Management Science Past Paper PDF

STUDY MATERIAL OF MANAGEMENT SCIENCE  SRI INDU INISTITUTE OF ENGINEERING AND TECHNOLOGY II Year B.Tech. xxxx L T/P/D C 3 1/ - /- 3...

STUDY MATERIAL OF MANAGEMENT SCIENCE  SRI INDU INISTITUTE OF ENGINEERING AND TECHNOLOGY II Year B.Tech. xxxx L T/P/D C 3 1/ - /- 3 OPEN ELECTIVE - II (R15A0065) MANAGEMENT SCIENCE OBJECTIVES: 1. This course is intended to familiarize the students with the basic knowledge of Management related concepts, Organization structures, Control charts, Marketing management, Human resource management, Project management, Strategic management in order to achieve the positions of future leaders and managers. Unit-I Introduction to Management: Nature of Management, importance functions of Management, Systems approach to Management, Taylor’s scientific Management theory, Fayal’s principles of Management, Maslow’s need hierarchy theory, McGregor’s Theory X and Theory Y, Hertzberg Two Factor Theory of Motivation, Leadership Styles, Social responsibilities of Management. Unit-II Organization Structures, Control charts and Marketing Management: Line Organization structure, Line and Staff organization structure, Matrix organization structure, Team Organization structure, Control charts ( chart, R chart, C chart, P chart), EOQ, ABC analysis, Functions of Marketing, Marketing Mix, Marketing strategies based on PLC. Unit-III Human Resource Management: Importance of HRM, HRM Vs PMIR (Personnel Management and Industrial Relations), Functions of HR Manager: Man power planning, Recruitment, Selection, Training and Development, Wage and Salary administration, Performance Appraisal, Grievance handling and welfare administration, Job evaluation, and merit rating. Unit-IV Project Management(PERT and CPM): Network analysis, Program Evaluation and Review Technique(PERT), Critical Path Method (CPM), Identifying Critical path, Probability of completing the project within given time, Project cost analysis, Project crashing(simple problems). Unit-V Strategic Management: Vision, Mission, Goals, Objectives, Policy, Strategy, Programs, Corporate planning process, Environmental scanning, SWOT analysis, Steps in strategy formulation and implementation. TEXT BOOKS: 1. Harold Koontz, Heinz Weihrich, A.R.Aryasri, Principles of Management, TMH, 2010. 2. K. Aswathappa, “Human Resource Management, Text and Cases”, TMH, 2011. 3. Philip Kotler, Kevin Lane Keller, Abraham Koshy and Mithleshwar Jha: Marketing Management, 13/e, Pearson Education, 2012. 4. Dipak Kumar Bhattacharyya, Production and Operations Management, Universities Press, 2012. REFERENCES: 1. Dilip Kumar Battacharya, Principles of Management, Pearson, 2012. 2. Gary Dessler, “Human Resource Management”, 12 Edition, Pearson- 2012. 3. Rajan Saxena: Marketing Management, 4/e, TMH, 2013 4. Aryasri: Management Science, McGraw Hill, 2012 1. To know the basic management practices, functional areas of the organisation which helps the students to build up their career in the corporate world.  UNIT-1 INTRODUCTION TO MANAGEMENT Management is a universal phenomenon. It is a very popular and widely used term. All organizations - business, political, cultural or social are involved in management because it is the management which helps and directs the various efforts towards a definite purpose. Definition: “Management is knowing exactly what you want men to do and then seeing that they do it the best and cheapest ways”. F.W.Taylor “Management is an art of getting things done through and with the people in formally organized groups. It is an art of creating an environment in which people can perform and individuals and can co-operate towards attainment of group goals”. ___ Koontz and O‟Donell Nature of Management: The study and application of management techniques in managing the affairs of the organization have changed its nature over the period of time. Multidisciplinary: Management is basically multidisciplinary. This implies that, although management has been developed as a separate discipline, it draws knowledge and concepts from various disciplines. It draws freely ideas and concepts from such disciplines as psychology, sociology, anthropology, economics, ecology, statistics, operations research, etc. Management integrates the ideas and concepts taken from these disciplines and present newer concepts which can be put into practice for managing the organization. Dynamic nature of principle: Based on integration and supported by practical evidences, management h a s f o r m e d c e r t a i n principles. However, these principles are flexible in nature and change with the changes in the environment in which an organization exists. Relative, not absolute principles: Management principles are relative, not absolute, and they should be applied according to the need of the organization. Each organization may be different from others. The difference may exist because of time, place, socio-cultural factors, etc. Management - Science or Art: There is a controversy whether management is science or art. However, management is both a science and art. Management as profession: Management has been regarded as profession by many while many have suggested that it has not achieved the status of a profession. Characteristics of Management: Management is an activity concerned with guiding human and physical resources such that organizational goals can be achieved. Nature of management can be highlighted as: - 1. Management is Goal-Oriented: The success of any management activity is assessed by its achievement of the predetermined goals or objective. Management is a purposeful activity. It is a tool which helps use of human & physical resources to fulfill the pre- determined goals. For example, the goal of an enterprise is maximum consumer satisfaction by producing quality goods and at reasonable prices. This can be achieved by employing efficient persons and making better use of scarce resources.  2. Management integrates Human, Physical and Financial Resources: In an organization, human beings work with non-human resources like machines. Materials, financial assets, buildings etc. Management integrates human efforts to those resources. It brings harmony among the human, physical and financial resources. 3. Management is Continuous: Management is an ongoing process. It involves continuous handling of problems and issues. It is concerned with identifying the problem and taking appropriate steps to solve it. E.g. the target of a company is maximum production. For achieving this target various policies have to be framed but this is not the end. Marketing and Advertising is also to be done. For this policies have to be again framed. Hence this is an ongoing process. 4. Management is all Pervasive: Management is required in all types of organizations whether it is political, social, cultural or business because it helps and directs various efforts towards a definite purpose. Thus clubs, hospitals, political parties, colleges, hospitals, business firms all require management. When ever more than one person is engaged in working for a common goal, management is necessary. Whether it is a small business firm which may be engaged in trading or a large firm like Tata Iron & Steel, management is required everywhere irrespective of size or type of activity. 5. Management is a Group Activity: Management is very much less concerned with individual‟s efforts. It is more concerned with groups. It involves the use of group effort to achieve predetermined goal of management of ABC & Co. is good refers to a group of persons managing the enterprise. FUNCTIONS OF MANAGEMENT According to Henry Fayol, “To manage is to forecast and plan, to organize, to command, & to control”. Whereas Luther Gullick has given a keyword ‟POSDCORB‟ where P stands for Planning, O for Organizing, S for Staffing, D for Directing, Co for Co-ordination, R for reporting & B for Budgeting. But the most widely accepted are functions of management given by KOONTZ and O‟DONNEL i.e. Planning, Organizing, Staffing, Directing and Controlling.. 1. Planning It is the basic function of management. It deals with chalking out a future course of action & deciding in advance the most appropriate course of actions for achievement of pre- determined goals. According to KOONTZ, “Planning is deciding in advance - what to do, when to do & how to do. It bridges the gap from where we are & where we want to be”. A plan is a future course of actions. It is an exercise in problem solving & decision making. Planning is determination of courses of action to achieve desired goals. Thus, planning is a systematic thinking about ways & means for accomplishment of pre-determined goals. Planning is necessary to ensure proper utilization of human & non-human resources. It is all pervasive, it is an intellectual activity and it also helps in avoiding confusion, uncertainties, risks, wastages etc. 2. Organizing It is the process of bringing together physical, financial and human resources and developing productive relationship amongst them for achievement of organizational goals. According to Henry Fayol, “To organize a business is to provide it with everything useful or its functioning i.e. raw material, tools, capital and personnel‟s”. To organize a business involves determining & providing human and non-human resources to the organizational structure. Organizing as a process involves:  Identification of activities.  Classification of grouping of activities.  Assignment of duties.  Delegation of authority and creation of responsibility.   Coordinating authority and responsibility relationships. 3. Staffing It is the function of manning the organization structure and keeping it manned. Staffing has assumed greater importance in the recent years due to advancement of technology, increase in size of business, complexity of human behavior etc. The main purpose o staffing is to put right man on right job i.e. square pegs in square holes and round pegs in round holes. According to Kootz & O‟Donell, “Managerial function of staffing involves manning the organization structure through proper and effective selection, appraisal & development of personnel to fill the roles designed un the structure”. Staffing involves: Manpower Planning (estimating man power in terms of searching, choose the person and giving the right place).  Recruitment, Selection & Placement. Training & Development. Remuneration. Performance Appraisal.  Promotions & Transfer. 4. Directing It is that part of managerial function which actuates the organizational methods to work efficiently for achievement of organizational purposes. It is considered life-spark of the enterprise which sets it in motion the action of people because planning, organizing and staffing are the mere preparations for doing the work. Direction is that inert-personnel aspect of management which deals directly with influencing, guiding, supervising, motivating sub-ordinate for the achievement of organizational goals. Direction has following elements:  Supervision  Motivation  Leadership  Communication Supervision- implies overseeing the work of subordinates by their superiors. It is the act of watching & directing work & workers. Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to work. Positive, negative, monetary, non-monetary incentives may be used for this purpose. Leadership- may be defined as a process by which manager guides and influences the work of subordinates in desired direction. Communications- is the process of passing information, experience, opinion etc from one person to another. It is a bridge of understanding. 5. Controlling It implies measurement of accomplishment against the standards and correction of deviation if any to ensure achievement of organizational goals. The purpose of controlling is to ensure that everything occurs in conformities with the standards. An efficient system of control helps to predict deviations before they actually occur. According to Theo Haimann, “Controlling is the process of checking whether or not proper progress is being made towards the objectives and goals and acting if necessary, to correct any deviation”. According to Koontz & O‟Donell “Controlling is the measurement & correction of performance activities of subordinates in order to make sure that the enterprise objectives and plans desired to obtain them as being accomplished”. Therefore controlling has following steps: a) Establishment of standard performance. b) Measurement of actual performance. c) Comparison of actual performance with the standards and finding out deviation if any. d) Corrective action.  Levels of Management The term “Levels of Management‟ refers to a line of demarcation between various managerial positions in an organization. The number of levels in management increases when the size of the business and work force increases and vice versa. The level of management determines a chain of command, the amount of authority & status enjoyed by any managerial position. The levels of management can be classified in three broad categories: 1. Top level / Administrative level 2. Middle level / Executory 3. Low level / Supervisory / Operative / First-line managers Managers at all these levels perform different functions. The role of managers at all the three levels is discussed below: LEVELS OF MANAGEMENT 1. Top Level of Management It consists of board of directors, chief executive or managing director. The top management is the ultimate source of authority and it manages goals and policies for an enterprise. It devotes more time on planning and coordinating functions. The role of the top management can be summarized as follows - a. Top management lays down the objectives and broad policies of the enterprise. b. It issues necessary instructions for preparation of department budgets, procedures, schedules etc. c. It prepares strategic plans & policies for the enterprise. d. It appoints the executive for middle level i.e. departmental managers. e. It controls & coordinates the activities of all the departments. f. It is also responsible for maintaining a contact with the outside world. g. It provides guidance and direction. h. The top management is also responsible towards the shareholders for the performance of the enterprise. 2. Middle Level of Management The branch managers and departmental managers constitute middle level. They are responsible to the top management for the functioning of their department. They devote more time to organizational and directional functions. In small organization, there is only one layer of middle level of management but in big enterprises, there may be senior and junior middle level management. Their role can be emphasized as - a. They execute the plans of the organization in accordance with the policies and directives of the top management. b. They make plans for the sub-units of the organization. c. They participate in employment & training of lower level management. d. They interpret and explain policies from top level management to lower level. e. They are responsible for coordinating the activities within the division or department. f. It also sends important reports and other important data to top level management. g. They evaluate performance of junior managers. h. They are also responsible for inspiring lower level managers towards better performance. 3. Lower Level of Management Lower level is also known as supervisory / operative level of management. It consists of supervisors, foreman, section officers, superintendent etc. According to R.C. Davis, “Supervisory management refers to those executives whose work has to be largely with personal oversight and direction of operative employees”. In other words, they are concerned with direction and controlling function of management. Their activities include - a) Assigning of jobs and tasks to various workers. b) They guide and instruct workers for day to day activities. c) They are responsible for the quality as well as quantity of production. d) They are also entrusted with the responsibility of maintaining good relation in the organization. e) They communicate workers problems, suggestions, and recommendatory appeals etc to the higher level and higher level goals and objectives to the workers. f) They help to solve the grievances of the workers. g) They supervise & guide the sub-ordinates. h) They are responsible for providing training to the workers. i) They arrange necessary materials, machines, tools etc for getting the things done. j) They prepare periodical reports about the performance of the workers. k) They ensure discipline in the enterprise. l) They motivate workers. m) They are the image builders of the enterprise because they are in direct contact with the workers. Taylor’s Scientific Management: The utility of scientific methods to problems of management was first introduced by F.W.Taylor Definition: Scientific management may be defined as the “Art of knowing exactly what is to be done and the best way of doing it”. Scientific management is the result of applying scientific knowledge and scientific methods to the various aspects of management and the problems that arise from them. Principles of Scientific Management: Taylor through his principles of scientific management initiated a system in which there would be an effective and fruitful coordination and cooperation between the management and the workers. Reject fast practices Replace Thumb rules by guide lines Taylor‟s Scientific System improvement Management Collection data decision making Principles of Scientific Management 1. Development of Science for each part of men’s job (replacement of rule of thumb) a. This principle suggests that work assigned to any employee should be observed, analyzed with respect to each and every element and part and time involved in it. b. This means replacement of odd rule of thumb by the use of method of enquiry, investigation, data collection, analysis and framing of rules. c. Under scientific management, decisions are made on the basis of facts and by the application of scientific decisions. 2. Scientific Selection, Training & Development of Workers a. There should be scientifically designed procedure for the selection of workers. b. Physical, mental & other requirement should be specified for each and every job. c. Workers should be selected & trained to make them fit for the job. d. The management has to provide opportunities for development of workers having better capabilities. e. According to Taylor efforts should be made to develop each employee to his greatest level and efficiency & prosperity. 3. Co-operation between Management & workers or Harmony not discord a. Taylor believed in co-operation and not individualism. b. It is only through co-operation that the goals of the enterprise can be achieved efficiently. c. There should be no conflict between managers & workers. d. Taylor believed that interest of employer & employees should be fully harmonized so as to secure mutually understanding relations between them. 4. Division of Responsibility a. This principle determines the concrete nature of roles to be played by different level of managers & workers. b. The management should assume the responsibility of planning the work whereas workers should be concerned with execution of task. c. Thus planning is to be separated from execution. 5. Mental Revolution a. The workers and managers should have a complete change of outlook towards their mutual relation and work effort. b. It requires that management should create suitable working condition and solve all problems scientifically. c. Similarly workers should attend their jobs with utmost attention, devotion and carefulness. They should not waste the resources of enterprise. d. Handsome remuneration should be provided to workers to boost up their moral. e. It will create a sense of belongingness among worker. f. They will be disciplined, loyal and sincere in fulfilling the task assigned to them. g. There will be more production and economical growth at a faster rate. 6. Maximum Prosperity for Employer & Employees a. The aim of scientific management is to see maximum prosperity for employer and employees. b. It is important only when there is opportunity for each worker to attain his highest efficiency.  c. Maximum output & optimum utilization of resources will bring higher profits for the employer & better wages for the workers. d. There should be maximum output in place of restricted output. e. Both managers & workers should be paid handsomely. Principle of Management by Exception: Taylor suggested that only major or significant deviations between the actual performance and standard performance should be brought to the notice of top management. Top management should pay more attention to those areas of work where standards and procedures could not be established and where there is a significant variation between standard performance and actual performance. Administrative Management Theory (Henry Fayol and Others): Henry Fayol is called as father of Modern Management He established the pattern of management and the pyramidal form of organization. He pointed out that technical ability is more dominating on the lower level of management managerial ability is more important on the higher level of management. There are 14 Principles of Management described by Henry Fayol. 1. Division of work a. Henri Fayol has stressed on the specialization of jobs. b. He recommended that work of all kinds must be divided & subdivided and allotted to various persons according to their expertise in a particular area. c. Subdivision of work makes it simpler and results in efficiency. d. It also helps the individual in acquiring speed, accuracy in his performance. e. Specialization leads to efficiency & economy in spheres of business. 2. Authority & Responsibility a. Authority & responsibility are co-existing. b. If authority is given to a person, he should also be made responsible. c. In a same way, if anyone is made responsible for any job, he should also have concerned authority. d. Authority refers to the right of superiors to get exactness from their sub-ordinates whereas responsibility means obligation for the performance of the job assigned. e. There should be a balance between the two i.e. they must go hand in hand. f. Authority without responsibility leads to irresponsible behavior whereas responsibility without authority makes the person ineffective. 