of
people.
RECAP
Concept of Management
Management is the process of getting things done with the
aim of achieving goals effectively and efficiently.
 Process in the definition means series of primary functions
or activities that management performs to get things done,
i.e. planning, organising, staffing, directing and controlling.
 ‘Effectiveness’ in management is concerned with doing the
right task, completing activities and achieving goals.
 Efficiency means doing the task correctly and with
minimum cost. Efficiency is increased if by using less
resources (i.e., the inputs) more benefits are derived (i.e.,
the outputs).
For management, it is important to be both effective and
efficient, i.e. to achieve goals (effectiveness) with minimum
resources (efficiency).
Characteristics/Features of Management G2IP MCD
1. Management is a oal-oriented process as it strives to
achieve organisational goals.
2. Management is all ervasive as it is required in all
organisations, in all the departments and at all levels.
3. Management is a ontinuous process as it involves an
ongoing series of functions (planning, organising,
staffing, directing and controlling).
4. Management is a ynamic function as it adapts
itself to the changing environment. In order to be
successful, an organisation must change itself and its
goals according to the needs of the environment.
5. Management is an ntangible force as it cannot be
seen but its presence can be felt in the way the
organization functions – When targets are achieved
and there is orderliness instead of chaos.
6. Management is a roup activity as it ensures team
work and coordination; and unites individual effort in
a common direction.
7. Management is ulti-dimensional as it involves
three dimensions: Management of work, Management
of people, Management of operations.
 Management of work means translating the work in
terms of goals to be achieved and assigning the
means to achieve it.
 Management of people means dealing with
employees as individuals with diverse needs and
behaviour as well as dealing with individuals as a
group of people.
 Management of operations means managing a
production process which involves transforming
inputs into desired output for consumption.
Objective Type Questions 1.1
Question 1
Complete the Sentence:
Management is concerned with the efficient use of
resources, because ___________.

Answer 1
they reduce costs and ultimately lead to higher profits.

Question 2
“High efficiency is associated with high effectiveness.”
(True/False)

Answer 2
True: High efficiency and high effectiveness is the aim
of all managers. Poor management is due to both
inefficiency and ineffectiveness.

Question 3
“Effectiveness means doing the task correctly and with
minimum cost.” (True/False)

Answer 3
False

Question 4
“Planning is the function of determining in advance
what is to be done and who is to do it.” (True/False)

Answer 4
True

Question 5
“Planning cannot prevent problems.“
True/False? Give reason.

Answer 5
True: Planning can only predict them and prepare
contingency plans to deal with then if and when they
occur.

Question 6
_________ function of management decides who will
do a particular task, where it will be done, and when it
will be done. (Fill up the blank with correct answer)

Answer 6
Organising

Question 7
Match the following function of management:
Column
ColumnI I Column
ColumnII II
(i) Setting
(i) Setting goals
goals ininadvance
advanceand developing
and developing a way(a) (a)
a way Planning
Planning
of achieving
of achieving them
themeffectively and
effectively effectively.
and effectively.
(ii) Establishing
(ii) Establishing an
anatmosphere
atmosphere that encourages (b) (b)
encourages
that Organising
Organising
employees to do their best.
(iii) Determining what activities and resources are (c) Staffing
(iii) Determining
required. what activities and resources are (c) Staffing
required.
(iv) Recruitment selection, placement and training (d) Directing
of personnel selection, placement and training (d) Directing
(iv) Recruitment
(v) of personnel.what activities and outputs are
Determining (e) Controlling
(v) Determining what activities and outputs are
critical to success (e) Controlling
critical to success.

Answer 7
(i) — (a), (ii) — (d), (iii) — (b), (iv) — (c), (v) — (e)

Question 8
Name the concept of management which involves
the grouping of the required tasks into manageable
departments or work units and establishment of
authority and reporting relationships within the
organisational hierarchy.

Answer 8
Organising

Question 9
____________ function of management is also known
as the human resource function.
(Fill up the blank with correct answer)

Answer 9
Staffing

Question 10
One of the very important aspects of management is
to make sure that the right people with the right
qualification are available at the right places and times
to accomplish the goals of the organisation. Identify the
aspect of management.

Answer 10
Staffing

Question 11
_________ is the management function of monitoring
organisational performance towards the attainment of

Answer 11
Controlling

Question 12
___________ function of management examines the
activities and resources required to implement the plan.

Answer 12
Organising

Question 13
"McDonalds, the fast food giant made major changes in
its menu to be able to survive in the Indian market."
State the characteristic of management highlighted in the
above statement.

Answer 13
Management is a dynamic function and has to adapt itself
to the changing environment. In order to be successful,
an organisation must change itself and its goals according
to the needs of the environment.

Question 14
Match the following functions of management:
Column
ColumnI I Column
Column II II
(i) Leading,
(i) Setting goals in advance
influencing andand (a) (a)
developingemployees
motivating a way Planning
Organising
of perform
to achieving the
themtasks
effectively and to
assigned effectively.
them.
(ii) Assigning
(ii) Establishing an atmosphere
duties, grouping that establishing (b) (b)
encourages
tasks, Organising
Staffing
authority and allocating resources required to
(iii)carry
Determining plan. and resources are (c) Staffing
what activities
out a specific
required.
(iii) Recruitment and selection of the personnel. (c) Directing

Answer 14
(i) — (c), (ii) — (a), (iii) — (b)

Question 15
Which function of management is concerned with finding
the right people for the right job?
(CBSE 2012)

Answer 15
Staffing

Question 16
‘In order to be successful an organisation must change
its goals according to the needs of the environment.’
Which characteristic of management is highlighted in the
statement?

Answer 16
Management is a dynamic function.

Question 17
“Successful organizations do not achieve their goals by
chance but by following a deliberate process”. Identify the
process highlighted here.
(CBSE SQP 2018-19)

Answer 17
Process highlighted in the statement is ‘Management’.

Question 18
Which function of management relates to assigning
duties, grouping tasks, establishing authority and
allocating resources required to carry out a specific plan?

Answer 18
Organising

Question 19
Match the example in column I with the function in
column II:
Column I Column II
(i) Matching outcomes with targets (a) Planning
(ii) Objectives (b) Organising
(iii) Resources for implementation (c) Directing
(iv) Recruitment and Training (d) Staffing
(v) Supervision and Motivation (e) Controlling

Answer 19
(i) — (e), (ii) — (a), (iii) — (b), (iv) — (d), (v) — (c)

Question 20
A production manager was able to produce the desired
output with minimum cost but not within the required
time. In this case the manager was:
(Choose the correct alternative)
(a) Effective only
(b) Efficient only
(c) Both effective and efficient
(d) Neither effective nor efficient

Answer 20
(b) Efficient only

Question 21
Name the process of working with and through
others to effectively achieve organisational objectives
by efficiently using limited resources in the changing
environment.

Answer 21
Management

Question 22
Suhasini, the General Manager of Fabmart, perfoms the
managerial functions of planning, organising, staffing,
directing and controlling as an ongoing process. Which
management feature is highlighted by this?

Answer 22
Management is a continuous process.

Question 23
Why is management considered a multi-faceted concept?
(NCERT)

Answer 23
Management is considered a multi-facted concept because
management is a complex activity that has three main
dimensions: management of work, management of people
and management of operations.

Case Studies
Question 1
Vrinda Ltd. is able to achieve the target production of
5,000 units within the prescribed period. However, to
achieve the target on time, additional `40,000 were paid
as overtime wages to employees. Do you think Vrinda
Ltd. is effective and efficient in its working? (1 mark)
Case Studies — Analysing, Evaluating & Creating Type Questions

Answer 1
The management of Vrinda Ltd. is effective as the target is
achieved. However, it is not efficient as target is achieved
at a higher cost.

Question 2
Volvo Ltd.’s target is to produce 10,000 shirts per month
at a cost of `100/- per shirt. The Production Manager
achieved this target at a cost of `90/- per shirt. Do you
think the Production Manager is effective? Give reasons
in support of your answer. (1 mark)

Answer 2
Yes, the Production Manager is effective because he has
completed the task and achieved the goal of producing
10,000 shirts. He is efficient also as he has achieved the
target at a lower cost since he achieved the target at a
lower cost of `90 per shirt while the standard cost is
`100 per shirt.

Question 3
Hero Ltd.’s target is to produce 10,000 shirts per
month at a cost of `150 per shirt. The Production
Manager could achieve this target at a cost of `160 per
shirt. Do you think the Production Manager is
‘effective’? Give reason in support of your answer.
(1 mark)

Answer 3
Yes, the Production Manager is effective since he is able
to produce the target production of 10,000 shirts. He is
not so efficient, since he could achieve this target at a
higher cost of `160 per shirt whereas the standard cost
is `150 per shirt.

Question 4
Ashita and Lakshita are employees working in Dazzling
enterprises dealing in costume jewellery. The firm
secured an urgent order for 1,000 bracelets that were
to be delivered within 4 days. They were assigned the
responsibility of producing 500 bracelets each at a cost
of `100 per bracelet. Ashita was able to produce the
required number within the stipulated time at the cost
of ` 55,000 whereas, Lakshita was able to produce only
450 units at a cost of ` 90 per unit.
State whether Ashita and Lakshita are efficient and
effective. Give reasons to justify your answer.
(NCERT) (3 marks)
Answer 4
Ashita is effective but not efficient.
Reason: She was able to produce 500 bracelets within the
stipulated time but at a higher cost of `110 per bracelet.
Lakshita is efficient but not effective.

Reason: Though she was able to achieve a lower cost of `90
per bracelet but could not produce the target production of
500 bracelets. She was able to produce only 450 bracelets.

Question 5
Tina, a manager of Shikhar Automobiles Ltd.; establishes
an atmosphere that encourages employees to do their
best. She also creates an environment that makes them
want to work. She directs through praise and criticism in
such a way that it brings out the best in the employee.
Identify the concept of management highlighted in the
above para.
(1 mark)

Answer 5
‘Directing’ function of management

Question 6
Sanjana is the branch manager of ABC Handicrafts Pvt.
Ltd. The company’s objective is to promote the sales of
Indian handloom and handicraft products. Its sells fabrics,
furnishings, readymades and household items are made
out of traditional Indian fabrics. Sanjana decides
quantities, variety, colour and texture of all the above
items and then allocates resources for their purchase
from different suppliers. She appoints a team of
designers and crafts people in the company, who
developed some prints for bed covers in bright colours
on silk.Although they looked very impressive, they were
more expensive than they had planned to sell. Average
customer could not afford to buy it. Praising their effort,
Sanjana suggested that they should keep the silk bed
covers for special occasions like Diwali and Christmas
and offer the cotton bed covers on a regular basis to
keep costs under control.
Identify and state the functions of management which
Sanjana performs by quoting the lines from the above
para.
(5 marks)

Answer 6
The functions of management which Sanjana performs are:
(i) Planning: Planning is the function of determining in
advance what is to be done and who is to do it. This
implies setting goals in advance and developing a way
of achieving them efficiently and effectively.
‘Sanjana decides quantities, variety, colour and texture
of all the above items...’
(ii) Organising: Organising is the management function of
assigning duties, grouping tasks, establishing authority
and allocating resources required to carry out a
specific plan.
‘.. allocates resources for their purchase from different
suppliers.’
(iii) Staffing: Staffing function of management is concerned
with obtaining, utilising and maintaining a satisfactory
and satisfied workforce.
‘She appoints a team of designers and crafts people in
the company...’
(iv) Directing: Directing involves leading, influencing and
motivating employees to perform the tasks assigned
to them.
‘Praising their effort, Sanjana suggested... ’
(v) Controlling: Controlling is the management function
of monitoring organisational performance towards
‘... offer the cotton bed covers on a regular basis to
keep costs under control.’

Question 7
Directors of Aman Ltd. assigned the task of implementing
the plans and policies framed by the board to all the
departmental heads. Departmental heads appointed
supervisors, superintendent, executives, etc. so that work
can be assigned to workers as per the plan. Supervisors
kept a check on workers as per the plan. Identify the
feature of management highlighted in above para.
(1 mark)

Answer 7
Management is a group activity.

Question 8
Social-Connect Pvt. Ltd. is a mobile manufacturing
company. The managdynamic and a lot of changes were
taking place in the mobile market and hence, the risk of
the product becoming obsolete is high. The designs of
the phones are governed by requirements and
preferences of the customers. He started incorporating
new and advanced features taking clue from the
consumers and with the help of his workers. Identify
the characteristic of management highlighted in this
case.
(1 mark)
Answer 8
Management is a dynamic function.

Question 9
Anushka Fabric Ltd. has been able to achieve its
production targets as per plans using a new German
technology. Its employees are happy and satisfied with
their pay scale and working environment in the
organisation. All the work proceeds as per plans and
there is orderliness in the entire functioning of the
organisation. Identify the feature of the management
discussed above.
(1 mark)

Answer 9
Management is an intangible force.

Objectives, Importance and
1.2
Levels of Management
Objectives of Management
Management seeks to achieve certain objectives which
are the desired result of any activity. They must be
derived from the basic purpose of the business. In any
organisation there are different objectives and
management has to achieve all objectives in an
effective and efficient manner.
Objectives can be classified into organisational
objectives, social objectives and personal or individual
objectives.
1. Organisational Objectives
Management is responsible for setting and achieving
objectives for the organisation. It has to achieve a
variety of objectives in all areas considering the
interest of all stakeholders including shareholders,
employees, customers and the government.
The main objective of any organisation should be to
utilise human and material resources to the
maximum possible advantage, i.e., to fulfill the
economic objectives of a business. These are survival,
profit and growth.
(i) Survival: The basic objectives of any business is
survival. Management must strive to ensure the
survival of the organisation. In order to survive,
an organisation must earn enough revenues to
cover costs.
(ii) Profit: Mere survival is not enough for business.
Management has to ensure that the organisation
makes a profit. Profit provides a vital incentive
for the continued successful operation of the
enterprise. Profit is essential for covering costs
and risks of the business.
(iii) Growth: A business needs to add to its prospects
in the long run, for this it is important for the
business to grow. To remain in the industry,
management must exploit fully the growth
potential of the organisation. Growth of a
business can be measured in terms of:
 increase in sales volume,
 increase in the number of employees,
 increase in the number of products, or
 the increase in capital investment, etc.
2. Social objectives
It involves the creation of benefit for society. As a
part of society, every organisation whether it is
business or non-business, has a social obligation to
fulfill. This refers to consistently creating economic
value for various constituents of society. This
includes:
 using environmental friendly methods of
production,
 giving employment opportunities to the
disadvantaged sections of society, and
 providing basic amenities like schools and crèches
to employees.
3. Personal objectives
Organisations are made up of people who have
different personalities, backgrounds, experiences and
objectives. They all become part of the organisation to
satisfy their diverse needs. These vary from:
 financial needs such as competitive salaries and
perks,
 social needs such as peer recognition, and
 higher level needs such as personal growth and
development.
Management has to reconcile personal goals with
organisational objectives for harmony in the
organisation.
 Top Tip
Personal objectives of management aim at satisfying the
diverse needs of people in the organisation who have
different personalities, objectives, etc. Personal objectives
of management should not be confused with fulfilling
personal objectives of employees.
Providing basic amenities like schools and crèches to
employees is social objective of management, not personal
objective since management of an organisation has to fulfill
its social responsibilities towards various stakeholders,
including employees.
Importance of Management
1. Management helps in achieving group
goals.
Management is required not for itself but for achieving
the goals of the organisation. The task of a manager is
to give a common direction to the individual effort in
achieving the overall goal of the organisation.
2. Management increases efficiency.
The aim of a manager is to reduce costs and increase
productivity through better planning, organising,
directing, staffing and controlling the activities of the
organisation.
3. Management creates a dynamic
organisation.
All organisations have to function in an environment
which is constantly changing. It is generally seen that
individuals in an organisation resist change as it often
means moving from a familiar, secure environment
into a newer and more challenging one.
Management helps people adapt to these changes so
that the organisation is able to maintain its
competitive edge.
4. Management helps in achieving personal
objectives.
A manager motivates and leads his team in such a
manner that individual members are able to achieve
personal goals while contributing to the overall
organisational objective.
 Top Tip
Through and the management helps individuals to develop
team spirit, cooperation and commitment to group success.
5. Management helps in the development of
society.
Management helps in the development of society by:
 providing good quality products and services,
 creating employment opportunities,
 adopting new technology for the greater good of the
people, and
 leading the path towards growth and development.
Management is a universal term used for certain
functions performed by individuals in an enterprise
who are bound together in a hierarchy of
relationships. Every individual in the hierarchy is
responsible for successful completion of a particular
task. To be able to fulfill that responsibility he is
assigned a certain amount of authority or the right to
take a decision.
The authority-responsibility relationship binds
individuals as superiors and subordinates and
gives rise to different levels of management in an
organisation.
Generally speaking there are three levels in the
hierarchy of an organisation:
(i) Top level management
(ii) Middle level management
(iii) Supervisory or operational management (i.e.
lower level management).
1. Top Level Management
They consist of the senior-most executives of the
organisation. For example:
 Chief Operating Officer
 Chief Executive Officer (CEO)
 Chief Marketing Officer (CMO)
 Chief Finance Officer (CFO)
 Managing Director
 Chairman
 President
 Vice-President
Functions
(i) Their basic task is to integrate diverse elements
and coordinate the activities of different
departments according to the overall objectives of
the organisation.
(ii) These top level managers are responsible for the
welfare and survival of the organisation.
(iii) They analyse the business environment and its
implications for the survival of the firm.
(iv) They formulate overall organisational goals and
strategies for their achievement.
(v) They are responsible for all the activities of the
business and for its impact on society.
Thus, the job of the top manager is complex and
stressful, demanding long hours and commitment to
the organisation.
 Top Tip
Top management is a team consisting of managers from
different functional levels, heading finance, marketing
etc. For example chief finance officer, vice president
(marketing). However, individually managers from
different functional levels, such as production manager
or marketing manager will be acting as middle level
managers.
2. Middle Level Management
Middle Management is the link between top and lower
level managers.
They are subordinate to top managers and superior to
the first line managers.
They are usually known as division heads. For example:
 Production manager
 Marketing manager
 Finance manager
 Human Resource (HR) manager
Middle management is responsible for implementing
and controlling plans and strategies developed by top
management. At the same time they are responsible
for all the activities of first line managers.
 Top Tip
Middle level management also includes the following:
 Operations manager
 Plant Superintendent
 Regional manager
 Divisional manager
Functions
Their main task is to carry out the plans formulated by
the top managers. For this they need to:
(i) interpret the policies framed by top management,
(ii) ensure that their department has the necessary
personnel,
(iii) assign necessary duties and responsibilities to
them,
(iv) motivate them to achieve desired objectives, and
(v) co-operate with other departments for smooth
functioning of the organisation.
3. Supervisory or Operational Management
Foremen and supervisors comprise the lower level in
the hierarchy of the organisation. Their authority and
responsibility is limited according to the plans drawn
by the top management.
Functions
Supervisory management plays a very important role
in the organisation because of the following main
functions they perform:
(i) They interact with the actual workforce and pass
on instructions of the middle management to the
workers.
(ii) Supervisors directly oversee the efforts of the
workforce.
(iii) Through their efforts quality of output is
maintained and wastage of materials is minimised.
(iv) They ensure that safety standards are maintained.
The quality of workmanship and the quantity of output
depends on the hard work, discipline and loyalty of the
workers.
RECAP
Objectives of Management
1. Organisational or Economic Objectives: The main
objective of any organization should be to utilize human
and material resources to the maximum possible
advantage to fulfill the economic objectives of a business.
 Survival – Management must strive to earn enough
revenues to cover cost for the survival of the business.
 Profit – Management has to ensure that business earns
profit which is essential for covering cost and risk of the
business.
 Growth – Management must exploit fully the growth
potential of the organization to remain in the industry.
Indicators of growth are increase in sales turnover, capital
investment and number of products and employees.
2. Social Objectives:
It involves the creation of economic value for various
constituents of society like using environment-friendly
methods of production, providing basic amenities like
schools and crèches to employees, giving employment
opportunities to the disadvantaged sections of the society,
etc.
3. Personal Objectives:
Personal objectives of management aim at satisfying the
needs of the employees such as financial needs by giving
them competitive salary and perks, social needs such as
peer recognition, and higher level needs such as personal
growth and development.
Importance of Management DPS EG
1. Management increases fficiency by reducing costs and
increasing productivity through better planning,
organising, staffing, directing and controlling the activities
of the organisation.
2. Management helps in the development of the ociety
by providing good quality products, creating employment
opportunities and adopting new technology, etc.
3. Management helps in achieving group oals by giving
a common direction to individual effort.
4. Management creates a ynamic organisation by
making the organisation adapt itself to the changing
environment.
5. Management helps in achieving ersonal objectives
by motivating and leading in such a way that both personal
goals and organisational objectives are accomplished.
1. Top Level Management consists of Chief Operating
Officer, Chief Executive Officer (CEO), Chief Finance
Officer, Director, Chairman, President, Vice-President,
etc. Their functions are:
(i) To coordinate the activities of different
departments according to the overall objectives of
the organisation.
(ii) To be responsible for welfare and survival of the
organisation.
(iii) To analyse the business environment and its
implications for the survival of the firm.
(iv) To formulate overall organisational goals and
(v) To be responsible for all the activities of the
business and for its impact on the society.
2. Middle Level Management consists of divisional
/departmental heads, such as Production Manager,
Marketing Manager, Operations Manager, Plant
Superintendent, etc. Their functions are:
(i) To interpret the policies framed by top
management.
(ii) To ensure that their department has the necessary
personnel.
(iii) To assign necessary duties and responsibilities to
the employees of their respective departments for
implementation of the plan.
(iv) To motivate employees of their respective
departments to achieve the desired objectives.
(v) To cooperate with other departments for smooth
3. Operational and Supervisory Management consists of
Supervisors and Foremen. Their functions are:
(i) To oversee the efforts of the workforce.
(ii) To interact with the actual workforce and pass on
the instructions of the middle management to the
workers.
(iii) To ensure that the quality of output is maintained
and wastage of material is minimized.
(iv) To ensure safety standards are maintained.
Question 1
Which of the following is not an indicator of growth of
an organisation?
(a) Increase in number of employees
(b) Increase in number of products
(c) Increase in capital investment
(d) None of the above

Answer 1

Question 2
The following is not an objective of management:
(NCERT) (Choose the correct alternative)
(a) earning profits
(b) growth of the organisation
(c) providing employment
(d) policy making

Answer 2
(d) policy making

Question 3
To meet the objectives of the firm, the Asian Paints
contributed large amount of funds to enable farmers to
use local resources effectively. Identify the management
objective it tried to achieve.

Answer 3
Social objectives of management

Question 4
Radhika Ltd. uses environment-friendly methods of
production. Identify the objective it is trying to achieve.

Answer 4

Question 5
In this first year of operation, the revenues generated
by Max Industries from sale of its products are just
sufficient to cover the cost of production. Which
organisational objective is met in the given case?

Answer 5
Survival

Question 6
Raheja Ltd. is diversifying its product lines. What
organisational objective it is trying to achieve?

Answer 6
Growth

Question 7
To meet the objectives of the firm, the management
of Bhavya Ltd. offers employment to physically
challenged persons. Identify the organisational
objective it is trying to achieve.

Answer 7
Growth; since number of employees is increasing, it
leads to increase in production and hence growth of the
company.

Question 8
The main objective of any organisation should be to
utilise human and material resources to the maximum
possible advantage, i.e. to fulfill the economic objectives
of a business. Enumerate the economic objectives of a
business.

Answer 8
Survival, profit and growth.

Question 9
Through __________ management helps individuals to
develop team spirit, cooperation and commitment to
group success.
(a) Coordination
(b) Supervision
(c) Controlling
(d) Motivation aand leadership.

Answer 9
(d) Motivation and leadership.

Question 10
The authority-responsibility relationship binds individuals
as superiors and subordinates and gives rise to different
____________ in an organisation.

Answer 10
levels of management

Question 11
The main task of the middle level managers is _______.
(Complete the sentence)

Answer 11
to carry out the plans formulated by the top level
managers.

Question 12
__________ comprises the lower level in the hierarchy
(a) Vice president (marketing)
(b) Production manager
(c) Foremen and supervisors
(d) Chief operating officers

Answer 12
(c) Foremen and supervisors

Question 13
Supervisory management plays a very important role of
the organisation since ______ .

Answer 13
they interest with the actual workforce and pass in
instructions of the middle management to the workers.
OR
Supervisors directly oversee the efforts of the workforce
and the quality and quantity of output depends on the
hard work, discipline and loyalty of the workforce.
It is through their efforts that quality of output is
maintained, wastage of materials is minimised and safety
standards are maintained.

Question 14
Name the level of management:
(i) overseeing the efforts of the workforce
(ii) formulating organisational goals

Answer 14
(i) Supervisory management
(ii) Top level management;

Question 15
Foremen and Supervisors comprise _____________.
(a) Top level of management
(b) Middle level of management
(c) Operational management
(d) None of these

Answer 15

Question 16
Ritu is the manager of the northern division of a large
corporate house. At what level of management does she
work in the organisation? What is her main task?

Answer 16
Middle level management; Her main task is to carry out
the plans formulated by the top managers.

Question 17
Your grandfather is working in an MNC as chief operating
officer. At which level of management he is working?

Answer 17
Top level management

Question 18
At which level of management are the managers
responsible for maintaining the quality of output and the
safety standards?
(CBSE 2012)

Answer 18
Supervisory/Operational management

Question 19
Name the level of management at which the managers
are responsible for implementing and controlling the
plans and strategies of the organisation.

Answer 19
Middle level management

Question 20
At which level of management the managers are
responsible for the welfare and survival of the
organisation?
(CBSE 2012)

Answer 20

Question 21
Sarthak Jain is responsible for framing plans and policies
of Neel Madhav Ltd. At which managerial level, he is
working?

Answer 21

Question 22
Match the following activities with their respective levels
of management:
Column I Column II
(i) Introducing a new product line and deciding (a) Top Management
the capital structure of the company.
(ii) Recruitment of casual labourers. (b) Middle
Management
(iii) Devise a suitable advertising campaign to (c) Supervisory and
sell a new product/service a company is Operational
launching. Management

Answer 22
(i) — (a), (ii) — (c), (iii) — (b)

Question 23
Dheeraj is working as ‘Operations Manager’ in Tifco Ltd.
Name the managerial level at which he is working.

Answer 23
Dheeraj is working at middle level management.

Question 24
Name the level of management which is a team consisting
of managers from different functional levels, heading
finance, marketing, etc, for example, chief finance officer,
vice president (marketing).

Answer 24

Case Studies
Question 1
ABC Group of companies decided to donate 2% of its
sales to ‘Child Rights and You (CRY)’ for improving the
condition of children in India. This initiative by the
company was highly appreciated by the public and their
sales increased by 10%. Identify the objective of
management depicted in the given case.
(1 mark)

Answer 1
Social Objectives of management

Question 2
Management of Alpha Ltd. has installed a special
recycling plant to recycle the waste instead of dumping
the waste in ground. It is also providing employment
opportunities to local residents. Company started a
school nearby for the children of their employees.
Identify the objective of management the company is
fulfilling.
(1 mark)

Answer 2

Question 3
The manager of Beta Ltd. is very efficient and effective
and makes sure that all the employees and workers in
his team perform the task on time with minimum cost.
His main focus is on cost reduction. So he never listens
to the demand of workers for increasing wages. He
even gives no opportunity to workers for promotion.
As a result workers started becoming frustrated and
disheartened all the time. Which objective of
management could not be achieved by the manager?
(1 mark)

Answer 3
Personal objectives of management

Question 4
XYZ Power Ltd. set up a factory for manufacturing
solar lanterns in a remote village as there was no
reliable supply of electricity in rural areas. The revenue
earned by the company was sufficient to cover the
costs and the risks. The demand of lanterns was
increasing day by day, so the company decided to
increase production to generate higher sales. For this
they decided to employ people from the nearby villages
as very few job opportunities were available in that
area. The company also decided to open schools and
crèches for the children of its employees.
Identify and explain the objectives of management
discussed above. Also, quote the lines.
(3 marks)

Answer 4
The company is fulfilling the organisatonal and social
objectives of management.
Organisational objectives include survival, profit and
growth.
"In order to survive, XYZ Power Ltd. earns enough revenues."
"Company’s profits are sufficient to the cover the costs and the risks."
“Since demand for lanterns was increasing day by day,
therefore, the company decided to increase production to
generate higher sales, it implies that the company exploits fully
its growth potential."
Social objectives involve the creation of benefits for the
society.
"The company decided to employ people from the nearby
villages as very few job opportunities were available in that
area. It also decided to open schools and crèches for the
children of its employees."

Question 5
H. Tech Ltd. is a company producing IT services. The
company’s profits are enough for the survival and
growth. The management of the company believes that
a satisfied employee creates a satisfied customer, who
in turn creates profits that lead to satisfied
shareholders. So, it pays competitive salaries and perks
to all its employees. All the employees are happy
working in the organisation because of personal growth
and development.
The company has a strong sense of social responsibility.
It has set up an engineering college in which one-third
of the students are girls to whom the company gives
50% scholarship.
Is the management of H. Tech Ltd. fulfilling its objectives?
Justify your answer by by quoting the lines from the
above.
(3 marks)

Answer 5
Yes, the management of H. Tech Ltd. is fulfilling all the
objectives — organisational objectives, social objectives
and personal objectives.
(i) Organisational objectives are the economic objectives
of a business.These are survival, profit and growth.
"Profits of H.Tech Ltd. are enough for the survival and growth."
(ii) Social objectives involve creation of benefits or
economic value for the society.
"H. Tech Ltd. has set up an engineering college in which one-
third of the students are girls to whom the company gives
50% scholarship.
(iii) Personal objectives are related to satisfying diverse
needs of the employees such as financial needs, social
needs and higher level needs.
“...it pays competitive salaries and perks to all its employees.
All the employees are happy working in the organisation
because of personal growth and development.”

Question 6
Rajiv Automobiles aims to produce and sell 1,00,000
cars in 2019. To achieve this objective, the production
department strives for timely production and sales
department takes all possible steps to sell them. Due to
combined efforts of all the departments, the company is
able to achieve its target. Which significance of
management is highlighted in the given case?
(1 mark)

Answer 6
Management helps in achieving group goals.

Question 7
Fashion India Limited is a chain of ladies garments
boutiques where most of the work is done manually.
Due to coming of international brands in India, the
company is finding it difficult to compete on two
fronts—finishing and embroidery work. The production
manager realised that without modern machines it
would not be possible for them to survive for long. The
company purchased new hi-tech modern machines
from Germany. During the production process, the
manager observed that the quality of production is not
as per standard and very often production is disrupted
Question 7
due to break-down of machinery. The workers get
frustrated by continuous rejection of output and
started showing resistance towards new technology. To
increase the efficiency of the workers, the company
decided to train their workers on-the-job under the
able guidance of specialists. The workers who are able
to pick the skills are promoted and made incharge of
the not so trained groups. This created positive impact
and everybody became keen to learn. Suggestions from
the workers are valued and workers are encouraged to
communicate freely.
Identify any three points of importance of management
highlighted in the above case by quoting the lines.
(3 marks)

Answer 7
The points of importance of management highlighted in
the given case are:
(i) Management increases efficiency
“To increase the efficiency of the workers, the company
decided to train their workers on-the-job under the able
guidance of specialists. ”
(ii) Management helps in achieving personal objectives.
“The workers who are able to pick the skills are promoted
and made incharge of the not so trained groups. This created
positive impact and everybody became keen to learn. ”
(iii) Management creates a dynamic organisation.
“The production manager realised that without modern
machines it would not be possible for them to survive for
long. The company purchased new hi-tech modern machines
from Germany. ”

Question 8
Mr. Shiv Sharma and Ms. Suhasini are both managers of
HTL Ltd. Mr. Shiv is the CEO of the company and Ms.
Suhasini is a branch manager at HTL Ltd. They manage
the enterprise at different levels. At which levels of
management are they working in HTL Ltd.?
(1 mark)

Answer 8
 Mr. Shiv Sharma, the CEO of the company is working
at the top level management.
 Ms. Suhasini, a branch manager at HTL Ltd. is working
at the middle level management.

Question 9
Ashutosh Goenka was working in ‘Axe Ltd.’, a company
manufacturing air purifiers. He found that the profits had
started declining from the last six months. Profit has an
implication for the survival of the firm, so he analysed
the business environment to find out the reasons for
this decline.
(a) Identify the level of management at which Ashutosh
Goenka was working.
(b) State three other functions being performed by
Ashutosh Goenka.
(CBSE 2017) (4 marks)
Answer 9
(a) Top Level Management
(b) Functions of the top level of management: (any three)
(i) To co-ordinate the activities of different
departments.
(ii) To be responsible for welfare and survival of the
organisation.
(iii) To formulate overall organisational goals and
(iv) To be responsible for all the activities of the
business and for its impact on the society.
Question 10
Rishitosh Mukerjee has recently joined AMV Ltd., a
company manufacturing refrigerators. He found that his
department was under-staffed and other departments
were not cooperating with his department for smooth
functioning of the organization. Therefore, he ensured
that his department has the required number of
employees and its cooperation with other departments
is improved.
(a) Identify the level at which Rishitosh Mukerjee was
working.

(b) Also, state three more functions required to be
performed by Rishitosh Mukerjee at this level.

Answer 10
(a) Middle Level Management
(b) Functions of the middle level of management:
(i) To interpret the policies framed by the top
management.
(ii) To assign necessary duties and responsibilities to
the employees of their respective departments
for implementation of the plan.
(iii) To motivate employees of their respective
departments to achieve the desired objectives.

Question 11
Govinda Ltd. is a highly reputed company. Different
functions are performed by different individuals in this
company, who are bound together in a hierarchy of
relationships. Every individual in the hierarchy is
responsible for successful completion of a particular task.
Mr. Gauranga is responsible for the welfare and survival
of the organisation. He formulates overall organisational
goals and strategies for their achievement.
Mr. Nityanand ensures that quality of output is
maintained, wastage of materials is minimised and safety
standards are maintained.
Mr. Sanatan assigns necessary duties and responsibilities
to the personnel and motivates them to achieve desired
objectives.
At what levels of management are Mr. Gauranga, Mr.
Nityanand and Mr. Sanatan working in Govinda Ltd.?
Justify your answer.
(3 marks)

Answer 11
(i) Mr. Gauranga is working at the top level management.
He is responsible for the welfare and survival of the
organisation. He formulates overall organisational
goals and strategies for their achievement.
(ii) Mr. Nityanand is working at the operational/
supervisory management.
He ensures that quality of output is maintained,
wastage of materials is minimised and safety standards
are maintained.

(iii) Mr. Sanatan is working at the middle level
management.
He assigns necessary duties and responsibilities to
the personnel and motivates them to achieve desired
objectives.

Management as Art, Science and
1.3
Profession
Management as an Art
Art is the skillful and personal application of
existing knowledge to achieve desired results. It
can be acquired through study, observation and
experience.
The basic features of an art are as follows:
(i) Existence of theoretical knowledge: Any art
(literature on dancing, public speaking, acting or
music) presupposes the existence of certain
theoretical knowledge.
(ii) Personalised application: The use of this basic
knowledge varies from individual to individual.
Art is, therefore, a personalised concept. For
example, two dancers, two speakers, two actors,
or two writers will always differ in demonstrating
their art.
(iii) Based on practice and creativity: All art is
practical. Art involves creative practice of
existing theoretical knowledge. Since art is
concerned with personal application of
knowledge some kind of creativity is required to
practice the basic principles learnt. For example,
a musician makes a unique composition based
on seven basic notes.
Management can be said to be an art since it satisfies
the following criteria:
1. Existence of theoretical knowledge

As in art, in management too, there is a lot of
literature available in various areas of management
(like finance, marketing, human resource, etc.)
which the manager has to specialise in. A successful
manager practices the art of management in the day-
to-day job of managing an enterprise based on study,
observation and experience.
2. Personalised application
Like in any art, in management too, a manager
applies his acquired knowledge in a personalised
and unique manner. He is involved in the activities
of the organisation, studies critical situations and
formulates his own theories for use in a given
situation. This gives rise to different styles of
management.
3. Based on practice and creativity
Management satisfies this criteria as manager
gains experience and achieves perfection after
long practice. A good manager works through a
combination of practice, creativity, imagination,
initiative and innovation.
Management as a Science
The basic features of science are as follows:
Science is a systematic body of knowledge. Its
principles are based on a cause and effect
relationship. For example, the phenomenon of an
apple falling from a tree towards the ground is
explained by the law of gravity.
Scientific principles are first developed through
observation and then tested through repeated
experimentation under controlled conditions.
Scientific principles have universal validity and
application.
Based on the above features, we can say that
management is a science but not an exact science or a
social science. It is neither as precise nor as
comprehensive as the pure science like Physics or
Chemistry. The following points clearly prove this:
1. Systematised body of knowledge
Like science, management is a systematic body of
knowledge with its own theory, vocabulary of terms,
concepts and principles that have developed over a
period of time.
So, this feature of science is present in management.
2. Principles based on observation and
experimentation
Like science, the principles of management are
derived over a period of time through observation
and repeated experimentation. However, since
management deals with human beings and human
behaviour, the outcomes of these experiments are
not capable of being accurately predicted. Therefore,
management can be called an inexact science.
So, this feature of science is not fully present in
management.
3. Universal Validity
The principles of management provide managers
with certain standardised techniques that can be
used in different situations. These principles are also
used for training and development of managers.
However, the principles of management are not as
exact as the principles of science. Their application
and use is not universal. They have to be modified
according to a given situation.
So, this feature of science is not fully present in
management.
 Top Tip
Management is both an art and a science.
Management has features of both art and science.
 The practice of management is an art.
 However, managers can work better if their practice is
based on the principles of management. These principles
constitute the science of management.
Management as an art and a science are therefore not
mutually exclusive, but complement each other.
Management as a Profession
A profession has the following characteristics:
(i) Well-defined body of knowledge: All professions
are based on a well-defined body of knowledge that
can be acquired through instruction.
(ii) Restricted entry: The entry to a profession is
restricted through an examination or through
acquiring an educational degree. For example, to
become a chartered accountant in India a
candidate has to clear a specified examination
conducted by the Institute of Chartered
Accountants of India.
(iii) Professional association: All professions are
affiliated to a professional association which
regulates entry, grants certificate of practice and
formulates and enforces a code of conduct. To be
able to practice in India lawyers have to become
members of the Bar Council of India which
regulates and controls their activities.
(iv) Ethical code of conduct: All professions are
bound by a code of conduct which guides the
behaviour of its members. All doctors, for
example, take the oath of ethical practice at the
time they enter the profession.
(v) Service motive: The basic motive of a profession
is to serve their client’s interests by rendering
dedicated and committed service. The task of a
lawyer is to ensure that his client gets justice.
Management is a profession but not a full fledged
profession like legal, accounting or medical professions
since it does not meet the exact criteria of a true
profession. The following points clearly prove this.
1. Well-defined body of knowledge
Like a profession, management too is based on a
systematic body of knowledge comprising well-defined
principles. This knowledge can be acquired at different
colleges and professional institutes and through a
number of books and journals.
The subject of management is taught at different
institutions such as the Indian Institutes of Management
(IIMs) to provide management education.
So, this feature of profession is present in management.
2. Restricted Entry
Entry to management institutes such as the Indian
Institutes of Management (IIMs) is usually through an
examination.
However, there is no restriction on anyone being
designated or appointed as manager in any business
enterprise. Anyone can be called a manager irrespective
of the educational qualifications possessed.
Unlike professions such as medicine or law which
require a practicing doctor or lawyer to possess valid
degrees, nowhere in the world is it mandatory for a
manager to possess any such specific degree. But
professional knowledge and training is considered to be
a desirable qualification, since there is greater
demand for those who possess degrees or diplomas
from reputed institutions.
So, presently this feature of profession is not present
in management.
3. Profession Association
There are several associations of practicing managers
in India, like All India Management Association
(AIMA) that has laid down a code of conduct to
regulate the activities of their members. There is,
however, no compulsion for managers to be members
of such an association.
So, presently this feature of profession is not present in
management.
4. Ethical code of conduct
AIMA has devised a code of conduct for Indian
managers but there is no statutory backing for this
code.
So, presently this feature of profession is not present in
management.
5. Service motive
The basic purpose of management to help the
organisation achieve its goals by providing good
quality products at reasonable prices, thereby serving
the society is being increasingly recognised.
So, presently this feature of profession is not fully
present in management.
RECAP
Management as an Art
Art is the skillful and personal application of knowledge to
achieve desired results. Management is an art because of
the following reasons:
1. Existence of theoretical knowledge: As in art, in
management too, there is a lot of literature available in
various areas of management which the manager has to
specialise in.
2. Personalised application: Like in any art, in
management too, a manager applies his acquired
knowledge in a personalised and unique manner.
3. Based on continuous practice and creativity:
Management satisfies this criteria as manager gains
experience through regular practice and becomes more
effective. Like any other art, a manager after studying
various situations, formulates his own theories for use in a
given situation. This gives rise to different styles of
management.
As all the criteria of art are satisfied by management, it
qualifies as an art.
Management as a Science
Science is a systematised body of knowledge that explains certain
general truths or the operation of general laws. Management is a
science but not an exact science. The reasons are:
1. Systematised body of knowledge: Like science,
management is a systematised body of knowledge with its
own theories and principles that have developed over a
period of time. So, this feature of science is present in
management.
2. Principles based on observation and experimentation:
Like science, management principles are derived through
observation and repeated experimentation. However, since
management deals with human beings the outcome of
these experiments are not capable of being accurately
predicted. So, this feature of science is not fully present in
management.
3. Universal validity: Principles of management like
principles of pure science provide managers with certain
standardised techniques that can be used in different
situations. However, since they have to be modified
according to a given situation, their application and use is
not universal. So, this feature of science is not fully
present in management.
Management is both an art and a science. The practice of

management is an art. However, managers can work
better if their practice is based on the principles of
management. These principles constitute the scieznce of
management. Management as an art and a science are
therefore not mutually exclusive, but complementary to
each other.
Management as a Profession SWEEP
Management is a profession but not a full-fledged profession
like legal, accounting or medical professions because it does
not meet the exact criteria of a profession.
1. ell-defined body of knowledge: All professions are
based on a well-defined body of knowledge that can be
acquired through instruction. Management too is based on
a systematic body of knowledge comprising well-defined
principles. This feature of profession is present in
management.
2. Restricted ntry: The entry to the above stated profession
is restricted through a prescribed qualification. But there is
no restriction on anyone being appointed as a manager in
any business enterprise. So, presently this feature of
profession is not present in management.
3. rofessional association: Legal and medical professions
are affiliated to a professional association like bar council
and medical council which regulates entry, grants
certificate of practice and formulates and enforces a code
of conduct. There are several associations of practising
managers in India, like the AIMA that has laid down a code
of conduct to regulate the activities of their members.
There is, however, no compulsion for managers to be
members of such an association. So, presently this feature
of profession is not present in management.
4. thical code of conduct: Legal and medical professions
are bound by a code of conduct which guides the
behaviour of its members. AIMA has devised a code of
conduct for Indian managers but there is no statutory
backing for this code. So, presently this feature of
profession is not present in management.
5. ervice motive: The motive of legal and medical
profession is to serve their clients' interests by rendering
dedicated and committed service. The basic purpose of
management to help the organisation achieve its goals by
providing good quality products at reasonable prices,
thereby serving the society is being increasingly
recognised. So, presently this feature of profession is not
fully present in management.
Question 1
“Management is the systematised body of knowledge
that explains certain general truths.” Identify the nature
of the management highlighted in the statement.

Answer 1
Management is a science

Question 2
“Management is skillful and personal application of
existing knowledge to achieve desired results.” Identify
the nature of the management highlighted in the
statement.

Answer 2
Management is an art

Question 3
Which of the following statement best explains the
“Management is an Art”?
(a) Two managers deal with the same problem differently.
(b) Management has drawn its knowledge from other
disciplines also.
(c) No formal qualification is required for the appointment
as a manager in a company.
(d) Outcomes of managerial actions cannot be predicted
accurately.

Answer 3
(a) Two managers deal with the same problem
differently.

Question 4
Management is:
(a) an art.
(b) a science.
(c) both art and science.
(d) neither art nor science.

Answer 4
(c) both art and science.

Question 5
Which of the following is not a characteristic of a
profession?
(a) Service motive
(b) Restricted entry
(c) Based on practice and creativity
(d) Well-defined body of knowledge.

Answer 5
(c) Based on practice and creativity

Question 6
In today’s scenario, organisations look for individuals with
specific qualifications and experience to manage them. It
has also been observe that there has been an increase in
the corporate form of business and increasing emphasis
on managed business concerns. What does the above
statement imply?

Answer 6
Management is a profession. However, it is not a full-
fledged profession like legal, accounting and medical
professions.

Case Studies
Question 1
A. R. Rehman is the first Indian to win Oscar award for
his composition ‘Jai Ho’. His composition of music is
unique as he has used the singing notes in a manner
that is entirely his own interpretation. Like A. R. Rehman,
Mr. Sugan, General Manager in Star Ltd., uses his
knowledge of management in a unique manner. All the
employees working under his guidance are happy and
satisfied because of his good behaviour. He everyday
rewards/appreciates the employees for coming office on
time, performing their assigned tasks with best of their
capabilities. Moreover, Mr. Sugan treats all his employees
as fairly as possible. He does not discriminate his
employees on the basis of sex, religion, caste, belief, etc.
Identify the nature of the management highlighted in
the above case. (1 mark)

Answer 1
Management is an art.

Question 2
Hema is one of the most successful managers of her
company, ‘Kobe Ltd.’ She uses her creativity and initiative
in handling challenging situations at work. The knowledge
gained by her during her student days at a renowned
management institute as well as through her observation
and experience over the years is applied by Hema in a
skillful manner in the context of the realities of a given
situation. She often reads books and other literature in
various fields of management to keep her knowledge
updated.

(i) An aspect of the nature of management is being
highlighted in the above description. Identify the
aspect.
(ii) Explain any three features of the aspect identified in
part–(i). (CBSE 2017) (4 marks)

Answer 2
(i) Management as an art.
(ii) Three features that establish it as an art are:
(a) Existence of theoretical knowledge: As in art, in
management too, there is a lot of literature
available in various areas of management which
the manager has to specialise in.
(b) Personalised application: Like in any art, in
management too, a manager applies his acquired
knowledge in a personalised and unique manner.

(c) Based on continuous practice and creativity:
Management satisfies this criteria as manager
gains experience through regular practice and
becomes more effective. Like any other art, a
manager after studying various situations,
formulates his own theories for use in a given
situation. This gives rise to different styles of
management.

Question 3
Akshat and Kshitiz are managers at the same level of
management in a company. Akshat says that management
is an ‘art’ whereas Kshitiz says that management is a
‘science’. As the director of the company, explain the
true nature of management to Akshat and Kshitiz.
(6 marks)

Answer 3
Management is regarded as an ‘art’ because like in any
art, in management too, there is:
— existence of theoretical knowledge (e.g. finance,
marketing, etc.);
— personalised application of scientific methods to a
given situation; and
— continuous practice and creativity which gives rise to
formulation of theories and styles of management.

Management is regarded as a ‘science’ because like
science, management is a systematic body of knowledge
with its own theories and principles which are derived
through observation and repeated experimentation.
However, since management deals with human beings
and human behaviour, the outcomes of these
experiments are not capable of being accurately
predicted. Therefore, management is called an ‘inexact
science’.

True nature of management
Management is both an art and a science. The practice
of management is an art. However, managers can work
better if their practice is based on the principles of
management. These principles constitute the science of
management. Management as an art and a science are
therefore not mutually exclusive, but complementary to
each other.

Question 4
Aman, Ahmad and Ally are partners in a firm engaged in
the distribution of dairy products in Maharashtra state.
Aman is a holder of Senior Secondary School Certificate
from Central Board of Secondary Education with
Business Studies as one of his elective subjects. Ahmad
had done his post graduation in History and Ally in dairy
farming. One day there was a serious discussion between
Ahmad and Ally regarding the nature of management.
Ahmad argued that management was a profession
whereas Ally argued against it saying that the legal and
medical professions are the only professions because they
fulfill all the conditions of profession.
Aman on the basis of his knowledge of business studies
explained the nature of management as a profession to
Ahmad and Ally.
Explain, how Aman would have satisfied both Ahmad and
Ally.
(5 marks)

Answer 4
Management is a profession but not a full-fledged
profession like legal, accounting or medical professions
because it does not meet the exact criteria of a
profession.
1. Well-defined body of knowledge: Like a profession,
management too is based on a systematic body of
knowledge comprising well-defined principles.
2. Restricted Entry: The entry to a profession is
restricted through a prescribed qualification. But
there is no restriction on anyone being appointed as
a manager in any business enterprise.
3. Professional association: Like legal and medical
professions are affiliated to bar council and medical
council, there are several associations of practising
managers in India, like the AIMA . However, there is
no compulsion for managers to be members of
such an association.
4. Ethical code of conduct: Legal and medical
professions are bound by a code of conduct which
guides the behaviour of its members. AIMA has
devised a code of conduct for Indian managers but
there is no statutory backing for this code.
5. Service motive: The basic purpose of management to
help the organisation achieve its goals by providing
good quality products at reasonable prices, thereby
serving the society is being increasingly recognised.

Coordination – Concept,
1.4
Characteristics and Importance
Concept of Coordination
The process by which a manager synchronises the
activities of different departments is known as
coordination.
Coordination is the force that binds all the other
functions of management. It is the common thread
that runs through all activities such as purchase,
production, sales, and finance to ensure continuity in
the working of the organisation.
It is through the process of coordination that a
manager ensures the orderly arrangement of
individual and group efforts to ensure unity of action
in the realisation of common objectives. Coordination
therefore involves synchronisation of the different
actions or efforts of the various units of an
organisation. This provides the requisite amount,
quality, timing and sequence of efforts which ensures
that planned objectives are achieved with a minimum
of conflict.
Coordination is important as it integrates the efforts of
individuals, departments and specialists. The primary
reason for coordination is that departments and
individuals in the organisation are interdependent, i.e.
they depend on each other for information and
resources to perform their respective activities. Thus,
managers need to reconcile differences in approach,
timing, effort or interest. At the same time, there is a
need to harmonise individual goals and organisational
goals.
Definition of Coordination
 “Coordination is the orderly synchronising of efforts of
subordinates to provide proper amount, timing and
quality of execution so that their united efforts lead to
the stated objectives, namely, the common purpose of
the enterprise.” —Theo Haimann
 “Coordination is the process whereby an executive
develops an orderly pattern of group efforts among his
subordinates and secures unity of action in the pursuit of
common purpose.” —McFarland
 “Coordination is balancing and keeping together the
team by ensuring suitable allocation of tasks to the
various members and seeing that the tasks are performed
with harmony among the members themselves.”
—E.F.L. Brech
Coordination – The Essence of
Management
Coordination is sometimes considered a separate
function of management. It is however, the essence of
management, for achieving harmony among individual
efforts towards the accomplishment of group goals.
Each managerial function is an exercise contributing
individually to coordination. Coordination is implicit
and inherent in all functions of an organisation.
 The process of coordinating the activities of an
organisation begins at the stage itself. Top
management plans for the entire organisation.
 According to these plans the organisational structure
is developed, which is the outcome of process.
 The function is performed to fill the roles designed
in the organisational structure.
 In order to ensure that these plans are executed
according to plans, is required.
 Any discrepancies/deviations between actual and
standard performance are taken care of at the stage of.
Thus, coordination is not a separate function of
management, but its very essence. For an organisation
to effectively and efficiently achieve its objectives
coordination is required. Like a thread in a garland,
coordination is a part of all management functions.
Characteristics/Features of Coordination
1. Coordination integrates group efforts.
Coordination unifies unrelated or diverse interests
into purposeful work activity. It gives a common focus
to group effort to ensure that performance is as it was
planned and scheduled.
2. Coordination ensures unity of action.
The purpose of coordination is to secure unity of
action in the realisation of a common purpose. It acts
as the binding force between departments and ensures
that all action is aimed at achieving the goals of the
organisation.
3. Coordination is a continuous process.
Coordination is not a one-time function but a
continuous process. It begins at the planning stage
and continues till controlling.
4. Coordination is an all pervasive function.
Coordination is required at all levels of management
due to the interdependent nature of activities of
various departments. It integrates the efforts of
different departments and different levels.
5. Coordination is the responsibility of all
managers.
Coordination is the function of every manager in the
organisation.
 Top level managers need to coordinate with their
subordinates to ensure that the overall policies for
the organisation are duly carried out.
 Middle level management coordinates with both the
top level and first line managers.
 Operational level management coordinates the
activities of its workers to ensure that work proceeds
according to plans.
6. Coordination is a deliberate function.
A manager has to coordinate the efforts of different
people in a conscious and deliberate manner. Even
where members of a department willingly cooperate
and work, coordination gives a direction to that willing
spirit.
 Top Tip
Cooperation in the absence of coordination may lead to
wasted effort and coordination without cooperation may
lead to dissatisfaction among employees.
Importance of Coordination
1. Growth in size
As organisations grow in size, the number of people
employed by the organisation also increases. At times, it
may become difficult to integrate their efforts and
activities. All individuals differ in their habits of work,
background, approaches to situations and relationships
with others.
It becomes necessary to ensure that all individuals work
towards the common goals of the organisation. But
employees may have their own individual goals also.
Therefore, for organisational efficiency, it is important
to harmonise individual goals and organisational goals
through coordination.
2. Functional differentiation
Functions of an organisation are divided into
departments, divisions and sections. In an
organisation there may be separate departments of
finance, production, marketing or human resources.
All these departments may have their own objectives,
policies and their own style of working. For example,
the marketing department’s objective may be to
increase sales by 10 per cent by offering discounts. But,
the finance department may not approve of such
discounts as it means loss of revenue.
These kinds of conflict arise in organisations because
each unit/ department is performing activities in
isolation from others and barriers between
departments are becoming more rigid. However, all
departments and individuals are interdependent and
they have to depend on each other for information to
perform their activities. The activity of each
department needs to be focused on attainment of
common organisational goals. The process of linking
the activities of various departments is accomplished
by coordination.
3. Specialisation
Modern organisations are characterised by a high degree
of specialisation. Specialisation arises out of the
complexities of modern technology and the diversity of
tasks to be performed. Organisations, therefore, need to
employ a number of specialists. Specialists usually think
that they only are qualified to evaluate, judge and decide
according to their professional criteria. They do not take
advice or suggestions from others in matters pertaining
to their area of specialisation.
This often leads to conflict amongst different specialists
as well as others in the organisation. Therefore, some
coordination is required by an independent person to
reconcile the differences in approach, interest or opinion
of the specialists.
RECAP
Coordination – The essence of management

activities of different departments is called
coordination.
Co-ordination is not a separate function of management.
It is the force that binds all other functions and thus called
the essence of management.
 The process of coordinating the activities begins at the
planning stage in which the top management plans for
the entire organization.
 At the organizing stage, the organizational structure is
developed as per plans.
 The staffing function is performed thereafter as per the
structure developed in the organization structure.
 Directing is then required to ensure that these plans are
executed accordingly.
 Controlling function ensures that the discrepancies
between actual and planned activities are taken care of.
Coordination, therefore, synchronises the efforts through
all functions of management and ensures that the
organizational objectives are achieved with a minimum
of conflict.
Characteristics/Features of Coordination DU PCR I
1. Coordination ntegrates group efforts by unifying
diverse interests into purposeful work activity.
2. Coordination ensures nity of action by acting as a
binding force between departments and ensuring that
all action is aimed at achieving the goals of the
organisation.
3. Coordination is a ontinuous process as it starts at the
planning stage and continues till controlling.
4. Coordination is a ervasive function as it is required in
all types of organisations, in all the departments and at all
levels. Coordination is required at all levels of management
due to the interdependent nature of activities of various
departments.
5. Coordination is the esponsibility of all managers at
the top, middle and operational level.
 Top level managers need to coordinate with their
subordinates to ensure that the overall policies are duly
carried out.
 Middle level management coordinates with both the top
level and first line managers.
 Operational level management coordinates the activities
of its workers to ensure that work proceeds according to
plans.
6. Coordination is a eliberate function as every manager
has to coordinate the efforts of different people in a
conscious and deliberate manner.
Need and Importance of Coordination
1. Growth in size – As organizations grow in size, the
number of people employed by the organization
increases. Individuals differ in their habits of work, needs
and behavior and may have their own individual goals.
Coordination is necessary to harmonize individual goals
and organizational goals. Coordination ensures that all
individuals work towards the common goals of the
organization.
2. Functional differentiation – Functions of organization
are divided into departments/divisions of finance,
production, marketing or human resources. All these
departments are dependent on each other. Coordination
links the activities of various departments to focus on
attainment of common goals. There may also arise
conflict among them. Coordination is needed to ensure
unity of action to avoid inter-departmental conflicts.
3. Specialisation – Modern organizations have high
degree of specialization and employ a number of
specialists. This leads to conflict as some specialists do
not like to take advice or suggestions from others.
Coordination is required to reconcile their differences.
Question 1
The process of linking the activities of various
departments is accomplished by ________.

Answer 1
Coordination

Question 2
Coordination is a one-time function. (True/False)

Answer 2
False: Coordination is a continuous process. It begins at
the planning stage and continues till controlling.

Question 3
___________ involves synchronisation of the different
actions or efforts of the various units of an organisation.

Answer 3
Coordination

Question 4
In the absence of ________ there is overlapping and
chaos instead of harmony and integration of activities.

Answer 4
Coordination

Question 5
Coordination is the function of the top management.
(True/False)

Answer 5
False: Coordination is the responsibility of all managers
from top level to supervisory level of management.

Question 6
For organisational efficiency, it is important to harmonise
individual goals and organisational goals through ______.

Answer 6
Coordination

Question 7
Identify and state the force that binds all the other
functions of management.

Answer 7
Coordination, which means the process by which
a manager synchronises the activities of different
departments.

Question 8
activities of different departments is known as
_____________.
(a) Coordination
(b) Cooperation
(c) Organising
(d) Supervision

Answer 8
(a) Coordination

Question 9
Which of the following is not a function of management?
(a) Planning
(b) Staffing
(c) Coordination
(d) Controlling

Answer 9
(c) Coordination

Question 10
Coordination is:
(NCERT) (Choose the correct alternative)
(a) a function of management.
(b) the essence of management.
(c) an objective of management.

Answer 10
(b) the essence of management.

Question 11
It is the force which binds all other functions of
management. It is the common thread that runs
through all activities such as purchase, production,
sales and finance to ensure continuity in the
working of the organisation. Identify it.

Answer 11
Coordination

Question 12
Name the process which provides the requisite
amount, quality, timing and sequence of efforts and
ensures that planned objectives are achieved with a
minimum of conflict.
(CBSE SQP 2018)

Answer 12
Coordination

Question 13
“Coordination is needed at all levels of management.
“State the characteristic of coordination highlighted
in the statement.

Answer 13
Coordination is an all pervasive function.

Case Studies
Question 1
In X Ltd., the purchase department purchased 10
tonnes of raw material for the production department.
However, the production department needed just 7
tonnes. Due to this reason, goods were over produced
and were not accepted by Sales department. As a
result, some goods remained unsold. Which aspect of
management is lacking?
(1 mark)

Answer 1
Coordination

Question 2
In Flipmart Co. Ltd. the production and sales department
have to coordinate their work, so that production takes
place according to the demand in the market.
State the feature of coordination highlighted above.
(1 mark)

Answer 2
Coordination ensures unity of action. It acts as the
binding force between departments and ensures that all
action is aimed at achieving the goals of the organisation.

Question 3
Company X is facing a lot of problems these days. It
manufactures white goods like washing machines,
microwave ovens, refrigerators and air conditioners.
The company’s margins are under pressure and the
profits and market share are declining. The production
department blames marketing for not meeting sales
targets and marketing blames production department
for producing goods, which are not of good quality
meeting customers expectations. The finance
department blames both production and marketing for
declining return on investment and bad marketing.
(a) What quality of management do you think the
company is lacking?
(b) Explain any five features of the concept of the
management identified in part (a).
(NCERT) (6 marks)

Answer 3
(a) Coordination
(b) Features of Coordination:
(i) Coordination integrates group efforts by unifying
diverse interests into purposeful work activity.
(ii) Coordination ensures unity of action by acting
as a binding force between departments and
ensuring that all action is aimed at achieving the
goals of the organisation.

(iii) Coordination is a continuous process as it starts
at the planning stage and continues till controlling.
(iv) Coordination is a pervasive function as it is
required in all types of organisations, in all the
departments and at all levels.
(v) Coordination is the responsibility of all managers
at the top, middle and operational level.

Question 4
Smita Rai is the director of Namchi Designer Candles,
which has 100 per cent women as employees. They
also produce varieties of candles. During Diwali, they
produce customized candles meant for the occasion.
Smita plans her diwali collection in the month of June
itself. She has to then ensure that there is adequate
workforce and continuously monitor whether
production is proceeding according to plans. Her
marketing department also has to be briefed in time to
prepare their promotional and advertising campaigns.
At Namchi Designer Candles, the production and sales
department coordinate their work, so that production
takes place according to the demand in the market.
The purchase, production and sales departmental
efforts have to be coordinated by Smita for achieving
organisational objectives harmoniously. The purchase
department is responsible for procuring fabric. This
then becomes the basis of the activities of the
production department and finally sales can take place.
If fabric purchased is of an inferior quality or is not
according to the specifications of the production
department, further sales will also decline.
Identify and explain by quoting lines from the above the
three characteristics of coordination.
(6 marks)

Answer 4
Three characteristics of coordination highlighted are:
(i) Coordination is a continuous process: Coordination
is not a one-time function but a continuous process.
It begins at the planning stage and continues till
controlling.
"Smita plans her diwali collection in the month of June
itself. She has to then ensure that there is adequate
workforce and continuously monitor whether production
is proceeding according to plans."

(ii) Coordination ensures unity of action: The purpose
of coordination is to secure unity of action in the
realisation of a common purpose. It acts as the
binding force between departments and ensures
that all action is aimed at achieving the goals of the
organisation.
"...the production and sales department coordinate
their work, so that production takes place according to
the demand in the market."

(iii) Coordination is an all pervasive function:
Coordination is required at all levels of management
due to the interdependent nature of activities of
various departments. It integrates the efforts of
different departments and different levels.
"The purchase, production and sales departmental
efforts have to be coordinated by Smita for achieving
organisational objectives harmoniously. The purchase
department is responsible for procuring fabric. This then
becomes the basis of the activities of the production
department and finally sales can take place."
Question 5
Modern organisations are characterised by a high degree
of specialisation. Specialisation arises out of the
complexities of modern technology and the diversity of
tasks to be performed. Organisations, therefore, need to
employ a number of specialists. Specialists usually think
that they only are qualified to evaluate, judge and decide
according to their professional criteria. They do not take
advice or suggestions from others. This often leads to
conflict amongst different specialists as well as others in
the organisation. State the reason why coordination is
required in such a case. (1 mark)
Answer 5
Coordination is required to reconcile the differences in
approach, interest or opinion of the specialists

Self-Assessment Test 1
Nature and Significance of Management
Time Allowed: 1 hour Maximum Marks: 25

Question 1
Match the columns: (1 mark)
Column I Column II
(i) The force that binds all the other functions (a) Planning
of management.
(ii) Doing the right task, completing activities (b) Coordination
and achieving goals.
(iii) Doing the task correctly and with minimum (c) Efficiency
cost.
(iv) Setting goals and developing a way of (d) Effectiveness
achieving them efficiently and effectively.
Self Assessment Test-1

Answer 1
(i) – (b), (ii) – (d), (iii) – (c), (iv) – (a)

Question 2
Management is:
(Choose the correct alternative) (1 mark)
(a) A Science
(b) An Art
(c) both science and art
(d) Neither

Answer 2
(c) both science and art

Question 3
A firm plans in advance and has a sound
organisation structure with efficient supervisory
staff and control system but on several occasion
it finds that plans are not being adhered to. It
leads to confusion and duplication of work.
Advise remedy.
(1 mark)

Answer 3
The management of the firm must perform
'Directing' function properly, which involves
execution of plans and motivating, leading,
communicating and supervising employees
at work.

Question 4
It is through the process of _______ that a manager
ensure the orderly arrangement of individual and
group efforts to ensure unity of action in the
realisation of common objective.
(a) Management
(b) Organising
(c) Coordination
(e) Controlling
Answer 4
(c) Coordination

Question 5
Justify how coordination is:
(a) a continuous process
(b) an all-pervasive function.
(3 marks)

Question 6
Mita has a successful ice cream business at Bikaner,
namely ‘Smartflavours’. Her ice creams are utterly
delicious. She makes ice creams from fresh milk and
the same are available in a wide range of flavours
and packs. She sets viable business objectives and
works with the same in mind in order to ensure that
the customers will come back for purchasing.
Having the first mover advantage, her business was
doing well. To earn higher profits, she started
cutting down costs. This would sometimes lead to
delay in delivery and the ice cream was not
reaching the market in time. Over a period of time,
the demand for her ice cream declined and
because of it the competitors entered the market.
She lost some of her market share to competitors.
At the beginning of summer season, she got back to
back orders for supply of 4,000 ice cream packs
of different flavours for special occasions. To ensure
that the task was completed and orders delivered
in time she hired additional workers. She was, thus
able to produce and deliver the ice cream packs
but at a high production cost.
While completing activities and finishing the given
task for achieving goals, Mita realised that she was
ignoring one of the important aspects of
management. Identify the aspect of management
that has been ignored by Mita. Also explain the
same with the help of an example.
(3 marks)
Answer 6
Efficiency: Efficiency means doing the task correctly
and with minimum cost.
Example: Suppose a company’s target production is
5,000 units in a year. The manager wants to achieve
the production target by cutting down costs. He was
able to cut down costs but could not achieve the
target production. In this case, the manager was
efficient but not effective.

