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Model Answers

Subject: Principles & Practices of Management Year: 2008-2009 PART-I 1. Choose the correct answer and write its serial order (a) Which one of the following skill combination is required for top management in descending orderSubject Code: MB-101 Faculty: Dr.Vidhi Agrawal

(i) Technical, human, conceptual (ii) Technical, Conceptual, Human (iii)Conceptual, Human, Technical (iv) Human, Conceptual, Technical
(b) Bureaucracy is considered most efficient system because

(i) It insist on rules (ii) It prescribes informal relationships (iii)It emphasizes on human elements in the organizatiom (iv) It provides more freedom to action.
(c) The era of scientific management-

(i) 1830-1880 (ii) 1880-1930 (iii)1930-1950 (iv) 1950-1980

(d ) Functional foremanship is a technique of Scientific Management (e) Which function is regarded as the essence of management?

(i) Planning (ii) Organising (iii)Directing (iv) Controlling

(f) Organising process does not involve one of the following elements:

(i) Departmentation (ii) Delegation of Authority (iii)Fixing Responsibility (iv) Appraisal of a Subordinate
(g) Delphi Technique is associated with

(i) Decision Making (ii) Planning (iii)Leadership (iv) Co-ordination

(h) Accountability always moves with Responsibility (i) Which one of the following is not a part of Job Analysis?

(i) Defining use of Job Analysis (ii) Information Collection for Job Analysis (iii)Information processing for job analysis (iv) Determining relative worth of a job.
(j)Which one of the following sources is most relevant for recruiting managerial personnel?

(i) Employment Exchange (ii) Advertisement (iii)Gate Hiring (iv) Trade Union
(K) Which one of the following theories is a process theory of motivation?

(i) Maslows Need Hierarchy (ii) Vrooms Valence Expectancy (iii)Motivation-Hygiene (iv) Equity Theory
(l) Achievement test is also known as Attitude Test (m) Managerial Grid has been developed by-

(i) Blake and Mouton (ii) (ii) Rensis Likert (iii)W.J.Reddin (iv) Elton Mayo
(n) Which one of the following is a function of communication?

(i) Creating Department (ii) Establishing Control (iii)Promoting Employees (iv) Integrating

(o) Management by exception implies that control is applied to

(i) Critical Points (ii) All Points (iii)Middle points (iv) Marginal points
(p) Controlling means looking back (q) Tactical Planning is also known as

(i) Strategic Planning (ii) (ii)Operational Planning (iii)Corporate Planning (iv) Proactive Planning
(r) Guidelines for action is

(i) Programme (ii) Policy (iii)Procedure (iv) Method

(s) Promotion Involves

(i) Financial Incentives (ii) Non Financial Incentives (iii)Both (iv) None of the above
(t) Authority cannot be delegated fully PART-II Read the following case carefully and answer the questions belowPunjab Machines Tools Corporation(PMTC)

Q1. What do you think is the mission of the enterprise? Ans. After reading the facts of the given case The mission of the Organization seems to be as To maximize the share of the organization in the market by providing improved and Valuable products to the consumers

Q2. What kind of opportunities and threats exist in the firms external environment? Ans. Following Opportunities exist in the firm External Environment Introduction of New Models can increase the domestic as well as export market share Only Few Restriction or no restrictions by the Government as the business already has the international competitors Market position of the Industry is balanced and sound . Business Capacity can be increased or business can be expanded or grow to the new heights Following Threats exist in the External Environment Competition with the domestic players as well as international players Upgradation of technology is must Financial Burden or Increased costs on introduction of new models with latest technology.

Q3. How would you go about evaluating the strengths and weaknesses of the firm? What factors are critical for success and failure? Ans. After analyzing the facts of the given case Strengths of the Firm are as follows1. 2. 3. 4. Good Management System Effective Coordination Between all the departments Firm is doing well with the existing models Stakeholders like distributors, executives etc. are actively involved and interested in the firms growth and expansion

Weakness of the firm are as follows1. 2. 3. 4. Financially not very strong Working on the few models with the old technology Differences in the thoughts of the management and the distributors. Lack of inventory space ,if new models will be introduced

To grow ,compete and survive in this fast changing business environment and to succeed it is must for every firm to introduce new and latest models with the updated technologies in the market. Lack of new training, obsolete technologies can result in the failure of any business. Q4. To be successful ,an organization must be an open system.What does this mean and how does it apply in this case? Ans. An open system can be defined as the system that actively interacts with its environment. By interacting with other systems, it tries to establish exchange relationships. In the given case the firm deals in the kinds of the products which needs continuous technological upgradation as it is not competing at the domestic level but it has the international competitors also. So to interact with the external agencies,government ant to research in the market is must for PMTC as it can