3. Discipline a. According to Fayol, “Discipline means sincerity, obedience, respect of authority & observance of rules and regulations of the enterprise”. b. This principle applies that subordinate should respect their superiors and obey their order. c. It is an important requisite for smooth running of the enterprise. d. Discipline is not only required on path of subordinates but also on the part of management. e. Discipline can be enforced if - - There are good superiors at all levels. - There are clear & fair agreements with workers. - Sanctions (punishments) are judiciously applied  4. Unity of Command a. A sub-ordinate should receive orders and be accountable to one and only one boss at a time. b. In other words, a sub-ordinate should not receive instructions from more than one person because - - It undermines authority - Weakens discipline - Divides loyalty - Creates confusion - Delays and chaos - Escaping responsibilities - Duplication of work - Overlapping of efforts c. Therefore, dual sub-ordination should be avoided unless and until it is absolutely essential. d. Unity of command provides the enterprise a disciplined, stable & orderly existence. e. It creates harmonious relationship between superiors and sub-ordinates. 5. Unity of Direction a) Fayol advocates one head one plan which means that there should be one plan for a group of activities having similar objectives. b) Related activities should be grouped together. There should be one plan of action for them and they should be under the charge of a particular manager. c) According to this principle, efforts of all the members of the organization should be directed towards common goal. d) Without unity of direction, unity of action cannot be achieved. e) In fact, unity of command is not possible without unity of direction. Basis Unity of command Unity of direction Meaning It implies that a sub-ordinate should receive orders It means one head, one plan for a group & instructions from only one boss. of activities having similar objectives. Nature It is related to the functioning of personnel’s. It is related to the functioning of departments or organization as a whole. Necessity It is necessary for fixing responsibility of each It is necessary for sound organization. subordinates. Advantage It avoids conflicts, confusion & chaos. It avoids duplication of efforts and wastage of resources. Result It leads to better superior sub-ordinate It leads to smooth running of the enterprise. relationship. Therefore it is obvious that they are different from each other but they are dependent on each other i.e. unity of direction is a pre-requisite for unity of command. But it does not automatically comes from the unity of direction. 6. Sub-Ordination of Individual Interest to General Interest a. An organization is much bigger than the individual it constitutes therefore interest of the undertaking should prevail in all circumstances. b. As far as possible, reconciliation should be achieved between individual and group interests. c. But in case of conflict, individual must sacrifice for bigger interests. d. In order to achieve this attitude, it is essential that - - Employees should be honest & sincere. - Proper & regular supervision of work. - Reconciliation of mutual differences and clashes by mutual agreement. For example, for change of location of plant, for change of profit sharing ratio, etc. 7. Remuneration a) The quantum and method of remuneration to be paid to the workers should be fair, reasonable, satisfactory & rewarding of the efforts. b) As far as possible it should accord satisfaction to both employer and the employees. c) Wages should be determined on the basis of cost of living, work assigned, financial position of the business, wage rate prevailing etc. d) Logical & appropriate wage rates and methods of their payment reduce tension & differences between workers & management creates harmonious relationship and pleasing atmosphere of work. Fayol also recommended provision of other benefits such as free education, medical & resident Equity a. Equity means combination of fairness, kindness & justice. b. The employees should be treated with kindness & equity if devotion is expected of them. c. It implies that managers should be fair and impartial while dealing with the subordinates. d. They should give similar treatment to people of similar position. e. They should not discriminate with respect to age, caste, sex, religion, relation etc. f. Equity is essential to create and maintain cordial relations between the managers and sub-ordinate. g. But equity does not mean total absence of harshness. h. Fayol was of opinion that, “at times force and harshness might become necessary for the sake of equity”.  8. Centralization & De-Centralization 1. Centralization means concentration of authority at the top level. In other words, centralization is a situation in which top management retains most of the decision making authority. 2. Decentralization means disposal of decision making authority to all the levels of the organization. In other words, sharing authority downwards is decentralization. 3. According to Fayol, “Degree of centralization or decentralization depends on no. of factors like size of business, experience of superiors, dependability & ability of subordinates etc. 4. Anything which increases the role of subordinate is decentralization & anything which decreases it is centralization. 5. Fayol suggested that absolute centralization or decentralization is not feasible. An organization should strike to achieve a lot between the two. 9. Scalar Chain 1. Fayol defines scalar chain as ’The chain of superiors ranging from the ultimate authority to the lowest”. 2. Every orders, instructions, messages, requests, explanation etc. has to pass through Scalar chain. 3. But, for the sake of convenience & urgency, this path can be cut shirt and this short cut is known as Gang Plank. 4. A Gang Plank is a temporary arrangement between two different points to facilitate quick & easy communication as explained below: In the figure given, if D has to communicate with G he will first send the communication upwards with the help of C, B to A and then downwards with the help of E and F to G which will take quite some time and by that time, it may not be worth therefore a gang plank has been developed between the two. 10. Order 1. This principle is concerned with proper & systematic arrangement of things and people. 2. Arrangement of things is called material order and placement of people is called social order.  3. Material order- There should be safe, appropriate and specific place for every article and every place to be effectively used for specific activity and commodity. 4. Social order- Selection and appointment of most suitable person on the suitable job. There should be a specific place for everyone and everyone should have a specific place so that they can easily be contacted whenever need arises. 11. Equity a. Equity means combination of fairness, kindness & justice. b. The employees should be treated with kindness & equity if devotion is expected of them. c. It implies that managers should be fair and impartial while dealing with the subordinates. d. They should give similar treatment to people of similar position. e. They should not discriminate with respect to age, caste, sex, religion, relation etc. f. Equity is essential to create and maintain cordial relations between the managers and sub- ordinate. g. But equity does not mean total absence of harshness. h. Fayol was of opinion that, “at times force and harshness might become necessary for the sake of equity 12. Stability of Tenure a) Fayol emphasized that employees should not be moved frequently from one job position to another i.e. the period of service in a job should be fixed. b) Therefore employees should be appointed after keeping in view principles of recruitment & selection but once they are appointed their services should be served. c) According to Fayol. “Time is required for an employee to get used to a new work & succeed to doing it well but if he is removed before that he will not be able to render worthwhile services”. d) As a result, the time, effort and money spent on training the worker will go waste. e) Stability of job creates team spirit and a sense of belongingness among workers which ultimately increase the quality as well as quantity of work. 13. Initiative a) Workers should be encouraged to take initiative in the work assigned to them. b) It means eagerness to initiate actions without being asked to do so. c) Fayol advised that management should provide opportunity to its employees to suggest ideas, experiences& new method of work. d) It helps in developing an atmosphere of trust and understanding. e) People then enjoy working in the organization because it adds to their zeal and energy. f) To suggest improvement in formulation & implementation of place. g) They can be encouraged with the help of monetary & non-monetary incentives. 14. Espirit De’ Corps (can be achieved through unity of command)  a) It refers to team spirit i.e. harmony in the work groups and mutual understanding among the members. b) Spirit De‟ Corps inspires workers to work harder. c) Fayol cautioned the managers against dividing the employees into competing groups because it might damage the moral of the workers and interest of the undertaking in the long run. d) To inculcate Espirit De‟ Corps following steps should be undertaken – 1. There should be proper co-ordination of work at all levels 2. Subordinates should be encouraged to develop informal relations among themselves. 3. Efforts should be made to create enthusiasm and keenness among subordinates so that they can work to the maximum ability. 4. Efficient employees should be rewarded and those who are not up to the mark should be given a chance to improve their performance. 