1|Page iDream Management College

BCA - I semester – Principles of management accepted privately and that objection to change is
controlled.
Q. 1 critically examined the nature and importance of Achieving personal objectives: Management promotes
management? leadership and furnishes motivation to the employees to
Management operate effectively in order to accomplish their personal
Management is required for an established life and aims while working towards the organizational goals.
essential to managing all types of management. Sound Development of Society: Management helps in the
management is the fortitude of thriving companies. enhancement of community by manufacturing reliable
Managing life implies getting everything done to quality commodities, establishing employment chances
accomplish life’s aspirations and maintaining an and fostering innovative technologies.
establishment means getting everything done with and by Features of Management:
other people to deliver its objectives. Post-learning a few definitions of management we come
To put it in other words, the organization and across some elements that can be referred to as basic
coordination of the pursuits of an industry for the idea of aspects of management:
accomplishing determined objectives efficiently and Management is a goal-oriented method: An establishment
thoroughly are marked as management. has a predefined set of fundamental goals which are the
Nature of Management: primary basis for its being. These must be easy and
Universal Process: Wherever there exists human pursuit, explicitly mentioned. Different establishments have
there exists management. Without effective various goals. For instance, the aim of a retail market may
management, the intentions of the organisation cannot be to improve sales, but the purpose of The Spastics
be accomplished. Society of India is to allow education to children with
The factor of Production: Equipped and experienced specific requirements. Management strengthens the
managers are necessary for the utilization of funds and energies of different individuals in the company towards
labour. accomplishing these goals.
Goal-Oriented: The most significant aim of all Management is all common: The activities associated with
management pursuit is to achieve the purposes of a firm. managing a firm are familiar to all companies whether
The aims must be practical and reachable. financial, cultural or civic.
Supreme in Thought and Action: Managers set achievable A petrol pump must be regulated as much as a school or a
goals and then direct execution on all aspects to achieve hospital. What managers do in India, Japan, Germany, or
them. For this, they need complete assistance from the USA is identical. How they achieve it may be
middle and lower degrees of management. considerably diverse. This variation is due to the
The system of Authority: Well-defined principles of distinctions in tradition, history and culture.
regulation, the regulation of proper power and efficiency Management is a perpetual process: The method of
at all degrees of decision-making. This is important so that management is a set of consecutive, composite, but
each self must perform what is required from him or her distinct purposes (organising, planning, staffing,
and to whom he must report. controlling and directing). These operations are
Profession: Managers require to control managerial concurrently executed by all managers. The responsibility
expertise and education, and have to adhere to a verified of a manager comprises a continuous series of duties.
law of demeanour and stay informed of their human and Management is intangible energy: It is an intangible
social responsibilities. strength that can’t be seen but its proximity can be felt in
Process: The management method incorporates a range the form of the business operations. The outcome of
of activities or services directed towards an object. management is remarkable in an industry where targets
Significance of Management: are reached according to procedures, employees are
Achieving Group Goals: Management encourages comfortable and content and there is arrangements
collaboration and coordination amongst workers. A rather than confusion.
general control must be provided to the organizational Management is a group activity: It implies that it is not a
and personal objectives in order to favourably accomplish single person who completes all the actions of the
the aims. Industry but it is always a group of people. Therefore,
Increases Efficiency: Management improves productivity management is a group endeavour.
by managing resources in a reliable conceivable way in Q.2. Elucidate the major functions of management?
order to decrease cost upscale potency. Functions of Management
Creates Dynamic organization: Management undertakes Management has been described as a social process
the conditions by assuring that these variations are well involving responsibility for economical and effective
planning & regulation of operation of an enterprise in the
2|Page iDream Management College
fulfillment of given purposes. It is a dynamic process organize a business is to provide it with everything useful
consisting of various elements and activities. These or its functioning i.e. raw material, tools, capital and
activities are different from operative functions like personnel’s”. To organize a business involves determining
marketing, finance, purchase etc. Rather these activities & providing human and non-human resources to the
are common to each and every manger irrespective of his organizational structure. Organizing as a process involves:
level or status. Identification of activities.
Different experts have classified functions of Classification of grouping of activities.
management. According to George & Jerry, “There are Assignment of duties.
four fundamental functions of management i.e. planning, Delegation of authority and creation of responsibility.
organizing, actuating and controlling”. Coordinating authority and responsibility relationships.
According to Henry Fayol, “To manage is to forecast and Staffing
plan, to organize, to command, & to control”. Whereas It is the function of manning the organization structure
Luther Gullick has given a keyword ’POSDCORB’ where P and keeping it manned. Staffing has assumed greater
stands for Planning, O for Organizing, S for Staffing, D for importance in the recent years due to advancement of
Directing, Co for Co-ordination, R for reporting & B for technology, increase in size of business, complexity of
Budgeting. But the most widely accepted are functions of human behaviour etc. The main purpose o staffing is to
management given by KOONTZ and O’DONNEL put right man on right job i.e. square pegs in square holes
i.e. Planning, Organizing, Staffing, Directing and Controllin and round pegs in round holes. According to
g. Kootz&O’Donell, “Managerial function of staffing involves
For theoretical purposes, it may be convenient to manning the organization structure through proper and
separate the function of management but practically effective selection, appraisal & development of personnel
these functions are overlapping in nature i.e. they are to fill the roles designed un the structure”. Staffing
highly inseparable. Each function blends into the other & involves:
each affects the performance of others. Manpower Planning (estimating man power in terms of
searching, choose the person and giving the right place).
Recruitment, Selection & Placement.
Training & Development.
Remuneration.
Performance Appraisal.
Promotions & Transfer.
Directing
It is that part of managerial function which actuates the
organizational methods to work efficiently for
Planning achievement of organizational purposes. It is considered
It is the basic function of management. It deals with life-spark of the enterprise which sets it in motion the
chalking out a future course of action & deciding in action of people because planning, organizing and staffing
advance the most appropriate course of actions for are the mere preparations for doing the work. Direction is
achievement of pre-determined goals. According to that inert-personnel aspect of management which deals
KOONTZ, “Planning is deciding in advance - what to do, directly with influencing, guiding, supervising, motivating
when to do & how to do. It bridges the gap from where sub-ordinate for the achievement of organizational goals.
we are & where we want to be”. A plan is a future course Direction has following elements:
of actions. It is an exercise in problem solving & decision Supervision
making. Planning is determination of courses of action to Motivation
achieve desired goals. Thus, planning is a systematic Leadership
thinking about ways & means for accomplishment of pre- Communication
determined goals. Planning is necessary to ensure proper Supervision- implies overseeing the work of subordinates
utilization of human & non-human resources. It is all by their superiors. It is the act of watching & directing
pervasive, it is an intellectual activity and it also helps in work & workers.
avoiding confusion, uncertainties, risks, wastages etc Motivation- means inspiring, stimulating or encouraging
Organizing the sub-ordinates with zeal to work. Positive, negative,
It is the process of bringing together physical, financial monetary, non-monetary incentives may be used for this
and human resources and developing productive purpose.
relationship amongst them for achievement of
organizational goals. According to Henry Fayol, “To
 3|Page iDream Management College
Leadership- may be defined as a process by which 3. In management, it is not possible to define, analyse and
manager guides and influences the work of subordinates measure phenomena by repeating the same conditions
in desired direction. over and over again to obtain a proof.
Communications- is the process of passing information, The above observation puts a limitation on management
experience, opinion etc from one person to another. It is a as a science. Management like other social sciences can
bridge of understanding. be called as "inexact science".
Controlling What is "Art"?
It implies measurement of accomplishment against the
'Art' refers to "the way of doing specific things; it indicates
standards and correction of deviation if any to ensure
how an objective is to be achieved." Management like any
achievement of organizational goals. The purpose of
other operational activity has to be an art. Most of the
controlling is to ensure that everything occurs in
managerial acts have to be cultivated as arts of attaining
conformities with the standards. An efficient system of
mastery to secure action and results.
control helps to predict deviations before they actually
occur. According to Theo Haimann, “Controlling is the The above definition contains three important
process of checking whether or not proper progress is characteristics of art. They are-
being made towards the objectives and goals and acting if 1. Art is the application of science. It is putting principle
necessary, to correct any deviation”. into practice.
According to Koontz &O’Donell “Controlling is the 2. After knowing a particular art, practice is needed to
measurement & correction of performance activities of reach the level of perfection.
subordinates in order to make sure that the enterprise 3. It is undertaken for accomplishing an end through
objectives and plans desired to obtain them as being deliberate efforts.
accomplished”. Therefore controlling has following steps: Judging from the above characteristics of art, it may be
Establishment of standard performance. observed that-
Measurement of actual performance.
1. Management while performing the activities of getting
Q.3 Elaborate on Whether management is art or an
things done by others is required to apply the
science ?
knowledge of certain underlying principles which are
It is said that "management is the oldest of arts and the
necessary for every art.
youngest of sciences". This explains the changing nature
2. Management gets perfection in the art of managing
of management but does not exactly answer what
only through continuous practice.
management is? To have an exact answer to the question
3. Management implies capacity to apply accurately the
it is necessary to know the meanings of the terms
knowledge to solve the problems, to face the situation
"Science" and "Art".
and to realise the objectives fully and timely.
What is "Science"? The above observation makes management an art and
Science may be described- "as a systematic body of that to a fine art.
knowledge pertaining to an area of study and contains
Management is both a Science as well as an Art
some general truths explaining past events or
Management is both a science as well as an art. The
phenomena".
science of management provides certain general
The above definition contains three important principles which can guide the managers in their
characteristics of science. They are professional effort. The art of management consists in
1. It is a systematized body of knowledge and uses tackling every situation in an effective manner. As a
scientific methods for observation matter of fact, neither science should be over-emphasised
2. Its principles are evolved on the basis of continued nor art should be discounted; the science and the art of
observation and experiment and management go together and are both mutually
3. Its principles are exact and have universal applicability interdependent and complimentary.
without any limitation. Management is thus a science as well as an art. It can be
Judging from the above characteristics of science, it may said that-"the art of management is as old as human
be observed that- history, but the science of management is an event of the
1. Management is a systematized body of knowledge and recent past."
its principles have evolved on the basis of observation.
2. The kind of experimentation (as in natural sciences)
cannot be accompanied in the area of management
since management deals with the human element.
4|Page iDream Management College
Q.4 Explain about the contribution of Provide wage incentives to workers for increased
output
F.W.Taylor, Henri fayol & Elton mayo to the Contributions
management thought . Scientific approach to business management and
process improvement
Frederick Taylor (1856-1915), developer of scientific
Importance of compensation for performance
management. Scientific management (also called
Began the careful study of tasks and jobs
Taylorism or the Taylor system) is a theory of Importance of selection criteria by management
management that analyzes and synthesizes workflows, Elements and Tools of Scientific Management
with the objective of improving labor productivity. Separation of planning and doing
Functional Foremanship
The contribution of F.W.Taylor to scientific management
Job Analysis
Frederick Taylor (1856-1915), developer of scientific
Standardization
management. Scientific management (also
Scientific Selection and training of workers
called Taylorism or the Taylor system) is a theory of
Financial Incentives
management that analyzes and synthesizes workflows,
Economy
with the objective of improving labor productivity. The
Mental Revolution
core ideas of the theory were developed by Frederick
Principles of Scientific Management
Winslow Taylor in the 1880s and 1890s, and were first
Replacing rule of thumb with science
published in his monographs, Shop Management.
Harmony in group action
(1905) and The Principles of Scientific
Co-operation
Management (1911). Taylor believed that decisions based
Maximum output
upon tradition and rules of thumb should be replaced by
Development of workers
precise procedures developed after careful study of an
Henry Fayol’s Contribution to Management
individual at work. Its application is contingent on a high
Henry Fayol (1841-1925) started his career as a junior
level of managerial control over employee work practices.
engineer in a coal mine company in France and became its
Taylorism is a variation on the theme of efficiency; it is a
general manager in 1880.He not only saved a large coal
late 19th and early 20th century instance of the larger
and steel company from bankruptcy, but also led to
recurring theme in human life of increasing efficiency,
crowning success.His ideas on management have been
decreasing waste, and using empirical methods to decide
summed up as the Administrative Management Theory,
what matters, rather than uncritically accepting pre-
which later evolved into the Management Process School.
existing ideas of what matters. Thus it is a chapter in the
A contemporary of Taylor, Fayol for the first time
larger narrative that also includes, for example, the folk
attempted a systematic analysis of the overall
wisdom of thrift, time and motion study, Fordism, and
management process. In 1916, he published his famous
lean manufacturing. It overlapped considerably with the
book in French language ‘Administration Industrielle
Efficiency Movement, which was the broader cultural
Generale.’ It was reprinted several times in French and
echo of scientific management's impact on business
later published in English language under the title,
managers specifically.
General and Industrial Management in 1929. Fayol’s
In management literature today, the greatest use of the
contribution to management can be discussed under the
concept of Taylorism is as a contrast to a new, improved
following four heads:
way of doing business. In political and sociological terms,
1. Division of Industrial Activities:
Taylorism can be seen as the division of labor pushed to
Fayol observed the organizational functioning from
its logical extreme, with a consequent de-skilling of the
manager’s point of view.
worker and dehumanisation of the workplace.
