S.Y.B.Com. Commerce III Past Paper PDF (University of Mumbai 2021)
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University of Mumbai
2021
University of Mumbai
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This is a past paper for S.Y.B.Com. Commerce III from the University of Mumbai, October 2021. The paper covers topics such as Management, Planning, Organizing, Directing, and Controlling, with an emphasis on Indian management ethos. The document contains the syllabus and question paper pattern.
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S.Y.B.COM. SEMESTER - III (CBCS) COMMERCE - III SUBJECT CODE : UBCOMFSIII.3 © UNIVERSITY OF MUMBAI Prof. Suhas Pednekar Vice-Chancellor, University of Mumbai Prof. Ravindra D. Kulkarni...
S.Y.B.COM. SEMESTER - III (CBCS) COMMERCE - III SUBJECT CODE : UBCOMFSIII.3 © UNIVERSITY OF MUMBAI Prof. Suhas Pednekar Vice-Chancellor, University of Mumbai Prof. Ravindra D. Kulkarni Prof. Prakash Mahanwar Pro Vice-Chancellor, Director, University of Mumbai IDOL, University of Mumbai Programme Co-ordinator : Prof. Rajashri Pandit Asst. Prof. in Economic, Incharge Head Faculty of Commerce, IDOL, University of Mumbai, Mumbai Course Co-ordinator : Mr. Sambhaji Shivaji Shinde Assistant Professor, IDOL, University of Mumbai, Mumbai Course Co-ordinator : Mr. Saurabh Mukund Panchamia Assistant Professor, G.S. College of Arts & Commere, Rajasthani Sammelan's Educational Complex, Swami Vivekananda Road, Mandlik Nagar, Sunder Nagar, Malad (W), Mumbai Course Writer : Dr. V. N. Yadav Principal, S.N. College of Arts and Commerce, Bhyander, Thane : Dr. B.B. Kamble Shri Chinai College of Commerce & Economics, Matunga, Mumbai : Dr. S.G. Sagar Principal, S.B. College, Shahapur, Thane : Dr. Vinita Pimple R.A. Podar College of Commerce & Economics, Matunga, Mumbai October 2021, Print - 1 Published by : Director, Institute of Distance and Open Learning , University of Mumbai, Vidyanagari, Mumbai - 400 098. DTP Composed & : Mumbai University Press Printed by Vidyanagari, Santacruz (E), Mumbai CONTENTS Unit No. Title Page No. Unit - I 1 Introduction to Management 1 Unit - II 2. Planning 28 3. Decision Making 48 Unit - III 4. Organizing I 59 5. Organizing II 83 Unit - IV 6. Directing & Controlling 101 Revised Syllabus S.Y.B.Com. Semester III (CBCS) Commerce –III (Management: Functions and Challenges) Course Objectives: To make the learners aware about conceptual knowledge and evolution of Management. To familiarize the learners with the functions in Management. Unit I : Introduction to Management Management- Concept, Nature, Functions, Managerial Skills & Competencies Evolution of Management Thoughts Classical Approach: Scientific Management – F.W. Taylor’s Contribution Classical Organisation Theory: Henri Fayol’s Principles Neo Classical: Human Relations Approach – Elton Mayo’s Hawthorne experiments Modern Management Approach-Peter Drucker’s Dimensions of Management, Indian Management Thoughts: Origin & Significance of Indian Ethos to Management. Unit II : Planning & Decision Making Planning - Steps, Importance, Components, Coordination – Importance M.B.O -Process, Advantages, Management By Exception- Advantages; Management Information System- Concept, Components Decision Making - Techniques, Essentials of a Sound Decision Making, Impact of Technology on Decision Making. Unit III : Organising Organising-Steps, Organisation Structures – Features of Line & Staff Organisation, Matrix Organisation, Virtual Organisation, Formal v/s Informal Organisation. Departmentation - Meaning - Bases, Span of Management- Factors Influencing Span of Management, Tall and Flat Organisation. Delegation of Authority - Process, Barriers to Delegation, Principles of Effective Delegation. Decentralisation : Factors Influencing Decentralisation, Centralization v/s Decentralisation Unit IV : Directing & Controlling : Motivation – Concept, Importance, Influencing factors. Importance of Communication, Barriers to effective Communication Leadership- Concept, Functions, Styles, Qualities of a good leader. Controlling – Concept, Steps, Essentials of good control system, Techniques of Controlling -PERT, CPM, Budgetary Control, Management Audit. I Question Paper Pattern Maximum Marks: 100 Questions to be set: 06 Duration: 03 Hrs. All Questions are Compulsory Carrying 15 Marks each. Question Particular Marks No Q-1 Objective Questions 20 Marks A) Sub Questions to be asked 12 and to be answered any 10 B) Sub Questions to be asked 12 and to be answered any 10 (*Multiple choice / True or False / Match the columns/Fill in the blanks) Q-2 Full Length Question 15 Marks OR Q-2 Full Length Question 15 Marks Q-3 Full Length Question 15 Marks OR Q-3 Full Length Question 15 Marks Q-4 Full Length Question 15 Marks OR Q-4 Full Length Question 15 Marks Q-5 Full Length Question 15 Marks OR Q-5 Full Length Question 15 Marks Q-6 A) Theory questions 10 Marks B) Theory questions 10 Marks OR Q-6 20 Marks Short Notes To be asked 06 To be answered 04 Note: Theory question of 15 marks may be divided into two sub questions of 7/8 and 10/5Marks. II REFERENCES : 1. Management Today Principles& Practice- Gene Burton, Manab Thakur, Tata McGraw- Hill, Publishing Co. Ltd. 2. Management – James A.F. Stoner, Prentice Hall, Inc.U.S.A. 3. Management : Global Prospective –Heinz Weihrich & Harold Koontz, Tata McGraw- Hill, Publishing Co. Ltd. 4. Essential of Database Management Systems -Alexis Leon, Mathews Leon Vijay Nicole, Imprints Pvt Ltd. 5. Management –Task, Resp, Practices – Peta Druche “Willian Heinemann LTD. III 1 INTRODUCTION TO MANAGEMENT Unit Structure 1.0 Objectives 1.1 Introduction to Management 1.2 Definitions of Management 1.3 Features of Management 1.4 Importance of Management 1.5 Principles of Management 1.6 Functions of Management 1.7 New Horizons in Management 1.8 Management Skills and Competencies In 21st Century 1.9 Evolution of Management Thoughts 1.10 Modern Management Approach 1.11 Summary 1.12 Questions 1.0 OBJECTIVES After studying the unit the students will be able to: Define the concept of Management. Discuss the features of management. Know the management principles. Understand the factors responsible for new horizons of management, Explain the management skills and competence in the 21st century, Understand the concept of Management by exception. 1.1 INTRODUCTION TO MANAGEMENT Management is a process of managing various activities. Management means managing an activity. It is a process of planning, organizing staffing, and controlling the organizational activities to accomplish its well-designed activities. Management is the art of getting things done by the people who are directly or indirectly associated with the organization. It is one of the important elements of business-like men, materials, money market, and management. Effective utilization of all their elements purely depends on effective and efficient management. The importance of management cannot be neglected in today’s business 1 process. Management is not only essential to business concerns but also essential to an organization like schools, Colleges, Hospitals, Charitable trusts. Many organizations are effective and efficient management for planning organizing and controlling their activities to accomplish their goals. 1.2 DEFINITIONS OF MANAGEMENT 1. Mary Parker Follet: - “Management is the art of getting things done through people”. 2. George Terry: - “Management is a distinct process consisting of planning organizing staffing and controlling performed to determine and accomplish stated objectives by the use of human being and other resources”. 3. Henry Fayol: - “To manage is to forecast and to plan to organize, to command, to coordinate and to control”. 4. Harold Koontz: - “Management is the art of getting things done through and with people in formally organized groups”. 1.3 FEATURES OF MANAGEMENT The Features of management are as follows: - 1. Management is a continuous and never-ending process: As stated, above management is a process. It includes four basic functions like planning organizing directing and controlling. It is a continuous and never-ending process as it does not come to an end like the accomplishment of organizational goals. 2. Management deals with the people: Management involves people who are directly or indirectly involves with the organization effective management requires teamwork the collective efforts of all the people to bring success to the organization. 3. It involves getting things done through people: Management involves people to get the thing done effective and efficient system of management maintain qualified and knowledgeable staff to whom a proper direction is given to implement the plans of an organization. 2 4. Management is goal-oriented: Management places emphasis on the accomplishment of an organization's goal. Every managerial activity results in the achievement of well-defined objectives. 5. Management is a system of activity: Management is an integral part of the system. A system may be defined as a set of various departments working in an organization to achieve a common objective. 6. Management is an art, science as well as profession. 7. Management is innovative: Management techniques are creative and innovative. Every manager in the organization uses their innovative skills and talent to make better things with higher efficiency at minimum cost. 8. Management has a different operation level: Such as higher level, middle level, and lower level. All the managers at different levels have to work with adequate authorities and responsibilities. 9. Management is dynamic: Business is influenced by economics, social, political, and technological and changes in human resources. Management adjusts itself to the changing atmosphere. Management has to make suitable forecasts and make the changes in the existing policies, therefore it is a dynamic activity. 10. Management follows well-established principles: It follows well-established principles in managing the organization. The principals include:- Division of work Authority and responsibility Discipline Unity of command Unity of direction etc. These principles help to solve the problems of the organization. 11. Management is universal: It is all-pervasive. It applies not to business organizations, but also to other organizations such as educational institutions charitable trusts, hospitals, etc. Management is a must for all activities. 3 12. Management adopts professional approach: Nowadays managers use a professional approach for getting the work done by their subordinates. The delegates' authority and responsibility to their subordinates give direction and guidance and also accept the suggestion from the subordinates for improving their work. 13. Management adopts multi-disciplinary approach: Management has to manage people. It is very difficult for managers to handle people of different backgrounds without the knowledge of different subjects such as economics, Information Technology, psychology, sociology, etc. 14. Ownership and management are separated from each other. 15. Management is an intangible activity. 16. Management is aided by computers but cannot be replaced- As managers can use computers to make quick decisions, computerized data can be used. But the judgment and experience of managers are required to use computerized data to take quick decisions. 1.4 IMPORTANCE OF MANAGEMENT The need and importance of management can be stated as follows:- 1. Accomplishment of goal: Effective and efficient management facilitates the accomplishment of an organization's goals Organizational activities are performed by the people under proper direction and guidance. 