5. Subordinates should be made conscious of that whatever they are doing is of great importance to the business & society. e) He also cautioned against the more use of Britain communication to the subordinates i.e. face to face communication should be developed. The managers should infuse team spirit & belongingness. There should be no place for misunderstanding. People then enjoy working in the organization & offer their best towards the organization. MOTIVATION Motivation is the word derived from the word ‟motive‟ which means needs, desires, wants or drives within the individuals. It is the process of stimulating people to actions to accomplish the goals. In the work goal context the psychological factors stimulating the people‟s behaviour can be -desire for money  success  recognition  job-satisfaction  team work, etc One of the most important functions of management is to create willingness amongst the employees to perform in the best of their abilities. Therefore the role of a leader is to arouse interest in performance of employees in their jobs. The process of motivation consists of three stages:- 1. A felt need or drive 2. A stimulus in which needs have to be aroused 3. When needs are satisfied, the satisfaction or accomplishment of goals. Therefore, we can say that motivation is a psychological phenomenon which means needs and wants of the individuals have to be tackled by framing an incentive plan.  1. Maslow’s Hierarchy of Needs Theory Abraham Maslow is well renowned for proposing the Hierarchy of Needs Theory in 1943. This theory is a classical depiction of human motivation. This theory is based on the assumption that there is a hierarchy of five needs within each individual. The urgency of these needs varies. These five needs are as follows- According to Maslow, individuals are motivated by unsatisfied needs. As each of these needs is significantly satisfied, it drives and forces the next need to emerge. Maslow grouped the five needs into two categories - Higher-order needs and Lower-order needs. The physiological and the safety needs constituted the lower-order needs. These lower-order needs are mainly satisfied externally. The social, esteem, and self-actualization needs constituted the higher-order needs. These higher-order needs are generally satisfied internally, i.e., within an individual. 1. Physiological needs- These are the basic needs of air, water, food, clothing and shelter. In other words, physiological needs are the needs for basic amenities of life. 2. Safety needs- Safety needs include physical, environmental and emotional safety and protection. For instance- Job security, financial security, protection from animals, family security, health security, etc. 3. Social needs- Social needs include the need for love, affection, care, FIGURE: Maslow’s Need Hierarchy Model belongingness, and friendship. 4. Esteem needs- Esteem needs are of two types: internal esteem needs (self- respect, confidence, competence, achievement and freedom) and external esteem needs (recognition, power, status, attention and admiration). 5. Self-actualization need- This include the urge to become what you are capable of becoming / what you have the potential to become. It includes the need for growth and self-contentment. It also includes desire for gaining more knowledge, social- service, creativity and being aesthetic. The self- actualization needs are never fully satiable. As an individual grows  psychologically, opportunities keep cropping up to continue growing. Implications of Maslow’s Hierarchy of Needs Theory for Managers As far as the physiological needs are concerned, the managers should give employees appropriat salaries to purchase the basic necessities of life. Breaks and eating opportunities should be given t employees. As far as the safety needs are concerned, the managers should provide the employees job security, saf and hygienic work environment, and retirement benefits so as to retain them. As far as social needs are concerned, the management should encourage teamwork and organize socia events. As far as esteem needs are concerned, the managers can appreciate and reward employees on accomplishing and exceeding their targets. The management can give the deserved employee higher jo rank / position in the organization. As far as self-actualization needs are concerned, the managers can give the employees challenging job in which the employees‟ skills and competencies are fully utilized. Moreover, growth opportunities ca be given to them so that they can reach the peak. The managers must identify the need level at which the employee is existing and then those needs can be utilized as push for motivation. Limitations of Maslow’s Theory  It is essential to note that not all employees are governed by same set of needs. Different individuals may be driven by different needs at same point of time. It is always the most  powerful unsatisfied need that motivates an individual.   The theory is not empirically supported.  The theory is not applicable in case of starving artist as even if the artist‟s basic needs are not satisfied, he will still strive for recognition and achievement. Theory X and Theory Y In 1960, Douglas McGregor formulated Theory X and Theory Y suggesting two aspects of human behaviour at work, or in other words, two different views of individuals (employees): one of which is negative, called as Theory X and the other is positive, so called as Theory Y. According to McGregor, the perception of managers on the nature of individuals is based on various assumptions. Assumptions of Theory X   An average employee intrinsically does not like work and tries to escape it whenever possible.   Since the employee does not want to work, he must be persuaded, compelled, or warned with punishment so as to achieve organizational goals. A close supervision is required on part of  managers. The managers adopt a more dictatorial style.  Many employees rank job security on top, and they have little or no aspiration/ ambition.   Employees generally dislike responsibilities.  Employees resist change.  An average employee needs formal direction. Assumptions of Theory Y  Employees can perceive their job as relaxing and normal. They exercise their physical and mental  efforts in an inherent manner in their jobs.  Employees may not require only threat, external control and coercion to work, but they can use self-direction and self-control if they are dedicated and sincere to achieve the organizational  objectives.  If the job is rewarding and satisfying, then it will result in employees‟ loyalty and commitment to  organization.  An average employee can learn to admit and recognize the responsibility. In fact, he can even  learn to obtain responsibility.   The employees have skills and capabilities. Their logical capabilities should be fully utilized. In other words, the creativity, resourcefulness and innovative potentiality of the employees can be utilized to solve organizational problems. Thus, we can say that Theory X presents a pessimistic view of employees‟ nature and behaviour at work, while Theory Y presents an optimistic view of the employees‟ nature and behaviour at work. If correlate it with Maslow‟s theory, we can say that Theory X is based on the assumption that the employees emphasize on the physiological needs and the safety needs; while Theory X is based on the assumption that the social needs, esteem needs and the self-actualization needs dominate the employees. McGregor views Theory Y to be more valid and reasonable than Theory X. Thus, he encouraged cordial team relations, responsible and stimulating jobs, and participation of all in decision-making process. Implications of Theory X and Theory Y Quite a few organizations use Theory X today. Theory X encourages use of tight control and supervision It implies that employees are reluctant to organizational changes. Thus, it does not encourage innovation Many organizations are using Theory Y techniques. Theory Y implies that the managers should creat and encourage a work environment which provides opportunities to employees to take initiative and self direction. Employees should be given opportunities to contribute to organizational well-being. Theory encourages decentralization of authority, teamwork and participative decision making in an organization Theory Y searches and discovers the ways in which an employee can make significant contributions i an organization. It harmonizes and matches employees‟ needs and aspirations with organizational need and aspirations. System Approach to Management: Following are the important features of systems approach to management thought: 1. System approach considers the organisation as a dynamic and inter-related set of parts. Each part represents a department or a sub-system. Each department has its sub-system. Continuous and effective interaction of sub-systems helps to attain goals of the larger system. Thus, every sub-system is a system and has sub-systems which together make an organisation a set of mutually dependent parts and their sub-parts. 2. It considers the impact of both near and distant future on organisational activities. Organisations constantly respond to changes in the internal and external environmental conditions. They also act as market leaders in the dynamic, competitive environment. 3. System approach integrates goals of different parts of the organisation (sub-systems or departments) with the organisation as a whole. It also integrates goals of the organisation with goals of the environment or society in which it operates. Integration of goals maintains equilibrium or balance and enables organisations to grow in the dynamic environment. 4. It synthesizes knowledge of different fields of study such as biology, sociology, psychology, information systems, economics etc. As business organisation deals with different components of society, it makes best use of different fields of study to improve interaction with its counterparts. 5. System approach enables organisations to frame policies that promote business objectives and social objectives. Business operates in the social system and social values, culture, beliefs and ethics are important constituents of business operations. Evaluation of System Approach: The system approach has the following merits: 1. System approach provides a holistic view of the organisations and emphasises on their adaptive nature. It increases organisation‟s adaptability to environmental changes. The organisation is studied as a whole and not through its parts. This enables it to adapt to the needs of the environment. Decisions are made keeping in mind organisation-environment interface. 2. It analyses the system at different levels and inter-relates and integrates it into a unified set of direction. Starting from individual goals, it focuses on overall organisational goals, synthesizes the two and converges them into global economy. 3. System approach provides a framework for effective interaction of parts of the organisation in a specific arrangement for attainment of its goals. It does not focus on one part of the organisation. 4. It considers the impact of environment on the organisation and vice versa. Interaction of external environment with the internal environment is the most significant contribution of systems theory. System approach, thus, analyses the organisation as an adaptive and dynamic entity. 5. System approach synthesizes the classical and behavioural theories into a broader framework to solve managerial problems. It, thus, focuses on organisations as multi-dimensional in nature. Limitations of System Approach: 1. Critics of this theory claim this as a theoretical approach to management. The way an organisation actually works and solves problems (by applying different techniques and methods) has no appeal in the theory. 2. Relationship amongst parts of the organisation is emphasised upon but the exact nature of inter-dependence is not defined. 