He found that all activities of the industrial enterprise
General approach
could be divided into six groups:
Shift in decision making from employees to
(i) Technical (relating to production);
managers
(ii) Commercial (buying, selling and exchange);
Develop a standard method for performing each
(iii) Financial (search for capital and its optimum use) ;
job
(iv) Security (protection of property and persons);
Select workers with appropriate abilities for each
(v) Accounting (Preparation of various statements,
job
accounts, returns etc.) and
Train workers in the standard method previously
(vi) Managerial (planning, organisation, command, co-
developed
ordination and control)
Support workers by planning their work and
eliminating interruptions
5|Page iDream Management College
He pointed out that these activities exist in every Individual Interest to General Interest, Fair Remuneration
enterprise. He further said that the first five activities are to workers.
well known to a manager and consequently devoted most Effective Centralisation, Scalar Chain, Order, Equity,
of his book to analyse managerial activities. Stability in the tenure of personnel, Initiative and Esprit de
2. Qualities of an Effective Manager: Corps (Union is Strength) principles which he himself used
Henry Fayol was the first person to recognise the different on most occasions. Fayol made distinction between
qualities for manager.: management principles and management elements.
According to him these qualities are: The management principle is a fundamental truth and
(i) Physical (health, vigour, and address); establishes cause-effect relationship while management
(ii) Mental (ability to understand and learn, judgement, element gives the functions performed by a manager.
mental vigour, and adaptability) ; (These have already been explained in a separate
(iii) Moral (energy, firmness, willingness to accept chapter The Management Process). The management
responsibility, initiative, loyalty, tact and dignity); theory of Elton Mayo can help you build more
(iv) Educational (acquaintance with matters related to productive teams.
general functioning) ; ELTON MAYO’ s contribution
(v) Technical (peculiar to the functions being performed); Elton Mayo's contribution to management theory helped
and pave the way for modern human relations management
(vi) Experience (arising from the work). methods.
3. Functions of Management: Based on his well-known Hawthorne experiments, Mayo's
Fayol classified the elements of management into five and management theories grew from his observations of
all such elements were considered by him as the functions employee productivity levels under varying environmental
of management. conditions. His experiments drew a number of conclusions
According to him following are the functions of about the real source of employee motivation, laying the
management: groundwork for later approaches to team building and
(i) Planning: group dynamics. Mayo management theory states that
Deciding in advance what to do. It involves thought and employees are motivated far more by relational factors
decision relating to a future course of action. such as attention and camaraderie than by monetary
(ii) Organizing: rewards or environmental factors such as lighting,
Providing everything that is useful to a business enterprise humidity, etc.
for its operation i.e., men, materials, machines and money Elton Mayo developed a matrix which he used to illustrate
etc. the likelihood that a given team would be successful. His
(iii) Commanding: matrix demonstrates the role that varying combinations
Maintaining activity among personnel (lead the personnel of group norms and group cohesiveness play in team
in a better way). effectiveness.
(iv) Co-ordinating: The following are the four combinations of Mayo theory
The channelisation of group efforts in the direction of and the effect of each on team dynamics:
achieving the desired objective of the enterprise (binding 1. Groups with low norms and low cohesiveness are
together-unifying and harmonizing all activity). ineffective; they have no impact, since none of the
(v) Controlling: members are motivated to excel, according to Mayo's
Seeing that everything is being carried out according to theory.
the plan which has been adopted, the orders which have 2. Groups with low norms and high cohesiveness have a
been given, and the principles which have been laid down. negative impact, since fellow members encourage
Its object is to point out mistakes in order that they may negative behavior (e.g., gangs).
be rectified and prevented from occurring again. 3. Groups with high norms and low cohesiveness have
Fayol observed that these principles apply not only to some degree of positive impact through individual
business enterprise, but also to political, religious, member accomplishments.
philanthropic or other undertakings. 4. Groups with high norms and high cohesiveness have
4. Principles of Management: the greatest positive impact, Mayo's theory predicts, since
Hentry Fayol evolved 14 principles that can be applied in group members encourage one another to excel.
all management situations irrespective of the types of Understand the concepts of Mayo's theory and how they
organization. He named Division of work (Specialisation), can benefit you
Parity between Authority and Responsibility, Discipline, Numerous websites provide valuable information about
Unity of Command, Unity of Direction, Subordination of Mayo theory. In addition to diagrams, summaries and
explanations of Mayo management principles, you'll find
6|Page iDream Management College
various videos and instructional materials that can help which help in putting things at place.
you develop the background knowledge and practical (ii) Focus on Business Organisations:
expertise to put Mayo's theories to work for your Amongst various institutions, the focus of management is on
company. business institutions because efficiency of management can
be judged through economic results and business is the most
Take advantage of consulting services that can help give
important economic institution. Practice of management can
you greater insight into Mayo theory be justified by the economic results it produces. Besides,
Consultants with knowledge and experience in the management can also reform Government and society and
management theory of Elton Mayo can guide you in promote values, customs and beliefs of the society.
maximizing the benefit of his principles in your own (iii) Synthesis of Classical and Behavioural
company's unique environment. Thoughts:
Take advantage of resources designed to help you make Management aims at making work productive and worker
the most of Mayo's management theories achieving. The work should be productive and result-oriented.
Widely available online tools and resources can help you It should not be considered different from the worker. The
more easily implement Elton Mayo management worker should be considered as human being with
principles. Videos and various other Elton Mayo theory- physiological and psychological needs and management
should fulfill these needs.
based products, information and services let you choose Management is, thus, a profession and discipline which
the resources most valuable to your business. achieves organisational tasks along with satisfaction of
Consider the many benefits of putting the Elton Mayo human wants. Management, thus, synthesizes classical and
management theory to work for your business. If you behavioural schools of management thought.
decide to use it, why not go all out and practice it in all the (iv) Systems Approach to Management:
areas it can effectively address: your own leadership of Every institution is part of the society and cannot ignore its
the company, your managers' development and your impact on society and vice versa. The systems approach to
employees' engagement. management is also considered by Drucker for managing the
Q.5 Explain about the contribution of Peter Drucker to the business organisations. Management deals with quantitative
management thought . and qualitative aspects of business as it interacts with the
1. Theory of Peter F. Drucker (1909-2005): society.
Peter F. Drucker, born in 1909, wrote extensively on subjects As regards quantity, business should provide the right
like foreign affairs, economics, history (American and quantity of goods and services to the society and as regards
European), religion, education, psychology, sociology, quality it should look after social responsibilities like quality
management and many other areas. Though his contribution goods, clean environment, job opportunities, cultural and
in these subjects is marked, he is more popularly known as ethical promotion of society etc. Management is a great
the ‘Father of Modern Management’. contributor in enabling the business to discharge the
He is famous for his contribution in the field of management quantitative and qualitative social responsibilities. It, thus,
as he focused on many managerial problems and their justifies the systems approach to management.
solutions. He wrote numerous books on management some of (v) Management by Objectives:
which are: The Practice of Management (1954), Managing by Drucker originated the concept of Management by Objectives
Results (1964), The Effective Executive (1967), The Age of (MBO). It stresses on participative management where
Discontinuity (1969), Management: Tasks, Responsibilities managers at all levels participate in the goal setting process so
and Practices (1974), Managing in Turbulent Times (1980), that individual performance synthesizes with organisational
Management Challenges for 21st Century (1999). performance. This promotes self-analysis and self-control and
He asserted that needs of the society (from pin to plane) can directs the efforts of everyone toward goals of the company.
be fulfilled through business institutions and, therefore, these According to him, MBO helps to overcome four
institutions must perform well. He focused on managers and major organisational problems:
management for effective functioning of business institutions. (a) The specialised work of most managers,,
Contribution to Management Thought: (b) The hierarchical structure of management,
His main contribution to management is as follows: (c) The differences in vision and work, and
(i) Management is a Profession: (d) The compensation structure of the management group.
Every society has institutions that provide employment to its Management by objectives helps in directing the efforts of
members and fulfill their needs. Management of these everyone at every level towards a unified direction. Everyone
institutions affects their performance and survival. Managers contributes towards goals of the business. Managers control
are different from owners and have specialised skills to their performance in favour of organisational performance.
perform the managerial tasks. Drucker, thus, considers Managers feel motivated to work which also increases their
management as a profession. inner strength (morale) to be productive towards
However, management is not a profession in its true sense. It organisational goals. It changes the focus from external
is a liberal profession. It takes knowledge from arts, as control to self-control.
managers need skills and techniques to deal with business (vi) Management Skills:
problems from different perspectives. Management is also a Managers should have the following skills to make
discipline with a defined set of tools, techniques and skills management effective:
7|Page iDream Management College
(a) Skills to make effective decisions, economy of efforts, training and constraint of
(b) Skills to communicate in and outside the organisation, resources affect decisions to solve the problems.
(c) Skills to make proper use of controls and measurements, (xi) Change:
and Technological developments are taking place at a fast rate and
(d) Skills to make proper use of analytical tools, that is, the organisations along with their work force have to be quick in
management sciences. adopting these changes for their survival. Change is inevitable
(vii) Organisation Structure: and not adopting change is not an option. Organisational
Rather than focusing on task-oriented or person-oriented success depends largely on how fast it can accept
approach to management, Drucker focused on organisation environmental changes. This requires organisations to be
structure that is both task-focused and person-focused. He dynamic with focus on knowledge workers, vision and
advocates both scientific management and human relations executive development.
doctrine. Drucker did not favour bureaucratic structure as it (xii) Key Result Areas:
affects the creative and innovative skills of employees. According to Drucker, marketing, innovation, human
He advocated a structure with the following organisation, financial resources, physical resources,
characteristics: productivity, social responsibility and profit requirements are
(i) The enterprise should be organised for business the eight important business areas where objectives should be
performance. rationally set.
(ii) It should have minimum number of managerial levels. Drucker’s work on management was highly appreciated by
(iii) It should enable training of managers to make them top subsequent management thinkers. According to William
managers in future. Young managers should be given Dowling, Drucker’s work “shows a rare combination of
responsibility so that they can assume important managerial qualities: inspired common sense and constant testing of the
positions in future. logical against the real’. His contribution in the areas of
Organisation structure is determined through: MBO, concern for society, role of management in improving
(a) Activity analysis: the quality of life, role of marketing and innovation in
It identifies total number of activities to be performed and improving organisation’s efficiency are valid even today.
emphasis to be placed on each activity. Critics, however, assert that “Drucker is one of the few
(b) Decision analysis: management authors who seem to be writing about
It identifies the importance of various decisions at various management as it is rather than as it ‘should be’.” His work
levels, the variables (qualitative and quantitative) that will deals with practical situations in business organisations; it
affect the decisions and the impact of decisions on other cannot be theorized and put into practice by business firms.
organisational activities. The criticism is, however, not practical. His work on
(c) Relation analysis: management is recognised even today and will continue to
It identifies how organisation structure is to be defined, guide managers, academicians and management thinkers in
organised and staffed to achieve the stated objectives. the times to come. His work on management has and will
(viii) Social Responsibilities: continue to provide basic knowledge to management thinkers.
According to Drucker, profits are necessary for business but Q.6. ‘Planning’ – the very fundamental necessity of
they should not be the goal of the business. “There is only one management. Explain?
valid definition of business purpose, to create a customer”. Planning means looking ahead and chalking out future
Profit is the test of business efficiency and the reason for courses of action to be followed. It is a preparatory step. It is
organisation to stay in business but management is a systematic activity which determines when, how and who is
responsible for its functions to the society. going to perform a specific job. Planning is a detailed
Profit is the necessity of business, not its objective. Profits programme regarding future courses of action.
and social responsibilities should be considered together. It is rightly said “Well plan is half done”. Therefore planning
Drucker specified eight areas where organisations have takes into consideration available & prospective human and
objectives (see point 12). These areas represent an optimum physical resources of the organization so as to get effective
mix of profitability and social responsibility. co-ordination, contribution & perfect adjustment. It is the
(ix) Development of Managers: basic management function which includes formulation of
Managers represent a business. They shape future one or more detailed plans to achieve optimum balance of
of the business. Therefore, there should be needs or demands with the available resources.
constant development of managers, through According to Urwick, “Planning is a mental predisposition to
training and development programmes. do things in orderly way, to think before acting and to act in
the light of facts rather than guesses”. Planning is deciding
(x) Decision-Making:
best alternative among others to perform different managerial
Decision-making is the foundation of functions in order to achieve predetermined goals.
organisational working. Every activity is based on According to Koontz &O’Donell, “Planning is deciding in
decision-making at every level. Tactical decisions advance what to do, how to do and who is to do it. Planning
represent decisions at the middle-level and bridges the gap between where we are to, where we want to
strategic decisions are taken at the top level. Risk, go. It makes possible things to occur which would not
otherwise occur”.
Steps in Planning Function
8|Page iDream Management College
Planning function of management involves following steps:- plans will include sales maximization, production
Establishment of objectives maximization, and cost minimization.
Planning requires a systematic approach. Derivative plans indicate time schedule and sequence of
Planning starts with the setting of goals and objectives to be accomplishing various tasks.
achieved. Securing Co-operation
Objectives provide a rationale for undertaking various After the plans have been determined, it is necessary rather
activities as well as indicate direction of efforts. advisable to take subordinates or those who have to
Moreover objectives focus the attention of managers on the implement these plans into confidence.
end results to be achieved. The purposes behind taking them into confidence are :-
As a matter of fact, objectives provide nucleus to the planning Subordinates may feel motivated since they are involved in
process. Therefore, objectives should be stated in a clear, decision making process.
precise and unambiguous language. Otherwise the activities The organization may be able to get valuable suggestions and
undertaken are bound to be ineffective. improvement in formulation as well as implementation of
As far as possible, objectives should be stated in quantitative plans.
terms. For example, Number of men working, wages given, Also the employees will be more interested in the execution
units produced, etc. But such an objective cannot be stated in of these plans.
quantitative terms like performance of quality control Follow up/Appraisal of plans
manager, effectiveness of personnel manager. After choosing a particular course of action, it is put into
Such goals should be specified in qualitative terms. action.
Hence objectives should be practical, acceptable, workable After the selected plan is implemented, it is important to
and achievable. appraise its effectiveness.