2. Optimum use of resources: Management facilitates optimum utilization of available human and physical resources with the minimum cost. This helps to bring progress and prosperity to a business enterprise. 3. Management encourages initiative: Management deals with people. It encourages people or subordinates to take an initiative to perform their work more effectively and efficiently. Employees and subordinates are encouraged to make their plans and policies and implement them to perform their work and accomplishment individual and organizational goals. 4. Management facilitates the introduction of new Techniques: It facilitates the introduction of new machine methods in the conduct of business activities. It also brings useful technological developments and innovations in the management of business activities. 4 5. Cordial industrial relations: Management develops better industrial relations. It ensures better life and welfare to employees and raiser their morale through suitable incentives. 6. Motivates employees: It motivates employees to take more interest and initiative in the work assigned to them. Effective management facilitates higher performance. Employees can be motivated with higher incentives. Motivated employees work with application and dedication which leads to higher efficiency in the organization. 7. Expansion of business: Effective management facilitates expansion growth and diversification of business. It creates a good corporate image for a business enterprise. Successful managers are responsible to bring success and stability to a business enterprise. 8. Reduction in wastages: Effective management facilitates the reduction of wastages in the organization. This facilitates the improvement of productivity and overall efficiency of the organization. 9. Reduces absenteeism and labour turnover: Absenteeism means remaining absent from the workplace without permission. Absenteeism creates several problems in the organization which affects adversely the efficiency and productivity of the organization. Labour turnover means the employees learn the organization. Labour turnover and absenteeism raise the cost of pricing. Effective management uses different techniques to reduce absenteeism and labour turnover in the organization. 10. Encourages teamwork: Management facilitates the improvement of better relations between individuals, groups, departments, and between various levels of management. Better relations among employees develop team spirit in the organization which helps to bring success and stability to the organization. 11. Exploiting opportunities: Success, stability prosperity expansion, growth, and diversification of business organizations largely depend on effective management. Management helps to make effective use of available resources to exploit 5 the opportunities in a better manner. As well as it helps to face challenges effectively and efficiently. 12. Improves Corporate Image: Efficient management enables the organization to improve its performance in respect of quality goods and services higher sales and higher profits. This creates goodwill and the corporate image of the organization in the minds of not only the employees but also in the minds of customers and society. A good corporate image helps to bring success and stability to a business organization. 13. Qualities of Worker’s Life: Modern Management shares the fruits of productivity and efficiency with the workers. At present workers are provided not only better working conditions but also other benefits like monetary and non- monetary incentives which enable them to work honestly and sincerely. Such monetary and non-monetary reward helps to improve the quality of life of the employees. CHECK YOUR PROGRESS: 1. “An effective utilization of Men, Material, and Money purely depends on an effective and efficient management”. Explain. 2. Give the definitions of management. 3. Enlist the Features of management. 1.5 PRINCIPLES OF MANAGEMENT Henry Fayol (1841 – 1925) is rightly treated as the father of Modern Management thought has developed the management principles and general management theory in the form of a book “Administration Industrialist General” Published in 1916. It was translated into English in 1930 as “Industrial and General Administration”. Henry Fayol has given 14 principles of management to manage organizational activities smoothly and efficiently. Principles mean the fundamental truth or principles which can be used by organizations to manage their business activities smoothly and successfully. 6 Henry Fayol’s fourteen principles of management are as follows: - 1. Division of work: Division of work means dividing the total work into small divisions a department under the departmental head a manager. Fayol suggests that a division of works brings specification in the work and the managers and the subordinates will work with more interest and initiative. The performance of managers will also improve as they will get an opportunity to use their skills & talent to perform their work. The principle of division of work can be applied at all levels of the organization 2. Authority and responsibility: Authority and responsibility are two sides of management. Managers must be given authority to get things done delegation of adequate authority enables the managers to perform their activities with almost devotion and dedications it improves the morale of the manager's responsibility arises out of assignment of activity. to discharge the responsibility properly then should be a balance between authority and responsibility. 3. Discipline: All the personnel serving in an organization should be disciplined. Discipline is obedience, application, energy behavior, an outward mark of respect shown by employees. Fayol stressed the need for discipline in the organization from top-level to lower level. There should be certain rules and regulations clear and fair agreements and judicious use of penalties to be laid down to govern the organization. All the employees and shareholders must respect all these rules and regulations and agreements to run the organization successfully. Principle of discipline state that subordinate should respect their superiors and obey their orders. 4. Unity of command: Unity of commands means that a person should get orders and instructions from only one superior. As well as subordinate should report only to one superior. Fayol observed that if one subordinate receives orders from more than one superior then he will have problems and confusion regarding whom he has to report. Lack of unity of command creates confusion and chaos in the organization. Therefore Fayol suggested that dual subordination should be avoided unless and until it is essential. 5. Unity of Direction: Fayol suggested that there should be one head and one plan for a group of activities having the same objectives. There should be the same directions to all employees doing similar activities. According to this principle, the efforts of all employees or members of the organization should be directed towards a common goal. Unity of direction is different from the unity of command in the sense that the former is concerned with 7 the functioning of the organization in respect of its grouping of activities while the latter is concerned with personnel at all levels in the organization in terms of reporting relationship. 6. Subordination of Individual to General Interest: This principle suggests that the general interest of the organization is more important than the interest of one employee or group of employees. Fayols states that common interest is above the individual interest. All employees of the organization should give more importance to accomplish the organizational objectives rather than individual objectives or group objectives. The superior should set an example in fairness and goodness. In other words, the interest of the organization should come first and then the individual or group interest. 7. Remuneration: Fayol suggested that the remuneration of employees should be fair and provide maximum satisfaction to employees and employers. Wages and salaries should be fair. More importantly, wages must be paid on time. Wages and salaries should be determined based on cost-of-living work assigned, the financial position of the business, and talent of the employees, etc. Fayol also suggested that wages should be supported by non-financial benefits such as good working conditions, canteen facilities, recreation facilities, etc. 8. Centralisation: Everything which goes to increase the importance of subordinate’s role is decentralization. Everything which goes to reduce it is centralization Fayol suggested that authority and responsibility must be centralization in any organization with adequate decentralization policies in other words extreme centralization and decentralization of authority should be avoided and proper balance between centralization and decentralization should be maintained 9. Scalar chain: The scalar chain principle refers to the line of authority or command for communication from the top levels to the lowest level of management. Fayol suggested that there should be a scalar chain of authority and of communication ranging from the highest to the lowest level to avoid delay in the decision-making process principle of scalar chain suggest that each communication going up or coming down must flow through each position in the line of authority. Fayol has suggested a gangplank which is used to prevent the scalar chain from bagging down the action. 8 A B K C L D M E N F O G P In this diagram A to G and A to P is the scalar chain. A is the head of the organization having immediate subordinate B & K. Thus B is superior to C while K is superior to L and so on at the respective level of management. Ordinarily, communication must flow from A to B to C to E to F and so on while going down. Similarly, it must flow from G to F to E and the same while going up. It means if any communication is going from F too it will flow from F to A via E, D, L, and B and coming down to O via K, L, M, and N. Fay suggested that this scalar chain system takes time and therefore can be substituted by a gangplank. Gang Plank suggested that F & P can have direct communication to avoid delay as decision making. A gangplank is a temporary arrangement between two different points to facilitate easy and quick communication. 10. Order: This is a principle relating to the arrangement of things and people. In material order, there should be a place for everything and everything should be in its place. Similarly, in the social order, there should be the `Right person at the right place. 11. Equity: Equity is the combination of justice kindness and fairness. Equity is treatment and behavior is liked by everyone and it brings loyalty to the organization. Impartial, fair, and good treatment should be given to all employees of the organization. The application of equity requires good sense experience and good nature for soliciting loyalty and devotion from subordinates. 12. Stability of Tenure: Fayol suggested no employees should be removed within a short time from one job to another position job. Sufficient time is to be given to the employees to learn the new job to get used to new work and succeed in doing it well. It means enough time is to be given to employees to get stability in the organization. This creates team spirit and a sense of belongingness among the workers. 