Question 7
Successful organisations do not achieve their goals
by chance but by following a deliberate process.
Identify it and explain its importance by giving
any three points.
(4 marks)

Question 8
“Management seeks to achieve certain objectives
which must be derived from the basic purpose of
the business.” In the light of this statement, explain
the objectives of management.
(5 marks)

Question 9
Forex Ltd. is a private limited company with several
branches all over India. It promotes the sales of
Indian handloom and handicraft products while
providing equitable employment to traditional
artisans. Mr. Brijesh, a branch manager of the
company plans his winter collection in the month of
June itself. He has to ensure that there is adequate
workforce and continuously monitor whether
production is proceeding according to plans. He also
provides direction and motivation to his employees
his employees. The purchase, production and sales
departmental efforts are coordinated by Mr. Brijesh
for achieving organisational objectives harmoniously.
The production and the sales department coordinate
their work, so that production takes place according
to the demand in the market. The purchase
department is responsible for procuring material.
This then becomes the basis of the activities of the
production department and finally sales can take
place.
(a) Identify any three functions of management
performed by Mr. Brijesh in Forex Ltd. by
quoting lines from the above case.
(b) Identify and explain any two features of
coordination discussed in the above case.
(6 marks)

Answer 9
(a) The functions of management performed by Mr.
Brijesh in Forex Ltd. are: (any three)
(i) Planning: “...plans his winter collection in the month of
June itself.”
(ii) Staffing: “...ensure that there is adequate workforce.”
(iii) Controlling: “...continuously monitor whether
production is proceeding according to plans.”
(iv) Directing: “...provides direction and motivation to his
employees.”
(b) The features of coordination discussed in the
given case are: (any two with explanation)
(i) Coordination is a continuous process.
“...plans his winter collection... ensure that there is
adequate workforce and continuously monitor
whether production is proceeding according to
plans.”

(ii) Coordination is an all pervasive function.
“The purchase, production and sales departmental
efforts are coordinated by Mr. Brijesh for
achieving organisational objectives harmoniously.”
(iii) Coordination ensures unity of action.
“...The production and the sales department
coordinate their work, so that production takes
place according to the demand in the market.”


Question 1
“Management has to see that takes are completed
and goals are achieved with the least amount of
resources at a minimum cost.”
Identify by quoting lines the two important aspects
of the concept of management highlighted in the
above statement.
(1 mark)

Answer 1
(i) Effectiveness – “ tasks are completed and goals
are achieves.
(ii) Effectively – “goals are achieved with the least
amount of resources at a minimum cost."

Question 2
________ gives a common flows to group effort
to ensure that performance is as it was planned
and scheduled.
(a) Planning
(b) Controlling
(c) Coordination
(e) Directing

Answer 2
(c) Coordination

Question 3
Through ____________ the management helps
individuals to develop team spirit, cooperation
and commitment to group success.
(a) Coordination
(b) Motivation and leadership
(c) Effectiveness
(d) Efficiency

Answer 3
(b) Motivation and leadership

Question 4
Das is the Managing Director of ‘Gamut Ltd.’,
manufacturing different varieties of cheese. He has
an efficient team working under him consisting of
Rajat, the Production manager, Vinay – the
Marketing manager and Adit – the Finance
manager. They understand and interpret the policies
made by Das, ensure that their departments have
adequate manpower, assign them the necessary
duties and motivate them to achieve the desired
objectives.
State one more function other than those mentioned
above, that this team may perform at the level they
are working.
(1 mark)

Answer 4
Co-operate with other departments for smooth

Question 5
Indian Railways has launched a new broad gauge solar
power train which is going to be a path breaking leap
towards making trains greener and more environment
friendly. The solar power DEMU (Diesel Electric Multiple
Unit) has 6 trailer coaches and is expected to save
about 21,000 liters of diesel and ensure a cost saving
of `12,00,000 per year. Identify and explain the
objectives of management achieved by Indian Railways
in the above case.
(3 marks)
Answer 5
The objectives of management achieved by Indian
Railways are:
(i) Organisational Objectives
(a) Profit: Cost saving of `12,00,000 per year
due to solar power DEMU (Diesel Electric
Multiple Unit) implies increase in profits of
Indian Railways.
(b) Growth: Increase in number of products, i.e.
new broad gauge solar power trains.
Answer 5
(ii) Social Objectives
New broad gauge solar power train is going to
be a path breaking leap towards making trains
greener and more environment friendly.

Question 6
The management of Vrinda Ltd. strongly believes
that the members of an organisation should work
towards fulfilling the common organisational goals.
This requires team work and integration of efforts
of all individuals, departments and specialists. This is
because all the individuals and departments
depend on each other for information and resources
to perform their respective activities. Managers
need to reconcile differences in approach, timing,

effort or interest. At the same time it should
enable all its members to grow and develop.
Thus, there is a need to harmonise individual
goals and organisational goals.
(a) Identify and explain the concept of
management discussed above.
(b) State the characteristic of management
which is reflected from the above para.
(3 marks)
Answer 6
(a) Coordination (give explanation)
(b) Management is a group activity

Question 7
“Science is a systematised body of knowledge that
explains certain general truths or the operation of
general laws.” In the light of this statement, describe
whether management is a science.
(4 marks)

Question 8
“Coordination is the orderly arrangement of group
efforts to provide unity of action in the pursuit of
common purpose.” In the light of this statement,
explain the nature of coordination.
(5 marks)

Question 9
Name the process of designing and maintaining an
environment in which individuals working together
in groups efficiently accomplish selected aims. Also,
explain its importance by giving any five points.
(6 marks)

Answer 9
Management
Importance of management (explain five points)


Question 1
‘Management is defined as a process of getting
things done with the aim of achieving goals
effectively and efficiently.’ ‘Process’ in the
definition means the primary function or activities
that management performs to get things done.
Enumerate these functions or activities.
(1 mark)

Answer 1
Planning, Organising, Staffing, Directing
and Controlling.

Question 2
‘The basic objective of any business is _________.
(a) Survival
(b) Profit
(c) Growth
(d) Personal

Answer 2
(a) Survival

Question 3
_______________ is responsible for implementing
and controlling plans and strategies developed by
the senior most executives of the organisation.
(Fill up the blank with correct answer) (1 mark)

Answer 3

Question 4
The purchase, production and sales managers at
Sharda Ltd, a firm manufacturing ready made
garments are generally at a conflict, as they have
their own objectives. Usually each thinks that only
they are qualified to evaluate, judge and decide on
any matter, according to their professional criteria.
Name the concept which will be required by the
CEO Mr. Raman, to reconcile the differences in
approach, interest or opinion in the organisation. (1)

Answer 4
Coordination.

Question 5
List any three tasks that Mr. Armstrong needs to do,
as a production manager, in his firm, to carry out
the plans laid down by the top managers.
(3 marks)

Answer 5
Following are the tasks that Mr. Armstrong needs to
perform as a production manager in his firm to
carry out the plans laid down by the Top managers:
(any three)
(i) Interpret the policies framed by top
management.
(ii) Ensure that the production department has the
necessary personnel.
(iii) Assign necessary duties and responsibilities to
them. Self Assessment Test-3
(iv) Motivate them to achieve the desired objectives.
(v) Cooperate with other departments for the smooth
functioning of the organization.

Question 6
In a company, the marketing department’s objective is
to increase sales by 10 per cent by offering discounts.
But, the finance department does not approve of such
discounts as it means loss of revenue.
These kinds of conflict arise in organisations because
of the lack of one of the concepts of management.
(a) Identify and explain the concept of management
highlighted above.

(b) State the characteristic of management the
company is violating. (3 marks)

Answer 6
(a) Coordination (give explanation)
(b) Management is a group activity.

Question 7
Kamal, Khan and David are partners in a firm
engaged in the distribution of dairy products in
Madhya Pradesh. Kamal is a holder of Senior
Secondary School Certificate from Central Board of
Secondary Education with Business Studies as one of
his elective subjects. Khan had done his post-
graduation in Hindi literature and David in Dairy
Farming. One day there was a serious discussion
between Khan and David regarding the nature of

‘Management as a Science. Khan argued that
Management is not a science whereas David was of
the opinion that Management is a science. Kamal
intervened and corrected both Khan and David
about the nature of Management as a Science with
the help of his knowledge of Business Studies.
Explain, how Kamal would have been able to satisfy
both Khan and David.
(4 marks)
Question 8
"A successful enterprise has to achieve its goals
effectively and efficiently." Explain the statement,
giving examples.
(5 marks)

Question 9
Define management. State any five characteristics
of management.
(6 marks)


Question 1
________________ is concerned with the end result
(Effectiveness/Efficiency).
(Choose the correct option) (1 mark)

Answer 1
Effectiveness

Question 2
Management has to ensure that the organisation
makes a profit. Profit is essential for ___________.
(Complete the sentence) (1 mark)

Answer 2
covering costs and risks of the business

Question 3
Providing basic amenities like schools and crèches to
employees is an example of ________ objectives of
management.
(a) Organisational
(b) Social
(c) Personal
(d) Growth

Answer 3
(b) Social

Question 4
In an organisation, managers need to reconcile
differences in approach, timing, effort or interest. At
the same time, there is a need to harmonies
individual goals and organisational goals.
State the concept of management highlighted in the
above para.
(1 mark)

Answer 4
Coordination, which is the process by which a
manager synchronises the activities of different
departments.

Question 5
One of the objectives of management is to
consistently create economic value for various
constituents of the society. Explain this objective
of management by giving any two examples.
(3 marks)

Question 6
Answer the following:
(a) How does coordination ensure unity of action in
Management?
(b) At which level of management coordination takes
place in an organisation?
(c) How does coordination integrate group efforts?
(3 marks)

Question 7
Nishtha is a manager of a company selling laptops.
She plans the target sale of 2,000 laptops per
month. She allocates necessary resources to carry
out the plan. She has six salesmen working under
her. She works with them, guiding and motivating
them to achieve the target sales. At the end of the
month, after comparison of actual sales with the
target sales she found that actual sales exceeded
the target sales.

Identify, by quoting the lines from the above
paragraph, the functions of management Nishtha is
performing. Explain these functions by quoting the
lines.
(4 marks)

Answer 7
Nishtha is performing the following functions of
management: (explain)
(i) Planning– ‘She plans the target sale of 2,000
laptops per month.’
(ii) Organising– 'She allocates necessary resources
to carry out the plan.’
(iii) Directing– ‘She works with them, guiding and
motivating them to achieve the target sales.’

(iv) Controlling– ‘At the end of the month, after
comparison of actual sales with the target sales
she found that actual sales exceeded the target
sales.’

Question 8
A company’s target production is 5000 units in a
year. To achieve this target the manager has to
operate on double shifts due to power failure most
of the time. The manager is able to produce 5000
units but at a higher production cost.
(a) Is the manager effective and efficient? Give
reasons.
(b) Why is it important for a manager to be both
effective and efficient? Explain. (5)
Answer 8
(a) In this case, the manager is effective since he is
able to produce the company’s target production
is 5000 units in a year. But he is not so efficient,
since for the same output, more inputs (labour
cost, electricity costs) were used.

Question 9
Define management. Do you think management has
the characteristics of a full-fledged profession? Give
reasons in support of your answer.
(6 marks)


Question 1
There is a kind of cost benefit analysis and the
relationship between inputs and outputs. If by
using less resources (i.e. the inputs) more
benefits are derived (i.e., the outputs), then
efficiency has increased.
Name any four input resources required to do a
particular task.
(1 mark)

Answer 1
Money, Materials, Equipment and persons

Question 2
______________ is responsible for all the activities
of first line managers.

Answer 2

Question 3
Management is required not for itself but for
__________.

Answer 3
achieving the goals the organisation

Question 4
In which two functions of management do managers
at the top level spend more time than managers at
lower level of the organisations?
(1 mark)

Answer 4
Planning and Organising

Question 5
Answer the following:
(a) Why is management a group activity?
(b) How does management increase efficiency?
(c) What is the purpose of coordination?
(3 marks)

Question 6
Why is management considered to be a multi-
dimensional concept? Explain.
(3 marks)

Question 7
Company X is facing a lot of problems these days. It
manufactures white goods like washing machines,
microwave ovens, refrigerators and air conditioners.
The company’s margins are under pressure and the
profits and market share are declining. The
production department blames marketing for not
meeting sales targets and marketing blames
production department for producing goods, which
are not of good quality meeting customers’

expectations. The finance department blames both
production and marketing for declining return on
investment and bad marketing.
What quality of management do you think the
company is lacking? Explain its importance by
giving any three points.
(4 marks)

Answer 7
Coordination (explain)

Question 8
"Coordination is the essence of management." Do
you agree? Give reasons.
(5 marks)

Question 9
B Ltd. wants to modify its existing product, DVD
player in the market due to decreasing sales. State
any two functions of each level of management to
give effect to this decision of the company.
(6 marks)

Answer 9
Top level managers such as the chief executive
officer, the chairman, president, etc. should perform
the following functions:
(i) To modify/modernise their existing product (DVD
player), they must plan to manufacture MP3
player, Blue ray player, etc. They must formulate
overall orginisational goals and strategies for
their achievement.

(ii) They must coordinate the activities of different
departments according to all overall objectives
Middle level managers such as production manager,
marketing manager etc., should perform the
following functions:
(i) They must interpret the policies framed by top
management regarding modernisation of their
product and ensure that their department has the
necessary personnel.
(ii) They must assign necessary duties and
responsibilities to them, motivate them to achieve
desired objectives, and cooperate with other
departments for smooth functioning of the
organisation.
Foremen and supervisors should perform the
following functions:
(i) To pass on instructions of the middle management
to the workforce and to oversee their efforts to

produce new products, i.e. Mp3 player, Blue ray
player etc.
(ii) To maintain quality of output, minimise wastage
of materials, and to maintain safety standards.

 Principles of Management–concept and
significance
 Fayol’s principles of management
 Taylor’s Scientific management–principles and
techniques
Principles of Management: Concept
Principles of management are broad and general
guidelines for decision-making and behaviour.
They can be used for conduct in workplaces under
certain situations. They help managers to take and
implement decisions.
For example, while deciding about promotion of an
employee one manager may consider seniority, whereas
the other may follow the principle of merit.
Principles of management are guidelines to action.
They denote a cause and effect relationship. While
functions of management viz. , Planning, Organising,
Staffing, Directing and Controlling are the actions to
be taken while practising management, principles of
help managers to take decisions while performing
these functions.
 Principles of management have been developed on
the basis of observation and experimentation as
well as personal experiences of the managers.
 Depending upon how they are derived and how
effective they are in explaining and predicting
managerial behaviour, they contribute towards the
development of management both as a science and
as an art. Derivation of these principles may be said
to be a matter of science and their creative
application may be regarded as an art.
 Management principles have gained importance
with increasing professionalisation of management.
Distinction between Principles of
Management and Principles of Pure Science
Management principles are not as rigid as principles of
pure science. They deal with human behaviour and,
thus, are to be applied creatively given the demands of
the situation. Human behaviour is never static and so
also technology, which affects business. Hence, all the
principles have to keep pace with these changes.
Management and Techniques of Management
Techniques are procedures or methods, which involve a
series of steps to be taken to accomplish desired goals.
Principles are guidelines to take decisions or actions
while practicing techniques.
Management and Values
 Values are something, which are acceptable or
desirable. hand, principles are basic truths or guidelines
for behaviour.
 Values are general rules for behaviour of individuals
in society formed through common practice
whereas principles of management are formed after
research in work situations, which are technical in
nature.
 However, while practicing principles of managem-
ent values cannot be neglected, as businesses have
to fulfill social and ethical responsibilities towards
society.
Henry Fayol
1. Life Time: 1841 to 1925
2. Profession: Mining Engineer and
Management Theorist (French national)
3. Education: Graduated from Mining
Academy at St. Entinne in 1880.
4. Positions Held: Founded the mining
company ‘Compagnie de Commentry-
Fourchambean- Decazeville’ and
became its Managing Director in 1888
and remained till 1918.
5. Writings: Administration industrielle et
générale. It was published in English as
General and Industrial Management in
1949 and is widely considered a foundational work in classical management
theory.
6. Contributions: Mainly 14 Management Principles, which are referred to as
administrative in nature in that they have Top-Down approach concerning
top management and other manager’s conduct. In the development of
classical school of management thought, Fayol’s administrative theory
6. provides an important link. Fayol’s contribution must be
interpreted in terms of the impact that his writings had and
continue to have improvement in managerial efficiencies.
Henri Fayol (1841-1925) was a French management theorist whose
theories concerning organisation of labour were widely influential
in beginning of twentieth century. He graduated from the mining
academy of St. Etienne in 1860 in mining engineering. The 19 year
old engineer started at the mining company ‘Compagnie de
commentary-Fourchambean- Decazeville, ultimately acting as its
managing director from 1888 to 1918. His theories deal with
organisation of production in the context of a competitive
enterprise that has to control its production costs. Fayol was the
first to identify four functions of management – Planning,
Organising, Directing and Controlling although his version was a
bit different – Plan, Organise, Command, Coordinate and Control.
According to Fayol, all activities of an industrial undertaking could
be divided into: Technical; Commercial; Financial; Security;
Accounting and Managerial. He also suggested that qualities a
manager must possess should be — Physical, Moral, Education,
Knowledge and Experience. He believed that the number of
management principles that might help to improve an organisation’s
operation is potentially limitless. Based largely on his own experience,
he developed his concept of administration. The 14 principles of
manageme nt propounded by him were discussed in detail in his book
published in 1917, ‘Administration industrielle et generale’. It was
published in English as
‘General and Industrial Management’ in 1949 and is widely considered a
foundational work in classical management theory. For his contribution
he is also known as the ‘Father of General Management’
1. Division of Work
Work should be divided into small tasks/jobs. A
trained specialist who is competent is required to
perform each job. Thus, division of work leads to
specialisation.
According to Fayol, “The intent of division of work is to
produce more and better work for the same effort.
Specialisation is the most efficient way to use human
effort.”
All kinds of work– technical or managerial – can be
performed more efficiently if it is divided into specialised
tasks; each performed by a specialist or trained
employee. This results in efficient and effective output.
Example
In a company there are separate departments for
finance, marketing, production and human resource
development etc. All of them have specialised persons.
Collectively they achieve production and sales targets
of the company.
2. Authority and Responsibility
According to Fayol, ‘Authority‘ means the right to give
orders and obtain obedience. There are two types of
authority—(a) official authority, i.e., authority to
command and (b) personal authority which is the
authority of the individual manager. Authority is both
formal and informal.
‘Responsibility’ means obligation of a subordinate to
properly perform the assigned duty.
Managers require authority commensurate with
their responsibility. There should be a balance
between authority and responsibility.
 An organisation should build safeguards against
abuse of managerial power.
 At the same time, a manager should have necessary
authority to carry out his responsibility.
Example 1
Suppose the production manager of a company
manufacturing scooters asks his foreman to achieve a
target production of 500 scooters per day. But he does
not give him the authority to requisition tools and
materials from stores department. The foreman is not
able to achieve the target. In this case, the production
manager cannot blame the foreman because he does
not give him the authority to requisition tools and
materials from stores department. Here, the principle
of 'Authority and Responsibility' is violated. When an
employee is given responsibility for a job he must also
be given the degree of authority necessary to carry it
out.
Example 2
If a sales manager requires to offer a credit period of 60
days to negotiate a deal with a buyer to fetch the
company net margin of `25 lakh, he should not be
given power to offer a credit period of 100 days because
it is not required. If authority granted is more than
responsibility, it may lead to misuse of authority. An
organisation should build safeguards against abuse of
managerial power. This is the principle of 'Authority
and Responsibility'.
 Top Tip
According to the principle of 'Authority and Responsibility', a
manager should have the right to punish a subordinate for
willfully not obeying a legitimate order but only after sufficient
opportunity has been given to a subordinate for presenting
his/her case.
3. Discipline
Discipline is the obedience to organisational rules
and employment agreement which are necessary
for the working of the organisation.
According to Fayol, discipline requires good superiors
at all levels, clear and fair agreements and judicious
application of penalties.
Example
Suppose management and labour union have entered
into an agreement whereby workers have agreed to
work overtime without any additional payment to
revive the company out of loss. In return, the
management has promised to increase wages when this
mission is accomplished.
Here, ‘discipline’ would mean that both workers and
management honour their commitments without any
prejudice towards one another.
4. Unity of command
According to Fayol, there should be one and only one
boss for every individual employee. Dual subordination
should be avoided.
The principle of unity of command states that
each participant in a formal organisation should
receive orders from and be responsible to only one
superior.
Example
Suppose a sales person is asked to clinch a deal with a
buyer and is allowed to give 10% discount by the marketing
manager. But finance department tells her/him not to offer
more than 5% discount. Now there is no unity of
command. This can be avoided if there is coordination
between various departments.
Positive effect
The principle of unity of command helps to prevent
confusion regarding tasks to be done.
Consequences of violation
If an employee gets orders from two or more superiors
at the same time, the principle of unity of command is
violated. Fayol felt that if this principle is violated:
• authority is undermined,
• discipline is in jeopardy,
• order is disturbed
• stability is threatened.
 Top Tip
The principle of unity of command resembles military
organisation.
5. Unity of direction
All the units/divisions of an organisation should be
moving towards the same objectives through coordinated
and focussed efforts.
Each group of activities having the same objective
must have ‘ONE HAND AND ONE PLAN'.
Example
If a company is manufacturing motorcycles as well as
cars then it should have two separate divisions for both
of them. Each division should have its own in-charge,
plans and execution resources. On no account should
the working of two divisions overlap.
Positive effects
 Unity of direction ensures unity of action and
coordination.
 It prevents overlapping of activities.
Difference betweeen Unity of Command and
Unity of Direction
Basis Unity of Command Unity of
Direction
1 Meaning One subordinate should receive Each group of
orders from and should be activities having
responsible to only one superior. same objective
must have one
head and one
plan.
2 Aim It prevents dual subordination. It prevents
overlapping of
activities.
3 Implications It affects an individual It affects the
employee. entire
organisation.
6. Subordination of Individual Interest
to General Interest
The interests of an organisation should take
priority over the interests of any one individual
employee.
A manager can ensure this by his/her exemplary
behaviour. For example, he/she should not fall into
temptation of misusing his/her powers for individual/
family benefit at the cost of larger general interest of
the workers/ company. This will raise his/her stature in
the eyes of the workers and at the same time ensure
same behaviour by them.
Explanation
Every worker has some individual interest for working
in a company. The company has got its own objectives.
For example, the company would want to get
maximum output from its employees at a competitive
cost (salary). On the other hand, an employee may
want to get maximum salary while working the least. In
another situation an individual employee may demand
some concession, which is not admissible to any other
employee like working for less time. In all the
situations the interests of the group/company will
supersede the interest of any one individual. This is so
because larger interests of the workers and stakeholders
are more important than the interest of any one
person. For example, interests of various stakeholders
i.e., owners, shareholders, creditors, debtors, financers,
tax authorities, customers and the society at large
cannot be sacrificed for one individual or a small group
of individuals who want to exert pressure on the
company.
7. Remuneration of Employees
The overall pay and compensation should be fair
to both employees and the organisation.
 The employees should be paid fair wages, which
should give them at least a reasonable standard of
living.
 At the same time it should be within the paying
capacity of the company.
In other words, remuneration should be just and
equitable.
Positive effects
(i) This will ensure congenial atmosphere and good
relations between workers and management.
(ii) Consequently, the working of the company would
be smooth.
8. Centralisation and Decentralisation
The concentration of decision-making authority is
called centralisation whereas its dispersal among more
than one person is known as decentralisation.
According to Fayol, “There is a need to balance
subordinate involvement through decentralisation
with managers’ retention of final authority through
centralisation.”
The degree of centralisation or decentralisation will
depend upon the circumstances in which the company
is working. In general large organisations have more
decentralisation than small organisations.
9. Scalar Chain
An organisation consists of superiors and subordinates.
The formal lines of authority from highest to lowest
ranks are known as 'scalar chain'.
According to Fayol, “Organisations should have a
chain of authority and communication that runs
from top to bottom and should be followed by
managers and the subordinates.”
Example
Let us consider a situation where there is one head ‘A’
who has two lines of authority under her/ him. One
line consists of B-C-D. Another line of authority under
‘A’ is L-M-N.
If ‘C’ has to communicate with ‘M’ who is at the same
level of authority then she/he has to traverse the route
C-B-A-L-M. This is due to the principle of scalar chain
being followed in this situation.
According to Fayol, this chain should not be violated in
the normal course of formal communication. However,
if there is an emergency then ‘C’ can directly contact
‘M’ through ‘Gang Plank’ as shown in the diagram.
Gang Plank is a shorter route and has been
provided so that communication is not delayed in
an emergency.
 Top Tip
A worker cannot directly contact the CEO of the company. If at
all he/she has to, then all the formal levels i.e., foreman,
superintendent, manager, director etc. must know about the
matter. However, in an emergency it can be possible that a
worker can contact CEO directly.
10. Order
According to Fayol, “People and materials must be in
suitable places at appropriate time for maximum
efficiency.” The principle of order states that ‘a place for
everything (everyone) and everything (everyone) in
its (his/her) place’. Essentially, it means orderliness.
Positive effects
 If there is a fixed place for everything (everyone)
and it (he/she) is present there, then there will be
no hindrance in the activities of business/factory.
 This will lead to increased productivity and
efficiency.
Example
In a school, books are kept in office, chalks in the
library and office records in the staff room.
In this case, the management principle of ‘Order' is
violated. In the absence of orderliness, school objectives
will not be achieved efficiently and effectively.
11. Equity
This principle emphasises kindliness and justice
in the behaviour of managers towards workers.
There should be no discrimination against anyone on
account of sex, religion, language, caste, belief or
nationality etc.
According to Fayol, "Good sense and experience are
needed to ensure fairness to all employees, who
should be treated as fairly as possible.”
Example
In multinational corporations, people of various
nationalities work together in a discrimination free
environment. Equal opportunities are available for
everyone in such companies to rise.
Positive effect
This will ensure loyalty and devotion.
 Top Tip
Fayol does not rule out use of force sometimes. Rather he says
that lazy personnel should be dealt sternly to send the
message that everyone is equal in the eyes of the
management. There should be no discrimination against
anyone on account of sex, religion, language, caste, belief or
nationality etc.
12. Stability of Personnel
Personnel should be selected and appointed after due
and rigorous procedure. But once selected they should
be kept at their post/position for a minimum fixed
tenure. They should have stability of tenure. They
should be given reasonable time to show results.
According to Fayol, “Employee turnover should be
minimised to maintain organisational efficiency.”
Consequences
 Any adhocism will create instability/insecurity
among employees. They would tend to leave the
organisation.
 Recruitment, selection and training cost will be
high.
So stability in tenure of personnel is good for the business.
13. Initiative
Initiative means taking the first step with self-
motivation. It is thinking out and executing the plan. It
is one of the traits of an intelligent person.
According to Fayol, "Workers should be encouraged to
develop and carry out their plans for improvements,
within the prescribed limits of authority. “
Example
A good company should have an employee suggestion
system whereby initiative/ suggestions which result in
substantial cost/time reduction should be rewarded.
 Top Tip
Initiative should be encouraged. But it does not mean going
against the established practices of the company for the sake
of being different.
14. Esprit De Corps
According to Fayol, "Management should promote a
team spirit of unity and harmony among employees."
Management should promote teamwork especially in
large organisations because otherwise objectives would
be difficult to realise. It will also result in a loss of
coordination.
A manager should replace ‘I’ with ‘We’ in all his
conversations with workers to foster team spirit.
Positive effects
 This will give rise to a spirit of mutual trust and
belongingness among team members.
 It will also minimise the need for using penalties.
RECAP
Concept of Principles of Management

Principles of management are general guidelines for managerial
decision making and behaviour.
• Management principles are not as rigid as principles of
pure science. They deal with human behaviour and, thus,
are to be
applied creatively given the demands of the situation.
• Management principles are guidelines for managerial
decisions or actions whereas management techniques are
procedures or methods, which involve a series of steps to
be performed to accomplish desired goals.
Fayol’s Principles of Management
1. Division of work: The principle of Division of work
suggests that work can be performed more efficiently
if it is divided into specialised tasks. A trained specialist
who is competent, is required to perform each job leading to
specialization which results in efficient and effective output.
2. Authority and Responsibility: Authority is the right to
give orders and obtain obedience, and responsibility is the
corollary of authority. The principle of Authority and
Responsibility suggests that managers require authority
commensurate with their responsibility. An organisation
should build safeguards against abuse of managerial power.
At the same time, a manager should have necessary
authority to carry out his responsibility. For example, a
manager enhances the production target from 500 units to
700 units per month but the authority to draw raw material
was not given by him. The production manager should not
be blamed if he could not achieve the revised production
target. He should have the necessary authority to carry out
his responsibility.
3. Discipline: Discipline refers to the obedience to
organizational rules and employment agreement which
are necessary for the working of the organization. It
requires good superiors at all levels, clear and fair
agreement and judicious application of penalties.
Workers and management both should honour their
commitments towards one another without prejudice.
Example: Suppose management and labour union have
entered into an agreement whereby workers have agreed
to work overtime without any additional payment to
revive the company out of loss. In return, the
management has promised to increase wages when this
mission is accomplished. Both workers and management
must honour their commitments.
4. Unity of command: The principle of unity of command
states that each employee in an organisation should
receive orders from one superior only and he should be
responsible to only one superior. It prevents confusion
regarding tasks to be done. Fayol felt that if this principle
is violated “authority is undermined, discipline is in
jeopardy, order disturbed and stability threatened.” (This
principle resembles military organisation.) Aim: It
prevents dual subordination. Implications: It affects an
individual employee. Example: Suppose a salesperson is
asked to make a deal with a buyer and is allowed to give
10% discount by the marketing manager. But the finance
manager does not permit him to offer more than 5%
discount. In this case, there is no unity of command.
5. Unity of Direction: Unity of direction states that all the
divisions/units of an organisation should be moving
towards the same objectives through coordinated and
focused efforts. Each group of activities having the same
objective must have one head and one plan. This ensures
unity of action and coordination. Aim: It prevents
overlapping of activities. Implications: It affects the entire
organisation. Example: If a company is manufacturing
motorcycles as well as cars, then it should have two
separate divisions for both of them. Each division should
have its own in-charge, plans and execution resources.
The working of the two divisions should not overlap on
any account.
6. Subordination of individual interest to general
interest: The interests of an organisation should take
priority over the interests of any individual employee.
The larger interests of the workers and stakeholders are
more important than the interest of any one person. A
manager can ensure this by his exemplary behaviour. For
example, he should not fall into temptation of misusing
his powers for individual/ family benefit at the cost of
larger general interest of the workers/ company. This will
ensure same behaviour by them.
7. Remuneration of employees: It states that the
remuneration of employees should be just and
equitable. Employees should be paid fair wages, which
should give them at least a reasonable standard of living.
At the same time it should be within the paying capacity
of the company. This will ensure good relations between
workers and management.
8. Centralisation and Decentralisation: The concentration
of decision-making authority by the top management is
called centralisation whereas its dispersal among more
than one person is known as decentralisation. In general,
large organisations have more decentralisation than small
organisations. According to Fayol, “There is a need to balance
subordinate involvement through decentralisation with
managers’ retention of final authority through
centralisation.”
9. Scalar chain: It refers to chain of authority and
communication that runs from top to bottom and should
be followed by the managers and the subordinates. It
facilitates smooth flow of communication and unity of
command in the organisation. This chain should not be
violated in the normal course of formal communication.
However, in case of any emergency, a shorter route
named ‘gang plank’ may be used to avoid delay in
communication. For example: There is one head A who
A who has two lines of authority under him, B-C-D and
L-M-N. If C has to communicate with M who is at the
same level of authority, then he has to transverse the
route C-B-A-L-M due to the principle of scalar chain.
However, if there is an emergency, then C can directly
contact M through gang plank.
10. Order: It states that there should be a place for
everything and everyone in an organization and that
everything or person should be found in its allotted
place. This will lead to increased productivity and
efficiency.
11. Equity: Equity states that there should be no
discrimination against anyone on account of sex, religion,
language, caste, belief, nationality etc. It emphasises
kindliness and justice in the behaviour of managers towards
the workers. This will ensure loyalty and devotion.
12. Stability of personnel: Employees, once selected,
should be kept at their post for a minimum fixed tenure
and be given reasonable time to show results. It will help
to minimize employee turnover and maintain
organizational efficiency. Any adhocism will create
instability/insecurity among employees. They would
tend to leave the organization. Recruitment, selection
and training cost of new employees will be high.
13. Initiative: Initiative means thinking out and executing
the plan within the prescribed limits of authority. It
states that the workers should be encouraged to develop
and carry out their plans for improvement in the
organisation. A good company should have an employee
suggestion system whereby initiative/suggestions which
result in substantial cost/time reduction should be
rewarded.
14. Esprit De Corps: It states that management should
promote a team spirit of unity and harmony among
employees to realise organisational objectives.
Otherwise, it will result in a loss of coordination. A
manager should replace ‘I’ with ‘We’ in all his
conversations with workers to foster team spirit. This
will give rise to a spirit of mutual trust and
belongingness among team members. It will also
minimise the need for using penalties.
Extra Shots
Fayol's Principles: Then and Now
Fayol’s 14 principles of management are widely applicable to managerial
problems and have cast a profound impact on management thinking
today. But with the change of environment in which business is done, the
interpretation of these principles has changed. For example, authority
and responsibility meant empowering of managers but now it means
empowerment of employees because of flat organisational structures
that are gaining ground. We are now in a position to understand the
current connotations of Fayol’s principles.
Name of Principle THEN NOW

1 Division of Work Specialisation in Generalisation in
workers' Job design workers’ Job design
2 Authority & Managers are Employees are
Responsibility empowered empowered
3 Discipline Formalised Controls Informal, Peer
pressure controls
4 Unity of Command Subordinates report to Subordinates report
only one boss to multiple bosses
5 Unity of Direction Functions have only one Functions have
plan and one boss multiple plans and
multiple bosses
6 Subordination of Employees are Organisation is
individual interest committed to the committed to the
to general interest organisation employees and vice
versa
7 Remuneration of Reasonable Pay reward Performance based
employees system reward system
8 Centralisation and Trickle down decision Task relevant adhoc
decentralisation making decision making
9 Scalar Chain Hierarchical, formalised Less formalised,
communication channel flatter
communication
structure
10 Order Internal information Internal information
system for control system for
purposes coordination
purposes
11 Equity Commitment obtained Commitment
through kindness obtained through a
sense of ownership
12 Stability of Train employees and On-going employee
personnel encourage them to training and
remain development
13 Initiative Managers conceive and Workers conceive
implement new ideas and implement new
ideas
14 Esprit de corps Maintaining high Maintaining high
morale among morale among
employees is imperative employees is desirable
Question 1
A manager enhances the production target from 500 units
to 700 units per month but the authority to draw raw
material was not given by him. The production manager
could not achieve the revised production target. Who is
responsible and which principle was violated? Explain.
(3 marks)

Answer 1
The manager is responsible since the authority to draw
raw material was not given by him.
The principle violated is ‘Authority and Responsibility’.

Question 2
In a company, a sales manager has to negotiate a deal
with a buyer. She finds that if she can offer credit period
of 60 days she is likely to clinch the deal which is
supposed to fetch the company net margin of say Rs. 50
crores. But the company gives power to the manager to
offer a credit period of only 40 days. As a result, she
could not negotiate the deal with the buyer. (3Marks)
(a) Is the sales manager liable for this? Give reason in
support of your answer.
(b) Should the sales manager be given a power to offer
a credit period of 100 days? Justify your answer.
Answer 2
(a) No, the sales manager is not responsible if she could
not negotiate the deal with the buyer.
She should be granted authority of offering credit
period of 60 days in the interest of the company.
Here, the principle of Authority and Responsibility is
violated. A manager should have necessary authority to
carry out his responsibility.
(b) No, the sales manager should not be given a power to
offer a credit period of 100 days because it is not
required. An organisation should build safeguards against
abuse of managerial power.
Question 3
Loyd Co. Ltd. manufactures motorcycles and cars. It has
two separate divisions for both of them. Each division
has its own incharge, plans and execution resources. On
no account the working of two divisions overlap.
Which principle of management is followed by Loyd Co.
Ltd.? (1 mark)

Answer 3
Unity of Direction

Question 4
In a formal organisation, a worker cannot directly
contact the CEO of the company. If at all he has to, then
all the formal levels, i.e. foreman, superintendent,
manager, director, etc have to know about the matter.
However, in an emergency it can be possible that a
worker can contact CEO directly.
(a) Identify and state the principle of management
highlighted above.
(b) State the device that can be used when in an
emergency a worker can contact CEO directly.
(3 marks)
Answer 4
(a) Scalar Chain: The formal lines of authority from
highest to lowest ranks are known as scalar chain.
According to Fayol, “Organisations should have a chain
of authority and communication that runs from top to
bottom and should be followed by managers and the
subordinates.”
(b) Gang Plank: If there is an emergency then a worker
can contact CEO directly through ‘Gang Plank’, which
is a shorter route provided so that communication is
not delayed.

Question 5
Zoya International Ltd. is a multinational company in
which people of various nationalities work together with
a team spirit of unity and harmony in a discrimination
free environment. Equal opportunities are available for
everyone in the company. The pay and compensation of
all the employees is just and equitable.
(a) State the principles of management being followed
by Zoya International Ltd.
(b) What benefits will Zoya International Ltd. derive by
following the principles identified in part (a).
(6 marks)
Answer 5
(a) The principles of management being followed by Zoya
International Ltd. are:
(i) Esprit de corps (ii) Equity (iii) Remuneration of
employees (Give the meaning)
(b) Benefits that Zoya International Ltd. will derive by
following the above principles are:
(i) Esprit de corps – This will give rise to a spirit of
mutual trust and belongingness among team members.
It will also minimise the need for using penalties.
(ii) Equity – Kindliness and justice in the behaviour of
managers towards workers will ensure loyalty and
devotion.
(iii) Remuneration of employees – This will ensure
congenial atmosphere and good relations between
workers and management. Consequently, the working
of the company would be smooth.

Question 6
Zaika Ltd. is a company manufacturing garments under the
brand name ‘Amol’. The management of the company does
not give the workers reasonable time to show results. Even
the management does not promote a team spirit of unity
and harmony among the workers. The workers often
have to work under two superiors at the same time.
(a) Identify and state the principles of management
overlooked in the above case.
(b) State the consequences which Zaika Ltd. will have
to face by not following the principles identified in
part (a). (6 marks)
Answer 6
(a) The principles of management overlooked by the
management of Zaika Ltd. are:
(i) Stability of Personnel (ii) Esprit De Corps (iii) Unity of
Command (Give the meaning)
(b) The consequences which Zaika Ltd. will have to face by
not following the above principles are:
(i) Stability of Personnel – Any adhocism in this regard will
create instability/insecurity among employees. They
would tend to leave the organisation. Recruitment,
selection and training cost will be high.
(ii) Esprit De Corps – Objectives would be difficult to
realise. It will also result in a loss of coordination
(iii) Unity of Command – If an employee gets orders from
two superiors at the same time, “authority is
undermined, discipline is in jeopardy, order disturbed
and stability threatened”.

Question 7
‘F’ limited was engaged in the business of food
processing and selling its products under a popular
brand. Lately the business was expanding due to good
quality and reasonable prices. Also with more people
working the market for processed food was increasing.
New players were also coming to cash in on the new
trend. In order to keep its market share in the short run
the company directed its existing workforce to work
overtime. But this resulted in many problems. Due to
increased pressure of work the efficiency of the workers
declined. Sometimes the subordinates had to work for
more than one superior resulting in declining efficiency. The
divisions that were previously working on one product were
also made to work on two or more products.
This resulted in a lot of overlapping and wastage. The
spirit of teamwork, which had characterised the company,
previously was beginning to wane. The quality of the products
was beginning to decline and market share was on the verge
of decrease. Actually the company had implemented changes
without creating the required infrastructure.
Identify and explain briefly any three principles of
management given by Henri Fayol that were violated by
the company. (6 marks)
Answer 7
Principles of Fayol violated are:
(i) Unity of command
(ii) Unity of direction
(iii) Esprit de corps

Question 8
The production manager of an automobile company
asked the foreman to achieve a target production of 200
scooters per day. But he did not give him the authority
to requisition tools and materials from the stores
department. Can the production manager blame the
foreman if he is not able to achieve the desired target?
Explain briefly the principle relating to the situation.
(3 marks)

Answer 8
No, the production manager cannot blame the foreman
because he did not give him the authority to requisition
tools and materials from the stores department.
In this case the principle of ‘Authority and Responsibility‘ is
violated. Managers require authority commensurate with
their responsibility. There should be a balance between
authority and responsibility. An organisation should build
safeguards against abuse of managerial power. At the same
time a manager should have necessary authority to carry
out his responsibility.

Question 9
Nutan Tiffin Box service was started in Mumbai by
Mumbai Dabbawalas. The Dabbawalas who are the soul
of entire Mumbai aim to provide prompt and efficient
services by providing tasty homemade tiffin to all office
goers at right time and place. The service is uninterrupted
even on the days of bad weather, political unrest and social
disturbances. Recently they have started online booking
system through their website ‘mydabbawala.com’. Owing to
their tremendous popularity amongst the happy and satisfied
customers and members, the dabbawalas were invited as
guest lecturers by top business schools. The Dabbawalas
Dabbawalas operate in a group of 25-30 people along
with a group leader. Each group teams up with other
groups in order to deliver the tiffin on time. They are
not transferred on frequent basis as they have to
remember the addresses of their customers. They follow
certain rules while doing trade- No alcohol during
working hours; No leave without permission; Wearing of
white cap & carrying ID cards during business hours.
State the three principles of management given by Fayol.
(CBSE SQP 2016) (3 marks)

Answer 9
Principles of management:
(i) Stability of Personnel
(ii) Discipline
(iii) Esprit de corps

Question 10
‘Aapka Vidyalaya’ believes in holistic development of
students and encourages team building through a mix of
curricular, co-curricular and sports activities. On its
founders day a stage performance had to be put up. A
committee of ten prefects was constituted to plan
different aspects of the function. They all decided to use
recycled paper for decoration. There was a spirit of
unity and harmony and all members supported each
other. With mutual trust and belongingness the
programme was systematically planned and executed.
Kartik, one of the prefects realised that unknowingly the
group had
applied one of the principles of management while
planning and executing the programme. He was so
inspired by the success of the function that he asked his
father to apply the same principle in his business. His
father replied that he was already using this principle.
Identify and explain the principle of management applied
for the success of the programme. (3 marks)

Answer 10
Esprit de corps

Question 11
Nikita and Salman completed their MBA and started
working in a multinational company at the same level.
Both are working hard and are happy with their
employer. Salman had the habit of backbiting and wrong
reporting about his colleagues to impress his boss. All
the employees in the organisation knew about it. At the
time of performance appraisal the performance of Nikita
was judged better than Salman. Even then their boss,
Mohammed Sharif decided to promote Salman stating
that being a female Nikita will not be able to handle the
complications of a higher post.
Identify and explain the principle of management which
was not followed by this multinational company.

Answer 11
The principle violated is 'Equity'.

Question 12
Rajat joined as a CEO of Bharat Ltd, a firm manufacturing
Computer hardware. On the first day he addressed the
employees. He said that he believed that a good
company should have an employee suggestion system
and he wished to minimise employee turnover to
maintain organisational efficiency. He informed all
employees that he would ensure that all agreements
were clear, fair and there was judicious application of
penalties. However, he said that he believed that lazy
personnel should be dealt sternly to send the message
that everyone was equal in the eyes of management.
Also, that he would want to promote a team spirit of
unity and harmony among employees, which would give
rise to a spirit of mutual trust and belongingness among
team members and eventually minimise need for using
penalties. He told all present that the interests of the
organisation should take priority over the interests of
any one individual employee.
Identify and briefly explain the principles of management
given by Fayol, which Rajat highlighted in his address to
the employees. (CBSE SQP 2018) (6 marks)

Answer 12
Following are the principles of management highlighted by
Rajat in his address to the employees:
(i) Initiative
(ii) Stability of personnel
(iii) Discipline
(iv) Equity
(v) Esprit de corps
(vi) Subordination of individual interest to general
interest

Question 13
Appar Foundation is a Non Government Organisation
(NGO) working to improve the lives of children with
medical needs, the homeless and victims of natural
disasters. Apart from donations in cash, they collect dry
ration, old clothes, shoes, toys, books and medicines
from donors. At Appar Foundation’s office in Bhopal the
material collected is segregated, classified and put in
shelves and boxes that are labelled systematically.
There is a specific place for each these items and
volunteers put everything at their respective places.
The volunteer work is divided into specific jobs like fund
fund raising, field visit, social media updates and so on.
Each volunteer is part of a particular team, depending on
their competency and training. Each volunteer becomes
specialised in their respective field, leading to efficient
utilisation of human effort.
Identify and explain two principles of management
adopted by Apaar Foundation. (4 marks)

Answer 13
Principles of management adopted by Appar Foundation are:
(i) Order (ii) Division of work

Question 14
Sigma Ltd. is a large company manufacturing electric
motors. The company has several departments—
Production, Marketing, Finance and HR. Mr. Shashank, CEO
of the company set the target sale of `10 crore in a month.
To increase the sales, the marketing manager, Mr. Ishaan
insists on offering 10% discount to customers. But the
finance manager, Mr. Mohak does not approve such
discount as it would mean loss of revenue. Because of
dual subordination, the sales manager, Mr. Anshik could
not achieve the sales target.
Which principle of management has been overlooked by
this company? (1 mark)
Answer 14
Unity of command

Question 15
Deewan Ltd. is a multinational consulting company with
its headquarters at Washington D.C. It hires young
people from different countries of the world. It is a
company in which people dream to work because of its
work-environment, pay and growth prospectus. The
company has a culture of open communication and
people of various nationalities work together in a
discrimination free environment. The behaviour of
managers of Deewan Ltd. emphasizes kindliness and
justice which ensures loyalty and devotion of workers.
It also promotes mutual trust and belongingness among
team members. In this way management of Deewan Ltd.
is able to achieve its objectives by promoting team work.
By doing so managers of Deewan Ltd. are following
some principles of management.
Identify and explain two such principles.

Answer 15
Two principles of management followed by managers of
Dewan Ltd are: (i) Equity (ii) Esprit de Corps

Question 16
Mohan Ltd. is producing different lines of products viz.
cosmetics, medicines, confectionary items, etc. All activities of
the company like purchase, production, sales, accounting, etc.
share common Purchase, Production, Sales and Accounts
Departments. As a result, there is chaos and ineffective
working of the organisation. No department is able to set
specific targets related to each type of product and is unable
to give justice and full concentration to each product line.
Moreover, employees remain confused regarding provision of
their focus and attention to a particular product line.
Identify the principle of management violated here.
(1 mark)
Answer 16
Unity of Direction

Question 17
In an organisation, a sales person is asked to clinch a
deal with a buyer and is allowed to give 10% discount by
the marketing manager. But finance department tells him
not to offer more than 5% discount.
Which principle of management is missing in the above
case and how this can be avoided? (1 mark)

Answer 17
There is no ‘unity of command’. This can be avoided if there
is coordination between the marketing and finance depart-
ments.

Question 18
In a company, management and labour union have
entered into an agreement whereby workers have
agreed to put in extra hours without any additional
payment to revive the company out of loss. In return the
management has promised to increase wages of the
workers when this mission is accomplished. As per the
agreement, the workers worked overtime and within
two months, the company’s losses were wiped out. Soon
the company started earning high profits. All this was
due to the hard work and commitment of the workers.
But the company denied to increase wages of the
workers as per the agreement.
Explain the principle of management violated in the
above case. (3 marks)

Answer 18
The principle of ‘discipline’ is violated by the company.

Question 19
Kushal Ltd. is a leading automobile company in which the
various departments are setting up their own objectives
without paying any interest to the organisational
objectives.
Identify the principle of management which has been
overlooked by this organisation. (1 mark)

Answer 19
Subordination of individual interest to general interest.

Question 20
The manager of an organisation knows that one of the
newly appointed workers belongs to the reserved
category and he always undermines that employee’s
performance.
Identify the principle of management violated by the
manager. (1 mark)

Answer 20
Principle of Equity

Question 21
Anand was continuously shifted from one job to another
in the organisation without giving him adequate time to
settle down in any department.
Identify the principle of management overlooked here.
(1 mark)

Answer 21
Principle of Stability of Personnel

Question 22
The production manager of Harsh Ltd. instructs a
salesman to go slow in selling the product, whereas the
marketing manager is insisting on fast selling to achieve
the target.
Which principle of management is being violated in this
case? (1 mark)

Answer 22
Unity of command

Question 23
Kanika and Priyanka are typists in a company having the
same educational qualifications. Kanika is getting `20,000
per month and Priyanka ` 15,000 per month as salary for
the same working hours. Which principle of management is
violated in this case? (1 mark)

Answer 23
Principle of equity

Question 24
Rishabh, a manager, very often speaks to people at all
levels, passing on instructions regarding his department
and also the other departments.
Which principle of management is being overlooked?
(1 mark)

Answer 24
Principle of Scalar Chain

Question 25
For the last two years, Tulip Industries is not functioning
smoothly and systematically. The relations between
management and employees are becoming bitter day-by-
day. After a complete analysis, it was observed that
employees are not working effectively and efficiently and
management is not fulfilling its commitment of
increments and promotions.
Which management principle is being ignored in the
given case? (1 mark)

Answer 25
The principle of Discipline

Question 26
Arun is a salesman in Sunrise Ltd. He did an aggressive
research on a new cost saving advertisement technique
and suggested the same to his sales manager. However,
the sales manager did not pay any attention to his
suggestion.
Which principle of management is being violated by the
sales manager? (1 mark)

Answer 26
The principle of Initiative

Question 27
Fast Cool Industries (AC manufacturing company) asked
its employees to work overtime in order to meet
growing demand of AC in the summer season. However,
the employees were not paid overtime wages for extra
time worked by them. As a result, the employees always
felt dissatisfied and it led to unhealthy relationships
between the employees and management.
Identify the principle of management not observed by
Fast Cool Industries. (1 mark)

Answer 27
Remuneration of Employees

Question 28
Mr. Prakash Chopra, General Manager of M/s Kwality
Enterprises (Leather bags manufacturing company)
retains complete authority over all the activities of the
business. No decision-making power is given to the
subordinates. As a result, Mr. Prakash is always engaged
in day-to-day operational activities and is unable to
concentrate on core issues of the company.
Identify the management principle violated by Mr.
Prakash Chopra. (1 mark)

Answer 28
The principle of Centralisation and Decentralisation

Question 29
Wizard Digitek Enterprises imports various computer
parts from China and assembles them to make a
complete computer. The total work involves three
different tasks: assembling, labelling and packaging of
computer. Each employee of the company independently
performs these three tasks. As a result, no employee is
able to gain specialisation in a particular field and the
company is unable to fulfill the orders on time. Identify
the principle of management which can be followed by
Wizard Digitek Enterprises to overcome this problem.
(1 mark)

Answer 29
The principle of Division of Work

Question 30
Mr. Kapoor, Finance manager of ABC Ltd. applied for
leave to attend a family function in Amritsar. The director
of the company requested him to cancel his leave as
there is an important meeting schedule on that date. Mr.
Kapoor immediately agreed and cancelled his trip as he
thought that attending the meeting was more important
for company’s benefit.
Which principle of management is highlighted in this
case? (1 mark)

Answer 30
The principle of subordination of individual interest to
general interest

Question 31
Raghav, a manager, expects his subordinates to adapt to
the new environs and working conditions without giving
them time to settle down.
Identify the principle of management overlooked by the
manager. (1 mark)

Answer 31
Stability of Personnel

Question 32
Pranav, a manager, expects his subordinates to work for
the happiness and pleasure of being in the organisation.
Identify the principle of management violated by the
manager. (1 mark)

Answer 32
Remuneration of Employees

Question 33
The sales manager assigned a target of selling 40 RO
Water Purifiers in a month to a group of 10 sales
executives. They mutually decided to sell 4 purifiers each.
However, after selling 1 purifier, Kshitij (one of the sales
executive) met with an accident. The other sales
executives did not pay any attention to the remaining
target of Kshitij and concentrated on their individual
sales target. At the end of the month, only 37 purifiers
could be sold. Identify the principle of management
violated in the given case? (1 mark)

Answer 33
Esprit De Corps

Question 1
In a company, there are four separate departments for
finance, marketing, production and human resource
development. Identify the principle of management.
(CBSE 2013)

Answer 1
Division of work

Question 2
Why did Fayol introduce the concept of ‘Gang Plank’ in
the principle of Scalar chain?

Answer 2
To avoid delay in communication.

Question 3
Name the principle of management which resembles
military organisation.

Answer 3
Unity of command

Question 4
If the company does not provide the right place for
physical and human resources, which principle of
management is violated?

Answer 4
Order

Question 5
Which principle of management envisages that each
group of activities having same objectives must have one
head and one plan?

Answer 5
Unity of direction

Question 6
Which principle of management suggests that employees
should be treated with justice and kindness?

Answer 6
Equity

Question 7
Identify the principle of Fayol which emphasises that
wages and salaries paid to the employees should be just
and equitable.

Answer 7
Remuneration of employees

Question 8
Fayol points out the danger and costs of unnecessary labour
turnover in one of his ‘Principles’.Name the principle.

Answer 8
Stability of personnel

Question 9
“Workers should be encouraged to develop and carry
out their plans for development.” Identify the principle
of management formulated by Fayol.

Answer 9
Initiative

Question 10
According to Fayol, workers should be encouraged to
develop and carry out their plans for improvements. A
good company should have an employee suggestion
system whereby initiative/ suggestions which result in
substantial cost/time reduction should be rewarded.
Identify the principle of management highlighted above.

Answer 10
Initiative

Question 11
According to Fayol, a manager should not fall into
temptation of misusing his powers for individual/ family
benefit at the cost of larger interest of the workers/
company. This exemplary behaviour of the manager will
raise his stature in the eyes of the workers and at the
same time will ensure same behaviour by them. Identify
the principle of management discussed.

Answer 11
Subordination of individual interest to general interest

Question 12
According to Fayol, “Good sense and experience are
needed to ensure fairness to all employees, who should
be treated as fairly as possible”. However, Fayol does not
rule out use of force sometimes. Rather he says that lazy
personnel should be dealt sternly to send the message
that everyone is equal in the eyes of the management.
Identify the principle of management highlighted above

Answer 12
Equity

Question 13
According to Fayol, personnel should be selected and
appointed after due and rigorous procedure. But once
selected they should be given reasonable time to show
results.

Answer 13
Stability of personnel

Question 14
Name the principle of management which requires
judicious application of penalties by the management.

Answer 14
Principle of discipline

Question 15
A manager should have the right to punish a subordinate
for wilfully not obeying a legitimate order but only after
sufficient opportunity has been given to his/her case.
Identify the principle of management highlighted here.

Answer 15
The principle of authority and responsibility

Question 16
Following this principle of management will minimise the
need for using penalities, but not following it may result in a
loss of coordination. Identify the principle.

Answer 16
Esprit de corps

Question 17
Name the partner whose association with the firm is
not known to the general public.
(a) When no division of the (i) Scalar chain
company has a separate
plan of action.
(b) When a manager awards (ii) Subordination of individual
contract for supply of raw interest to general interest
material to a particular party,
which happens to be owned
by his relative ignoring other
parties, who can supply the
same at a cheaper rate.

(c) When a subordinate (iii) Unity of direction
habitually contacts higher
authorities in the company
by passing his/her immediate
superior.
(d) When the manager grants (iv) Equity
one month medical leave to
a supervisor with pay and
only one week medical leave
to accountant.

Answer 17
(a) – (iii), (b) – (ii), (c) – (i), (d) – (iv)

Question 18
Name the principle of management according to which a
manager should replace ‘I’ with ‘We’ in all his conversations
with the workers. (CBSE 2013)

Answer 18
Esprit de corps

Question 19
A worker directly contacts the CEO of the company
with a complaint regarding working conditions in the
factory. Which of the following principles is being
violated here?
(a) Unity of Command
(b) Unity of Direction
(c) Scalar Chain
(d) Discipline

Answer 19
(c) Scalar Chain

Question 20
What light does the idea of ‘Gang Plank’ show about the
nature of principles of management?

Answer 20
Flexibile: The principles of management are not rigid
prescriptions, which have to be followed
absolutely.They are flexible and can be modified
by the manager when the situation so
demands.

Question 21
Which principle of management aims at securing the
loyalty and devotion of the employees by giving them
kind, fair and just treatment?

Answer 21
Equity

Question 22
If an organisation does not provide the right place for
physical and human resources in an organisation, which
principle is violated?

Answer 22
Order

Taylor's Scientific
Management
Fredrick Winslow Taylor
Life Time : March 20,1856 to March 21, 1915
Profession : American mechanical engineer
Education : Degree in Mechanical Engineering
from Stevens Institute of Technology
in 1883.
Positions held:
1. Apprentice Machinist in 1874.
2. Executive at Midville Steel Company in 1884.
3. At Bethlehem Iron Company in 1898, which
later became Bethlehem Steel Company.
4. Professor at ‘Tuck School of Business’ founded
in 1900.
5. President of ‘American Society of Mechanical
Engineers’ from 1906 to 1907.
Writings:
‘The Principles of Scientific Management’ series of articles published in ‘The
American Magazine’ during March-May 1911, later published in book form.
1. ‘Concrete, Plain and Reinforced’ in 1906.
2. ‘Notes on Belting’ in 1893
3. ‘On the Art of Cutting Metals’ December 1906.
4. ‘A Piece Rate System’ in June 1895.
5. ‘The making of a putting green’ a series of articles published in
1915.
6. ‘Not for the genius but for the average man’ published in ‘The
American Magazine’ in March 1918.
Taylor's contribution to Scientific Management
Scientific management refers to an important stream of one of the
earlier schools of thought of management referred to as the ‘Classical’
school. Fredrick Winslow Taylor (March 20,1856 – March 21, 1915) was
an American mechanical engineer who sought to improve industrial
efficiency. In 1874, he became an apprentice mechanist, learning factory
conditions at the grass roots level. He earned a degree in mechanical
engineering. He was one of the intellectual leaders of the efficiency
movement and was highly influential in reshaping the factory system of
production. He belonged to the era of the industrial revolution
characterised by mass production.
Taylor’s contribution must be seen in the light of the efforts made to
perfect the factory system of production. Taylor thought that by
scientifically analysing work, it would be possible to find ‘one best way’
to do it. He is most remembered for his time and motion studies. Taylor
believed that workers should cooperate with the management and thus
there would be no need of trade unions. The best results would come
from the partnership between a trained and qualified management and
a cooperative and innovative workforce. Each side needed the other. He
is known for coinage of the term ‘Scientific Management’ in his article
‘The Principles of Scientific Management’ published in 1911. After being
fired from Bethlehem Steel Company he wrote a book ‘Shop floor’
which sold well. He was selected to be the president of the American
Society of Mechanical Engineers (ASME) from 1906 to 1907. He was a
professor at Tuck School of Business at Dartmouth College founded in
1900. In 1884 he became an executive at Midvale Steel Company by
demonstrating his leadership abilities. He instructed his fellow workers
to work in phases. He joined the Bethlehem Iron Company in 1898,
which later became Bethlehem Steel Company. He was originally
employed to introduce piece rate wage system. After setting up the wage
system, he was given authority and more responsibilities in the
company. Using his newfound resources he increased the staff and
made Bethlehem a show place for inventive work. Unfortunately, the
company was sold to another group and he was discharged. In 1910 his
health started to fall. He died in 1915 due to pneumonia.
Principles of Scientific Management
In the earlier days of the Industrial Revolution, in the
absence of an established theory of factory organisation,
factory owners or managers relied on personal judgment
in attending to the problems they confronted in the
course of managing their work. This is what is referred
to as ‘rule of thumb’. Managing factories by rule of
thumb enabled them to handle the situations as they
arose but suffered from the limitation of a trial and
error approach. For their experiences to be emulated, it
was important to know what works and why does it
work. For this, there was a need to follow an approach
that was based on the method of science defining a
problem, developing alternative solutions, anticipating
and drawing conclusions. In this scenario, Taylor
emerged as the ‘Father of Scientific Management’. He
proposed scientific management as opposed to rule of
thumb. He broke up human activity into small parts
and found out how it could be done effectively, in less
time and with increased productivity.
According to Taylor, “Scientific management means
knowing exactly what you want men to do and seeing
that they do it in the best and cheapest way."
The Bethlehem Steel company where Taylor himself
worked achieved three-fold increase in productivity by
application of the following scientific management
principles.
1. Science, not Rule of Thumb
Taylor believed that there was only one best
method to maximise efficiency.
 This method can be developed through study and
analysis.
 The method so developed should substitute ‘Rule of
Thumb’ throughout the organisation.
 Scientific method involved investigation of
traditional methods through work-study, unifying
the best practices and developing a standard
method, which would be followed throughout the
organisation.
According to Taylor, even a small production activity
like loading pigs of iron into boxcars can be
scientifically planned and managed. This can result in
tremendous saving of human energy as well as wastage
of time and materials.
The more sophisticated the processes, greater would be
the savings.
In the present context, the use of Internet has brought about dramatic
improvements in internal efficiencies and customer satisfaction.
2. Harmony, Not Discord
Factory system of production implied that managers
served as a link between the owners and the workers.
Since as managers they had the mandate to ‘get work
done’ from the workers, it should not be difficult for
you to appreciate that there always existed the
possibility of a kind of class-conflict, the managers
versus workers. Taylor recognised that this conflict
helped none, the workers, the managers or the factory
owners.
Taylor emphasised that there should be complete
harmony between the management and workers.
Both should realise that each one is important.
To achieve this state, Taylor called for complete
'mental revolution' on the part of both management
It means that management and workers should
transform their thinking.
Both should be part of the family. In such a situation
even trade unions will not think of going on strike etc.
 Management should share the gains of the
company, if any, with the workers.
 At the same time workers should work hard and be
willing to embrace change for the good of the
company.
According to Taylor, "Prosperity for the employer
cannot exist for a long time unless it is accompanied
by prosperity for the employees and vice versa".
Japanese work culture is a classic example of a situation of Harmony, not
Discord. In Japanese companies, 'paternalistic style of management' is in
practice. There is complete openness between the management and workers. If
at all workers go to strike they wear a black badge but work more than normal
working hours to gain the sympathy of the management.
Concept of Mental Revolution

Mental revolution involves a change in the attitude of
workers and management towards one another from
competition to cooperation. Both should realise that
they require one another. Both should aim to increase
the size of surplus. This would eliminate the need for
any agitation. Management should share a part of
surplus with workers. Workers should also contribute
their might so that the company makes profits. This
attitude will be good for both of them and also for the
company. In the long run only worker’s well-being will
ensure prosperity of the business.
3. Cooperation, Not Individualism
There should be complete cooperation between
the labour and the management instead of
individualism. Competition should be replaced by
cooperation. Both should realise that they need
each other.
 For this, management should not close its ears to
any constructive suggestions made by the
employees. They should be rewarded for their
suggestions which results in substantial reduction
in costs. They should be part of management and, if
any important decisions are taken, workers should
be taken into confidence.
 At the same time workers should desist from going
on strike and making unreasonable demands on the
management. In fact when there will be open
communication system and goodwill there will be no
need for even a trade union. Paternalistic style of
management, whereby the employer takes care of the
needs of employees, would prevail as in the case of
Japanese companies.
This principle is an extension of principle of ‘Harmony
not discord’. According to Taylor, "there should be an
almost equal division of work and responsibility
between workers and management. All the day
long the management should work almost side by
side with the workers helping, encouraging and
smoothing the way for them.”
4. Development of Each and Every Person to
His or Her Greatest Efficiency and Prosp-
erity
Industrial efficiency depends to a large extent on personnel
competencies. As such, scientific management also stood
for worker development. Worker training was essential
also to learn the ‘best method’ developed as a
consequence of the scientific approach.
 Taylor was of the view that the concern for
efficiency could be built in right from the process of
employee selection. Each person should be
scientifically selected. Then, work assigned should
suit her/his physical, mental and intellectual
capabilities.
 To increase efficiency, employees should be given
the required training. Efficient employees would
produce more and earn more. This will ensure their
greatest efficiency and prosperity for both company
and workers.
Techniques of Scientific Management
1. Functional Foremanship
In the factory system, the foreman represents the
managerial figure with whom the workers are in face-
to-face contact on a daily basis. The foreman is the
lowest ranking manager and the highest ranking
worker. He is the pivot around whom revolves the
entire production planning, implementation and
control. Thus, Taylor concentrated on improving the
performance of this role in the factory set-up. In fact, he
identified a list of qualities of a good foreman/supervisor.
Foremen should have intelligence, education, tact, grit,
judgment, special knowledge, manual dexterity and
energy, honesty and good health. Since all these
qualities could not be found in a single person so
Taylor proposed eight specialists. Each specialist is to
be assigned work according to her/his qualities. For
example, those with technical mastery, intelligence
and grit may be given planning work. Those with
energy and good health may be assigned execution
work.
Functional foremanship is an extension of the principle
of division of work and specialisation to the shop floor.
Functional foremanship is a technique which aims
to improve the quality of supervision at shop floor by
putting a worker under eight specialist foremen. In
this technique, planning is separated from execution.
Under the factory manager there was a planning
incharge and a production incharge.
Under planing incharge four personnel namely
instruction card clerk, route clerk, time and cost clerk
and a disciplinarian worked. Their role are as follows:
(i) Instruction card clerk: To draft instructions for the
workers.
(ii) Route clerk: To specify the route of production.
(iii)Time and cost clerk: To prepare time and cost
sheet.
(iv) Disciplinarian: To ensure discipline. Under
Production incharge, personnel who would work
were speed boss, gang boss, repair boss, and
inspector. Their role are as follows:
(v) Speed boss: To be responsible for timely and
accurate completion of the job.
(vi) Gang boss: To keep machines and tools ready
for operation by the workers.
(vii) Repair boss: To ensure proper working conditions
of machines and tools.
(viii)Inspector: To check the quality of work. Each
worker will have to take orders from these
eight foremen in the related process or function of
production.
2. Method Study
The objective of method study is to find out one
best way/method of doing the job.
It helps to minimise the cost of production and
maximise the quality and satisfaction of the customer.
For this purpose many techniques like process charts
and operations research etc. are used.
Right from procurement of raw materials till the final
product is delivered to the customer every activity is
part of method study.
For example, for designing a car, the assembly line
production would require deciding the sequence of
operations, place for men, machines and raw materials
etc. All this is part of method study.
Taylor devised the concept of assembly line by using method study. Ford Motor
Company used this concept very successfully. Even now auto companies are
using it.
3. Motion Study
Motion study refers to the study of movements
like lifting, putting objects, sitting and changing
positions etc., which are undertaken while doing a
typical job.
For example, on close examination of body motions, it
is possible to find out:
(i) Motions which are productive
(ii) Motions which are incidental (e.g., going to stores)
(iii) Motions which are unproductive.
Taylor used stopwatches and various symbols and
colours to identify different motions.
The objective of motion study is to eliminate
unnecessary and wasteful movements so that it
takes less time to complete the job efficiently. It
helps to increase productivity.
4. Time Study
It is a technique to determine the standard time,
i.e. the time taken by a worker of reasonable skill
and efficiency to perform a well-defined job.
Time measuring devices are used for each element of
task. The standard time is fixed for the whole of the
task by taking several readings.
The method of time study will depend upon:
(i) volume and frequency of the task,
(ii) the cycle time of the operation and
(iii) time measurement costs.
The objective of time study is to determine the
number of workers to be employed; frame suitable
incentive schemes and determine labour costs.
For example, on the basis of several observations it is
determined that standard time taken by the worker to
make one cardboard box is 30 minutes. So in one hour
he/she will make 2 boxes. Assuming that a worker has
to put in 8 hours of work in a shift and deducting one
hour for rest and lunch, it is determined that in 7 hours
a worker makes 14 boxes @ 2 boxes per hour. Now this
is the standard task a worker has to do. Wages can be
decided accordingly.
5. Fatigue Study
A person is bound to feel tired physically and mentally
if he/she does not rest while working. The rest intervals
will help one to regain stamina and work again with
the same capacity. This will result in increased
productivity.
Fatigue study seeks to determine the amount and
frequency of rest intervals in completing a task.
For example, normally in a plant, work takes place in
three shifts of eight hours each. Even in a single shift a
worker has to be given some rest interval to take
his/her lunch etc. If the work involves heavy manual
labour, then small pauses have to be frequently given to
the worker so that he/she can recharge his/her energy
level for optimum contribution.
 Top Tip
There can be many causes for fatigue like long working hours,
doing unsuitable work, having uncordial relations with the
boss or bad working conditions etc. Such hindrances in good
performance should be removed.
6. Differential Piece Wage System