Establishment of Planning Premises This is done on the basis of feedback or information received
Planning premises are the assumptions about the lively shape from departments or persons concerned.
of events in future. This enables the management to correct deviations or modify
They serve as a basis of planning. the plan.
Establishment of planning premises is concerned with This step establishes a link between planning and controlling
determining where one tends to deviate from the actual plans function.
and causes of such deviations. The follow up must go side by side the implementation of
It is to find out what obstacles are there in the way of business plans so that in the light of observations made, future plans
during the course of operations. can be made more .
Establishment of planning premises is concerned to take such Characteristics of Planning
steps that avoids these obstacles to a great extent. Planning is goal-oriented.
Planning premises may be internal or external. Internal Planning is made to achieve desired objective of business.
includes capital investment policy, management labour The goals established should general acceptance otherwise
relations, philosophy of management, etc. Whereas external individual efforts & energies will go misguided and
includes socio- economic, political and economical changes. misdirected.
Internal premises are controllable whereas external are non- Planning identifies the action that would lead to desired goals
controllable. quickly & economically.
Choice of alternative course of action It provides sense of direction to various activities. E.g. Maruti
When forecast are available and premises are established, a Udhyog is trying to capture once again Indian Car Market by
number of alternative course of actions have to be considered. launching diesel models.
For this purpose, each and every alternative will be evaluated Planning is looking ahead.
by weighing its pros and cons in the light of resources Planning is done for future.
available and requirements of the organization. It requires peeping in future, analyzing it and predicting it.
The merits, demerits as well as the consequences of each Thus planning is based on forecasting.
alternative must be examined before the choice is being A plan is a synthesis of forecast.
made. It is a mental predisposition for things to happen in future.
After objective and scientific evaluation, the best alternative Planning is an intellectual process.
is chosen. Planning is a mental exercise involving creative thinking,
The planners should take help of various quantitative sound judgement and imagination.
techniques to judge the stability of an alternative. It is not a mere guesswork but a rotational thinking.
Formulation of derivative plans A manager can prepare sound plans only if he has sound
Derivative plans are the sub plans or secondary plans which judgement, foresight and imagination.
help in the achievement of main plan. Planning is always based on goals, facts and considered
Secondary plans will flow from the basic plan. These are estimates.
meant to support and expediate the achievement of basic Planning involves choice & decision making.
plans. Planning essentially involves choice among various
These detail plans include policies, procedures, rules, alternatives.
programmes, budgets, schedules, etc. For example, if profit Therefore, if there is only one possible course of action, there
maximization is the main aim of the enterprise, derivative is no need planning because there is no choice.
9|Page iDream Management College
Thus, decision making is an integral part of planning. Planning helps in focusing the attention of employees on
A manager is surrounded by no. of alternatives. He has to the objectives or goals of enterprise.
pick the best depending upon requirements & resources of the Without planning an organization has no guide.
enterprises. Planning compels manager to prepare a Blue-print of the
Planning is the primary function of management / Primacy of
courses of action to be followed for accomplishment of
Planning.
Planning lays foundation for other functions of management. objectives.
It serves as a guide for organizing, staffing, directing and Therefore, planning brings order and rationality into the
controlling. organization.
All the functions of management are performed within the Planning minimizes uncertainties.
framework of plans laid out. Business is full of uncertainties.
Therefore planning is the basic or fundamental function of There are risks of various types due to uncertainties.
management. Planning helps in reducing uncertainties of future as it
Planning is a Continuous Process. involves anticipation of future events.
Planning is a never ending function due to the dynamic
Although future cannot be predicted with cent percent
business environment.
Plans are also prepared for specific period f time and at the accuracy but planning helps management to anticipate
end of that period, plans are subjected to revaluation and future and prepare for risks by necessary provisions to
review in the light of new requirements and changing meet unexpected turn of events.
conditions. Therefore with the help of planning, uncertainties can be
Planning never comes into end till the enterprise exists issues, forecasted which helps in preparing standbys as a result,
problems may keep cropping up and they have to be tackled uncertainties are minimized to a great extent.
by planning effectively. Planning facilitates co-ordination.
Planning is all Pervasive. Planning revolves around organizational goals.
It is required at all levels of management and in all
All activities are directed towards common goals.
departments of enterprise.
Of course, the scope of planning may differ from one level to There is an integrated effort throughout the enterprise in
another. various departments and groups.
The top level may be more concerned about planning the It avoids duplication of efforts. In other words, it leads to
organization as a whole whereas the middle level may be better co-ordination.
more specific in departmental plans and the lower level plans It helps in finding out problems of work performance and
implementation of the same. aims at rectifying the same.
Planning is designed for efficiency. Planning improves employee’s moral.
Planning leads to accompishment of objectives at the
Planning creates an atmosphere of order and discipline in
minimum possible cost.
It avoids wastage of resources and ensures adequate and
organization.
optimum utilization of resources. Employees know in advance what is expected of them and
A plan is worthless or useless if it does not value the cost therefore conformity can be achieved easily.
incurred on it. This encourages employees to show their best and also
Therefore planning must lead to saving of time, effort and earn reward for the same.
money. Planning creates a healthy attitude towards work
Planning leads to proper utilization of men, money, materials, environment which helps in boosting employees moral
methods and machines. and efficiency.
Planning is Flexible. Planning helps in achieving economies.
Planning is done for the future.
Since future is unpredictable, planning must provide enough
Effective planning secures economy since it leads to
room to cope with the changes in customer’s demand, orderly allocation ofresources to various operations.
competition, govt. policies etc. It also facilitates optimum utilization of resources which
Under changed circumstances, the original plan of action brings economy in operations.
must be revised and updated to male it more practical. It also avoids wastage of resources by selecting most
appropriate use that will contribute to the objective of
Q.7. Depict the Advantages and Utilities of Planning? enterprise. For example, raw materials can be purchased
Advantages of Planning in bulk and transportation cost can be minimized. At the
Planning facilitates management by objectives. same time it ensures regular supply for the production
Planning begins with determination of objectives. department, that is, overall efficiency.
It highlights the purposes for which various activities are Planning facilitates controlling.
to be undertaken. Planning facilitates existence of certain planned goals and
In fact, it makes objectives more clear and specific. standard of performance.
It provides basis of controlling.
10 | P a g e iDream Management College
We cannot think of an effective system of controlling Planning is a time consuming process because it involves
without existence of well thought out plans. collection of information, it’s analysis and interpretation
Planning provides pre-determined goals against which thereof. This entire process takes a lot of time specially
actual performance is compared. where there are a number of alternatives available.
In fact, planning and controlling are the two sides of a Therefore planning is not suitable during emergency or
same coin. If planning is root, controlling is the fruit. crisis when quick decisions are required.
Planning provides competitive edge. Probability in planning
Planning provides competitive edge to the enterprise over Planning is based on forecasts which are mere estimates
the others which do not have effective planning. This is about future.
because of the fact that planning may involve changing in These estimates may prove to be inexact due to the
work methods, quality, quantity designs, extension of uncertainty of future.
work, redefining of goals, etc. Any change in the anticipated situation may render plans
With the help of forecasting not only the enterprise ineffective.
secures its future but at the same time it is able to Plans do not always reflect real situations inspite of the
estimate the future motives of it’s competitor which helps sophisticated techniques of forecasting because future is
in facing future challenges. unpredictable.
Therefore, planning leads to best utilization of possible Thus, excessive reliance on plans may prove to be fatal.
resources, improves quality of production and thus the False sense of security
competitive strength of the enterprise is improved. Elaborate planning may create a false sense of security to
Planning encourages innovations. the effect that everything is taken for granted.
In the process of planning, managers have the Managers assume that as long as they work as per plans,
opportunities of suggesting ways and means of improving it is satisfactory.
performance. Therefore they fail to take up timely actions and an
Planning is basically a decision making function which opportunity is lost.
involves creative thinking and imagination that ultimately Employees are more concerned about fulfillment of plan
leads to innovation of methods and operations for growth performance rather than any kind of change.
and prosperity of the enterprise. Expensive
Disadvantages of Planning Collection, analysis and evaluation of different
Internal Limitations information, facts and alternatives involves a lot of
There are several limitations of planning. Some of them expense in terms of time, effort and money
are inherit in the process of planning like rigidity and According to Koontz and O’Donell, ’ Expenses on planning
other arise due to shortcoming of the techniques of should never exceed the estimated benefits from
planning and in the planners themselves. planning. ’
Rigidity
Planning has tendency to make administration inflexible. Q.9.What is decision making? Discuss the process
Planning implies prior determination of policies, and techniques of Appropriate decision making?
procedures and programmes and a strict adherence to What is Decision Making ?
them in all circumstances. Decision-making is an integral part of modern
There is no scope for individual freedom. management. Essentially, Rational or sound decision
The development of employees is highly doubted because making is taken as primary function of management.
of which management might have faced lot of difficulties Every manager takes hundreds and hundreds of decisions
in future. subconsciously or consciously making it as the key
Planning therefore introduces inelasticity and discourages component in the role of a manager. Decisions play
individual initiative and experimentation. important roles as they determine both organizational
Misdirected Planning and managerial activities. A decision can be defined as a
Planning may be used to serve individual interests rather course of action purposely chosen from a set of
than the interest of the enterprise. alternatives to achieve organizational or managerial
Attempts can be made to influence setting of objectives, objectives or goals. Decision making process is continuous
formulation of plans and programmes to suit ones own and indispensable component of managing any
requirement rather than that of whole organization. organization or business activities. Decisions are made to
Machinery of planning can never be freed of bias. Every sustain the activities of all business activities and
planner has his own likes, dislikes, preferences, attitudes organizational functioning.
and interests which is reflected in planning. Decisions are made at every level of management to
Time consuming ensure organizational or business goals are achieved.
11 | P a g e iDream Management College
Further, the decisions make up one of core functional result of such process in a professional organization is
values that every organization adopts and implements to magnanimous
ensure optimum growth and drivability in terms of All managers face issues every day that need decisions;
services and or products offered. decisions about managing employees, resources and
As such, decision making process can be further setting plans and strategies. And to do that, there are two
exemplified in the backdrop of the following definitions. ways to make a decision, Intuitive way and rational
Definition of Decision Making decision making way.
According to the Oxford Advanced Learner’s Dictionary Q. 10 . What are the different types of decision
the term decision making means - the process of deciding making found in an organisation ?
about something important, especially in a group of 1. Programmed and Non-Programmed Decisions:
people or in an organization. (a) Programmed decisions are those made in accordance
Trewatha& Newport defines decision making process as with some habit, rule or procedure. Every organisation
follows:, “Decision-making involves the selection of a has written or unwritten policies that simplify decision
course of action from among two or more possible making in recurring situations by limiting or excluding
alternatives in order to arrive at a solution for a given alternatives.
problem”. For example, we would not usually have to worry about
As evidenced by the foregone definitions, decision making what to pay to a newly hired employee; organizations
process is a consultative affair done by a comity of generally have an established salary scale for all positions.
professionals to drive better functioning of any Routine procedures exist for dealing with routine
organization. Thereby, it is a continuous and dynamic problems.
activity that pervades all other activities pertaining to the Routine problems are not necessarily simple ones;
organization. Since it is an ongoing activity, decision programmed decisions are used for dealing with complex
making process plays vital importance in the functioning as well as with uncomplicated issues. To some extent, of
of an organization. Since intellectual minds are involved in course, programmed decisions limit our freedom, because
the process of decision making, it requires solid scientific the organization rather than the individual decides what
knowledge coupled with skills and experience in addition to do.
to mental maturity. However, the policies, rules or procedures by which we
Further, decision making process can be regarded as make decisions free us of the time needed to work out
check and balance system that keeps the organisation new solutions to old problems, thus allowing us to devote
growing both in vertical and linear directions. It means attention to other, more important activities in the
that decision making process seeks a goal. The goals are organization.
pre-set business objectives, company missions and its (b) Non-programmed decisions are those that deal with
vision. To achieve these goals, company may face lot of unusual or exceptional problems. If a problem has not
obstacles in administrative, operational, marketing wings come up often enough to be covered by a policy or is so
and operational domains. Such problems are sorted out important that it deserves special treatment, it must be
through comprehensive decision making process. No handled by a non-programmed decision.
decision comes as end in itself, since in may evolve new Such problems as:
problems to solve. When one problem is solved another (1) How to allocate an organisation’s resources
arises and so on, such that decision making process, as (2) What to do about a failing product line,
said earlier, is a continuous and dynamic. (3) How community relations should be improved will
A lot of time is consumed while decisions are taken. In a usually require non- programmed decisions.
management setting, decision cannot be taken abruptly. It As one moves up in the organizational hierarchy, the
should follow the steps such as ability to make non- programmed decisions becomes
Defining the problem more important because progressively more of the
Gathering information and collecting data decisions made are non-programmed.
Developing and weighing the options Type 2. Major and Minor Decisions:
Choosing best possible option A decision related to the purchase of a CNC machine
Plan and execute costing several lakhs is a major decision and purchase of a
Take follow up action few reams of typing paper is a minor (matter or) decision.
Since decision making process follows the above Type 3. Routine and Strategic Decisions:
sequential steps, a lot of time is spent in this process. This Routine decisions are of repetitive nature, do not require
is the case with every decision taken to solve much analysis and evaluation, are in the context of day-
management and administrative problems in a business to-day operations of the enterprise and can be made
setting. Though the whole process is time consuming, the quickly at middle management level. An example is,
12 | P a g e iDream Management College
sending samples of a food product to the Government The first step to make a rational decision is to identify and
investigation centre. describe the problem by defining the current and desired
Strategic decisions relate to policy matter, are taken at states and defining the alternatives:
higher levels of management after careful analysis and Keep in mind during identifying the problem to identify
evaluation of various alternatives, involve large the cause of the problem, not the symptoms.
expenditure of funds and a slight mistake in decision Define the gap between the current state and the desired
making is injurious to the enterprise. Examples of strategic state. And the gap must be enough to motivate the
decisions are- capital expenditure decisions, decisions involved people to implement the decision.
related to pricing, expansion and change in product line Define all available options and don’t think about quick
etc. solutions.