13. Initiative: Initiative means taking lead, coming forward to do the things. If managers are leading down the examples within the limits of authority and 9 discipline, managers should encourage their employees for taking initiative. The initiative is concerned with thinking out and executing a plan. The initiative increases zeal and energy on the part of employees. 14. Esprit de corps: This is the principle of unity as a strength and extension of unity of command for establishing team spirit. Fayol suggested that the managers should encourage team spirit among the employees of the organization. Employees should not be divided into small groups or competing groups. Because it might be damaged the morale of the employees. Esprit de corps facilitates to development of proper coordination, informal relations among employees. It also creates interest and enthusiasm. 1.6 FUNCTIONS OF MANAGEMENT Management is a process that refers to various functions which a manager performs in an organization to accomplish organizational objectives. Henry Fayol has classified managerial functions in his well- known book "Industrial and General management” on 19/6. He identified fine functions of management such as planning organizing commanding, coordinating, and controlling. George R Terry, a well-known author believes that management is a distinct process consisting of planning, organizing, directing, and controlling, which are performed to determine and accomplish objectives by the use of people and resources. Like this various management, scholars have identified separate functions of management. In 1937 Luther Gullite gave the seven functions of management they are POSDCORB which refers to: - 1. Planning (P). 2. Organizing (O). 3. Staffing (S). 4. Directing (D). 5. Coordinating (C). 6. Reporting (R). 7. Budgeting (B). Hence, the function of management has been classified as per the studies undertaken by the management experts. The important functions of management are as given below: - 1. Planning: Planning is the first managerial function to be performed in the process of management. Planning is the primary function of management. It occupies the first position in the management process. It is the starting point of the whole management process as other management functions are related to the planning function. Planning is concerned with deciding in advance what is to be done & when, where, how, and by whom to what is to be done. It deals with -chalking out a future course of action and deciding in advance the most appropriate course of action for the 10 achievement of pre-determined goals of action. Planning is a decision- making process. It is an intellectual process as it deals with the determination of the course of action to achieve predetermined goals. Playing is bridging the gap between the present and future planning begins with the determination of objectives of the organization. i.e deciding the future course of action. Planning is necessary to ensure proper initialization of physical and human resources to accomplish the organizational objectives. In the work of Alfred and Betty “planning is the thinking process, the organized foresight the vision, based on facts and experience that is required for intelligent action”. George Terry stated that “Planning is the selecting and relating of facts and making and using of assumptions regarding the future in the visualization and formulation of proposed activities believe necessary to achieve the desired results”. Hence, planning is concerned with deciding in advance the future course of action. It is needed in all areas and at all levels. 2. Organizing: Organizing is one of the basic functions of management. It is a process of integrating and coordinating the efforts of manpower and material resources for the accomplishment of certain objectives. Louis Allen states that organizing is a process of identifying and grouping the work to be performed defining and delegating authority and responsibility and establishing relationships to accomplish objectives. George Terry defines organizing as “The establishing of effective authority relationship among selected work, persons and workplaces for a group to work together effectively”. Organizing involves the following aspects 1. Identification and classification of activities that are required to achieve organizational objectives. 2. Grouping of the activities into workable units for achieving objectives. 3. Assigning duties and responsibilities to subordinates to achieve the tasks assigned. 4. Delegating authority necessary and useful for the accomplishment of assigned tasks. 5. Establishing a superior-subordinate relationship. 6. Providing a system of coordination for integrating the activities of individuals and departments. 11 3. Staffing: Staffing is one basic function of management and occupies a key position in the management process staffing refers to manpower or human resources required for the execution of a business plan. Staffing is the process of filling positions in the organization with adequate and qualified personnel. “Right man for the right job” is the basic principle in staffing. Mcfarland stated that “staffing is the function by which managers build an organization through the recruitment, selection, and development of individuals as capable employees”. Thus, staffing provides proper personnel who are competent qualified, and with the essential skills to perform the job efficiently. Staffing involves: - 1. Manpower planning. 2. Job Analysis. 3. Recruitment, selection, and placement. 4. Training and development. 5. Remuneration. 6. Performance appraisal. 7. Promotions and transforms. 8. Motivation. 9. Mentoring and counseling. 10. Retirement of employees. 4. Directing: It is one of the most important functions of management. When people are available in the organization, they must know what they are expected to do in the organization. Directing means explaining the company’s plans to its employees the managers should inform the subordinate by giving information about the plans, objectives of the organization and instruct the people that they know what is expected of them. Directing includes: - Communicating: - cleanly transfer of information from one person to another. Leading: - to lead the people and to create an interest among them to do the work for attainment and designed objectives. Motivating: - Subordinates should be motivated by the superior by providing incentives so that they work with dedication and sincerely to achieve the goals of the organization. 5. Coordinating: It is one of the key functions of management. Coordination means integrating all the activities of an organization. Coordination is a managerial function in which different activities are properly adjusted, integrated, or inter-linked to achieve well-defined objectives. Such coordination among the different activities and department is essential. It is like bringing unity among diversity. Coordination gives one common 12 direction to all departments and employees functioning in the organization. Coordination is essential at levels of management- The top-level coordinates the activities of the middle level. The middle level coordinates the activities of the lower level. The lower-level managers coordinate the activities of the subordinates. 6. Decision Making: Decision-making is an important function of management. Decision-making plays an important role in its effectiveness and also excellence. The concept of decision making is defined as “The selection from among alternatives of course of action”. Decision-making is necessary for all management functions. Oxford Dictionary defines decision making means “The action of carrying out or carrying into effects”. James Stoner states that - Decision making is the process of identifying and selecting a course of action to solve a specific problem. The Decision-making process includes the following steps- a. Defining the problem or situation. b. Forming an alternative solution. c. Evaluating alternative solutions. d. Selection of the best alternative. e. Implementation of alternative. f. Review of performance. 7. Controlling: Controlling is the end function of management. Controlling is the core of the management process. An organization cannot work without an effective control mechanism. Controlling is a regular activity. It is rightly treated as the soul of the management process. It is true that without planning there will be nothing to control. Along with this, it is equally true that without control planning will be useless. In simple words to control means to check that the actual performance conforms to the standard and if any variance is observed, to find out the reasons for the same. It includes verifying the actual execution against the plans to ensure that execution is being done following the plans. The purpose of controlling is to ensure that everything occurs in conformities with the standards. Controlling has following Steps: - a. Setting standards or targets. b. Implementation of Tasks. c. Measuring actual performance. d. Comparing actual performance with plans or targets. e. Finding out causes of deviations. 13 f. Listing out various corrective measures. g. Selecting the appropriate corrective measures. h. Implementation and review of corrective measures. 1.7 NEW HORIZONS IN MANAGEMENT It is the latest development in the field of management. Many developed countries have adopted new horizons in their industries to manage business activities and thereby to improve organizational efficiency and productivity. Large firms from developing countries also introduced new horizons in managing their activities. At present, it is essential to all firms’ especially large firms to emphasize the introduction of new horizons in the field of management to improve overall organizational efficiency and to accomplish their objectives. 1.7.1 New horizons in the management include: - Flat organization structure. Virtual organization. Strategic business units. Knowledge management. Intra perineurial culture within the organization. Management by exception. Management information system. Total quality management. Six sigma technique. Value engineering etc. 1.7.2 Factors Responsible for New Horizons of Management 1. Globalisation: Globalization is one of the important factors responsible for new horizons in management. Due to globalization, international business needs to expand their business to meet the global challenges. Like as expansion diversification, foreign direct investment global wagers and take one and research and developments. To face such challenges at the global level and also to achieve the growth of business at an international level many business firms must have to adopt modern techniques of organization and management. 2. Policies of the Government: After 1990, most of the governments in the developing countries has introduced new business policies, which favors liberalization, privatization, and globalization. Govt. has deserved the public sector, delicensing of the industries, direct foreign investment, etc. Such policies are favoring the private sector enable them to participate in the economic and social development of the country. This has resulted in the expansion of business of private sector enterprises. To handle the expansion of business and to manage it effectively business firms now, have to give 14 importance to introducing new techniques in the field of management and business. 