According to Taylor, the standard time and other
parameters should be determined on the basis of the
work study techniques (time study, method study,
etc.). The workers can then be classified as efficient or
inefficient on the basis of these standards.
Taylor wanted to differentiate between efficient
and inefficient workers. He wanted to reward
efficient workers. So he introduced different rate
wage payment for those who performed above
standard and for those who performed below
standard.
For example, it is determined that standard output per
worker per day is 10 units and those who made
standard or more than standard will get `50 per unit
and those below will get `40 per unit.
An efficient worker making 11 units will get 11 × 50 = `
550 per day.
On the other hand, an inefficient worker who makes 9
units will get 9 × 40 = `360 per day.
According to Taylor, the difference of `190 should be
enough for the inefficient worker to be motivated to
perform better.
7. Standardisation and Simplification of Work
Simplification aims at eliminating superfluous
varieties, sizes and dimensions while standardisation
implies devising new varieties instead of the existing
ones.
Standardisation refers to the process of setting
standards for every business activity. It can be
standardisation of process, raw material, time,
product, machinery, methods or working conditions.
These standards are the benchmarks, which must be
adhered to during production.
The objectives of standardisation are:
(i) To reduce a given line or product to fixed types,
sizes and characteristics.
(ii) To establish interchange ability of manufactured
parts and products. For example, same battery can be
used in different mobile phones of a particular brand.
(iii) To establish standards of excellence and quality in
materials.
(iv) To establish standards of performance of men and
machines.
Simplification aims at eliminating unnecessary
diversity of products. It results in savings of cost of
labour, machines and tools. It implies reduced inventories,
fuller utilisation of equipment and increasing turnover.
•Most large companies like Nokia, Toyota and Microsoft etc. have successfully
implemented standardisation and simplification. This is evident from their
large share in their respective markets.
•Even the contemporary techniques of business process including
reengineering, kaizen (continuous improvement) and benchmarking are
aimed at standardising the work.
 Top Tip
Taylor was an ardent supporter of standardisation. According
to him, scientific method should be used to analyse methods
of production prevalent under the rule of thumb. The best
practices can be kept and further refined to develop a
standard which should be followed throughout the
organisation. This can be done through work-study techniques
which include time study, motion study, fatigue study and
method study.
Extra Shots
Applications of Scientific Management by Taylor and his
Contemporaries
1. Taylor found out the optimum-shovelling load of 21 pounds per
shovel per worker through a series of experiments in work-study at
Bethlehem Steel Company. The implementation saved the company $
75000 to $80000 per year.
2. Pig iron handling per person per day was increased from 12.5 tons to
47 tons. This also resulted in the wages increase to labourers by 60%
but also savings to the company on account of less number of
labourers from 500 to 140.
3. He had published a paper “The Art of cutting metals” which turned it
into a science.
4. He designed a Piece Rate Wage System including incentives for
Bethlehem Steel Company.
5. Taylor’s associate Frank Gilbreth applied scientific management to
the art of ‘brick layering’ and through motion study, he was able to
eliminate certain motions which were considered by the brick layers
to be necessary (reduced motions from 18 to 5), designed simple
apparatus like adjustable scaffold and its packets to hold the bricks
and finally also taught brick layers to use both the hands at the same
time. This is a classic example of application of Scientific
Management to the simple art of brick layering.
Fayol Versus Taylor — A Comparison
Henri Fayol was a French mining engineer whereas F.W.
Taylor was an American mechanical engineer. Both of
them have contributed immensely to the knowledge of
management, which has formed a basis for further
practice by managers.
Taylor gave the concept of ‘Scientific Management’
whereas Fayol emphasised ‘Administrative Principles’.
While Taylor succeeded in revolutionising the working
of factory shop-floor in terms of devising the best
method, fair day’s work, differential piece-rate system
and functional foremanship; Henri Fayol explained
what amounts to a managers work and what principles
should be followed in doing this work. If workers’
efficiency mattered in the factory system, so does the
managerial efficiency. Thus, their contributions are
complementary to each other.
We can make out the following points of difference
between their contributions:
S. No. Basis of difference Henri Fayol F. W. Taylor
1 Perspective Fayol’s perspective Taylor’s perspective
was on the top level was on the shop floor
of management. level of a factory.
2 Unity of command Fayol was a staunch Taylor did not feel
proponent of unity that it is important as
of command. under functional
foremanship a worker
received orders from
eight specialists.
3 Focus Fayol focused on Taylor focused on
improving overall increasing produc-
administration. tivity of workers.
4 Expression Fayol used the expr- Taylor used the
ession ‘General expression ‘Scientific
Theory of Admin- Management’.
istration’.
5 Applicability Fayol’s principles are Taylor’s principles are
applicable universal- applicable to special-
ly. ised situations.
6 Basis of formation Principles were Principles were based
based on his on observations and
personal experience. experimentation.
7 Personality Practitioner Scientist
Today, many new techniques have been developed as a sequel to scientific
management. Operations research was developed in the second World War to
optimise the deployment of war material. Similarly assembly line was also
discovered by F.W. Taylor, which was used very successfully by Ford motor
company for manufacturing ‘Model T’ car for the masses. This concept is much
used now. The latest development in scientific management is ‘LEAN
MANUFACTURING’. Now-a-days, robotics and computers are being used in
production and other business activities. This is part of scientific management of
these activities. It has increased productivity levels.
Think about it
Taylor’s techniques of management are universally applicable.
Do you agree? Give reasons in support of your answer.
RECAP
Taylor’s Scientific Management – Principles

Scientific management means knowing exactly what you
want men to do and seeing that they do it in the best and
cheapest way.
1. Science not rule of thumb: Taylor believed that there was
only one best method to maximise efficiency. This method
can be developed through scientific study and analysis of
each element of a job and should substitute ‘Rule of
Thumb’. This standard method then should be followed
throughout the organisation.
2. Harmony Not Discord: The principle emphasises that
there should be complete harmony between the
management and the workers. Management should share
gains of the company with the workers and workers should
work hard and be willing to embrace change for the good of
the company. This requires ‘Mental revolution’ on the part
of both management and workers. Both management and
the workers should transform their thinking. Both should
realise that they require one another.
3. Cooperation, not individualism: This principle is an
extension of principle of ‘Harmony, Not Discord’. There
should be complete cooperation between the management
and the workers instead of individualism. According to
Taylor, there should be an almost equal division of work
and responsibility between workers and management.
The management should work almost side by side with
the workers helping, encouraging and smoothing the way
for them. For all important decisions taken by the
management, workers should be taken into confidence.
The management should be open to any constructive
suggestions made by the employees and suitably reward
them.
4. Development of each and every person to his/her
greatest efficiency and prosperity: This principle is
concerned with efficiency of employees which could be
built in right from the process of employee selection. The
work assigned to employees should suit their
capabilities. They should be given the required training
to increase their efficiency. Efficient employees would
produce more and earn more. This will ensure greatest
efficiency and prosperity for both the company and the
workers.
Techniques of Scientific Management
1. Functional Foremanship: Functional foremanship is
an extension of the principle of division of work and
specialisation. It is a technique which aims to improve
the quality of supervision at shop floor by putting a
worker under eight specialist foremen. In this technique,
planning is separated from execution. Taylor suggested
four foremen for planning and four foremen for execution.
The four foremen for planning and their role: (i)
Instruction card clerk: To draft instructions for the
workers. (ii) Route clerk: To specify the route of
production. (iii) Time and cost clerk: To prepare time and
cost sheet. (iv) Disciplinarian: To ensure discipline.
The four foremen for execution and their role: (i) Speed
boss: To be responsible for timely and accurate completion
of the job. (ii) Gang boss: To keep machines and tools
ready for operation by the workers. (iii) Repair boss: To
ensure proper working conditions of machines and tools.
(iv) Inspector: To check the quality of work.
2. Method Study: The objective of method study is to find
out one best way of doing the job and includes all activities
from procurement of raw materials till the final product is
delivered to the customer. It helps to minimize the cost
of production, improve the quality and maximize
satisfaction of the customer. For example, for designing a
car, the assembly line production would entail deciding
the sequence of operations, place for men, machines and
raw materials etc. All this is part of method study.
3. Motion Study: It is a technique to study the movements
which are undertaken while doing a well defined job. The
movement could be productive, incidental and
unproductive. Motion study seeks to eliminate unnecessary
and wasteful movements so that it takes less time to
complete a job efficiently.
4. Time Study: It is a technique to determine the standard
time i.e. the time taken by a worker of reasonable skill and
efficiency to perform a well-defined job. The standard time is
fixed for the whole of the task by taking several readings.
The objective of time study is to determine the number
of workers to be employed, frame suitable incentive
schemes and determine labour costs. For example, on
the basis of several observations, it is determined that
standard time taken by the worker to make one lunch
box is 30 minutes. So, in one hour he/she will make 2
boxes. Assuming that a worker works for 8 hours per day
and deducting one hour for rest and lunch, it is
determined that in 7 hours a worker makes 14 boxes @ 2
boxes per hour. Now this is the standard task a worker
has to do. Wages can be decided accordingly.
5. Fatigue study: Fatigue Study determines the amount
and frequency of rest intervals in completing task. The
rest intervals help the workers to regain stamina and
work again with the same capacity resulting in increased
productivity. There can be many causes for fatigue like
long working hours, doing unsuitable work, bad
working conditions etc.
6. Differential piece wage system: It is a technique
which differentiates between efficient and less efficient
workers. Taylor wanted to reward the efficient workers.
So he introduced different rate of wage payment for
those who performed above standard and for those who
performed below standard. Example: Standard output
(per worker per day) = 10 units. Wage rate I = ` 50 per
unit (for output >= 10 units) Wage rate II = ` 40 per unit
(for output < 10 units). Worker A produced 11 units and
Worker B 9 units. Total wages of Worker A = 11 × 50 =
`550 and of Worker B = 9 × 40 = ` 360. According to
Taylor, this loss of ` 190 should be enough for the
inefficient worker (worker B) to be motivated to perform
better.
7. Standardisation and simplification of work:
Standardisation is the process of setting standards for every
business activity – standardisation of process, raw material,
time, etc. The objectives of standardisation of work are: (i) To
reduce a given line or product to fixed types, sizes and
characteristics. (ii) To establish standards of excellence
and quality in materials. (iii) To establish standards of
performance of men and machines. (iv) To establish
interchange ability of manufactured parts and products.
Simplification of Work is a technique to eliminate
superfluous varieties, sizes and dimensions of products.
It leads to reduced inventories, fuller utilization of
equipment and increased turnover to reduce costs.
Fayol versus Taylor– A Comparison
1. Perspective: Fayol – Top level of management Taylor –
Shop floor level of a factory
2. Basis of formation: Fayol – Personal experience Taylor
– Observations and experimentation
3. Focus: Fayol – Improving overall administration Taylor –
Increasing productivity
4. Unity of Command: Fayol – Staunch proponent Taylor
– Did not feel that it is important as under functional
foremanship a worker received orders from eight
specialists.
5. Applicability: Fayol – Applicable universally Taylor –
Applicable to specialised situations
6. Expression: Fayol – General Theory of Administration
Taylor – Scientific Management
Question 1
According to Taylor, there are various ways of doing the
job. To determine the best way there are several parameters.
Right from procurement of raw materials till the final product
is delivered to the customer every activity is part of it. For
designing a car, the assembly line production would entail
deciding the sequence of operations, place for men, machines
and raw materials etc. All this is part of this technique of
scientific management. Ford Motor Company used this
concept very successfully. Even now auto companies are using
it. Taylor also demonstrated that productivity increased
to about four times by following his another technique.
On close examination of body movements, it is possible
to find out the productive, incidental and unproductive
movements. He used stopwatches and various symbols
and colours to identify different movements. Through
this technique, Taylor was able to design suitable
equipment and tools to educate workers on their use.
Identify and explain the two techniques of scientific
management highlighted above. (3 marks)

Answer 1
The two techniques of scientific management highlighted
are: (Explain)
(i) Method Study
(ii) Motion Study

Question 2
Factory system of production implies that managers
serve as a link between the owners and the workers.
Since as managers they had the mandate to ‘get work
done’ from the workers, there always exist the
possibility of a kind of class-conflict, the managers versus
workers. Taylor recognised that this conflict helped none,
the workers, the managers or the factory owners. Both
should realise that each one is important. In such a
situation even trade unions will not think of going on
strike etc. According to Taylor, ‘Scientific management has
for its foundation the firm conviction that the true
two are one and the same; that prosperity of the
business cannot exist for a long time unless it is
accompanied by prosperity/well-being of its workers.’
Japanese work culture is a classic example of such a
situation. In Japanese companies, paternalistic style of
management is in practice. There is complete openness
between the management and workers. If at all workers
go to strike they wear a black badge but work more
than normal working hours to gain the sympathy of the
management.
(a) Identify and explain the principle of scientific
management highlighted in the above paragraph.
(b) To achieve a state like that of Japanese work culture,
Taylor called for an important concept. Identify and
explain that concept. (4 marks)

Answer 2
(a) Harmony, Not Discord
(b) To achieve this state,Taylor called for Mental Revolution.

Question 3
Taylor’s prescription for efficiency depends to a large
extent on personnel competencies. To increase efficiency,
workers should be given the required training. Efficient
employees will produce more and earn more. Efficiency
also requires the search for one best method of doing
the job. The best method chosen must lead to the
determination of a fair day’s work. There must be a
compensation system that differentiates those who are
able to accomplish/exceed the fair day’s work. This
system must be based on the premise that efficiency is
the result of the joint efforts of the managers and the
workers. Thus, rather than quarreling over the share in
the resultant surplus, the workers and managers should
work in harmony for maximising the output rather than
restricting it.
Identify and explain the principles / techniques of
scientific management as given by Taylor discussed above.
(6 marks)

Answer 3
The principles of scientific management as given by Taylor
discussed above are:
(i) Development of each and every person to his or her
greatest efficiency and prosperity
(ii) Harmony, Not Discord
The techniques of scientific management as given by Taylor
discussed above are:
(i) Method study
(ii) Differential Piece Wage System

Question 4
Karan Nath took over ‘D North Motor Company’ from
his ailing father three months ago. In the past the
company was not performing well. Karan was
determined to improve the company’s performance. He
observed that the methods of production as well as
selection of employees in the company were not
scientific.
He believed that there was only one best method to
maximise efficiency. He also felt that once the method is
developed, the workers of the company should be
trained to learn that ‘best method’.
He asked the Production Manager to develop the best
method and carry out the necessary training. The
Production Manager developed this method using
several parameters right from deciding the sequence of
operations, place for men, machines and raw materials
till the delivery of the product to the customers. This
method was implemented throughout the organisation.
It helped in increasing the output, improving the quality
and reducing the cost and wastage.
Identify and explain the principles and the technique of
scientific management followed by the Production
Manager in the above case. (CBSE 2018) (6 marks)

Answer 4
Principles of management followed in the above case:
(a) Science, not rule of thumb
(b) Development of each and every person to his greatest
efficiency and prosperity (Explain)
Technique of scientific management followed in the above
case:
(a) Method Study (Explain)

Question 5
Sanchit, after completing his entrepreneurship course
from Sweden returned to India and started a coffee
shop ‘Aroma Coffee Can’ in a famous mall in New Delhi.
The speciality of the coffee shop was the special aroma
of coffee and a wide variety of flavours to choose from.
Somehow, the business was neither profitable nor
popular. Sanchit was keen to find out the reason. He
appointed Sandhya, an MBA from a reputed college, as a
manager to find out the causes for the same. Sandhya
took feedback from the clients and found out that
though they loved the special unique aroma of coffee
but were not happy with the long waiting time being taken to
process the order. She analysed and found out that there
were many unnecessary obstructions in between which
could be eliminated. She fixed a standard time for processing
the order.
She also realised that there were some flavours whose
demand was not enough. So, she also decided to stop the sale
of such flavours. As a result within a short period Sandhya
was able to attract the customers.
Identify and explain any two techniques of scientific
management used by Sandhya to solve the problem.
(CBSE 2017) 4 marks
Answer 5
Techniques of Scientific management used by Sandhya to
solve the problem were:
(i) Motion Study
(ii) Time Study
(iii) Simplification of Work

Question 6
Mr. Gopal, HR Manager of a company, selects each
person scientifically, assigns work to each employee
according to her/his physical, mental and intellectual
capabilities. He also gives them the required training so
that they may produce more and earn more. This will
ensure their prosperity for both company and workers.
Identify the principle of management highlighted in the
above case. (1 mark)

Answer 6
Development of each and every person to his or her
greatest efficiency and prosperity.

Question 7
In order to set up standard target of performance for
workers, it was necessary for Shiv Ltd. to fix standard
time for workers to perform a particular job. For this
Mr. Ganesh, the Production Manager of the company
observed the workers when they were performing the job.
He used a stop watch in hand and noted down the average
time taken by workers for completion of the job. He
repeated the same observation for 100 times and then
calculated average time for the performance of the job. This
was fixed as the standard time on the basis of which efficient
and inefficient workers were distinguished. Identify technique
of scientific management followed by Mr. Ganesh. (1 mark)
Answer 7
Time Study

Question 8
Sitaram, the production manager of X Ltd., wants to
increase the speed of packaging. In order to identify and
eliminate unnecessary and unproductive movements of
workers in packaging, he installed a CCTV camera in the
factory. Which technique of scientific management is
adopted by Sitaram? (1 mark)

Answer 8
Motion Study

Question 9
Ram Kishan is the owner of a shoe manufacturing
factory. He follows the traditional practice of fixing
standard time of work based on his own past
experiences. He could not match the supply with the
demand for shoes produced in his factory. His son,
Shyam who has done MBA from FMS joined business
and suggested to fix the standard time by analysing the
work scientifically. The production increased and supply
could match the demand. Which principle of scientific
management of Taylor is highlighted in above case?
(1 mark)
Answer 9
Science, not rule of thumb

Question 10
Beena, a student of management, likes to relate what she
learnt in class to real life situations. She observed many
situations while watching educational programmes on
television that remind her of concepts of scientific
Management. In one such programme, factories
manufacturing parts for products like automobiles,
computers and mobile phones were being telecast.
Name the technique of Scientific management that
should be adhered to, while manufacturing parts for
such products. (CBSE 2017) (1 mark)

Answer 10
Standardisation and simplification of work

Question 11
Pawan is working as a ‘production manager’ in CFL Ltd.
engaged in manufacturing of CFL bulbs. There is no class
conflict between the management and workers. The
working conditions are very good. The company is
earning huge profits. As a policy matter, management is
sharing the gains with the workers because they believe
that prosperity of the company cannot exist for a long
time without the prosperity of the employees.
Identify the principle of management described in the
above para. (1 mark)

Answer 11
Harmony, not Discord

Question 1
Same battery can be used in different mobile phones of a
particular brand. This is an example of which of the
following techniques of scientific management?
(a) Standardisation of work
(b) Simplification of work
(c) Method Study
(d) Functional Foremanship
Answer 1

Question 2
Which of the following statements is FALSE about Taylor
and Fayol? (Choose the correct alternative)
(a) Fayol was a mining engineer whereas Taylor was a
mechanical engineer
(b) Fayol’s principles are applicable in specialised
situations whereas Taylor’s principles have universal
application
(c) Fayol’s principles were formed through personal
experience whereas Taylor’s principles were formed
through experimentation
(d) Fayol’s principles are applicable at the top level of
management whereas Taylor’s principles are applicable at
the shop floor.

Answer 2
(b) Fayol’s principles are applicable in specialised situations
whereas Taylor’s principles have universal application

Question 3
Match the techniques of scientific management
(Column II) which are described by the statements given
in (Column I):
Column I Column II
(a) Each specialist is to be assigned work according to (i) Time study
her/his qualities. For example, those with technical
mastery, intelligence and grit may be given planning
work. Those with energy and good health may be
assigned execution work.
(b) Devising new varieties instead of the existing ones (ii) Method study
and eliminating unnecessary diversity of products.

(c) Fixing the standard time taken to perform a well- (iii) Functional
defined job so as to determine the number of foremanship
workers to be employed; frame suitable incentive
schemes and determine labour costs.
(d) Finding out one best way of doing the job to (iv) Standardisation
minimise the cost of production and maximise the and simplification
quality and satisfaction of the customer. of work

Answer 3
(a) – (iii), (b) – (iv), (c) – (i), (d) – (ii)

Question 4
‘She/he keeps machines, materials, tools etc., ready for
operations by concerned workers’. Whose work is
described by this sentence under functional
foremanship? (Choose the correct alternative)
(a) Instruction Card Clerk
(b) Repair Boss
(c) Gang Boss
(d) Route Clerk

Answer 4
(c) Gang Boss

Question 5
Which one of the following statements best describes
‘Mental Revolution’? (Choose the correct alternative)
(a) It implies change of attitude.
(b) The management and workers should not play the
game of one upmanship.
(c) Both management and workers require each other.
(d) Workers should be paid more wages.

Answer 5
(c) Both management and workers require each
other.

Question 6
Name the technique of scientific management which is
the strongest motivator for a worker to reach standard
performance. (CBSE 2012)

Answer 6
Differential piece wage system

Question 7
Why did Taylor introduce Differential piece wage system?
(CBSE 2009)

Answer 7
(i) To differentiate between efficient and inefficient
workers.
(ii) To reward efficient workers.

Question 8
Identify the technique of scientific management which
helps in eliminating unnecessary diversity of products
and thus results in saving cost.

Answer 8
Simplification of work

Question 9
Which principle of scientific management suggests the
introduction of scientific investigation and analysis of
management practices?

Answer 9

Question 10
In one of the principles of scientific management, Taylor
emphasises that there should be equal division of work
and responsibility between workers and management
and management should work almost side by side with
workers helping and smoothing the way for them.
Identify the principle.

Answer 10
Cooperation, not individualism

Question 11
Principle of cooperation, not individualism is an
extension of which principle given by Taylor?

Answer 11
Harmony, not discord

Question 12
Which principle of Taylor advocates scientific inquiry as
opposed to hit and trial method?

Answer 12

Question 13
Which technique of scientific management is an extension
of the principle of division of work and specialisation on
the shop floor?

Answer 13
Functional Foremanship

Question 14
Management should find ‘One best way’ to perform a task.
Which technique of Scientific management is defined in this
sentence?

Answer 14
Method study

Question 15
Name the technique of scientific management which
helps in establishing interchange ability of manufactured
parts and products. (CBSE 2010)

Answer 15
Standardisation of work

Question 16
Which technique of scientific management aims at
elimination of superfluous varieties, sizes and dimensions of
the product? (CBSE 2010)

Answer 16
Simplification of work

Question 17
On which principle of management, Taylor’s technique of
functional foremanship is based?

Answer 17
Division of work and specialisation

Question 18
differentiates between efficient and inefficient workers.
(CBSE 2010)

Answer 18
Differential piece wage system

Question 19
focuses on separation of planning and execution
functions. (CBSE 2009)

Answer 19

Question 20
According to Taylor, scientific method should be used to
analyse methods of production prevalent under the rule
of thumb. The best practices can be kept and further
refined to develop a standard which should be followed
throughout the organisation. These are the benchmarks,
which must be adhered to during production. Its objective
is to reduce a given line or product to fixed types, sizes and
characteristics; and to establish interchange ability of
manufactured parts and products. Scientific management also
aims at eliminating unnecessary diversity of products. Most
large companies like Nokia, Toyota and Microsoft etc.
have successfully implemented these technique of
scientific management. This is evident from their large
share in their respective markets.
Identify the technique of scientific management highlighted
in the above paragraph.

Answer 20
Standardisation and Simplification of Work

Question 21
According to Taylor, management should not close its
ears to any constructive suggestions made by the
employees .They should be rewarded for their
suggestions which results in substantial reduction in
costs. They should be part of management and, if any
important decisions are taken, workers should be taken
into confidence. At the same time workers should desist
from going on strike and making unreasonable demands
on the management. Both should realise that they need
each other. In fact, when there will be open communication
system and goodwill there will be no need for even a
trade union. Paternalistic style of management, whereby
the employer takes care of the needs of employees,
would prevail as in the case of Japanese companies.
Identify the principle of scientific management
highlighted in the above paragraph.

Answer 21
Cooperation, Not Individualism

Question 22
In the factory set-up / system ,Taylor concentrated on
improving the performance of the managerial figure with
whom the workers are in face-to-face contact on a daily
basis. He is the pivot around whom revolves the entire
production planning, implementation and control. In fact,
Taylor identified a list of qualities of that person such as
intelligence, education, tact, grit, judgement, special
knowledge, manual dexterity, and energy, honesty and
good health. Taylor found that no single person could fit
them all. This prompted him to suggest a technique of
scientific management which is an extension of the
principle of division of work and specialisation to the
shop floor. This concept was extended to the lowest
level of the shop floor.
Identify the technique of scientific management
discussed in the above paragraph.

Answer 22

Question 23
According to Taylor, even a small production activity like
loading pigs of iron into boxcars can be scientifically
planned and managed. This can result in tremendous
saving of human energy as well as wastage of time and
materials. The more sophisticated the processes, greater
would be the savings. In the present context, the use of
internet has brought about dramatic improvements in
internal efficiencies and customer satisfaction.

Answer 23
Science not Rule of Thumb

Question 24
24. Which concept of management is the basis of
principles and techniques of scientific management?

Answer 24
Mental revolution

Nature and Significance of
Principles of Management
Nature/Characteristics/Features of
1. Universal applicability
The principles of management apply to all types of
organisations, at all levels and at all times.
The principles of management are intended to apply to
all types of organisations, business as well as non-
business, small as well large, public sector as well as
private sector, manufacturing as well as the services
sectors. However, the extent of their applicability
would vary with the nature of the organisation,
business activity, scale of operations, etc.
For example, for greater productivity, work should be
divided into small tasks and each employee should be
trained to perform his/her specialised job (i.e.,
Division of work). This principle is applicable to a
government office where there is a diary/dispatch clerk
whose job is to receive and send mail or documents, a
data entry operator whose task is to input data on the
computer, a peon and an officer etc. This principle is
also applicable to a limited company where there are
separate departments like Production, Finance,
Marketing and Research and Development etc. Extent
of division of work, however, may vary from case to
case.
2. General guidelines
The principles of management are guidelines to
action and behaviour of managers.
For example, in dealing with a situation of conflict
between two departments, a manager may emphasise
the primacy of the overall goals of the organisation (i.e.
subordination of individual interest to general
interest).
The principles are guidelines to action but do not
provide readymade, straitjacket solutions to all
managerial problems. This is so because real business
situations are very complex and dynamic and are a
result of many factors.
3. Formed by practice and experimentation
The principles of management are formed by
experience and collective wisdom of managers as
well as experimentation.
For example, it is a matter of common experience that
discipline is indispensable for accomplishing any
purpose. This principle finds mention in management
theory. On the other hand, in order to remedy the
problem of fatigue of workers in the factory, an
experiment may be conducted to see the effect of
improvement of physical conditions to reduce stress.
4. Flexible
The principles of management are not rigid prescriptions,
which have to be followed absolutely.
The principles of management are flexible and
can be modified by the manager when the situation
so demands.
For example, the degree of concentration of authority
(centralisation) or its dispersal (decentralisation) will
depend upon the situations and circumstances of each
enterprise.
The principles of management give the manager enough
discretion to modify them according to the situation.
Moreover, individual principles are like different tools
serving different purposes, the manager has to decide
which tool to use under what circumstances.
5. Contingent
The application of principles of management is
contingent or dependent upon the prevailing
situation at a particular point of time.
The application of principles has to be changed as per
requirements. For example, employees deserve fair and
just remuneration. But what is just and fair is
determined by multiple factors. They include
contribution of the employee, paying capacity of the
employer and also prevailing wage rate for the
occupation under consideration.
5. Contingent
The application of principles of management is
contingent or dependent upon the prevailing
The application of principles has to be changed as per
requirements. For example, employees deserve fair and
just remuneration. But what is just and fair is
determined by multiple factors. They include
 Top Tip
Difference between nature of principles of management on
the basis of 'Flexible' and 'Contingent‘
Flexible: Principles of management can be modified according
to the situation.
Contingent: Their application depends upon the prevailing
6. Mainly behavioural
The principles of management are mainly
behavioural in nature as they aim at influencing
behaviour of human beings.
It is not that these principles do not pertain to things
and phenomenon at all, it is just a matter of emphasis.
Moreover, principles enable a better understanding of
the relationship between human and material resources
in accomplishing organisational purposes.
For example, while planning the layout of a factory,
orderliness would require that work flows are matched
by flow of materials and movement of men.
7. Cause and effect relationships
The principles of management are intended to
establish relationship between cause and effect so
that they can be used in similar situations in a
large number of cases. As such, they tell us if a
particular principle was applied in a particular
situation, what would be its likely effect.
The principles of management are less than perfect
since they mainly apply to human behaviour. In real
life, situations are not identical. So, accurate cause and
effect relationships may be difficult to establish.
However, principles of management assist managers in
establishing cause and effect relationships to some
extent and are therefore useful. In situations of
emergencies, it is desirable that someone takes charge
and others just follow. But in situations requiring
cross-functional expertise, such as setting up of a new
factory, more participative approach to decision-
making would be advisable.
Significance/Importance of Principles
of Management
1. Providing managers with useful insights
into reality
 Adherence to these principles will add to their
knowledge, ability and understanding of managerial
situations and circumstances.
 It will also enable managers to learn from past
mistakes and conserve time by solving recurring
problems quickly. As such management principles
increase managerial efficiency. For example, a
manager can leave routine decision-making to his
subordinates and deal with exceptional situations
which require her/his expertise by following the
principle of 'Centralisation and Decentralisation'.
2. Optimum utilisation of resources and
effective administration
 Resources both human and material available with
the company are limited. They must be used
optimally, i.e. in such a manner that they should
give maximum benefit with minimum cost. Principles
of management help in optimum utilisation of
resources by equipping the managers to foresee the
cause and effect relationships of their decisions and
actions. As such, the wastages associated with a
trial-and-error approach can be overcome.
 Effective administration necessitates impersonalisation
of managerial conduct so that managerial power is
used with due discretion. Principles of management
help in effective administration by limiting the
boundary of managerial discretion so that their
decisions may be free from personal prejudices and
biases. For example, in deciding the annual budgets for
different departments, rather than personal
preferences, managerial discretion is bounded by
the principle of contribution to organisational
objectives (i.e. Subordination of individual interest
to general interest).
3. Scientific decisions
Decisions must be based on facts, thoughtful and
justifiable in terms of the intended purposes. They
must be timely, realistic and subject to measurement
and evaluation. Management principles help in
thoughtful decision-making.
 They emphasise logic rather than blind faith.
 Management decisions taken on the basis of
principles are free from bias and prejudice.
 They are based on the objective assessment of the
situation.
4. Meeting changing environment
requirements
Although the principles are in the nature of general
guidelines but they are modified and as such help
managers to meet changing requirements of the
environment. Management principles are flexible to
adapt to dynamic business environment. For example,
management principles emphasise division of work
and specialisation. In modern times, this principle has
been extended to the entire business whereby
companies are specialising in their core competency
and divesting non-core businesses. One may cite the
decision of Hindustan Unilever Limited in divesting
non-core businesses of chemicals and seeds. Some
companies are outsourcing their non-core activities
like share-transfer management and advertising to
outside agencies. Even core processes such as R&D,
manufacturing and marketing are being outsourced
today (‘Business Process Outsourcing’ and ‘Knowledge
Process Outsourcing’).
5. Fulfilling social responsibility
The increased awareness of the public, forces
businesses especially limited companies to fulfill their
social responsibilities. Management principles have
also evolved in response to the demands of the public.
Moreover, the interpretation of the principles also
assumes newer and contemporary meanings with the
change in time. So, if we talk of ‘equity’ today, it does
not apply to wages alone. Value to the customer, care
for the environment, dealings with business associates
would all come under the purview of this principle.
Extra Shots
Bharat Heavy Electricals Limited (BHEL)
As an application of the principle of ‘equity’, we find that Public Sector
Undertakings have developed entire townships as, for example, BHEL has
developed Ranipur in Hardwar (Uttaranchal).
Shri Mahila Griha Udyog Lijjat Papad
The story of Shri Mahila Griha Udyog Lijjat Papad is very inspiring for
would-be managers. It shows how an organisation can combine business
with social responsibility and make its stakeholders self-reliant. The
stakeholders are various women who, numbering over 45,000, are given
the task of making lijjat papads, which are famous for their quality
throughout the world. The organisation started with a modest loan of `80
and is now worth around `650 crores. Its exports exceed `60 crores. Their
exports are made through Merchant Exporters to countries like UK, USA,
Middle East Countries, Thailand, Singapore, Hongkong, Holland, Japan,
Australia and other Countries. One of the main reasons for their success
can be attributed to their core values to which they have stuck to since
its inception in 1959. It has shown how it is possible to combine
Gandhian values with business. Shri Mahila Griha Udyog Lijjat Papad is a
of three different concepts (core values) namely: (i) The concept of
business (ii)The concept of family (iii) The concept of devotion. All
these concepts are uniformly followed in this institution. As a
result of his synthesis, a peculiar Lijjat way of thinking has
developed therein. Besides the concept of business, the institution
along with all its member sisters has adopted the concept of
mutual family affection, concern and trust. All the affairs of the
institution are dealt with in a manner similar to that of a family
carrying out its own daily household chores. But the most
important concept adopted by the institution is the concept of
devotion. For the member sisters, employees and well-wishers, the
institution is never merely a place to earn one’s livelihood — it is a
place of worship to devote one’s energy not for his or her own
benefits but for the benefit of all. Lijjat’ provides scholarships to
the children of the papad roller sister members who pass out in
10th and 12th standard every year so as to enable the Lady
Members to encourage their children for education.
6. Management training, education and
research
Principles of management are at the core of
management theory. As such, these are used as a basis
for management training, education and research.
 Entrance to management institutes is preceded by
management aptitude tests. These tests could not
have been developed without an understanding of
management principles.
 Management principles provide basic groundwork
for the development of management as a discipline.
Professional courses such as MBA (Master of Business
Administration), BBA (Bachelor of Business
Administration) also teach these principles as part of
their curriculum at the beginner’s level.
 Management principles enable refinement of
management practices as well by facilitating the
development of new management techniques. The
new management techniques like 'Operations
Research (OR)', 'Cost Accounting', ‘Just in Time’,
‘Kanban’ and ‘Kaizen’ have developed due to further
research on these principles.
Extra Shots
Modern Production/Scientific Management Techniques
 Just In Time Manufacturing: It is an inventory management strategy
to improve return on investment by reducing in process inventory and
its associated costs. The system is implemented by the use of visual
signals or KANBAN, which tells whether the replenishment is required
at any level of production process, or not.
 Lean Manufacturing: It is a management philosophy focusing on
reduction of seven wastes of overproduction, waiting time,
transportation, processing, motion, inventory and scrap in any type of
manufacturing process or any type of business. By eliminating waste,
quality is improved, production time is reduced and cost is reduced.
 Kaizen: It is a Japanese word, which means ‘change for better’ or
‘improvement’. It is an approach to improvement of productivity
through application of works of American experts such as F.W. Taylor
by Japanese after World War II. The goals of kaizen include
elimination of waste (which is defined as those activities which add
cost but not value to the product or service), just in time delivery,
production load levelling of amount and types, standardised work,
paced moving lines, right sized equipment and others. A closer
Japanese use of the word means ‘to take apart and put it in a better
way’. What is taken apart is usually a process, system, product or
service. It is a daily activity which humanizes the workplace, eliminates
hard work both physical and mental, teaches people how to do rapid
experiments using scientific method and how to learn to see and
eliminate waste in business processes.
 Six Sigma: It is a data driven approach that can help any
organisation whatever sector or field it might be operating in, to bring
down inefficiencies and save time and money by reducing ‘quality
variations’. It has a strong customer oriented approach that relies on
data to create more efficient processes or refine existing processes.
There should not be more than 3-4 defects per million opportunities
according to prescribed norms. It can be applied to any process but
needs unstilted organisational support.
RECAP
Nature/Characteristics/Features of Principles of
Management UGC2 F2B
1. General guidelines: The principles of management are
guidelines to action but do not provide readymade,
straitjacket solutions to all managerial problems since real
business situations are very complex and dynamic and are
a result of many factors.
2. Formed by practice and experimentation: The principles
of management are derived by observation,
experimentation and personal experience of managers.
3. Universal applicability: The principles of management
apply to all types of organisations, at all levels and at all
times.
4. Flexible: They are not rigid but are flexible and can be
modified by the manager when the situation so demands.
5. Contingent: The application of principles of
management is contingent or dependent upon the
prevailing situation at a particular point of time.
6. Behavioural: Management principles aim at
influencing behaviour of human beings.
7. Cause and effect relationships: The principles of
management establish cause and effect relationship so
that they can be used in similar situations in a large
number of cases. Since principles of management mainly
apply to human behaviour, accurate cause and effect
relationships may be difficult to establish.
Significane of Management Principles TOP SMS
1. They provide the managers with useful insights into
real world situations. Principles of management
provide useful insights into reality by enabling the
managers to learn from past mistakes and conserve
time by solving recurring problems quickly. Adherence
to these principles adds to their knowledge, ability and
understanding of managerial situations and
circumstances.
2. They help in optimum utilisation of resources as the
wastages associated with trial and error approach can be
overcome. They help in effective administration as the
decisions are free from personal bias.
3. They help managers in taking scientific decisions
because the decisions based on principles are free from
bias. They are based on the objective assessment of the
situation.
4. They help in meeting changing environment
requirements as they can be modified according to the
needs of the environment.
5. They help in fulfilling social responsibility by
responding to the demands of the public.
6. They are used as a basis for management training,
education and research by providing the basic
groundwork for the development of management as a
discipline.
Question 1
The principle of ‘equity’ today does not apply to wages
alone. Value to the customer, care for the environment,
dealings with business associates would all come under
the purview of this principle. Today, we find that Public
Sector Undertakings (PSUs) have developed entire
townships as, for example, BHEL has developed Ranipur in
Hardwar (Uttaranchal).
Similarly, Shri Mahila Griha Udyog Lijjat Papad is famous for its
quality Papad throughout the world. The organisation which
started with a modest loan of ` 80 now has a turnover of
over `301 crores. Its exports exceed ` 10 crore.The
company has at least 61 branches.The company is synthesis
of three core values(or concepts), namely the concept of
business, the concept of family and the concept of devotion.
All its dealings are carried out on a sound and pragmatic
footing-production of quality goods and at reasonable
prices.Besides, its member-sisters donate collectively for
good causes from time-to-time according to their capacity.
All the affairs of the institution are dealt with in a manner
similar to that of a family carrying out its own daily
household chores. For the member-sisters, employees and
well-wishers, the institution is never merely a place
to earn one’s livelihood – it is a place of worship to
devote one’s energy not for his or her own benefits
but for the benefit of all. In this institution work is
worship. The institution is open to everybody who
has faith in its basic concepts.
(a) To what aspect of the significance of principles of
management would you attribute the endeavours of
BHEL and Shri Mahila Griha Udyog Lijjat Papad?
(b) Explain any four other points of significance of
principles of management. (5 marks)
Answer 1
(a) Principles of management help in fulfilling social
responsibility.
(b) Significance of principles of management: (any four
with explanation)
(i) Providing managers with useful insights into reality
(ii) Optimum utilisation of resources and effective
administration
(iii) Scientific decisions
(iv) Meeting changing environment requirements
(v) Management training, education and research
Question 2
Principles of management equip the managers to foresee
the cause and effect relationship of their decisions and
actions. As such the wastages associated with a trial -
and - error approach can be overcome.
Principles of management also limit the boundary of
managerial discretion so that their decisions may be free
from personal prejudices and biases. For example, in
deciding the annual budgets for different departments,
rather than personal preferences, managerial discretion
is bounded by the principles of contribution to
organisational objectives.
(a) Identify and explain the administration principle of
management highlighted above.
(b) State the point of significance of management
principles highlighted above. (3 marks)

Answer 2
(a) Subordination of individual interest to general interest.
(b) Principles of management help in optimum utilisation of
resources and effective administration.

Question 3
Gopal, a manager of A Ltd. believes that the degree of
concentration of authority or its dispersal will depend
upon the situations and circumstances of each
enterprise.
(a) What characteristic of nature of principles of
management is highlighted in the above case?
(b) Which principle of management is highlighted here?
Explain. (3 marks)

Answer 3
(a) Flexible: The principles of management are not rigid
prescriptions, which have to be followed absolutely. They
are flexible and can be modified by the manager when
the situation so demands.
(b) Centralisation and Decentralisation

Question 4
Fayol, in one of his principles, insists that employees
deserve fair and just wages or salary. But what is just and
fair is determined by multiple factors, such as
(a) Identify and state the feature of principles of
(b) Identify and explain the principle of Fayol highlighted
above. (3 marks)

Answer 4
(a) Contingent: The application of principles of
management is contingent or dependent upon the
prevailing situation at a particular point of time. The
application of principles has to be changed as per
requirements.
(b) The principle of ‘Remuneration of Employees’ is
highlighted in the above case.

Question 5
In today’s dynamic business environment, companies are
specialising in their core competency and divesting non-
core businesses. In this context, one may cite the
decision of Hindustan Unilever Limited in divesting non-
core businesses of chemicals and seeds. Some
companies are outsourcing their non-core activities like
share-transfer management and advertising to outside
agencies. So much so, that even core processes such as R&D,
manufacturing and marketing are being outsourced today.
Thus, significance of ‘Business Process Outsourcing’(BPO)
and ‘Knowledge Process Outsourcing’ (KPO) has increased.
(a) Identify the significance of principles of management
highlighted above.
(b) Identify and explain the principle of management
followed by the companies which are outsourcing
their non-core and core activities. (3 marks)

Answer 5
(a) Principles of management help in meeting changing
environment requirements.
(b) Division of work and specialisation

Key Terms
Principles of management – Principles of management are broad
and general guidelines for decision-making and behaviour.
Techniques of Management – Techniques are procedures or
methods, which involve a series of steps to be taken to
accomplish desired goals.
Authority – Authority means the right to give orders and obtain
obedience.
Responsibility – Responsibility means obligation to perform the of
a subordinate to properly perform the assigned duty.
Discipline – Discipline is the obedience to organisational rules and
employment agreement which are necessary for the working of
the organisation.
Unity of command – It means that there should be one and only
one boss for every individual employee. Dual subordination
should be avoided.
Unity of direction – It means that all the units of an organisation
should be moving towards the same objectives through
coordinated and focussed efforts.
Centralisation – The concentration of decision-making authority is
called centralisation.
Decentralisation – The dispersal of decision-making authority
among more than one person is known as decentralisation.
Scalar Chain – The formal lines of authority from highest to lowest
ranks are known as 'scalar chain'.
Gang Plank – Gang plank is a shorter route and has been provided
so that communication is not delayed in an emergency.
Order – It means that ‘a place for everything (everyone) and
everything (everyone) in its (his/her) place’.
Employee turnover/Labour turnover – It measures the rate at
which employees are leaving an organisation. Employee turnover
should be minimised to maintain organisational efficiency.
Initiative – Initiative means taking the first step with self-
motivation. It is thinking out and executing the plan.
Esprit De Corps – Management should promote a team spirit of
unity and harmony among employees.
Scientific Management – It means conducting business activities
according to standardised tools, methods and trained personnel in
order to increase the output, improve its quality and reduce costs
and wastes.
Harmony, Not Discord – It means that there should be complete
harmony between the management and workers. Both should
realise that each one is important.
Mental revolution – It involves a change in the attitude of workers
and management towards one another from competition to
cooperation. Both should realise that they require one another.
Both should aim to increase the size of surplus.
Cooperation, Not Individualism – There should be complete
cooperation between the labour and the management instead of
individualism. Competition should be replaced by cooperation.
Both should realise that they need each other.
Functional foremanship – It is a technique which aims to improve
the quality of supervision at shop floor by putting a worker under
eight specialist foremen. In this technique, planning is separated
from execution.
Gang boss – Gang boss is a foreman under Production incharge,
who keeps machines and tools ready for operation by the
workers.
Method Study – It is a technique of scientific management to find
out one best way/method of doing the job. It helps to minimise
the cost of production and maximise the quality and satisfaction
of the customer.
Motion study – Motion study refers to the study of movements
like lifting, putting objects, sitting and changing positions etc.,
which are undertaken while doing a typical job. It seeks to
eliminate unnecessary and wasteful movements so that it takes
less time to complete the job efficiently.
Time Study – It is a technique to determine the standard time i.e.
the time taken by a worker of reasonable skill and efficiency to
perform a well-defined job.
Fatigue study – It is a technique to determine the amount and
of rest intervals in completing a task.
Differential Piece Wage System – It is technique of scientific
management to differentiate between efficient and inefficient
workers. It has two different rates of wage payment for those who
performed above standard and for those who performed below
standard.
Standardisation of work – Standardisation refers to the process of
setting standards for every business activity. It can be standardisation of
process, raw material, time, product, machinery, methods or working
conditions.
Simplification of work – Simplification aims at eliminating
unnecessary diversity of products. It results in savings of cost of
labour, machines and tools.
Universal applicability of principles of management – It means
that the principles of management apply to all types of
organisations, at all levels and at all times.
Flexibility of principles of management – It means that the
principles of management are not rigid prescriptions, which have
to be followed absolutely. They are flexible and can be modified
by the manager when the situation so demands.
Contingent – The application of principles of management is
dependent upon the prevailing situation at a particular point of
time. The application has to be changed as per requirements.
Cause and effect relationships – The principles of management
are intended to establish relationship between cause and effect.
They tell us if a particular principle was applied in a particular
situation, what would be its likely effect.
Question 1
The principles of management are significant because of
(a) Increase in efficiency
(b) Initiative
(c) Optimum utilisation of resources
(d) Adaptation to changing technology

Answer 1
(c) Optimum utilisation of resources

Question 2
How are principles of management formed?
(a) In a laboratory
(b) By experiences of managers
(c) By experiences of customers
(d) By propagation of social scientists

Answer 2
(b) By experiences of managers

Question 3
Principles of management are NOT
(a) Universal
(b) Flexible
(c) Absolute
(d) Behavioural

Answer 3
(c) Absolute

Question 4
How do principles of management help in meeting
changing environment requirements? What nature of
principles of management does this highlight?

Answer 4
Principles of management help in meeting changing
environment requirements as they can be as they can be
modified according to the needs of the environment. This
shows that principles of management are flexible in
nature.


Question 1
Sanak and Gagan started their career in Wales
Limited (a printing press) after going through a
rigorous recruitment process. Since they had no prior
work experience, the firm decided to give them one
year to prove themselves. The principle of
management followed by Wales Limited is
__________ .
Answer 1
Stability of Personnel
Question 2
Match the following techniques of scientific management:
(1 mark)
(i) Separation of planning and execution (a) Standardisation of
functions work
(ii) Setting benchmarks for every business activity (b) Simplification of work
which must be adhered to during production
(iii) Eliminating superfluous varieties, sizes and (c) Method study
dimensions.
(iv) Minimising the cost of production and maximise (d) Functional foremanship
the quality and satisfaction of the customer
Answer 2
(i) – (d), (ii) – (a), (iii) – (b), (iv) – (c)
Question 3
Principles of management equip the managers to
foresee the cause and effect relationships of their
decisions and actions so that the wastages associated with
a trial and error approach can be overcome. The point of
significance of principles of management highlighted
here is __________ .
Answer 3
Optimum utilization of resources and effective administration.
Question 4
To motivate the workers ‘Differential Piece Wage
System’ should be implemented.
True/False? Give reason. (1 mark)
Answer 4
True: The difference in wages of an efficient worker and an
inefficient worker should be enough for the inefficient
worker to be motivated to perform better.
Question 5
Damini D’souza took over the reins of ‘Kinsa Retail’ as its
Managing Director in India. Kinsa Retail with its headquarters at
Japan has been in retail business for the last 40 years. It has
regional offices in many countries with each regional office taking
care of the shops in that particular region. As it is a large
organisation, the regional officers have been given the powers to
decide and spend funds sanctioned to them by the headquarter for
the welfare of the customers of their region.
Kinsa Retail wants the highest possible standards of ethical conduct
being followed for which a code of conduct is in place for putting
values into practice. All employees as well as Board members are
required to act in accordance with the highest standards of personal
and professional integrity when acting on behalf of the company.
Non-compliance involves a heavy penalty including
termination of employment.
Identify and state two principles of general management
being followed by Kinsa Retail. (3 marks)
Answer 5
(i) Discipline
(ii) Centralisation and Decentralisation
Question 6
Name and explain with a suitable example the
technique of Scientific Management given by Taylor, with
the objective of determining the number of workers to be
employed for a task. (3 marks)
Answer 6
Time Study
Question 7
Define principles of management. Explain any three
points highlighting the significance of principles of
management. (4 marks)
Question 8
Explain briefly any five characteristics of principles of
management. (5 marks)
Question 9
Fayol and Taylor both have contributed immensely to the
knowledge of management, which has become a basis for
further practice by managers. Taylor thought that by
scientifically analysing work it would be possible to find
‘one best way’ to do it. He is most remembered for his time
and motion studies and functional foremanship. He said
that the best result would come from the partnership
between a trained and qualified management and a
cooperative and innovative workforce. Fayol explained
what amounts to a manager’s work and what principles
should be followed in doing this work. In the light of the
above discussion, differentiate between the contribution of
Taylor and Fayol on the following basis:
(a) Perspective
(b) Unity of command
(c) Focus
(d) Expression
(e) Applicability
(f) Basis of formation (6 marks)
Answer 9
“One man control is best in the world if that one man
is big enough to manage everything” —W.R. Basset.
These advantages are as follows:
(i) It requires less amount of capital.
(ii) Ease of formation and closure of business.
(iii) Quick decision making without consulting others.
(iv) Confidentiality of information.
(v) A sole proprietor is the sole recipient of all the
profits.
(vi) Flexibility of operations because all decisions

Question 1
Appliances India Ltd is engaged in manufacturing and
distribution of home appliances since 1987. It has a good
name in the market as the company is producing good
quality appliances. It has separate departments for
manufacturing, finance, sales, maintenance services and
technical services to achieve specialisation. Since the areas
of operation of the company have increased and customers
have become more demanding, the company decided to
modify the existing principle of management to meet the
changing requirements of the environment. The general
principle of management which the company wants to
modify to meet the changing requirements is _________.
Answer 1
Principle of Division of work
Question 2
Match the following techniques of scientific management:
(1 mark)
(i) To reduce a given line or product to fixed (a) Method Study
types, sizes and characteristic
(ii) Devising new varieties instead of the existing (b) Time Study
ones
(iii) To find out one best way of doing the job. (c) Standardisation
of work
(iv) To determine the number of workers to be (d) Simplification of
employed ; frame suitable incentive schemes and work
determine labour costs.
Answer 2
(i) – (c), (ii) – (d), (iii) – (a), (iv) – (b)
Question 3
Management principles are rigid as principles of pure
science. (True/False) (1 mark)
Answer 3
False: Since they deal with human behaviour, they are
to be applied creatively given the demand of
the situation.
Question 4
"The application of principles of management has to be
changed as per requirements."
Which characteristic of management principles is
highlighted above?
(a) Flexible
(b) Contingent
(c) Behavioral
(d) General guidelines
Answer 4
(b) Contingent
Question 5
Management principles enable managers to learn from past
mistakes and conserve time by solving recurring problems
quickly. As such management principles increase managerial
efficiency. For example, a manager can leave routine
decision-making to his subordinates and deal with
exceptional situations which require his/her expertise.
(a) State the point of significance of principles of managem-
ent highlighted above.
(b) Identify and state the principles of management highligh-
ted above. (3 marks)
Answer 5
(a) The principles of management provide the
managers with useful insights into real world
situations.
(b) Centralisation & decentralisation
Question 6
Kirtika Kapoor, the CEO of Mobilo Ltd. firmly believes
in providing fair wages to the employees , superior
value to the customer, care for the environment and
honest dealings with business associates.
(a) Identify and explain the general principle of
management followed by Kirtika Kapoor.
(b) State the point of importance of management
principles highlighted above.
Answer 6
(a) Equity
(b) Principles of management help in fulfilling social
responsibility.
Question 7
Define principles of management. Distinguish between
the principles of 'unity of command' and 'unity of
direction' on the basis of:
(i) Meaning
(ii) Aim
(iii) Implications (4 marks)
Question 8
Tanvi is a manager in Beta ltd, a company manufacturing
plastic glasses and bowls. The government banned plastic
items. As a result, Beta Ltd. incurred a huge loss as it had to
stop production of plastic glasses and bowls, and had to
purchase new machinery for producing paper glasses
and bowls.
The management of the company entered into an
agreement with labour union whereby workers agreed
to put in extra hours without additional payment to revive
the company out of loss. In return the management
promised to increase wages of the workers when this
mission was accomplished.
Tanvi found that workers' efficiency declined due to
long working hours. She conducted an experiment to
see the effect of improvement of physical conditions of
work to reduce stress. It worked and workers efficiency
and productivity increased manifold.
Within two months, the company revived out of loss.
The management in returned increased their wages by
30 per cent.
(a) Identify and explain the principles/technique of
(b) State the characteristic of principles of
management highlighted above. (5 marks)
Answer 8
(a) Discipline ; Fatigue study
(b) The principles of management are formed in the
basis of observation/experimentation and
experiences of the managers.
Question 9
Vishesh completed his MBA at a reputed business
school in Lucknow. He was impressed by the Principles
and Techniques of Scientific Management developed
by F.W. Taylor. On completing his MBA, he wanted to
apply scientific Management in his family’s business of
fast food chain of restaurants named ‘Burger Mania’.
His main goal was to reduce costs with increased
output. To begin with, he wanted to develop a
standard method which would be followed throughout
the organisation. So, he investigated traditional
methods through work study and unified the best
practices. The standard method, i.e. the best way of doing
the job was then developed taking into account all
parameters right from the procurement of raw materials
till the delivery of the final product to the customer.
Vishesh also believed that each person should not only be
scientifically selected but should also be given the required
training to increase efficiency. For this, he set up a Special
Training Unit called ‘Hamburger’ in Bengaluru where the
workers were given the required training to increase
efficiency. For this, he set up a workers were given the
required training to learn the best method. At the factory,
the ingredients making up a burger were strategically
placed to reduce the time taken for excess movements. The
standard time and other parameters were determined on
the basis of work study and Vishesh rewarded the workers
for meeting the standard output.
Now, ‘Burger Mania’ has standardised processes, raw
material, time, machinery, product and working conditions
that ensure the food they send out to their customers has
the same high standards of excellence and level of quality
in every chain or franchise.
The application of Scientific Management to every aspect
of restaurant operations led to Burger Mania’s
widespread success.
Quoting the lines from the above, explain the Principles
and Techniques of Scientific Management used by ‘Burger
Mania’.
Answer 9
(i) Science, not rule of thumb
“To begin with, he ..... best practices.”
(ii) Development of each and every person to his/her
greatest efficiency and prosperity
“Vishesh also believed that ..... increase efficiency.”
(iii)Method study
“The standard method, i.e. the .... to the customer.”
(iv)Motion study
“At the factory, ..... movements.”
(v) Time study
“The standard time ... work study"
(vi) Standardization of Work
“Now, ‘Burger Mania’ has standardised... franchise.”
 Business Environment- concept and
importance
 Dimensions of Business Environment-
Economic, Social, Technological, Political
and Legal
3.1
Business Environment:
Concept and Importance
Meaning of Business Environment
The term ‘business environment’ means the sum
total of all individuals, institutions and other for-
ces that are outside the control of a business ente-
rprise but that may affect its performance.
 The economic, social, political, legal and technolo-
gical forces which operate outside a business enter-
prise are part of its general environment.
 The individual consumers or competing enterprises
as well as the governments, consumer groups, com-
petitors, courts, media and other institutions
working outside an enterprise constitute its specif-
ic environment.
 Top Tips
In contrast to the specific environment, the general environ-
ment which includes economic, social, technological, political
and legal conditions, influences many enterprises at the same
time.
These individuals, institutions and forces are likely to

influence the performance of a business enterprise alt-
hough they happen to exist outside its boundaries.
Changes in business Influence on performance
environment of business enterprises
1. Increasing taxes by Increased cost of production,
government hence things become expensive
to buy
2. Increased competition in the Reduction in profit margins
market
3. Changes in fashion and tastes Shift in market demand from
of consumers existing products to new ones
4. Technological improvements Render existing products
and innovations obsolete, e.g. LCD TVs become
obsolete with introduction of
LED TVs
5. Political uncertainty Creates fear in the minds of
investors to invest in long-term
projects
Features/Characteristics of Business
Environment
1. Totality of external forces
Business environment is the sum total of all things ex-
ternal to business firms and, as such, is aggregative in
nature.
2. Specific and general forces
Business environment includes both specific and gene-
ral forces.
 Specific forces (such as investors, customers, com-
petitors and suppliers) affect individual enterprises
directly and immediately in their day-to-day worki-
ng.
 General forces (such as social, political, legal and
technological conditions) have impact on all busin-
ess enterprises and thus may affect an individual
firm only indirectly.
3. Inter-relatedness
Different elements or parts of business environment
are closely interrelated.
For example, increased life expectancy of people and i-
ncreased awareness for health care have increased the
demand for many health products and services like soft
drinks, fat-free cooking oil, and health resorts. New h-
ealth products and services have, in turn, changed peo-
ple’s lifestyles.
4. Dynamic nature
Business environment is dynamic as it keeps on chan-
ging in terms of technological improvement, shifts in
consumer preferences, entry of new competition in the
market, etc.
5. Uncertainty
Business environment is largely uncertain as it is very
difficult to predict future happenings, especially when
environment changes are taking place too frequently as
in the case of information technology or fashion indus-
tries.
6. Complexity
Since business environment consists of numerous inte-
rrelated and dynamic conditions or forces which arise
from different sources, it becomes difficult to compre-
hend at once what exactly constitutes a given environ-
ment. In other words, environment is a complex phen-
omenon that is relatively easier to understand in parts
but difficult to grasp in its totality. For example, it may
be difficult to know the extent of the relative impact of
the social, economic, political, technological or legal
factors on change in demand of a product in the mar-
ket.
7. Relativity
Business environment is a relative concept since it dif-
fers from country to country and even region to region.
For example, political conditions in the USA differ from
those in China or Pakistan. Similarly, demand for sar-
ees may be fairly high in India whereas it may be almo-
st non-existent in France.
Importance of Business Environment
A good understanding of environment by business ma-
nagers enables them not only to identify and evaluate,
but also to react to the forces external to their firms.
The importance of business environment and its und-
erstanding by managers can be appreciated if we co-
nsider the following facts:
1. It enables the firm to identify opportunit-
ies and getting the first mover advantage.
Environment provides numerous opportunities for bu-
siness success.
'Opportunities' refer to the positive external trends or
changes that will help a firm to improve its perform-
ance.
Early identification of opportunities helps an enterp-
rise to be the first to exploit them instead of losing the-
m to competitors.
Example:Maruti Udyog became the leader in the small
car market because it was the first to recognise the
need for small cars in an environment of rising petrole-
um prices and a large middle class population in India.
2. It helps the firm to identify threats and
early warning signals.
Besides opportunities, environment happens to be the
source of many threats.
'Threats' refer to the external environment trends and
changes that will hinder a firm’s performance.
Environmental awareness can help managers to iden-
tify various threats on time and serve as an early wa-
rning signal.
Example: If an Indian firm finds that a foreign mu-
ltinational is entering the Indian market with new
substitutes, it should act as a warning signal. On the
basis of this information, the Indian firms can prepare
themselves to meet the threat by adopting such me-
asures as improving the quality of the product, reduc-
ing cost of the production, engaging in aggressive ad-
vertising, and so on.
3. It helps in assisting in planning and
policy formulation.
Since environment is a source of both opportunities
and threats for a business enterprise, its understand-
ding and analysis can be the basis for deciding the
future course of action (planning) or training guide-
lines for decision making (policy).
Example: Entry of new players in the market, which
means more competition may make an enterprise thi-
nk afresh about how to deal with the situation.
4. It helps in coping with rapid changes.
Today’s business environment is getting increasingly
dynamic where changes are taking place at a fast pace.
Turbulent market conditions, less brand loyalty, divis-
ions and sub-divisions (fragmentation) of markets,
more demanding customers, rapid changes in techno-
logy and intense global competition are just a few of
the images used to describe today’s business environ-
ment.
In order to effectively cope with these significant cha-
nges, managers must understand and examine the en-
vironment and develop suitable courses of action.
5. It helps in tapping useful resources.
A business enterprise assembles various resources cal-
led inputs like finance, machines, raw materials, pow-
er and water, labour, etc., from its environment inclu-
ding financiers, government and suppliers. In return,
the business enterprise supplies the environment with
its outputs such as goods and services for customers,
payment of taxes to government, return on financial
investment to investors and so on.
Thus, business environment helps in tapping the res-
ources that it needs so that it can convert those reso-
urces into outputs that the environment desires.
6. It helps in improving performance.
The enterprises that continuously monitor their envi-
ronment and adopt suitable business practices can n-
ot only improve their present performance but also
continue to succeed in the market for a longer period.
RECAP
Meaning of Business Environment

Business environment refers to the sum total of all indi-
viduals, institutions and other forces that are outside the
control of a business enterprise but that may affect its perf-
ormance.
Features/Characteristics of Business
Environment TUSI CDR
1. Business environment is totality of all external forces
affecting a business. Therefore, it is aggressive in nature.
2. It includes both specific and general forces. Specific
forces (e.g. investors, customers, competitors and suppl-
iers) affect individual enterprises directly and immedi-
ately in their day-to-day working. General forces (e.g. ec-
onomic, social, political, legal and technological cond-
itions) have impact on all business enterprises and thus
may affect an individual firm only indirectly.
3. Its elements are closely inter-related.
4. It is dynamic as it keeps on changing (in terms of tech-
nological improvement, new competition in the market,
etc.).
5. It is uncertain as it is difficult to predict future happ-
enings (especially when environment changes are taking
place frequently as in the case of information techn-
ology or fashion industries).
6. It is complex and difficult to comprehend as it consists
of numerous inter-related and dynamic forces.
7. It is a relative conceptas it differs from region to region.
Importance of Business Environment CPT TOP
1. It helps to identify opportunities and getting the first
mover advantage instead of losing them to the compet-
itors. For example, Maruti Udyog became the leader in
the small car market because it was the first to recognise
the need for small cars in India, where petroleum prices
were rising and there was a large middle-class popula-
tion.
2. It helps to identify threats on time which serves as an
early warning signal. For example, if an Indian firm
finds that an MNC is entering the Indian market with
new substitutes, it can improve the quality of its prod-
ucts, reduce cost of production, etc.
3. It helps in assisting inplanningand policy formulation.
4. It helps in tapping useful resources so that the enter-
prise can convert them into output that the environment
desires.
5. It helps in coping with rapid changes in an increasing-
gly dynamic environment.
6. It helps in improving performance by continuously
monitoring the environment and adopting suitable pra-
ctices.
Question 1
Which of the following does not characterise the busin-
ess environment?
(a) Uncertainty
(b) Employees
(c) Relativity
(d) Complexity

Answer 1
(b) Employees

Question 2
“It may be difficult to know the extent of the relative im-
pact of the social, economic, political, technological or
legal factors on change in demand of a product in the m-
arket.” Which feature of business environment is highlig-
hted by this point?

Answer 2
Complexity

Question 3
“The understanding of business environment enables the
firm to identify opportunities and threats.” What does
‘opportunities’ mean here?

Answer 3
Opportunities refer to the positive external trends and
changes that will help to improve a firm’s performance.

Question 4
Match the column I with the features of business envir-
onment in column II:
Column I Column II
(a) Increased life expectancy of people and increased awareness (i) Inter-
for health care have increased the demand for many health relatedness
products and services like diet Coke, fat-free cooking oil, and
health resorts. New health products and services have, in turn,
changed people’s life styles.
(b) It may be difficult to know the extent of the relative impact of (ii) Relativity
the social, economic, political, technological or legal factors on
change in demand of a product in the market.
(c) Political conditions in the USA, for instance, differ from those (iii) Complexity
in China or Pakistan. Similarly, demand for sarees may be fairly
high in India whereas it may be almost non-existent in France.

Answer 4
(a) – (i), (b)– (iii), (c) – (ii)

Question 5
Which of the following best indicates the importance of
business environment?
(a) Identification of opportunities and threats
(b) Improvement in performance
(c) Coping with rapid changes
(d) All of these

Answer 5
(d) All of these

Question 1
Mr. Ajay after completing MBA from USA comes to India
to start a new business under the banner Ecom Crea-
tions Ltd. He launches a new product in e-learning for
Senior Secondary School students in Commerce stream,
which already has an established market in UK and USA
but not in India. His business starts flourishing in India.
Now more Indian companies entered into the market
with other subjects also.
HOTs 3.1 — Analysing, Evaluating & Creating Type Questions

Identify and quote the lines from above para which hig-
hlight the significance of understanding business environ-
ment.