Type 4. Organizational and Personal Decisions: Example: if your family is growing and you have a small
A manager makes organizational decisions in the capacity house which doesn’t meet your needs. Let’s assume that
of a company officer. Such decisions reflect the basic your decision is buying a bigger house to overcome that
policy of the company. They can be delegated to others. issue.
Personal decisions relate the manager as an individual and Note that: buying a new house is a solution (not
not as a member of an organization. Such decisions identifying the problem), and by this way you don’t think
cannot be delegated. about the cause of the problem (space), the gap between
Type 5. Individual and Group Decisions: the current and desired state and all alternative options.
Individual decisions are taken by a single individual in The cause of the problem:
context of routine decisions where guidelines are already Buying a new house isn’t a problem, it’s a symptom. And
provided. Group decisions are taken by a committee the cause of the problem is the (Space).
constituted for this specific purpose. Such decisions are The gap between the current and desired state:
very important for the organisation. In our example, you should mention the available space
Type # 6. Policy and Operative Decisions: and the needed space.
Policy decisions are very important, they are taken by top All alternative options
management, they have a long-term impact and mostly Think about all alternatives:
relate to basic policies. Operative decisions relate to day- If there is unneeded stuff in your house can be removed
to-day operations of the enterprise and are taken at lower to free up space.
or middle management level. Whether to give bonus to Having a space to build a new room in the house.
employees is a policy decision but calculating bonus for Buying a new house.
each employee is an operative decision. Step 2: Identify the decision criteria:
Type 7. Long-Term Departmental and Non-Economic The second step in the rational decision making model is
Decisions: outlining all the criteria ahead of time because those
In case of long term decisions, the time period covered is criteria will be a good guide to make a decision
long and the risk involved is more. Departmental decisions Example: let’s get back to our problem, space is our issue
relate to a particular department only and are taken by and we need to identify some criteria to measure all
departmental head. Non-economic decisions relate to alternatives and determining if there is solution is better
factors such as technical values, moral behavior etc. than others, in this example our criteria are (time and
cost)
Q . 11 . Describe in detail about the process of Time: we should think about:
rational decision making ? When will we need that space?
Rational decision making is a multi-step and linear When will solving the problem be critical?
process, designed for problem-solving start from problem And how long will each option take?
identification through solution, for making logically sound Cost: these criteria are important to know if there is some
decisions. options cost more than others; so you should know:
The rational decision making model is a good model to How much will each option cost?
make good decisions because it depends on rational way How much money do we have?
used for problems solving. Note that: if our problem is buying a new house instead of
Rational decision making model steps: solving a space issue, we would establish criteria a little
If you want to make a good decision which helps you to differently; and we would likely focus on things like
achieve your goals; you should depend on the available distances to activities, crime per capita, quality of schools,
facts to make a careful analysis to make a decision as we’ll and some other factors.
explain in the following steps: Now we’ve identified the problem and the decision’s
Step 1: Identify and define the problem: criteria, it’s the time to weigh those criteria:
13 | P a g e iDream Management College
Step3: weight established criteria: these six key aspects when creating the design elements
We need to weigh those criteria because each criterion is of an organization.
unlikely to have the same level of importance; there are Work Specialization
few ways you can use to accomplish this step: Work specialization is the first of the elements of
1- Using an absolute comparison: organization structure. Business leaders must consider the
You can use this method which you commonly find job tasks and specific duties associated with given
costumers’ ratings; this comparison is helpful because it positions. Dividing work tasks among different jobs and
allows you to compare items side by side. So if you’re assigning them to definite levels, is the role of work
shopping for a product, you can look through customers’ specialization elements. An example would be giving the
reports and ratings and compare different types of the first person in the assembly line the job of putting the first
product in a specific category. three components together. The second person in the
Those reports and ratings are accomplished by assembly line might then put the decals on the product,
incorporating a ranking system where the user enters a and the third would put the item in the box.
value reflecting the importance of the criteria on a scale. Leaders should be careful to not overly specialize in any
Example: let’s say that there is a scale starting from “1” one job because this can lead to boredom and fatigue.
and going to “10”. “1” indicates that the criteria has no This results in slower work and even errors. Managers
importance to us and a score of “10” indicates that the may have jobs assigned and adjust the roles depending on
item is very important. So we would go through each how specialized the job in one area is.
criteria and use this method to weigh their significance to Departmentalization and Compartments
us. Departmentalization and compartments are two other
Since we are evaluating the criteria on their own metric components of organizational design. Departments are
and not in relation to another criteria so we can assign the often a group of workers with the same overall functions.
same value to different criteria. They are often broken down by broad categories such as
2- Using relative comparison functional, product, geographical, process and customer.
A relative comparison is made by comparing each criteria Common departments include accounting, manufacturing,
with another. So by using relative comparison; we can customer service and sales.
obtain what criteria are most important to us. This can be Compartments might have teams with different
helpful when you attempt to weigh criteria that have department members that are put together for efficiency.
similar ratings by using an absolute comparison. For example, a company delivering IT services to other
So by comparing them against one another we firmly businesses might have teams assigned to each company.
know which one is more important. Each team might have a project manager, a graphic
Step 4: Generate list of alternatives designer, a coding specialist, a security specialist, a client
Once we have identified a thorough list of criteria and rep and service provider.
weighed the importance of those criteria, now we can Chain of Command
generate a list of alternatives. The chain of command is what the organizational chart
During this step, our goal is generating many alternatives typically illustrates. It shows who reports to who in the
as possible. The more alternatives that we generate, the company's human resources structure. Some companies
greater the likelihood is that we’ll come up with an have a more traditional hierarchy with very clear
effective solution to our problem. department leaders and executives in charge. Other
Going back to our problem, we can generate a few companies use a more fluid chain of command and
alternatives, including buying new house, building another structure where more people are considered part of the
room, placing possessions in storage, or even placing a same level of command on a cross-functional team.
few kids up for adoption. There are pros and cons to any model. What is important
Keep in mind, in this stage we define all possible options, is that employees know what is expected of them and
no matter they are good or bad solutions because we’ll how they get information to flow to the proper channels.
think about that in the next stage. If an employee isn't sure who his direct supervisor is due
Q.12. Describe about the elements & process of to an unclear chain of command, he might not properly
organising in detail ? relay the right information to the right party.
Organizational design is the process of creating the Span of Control
hierarchy within a company. The six elements of The span of control is the organizational design element
organizational design help business leaders establish the that considers the capacity of any manager. There are
company departments, chain of command and overall limits to the number of people one person can oversee
structure. The aspects of organizational structure most and supervise. The span of control addresses this design
notably reviewed is the organizational chart. Consider element. If a manager has too many people to oversee, he
14 | P a g e iDream Management College
might lose his effectiveness and not recognize problems of these divided activities making tellers, loan
or successes. officers, customer care representatives, etc., as
A span of four means that for every four managers, specified jobs.
sixteen employees can be effectively managed. Other 2. Grouping of Activities or Departmentation:
industries might use a span of eight or another number
The jobs identified from the previous step are further
that describes how the human resources directors need to
grouped together and put into separate
disburse managers.
departments. These departments can be either
Centralization and Decentralization
Centralization and decentralization are organizational functional or divisional where in functional
design elements deciding the degree which decision- departments are related to common functions
making is made at one central level or at various levels by grouped into one department or divisional
employees. For example, all major budget decisions would departments are created for businesses on the basis
filter to the chief executive officer and chief financial of either types of products, geographical location of
officer in a centralized fashion. Customer service decisions the business or the targeted customer groups. From
might be decentralized giving those interacting with the previous banking example, all jobs related to
customer directions on how to handle issues but the managing car loans, home loans and business loans
authority to make certain decisions. will come under the ‘Loans Department’.
Formalization of Elements 3. Assignment of Duties:
Smaller organizations tend to have informal elements
Subsequent to containing all activities into
where large organizations formalize roles more
specialised departments, employees working in these
specifically. The reason smaller organizations use less
formal standards is that employees may serve multiple departments are assigned with only one job in that
roles as necessary. Bigger organizations need to formalize department that suit their skills, qualifications and
elements to ensure the right stuff gets done on time and capabilities. Employees are assigned and granted
correctly. with duties and responsibilities through a document
Formalization might also be seen with specific job called ‘job description’ that clearly defines their
duties. For example, there may be a very specific way responsibilities as shown in the table below.
that payroll is done to ensure that everyone gets paid 4. Establishing Reporting Relationship:
on time, with the correct withholding. The sales The final step involves the establishment of authority
department might not be very formalized, and might that creates a chain of command. This implies that
allow each representative to find his organic process employees will have to report to an authority like the
so that he may succeed. top management or superiors who manage, guide,
Process of Organising – 4 Step Process supervise and oversee the work and responsibilities
For a sound and well-defined organising process, a of their subordinate reporting to them.
business needs to undertake the following steps: A superior-subordinate relationship is defined by
1. Identification and Classification of Activities: which each superior should be aware of the extent of
Organising as a function begins with identifying all authority he/she can have over their subordinates.
activities that are planned for a business based on The purpose of creating the superior-subordinate
their mission, goals and objectives. The process then relationship is to coordinate the efforts of all
involves ‘division of labour’ that divides the work individuals/groups/departments towards the
process into a certain number of tasks, with each common goals and objectives of the business.
task performed separately by employees or groups of
employees. These separate tasks are classified into Q. 13 . What do you understand by staffing & what
separate business units. Each unit of the total work is the importance of this function in organisation ?
will be a ‘job’. The first and foremost function of staffing is to
For example- banking activities in a bank include obtain qualified personnel for different jobs position in the
organization.
managing accounts, providing loans, managing
In staffing, the right person is recruited for the right jobs,
foreign currency, managing customer queries, etc.
therefore it leads to maximum productivity and higher
These activities are divided into smaller tasks or jobs performance.
performed among tellers, loan officers, customer It helps in promoting the optimum utilization of human
care representatives, etc. Individuals with relevant resource through various aspects.
qualifications and expertise are allotted across each
15 | P a g e iDream Management College
Job satisfaction and morale of the workers increases subordinates towards the accomplishment of group
through the recruitment of the right person. activities.
Staffing helps to ensure better utilization of human Direction is called management in action. In the words of
resources. Theo Haimann, “In order to make any managerial decision
It ensures the continuity and growth of the organization, really meaningful, it is necessary to convert it into
through development managers. effective action, which the manager accomplishes by
Importance of Staffing directing. Without this managerial function nothing or at
Efficient Performance of Other Functions best very little is likely to come about.
For the efficient performance of other functions Planning, organizing and staffing can be considered
of management, staffing is its key. Since, if an organization preparatory managerial functions the purpose of
does not have the competent personnel, then it cannot controlling is to find out whether or not the goals are
perform the functions of management like planning, being achieved. The connecting and actuating link
organizing and control functions properly. between these functions is the managerial function of
Effective Use of Technology and Other Resources directing, which means the issuance of directives and the
What is staffing and technology’s connection? Well, it is the guidance and overseeing of subordinates.”
human factor that is instrumental in the effective utilization “Just as starting the motor of a car does not make it move
of the latest technology, capital, material, etc. the unless put into gear and the accelerator pressed, in the
management can ensure the right kinds of personnel by same way organized actions are initiated in the enterprise
performing the staffing function. only through the directing function of management.
Optimum Utilization of Human Resources Definitions:
The wage bill of big concerns is quite high. Also, a huge “Directing concerns the total manner in which a manager
amount is spent on recruitment, selection, training, and influences the action of subordinates. It is the final action
development of employees. To get the optimum output, of manager in getting others to act after all preparations
the staffing function should be performed in an efficient have been completed.” Massie
manner. “Directing is the interpersonal aspect of managing by
Development of Human Capital which subordinates are led to understand and contribute
Another function of staffing is concerned with human effectively and efficiently to the attainment of
capital requirements. Since the management is required to enterprise’s objectives.” Koontz and O’Donnel
determine in advance the manpower requirements. “Directing is the guidance, the inspiration, the leadership
Therefore, it has also to train and develop the existing of those men and women that constitute the real core of
personnel for career advancement. This will meet the the responsibilities of management.”
requirements of the company in the future. Urwick and Breach “Telling people what to do and seeing
The Motivation of Human Resources that they do it to the best of their ability. It includes
In an organization, the behaviour of individuals is influenced making assignment, explaining procedures, seeing that
by various factors which are involved such as education mistakes are corrected, providing on the job instruction,
level, needs, socio-cultural factors, etc. Therefore, the and of course, issuing order.” Earnest Dale
human aspects of the organization have become very “The heart of administration is the directing function
important and so that the workers can also be motivated by which involves determining the course, giving order and
financial and non-financial incentives in order to perform instructions, providing the dynamic leadership.
their functions properly in achieving the objectives. Marshall E. Dimock “Directing consists of the process and
Building Higher Morale techniques utilizing in issuing instructions and making
The right type of climate should be created for the workers certain that operations are carried out as originally
to contribute to the achievement of the organizational planned.”
objectives. Therefore, by performing the staffing function Haimann remarks from the above definitions, we can
effectively and efficiently, the management is able to conclude that the directing function of management is the
describe the significance and importance which it attaches heart of management process as it is concerned with
to the personnel working in the enterprise. initiating action. It consists of all those activities which are
Q.14. Explain the nature and principles of Directing? concerned with influencing, guiding or supervising the
Directing: Nature, Principles subordinates in their job.