3. Competition: Due to globalization, liberalization, and privatization, there is still competition among the firms within and outside the country. Every firm from the developed and developing countries needs to face competition. This leads to the introduction or use of modern techniques of management in the field of business to gain competitive advantages. 4. Technological Developments: Technological Development is a factor responsible for use of new horizons in management and business. The use of the latest and updated technology is one of the important aspects of functional management which is essentially required to manage the business and managerial activities successfully. Therefore the business firms need to use modern technology new systems in the field of business management. 5. Customer expectations: Nowadays, customer expectations are growing. They want a new and better product at the right prices. Due to this business firms must have to give importance to the use of new techniques in the field of production and management to provide better and quality products and services to meet the needs and expectations of customers. At present emphasis is given on total quality management, inventory control management customer satisfaction surveys, etc. 6. Dynamic environment: The business environment has become very dynamic. It charges very quickly. People who like to take initiative and come out with solutions are likely to succeed in a dynamically changing environment. The organization recognizes managers who find their way and came to their niche. Taking initiative rather than waiting for instructions or solutions is a very important skill that is required when you work across the globe. 7. Shareholders expectations: At present shareholders have more expectations from their companies. They expect the right information, higher dividend, best corporate governance practice, etc. Due to this business firms need to give more importance to the introduction of new techniques in the field of business and management which helps to improve the overall efficiency of the organization. At present the business firms have to introduce/uses total quality management techniques, flat organization structure, and six sigma techniques. 8. Employees expectations: Employees' expectations are another important factor responsible for new horizons in management. At present employees expect more 15 freedom, empowerment, good working condition, better mgt. workers relations, etc. to meet such growing expectation of the employees and for the interment of the organization, business firms must have to give importance to the introduction of modern techniques of management in the field of production and other areas of business. 8. Growth and expansion strategies: Due to globalization, liberalization, and privatization, the business firms use different growth and expansion strategies like internal growth strategies, external growth strategies which includes product development, market development, market penetration, diversification internal wagers, take ones, joint ventures, etc. to manage such growth and expansion strategies a business firm may have t adopt modern techniques of management and organization. Check Your Progress: 1. Explain the following functions of Management: a. Controlling b. Directing c. Decision Making d. Coordinating e. 2. Explain the following Principles of management: a. Scalar Chain b. Centralization c. Unity of Direction d. Unity of Command e. Division of Work f. Equity 3. Enlist the New horizons in the management. 1.8 MANAGEMENT SKILLS AND COMPETENCIES IN 21ST CENTURY To perform various management functions effectively, managers must possess certain skills. Skill refers to expertness, practical ability, or facility in action or doing something. Robert L. Katz identified three kinds of skills and made them more popular. Skills required by the managers are: - 16 1. Technical skill: Technical skills are concerned with what is done. These certain to knowledge and proficiency in activities involving methods and procedures. These involve working with specific tools and techniques. Such skills are learned by accountants, engineers. Technical skills are required at all levels in the enterprise. 2. Conceptual skills: Conceptual skills mean the ability to see the enterprise as a whole and recognize how the various functions of the enterprise depend on one another. It is the ability to understand concepts, develop ideas and strategies. It helps the managers to identify the causes of the problem and not the symptoms. It helps him to solve the problems for the benefit of the entire centralized. Such conceptual skills are more required by the top- level because they spend more time in planning and decision making. 3. Human skills: It is also called interpersonal skills. It is also reformed as human relations skills. It involves working effectively with others on a person-to- person basis and building up cooperative group relations to accomplish enterprise objectives. Such skill helps the managers to understand, communicate, motivate, and lead the people in the enterprise. It also helps to build up team spirit in the enterprise. 4. Other skills Other than these three basic skills the managers also possess the following skills: - Communication skills: - Such type of skill requires effective communication with the people in the enterprise to communicate plans policies, objectives, strategies, problems, and so on. Administrative skills: - Such skills are required at the top-level management. Top-level managers need to have the ability to formulate plans and policies. They should be able to coordinate the various activities of the enterprise. Decision-making skills: - Such skills are required at all levels of management. A manager must be able to take a quick decision and also he must be able to implement the decision wisely and quickly to solve the problem. Design skills: - It refers to problem-solving skills. Managers should not just identify a problem but design the best solution to solve the problem. Leadership skills: - Good managers need to be good leaders. They should be able to lead and motivate the employees or subordinates to work for the betterment of themselves and the enterprise. A good manager must possess certain qualities and leadership. 17 1.9 EVOLUTION OF MANAGEMENT THOUGHTS 1.9.1 Introduction The evolution of management thought has originated when man started living in groups. The principles of management were used in the organization of the Roman Catholic Church and the organization of military forces in ancient Greece. These principles were practiced in different parts of the world since the dawn of civilization. After the industrial revolution, the structure of industry became extremely complex and this gave rise to modern management thought and a formal theory of management came into practice. Stages in Evolution The stages in the Evolution of management thought - can be given as follows – A. Pre-scientific management period. B. Classical Approach / Scientific management - i) Taylor’s scientific management theory ii) Fayol’s principles of management iii) Bureaucratic model of Max Webber C. Neo-classical Theory or Human Relations / Behavioral Approach D. Modern Theory or Systems Approach. A. Pre-scientific management period: Industrial Revolution revolutionalised the methods of production, tools & equipment, organization of labour, and methods of raising capital. To manage the business became complex and complicated. All these changes, in turn, brought about changes in the field of management, Traditional, conventional or customary ideas of management were slowly given up and management came to be based on scientific principles. Certain pioneers such as Prof. Charles Babbage, James Watt Jr, Robert Owens introduced new ideas and approaches to management - for taking decisions and solving business problems with the help of following - 1) Use of science and mathematics principles for taking decisions and solving business problems. 2) Improving working conditions and industrial relations 3) Combination of principles of engineering and economics to improve industrial productivity. 4) Need for labour welfare schemes for improving industrial relations. B. Classical Approach / Scientific management - The use of scientific management started during the last decade of the 19th century. During this period, the advocates of classical theory such as F.W. Taylor, and Henry Fayol are generally regarded as the founders of scientific management. 18 i) F.W. Taylors scientific management theory He is known as the founder of scientific management as he was the first to recognize and advocate the need for adopting a scientific approach for managing any business enterprise. He studied the causes of low efficiency in industry and he observed and came to the conclusion that waste and inefficiency are due to the absence of order and system in the management of the business. He noticed that the quota system was absent and the best methods of doing the jobs. He, therefore, advocated that the managers should make use of the ‘scientific method’ for achieving higher efficiency. The scientific method should consist of the following aspects of management. 1) Management is based on a scientific approach and not rules of thumb. 2) Cordial relations among workers and management 3) Understanding and co-operation between the management and the workers. 4) Emphasis on improving efficiency and productivity by division of work & specialization. 5) Imparting training to workers to achieve their development. 6) Planning the work 7) Using the best tools, equipments & machinery 8) Time, motion & fatigue study. 9) Differential wage system 10) Use of scientific selection of workers. 11) Providing proper working conditions to achieve standard performance such as ventilation, safety measures, etc. 12) Profit-sharing among the workers. The following are the benefits of scientific management advocated by F.W. Taylor: 1) Wider scope for specialization 2) Emphasis on planning the work 3) Use of standardized methods 4) Higher efficiency & productivity 5) Better quality of output. 6) Lower costs, minimum wastage of materials, time, and energy 7) Cordial relations between management and workers. However, there are certain arguments against the use of scientific management which can be given as follows - 19 1) Due to specialization and division of work, the workers can face the monotony of work. 2) No scope for workers’ initiative, innovativeness, and creativity. 3) Reduction of employment opportunities. 4) Lesser importance to trade unions as important issues of wages and working conditions are decided by the management. 5) The exploitation of workers. 6) Need for heavy investment in business 7) Unsuitable for small scale firms ii) Henry Fayol’s principles of management Henry Fayol is considered the father of the modern theory of general and industrial management. The following are the principles of management advocated by Henry Fayol: 1) Division of work or specialization - Division of work or specialization can improve overall efficiency and productivity because it makes a worker specialized to carry out a particular activity. 