Answer 1
(a) “Comes to India to start a new business ... launches a
new product in e-learning for Senior secondary school
students in Commerce stream.”
(i) It helps in assisting in planning and policy
formulation.
(ii) It helps the firm to identify opportunities and
get the first mover advantage.
(b) “His business starts flourishing in India.”
(iii) It helps in improving performance.

(c) “Now more Indian companies entered into the market
with different subjects also.”
(iv) It helps the firm to identify threats and early
warning signals.

Question 2
Identify and state the importance of business environm-
ent from the following: (6 marks)
(i) Maruti Udyog became the leader in the small car
market because it was the first to recognise the
need for small cars in an environment of rising pet-
roleum prices and a large middle class population
in India.
(ii) An Indian firm finds that a foreign multinational is
entering the Indian market with new substitutes.
On the basis of this information, the Indian firm
can prepare itself to meet the threat by adopting
such measures as improving the quality of the pr-
oduct, reducing cost of the production, engaging in
aggressive advertising, and so on.
(iii) To engage in any type of activity, a business enter-
prise assembles various inputs like finance, machi-
nes, raw materials, power and water, labour, etc.,
from its environment including financiers, govern-
ment and suppliers. In return, the business enter-
prise supplies the environment with its outputs su-
ch as goods and services for customers, payment
of taxes to government, return on financial invest-
ent to investors and so on.
(iv) Today’s business environment is getting increasingly
dynamic where changes are taking place at a fast
pace. Information technology and intense global
competition are just a few of the images used to
describe today’s business environment. All sizes an-
d all types of enterprises are facing increasingly dy-
namic environment. Therefore, managers must un-
derstand and examine the environment and deve-
lop suitable courses of action.

(v) Entry of new players in the market, which means
more competition may make an enterprise think a-
fresh about how to deal with the situation.
(vi) Many studies reveal that the future of an enterpr-
ise is closely bound up with what is happening in
the environment. It really makes a difference in the
performance of an enterprise.

Answer 2
Importance of business environment:
(i) It enables the firm to identify opportunities and ge-
tting the first mover advantage.
“...it was the first to recognise the need for small cars...”
(ii) It helps the firm to identify threats and early war-
ning signals.
“...finds that a foreign multinational is entering the Ind-
ian market with new substitutes.”

(iii) It helps in tapping useful resources.
“...a business enterprise assembles various inputs like
finance, machines, raw materials, ... from its environmen-
t...”
(iv) It helps in coping with rapid changes.
“...changes are taking place at a fast pace.”
“...managers must understand and examine the enviro-
nment and develop suitable courses of action.”

(v) It helps in assisting in planning and policy formulate-
on.
“... think afresh about how to deal with the situation.”
(vi) It helps in improving performance.
“... future of an enterprise is closely bound up with what
is happening in the environment. It really makes a diffe-
rence in the performance of an enterprise.”

3.2
Dimensions of Business
Environment
Dimensions of, or the factors constituting the business
environment include economic, social, technological,
political and legal conditions which are considered rel-
evant for decision-making and improving the perfor-
mance of an enterprise.
A brief discussion of the various factors constituting t-
he general environment of business is given below:
Dimensions of General
Environment of Business
1. Economic Environment
Some of the economic factors that can affect manage-
ment practices in a business enterprise are:
 Interest rates
 Inflation rates
 Stock market indices
 Value of rupee
 Changes in disposable income of people
Examples of economic environment affecting the
functioning of a business enterprise:
(i) High inflation rates generally result in constraints
on business enterprises as they increase the var-
ious costs of business such as the purchase of raw
materials or machinery and payment of wages a-
nd salaries to employees.
(ii) A rise in the disposable income of people due to
increase in the gross domestic product of a coun-
try creates increasing demand for products.
(iii) Short and long term interest rates significantly
affect the demand for product and services. For
example, in case of construction companies and
automobile manufacturers, low longer-term rates
are beneficial because they result in increased sp-
ending by consumers for buying homes and cars
on borrowed money.
Components of Economic Environment
 The rates of growth of GNP and per capita income at current and
constant prices
 Rates of saving and investment
 Volume of imports and exports of different items
 Money supply in the economy
 Balance of payments and changes in foreign exchange reserves
 Public debt (internal and external)
 Agricultural and industrial production trends
 Expansion of transportation and communication facilities
 Existing structure of the economy in terms of relative role of
private and public sectors
 Planned outlay in private and public sectors
2. Social Environment
The social environment of business include the social
forces like:
 Customs and traditions
 Values
 Social trends
 Society’s expectations from business
Examples of social environment affecting the fun-
ctioning of a business enterprise:
(i) Social trends present various opportunities and t-
hreats to business enterprises. For example, the
health-and-fitness trend has become popular am-
ong large number of urban dwellers. This has cre-
ated a demand for products like organic food, gy-
ms, bottled (mineral) water and food supplemen-
ts.
(ii) Customs and traditions define social practices
that have lasted for decades or even centuries. For
example, the celebration of Diwali, Eid, Christ-
mas, and Guru Parv in India provides significant
financial opportunities for greetings card compa-
nies, sweets or confectionery manufacturers, tail-
oring outlets and many other related business.
(iii) Values refer to concepts that a society holds in
high esteem. In India, individual freedom, social
justice, equality of opportunity and national inte-
gration are examples of major values cherished by
all of us. In business terms, these values translate
into freedom of choice in the market, business’ r-
esponsibility towards the society and non-discr-
iminatory employment practices.
Components of Social Environment
 Concern with quality of life
 Life expectancy
 Consumption habits
 Composition of family
 Birth and death rates
 Population shifts
 Educational system and literacy rates
 Expectations from the workforce
 Shifts in the presence of women in the workforce
 Attitudes towards product innovations, lifestyles, occupational
distribution and consumer preferences
3. Technological Environment
Technological environment includes forces relating to:
 Scientific improvements and innovations which pr-
ovide new ways of producing goods and services and
 New methods and techniques of operating a busin-
ess.
Examples of technological environment affecting
the functioning of a business enterprise:
(i) Airline companies have Internet and World Wide
Web pages where customers can look for flight
times, destinations and fares and book their
tickets online.
(ii) Recent technological, advances in computers and
electronics have modified the ways in which com-
panies advertise their products. It is common now
to see computerised information kiosks, and Wo-
rld Wide Web multimedia pages highlighting the
virtues of products.
(iii) Retailers have direct links with suppliers who rep-
lenish stocks when needed. Manufacturers have
flexible manufacturing systems.
Continuing innovations in different scientific and engineering fie-
lds such as lasers, robotics, biotechnology, food preservatives, me-
dicine, telecommunication and synthetic fuels have provided num-
erous opportunities and threats for many different enterprises. Sh-
ifts in demand from vaccum tubes to transistors, from steam loco-
motives to diesel and electric engines, from fountain pens to ballp-
oint, from propeller airplanes to jets, and from typewriters to com-
puter based word processors, have all been responsible and creat-
ing new business.
4. Political Environment
Political environment includes political conditions su-
ch as:
 General stability and peace in the country and
 Specific attitudes that elected government represe-
ntatives hold towards business.
Examples of political environment affecting the
functioning of a business enterprise:
(i) Political stability builds up confidence among b-
usiness people to invest in the long term proje-
cts for the growth of the economy. On the other
hand, there may be uncertainty of business act-
ivities due to political unrest and threats to law
and order.
(ii) The attitudes of government officials towards bu-
siness may have either positive or negative impact
upon business. For example, even after opening
up of our economy in 1991, foreign companies
found it extremely difficult to cut through the bu-
reaucratic red tape to get permits for doing bus-
iness in India. Sometimes, it took months to pro-
cess even their application for the purpose. As a
result, these companies were discouraged from
investing in our country.
However, the situation has improved over time.
Components of Political Environment
 Prevailing political system
 Political ideology and practices of the ruling party
 Dominant ideologies and values of major political parties
 The nature of relationship of our country with foreign cou-
ntries
 The extent and nature of government intervention in business
 The level of political morality
 Political institutions like the government and allied agencies
 The nature and profile of political leadership and thinking of
political personalities
 The degree of politicisation of business and economic issues
5. Legal Environment
Legal environment includes various:
 Legislations passed by the Government
 Administrative orders issued by government autho-
rities
 Court judgments
 Decisions rendered by various commissions and ag-
encies at every level of the government — centre,
state or local.
It is imperative for the management of every enterp-
rise to obey the law of the land. Therefore, an adequa-
te knowledge of rules and regulations framed by the
Government is a pre-requisite for better business per-
formance. Non-compliance of laws can land the bus-
iness enterprise into legal problems.
In India, a working knowledge of the following is
important for doing business:
(i) The Companies Act, 2013
(ii) The Consumer Protection Act, 2019
(iii) Factories Act, 1948
(iv) Trade Union Act, 1926
(v) Workmen’s Compensation Act, 1923
(vi) Industrial Disputes Act, 1947
(vii) Competition Act, 2002
(viii) Industries (Development and Regulations)
Act, 1951
(ix) Foreign Exchange Management Act and the I-
mports and Exports (Control) Act, 1947
Impact of legal environment can be illustrated w-
ith the help of the following government regulat-
ions to protect consumer’s interests:
(i) The advertisement of alcoholic beverages is pr-
ohibited.
(ii) Advertisements, including packets of cigarettes
carry the statutory warning ‘Cigarette smoking
is injurious to health’.
(iii) Advertisements of baby food must necessarily
inform the potential buyer that mothers milk is
the best.
All these regulations are required to be followed by
advertisers.
Management of every enterprise can benefit from being aware of
these dimensions instead of being disinterested in them. For ins-
tance, scientific research has discovered a technology that makes it
possible to produce an energy efficient light bulb that lasts at least
twenty times as long as a standard bulb. Senior managers in the
lighting divisions at General Electric and Phillips recognised that
this discovery had the potential to significantly affect their unit gr-
owth and profitability, So they have carefully followed the progress
on this research and profitably used its findings.
RECAP
Dimensions/Elements of Business
Environment
1. Economic Environment: It refers to factors like intere-
st rates, inflation rates and changes in disposable inco-
me of people etc. which have an impact on business ent-
erprise. Example: High inflation rates generally result in
constraints on business enterprises as they increase c-
osts of raw materials or machinery and payment of wa-
ges and salaries.
Components of Economic Environment: • Rates of sav-
ing and investment • Volume of imports and exports •
Balance of payments and changes in foreign exchange
reserves • Agricultural and industrial production trends
• Expansion of transportation and communication facili-
ties • Money supply in the economy • Public debt (inter-
nal and external) • Planned outlay in private and public
sectors • Existing structure of the economy in terms of
relative role of private and public sectors.
2. Social Environment: It includes social forces like cus-
tom and traditions, values, social trends and society’s
expectation from business. Social trends present various
opportunities and threats to business enterprises. For
example, the health-and-fitness trend has created a
demand for diet soft drinks, bottled (mineral) water and
food supplements but harmed tobacco and liquor busi-
nesses. Components of Social Environment: • Attitudes
towards product innovations, lifestyles and consumer
preferences • Concern with quality of life • Life expec-
tancy • Expectations from the workforce • Shifts in the
presence of women in the workforce • Birth and death
rates • Population shifts • Educational system and litera-
cy rates • Consumption habits • Composition of family
3. Political environment: It includes political conditions
such as general stability and peace in the country and
specific attitudes that elected government representat-
ives hold towards business. Example: Political stability
builds up confidence among business people to invest in
the long term projects. Political instability can shake
that confidence. Components of Political Environment:
• The Constitution of the country • Dominant ideologies
and values of major political parties • The extent and na-
ture of government intervention in business. • The nat-
ure of relationship of our country with foreign countries
4. Legal environment: It includes various legislations p-
assed by the Government, administrative orders issued
by government authorities, court judgments and the de-
cisions rendered by various commissions and agencies at
every level of the government — Centre, state or local. It
is imperative for the management of every enterprise to
obey the law of the land. Non-Compliance of laws can
land the business enterprises into legal problems. For
example, knowledge of Companies Act 2013; Consumer
Protection Act, 2019 etc. is important for doing business.
Examples of government regulations to protect consum-
er’s interests: (i) Advertisements for packets of cigarettes
must carry the statutory warning– ‘Cigarette smoking is
injurious to health’ (ii) Advertisement of alcoholic bev-
erages is prohibited on Doordarshan
5. Technological Environment: It includes forces rela-
ting to scientific improvements and innovations which
provide new ways of producing goods and services and
new methods and techniques of operating a business.
Example: Airline companies have internet and www pag-
es where customers can look for flight times, destinatio-
ns and fares and book their tickets online.
Question 1
Which component of general environment of business
prohibits the advertisement of alcoholic beverages?

Answer 1
Legal environment

Question 2
‘It is common now to see CD-ROM’s, computerised inf-
ormation kiosks, and Internet/World Wide Web multi-
media pages highlighting the virtues of products.’ Name
the dimension of the business environment highlighted by
this statement.

Answer 2
Technological environment

Question 3
Which component of business environment requires th-
at advertisements of baby food must necessarily inform
the potential buyers that mother’s milk is the best?

Answer 3
Legal environment

Question 4
Just after declaration of Lok Sabha Elections 2014 resu-
lts, the Bombay Stock Exchange’s price index (Sensex)
rose by 1000 points in a day. Identify the environmental
factor which led to this rise.

Answer 4
Political environment

Question 5
Which of the following is an example of social environ-
ment?
(a) Money supply in the economy
(b) Consumer Protection Act
(c) The Constitution of the country
(d) Composition of family

Answer 5
(d) Composition of family

Question 6
Match the following:
Column I Column II
(i) Banks reducing interest rates on (a) Economic
housing loans environment
(ii) An increasing number of working (b) Political
women environment
(iii) Alcoholic beverages are prohibited (c) Legal
to be advertised on ‘Doordarshan’ environment
(iv) A stable government has built up (d) Social
confidence among the firms to environment
invest in big projects
Answer 6
(i) – (a), (ii) – (d), (iii) – (c), (iv) - (b)

Question 7
Many businesses are using social media like facebook a-
nd twitter to promote themselves. This is an example of
which dimension of Business environment:
(a) Social
(b) Economic
(c) Legal
(d) Technological

Answer 7
(d) Technological

Question 8
Even after opening up of the Indian Economy in 1991, f-
oreign companies found it extremely difficult to cut thr-
ough the bureaucratic red tape to get permits for doing
business in India, which discouraged them from investing
in our country. Identify the dimension of business envir-
onment.

Answer 8
Political environment

Question 9
‘The celebration of Diwali, Eid, Christmas and Guru Pa-
rv in India provides significant financial opportunities for
greeting cards companies, sweets or confectionery man-
ufacturers, tailoring outlets and many other related bus-
iness.’ Name the dimension of the business environment
highlighted by this statement.

Answer 9
Social environment

Question 10
The Reserve Bank of India (RBI) increased the Cash Re-
serve Ratio (CRR) by 0.25 Basis Points to overcome the
inflationary trends in the economy. Identify the dimen-
sion of business environment highlighted in the given st-
atement.

Answer 10
Economic Environment

Question 11
According to Consumer Protection Act, 1986, manufac-
turers are under an obligation to provide all the releva-
nt information (MRP, ingredients, date of manufacturing,
expiry date, etc.) about the product.
Which dimension of business environment is highlighted
in the given sta-tement?

Answer 11
Legal Environment

Question 1
The Court passed an order to ban polythene bags as
(i) The bags are creating many environmental proble-
ms which affect the life of people in general.
(ii) Society in general is more concerned about quality
of life.
The Government decided to give subsidy to jute indust-
ry to promote this business.
Innovative techniques are being developed to manufactu-
re jute bags at low rates.
Incomes are rising and people can afford to buy these
bags.
Identify the different dimensions of Business Environm-
ent by quoting the lines from the above particulars.

Answer 1
(i) Legal environment: ‘The Court passed an order to
ban polythene bags.’
(ii) Social environment: ‘The bags are creating many
environmental problems which affect the life of people
in general. Society in general is more concerned about
quality of life.’
(iii) Political environment: ‘The Government decided to
give subsidy to jute industry to promote this business.’
(iv) Technological environment: ‘Innovative techniques
are being developed to manufacture jute bags at low
rates.’
(v) Economic environment: ‘Incomes are rising and peo-
ple can afford to buy these bags.’

Question 2
Beni, after completing her MBA, took up a job with a
multinational company named ‘Fortio’. The company was
paying good salary and perks to its employees. The w-
ages were within the paying capacity of the company
that provided the employees a reasonable standard of
living. The company also had a good work-culture and
the behaviour of superiors was very good towards their
subordinates. Beni was very happy in this organization,
but due to long working hours she did not have time to
cook her meals. She had to depend on outside food, w-
hich was deteriorating her health.
She observed that this problem was faced by many of
her colleagues, not only in her company but also in m-
any other companies. This was because of increase in
the number of working women and non-availability of
hygienic home-cooked food. She identified this as a
great opportunity and decided to give up her job to
supply packaged home-cooked food to office goers at a
reasonable price. At the end of the day she was also
distributing the left-over food in the nearby night-
shelters. State the dimension of business environment
being discussed above. (1 mark)
Answer 2
Social environment which includes social forces like
customs and traditions, values, social trends etc.

Question 3
The Government of India has recently come up with an
amendment to Section 6 of the Payment of Wages Act
1936, to allow employers of certain industries to make
payment through various electronics modes of payments.
The amendment will be applicable to all the public sec-
tor undertakings for wages disbursement using repaym-
ent options. This is another milestone in the direction to
further push to cashless economy.
Identify and explain any two dimensions of business envi-
ronment which relate to the above mentioned case.
(CBSE SQP 2018-19) (4 marks)
Answer 3
The various dimensions of business environment which
r-elate to the above mentioned case are stated below:
(a) Political Environment
(b) Legal Environment
(c) Technological Environment (any two with explanation)

Question 4
With rapid advancements in the field of replacing manual
work with machines, a Robot named ‘Sujan’ has been inv-
ented and developed and is likely to get the citizenship
of the country of its origin.
It has led to a stage where machines are being used in
place of human beings. ‘Sujan’ is doing all types of work
whether routine or hazardous and even answering the
queries of people. However, this issue has to be carefully
looked into keeping in mind the consumer attitude
towards product innovations, problem of unemployment
and its impact on the quality of life. Through the orders
and decisions of various commissions and agencies at
Centre, State or Local level the Indian Government is
playing a very significant role in balancing the use of hu-
man and machine power. Various dimensions of business
environment are being discussed in the above para.
By quoting the lines from the above identify and explain
any three dimensions.

Answer 4
(i) Technological Environment: 'With rapid advancements
in the field of replacing manual work with machines, a
robot named ‘Sujan’ has been invented and developed’.
(ii) Social Environment: ‘However, this issue has to be ca-
refully looked into keeping in mind the consumer attit-
ude towards product innovations, problem of unempl-
oyment and its impact on the quality of life’.
(iii) Legal environment: ‘Through the orders and decisions
of various commissions and agencies at Centre, State or
local level the Indian Government is playing a very sign-

ificant role in balancing the use of human and machine
power.’
(Give explanation of these dimensions)

Question 5
Reserve Bank of India (RBI) has set the deadline for rep-
lacing all magnetic strip based ATM cards into EMV cards
by December 31, 2018. EMV stands for Europay, Maste-
rcard and Visa from which the standards for a chip ena-
bled card emerged. The EMV card provides a higher level
of security as compared to magnetic strip cards which
can be easily cloned. This switching to secure system may
push up the costs of the banking sector. Identify the two
dimensions of business environment in the above para.
(1 mark)

Answer 5
Legal Environment and Technological Environment

Question 6
It is heartening that the implementation of compliance
requirements of the Companies Act, 2013 has progressed
substantially with NIFTY 500 companies. Data shows a
significant increase in women’s participation in the top
management of Indian Companies from 5% few years ago
to 13% now. Even companies which are not in NIFTY 500
have undertaken drives to increase women’s participation
across different areas of work. The government had also
announced that it would support such companies.
Identify and explain the dimensions of business environ-
ment discussed above which brought about the change.
Answer 6
The dimensions of Business environment discussed abo-
ve which brought about the above change are:
(a) Legal environment
(b) Political environment (Explain)

Question 7
The court passed an order that all schools must have
water purifier for the school children as
(i) Society in general is more concerned about quali-
ty of life.
(ii) Innovative techniques are being developed to ma-
nufacture water purifier at competitive rates.
(iii) Incomes are rising and children at home are also
drinking purified water.
The government is also showing positive attitude tow-
ards the water purifier business.

Identify the different dimensions of business environm-
ent by quoting from the above details.
(5 marks)

Answer 7
(i) Legal environment: ‘The court passed an order that all
schools must have water purifier for the school children.’
(ii) Social environment: ‘Society in general is more concer-
ned about quality of life.’
(iii) Technological environment: ‘Innovative techniques are
being developed to manufacture water purifier at comp-
etitive rates.’
(iv) Economic environment: ‘Incomes are rising and child-
ren at home are also drinking purified water.’
(v) Political environment: ‘The government is also showing
positive attitude towards the water purifier.’
Question 8
The Prime minister Mr. Narender Modi launched a Ca-
mpaign of ‘Swachh Bharat’ and invited various celebri-
ties to be a part of this Abhiyaan. This spread awareness
among the people in society and in general, people
started becoming more careful and aware about the
cleanliness around their area. To continue its impact, a
new service tax for Swachh Bharat was also started. The
government is planning to import new and better
technology to adopt new methods of treating the
garbage and waste.

Explain the various dimensions of business environment
mentioned in the above para quoting the lines from the
above para.
(4 marks)

Answer 8
(i) Political Environment: ‘The Prime minister Mr. Nare-
nder Modi launched a Campaign of ‘Swachh Bharat’
(ii) Social Environment: ‘people started becoming more
careful and aware about the cleanliness around their
area.’
(iii) Economic Environment: ‘a new service tax for Swachh
Bharat was also started.’
(iv) Technological Environment: ‘import new and better
technology to adopt new methods of treating the garba-
ge and waste.’
(Explain)
 Planning: Concept, importance and limitation
 Planning process
4.1
Planning: Concept and
Process
Concept of Planning
Planning is deciding in advance what to do and how to
do. It is one of the basic managerial functions. Before
doing something, the manager must formulate an idea
of how to work on a particular task. Thus, planning is
closely connected with creativity and innovation.
But the manager would first have to set objectives, only
then will a manager know where he has to go. Planning
seeks to bridge the gap between where we are and where
we want to go.
Planning is what managers at all levels do. It requires
taking decisions since it involves making a choice from
alternative courses of action.
Planning involves setting objectives and developing
appropriate courses of action to achieve these
objectives.
Objectives provide direction for all managerial decisions
and actions. Planning provides a rational approach for
achieving predetermined objectives. All members,
therefore, need to work towards achieving organisational
goals. These goals set the targets which need to be
achieved and against which actual performance is
measured.
Planning means setting objectives and targets and
formulating an action plan to achieve them. It is
concerned with both ends and means i.e., what is
to be done and how it is to be done.
The plan that is developed has to have a given time
frame but time is a limited resource. It needs to be
utilised judiciously. If time factor is not taken into
consideration, conditions in the environment may change
and all business plans may go waste. Planning will be a
futile exercise if it is not acted upon or implemented.
Comprehensive definition of planning
Planning can be defined as:
• setting objectives for a given time period,
• formulating various courses of action to achieve them, and
then
• selecting the best possible alternative from among the various
courses of action available.
Planning Process
do. It is a process of decision making. How do we go
about making a plan? Since planning is an activity
there are certain logical steps for every manager to
follow.
1. Setting Objectives
The first and foremost step in the planning process is
setting objectives. Every organisation must have certain
objectives.
 Objectives may be set for the entire organisation and
each department or unit within the organisation.
 Objectives or goals specify what the organisation
wants to achieve, i.e. end point of planning or the
end result of activities. For example, an organisation
may have an objective of increasing sales by 10% or
earning 20% Return on Investment (RoI) from
business.
 Objectives serve as a guide for overall business
planning.
 They are usually set by top management of the
organisation.
 Different departments or divisions in the organisation
may have their own objectives.
2. Developing premises
Planning is concerned with the future, which is uncertain.
Therefore, the manager is required to make certain
assumptions about the future, which are considered to be
the base material upon which plans are to be drawn. These
assumptions are called ‘planning premises’.
 Assumptions are made in the form of forecasts.
Forecasting is important in developing premises as
it is technique of gathering information.
 Forecasts can be made about the demand for a
particular product, government policy change, interest
rates, tax rates, etc. Accurate forecasts, therefore,
become essential for successful plans.
3. Identifying alternative courses of action
Once objectives are set and assumptions are made,
then the next step is to identify all possible alternative
courses of action to achieve the objectives.
If the project is important, then more alternatives should
be generated and thoroughly discussed amongst the
members of the organisation.
4. Evaluating alternative courses
The next step is to weigh the pros and cons of each
alternative. The positive and negative aspects (i.e.,
feasibility and consequences) of each proposal are
evaluated in the light of the objective to be achieved.
For example, in financial plans the risk-return trade-off
is very common. The more risky the investment, the
higher the returns it is likely to give. To evaluate such
proposals detailed calculations of earnings, earnings
per share, interest, taxes, dividends are made and
decisions are taken.
5. Selecting an alternative
This is the real point of decision-making. The best plan
has to be adopted and implemented. The ideal plan
would be the most feasible, profitable and with least
negative consequences.
 Sometimes, a combination of plans may be selected
instead of one best course.
 The manager will have to apply permutations and
combinations and select the best possible course of
action.
6. Implementing the plan
This step is concerned with putting the plan into
action, i.e., doing what is required.
 This is the step where other managerial functions
also come into the picture. For example, if there is a
plan to increase production then more labour, more
machinery will be required.
 This step would also involve organising for labour
and purchase of machinery.
7. Follow-up action
Follow-up action means to see whether plans are being
implemented and activities are performed according to
plans. Monitoring the plan is equally important to
ensure that objectives are achieved.
RECAP
Concept of Planning
Planning is defined as the process of setting objectives for a given
time period, formulating various courses of action to achieve
them and then selecting the best possible alternative from among
the various courses of action available.
Steps in Planning Process SD IES IF
1. Setting objectives: Objectives may be set for the entire
organization and each department or unit within the organization.
They specify what the organization wants to achieve.
2. Developing Premises: Planning premises are the assumptions
made about the future. Assumptions are made in the form of
forecasts about the demand for the product etc. Planning premises
are base material upon which plans are to be drawn.
3. Identifying alternative courses of action: As there may be many
ways to achieve the objectives, all the alternative courses of action
should be identified and thoroughly discussed.
4. Evaluating alternative courses of action: The positive
and negative aspects (i.e., feasibility and consequences) of
each alternative are evaluated.
5. Selecting an alternative which involves scrutinizing the
feasibility and consequences of each alternative before a
choice is made. This is the real point of decision-making.
The best plan would be the most feasible, profitable and
with least negative consequences.
6. Implementing the plan: It means putting the plan into
action. This is the step where other managerial functions
also come into the picture. This step would also involve
organising for labour and purchase of machinery.
7. Follow up action which involves seeing that activities are
performed according to plans. Monitoring the plans is
equally important to ensure that objectives are achieved.
Question 1
A company is manufacturing garments. The manager wants
to increase profits by purchasing new high speed machines
or increasing the sale price or using waste material in
manufacturing stuffed toys.
He decided that ‘using waste material’ to increase the
profit is the best solution for him.
(a) Identify the concept of management involved.
(b) Mention the steps involved in the above process by
quoting the lines from the question.
Case Studies 4.1— Analysing, Evaluating & Creating Type Questions
(c) To complete the process of the concept identified in
(a), what two next steps does the manager have to
take? Explain. (6 marks)

Answer 1
(a) The concept of management involved is PLANNING.
(b) Steps involved are:
(i) Setting objectives: increasing profits
(ii) Developing premises: making certain assumptions
about future.
(iii) Identifying alternative courses of action:
– purchasing new high speed machines, or
– increasing the sale price, or
– using waste material in manufacturing stuffed
toys
(iv) Evaluating alternatives: positive and negative aspects
of these alternatives are evaluated.
(v) Selecting an alternative: using waste material in
manufacturing stuffed toys.
(c) Further steps to complete the process of planning:
(vi) Implementing the plan: This step is concerned with
putting the plan into action. It involves organising
for labour and purchase of machinery.
(vii) Follow-up action: The managers also take follow
up action to ensure that objectives are achieved.

Question 2
Having transformed 2,500 Kirana stores across eight
cities into virtual super markets, the start up Quick Bizz
further decided in advance, to collaborate with 15,000-
20,000 store owners in top 30 cities of the country by
the end of this year. The company has set its eye on
digitizing over 1,00,000 kirana stores over next 18-24
months.
(a) Identify and explain the step in the process of one of
the functions of management discussed above.
(b) Also explain the last step to be performed by Quick
Bizz as part of the process.
Answer 2
(a) Following is the step in process of Planning: Setting
objectives (Explain)
(b) Following is the last step to be performed by Quick
Bizz as part of the process of Planning: Follow up
action (Explain)

Question 3
On the introduction of Goods and Services Tax Act,
experts in the field of business started analysing and
forecasting its impact on various sectors and industries.
Vivek, an established businessman, attended a few
seminars and conferences organised by such experts to
familiarise himself with this information. He wanted to
use these forecasts to reduce the uncertainty in making
decisions for the future in his business.
Name the step in the planning process that is being
discussed in the above paragraph.
(CBSE 2017) (1 mark)
Answer 3
Developing premises

Question 4
Saurabh decided to start a chocolates manufacturing
business. He set the target of earning 10% profit on sales
in the first year. As a good businessman, he was
concerned about the future of the business, which was
uncertain. He gathered information that the demand for
chocolates is increasing day-by-day. He used this
information as the base for future planning and shared it
with his team. On the basis of the gathered information,
he scheduled a meeting in the following week to find
innovative ways to achieve the objectives.
List the first two steps, which have been followed by
Saurabh that are related to the process of one of the
functions of management. (CBSE 2018) (1 mark)

Answer 4
Two steps of Planning which have been followed by
Saurabh are:
(i) Setting Objectives
(ii) Developing Premises

Question 5
Saurabh Jain set up a telecom business in Nasik ‘ Ketone’
with an ambitious target of reaching out to 90% of the
Indian population within one year. He chose this
business on the belief that the demand for data services
will increase 4 times within the next 2-3 years. To fulfill
such an ambitious target, he had to either acquire an
existing telecom business or collaborate or go independent
aggressively in the light of tough competition. He assessed
the proposals of different companies vis-à-vis earnings per
share, taxes, dividends paid etc. and their future
projections knowing fully well that the projections may
change if the country’s economic policies get modified.
The above paragraph discusses some of the steps of one
of the functions of management. By quoting the lines
from the above paragraph, explain these steps in
chronological order. (6 marks)

Answer 5
Steps discussed in the above case are:
(Explain these steps)
(i) Setting objectives
‘Saurabh Jain set up a telecom business in Nasik ‘ Ketone’
with an ambitious target of reaching out to 90% of the
Indian population within one year’
(ii) Developing premises
‘He chose this business on the belief that the demand for
data services will increase 4 times within the next 2-3
years’
(iii) Identifying alternative courses of action
‘To fulfill such an ambitious target, he had to either
acquire an existing telecom business or collaborate or go
independent aggressively in the light of tough competition’
(iv) Evaluating alternative courses
‘He assessed the proposals of different companies vis-à-
vis earrings per share, taxes, dividends paid etc and their
future projections knowing fully well that the projections
may change if the country’s economic policies get
modified’

Question 6
Rahul decided to start a desert cooler manufacturing
business. He sets the target of earning 20% profit on
sales in the first year. He was very much concerned
about the future prospects of the business, which were
uncertain. For this, he gathered information from the
potential market and analyzed that the demand for wall-
mounted coolers is increasing day by day. He used this
information as the base for future planning. On the basis
of the gathered information, he called a meeting in the
following week to find new methods to achieve the
objective.
(a) Identify the function of management involved in the
above case.
(b) Enumerate the next two steps, which have been
followed by Rahul that are related to the process of
one of the functions of management.
(CBSE SQP 2018-19) (3 marks)

Answer 6
(a) Planning
(b) (i) Identifying alternative courses of action
(ii) Evaluating alternative courses of action

Question 1
Planning has no meaning unless _____________ .

Answer 1
it contributes to the achievement of pre-determined

Question 2
___________ is a process of decision-making.
(a) Planning
(b) Organising
(c) Directing
(d) Controlling

Answer 2
(a) Planning

Question 3
_______________ is the step in the planning process
where other managerial functions also curve into the
picture. (Choose the correct alternative)
(a) Evaluating alternative courses
(b) Selecting an alternative
(c) Implementing the plan
(d) Following action

Answer 3
(c) Implementing the plan

Question 4
_________________ is the step in the planning
process which involves organising for labour and
purchase of machinery.

Answer 4
Implementing the plan

Question 5
To see whether plans are being implemented and
activities are performed according to schedule is a part
of the planning process. (True/False)

Answer 5
True: This step of the planning process is ‘Follow-up
action’.

Question 6
While formulating a plan, the manager is required to
make certain assumptions about the future. What are
these assumptions called?

Answer 6
Planning premises

Question 7
Following are the steps of Planning Process. Arrange
them in correct sequence:
(a) Developing premises
(b) Identifying the course of action
(c) Setting objective
(d) Evaluating alternative courses

Answer 7
(c) Setting objective (a) Developing premises (b)
Identifying the course of action (d) Evaluating
alternative courses.

Question 8
“Management translates work into goals and also finds
ways and means to achieve those goals.” Name the term
highlighting the above statement.

Answer 8
Planning

Question 9
What is important in developing planning premises and
why?

Answer 9
Forecasting is important in developing premises as it is
a technique of gathering information about demand for
a particular product, interest rates, tax rates, etc.

Question 10
‘To see whether plans are being implemented and
activities are being performed according to schedule’ is
a step of planning process.’ Identify the step.
(CBSE 2013)

Answer 10
Follow up action

4.2
Features, Importance and
Limitations of Planning
Features of Planning
The planning function of the management has certain
special features. These features throw light on its nature
and scope.
1. Planning focuses on achieving objectives.
Specific goals are set out in the plans along with the
activities to be undertaken to achieve the goals. Thus,
planning is purposeful.
Planning has no meaning unless it contributes to the
achievement of predetermined organisational goals.
2. Planning is a primary function of
management.
Planning lays down the base for other functions of
management. All other managerial functions are
performed within the framework of the plans drawn.
Thus, planning precedes other functions. This is also
referred to as 'the primacy of planning'.
The various functions of management are interrelated
and equally important. However, planning provides the
basis of all other functions.
3. Planning is pervasive.
Planning is required at all levels of management as well
as in all departments of the organisation.
Planning is not an exclusive function of top management
nor of any particular department. But the scope of
planning differs at different levels and among different
departments.
• The top management undertakes planning for the
organisation as a whole.
• Middle management does the departmental
planning.
• At the lowest level, day-to-day operational planning
is done by supervisors.
4. Planning is continuous.
Plans are prepared for a specific period of time, may be
for a month, a quarter, or a year. At the end of that
period there is need for a new plan to be drawn on the
basis of new requirements and future conditions.
Hence, planning is a continuous process because a plan
is framed, it is implemented, and is followed by
another plan, and so on.
5. Planning is futuristic.
Planning essentially involves looking ahead and preparing
for the future.
The purpose of planning is to meet future events effectively
to the best advantage of an organisation. It implies peeping
into the future, analysing it and predicting it. Planning is,
therefore, regarded as a forward looking function based on
forecasting.
Through forecasting, future events and conditions are
anticipated and plans are drawn accordingly. For example,
sales forecasting is the basis on which a business firm
prepares its annual plan for production and sales.
6. Planning involves decision making.
Planning essentially involves choice from among
various alternatives and activities. It involves thorough
examination and evaluation of each alternative and
choosing the most appropriate one.
 Top Tip
If there is only one possible course of action, there is no need
for planning because there is no choice. The need for planning
arises only when alternatives are available.
7. Planning is a mental exercise.
Planning requires application of mind involving foresight,
intelligent imagination and sound judgement. It is basically
an intellectual activity of thinking rather than doing,
because planning determines the action to be taken.
 Top Tip
Planning requires logical and systematic thinking rather than
guess work or wishful thinking. Thinking for planning must be
orderly and based on the analysis of facts and forecasts.
Importance of Planning
No enterprise can achieve its objectives without systematic
planning. It is rightly remarked —“Failing to plan is
planning to fail.” The major benefits of planning are
given below:
1. Planning provides directions.
By stating in advance how work is to be done planning
provides direction for action.
 Planning ensures that the goals or objectives are clearly
stated so that they act as a guide for deciding what
action should be taken and in which direction.
 If goals are well defined, employees are aware of what
the organisation has to do and what they must do to
achieve those goals.
 Departments and individuals in the organisation are
able to work in coordination.
 Top Tip
If there was no planning, employees would be working in
different directions and the organisation would not be able to
achieve its desired goals.
2. Planning reduces the risks of uncertainty.
Planning is an activity which enables a manager to look
ahead and anticipate changes. By deciding in advance
the tasks to be performed, planning shows the way to
deal with changes and uncertain events.
 Top Tip
Planning cannot eliminate changes or events; but they can be
anticipated and managerial responses to them can be
developed through planning.
3. Planning reduces overlapping and wasteful
activities.
 Planning serves as the basis of coordinating the
activities and efforts of different divisions, departments
and individuals. It helps in avoiding confusion and
misunderstanding.
 Since planning ensures clarity in thought and
action, work is carried on smoothly without
interruptions. Useless and redundant activities are
minimised or eliminated.
 It is easier to detect inefficiencies and take corrective
measures to deal with them.
4. Planning promotes innovative ideas.
do. Before doing something, the manager must
formulate an idea of how to work on a particular task.
Thus, planning promotes innovative ideas.
Since planning is the first function of management,
new ideas can take the shape of concrete plans.
Planning is the most challenging activity for the management as it guides all
future actions leading to growth and prosperity of the business.
5. Planning facilitates decision making.
 Planning helps the manager to look into the future and
make a choice from amongst various alternative courses
of action.
 The manager has to evaluate each alternative and select
the best possible alternative course of action.
 Top Tip
Planning involves setting targets and predicting future
conditions, thus helping in taking rational decisions.
6. Planning establishes standards for contro-
lling.
 Planning provides the goals or standards against which
actual performance is measured. By comparing actual
performance with some standards, managers can know
whether they have actually been able to attain the goals.
If there is any deviation it can be corrected. Therefore,
we can say that planning is a pre-requisite for
controlling.
 If there were no goals and standards, then finding
deviations which are a part of controlling would not be
possible. Thus, planning provides the basis of control.
Limitations of Planning
Planning is essential for all business organisations. It is
difficult to manage operations without formal planning.
But things do not always go according to plan. Unforeseen
events and changes, rise in costs and prices, environmental
changes, government interventions, legal regulations,
all affect our business plans. Plans then need to be
modified. Thus, planning might fail in spite of the best
efforts of management due to the following major
limitations of planning:
1. Planning leads to rigidity.
In an organisation, a well-defined plan is drawn up
with specific goals to be achieved within a specific time
frame. These plans then decide the future course of
action and managers may not be in a position to change it.
This kind of rigidity in plans may create difficulty.
Managers need to be given some flexibility to be able
to cope with the changed circumstances.
 Top Tip
Following a pre-decided plan, when circumstances have
changed, may not turn out to be in the organisations interest.
2. Planning may not work in a dynamic
environment.
The business environment is dynamic, nothing is
constant. The environment consists of a number of
dimensions, economic, political, physical, legal and
social dimensions. The organisation has to constantly
adapt itself to changes.
 It becomes difficult to accurately assess future
trends in the environment if economic policies are
modified or political conditions in the country are
not stable or there is a natural calamity.
 Competition in the market can also upset financial
plans, sales targets may have to be revised and,
accordingly, cash budgets also need to be modified
since they are based on sales figures.
Planning cannot foresee everything and thus, there
may be obstacles to effective planning.
3. Planning reduces creativity.
The top management undertakes planning for the
organisation as a whole. Usually, the rest of the members
just implement these plans. As a consequence, middle
management and other decision makers are neither
allowed to deviate from plans nor are they permitted to
act on their own. Thus, much of the initiative or
creativity inherent in them also gets lost or reduced.
Most of the time, employees do not even attempt to
formulate plans. They only carry out orders. Thus,
planning in a way reduces creativity since people tend to
think along the same lines as others. There is nothing
new or innovative.
4. Planning involves huge costs.
When plans are drawn up huge costs are involved in
their formulation. These may be in terms of time and
money.
 Checking accuracy of facts may involve lot of time.
Detailed plans require scientific calculations to
ascertain facts and figures.
 There are a number of incidental costs like expenses
on boardroom meetings, discussions with professional
experts and preliminary investigations to find out
the viability of the plan.
Sometimes, the costs incurred may not justify the
benefits derived from the plans.
5. Planning is a time-consuming process.
Sometimes plans to be drawn up take so much of time
that there is not much time left for their implementation.
6. Planning does not guarantee success.
 The success of an enterprise is possible only when
plans are properly drawn up and implemented. Any
plan needs to be translated into action or it becomes
meaningless.
 Managers have a tendency to rely on previously
tried and tested successful plans. It is not always
true that just because a plan has worked before it
will work again. Besides, there are so many other
unknown factors to be considered.
This kind of complacency and false sense of security
may actually lead to failure instead of success.
Think about it
"Planning always reduces creativity." Comment.
Ans. False: Because planning promotes innovative ideas. Since
planning is the first function of management, new ideas can
take the shape of concrete plans. However, planning in a way
reduces creativity since people tend to think along the same
lines as others.
RECAP
Features of Planning CM OP2D F

1. Planning focuses on achieving objectives as specific goals
are set out in the plans along with activities to be undertaken
to achieve the goals. (Thus, planning is purposeful.)
2. Planning is futuristic as it involves looking ahead and
preparing for the future to meet future events effectively to
the best advantage of the organisation.
3. Planning involves decision making as it involves evaluation of
each alternative course of action and choosing the most appropriate
one.
4. Planning is a mental exercise. Planning is an intellectual activity
of thinking rather than doing. It requires application of mind
involving foresight, intelligent imagination and sound judgement.
5. Planning is the primary function of management as it lays
down the basis for all other functions of management. All other
managerial functions are performed within the framework of the
plans drawn. Thus, planning precedes other functions.
This is also referred to as the ‘primacy of planning’.
6. Planning is pervasive as it is required in all types of
organizations, at all levels of management and in all
departments of an organization. Top management
undertakes planning for the whole organisation. Middle
management does the departmental planning. At the
lowest level, day-to-day operational planning is done by
supervisors.
7. Planning is continuous because a plan is framed and
implemented for a specific period of time and is followed
by another plan and so on.
Importance of Planning
1. Provides direction: Planning provides directions by
deciding in advance what action should be taken. If there
was no planning, employees would be working in
different directions and the organisation would not be
able to achieve its desired goals.
2. Reduces the risks of uncertainty: Planning reduces
the risks of uncertainty by anticipating changes and
developing managerial responses to them. Planning
cannot eliminate changes/uncertainties but can predict
them and prepare contingency plans to deal with them.
3. Reduces overlapping and wasteful activities:
Planning reduces overlapping and wasteful activities by
coordinating the activities of different divisions,
departments and individuals.
4. Promotes innovative ideas: Planning promotes
innovative ideas requiring application of mind and
foresight. It is the most challenging activity for the
management as it guides all future actions leading to
growth and prosperity of the business.
5. Facilitates decision making: Planning facilitates
decision making by making a choice from among the
alternative courses of action.
6. Establishes standards for controlling: Planning
establishes standards against which actual performance
is measured. (A comparison of actual performance with
the standards helps to identify the deviations and to take
corrective action. Thus, planning is a prerequisite for
controlling.)
Limitation of Planning RS DTC2
1. Planning leads to rigidity. Plan is drawn with specific
targets within a specific time frame. Once the plans are
drawn, the managers may not be able to change them. It
may not be in the best interest of the organisation when
circumstances change.
2. Planning may not work in a dynamic environment
as the organisation has to constantly adapt itself to
changes.
3. Planning reduces creativity as it is mostly done by the
top management; rest of the members just carry out
orders and think on the same lines as others. They are
neither allowed to deviate from plans nor are they
permitted to act on their own. Thus, their initiative or
creativity gets lost or reduced.
4. Planning involves huge costs in terms of time and
money. Sometimes costs incurred may not justify the
benefit derived from the plan.
5. Planning is time consuming and sometimes not much
time is left for its implementation.
6. Planning does not guarantee success unless it is
translated into action. Managers have a tendency to rely
on previously tried and tested successful plans which
may create a false sense of security and lead to failure.
Question 1
Super Fine Rice Ltd. has the largest share of 55% in the
market. The company’s policy is to sell only for cash. In
2020, for the first time company’s number one position in
the industry has been threatened because other
companies started selling rice on credit also. But the
managers of Super Fine Rice Ltd. continued to rely on its
previously tried and tested successful plans which didn’t
work because the environment is not static. This led to
decline in sales of Super Fine Rice Ltd. The above situation
is indicating two limitations of planning which led to
decline in it sales. Identify these limitations. (1 mark)

Answer 1
(i) Planning does not guarantee success.
(ii) Planning may not work in dynamic environment.

Question 2
ABC Ltd. has a plan of increasing profits by 20%. It has
devoted a lot of time and money to this plan. But the
competition starts increasing, so it could not change its
plan to beat its competitors because huge amount of
money had already been devoted to the pre-decided
plan. It caused losses to the company.
Explain any two limitations of planning highlighted in the
above case.Also, quote the lines from it. (4 marks)

Answer 2
(i) Planning is a time consuming process.
‘ABC Ltd. has devoted a lot of time and money to its
plan.’
(ii) Planning leads to rigidity
‘The competition starts increasing, so it could not change
its plan to beat its competitors because huge amount of
money had already been devoted to the pre-decided
plan.’ (give explanation of these two limitations)

Question 3
In 2015, Naveen left his luxurious life in Mumbai, where
he worked as a manager for Blue Birds Ltd. He shifted
to Begampur, Chhattisgarh to fulfil his grandmother’s
dream of converting their 25-acre ancestral land into a
fertile farm. For this he set out specific goals along with
the activities to be performed to achieve the goals.
Every activity was a challenge since he was clueless
about farming. He learnt every activity from filling the
land to sowing the seeds. To aid farmers he launched his
own company ‘Innovative Agriculture Solutions Pvt. Ltd’.
It was difficult initially as no one trusted an urban youth
telling farmers about farming. But when everything was
discussed in detail the farmers started taking interest.
He wanted to ensure that the future events meet
effectively the best interests of the company. Through
sales forecasting, he prepared an annual plan for
production and sales.
He also found that the farmers grew only paddy, which
was an activity of 3-4 months and the land remained idle
for the rest 8-9 months of the year. He not only
identified but evaluated various alternatives through
which the farms could be utilised for the remaining
months of the year. Through correct foresight and logical
and systematic thinking based on analysis of all facts, all
alternatives were examined and evaluated. He presented
a plan to the farmers, where after harvesting paddy,
vegetables could be grown.
The above case highlights the features of one of the
functions of management. By quoting lines from the
above identify and explain these features.

Answer 3
Features of planning are:
(Explain these features)
(i) Planning focuses on achieving objectives.
‘He set out specific goals along with the activities to be
performed to achieve the goals’
(ii) Planning is futuristic.
‘He wanted to ensure that the future events meet
effectively the best interests of the company’
‘Through sales forecasting, he prepared an annual plan for
production and sales’
(iii) Planning involves decision making.
‘He not only identified but evaluated various alternatives
through which the farms could be utilised for the
remaining months of the year’.
‘…. all alternatives were examined and evaluated’
(iv) Planning is a mental exercise.
‘Through correct foresight and logical and systematic
thinking based on analysis of all facts…’.

Question 4
Ravi was working in a mobile company. It had an
assembling unit in Noida. In this assembling unit,
standard output of producing 12 units per day per
worker had been set. While assembling mobile phones,
he realised that by simply reorganising the sequence of
tasks more units can be assembled at a lower cost. He
went to his supervisor and informed him about his new
discovery. The supervisor, on the contrary, instructed him
to carry out work as per the method and techniques
decided earlier.
Identify this limitation of one of the functions of
management. (1 mark)
Answer 4
Planning reduces creativity.

Question 1
The purpose of planning is ________________.

Answer 1
to meet future events effectively to the best advantages of
an organisation.

Question 2
Planning is basically an intellectual activity of thinking
rather than doing because ____________ .

Answer 2
it is mental exercise of determining the action to be taken.

Question 3
“Planning requires logical and systematic thinking rather
than guess work or wishful thinking.” (True/False)

Answer 3
True: Planning is intellectual thinking based on the analysis
of facts and forecasts.

Question 4
‘Planning requires logical and systematic thinking rather
than guess work or wishful thinking.’ What characteristic
of planning does this statement highlight?

Answer 4
Planning is mental exercise.

Question 5
Which of the following statements is false?
(a) Planning reduces creativity.
(b) Planning is economical.
(c) Planning focuses on achieving objectives.
(d) Planning is a mental exercise.

Answer 5
(b) Planning is economical.

Question 6
Following a pre-decided plan, when circumstances have
changed, may not turn out to be in the organisation’s
interest.Which limitation of planning is indicated here?

Answer 6
Planning leads to rigidity.

Question 7
Planning is a mental exercise as it involves wishful thinking
(True/False)

Answer 7
False

 Organising: Concept and importance
 Organising Process
 Structure of organisation- functional and
divisional concept
 Delegation: concept, elements and
importance
 Decentralization: concept and
importance
5.1
Organising: Concept,
Process and Importance
Meaning of 'Organising' as a Process
Organising essentially implies a process which
coordinates human efforts, assembles resources and
integrates both into a unified whole to be utilised for
achieving specified objectives.
Organising can be defined as a process that initiates
implementation of plans by clarifying jobs and
working relationships and effectively deploying
resources for attainment of identified and desired
results (goals).
Organising is a process by which the manager brings
order out of chaos, removes conflict among people over
work or responsibility sharing and creates an environment
suitable for teamwork.
Definitions of Organising
 “Organising is the process of defining and grouping the
activities of the enterprise and establishing authority
relationships among them.” —Theo Haimman
 “Organising is the process of identifying and grouping the
work to be performed, defining and delegating responsibility
and authority, and establishing relationships for the purpose
of enabling people to work most effectively together in
accomplishing objectives.” —Louis Allen
Steps in the Process of Organising
Organising involves a series of steps that need to be taken
in order to achieve the desired goal. The following steps
emerge in the process of organising:
1. Identification and division of work
The first step in the process of organising involves
identifying and dividing the work that has to be done
in accordance with previously determined plans.
The work is divided into manageable activities so that
duplication can be avoided and the burden of work can
be shared among the employees.
2. Departmentalisation
Once work has been divided into small and
manageable activities then those activities which are
similar in nature are grouped together. This grouping
process is called departmentalisation. This facilitates
specialisation.
 Top Tip
Departments can be created using several criteria as a basis.
Examples of some of the most popularly used basis are:
• Territory (north, south, west etc.) and
• Products (appliances, clothes, cosmetics etc).
3. Assignment of duties
It is necessary to define the work of different job
positions and accordingly allocate work to various
employees. Once departments have been formed, each
of them is placed under the charge of an individual.
Jobs are then allocated to the members of each
department in accordance to their skills and
competencies.
 Top Tip
It is essential for effective performance that a proper match is
made between the nature of a job and the ability of an
individual. The work must be assigned to those who are best
fitted to perform it well.
4. Establishing reporting relationships
Merely allocating work is not enough. Each individual
should also know who he has to take orders from and
to whom he is accountable.
The establishment of such clear relationships helps to
create a hierarchical structure and helps in coordination
amongst various departments.
Importance/Significance of Organising
The significance of the organising function mainly
arises from the fact that it helps in the survival and
growth of an enterprise and equips it to meet various
challenges. In order for any business enterprise to
perform tasks and successfully meet goals, the
organising function must be properly performed.
The following points highlight the crucial role that
organising plays in any business enterprise:
1. Benefits of specialisation
Organising leads to a systematic allocation of jobs
amongst the work force. This reduces the workload as
well as enhances productivity because of the specific
workers performing a specific job on a regular basis.
Repetitive performance of a particular task allows a
worker to gain experience in that area and leads to
specialisation.
2. Clarity in working relationships
The establishment of working relationships clarifies
lines of communication and specifies who is to report
to whom.
 This removes ambiguity in transfer of information
and instructions.
 It helps in creating a hierarchical order thereby
enabling the fixation of responsibility and
specification of the extent of authority to be
exercised by an individual.
3. Effective administration
Organising provides a clear description of jobs and
related duties. This helps to avoid confusion and
duplication. Clarity in working relationships enables
proper execution of work. Management of an enterprise
becomes easy and this brings effectiveness in
administration.
4. Optimum utilisation of resources
Organising leads to the proper utilisation of all
material, financial and human resources. The proper
assignment of jobs avoids overlapping of work and also
makes possible the best use of resources.
Avoidance of duplication of work helps in preventing
confusion and minimising the wastage of resources
and efforts.
5. Development of personnel
Organising helps in development of personnel by
delegation of work to subordinates. Effective delegation
allows the managers to reduce their workload by assigning
routine jobs to their subordinates.
 It allows the manager to develop new methods and
ways of performing tasks. It gives them the time to
explore areas for growth and the opportunity to
innovate thereby strengthening the company’s
competitive position.
 It also develops in the subordinate the ability to deal
effectively with challenges and helps them to realise
their full potential.
 Top Tip
Delegation refers to the downward transfer of authority from
a superior to a subordinate.
A manager, no matter how capable he is, cannot manage to do
every task on his own. The volume of work makes it
impractical for him to handle it all by himself. As a
consequence, if he desires to meet the organisational goals,
focus on objectives and ensure that all work is accomplished,
he must delegate authority.
6. Adaptation to change
The process of organising allows the organisation
structure to be suitably modified according to changes
in business environment. It thus provides stability to
the enterprise as it can continue to survive and grow in
spite of changes.
7. Expansion and growth
Organising helps in the growth and diversification of
an enterprise by enabling it to deviate from existing
norms and taking up new challenges.
 It allows a business enterprise to add more job
positions, departments and even diversify their
product lines.
 New geographical territories can be added to
current areas of operation and this will help to
increase customer base, sales and profit.
RECAP
Organising as a Process
Organising is defined as the process of identifying and grouping
the work to be performed, assigning duties to job positions and
establishing relationships for the purpose of accomplishing
objectives.
Steps in the Process of Organising IDEA
1. Identification and division of work: Identifying and
dividing the work into manageable activities so that
duplication can be avoided.
2. Departmentalisation: Activities of a similar nature are
grouped together. It facilitates specialisation. (Departments
can be created on the basis of territory (north, south, etc.) and
products (garments, footwear etc).
3. Assignment of duties to job positions: Jobs are alloc-
ated to the members of each department according
to their skills and competencies for effective
performance.
4. Establishing reporting relationships: Authority
responsibility relationships are clearly established so that
each individual knows who he has to take orders from
and to whom he is accountable. This helps in
coordination amongst various departments.
Importance of Organising SAD-C-GOA
1. Specialisation: It leads to specialisation by a systematic
allocation of jobs resulting in reduced workload and
enhanced productivity.
2. Clarity in working relationships: It leads to clarity in
working relationships by specifying who is to report to
whom.
3. Effective administration: It helps in effective
administration by providing a clear description of jobs
and working relationships.
4. Optimum utilisation of resources: It leads to
optimum utilisation of resources by avoiding duplication of
work and minimizing wastage of resources and efforts.
5. Growth and expansion: It helps in expansion and
growth by allowing an enterprise to add more job
positions, departments and product lines.
6. Adaptation to change: It helps in adaptation to change
by allowing the organisation structure to be suitably
modified as per the changes in business environment.
7. Development of personnel: It helps in development of
personnel by delegation of work to subordinates.
Question 1
In a school, twelve students work for the school library
in the summer vacations. One afternoon they are told to
unload a shipment of new releases, stock the bookshelves,
and then dispose of all waste (packaging, paper etc). One
student supervises the work by grouping students, divides
the work, assigns each group their quota and develops
reporting relationships among them.
Identify the function of management highlighted above.
(1 mark)
Case Studies 5.1 — Analysing, Evaluating & Creating Type Questions
Answer 1
‘Organising’ function of management is highlighted in
the given case.

Question 2
In a school fete, the whole activity is divided into task
groups each dealing with a specific area like the food
committee, the decoration committee, the ticketing
committee and so on. These are under the overall
supervision of the official in-charge of the event.
Coordinating relationships are established among the
various groups to enable smooth interaction and clarity
about each group’s contribution towards the event.
(a) Identify and state the function of management
highlighted above.
(b) State the steps involved in the function of
management identified in part
(a) by quoting the lines from the above paragraph.
(6 marks)

Answer 2
(a) Organising (give meaning)
(b) The following steps emerge in the process of
organising: (Explain the steps)
(i) Identification and division of work
“...the whole activity is divided into task groups...”
(ii) Departmentalisation/Departmentation
“...each dealing with a specific area...”
(iii) Assignment of duties
“... the food committee, the decoration committee, the
ticketing committee ... are under the overall supervision of
the official in-charge of the event.”
(iv) Establishing reporting relationships
“... Coordinating relationships are established ... clarity
about each group’s contribution towards the event.”

Question 3
Rishu, Ashu and Ravi have decided to start a business of
manufacturing toys. They identified the following main
activities which they have to perform: (i) Purchase of
raw materials, (ii) Purchase of machinery, (iii) Production
of toys, (iv) Arrangement of finance, (v) Sale of toys, (vi)
Identifying the areas where they can sell their toys and
(vii) Selection of employees
In order to facilitate the work they thought that four
managers should be appointed to look after
(a) Production, (b) Finance, (c) Marketing, (d) Personnel.
A. Identify the function of management involved in the
above-mentioned para.
B. Quote the lines from the above para which help you
in identifying this function.
C. State the steps followed in the process of this
function of management. (5 marks)

Answer 3
A. Organising
B. ‘They identified the following main activities which they
have to perform.’
‘In order to facilitate the work they thought that four
managers should be appointed to look after.
(a) Production, (b) Finance, (c) Marketing, (d) Personnel.’
C. Steps in Organising Process:
(i) Identifying and dividing the work into manageable activities.
(ii) Departmentalisation/Departmentation where activities of
a similar nature are grouped together.
(iii) Assignment of duties to job positions.
(iv) Establishing reporting relationships so that each individual
knows from whom he has to take orders and to whom he
is accountable.

Question 4
Ramdas, aged 49 is working in an aviation company. He is
the senior-most employee in his division. He is even
senior to the division manager, Kanaputti. Ramdas is
considered one of the most committed, capable and
hard-working employees. As a result of his abilities and
seniority, he generally received the work assignments of
his choice. Although there was no formal designation of
various special projects assigned to Ramdas, he handled
them as a matter of routine. A problem developed when
an able and intelligent person Nagarjuna, aged 33, was
appointed by Kanaputti. Nagarjuna's previous three
years experience in the closely related work, made it
possible for him to catch on to the routine work of his
new job more rapidly than was customary for a new
employee. On several occasions, Kanaputti noticed the
tension developing between the two employees.
However, he didn’t want to get involved in their personal
issues as long as the work was completed effectively and
efficiently by them. One day, the tension between them
reached the boiling point and Ramdas complained to
Kanaputti stating that his duties were being largely taken
over by Nagarjuna. Kanaputti issued the order stating
the clear allocation of the jobs and related duties
between the two. He further clarified the working
between them by specifying who was to report to
whom. This helped in reducing the workload, enhancing
productivity and removing ambiguity.
(i) Identify and state the step of organising process which
has not been carried out properly and contributed to
this problem.
(ii) State the two steps of the organising process which
have been taken by Kanaputti to respond to the
complaint of Ramdas.
(iii) Also state two points of importance of organising as
reflected in the above case.
(CBSE SQP 2017) (4marks)
Answer 4
(i) Assignment of duties: Defining the work of different
job positions and allotting the work according to
the skills of the employees.
(ii) Kanaputti responded to the complaint of Ramdas
by
(a) Assigning the duties
(b) Establishing reporting relationship
(iii) (a) clarity in working relationship
(b) Benefits of specialisation
(c) Effective administration (any two)
Question 5
Zamon Ltd. is manufacturer of electronics goods based
in Pune. On one hand it deals in items like books, music
instrument, videotapes etc., and on the other hand it
deals in laptops and mobile phones.
The company had a functional structure with separate
heads for production, marketing and finance. All the
functional heads were looking after the products, but at
times their activities overlapped. This led to problems
related to coordination and inter-departmental conflicts.
To facilitate specialization Ramit, the CEO of the
company decided to group books, music instrument,
under ‘Media’ and laptops and mobile phones under
‘consumer electronics’. While doing so Ramit has
performed a step in the process of one of the functions
of management. Identify the step. (CBSE 2018) (1 mark)

Answer 5
Departmentalisation

Question 1
Name the function of management which examines the
activities and resources required to implement the plan.

Answer 1
Organising

Question 2
__________ function of management includes the
designing of roles to be filled by suitably skilled people.

Answer 2
Organising

Question 3
__________ essentially implies a process which
coordinates human efforts, assembles resources and
integrates both into a unified whole to be utilised for
achieving specified objectives.
(a) Coordination
(b) Planning
(c) Organising
(d) Directing

Answer 3
(c) Organising

Question 4
____________ is a process that initiates
implementation of plans by clarifying jobs and working
relationships and effectively deploying resources for
attainment of identified and desired results (goals).
(Organising/Directing/Controlling)
(Fill up the blank with correct option)

Answer 4
Organising

Question 5
The process of organising involves identifying and
dividing the work into small and manageable activities,
and then grouping those activities which are similar in
nature. This grouping process is called __________.
This facilitates_________.
(Fill up the blanks with correct answers)

Answer 5
Departmentalisation; Specialisation

Question 6
Establishing reporting relationships under organising
function helps in ____________.

Answer 6
Coordination amongst various departments

Question 7
The significance of the organising function of
management mainly arises from the fact that _______.

Answer 7
it helps in the survival and growth of an enterprise and
equips it to meet various challenges.

Question 8
__________ is a process by which the manager brings
order out of chaos,removes conflict among people over
work or responsibility sharing and creates an
environment suitable for teamwork.

Answer 8
Organising

Question 9
Which function of management is concerned with
establishing relationships for the purpose of enabling people
to work most effectively together in accomplishing
objectives?

Answer 9
Organising

Question 10
Name the function of management which coordinates the
physical, financial and human resources and establishes
productive relations among them for achievement of
specific goals.

Answer 10
Organising

Question 11
It is a process of management by which the manager
brings order out of chaos, removes conflict among
people over work or responsibility sharing and creates
an environment suitable for team work. Identify it.