3. Exact relationship between internal and external environment of the organisation is also not defined. For example, it specifies that change in economic policies necessitates change in internal policies of the organisation but what changes are required to match the changes in economic environment is not talked about. 4. System approach fails to provide uniform approach to management. Management practices change with changes in environmental variables. No standard set of principles apply to all types of organisations. It has added nothing new to the study of management. Even before this approach was introduced, managerial decisions were taken keeping in mind the environmental variables. No specific decision-making techniques are offered to deal with specific problems. 5. It fails to provide concepts that apply to all types of organisations. The small organisations are less adaptive to environmental variables than large organisations. The theory assumes that most of the organisations are big, complex and open systems. It, thus, fails to provide a unified theory. Herzberg’s Two-factors Theory: In 1959, Frederick Herzberg, a behavioural scientist proposed a two-factor theory or the motivator-hygiene theory. According to Herzberg, there are some job factors that result in satisfaction while there are other job factors that prevent dissatisfaction. According to Herzberg, the opposite of “Satisfaction” is “No satisfaction” and the opposite of “Dissatisfaction” is “No Dissatisfaction” “Herzberg called these factors as „dissatisfiers‟ and not motivators, by this he means their presence or existence does not motivate in the sense of yielding satisfaction, but their  absence would result in dissatisfaction. These are also referred to as „hygiene‟ factors. In the second group are the „satisfiers‟ in the sense that they are motivators, which are related to „Job content‟. He included the factors of achievement, recognition, challenge work, advancement and growth in the job. He says that their presence will yield feelings of satisfactory or no satisfaction, but not dissatisfaction. FIGURE: Herzberg’s view of satisfaction and dissatisfaction Herzberg classified these job factors into two categories- a. Hygiene factors- Hygiene factors are those job factors which are essential for existence of motivation at workplace. These do not lead to positive satisfaction for long-term. But if these factors are absent / if these factors are non-existant at workplace, then they lead to dissatisfaction. In other words, hygiene factors are those factors which when adequate/reasonable in a job, pacify the employees and do not make them dissatisfied. These factors are extrinsic to work. Hygiene factors are also called as dissatisfiers or maintenance factors as they are required to avoid dissatisfaction. These factors describe the job environment/scenario. The hygiene factors symbolized the physiological needs which the individuals wanted and expected to be fulfilled. Hygiene factors include:  Pay - The pay or salary structure should be appropriate and reasonable. It must be equal and competitive to those in the same industry in the same  domain.  Company Policies and administrative policies - The company policies should not be too rigid. They should be fair and clear. It should include  flexible working hours, dress code, breaks, vacation, etc.  Fringe benefits - The employees should be offered health care plans (mediclaim), benefits for the family members, employee help programmes,  etc.  Physical Working conditions - The working conditions should be safe, clean  and hygienic. The work equipments should be updated and well-maintained.  Status - The employees‟ status within the organization should be familiar  and retained.  Interpersonal relations - The relationship of the employees with his peers, superiors and subordinates should be appropriate and acceptable. There  should be no conflict or humiliation element present.  Job Security - The organization must provide job security to the employees.   b. Motivational factors- According to Herzberg, the hygiene factors cannot be regarded as motivators. The motivational factors yield positive satisfaction. These factors are inherent to work. These factors motivate the employees for a superior performance. These factors  are called satisfiers. These are factors involved in performing the job. Employees find these factors intrinsically rewarding. The motivators symbolized the psychological needs that were perceived as an additional benefit. Motivational factors include:  Recognition - The employees should be praised and recognized for their  accomplishments by the managers.  Sense of achievement - The employees must have a sense of achievement. This  depends on the job. There must be a fruit of some sort in the job.  Growth and promotional opportunities - There must be growth and advancement  opportunities in an organization to motivate the employees to perform well.  Responsibility - The employees must hold themselves responsible for the work. The managers should give them ownership of the work. They should minimize  control but retain accountability.  Meaningfulness of the work - The work itself should be meaningful, interesting and challenging for the employee to perform and to get motivated. Limitations of Two-Factor Theory The two factor theory is not free from limitations: 1. The two-factor theory overlooks situational variables. 2. Herzberg assumed a correlation between satisfaction and productivity. But the research conducted by Herzberg stressed upon satisfaction and ignored productivity. 3. The theory‟s reliability is uncertain. Analysis has to be made by the raters. The raters may spoil the findings by analyzing same response in different manner. 4. No comprehensive measure of satisfaction was used. An employee may find his job acceptable despite the fact that he may hate/object part of his job. 5. The two factor theory is not free from bias as it is based on the natural reaction of employees when they are enquired the sources of satisfaction and dissatisfaction at work. They will blame dissatisfaction on the external factors such as salary structure, company policies and peer relationship. Also, the employees will give credit to themselves for the satisfaction factor at work. 6. The theory ignores blue-collar workers. Despite these limitations, Herzberg‟s Two- Factor theory is acceptable broadly. Implications of Two-Factor Theory The Two-Factor theory implies that the managers must stress upon guaranteeing the adequacy of the hygiene factors to avoid employee dissatisfaction. Also, the managers must make sure that the work is stimulating and rewarding so that the employees are motivated to work and perform harder and better. This theory emphasize upon job- enrichment so as to motivate the employees. The job must utilize the employee‟s skills and competencies to the maximum. Focusing on the motivational factors can improve work-quality Leadership and Leadership Styles: Leadership is a process by which an executive can direct, guide and influence the behavior and work of others towards accomplishment of specific goals in a given situation. Leadership is the ability of a manager to induce the subordinates to work with confidence and zeal. Leadership is the potential to influence behaviour of others. It is also defined as the capacity to influence a group towards the realization of a goal. Leaders are required to develop future visions, and to motivate the organizational members to want to achieve the visions. According to Keith Davis, “Leadership is the ability to persuade others to seek defined objectives enthusiastically. It is the human factor which binds a group together and motivates it towards goals.” Characteristics of Leadership It is a inter-personal process in which a manager is into influencing and guiding workers towards attainment of goals. It denotes a few qualities to be present in a person which includes intelligence, maturity and personality. It is a group process. It involves two or more people interacting with each other. A leader is involved in shaping and moulding the behaviour of the group towards accomplishment of organizational goals. Leadership is situation bound. There is no best style of leadership. It all depends upon tackling with the situations. All leaders do not possess same attitude or same perspective. As discussed earlier, few leaders adopt the carrot approach and a few adopt the stick approach. Thus, all of the leaders do not get the things done in the same manner. Their style varies. The leadership style varies with the kind of people the leader interacts and deals with. A perfect/standard leadership style is one which assists a leader in getting the best out of the people who follow him. Some of the important leadership styles are as follows: 1.Autocratic leadership style: In this style of leadership, a leader has complete command and hold over their employees/team. The team cannot put forward their views even if they are best for the team‟s or organizational interests. They cannot criticize or question the leader‟s way of getting things done. The leader himself gets the things done. The advantage of this style is that it leads to speedy decision-making and greater productivity under leader‟s supervision. Drawbacks of this leadership style are that it leads to greater employee absenteeism and turnover. This leadership style works only when the leader is the best in performing or when the job is monotonous, unskilled and routine in nature or where the project is short-term and risky. 2.Democrative/Participative leadership style: The leaders invite and encourage the team members to play an important role in decision-making process, though the ultimate decision-making power rests with the leader. The leader guides the employees on what to perform and how to perform, while the employees communicate to the leader their experience and the suggestions if any. The advantages of this leadership style are that it leads to satisfied, motivated and more skilled employees. It leads to an optimistic work environment and also encourages creativity. This leadership style has the only drawback that it is time-consuming. 3.Bureaucratic leadership style: Here the leaders strictly adhere to the organizational rules and policies. Also, they make sure that the employees/team also strictly follows the rules and procedures. Promotions take place on the basis of employees‟ ability to adhere to organizational rules. This leadership style gradually develops over time. This leadership style is more suitable when safe work conditions and quality are required. But this leadership style discourages creativity and does not make employees self-contented.  