2) Authority and responsibility - Authority and responsibility are the two sides of the same coin. If any person is assigned a responsibility to complete a particular job, he also should be given the necessary authority to help him to perform the job. 3) Discipline - Every employee should follow rules, regulations, policies, and procedures. There must be penalties/punishment for non- obedience or indiscipline. Any organization cannot function smoothly without discipline. 4) Unity of Command - Every employee of an organization should receive orders and instructions only from one superior to avoid confusion and conflicts. 5) Unity of direction - Every employee should work in one direction only and that is to achieve organizational objectives. 6) Subordination of Personal interest - Organisation’s interest is supreme. Personal interest can be fulfilled only if the organization’s interest is achieved. 7) Remuneration - Workers work in an organization for getting remuneration. Fair pay with non-financial incentives can motivate workers for better performance. 8) Centralization - There must be a good balance between centralization and decentralization of authority. Over or under centralization should be avoided. 20 9) Scalar chain - Organisation structure consists of steps / a chain or hierarchy of levels of management from the top to the bottom. All members of the organization are linked to each other with the scalar chain. 10) Order - Every activity in an organization should be performed with order and system. There has to be a standard procedure for performing routine activities. 11) Equity - An organization should treat all the parties connected to it in a fair or just manner. 12) Stability of Tenure - Every employee in an organization should be given security and stability of job within a certain period. 13) Spirit of Co-operation - An organization works better when there is cooperation or team spirit among the employees. 14) Initiative - Managers should encourage their subordinates to take initiative and develop innovativeness while performing the job. Thus the functions of management involving planning, organizing, directing, coordination, and controlling are based on the principles of management advocated by Henry Fayol. iii) Bureaucratic model – It was developed by Max Weber. It is a rigid model of an organization involving rules, regulations, the hierarchy of authority, work procedures, division of labour, and so on. The human element is absent in this model. It is suitable where change is not anticipated or where the rate of change can be predicted. It is followed particularly in government organizations. C. Neo-classical Theory or Human Relations / Behavioural Approach This theory is an extension of classical theory. The classical theory focused on the job and improving efficiency and productivity whereas this theory gives importance to individual and group relationships in the workplace. It is interdisciplinary in approach and involves the study of sociology and psychology to understand the individual and group behaviour of the workers. Elton Mayo’s Hawthorne experiments In 1927, Elton Mayo and a group of researchers of the Harvard Business School were given a project to study the Hawthorne Plant of Western Electric Company at Chicago. They believed that behavioral science played an important role in the management of the business organization. In this experiment, the researchers tried to find out the relation between output and sufficient light, physical conditions length of 21 the working day, rest hours, workers’ attitudes towards work, working conditions, and supervision and group behavior. It was observed that the efficiency and productivity of employees depend more on employee’s job satisfaction than the physical conditions of the work. The important features of the Hawthorne Experiment are – 1) A business organization is a socio-economic system. 2) An employee is a human being and his behavior is influenced by his emotions, feelings, and attitudes. An employee has to be motivated by using both monetary and non-monetary incentives. 3) Management should co-operate with workers. 4) Productivity is the effect of employee satisfaction in any business organization. 5) While managing business, management should make use of sociology and psychology to understand individual and group behaviour. 6) Management should have communication skills to get employee participation. 7) Developing high morale is very important to achieve organizational goals. 1.10 MODERN MANAGEMENT APPROACH 1.10.1 Meaning / Concept The modern theory considers any business as a socio-economic organization. According to this theory, any business organization operates under the influence of various environmental factors such as social, political, economic, technological, and so on and it has to adjust itself as per the changes taking place in environmental factors/forces. The modern theory is called Systems approach because any organization is a set of interconnected and interrelated elements or components to achieve certain goals. Any organization is coordinated efforts of shareholders, creditors, suppliers, management, employees, customers, society, and so on. So it requires considering the interests of all these groups while achieving organizational objectives/goals. 1.10.2 Peter Drucker’s Dimensions of Management : Peter Drucker is known as the father of Modern Management. He has developed leadership terms and strategies that are still used today. In his book, ‘The Principles of Management, he has defined management as it is a multi-purpose organ that manages the business and manages managers and manages workers and work. Peter Drucker’s management theory includes many modern concepts which can be given as follows - 22 1) Decentralization - Managers should decentralize their authority and responsibilities among their subordinates. It helps in creating a sense of responsibility and belongingness among the employees. However, if the decision is related to key areas of the business operations that is involving more funds and affecting the goodwill and reputation of the organization, then it is generally taken at a higher level of the management. 2) Knowledge work - Knowledge workers do jobs requiring handling or using information, such as engineers or analysts. According to P.F. Drucker, “The workers who solve problems and work creatively are valuable. 3) Management by objectives - Peter Drucker developed the concept of ‘Management - by Objectives. It is a process in which goals & objectives are set, employees are encouraged to work together to achieve the targets, their performance is evaluated and employees are rewarded as per their performance. While setting objectives, care has to be taken to see that they are specific, measurable, achievable, relevant, and time-bound. He advocated that management should give topmost priority to business ethics and morals while managing business activities. 1.10.3 Indian Ethos in Management Indian Ethos in management refers to the values and practices that the culture of India can contribute to service, leadership, and management. These values and practices are rooted in Sanathana Dharma (the eternal essence) and have been influenced by various strands of Indian philosophy. Work values that can be derived from the culture of India are: 1. Paropakaartham Idam Shareeram - The body is meant for serving others or for the higher common good, 2. Atmano mokshartham Jagat Hitayacha - Endeavors should be made considering the well-being of the world too while considering the spiritual well-being of oneself. 3. Trikaranasuddhi - To consider work as a means to grow oneself in ‘Purity and Unity’ of Thought, Word, and Deed. 4. Yognaya Charatha Karma - To engage in work as a sacred offering. Various texts of India are useful for deriving aspects related to management - theory and practice such as Autobiography of a Yogi, Thirukkural, Vedas, Upanishads, Manusmiriti, Arthashastra, Mahabharatha, Ramayana, and Bhagavad Gita As per Indian ethos, Indians believe in accommodative attitude, self-control, fulfillment of duties, advancement in spirituality, team achievement, protection of the surrounding environment, respect of elderly, and the belief in trust. 23 Indian Ethos in management can be applied for undertaking business activities fairly and equitably. The management can follow ethical principles in carrying out various business functions such as production, marketing, finance, and also Human Resources Management. It guides the management to put in their best efforts for the organization without having any selfish interest. It emphasizes giving due respect to everyone associated with the organization and performing duties to the best of one’s abilities, Indian ethos places emphasis on a positive attitude and having good thoughts and actions. It strongly believes that good thoughts lead to good feelings, emotions, and attitude which ultimately results in good actions and good actions bring success to the organization. It teaches us to perform duties towards society’s well-being. It helps the organization to undertake activities for achieving socio-economic objectives. Significance of Indian ethos in Management: 1. Creates strong relation: Organizations following Indian ethos consider humanity as supreme. This provides a strong bond with internal as well as external customers, resulting in an improved performance. 2. Inward considerations: Indian ethos focuses on ‘if a person is good then the whole world is good’. Any organization which follows the above ethical thought automatically get converted into an ethical organization with less conflicts and hindrances. 3. Avoids unethical aspects: As Indian ethos is a principle derived from Upanishads, Bhagwat Gita and Puranas, where the performance is always ethical. 4. Balanced values: Indian ethos promotes a person to live a life of materialism and spirituality by maintaining a balance between spiritual values and secular values. 5. Improves performance: Indian ethos impacts the performance of business by emphasising on the concept like sacrificing individual desires in favour of social benefits, preferring long-term benefits. 6. Improves quality: Self-motivation and self-development helps a lot in development of business and its quality. 7. Management Attitude: Top management having firm belief in value-oriented holistic management. Profit is earned through service and satisfaction of all 24 stakeholders – employees, customers, shareholders and citizens. Fulfillment of social responsibility must be ensured. 8. Welfare: Indian ethos teaches welfare of all (yagna spirit). “Atmano Mokharth Jagat Hitay Cha” (serve your personal interest but do not forget others). This philosophy is needed in modern times. 