Management is the art of getting things done through Nature or Characteristics of Direction:
others. One of the main functions of a manager is to 1. It is a Dynamic Function:
direct subordinates effectively. Directing is concerned Directing is a dynamic and continuing function. A manager
with carrying out the desired plans. It initiates organized has to continuously direct, guide, motivate and lead his
and planned action and ensures effective performance by subordinates. With change in plans and organizational
16 | P a g e iDream Management College
relationships, he will have to change the methods and the authority is undermined, discipline weakened, loyalty
techniques to direction. divided and confusion and delays are caused.
2. It Initiates Action: 3. Unity of Direction:
Directing initiates organized and planned action and To have effective direction, there should be one head and
ensures effective performance by subordinates towards one plan for a group of activities having the same
the accomplishment of group activities. It is regarded as objectives. In other words, each group of activities having
the essence of management-in-action. the same objectives must have one plan of action and
3. It Provides Necessary Link between Various Managerial must be under the control of one supervisor.
Functions: 4. Direct Supervision:
Directing links the various managerial functions of The directing function of management becomes more
planning, organizing, staffing and controlling. Without effective if the superior maintains direct personal contact
directing the function of controlling will never arise and with his subordinates. Direct supervision infuses a sense
the other preparatory functions of management will of participation among subordinates that encourages
become meaningless. In the words of Haimann, “nothing them to put in their best to achieve the organizational
happens unless and until the business automobile is put goals and develop an effective system of feed-back of
into gear and the accelerator pressed.” information.
4. It is a Universal Function: 5. Participative or Democratic Management:
Directing is a universal function that is performed in all The function of directing becomes more effective if
organizations and at all the levels of management. All participative or democratic style of management is
managers have to guide, motivate, lead, supervise and followed. According to this principle, the superior must
communicate with their subordinates, although more act according to the mutual consent and the decisions
time is spent on directing at higher levels of management. reached after consulting the subordinates. It provides
5. It is Concerned with Human Relationships: necessary motivation to the workers by ensuring their
The direction function of management deals with participation and acceptance of work methods.
relationship between people working in an organization. It 6. Effective Communication:
creates cooperation and harmony among the members of To have effective direction, it is very essential to have an
the group. It seeks to achieve orderly arrangement of effective communication system which provides for free
group effort to provide unity of action in the pursuit of flow of ideas, information, suggestions, complaints and
common objectives. grievances.
Principles of Effective Direction: 7. Follow-up:
Effective direction leads to greater contribution of In order to make direction effective, a manager has to
subordinates to organization goals. The directing function continuously direct, guide, motivate and lead his
of management can be effective only when certain well subordinates. A manager has not only to issue orders and
accepted principles are followed. instructions but also to follow-up the performance so as
The following are the basic principles of to ensure that work is being performed as desired. He
effective direction: should intelligently oversee his subordinates at work and
1. Harmony of Objectives: correct them whenever they go wrong.
It is an essential function of management to make the Q.15. Communication is the prime pillar of
people realize the objectives of the group and direct their management. Elucidate?
efforts towards the achievement of their objectives. The Communication
interest of the group must always prevail over individual Communications is fundamental to the existence and
interest. The principle implies harmony of personal survival of humans as well as to an organization. It is a
interest and common interest. Effective direction fosters process of creating and sharing ideas, information, views,
the sense of belongingness among all subordinates in such facts, feelings, etc. among the people to reach a common
a way that they always identify themselves with the understanding. Communication is the key to the
enterprise and tune their goals with those of the Directing function of management.
enterprise. A manager may be highly qualified and skilled but if he does
2. Unity of Command: not possess good communication skills, all his ability
This principle states that one person should receive orders becomes irrelevant. A manager must communicate his
from only one superior, in other words, one person should directions effectively to the subordinates to get the work
be accountable to only one boss. If one person is under done from them properly.
more than one boss then there can be contradictory Communications Process
orders and the subordinate fails to understand whose Communications is a continuous process which mainly
order to be followed. In the absence of unity of command, involves three elements viz. sender, message, and receiver.
17 | P a g e iDream Management College
The elements involved in the communication process are 1. The Basis of Co-ordination
explained below in detail: The manager explains to the employees the organizational
1. Sender goals, modes of their achievement and also
The sender or the communicator generates the message the interpersonal relationships amongst them. This provides
and conveys it to the receiver. He is the source and the one coordination between various employees and also
who starts the communication departments. Thus, communications act as a basis for
2. Message coordination in the organization.
It is the idea, information, view, fact, feeling, etc. that is 2. Fluent Working
generated by the sender and is then intended to be A manager coordinates the human and physical elements of
communicated further. an organization to run it smoothly and efficiently.
3. Encoding This coordination is not possible without proper
The message generated by the sender is encoded communication.
symbolically such as in the form of words, pictures, 3. The Basis of Decision Making
gestures, etc. before it is being conveyed. Proper communication provides information to the
4. Media manager that is useful for decision making. No decisions
It is the manner in which the encoded message is could be taken in the absence of information. Thus,
transmitted. The message may be transmitted orally or in communication is the basis for taking the right decisions.
writing. The medium of communication includes telephone, 4. Increases Managerial Efficiency
internet, post, fax, e-mail, etc. The choice of medium is The manager conveys the targets and issues instructions
decided by the sender. and allocates jobs to the subordinates. All of these aspects
5. Decoding involve communication. Thus, communication is essential
It is the process of converting the symbols encoded by the for the quick and effective performance of the managers
sender. After decoding the message is received by the and the entire organization.
receiver. 5. Increases Cooperation and Organizational Peace
6. Receiver The two-way communication process promotes co-
He is the person who is last in the chain and for whom the operation and mutual understanding amongst the workers
message was sent by the sender. Once the receiver receives and also between them and the management. This leads to
the message and understands it in proper perspective and less friction and thus leads to industrial peace in the factory
acts according to the message, only then the purpose of and efficient operations.
communication is successful. 6. Boosts Morale of the Employees
7. Feedback Good communication helps the workers to adjust to the
Once the receiver confirms to the sender that he has physical and social aspect of work. It also improves good
received the message and understood it, the process of human relations in the industry. An efficient system of
communication is complete. communication enables the management to motivate,
8. Noise influence and satisfy the subordinates which in turn boosts
It refers to any obstruction that is caused by the sender, their morale and keeps them motivated.
message or receiver during the process of communication. Types of Communication
For example, bad telephone connection, faulty encoding, 1. Formal Communication
faulty decoding, inattentive receiver, poor understanding of Formal communications are the one which flows through
message due to prejudice or inappropriate gestures, etc. the official channels designed in the organizational chart. It
may take place between a superior and a subordinate, a
subordinate and a superior or among the same cadre
employees or managers. These communications can be oral
or in writing and are generally recorded and filed in the
office.
Formal communication may be further classified as Vertical
communication and Horizontal communication.
Vertical Communication
Vertical Communications as the name suggests flows
vertically upwards or downwards through formal channels.
Upward communication refers to the flow of
communication from a subordinate to a superior whereas
downward communication flows from a superior to a
(Source: businessjargons)
subordinate.
Importance of Communication
18 | P a g e iDream Management College
Application for grant of leave, submission of a progress Cluster Network: In this network, the individual
report, request for loans etc. are some of the examples of communicates with only those people whom he trusts.
upward communication. Sending notice to employees to Out of these four types of networks, the Cluster network is
attend a meeting, delegating work to the subordinates, the most popular in organizations.
informing them about the company policies, etc. are some Q.16.“Motivation” – A guiding and driving
examples of downward communication. force.Explain?
Horizontal Communication MOTIVATION
Horizontal or lateral communication takes place between Motivation is a process that starts with a physiological or
one division and another. For example, a production psychological need that activates a behavior or a drive
manager may contact the finance manager to discuss the that is aimed at a goal.
delivery of raw material or its purchase. Every employee is expected to show increased and
Types of communication networks in formal qualitative productivity by the manager. To achieve this
communication: the behavior of the employee is very important. The
Single chain: In this type of network communications flows behavior of the employees is influenced by the
from every superior to his subordinate through a single environment in which they find themselves. Finally, an
chain. employee's behavior will be a function of that employee's
Wheel: In this network, all subordinates under one innate drives or felt needs and the opportunities he or she
superior communicate through him only. They are not has to satisfy those drives or needs in the workplace
allowed to talk among themselves. If employees are never given opportunities to utilize all of
Circular: In this type of network, the communication their skills, then the employer may never have the benefit
moves in a circle. Each person is able to communicate with of their total performance. Work performance is also
his adjoining two persons only. contingent upon employee abilities. If employees lack the
Free flow: In this network, each person can communicate learned skills or innate talents to do a particular job, then
with any other person freely. There is no restriction. performance will be less than optimal. A third dimension
Inverted V: In this type of network, a subordinate is of performance is motivation
allowed to communicate with his immediate superior as
well as his superior’s superior also. However, in the latter “Motivation is the act of stimulating someone or oneself
case, only ordained communication takes place. to get desired course of action, to push right button to get
2. Informal Communication desired reactions.”
Any communication that takes place without following the The following are the features of motivation :
formal channels of communication is said to Motivation is an act of managers
be informal communication. The Informal communication is Motivation is a continuous process
often referred to as the ‘grapevine’ as it spreads throughout Motivation can be positive or negative
the organization and in all directions without any regard to Motivation is goal oriented
the levels of authority. Motivation is complex in nature
The informal communication spreads rapidly, often gets Motivation is an art
distorted and it is very difficult to detect the source of such Motivation is system-oriented
communication. It also leads to rumors which are not true. Motivation is different from job satisfaction.
People’s behavior is often affected by the rumors and Importance of motivation
informal discussions which sometimes may hamper the Management tries to utilize all the sources of production
work environment. in a best possible manner. This can be achieved only when
However, sometimes these channels may be helpful as they employees co-operative in this task. Efforts should be
carry information rapidly and, therefore, may be useful to made to motivate employees for contributing their
the manager at times. Informal channels are also used by maximum. The efforts of management will not bear fruit if
the managers to transmit information in order to know the the employees are not encouraged to work more. The
reactions of his/her subordinates. motivated employees become an asset to the
Types of Grapevine network: organization. The following in the importance of
Single strand: In this network, each person communicates motivation.
with the other in a sequence. 1. High Performance : Motivated employees will put
Gossip network: In this type of network, each person maximum efforts for achieving organizational goals. The
communicates with all other persons on a non-selective untapped reservoirs, physical and mental abilities are
basis. tapped to the maximum. Better performance will also
Probability network: In this network, the individual result in higher productivity. The cost of production can
communicates randomly with other individuals. also be brought down if productivity is raised. The
19 | P a g e iDream Management College
employees should be offered more incentives for In essence, he believed that once a given level of need is
increasing their performance. Motivation will act as a satisfied, it no longer serves to motivate man. Then, the
stimulant for improving the performance of employees. next higher level of need has to be activated in order to
2. Low Employee Turnover and Absenteeism : When the motivate the man. Maslow identified five levels in his
employees are not satisfied with their job then they will need hierarchy as shown in figure 17.2.
leave it whenever they get an alternative offer. The
dissatisfaction among employees also increases
absenteeism. The employment training of new employees
costs dearly to the organization. When the employees are
satisfied with their jobs and they are well motivated by
offering them financial and non-financial incentives then
they will not leave the job. The rate of absenteeism will
also be low because they will try to increase their output.
3. Better of Organizational Image : Those enterprises which
offer better monetary and non monetary facilities to their These are now discussed one by one:
employees have a better image among them. Such 1. Physiological Needs:
concerns are successful in attracting better qualified and These needs are basic to human life and, hence, include
experienced persons. Since there is a better man-power food, clothing, shelter, air, water and necessities of life.
to development programme, the employees will like to These needs relate to the survival and maintenance of
join such organizations. Motivational efforts will simplify human life. They exert tremendous influence on human
personnel function also. behaviour. These needs are to be met first at least partly
4. Better Industrial Relations: A good motivational system will before higher level needs emerge. Once physiological
create job satisfaction among employees. The needs are satisfied, they no longer motivate the man.
employment will offer them better service conditions and 2. Safety Needs:
various other incentives. There will be an atmosphere of After satisfying the physiological needs, the next needs
confidence among employers and employees. There will felt are called safety and security needs. These needs find
be no reason for conflict and cordial relations among both expression in such desires as economic security and
sides will create a health atmosphere. So motivation protection from physical dangers. Meeting these needs
among employees will lead to better industrial relations. requires more money and, hence, the individual is
5. Acceptability to Change : The changing social and industrial prompted to work more. Like physiological needs, these
situations will require changes and improvements in the become inactive once they are satisfied.
working enterprises. There will be a need to introduce 3. Social Needs:
new and better methods of work from time to time. Man is a social being. He is, therefore, interested in social
Generally, employees resist changes for fear of an adverse interaction, companionship, belongingness, etc. It is this
effect on their employment. When the employees are socialising and belongingness why individuals prefer to
given various opportunities of development then they can work in groups and especially older people go to work.
easily adapt to new situations. They will think of positive 4. Esteem Needs:
side of new changes and will co-operate with the These needs refer to self-esteem and self-respect. They
management. If the employees are satisfied with their include such needs which indicate self-confidence,
work and are not offered better avenues then they will achievement, competence, knowledge and independence.
oppose everything suggested by the management. The fulfillment of esteem needs leads to self-confidence,
Motivation will ensure the acceptability of new changes strength and capability of being useful in the organisation.
by the employees. However, inability to fulfill these needs results in feeling
Q . 17 Explain the Different theories of like inferiority, weakness and helplessness.
motivation propouned by the experts . 5. Self-Actualisation Needs:
This level represents the culmination of all the lower,
Motivation Theories: intermediate, and higher needs of human beings. In other
These are discussed in brief in that order. words, the final step under the need hierarchy model is
1. Maslow’s Need Hierarchy Theory: the need for self-actualization. This refers to fulfillment.
It is probably safe to say that the most well-known theory The term self-actualization was coined by Kurt Goldstein
of motivation is Maslow’s need hierarchy theory Maslow’s and means to become actualized in what one is
theory is based on the human needs. Drawing chiefly on potentially good at. In effect, self- actualization is the
his clinical experience, he classified all human needs into a person’s motivation to transform perception of self into
hierarchical manner from the lower to the higher order. reality.