Answer 11
Organising

5.2
Organisation Structure:
Concept and Types
Meaning of Organisation Structure (or
Organising as a Structure)
Organisation structure is the outcome of the organising
process.
The organisation structure can be defined as the
framework within which managerial and operating
tasks are performed.
 An organisation structure provides the framework
which enables the enterprise to function as an
integrated unit by regulating and coordinating the
responsibilities of individuals and departments.
 It specifies the relationships between people, work
and resources.
 It allows correlation and coordination among
human, physical and financial resources and this
enables a business enterprise to accomplish desired
goals.
 A proper organisation structure is essential to
ensure a smooth flow of communication and better
control over the operations of a business enterprise.
 An effective structure will result in increased
profitability of the enterprise.
Example: Sonali opened her own travel agency. The
success of her travel agency depends on a harmonious
relationship between the customer and the employees
of the travel agency. In order to achieve this objective,
she has divided the entire work of the agency into three
subheads based on the functions namely operations,
sales and administration.
– Operations include travel counsellor, reservation
and ticketing and customer care.
– Sales include the Accounts executive.
– Administration includes Book Keeper, Cashier
and utility personnel.
This division of work on the basis of functions has
resulted into an organisational structure specifying the
line of authority and responsibility.
Need for an adequate organisation
structure
The need for an adequate organisation structure is felt
by an enterprise whenever it grows in size or
complexity. As an organisation grows, coordination
becomes difficult due to the emergence of new
functions and increase in structural hierarchies.
It is only those enterprises which do not focus on growth that can maintain a
particular structure for a long period of time. However, it is important to
understand that such stagnancy may prove to be detrimental to an enterprise as
those companies which do not change at all will close down or cease to grow.
Thus, for an organisation to function smoothly and face environmental changes,
it becomes necessary to pay attention to its structure. Peter Drucker emphasises
on the importance of having an appropriate organisation structure when he says,
“organisation structure is an indispensable means; and the wrong structure will
seriously impair business performance and even destroy it.”
Thus, it can be said that business operates in a dynamic environment and those
enterprises which fail to adapt to change are unable to survive. Hence,
management must continuously review its plans and objectives and accordingly
the organisation structure of the enterprise should also be subjected to periodic
review to determine if modification is required. An organisation structure, at all
times should contribute towards the achievement of the enterprise’s objectives
and should provide scope for initiative so that contribution of personnel can be
maximum and effective.
How is the organisation structure of a
firm shown?
The organisation structure of a firm is shown in an
organisation chart.
The span of management, to a large extent gives shape
to the organisational structure.
Span of management refers to the number of
subordinates that can be effectively managed by a
superior.
This determines the levels of management in the
structure.
 Top Tip
A narrow span of management has tall organisation structure
whereas, a wide span of management has short organisation
structure.
Types of Organisation Structure
The type of structure adopted by an organisation will
vary with the nature and types of activities performed
by an organsation. The organisational structure can be
classified under two categories which are as follows:
1. Functional structure
Functional structure is an organisational structure
formed by grouping of jobs of similar nature according
to functions and organising these major functions as
separate departments. All departments report to a
coordinating head, say Managing Director.
For example, in a manufacturing concern division of
work into key functions will include production,
finance, marketing, and human resource (HR). These
departments may be further divided into sections. For
instance, marketing department may have sections like
packaging, advertising, selling, etc.
A functional structure is an organisational design
that groups similar or related functions/jobs together.
Suitability: Functional structure is suitable for those

enterprises which have only one category of products to
offer, however:
• the size of the organisation is large,
• it has a diversified activities and
• operations require a high degree of specialisation.
2. Divisional structure
Many large organisations with diversified activities
have re-organised themselves away from the simpler
and basic functional structure towards a divisional
structure which is more suited to their activities. This
is particularly true of those enterprises which have
more than one category of products to offer. This is
because although every organisation performs a set of
homogeneous functions, as it diversifies into varied
product categories, the need for a more evolved
structural design is felt to cope with the emerging
complexity.
A divisional structure is the organisation structure
which comprises of separate business units or
divisions. Generally, manpower is grouped on the
basis of different products manufactured. For
example, a large company may have divisions like
Footwear, Garments, etc.
 Each unit or division has a divisional manager
responsible for performance and who has authority
over the unit or division.
 Each division is multi-functional because within
each division functions like production, marketing,
finance, purchase etc. are performed together to
achieve a common goal. In other words, within each
division, the functional structure tends to be
adopted. However, functions may vary across
divisions in accordance with a particular product
line.
 Each division works as a profit center where the
divisional head is responsible for the profit or loss of
his division.
 Each division is self-contained as it develops
expertise in all functions related to a product line.
Suitability: A divisional structure is suitable for those

business enterprises where a large variety of products
are manufactured using different productive resources.
An organisation will decide to adopt a divisional
structure when:
• an organisation grows and needs to add more
employees,
• create more departments and
• introduce new levels of management.
Functional Structure: Advantages and
Disadvantages
Divisional Structure: Advantages and
Disadvantages
Difference between Functional and
Divisional Structure
RECAP
Organising as a Structure
Organisation structure refers to the framework within which
managerial and operating tasks are performed.
It specifies the relationship between people, work and
resources. It allows coordination among human, physical and
financial resources. The organisation structure of a firm is
shown in an organisation chart. The span of management
gives shape to the organisational structure. Span of
management refers to the number of subordinates that can be
effectively managed by a superior. This determines the levels
of management in the organisation structure.
The need for an adequate organisation structure is felt when
an enterprise grows in size or complexity because
coordination then, becomes difficult due to new functions or
increase in number of products.
Functional Structure
Functional structure is an organisational structure formed
by grouping of jobs of similar nature according to functions
and organising these major functions as separate
departments. For example, a company manufacturing
garments may have separate departments for Production,
Marketing, Finance, etc.
Functional structure is suitable for those enterprises which
have only one category of products to offer. When the size of
the organisation is large, it has diversified activities and
operations require a high degree of specialisation, functional
structure is suitable.
Advantages: (i) It leads to occupational specialisation since
emphasis is placed on specific functions. (ii) It promotes
control and coordination within a department because of
similarity in the tasks being performed. (iii) It increases
managerial and operational efficiency resulting in increased
profit. (iv) It lowers cost as it reduces duplication of effort.
(v) It makes training of employees easier as it focuses on a
limited range of skills. (vi) It ensures that different functions
get due attention.
Disadvantages: (i) Creation of functional empires where
less emphasis is placed on overall objectives of the enterprise
and more on the objectives pursued by a functional head.
(ii) Inter-departmental conflicts may arise when the
interests of two or more departments are not compatible.
(iii) Problems in coordination as information has to be
exchanged across functionally differentiated departments.
(iv) Inflexibility – as people with the same skills and
knowledge may develop a narrow perspective.
Divisional structure is an organisation structure comprising
or divisions created on a certain basis e.g. on the basis of
different products produced, etc. For example, a large
company may have two divisions, say Footwear and
Garments. Each division is multi-functional because within
each division functions like production, marketing, finance,
etc. are performed together to achieve a common goal. Each
division works as a profit center where the divisional head is
responsible for the profit or loss of his division.
Divisional structure is suitable for those business enterprises
where a large variety of products are manufactured using
different productive resources. When an organisation grows
and needs to add more employees, create more departments
and introduce new levels of management, it will decide to
adopt a divisional structure.
Advantages:(i) Product Specialisation helps in the
development of varied skills in a divisional head and this
Difference between Functional and Divisional Structure
1. Formation: Functional – Formation is based on
functions; Divisional – Formation is based on product
lines and is supported by functions.
2. Specialisation : Functional – Functional specialisation;
Divisional – Product specialisation
3. Cost: Functional – Functions are not duplicated,
economical; Divisional – Duplication of resources in
various departments, costly
4. Coordination: Functional – Difficult for a multi-
product company Divisional – Easy; because all
functions related to a particular product are integrated
in one division
5. Responsibility: Functional – Difficult to fix
responsibility on a particular department Divisional – Easy
to fix responsibility
6. Managerial development: Functional – Difficult; as
each functional manager has to report to the top
management; Divisional – Easier; autonomy as well as
chance to perform multiple functions help in managerial
development.
Question 1
A company, which manufactures a popular brand of toys,
has been enjoying good market reputation. It has separate
departments for Production, Marketing, Finance, Human
Resources and Research and Development.
Lately to use its brand name and also to cash on to new
business opportunities it is thinking to diversify into
manufacture of new range of electronic toys for which a
new market is emerging.
Identify the type of the organisational structure the
adopt with diversification. Give reasons in support of
your answer. Diagram. (3 marks)

Answer 1
Divisional structure; since the company is diversifying
into manufacture of new range of electronic toys, it
needs to add more employees, create more
departments and introduce new levels of management.

Question 2
Neha runs a factory wherein she manufactures shoes.
The business has been doing well and she intends to
expand by diversifying into leather bags as well as
western formal wear thereby making her company a
complete provider of corporate wear. This will enable
her to market her business unit as the one stop for
working women. Which type of structure would you
recommend for her expanded organisation and why?
(3 marks)

Answer 2
Divisional structure; since Neha intends to expand by
diversifying into leather bags as well as western formal wear,
she needs to add more employees, create more
departments and introduce new levels of management.

Question 3
A truck manufacturing company has its registered office
in Delhi, manufacturing unit at Gurgaon and marketing
department is located at Faridabad. Which type of
organisational structure should it adopt to achieve its
target? Give reasons. (3 marks)

Answer 3
The company should adopt ‘Functional Structure’ since it
manufactures trucks only (a single product). The company
has separate departments like manufacturing unit
(Gurgaon), marketing and sales department (Faridabad),
etc.
That means, the size of the organisation is large, it has
diversified activities and operations require a high degree
of specialisation. So, it should adopt functional structure.

Question 4
Kiran Industries is a company manufacturing office
furniture. The company chose to diversify its operations
to improve its growth potential and increase market
share. As the project was important many alternatives
were generated for the purpose and were thoroughly
discussed amongst the members of the organisation.
After evaluating the various alternatives Sukhvinder, the
Managing Director of the company decided that they
should add ‘Home Interiors and Furnishings’ as a new
line of business activity.
Name the framework, which the diversified organisation
should adopt, to enable it to cope with the emerging
complexity?

Answer 4
(a) Divisional Structure (give any one advantage)

Question 5
Aradhana and Gandharv are heads of two different
departments in ‘Yumco Ltd.’ They are efficient managers
and are able to motivate the employees of their
respective departments to improve performance.
However, their drive to excel in their own sphere of
activity instead of giving emphasis on objectives of the
enterprise has hindered the interaction between the
departments that Aradhana and Gandharv are heading.
Often there are inter-departmental conflicts and they
have become incompatible. This has proved to be
harmful in the fulfilment of the organisational objectives.
The situation has deteriorated to such an extent that
the CEO of ‘Yumco Ltd.’ has hired a consultant, Rashmi,
to resolve the problem. After studying the situation
closely, Rashmi found that the problem has arisen due to
inflexibility and a narrow perspective on the part of both
Aradhana and Gandharv. She is of the view that this
situation is a result of the type of organisational
structure ‘Yumco Ltd.’ has adopted.
From the above information, identify the organisational
structure adopted by ‘Yumco Ltd.’

Answer 5
Functional Structure is the organisational structure
adopted by ‘Yumco Ltd.’. (State any three)

Question 6
‘Himalaya Ltd.’, is engaged in manufacturing of washing
machines. The target of the organisation is to
manufacture 500 washing machines in a day. There is an
occupational specialisation in the organisation which
promotes efficiency of employees. There is no duplication of
efforts in such type of organization structure.
Identify the type of organisation structure described
above. (CBSE 2015) (1 mark)

Answer 6
Functional structure

Question 7
A company has been registered under the Companies
Act with an authorised share capital of ` 20,000 crore.
Its registered office is situated in Delhi and
manufacturing unit in a backward district of Rajasthan.
Its marketing department is situated in Bhopal. The
company is manufacturing Fast Moving Consumer
Goods (FMCG). Which type of organisational structure
would suit the requirements of the company? (1 mark)

Answer 7

Question 8
An electronic company manufacturing TV and
Refrigerators wants to bring two new products Washing
Machines and ACs in the market. For each product
separate division is to be set up. The in-charge of
washing machine division and AC division will be a
female and a disabled person respectively.
What type of organisational structure is suitable for this
company? (1 mark)

Answer 8
Divisional structure

Question 10
A company has its registered office in Delhi,
manufacturing unit at Gurgaon and marketing and sales
department at Faridabad. The company manufactures the
Fast Moving Consumer Goods(FMCG). Which type of
organisational structure should it adopt to achieve its
target? Why?

Answer 10
Divisional structure ; since the company manufactures
many consumer products, it is a multi-product company.
The company will have separate business units or
divisions for each product. Each unit will have a divisional
manager responsible for performance of his division.

Question 11
Ravi runs a locks manufacturing factory. He manufactures
locks used in houses. He wants to expand his business. For
this, he wants to enter into the manufacturing of locks for
cars and motorcycles.
Which type of organisational structure will he choose
for his factory and why? (1 mark)

Answer 11

Question 12
A company is manufacturing Televisions, Refrigerators,
Airconditioners, Washing machines and Gas stoves using
different productive resources and is at the threshold of
growth, requiring more emplooyees.
Suggest a suitable organisational structure for this
company giving reason in support of your answer. Draw
a diagram depicting the structure. (3 marks)

Answer 12

Question 13
A Steel Manufacturing Company has the following main
jobs: (i) Manufacturing, (ii) Finance, (iii) Marketing, (iv)
Personnel and, (v) Research and development.
Which type of organisational structure will you choose
for this type of a company and why? (3 marks)

Answer 13
Functional structure; because the company has diversified
activities and operations require a high degree of
specialisation.

Question 1
Span of management refers to __________.
(a) Number of managers
(b) Length of term for which a manager is appointed
(c) Number of subordinates under a superior
(d) Number of members in top management

Answer 1
(c) Number of subordinates under a superior

Question 2
A tall structure has a __________.
(a) Narrow span of management
(b) Wide span of management
(c) No span of management
(d) Less levels of management

Answer 2

Question 3
Grouping of activities on the basis of product lines is a part
of __________. (Choose the correct alternative)
(a) Delegated organisation
(b) Divisional organisation
(c) Functional organisation
(d) Autonomous organisation

Answer 3

Question 4
Grouping of activities on the basis of functions is a part
of __________. (Choose the correct alternative)
(a) Decentralised organisation
(d) Centralised organisation

Answer 4

Question 5
Which type of organisational structure is suitable for a
large scale organisation having diversified activities
requiring high degree of specialisation in operations?
(CBSE 2013)

Answer 5

Question 6
Name the type of ‘organisational structure’ which
promotes efficiency in utilisation of manpower.

Answer 6

Question 7
___________ refers to the number of subordinates
that can be effectively managed by a superior.

Answer 7
Span of management

Question 8
The type of organisation structure adopted by an
enterprise will vary with ______ .

Answer 8
The nature and types of activities performed by it.

Question 9
__________ is an organisational design that groups
similar or related jobs together.
(Functional structure/Divisional structure)

Answer 9

Question 10
__________ promotes efficiency in utilisation of
manpower as employees perform similar tasks within a
department and are able to improve performance.

Answer 10

Question 11
_________ promotes control and coordination within
a department because of similarity in the tasks being
performed.(Functional structure/Divisional structure)

Answer 11

Question 12
__________ makes training of employees easier as the
focus is on a limited range of skills. (Functional
structure/Divisional structure)

Answer 12
Functional structure.

Question 13
The sales department insist on a customer friendly
design which causes difficulties in production. Such
dissension can prove to be harmful in terms of
fulfillment of organisational interest. Such a conflict of
interests arise in case of _____________ being
adopted by the organisation. (Functional

Answer 13

Question 14
___________ may lead to inflexibility as people with
same skills and knowledge base may develop a narrow
perspective and thus, have difficulty in appreciating the
others point of view. (Functional structure/Divisional
structure). (Fill up the blank with correct option)

Answer 14

Question 15
__________ is most suitable when the size of the
organisation is large, has a diversified activities and
operations require a high degree of specialisation.(Functional
structure/Divisional structure).

Answer 15

Question 16
Many large organisation which have diversified into
varied product categories have reorganised themselves
towards ______________to cope with the emerging
complexity. (Functional structure/Divisional structure)

Answer 16

Question 17
Under ___________, a manager gains experience in all
functions related to a particular product. (Functional

Answer 17

Question 18
_____________ promotes flexibility and initiative
because each business unit functions as an autonomous
unit which leads to faster decision-making. (Functional
structure/Divisional structure).

Answer 18

Question 19
___________ may lead to increase in costs since there
may be a duplication of activities across products.

Answer 19

Question 20
___________ is suitable for those business enterprises,
where a large variety of products are manufactured
using different productive resources.

Answer 20

Question 21
When an organisation grows and needs to add more
employees, create more departments and introduce new
levels of management, it will decide to adopt a
______________.

Answer 21
Divisional structure.

Question 22
Match the following :
Column I Column II
(i) It is difficult to fix responsibility on a (a) Functional
particular department. structure
(ii) It is costly because of duplication of resource (b) Divisional
in various departments. structure
(iii) Coordination is easy because all functions
related to a particular product are integrated
in one department.
(iv) Managerial development is difficult as each
manager has to report to the top
management.
Answer 22
(i)-(a),(ii)-(b) ,(iii)-(b),(iv)-(a).

Question 23
The need for an adequate organisation structure is felt
by an enterprise in when (i) ________________
because (ii) ______________.

Answer 23
(i) It grows in size or complexity.
(ii) As an organisation grows, coordination becomes
difficult due to the emergence of new functions
and increase in structural hierarchies.

5.3
Delegation and
Decentralisation
Concept of Delegation
Delegation refers to the transfer of authority from
a superior to a subordinate, the entrustment of
responsibility and the creation of accountability
for performance, which helps a manager to
extend his area of operations as without it, his
activities would be restricted to only what he
himself can do.
 Delegation is a pre-requisite to the efficient
functioning of an organisation because it enables a
manager to use his time on high priority activities.
 It also satisfies the subordinates' need for
recognition and provides them with opportunities
to develop and exercise initiative.
Definitions of Financial Management
 “Delegation of authority merely means the granting of
authority to subordinates to operate within prescribed limits.”
—Theo Haimman
 “Delegation is the process a manager follows in dividing the
work assigned to him so that he performs that part which only
he because of his unique organisational placement, can
perform effectively and so that he can get others to help with
what remains..” —Louis Allen
Elements of Delegation
1. Authority
Authority refers to the right of an individual to
command his subordinates and to take action within
the scope of his position.
 The concept of authority arises from the established
scalar chain which links the various job positions
and levels of an organisation. In the formal
organisation authority originates by virtue of an
individual’s position and the extent of authority is
highest at the top management levels and reduces
successively as we go down the corporate ladder.
Thus, authority flows from top to bottom, i.e., the
superior has authority over the subordinate.
 Authority relationships helps to maintain order in
the organisation by giving the managers the right to
exact obedience and give directions to the workforce
under them.
 Authority determines the superior subordinate
relationship wherein the superior communicates his
decision to the subordinate, expecting compliance
from him and the subordinate executes the decision
as per the guidelines of the superior.
2. Responsibility
Responsibility is the obligation of a subordinate
to properly perform the assigned duty.
 It arises from a superior-subordinate relationship
because the subordinate is bound to perform the
duty assigned to him by his superior.
 Responsibility flows upwards i.e., a subordinate will
always be responsible to his superior.
3. Accountability
Accountability implies being answerable for the
final outcome of the assigned task.
 Once responsibility for performance of an assigned
task is accepted, one cannot deny accountability.
Thus, accountability arises from responsibility.
 Accountability flows upwards i.e., a subordinate will
be accountable to a superior for satisfactory performa-
nce of work. The subordinate will be expected to explain
the consequences of his actions or omissions.
 Top Tip
While authority is delegated, responsibility is assumed, accountability
is imposed. Responsibility is derived from authority and accou-
ntability is derived from responsibility.
Elements of Delegation – A comparison
Principles of Delegation
1. For effective delegation, the authority granted
must be commensurate with the assigned
responsibility. (Principle of 'authority and
responsibility'): An important consideration to be
kept in view with respect to both authority and
responsibility is that when an employee is given
responsibility for a job, he must also be given the
degree of authority necessary to carry it out. For
effective delegation, the authority granted must be
commensurate with the assigned responsibility. Thus, if
authority granted is more than responsibility, it may
lead to misuse of authority, and if responsibility
assigned is more than authority it may make a
person ineffective.
2. The authority granted to a subordinate can be
taken back and redelegated to another person:
If the subordinate fails to perform the assigned task,
the authority granted to him/her can be taken back
and redelegated to another person.
3. Delegation does not mean abdication
(Principle of 'absoluteness of accountability'):
Delegation helps a manager to extend his area of
operations. However, delegation does not mean
abdication. It means that the manager shall still be
accountable for the performance of the assigned tasks.
Delegation of authority, undoubtedly empowers an
employee to act for his superior but the superior would
still be accountable for the final outcome. Thus,
irrespective of the extent of delegated authority, the
manager shall still be accountable to the same extent as
before delegation. It indicates that the manager has to
ensure the proper discharge of duties by his
subordinates. It is generally enforced through regular
feedback on the extent of work accomplished.
Example: Suppose the directors of a company
manufacturing computers have asked their marketing
manager to achieve a target sale of 100 computers per
day. The marketing manager has delegated the task
to a sales manager working under him but the
authority to give discount was not given by him. The
sales manager could not achieve the target.
In this case, the marketing manager cannot blame the
sales manager since he was not given the authority to
give discount.
However, the authority granted to the sales manager
can be taken back and redelegated to another person.
The marketing manager shall still be accountable to
the directors. The process of delegation does not
relieve the marketing manager of his own
accountability. Accountability cannnot be delegated at
all.
Importance of Delegation
Delegation ensures that the subordinates perform
tasks on behalf of the manager thereby reducing his
workload and providing him with more time to
concentrate on important matters.
"Delegation is a key element in effective organising."
Effective delegation leads to the following benefits:
1. Effective management
 By empowering the employees, the managers are
able to function more efficiently as they get more
time to concentrate on important matters.
 Freedom from doing routine work provides them
with opportunities to excel in new areas.
2. Employee development
 As a result of delegation, employees get more
opportunities to utilise their talent. It allows them
to develop those skills which will enable them to
perform complex tasks and assume those
responsibilities which will improve their career
prospects.
 It makes them better leaders and decision makers.
Thus, delegation helps by preparing better future
managers.
 Delegation empowers the employees by providing
them with the chance to use their skills, gain
experience and develop themselves for higher
positions.
3. Motivation of employees
 Delegation helps in developing the talents of the
employees. It also has psychological benefits. When
a superior entrusts a subordinate with a task, it is
not merely the sharing of work but involves trust on
the superior’s part and commitment on the part of
the subordinate.
 Responsibility for work builds the self-esteem of an
employee and improves his confidence. He feels
encouraged and tries to improve his performance
further.
4. Facilitation of growth
Delegation helps in the expansion of an organisation
by providing a ready workforce to take up leading
positions in new ventures. Trained and experienced
employees are able to play significant roles in the
launch of new projects.
5. Basis of management hierarchy
 Delegation of authority establishes superior-
subordinate relationships, which are the basis of
hierarchy of management. It is the degree and flow
of authority which determines who has to report to
whom.
 The extent of delegated authority also decides the
power that each job position enjoys in the
organisation.
6. Better coordination
 The elements of delegation, namely authority,
responsibility and accountability help to define the
powers, duties and answerability related to the
various positions in an organisation. This helps to
avoid overlapping of duties and duplication of effort
as it gives a clear picture of the work being done at
various levels.
 Such clarity in reporting relationships help in
developing and maintaining effective coordination
amongst the departments, levels and functions of
management.
Concept of Decentralisation
In many organisations, the top management plays an
active role in taking all decisions while there are others
in which this power is given to even the lower levels of
management. Those organisations in which decision
making authority lies with the top management are termed
as 'centralised organisations' whereas those in which such
authority is shared with lower levels are 'decentralised
organisations'.
Decentralisation explains the manner in which decision
making responsibilities are divided among hierarchical
levels. Put simply, decentralisation refers to delegation of
authority throughout all the levels of the organisation.
Decentralisation refers to systematic delegation
of authority through all the levels of management
and in all the departments except that which can
be exercised only at central points.
Decision making authority is shared with lower levels
and is consequently placed nearest to the points of
action. In other words, decision making authority is
pushed down the chain of command.
When decisions taken by the lower levels are
numerous as well as important an organisation can be
regarded as greatly decentralised.
 “Decentralisation refers to systematic effort to delegate to the
lowest level all authority except that which can be exercised at
central points.” —Louis Allen
 “Everything which goes to increase the importance of a
subordinate’s role is decentralisation, everything that goes to
reduce it is centralisation.” —Henri Fayol
Centralisation and Decentralisation
An organisation is centralised when decision-making authority is retained by higher
management levels whereas it is decentralised when such authority is delegated.
• Complete centralisation would imply concentration of all decision making
functions at the apex of the management hierarchy. Such a scenario would
obviate the need for a management hierarchy.
• On the other hand, complete decentralisation would imply the delegation of all
decision making functions to the lower level of the hierarchy and this would
obviate the need for higher managerial positions.
Both the scenarios are unrealistic. An organisation can never be completely
centralised or decentralised. As it grows in size and complexity , there is a tendency
to move towards decentralised decision making. This is because in large
organisations those employees who are directly and closely involved with certain
operations tend to have more knowledge about them than the top management
which may only be indirectly associated with individual operations. Hence, there is a
need for a balance between these co-existing forces. Thus, it can be said that every
organisation will be characterised by both centralisation and decentralisation.
of authority through all the levels of management
and in all the departments except that which can
be exercised only at central points.
Decision making authority is shared with lower levels
and is consequently placed nearest to the points of
action. In other words, decision making authority is
pushed down the chain of command.
When decisions taken by the lower levels are
numerous as well as important an organisation can be
regarded as greatly decentralised.
 Top Tip
Decentralisation is much more than a mere transfer of authority to
the lower levels of management hierarchy. It is a philosophy that
implies selective dispersal of authority because it propagates the
belief that people are competent, capable and resourceful. They can
assume the responsibility for the effective implementation of their
decisions .Thus this philosophy recognises the decision maker’s
need for autonomy. The management, however, needs to carefully
select those decisions which will be pushed down to lower levels
and those that will be retained for higher levels. In other words,
decentralisation should be applied with caution as it can lead to
organisational disintegration if the departments start to operate on
their own guidelines which may be contrary to the interest of the
organisation. Decentralisation must always be balanced with
centralisation in areas of major policy decisions.
Difference between Delegation and
Decentralisation
Basis Delegation Decentralisation
1. Nature Delegation is a compulsory act Decentralisation is an
because no individual can optional policy decision. It
perform all tasks on his own. is done at the discretion of
the top management.
2. Freedom of action More control by superiors Less control over executives
hence less freedom to take own hence greater freedom of
decisions. action.
3. Status It is a process followed to share It is the result of the policy
tasks. decision of the top
management.
4. Scope It has narrow scope as it is It has wide scope as it
limited to superior and his implies extension of
immediate subordinate. delegation to the lowest
level of management.
5. Purpose To lessen the burden of the To increase the role of the
manager. subordinates in the
organisation by giving
them more autonomy.
Importance of Decentralisation
1. Relief to top management
 Decentralisation diminishes the amount of direct
supervision exercised by a superior over the activities of
a subordinate because they are given the freedom to
act and decide within the prescribed limits.
Personal supervision is generally replaced by other
forms of control such as return on investment etc.
 Decentralisation also leaves the top management
with more time which they can devote to important
policy decisions rather than occupying their time
with both policy as well as operational decisions.
2. Develops initiative among subordinates
Decentralisation helps to promote self-reliance and
confidence amongst the subordinates. This is because
when lower managerial levels are given freedom to take
their own decisions they learn to depend on their own
judgment.
 It also keeps them in a state wherein they are
constantly challenged and have to develop solutions
for the various problems they encounter.
 A decentralisation policy helps to identify those
executives who have the necessary potential to
become dynamic leaders.
3. Develops managerial talent for the future
 Decentralisation gives subordinates a chance to
prove their abilities and creates a reservoir of
qualified manpower who can be considered to fill
up more challenging positions through promotions.
 It also helps to identify those who may not be
successful in assuming greater responsibility.
Thus, decentralisation is a means of management
education as well as an opportunity for trained manpower
to use its talent in real life situations.
4. Quick decision making
 In a decentralised organisation, since decisions are
taken at levels which are nearest to the points of
action and there is no requirement for approval
from many levels, the decision-making process is
much faster.
 There are also less chances of information getting
distorted because it doesn’t have to go through long
channels.
In centralised organisation because every decision is taken by the top

management the flow of information is slow as it has to traverse many levels.
Response also takes time. This reduces the speed of decision making and
makes it difficult for an enterprise to adapt to dynamic operating conditions.
5. Facilitates growth
 Decentralisation awards greater autonomy to the
lower levels of management as well as divisional or
departmental heads. This allows them to function
in a manner best suited to their department and
fosters a sense of competition amongst the
departments.
 Consequently, with each department doing its best
in a bid to outdo the other, the productivity levels
increase and the organisation is able to generate
more returns which can be used for expansion
purposes.
6. Better control
 Decentralisation makes it possible to evaluate
performance at each level and the departments can
be individually held accountable for their results.
 Feedback from all levels helps to analyse variances
and improve operations.
In decentralisation, one of the challenges is the accountability of performance.

In response to this challenge, better control systems are being evolved such as
the balance score card and management information system. Decentralisation
compels the management to innovative performance measurement systems.
RECAP
Concept and Elements of Delegation

Delegation is the transfer of authority from superior to
subordinate, entrustment of responsibility and creation of
accountability for performance which helps a manager to
extend his area of operations. Elements of Delegation are:
1. Authority: It refers to the right of an individual to
command his subordinates and to take action within the
scope of his position. Origin–It arises from formal position.
Flow–Authority flows from top to bottom, i.e. the superior
has authority over the subordinate. Delegation– Can be
delegated.
2. Responsibility: It refers to the obligation of a subordinate
to properly perform the assigned duty. Origin– It arises from
delegated authority. Flow–It flows upwards, i.e. a subordinate
will always be responsible to his superior. Delegation–
Cannot be entirely delegated.
3. Accountability: It refers to the answerability for the
final outcome of the assigned task. Origin–It arises from
responsibility. Flow–It flows upwards, i.e. a subordinate
will be accountable to a superior for satisfactory
performance of work. Delegation – Once authority has
been delegated and responsibility accepted, one cannot
deny accountability. It cannot be delegated. Delegation
does not mean abdication. The manager shall still be
accountable for the assigned task. Moreover, the
authority granted to a subordinate can be taken back
and redelegated to another person.
Importance of Delegation GEM – EMC
1.Effective management: Delegation helps in effective
management as the managers get more time to concentrate on
important matters. Freedom from doing routine work provides
them with opportunities to excel in new areas.
2. Employee development: Effective delegation helps in
development of employees as the employees get more
opportunities to utilize their talent. This allows them to
perform complex tasks.
3. Motivation of employees: It helps to motivate
employees as the employees feel encouraged and try to
improve their performance further.
4. Facilitation of growth: It facilitates growth by
providing a ready workforce to take up leading positions
in new ventures.
5. Basis of management hierarchy: It establishes a
management hierarchy through clear superior subordinate
relationships.
6. Better coordination: Elements of delegation, namely,
responsibility and accountability help to define powers,
duties and answerability related to various positions in an
organisation. This helps in better co-ordination by avoiding
overlapping of duties and duplication of effort.
Concept of Decentralisation
Decentralisation refers to systematic delegation of authority
through all the levels of management and in all the
departments except that which can be exercised only at
central points. Decentralisation implies selective dispersal of
authority and believes that people are competent, capable
and resourceful. It recognises the decision-maker’s need for
autonomy. The management, however, needs to carefully
select those decisions which will be pushed down to lower
levels (operational decisions) and those that will be retained
for higher levels (major policy decisions). It can lead to
organisational disintegration if the departments start to
to operate on their own guidelines which may be contrary to
the interest of the organisation.
Difference between Delegation and Decentralisation
NFP SS
1. Nature: Delegation – Delegation is a compulsory act
because no individual can perform all tasks.;
Decentralisation – Decentralisation is an optional policy
decision. It is done at the discretion of the top
management.
2. Purpose: Delegation – To lessen the burden of the
manager.; Decentralisation – To increase the role of the
subordinates in the organisation by giving them more
autonomy.
3. Freedom of action: Delegation – More control by
superiors, hence less freedom to take own decisions by
subordinates.; Decentralisation – Less control over
executives, hence greater freedom of action to
subsordinates.
4. Scope: Delegation – It has narrow scope as it is limited to a
superior and his immediate subordinate.; Decentralisation
– It has wide scope as it implies extension of delegation
to the lowest level of management.
5. Status: Delegation – It is a process followed to share
tasks.; Decentralisation – It is the result of the policy
decision of the top management.
Importance of Decentralisation TC-RIGD
1. Relief to the top management: It gives relief to the top
management as, when the subordinates are given the
freedom to act, the top management gets more time to
devote on important policy decisions rather than
handling operational decisions.
2. Initiative amongst subordinates: It develops initiative
subordinates by promoting self reliance and confidence
among them. This is because when lower managerial
levels are given freedom to take their own decisions they
learn to depend on their own judgement.
3. Talent for the future: It develops managerial talent for
the future by giving the subordinates a chance to prove
themselves, thus, creating reservoir of qualified
manpower to fill up challenging positions in future.
4. Growth: It facilitates growth by fostering competition
amongst the departments leading to increase in
productivity, thereby generating to higher profits which
can be used for growth and expansion.
5. Decision-making: It helps in quick decision making
since decisions are taken at the points of action. There is
no requirement for approval from many levels. There are
also less chances of information getting distorted as it
to go through many levels.
6. Control: It leads to better control by evaluating performance
at each level of management. The departments can be held
accountable for their results.
Key Terms
Organising – Organising is the process of defining and grouping
the activities of tshe enterprise and establishing authority
relationships among them.
Departmentalisation – Once work has been divided into small
and manageable activities then those activities which are similar
in nature are grouped together. This grouping process is called
departmentalisation.
Organisation structure – The organisation structure can be
defined as the framework within which managerial and operating
tasks are performed.
Span of management – It refers to the number of subordinates
that can be effectively managed by a superior.
Functional structure – A functional structure is an organisational
design that groups similar or related functions/jobs together e.g.
marketing, finance, production etc.
Divisional structure – A divisional structure is the organisation
structure which comprises of separate business units or divisions.
Generally, manpower is grouped on the basis of different products
manufactured. For example, a large company may have divisions
like cosmetics, clothing etc.
Formal organisation – It refers to the organisation structure which
is designed by the management to accomplish a particular task. It
specifies clearly the boundaries of authority and responsibility and
there is a systematic coordination among the various activities to
achieve organisational goals.
Informal organisation – It is a network of personal and social
relations not established or required by the formal organisation
but arising spontaneously as people associate with one another.
Delegation – It refers to the transfer of authority from a superior
to a subordinate, the entrustment of responsibility and the
creation of accountability for performance, which helps a
manager to extend his area of operations.
Authority – Authority refers to the right of an individual to
command his subordinates and to take action within the scope of
his position.
Responsibility – Responsibility is the obligation of a subordinate
to properly perform the assigned duty.
Accountability – Accountability implies being answerable for the
final outcome of the assigned task.
Decentralisation – It refers to systematic delegation of authority
through all the levels of management and in all the departments
except that which can be exercised only at central points.
Question 1
Samir Gupta started a telecommunication company,
‘Donira Ltd.’ to manufacture economical mobile phones
for the Indian rural market with 15 employees. The
company did very well in its initial years. As the product
was good and marketed well, the demand of its products
went up. To increase production the company decided to
recruit additional employees. Samir Gupta, who was
earlier taking all the decisions for the company had to
selectively disperse the authority. He believed that
subordinates are competent, capable and resourceful and
can assume responsibility for effective implementation of
their decisions. This paid off and the company was not
only able to increase its production but also
expanded its product range.
(a) Identify the concept used by Samir Gupta through
which he was able to steer his company to greater
heights.
(b) Also explain any three points of importance of this
concept. (CBSE 2015) (4 marks)

Answer 1
(a) Decentralisation
(b) Importance of Decentralisation (Explain any three)

Question 2
Aman Chadha started ‘Bulls Eyes’ a company for
providing cyber security solutions to businesses. Its
objective is to prevent, detect and respond to cyber
attacks and protect critical data. He was a hardworking
software engineer and an expert in cyber security. His
reputation grew by leaps and bounds as he was not only
a person of integrity but also did his work with utmost
honesty and sincerity. The business started growing day
by day. He was delighted when he was offered a big
project by the Ministry of Defence. While working on
the project, he found that the volume of work made it
impractical for him to handle all the work by himself
He decided to expand the team. The company maintained a
close liaison with a local engineering college. During a
campus placement, Ishan and Vrinda were appointed to
work for the new project.
He found the new employees capable, enthusiastic and
trustworthy. Aman Chadha was thus, able to focus on
objectives and with the help of Ishan and Vrinda, the project
was completed on time. Not only this Aman Chadha was
also able to extend his area of operations. On the other
hand, Ishan and Vrinda also got opportunities to develop and
exercise initiative.
(i) Identify and briefly explain the concept used by Aman
Chadha Chadha in the above case which helped him
in focusing on objectives.
(ii) Also, state any four points of importance of the
concept identified in (i) above.

Answer 2
(i) Delegation (give the meaning)
(ii) Importance of delegation of authority:
(Explain any four)

Question 3
The manager of Sudha Industries is overburdened with
routine work and is unable to concentrate on core
issues of the company. The overcome this problem, he
entrusted some of his responsibility and authority to his
immediate subordinate to share some of his routine
work. Which concept of management is used by the
manager? (1 mark)

Answer 3
Delegation

Question 4
Shreya Ltd. has been awarded recently with the ‘Best
Employer of the Year Award’. The company has believed
in the ideas and suggestions of its employees. There is
selective dispersal of decision making authority at all
levels. There is no delay in delivery of orders to
customers due to prompt decisions taken by employees.
Identify the concept of management followed by the
company. (1 mark)

Answer 4
Decentralisation

Question 5
A company X limited manufacturing cosmetics, which
has enjoyed a pre-eminent position in business, has
grown in size. Its business was very good till 1991. But
after that, new liberalised environment has seen entry of
many MNC’s in the sector. With the result the market
share of X limited has declined. The company had
followed a very centralised business model with
Directors and divisional heads making even minor
decisions. Before 1991 this business model had served
the company very well as consumers had no choice. But
now the company is under pressure to reform.
What organisation structure changes should the
company bring about in order to retain its market
share? How will the changes suggested by you help the
firm? Explain any three points. (NCERT) (1 mark)

Answer 5
The top management of X limited should apply the policy
of ‘Decentralisation’ (Explain any three importance)

Question 6
Anoop Gaur started ‘Cat’s Eye’, a company for providing
cyber security solutions to businesses. Its objective was
to prevent, detect, respond to cyber attacks and protect
critical data. He was a hardworking software engineer and an
expert in cyber security. His reputation grew by leaps and
bounds as he was not only a person of integrity but also did
his work with utmost honesty and sincerity. The business
started growing day by day. He was delighted when he was
offered a big project by the Ministry of Science and
Technology. While working on the project he found that the
volume of work made it impractical for him to handle all the
work by himself.Therefore he decided to expand the team.
The company maintained a close liaison with an engineering
college in the State. During a campus placement, Aarav and
Pranshi were appointed to work for the new project. He
found the new employees capable, enthusiastic and
trustworthy. Anoop Gaur was thus, able to focus on the
objectives and with the help of Aarav and Pranshi, the
project was completed on time. Not only this, Anoop
Gaur was also able to extend his area of operations. On
the other hand, Aarav and Pranshi also got opportunities
to develop and exercise initiative.
(a) Identify and briefly explain the concept used by
Anoop Gaur in the above case which helped him in
focusing on objectives.
(b) Also, explain any four points of importance of the
concept identified in part (a). (6 marks)

Answer 6
Delegation (Explain its importance – any four points)

Question 1
Which of the following is not an element of delegation?
(a) Accountability
(b) Authority
(c) Responsibility
(d) Informal organisation

Answer 1
(d) Informal organisation

Question 2
It refers to the right to take decisions inherent in a
managerial position to tell people what to do and expect
them to do it. Identify the concept.

Answer 2
Authority

Question 3
It arises from a superior-subordinate relationship wherein
the subordinate is bound to perform the duty assigned to
him by his superior. Identify the concept.

Answer 3
Responsibility

Question 4
Which of the following is the ideal situation?
(a) Authority > Responsibility
(b) Authority = Responsibility
(c) Authority < Responsibility

Answer 4
(b) Authority = Responsibility

Question 5
For delegation to be effective, it is essential that
responsibility should be accompanied with necessary
________. (Choose the correct alternative)
(a) Authority
(b) Manpower
(c) Incentives
(d) Promotions

Answer 5
(a) Authority

Question 6
Decentralisation explains the manner in which decision
making authority is pushed down the _____.

Answer 6
Chain of command

Question 7
When decisions taken by the lower levels are numerous
as well as important, an organisation is greatly _______.
(centralised/decentralised).

Answer 7
Decentralised

Question 8
An organisation is ______ (centralised/decentralised)
when decision making authority is delegated.

Answer 8
Decentralised

Question 9
Complete centralisation would imply concentration of
all decision making functions at the _______.
(a) lower level of the management hierarchy
(b) apex of the management hierarchy
(c) middle level management
(d) None of these

Answer 9
(b) apex of the management hierarchy

Question 10
A manager must delegate authority if ______________.

Answer 10
he desires to meet the organisational goals, focus on
objectives and ensure that all work is accomplished

Question 11
____________ refers to the downward transfer of
authority from a superior to a subordinate.

Answer 11
Delegation

Question 12
Delegation is a pre-requisite to the efficient functioning
of an organisation because __________.

Answer 12
it enables a manager to use his time on high priority
activities. It also satisfies the subordinate’s need for
recognition and provides them with opportunities to
develop and exercise initiative.

Question 13
“Delegation does not mean abdication.” What does it
mean?

Answer 13
It means the manager shall still be accountable to the
same extent for the performance of the assigned tasks,
before delegation.

Question 14
__________ reduces successively as we go down the
corporate ladder.
(Authority/Responsibility/Accountability)

Answer 14
Authority

Question 15
As an organisation grows in size and complexity, there is
a tendency to move towards decentralised decision-
making because _____________.

Answer 15
in large organisations employees who are directly and
closely involved with certain operations tend to have
more knowledge about them than the top management.

Question 16
Decentralisation should be applied with caution as
__________. (Complete the sentence).

Answer 16
It can lead to organisational disintegration if departments
start to operate on their own guidelines which may be
contrary to the interest of the organisation.

Question 17
In a decentralised organisation, there is no need for
supervision over the activities of a subordinate.
(True/False)

Answer 17
False: Decentralisation diminishes the amount of direct
supervision exercised by a supervisor over the
activities of a subordinate as they are given the
freedom to act and decide within the prescribed
limits. However, personal/direct supervision is
replaced by other forms of control only such as
return on investments, etc.

Question 18
Decentralisation is _____________(least/greatest)
when checking required on decisions taken by lower
levels of management is least.

Answer 18
Greatest.

Question 19
In a decentralised organisation, one of the challenges is
the accountability of performance. In response to this
challenge, better control systems are being evolved by
the corporate enterprises. Name any two such control
systems.

Answer 19
(i) Balance score card
(ii) Management Information system

Question 20
Centralisation refers to _________.
(a) Retention of decision making authority
(b) Dispersal of decision making authority
(c) Creating divisions as profit centers
(d) Opening new centers or branches

Answer 20
(a) Retention of decision making authority

Question 21
Which of the following is not an element of the process
of delegation? (Choose the correct alternative)
(a) Creation of an obligation
(b) Granting of authority
(c) Freedom from responsibility
(d) Assignment of duties.

Answer 21
(c) Freedom from responsibility

Question 22
A manager has kept all right of decision-making with
himself. Each and every employee has to come to him
for orders again and again. Identify the concept of
management not followed by the manager.

Answer 22
Delegation

Question 23
“A manager is of the view that he is not responsible for
the quality of work that he has delegated to his
subordinate.” Do you agree with his viewpoint?

Answer 23
No, because delegation does not mean abdication. The
manager shall still be accountable for the performance
of the assigned tasks.

Question 24
Name the concept of management which helps a
manager to extend his area of operations as without it,
his activities would be restricted to only what he himself
can do.

Answer 24
Delegation

Question 25
It determines the superior-subordinate relationship
wherein the superior communicates his decision to the
subordinate, expecting compliance from him. Identify the
concept.

Answer 25
Authority

 Concept and Importance of Staffing
 Staffing as a part of Human Resource Management
— Concept
 Staffing Process
 Recruitment Process
 Selection — Process
 Training and Development — Concept and
Importance, Methods of Training — On-the-Job
and Off-the-Job: Vestibule Training,
Apprenticeship Training and Internship Training
Concept and Importance of
6.1
Staffing
Meaning of Staffing
In any organisation, there is a need for people to perform
work. The staffing function of management fulfills this
requirement and finds the right people for the right
job.
Basically, staffing fills the positions as shown in the
organisation structure.
After planning and selection of the organisation
structure, the next step in the management process is
to fill the various posts provided in the organisation.
This is termed as the management of 'staffing' function.
In the simplest terms, staffing is ‘selecting right person
for the right job’.
It begins with workforce planning and includes different
other function like recruitment, selection, training,
development, promotion, compensation and performance
appraisal of work force.
Staffing: Selecting right person for the right job

Definitions of Staffing
 Staffing is that part of the process of management which
is concerned with obtaining, utilising and maintaining a
 Staffing, as a process, includes acquisition, retention,
development, performance appraisal, promotion and
compensation of the most important resource of an
organisation, that is, its human capital.
Today,Topstaffing
Tip
may involve any combination of employees including
daily wagers, consultants and contract employees.
Staffing recognises the importance of every single
person employed by an organisation as it is the
individual worker, who is the ultimate performer.
Staffing is the managerial function of filling and
keeping filled the positions in the organisation
structure. This is achieved by, first of all, identifying
requirement of workforce, followed by recruitment,
selection, placement, promotion, appraisal and
development of personnel, to fill the roles designed
into the organisation structure.
 In a new enterprise, the staffing function follows the
planning and organising functions.
After deciding what is to be done, how it is to be
done and after creation of the organisation structure,
the management is in a position to know the
human resource requirements of the enterprise at
different levels. Once the number and types of
personnel to be selected is determined, management
starts with the activities relating to recruiting,
selecting and training people, to fulfill the
requirements of the enterprise.
 In an existing enterprise, staffing is a continuous
process. This is because new jobs may be created
and some of the existing employees may leave the
organisation.
Importance of Staffing
Human resources are the most important asset of an
organisation. The ability of an organisation to achieve
its goal depends upon the quality of its human
resources. If right kind of employees are not available,
it will lead to wastage of materials, time, effort and
energy, resulting in lower productivity and poor quality
of products. The enterprise will not be able to sell its
products profitably. It is, therefore, essential that right
kind of people must be available in right number at the
right time. They should be given adequate training so
that wastage is minimum.
Thus, staffing is a very important managerial function.
No organisation can be successful unless it can fill and
keep filled the various positions provided for in the
structure with the right kind of people.
Staffing is the most fundamental and critical drive of

organisational performance: The right people can help you take
your business to the top; the wrong people can break your business.
Proper staffing ensures the following benefits to the
organisation:
1. Obtaining competent personnel
It helps in discovering and obtaining competent personnel
for various jobs.
2. Higher performance
It ensures higher performance, by putting right person
on the right job.
3. Continuous survival and growth
It ensures the continuous survival and growth of the
enterprise through the succession planning for managers.
4. Optimum utilisation of human resources
It helps to ensure optimum utilisation of the human
resources. By avoiding overmanning, it prevents under-
utilisation of personnel and high labour costs. At the
same time it avoids disruption of work by indicating in
advance the shortages of personnel.
It ensures higher performance, by putting right person
on the right job.
5. Improves job satisfaction
It improves job satisfaction and morale of employees
through objective assessment and fair reward for their
contribution.
TheTop Tip
staffing function has assumed greater importance these days
because of: • rapid advancement of technology, • increasing size of
organisation and • complicated behaviour of human beings.
RECAP
Concept of Staffing
Staffing function of management is concerned with obtaining,
utilising and maintaining a satisfactory and satisfied workforce.
It is the process of filling and keeping filled, the positions
in the organisation structure. • In an existing enterprise,
staffing is a continuous process because new jobs may be
created and some of the existing employees may leave the
organisation. • The staffing function has assumed greater
importance these days because of rapid advancement of
technology, increasing size of organisation and complicated
behaviour of human beings.
Importance of Staffing SHO CM
1. It helps in obtaining ompetent personnel for various
jobs.
2. It ensures igher performance by putting right person
on the right job.
3. It ensures continuous urvival and growth of business
through succession planning for managers.
4. It ensures ptimum utilisation of human resources.
It avoids disruption of work by indicating in advance the
shortage of personnel.
5. It improves job satisfaction and orale of employees
through objective assessment and fair reward for their
contribution.
Question 1
___________ is that part of the process of management
which is concerned with obtaining utilising and maintaining
a satisfactory and satisfied workforce.

Answer 1
Staffing

Question 2
___________ recognises the importance every single
person employed by an organisation.
(a) Organising
(b) Staffing
(c) Directing
(d) Motivation

Answer 2
(b) Staffing

Question 3
The staffing function of management always follows the
planning and organising function.
True/False?

Answer 3
False: It is only in case of a new enterprise that the
staffing function follows the planning and organising
functions. However, in an existing enterprises, staffing
is a continuous process because new jobs may be
created and some of the existing employees may
leave the organisation.

Question 4
Staffing is a continuous process because ___________.

Answer 4
New job may be created and some of the existing
employees may leave the organisation.

Question 5
Staffing is the most fundamental and critical drive of
organisational performance because __________.

Answer 5
Human resources are the foundation of any business the
right people can help to take a business to the top the
wrong people can break the business.

Question 6
The staffing function has assured greater importance
these days because of _____________.

Answer 6
(i) Rapid advancement of technology, (ii) Increasing size of
organisation, and (iii) Complicated behaviour of human
beings.

Question 7
No organisation can be successful unless it can fill and
keep filled the various positions provided for in the
organisational structure with the right kind of people.
Identify the aspect of the management process
highlighted above.

Answer 7
Staffing

Question 8
Staffing ensures the continuous survival and growth of the
enterprise through ______________.

Answer 8
The succession planning for managers

Question 9
Staffing improves job satisfaction and morale of employees
through _______________.

Answer 9
Objective assessment and fair reward for their
contribution

Question 10
Staffing function must be performed efficiently by all
organisation because ________________.

Answer 10
If right kind of employees are not available it will lead to
wastage of material, time, effort and energy, resulting in
lower productivity and poor quality of product. The
enterprises will not be able to sell its products profitably.

Question 11
Staffing is closely linked to organising because
________________.
(complete the sentence)

Answer 11
It includes filling and keeping filled the positions in the
organisation structure, which is considered to be the
outcome of the organising process.

Question 12
_______________ function of management deals with
the human element of management.

Answer 12
Staffing

Question 13
Staffing function has assumed greater importance these
days because of _______.
(a) rapid advancement of technology
(b) increasing size of organisation
(c) complicated behaviour of human beings
(d) All of these

Answer 13
(d) All of these

Question 14
Name the part of the management process which is
concerned with obtaining, utilising and maintaining a

Answer 14
Staffing

Question 1
Mr. Ali Mohammad, the CEO of Super Ltd. believes that
human resource is the most important asset of the firm.
He believes that no organisation can be successful unless
it can fill and keep filled the various positions provided
for in the structure with the right kind of people.
Identify the function of management being discussed
above and state the benefits to the organisation that its
proper application in the firm will ensure.
(6 marks)
Answer 1
Staffing
Proper staffing ensures the following benefits to the
organization:
(i) helps in discovering and obtaining competent
personnel for various jobs;
(ii) makes for higher performance, by putting right
person on the right job;
(iii) ensures the continuous survival and growth of the
enterprise through the succession planning for
managers;

(iv) helps to ensure optimum utilisation of the human
resources. By avoiding overmanning, it prevents
under-utilisation of personnel and high labour costs.
At the same time it avoids disruption of work by
indicating in advance the shortages of personnel; and
(v) improves job satisfaction and morale of employees
through objective assessment and fair rewarding of
their contribution.

6.2 Staffing Process
1. Estimating Manpower Requirements
Staffing function in the management process is the
timely fulfillment of the manpower requirements
within an organisation. These requirements may arise
in case of starting a new business or expanding the
existing one or they may arise as a matter of the need
for replacing those who quit, retire or are transferred or
promoted from or are fired from the job.
Estimating manpower requirements means knowing
how many persons are needed and of what type
(i.e., educational qualification, skills, prior
experience, personality characteristics, etc.) in the
organisation to fill the various job positions created
while designing the organisational structure.
Understanding the manpower requirements would
necessitate workload analysis on the one hand and
workforce analysis on the other.
(a) Workload Analysis
Workload Analysis is an assessment of the number
and types of human resources necessary for the
performance of various jobs and accomplishment
of organisational objectives.
(b) Workforce Analysis
Workforce Analysis is an assessment of the
number and type of human resources available in
the organisation.
Workload analysis and workforce analysis would reveal
whether the organisation is understaffed, overstaffed
or optimally staffed. In fact, this exercise would form
the basis of the subsequent staffing actions.
 A situation of over-staffing somewhere would
necessitate employee removalor transfer elsewhere.
Otherwise, there would be ‘more play, less work’ in
the organisation.
 On the other hand, a situation of under-staffing
would necessitate the starting of the recruitment
process. However, before starting the recruitment
process, it is important to translate the manpower
requirements into specific job description and the
candidate profile — the desired qualifications,
experience, personality characteristics and so on.
This information becomes the base for looking for
potential employees.
Over-staffing: more play, less work

2. Recruitment
The information generated in the job description and
the candidate profile may be used for developing the
‘situations vacant’ advertisement. Advertising is
commonly part of the recruitment process, and can
occur through several means, through newspapers,
through professional publication, through a job center,
through campus interviews, etc. The advertisement
may also be displayed on the factory/ office gate or else
it may be published in print media or flashed in
electronic media.
The requisite positions may be filled up from within
the organisation or from outside. Thus, there are two
sources of recruitment – Internal and External.
Both internal and external sources of recruitment may
be explored. Internal sources (e.g. transfers and
promotions) may be used to a limited extent. For fresh
talent and wider choice external sources (e.g. advertisements,
management consultants, internet, etc.) are used.
Recruitment may be defined as the process of
searching for prospective employees and stimulating
them to apply for jobs in the organisation.
Recruitment is a positive process as it seeks to attract
suitable applicants to apply for available jobs in the
organisation. There is no rejection in this process.
Definitions of Recruitment
 Recruitment refers to the process of finding possible
candidates for a job or a function.
 Recruitment involves locating the potential candidate
or determining the sources of potential candidates.
Recruitment Process
The various activities/steps involved with the process of
recruitment:
1. Identification of the different sources of labour supply
2. Assessment of their validity
3. Choosing the most suitable source(s)
4. Inviting applications from the prospective
candidates, for the vacancies.
Objective of Recruitment
The objective of recruitment is to identify and attract
potential employees with the necessary characteristics
or qualification, in the adequate number for the jobs
available. It locates available people for the job and
invites them to apply for the job in the organisation.
In other words, the essential objective of recruitment is
to create a pool of the prospective job candidates.
3. Selection
Selection is the process of identifying and choosing
the best person out of a number of prospective
candidates for a job.
Definitions of Selection
 “Selection is the process of choosing from among the
candidates from within the organisations or from the
outside, the most suitable person for the current position
or for the future position..” — Dale Yoder
 “Selection is a managerial decision making process as to
predict which job applicants will be successful if hired.”
— David and Robbins
 “Selection is the process of differentiating between
applicants in order to identify and hire those with a
greater likelihood of success in a job..” — Stone
Selection is the process of choosing from among the

pool of the prospective job candidates developed at the
stage of recruitment. It is a negative process because the
candidates are required to take a series of employment
tests and interviews. At every stage, many are eliminated
and a few move on to the next stage until the right type
is found. Those who are able to successfully negotiate
the test and the interviews are offered an employment
contract, a written document containing the offer of
employment, the terms and conditions and the date of
joining.
Even in case of highly specialised jobs where the choice
space is very narrow, the rigour of the selection process
serves two important purposes:
(i) It ensures that the organisation gets the best
among the available.
(ii) It enhances the self-esteem and prestige of those
selected and conveys to them the seriousness with
which the things are done in the organisation.
Selection process may start right from the screening of
the applications. It may continue even after the offer of
employment, acceptance and joining of the candidate.
It is so because the process of selection, like any other
managerial decision, involves judgment about the
performance potential of the candidate. The effectiveness
of the selection process would ultimately be tested in
terms of on-the-job of the chosen person.
4. Placement and Orientation

Placement
Joining a job marks the beginning of socialisation of the
employee at the workplace. This is called 'Placement'.
Placement refers to the employee occupying the
position or post for which he/she has been selected.
Orientation
The employee is given a brief presentation about the
company and is introduced to his superiors, subordinates
and the colleagues. He is taken around the workplace
and given the charge of the job for which he has been
selected. This process of familiarisation (called
'Orientation') is very crucial and may have a lasting
impact on his decision to stay and on his job
performance.
Orientation is introducing the selected employee
to other employees and familiarising him/her with
the rules and policies of the organisation.
5. Training and Development
Training and Development is an attempt to improve the
current or future employee performance by increasing
an employee’s ability to perform through learning,
usually by changing the employee’s attitude or
increasing his or her skills and knowledge.
What people seek is not simply a job but a career.
Everyone must have the opportunity to rise to the top.
The best way to provide such an opportunity is to
facilitate employee training. Organisations have either
in-house training centers or have forged alliances with
training and educational institutes to ensure continuing
learning of their employees. The organisations too
benefit in turn. If employee motivation is high, their
competencies are strengthened, they perform better and
thus, contribute more to organisational effectiveness
and efficiency. By offering the opportunities for career
advancement to their members, organisations are not
only able to attract but also retain its talented people.
In some organisations the term Learning and Development

is used instead of Training and Development in order to
emphasise the importance of learning for the individual
and the organisation. In other organisations, the term
Human Resource Development is used.
Training
Training is the process by which aptitudes, skills
and abilities of employees to perform specific jobs
are increased. It is a process of learning new skills
and application of knowledge. It attempts to
improve the performance of employees on the
current job or prepare them for any intended job.
Development
Development refers to the learning opportunities
designed to help employees grow. It means growth
of an individual in all respects.
 Top Tip
In case the candidate is selected only on the basis of
academic qualifications and aptitude for learning, say
he/she is selected by a Business Process Outsourcing (BPO)
unit by virtue of being extrovert and well-versed in English
speaking, he/she needs to be trained in the relevant
business processes, telephone conversation etiquettes as
well as diction adaptation before actual placement. Even
whilst on the job, the employees need training for
upgradation of knowledge and skills (i.e. training) and for
preparing for higher responsibilities (i.e. development).
Training Development
It is a process of increasing It is a process of learning and growth.
knowledge and skills.
It is to enable the employee to do the It is to enable the overall growth of
job better. the employee.
Training is a job-oriented process. Development is a career-oriented
process.
Training is a short-term process. Development is an on-going process.
It includes training also.
6. Performance Appraisal
After the employees have undergone a period of training
and they have been on the job for some time, there is a
need to evaluate their performance. All organisations
have some formal or informal means of appraising their
employee’s performance.
Performance appraisal means evaluating an
employee’s current and/or past performance as
against certain predetermined standards.
The employee is expected to know what the standards
are and the superior is to provide the employee
feedback on his/her performance. The performance
appraisal process, therefore, will include:
(a) defining the job,
(b) appraising performance and
(c) providing feedback.
7. Promotion and Career Planning
Promotions refer to being placed in positions of
increased responsibility. They usually mean more
pay, responsibility and job satisfaction.
It becomes necessary for all organisations to address
career related issues and promotional avenues for their
employees because by offering the opportunities for
career advancement to their members, organisations
are not only able to attract but also retain its talented
people. Therefore, managers need to design activities to
serve employees’ long-term interests also. They must
encourage employees to grow and realise their full
potential. Promotions are an integral part of people’s
career.
8. Compensation
Compensation refers to all forms of pay or rewards
going to employees. It may be in the form of direct
financial payments like wages, salaries, incentives,
commissions and bonuses and indirect payments
like employer paid insurance and vacations.
Types of direct financial payments
1. Time based wage plan: A time based plan means
salary and wages are paid either daily, weekly or
monthly or annually.
2. Performance based wage plan: Performance based
plans means salary/wages are paid according to
piecework. For example, a worker may be paid according
to the number of units produced by him/her.
Methods to calculate the compensation
Methods to calculate the compensation under various
incentive plans to reward performance:
1. Certain pay plans can be created which are a
combination of time based pay plus incentives for
higher performance.
2. Various plans may be formulated for paying employees
time based wage or salary as well as performance
based financial incentives and bonuses, and
employee benefits.
Factors which influence the design of any pay
plan/compensation plan
(i) Legal factors (labour laws)
(ii) Labour union
(iii) Company policy
(iv) ‘Equity’ principle
 Top Tip
There are three main aspects of staffing: Recruitment, Selection and
Training.
It needs to be kept in mind that several factors such as supply and

demand of specific skills in the labour market, unemployment rate,
labour market conditions, legal and political considerations, company’s
image, policy, human resource planning cost, technological developments
and general economic environment etc., will influence the way
recruitment, selection and training will be actually carried out.
RECAP
Steps in Staffing Process ERSPTP2C

1. stimation of manpower requirement. It involves
determining the number and type of employees required.
It would necessitate workload analysis and workforce
analysis. Workload Analysis would enable an assessment
of the number and types of human resources necessary
for the performance of various jobs. Workforce Analysis is
an assessment of the number and type of human
resources available for the performance of various jobs
and accomplishment of organisational objectives.
2. ecruitment is the process of searching for prospective
employees and stimulating them to apply for jobs in the
organisation. Recruitment is a positive process because
there is no rejection. Aim/objective is to attract more
and more candidates for the vacant job.
3. election is defined as the process of identifying and
choosing the best person(s) out of a number of
prospective candidates for the job. Selection is a negative
process because the candidates are required to take a
series of employment tests and interviews. At every
stage, many are eliminated and a few move on to the
next stage until the right type is found.
4. lacement and Orientation: Placement refers to
occupying of position by the employee for which he has
been selected. Orientation refers to introducing the
selected employee to other employees and familiarizing
him with the rules and policies of the organization.
5. raining and Development: Training is the process of
improving the skills and knowledge of employees to do
the current job. It is to enable the employee to do the job
better. It is a job-oriented process. Development means
to acquire skills and competence for handling higher
jobs in future. It is to enable the overall growth of the
employee. It is a career-oriented process.
6. erformance Appraisal: Performance Appraisal means
evaluating an employee’s current and/or past performance
as against certain predetermined standards.
7. romotion and Career Planning: Promotion means
shifting/placing an employee to a higher position
carrying higher responsibility, facilities, status and pay.
Career planning includes all activities associated with
promotion of employees.
8. ompensation refers to all forms of pay or rewards to
employees. It may be in the form of direct financial
payments like wages, salaries, incentives, commissions
and bonuses and indirect payments like employer paid
insurance and vacations. Direct financial payments are
of two types: (a) Time based wage plan (b) Performance
based wage plan. Factors which influence the design of
any pay plan/compensation plan: (i) Time devoted by
the employee (ii) Performance of the employee (iii)
Legal factors (labour laws) (iv) Labour union (v)
Company policy (vi) ‘Equity’ principle.
Question 1
Name the function in the management process which is
concerned with the timely fulfillment of manpower
requirements within an organisation.

Answer 1
Staffing

Question 2
How is manpower requirement in an organisation
estimated?

Answer 2
On the basis of various job positions created while
designing the organisation structure.

Question 3
Column I Column II
(i) An assessment of the number of and (a) Workforce analysis
types of human resources necessary for
the performance of various jobs and
accomplishment of organisational
objectives.
(ii) An analysis that would reveal the number (b) Workload anaylsis
and type of human resources available.
(iii) Assessment, evaluation and final match. (c) Training
(iv) Acquainting and skill development (d) Selection

Answer 3
(i) — (b),(ii) — (a),(iii) — (d),(iv) — (c)

Question 4
Operationally, understanding the manpower requirements
would necessitate workload analysis on the one hand and
workforce analysis on the other. Such an exercise would
reveal _________________.

Answer 4
Whether the organisation is understaffed, over staff or
optimally staffed.

Question 5
Under staffing is not good for an organisation; however,
over-staffing is a desirable situation.
(True/False)

Answer 5
False: Neither under-staffing nor over-staffing is a
desirable situation.

Question 6
A situation of over staffing somewhere in an organisation
would necessitate ______________.

Answer 6
Employee removal or transfer elsewhere.

Question 7
A situation of under staffing would necessitate the starting
of the _________ process.

Answer 7
Recruitment

Question 8
Tina is HR manager of Vipin Garments Ltd. The demand
for the company’s products in on the rise, whereas the
company is unable to meet the rising demand. Tina
conducts workload and workforce analysis and finds that
the organisation is under-staffed, which is the reason
behind less production of output. What step or action,
Tina should undertake before starting the recruitment
process ?

Answer 8
To translate the manpower Recruitments into specific
job description and the desirable profile of its
occupant — the desired qualifications, experience,
personality characteristics, etc. This information
becomes the base for looking for potential employees.

Question 9
The ______________ step of staffing process involves
locating the potential. Candidate and inviting them to
apply for the job in the organisation.

Answer 9
Recruitment

Question 10
_________________ (i) is the process of choosing
from among the pool of the prospective job candidates
developed at the stage of (ii) _________________.
(Recruitment/Selection)
(Fill up the blanks with correct options)

Answer 10
(i) Selection
(ii Recruitment

Question 11
In the staffing process _____________ precedes
the ____________ of a right candidate for the
given position in the organisation.

Answer 11
Recruitment ; Selection

Question 12
_______________ seeks to attract suitable applicants
to apply for available jobs.

Answer 12
Recruitment

Question 13
In the selection process, those who are able to
successfully negotiate the test and the interviews are
offered employment contract, a written document
containing the offer of employment, the terms and
conditions and the date of joining.

Answer 13
Employment contract

Question 14
In case the candidates are selected only on the basis of
academic qualifications and aptitude for learning they
might need specific training skills. For example, if one is
selected by a business process outsourcing (BPO) unit
by virtue of being extrovert and well-versed in English
speaking one needs to be trained in the relevant
business processes, telephonic conversation etiquettes
as well as diction adaptation. In such a case, after
recruitment and selection, what step will come first ?
(Placement/Training)
(Choose the correct option)
Answer 14
Training

Question 15
What people seek is not simply a job but a career.
Everyone must have the opportunity to rise on the top.
The best way to provide such an opportunity is through
_________.
(a) Training and development
(b) Promotion and career planning
(c) Both (a) and (b)
(d) Compensation

Answer 15

Question 16
Name the two sources of employee training.

Answer 16
(i) In-house training centers
(ii) Forged alliances with training and educational
institutes

Question 17
After the employees have undergone a period of training
and they have been on the job for some time, there is a
need to evaluate their performance through _________.

Answer 17
Performance appraisal

Question 18
________________ means evaluating an employee’s
current and/or past performance as against certain pre-
determined standards.
(a) Controlling
(b) Supervision
(c) Control by exception
(d) Performance appraisal

Answer 18
(d) Performance appraisal

Question 19
The performance appraisal process includes:
(a) Defining the job
(b) Evaluating performance
(c) Providing feedback
(d) All of these

Answer 19
(d) All of these

Question 20
“It becomes necessary for all organisations to address
career related issues and promotional avenues for their
employees. Managers must encourage employees to grow
and realise their full potential.”
Which of the following concept is highlighted above?
(b) Promotion and career planning
(c) Directing
(d) Motivation
Answer 20
(b) Promotion and career planning.

Question 21
In different organisations, there are different ways to
prepare pay plans for their employees depending on the
net worth of the job. Basically the price of the job needs
to be determined. One of the step of one of the functions
of management is highlighted in the above para.
Identify the step.

Answer 21
‘Compensation’ - a step of staffing process

Question 22
Which of the following is not a direct financial payment as
a part of compensation given to employees?
(a) Wages and salaries
(b) Incentives
(c) Commission
(d) Employer paid vacations

Answer 22
(d) Employer paid vacations

Question 23
Column I Column II
(i) Payment of wages/salary either (a) Performance based direct
daily, weekly or monthly or annually financial payment
(ii) Payment of wages/salary and salary (b) Time based direct
according to piece work financial payment
(iii) Commission and bonuses (c) Direct financial payments
(iv) Employer paid insurance (d) Indirect financial payment

Answer 23
(i) — (b),(ii) — (a), (iii) — (c), (iv) — (d)

Question 24
Yashraj is a HR manager in Piyush Constructions Ltd. He
is paid an annual salary of `10 lakh. He is also given
company shares at a price less than the market price.
Which of the following method of compensation is used
by company to pay to its HR manager?
(a) Time based direct financial payment
(b) Performance based direct financial payment
(c) Time based pay plus incentives
(d) Time based pay as well as performance based
financial incentive.
Answer 24
(c) Time based pay plus incentives

Question 25
Roshni is an employee of Gloriya Life Insurance Ltd.,
who gets an annual salary of `8 lakh. As per the contract
of employment, Roshni has a target business turnover of
`1 crore per month. She gets turnover 10% commission
if the turnover exceeds `1 crore in any month. As a
company policy, all the employees get medical aid and
education to the children. Which of the following pay
plan is highlighted above?

(a) Time based direct financial payment
(b) Performance based direct financial payment
(c) Time based pay as well as performance based
financial incentives
(d) Time based pay plus incentives

Answer 25
(c) Time based pay as well as performance based financial
incentives

Question 26
Enumerate any four factors, other than time based and
performance based, which also influence the design of any
pay plan.

Answer 26
Legal factors (labour laws), labour union, company policy
and 'equity' principle

Question 27
Enumerate any two factors that need to be kept in mind
which influence the way recruitment, selection and training
will be actually carried out.