4. The Laissez Faire Leadership Style: Here, the leader totally trusts their employees/team to perform the job themselves. He just concentrates on the intellectual/rational aspect of his work and does not focus on the management aspect of his work. The team/employees are welcomed to share their views and provide suggestions which are best for organizational interests. This leadership style works only when the employees are skilled, loyal, experienced and intellectual.. Social Responsibility of Management: Social responsibility refers to the process with includes several activities from providing safe products and services to giving apportion of the company‟s profits to welfare organizations. Responsibility towards shareholders: The business enterprise has the responsibility to provide fair return on capital to the shareholders. The firm must provide them regular, accurate, and full information about the working of enterprise in order to fulfill and encourage their interest in the affairs of the company. Responsibility towards consumers: The management has to provide quality products and services to the customers at reasonable prices. It should consider customer suggestions and also plan it services more effectively through consumer satisfaction survey. Responsibility towards employees: Good working conditions motivate workers to contribute their best it is the responsibility of the management recognize their unions and respect their right to associate with a union of their choices. Responsibility towards creditors: The business has to repay the loans it has taken from the financial institutions as per the repayment schedule also it should inform the creditors about the developments in the company from time-to-time. Responsibility towards Government: The business firm has to pay its taxes and be fair in its endeavours. It should also support the government in community development projects. Responsibility towards competitors: The business firm should always maintain the highest ethical standards and maintain cordial relations with each of the competitors, which is a critical and sensitive segment. Responsibility towards public: Business units have tremendous responsibility towards the general public to support the cause of community development. Most of the companies maintain public relations departments exclusively to maintain good relations with the community.  Designing an Organisation structure Organization is form of organizing which is a part of management process Organization defied as collectivity of people for achieving common objectives “Organization means the determination and assignment of duties to people, and also the establishment and the maintenance of authority relationships among these grouped activities it is the structural frame work with in which the various efforts are coordinated and related to each other”. Definitions: “Organization are collectivities of people that have been established for the pursuit of relatively specific objectives on a more or less continuous basis”. William Scott “Organization is the form of every human association for the attainment of a common purpose”. Mooney and Reilly “Organization involves the grouping of activities necessary to accomplish goals and plans assignment and these activities to appropriate departments and positions to appropriate departments and positions for authority delegation and coordination”. Koontz and O‟Donnell Organization is used in the following ways with or without prefix or suffix 1. as entity 2. as group of people 3. as structure 4. as process Process of Organization: Determination of objectives, strategies, plans and policies: Objectives should be clear and precise, because the entire organization is to be built around the objectives of the enterprises. Determination of activities: Determine activities needed to execute these plans and policies and accomplish the objectives. The work load is broken into component activities that are to be performed by all the employees. The activities are so split to determine the job which can be performed by an individual. Separation and grouping of activities: To attain the benefits of specialization and division of labour, every company, will separate its activities on the basis of primary functions like finance, engineering, purchasing, production, sales and industrial relations. All the similar or directly related activities are grouped together in the form of departments. Delegation of authority: Authority is necessary for the performance of the job and therefore authority is delegated to the subordinates for enabling them to carry out their work smoothly and efficiently. Delegation of responsibility: Responsibility may be described as the obligation and accountability for the performance of delegated duties. A superior is always accountable for the acts of his subordinate. Therefore, responsibility always flows from subordinates to superiors. Establish inter-relationships: The grouped activities are placed in the overall organization structure at appropriate level. It is necessary to integrate or the these groups of activities through. a) Authority relationship horizontally, vertically and diagonally b) Organized information or communication system i.e., with the help of effective coordination and communication. Providing physical facilities and proper environment: Physical facilities means provide machinery, tools equipments, infrastructure etc, environment means provide proper lighting, ventilation, heating, cooling arrangement at the work place, reasonable hors of work, safety devices, job security etc Principles of Organization: Principle of unity of objectives: An organization structure is effective if is enables individuals to contribute to entire objectives. Principle of co-ordination: The aim of the objective can be achieved it proper co- ordination exists for efferent activities Principles of organizational efficiency: An organization is efficient it is structured to aid the accomplishment of enterprise objective with a minimum of unsought consequences or costs. Span of management principle: In each managerial position, there is a limit to the number of persons an individual can effectively manage but the exact number will depend on the impact of underlying variables. Scalar principle: The clearer the line of authority from the ultimate management position in an enterprise to every subordinate position, the clearer will be the responsibility for decision making the more effective will be organization communication. Principle of delegation by results expected: Authority delegated to all individual managers should be adequate enough to ensure their ability to accomplish the results expected. Principle of responsibility: The responsibility of subordinates to their superiors for performance is absolute, and superiors can not escape responsibility for the organization activity of their subordinates. Principle of parity of authority and responsibility: The responsibility for actions can not be greater than that implied by the authority delegated, not should it be less. Principle of unity command: The more complete an individual‟s reporting relationships to a single superior, the smaller the problem of conflicting instructions and the greater the feeling of personal responsibility for results. Authority level principle: Maintenance of intended delegation requires that decisions with in the authority of individual managers should be made by them and not be referred upward in the organization structure. Principle of balance: The application of principles or technique must be balanced to ensure the over all effectiveness of the structure in meeting enterprise objectives. Principle of flexibility: the more that provisions are made for building flexibility in to an organization structure can fulfill its purpose. Principle of leadership facilitation: The more an organization structure and its delegations of authority enable managers to design and maintain an environment for performance, the more they will help the leadership abilities of those managers.  Design of Organization structure: The main objective of an organization structure is to ensure that efforts of all the people working in various sections are co-ordinate and integrated for achieving the task in the most efficient effective way with minimum consumption of resources i.e. economical ways 1) Formal organization structure 2) Informal organization structure Formal organization structure: According to classical theorists the formal organization is built an four pillars 1) Division of labour 2) Scalar functional processes 3) Structure 4) Span of control Definition: An organization is formal when the activities of two or more persons are consciously coordinated towards common objectives. Informal organization: Informal organization arises spontaneously based on friendship or some common interest and not based on rules, regulation and procedures. It is developed by the employees themselves and not by the formal authority. Definition: Informal organization brings cohesiveness to a formal organization, it brings to the members of formal organization a feeling of belonging of status, of self-respect and of gregarious satisfaction. Comparison between formal and informal organization: Basis of comparison Formal Informal Formation Planned & deliberated Spontaneous Purpose Well-set goals Social interaction Structure Well structured Un structured Focus Positions Persons Nature Official Unofficial Leadership Superior Any one Source of power Delegated Given by group Guidelines for behaviour Rules procedures Group norms Source of control Rewards/Punishment Sanctions Type of organization: On the basis of authority relationships organization classified as follows 1. Line organization or Military organization or Scalar organization 2. Functional organization 3. Line and Staff organization 4. Project organization  5. Committee organization 6. Matrix organization 1. Line organization: Manager Vertical directions and instructions Engineer Foreman Supervisor Where efforts of large number of people have to be controlled and discipline is of prime importance line type organization structure will serve the purpose. This is also one of the oldest structures. However, in present conditions this type of structure has lost the applicability. In line structure ten lines of instruction, directing is vertical. This means in this type boss is always right and his orders are to be obeyed at any cost. Merits: Simplicity: Line organization is very simple to establish and can be easily understand by the employees Discipline: Since each position is subject to control by its immediate superior position, often the maintenance of discipline is easy unity of command and unity of direction foster discipline among the people in the organization. Co-ordination: The hierarchy in management helps in achieving effective coordination Effective communication: There will be a direct link between superior and his subordinate; both can communicate properly among himself or herself. Economical: Line organization is easy to operate and less expensive Unity of command: In line organization every person is under the command of one boss only. Prompt decision: Only one person is in charge of one division or department. This enables manager to take quick decisions. Over all development of the managers: The departmental head has to look after all the activities of his department; therefore, it encourages the development of all round managers at the higher level of authority.  