20 | P a g e iDream Management College
According to Maslow, the human needs follow a definite ‘satisfaction’ is ‘no satisfaction’ and the opposite of
sequence of domination. The second need does not arise ‘dissatisfaction’ is ‘no dissatisatisfaction’.
until the first is reasonably satisfied, and the third need According to Herzberg, today’s motivators are tomorrow’s
does not emerge until the first two needs have been hygiene because the latter stop influencing the behaviour
reasonably satisfied and it goes on. The other side of the of persons when they get them. Accordingly, one’s
need hierarchy is that human needs are unlimited. hygiene may be the motivator of another.
However, Maslow’s need hierarchy-theory is not without 3. McClelland’s Need Theory:
its detractors. Another well-known need-based theory of motivation, as
2. Herzberg’s Motivation Hygiene Theory: opposed to hierarchy of needs of satisfaction-
The psychologist Frederick Herzberg extended the work of dissatisfaction, is the theory developed by McClelland and
Maslow and propsed a new motivation theory popularly his associates’. McClelland developed his theory based on
known as Herzberg’s Motivation Hygiene (Two-Factor) Henry Murray’s developed long list of motives and
Theory. Herzberg conducted a widely reported manifest needs used in his early studies of personality.
motivational study on 200 accountants and engineers McClelland’s need-theory is closely associated with
employed by firms in and around Western Pennsylvania. learning theory, because he believed that needs are
He asked these people to describe two important learned or acquired by the kinds of events people
incidents at their jobs:
experienced in their environment and culture.
(1) When did you feel particularly good about your job,
He found that people who acquire a particular need
and
behave differently from those who do not have. His
(2) When did you feel exceptionally bad about your job?
theory focuses on Murray’s three needs; achievement,
He used the critical incident method of obtaining data.
power and affiliation. In the literature, these three needs
The responses when analysed were found quite
are abbreviated “n Ach”, “n Pow”, and “n Aff”
interesting and fairly consistent. The replies respondents
respectively’.
gave when they felt good about their jobs were
They are defined as follows:
significantly different from the replies given when they
Need for Achievement:
felt bad. Reported good feelings were generally
This is the drive to excel, to achieve in relation to a set of
associated with job satisfaction, whereas bad feeling with
standard, and to strive to succeed. In other words, need
job dissatisfaction. Herzberg labelled the job satisfiers
for achievement is a behaviour directed toward
motivators, and he called job dissatisfies hygiene or
competition with a standard of excellence. McClelland
maintenance factors. Taken together, the motivators and
found that people with a high need for achievement
hygiene factors have become known as Herzberg’s two-
perform better than those with a moderate or low need
factor theory of motivation
for achievement, and noted regional / national differences
Herzberg’s motivational and hygiene factors have been
in achievement motivation.
shown in the Table 17.1
Through his research, McClelland identified the following
three characteristics of high-need achievers:
1. High-need achievers have a strong desire to assume
personal responsibility for performing a task for finding a
solution to a problem.
2. High-need achievers tend to set moderately difficult
goals and take calculated risks.
3. High-need achievers have a strong desire for
performance feedback.
Need for Power:
The need for power is concerned with making an impact
on others, the desire to influence others, the urge to
change people, and the desire to make a difference in life.
People with a high need for power are people who like to
be in control of people and events. This results in ultimate
satisfaction to man.
According to Herzberg, the opposite of satisfaction is not People who have a high need for power are
dissatisfaction. The underlying reason, he says, is that characterized by:
removal of dissatisfying characteristics from a job does 1. A desire to influence and direct somebody else.
not necessarily make the job satisfying. He believes in the 2. A desire to exercise control over others.
existence of a dual continuum. The opposite of 3. A concern for maintaining leader-follower relations.
21 | P a g e iDream Management College
Need for Affiliation: within which the organisational man is usually seen to
The need for affiliation is defined as a desire to establish behave. The fact remains that no organisational man
and maintain friendly and warm relations with other would actually belong either to theory X or theory Y. In
people’. The need for affiliation, in many ways, is similar reality, he/she shares the traits of both. What actually
to Maslow’s social needs. happens is that man swings from one set or properties to
The people with high need for affiliation have these the other with changes in his mood and motives in
characteristics: changing .environment.
1. They have a strong desire for acceptance and approval 5. Urwick’s Theory Z:
from others. Much after the propositions of theories X and Y by
2. They tend to conform to the wishes of those people McGregor, the three theorists Urwick, Rangnekar, and
whose friendship and companionship they value. Ouchi-propounded the third theory lebeled as Z theory.
3. They value the feelings of others. The two propositions in Urwicks’s theory are that:
(i) Each individual should know the organisational goals
precisely and the amount of contribution through his
efforts towards these goals.
(ii) Each individual should also know that the relation of
organisational goals is going to satisfy his/her needs
positively.
In Urwick’s view, the above two make people ready to
behave positively to accomplish both organisational and
individual goals.
However, Ouchi’s Theory Z has attracted the lot of
attention of management practitioners as well as
researchers. It must be noted that Z does not stand for
anything, is merely the last alphabet in the English
Language.
Figure 17.2 is a summary chart of the three need theories Theory Z is based on the following four postulates:
of motivation just discussed. The chart shows the parallel 1. Strong Bond between Organisation and Employees
relationship between the needs in each of the theories. 2. Employee Participation and Involvement
Maslow refers to higher- lower order needs, whereas 3. No Formal Organisation Structure
Herzberg refers to motivation and hygiene factors. 4. Human Resource Development
4. McGregor’s Participation Theory: Ouchi’s Theory Z represents the adoption of Japanese
Douglas McGregor formulated two distinct views of management practices (group decision making, social
human being based on participation of workers. The first cohesion, job security, holistic concern for employees,
basically negative, labeled Theory X, and the other etc.)by the American companies. In India, Maruti-Suzuki,
basically positive, labled Theory Y. Hero-Honda, etc., apply the postulates of theory Z.
Theory X is based on the following assumptions: 6. Argyris’s Theory:
1. People are by nature indolent. That is, they like to work Argyris has developed his motivation theory based on
as little as possible. proposition how management practices affect the
2. People lack ambition, dislike responsibility, and prefer individual behaviour and growth In his view, the seven
to be directed by others. changes taking place in an individual personality make
3. People are inherently self-centered and indifferent to him/her a mature one. In other words, personality of
organisational needs and goals. individual develops
4. People are generally gullible and not very sharp and
bright.
On the contrary, Theory Y assumes that:
1. People are not by nature passive or resistant to
organisational goals.
2. They want to assume responsibility.
3. They want their organisation to succeed.
4. People are capable of directing their own behaviour.
5. They have need for achievement.
What McGregor tried to dramatise through his theory X
and Y is to outline the extremes to draw the fencing
22 | P a g e iDream Management College
Argyris views that immaturity exists in individuals mainly Leadership
because of organisational setting and management Leaders and their leadership skills play an important role in
practices such as task specialisation, chain of command, the growth of any organization. Leadership refers to the
unity of direction, and span of management. In order to process of influencing the behaviour of people in a manner
make individuals grow mature, he proposes gradual shift that they strive willingly and enthusiastically towards the
from the existing pyramidal organisation structure to achievement of group objectives.
humanistic system; from existing management system to A leader should have the ability to maintain good
the more flexible and participative management. interpersonal relations with the followers or subordinates
He states that such situation will satisfy not only their and motivate them to help in achieving the organizational
physiological and safety needs, but also will motivate objectives.
them to make ready to make more use of their Features of Leadership
physiological and safety needs. But also will motivate Influence the behaviour of others: Leadership is an ability
them to make ready to make more use of their potential of an individual to influence the behaviour of other
in accomplishing organisational goals. employees in the organization to achieve a common
7. Vroom’s Expectancy Theory: purpose or goal so that they are willingly co-operating with
One of the most widely accepted explanations of each other for the fulfillment of the same.
motivation is offered by Victor Vroom in his Expectancy Inter-personal process: It is an interpersonal process
Theory” It is a cognitive process theory of motivation. The between the leader and the followers. The relationship
theory is founded on the basic notions that people will be between the leader and the followers decides how
motivated to exert a high level of effort when they believe efficiently and effectively the targets of the organization
there are relationships between the effort they put forth, would be met.
the performance they achieve, and the outcomes/ Attainment of common organizational goals: The purpose
rewards they receive. of leadership is to guide the people in an organization to
The relationships between notions of effort, performance, work towards the attainment of common organizational
and reward are depicted in Figure 17.3 goals. The leader brings the people and their efforts
together to achieve common goals.
Continuous process: Leadership is a continuous process. A
leader has to guide his employees every time and also
monitor them in order to make sure that their efforts are
going in the same direction and that they are not deviating
from their goals.
Group process: It is a group process that involves two or
more people together interacting with each other. A
leader cannot lead without the followers.
Thus, the key constructs in the expectancy theory of Dependent on the situation: It is situation bound as it all
motivation are: depends upon tackling the situations present. Thus, there
1. Valence: is no single best style of leadership.
Valence, according to Vroom, means the value or strength
one places on a particular outcome or reward.
2. Expectancy:
It relates efforts to performance.
3. Instrumentality:
By instrumentality, Vroom means, the belief that
performance is related to rewards.
Thus, Vroom’s motivation can also be expressed in the
form of an equation as follows: Motivation = Valence x Qualities of a Leader
Expectancy x Instrumentality Personality: A pleasing personality always attracts people.
Being the model multiplicative in nature, all the three A leader should also friendly and yet authoritative so that
variables must have high positive values to imply he inspires people to work hard like him.
motivated performance choice. If any one of the variables Knowledge: A subordinate looks up to his leader for any
approaches to zero level, the possibility of the so suggestion that he needs. A good leader should thus
motivated performance also touches zero level. possess adequate knowledge and competence in order to
Q.18. Define Leadership. Explain the characteristics influence the subordinates.
of a good leader?
23 | P a g e iDream Management College
Integrity: A leader needs to possess a high level of integrity Quite often people in the work place need counselling to
and honesty. He should have a fair outlook and should eliminate the emotional disequilibrium that is created
base his judgment on the facts and logic. He should be sometimes in them. He removes barriers and stumbling
objective and not biased. blocks to effective performance.
Initiative: A good leader takes initiative to grab the 4. Uses Power Properly:
opportunities and not wait for them and use them to the If a leader is to effectively achieve the goals expected of
advantage of the organization. him, he must have power and authority to act in a way
Communication skills: A leader needs to be a good that will stimulate a positive response from the workers. A
communicator so that he can explain his ideas, leader depending on the situation exercise different types
policies, and procedures clearly to the people. He not only of power viz., reward power, conceive power, legitimate
needs to be a good speaker but also a good listener, power, represents power and expert power. Besides the
counsellor, and persuader. formal basis the informal basis of power also has a more
Motivation skills: A leader needs to be an effective powerful impact on organizational effectiveness. No
motivator who understands the needs of the people and leader is effective unless the subordinates obey his order.
motivates them by satisfying those needs. 5. Leader Manages the Time Well:
Self-confidence and Will Power: A leader needs to have a Time is precious and vital but often overlooked in
high level of self-confidence and immense will-power and management. There are three dimensions of time, boss-
should not lose it even in the worst situations, else imposed time, system-imposed time and self- imposed
employees will not believe in him. time that is prominent in literature. Because the leader
Intelligence: A leader needs to be intelligent enough to has through knowledge of the principles of time
analyze the pros and cons of a situation and take a management such as time preparing charts, scheduling
decision accordingly. He also needs to have a vision and techniques etc., he is in a position to utilize the time
fore-sightedness so that he can predict the future impact productivity in the organizations.
of the decisions taken by him. 6. Strive for Effectiveness:
Decisiveness: A leader has to be decisive in managing his Quite frequently the managers are workaholic and too
work and should be firm on the decisions are taken by him. busy with petty things to address to major details of
Social skills: A leader should possess empathy towards effectiveness. To fill the gap, sometimes leader throws his
others. He should also be a humanist who also helps the concerted effort to bring effectiveness by encouraging
people with their personal problems. He also needs to and nurturing team work, by better time management
possess a sense of responsibility and accountability and by the proper use of power.
because with great authority comes great responsibility. Leadership is rather examined in personal characteristics
Leadership Styles than in terms of activities.
Autocratic leadership style: It refers to a leadership style Herbert G. Hicks refers the following as common
where the leader takes all the decisions by himself. leadership activities:
Democratic leadership style: It refers to a style where the 1. Arbitrating:
leader consults its subordinates before taking the final Often members disagree on the best decision for an
decision. organizational matter. An effective leader often will
Laissez-faire or Free-rein leadership style: It refers to a resolve such disagreement by arbitrating on making the
style where the leader gives his subordinates complete decision on the course of action to be taken.
freedom to take the decisions. 2. Suggesting:
Functions of Leadership: 14 Major Functions of Leadership Suggestions are often employed by an adroit leader for a
Some of the important functions the leader performs are long-term. Suggestions are likely to be a powerful tool in
giving under: the manager’s kit.