Answer 27
(i) Supply and demand of specific skills in the labour
market
(ii) Unemployment rate
(iii) Labour market conditions
(iv) Legal and political considerations
(v) Company’s image, policy
(vi) Human resource planning cost
(vii) Technological development
(viii) General economic environment

Question 28
Which of the following is not a component of staffing?
(a) Recruitment
(b) Advertising
(c) Selection
(d) Training

Answer 28
(b) Advertising

Question 29
While designing the organisational structure, managers
undertake an analysis of the decisions and the decision-
making levels, activities as well as relationship among
them with a view to evolving the horizontal and vertical
dimensions of the structure. Thus, various job positions
are created. Clearly, performance of each job necessitates
the appointment of a person with a specific set of
educational qualifications, skills, prior experience and so
on.
Identify the step of staffing function of management
highlighted above.
Answer 29
Estimating the manpower requirements

Question 30
‘‘It covers not only those activities which improve job
performance but also those which bring about growth of
the personality, help individuals in the progress towards
maturity and actualisation of their potential capacities so
that they become not only good employees but better
men and women.’’
Identify the step of staffing process highlighted above.

Answer 30
Training and development

Question 31
‘‘What people seek is not simply a job but a career.
Everyone must have the opportunity to rise to the top. The
best way to provide such an opportunity is to facilitate
employee learning.’’
Identify the step involved in the staffing process highlighted
in the above statement.

Answer 31
Training and Development

Question 32
Column I Column II
(a) Identifying and attracting (i) Recruitment
prospective employees.
(b) Assessment, evaluation and final (ii) Training
match.
(c) Acquainting and skill (iii) Selection
development.

Answer 32
(a) — (i), (b) — (iii, (c) — (ii)

Question 33
“Some learning opportunities are designed and delivered
to improve skills and abilities of employees whereas some
others are designed to help in the growth of individuals in
all respects.” Identify the two concepts.

Answer 33
Training: ‘Some learning opportunities are designed and
delivered to improve skills and abilities of employees.’
Development: ‘Some others are designed to help in the
growth of individuals in all respects.’

Question 34
________________ means determining the number and
types of personnel required to fill various positions in the
organisation.
(a) Recruitment
(b) Selection
(c) Staffing
(d) Human Resource Planning

Answer 34
(d) Human Resource Planning

Question 35
_______________ seeks to attract suitable candidates
to apply for available jobs.
(a) Human resource planning
(b) Orientation
(c) Recruitment
(d) Selection

Answer 35
(c) Recruitment

Question 36
_____________ is the process of learning and growth.
(a) Training
(b) Education
(c) Development
(d) None of these.

Answer 36
(c) Development

Question 37
_______________ refers to the learning opportunities
designed to help the employees to grow. It involves the
growth of the individuals in all respect like personality,
maturity, etc.
(a) Training
(b) Development
(c) Education
(d) Selection

Answer 37
(b) Development

Question 38
Name the concept related to: (i) searching for qualified
people. (ii) discovering the most suitable candidate to fill
the vacant job position.

Answer 38
(i) Recruitment
(ii) Selection

Question 39
Which of the following option is correct:
1. Recruitment is a positive step.
2. Selection is a negative step.
3. Both recruitment and selection are part of staffing.
(a) 1 is correct
(b) 2 is correct
(c) Both 1 & 2 are correct
(d) All are correct

Answer 39
(d) All are correct

Question 1
The IT major GIPRA is terminating the employment of
its senior managers, if after evaluating their performance
against pre-determined standards if it is found lacking.
With this disruption analysts say a large portion of the
employees may become irrelevant unless they learn new
skills and apply the knowledge to work on emerging
technologies. GIPRA is ready to facilitate employee
learning, through its in-house centers.

(a) Identify the step of one of the functions of
management involved in the above case.
(b) Identify and state the concept which will help in
deciding the number of persons required.
(c) Identify and explain the next two steps in the function
of management identified in part (a) to fulfill the
additional requirements of 200 persons.
(4 marks)

Answer 1
(a) The step of staffing function of management involved
in the case is ‘Estimating Manpower Requirements’.
(b) Workload Analysis
(c) (i) Recruitment
(ii) Selection
(Explain)

Question 2
The IT major GIPRA is terminating the employment of
its senior managers, if after evaluating their performance
against pre-determined standards if it is found lacking.
With this disruption analysts say a large portion of the
employees may become irrelevant unless they learn new
skills and apply the knowledge to work on emerging
technologies. GIPRA is ready to facilitate employee
learning, through its in-house centers.
A. Name the function of management performed by
GIPRA to maintain a satisfactory work force.

B. Identify and explain the two steps in the process of
the function of management discussed above.
C. Also state any two steps of the function of
management discussed, that the firm had to perform
before performing the above steps.

Answer 2
A. The function of management being performed by
GIPRA to maintain a satisfactory work force is
Staffing.
B. The two steps of staffing discussed above are:
(Explain)
(b) Performance Appraisal
C. Following are the two steps in the process of staffing
that the management had to perform before
performing the above steps: (Explain any two)

(a) Estimating manpower requirements
(b) Recruitment
(c) Selection
(d) Orientation and Placement

Question 3
Aakanksha, Nikita and Parishma are the owners of a
handicraft unit in the urban area of Dibrugarh in Assam,
which is involved in the manufacturing and marketing of
Sital Pati, traditional mats and Jappi (the traditional
headgear). They decided to shift this manufacturing unit
to a rural area with an objective of reducing the cost
and providing job opportunities to the locals.
They followed the functional structure in this
organisation with a view to increasing managerial and
operational efficiency.

They assessed and analysed the type and number of
employees required, keeping in mind that they had to
encourage the women, and the people with special needs
belonging to the rural area.
State the next three steps that they will have to
undertake, for obtaining a satisfied workforce for their
handicraft unit.

Answer 3
The next three steps in the process of staffing are stated
below: (i) Recruitment (ii) Selection (iii) Placement and
orientation (Explain)

Question 4
Sahil, the director of garments company, is planning to
manufacture bags for the utilisation of waste material of
one of his garments unit. He decided that his
manufacturing unit will be set up in a rural area of
Orissa where people have very less job opportunities
and labour is available at very low rate. He also thought
of giving equal opportunities to men and women. For
this he selected S. Chatterjee, Indrajeet Kaur, Aslam and
Sarabjeet as heads of Sales, Accounts, Purchase and
Production departments.

Identify and state the next two steps that Sahil has to
follow in the staffing process after selecting the above
heads.
(3 marks)

Answer 4
The next two steps that Sahil has to follow in the staffing
process are:
(a) Placement and Orientation
(b) Training and development (Explain)

Question 5
Alpha Enterprises is a company manufacturing water
geysers. The company has a functional structure with
four main functions-Production, Marketing, Finance and
Human Resource. As the demand for the product grew,
the company decided to hire more employees. Identify
the concept which will help the Human Resource
Manager in deciding the actual number of persons
required in each department.

Answer 5
Workload Analysis

Question 6
Bhagwati Enterprises is a company engaged in the
marketing of air-conditioners of a famous brand. The
company has a functional structure with the four main
functions– Purchase, Sales, Finance and Staffing. As the
demand for the product grew, the company decided to
recruit more employees. Identify the concept which will
help the Human Resource Manager to find out the
number and type of personnel available so that he could
decide and recruit the required number of persons for
each department.
Answer 6
Workforce analysis.

Question 7
Resolutions Pvt. Ltd. is a publishing company. Its book on
Business Studies for class XII is in great demand. As a
result, the employees in the marketing department are
always racing against time. The employees have to work
overtime and on holidays to cater to the demand.
Managers in the marketing department are under stress
as they have to handle more than two territories. The
work stress has led to dissatisfaction among the
employees and managers.

(a) Name and explain the step of staffing process which
has not been performed properly.
(b) State the next two stages immediately following the
step identified in part (a).

Answer 7
(a) Estimation of manpower requirement
(b)
(i) Recruitment
(ii) Selection

Question 8
A company X Ltd. is setting up a new plant in India for
manufacturing auto components. India has highly
competitive and cost-effective production base in this
sector. Many reputed car manufacturers source their
auto components from here.
X Ltd. is planning to capture about 40% of the market
share in India and also export to the tune of at least $5
million in about 2 years of its planned operations. To
achieve these targets, it requires a highly trained and
motivated workforce.

You have been retained by the company to advise it in
this matter. Suggest the company about the three main
aspects of staffing function.
(6 marks)

Answer 8
The three main aspects of staffing function are:
(i) Recruitment
The company should rely upon the external sources
of recruitment as it is setting up a new plant.
Methods of external recruitment the company should
adopt are advertisement, management consultants
and placement agencies, campus recruitment, etc. to
recruit technical, professional and managerial
personnel.

(ii) Selection
Selection process of employees will include
preliminary screening of application forms to
eliminate unqualified job-seekers; selection tests such
as intelligence test, aptitude test, etc., employment
interview to judge the candidates suitability for the
jobs, reference and background checks, selection
decision, medical examination, job offer and contract
of employment.

(iii) Training and development
The company should initiate various training
programmes to increase the knowledge and skills of
the employees so that they may handle sophisticated/
hi-tech machines and equipment, e.g. Apprenticeship
training Vestibule training, Internship, etc.

Recruitment – Internal and
6.3
External Sources
Internal Sources of Recruitment
There are two important sources of internal recruitment,
namely, transfers and promotions.
1. Transfers
It involves shifting of an employee from one job to
another, one department to another or from one
shift to another, without a substantive change in
the responsibilities and status of the employee. It
may lead to changes in duties and responsibilities,
working condition etc., but not necessarily salary.
 Transfer is a good source of filling the vacancies
with employees from over-staffed departments.
 It is practically a horizontal movement of employees.
Shortage of suitable personnel in one branch may
be filled through transfer from other branch or
department.
 Job transfers are also helpful in avoiding termination
and in removing individual problems and grievances.
 Transfers can also be used for training of employees
for learning different jobs.
At theToptimeTipof transfer, it should be ensured that the employee to be

transferred to another job is capable of performing it.
2. Promotions
Business enterprises generally follow the practice of
filling higher jobs by promoting employees from lower
jobs.
Promotion refers to shifting an employee to a
higher position, carrying higher responsibilities,
facilities, status and pay.
 Promotion is a vertical shifting of employees.
 This practice helps to improve the motivation,
loyalty and satisfaction level of employees.
 It has a great psychological impact over the
employees because a promotion at the higher level
may lead to a chain of promotions at lower levels in
the organisation.
Internal Sources of Recruitment – Merits
and Limitations
Merits Limitations
1. Motivates employees: Employees 1. Reduces scope for induction
are motivated to improve their of fresh talent: When vacancies
performance. A promotion at a are filled through internal
higher level may lead to a chain of promotions, the scope for
promotion at lower levels in the induction of fresh talent is
organisation. This motivates the reduced. Hence, complete
employees to improve their reliance on internal recruitment
performance through learning and involves danger of ‘inbreeding’
practice. Employees work with by stopping ‘infusion of new
commitment and loyalty and blood’ into the organisation.
remain satisfied with their jobs.
Also, peace prevails in the
enterprise because of promotional
avenues.
2. Simplifies the process of 2. Employees may become
selection and placement: lethargic: The employees may
Internal recruitment also simplifies become lethargic if they are sure
the process of selection and of time bound promotions.
placement. The candidates that are
already working in the enterprise
can be evaluated more accurately
and economically. This is a more
reliable way of recruitment since
the candidates are already known
to the organisation.
3. Tool of training: Transfer is a tool 3. Incomplete source: A new
of training the employees to enterprise cannot use internal
prepare them for higher jobs. Also sources of recruitment. No
people recruited from within the organisation can fill all its
organisation do not need induction vacancies from internal sources.
training. The existing staff may be
insufficient or they may not
fulfill the eligibility criteria of
the jobs to be filled.
4. Adjustment of surplus staff: 4. Spirit of competition
Transfer has the benefit of shifting hampered: The spirit of
workforce from the surplus competition among the
departments to those where there employees may be hampered.
is shortage of staff.
5. Economical: Filling of jobs 5. May reduce productivity:
internally is cheaper as compared Frequent transfers of employees
to getting candidates from external may often reduce the
sources. productivity of the organisation.
External Sources of Recruitment

The commonly used external sources of recruitment are
discussed below:
1. Direct Recruitment
Under the direct recruitment, a notice is placed on the
notice-board of the enterprise specifying the details of
the jobs available. Job-seekers assemble outside the
premises of the organisation on the specified date and
selection is done on the spot.
The practice of direct recruitment is followed usually
for casual vacancies of unskilled or semi-skilled jobs.
Such workers are known as casual or ‘badli’ workers and
they are paid remuneration on daily wage basis.
Suitability: It is suitable for filling casual vacancies
when there is a rush of work or when some permanent
workers are absent.
Advantage: This method of recruitment is very
inexpensive as it does not involve any cost of advertising
the vacancies.
2. Labour Contractors
Labour contractors maintain close contacts with
labourers and they can provide the required number of
unskilled workers at short notice. Workers are recruited
through labour contractors who are themselves employees
Disadvantage: If the contractor himself decides to
leave the organisation, all the workers employed through
him will follow suit.
3. Casual Callers
Many reputed business organisations keep a database
of unsolicited applicants in their offices. Such job-
seekers can be a valuable source of manpower. A list of
such job-seekers can be prepared and can be screened
to fill the vacancies as they arise.
Advantage: It reduces the cost of recruiting workforce
in comparison to other sources.
4. Employment Exchange
Employment exchanges run by the Government are
regarded as a good source of recruitment for unskilled
and skilled operative jobs. In some cases, compulsory
notification of vacancies to employment exchange is
required by law. Thus, employment exchanges help to
match personnel demand and supply by serving as link
between job-seekers and employers.
Disadvantage: The records of employment exchange
are often not up to date and many of the candidates
referred by them may not be found suitable.
5. Advertising on Television
The practice of telecasting of vacant posts over
Television is gaining importance these days. The
detailed requirements of the job and the qualities
required to do it are publicised along with the profile of
the organisation where vacancy exists.
6. Web Publishing
Internet is becoming a common source of recruitment
these days. There are certain websites specifically
designed and dedicated for the purpose of providing
information about both job seekers and job opening e.g.
www.naukri.com. In fact, websites are very commonly
visited both by the prospective employees and the
organisations searching for suitable people.
7. Advertisement in newspapers or trade
and professional journals
Advertisement in newspapers or trade and professional
journals is generally used when a wider choice is required.
Advantage: More information about the organisation
and job can be given in the advertisement. Advertisement
gives the management a wider range of candidates from
which to choose.
Disadvantage: It may bring in a flood of response, and
many times, from quite unsuitable candidates.
MostTopof the
Tip
senior positions of industry as well as commerce are
filled by this method.
8. Recommendations of Employees
Applicants introduced by present employees, or their
friends and relatives may prove to be a good source of
recruitment. Such applicants are likely to be good
employees because their background is sufficiently
known. A type of preliminary screening takes place
because the present employees know both the company
and the candidates and they would try to satisfy both.
9. Placement Agencies and Management
Consultants
In technical and professional areas, private agencies and
professional bodies appear to be doing substantive work.
Placement agencies: Placement agencies provide a
nationwide service in matching personnel demand and
supply. These agencies compile bio-data of a large
number of candidates and recommend suitable names
to their clients.
 Such agencies charge fee for their services and they
are useful where extensive screening is required.
 These professional recruiters can entice the needed
top executives from other companies by making the
right offers.
Management Consultants: Management consultancy
firms help the organisations to recruit technical,
professional and managerial personnel.
 They specialise in middle level and top level
executive placements.
 They maintain data bank of persons with different
qualifications and skills.
Management
Top Tip
consultancy firms even advertise the jobs on behalf
of their clients to recruit right type of personnel.
10. Campus Recruitment
Recruitment from educational institutions is a well-
established practice of businesses, which is referred to
as 'campus recruitment'.
Colleges and institutes of management and technology
have become a popular source of recruitment for
technical, professional and managerial jobs.
Many big organisations maintain a close link with the
universities, vocational schools and management
institutes to recruit qualified personnel for various jobs.
Campus Recruitment: Recruitment from educational institutions
such as colleges and institutes of management and technology etc.1
External Sources of Recruitment – Merits
and Limitations
Merits Limitations
1. Competitive Spirit: If a company 1. Costly process: It is very costly
taps external sources, the existing to recruit staff from external
staff will have to compete with the sources. A lot of money has to
outsiders. They will work harder be spent on advertisement and
to show better performance. processing of applications.
2. Wider Choice: When vacancies 2. Lengthy process: Recruitment
are advertised widely, a large from external sources takes a
number of applicants from long time. The business has to
outside the organisation apply. notify the vacancies and wait
The management has a wider for applications to initiate the
choice while selecting the people selection process.
for employment.
3. Qualified Personnel: By using 3. Dissatisfaction among
external sources of recruitment, existing staff: External
the management can attract recruitment may lead to
qualified and trained people to dissatisfaction and frustration
apply for vacant jobs in the among existing employees.
organisation. They may feel that their
4. Fresh Talent: The present chances of promotion are
employees may be insufficient or reduced.
they may not fulfill the
specifications of the jobs to be
filled. External recruitment
provide wider choice and brings
new blood in the organisation.
RECAP
Internal Sources of Recruitment

1. Transfers: Transfers involve shifting of an employee from
one job to another, one department to another or from
one shift to another, without a substantive change in the
responsibilities and status of the employee. It may lead to
changes in duties and responsibilities, working condition
etc., but not necessarily salary.
2. Promotions: Promotions involve shifting an employee
to a higher position, carrying higher responsibilities,
facilities, status and pay.
Merits of internal source of recruitment: (a) Employees
are motivated to improve their performance as promotion
at a higher level may lead to a chain of promotions at lower
levels in the organisation. (b) It simplifies the process of
selection as the candidates are already known to the
organisation. (c) There is no need for induction training as
the employees are already familiar with the organisation.
(d) It helps in adjustment of surplus staff in those
departments where there is shortage of staff. (e) It is an
economical source of recruitment.
Limitations of internal source of recruitment: (a) It
reduces the scope for induction of fresh talent by stopping
infusion of new blood into the organisation. (b) The
employees may become lethargic if they are sure of time
bound promotions. (c) A new enterprise cannot use
internal sources of recruitment, thus an incomplete source
of recruitment. (d) It hampers the spirit of competition
among the employees. (e) Frequent transfers may reduce
productivity.
External Sources of Recruitment
1. Casual callers: A list of job seekers is prepared and
screened to fill the vacancies as they arise, from the
database of unsolicited applications kept in the office.
2. Labour Contractors: Labour contractor maintains
close contacts with labourers and provides the required
number of unskilled workers at short notice.
3. Direct recruitment: A notice is placed on the notice-
board of the enterprise specifying the details of the jobs
available.
Unskilled or semi-skilled job-seekers assemble outside
the premises of the organisation on the specified date
and selection is done on the spot. Such workers are
called badli workers; payment on daily wage basis;
suitable when there is rush of work or some permanent
workers are absent.
4. Advertisement: Vacancies are advertised in newspapers
or trade and professional journals and on television to
search for qualified and experienced personnel. It gives
the management a wider range of candidates from which
to choose. Most of the senior positions in businesses are
filled by advertising by this method. Disadvantage: It may
bring in a flood of response, and many times from quite
unsuitable candidates.
5. Campus recruitment: Recruitment from educational
institutions like universities, vocational schools and
management institutes to recruit qualified personnel for
technical, professional and managerial jobs.
6. Placement agencies and Management consultants:
Placement agencies compile bio-data of a large number
of candidates and recommend suitable names to their
clients. They charge fee for their services. They can
entice the needed top executives from other companies
by making the right offers. Management consultancy
firms help the organisations to recruit technical,
professional and managerial personnel. They specialise
in middle level and top level executive placements.
7. Recommendations of employees: Applicants are
introduced by present employees or their friends and
relatives. Such employees are likely to be good
employees as their background is sufficiently known.
8. Employment exchanges: Employment exchanges help
to match personnel demand and supply by serving as
link between job-seekers and employers. They are
suitable for unskilled and skilled operative jobs.
Disadvantage: The records of employment exchanges are
often not up-to-date and many of the candidates
referred by them may not be found suitable.
9. Web publishing: Internet is becoming a common
source of recruitment, e.g., www.naukri.com
Merits of external sources of recruitment: (i) The
management can attract qualified and trained people to
apply for vacant jobs in the organisation. (ii) Management
has a wider choice while selecting the right candidates. (iii)
External sources bring fresh talent in the organisation.(iv)
Competitive spirit: If a company taps external sources, the
existing staff will have to compete with the outsiders. They
will work harder to show better performance.
Limitations of external source of recruitment: (i) It
may lead to dissatisfaction among existing employees as
they may feel that their chances of promotion are reduced.
(ii) It is a lengthy process as the vacancies have to be
notified and applications received before selection.(iii) It is
a costly process as a lot of money is spent.
Question 1
The practice of direct recruitment is followed usually
for:
(a) Casual vacancies of unskilled or semi-skilled jobs.
(b) Senior positions of industry as well as commerce.
(c) Recruiting technological, professional and
managerial personnel.
(d) Highly educated people.
Answer 1

Question 2
The practice of direct recruitment is suitable for filling
casual vacancies of unskilled or semi-skilled jobs when
________________.

Answer 2
There is a rush or work or some permanent workers
are absent.

Question 3
Many reputed business organisations keep a database
of unsolicited applicants in their offices. A list of such
job seekers can be prepared and screened to fill the
vacancies as they arise. The method of recruitment
described is:
(a) Transfers
(b) Direct recruitment
(c) Campus recruitment
(d) Casual callers
Answer 3
(d) Casual callers

Question 4
Most of the senior positions of industry as well as
commerce are filled by this method of recruitment:
(a) Promotions
(b) Advertisement
(c) Employment exchange
(d) Campus recruitment

Answer 4
(b) Advertisement

Question 5
The disadvantage of using advertisement for recruitment
of employees is that ______________.

Answer 5
It may bring in a flood of response, and many times, from
quite unsuitable candidates.

Question 6
Employment exchange run by the government are
regarded as a good source of recruitment for:
(b) Filling the senior positions of industry as well as
commerce
(c) Unskilled and skilled operative jobs.
(d) Technical, professional and managerial jobs.

Answer 6
(c) Unskilled and skilled operative jobs.

Question 7
‘Transfer’ Involves shifting of an employee from
____________.
(a) One job to another
(b) One department to another
(c) One shift to another
(d) All of these

Answer 7
(d) All of these

Question 8
Transfer involves change in salary also. (True/False)

Answer 8
False: Transfer may lead to changes in duties and
responsibility working condition etc. but not necessarily
salary.

Question 9
Column I Column II
(i) A horizontal movement of employees (a) Promotion
(ii) A vertical shifting of employees (b) Transfer

Answer 9
(i) — (b),(ii) — (a)

Question 10
Promotion helps to improve the motivation and
satisfaction level of employees. It has a great psychological
impact over the employees because ______________.

Answer 10
a promotion at the high level may lead to a chain of
promotions at lower levels in the organisation.

Question 11
Internal recruitment is a more reliable way of
recruitment since ______________.

Answer 11
the candidates are already known to the organisation

Question 12
Which of the following is not a limitation of internal
sources of recruitment?
(a) It reduces the productivity of the organisation.
(b) Spirit of competition among the employees may be
hampered.
(c) The employees may become lethargic.
(d) It is cheaper.

Answer 12
(d) It is cheaper.

Question 13
An enterprise has to tap external sources of recruitment
for various positions because _________.

Answer 13
all the vacancies cannot be filled through internal recruitment.
The existing staff may be insufficient or they may not fulfill
the eligibility criteria of the jobs to be filled.
Or, External recruitment provides wide choice and brings
new blood in the organisation.

Question 14
The disadvantage of using employment exchange run
by the government is that ________________.

Answer 14
the records of employment exchange are offer not up to
date and many of the candidates referred by them may
not be found suitable

Question 15
Placement agencies, as a method of recruitment are very
useful where ______________.

Answer 15
extensive screening is required; they can entice the needed
top executives from other companies by making the right
offers

Question 16
______________ specialise in middle level and top
level executive placements.
(a) Campus recruitment
(b) Employment exchange
(c) Management Consultants
(d) Placement agencies

Answer 16
(c) Management Consultants

Question 17
For recruitment of technical, professional and managerial
personnel, _______________ is most suitable.
(a) Advertisement
(b) Campus recruitment
(c) Management consultants
(d) Both (b) and (c)

Answer 17
(d) Both (b) and (c)

Question 18
Aastha Ltd. a cellular network company, approached
Quick Consultants Pvt. Ltd. for recruitment of top level
executive placements. Quick Consultants Pvt. Ltd. advertised
the jobs on www.naukri.com on behalf of Aastha Ltd. The
recruitment method followed by Aastha Ltd is:
(a) Advertisement
(b) Management consultants
(c) Placement agencies
(d) Web-publishing
Answer 18
(b) Management consultants

Question 19
______________ maintain data bank of persons with
different qualifications and skills and even advertise the
jobs an behalf of their clients to recruit right type of
personnel.
(Fill in the blanks with correct method of recruitment)

Answer 19
Management consultants

Question 20
__________ provide a nationwide service in matching
personnel demand and supply. They compile bio-data of a
large number of candidates and recommend suitable
names to their clients. They charge fee for their services.
They can even entice the needed top executives from
other companies by making the right offers.
(a) Management consultants
(b) Placement agencies
(c) Recommendation of employees
(d) Labour contractors
Answer 20
(b) Placement agencies

Question 21
Recruitment from educational institutions, such as
vocational schools, universities, colleges, institutes of
management and technology, etc. of business for
recruitment of (i) ______________ jobs. This is
referred to as (ii) ______________.
(Fill in the blanks with correct answers)

Answer 21
(i) technical, professional and managerial jobs.
(ii) Campus recruitment.

Question 22
Applicants introduced by present employees, or their
friends and relatives may prove to be a good source
of recruitment. Such applicants are likely to be good
employees because _______________.

Answer 22
their background is sufficiently known; the present
employees know both the company and the candidates
and they would try to satisfy both.

Question 23
___________ maintain close contacts with labourers
and they can provide the required number of unskilled
workers at short notice.
(Fill in the blanks with correct method of recruitment)

Answer 23
Labour contractors

Question 24
Recruitment from external sources is a lengthy process
because ____________.

Answer 24
the business has to notify the vacancies and wait for
applications to initiate the selection process.

Question 25
The disadvantage of using labour contractors for
recruitment of unskilled workers at short notice is
that _____________.

Answer 25
since the labour contractors are themselves employees
of the organisation, therefore, if the contractor himself
decides to leave the organisation, all the workers
employed through him will follow suit

Question 26
Divya Ltd. advertised its vacancies on the website
www.jobseekers.com. The method of recruitment used by
the company is _________________.
(Fill in the blank with correct answer)

Answer 26
Web publishing

Question 27
Which of the following is not a limitation of external
sources of recruitment?
(a) Competitive spirit
(b) Dissatisfaction of existing staff
(c) Lengthy process
(d) Costly process

Answer 27
(a) Competitive spirit

Question 28
External recruitment may lead to dissatisfaction
and frustration among existing employees because
_________.

Answer 28
they may feel that their chances of promotion
are reduced

Question 29
Recruitment from external sources is a very costly process
because _______________.

Answer 29
a lot of money has to be spent an advertisement and
processing of applications.

Question 30
Which of the following is not an internal source
of recruitment?
(a) Transfers
(b) Promotions
(c) Labour contractor
(d) None of these

Answer 30
(c) Labour contractor

Question 31
Which of the following is an external source of
recruitment?
(a) Media advertising
(b) Employment exchange
(c) Placement agencies
(d) All of these

Answer 31
(d) All of these

Question 32
Which of the following is not an advantage of external
source of recruitment?
(a) Fresh talent
(b) Competitive spirit
(c) Wider choice
(d) Motivates employees

Answer 32
(d) Motivates employees

Question 33
Name any two methods of recruitment suitable to recruit
technical, professional and managerial personnel.

Answer 33
(i) Management consultants
(ii) Campus recruitment.

Question 34
Column I Column II
(i) A company gets applications on and off even (a) Direct
without declaring any vacancy. However, as recruitment
and when the vacancy arises, the company
makes use of such applications.
(ii) Casual vacancies of unskilled or semi-skilled (b) Advertisement
jobs when there is a rush of order or when
some permanent workers are absent.
(iii) Recruitment by which most of the senior (c) Casual callers
positions of the industry as well as
commerce are filled.

Answer 34
(i) — (c), (ii) — (b), (iii) — (a)

Question 35
Which source of external recruitment is ideal for a
manufacturing organisation? Why?

Answer 35
Advertisement, because it has wider choice to recruit
and select most of the senior position of industry and
commerce. More information about the organisation
and job can be given in the advertisement.

Question 36
A company gets application on and off even without
declaring any vacancy. However, as and when the vacancy
arises, the company makes use of such applications.
Name the source of recruitment used by the company.

Answer 36
Casual Callers

Question 37
Name the most common method of recruitment of
employees.
(CBSE 2013)

Answer 37
Advertisements through newspapers, journals, televisions,
etc.

Question 38
Which of the following is not an external source of
Recruitment?
(a) Transfer
(b) Advertisement
(c) Employment exchange
(d) Placement agencies

Answer 38
(a) Transfer

Question 1
A company is manufacturing paper plates and bowls. It
produces 1,00,000 plates and bowls per day. Due to local
festival there is a rush of work and some permanent
workers have gone to their villages. The company got an
urgent order of extra 50,000 plates and bowls per day.
Advise how the company will fulfill its order and which
method of recruitment would you suggest.
(3 marks)

Answer 1
To fulfill the urgent order of extra 50,000 plates and bowls
per day the company should follow the recruitment step of
the staffing process. The suitable method of recruitment is
‘direct recruitment’ (an external source of recruitment).
(Explain)

Question 2
Zenith Ltd. is a highly reputed company and many
people wanted to join this company. The employees of
this organisation are very happy and they discussed how
they came in contact with this organisation.
Aman said that he was introduced by the present Sales
Manager, Mr. John.
Benu said that he had applied through the newspaper
and was appointed as H.R Manager.
Vaibhav said that he was neither related to any of the
employee of the organisation nor there was any
advertisement in the newspaper even then he was
directly called from IIM, Ahmedabad from where he was
about to complete his MBA.
(a) The above discussion is indicating an important
function of management. Name the function of
management
(b) The management function identified in part (a)
follows a particular process. Explain the step of this
process which is being discussed in the above para.
(c) Identify the sources of the step identified in part
(b) by quoting the lines from the above para.
(6 marks)
Answer 2
(a) Staffing
(b) Recruitment (Explain)
(c) Recommendations of employees: “Aman said that he
was introduced by the present Sales manager, Mr. John."
Advertisement: “Benu said that he had applied through
the newspaper and was appointed as H.R Manager.”
Campus recruitment: “Vaibhav was directly called from
IIM Ahmedabad from where he was about to complete
his MBA."

Question 3
There were two vacancies for the post of Assistant
Manager in ‘Gyan Electrics Private Ltd.’ ‘Parth’ the Human
Resources Manager identified one suitable candidate
‘Vishwas’ from within the organization and promoted him
to the post of Assistant Manager. For another post, the
Manager ‘Parth’ took help of a placement agency and
selected ‘Saleem’. After six months, Parth observed that
‘Vishwas’ performance was much better than ‘Saleem’s’
performance though ‘Vishwas’ was less qualified than
‘Saleem’. Hence, ‘Parth’ decided that in future he will not
make any appointment with the help of an outside source.
Explain any four reasons on the basis of which ‘Parth’
would have taken the above decision.

Answer 3
Reasons on the basis of which ‘Parth’ would have taken
the decision not to make appointment with the help of an
outside source are:
(Explain any four advantages of internal sources of recruitment)

Question 4
Himesh is working as a supervisor in a company. Due to
his hard work, he is promoted to the post of Production
Manager. Now the post of supervisor is vacant and no
one can be transferred or promoted to this post. Name
the source of recruitment the company will use to fill up
this post.
(1 mark)

Answer 4
External source of recruitment

Question 5
Max Industries wants to hire staff for its Chemicals division.
The Human Resource Department lists out the following
methods of recruitment. Identify the source of recruitment
indicated in the given cases.
(i) Consider voluntary applications received earlier from
various job-seekers.
(ii) Using www.naukri.com to search for prospective
candidates.
(1 mark)

Answer 5
(i) Casual Callers
(ii) Web Publishing

Question 6
Giridhar Ltd. is a highly reputed company. The employees
of this organisation discussed how they came in contact
with this organisation. Reena said she was introduced by
the Purchase Manager, Mr. John. Indu said she was
directly called by the company from her IIM institute.
Identify the different sources of recruitment.
(1 mark)

Answer 6
Reena — Recommendations of employees;
Indu — Campus recruitment

6.4 Selection Process
Steps in the Process of Selection
1. Preliminary Screening
Preliminary screening helps the manager eliminate
unqualified or unfit job seekers based on the information
supplied in the application forms.
Preliminary interviews help reject misfits for reasons,
which did not appear in the application forms.
2. Selection Tests
An employment test is a mechanism (either a paper
and pencil test or an exercise) that attempts to
measure certain characteristics of individuals. These
characteristics range from aptitudes, such as manual
dexterity, to intelligence, to personality.
Important tests used for selection of employees are:
(i) Intelligence Tests: This is one of the important
psychological tests used to measure the level of
intelligence quotient of an individual. It is an
indicator of a person’s learning ability or the ability
to make decisions and judgments.
(ii) Aptitude Test: It is a measure of individuals
potential for learning new skills. It indicates the
person’s capacity to develop. Aptitude tests are
good indices of a person’s future success score.
(iii) Trade Test: Trade tests measure the existing skills
of the individual. They measure the level of
knowledge and proficiency in the area of professions
or technical training.
 Top Tip
The difference between aptitude test and trade test is
that the former measures the potential to acquire skills
and the later the actual skills possessed.
(iv) Personality Tests: Personality tests provide clues

to a person’s emotions, her reactions, maturity
and value system etc. These tests probe the overall
personality. Hence, these are difficult to design
and implement.
(v) Interest Tests: Every individual has fascination
for some job than the other. Interest tests are used
to know the pattern of interests or involvement of
a person.
3. Employment Interview
Interview is a formal, in-depth conversation conducted
to evaluate the applicant’s suitability for the job.
The role of the interviewer is to seek information and
that of the interviewee is to provide the same. Though,
in present times, the interviewee also seeks information
from interviewer.
4. Reference and Background Checks
Many employers request names, addresses, and
telephone numbers of references for the purpose
of verifying information and, gaining additional
information on an applicant.
Previous employers, known persons, teachers and
university professors can act as references.
5. Selection Decision
The final decision has to be made from among the
candidates who pass the tests, interviews and reference
checks.
 Top Tip
The views of the concerned manager will be generally
considered in the final selection because it is he/she who
is responsible for the performance of the new employee.
6. Medical Examination
After the selection decision and before the job offer is
made, the candidate is required to undergo a medical
fitness test. The job offer is given to the candidate after
being declared fit in the medical examination.
7. Job Offer
The next step in the selection process is job offer to
those applicants who have passed all the previous
hurdles. Job offer is made through a letter of appointment/
confirm his acceptance. Such a letter generally contains
a date by which the appointee must report on duty. The
appointee must be given reasonable time for reporting.
8. Contract of Employment
After the job offer has been made and candidate accepts
the offer, certain documents need to be executed by the
employer and the candidate.
Attestation form: This form contains certain vital
details about the candidate, which are authenticated
and attested by him or her. Attestation form will be a
valid record for future reference.
Contract of employment: There is also a need for
preparing a contract of employment. Basic information
that should be included in a written contract of
employment will vary according to the level of the job,
but the following checklist sets out the typical
headings:
 Job Title
 Duties
 Responsibilities
 Rates of pay
 Allowances
 Hours of work
 Leave rules
 Sickness, grievance procedure
 Disciplinary procedure
 Work rules
 Termination of employment
RECAP
Steps involved in the selection process PSER SMJ C

1. reliminary Screening: Preliminary screening helps
the manager eliminate unqualified or unfit job seekers
based on the information supplied in the application forms.
2. election Tests: An employment test is a mechanism
(either a paper and pencil test or an exercise) that attempts
to measure certain characteristics of individuals, such as
intelligence, aptitude, etc.
3. mployment Interview: Employment interview is a
formal, in-depth conversation conducted to evaluate the
applicant’s suitability for the job. The role of the
interviewer is to seek information and that of the
interviewee is to provide the same. Though, in present
times, the interviewee also seeks information from
interviewer.
4. eference and Background Checks for the purpose of
verifying the information and gaining additional
information. Previous employers, known persons, teachers
and university professors can act as references.
5. election Decision from among the candidates who
pass the tests, interviews and reference checks. (The
views of the concerned manager will be generally
considered in the final selection because it is he who is
responsible for the performance of the new employee.)
6. edical Examination which includes a medical fitness
test which the candidate is required to undergo. (The job
offer is given to the candidate after being declared fit in
the medical examination.)
7. ob offer: Job offer is made through a letter of
appointment, which contains the date by which the
appointed candidate must report on duty.
8. ontract of employment: After the job offer has been
made and candidate accepts the offer, certain
documents need to be executed by the employer and
the candidate–the attestation form and a contract of
employment (regarding terms and conditions of
employment, pay, hours of work, leave rules, etc.)
Types of Selection/Employment Tests PI2TA
1. ntelligence test measures to level of intelligence
quotient of an individual. It is an indicator of a person’s
learning ability or the ability of make decisions and
judgements.
2. ptitude test is conducted to measure an individual’s
potential for learning new skills. It indicates the person’s
capacity to develop.
3. ersonality test provides clues to a person’s emotions,
reactions, maturity, value systems etc. These tests probe
the overall personality. Hence, these are difficult to
design and implement.
4. rade test: These tests measure the existing/actual
skills possessed by the individual. They measure the
level of knowledge and proficiency in the area of
professions or technical training.
5. nterest tests are used to know the pattern of interests
or involvement of a person for performance of a job.
Question 1
The selection process may continue even after the offer
of employment, acceptance and joining of the candidate. It
is so because _____________________.

Answer 1
Selection process, like any other managerial decision,
involves judgement about the performance potential of
the candidate. The effectiveness of the selection process
would ultimately be tested in terms of on-the-job of the
chosen person.

Question 2
The selection process ends after the offer of employment
through a contract of employment.
(True/False)

Answer 2
False; involves judgement about the performance potential
of the candidate. The effectiveness of the selection process
would ultimately be tested in terms of on-the-job of the
chosen person.

Question 3
_________ helps the manager eliminate unqualified or
unfit. Job seekers based on the information supplied in the
application forms.

Answer 3
Preliminary screening

Question 4
Column I Column II
(i) An indicator of a person’s learning ability (a) Intelligence test
(ii) To judge the involvement of a person (b) Aptitude test
(iii) To measure the level of knowledge and (c) Trade test
proficiency in the area of professions or
technical training
(iv) Indicates the person’s capacity to develop (d) Interest tests

Answer 4
(i) — (a),(ii) — (d),(iii) — (c),(iv) — (b)

Question 5
Intelligence test in a measure of individual’s potential for
learning new skills.
(True/False)

Answer 5
False

Question 6
____________ is a measure of individual’s potential for
learning new skills.

Answer 6
Aptitude test

Question 7
________ are good indices of a person’s future success
score.

Answer 7
Aptitude tests

Question 8
Aptitude tests are used to measure the level of intelligence
quotient (IQ) of an individual.
(True/False)

Answer 8
False

Question 9
__________ is one of the important psychological tests
used to measure the level of IQ of an individual.
(a) Trade test
(b) Interest test
(c) Aptitude test
(d) Intelligence test

Answer 9
(d) Intelligence test

Question 10
Personality tests are difficult to design and implement
because _______________.

Answer 10
these tests prove the overall personality of the candidate;
They provide clues to a person’s emotions, reactions,
maturity and value system etc.

Question 11
___________ measure the existing skills of the individual.
They measure the level of knowledge and proficiency in
the areas of professions of technical training.
(a) Intelligence tests
(b) Aptitude test
(c) Trade test
(d) Interest test

Answer 11
(c) Trade test

Question 12
___________ are used to know the pattern of interests
or involvement of a person.

Answer 12
Interest tests

Question 13
The difference between aptitude test and trade test
is that the ___________ measures the actual skills
possessed. Whereas _____________ the potential
to acquire skills.

Answer 13
Trade test; Aptitude test

Question 14
_________________ is a formal, in-dept conversation
conducted to evaluate the applicant’s suitability for the
job.
(Fill in the blanks with correct step of the selection process of
employees)

Answer 14
Employment interview

Question 15
After the selection decision and before the job offer is
made, the candidate is required to undergo a ______.

Answer 15
medical examination/medical fitness test

Question 16
After the job offer has been made through a ________
and candidate accepts the offer, certain document need
to be executed by the employer and the candidate. One
such document is _____________ which contains viral
details about the candidates, which are authenticated
and attested by him/her. It is a valid record for future
reference.

Answer 16
Letter of appointment,The attestation form

Question 17
____________ includes job title, duties, responsibilities,
date when continuous employment starts and the basis
for calculating service, rates of pay, allowances, hours or
work, leave rules, termination of employment, etc.

Answer 17
Employment contract

Question 18
Which of the following is not a selection test?
(a) Intelligence test
(b) Aptitude test
(c) Trade test
(d) Medical fitness test

Answer 18
(d) Medical fitness test

Question 19
Column I Column II
(i) An interior decorator (a) Intelligence test
(ii) A computer operator (b) Trade test
(iii) A public dealing officer (c) Interest test
(iv) A school teacher (d) Personality test

Answer 19
(i) — (c), (ii) — (b), (iii) — (d), (iv) — (a)

Question 20
It is the process of differentiating between applicants in
order to identify and hire those with a greater likelihood
of success in job. Identify it.

Answer 20
‘Selection’ is the process being referred to in the
statement.

Question 21
Star Industries is conducting the following tests to select
the most suitable candidate out of the various applicants.
Identify the selection test highlighted in each case.
(i) This test is conducted to determine actual skills
possessed by the candidate.
(ii) This test aims to measure the IQ level of the applicant.

Answer 21
(i) Trade Test
(ii) Intelligence Test

Question 1
Mr. Murthy is the Human Resource Manager of Jai Hind
Hospital in Vellore. He has to appoint nurses for the
hospital. Since patients in the hospital are of different
types, he wants to find out the candidates’ maturity and
emotions in dealing with the patients. He also wants to
know about the candidates’ ability to make decisions.
Explain two types of tests that Mr. Murthy can use to
meet his requirements.
Answer 1
Two types of tests that Mr. Murthy can use to meet his
requirement are:
(i) Personality Test
(ii) Intelligence Test (Explain)

Question 2
Nishant, the director of a garments company, is planning
to manufacture bags for the utilisation of waste material
from one of his garments units. He has decided that this
manufacturing unit will be set up in a rural area of
Odisha where people have very few job opportunities
and labour is available at very low rates. He has also
thought of giving equal opportunities of men and
women. For this he wants four different heads for Sales,
Accounts, Purchase and Production. He gives an
advertisement and shortlists ten candidates per post
after conducting different selection tests. Identify and
state the next three steps for choosing the best candidate
out of the candidates short listed.

Answer 2
The next three steps for choosing the best candidate are:
(a) Employment interview
(b) Reference and background checks
(c) Selection decision (Explain)

Question 3
A public transport corporation has hired 2000 buses for
the different routes for the passengers of metropolitan
city. In order to fill vacancies, it advertised in the
newspaper and number of applicants applied for the same.
The company has to now undertake the process of
selection to identify and select the best. Explain the first
six steps involved in the process.

Answer 3
(Explain the first six steps involved in the selection process of
employees.)

Training and Development –
6.5
Importance and Methods
Importance/Benefits of Training and
Development
Importance/Benefits to the Importance/Benefits to the
Organisation Employee
1. Systematic learning: Training is 1. Better career: Improved skills
a systematic learning, always and knowledge due to training
better than hit and trial methods lead to better career of the
which lead to wastage of efforts individual.
and money.
2. Higher profits: It enhances 2. Increased earnings:
employee productivity both in Increased performance by the
terms of quantity and quality, individual help him to earn
leading to higher profits. more.
3. Equips future managers: 3. More efficient to handle
Training equips the future machines: Training makes the
manager who can take over in case employee more efficient to
of emergency. handle machines. Thus, less
prone to accidents.
4. Reduces absenteeism and 4. Increases morale: Training
employee turnover: Training increases the satisfaction and
increases employee morale and morale of employees.
reduces absenteeism and
employee turnover.
5. Effective response to
environment changes: It helps
in obtaining effective response to
fast changing environment –
technological and economic.
When jobs were simple, easy to learn and influenced to
only a small degree by technological changes, there was
little need for employees to upgrade or alter their skills.
But the rapid changes taking place during the last quarter
century in our highly sophisticated and complex society
have created increased pressures for organisations to
readapt the products and services produced, the manner in
which products and services are produced and offered, the
types of jobs required and the types of skills necessary to
complete these jobs. Thus, as jobs have become more
complex the importance of employee training has increased.
Training Methods
On-the-Job Training Off-the-Job Training
Methods Methods
• On-the-Job methods refer to • Off-the-Job methods are
the methods that are applied used away from the work
to the workplace, while the place.
employee is actually
working.
• It means 'learning while • It means 'learning before
doing'. doing'.
• Examples: • Example: Vestibule training
(i) Apprenticeship training
programmes
(ii) Internship training
1. Apprenticeship training programmes
Apprenticeship programmes put the trainee under the
guidance of a master worker.
 These are designed to acquire a higher level of skill.
 People seeking to enter skilled jobs, to become, for
example, plumbers, electricians or iron-workers, are
often required to undergo apprenticeship training.
 These apprentices are trainees who spend a prescribed
amount of time working with an experienced guide,
or trainer.
A uniform
Top Tip
period of training is offered to trainees, in which both fast
and slow learners are placed together. Slow learners may require
additional training.
2. Vestibule Training
 Employees learn their jobs on the equipment they will
be using, but the training is conducted away from the
actual work floor.
 Actual work environments are created in a class room
and employees use the same materials, files and
equipment.
 This is usually done when employees are required to
handle sophisticated machinery and equipment.
3. Internship Training
 It is a joint programme of training in which educational
institutions and business firms cooperate.
 Selected candidates carry on regular studies for the
prescribed period. They also work in some factory or
office to acquire practical knowledge and skills.
RECAP
Importance of Training
Benefits of training to the organisation: (i) It avoids
wastage of efforts and money as training is systematic
learning, better than hit and trial methods. (ii) It enhances
employee productivity both in terms of quantity and quality
leading to higher profits. (iii) It equips the future managers
to take over in an emergency. (iv) It reduces employees’
turnover as it increases employee morale and reduces
absenteeism. (v) It helps the organisation in obtaining
effective response in a fast changing environment.
Benefits to Employees: (i) It helps in career growth due to
improved skills and knowledge. (ii) It helps them to earn
more due to improved performance. (iii) It reduces accidents
as the employees are more efficient to handle machines.
(iv) It increases the morale of the employees as the employees
are more satisfied.
Methods of Training
On-the-job training methods are used at the workplace. It
means ‘learning while doing’. E.g., Apprenticeship training.
Off-the-job training methods are used away from the
workplace. It means ‘learning before doing’. E.g., Vestibule
training.
1. Apprenticeship Training Programme: Apprenticeship
Training is a method of training in which the trainee is
kept under guidance of a master worker for a prescribed
period of time. It is designed to acquire a higher level of
skill. People who want to enter skilled trades e.g.
plumbers, electricians, iron workers, motor mechanic
etc. are often required to undergo such training.
2. Internship Training: Internship Training is a joint
programme of training between educational institutions
and business firms. Besides carrying out regular studies,
the trainees alsao work in some factory or office to
acquire practical knowledge and skills.
3. Vestibule training: Vestibule Training is a method of
training which is conducted on the equipment &
machines they will be using. But the training is
conducted away from actual workplace. It is used where
the employees are required to handle sophisticated
machinery.
Question 1
The importance of employee training has increased as
____________________.

Answer 1
jobs have become more complex

Question 2
Which one of the following is not a benefit of training
to an organisation?
(a) Enhances employee productivity
(b) Equips the future manager
(c) Increases employee turnover
(d) Reduction in wastage of efforts and money

Answer 2
(c) Increases employee turnover

Question 3
Which of the following is not a benefit of training and
development to the employees?
(a) Increased performance help to earn more
(b) Enhances employee productivity
(c) More efficient to handle machines
(d) Increases the satisfaction and morale of
employees

Answer 3
(b) Enhances employee productivity

Question 4
Column I Column II
(i) It is to enable the employee to do the (a) Training
job better
(ii) It is to enable the overall growth of (b) Development
the employee

Answer 4
(i) — (a), (ii) — (b)

Question 5
Column I Column II
(i) It is career-oriented process (a) Training
(ii) It is a job-oriented process (b) Development

Answer 5
(i) — (b), (ii) — (a)

Question 6
____________ is a process of learning new skills and
application of knowledge. (Training/Development)
(Fill in the blank with correct option)

Answer 6
Training

Question 7
____________ attempts to improve the performance
of employees on the current job or prepare them for
any intended job. (Training/Development)
(Fill in the blank with correct option)

Answer 7
Training

Question 8
_____________ covers not only those abilities which
improve job performance but also those which bring
about growth of the personality, help individuals in the
progress towards maturity and actualisation of their
potential capacities so that they become not only good
employees but better men and women.

Answer 8
Development

Question 9
____________ are designed to acquire a higher level
of skill. People seeking to enter skilled jobs, to become,
for example, plumbers, electricians or iron-workers, are
often required to undergo such training.

Answer 9
Apprenticeship programmes

Question 10
This is a method of training in which actual work
environments are created in a classroom and employees
use the same materials, files and equipment. This is
usually done when employees are required to handle
sophisticated machinery and equipment.
(a) Apprenticeship programmes
(b) Internship training
(c) Vestibule training
(d) Induction training
Answer 10

Question 11
This is a training method in which selected candidates
carry on regular studies for the prescribed period.
They also work in some factory or office to acquire
practical knowledge and skills.
(a) Apprenticeship programmes
(d) Induction training

Answer 11

Question 12
Column I Column II
(i) It is a joint programme of training in (a) Apprenticeship
which educational institutions and programmes
business firms cooperate.
(ii) Employees learn their jobs on the (b) Internship training
equipment they will be using but the
training is conducted away from the
actual work floor.
(iii) The trainee works under the guidance of (c) Vestibule training
a master worker or an experienced
guide, or trainer for a prescribed period.

Answer 12
(i) — (b), (ii) — (c), (iii) — (a)

Question 13
The workers of a factory are unable to work on new
machines and always demand for help of supervisor. The
Supervisor is overburdened with their frequent calls.
Suggest the remedy.

Answer 13
Training of workers

Question 14
The quality of production is not as per standards.
On investigation it was observed that most of the
workers were not fully aware of the proper
operation of the machinery.
What could be the way to improve the quality of
production to meet the standards?

Answer 14
Training of workers

Question 15
Column I Column II
(i) The trainee learns under the guidance (a) Internship training
of a master worker.
(ii) Trainees learn on the equipment they (b) Apprenticeship
will be using, but training is conducted training
away from the actual work floor.
(iii) Trainees work in some factory or (c) Vestibule training
office to acquire practical knowledge
and skills along with regular studies.

Answer 15
(i) — (b), (ii) — (c), (iii) — (a)

Question 1
Blue Heavens Ltd. purchased a new hi-tech machine from
Germany for manufacturing high quality auto components
in a cost effective manner. But during the production
process, the manager observed that the quality of
production was not as per standard. On investigation it
was found that there was lack of knowledge amongst the
employees of using these hi-tech machines. So, frequent
visit of engineers was required from Germany. This
resulted in high overhead charges. Suggest what can be
done to develop the skills and abilities of employees for
producing high quality products by using these hi-tech
machines. Also state how the employees or the
organisation will benefit from your suggestion.

Answer 1
Training of employees
(State any three benefits to the organisation or employees)

Question 2
‘Moga Industries Ltd.’ approached a well established
university in the city of Madurai to recruit qualified
personnel for various technical and professional jobs.
They selected Tanya, Ritu, Garima and Chetan for
various vacancies in the organisation.
After the selection and placement, ‘Moga Industries Ltd.’
felt the need to increase the skills and abilities, and the
development of positive attitude of the employees to
perform their specific jobs better. The company also
realised that learning new skills would improve the job
performance of the employees. Hence, the company
decided to take action for the same.
(a) Name the step of the staffing process regarding
which the company decided to take action.
(b) State the benefits of the action to ‘Moga Industries
Ltd.’

Answer 2
(a) Training and Development.
(b) Benefits of training to ‘Moga Industries Ltd.’:
(Explain)

Question 3
After passing his secondary school examination, David
left the school at the age of 15 years and started getting
training under his father. His father, a renowned
electrician, had worked for many companies. He everyday
started accompanying his father on work and watched
him carefully while working. David was a good learner
and learnt the techniques of work quickly. Now his father
started passing on the tricks of the trade to David. With
the passage of time David acquired a high level skill and
became a well-known electrician in Indore. Big business-
houses started calling him for electrical -wiring .
(a) Name the method of training discussed in the above
para.
(b) State any three benefits which David could get on
being trained.

Answer 3
(a) Apprenticeship Training
(b) Benefits which David could get on being trained:
(Any three)

Question 4
Ramesh has been working under the guidance of Harish,
a carpenter, for the last three years to learn the different
skills of this job. Name the on-the-job method of
training Ramesh is undergoing.
(1 mark)

Answer 4
Apprenticeship training

Question 5
Manu, a Chief Manager in a company using highly sophisticated
machines and equipments, and wants that every employee
should be fully trained before using the machines and
equipment. Suggest the best method of training that Manu
can use for training of the employees.
(1 mark)

Answer 5
Vestibule Training (off-the-job method)

Key Terms
Staffing – Staffing is that part of the process of management

which is concerned with obtaining, utilising and maintaining a
satisfactory and satisfied work force.
Human Resource Management (HRM) – It includes many
specialised activities and duties which the human resource
personnel must perform, e.g. recruitment, analysing jobs,
developing compensation and incentive plans, training and
development of employees, maintaining labour relations and
union management relations, etc.
Estimating manpower requirements – It means knowing how
many persons are needed and of what type (i.e., educational
qualification, skills, prior experience, personality characteristics,
etc.) in the organisation to fill the various job positions created
while designing the organisational structure.
Workload Analysis – It is an assessment of the number and
types of human resources necessary for the performance of
various jobs and accomplishment of organisational objectives.
Workforce Analysis – It is an assessment of the number and
type of human resources available for the performance of
various jobs and accomplishment of organisational objectives.
Recruitment – It is the process of searching for prospective
employees and stimulating them to apply for jobs in the
organisation.
Selection – It is the process of identifying and choosing the
best person out of a number of prospective candidates for a job.
Placement – It refers to the employee occupying the position
or post for which the person has been selected.
Orientation – It refers to introducing the selected employee to
other employees and familiarising him with the rules and
policies of the organisation.
Training – It is the process by which aptitudes, skills and
abilities of employees to perform specific jobs are increased. It
is a process of learning new skills and application of knowledge.
It attempts to improve the performance of employees on the
current job or prepare them for any intended job.
Development – It refers to the learning opportunities designed
to help employees grow. It means growth of an individual in all
respects.
Performance appraisal – It means evaluating an employee’s
current and/or past performance as against certain predetermined
standards.
Promotions – It refers to being placed in positions of increased
responsibility. They usually mean more pay, responsibility and
job satisfaction.
Compensation – It refers to all forms of pay or rewards going to
employees. It may be in the form of direct financial payments
like wages, salaries, incentives, commissions and bonuses and
indirect payments like employer paid insurance and vacations.
Transfers – It involves shifting of an employee from one job to
another, one department to another or from one shift to
another, without a substantive change in the responsibilities
and status of the employee. It may lead to changes in duties
and responsibilities, working condition etc., but not necessarily salary.
Promotion – It refers to shifting an employee to a higher
position, carrying higher responsibilities, facilities, status and pay.
Direct Recruitment – Under the direct recruitment, a notice is
placed on the notice-board of the enterprise specifying the
details of the jobs available. Job-seekers assemble outside the
premises of the organisation on the specified date and
selection is done on the spot. The practice of direct recruitment
is followed usually for casual vacancies of unskilled or semi-
skilled jobs.
Casual Callers – Many reputed business organisations keep a
database of unsolicited applicants in their offices. Such job-
seekers can be a valuable source of manpower. A list of such
job-seekers can be prepared and can be screened to fill the
vacancies as they arise.
Labour Contractors – Labour contractors maintain close
contacts with labourers and they can provide the required
number of unskilled workers at short notice. Workers are
recruited through labour contractors who are themselves
employees of the organisation.
Employment Exchange – Employment exchanges run by the
Government are regarded as a good source of recruitment for
unskilled and skilled operative jobs. In some cases, compulsory
notification of vacancies to employment exchange is required
by law.
Web Publishing – Internet is becoming a common source of
recruitment these days. There are certain websites specifically
designed and dedicated for the purpose of providing information
about both job seekers and job opening e.g. www.naukri.com.
Placement agencies – Placement agencies provide a nationwide
service in matching personnel demand and supply. These
agencies compile bio-data of a large number of candidates and
recommend suitable names to their clients. Such agencies
charge fee for their services and they are useful where
extensive screening is required.
Management Consultants – Management consultancy firms
help the organisations to recruit technical, professional and
managerial personnel. They specialise in middle level and top
level executive placements.
Campus Recruitment – Recruitment from educational institutions
such as colleges and institutes of management and technology
etc.
Preliminary Screening – Preliminary screening helps the manager
eliminate unqualified or unfit job seekers based on the
information supplied in the application forms.
Selection Tests – An employment test is a mechanism (either a
paper and pencil test or an exercise) that attempts to measure
certain characteristics of individuals. These characteristics range
from aptitudes, such as manual dexterity, to intelligence to personality.
Intelligence Tests – These tests used to measure the level of
intelligence quotient of an individual. It is an indicator of a
person’s learning ability or the ability to make decisions and
judgments.
Aptitude Test – It is a measure of individuals potential for learning
new skills. It indicates the person’s capacity to develop.
Trade Test – Trade tests measure the existing skills of the
individual. They measure the level of knowledge and proficiency in
the area of professions or technical training.
Personality Tests – Personality tests provide clues to a person’s
emotions, her reactions, maturity and value system etc.
Interest Tests – Interest tests are used to know the pattern of
interests or involvement of a person.
Employment Interview – Interview is a formal, in-depth
conversation conducted to evaluate the applicant’s suitability
for the job.
Reference and Background Checks – Many employers request
names, addresses, and telephone numbers of references for the
purpose of verifying information and, gaining additional
information on an applicant. Previous employers, known persons,
teachers and university professors can act as references.
Medical Examination – After the selection decision and before
the job offer is made, the candidate is required to undergo a
medical fitness test. The job offer is given to the candidate
being declared fit after the medical examination.
Job Offer – Job offer is made through a letter of appointment/
confirm his acceptance. Such a letter generally contains a date by
which the appointee must report on duty.
Contract of employment – It includes job title, duties,
responsibilities, date when continuous employment starts and
the basis for calculating service, rates of pay, allowances, hours
of work, leave rules, sickness, grievance procedure, disciplinary
procedure, work rules, termination of employment etc.
Apprenticeship Training Programme – Apprenticeship Training
is a method of training in which the trainee is kept under
guidance of a master worker for a prescribed period of time. It
is designed to acquire a higher level of skill. People who want to
enter skilled trades e.g. plumbers, electricians, iron workers,
motor mechanic etc. are often required to undergo such training.
Internship Training – Internship Training is a joint programme of
training between educational institutions and business firms.
Besides carrying out regular studies, the trainees also work in
some factory or office to acquire practical knowledge and skills.
Vestibule training – Vestibule Training is a method of training
which is conducted on the equipment & machines they will be
using. But the training is conducted away from actual work
place. It is used where the employees are required to handle
sophisticated machinery.
 Directing: Concept and importance
 Elements of Directing
 Motivation - concept, Maslow’s hierarchy
of needs, Financial and non-financial
incentives
 Leadership - concept, styles - authoritative,
democratic and laissez faire
 Communication - concept, formal and
informal communication;
7.1
Concept, Elements and
Importance of Directing
Concept of Directing
In the ordinary sense, directing means giving
instructions and guiding people in doing work. In our
daily life, we come across many situations like a hotel
owner directing his employees to complete certain
activities for organising a function, a teacher directing
his student to complete an assignment, a film director
directing the artists about how they should act in the
film etc. In all these situations, we can observe that
directing is done to achieve some predetermined
objective.
In the context of management of an organisation:
Directing refers to the process of instructing,
guiding, coaching/counseling, motivating and
leading the people in an organisation to achieve
Elements of Directing
Directing function of management has four main
elements:
(i) Supervision
(ii) Motivation
(iii) Leadership and
(iv) Communication.
1. Supervision
The term supervision can be understood in two ways.
Firstly, it can be understood as an element of directing
and secondly, as a function performed by supervisors
in the organisational hierarchy. As an element of
directing: Supervision being an element of directing,
every manager in the organisation supervises his/her
subordinates. In this sense, supervision can be defined
as follows:
Supervision is the process of guiding the efforts of
of employees and other resources to accomplish
the desired objectives. It means overseeing what is
being done by subordinates and giving
instructions to ensure optimum utilisation of
resources and achievement of work targets.
As the function to be performed by supervisor: Supervision
is a managerial position in the organisation hierarchy at
the operative level i.e., immediately above the worker. The
functions and performance of the supervisor are vital to
any organisation because he is directly related with
workers whereas other managers have no direct touch
with bottom level workers.
2. Motivation
Motivation means incitement or inducement to act or
move. In the context of an organisation, it means the
process of making subordinates to act in a desired
manner to achieve certain organisational goals.
"Motivation means a process of stimulating people
to action to accomplish desired goals."
– William G. Scout
3. Leadership
Leadership is the process of influencing the behaviour
of people by making them strive voluntarily towards
achievement of organisational goals. Leadership
indicates the ability of an individual to maintain good
interpersonal relations with followers and motivate
them to contribute for achieving organisational
objectives.
"Leadership is the art or process of influencing
people so that they will strive willingly and
enthusiastically towards the achievement of group
goals." –Harold Koontz and Heinz Weihrich
4. Communication
The word communication has been derived from the
Latin word ‘communis’ which means ‘common’ which
consequently implies common understanding.
Communication is defined in different ways. Generally,
it is understood as a process of exchange of ideas,
views, facts, feelings etc., between or among people to
create common understanding.
"Communication is a process by which people
create and share information with one another in
order to reach common understanding." –Rogers
Characteristics/Features of Directing
1. Directing initiates action.
Directing is a key managerial function. A manager has
to perform this function along with planning,
organising, staffing and controlling while discharging
his duties in the organisation. While other functions
prepare a setting for action, directing initiates action in
the organisation. Thus, directing is an executive
function.
2. Directing takes place at every level of
management.
Every manager, from top executive to supervisor
performs the function of directing. The directing takes
place wherever superior-subordinate relations exist.
3. Directing is a continuous process.
Directing is a continuous activity. It takes place
throughout the life of the organisation irrespective of
people occupying managerial positions.
We can observe that in organisations like Infosys, Tata, BHEL, HUL the
managers may change but the directing process continues because without
direction the organisational activities cannot continue further.
4. Directing flows from top to bottom.
Directing is first initiated at top level and flows to the
bottom through organisational hierarchy. It means that
every manager can direct his immediate subordinate
and take instructions from his immediate boss.
Importance of Directing
The importance of directing can be understood by the
fact that every action in the organisation is initiated
through directing only. Directing guides towards
achievement of common objectives. Through directing,
managers not only tell the people in the organisation
as to what they should do, when they should do and
how they should do but also see that their instructions
are implemented in proper perspective. Very often, this
becomes an important factor in the efficient and
effective functioning of the organisation.
The points which emphasise the importance of
directing are presented as follows:
1. Initiates action
Directing helps to initiate action by people in the
organisation towards attainment of desired objectives.
For example, if a supervisor guides his subordinates
and clarifies their doubts while performing a task, it
will help the worker to achieve work targets given to
him.
2. Integrates employees efforts
Directing integrates employees efforts in the
organisation in such a way that every individual effort
contributes to the organisational performance. Thus, it
ensures that the individuals work for organisational
goals.
For example, a manager with good leadership abilities
will be in a position to convince the employees working
under him that individual efforts and team effort will
lead to achievement of organisational goals.
3. Guides employees
Directing guides employees to fully realise their
potential and capabilities by motivating and providing
effective leadership.
A good leader can always identify the potential of his
employees and motivate them to extract work up to
their full potential.
4. Facilitates introduction of needed
changes in the organisation
Directing facilitates introduction of needed changes in
the organisation.
Generally, people have a tendency to resist changes in
the organisation. Effective directing through motivation,
communication and leadership helps to reduce such
resistance and develop required cooperation in introducing
changes in the organisation.
For example, if a manager wants to introduce new
system of accounting, there may be initial resistance from
accounting staff. But, if manager explains the purpose,
provides training and motivates with additional rewards,
the employees may accept change and cooperate with
manager.
5. Brings stability and balance in the
organisation
Effective directing helps to bring stability and balance
in the organisation since it fosters cooperation and
commitment among the people and helps to achieve
balance among various groups, activities and the
departments.
Think about it
Is directing required at planning stage? Give reason to support
your answer.
Ans. No, directing is not required at planning stage since it is an
executive function. It initiates action in the organisation.
RECAP
Concept of Directing
Directing refers to the process of instructing, guiding, counselling,
motivating and leading people in the organisation to achieve its
objectives.
Elements of Directing
1. Supervision means instructing, observing, monitoring
and guiding the efforts of the subordinates for the achievement
of work targets in the desired manner.
2. Motivation means stimulating people to action to accomplish
desired goals.
3. Leadership is the art or process of influencing people so that
they strive willingly and enthusiastically towards the achiev-
ement of group goals.
4. Communication is the process of exchange of ideas and
information among people to create common understanding.
Features/Characteristics of Directing
1. Directing initiates action. Directing initiates action by
people in the organisation towards attainment of desired
objectives.
2. It takes place at every level of management. Every
manager from top executive to the supervisor performs
the directing function.
3. It flows from top to bottom through the
organisation hierarchy. Every manager can direct his
immediate subordinates and take instructions from his
immediate boss.
4. It is a continuous process as it takes place throughout
the life of the organisation irrespective of the people
occupying managerial positions.
Importance of Directing PI2CS
1. Directing helps to initiate action by people in the
organization towards attainment of desired objectives.
2. Directing integrates employees’ efforts in the
organization in such a way that every individual effort
contributes to the organisational performance. Thus, it
ensures that the individuals work for organisational
goals.
3. Directing guides employees to fully realise their
effective leadership.
4. Directing facilitates introduction of needed changes in
the organisation by reducing resistance to change and
developing cooperation.
5. Directing brings stability and balance in the
organisation since it fosters cooperation and commitment
among the people and helps to achieve balance among
various groups, activities and the departments.
Question 1
Alfa Ltd.’ was dealing in renewable energy. To get the business,
the team leader and his team used to travel to different
states to give presentation to their clients. As per the
policy of the company, the leader used to travel by air,
whereas his team travelled by road/train. It was not only
time consuming but also at time forced female team members
to travel alone. As a result, the subordinates were not acting
in a desired manner to achieve organisational goals. The CEO
came to know about it.