9. Unique Work Culture: Indian ethos helps in development of unique work culture. Work is considered as duty or Sadhana and there is no difference between Karma(work) and Dharma(religion). The term Dharma does not indicate any particular religion. Dharma is a duty to be performed in a given situation. Thus, Dharma is possible through Karma only. 1.11 SUMMARY After the above discussion is summarized as Management means doing various activities it is a continuous process having the features like continuous activity dealing with people, goal-oriented activity, system activity, it is innovative, activity having different operation levels, dynamic, universal and having professional and multi-disciplinary approach. A business cannot survive without management because management is its means of support. Management is concerned with maximum prosperity with minimum efforts. Management is essential wherever group efforts are required to be directed towards achievements of common goals. Henry Fayol’s fourteen principles of management have been a significant influence on modern management theory which are as follows: -Division of work, Authority, and responsibility, Discipline, Unity of command, Unity of Direction, Subordination of Individual to General Interest, Remuneration, Centralisation, Scalar chain, Order, Equity, Stability of Tenure, Initiative, Esprit de corps. Planning, Organizing, Staffing, Directing, Coordinating, Reporting, and Budgeting are the main functions of management. Due to globalization, increased competition, growing demands of the customers, and innovations in technology various new horizons are entered into the management process. Management information system, or MIS, broadly refers to a computer-based system that provides managers with the tools to organize evaluate, and efficiently manage departments within an organization. To provide past, present, and prediction information, a Management Information System can include software that helps in decision making, data resources such as databases, the hardware resources of a 25 system, decision support systems, people management, and project management applications, and any computerized processes that enable the department to run efficiently. Management by exception is the practice of examining the financial and operational results of a business and only bringing issues to the attention of management if results represent substantial differences from the budgeted or expected amount. The purpose of the management by exception concept is to only bother management with the most important variances from the planned direction or results of the business. 1.12 QUESTIONS 1.12.1 Multiple Choice Questions 1. Management is the _____________ of getting things done through people a) Art b) Science c) Commerce e) Technique 2. Management is a ___________ Process a) Continuous b) Temporary c) Permanent e) Slow 3. ___________means dividing the total work into small divisions a department under the departmental head a manager a) Division of Work b) Division of Time c) Division of Company d) Division of Money 4. As per ______________ Principle of Management the employees should work as per the Rules and Regulations of the organisation a) Scalar Chain b) Authority & Responisibility c) Discpline d) Direction 5. Principle of Espirit de Corps means ___________ a) Company’s Unity b) Team Spirit c) Employer’s Spirit d) Strength. 6. ___________ Is the primary function of Management a) Staffing b) Directing c) Controlling d) Planning 7. ____________ ia a decision making process a) Staffing b) Directing c) Controlling d) Planning 8. “Right Man for the Right Job” is the Principle of __________ a) Staffing b) Directing c) Controlling d) Planning 9. __________means integrating all the activities of an organization a) Staffing b) Directing c) Coordinating d) Planning 10. ____________ is a factor responsible for use of new horizons in management and business. a) Customer Expectations b) Government Policies c) Technological Develpment d) Competition 26 11. ___________ skills is known as interpersonal skills a) Human Skills b) Administrative Skills c) Conceptual Skills d) Leadership Skills 12. ___________ is the ability to understand the concepts a) Administrative Skills b) Conceptual Skills c) Human Skills d) Leadership Skills 13. ____________ is called as the father of Modern Management a) Peter F. Drucker b) Henry Fayol c) F.W.Taylor d) None of the above 14. ____________ is called as the father of Scientific Management a) Peter F. Drucker b) Henry Fayol c) F.W.Taylor d) None of the above 15. _______________ Principle states that Every employee should work in one direction only a) Scalar Chain b) Authority & Responisibility c) Unity of Direction d) Direction 16. ____________refers to the values and practices that the culture of India can contribute to service, leadership, and management. a) Indian Ethos b) US Ethos c) Chinese Ethos d) None 17. ________is a management style that where managers only intervene when employees fail to meet their standards of performance a) Autocratic b) bureaucratic c) Management by Exception d) None 1.12.2 Theory Questions 1. Define Management. Explain the features/nature of Management. 2. Discuss the functions of management. 3. Explain the stages in the evolution of Management Thought. 4. What are the factors responsible for the New Horizons of management? 5. Write short notes: a. Importance of Management b. Management by Exception c. Management Skills d. Indian Ethos in management e. Elton Mayo’s Hawthorne experiments f. F.W. Taylors scientific management theory g. Peter Drucker’s Dimensions of Management h. Henry Fayol’s principles of management 27 2 PLANNING Unit Structure 2.0 Objectives 2.1 Introduction 2.2 Meaning and Definitions 2.3 Nature or Features of Planning 2.4 Importance of Planning 2.5 Steps in Planning Process 2.6 Components of Planning 2.7 Co-Ordination 2.8 Management by Objectives (MBO) 2.9 Management Information System (MIS) 2.10 Management by Exception 2.11 Summary 2.12 Questions 2.0 OBJECTIVES After studying the unit, the students will be able to: To understand the features of Planning To know planning and its importance To do the planning perfectly To understand the procedure for MBO and its advantage To Give suggestions for effective MBO 2.1 INTRODUCTION The concept of planning is as old as history and hasbecome very common in today’s life. It is essential in every walk of life. It is not only important in human beings life but also business units life. Its importance has grain up since the systematic study of management hasbeen undertaken by the business. It is the most important aspect of every activity to complete it accurately and in an expert manner. 2.2 MEANING & DEFINITIONS Meaning: Planning is deciding in advance what is to be done. It is the determination of a course and action for achieving the desired result. It is 28 to look ahead and chart out the future course of action. This is undertaken to identify the alternatives and select the best alternatives from the available ones. It is also known as a blueprint of our actions. It is an intellectual process wherein the planner goes through certain steps and then comes to a perfect conclusion. That is what he's planning. As per Fayol’s opinion, it is action at once and at sometime the result envisaged. It is the future picture wherein proximate events are outlined with certain distinctness. Therefore, to plan one needs imagination foresight and sound judgment planning involves problem-solving and decision making. Planning is the first function of management without planning no business unit can survive, stare or progress and itspassion will be like a blind person who is searching for something in the dark. Here planning helps management to set the objectives, decides how to achieve them, and guide it to what exactly it has to accomplish and how best to go about it. In short, we can conclude that planning is nothing but deciding in advance what to do how to do when to do were to do with whom to do, what will be the cost of it, etc. in another word answering all W and H questions related to the business activity for its successful completion is known as planning. Definitions of planning: 1) “Planning is the process of setting goals and establishing methods or paths reaching them” Gray and Smeltzer. 2) “Planning is the selecting and relating of acts and the making and using of assumptions regarding the future in the visualization and formulation of proposed activities believed necessary to achieved desired results”. “George R Terry. 3) “Planning is deciding in the present what to do in the future. It is the process whereby companies reconcile their resources with their objectives and opportunities” Philip Kotler. 2.3 NATURE / FEATURES OF PLANNING 1. Planning is a process: It is not a single activity; or one-shot function. To perform, it needs lots of things that means it involves so many sub-activities with which it gets completed. 2. It is result-oriented: Planning has no meaning if there is no gain or result without result it becomes mental exercise. 3. It is an intellectual process: Because the quality of planning will be decided as well as it varies, according to the planner's caliber or intellectual capacity. 29 4. Continuous: Planning should be continuous. It should continuously collect, evaluate, and select data for scientific investigation and analysis of the possible alternative course of action. 5. Planning is all-pervasive: It is the prime function of management. It is concerned with all functions of management without a plan no management function is performed by any level of management. So it is all-pervasive 6. It aims at co-ordination: Because of planning all management functions are co-ordinate and executed properly. 7. The elasticity of in planning: The planning should be flexible. It should be changed as per the situation demands. If it is not, then that plan never became a success. 8. Planning directs efficiency economy and accuracy: A good plan always gives these three things with this a planner reconciles all company's research well, and it will be easy to complete the good. 2.4 IMPORTANCE OF PLANNING Planning is a systematic and orderly approach to management. It is a basic function of management; it has wide significance in management. This will be explained with the help of the following points 1. Planning is a primary function: It is the primary function and management. Without planning there will be nothing to organize, direct, coordinate, and control. All these functions are interrelated and independents so to have a smooth function of all these is a need of planning. 2. Pervasive: Planning is all-pervasive, it means it touches considers to all aspect of the business. It is necessary at all levels of management,The only difference between top-level management planning function lower-level management planning function is that the earlier one is strategic planning in native and later are is operational planning. 3. Planning is an intellectual process: Planning is an intellectual process of decision-making. It involves thinking capacity, foresight, and vision for that one needs brain capacity. Planning cannot be done on the balls of guess or it, not a work of common people those who are lacking vision forecasting, no thinking capacity. 30 4. It is realistic and objectives oriented: Planning is realistic it means it is based on facts & figures. If we put proper inputs then the result is ought to be planning is always directed at a particular object If the objectives are attained then it will call planning otherwise it is not planning. 5. Planning raises accuracy, economy, and efficiency: With the plan, a business can do an activity better, systematically and with low detects. As it has been planned activity, all sub-activities are in a particular order & sequences, therefore low wastages are incurred. Its benefits are there is increased efficiency and low cost of operation. 