1. Leader Develops Team Work: 3. Supplying Objectives:
The three vital determinates of team work are the leader, A manager often personally supplies the objectives for the
sub-ordinates and the environment. These factors are organization. The manager must see that the organization
interdependent. It is the leader’s responsibility to make is always supplied with suitable objectives.
the environment conductive to work. He inculcates the 4. Catalyzing:
sense of collectivism in employees to work as a team. In organization some force is required to start or
2. Leader is a Representative of Sub-Ordinates: accelerate movement. A leader is expected to provide
He is an intermediary between the work groups and top such a force.
management. They are called linking pins by Rensis Likert. 5. Providing Security:
3. Leader is an Appropriate Counsellor: In organizations personal security is often a significant
factor. A leader can provide a large measure of security by
24 | P a g e iDream Management College
maintaining a positive and optimistic attitude even the much wastage of time, efforts and money with the help of
face of adversities. co-ordination.
6. Representing: A modern enterprise consists of a number of
A leader usually treated as the representative of the departments. In olden days, the enterprise was divided
organization. into departments such as – purchase, production, sales,
7. Inspiring: finance and accounts. But, now a days, the enterprise is
Many persons work more productively in organizations divided into the following departments – purchase,
when their leader keeps them known that the work they production, sales, finance, account, personnel, research
do is worthwhile and of important. and development, public relations and the like. The
8. Praising: classification of departments is very large at present. So
Managers can help to satisfy the needs by their sincere the importance of co-ordination has subsequently
praise. increased.
The functions discussed above are of an ideal leader. A manager has to perform five interrelated functions in
Though an ordinary leader cannot perform all these the process of managing an organization, which is s
functions; but he should do his best in the interest of sub- system made up of different inter linked and
ordinates. Hence, Stogdill is right in saying that interdependent subsystems. A manager has to link these
“Leadership is consistent with problems of human diverse groups towards the achievement of a common
performance and interaction”. goal. The process by which a manager synchronizes the
Thus, it can be said that a leader has the function of activities of different department is known as
leading the group of his sub-ordinates. As leader, he has coordination.
not only to show the way but also to lead the group Coordination is the force that binds all the other functions
towards it. Because of this, Haiman says, “It is leadership of management. It is the common thread that runs
for the mutual objectives and that is not sheer weight of through all activities such as – purchase, production, sales,
authority or power.” and finance to ensure continuity in the working of the
organisation. Sometimes it is considered as a separate
Q.19. Critically evaluate the importance and utilities of function of management.
Coordination? It is however the essence of management for achieving
Coordination harmony among individual efforts towards the
Everything you need to know about accomplishment of group goals. Each Managerial function
coordination. Coordination is the force that binds all the is an exercise contributing individually to coordination.
other functions of management. Coordination is implicit and inherent in all functions of an
Coordination is the common thread that runs through all organisation.
activities such as – purchase, production, sales, and Need of Co-ordination
finance to ensure continuity in the working of the Modern organisations depend upon specialisation of
organisation. Sometimes it is considered as a separate functions and activities delegated to different
function of management. participating individuals. If each individual is allowed to
Coordination is the essence of management or manager perform his own function efficiently without taking note
ship, for the achievement of harmony of individual effort of the connected function performed by another
towards the accomplishment of group goals is the purpose individual, there will result a chaos in the organisation. It
of management. is essential that there be complete coordination, so that
It is a process by which the manager achieves harmonious unity of action on the part of all is achieved.
group effort and unity of action in the pursuit of a Also, conflict between the line executives and the staff
common purpose. The manager brings about this process poses the problem of coordination by the chief executive.
as he performs the basic managerial functions of planning, Hence, the chief executive has to coordinate not only
organising, staffing, directing and controlling. functions and activities but also individuals performing
Coordination different functions. For example, to ensure harmonious
Various departments or sections are assigned different functioning of the organisation, it is essential that the
tasks to perform. They are assigned on the basis of their functions of purchasing, designing, production and sales
specialisation. Employees of each department perform departments are co-ordinated.
their duties with a view to achieving common objectives If the sales manager procures a huge order to be executed
collectively. It is co-ordination. Coordination is the process within a specified period of time without reference to the
which ensures smooth interplay of the functions of production manager or the buyer, it may turn out that the
management. Common objectives are achieved without goods cannot be produced in quantities ordered within
the specified time. Or, even if they can be produced, the
25 | P a g e iDream Management College
suitable raw material may not be available. Therefore, the economy in labour, time and equipment. When the
inter-relationship between the purchasing department activities are properly integrated, there will be lest delays
and production department as well as the sales which will bring efficiency in the business organization.
department demands the establishment of coordination. (d) Good Personal Relations:
1. Constant changes Coordination is achieved through systematic efforts. Good
2. Poor leadership and coordination gives job satisfaction to the employees
3. Inherent complexity of large scale organisation give rise which keep their morale high. Moreover, there are good
to problems of co-ordination and controls. human relations because the authority-responsibility
Diversified and specialised activities under the principle of relationships are clear. The conflict between line and staff
division of labour leading to an extreme specialisation, personnel can also be avoided through proper
demand special attention to co-ordination. coordination of their efforts.
Departmentation also leads to co-ordination. Human (e) Retention of Managerial and Other Personnel:
nature of competition, rivalries and jealousies in large It has been pointed out that sound coordination has a
business organisations create special need for co- significant effect on the development and retention of
ordination. Large number of employees work in big good personnel in business. If the total organization is so
business organisation. designed and patterned that each executive and
It therefore becomes essential to co-ordinate, that employees derives job satisfaction, there will be tendency
differences in efforts, approaches or interests are on the part of the executive and employees and
reconciled and individual goals and actions are employees to stay with the organization. The absence of
harmonized so that they may bring about common this will create suffocating conditions in which it would be
objectives. Coordination promotes efficiency, unity of difficult for any person to stay r for long in the
command, team spirit, subordinates, individual interests organization.
of general interests of the enterprise, boost to good Coordination – Features
relations and enhancement of employee morale. i. Co-ordination is not a separate function but the very
Coordination avoids duplication of work or efforts, essence of management. It is present in all the functions.
interpersonal conflicts, controversies, misunderstandings, ii. Need for co-ordination arises due to inter-dependency
delay, wastages and confusions. It harmonizes, unifies and of various functional departments.
blends all activities and thus, ensures the achievement of iii. Co-ordination is a dynamic process and it is to be
predetermined objectives. exercised all the time to ensure smooth functioning of
Although for the success of any organisation co-ordination departments.
must exist between different departments, groups and iv. The managers across the level have to consciously
activities. exercise co-ordination.
Objectives: v. It is required in group efforts and not in individual
(a) Reconciliation of Goals: effort. Hence it involves orderly arrangement of group
This can be done by the coordination only. The conflict of effort.
goals arises because everybody perceives the vi. The objective of coordination is to facilitate
organizational goals differently and tries to achieve them accomplishment of overall objectives. It works on the
in his own way. This may lead to confusion and chaos in fulcrum of unity of purpose.
the organization. Therefore, coordination is necessary to Coordination – The Essence of Management
bring unity of action in the organization. Co-ordination brings unity of action and integrates
(b) Total Accomplishment: different activities. Every managerial function needs co-
Through coordination it is possible to bring about total ordination and synchronisation of various activities.
accomplishment which will be far in excess of the sum of Co-ordination is necessary for the following reasons:
the individual parts. It has been observed that the total 1. Co-Ordination Needed to Perform all Functions:
accomplishment of ten employees of a department whose Managerial functions are performed in a better way with
efforts are properly coordinated will be far greater than the help of co-ordination.
the mathematical sum of their individual accomplishment. (i) Planning needs co-ordination among main plan and
This happens because through coordination, duplication sub-plans. The plans of different departments or sections
of efforts is prevented and the time and energy thus will be co-ordinated to prepare a plan for the whole
saved are better utilized in more creative tasks. organisation.
(c) Economy and Efficiency: (ii) While performing organising function, there is a need
Through coordination, it is possible to bring about to have co-ordination between authority, responsibility
economy and efficiency in the organization. Coordination and accountability at different levels.
will avoid duplication of efforts due to which there will be
26 | P a g e iDream Management College
(iii) Co-ordination in staffing function is needed between In the process of organisation, the authority and
nature of job and qualifications of employees and responsibility of various persons is defined and even the
between nature of work and compensation fixed. relationship among different jobs is also specifically given.
(iv) In directing function, co-ordination is required The whole process of organisation will lead to effective
between superior and subordinate, between orders, co-ordination. A well thought-out organisation will
instructions, guidelines, etc. ultimately lead to co-ordination.
(v) In controlling function, co-ordination is required 3. Through Directing:
between standards set and actual performance. When a manager directs his subordinates he will be co-
2. Co-Ordination Needed at all levels: ordinating their work. He will give them directions,
(i) At top level co-ordination is needed to synchronise the guidelines and instructions for doing a job assigned to
activities of the organisation for achieving overall goals of them. He will direct in such a way that the achievement of
the firm. overall organisational objectives is ensured. The manager
(ii) At middle level, co-ordination is needed to balance the should use a group system to take decisions.
activities of different departments for attaining the Everybody should be free to express his option. This will
organisational objectives. create a sort of moral binding on the employees to work
(iii) At lower level of management, the activities of for the proper implementation of these decisions. The co-
workers and others are co-ordinated for achieving ordination work of the manager will also become easy. So
departmental goals. direction of employees will also lead to co-ordination.
3. Co-Ordination is the Most Important Function: 4. Through Controlling:
Co-ordination is the most important function of every The manager is required to control the work of everyone
organisation. The integration of various functions will be in the organisation so that all efforts are directed towards
done through co-ordination. In the absence of co- main goals. There may be instances when performance of
ordination there will be chaos and mismanagement. There subordinates is not up to the mark or it is not in the
will be a need of co-ordination for setting the things right. direction in which it should have been. The manager will
It was with this reason that classical school of thought take corrective measures as and when required.
considered co-ordination as a separate function. All He will synchronise the work of his subordinates so that
managerial functions try to achieve integration of various the goals are achieved easily. The controlling function
efforts and co-ordination becomes the essence of itself will facilitate co-ordination because it will require
management. the evaluation of performance of subordinates and will
Process of Coordination enable the manager to make changes if there are
1. Through Planning: deviations between standards set and results achieved.
The planning is the elementary stage of achieving co- 5. Through Staffing:
ordination. When various functions are properly planned The staffing function can also help in proper co-
and various policies are integrated then co-ordination will ordination. While staffing, the manager should keep in
be easily achieved. If production manager is to plan for his mind the nature of jobs and the type of persons required
development then it will be better to consult purchase for managing them. He should ensure the right number of
manager, personnel manager, finance manager, sales executives in various positions for proper performance of
manager also. When production is planned with the their functions. The executives are of such a quality or are
consent of other concerned managers then co-ordination given such a training that they are able to co-operate and
takes place at planning level. co-ordinate their efforts.
If other managers feel some difficulties then they will 6. Through Proper Communication:
explain it and mutually accepted decisions will resolve the Effective communication is of utmost importance for
difference. Co-ordination can certainly be achieved at achieving better co-ordination. There should be a regular
planning stage. According to Mary Follett, planning stage flow of information among various persons so that they
is the ideal time to bring about co-ordination and they are given required information for proper co- ordination.
must see to it that various plans are properly interrelated. The personal contact is the most effective type of
2. Through Organisation: communication. Other methods like reports, procedures,
Co-ordination is an essential part of organisation. Mooney bulletins, etc., can also be used properly. The
considers co-ordination as the very essence of development of data processing devices are of utmost use
organisation. When a manager groups and assigns various for facilitating quick communication.
activities to subordinates, the thought of coordination will The subordinates must get proper information at the right
be upper most in his mind, the related activities are time for enabling them to co-ordinate their work.
placed together to avoid delays and confusion. According to Newman, “Since co-ordination is concerned
with the interrelationships of separate activities, it can be
27 | P a g e iDream Management College
no better than the transfer of information about those Personnel Satisfaction: If the decisions are systematized
activities to some common point or points, where the in the organization everyone knows how to proceed, how
dovetailing takes place.” to contribute towards objectives this clarity
Q.19. Define Strategic Management? Discuss it’s classes and levels?
bringssatisfaction.
STRATEGIC MANAGEMENT Limitations:
Explain strategic alliance with illustration Complex & Dynamic Environment: We require
An arrangement between two companies that have knowledge of the trend in the environment, increase in
decided to share resources to undertake a specific, complexity leads in difficult to predict the future outcome
mutually beneficial project. A strategic alliance is less Rigidity: There is a need for concept of moving balance
involved and less permanent than a joint venture, in among the consideration on which the strategy isbased.
which two companies typically pool resources to create a
Inadequate Appreciation of Strategic Management:
separate business entity. In a strategic alliance, each
Managers are inadequately aware about its contribution
company maintains its autonomy while gaining a new
to the success & the way in which Strategic Management
opportunity. A strategic alliance could help a company
(SM) can beundertaken
develop a more effective process, expand into a new
market or develop an advantage over a competitor, Limitations in Implementation: Many problems cannot
among otherpossibilities. be solved by SM alone but require the use of other
Example: Hewlett-Packard and Disney have a long- aspects ofmanagement
standing alliance, starting back in 1938, when Disney for carrying out these goals.
purchased eight oscillators to use in the sound design of Name the strategic managementprocess.
Fantasia from HP founders Bill Hewlett and Dave Packard. Strategic management is defined as the set of decisions &
When Disney wanted to develop a virtual attraction called actions in formulation and implementation of strategies
Mission: SPACE, Disney Imaginers and HP engineers relied designed to achieve the objectives of an organization.
on HP's IT architecture, servers and workstations to create Itinvolves 7 steps.