He called the team leader, discussed the matter with him
and decided to change the travel policy of the company.
It was decided that all the members including the leader
would travel together in future and would usefully utilise
the travelling time in discussion with the subordinates
about presentation to be given to the clients. This made
a positive impact and every member of the team started
acting in a manner as desired by the team leader.
Identify and explain the element of directing function of
management used by the CEO. (CBSE 2016) (3 marks)

Answer 1
Motivation

Question 2
Identify and explain the following elements of directing
function of management: (6 marks)
(i) Mr. Pramod Aggarwal, a manager explains a worker
about operations to be carried out by him on a hi-
tech machine.
(ii) Mr. Rajinder Tyagi, a mining engineer explains about
safety precautions to be followed while working in a
coal mine.
(iii) Mr. Anil Sarraf, a managing director declares share in
the profits to the managers for their contribution to
enhance profits of the company.
(iv) Mr. Rajiv Asopa, a manager inspires his employees
by playing a lead role in performing a work.

Answer 2
(i) Supervision
(ii) Communication
(iii) Motivation
(iv) Leadership (Explain)

Question 3
M/s Beta Ltd. deals in consumer goods. It employs 100
workers and 10 operative managers who give guidance and
support to the workers while operating the machinery. The
company has a policy of granting leave as per the
requirement of the workers. Workers are generally granted
leave on festivals and special occasions. Recently on Puja
festival, it received a big order. Workers are keen to take Puja
holidays while management is pressing hard for overtime.This
matter was placed before the Personnel Manager who called
the meeting of operative managers and workers to
inform them about the changes in the incentive plan
which states payment of double wages which states payment
of double wages for working overtime and triple wages for
working on holidays. Workers without any pressure
voluntarily took limited holidays and were able to increase
their earning by working overtime and on holidays.
During Board of Directors’ meeting, Personnel Manager was
asked to update the management for achieving higher output,
meeting timely supplies without any confrontation with
workers. Personnel Manager replied, “I just used a carrot with
no sticks approach”.
By quoting the lines from above paragraph state any two
elements of directing. (3 marks)
Answer 3
(i) Supervision (give the meaning)
‘it employs 10 operating managers ……. support to the
workers.’
(ii) Motivation (give the meaning)
‘to pay double wages for working overtime and triple wages
for working on holidays.’

Question 1
Through ___________ managers not only tell the
people in the organisation as to what they should do,
when they should do and how they should do but also see
that their instructions are implemented in proper
perspective. (Choose the correct alternative)
(a) Planning
(b) Organising
(c) Staffing
(d) Directing
Answer 1
(d) Directing

Question 2
Directing integrates employees efforts in the
organisation in such a way that _____________ .

Answer 2
every individual efforts contributes to the organisational
performance

Question 3
“A manager with good leadership abilities will be in a
position to convince the employees working under him
that individual efforts and team effort will lead to
achievement of organisational goals.”
The above statements highlights the importance of one
of the functions of management. Identify and state the
point of importance.

Answer 3
Directing integrates employees’ efforts in the organisation
in such a way that every individual effort contributes to
the organisational performance.

Question 4
“A good leader can always identify the potential of
employees and motivate them to extract work up to
their full potential.”
The above statement highlights the importance of one
of the functions of management. Identify and state the
point of importance.

Answer 4
Directing guides employees to fully realise their
effective leadership

Question 5
Mr. Rajesh Lathigara, a manager wanted to introduce
new system of accounting in the organisation. There
were initial resistance from accounting staff. But Mr.
Rajesh explained the purpose, provided training and
motivated them with additional rewards. The employees
then accepted change and cooperated with the manager.
Identify and state the point of importance of one of the
functions of management highlighted above.

Answer 5
Directing facilitates introduction of needed changes in the
organisation - Effective directing through motivation,
communication and leadership helps to reduce
resistance and develop required cooperation in
introducing changes in the organisation.

Question 6
Effective directing helps to bring stability and balance in
the organisation since _____________ .

Answer 6
It fosters cooperation and commitment among the
people and helps to achieve balance among various
groups, activities and the departments.

Question 7
The process of guiding the efforts of employees and
other resources to accomplish the desired objectives is
called ____________. (Leadership/Supervision).

Answer 7
Supervision

Question 8
____________ means overseeing what is being done by
subordinates and giving instructions to ensure optimum
utilisation of resources and achievement of work targets.

Answer 8
Supervision

Question 9
___________ means the process of making
subordinates to act in a desired manner to achieve
certain organisational goals.
(Supervision/Motivation/Leadership).

Answer 9
Motivation

Question 10
___________ means a process of stimulating people to
action to accomplish desired goals.

Answer 10
Motivation

Question 11
__________ is the activity of influencing people to strive
willingly for group objectives. (Motivation/ Leadership/)

Answer 11
Leadership

Question 12
___________ is the process of influencing the behavior
of people by making them strive voluntarily towards
achievement of organisational goals.

Answer 12
Leadership

Question 13
___________ is a process of exchange of ideas, views,
facts, feelings, etc. between or among people to create
common understanding.
(a) Supervision
(b) Motivation
(c) Leadership
(d) Communication

Answer 13
(d) Communication

Question 14
___________ is a process by which people create and
share information with one another in order to reach

Answer 14
Communication

Question 15
Which one of the following is not an element of
directing? (Choose the correct alternative)
(a) Motivation
(b) Communication
(c) Delegation
(d) Supervision

Answer 15
(c) Delegation

Question 16
A manager needs to use various ways to lead, motivate and
inspire the subordinates and to communicate with them
suitably.
Identify the function of management highlighted in the given
statement.

Answer 16
Directing function of management highlighted in the
given statement.

Question 17
Name the concept of management which stimulates people
to take up work voluntarily.

Answer 17
Motivation

Question 18
Name the element of one of the functions of management
which refers to the process of making subordinates to act in
a desired manner to achieve certain organisational goals.

Answer 18
Motivation

Question 19
It refers to the process of using non-coercive influence to
direct and coordinate the activiites of the members of an
organised group towards the accomplishment of group
objectives.
Identify the concept of management highlighted in the above
statement.

Answer 19
Leadership

Question 20
Column I Column II
(i) The superiors oversee the activities of their (a) Motivation
subordinates.
(ii) The superiors assure the subordinates that their (b) Supervision
needs will be taken care of.
(iii) The superior attempts to influence the behaviour (c) Communication
of people at work towards the realisation of
specified goals.
(iv) The superiors share information with the subordi- (d) Leadership
nates in order to reach common underst-anding.

Answer 20
(i) – (b), (ii) – (a), (iii) –(d), (iv)– (c)

Question 21
Name the element of directing which can be understood as
the process of guiding the efforts of employees and other
resources to accomplish the desired objectives.

Answer 21
Supervision

Question 22
Name the element of directing in which a manager maintains
good inter-personal relations with his subordinates and
motivate them to contribute to achieve organisational
objectives.

Answer 22
Leadership

Question 23
State the element of directing which helps in implementing
the principle of ‘scalar chain’.

Answer 23
Communication

Question 24
Name the term used in management which stimulates
people to take up work voluntarily.

Answer 24
Motivation

Question 25
Name the function of management the performance of
which requires establishing an atmosphere that employees
have to do their best.

Answer 25
Directing

Question 26
At which level of management directing takes place?
(CBSE 2013)

Answer 26
Directing takes place at every level of management, i.e.,
from top management to supervisory level.

Question 27
It is the activity of influencing people to strive willingly for
group objective. Identify it. (CBSE 2011)

Answer 27
Leadership

Question 28
Name the element of directing which involves systematic and
continuous process of telling, listening and understanding.

Answer 28
Communication

Question 29
To create a desire among employees to perform to the best
of their ability is an important element of directing. Name it.

Answer 29
Motivation

Question 30
Which element of directing helps in inspiring subordinates
to give their best to the organisation?

Answer 30
Motivation

Question 31
Explain in one sentence how direction is an executive
function of management. (CBSE 2013)

Answer 31
Directing initiates action in the organisation while
other functions of management (planning, organising,
staffing and controlling) just prepare a setting for
action.Thus, directing is an executive function.

Question 32
The following table contains two columns on the elements
of directing and main purposes thereof. You are required to
indicate the best alternative combination of the element and
main purpose.
Element of directing Main purpose
1. Supervision (i) Instructing, feedback
2. Motivation (ii) Influencing behaviour
3. Leadership (iii) Fulfillment of needs
4. Communication (iv) Overseeing performance

Select from the options given below
(a) 1. (iv); 2. (iii); 3. (ii); 4.(i)
(b) 1. (i); 2.(ii); 3.(iv); 4.(iii)
(c) 1.(iii)- 2. (ii); 3. (iv); 4.(i)
(d) 1. (iii); 2.(iv); 3.(ii); 4.(i)

Answer 32
(a) 1. (iv); 2. (iii); 3. (ii); 4.(i)

7.2
Motivation: Concept;
Maslow's Hierarchy of
Needs; Financial and Non-
Financial Incentives
Concept of Motivation
Motivation means incitement or inducement to act or
move. In the context of an organisation, it means the
process of making subordinates to act in a desired manner
to achieve certain organisational goals.
While discussing about motivation, we need to understand
three inter related terms — motive, motivation and
motivators.
1. Motive
A motive is an inner state that energises, activates
or moves and directs behaviour towards goals.
Motives arise out of the needs of individuals. Realisation of
a motive causes restlessness in the individual which
prompts some action to reduce such restlessness.
For example, the need for food causes hunger an
account of which a man searches for food. Some such
motives are – hunger, thirst, security, affiliation, need
for comfort, recognition etc.,
2. Motivation
Motivation is the process of stimulating people to
action to accomplish desired goals.
Motivation Process: Motivation process is based on
human needs. Motivation depends upon satisfying
needs of people. An unsatisfied need of an individual
creates tension which stimulates his or her drives.
These drives generate a search behaviour to satisfy such
need. If such need is satisfied, the individual is relieved
of tension.
Example: Golu is very hungry since he did not have
breakfast in the morning. By 2 p.m., he became restless and
started walking on the road in search of a hotel for snacks
or meals. After walking for about 1 km, he could find a
hotel where roti and dal was available for `100.
Since he had only `200 in his pocket, he paid ` 100 and
had a satisfying meal. After taking a meal, he felt that
he had regained energy.
3. Motivators
Motivator is the technique/incentive used to motivate
people in an organisation to improve performance.
Managers use diverse motivators/incentives like pay,
bonus, promotion, recognition, praise, responsibility etc.,
in the organisation to influence people to contribute their
best.
 Top Tip
Incentive means all measures which are used to motivate
people to improve performance. These incentives may be
broadly classified as financial and non-financial. For example,
pay and bonus are financial incentives, whereas promotion,
recognition, praise, responsibility etc. are non-financial
incentives.
 “Motivation means a process of stimulating people to action
to accomplish desired goals” —William G. Scout
 “Motivation refers to the way in which urges, drives, desires,
aspirations, strivings or needs direct, control and explain the
behaviour of human beings.” —Mc Farland
 “Motivation is a complex force starting with keeping a person
at work in an organisation. Motivation is something which
moves the person to action and continues him in the course of
action already initiated.” —Dubin
 “Motivation is a process which begins with a physiological or
psychological need or deficiency which triggers behaviour or a
drive that is aimed at a goal or incentive.” —Fred Luthans
Features of Motivation
1. Motivation is an internal feeling.
The urge, drives, desires, aspirations, striving or needs
of human being, which are internal, influence human
behaviour. For example, people may have the urge or
desire for possessing a motorbike, comfortable house,
reputation in the society. These urges are internal to an
individual.
2. Motivation produces goal directed
behaviour.
For example, the promotion in the job may be given to
employee with the objective of improving his performance.
If the employee is interested in promotion, it helps to
produce a behaviour to improve performance.
3. Motivation can be either positive or
negative.
Positive motivation provides positive rewards like
increase in pay, promotion, recognition etc.
Negative motivation uses negative means like
punishment, stopping increments, threatening etc. which
also may induce a person to act in the desired way.
4. Motivation is a complex process.
Motivation is a complex process as the individuals are
heterogeneous in their expectations, perceptions and
reactions. Any type of motivation may not have
uniform effect on all the members.
Maslow’s Need Hierarchy Theory of
Motivation
Maslow’s Need Hierarchy Theory is considered
fundamental to understanding of motivation.
Abraham Maslow, a well-known psychologist in a
classic paper published in 1943, outlined the elements
of an overall theory of motivation. His theory was
based on human needs. He felt that within every
human being, there exists a hierarchy of five needs.
These are:
1. Basic Physiological Needs: These needs are most
basic in the hierarchy and corresponds to primary
needs. Hunger, thirst, shelter, sleep, etc. are some
examples of these needs. In the organisational
context, basic salary helps to satisfy basic
physiological needs..
2. Safety/SecurityNeeds: These needs provide security
and protection from physical and emotional harm.
Examples: job security, stability of income, Pension
plans etc.
3. Affiliation/Belonging Needs: These needs refer
to affection, sense of belongingness, acceptance and
friendship.
4. Esteem Needs: These include factors such as self-
respect, autonomy status, recognition and attention.
5. Self Actualisation Needs: It is the highest level of
need in the hierarchy. It refers to the drive to become
what one is capable of becoming. These needs include
growth, self-fulfilment and achievement of goals.
Assumptions of Maslow’s Need Hierarchy
Theory
1. People’s behaviour is based on their needs.
Satisfaction of such needs influences their
behaviour.
2. People’s needs are in hierarchical order, starting
from basic needs to other higher level needs.
3. A satisfied need can no longer motivate a person;
only next higher level need can motivate him.
4. A person moves to the next higher level of the
hierarchy only when the lower need is satisfied.
Role of Maslow’s Theory in Motivation of
Employees
Maslow’s Theory focuses on the needs as the basis for
motivation. It helps managers to realise that need level
of employee should be identified to provide motivation
to them.
Financial Incentives
Financial incentives refer to incentives which are in
direct monetary form or measurable in monetary
term and serve to motivate people for better
performance. These incentives may be provided
on individual or group basis.
 Top Tip
In the context of existing economic system, money has
become a means to satisfy the physical needs of daily life and
also of obtaining social position and power. Since, money has
the purchasing power, it becomes a very important incentive
for every individual.
1. Pay and allowances
For every employee, salary is the basic monetary
incentive. It includes basic pay, dearness allowance and
other allowances. Salary system consists of regular
increments in the pay every year and enhancement of
allowances from time-to-time. In some business
organisations, pay hike and increments may be linked
to performance.
2. Bonus
Bonus is an incentive offered over and above the
wages/salary to the employees.
3. Perquisites
In many companies, perquisites and fringe benefits are
offered such as car allowance, housing, medical aid,
and education to the children etc., over and above the
salary.
These measures help to provide motivation to the
employees/managers.
4. Profit Sharing
Profit sharing is meant to provide a share to employees
in the profits of the organisation. This serves to
motivate the employees to improve their performance
and contribute to increase in profits.
5. Co-partnership/ Stock option
Under this incentive scheme, employees are offered
company shares at a set price, which is lower than
market price. The allotment of shares creates a feeling
of ownership to the employees and makes them to
contribute for the growth of the organisation.
In Infosys, the scheme of stock option has been implemented as a part of

managerial compensation.
6. Productivity linked wage incentives
Several wage incentive plans aim at linking payment of
wages to increase employee productivity at individual
or group level.
7. Retirement Benefits
Retirement benefits such as provident fund, pension,
and gratuity provide financial security to employees
after their retirement. This acts as an incentive when
they are in service in the organisation.
Non- financial Incentives
All the needs of individuals are not satisfied by money
alone. Psychological, social and emotional factors also
play important role in providing motivation. Non-
financial incentives mainly focus on these needs.
 Top Tip
Sometimes, monetary aspect may be involved in non-financial
incentives as well. However, the emphasis is to provide
psychological and emotional satisfaction rather than money
driven satisfaction. For example, if an individual gets
promotion in the organisation, it satisfies him psychologically
more as he gets a feeling of elevation, increase in status,
increase in authority, challenge in the job, etc. Though
promotion involves payment of extra money, non-monetary
aspects over-ride monetary aspects.
1. Employee Recognition programmes
Most people have a need for evaluation of their work
and due recognition. They feel that what they do
should be recognised by others concerned.
Recognition means acknowledgment with a show
of appreciation.
When such appreciation is given to the work
performed by employees, they feel motivated to
perform/work at higher level.
Some examples of employee recognition are:
• Congratulating the employee for good performance
• Installing award or certificate for best performance
• Rewarding an employee for giving valuable suggestions
• Displaying on the notice board or in the company
news letter about the achievement of employee
• Distributing mementos, complementaries like T-
shirts in recognition of employee services
2. Job security
Employees want their job to be secure. They want
certain stability about future income and work so that
they do not feel worried on these aspects and work
with greater zeal.
However, there is one negative aspect of job security.
When people feel that they are not likely to lose their
jobs, they may become complacent.
In India, this aspect is more important considering the inadequate job

opportunities and too many aspirants for these jobs.
3. Career Advancement Opportunity
Every individual wants to grow to the higher level in the
organisation. Managers should provide opportunity to
employees to improve their skills and be promoted to the
higher level jobs.
Appropriate skill development programmes, and sound
promotion policy will help employees to achieve
promotions. Promotion works as a tonic and encourages
employees to exhibit improved performance.
4. Employee participation
'Employee participation' means involving employees
in decision making of the issues related to them.
In many companies, these programmes are in practice
in the form of joint management committees, work
committees, canteen committees etc.
5. Status
In the organisational context, status means ranking of
positions in the organisation.
 The authority, responsibility, rewards, recognition,
perquisites and prestige of job indicate the status
given to a person holding a managerial position.
 Psychological, social and esteem needs of an
individual are satisfied by status given to their job.
6. Job Enrichment
Job enrichment is concerned with designing jobs that
include:
• greater variety of work content requiring higher
level of knowledge and skill;
• give workers more autonomy and responsibility;
and
• provide the opportunity for personal growth and a
meaningful work experience.
If jobs are enriched and made interesting, the job itself
becomes a source of motivation to the individual.
7. Organisational Climate
Organisational climate indicates the characteristics
which describe an organisation and distinguish one
organisation from the other.
• These characteristics influence the behaviour of
individuals in the organisation. Some of these
characteristics are–individual autonomy, reward
orientation, consideration to employees, risk-
tasking etc.
• If managers take positive measures regarding these
aspects, it helps to develop better organisational
climate.
8. Employee Empowerment
'Employee empowerment' means giving more
autonomy and power to subordinates.
Empowerment makes people feel that their jobs are
important. This feeling contributes positively to the
use of skills and talents in the job performance.
RECAP
Features of Motivation
(i) It is an internal feeling. The urge, drives, desires,
aspirations, striving or needs of human being, which are
internal, influence human behaviour. (ii) It produces goal
directed behaviour. For example, if the employee is interested
in promotion, it helps to produce a behaviour to improve
performance. (iii) It can be positive or negative. Positive
motivation provides positive rewards like increase in pay,
promotion, recognition etc. Negative motivation uses
negative means like punishment, stopping increments,
threatening etc. which also may induce a person to act in the
desired way. (iv) It is a complex process because any type of
motivation may not have a uniform effect on all the members.
Maslow’s Need Hierarchy Theory of Motivation
Maslow’s theory of motivation was based on human needs.
He felt that within every human being, there exists a
hierarchy of
five needs. These are:
1. Basic Physiological Needs: Hunger, thirst, shelter and
sleep are some examples of these needs. In the organisational
context, basic salary helps to satisfy these needs.
2. Safety/Security Needs: These needs provide security
and protection from physical and emotional harm.
Examples: job security, stability of income, Pension
plans, etc.
3. Affiliation/Belonging Needs: These needs refer to
affection, sense of belongingness, cordial relations with
colleagues, acceptance and friendship.
4. Esteem Needs: These include factors such as self-
respect, autonomy status, recognition and attention, job
titles, etc.
5. Self Actualization Needs: It refers to the drive to
become what one is capable of becoming. These needs
include growth, self-fulfillment and achievement of
goals.
Assumptions of Maslow’s Need Hierarchy Theory: (i) People’s
behaviour is based on their needs. Satisfaction of such needs
influences their behaviour. (ii) People’s needs are in
hierarchical order, starting from basic needs to higher level
needs. (iii) A satisfied need no longer can motivate a person;
only next higher level need can motivate him. (iv) A person
moves to the next higher level need only when the lower
need is satisfied.
Importance of Maslow’s Need Hierarchy Theory: Maslow’s
Theory focuses on the needs as the basis for motivation. It
helps managers to realise that need level of employee should
be identified to provide motivation to them.
Financial incentives to motivate employees P4CRB
Financial incentives are measurable in terms of money. To
satisfy basic physiological needs of lower level employees,
financial incentives are important.
1. Productivity linked wage incentive involves linking
payment of wages of employees to the increase in their
productivity at individual or group level.
2. Bonus involves offering an amount of funds over and
above the wages/ salary to the employees.
3. Profit Sharing involves providing a share in the profits
of the organization to employees. (This motivates them
to improve their performance and contributes to increase
in profits of the organisation.)
4. Co-partnership/Stock option is an incentive under which
the employees are offered company shares at a set price
which is lower than market price. (The allotment of
shares at lower price creates a feeling of ownership
to the employees and makes them to contribute for
the growth of the organisation.)
5. Retirement Benefits include benefits such as
provident fund, pension and gratuity that provide
financial security to employees after their retirement.
(This acts as an incentive when they are in service in
the organisation.)
6. Perquisites include incentives such as car
allowance, housing, medical aid and education to
the children etc., which are offered over and above
the salary.
7. Pay and allowances – salary, dearness allowance,
etc. Salary is the basic financial incentive.
Non-financial Incentives to Motivate Employees
CSO J2P - ER
All the needs of individuals are not satisfied by money
alone. Psychological, social and emotional factors also play
important role in providing motivation. Non-financial
incentives mainly focus on these needs.
1. Job enrichment: Job Enrichment means designing jobs
that include greater variety of work content, require higher
level of knowledge and skill, give workers more autonomy and
responsibility and provide the opportunity for personal
growth and a meaningful work experience. • If jobs are
enriched and made more interesting, the job itself
becomes a source of motivation to the individual.
2. Employee recognition programme: It means
acknowledging and appreciating the work performed by the
employees to motivate them to perform at higher levels. (e.g.,
rewarding an employee for giving valuable
suggestions, congratulating and giving award for good
performance, Displaying on the notice board or in the
company newsletter about the achievement of employee,
distributing mementos, complementaries like T-shirts
in recognition of employee services, etc.)
3. Employee participation: It means involving
employees in decision-making issues related to them,
for example, making them a part of joint management
committees, work committees, canteen committees, etc.
4. Employee empowerment: It means giving more
autonomy and powers to the subordinates to make
them feel that their jobs are important.
5. Job security which refers to providing stability to
the employees about future income and work so
that they do not feel worried on these aspects and
work with greater zeal. (Negative aspect of job
security: When people feel that they are not likely to
lose their jobs, they may become complacent.)
6. Career advancement opportunity/Promotion
means providing an opportunity to employees to
improve their skills to be promoted to higher level of
jobs. Appropriate skill development programmes and
sound promotion policy provide career advancement
opportunity to the employees.
7. Status: It means ranking of positions in the
organisation. The authority, responsibility, rewards,
recognition, etc. of a job indicate the status given to a
person. Status given to a job satisfies psychological,
social and esteem needs of an individual.
Organisational climate: It indicates the
characteristics, like individual autonomy, reward
orientation, consideration to employees, risk taking
etc. which describe an organization and distinguish one
organization from the other. These characteristics
influence the behaviour of individuals in the
organisation.
Question 1
A Public transport corporation has hired 1000 buses for the
different routes for the passengers of metropolitan city. Most
of the 3000 crewmen (drivers, conductors, helpers etc.) of
these buses have been found to be unsatisfactorily dealing with
public and daily commuters. They seem to be little interested in
the job and the job seem to have lost all meaning to them.
As manager of the public transport company what financial
and non-financial incentives will you use to improve the
working of crewman in question? State any two of each type
of incentives. (4 marks)
Answer 1
Financial incentives:
(i) Productivity linked wage incentives
(ii) Retirement benefits
(iii) Perquisites (Explain any two)
Non-Financial incentives:
(i) Career Advancement Opportunity
(ii) Job Enrichment
(iii) Employee Recognition Programmes
(iv) Job Security (Explain any two)

Question 2
Rahim was working in an enterprise on daily wages basis. It
was difficult for him to fulfill the basic needs of his family. His
daughter fell ill. He had no money for his daughter’s
treatment. To meet the expenses of her treatment, he
participated in a cycle race and won the prize money. The
cycle company offered him a permanent pensionable job
which he happily accepted.
(i) By quoting the lines from the above para identify the
needs of Rahim that are satisfied by the offer of the cycle
company.
(ii) Also, explain two other needs of Rahim followed by
above that are still to be satisfied.
Answer 2
(i) Needs of Rahim that are satisfied by the offer of the
cycle company are Physiological and Safety/Security
needs.
‘The cycle company offered him a permanent pensionable job’.
(ii) The other needs followed by the above stated needs
that are still to be satisfied are:
(a) Affiliation/Belongingness needs: These needs refer to
the need for affection, sense of belonging, acceptance
and friendship.
(b) Esteem needs: These needs refer to the need for self-
respect, autonomy, status, recognition, etc.
Question 3
Mrs. Rajlaxmi is working as the Human Resource
Consultant in a firm manufacturing cosmetic, which is
facing a problem of high employee turnover. The CEO of
the company has invited suggestions from her for
retaining the talented employees & reducing the
employee turnover. Mrs. Rajlaxmi recommends that the
good employees be rewarded in a way that it creates a
feeling of ownership among the employees and at the
same time makes them contribute towards the growth
of the organization.
(a) Identify the incentive and explain its type, which has
been suggested by Mrs. Rajlaxmi to the CEO of the
company.
(b) Also explain any two other incentives of the same
type. (CBSE SQP 2016) (4 marks)

Answer 3
(a) Financial incentive.
Co -Partnership/ Stock Option
(b) Other financial incentives: (i) Pay and allowances (ii)
Profit sharing (Explain)

Question 4
Sadaf is the Chief Executive Officer of a reputed
company. She introduced appropriate skill development
programmes and a sound promotion policy for the
employees of her company. to motivate and retain the
best talent in the company, she designed the jobs of the
managers to include greater variety of work content.
Identify and explain the two incentives introduced by
Sadaf to motivate the employees of her company.

Answer 4
The two incentives used by Sadaf to motivate the
employees of her company are:
(i) Career Advancement Opportunity
(ii) Job Enrichment (Explain)

Question 5
Sanjana Ltd. assured their employees that in spite of
recession no worker will be retrenched from the job.
Name the type of incentive offered to the employees.

Answer 5
Job security (Non-financial incentive)

Question 6
Rajat a Sales Manager, achieved his sales target one
month in advance. This achievement was displayed on
the notice board and the CEO of the Company awarded
a certificate for the best performance to him. Name the
incentive provided to Rajat. (1 mark)

Answer 6
The Incentive provided to Rajat is ‘Recognition’/Employee
recognition programmes

Question 7
Prachi is working in an MNC. She has been given an
option to buy the shares of the company at an amount
less than the market price because of her performance
as an incentive. Identify which incentive is being given to
her. (1 mark)

Answer 7
Co-partnership/Stock option

Question 8
Trendz Industries provides free car, rent free home and
medical allowance to Ramesh (director of the company).
Identify the incentive offered to Ramesh. (1 mark)

Answer 8
Perquisites (Financial incentive)

Question 9
Charu is working in a company on permanent basis. As
per the job agreement she had to work for 8 hours a
day and was free to work overtime. Charu worked
overtime. Due to overtime she fell ill and had to take
leave from her work. No one showed concern and
enquired about her health. She realised that she was
fulfilling only some of her needs while some other needs
still remained to be fulfilled
(i) Identify the needs of Charu discussed in the above
para, by quoting the lines.
(ii) Also explain two other needs of Charu followed by
the above needs, which still remained to be satisfied.
(4 marks)

Answer 9
(i) (a) Safety/Security needs: "Charu is working in a company
on permanent basis.”
(b)Affiliation/Belonging needs: "No one showed concern
and enquired about her health.”
(ii) (a) Esteem needs
(b) Self actualisation needs (Explain)

Question 1
___________ is a process which begins with a
physiological or psychological need or deficiency which
triggers behaviour or a drive that is aimed at a goal or
incentive. (Choose the correct alternative)
(a) Supervision
(b) Motivation
(c) Leadership
(d) Communication
Answer 1
(b) Motivation

Question 2
___________ is a complex force starting with keeping
a person at work in an organisation. It is something
which moves the person to action and continues him in
the course already initiated.

Answer 2
Motivation

Question 3
___________ refers to the way in which urges, drives,
desires, aspirations, strivings or needs direct, control and
explain the behaviour of human beings.

Answer 3
Motivation

Question 4
Column I Column II
(i) Technique to influence people to contribute their (a) Motive
best.
(ii) An inner state that energises, activates or moves (b) Motivation
and directs behaviour towards goals.
(iii) The process of stimulating people to action to (c) Motivator

Answer 4
(i)-(c),(ii)-(a),(iii)-(b)

Question 5
Motivation is a complex process as _____________ .

Answer 5
the individuals are heterogeneous in their expectations,
perceptions and reactions. Any type of motivation may
not have uniform effect on all the members.

Question 6
Column I Column II
(i) These needs refer to affection, sense of belongingness, (a) Physiological
acceptance and friendship. needs
(ii) These needs are most basic in the hierarchy. (b) Safety needs
(iii) These needs include self-respect, autonomy status, (c) Affiliation needs
recognition and attention
(iv) These needs provide security and protection from physical (d) Esteem needs
and emotional harm.

Answer 6
(i)-(c),(ii)-(a),(iii)-(d),(iv)-(b)

Question 7
In the organisational context, _________ helps to
satisfy basic physiological needs.

Answer 7
Basic salary

Question 8
__________ refer to the drive to become what one is
capable of becoming. (Fill up the blank with correct answer)

Answer 8
Self actualisation needs

Question 9
Column I Column
(i) Self respect, autonomy status, recognition (a) Basic physiological
and attention. needs.
(ii) Growth, self-fulfillment and achievement (b) Safety/security
of goals needs
(iii) Hunger, thirst, shelter, sleep, etc. (c) Esteem needs
(iv) Stability of income, pension plans, etc. (d) Self- Actualisation
needs

Answer 9
(i)-(c),(ii)-(d),(iii)-(a),(iv)-(b)

Question 10
Choose the correct alternative by matching the columns :
Column I (Needs) Column II Column III
Individual Example Organisational Example
(i) Self actualisation needs (I) Friendship (a) Pension Plan
(ii) Esteem needs (II) Status (b) Basic salary
(iii) Affiliation/belongingness (III)Self - fulfillment (c) Achievement of goals
needs
(iv) Safety/securities needs (IV) Stability of Income (d) Coordinations with
colleagues
(v) Basic physiological (V) Hunger (e) Job title
needs

(A) (i)-(II)- (e) ,(ii)-(III)- (c) ,(iii)-(I)- (d) ,(iv)-(IV)- (a) , (v) -(V)-
(b)
(B) (i) -(III)- (c) , (ii)-(II)- (e) ,(iii)-(I)- (d) ,(iv)-(IV)- (a) , (v) -(V)-
(b)
(C) (i) -(V)- (b) , (ii)-(II)- (e) , (iii)-(I)- (d) ,(iv)-(IV)- (a) , (v) -
(III)- (c)
(D) (i) -(IV)- (a) ,(ii)-(II)- (e) ,(iii)-(I)- (d) , (iv)-(III)- (c) , (v) -(V)-
(b)

Answer 10
(b) (i) – (iii) – (c), (ii) - (ii) – (e), (iii) – (i) – (d), (iv) –
(iv) – (a), (v) – (v) – (b)

Question 11
Maslow’s need hierarchy theory of motivation helps
manager to realise that _____________ .

Answer 11
Need level of employee should be identified to provide
motivation to them.

Question 12
Financial incentives are provided to the employees on :
(a) Individual basis
(b) Group basis
(c) Either (a) or (b)
(d) Neither (a) or (b)

Answer 12
(c) Either (a) or (b)

Question 13
For every employee ______________ is the basic
monetary incentive. (Choose the correct alternative)
(a) Basic pay, dearness allowance and other allowances.
(b) Bonus
(c) Perquisites
(d) Retirement benefits

Answer 13
(a) Basic pay, dearness allowance and other allowances.

Question 14
Column I Column II
(i) Employees are offered company (a) Retirement benefits
shares at a set price which is lower
than market price.
(ii) An incentive offered over and (b) Co-partnership

above wages/salary to the
employees.
(iii) Employees are provided a share in (c) Profit sharing
the profits of the organisation.
(iv) Provident fund and gratuity (d) Bonus

Answer 14
(i) – (b), (ii) – (d), (iii) – (c), (iv) – (a)

Question 15
In many companies employees are offered car allowance,
housing, medical aid and education to the childern etc,
over and above the salary. The incentive offered to the
employees by such companies is called :
(a) Bonus
(b) Pay and allowances
(c) Profit sharing
(d) Perquisites

Answer 15
(d) Perquisites

Question 16
Which one of the following incentives will satisfy the
psychological, social and emotional needs of employees?
(a) Perquisites
(b) Stock option
(c) Job enrichment
(d) Profit sharing

Answer 16
(c) Job enrichment

Question 17
Which of the following incentive provides psychological and
emotional satisfaction to the employees ?
(a) Status
(b) Recognition
(c) Co-partnership
(d) Both (a) and (b)

Answer 17
(d) Both (a) and (b)

Question 18
Monetary aspect may be involved in a non-financial
incentive. (True/False).

Answer 18
True: Promotion, which is a non-financial incentive,
involves payment of extra money, through non-
monetary aspects such as increase in status,
authority etc. override monetary aspects.

Question 19
____________ indicates the status given to a person
holding a managerial position.
(a) Individual Autonomy
(b) Perquisites
(c) Promotion
(d) More autonomy and powers

Answer 19
(b) Perquisites

Question 20
_____________ indicates the status given to a person
holding a managerial position. (Complete the sentence)

Answer 20
The authority, responsibility, rewards, recognition,
perquisites and prestige of job.

Question 21
The characteristics such as individual autonomy, reward
orientation, consideration to employees, risk-taking, etc. are
indicated by ____________.
(a) Status
(b) Organisational climate
(c) Employee recognition programmes
(d) Employee empowerment

Answer 21

Question 22
In a company, jobs are such designed that include greater
vaiety of work content, require higher level of knowledge
and skill; give workers more autonomy and responsibility;
and provide the opportunity for personal growth and a
meaningful work experience. The non-financial incentive
highlighted above is: (Choose the correct alternative)
(a) Organisational climate
(b) Job enrichment
(c) Status
Answer 22
(b) Job enrichment

Question 23
In a company, all the employees are given individual
autonomy, reward orientation, consideration, risk-taking etc.
The non-financial incentive discussed above is:
(a) Status
(c) Job enrichment

Answer 23

Question 24
In a company, subordinates are given more autonomy and
powers, which makes them feel that their jobs are
important. This feeling contributes positively to the use of
skills and talents in the job performance.
(a) Job enrichment
(b) Employee empowerment
(c) Status
(d) Organisational climate

Answer 24
(b) Employee empowerment

Question 25
In a company, employees are involved in decision-making of
the issues related to them by forming joint management
committees, work committees, canteen committees, etc.
The non-financial incentive discussed above is _________.

Answer 25
Employee Participation

Question 26
Match the following non-financial incentives :
Column I Column II
(i) Rewarding an employee for giving (a) Career Advancement Opportunity
valuable suggestions
(ii) Appropriate skill development (b) Employee recognition programmes
programmes and sound promotion
policy
(iii) Stability about future income and (c) Job security
work
(iv) Giving more autonomy and powers (d) Employee empowerment
to subordinates

Answer 26
(i)-(b),(ii)-(a),(iii)-(c),(iv)-(d).

Question 27
“Installing award or certificate for best performance” is an
example of which of the following non-financial incentive?
(a) Organisational climate
(b) Employee recognition programmes
(c) Career Advancement Opportunity

Answer 27
(b) Employee recognition programmes

Question 28
Ekta has been awarded the ‘Employee of the Month’ award.
Her name has been displayed on the notice board. Which
incentive has been given to her? (1)

Answer 28
Employee recognition programmes/Recognition

Question 29
The highest level need in the need Hierarchy of Abraham
Maslow: (Choose the correct alternative)
(a) Safety need
(b) Belongingness need
(c) Self actualisation need
(d) Prestige need

Answer 29
(c) Self actualisation need

Question 30
Which of the following is a financial incentive?
(a) Promotion
(b) Stock option
(c) Job Security
(d) Employee Participation

Answer 30
(b) Stock option

Question 31
“All needs cannot be satisfied by money alone.” Name any
two such needs.

Answer 31
Social and esteem needs

Question 32
Match the example of need in column-1 with type of need
in column-2 as per Maslow’s need hierarchy theory of
motivation
Column I Column II
1. Hunger (a) Safety/security needs
2. Friendship (b) Affiliation/belonging needs
3. Personal fulfillment (c) Esteem needs
4. Stability of income (d) Self actualisation needs
5. Status (e) Basic physiological needs

Select from the options given below
(A) 1. (e) ; 2. (c) ; 3. (a) ; 4. (e) ; 5. (e)
(B) 1. (e) ; 2. (b) ; 3. (a) ; 4. (c) ; 5. (d)
(C) 1. (e) ; 2. (b) ; 3. (d) ; 4. (a) ; 5. (c)
(D) 1. (e) ; 2. (b) ; 3. (d) ; 4. (c) ; 5. (a)

Answer 32
(c) 1. (e); 2. (b); 3. (d); 4. (a); 5. (c)

Question 33
“One of the incentives is concerned with jobs that include
greater variety of work content and require higher level of
knowledge.” Identify the incentive highlighted in the given
statement. (Choose the correct alternative)
(a) Job enrichment
(b) Career advancement opportunity
(c) Job security
(d) Employee recognition programme.

Answer 33
(a) Job enrichment

Question 34
Identify the Maslow’s hierarchy needs highlighted in the
following statements:
(i) Autonomy, status and prestige in the society help to
satisfy this need.
(ii) Informal groups are often formed to satisfy this need.

Answer 34
(i) Esteem Needs (ii) Affiliation or Belonging Needs

Question 35
What is the basic monetary incentive for every employee?

Answer 35
Salary

Question 36
Job security provides stability of income. However, there is
one negative aspect of job security. What is that negative
aspect?

Answer 36
When people feel that they are not likely to lose their
jobs, they may become complacent.

7.3
Leadership: Concept; Styles
— Authoritative, Democratic
and Laissez Faire
Concept of Leadership
Meaning of leadership
Leadership is the process of influencing the
behaviour of people by making them strive
voluntarily towards achievement of organisational
goals.
Leadership indicates the ability of an individual to
maintain good inter-personal relations with followers and
motivate them to contribute for achieving organisational
objectives.
Definitions of Leadership
 “Leadership is the art or process of influencing people so that
they will strive willingly and enthusiastically towards the
achievement of group goals.”
—Harold Koontz and Heinz Weihrich
 “Leadership is the activity of influencing people to strive
willingly for group objectives.” —George Terry
 “Leadership is a set of interpersonal behaviours designed to
influence employees to cooperate in the achievement of
objectives.” —Glueck
 “Leadership is both a process and property. The process of
leadership is the use of non-coercive influence to direct and
coordinate the activities of the members of an organised
group towards the accomplishment of group objectivities. As a
property, leadership is the set of qualities or characteristics
attributed to those who are perceived to successfully employ
such influence.” —Gay and Strake
Features of leadership
1. Leadership indicates ability of an individual to
influence others.
2. Leadership tries to bring change in the behaviour of
others.
3. Leadership indicates inter-personal relations
between leaders and followers.
4. Leadership is exercised to achieve common goals of
the organisation.
5. Leadership is a continuous process.
Leadership Styles
Leadership style refers to a leader’s behaviour.
Behavioural pattern which the leader reflects in his
role as a leader is often described as the ‘style of
leadership’.
A leadership style depends on:
• the leader’s philosophy, personality, experience and
value system;
• the type of followers;
• the atmosphere prevailing in the organization; and
• the ‘use of authority’ by the leader.
The most popular classification of leadership styles is
based on the ‘use of authority’. Depending on the use
of authority, there are three basic styles of leadership:
(i) Autocratic
(ii) Democratic, and
(iii) Laissez-faire
Three basic styles of leadership: based on the use of
authority
1. Autocratic or Authoritarian leadership
style
 An autocratic leader gives orders and expects his
subordinates to obey those orders.
 This leader is dogmatic i.e., does not change or wish
to be contradicted.
 He determines the policies for the group without
consulting them.
 He does not give information about future plans but
simply tells the group what immediate steps they
must take.
 If a manager is following this style, then
communication is only one-way with the subordinate
only acting according to the command given by the
manager.
 His following is based on the assumption that
reward or punishment both can be given depending
upon the result.
 Under this style, all decision making power is
centralized in the leader as shown in the diagram.
He does not give the subordinates any freedom to
influence his decision. It is like “bossing people
around.”
Advantages/Benefits:
(i) This style should normally be used on rare occasions.
However, this leadership style is effective in getting
productivity in many situations like in a factory
where the supervisor is responsible for production
on time and has to ensure labour productivity.
(ii) Quick decision-making is also facilitated.
ThereTopmay
Tip
be variations also. Autocratic leaders may
listen to everyone’s opinion, consider subordinates ideas
and concerns but the decision will be their own.
2. Democratic or Participative leadership
style
 A democratic leader develops action plans and makes
decisions in consultation with his subordinates.
 He works out the policies with the acceptance of the
group. He exercises more control by using forces
within the group.
 He never asks people to do things without working
out the long-term plans on which they are working.
 He respects the other’s opinion and supports
subordinates to perform their duties and accomplish
Advantages/Benefits:
(i) This improves the attitude of the employees
their jobs and the organisation thereby increasing
their morale.
(ii) Using this style is of mutual benefit – it allows
them (subordinates) to become part of the team
and helps leaders (seniors) to make better
decisions.
 Top Tip
Democratic or Participative leadership style is more common
now-a-days, since leaders also recognise that people perform
best if they have set their own objectives.
3. Laissez-faire or Free-rein leader style
 A free-rein leader does not believe in the use of
power unless it is absolutely essential.
 The leader gives a high degree of independence to
his followers so as to formulate their own objectives
and ways to achieve them. At the same time, the
subordinates assume responsibility for the work to
be performed.
 He depends largely upon the group to establish its
own goals and work out its own problems. Group
members work themselves as per their own choice
and competence resolving issues themselves.
 The manager (leader) is there only to support them.
He exists as a contact man with the outsiders to
bring information and the resources the group
 requires for accomplishing the task assigned.
 Top Tip
This leadership style is known as 'laissez-faire' which means –
"no interference in the affairs of others."
[French: 'laissez' means to let/allow and 'faire' means to do.]
Leadership is situational.
Depending upon the situation a leader may choose to exercise a combination of
these styles when required. Even a laissez faire leader would have certain rules
to be followed while doing work and a democratic leader may have to take his
own decision in an emergency situation.
Thus, a leader may use all styles over a period of time but one style tends to
predominate as his normal way of using power.
Example: Mr. Neel Madhav, CEO of Shree Radhey Publications Pvt. Ltd.,
distributes the work for the month. He delegates the work to his staff Ms.
Vrinda, Ms. Divya, Ms. Shreya and Mr. Gopal as per his discretion. (Mr. Neel
Madhav is behaving as an autocratic leader)
Mr. Neel Madhav has realized that in absence of Ms. Shreya, the work will not
get over as scheduled. He discusses with his staff members to meet the dead
line. Everybody decided to do over time and planned to stay back accordingly.
(Mr. Neel Madhav is behaving as a democratic leader)
The staff plans to organize a party in honor of Ms. Shreya as she got promoted.
Mr. Neel Madhav asks the other members of staff to fix the venue and the
menu for the occasion. (Mr. Neel Madhav is behaving as a free
rein leader)
RECAP
Leadership is the art or process of influencing people so

that they strive willingly and enthusiastically towards the
achievement of group goals.
Features of Leadership: (i) It is a continuous process. (ii)
It indicates ability of an individual to influence others. (iii)
It tries to bring change in the behaviour of others. (iv) It is
exercised to achieve common goals of the organisation. (v)
It indicates inter-personal relations between leaders and
followers.
Leadership Styles
1. Autocratic or Authoritarian leadership: An autocratic
leader gives orders and expects his subordinates to obey
those orders. • There is one-way communication with the
subordinates who act according to the command given by
the manager. • He does not give the subordinates any freedom to
influence his decision. • He determines the policies for the group
without consulting them. • He does not give information about
future plans but simply tells the group what immediate steps they
must take. This leader is dogmatic i.e., does not wish to be
contradicted. His following is based on the assumption that
reward or punishment both can be given depending upon the
result. It is like “bossing people around.” It is called Boss-Centred
Leadership.
Benefits of Autocratic or Authoritarian leader:
(a) This leadership style is effective in getting productivity in
many situations.
(b) Quick decision-making is also facilitated by this style of
leadership.
2. Democratic or Participative leadership: Democratic
style of leadership is one in which the leader develops
action plans and makes decisions in consultation with his
subordinates. • Such a leader recognises that people perform
best if they set their own objectives. • A democratic leader
favours decision making by the group. • This improves the
attitude of the employees towards their jobs and the
organization thereby increasing their morale. Using this
style is of mutual benefit – it allows them (subordinates) to
become part of the team and helps leaders (seniors) to make
better decisions. The leader respects the other’s opinion. It is
called Group-Centred Leadership.
3. Laissez-faire or Free-rein leadership: ‘Laissez-faire’
style of leadership is one in which a leader gives a high
degree of freedom to his followers to formulate their own
objectives and ways to achieve them. • The leader does not
believe in the use of power unless it is absolutely essential.
The group members work on their own tasks resolving
issues themselves. The leader is there only to support them
and supply them the required information to complete the
assigned task. It is called Subordinate-Centred Leadership.
Question 1
Pramod was a supervisor at a ‘Annapurna Aata’ factory.
The factory was producing 200 quintals of aata every day.
His job was to make sure that the work went on
smoothly and there was no interruption in production. He
was a good leader who would give orders only after
consulting his subordinates and work out the policies with
the acceptance of the group.
Identify and describe the leadership style being adopted
by Pramod. (CBSE 2015) (3 marks)

Answer 1
Democratic style of leadership (Explain)

Question 2
Umang Gupta is the Managing Director of Denver Ltd.
The company had established a good name for itself and
had been doing well. It was known for timely completion
of orders. The Production Manager, Ms. Kanta was
efficiently handling the processing of orders and had a
team of fourteen motivated employees working under
her. Everything was going on well. Unfortunately, she met
with an accident. Umang knew that in the absence of Ms.
Kanta, the company may not be able to meet the
deadlines. He also knew that not meeting the deadlines
may lead to customer dissatisfaction with the risk of loss
of business and goodwill. So, he had a meeting with
his employees in which accurate and speedy processing
of orders was planned. Everybody agreed to work as
team because the behaviour of Umang Gupta was
positive towards the employees of the organisation.
Hence, everyone put in extra time and efforts and the
targets were met on time. Not only this, Umang visited
Ms. Kanta and advised her to take sufficient rest.
Identify and explain with diagram the leadership style of
Umang Gupta. (4 marks)

Answer 2
Leadership Style – Democratic/Participative/Group-
Centered (Explain with diagram)

Question 3
In an organization, employees always feel that they are
under enormous unnecessary stress as Mr. Latoor, the
manager does not provide any information about future
plans but simply instructs them what to do. He also does
not listen to any of the suggestions given by the
subordinates.
Identify the type of leadership style followed by the
manager in the above situation.
(CBSE SQP 2018-19) (1 mark)

Answer 3
Autocratic style of leadership is being followed by the
manager in the given situation.

Question 4
Ms. Umang, production manager of Creative Concepts
discusses with her staff about the new export order. All
the staff members unanimously agree that they all will
work together to do overtime to complete the order
and meet the deadline.
State the ‘leadership style’ being followed by Ms. Umang.
(1 mark)

Answer 4
Ms. Umang is following Democratic leadership style, in
which a leader consults with her subordinates on proposed
actions and decisions and encourages them to participate in
decision making.

Question 5
Ayushi worked in a call center. Her team manager did
not wish to be contradicted and gave rewards depending
on the result.
State one benefit of the style of leadership being
followed by Ayushi’s team manager.
(CBSE SQP 2018) (1 mark)

Answer 5
Benefits of Autocratic or Authoritarian leader: (Any one)
(a) This leadership style is effective in getting productivity
in many situations.
(b) Quick decision-making is also facilitated by this style of
leadership.

Question 6
Dhruv is working as a supervisor with ‘Neer Purifier
Ltd.’ which is producing water purifiers. The target of the
company is to produce 200 water purifiers every day.
His job is to make sure that work goes on smoothly and
there is no interruption in production. The achieve this,
he always gives orders and insists that they are obeyed.
He believes that reward or punishment both can be
given depending upon the performance.
Identify the leadership style being adopted by Dhruv.
(1 mark)

Answer 6
Autocratic Leadership

Question 7
Gopal, a manager in a company, sets the targets for his
subordinates without discussing it with them. He firmly
tells them that if the task is not completed within time,
then strict action will be taken against the defaulter.
Which form of leadership is he following? (1 mark)

Answer 7
Autocratic Leadership

Question 8
Shyamsundar, a manager in a pharmaceutical company, is
really appreciative of fresh ideas given by his
subordinates. He frames policies only after consulting
them.
Which style of leadership is he following? (1 mark)

Answer 8
Democratic Leadership

Question 9
Manmohan, a manager in a chemical company, has given
complete freedom to his subordinates. He avoids the
use of power and depends largely upon the group to
establish its own goals and work out its own problems.
Which style of leadership is he following? (1 mark)

Answer 9
Laissez-faire Leadership

Question 10
Mr. Neelesh is working as a Production Manager in
Vohra Ltd. His subordinates are mostly engineers and
qualified technicians.
As a manager, he is very strict, does not listen to any
suggestions or feedbacks given by his subordinates. He
expects them to follow his instructions without any
questions and does not allow them to give suggestions.
(a) What leadership style does the manager follow?
Explain.
(b) Is such a leadership style beneficial for the company?
Explain. (3 marks)
Answer 10
(a) Autocratic leadership
(b) (i)This leadership style is effective in getting productivity in
many situations like in a factory where the supervisor is
responsible for production on time and has to ensure
labour productivity.
(ii) Quick decision-making is also facilitated.

Question 1
_____________ indicates the ability of an individual to
maintain good interpersonal relations with followers and
motivate them to contribute for achieving organisational
objectives. (Fill up the blank with correct answer)

Answer 1
Leadership

Question 2
The process of ______________ is the use of non-
coercive influence to direct and coordinate the activities
of the members of an organised group towards the
accomplishment of group objectives.
(Motivation/Leadership). (Choose the correct option)

Answer 2
Leadership

Question 3
There are three basic styles of leadership — Autocratic
leadership, Democratic leadership and Laissez-faire
leadership, depending upon the _______________.

Answer 3
use of authority

Question 4
If a manager is following this style of leadership, then
communication is only one-way with the subordinates
only acting according to the command given by the
manager. (Choose the correct alternative)
(b) Democratic leadership
(c) Laissez faire leadership

Answer 4

Question 5
Mr. Chirag is a manager in Tanvi Designers Ltd. His
following is based on the assumption that reward or
punishment both can be given depending upon the
result. Which of the following leadership style Mr. Chirag
is using? (Choose the correct alternative)
(a) Authoritarian leadership
(b) Participative leadership
(c) Free-rein leadership

Answer 5
(a) Authoritarian leadership

Question 6
Kirtika, the marketing manager of a company listens to
everyone’s opinion, considers subordinates ideas and
concerns but the final decision is her own. Which
leadership style is Kirtika using?
(b) Participative leadership
(c) Free-rein leadership

Answer 6

Question 7
A manager exercises more control over his
subordinates by using forces within the group. The
leadership style he is using is ___________________.

Answer 7
Democratic or participative leadership

Question 8
Match the following leadership styles with the lender’s
behaviour:
Column I Column II
(i) Autocratic leadership (a) The leader encourages his subordinates to
participate in decision making.
(ii) Democratic leadership (b) The leader is dogmatic i.e. does not wish to be
contradicted.
(iii) Laissez faire leadership (c) The leader does not believe in the use of power
unless it is absolutely essential.

Answer 8
(i) – (b), (ii) – (a), (iii) – (c)

Question 9
Match the following behaviour of manager under different
situations with the style of leadership he is using under
different situations.
Column I Column
(i) The leader gives his subordinates a high degree of (a) Authoritarian style of
independence to formulate their own objectives leadership
and ways to achieve them.
(ii) The leader gives orders and expects his (b) Democratic style of
subordinates to obey those orders. leadership
(iii) The lender develops action plans and makes (c) Laissez faire style of
decision in consultation with his subordinates. leadership

Answer 9
(i) – (c), (ii) – (a), (iii) – (b)

Question 10
The subordinates working under a manager assume
responsibility for the work to be performed. The group
members work on their own tasks resolving issues
themselves. The manager is there only to support them
and supply them the required information to complete
the task assigned. The manager is using Democratic or
participative leadership style. True/ False? Give reason.

Answer 10
False: The manager is using Laissez-faire or free-rein
leadership style.

Question 11
A Laissez-faire leader may have certain rules to be
followed while doing work. (True/False)

Answer 11
True

Question 12
A democratic leader may take his own decision.

Answer 12
True; in an emergency situation.

7.4
Communication: Concept,
Types and Barriers
Concept of Communication
Meaning of Communication
Communication is the process of exchange of
information between two or more persons to reach
Definitions of Communication
 Communication is a process by which people create and share
information with one another in order to reach common
understanding.” —Rogers
 “Communication is transfer of information from the sender to
the receiver with the information being understood by the
receiver.” —Harold Koontz and Heniz Weihrich
 “Communication is the sum of all things one person does
when he wants to create understanding in the mind of
another. It involves systematic and continuous process of
telling, listening and understanding.” —Louis Allen
Elements of Communication Process
Communication process involves elements like source,
encoding, media/channel, receiver, decoding, noise
and feedback. The process is represented in the figure.
The elements involved in communication process are
explained below:
1. Sender: Sender means person who conveys his
thoughts or ideas to the receiver. The sender
represents source of communication.
2. Message: It is the content of ideas, feelings,
suggestions, order etc., intended to be communicated.
3. Encoding: It is the process of converting the
message into communication symbols such as
words, pictures, gestures etc.
4. Media: It is the path through which encoded
message is transmitted to receiver. The channel may
be in written form, face to face, phone call, Internet,
etc.
5. Decoding: It is the process of converting encoded
symbols of the sender.
6. Receiver: The person who receives communication
of the sender.
7. Feedback: It includes all those actions of receiver
indicating that he has received and understood
message of sender.
8. Noise: Noise means some obstruction or hindrance
to communication. This hindrance may be caused
to sender, message or receiver. Some examples of
noise are:
(i) A poor telephone connection
(ii) An inattentive receiver
(iii) Faulty decoding (attaching wrong meanings to
message)
(iv) Ambiguous symbols that lead to faulty encoding
(v ) Gestures and postures that may distort the
message
(vi) Prejudices obstructing the poor understanding of
message
Formal and Informal Communication
Communication taking place within an organisation
may be broadly classified as formal and informal
communication.
Formal Communication
Formal communication flows through official
channels designed in the organisation chart. This
communication may take place between a superior and
subordinate, a subordinate and superior or among
same cadre employees or managers. Formal
communication may be further classified as – Vertical
and Horizontal.
1. Vertical communication:Vertical communication
flows vertically i.e., upwards or downwards through
1. formal channels.
(i) Upward communication refers to flow of
communication from a subordinate to superior.
Examples: Application for grant of leave,
submission of progress report, request for grants,
etc.
(ii) Downward communication refers to
communication from a superior to subordinate.
Examples: Sending notice to employees to attend a
meeting, ordering subordinates to complete an
assigned work, passing on guidelines framed by
top management to the subordinates etc.
2. Horizontal or lateral communication:
Horizontal or lateral communication takes place
between one division and another. For example, a
production manager may contact marketing manager
to discuss about schedule of product delivery, product
design, quality etc.
 Top Tip
Formal communications may be oral or written but generally
recorded and filed in the office.
Informal Communication
Communication that takes place without
following the formal lines of communication is
called informal communication.
Workers chit chating in a canteen about the behaviour
of the superior, discussing about rumours that some
employees are likely to be transferred are some
examples of informal communications.
Features
(i) The informal communication arises out of needs
of employees to exchange their views, which
cannot be done through formal channels.
(ii) Informal system of communication is generally
referred to as the ‘grapevine’ because it spreads
throughout the organisation with its branches
going out in all directions in utter disregard to the
levels of authority.
Positive Aspects
(i) Sometimes, grapevine channels may be helpful as
they carry information rapidly and, therefore, may
be useful to the manager at times.
(ii) Informal channels are used by the managers to
transmit information so as to know the reactions
of his/her subordinates.
Negative Aspects
(i) The grapevine/ informal communication spreads
rapidly and sometimes gets distorted. It is very
difficult to detect the source of such communication.
(ii) It also leads to generate rumours which are not
authentic. People’s behaviour is affected by rumours
and informal discussions and sometimes may hamper
work environment.
 Top Tip
An intelligent manager should make use of positive aspects of
informal channels and minimise negative aspects of this
channel of communication.
RECAP
Elements in communication process:

(i) Sender–source of communication.
(ii) Message–information to be communicated.
(iii) Encoding–converting the message into
communication symbols such as words, pictures,
gestures etc.
(iv) Media/channel–face to face, phone call, internet etc.
(v) Decoding–converting encoded symbols.
(vi) Receiver of the communication.
(vii) Feedback–actions of receiver indicating that he has
received and understood the message.
(viii) Noise–obstruction or hindrance to communication,
e.g. a poor telephone connection, an inattentive
receiver, faulty decoding, etc.
Formal and Informal Communication
Formal Communication flows through official channels
designed in the organisation chart. Formal communication
may take place:
(i) from a superior to subordinate (downward
communication, e.g. ordering subordinates to complete an
assigned work)
(ii) from a subordinate to superior (upward
communication, e.g. submission of progress report) or
(iii) among same level of managers or employees
(horizontal communication, e.g. the production
manager of a company contacts the marketing manager
to discuss about schedule of product delivery, product
design, quality, etc.). Formal communications may be
oral or written but generally recorded and filed in the
office.
Informal Communication takes place without following
the formal lines of communication, e.g. workers chit chating
in a canteen about the behaviour of the superior. • The
informal communication arises out of needs of employees to
exchange their views, which cannot be done through formal
channels. • Informal system of communication is generally
referred to as the ‘grapevine’ because it spreads throughout
the organisation with its branches going out in all
directions, disregarding the levels of authority.
Two positive aspects of informal communication: (i) It
carries information rapidly and therefore may be useful to
transmit information so as to know the reaction of his/ her
subordinates.
Two negative aspects of informal communication: (i)
The grapevine/informal communication spreads rapidly and
sometimes gets distorted. (ii) It may lead to generate
rumours, or may hamper work environment.
Question 1
Amit and Mikki are working in the same organisation but
in different departments. One day at lunch time Mikki
informed Amit that due to computerisation some people
are going to be retrenched from the organisation.
Identify the type of communication. (3 marks)

Answer 1

Question 2
In an organisation all the employees take things easy and
are free to approach anyone for minor queries and
problems. This has resulted in everyone taking to each
other and thus resulting in inefficiency in the office. It
has also resulted in loss of secrecy and confidential
information being leaked out.
(a) Identify the type of communication discussed above.
(b) State any two negative aspects of the type of
communication identified in part (a).
(c) What system of communication do you think the
manager should adopt to improve communication?
(4 marks)
Answer 2
(a) Informal communication
(b) (Give two negative aspects of informal communication)
(c) Formal communication system

Question 3
Arun is working in a multinational company in Gurgaon.
He was running temperature for the last many days.
When his blood was tested, he was found positive for
dengue with a very low platelet count. Therefore, he was
admitted in the hospital and a blood transfusion was
advised by the doctors. One of his colleagues sent a text
message about it to his immediate superior ‘Mr. Narain’.
‘Mr. Narain’ in turn sent a text message to the
employees of the organisation requesting them to
donate blood for Arun. When the General Manager
came to know about it, he ordered for fumigation in the
company premises and cleanliness of the surroundings.
(a) From the above para quote lines that indicate formal
and informal communication.
(b) State any two features of informal communication.
(3 marks)

Answer 3
(a) Informal communication—‘... sent a text message to the
employees of the organisation requesting them to donate blood
for Arun.’
Formal communication—‘... ordered for fumigation in the
company premises and cleanliness of the surroundings.’
(b) (i) It refers to the communication which takes place without
following the formal lines of communication (i.e.,
disregarding the levels of authority).
(ii) Informal communication spreads throughout the
organisation with its branches going out in all directions in utter
disregard to the levels of authority. There is no fixed line of
communication. So, it is generally referred to as ‘grapevine’.
Question 4
In an organisation all the employees take things easy and
are free to approach anyone for minor queries and
problems. It has resulted in loss of secrecy and
confidential information being leaked out. What system
do you think the manager should adopt to improve
communication? (3 marks)

Answer 4
The manager should adopt the system of ‘Formal
communication’

Question 5
Mohan and Sohan are friends working in Surya Ltd. as
Production Manager and Sales Manager respectively. In
an interdepartmental meeting, Sohan informed Mohan
about a change in the marketing policy of the company.
Identify the type of communication used in the above
example. (1 mark)

Answer 5
Formal Communication

Question 6
Radha and Meera are working in the same organisation
but in different departments. One day at lunch time
Meera informs Radha that due to computerisation many
people are going to be retrenched soon from the
organisation.Which type of communication is this?
(1 mark)

Answer 6

Key Terms
Directing – It refers to the process of instructing, guiding,
coaching/counselling, motivating and leading the people in an
organisation to achieve organisational objectives.
Supervision – It is the process of guiding the efforts of employees
and other resources to accomplish the desired objectives. It
means overseeing what is being done by subordinates and giving
instructions to ensure optimum utilisation of resources and
achievement of work targets.
Motivation – It means a process of stimulating people to action to
Leadership – It is the art or process of influencing people so that
they will strive willingly and enthusiastically towards the
achievement of group goals.
Communication – It is a process by which people create and share
information with one another in order to reach common
understanding.
Motive – A motive is an inner state that energises, activates or
or moves and directs behaviour towards goals.
Motivator – It is a technique/incentive used to motivate people in
an organisation to improve performance. Managers use diverse
motivators/incentives like pay, bonus, promotion, recognition,
praise, responsibility etc., in the organisation to influence people
to contribute their best.
Basic Physiological Needs – These needs are most basic in the
hierarchy and corresponds to primary needs. Hunger, thirst,
shelter, sleep, etc. are some examples of these needs.
Safety/Security Needs – These needs provide security and
protection from physical and emotional harm. Examples: job
security, stability of income, Pension plans etc.
Affiliation/Belonging Needs – These needs refer to affection,
sense of belongingness, acceptance and friendship.
Esteem Needs – These include factors such as self-respect,
autonomy status, recognition and attention.
Self Actualisation Needs – It is the highest level of need in the
hierarchy. It refers to the drive to become what one is capable of
becoming. These needs include growth, self-fulfillment and
achievement of goals.
Financial incentives – Financial incentives refer to incentives
which are in direct monetary form or measurable in monetary
term and serve to motivate people for better performance. These
incentives may be provided on individual or group basis.
Co-partnership/ Stock option – Under this incentive scheme,
employees are offered company shares at a set price, which is
lower than market price.
Perquisites – In many companies, perquisites and fringe benefits
are offered such as car allowance, housing, medical aid, and
education to the children etc., over and above the salary.
Retirement Benefits – Retirement benefits such as provident
fund, pension, and gratuity provide financial security to
employees after their retirement.
Non- financial Incentives – All the needs of individuals are not
satisfied by money alone. Psychological, social and emotional
factors also play important role in providing motivation. Non-
financial incentives mainly focus on these needs.
Employee Recognition programmes – Recognition means
acknowledgment with a show of appreciation e.g. congratulating
the employee for good performance. When such appreciation is
given to the work performed by employees, they feel motivated
to perform/work at higher level.
Employee participation – Employee participation means involving
employees in decision making of the issues related to them. In
many companies, these programmes are in practice in the form of
joint management committees, work committees, canteen
committees etc.
Status – In the organisational context, status means ranking of
positions in the organisation. The authority, responsibility,
rewards, recognition, perquisites and prestige of job indicate the
status given to a person holding a managerial position.
Job Enrichment – It is concerned with designing jobs that include
greater variety of work content requiring higher level of knowledge and
skill; give workers more autonomy and responsibility; and provide the
opportunity for personal growth and a meaningful work
experience.
Organisational Climate – It indicates the characteristics which
describe an organisation and distinguish one organisation from
the other. These characteristics influence the behaviour of
individuals in the organisation. Some of these characteristics are
individual autonomy, reward orientation, consideration to
employees, risk-tasking etc.
Employee Empowerment – It means giving more autonomy and
powers to subordinates.
Leadership Styles – Leadership style refers to a leader's
behaviour. Behavioural pattern which the leader reflects in his
role as a leader is often described as the 'style of leadership'.
Autocratic or Authoritarian leadership style – An autocratic
leader gives orders and expects his subordinates to obey those
orders. This leader is dogmatic i.e., does not change or wish to be
contradicted.
Democratic or Participative leadership style – A democratic
Leader develops action plans and makes decisions in consultation
with his subordinates.
Laissez faire or Free-rein leader style – A free-rein leader does
not believe in the use of power unless it is absolutely essential.
The leader gives a high degree of independence to his followers
so as to formulate their own objectives and ways to achieve them.
Sender – Sender means person who conveys his thoughts or ideas
to the receiver. The sender represents source of communication.
Message – It is the content of ideas, feelings, suggestions, order
etc., intended to be communicated.
Encoding – It is the process of converting the message into
communication symbols such as words, pictures, gestures etc.
Media – It is the path through which encoded message is
transmitted to receiver. The channel may be in written form, face
to face, phone call, Internet etc.
Decoding – It is the process of converting encoded symbols of the
sender.
Receiver – The person who receives communication of the sender.
Feedback – It includes all those actions of receiver indicating that
he has received and understood message of sender.
Noise – Noise means some obstruction or hindrance to
communication. This hindrance may be caused to sender,
message or receiver. Examples of noise are: a poor telephone
connection, an inattentive receiver, etc.
Formal Communication – It flows through official channels
designed in the organisation chart. This communication may take
place between a superior and subordinate, a subordinate and
superior or among same cadre employees or managers.
Vertical communication – Vertical communication flows vertically
i.e., upwards or downwards through formal channels.
Upward communication – It refers to flow of communication
from a subordinate to superior. Examples: Application for grant of
leave, submission of progress report, request for grants, etc.
Downward communication – It refers to communication from a
superior to subordinate. Examples: Sending notice to employees
to attend a meeting, ordering subordinates to complete an
assigned work, passing on guidelines framed by top management
to the subordinates etc.
Horizontal or lateral communication – It takes place between one
division and another. For example, a production manager may
contact marketing manager to discuss about schedule of product
delivery, product design, quality etc.
Informal Communication – Communication that takes place
without following the formal lines of communication is called
informal communication. Workers chit chating in a canteen about
the behaviour of the superior, discussing about rumours that
some employees are likely to be transferred are some examples
of informal communications.
Question 1
“It involves systematic and continuous process of telling,
listening and understanding,” The concept of management
highlighted is ____________ .