Demerits: Undue reliance: The success of the enterprise depends upon the caliber and ability of few departmental heads, loss of one or two capable men may put the organization in difficulties. Personnel limitations: In this type of organization an individual executive is suppose to discharge different types of duties. He cannot do justice to all different activities because he cannot be specialized in all the trades. Overload of work: Departmental heads are overloaded with various routine jobs hence they can not spare time for important managerial functions like planning, development budgeting etc. Dictatorial way: In line organization, too much authorities centre on line executive. Hence it encourages dictatorial way of working. Duplication of work: Conflicting policies of different departments result in duplication of work. Unsuitable for large concerns: It is limited to small concerns General interest of enterprise may be over looked: Departments may work for their self- interest and may sacrifice the general interest of the enterprise. Scope of favourism: As the departmental heads has the supreme authority, there is chance of favourism. 2. Functional organization: This structure most widely used, in the medium and large organizations having limited number of products. This was introduced by F.W.Taylor and is logical extension of the division of labour cover departments as well as men. In this authority is delegated to an individual or department to control specified processes, policies or other matter relating to activities under taken by persons in other departments. Head Quarters Production Marketing Finance Personal Plant – 1 Plant – 2 Plant – 3 Production Marketing Finance Personal Production Marketing Finance Personal Production Marketing Finance Personal In this system planning is separated from performance since the direction of work is divided by various function in the factory. It has been found that this type of structure becomes ineffective when the work of departments and individuals increases in variety and complexity. Merits: Separation of work: In functional organization, work has been separated from routine work. The specialist has been given the authority and responsibility for supervision and administration pertaining to their field of specialization unnecessary over loading of responsibilities is thus avoided. Specialization: Specialization and skilled supervisory attention is given to workers the result is increase in rate of production and improved quality of work. Narrow range with high depth: The narrow range of activities enable the functional expert to developing in depth understanding in his particular area of activity Ease in selection and training: Functional organization is based upon expert knowledge. The availability of guidance through experts makes it possible to train the workers properly in comparatively short span of time. Reduction in prime cost: Since for every operation expert guidance is there, wastage of material is reduced and thus helps to reduce prime cost. Scope of growth and development of business: This type of organization presents ample scope for the growth and development of business. Demerits: Indispline: Since the workers receive instructions from number of specialist it leads to confusion to whom they should follow. Therefore, it is difficult to maintain discipline Shifting of responsibility: It is difficult for the top management to locate responsibility for the unsatisfactory work every body tries to shift responsibility on others for the faults and failure. Kills the initiative of workers: As the specialized guidance is available to the workers the workers will not be using their talents and skills therefore their initiative cannot be utilized. Overlapping of authority: The sphere of authority tends to overlap and gives rise to friction between the persons of equal rank. Lack of co-ordination between functions: except the function in which he is specialized  he is absolutely indifferent to other functions. Therefore, there is a lack of coordination of function and efforts. 3. Line and Staff Organization: Line and Staff organization is the in which the line heads are assisted by specialist staff. If the firm is of large size, manager cannot give careful attention to every aspect of management. They are busy with ordinary task of production and selling. Hence staff is deputed to do the work of investigation, research, recording, and advising to managers. Thus the staff brings advising to managers. Thus the staff brings specialization by assisting the line officers. “Line” means - Operating “Staff” means - Service Secretary General Manager Public Relation Officer Finance Manager Personal Manager Production Manager Marketing Manager Production Engineer Sales Officer Foreman Sales Supervisor Worker Sales s Man Merits: Planned specialization: The line and staff structure is based upon the principle of specialization. The line managers are responsible for operations contributing directly to the achievement of organizational objectives where as staff people are there to provide expert advice on the matters of their concerns. Quality decisions: Decisions come after careful consideration and thought each expert gives his advise in the area of his specialization which is reflected in the decisions. Prospect for personal growth: Prospect for efficient personal to grow in the organization not only that, it also offers opportunity for concentrating in a particular area, there by increasing personal efficiency Less wastage: There will be less wastage of material. Training ground for personnel: It provides training ground to the personnel in two ways. First, since everybody is expected to concentrate on one field, one‟s training needs can easily be identified. Second, the staff with expert knowledge provides opportunities to the line managers for adopting rational multi- dimensional approach towards a problem. Demerits: Chances of Misinterpretation: Although the expert advice is available, yet it reaches the workers through line supervisors. The line officers may fail to understand the meaning of advice and there is always a risk of misunderstanding and misinterpretation. Chances of friction: There are bound to be occasions when the line and staff may differ in opinion may resent in conflict of interests and prevents harmonious relations between the two. Ineffective Staff in the absence of authority: The staff has no authority to execute their own advice. Their advice is not a binding on the line officers. Therefore the advice given by specialist may be ignored by line heads. Expensive: The overhead cost of the product increases because of high salaried specialized staff. Loss of initiative by line executives: If is they start depending too much on staff may loose their initiative drive and ingenuity. 4. Project Organization: A project organization is a special case where common service like finance, purchase etc. are organized at the functional level. But project resources are allocated to the project manager. Since the business responsibility rests with the project manager, necessary authority is given to him with the requisite resources. This type of organization structure helps in making decisions for project control in terms of cost, resource and time. In a project organization some of the functions are corporate responsibility and some of them are project manager‟s responsibility. Managing Director Project Division-B Manufacturing Project Division-A Finance Design Erection Commissioning Design Erection Commissioning Merits: 1. This calls for quick divisions 2. Organizing all functional 3. Proper coordination of work of different departments 1. It tends to increase the problems of control for top management 2. It is special case of product organization 3. The organization may get disintegrated with increasing focus on departments 5. Committee Organization: A committee is formed when two or more persons are appointed to work as a team to arrive at a decision on the matters referred to it. It is intended to utilize the knowledge, skills, and experiences of all the  concerned parties. Particularly, in large organizations, problems are too big to be handled by one single expert. Vice-chancellor Executive Council Academic senate Rector Finance Committee Board of studies Registrar Selection Committee Purchases Convocation committee Committee Merits: 1. It pools up the organizational resources in terms of knowledge skills and experiences. 2. It represents all interested groups and thus, facilitates group decision. 3. It yields good results if the committee are headed by taskmaster like chairman and time bound in terms of decision-making. 4. It minimizes the fear of too much authority vested in one person 5. It motivates all the concerned or effected groups to participate. 1. Responsibility of decisions cannot be fixed on a particular person. 2. It calls for high degree of coordination. 3. It involved high cost in terms of time and money. 6. Matrix Organization: This is also called as project orgnisation it is a combination of all relationships in the organization in vertical, horizontal and diagonal. It is mostly used in complex projects. It provides a high degree of operational freedom, flexibility and adoptability for both the line and staff managers in performing their respective roles. The main objective of matrix organization is to secure a higher degree of coordination than what is possible from the conventional organizational structure as the line and staff.  