Concept of Management and Its Importance

Questions and Answers

What is the primary focus of the systems approach?

Optimizing individual employee output.

Maximizing individual department performance.

Minimizing costs and increasing profits.

Producing right results for the overall system. (correct)

Which of the following is a characteristic of the systems approach?

Each part of the system works independently to achieve the business goal.

The system remains unchanged despite changes in the environment.

Each part of the system derives inputs and information from other systems to achieve the business goal. (correct)

The system is focused on producing individual results rather than overall system results.

Which of the following is an advantage of the systems approach?

It increases the complexity of the problem.

It focuses on individual department performance.

It helps to identify individual employee weaknesses.

It helps to see the problem at a holistic level and resolves the issues. (correct)

Which of the following is a characteristic of responsiveness in the systems approach?

The system changes as per the environment and reacts to the changes in the environment. Signup and view all the answers

What is a potential disadvantage of the systems approach?

It sometimes overlooks important sub-system details. Signup and view all the answers

What is the primary benefit of clearly defining the focus of each part of the system?

It ensures each part works according to the requirement of the overall system. Signup and view all the answers

What is the primary disadvantage of focusing on the overall system rather than sub-systems?

It may overlook important sub-system details. Signup and view all the answers

Which of the following is a characteristic of dependency in the systems approach?

Each part of the system derives inputs and information from other systems to achieve the business goal. Signup and view all the answers

What is the primary advantage of using the systems approach?

It helps to understand the problem in a better way and comes up with more efficient solutions. Signup and view all the answers

What is the primary benefit of using the systems approach in business?

It enables the organization to respond effectively to changes in the environment. Signup and view all the answers

Study Notes

Conceptual Skills

Conceptual skills involve viewing the enterprise as a whole and analyzing the implications of external environmental factors (economic, social, political, technological, etc.) for its successful functioning.

Importance of Management

Enables an enterprise to achieve its desired objectives through proper planning and control
Ensures the optimum utilization of resources (materials, machines, and money) and efficient use of human resources
Fulfills social obligations by monitoring the business environment and making necessary changes to policies and practices
Ensures the stability of the organization in a fast-changing environment
Improves the personality and caliber of people to raise their efficiency and productivity
Meets the challenge of change through innovation and creativity
Integrates various interests to achieve the objectives of the organization

Functions of Management

Planning

Deciding in advance what should be done in the future
Helps to work in a systematic manner
Provides the basis for measuring actual performance
Eliminates the tendency to work at random
Determines the priorities of the business
Is goal-oriented, an intellectual activity, primary, all-pervasive, continuous, and forward-looking

Organizing

The process of bringing together the necessary resources for the accomplishment of the objectives
Divides the total work into different parts for better performance
Provides authority and responsibility
Establishes answerability or accountability on the part of subordinates to their superiors
Identifies the activities to be performed
Groups activities

Staffing

Employing the right number and right kind of employees to do various jobs
Ensures the efficient use of human resources
Impacts the cost of operation and the potential of employees

Distinction Between Public Company and Private Company

Minimum paid-up capital: Rs. 1,00,000 for Private Company, Rs. 5,00,000 for Public Company
Minimum number of members: 2 for Private Company, 7 for Public Company
Limited liability: limited to the extent of capital in both cases
Perpetual existence: Public Company has a separate legal entity, unaffected by death, retirement, or insolvency of shareholders
Transfer of shares: freely transferable in Public Company, requires consent of all partners in Private Company
Finance: vast and unlimited scope for raising finance in Public Company, relatively limited in Private Company

Cooperative Societies

Have a separate legal entity
Limited liability: liability of members is limited to the extent of their capital
Perpetual existence: unaffected by death, insolvency, retirement, or lunacy of members
Social service: fosters fellow feeling and inculcates moral values
Open membership: open to all, regardless of caste, color, creed, or economic status
Tax advantage: exempt from income-tax and surcharge on earnings up to a certain limit
State assistance: receives grants, loans, and financial assistance from the government
Democratic management: management is entrusted to the managing committee elected by members

Disadvantages of Cooperative Societies

Lack of secrecy: annual reports and accounts are submitted to the Registrar of Cooperative Societies

Systems Approach

Factors: dependency, responsiveness, results, and focus
Advantages: helps to see the problem at a holistic level, resolves issues, and understands the problem in a better way
Disadvantages: problems may be too complex, and focus on sub-systems may be required