Disney's most technologically advanced attraction. Organizational Mission & Objectives: They have some
What is strategic planning? How is different from specific mission towards which all efforts are directed.
tacticalplanning? Objectives are other factor which determines the
It is a process of deciding on objectives of the Strategy.
organization, on changes in these objectives, on the Environmental Analysis: The organization has to relate
resources used to attain these objectives & on the policies itself with the environment it provides opportunities &
that are to govern the acquisitions, use & disposition of threats to anorganization
these resources. Organizational Analysis: Evaluates an organization‟s
Major difference between them is that strategy strength & weakness, it helps to overcome theweakness
determines what major plans are to be undertaken & Identification of Strategic Alternatives: It should be
allocates resources to them, while tactics it is means by identified the opportunities & threats generated through
which previously determined plans areexecuted. the environmental & organizational analysis and
Explain the importance and limitations of organizational mission &objectives
strategicmanagement. Choice of Strategy: Identification of various
Strategic management is defined as the set of decisions & strategicalternatives
actions in formulation and implementation of strategies
Implementation of Strategy: It involves various
designed to achieve the objectives of an organization.
activities like organization structure, effective leadership
Importance:
& information system, functional policies, allocation of
Financial Benefits: It results into financial benefits to resourcesetc
the organizations in the form of increased profit even in
Evaluation & control: It is an ongoing process for future
the face of environmentalthreats.
course ofaction
Offsetting Uncertainty: By prescribing the future course What is meant by “strategy”. Illustrate withexample
ofaction. Strategy is the determination of basic long-term goals and
Clarity in Objectives & Directions: It is used for objectives of an enterprise & the adoption of the courses
achieving those objectives; they focus on clarity of action & the allocation of resources necessary for
ofobjectives. carrying out these goals.
Increased Organizational Effectiveness: Its concept is Example: E I hotels Ltd, an Oberoi-group company, has a
that the organization is able to achieve its objectives strategy of continuous growth, for achieving this they
within the given resources. adopted two routes: takeover of existing hotels &
construction of new hotels. Finally they choose a strategy
28 | P a g e iDream Management College
of taking over an existing hotel & it adopted a policy that Evaluating Speed as a Competitive Advantage: or rapid
every hotel can spend 7-8% of sales revenue on response to customer requests or market and
refurbishment & decoration along with maintenance. technological changes, have become a major source of
Section B competitiveadvantagefornumerousfirmsintoday‟sintensel
Define and differentiate between vision, mission, goals y competitiveglobal economy
objectives andpolicies Evaluating Market Focus as a Way to Competitive
Vision: A statement that presents a firm‟s strategic intent Advantage: the extent to which a business concentrates
designed to focus the energies & resources of the on a narrowly definedmarket
company on achieving a desirable future. Q.20. What is Strategy? Explain the role of different
Mission: A broadly framed but enduring statement of a
strategists?
firm‟s intent. It is the unique purpose that sets a company STRATEGISTS AND THEIR ROLE IN STRATEGIC MANAGEMENT
apart from others of its type and identifies the scope of its TOP MANAGEMENT CONSTITUENTS
operations in product, market, and technology terms. 1. BOARD OF DIRECTORS
Goals Objectives: It provides the foundation for all 2. SUB – COMMITTEE
managerial activities. They can be considering as ends or 3. CHIEF EXECUTIVE OFFICER
aims towards which all activities are directed. 4. TASK RESPONSIBILITIES AND
Policies: It provides a definition of the common purpose 5. SKILLS OF TOP MANAGEMENT
for the organizational components as a whole. There are nine Strategists (TOP MANAGEMENT), who, as
Describe the nature and scope of strategic management individuals or in groups are concerned with and play a role in
strategic management their role in strategic management is
Respond to challenges posed by the firm‟s immediate explained below:-
and remote external environment (1) Role of Board of Directors
Immediate external environment – competitors, The ultimate legal authority of an organisation vests in the
suppliers, increasingly scarce resources, government board of directors. The owners of the organisation –
agencies, regulations, shifting customer preferences shareholders, controlling agencies, government, financial
Remote external environment – economic, social, institutions, holding company or the parent company-elect and
political,technological. appoint the directors on the board. The board is responsible to
them for the governance of the organisation. As directors, the
Explain the different hierarchical levels of planning in
members of the board, are responsible for providing guidance
strategicmanagement and establishing the directives according to which the managers
Strategic management is defined as the set of decisions & of the organisation can operate. The board exercises its
actions in formulation and implementation of strategies authority according to the memorandum of association and
designed to achieve the objectives of an organization. articles of association of the company. Legally, they have to
Organizational Mission & Objectives: formulation of conform to the various provisions of the Companies Act, 1956.
mission &objectives Apart from the legal framework, the board acts according to the
policies, rules, procedures and conventions of the organisation.
Environmental analysis: analysis of general
The role of the board in strategic management is to guide the
environment, Industry& competitionanalysis senior management in setting and accomplishing objectives,
Organizational analysis: SWOTanalysis reviewing and evaluating
Identification of strategic alternatives: stability, organizational performance and appointing senior executives.
retrenchment, growth & combinationstrategy However, there is no clarity regarding the exact role that the
Choice of strategy: focusing on strategicalternatives board should play in managing the affairs of the organisation.
Much depends on the relative strength, in terms of power, held
Implementation of strategy: Implementation of by the board and the chief executive. Where there is a high
strategic alternatives level of clarity regarding their respective rules, the relationship
Evaluation & control: Evaluation & control of between the board and the chief executive is cordial and the
strategicalternatives functioning of the board is smooth. Where such clarity is less,
Discuss the importance of strategy. What might happen to problems occur.
a company if it does not have amission? As the board of directors operates as the representatives of
stockholders so the board has also following major
Determination ofobjectives
responsibilities:
Determination of course of action to achievethosegoals 1. To establish and update the company mission.
Allocation of recourses for carrying outactions 2. To elect the company’s top officers, the formost of whom is
Missionisthepurposeofacompany,ifacompanydoesn‟thave the CEO.
amissionislikeacompany running without any purpose. 3. To establish the compensation level of the top officers,
including their salaries and bonuses.
Evaluating Differentiation: it requires that the business
4. To determine the amount and timing of the dividends paid to
have sustainable advantages that allow it to provide stockholders.
buyers with something uniquely valuable to them
29 | P a g e iDream Management College
5. To set broad company policy on such matters as labour – are the major implementers of strategies and also their
management relations, product or service lines of business and evaluators. The strategic management process adopted by
employee benefit packages. entrepreneurs is, generally, not based on a formal system and,
6. To set company objectives and to authorize managers to usually, they play all the strategic roles simultaneously. Strategic
implement the long-term strategies that the top officers and decision-making is quick and the entrepreneurs generate a
the board have found agreeable. sense of purpose among their subordinates.
7. To mandate company compliance with legal and ethical (4) Role of Senior Manager
dictates. The senior (or top) management consists of managers at the
(2) Role of Chief Executives highest level of the managerial hierarchy. Starting from the
The chief executive (CE) is the most important strategist who is chief executive to the level of functional or profit centre heads,
responsible for all aspects of strategic management from these managers are involved in various aspects of strategic
formulation to evaluation of strategy. The CE is variously management. Some of the members of the senior management
designated as managing director, executive director, president act as directors on the board usually on a rotational basis. All of
or general manager in business organizations. As the chief them serve on different top-level committees set up by the
strategist, the CE plays a major role in strategic decision-making. board to look after matters of strategic importance and other
The functioning of the board critically depends on its policy issues. Executive, committees, consisting of senior
relationship with the chief executive. Where there are managers, are responsible for implementing strategies and
differences of opinion between the respective perspectives of plans, and for a periodic evaluation of performance. Ad hoc
the role of the board and the chief executive, disagreements committee formed to deal with new projects has senior
arise. The CE of an organisation plays the most crucial role in managers as project
determining whether an organisation is successful or not. managers. When assigned specific responsibilities, senior
The role of the CE in strategic management is the most managers look after modernization, technology upgradation,
important among the roles played by different strategists. He is diversification and expansion, plan implementation, and new
the person who is chiefly responsible for the execution of product development. On the whole, senior managers perform
functions which are of strategic importance to the organisation. a variety of roles by assisting the board and the chief executive
In other words, a CE performs the strategic tasks; actions which in the formulation, implementation and evaluation of strategy.
are necessary to provide a direction to the organisation so that (5) Role of SBU-level Executive.
it achieves its purpose. He plays a pivotal role in setting the The rationale for organizing structure according to the strategic
mission of the organisation, deciding the objectives and goals, business units (SBUs) is to manage a diversified company as a
formulating and implementing the strategy and, in general, portfolio of businesses; each business having a clearly defined
seeing to it that the organisation does not deviate from its product-market segment and a unique strategy. The role that
predetermined path designed to move it from the position it is the SBU-level executives play is, therefore, important in
in to where it wants to be. strategic management. SBU-level executives, also known as
The role modeling approaches attempt to describe the CE in either profit-centre heads or divisional heads, are considered as
terms of the different roles that they play in organisations. For chief executives of a defined business unit for the purpose of
instance, a CE may be considered as: strategic management. In practice, however, the concept of
Chief architect of organizational purpose, strategist or planner; SBU is adapted to suit traditions, shared facilities and
Organisation leader, organizer or organisation builder; distribution channels, and manpower constraints.
Chief administrator, implementer or coordinator; and With regard to strategic management, the SBU-level strategy
Communicator of organizational purpose, motivator, personal formulation and implementation are the primary
leader or mentor. responsibilities of the SBU-level executives. Many public and
(3) Role of entrepreneurs private sector companies have adopted the SBU concept in
According to Drucker, “the entrepreneur always searches for some or the other form.
change, responds to it and exploits it as an opportunity”. The (6) Role of Corporate Planning Staff
entrepreneur has been usually considered The corporate planning staff play a supporting role in strategic
as the person who starts a new business, is a venture capitalist, management. They assist the management in all aspects of
has a high level of achievement-motivation, and is naturally strategy formulation, implementation and evaluation. Besides
endowed with qualities of enthusiasm, idealism, sense of these, they are responsible for the preparation and
purpose, and independence of thought and action. However, communication of strategic plans, and for conducting special
not all these qualities are present in all entrepreneurs; nor are studies and research pertaining to strategic management. The
these found uniformly. An entrepreneur may also demonstrate corporate planning department is not
these qualities in different measures at different stages of life. responsible for strategic management and, usually, does not
Contrary to the generally accepted view of entrepreneurship, initiate the process on its own. By providing administrative
entrepreneurs are not only to be found in small businesses or support, it fulfills its functions of assisting the introduction,
new ventures. They are also present in established and large working and maintenance of the strategic management system.
businesses, in service institutions and also in the bureaucracy How corporate planning works at voltas
and government. The basic function of the corporate planning cell (CPC) at Voltas
Entrepreneurs play a proactive role in strategic management. As Ltd. is to disseminate the concept of corporate planning and
initiators, they provide a sense of direction to the organisation, make planning a way of life in the company. The main objective
set objectives and formulate strategies to achieve them. They of the CPC is to convert the existing budgeting system into a
30 | P a g e iDream Management College
corporate planning system which deals with strategic issues. functional areas, excellent written and oral communication
The CPC supports the corporate planning process by assisting ability, and a pleasing personality. The qualification required is,
the top management in the formulation of corporate plans and generally, an MBA or CA. The position of executive assistant
integrating the divisional plans with the corporate plan. Based offers a unique advantage to young managers as nowhere else
on the company’s long-range plan, divisional strategic plans are can he or she gain a comprehensive view of the organisation
made annually. The strategies for each division are explicitly which can help in career planning and development and rapid
stated by the CPC and communicated to the senior managers. advancement to the senior levels of management.
After this, the CPC staff acts as a catalyst in the implementation
process by helping the senior managers implement the plan.
Evaluation is done quarterly by the corporate executive
committee consisting of the president and six vice presidents in
different functional areas. The staff at CPC is mainly drawn from
within and they possess a few years’ line experience in different
functional areas in the company.
(7) Role of Consultants
Many organizations which do not have a corporate planning
department owing to reasons of small size, infrequent
requirements, financial constraints, etc. take the help of
external consultants in strategic management. These
consultants may be individuals, academicians or consultancy
companies specializing in strategic management activities.
According to Management Consultants Association of India,
management consultancy is “a professional service performed
by specially trained
and experienced person to advise and assist managers and
administrators to improve their performance and effectiveness
and that of their organisation”. Among the many functions that
management consultants perform, corporate strategy and
planning is one of the important services offered. The main
advantages in hiring consultants are getting an unbiased and
objective opinion from a knowledgeable outsider, cost-
effectiveness and using specialists skills.
(8) Role of Middle- level Managers
The major functions of middle-level managers relate to
operational matters and, therefore, they rarely play an active
role in strategic management. They may, at best, be involved as
‘sounding boards’ for departmental plans, as implementers of
decisions taken above, followers of policy guidelines and
passive receivers of communication regarding strategic plans.
Basically involved in the implementation of functional
strategies, the middle-level managers are rarely employed for
other purposes in strategic management.
The importance of middle management cadres lies in the fact
that they form the catchments areas for developing future
strategists for the organisation.
(9) Role of Executive Assistant
The emergence of executive assistants in the managerial
hierarchy is relatively a recent phenomenon. An executive
assistant is a person who assists the chief executive in the
performance of his duties in various ways. These ways could be
to assist the chief executive in data collection and analysis,
suggesting alternatives where decisions are required, preparing
briefs of various proposals, projects and reports, help in public
relations and liaison functions, coordinating activities with the
internal staff and outsiders and acting as filters for information
coming from different sources. The executive assistants assist
the chief executive, they help to optimise
their time utilisation. The requirements for an executive
assistant, in terms of skills and attitudes, include a generalist
orientation, a few years’ line experience, exposure to different