6. Planning is the link between past-present-future: While preparing a plan, the planner at first use to consider the post records its consequences, then he thinks about the present position of the planning activity, and how it would be in the future, in what way it will be considered in the future are assured and accordingly planned. Therefore, with the consideration of these the planning becomes perfect. To make a plan very successful &beneficial to the organization planner should keep certain things in his mind while preparing the plan. These things are known as the essentials of a good plan. Essentials of a good plan I Simplicity ii Clear objectives iii Suitability iv Flexibility v Continuity vi Unity of purpose & direction vii Realistic and acceptable 2.5 STEPS IN PLANNING PROCESS Planning may be done at the corporate level or departmental level. It may be short-term as well as long-term. Whatever may be the nature of planning, it involves the following steps. 1. Analysis of external environment: The manager must carefully analyze the external environment as these environmental uses one not controllable. He has to see factors of external environment like social, economical, and political nature of competition exists in the region or country and accordingly prepare a plan, policies or programs as per the need of The business unit. 2. Analysis of internal environment: Internal environment factors are residing within the business and are controllable. Here manager needs to adjust them as per plans policies programming and accordingly go for planning. Generally, internal 31 environmental factors consist of men, machines materials, fiancé, methods of production know-how,etc 3. Establishing objectives: After having analyzed the internal and external environmental forces, the planner needs to set objectives for the entire enterprise, and every department's objectives are the endpoints, which shows what is to be achieved. These objectives are at the root of the planning process course of action and shape the future policies while planning objectives are to be set in multiple objectives in different areas of the business. 4. Determining the planning premises (forecasting): Planning premises are nothing but assumptions and predictions about the business situation. These premises supply relevant facts, information, or data to businesses based on business use to lay down the specific course of action. Forecasting is an assessment of the future. It is a systematic attempt to know probable events to provide against the future it works in relation to the activities and working of an enterprise. There are three types of premises do exist in business i) Controllable premises ii) Sem-controllable premises iii) Uncontrollable premises 5. Determining alternatives plans: Here the planner must prepare and keep ready alternative plans, which are suitable for business under different situations. And the best one is to be used for actual execution. The preparation of an alternative plan is essential as one plan is not sufficient or adequate for business under different conditions. Therefore business units prepare certain plans. Generally, the preparation of alternative plans is subject to the availability and collection of data i.e. primary and secondary data. It data is enough and good related to a different business situation. Then more alternatives plans can be prepared. 6. Evaluating alternative plans: After seeking out alternative courses and examining. Their strong and weak point, the next step is to weigh them in light of premises and goals. One alternative plan may appear to be most suitable and profitable but at the same time, it may require home amounts of funds. Another one may require low funds but not profitable and may have risk. Here proper evolution is to be done and then suitable plans need to be accepted. 7. Selecting the best plan: It is the real point of decision-making. Once the evaluation is over the best & fittest plan is to be selective. It is to be done in The light of objectives and planning premises. 32 8. Preparing derivative plans: Derivative plans are related to different department plans and are supporting to main plan of the business. It is important to easy execution of the whole plan 9. Formulating the plans: For the implementation of plans, managers have to perform managerial functions, like organizing, directing, and controlling. Proper duties & responsibilities are to be assigned to employees with proper communication & explanation of the plan. then the manager has to after follow-up. It gives a periodical review of the execution process. It also helps to understand actual progress and deficiencies in the process of execution of the plan. this also helps to adopt suitable remedial measures as & when required. 2.6 COMPONENTS OF PLANNING In the planning process, several plans are prepared. These plans are arranged in a hierarchy within the organization. These are known as elements or components of planning and are classified into two board categories. Components of plan 1. Standing plans 2. Single-use-plans a) Mission a) Programmes b) Objectives b) budgets c) Policies c) schedules d) Procedures d) projects e) Rules e) standards f) Strategies g) Forecasting 1. Standing Plans or Repeated-use plans: Standing plan is also known as one time plans once it is prepared then it will be used by business in future as & when it required. They are used over a long period, therefore, it is known as long term plans. Components of standing plans are: a) Mission: The mission is the basic or fundamental reason for the existence of an organization. Every business must havea definite mission to undertake and make the organization meaningful. Mission also points out the beliefs and philosophy of the management. It gives a long-run commitment to the organization. 33 b) Objectives / goals: Objectives are the end points of not only planning but also all functions of management. It provides a basic foundation to build-up plans. They help in achieving consistency in decision-making in the long run. They help in measuring the efficiency of the individuals working in the enterprise. They prevent the people from deviating from the positions they have set for them. c) Policies: The policy is verbal written or implied statements, which are followed as a guide to action by managers and employees of an organization policies guide managers and provide stability to an organization. They are like well-prepared solutions to identical problems. Policies are intended to pre-decide the issue, avoid repeated analysis and give a unified structure to other types of plans. Policies define and delimit the area within which the subordinate managerial personnel can take a decision, permitting them to exercise their judgment and initiative. d) Procedures: Procedures indicate the specific manner to handle a situation. It is closely related to policies and useful for systematically conducting activities. It avoids the burden on lower staff as it lay down a standard path to be followed to action rather than thinking. They detail the exact manner in which a certain activity must be accomplished its essence is chronological action required. e) Rules: It is the simplest and most specific type of standing plan. It guides what may or may not be done. A rule demands a specific action. It is more rigid than policy rules which are on the administrative area of a procedure. Rules demand strict compliance. F) Strategies: The term strategy is used in military science and is an art of a military General leading on army strategy means a plan based on the anticipated moves of the opponent. Incorporate, strategy means the preparation of a comprehensive plan, which will enable the company to meet any type of situation effectively. Here competitors' plans are used as a background for the preparation of a strategy. The strategy is necessary as future events in business are unpredictable strategies will help management to win the race in the competitive market. g) Forecasting A forecast is a prediction. It is the estimate of probable events. Fore casting does not involve decision-making but helps in decision- making by providing tips about what is likely to happen in the future. In 34 short, forecasting is a systematic attempt to investigate the by inference from known facts. 2. Single- Use-Plans (Non- repetitive plans): As its title suggests that it is prepared for a single activity. Once the activity gets over plan becomes null & void. It cannot use for other activities. Therefore there are formulated to meet unique, novel, and non- repetitive situations. a) Programs: A program is a sequence of activities designed to implement policies and accomplish objectives. The programs may be minor. Generally, programs are a complex of goals, policies, procedures rules, steps to be taken resources to be employed, and other necessary elements to carry out a given course of action. Programs are supported by budgets. b) Budget: A budget is an estimation of expected income and expenditure. It may be for cash, revenue, or capital expenditure. The budget provides a standard to the activity by setting a standard and in any variation. Then it will be checked. Therefore it is also known as a planning instrument and controllable device. c) Schedule: A schedule is a timetable of work. It is a process of establishing the sequence of work to be done schedule prescribes the exact time require by an activity to complete and start it. Scheduling helps to honor the delivery of goods. It helps to maintain inventory too. d) Projects: It is a scheme for investing resources. It can be evaluation an independent unit. It is a workplan established through scientific investigation and analysis. e) Standards: Standard is a criterion against which a program is compared and evaluated. It is a guide for performance evaluation. A company may set up a variety of standards expressing the anticipated results of the plans. There are two types of standards known as i) Qualitative standards ii) Quantitative standards. 2.7 CO-ORDINATION 2.7.1 Meaning Co-ordination means integrating or being together with all the activities of an organization. It is done for achieving the goals of an organization. There must be proper coordination throughout the organization. The functions of management i.e. planning, organizing, 35 directing, controlling, staffing need to be coordinated to achieve organizational objectives. Also, different levels of management and employees of the organization are required to coordinate. 2.7.2 Importance of Coordination The need and importance of co-ordination can be given with the help of following points. 1. It helps in developing team spirit It encourages employees to work as a team by improving communication and cordial relations among them. 2. It gives proper direction Co-ordination brings together various activities of the organization for achieving the common goals or objectives of the organization. So it acts as a direction to all the departments of the organization. 3. It leads to motivating employees By improving interpersonal relations, it leads to motivating employees through various monetary and non-monetary incentives. 4. It facilitates optimum utilization of resources: Proper coordination helps in optimum utilization of resources such as machinery, materials, money, manpower, and management by avoiding wastages of all types. 5. It leads to the achievement of organizational objectives: Co-ordination helps to achieve cordial relations among employees of the organization and thereby it facilitates the smooth working of the organization. So it leads to the achievement of organizational objectives. 6. It can develop good relations in the organization: Coordination among different activities/functions of the organization can be achieved by effective communication among employees of the organization and it helps to develop team spirit and cordial relations among employees. 