Answer 1
Communication

Question 2
____________ process involves elements like source,
encoding, media/channel, receiver, decoding, noise and
feedback. (Fill up the blank with correct answer)

Answer 2
Communication

Question 3
Match the following elements of communication process:
Column I Column II
(i) Some obstruction or hindrance to communication (a) Sender
(ii) Content of ideas, feelings, suggestions, order, etc. (b) Message
(iii) Source of communication (c) Receiver
(iv) The person who receives communication (d) Noise

Answer 3
(i) – (d), (ii) – (b), (iii) – (a), (iv) – (c)

Question 4
“It includes all those action of receiver indicating that he
has received and understand message of sender.”
The element of communication process highlighted are:
(a) Feedback
(b) Media
(c) Encoding

Answer 4
(a) Feedback

Question 5
Match the following elements of communication
process:
Column I Column II
(i) Gestures and postures that may distort the message (a) Sender
(ii) The path / channel through which message is transmitted to (b) Media
receiver
(iii) The process of conventing communication symbols of the (c) Decoding
sender
(iv) The person who conveys his thoughts or ideas (d) Noise

Answer 5
(i) – (d), (ii) – (b),(iii)-(c),(iv)-(a).

Question 6
___________is the process of conventing the message
into communication symbols such as words, pictures,
gestures, etc. (Fill up the blank with correct answer)

Answer 6
Encoding

Question 7
Ambiguous symbols that lead to faulty encoding, a poor
telephone connection, an inattentive receiver, faulty
decoding (attaching wrong meanings to message), etc.
are a few examples of one of the elements of the
communication process in an organisation. Identify the
element.

Answer 7
Noise

Question 8
___________ (Formal/Informal) communication flows
through official channels designed in the organisation chart.

Answer 8
Formal

Question 9
Formal communication takes place between a superior
and subordinates or a subordinates and superior only.
(True/False)

Answer 9
False: Formal communication may also take place
among some cadre employees or managers.

Question 10
Formal communications are written only and generally
recorded and filed in the office. (True/False)

Answer 10
False; formal communication may be oral also.

Question 11
Column I Column II
(i) Submission of progress report (a) Upward
communication
(ii) Discussion about product design between production (b) Downward
manager and marketing manager communication
(iii) Ordering subordinates to complete an assigned task (c) Horizontal
communication

Answer 11
(i) – (a), (ii) – (c), (iii) – (b)

Question 12
Application for grant of leave, request for grants, etc. are
example of: (Choose the correct alternative)
(a) Downward (Formal) communication
(b) Upward (Formal) communication
(c) Horizontal (Formal) communication
(d) Informal communication

Answer 12

Question 13
Sending notice to employees to attend a meeting,
passing on guidelines framed by top management to the
subordinates etc. are example of:
(c) Horizontal (Formal) communication

Answer 13

Question 14
Informal system of communication is generally referred
to as the ‘grapevine’ because _____________ .

Answer 14
It spreads throughout the organisation with its
branches going but in all directions in utter disregard
to the levels of authority.

Question 15
Sometimes grapevine channels may be helpful as
_____________ . (Complete the sentence)

Answer 15
They carry information rapidly and, therefore, may be-
useful to the manager at times.

Question 16
The process of converting the message into
communication symbols is known as:
(a) Media
(b) Encoding
(c) Feedback
(d) Decoding

Answer 16
(b) Encoding

Question 17
Name the type of communication in which persons
communicate with each other through official channels.

Answer 17
Formal communication

Question 18
Is formal communication oral or written?

Answer 18
Formal communication can be both oral or written.

Question 19
Name the type of formal communication in which
communication flows from a superior to a subordinate
and vice versa.

Answer 19
Vertical communication

Question 20
Name the type of formal communication in which two
departmental heads communicate with each other.

Answer 20
Horizontal or Lateral communication

Question 21
Name the type of formal communication in which
communication flows from a superior to a subordinate.

Answer 21
Downward communication

Question 22
Grapevine is: (Choose the correct alternative)
(a) Formal communication
(b) Barrier to communication
(c) Lateral communication

Answer 22

Question 23
Communication has been defined as a process.
Enumerate the elements in this process.

Answer 23
Source, encoding, media/channel, receiver, decoding,
noise and feedback.

Question 24
Which of the following is not an element of
communication process?
(a) Decoding
(b) Communication
(c) Channel
(d) Receiver

Answer 24
(b) Communication

 Controlling - Concept and importance
 Relationship between planning and controlling
 Steps in process of control
Planning without controlling is meaningless.
Controlling guides the organisation and keeps it
on the right track so that organisational goals
may be achieved.
Concept and Importance of
8.1 Controlling; Relationship between
planning and controlling
Concept of Controlling
Meaning of Controlling
Controlling means ensuring that activities in an
organisation are performed as per the plans.
 “Managerial Control implies the measurement of

accomplishment against the standard and the
correction of deviations to assure attainment of
objectives according to plans.” — Koontz and O’ Donnel
Natures/Features/Characteristics of
Controlling
1. Controlling is a goal oriented function
Controlling ensures that an organisation’s resources
are being used effectively and efficiently for the
achievement of predetermined goals. Controlling is,
thus, a goal-oriented function.
2. Controlling is an all pervasive (Top, middle and
Operational Level) function
Controlling function of a manager is a pervasive
function. It is a primary function of every manager.
Managers at all levels of management— top, middle
keep a control over activities in their areas.
Moreover, controlling is as much required in an
educational institution, military, hospital, and a
club as in any business organisation.
3. Controlling is both a backward looking as well
as forward looking function
Controlling is like a post-mortem of past activities
to find out deviations from the standards. In that
sense, controlling is a backward-looking function.
Controlling is also a forward-looking function
because the corrective action initiated by control
function aims to improve future performance.
4. Controlling is a continuous function
Controlling is a continuous function as it involves a
constant review of performance to ensure that
activities in the organisation are performed as per
the plans.
Controlling should not be misunderstood as the
last function of management. It brings the
management cycle back to the planning function.
The controlling function finds out how far actual
performance deviates from standards, analyses the
causes of such deviations and attempts to take
corrective actions based on the same. This process
helps in formulation of future plans in the light of
the problems that were identified and, thus, helps
in better planning in the future periods.
Thus, controlling only completes one cycle of
management process and improves planning in the
next cycle.
Importance of Controlling
1. Accomplishing organisational goals
The controlling function measures progress towards the
organisational goals and brings to light the deviations, if
any, and indicates corrective action.
It, thus, guides the organisation and keeps it on the right
track so that organisational goals might be achieved.
2. Making efficient use of resources
By exercising control, a manager seeks to reduce wastage
and spoilage of resources. Each activity is performed in
accordance with predetermined standards and norms.
This ensures that resources are used in the most effective
and efficient manner.
3. Ensuring order and discipline
Controlling creates an atmosphere of order and
discipline in the organisation. It helps to minimise
dishonest behaviour on the part of the employees by
keeping a close check on their activities.
4. Improving employee motivation
A good control system ensures that employees know
well in advance what they are expected to do and what
are the standards of performance on the basis of which
they will be appraised. It, thus, motivates them and
helps them to give better performance.
5. Facilitating coordination in action
Controlling provides direction to all activities and efforts
for achieving organisational goals. Each department and
employee is governed by predetermined standards which
are well coordinated with one another. This ensures that
overall organisational objectives are accomplished.
6. Judging accuracy of standards
 An efficient control system keeps a careful check on
the changes taking place in the organisation and in
the environment and helps to review and revise the
standards in light of such changes.
 A good control system enables management to verify
whether the standards set are accurate and objective.
Relationship between Planning and
Controlling
"Planning and controlling are inseparable twins
of management."
They are mutually inter-related and inter-dependent
activities. Planning seeks consistent, integrated and
articulated programmes while controlling seeks to
compel events to conform to plans.
1. Controlling takes place on the basis of
certain standards, developed by planning.
The standards of performance which serve as the basis of
controlling are provided by planning. If the standards are
not set in advance, managers have nothing to control. In
other words,without planning, there is no predetermined
understanding of the desired performance. Planning is
clearly a pre-requisite for controlling.
Thus, controlling is blind without planning.
2. Planning without controlling is
meaningless.
Once a plan becomes operational, controlling is
necessary to monitor the progress, measure it,
discover deviations and initiate corrective measures to
ensure that events conform to plans. Thus, planning
without controlling is meaningless.
3. Planning is prescriptive whereas,
controlling is evaluative.
 Planning is basically an intellectual process
involving thinking, articulation and analysis to
discover and prescribe an appropriate course of
action for achieving objectives. Thus, planning is
prescriptive.
 Controlling, on the other hand, checks whether
decisions have been translated into desired action.
Thus, controlling is evaluative.
4. Planning and controlling are both
backward-looking as well as a forward-
looking functions.
It is often said – "Planning is looking ahead while
controlling is looking back." However, the statement is
only partially correct. Planning and controlling are both
backward-looking as well as a forward-looking functions.
 Plans are prepared for future and are based on
forecasts about future conditions. Therefore,
planning involves looking ahead and is called a
forward-looking function.
 Controlling is like a postmortem of past activities
to find out deviations from the standards. In that
sense, controlling is a backward-looking function.
 Planning is also a backward-looking function as it
is guided by past experiences.
 Controlling is also a forward-looking function
because the corrective action initiated by control
function aims to improve future performance.
 Top Tip
Planning and controlling are interrelated and, in fact,
reinforce each other in the sense that:
(i) Planning based on facts makes controlling easier and
effective; and
(ii) Controlling improves future planning by providing
information derived from past experience.
RECAP
Controlling means ensuring that the activities in an

Nature/Features of Controlling
1. Controlling is a goal-oriented function as it ensures that
an organisation’s resources are being used effectively and
efficiently for the achievement of pre-determined goals.
2. Controlling is a pervasive function as it is required in all
types of organisations and at all levels of management—
top, middle and lower.
3. Controlling is a continuous function as it involves a
constant review of actual performance to ensure that
activities in the organisation are performed as per the plans.
Controlling is not the last function of management. It
brings back the management cycle back to the planning
function. It helps in formulation of future plans in the light
of the problems identified in the past and, thus, helps in
better planning in the future periods.
4. Controlling is both looking back and forward looking.
Importance of Controlling SR G OM
1. Accomplishing organisational oals
Controlling function measures the progress towards the
organisational goals by bringing to light, deviations if any
and indicating corrective action.
2. Making efficient use of esources
Controlling seeks to reduce wastage and spoilage of
resources as each activity is performed in accordance with
predetermined standards and norms.
3. Ensuring rder and discipline:
Controlling helps to minimise dishonest behaviour on the
part of the employees by keeping a close check on their
activities.
4. Improves employee otivation:
Employees know well in advance what they are expected to do
and the standards of performance on the basis of which they
will be appraised. This motivates them and helps them to give
better performance.
5. Judging accuracy of tandards:
A good control system keeps a careful check on the changes
taking place in the organisation and the environment and helps
to review and revise the standards in the light of such changes.
6. Facilitates coordination in action:
Each department and employee is governed by pre-determined
standards which facilitates coordination in action.
Relationship between Planning and Controlling
1. Controlling takes place on the basis of standards
developed by planning because if the standards are not set in
advance, managers have nothing to control.
2. Planning without controlling is meaningless because
once a plan becomes operational, controlling ensures that
events conform to the plans.
3. Planning is prescriptive whereas controlling is
evaluative because planning prescribes an appropriate
course of action for achieving objectives while controlling
evaluates whether decisions have been translated into
desired actions.
4. Planning and controlling both are forward looking
because plans are prepared for the future and controlling
seeks to improve the future performance on the basis of
the past experience.
5. Planning and controlling are both looking back
because planning is guided by past experiences and
controlling compares the actual performance with the
standards set in the past.
Question 1
All managers need to control situation intelligently and
take corrective action before ________.

Answer 1
Any damage is done to the business.

Question 2
______________ not only helps in keeping a track
on the progress of activities but also ensures that
activities conform to the standards set in advance so
that organisational goals are achieved.

Answer 2
Controlling

Question 3
In order to seek planned results from the subordinates,
a manager needs to exercise effective ______ over the
activities the subordinates. (coordination/controlling)

Answer 3
Controlling

Question 4
__________ means ensuring that activities in an

Answer 4
Controlling

Question 5
__________________ ensures that an organisation's
resources are used effectively and efficiently for the
achievement of pre-determined goals.
(a) Management
(b) Organising
(c) Controlling
(d) Coordination

Answer 5
(c) Controlling

Question 6
Controlling is a goal-oriented function.
(True/False)

Answer 6
True: Controlling ensures that an organisation’s
resources are being used effectively and efficiently for
the achievement of pre-determined goals. Controlling
is thus, a goal - oriented function.

Question 7
Controlling function of a manager is a pervasive function.

Answer 7
True: Controlling is a primary function of every
managers at all levels of management top, middle and
lower-need to perform controlling functions to keep a
control over activities in their areas.

Question 8
Controlling is as much required in an educational
institution, military, hospital, and a club as in any business
organisation. What feature of nature of controlling is
highlighted above?

Answer 8
Controlling is a pervasive function.

Question 9
Controlling is the last function of management.

Answer 9
False: Controlling should not be misunderstand as the
last function of management. It is a function that brings
back the management cycle back to the planning function
thus, controlling is a continuous process.

Question 10
Controlling only completes are cycle of management
process and improves planning in the next cycle.

Answer 10
True: The controlling function finds out how far actual
performance deviates from standards, analyses the causes
of such deviations and attempt to take corrective actions
based on the same. This process helps formulation of
future plans in the light of the problems that were
identified. Thus controlling helps in better planning in the
future periods.

Question 11
Today almost every business organisation has computer
monitoring as a part of their control system. Which point
of importance of controlling function of management is
highlighted above?

Answer 11
Controlling helps in ensuring order and discipline in the
organisation.

Question 12
Which one of the following points of importance of
controlling is best described above?
(a) Accomplishing organisational goals
(b) Facilitating coordination in action
(c) Making efficient use of resources
(d) Improving employee motivation

Answer 12
(b) Facilitating coordination in action

Question 13
A system of control presupposes the existence of certain
standards. These standards of performance which serve as
the basis of controlling are provided by _________.

Answer 13
Planning

Question 14
Once a plan becomes operational, _______ is necessary
to monitor the progress, measure it discover deviations
and initiate corrective measures to ensure that events
conform to plans.

Answer 14
Controlling

Question 15
Planning without controlling is meaningless.

Answer 15
True: Once a plane becomes operational, controlling is
necessary to monitor the progress, measure it, discover
deviations and initiate corrective measures to ensure
that events conform to plans. Thus, planning without
controlling is meaningless.

Question 16
Controlling is blind without planning.

Answer 16
True: If the standards are not set in advance by planning,
managers have nothing to control.

Question 17
When there is no plan, there is no basis of controlling.

Answer 17
True: A system of control presupposes the existence
of certain standards developed by planning, It measure
accomplishment against those standards and take
corrective action to assure attainment of objectives.
Thus, if there is no plan, there is no basis of controlling.
i.e. standards.

Question 18
Planning is clearly a pre-requisite for controlling.

Answer 18
True: Without planning, there is no pre-determined
understanding of the desired performance,i.e. standards,
which forms the basis of controlling because controlling
measures the actual performance against the standards,
identifies deviations and taken corrective action to
ensure that events conform to plans.

Question 19
_________ seeks consistent, integrated and articulated
programmes while ________ seek to compel events to
conform the plans.

Answer 19
Planning; Controlling.

Question 20
_________ is basically an intellectual process involving
thinking, articulation and analysis to discover and
prescribe an appropriate course of action for achieving
objectives.

Answer 20
Planning

Question 21
Controlling checks whether decisions have been
translated into desired action. What feature of controlling
is highlighted above?

Answer 21
Controlling is evaluative as it evaluates whether the
activities are taking place as per plans.

Question 22
Planning and controlling reinforce each other in the sense
that ____________.

Answer 22
Planning based on facts makes controlling easier and
effective; and controlling improves future planning by
providing information derived from past experience.

Question 23
Controlling is looking back.

Answer 23
True: Controlling is like a postmortem of past activities
to find out deviations from the standards. In that sense,
controlling is looking back.

Question 24
Controlling is also a forward looking function.

Answer 24
True: because the corrective action initiated by controlling
function aims to improve future performance. In this sense,
controlling is also a forward looking function.

Question 25
An efficient control system helps to ___________.
(a) accomplish organisational objectives
(b) boost employee morale
(c) judge accuracy of standards
(d) All of these

Answer 25
(d) All of these

Question 26
Name the function of management which is concerned
with monitoring organisational performance towards

Answer 26
Controlling

Question 27
Why is controlling called a continuous process?

Answer 27
Controlling is a continuous process because it involves
a constant review of actual performance for taking
corrective action, if any.

Question 28
Now-a-days Closed Circuit Television (CCTV) is used in
organisations as a means to control on wrong behaviour
and to prevent theft etc. Which point of importance of
control does this illustrate?
(a) Accomplishing organisational goals
(b) Making efficient use of resources
(c) Improving employee motivation
(d) Ensuring order and discipline

Answer 28
(d) Ensuring order and discipline

Question 29
Controlling function of an organisation is _________.
(a) Forward looking
(b) Backward looking
(c) Forward as well as backward looking

Answer 29
(c) Forward as well as backward looking

Case Studies
Question 1
D&D Ltd. is a large manufacturing unit. Recently, the
company has conducted the ‘time’ and ‘motion’ studies
and concluded that on an average a worker could
produce 120 units per day. However, it has been noticed
that average daily production of a worker is in the range
of 80-90 units.
Which function of management is needed to ensure that
the actual performance is in accordance with the

performance as per ‘time’ and ‘motion’ studies? State
four features of this function of management. (5 marks)

Answer 1
Controlling (explain the features)

Question 2
Rajeev and Sanjeev are managers in the same
organisation having different units. While discussing
about the function of management, Rajeev says “Planning
is looking ahead whereas controlling is looking back.”
But Sanjeev says, “Planning is looking back whereas
controlling is looking ahead.” Both are giving reasons in
favour of their statements.
Explain the possible reasons given by both and justify
who is correct.
(5 marks)

Answer 2
Rajeev says, “Planning is looking ahead whereas controlling
is looking back” because:
 Plans are prepared for future and are based on
forecasts about future conditions. Therefore, planning
is looking ahead.
 On the contrary, controlling is like a post-mortem of
past activities to find out deviations. In this sense,
controlling is looking back.

Sanjeev says, “Planning is looking back whereas controlling is
looking ahead” because:
 Planning is also looking back because future planning is
guided by past experiences.
 Controlling is looking ahead because the corrective
action initiated by control function seeks to improve
future performance or to revise future plans.
Conclusion: Planning and controlling are both backward
looking and forward looking functions. Hence, both of
them are partially correct.
8.2 Controlling Process
Step 1: Setting Performance Standards
The first step in the controlling process is setting up of
performance standards.
Standards are the criteria against which actual
performance would be measured. Thus, standards
serve as benchmarks towards which an
organisation strives to work.
 Standards can be set in both quantitative as well as
qualitative terms.
Examples of quantitative standards:
(i) Cost to be incurred
(ii) Revenue to be earned
(iii) Product units to be produced and sold
(iv) Time to be spent in performing a task
Examples of quantitative standards:
(i) Improving goodwill
(ii) Improving motivation level of employees.
Standards used in Functional Areas to Gauge
Performance
Production Marketing HRM Finance and
Accounting
 Quantity  Sales volume  Labour  Capital
 Quality  Sales expense relations expenditures
 Cost  Advertising  Labour  Inventories
 Individual job expenditures turnover  Flow of capital
performance  Individual sales  Labour  Liquidity
person’s absenteeism
performance
 At the time of setting standards, a manager should
try to set standards in precise quantitative terms as
this would make their comparison with actual
performance much easier. For instance, reduction
of defects from 10 in every 1,000 pieces produced to
5 in every 1,000 pieces produced by the end of the
quarter. However, whenever qualitative standards
are set, an effort must be made to define them in a
manner that would make their measurement
easier. For instance, for improving customer
satisfaction in a fast food chain having self-service,
standards can be set in terms of time taken by a
customer to wait for a table, time taken by him to
place the order and time taken to collect the order.
 Standards should be flexible enough to be modified
whenever required. Due to changes taking place in
the internal and external business environment,
standards may need some modification to be
realistic in the changed business environment.
Step 2: Measurement of Actual
Performance
Once performance standards are set, the next step is
measurement of actual performance. Performance
should be measured in an objective and reliable manner.
 There are several techniques for measurement of
performance. These include personal observation,
sample checking, performance reports, accounting
ratios etc.
(i) Performance reports
Measurement of performance of an employee
may require preparation of performance report
by his superior.
(ii) Accounting ratios
Measurement of a company’s performance
may involve calculation of certain ratios like
gross profit ratio, net profit ratio, return on
investment, etc., at periodic intervals.
(iii) Personal observation
Progress of work in certain operating areas like
marketing may be measured by considering
the number of units sold, increase in market
share etc., whereas, efficiency of production
may be measured by counting the number of
pieces produced and number of defective
pieces in a batch.
(iv) Sample checking
In small organisations, each piece produced may
be checked to ensure that it conforms to quality
specifications laid down for the product.
However, this might not be possible in a large
organisation. Thus, in large organisations,
certain pieces are checked at random for quality.
This is known as sample checking.
 As far as possible, performance should be measured
in the same units in which standards are set as this
would make their comparison easier.
 Wherever possible, measurement of work should
be done during the performance. For instance, in
case of assembling task, each part produced
should be checked before assembling. Similarly, in
a manufacturing plant, levels of gas particles in
the air could be continuously monitored for safety.
4. Controlling is a continuous function
Controlling is a continuous function as it involves a
constant review of performance to ensure that
activities in the organisation are performed as per
the plans.
Controlling should not be misunderstood as the
last function of management. It brings the
management cycle back to the planning function.
The controlling function finds out how far actual
performance deviates from standards, analyses the
causes of such deviations and attempts to take
corrective actions based on the same. This process
helps in formulation of future plans in the light of
the problems that were identified and, thus, helps
in better planning in the future periods.
Step 3: Comparing Actual Performance
with Standards
This step involves comparison of actual performance
with the standard. Such comparison will reveal the
deviation between actual and desired results.
Comparison becomes easier when standards are set in
quantitative terms. For instance, performance of a
worker in terms of units produced per day can be easily
measured against the standard output.
Example: Rohit Machine Components Ltd. is engaged
in manufacturing machine components. The standard
output is 250 units per day per worker. The company
had been successfully attaining this target until two
months ago. Over the last two months, it has been
observed that daily production varies between 200–210
units per worker. Thus, there is a deviation of 40-50
units per day per worker.
Step 4: Analysing Deviations
Some deviation in performance can be expected in all
activities. It is, therefore, important to determine the
acceptable range of deviations (called 'Management
by Exception'). Also, deviations in key areas of
business need to be attended more urgently as
compared to deviations in certain insignificant areas
(called 'Critical Point Control'). Critical point control
and management by exception should be used by a
manager in this regard.
1. Critical Point Control
It is neither economical nor easy to keep a check on each
and every activity in an organisation. Control should,
therefore, focus on key result areas (KRAs) which are
critical to the success of an organisation. These KRAs are
set as the critical points. If anything goes wrong at the
critical points, the entire organisation suffers.
Example: In a manufacturing organisation, an increase
of 5 per cent in the labour cost may be more troublesome
than a 15 per cent increase in postal charges.
2. Management by Exception (or Control
by Exception)
Management by exception is an important principle/
technique of management control based on the belief
that "an attempt to control everything results in
controlling nothing".
Thus, only significant deviations which go beyond the
permissible limit should be brought to the notice of
management.
Example: If the plans lay down 2 per cent increase in
labour cost as an acceptable range of deviation in a
manufacturing organisation, increase in labour cost
up to 2 per cent should not be brought to the notice of
the management. Minor deviations must be ignored.
However, in case of major deviation from the standard
(say, 5 per cent), the matter has to receive immediate
action of management on a priority basis.
When a manager sets critical points and focuses
attention on significant deviations which cross the
permissible limit, the following advantages accrue:
1. It saves the time and efforts of managers as they deal
with only significant deviations.
2. It focuses managerial attention on important areas.
Thus, there is better utilisation of managerial talent.
3. The routine problems are left to the subordinates.
Management by exception, thus, facilitates
delegation of authority and increases morale of the
employees.
4. It identifies critical problems which need timely
action to keep the organisation in right track.
After identifying the deviations that demand
managerial attention, these deviations need to be
analysed for their causes. Deviations may have
multiple causes for their origin, such as unrealistic
standards, defective process, inadequacy of resources,
structural drawbacks, organisational constraints and
environmental factors beyond the control of the
organisation. It is necessary to identify the exact
cause(s) of deviations, failing which, an appropriate
corrective action might not be possible. The deviations
and their causes are then reported and corrective
action taken at appropriate level.
Step 5: Taking Corrective Action
The final step in the controlling process is taking
corrective action. When the deviations go beyond the
acceptable range, especially in the key result areas, it
demands immediate managerial attention so that
deviations do not occur again and standards are
accomplished. However, no corrective action is required
when the deviations are within acceptable limits.
Corrective action might involve training of employees
if the production target could not be met. Similarly, if
an important project is running behind schedule,
corrective action might involve assigning of additional
workers and equipment to the project and permission
for overtime work. In case, the deviation cannot be
corrected through managerial action, the standards
may have to be revised.
Causes of Deviation Corrective action to be taken
Defective material Change the quality specification
for the material used
Defective machinery Repair the existing machine or
replace the machine if it cannot
be repaired
Obsolete machinery Undertake technological
upgradation of machinery
Defective process Modify the existing process
Defective physical conditions Improve the physical conditions
of work of work
Key Term
Controlling – Controlling means ensuring that activities in an organisation
are performed as per the plans.
Standards – Standards are the criteria against which actual performance
would be measured. Thus, standards serve as benchmarks towards which
an organisation strives to work.
Personal observation – Progress of work in certain operating areas like
marketing may be measured by considering the number of units sold,
increase in market share etc., whereas, efficiency of production may be
measured by counting the number of pieces produced and number of
defective pieces in a batch.
Sample checking – In small organisations, each piece produced may be
checked to ensure that it conforms to quality specifications laid down for
the product. However, this might not be possible in a large organisation.
Thus, in large organisations, certain pieces are checked at random for
quality. This is known as sample checking.
Deviation – Deviation means the difference between actual performance
and the standard performance.
Key Term
Critical Point Control – Focusing on key result areas (KRAs), which are
critical to the success of an organisation is called Critical Point Control.
These KRAs are set as the critical points. If anything goes wrong at the
critical points, the entire organisation suffers.
Management by Exception (or Control by Exception) – Management by
exception is an important principle/technique of management control
based on the belief that "an attempt to control everything results in
controlling nothing". Thus, only significant deviations which go beyond
the permissible limit should be brought to the notice of management.
RECAP
Steps in Controlling Process

1. Setting performance standards
Standards are the criteria against which actual performance
would be measured. Standards can be set in both
quantitative terms (cost to be incurred, revenue to be
earned, product units to be produced and sold, time to be
spent in performing a task) as well as qualitative terms
(improving goodwill and motivation level of employees).
Standards set should be flexible enough to be modified,
whenever required.
2. Measurement of actual performance
Actual performance should be measured in an objective
and reliable manner. Measurement is normally done after
the task is completed but wherever possible, it should be
done during the performance.
• There are several techniques for measurement of
performance— personal observation, sample checking,
performance reports, and accounting ratios etc. • As far as
possible, performance should be measured in the same
units in which standards are set as this would make their
comparison easier.
3. Comparing actual performance with standards
Actual performance is compared with the standards to find
out the deviation between actual and desired results.
• Comparison becomes easier when standards are set in
quantitative terms.
4. Analysing deviations
Some deviation in performance can be expected in all
activities. It is, therefore, important to determine the
acceptable range of deviations. Also, deviations in key areas
of business need to be attended more urgently as compared
to deviations in certain insignificant areas. After identifying
significant deviations in key result areas, these deviations
need to be analysed for their causes.
Critical Point Control is a technique of managerial control
which focuses on key result areas that are critical to the
success of an organisation. The key result areas are set as
critical points since it is neither economical nor easy to keep
a check on each and every activity of the organisation. For
example, in a manufacturing organization, an increase of 5
percent in the labour cost may be more troublesome than a 15
percent increase in postal charges.
Management by Exception is a technique of managerial
control which involves identifying only significant deviations
which go beyond the permissible limit and bringing them to
the notice of the management. It is based on the belief that
an effort to control everything results in controlling nothing.
For example, if the plans lay down 2 per cent increase in
labour cost as an acceptable range of deviation, then only
increase in labour cost beyond 2 per cent (say, 5 per cent)
should be brought to the notice of the management.
5. Taking corrective action
Corrective action is taken if deviations go beyond the
acceptable limits. • However, no corrective action is
required when the deviations are within acceptable limits. •
If the deviations cannot be corrected through managerial
action, the standards may have to be revised.
Causes of deviations: (i) Defective materials (ii) Defective
machinery (iii) Obsolete machinery (iv) Defective process
(v) Defective physical conditions of work
Corrective actions: (i) Change the quality specification for
the materials used (ii) Repair the existing machine or
replace the machine if it cannot be repaired (iii) Undertake
technological upgradation of machinery (iv) Modify the
existing process (v) Improve the physical conditions of work
Question 1
The first step in the controlling process is
________________.

Answer 1
Setting performance standards.

Question 2
_____________ serve as bench marks towards which
an organisation strives to work.

Answer 2
Standards

Question 3
Which of the following represents quantitative standards?
(a) Improving goodwill
(b) Time to be spent in performing a task
(c) Improving the motivation level of employees
(d) None of these

Answer 3

Question 4
Which of the following is an example of qualitative
standards?
(a) Time taken by a customer to wait for a table in a
fast food chain having self-service
(c) Cost to be incurred
(d) Product units to be produced and sold

Answer 4
(a) Time taken by a customer to wait for a table in a
fast food chain having self-service

Question 5
Time taken by a customer to place the order in a fast
food chain having self-service is an example of
____________ standards. (quantitative/qualitative)

Answer 5
Qualitative

Question 6
Revenue to be earned is an example of ____________
(quantitative/qualitative) standards.

Answer 6
Quantitative

Question 7
Time taken by a customer to collect the order placed by
him in a fast food chain having self-service is an example
of ____________ (quantitative/qualitative) standards.

Answer 7
Qualitative

Question 8
Individual job performance is the standards set to gauge
performance in which one of the following functional
areas of business?
(a) Production
(b) Marketing
(c) HR
(d) Finance and Accounting

Answer 8
(a) Production

Question 9
A manager should try to set standards in precise
quantitative terms as ___________________.

Answer 9
This would make their comparison with actual
performance much easier.

Question 10
Standards should be flexible enough so that
_____________________.

Answer 10
these may be modified to be realistic in the changed
business environment.

Question 11
In the controlling process, once performance standards
are set the next step is ________________.

Answer 11
Measurement of actual performance.

Question 12
In the controlling process, there are several techniques
for measurement of actual performance. These include.
_______________________ .

Answer 12
Personal observation, sample checking, performance
reports, etc.

Question 13
As far as possible, performance should be measured in
the same units in which standards are set as
_________________.

Answer 13
This would make their comparison easier.

Question 14
Measurement of performance should be done often the
task is completed.

Answer 14
False: Wherever possible, measurement of work should
be done during the performance.

Question 15
In case of assembling task, each part produced should be
checked before assembling. Similarly, in a manufacturing
plants levels of gas particles in the air could be
continuously monitored for safety.
What step of controlling process and its aspect has been
highlighted in the above examples?

Answer 15
Measurement of actual performance wherever possible,
measurement of work should be done during the
performance.

Question 16
Measurement of performance of an employee may
require preparation of _____________ by his superior.

Answer 16
Performance report.

Question 17
Measurement of a company’s performance may involve
calculation of certain ratios like ________________ at
periodic interval.

Answer 17
Gross profit ratio, net profit ratio, return on investment,
etc.

Question 18
Progress of work in certain operating meas like
marketing may be measured by considering _________.

Answer 18
The number of units sold, increase in market share, etc.

Question 19
Efficiency of production may be measured by ________.

Answer 19
Counting the number of pieces produced and number of
defective pieces in a batch.

Question 20
In all organisation for effective controlling, each piece
produced must be checked to ensure that it conforms
to quality specifications laid down for the product.

Answer 20
False: this might not be possible in ease of a large
organisation.

Question 21
In large organisations, certain pieces are at random
checked for quality. This technique of measurement of
performance is known as _____________.

Answer 21
Sample checking

Question 22
The third step in the controlling process involves
comparison of actual performance with standard.
Such comparison will reveal ________________.

Answer 22
the deviation between actual and desired results

Question 23
Comparison of actual performance with standards
becomes easier when standards are set in ___________
terms (quantitative/qualitative)

Answer 23
Quantitative

Question 24
In the controlling process, it is important to determine the
acceptable range of deviations because ___________.

Answer 24
some deviation in performance can be expected in all
activities. This is known management by exception/control
by exception.

Question 25
Deviation in key areas of business need to be attended
as compared to deviations in certain insignificant areas
this is known is ________________________.

Answer 25
Critical Point control

Question 26
Control should focus on key result areas (KRAS) only
which are critical to the success of an organisation
because ____________.

Answer 26
It is neither economical nor easy to keep a check on each
and every activity in an organisaton.

Question 27
In organisation, ______________ are set as the critical
points. If anything goes wrong at the critical points, the
entire organisation suffer.

Answer 27
key result areas (KRAs)

Question 28
In a manufacturing organisation, an increase of 5 % in the
labour cost may be more trouble some than 15%
increase in postal changes.
Which of the following has been highlighted above?
(a) Critical point control
(b) Management by exception
(c) Performed reports
(d) Sample checking
Answer 28
(a) Critical point control

Question 29
It is neither economical nor easy to keep a check on
each and every activity in an organisation control should,
therefore, focus on key result areas (KRAS) which are
critical to the success of an organisation. These KRAS
are set as the critical points. If anything goes wrong at
the critical points, the entire organisation - suffers.
The technique/principle of management control
discussed above is _____________. (Management by
Exception/Critical point control).

Answer 29
Critical point control

Question 30
_______________ is an important principle/technique
of management control based on the belief that an
attempt to control everything results in controlling
nothing.

Answer 30
Management by exception or control by exception.

Question 31
Only significant deviations which go beyond the permissible
limit/ acceptable range should be brought to the notice of
management.
The technique/principle of management control highlighted
above is ___________.

Answer 31
Management by exception (or control by exception).

Question 32
____________ identifies critical problems which need
timely action of management to keep the organisation in
right track.

Answer 32
Critical point control

Question 33
The routine problems are left to the subordinates.
__________ thus, facilitates delegation of authority and
increase morale of employees. (Management by
exception/critical point control).

Answer 33
Management by exception

Question 34
_____________ saves the time and efforts of managers
as they deal with only significant deviations.

Answer 34
Management by exception

Question 35
The final step in the controlling process is __________.

Answer 35
Taking corrective action

Question 36
If there is any deviations from the standards, it demand
immediate corrective action on the part of management.

Answer 36
False: no corrective action is required when the deviation
are within acceptable limits.

Question 37
This is the last step in the process of controlling.
(a) Analysing deviations
(b) Taking corrective action
(c) Setting performance standard
(d) Measurement of performance.

Answer 37
(b) Taking corrective action

Question 38
Standards are set in quantitative as well as in qualitative
terms. Identify the type of standards when it is set in
terms of ‘Cost to be incurred.

Answer 38
Quantitative standards

Question 39
Which two steps in the process of controlling are
concerned with compelling events to conform to
the plan?

Answer 39
(i) Comparison of actual performance with standards
(ii) Taking corrective action

Question 40
What is important while analysing deviations
in controlling?

Answer 40
While analysing deviations, it is important to determine
the acceptable range of deviations/Key result areas.

Question 41
Technique for measurement of performance:
(a) Personal observation
(b) Sample checking
(c) Performance reports
(d) All of these

Answer 41
(d) All of these

Question 42
While scrutinizing the production records, it is found that
in a particular batch the rejection rate was 5% against the
set standard of 2%. The management found out that this
was due to negligence of quality control staff. This action
is part of which step in the controlling process?
(a) Measurement of actual performance.
(b) Comparing actual performance with standards.
(c) Analysing deviations
(d) Taking corrective action.
Answer 42
(c) Analysing deviations

Question 43
You are the manager of Bharti Chemicals Ltd. It is reported
to you that postal expenses have increased by 10% over
standard rates and cost of raw materials has increased by
2%. Which of the two deviations will be more critical to
you?

Answer 43
Increase in cost of raw materials by 2% is more critical.
(Critical Point Control)

Question 44
What should be the ‘focus point’ for a manager while
controlling, as controlling at each and every step is not
possible?

Answer 44
Key Result Areas (KRAs)

Question 45
Standards are set in quantitative as well as in qualitative
terms. Identify the type of standards when it is set in
terms of ‘time to be spent’.

Answer 45
Quantitative standards

Case Studies
Question 1
‘A.S. Ltd.’ is a large company engaged in assembly of air-
conditioners. Recently the company had conducted the
‘Time’ and ‘Motion’ study and concluded that on an
average a worker can assemble ten air-conditioners in a
day. The target volume of the company in a day is
assembling of 1,000 units of air-conditioners. The
company is providing attractive allowances to reduce
labour turnover and absenteeism. All the workers are
happy. Even then the assembly of air-conditioners per
day is 800 units only. To find out the reason the company
compared actual performance of each worker and
observed through C.C.T.V. that some of the workers
were busy in gossiping.
(a) Identify the function of management discussed above.
(b) State those steps in the process of the function
identified which are discussed in the above paragraph.

Answer 1
(a) Controlling
(b) Steps discussed in the above paragraph are:
(Explain the steps briefly)
(i) Setting performance standards
The target volume of the company in a day is
assembling of 1,000 units of air-conditioners.’
(ii) Measurement of actual performance
‘Even then the assembly of air-conditioners per day is
800 units only.’

(iii) Comparing actual performance with the standards
‘...the company compared actual performance of each
worker’
(iv) Analysing deviations
‘observed through C.C.T.V. that some of the workers
were busy in gossiping.’

Question 2
K&K Co. Ltd. is engaged in manufacturing machine
components. The target production is 200 units daily.
The company had been successfully attaining this target
until two months ago. Over the last few months it has
been observed that daily production varies between
150-170 units.
Identify the possible causes for the decline in production
and the steps to be taken to achieve the desired targets.

Answer 2
(State any five causes of deviation and their corrective action)

Question 3
Babita Ltd. is engaged in manufacturing machine
components. The target production is 250 units per
day per worker. The company had been successfully
attaining this target until two months ago. Over the last
two months it has been observed that daily production
varies between 200–210 units per worker.
(a) Name the function of management and identify the
step in the process of this function which helped in
finding out that the actual production of a worker
is less than the set target.

(b) To complete the process of the function identified
in (a) and to ensure the performance as per set
targets, explain what further steps a manager has
to take.
(5 marks)

Answer 3
(a) The management function is Controlling.
“Comparing actual performance with standards” is the
step involved in the process of controlling which
helped in finding out that the actual production of a
worker is less than the set target.
(b) A manager has to take the following two further
steps to complete the process of controlling:
(i) Analysing deviations
(ii) Taking corrective action

Question 4
Textile manufacturer Super textiles reported 43% fall in its
profits in the fourth quarter ended 31 March 2019, which
is beyond the acceptable range 25% decided by the
company. This was due to higher fuel cost and lower yield
on account of demonetization. The company aims to
implement cost saving measures by restructuring contracts
and its business processes to meet its targets in the future.
(a) Name the function of management discussed above.
(b) Also identify and explain the steps of the function of
management discussed above.
Answer 4
(a) Controlling
(b) The steps of controlling discussed above are:
(i) Analysing deviations
(ii) Taking Corrective Action (Explain)

Question 5
Rudrakshi Ltd. is engaged in manufacturing high end luxury
pens. The target production is 700 units daily. The company
had been successfully attaining this target until three
months ago. Over the last few month, it has been observed
that daily productions varies between 600-650 units.
I. Identify the function of management, which has been
highlighted in the above context.
II. Discuss the first four steps involved in the process of
the function identified above.

Answer 5
(I) Controlling
(II) Following are the first four steps involved in the
controlling process:
(a) Setting Performance Standards
(b) Measurement of Actual Performance
(c) Comparing Actual Performance with Standards
(d) Analysing Deviations (Explain)

Question 6
Isha Machines was a renowned name for quality sewing
machines since 1960. Mr Suresh, the owner of Isha
Machines was worried as the production had declined
during the last three months. He directed the Production
Manager to find out the reason. The Production Manager
ordered the different supervisors to prepare a
performance report of the workers working under them.
Identify the step taken by the Production Manager that is
related to one of the functions of management.

Answer 6
Measurement of actual performance.

Controlling

Question 1
The principle of management control which a manager
should consider while dealing with deviations effectively
is referred to as _________.

Answer 1
Management by Exception/Control by Exception

Question 2
Match the columns: (1 mark)
Standards to gauge performance Functional areas of business
(i) Labour relations, labour turnover, (a) Production
labour absenteeism, etc.
(ii) Sales volume, sales expense, (b) Marketing
advertising expenditure, individual
sales person’s performance, etc.
(iii) Capital expenditure, inventories, (c) Human resource
flow of capital, liquidity, etc. management
(iv) Quantity, quality, cost, individual job (d) Finance and accounting
performance, etc.

Answer 2
(i) – (c), (ii) – (b), (iii) – (d), (iv) – (a)

Question 3
Which term is used to indicate the difference
between standard performance and actual
performance?
(1 mark)

Answer 3
Deviation

Question 4
An important project at AMB consultants is running
behind schedule by a month. This has upset their
clients and might affect the reputation of the
company in the long run. No managerial action like
assigning more workers, equipment or giving
overtime has been able to solve the problem. What
managerial action may now be taken by the
company to avoid such a situation from arising in the
future?

(a) Revise the schedule
(b) Assigning additional workers and equipment to
the project
(c) Get permission for further overtime work
(e) Both B&C

Answer 4
(a) Revise the schedule

Question 5
Mr. Arfaaz had been heading the production
department of Writewell Products Ltd., a firm
manufacturing stationary items. The firm secured an
export order that had to be completed on a priority
basis and production targets were defined for all
the employees. One of the workers, Mr. Bhanu
Prasad, fell short of his daily production target by
10 units for two days consecutively. Mr. Arfaaz
approached Ms Vasundhara, the CEO of the

Company, to file a complaint against Mr. Bhanu
Prasad and requested her to terminate his services.
Explain the principle of management control that
Ms. Vasundhara should consider while taking her
decision. (3 marks)

Answer 5
Management by exception (Explain)

Question 6
Mr. Shantanu is a chief manager of a reputed
company that manufactures garments. He called
the production manager and instructed him to keep
a constant and continuous check on all the activities
related to his department so that everything goes
as per the set plan. He also suggested him to keep
a track of the performance of all the employees in
the organisation so that targets are achieved
effectively and efficiently.

Explain three features of Controlling highlighted in
the above situation. (3 marks)

Answer 6
Features of Controlling highlighted in the given
situation are:
(i) Goal-oriented function
(ii) Continuous function
(iii) Pervasive function (Explain)

Question 7
Vinber Ltd. set up a manufacturing unit at Bhiwadi
at Himachal Pradesh to manufacture electric
geysers and supply them to dealers all over the
country. Their production target was 500 geysers
per week. It was decided by the management that
variation in production upto 10 units would be
acceptable. At the end of the first week, the
production was 450 geysers. The next week,
production increased to 470 geysers. A week later,

production was 460 geysers. On investigation, it was
found out that fluctuation in production was due to
irregular supply of electricity.
(a) The above para discusses some of the steps of
one of the functions of management. Explain the
steps.
(b) Also, state the step(s) not discussed in the above
para. (4 marks)

Answer 7
(a) Steps in the process of controlling discussed in
the above case:
(i) Setting performance standards
(ii) Measuring actual performance
(iii) Comparing actual performance with
standards and Analysing deviations
(b) Step not discussed in the above para:
Taking corrective action if deviations go
beyond the acceptable limits.
Question 8
‘Planning is looking ahead and controlling is looking
back.’ Comment.
(5 marks)

Question 9
Banwari Lal is a cloth merchant in Karol Bagh. His
grandsons are requesting him to let them diversify
the business into bridal wear. Banwari Lal has
agreed but on the condition that they will follow the
function of management he has always followed,
which helps an organisation in keeping track of the
progress of activities and ensures that the activities
conform to the standards set in advance so that the
organisational goals are achieved. Name the
function of management which Banwari Lal is asking
his grandsons to follow. List any five reasons why it is
considered an indispensable function of management.
(6 marks)

Answer 9
Controlling (Explain)

Controlling

Question 1
Mahima Jain is the Senior Manager in the Advisory
Services Department of Kodes Ltd. She regularly
prepares performance reports of her subordinates
as a part of the appraisal. The step of the
controlling process performed by her is ________.

Answer 1
Measurement of actual performance

Question 2
A control technique should keep a check on each
and every activity in an organisation.
(True/False? Give reason) (1 mark)

Answer 2
False: It is neither economical nor easy to keep a
check on each and every activity in an organisation.
Control should, therefore, focus on key result areas
(KRAs) which are critical to the success of an
organisation (Critical Point Control).

Question 3
The term used to indicate the difference between
standard performance and actual performance is
called ______________.

Answer 3
Deviation

Question 4
Give any two standards that can be used by a
company to evaluate the performance of its
Finance & Accounting department.
(1 mark)

Answer 4
Capital expenditure, Inventories, Flow of capital,
Liquidity (any two)

Question 5
Explain the concept of ‘Controlling’. Is controlling the
last function of management? Explain.
(3 marks)

Question 6
“A control technique should check each and every
activity in an organisation.” Do you agree? Give
reasons.
(3 marks)

Question 7
‘‘Planning is looking ahead while controlling is
looking back.’’ Comment.
(4 marks)

Answer 7
It is often said that planning is looking ahead while
controlling is looking back. However, the statement is
only partially correct.
Plans are prepared for future and are based on
forecasts about future conditions. Therefore, planning
involves looking ahead and is called a forward
looking function. On the contrary, controlling is like a
postmortem of past activities to find out deviations
from the standards. In that sense, controlling is a
backward-looking function.
However, planning is guided by past experiences
and the problems identified in the past. Therefore,
planning also involves looking back. On the contrary,
the corrective action initiated by controlling function
aims to improve future performance. Therefore,
controlling is also a forward-looking function.
Conclusion: Planning and controlling are both
backward-looking as well as a forward-looking
function.

Question 8
Each Employee of ‘Bhoomika Ltd.’ should
manufacture 10 tables per day as per day as per
the terms of employment. All the employees met
the said target except a few who manufactured
between 4 – 6 tables per day. On investigation, it
was found that these employees wasted time in
gossiping and sitting idle. The management took a
decision to install Closed Circuit Television (CCTV’s)
in the factory for monitoring the activities of the
employees.
Identify by quoting lines the steps in the controlling
function discussed above and explain these steps.
(5 marks)

Question 9
Vikas was the Chief Operating Officer of ‘Yalet
Ltd.’, a company providing advanced software
solutions to Indian Defence Services. They had
been carrying on business successfully for the last
twelve years and earning enough profits. But from
the last one year, they realised that though the
business is getting big orders which are being
fulfilled in time, even then the revenues kept on
decreasing. Vikas was not able to find out where
the problem was. He started keeping a close check
on the progress of activities as he could sense that
something was wrong. He wanted to take some
action before any major damage could be done to
the business. Vikas appointed a cyber security
expert who monitored the company’s processes and
found out that the computer operator was deleting
the entries from the computers and pocketing the
revenues. He was caught and handed over to the
police. This created an atmosphere of order and

discipline in the organisation and helped in minimising
dishonest behaviour on the part of the employees.
Explain the importance of the function of management
highlighted in the above paragraph by giving any six
points.
(6 marks)

Answer 9
Importance of controlling (explain six points)

Controlling

Question 1
In case the deviation cannot be corrected through
managerial action, ________.

Answer 1
The standards may have to be revised.

Question 2
___________ checks whether decisions have been
translated into desired action.
(a) Directing
(b) Controlling
(c) Organising
(d) Coordination

Answer 2
(b) Controlling

Question 3
Planning is prescriptive whereas, controlling is
evaluative.
(True/False? Give reason) (1 mark)

Answer 3
True: Planning prescribes an appropriate course of
action for achieving objectives, whereas controlling
evaluates whether activities conform to plans.

Question 4
When the deviations go beyond the acceptable
range, especially in the importance area, it demands
immediate managerial attention so that deviations
do not occur again and standards are accomplished.
(a) Management by exception
(b) Critical point control
(d) Analysing deviations
Answer 4

Question 5
Airtech Ltd. is manufacturing mobile phones both
for domestic Indian market and for export. It had
enjoyed a substantial market share and also had a
loyal customer following. But lately it has been
experiencing problems because its targets have not
been met with regard to sales and customer
satisfaction. Also, mobile market in India has grown
tremendously and new players have come with
better technology and pricing. This is causing
problems for the company. It is planning to revamp
its controlling system and take other steps necessary
to rectify the problems it is facing.
(a) Suggest any two benefits the company will
derive from a good control system.
(b) Give the steps that the company should follow
to remove the problems it is facing.
(3 marks)

Answer 5
(a) Two benefits which the company will derive
from a good control system are:
(i) Accomplishing organisational goals
(ii) Judging accuracy of standards
(b) The steps that the company should follow to
remove the problems it is facing are:
(i) Analysing deviations to identify their causes,
e.g. obsolete machinery, defective process,
etc.
(ii) Taking corrective action:
The company should undertake technological
upgradation of machinery, and modify the
existing process, etc.

Question 6
“An attempt to control everything results in controlling
nothing.” Explain with example.
(3 marks)

Question 7
Describe briefly the relationship between controlling
and planning.
(4 marks)

Question 8
State any five points that highlight the importance of
‘controlling’ function of management.
(5 marks)

Question 9
A company was manufacturing ‘LED bulbs’ which
were in great demand. It was found that the
target of producing 300 bulbs a day was not met
by the employees. On analysis, it was found that
the workers were not at fault. Due to electricity
failure and shortage of workers, the company was
not able to achieve the set targets and alternative
arrangements were needed.
To meet the increased demand, the company
assessed that approximately 88 additional
workers were required out of which 8 would work
as heads of different departments and 10 would
work as subordinates under each head. The
required qualifications and job specifications were
also enlisted. It was also decided that necessary
relaxation should be given to encourage women,
persons from backward and rural areas and
persons with special abilities to assume responsible
positions in the organisation. All efforts were made

to match the ability of the applicants with the
nature of work.
(a) Identify the functions of management discussed
above.
(b) State the two steps in the process of each
function discussed in the above para.
(6 marks)

Answer 9
(a) Staffing and controlling
(b) Steps in Staffing Process
(i) Estimating manpower requirements which
involves knowing how many persons are
needed and of what type.
‘To meet the increased demand, the company
assessed that ... subordinates under each
head.’

(ii) Recruitment which involves searching for
prospective employees and stimulating them
to apply for jobs in the organisation.
(c) Steps in controlling: (any two)
(i) Comparison of actual performance with the
standards which would reveal the deviation
between actual and desired results.
‘It was found that the target of producing 300
bulbs a day was not met by the employees.’
(ii) Analysing deviations which would help to find
out the causes of deviation.
"On analysis, it was found that the workers
were not at fault...alternative arrangements
were needed."
(iii) Taking corrective action, if required.
"To meet the increased demand, the company
assessed that approximately...as subordinates
under each head."
Time Allowed: 2 hours Maximum Marks: 50

Chapter-1 Nature and Significance of Management
Chapter-2 Principles of Management
Chapter-3 Business Environment
Chapter-4 Planning
Chapter-5 Organising
Chapter-6 Staffing
Chapter-7 Directing
Chapter-8 Controlling
Question 1
Same battery can be used in different mobile phones
of a particular brand. This is an example of which of
the following techniques of scientific management?
(b) Simplification of work
(c) Method Study
(d) Functional Foremanship

Answer 1

Question 2
Match the column: (1 mark)
(a) Increased life expectancy of people and increased (i) Inter-
awareness for health care have increased the demand for relatedness
many health products and services like diet Coke, fat-free
cooking oil, and health resorts. New health products and
services have, in turn, changed people’s life styles.
(b) It may be difficult to know the extent of the relative impact (ii) Relativity
of the social, economic, political, technological or legal
factors on change in demand of a product in the market.
(c) Political conditions in the USA, for instance, differ from those (iii) Complexity
in China or Pakistan. Similarly, demand for sarees may be
fairly high in India whereas it may be almost non-existent in
France.

Answer 2
(a) – (i), (b) – (iii), (c) – (ii)

Question 3
A tall structure has a ___________.
(b) Wide span of management
(c) No span of management
(d) Less levels of management

Answer 3

Question 4
The ‘on-the-job’ method of training that is used to
give training to plumbers is ____________.

Answer 4
Apprenticeship programmes

Question 5
In an organization, employees always feel that they
are under enormous unnecessary stress, as the
manager does not provide any information about
future plans but simply instructs them what to do. He
also does not listen to any of the suggestions given
by the subordinates.
Identify the type of leadership style followed by the
manager in the above situation.
(1 mark)
Answer 5
Autocratic style of leadership is being followed by
the manager in the given situation.

Question 6
“Successful organizations do not achieve their goals
by chance but by following a deliberate process”.
Identify the process highlighted here.
(1 mark)

Answer 6
Process highlighted in the statement is ‘Management’.

Question 7
Mr. Mohan, Financial manager of ABC Ltd., has
prepared the annual Statement of proposed
expenditure to be presented in the Annual General
Meeting.
Identify the type of plan formulated by the financial
manager.
(1 mark)

Answer 7
Budget is the type of plan formulated by the
financial manager.

Question 8
State any three points of importance of
directing function of management.
OR
State any three measures to overcome the
communication barriers.
(3 marks)

Question 9
‘Delegation is not a process of abdication.’ Comment.
(3 marks)

Answer 9
The given statement is true as delegation helps a
manager to extend his area of operation as without
it his activities would be restricted to only what he
himself can do. However, delegation does not mean
abdication; the manger shall still be accountable for
the assigned task.

Question 10
Rahul decided to start a desert cooler manufacturing
business. He sets the target of earning 20% profit
on sales in the first year. He was very much
concerned about the future prospects of the business,
which were uncertain. For this, he gathered
information from the potential market and analyzed
that the demand forwall mounted coolers is
increasing day by day. He used this information as
the base for future planning. On the basis of the

gathered information, he called a meeting in the
following week to find new methods to achieve the
objective.
(a) Identify the function of management involved in
the above case.
(b) Enumerate the next two steps, which have been
followed by Rahul that are related to the
process of one of the functions of management.
(3 marks)
Answer 10
(a) Planning
(b) (i) Identifying alternative courses of action.
(ii) Evaluating alternative courses of action.

Question 11
State any three functions performed by the manager
who is working at the middle level management.
OR
State any three characteristics of Coordination.
(3 marks)

Question 12
‘The Government of India has recently come up with
an amendment to Section 6 of the Payment of
Wages Act 1936, to allow employers of certain
industries to make payment through various
electronics modes of payments. The amendment will
be applicable to all the public sector undertakings
for wages disbursement using e-payment options.
This is another milestone in the direction to further
push to cashless economy.

Identify and explain any two dimensions of business
environment which relate to the above mentioned
case.
(3 marks)

Answer 12
The various dimensions of business environment which
relate to the above mentioned case are stated below:
(a) Political Environment
(b) Legal Environment
(c) Technological Environment (Explain any two)

Question 13
Kavita recently joined as the human resource director
of Arjun Vidyamandir School, a senior secondary
educational institute. She observed that the school
had an experienced medical team on its payroll.
They regularly offered useful suggestions which were
neither appreciated nor rewarded by the school
authorities. Instead the school outsourced the task of
maintenance of health records of the students and
paid them a good compensation for their services.

Because of this, the existing medical team felt
disheartened and stopped giving useful suggestions.
(a) Identify the communication barrier discussed
above.
(b) Identify the category of this communication
barrier.
(c) Explain any other two communication barriers
of the same category.
(4 marks)
Answer 13
(i) The communication barrier discussed in the above
paragraph is Lack of proper incentives.
(ii) It is a type of Personal barrier.
(iii) Other communication barriers of the same
category are: (any two with suitable explanation)
(a) Fear of challenge to authority
(b) Lack of confidence of superior on his
subordinates
(c) Unwillingness to communicate.
Question 14
Rudrakshi Ltd. is engaged in manufacturing high end
luxury pens. The target production is 700 units daily.
The company had been successfully attaining this
target until three months ago. Over the last few
month, it has been observed that daily productions
varies between 600-650 units. (5 marks)
I. Identify the function of management, which has
been highlighted in the above context.
II. Discuss the first four steps involved in the process
of the function identified above.
Answer 14
(i) Controlling
(ii) (Explain the first four steps involved in the controlling
process.)

Question 15
Flavours Ltd. was engaged in the business of making
handmade chocolates. Lately, the business was
expanding due to good quality and reasonable
prices. As the demand was increasing, Flavours Ltd.
decided to explore bakery products as well. In order
to make bakery products the company directed its
workforce to work overtime but this resulted in
multiple problems.
Due to increased pressure the efficiency declined
and the workers had to take orders from more than
one superior. Workers were overburdened and their
health was also affected. Gradually the quality of
the products begins to decline and market share
also went down. The company realized that they
had implemented changes without waiting for the
required infrastructure.
Identify and explain the principles/technique of
Taylor/Fayol referred to in the above para.
(6 marks)
Answer 15
(i) Unity of Command
(ii) Fatigue Study (Explain)

Question 16
Differentiate between Functional structure and
Divisional structure.
OR
Distinguish between Formal organization and
Informal organization.
(6 marks)

Question 17
A public transport corporation has hired 2000 buses
for the different routes for the passengers of
metropolitan city. In order to fill vacancies, it
advertised in the newspaper and number of
applicants applied for the same. The company has to
now undertake the process of selection to identify
and select the best. Explain the first six steps
involved in the process.

Answer 17
(Explain the steps involved in the selection process.)

Time Allowed: 2 hours Maximum Marks: 50

Chapter-1 Nature and Significance of Management
Chapter-2 Principles of Management
Chapter-3 Business Environment
Chapter-4 Planning
Chapter-5 Organising
Chapter-6 Staffing
Chapter-7 Directing
Chapter-8 Controlling
Question 1
Foremen and Supervisors comprise ___________.
(a) Top level of management
(b) Middle level of management
(d) None of these

Answer 1

Question 2
‘She/he keeps machines, materials, tools etc., ready
for operations by concerned workers’. Whose work
is described by this sentence under functional
foremanship?
(a) Instruction Card Clerk
(b) Repair Boss
(c) Gang Boss
(d) Route Clerk
Answer 2
(c) Gang Boss

Question 3
The method of training in which the trainee works
under the guidance of a master worker is _______.

Answer 3
Apprenticeship training

Question 4
The type of barrier of communication which refers
to problems and obstructions in the process of
encoding and decoding of message into words or
impressions:
(a) Semantic barriers
(b) Organisational barriers
(c) Personal barriers
(d) Psychological barriers
Answer 4
(a) Semantic barriers

Question 5
Raj and Riya are working in different departments
of Leo Infocom. One day at lunch time Riya told Raj
that due to recession many people are going to be
retrenched soon from the organisation. The type of
communication that took place between Raj and
Riya is _________ (formal communication/informal
communication).
(Choose the correct option) (1 mark)

Answer 5
Informal communication

Question 6
Raj Auto Ltd. was engaged in manufacturing motor
cycles. Its long term objective was to capture the market
by increasing sales every year. For this it analysed the
pricing policy of the competitors. To achieve this
objective it decided to offer a discount of 3,000 and
free insurance on purchase of every motor cycle. This
attracted the customers and the sales increased.
Identify the type of plan being followed by Raj Auto
Ltd. (1 mark)

Answer 6
Strategy

Question 7
State any three limitations of Planning.
(3 marks)

Question 8
State any three points of importance of Organising.
(3 marks)

Question 9
Mayank, the director of a company, is planning to
manufacture stuffed toys for utilising waste material
of one of his garments factories. He decided that
this manufacturing unit will be set up in a rural area,
so that people living in rural areas can have job
opportunities. For this he selected Arbaaz, Kriti,
Lata and Ritik as heads of Sales, Accounts, Purchase
and Production departments respectively. They were
differently abled but intelligent and creative

persons in designing. State the next three steps
Mayank has to follow in the staffing process after
selecting heads of different departments.
(3 marks)

Answer 9
The next three steps that Mayank has to follow in the
staffing process after selecting heads of different
departments are:
(a) Placement and orientation
(b) Training and development
(c) Performance Appraisal

Question 10
Explain any three points of importance of
decentralisation.
(3 marks)

Question 11
‘Express Tours Ltd.’ is a travel agency which books air
tickets on commission basis. It takes two days for
Express Tours to get the tickets from airport
reservation counter and deliver the same to
customers. During the last one year, there has been
drastic decrease in its business as most of the
customers have shifted to another travel agency,
‘Shiva Tours and Travels’, which provides tickets
within half-an-hour through internet.

(a) Name and explain the dimension of business
environment that is being overlooked by ‘Express
Tours Ltd.’
(b) Explain another dimension of business environment
other than that identified in (a) above.
(4 marks)

Answer 11
(a) Technological environment (Explain)
(b) Another dimension of business environment:
(Explain any one)
(i) Social environment.
(ii) Political environment.
(iii) Economic environment.
(iv) Legal environment.

Question 12
The Managing Director of ‘Verma Chemicals Pvt. Ltd.’
held a meeting of all the departmental managers. In
the meeting, the managing director said that besides
doing their current work efficiently, they also had to
make themselves capable of shouldering more
responsibility in future as the company is going to
add an additional product to its existing product line.
For the realisation of this objective he invited
suggestions from all departmental heads. The

Managing Director proposed a plan on the basis of
the suggestions received. All the departmental heads
carried out the plan.
(a) Identify and give the meaning of the style of
leadership referred in the above para.
(b) Explain the other two styles of leadership.
(4 marks)

Answer 12
(a) Democratic style of leadership (give the meaning)
(b) The other two leadership styles are:
(i) Autocratic style of leadership
(ii) Laissez Faire style of leadership

Question 13
Explain any four characteristics of planning.
OR
Explain the steps in the process of organising function
of management.
(4 marks)

Question 14
Mohan is working as a vice-president in Ashoka Ltd.
He performs a separate and specialised function
having many aspects of human relations. His job is
closely linked with organising since after the structure
and positions have been decided, people are
required to work in these positions. His function is
seen as a generic function of management. When he
performs his duties, his role is slightly limited.

(a) Identify and explain the meaning of the function
being performed by Mohan as the vice-president
of Ashoka Ltd.
(b) The function performed by Mohan benefits the
organisation in many ways. State any three such
benefits.
(4 marks)

Answer 14
(a) Staffing
(b) Benefits of Staffing (State any three)

Question 15
Fayol and Taylor both have contributed immensely to
the knowledge of management, which has become a
basis for further practice by managers. Taylor
thought that by scientifically analysing work it would
be possible to find ‘one best way’ to do it. He is most
remembered for his time and motion studies and
functional foremanship. He said that the best result
would come from the partnership between a trained
and qualified management and a cooperative and

innovative workforce. Fayol explained what amounts
to a manager’s work and what principles should be
followed in doing this work.
In the light of the above discussion, differentiate
between the contribution of Taylor and Fayol on the
following basis:
(a) Perspective (b) Unity of command
(c) Focus (d) Applicability
(e) Basis of formation (5 marks)

OR
State any five points that highlight the importance
of ‘Management’.
(5 marks)

Question 16
State any five impacts of government policy changes
on Business and Industry.
(5 marks)

Question 17
Each employee of ‘Bhoomika Ltd.’ should manufacture
10 tables per day as per the terms of employment.
All the employees met the said target except a few
who manufactured between 4 – 6 tables per day. The
management look a decision to install Closed Circuit
Television (CCTV’s) in the factory for monitoring the
activities of the employees.
(a) Identify the managerial function discussed above.
(b) Explain the steps in the process of the function
identified in (a) above. (6 marks)
Answer 17
(a) Controlling
(b) Steps in the process of controlling (Explain)

B.ST XII Part-A Subhash Dey All Chapters PPTs (Teaching Made Easier)

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