MD Manufacturing Finance Personnel Materials Product Production Finance Personnel Materials Manager - A Manager - A Manager - A Manager - A Manager - A Product Production Manager - B Manager - B Finance Personnel Materials Manager - B Manager - B Manager - B Merits: 1. It offers operational freedom and flexibility 2. It seeks to optimize the utilization of resources 3. It focuses on results 4. It maintains professional identity 5. It holds employees responsible for management of resources Demerits: 1. It calls for greater degree of coordination 2. It violates unity of command principle 3. It may be difficult to define authority and responsibility precisely 4. Employees may find it frustrating to work with two bosses  MODERN TRENDS IN ORGANISATIONAL STRUCTURE DESIGNS: Organizations in the recent times have been gearing themselves to suit to the growing demands from their stakeholders in terms of responsiveness, flexibility, agility, adaptability etc. In this process, they are following organic structure, which are more agile, flexible and adaptable to the changing circumstances. Virtual organizations, cellular organizations, team structure, boundaryless organization and inverted pyramid and different forms of organic structure that are widely seen among most of the sun-rise sectors such as financial services, Information Technology (IT) and IT enabled services. These structures have been contributing to the organic growth of the organization. The focus of organic structures is to do away with those activities which do not directly contribute to the growth of the organization and focus only on those activities which directly lead the organization for the achievement of the given goals. These are discussed below: 1. Virtual Organisation: Virtual organizations facilitate competitiveness particularly when these organizations are part of the global economy. Here, there can be alliances and partnerships with other organizations almost all over world. It is a flexible organization structure that removes the traditional boundaries. It allows easy reassignment and reallocation of resources to take quick advantage of shifting opportunities in global markets. To avoid disintegration and to attain the effective needed focus, the lead virtual organizations must have a shared vision,, strong brand and high trust culture. The virtual organization is a temporary network of companies that come together quickly to exploit fast changing opportunities. Virtual organizations appear to be bigger than traditional organizations. As virtual organizing required a strong information technology (IT) platform, The boundaries that traditionally separate a firm form its suppliers, customers and even competitors are largely eliminated, temporarily and in respect to a given transaction or business purpose. Virtual organizations  come into being „as needed‟ when alliances are called into action to meet specific operating needs and objectives. When the task is complete, the alliances rests until next called into action. Each partner in the alliance contributes to the virtual organization what it is best as-its core competence. 2. Cellular Organization: Organizations structured around the units/cells that complete the entire assembly process are called cellular organizations. In the modern organizations, cellular organizations have been replacing the continuous line or linear production process system. In cellular organizations, workers manufacture total product or sub-assemblies in teams (cells). Every team (cell) of workers has the responsibility to improve or maintain the quality and quantity of its products. Each team is free to recognize itself to improve performance and product quality. These cells comprise self-managed teams. They monitor themselves and also correct where necessary on their own. Cellular organizations are characterized by much smaller staff all over the organization with middle management positions reduced and lean management members at the top. It is both a lean and flat structure. 3. Team Structure: A structure in which the entire organization is made up of work groups or teams is known as team structure. Team structures are both permanent and temporary in nature as situation demands. Traditional organizations are characterized by vertical structures and modern organizations are identified by the horizontal i.e., team structures. „We report to each other‟ is the main feature of team structure. It leads to boundary less organsiation in a borderless world. In team structures, we find cross-functional teams meant for improving lateral relations, solving problem, completing special projects and accomplishing routine tasks. A cross- functional team comprises members from different functional departments such as marketing, finance, HR, production etc. Project teams are convened for a particular task or project and these get dissolved once task is completed. The intention here is to quickly bring together the people with the needed talents and focus their efforts intensely to solve a problem or take advantage of a special opportunity. Here employees are more involved and empowered because of reduced barriers among functional areas. Sometimes, when there is pressure on teams to perform and there is no clear chain of command, team structure fails to deliver results. 4. Boundaryless Organization: At the name indicates, a boundary less organization eliminates internal boundaries among subsystems and external boundaries with external environment. It is a combination of team and network structures with the addition of temporariness. Such type of organization structure is characterized by spontaneous teamwork and communication. This replaces formal chain of command. It is a dynamic organization structure wherein organizational needs are met through a judicious mix of outsourcing contracts and alliances as and when needed. The key features of boundary less organization include knowledge-sharing, absence of hierarchy and bureaucracy, empowerment voluntary participation of expert members, technology utilization and temporariness. The focus is on mustering necessary talent and competencies required for the achievement of a task without any bureaucratic restrictions. Creativity, quality, timeliness, increase in speed and flexibility are the benefits the boundary less organization yields. It also reduces inefficiencies. The boundary less organization is highly flexible and responsive. These draw on talent wherever it is found. Sometimes, they are ineffective due to problems in communication. 5. Inverted Pyramid: This is an alternative to the traditional chain of command. This is a structure, which is narrow at the top and wide at the base. It includes a few levels of management. For instance, sales people and sales support staff sit on the top as the key decision makers for all the issues related to sales and dealing with the customers. Since the sales staffs are in touch with the customer and aware of the requirements of the customers, they are given all the freedom to follow their own best judgment at all levels. Departmentation: On the basis activity or departmentation Industrialisation has created problems, which are complex in nature. It created a necessity of large-scale industries to meet the increased demand. In large scale, industries there are large number of employees. For the sake of efficient supervision and control, the factory/enterprise is divided into different departments. Each department is entrusted with a particular function for carrying out particular activity each departmental head is expected to control and supervise the work in his department. Definition: The process of dividing the work and then grouping them into units and submits or departments for the purpose of administration. Method of Departmentation: By function: It is divided into primary function to be performed such as, finance, marketing, production, personnel etc. each function separate departments By product: All activities related to a particular product line may be grouped together. This basis of departmentation has become increasingly important, especially for complex organizations producing different types of products. By process: In this method, the manufacturing activity are sub divided on the basis of their process of production, similar machines such as all laths, milling machines, grinding machines, milling machine etc. are grouped into separate section, such as lathe department, milling department, drilling department. By geographical region: This method may be adopted when the enterprise produces and sells in the wide market, often in international markets.  UNIT – 2 INTRODUCTION TO OPERATIONS MANAGEMENT Plant location: Plant location is a strategic decision several factors influence this decision. The main objective of any business is to optimize its cost and revenue that is, minimize its costs and maximize its returns. The degree of significance for the selection of location for any enterprise mainly depends on its size and nature large scale industries requiring huge amount of investment there are many considerations other than the local demand in the selection proper plant location these plants cannot be easily shifted to other place and an error of judgment in the selection of site can be vary expensive to the organization. However, small-scale industry mainly selects the site where in accordance with its capacity; the local market is available for its products. It can easily shift to other place when there is any change in the market. Factors affecting plant location: 1. Nearness to Market: If the plant is located close to the market the cost of transportation can be minimized. This also helps the producers to have direct knowledge of the requirements of the customers. 2. Nearness to supply of raw materials: As far as possible the site selected should be near the source of raw materials, so that the cost of transportation can be minimized and storing cost can be reduced due to shorter lead time. 3. Availability of labour: Availability of right kind of labour force in required number at reasonable rates is also a deciding factor in selection of site 4. Transport and communication facilities: Generally, industries have a tendency to locate the industrial units near the railway station, highway or port areas. Availability of power and fuel: Coal, electricity, oil and natural gas are the important sources of power in the industries. Ex: Tata iron and steel industry is established near the coalmines of Bihar. Climatic conditions: Climatic conditions largely affect certain production processes and also the efficiency of the employees. Ex: Textile mills require moist climate that why these plant located at Mumbai and Ahmedabad. 5. Availability of water: Water is used in industries for processing as in paper in chemical industries, for generation of power in hydroelectric power, plants and also required for drinking sanitary purpose also. 6. Ancillary industries: Many industries such as processing and assembly industries are not producing al the parts of their product but purchase some of the parts from ancillary industries producing it. 7. Financial and other aids: For the development of backward regions central as well as state government provide certain incentives and facilities such as cash- subsides, concession financial assistance, land, power and other facilities at cheaper rates, tax concession etc. Plant Layout: A technique of locating machines, processes and plant services within the factory in order to secure the greatest possible output of high quality at the lowest possible total cost of production Type of plant layout: 1. Product or line layout: This type of layout is developed for product-focused systems. In this type of layout only one product, or one type of product, is produced in a given area. In case of product being assembled, this type of layout is popularly known as an assembly line layout. The work centers are organized in the sequence of appearance. The raw material centre at one end of the line and goes from one operation to another rapidly with minimum of work-in-process storage and material handling Raw Cutting Turning Milling Grinding Painting Inspect packing Material finished goods 2. Process or Functional layout: This type of layout is developed for process focused systems. The processing units are organized by functions into departments on the assumption that certain skills and facilities are av