7. It leads to higher efficiency As coordination helps in optimum utilization of resources, it leads to higher efficiency by reducing costs, labour, and time involved in doing the jobs in the organization. 36 8. Co-ordination improves goodwill of the organization: Co-ordination helps the organization to sell good quality products at reasonable prices and also to provide efficient after-sales service and thereby it leads to improving the goodwill and reputation of the organization. Check Your Progress 1. “Planning is a basic function of management having wide significance”. Explain. 2. Define the following terms: a) Planning b) Standing plans c) Single-use plan d) Mission e) Policies f) Strategies g) Schedule h) Standards 3. Enlist the features of Planning. 4. What are the steps in the planning process? 5. What is the importance of Coordination 2.8 MANAGEMENT BY OBJECTIEVES ( MBO ) 2.8.1 CONCEPT OF MBO: Management by Objective term is developed by Peter Drucker in the year 1954 in the “The practice of management”. The concept of MBO is very closely connected with planning. It is a dynamic system of management. Its core meaning is working together, with each other’s involvement, and attaining The pre-decided goal by superior and subordinate. This type of work is needed to integrate The individuals’ needs and organizational needs. MBO insists to the manager to be very clear about his objectives before he starts a task Ifhe is not sure about The task to be attained, Then there would not success of MBO. Its process starts from Top level management and is passed on to the middle and down level of management. In the short whole idea of MBO is based on the assumptions that collaboratively set objectives to elicit subordinates commitment, which leads to improved or increased performance. In other words, it is the 37 establishment of goals by managers and their subordinates and assigning authority for achieving the goals with constant performance monitoring Definitions: 1. MBO is regarded “As a s ystem for improving performance both the individual managers and enterprises as a whole by the setting of objectives at the corporate, department and individual manager’s level. Peter ducker. 2. “MBO is a result-centered, non-specialist, operational managerial process for the effective utilization of material, physical and human resources of the organization by integrating the individual with the organization and the organization with the environment.” Prof. S. K. Chakravarty. 2.8.2 STEPS IN MBO / PROCESS OF MBO: MBO is a process that consists of certain steps which are as follows. 1. Setting of organizational goal: In the process of MBO, the first step is to set up the organizational goals which need to be verifiable; this is generally decided by top management with the consultation of other managers. The goals should be set up in “Key-Result areas” (KRA) in a clearly defined manner and it should be made known to each & every member those who one involved in the process. Here the term “Key-Result-Area” means which are considered critical to the firm’s long-term success. These areas also affect business survival & growth too. For example, reducing wastages of raw material by certain percentages (say 4%) leads to its survival, or increasing production by certain % age. Generally, key areas are included profitability, market standing, productivity Financial & physical resources, manager’s & worker’s performances, and innovations research & development. 2. Matching goals & resources: Management should think of the resources available and the goals to be accomplished and according to the allocation of resources is to be made. For example, if the goal has been set in the production area then, the resources like raw material, should be of quality and inadequate quality, here management’s responsibility is to see whether this is available with the organization then set goals. In some way, it should happen with tools equipments, and machinery. 3. Manager – subordinate involvement: The success of MBO is depended upon the involvement of managers and subordinates in the chosen task. They both are loyal toward their authority and responsibility. The task will complete without any hurdles. 4. Developing action plan: After objectives are set, action plans must be developed. Action plans focus on the methods or activities required or necessary to reach 38 objectives. In other words, it suggests that how, when, What, Where, and with whom the task is to be complete. It also focuses on production planning and control. 5. Establishing check-up plains/standards ofperformance: In the process of MBO, periodic meetings between managers and subordinates are required to review the progress for accomplishing the organization's goal. In this case superior uses to establish certain paints to check the subordinate’s performance These paints are defined quantitatively. 6. Implementation of the plan: After developing an action plan and establishing check-up points, the task is to undertake or start implementing while working on whenever subordinate felt/faces difficulties, they can seek guidance or clarification on particular points from the superior. 7. Periodic Review of progress: The superior must make a periodic review of the progress in achieving subordinate’s objectives and as & when needed to guide them so that the whole work can move smoothly & smoothly. 8. Feedback: Feedback is last but not least important stage in MBO. Here superior gives comments on subordinates' performance based on their evaluation. Sometimes the superior use to make changes in the MBO program with the consultation of top management. 2.8.3 ADVANTAGES OF MBO: MBO’s core concept is to together, Share responsibility and accomplish the organizational goal. It is also known as management by task. While implementing it in the organization gives benefits to the organization, and employees. This will be made clear with the help of the following points. 1. Participation and collaboration: In MBO, The departmental objectives are consistent with organizational objectives. Here every participant by clarifying, his role and responsibility, and knowing his contribution needed by the business, participate and involved in the process. There is no need for that superior to keep on insisting the employee do the work. That is way is beneficial of organization. 2. Better management of Resources: MBO is important as in MBO resources are put in such a way that they give food results. 3. MBO is a result-oriental approach: It is important because practically it results oriental. It does not favor management by crisis. Here individual and common goals are developed and executed well. 39 4. Definite and clear goals: In MBO, the goals are clearly defined and they are veritable and measurable. General they focus on problematic areas. 5. Higher productivity: MBO leads to higher productivity because it always concentrates on the important task of increasing productivity, decreasing costs, and minimizing waste. 6. Personal leadership: MBO is important because in this process the individual leadership is developing to a large extent. Every individual has been given the freedom to think express and work. Here conceptual skill is also developed among the subordinates. 7. Efficient Communication: In the process of MBO frequent interaction between superiors and subordinates workplace, leads to mutual faith and understanding between them. 8. Performance appraisal: MBO provides objectives yardsticks for the evaluation of performance. Also, superiors use to have a periodic review of subordinates' performance. This enables the subordinate to know how well they are doing. 2.9 MANAGEMENT INFORMATION SYSTEM ( MIS ) 2.9.1Meaning: Information is the lifeblood of an enterprise. The information can be defined as the knowledge communicated by others or obtain from investigation or study. The senior firms need to have up-to-date knowledge about customers, dealers, suppliers, investors, and other as well as should have updated information about political, economic, social, technological, and legal changes. This information is required to take timely decisions. The flow of information is made regular by an information system, commonly known as a management information system (MIS). Kennevans defines MIS as “An enterprise method of providing, past, present and projected information relating to internal operations and external intelligence. H. Weihrich and H. Koontz define MIS as a formal system of gathering, integrating, comparing, and entrails and dispersing information internal and external to the enterprise in a timely effective, and efficient manner. 40 Thus MIS can be defined as the system providing needed information to each manager at the right time, in the right form and relevant form one which aids his understanding and stimulates his action. 2.9.2Features: Some of the features of MIS are as under- 1. Systematic process: MIS involves a systematic process of gathering, integrating comparing, and centralizing information for effective decision making. It is a process of:- Data collection about interval. Classification of data into different categories. Integrating or combining data Comparing data Analyzing the data Transmitting the data 2. MIS is a continuous process. Management is an on-going process as the management starts at the formation of the company and ends when the company dissolves. Management starts with the setting up of objectives for the organization which is followed by planning for achieving those objectives. 3. Scope of MIS: - The scope of MIS includes: - Decision support system. Human Resource Management. Enterprise resource planning. Enterprise performance management. Supply chain management. Customer relationship management. Project management. Data retrieval applications. 4. Computer-Based System: MIS is a computer-based system. It uses computers for storing centralized and supply information. It also uses microfilms for storing information. 5. Unified and centralized system: MIS involves data collection processing storing and transmission. All these activities must be integrated into a unified system. The unified system must be managed in a 41centralized place. 41 6. Used by all levels: MIS is used by all three levels of management. i.e. top, middle, and lower. It is used for making business plans, policies, and strategies. It also helps to solve business-related problems and to take advantage of business opportunities. 7. Professional Approach: In MIS, data must be collected analyzed classified combined/compared, and transmitted to managers by well-educated, qualified, and trained staff. The managers and MIs staff must be well trained and are unable to take various decisions relating to production finance, marketing, and human resources. 8. Components of MIS: - It includes: - 1. Hardware. 2. Software. 3. Procedures (Rules or guidelines for the use of MIS). 4. Personnel (Expert people). 5. Data (Information for decision making). 9. MIS is future-oriented: It provides information for solving future problems. 10. MIS Helps in decision making: MIS supplies up-to-date and accurate information. It helps managers to take quick and right decisions. 2.9.3 ADVANTAGES OF MIS 1. Decision-making. 2. Identifies strengths and weaknesses. 3. Identification of opportunities and threats. 4. Facilitates planning and control. 5. Helps to recognize trends. 6. Integration of information. 7. Optimum use of resources. 8. Accomplis