bring new opportunities for this firm and at the sane time can alert the firm with the existing threats prevalent in the environment. PART-III Q3. The work of Taylor and Fayol was off course essentially complimentary. Discuss the above statement in the light of contributions made by them to the management thought? Ans. Comparative Study of Taylor and Fayol Both the persons have contributed to development of science of management. The contribution of these two pioneers in the field of science of management has been reviewed as The work of Taylor & Fayol was, of course, especially complementary. They both realized that problem of personnel & its management at all levels is the key to individual success. Both applied scientific method to this problem that Taylor worked primarily from operative level, from bottom to upward, while Fayol concentrated on managing director and work downwards, was merely a reflection of their very different careers. They both differ from each other in following aspects: 1.Taylor looked at management from supervisory viewpoint & tried to improve efficiency at operating level. He moved upwards while formulating theory. On the other hand, Fayol analyzed management from level of top management downward. Thus, Fayol could afford a broader vision than Taylor. 2.Taylor called his philosophy Scientific Management while Fayol described his approach as A general theory of administration. 3.Main aim of Taylor - to improve labor productivity & to eliminate all type of waste through standardization of work & tools. Fayol attempted to develop a universal theory of management and stressed upon need for teaching the theory of management. 4.Taylor focused his attention on fact by management and his principles are applicable on shop floor. But Fayol concentrated on function of managers and on general principles of management that could be equally applied in all. Similarity - Both emphasized mutual co-operation between employment and employees. Spheres of Human Activity Fayols theory is more widely applicable than that of Taylor, although Taylors philosophy has undergone a big change Under influence of modern development, but Fayols principles of management have stood the test of time and are still being accepted as the core of management theory. Q3.What do you understand by Business Ethics? The objective function of a business to maximize profits. It has nothing to do with the social responsibility. Do you agree with this? Why or Why not? Ans. The word ethics refers to the principles of behaviour that distinguish between good, bad, right and wrong .Its a person own attitude and beliefs concerning good behaviour. Ethics reside with in individuals

and as such are defined separately by each individual in his own way. What may be ethical behaviour to X may be unethical to Y. Business ethics (also corporate ethics) is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations Business ethics is the behavior that a business adheres to in its daily dealings with the world. The ethics of a particular business can be diverse. They apply not only to how the business interacts with the world at large, but also to their one-on-one dealings with a single customer. Good business ethics should be a part of every business. There are many factors to consider. When a company does business with another that is considered unethical, does this make the first company unethical by association? Some people would say yes, the first business has a responsibility and it is now a link in the chain of unethical businesses. The objective function of a business to maximize profits. It has nothing to do with the social responsibility. The given statement is not correct , as every business has the social responsibilities. Business is a social and economic institution which can not live in isolation. The establishment and development of business depends upon the contribution made by the society. This socioeconomic view says that managers' social responsibility go beyond making profit to include protecting g and improving societys welfare .Thus to prosper and succeed in any kind of business ,every business man has the responsibilities towards all the stakeholders. Social responsibilities of the business owners or companies towards the General public, customers, investrors, financial community and employees are as followsResponsibility towards the General Public Public Health Issues. What to do about inherently dangerous products such as alcohol, tobacco, vaccines, and steroids. Protecting the Environment. Using resources efficiently, minimizing pollution. Recycling. Reprocessing used materials for reuse. Developing the Quality of the Workforce. Enhancing quality of the overall workforce through education and diversity initiatives.

Responsibilities to Customers The Right to Be Safe. Safe operation of products, avoiding product liability. The Right to Be Informed. Avoiding false or misleading advertising and providing effective customer service. The Right to Choose. Ability of consumers to choose the products and services they want.

The Right to Be Heard. Ability of consumers to express legitimate complaints to the appropriate parties.

Responsibilities to Employees Workplace Safety. Monitored by Occupational Safety and Health Administration. Quality-of-Life Issues. Balancing work and family through flexible work schedules, subsidized child care, and regulation such as the Family and Medical Leave Act of 1993. Ensuring Equal Opportunity on the Job. Providing equal opportunities to all employees without discrimination; many aspects regulated by law. Sexual Harassment and Sexism. Avoiding unwelcome actions of a sexual nature; equal pay for equal work without regard to gender.

Responsibilities to Shareholders/Investors Obligation to make profits for shareholders. Expectation of ethical and moral behavior. Investors protected by regulation by the Securities and Exchange Commission and state regulations. A fair and responsible return on the capital invested by them A part in profit or bonus payment scheme Political and economical security for investment through stable govt. law Knowledge about the working of a n enterprise. Fair amount of dividend or retained earnings. Voting rights

Q4. Planning is an intellectual process,the conscious determination of course of action,the basing of decisions on the purpose ,facts and considered estimates. Comment Discuss the steps that are involved in planning. Ans. Planning is the most basic of all management functions since it involves deciding of future course of action. Planning logically precedes the execution of all other management functions. Planning is the process of deciding in advance what is to be done, who is to do It, how it is to be done and when it is to be done and when it is to be done. It is the determination of a course of action to achieve the desired results. It bridges the gap from where we are to where we want to go. As an element of management process planning involves anticipation of future course of events and deciding the best course of action.

The process of planning involves the following steps: 1. Analyzing Environment At the outset, the internal and external environment is analyzed in order to identify company's strengths and weaknesses (in internal environment) and opportunities and threats (existing in the external environment). This is also known as SWOT (strengths, weaknesses, opportunities and threats) analysis. 2. Establishing Objectives Or Goals In the light of the environmental scanning (study), clear or probable opportunities that can be availed are identified. In order to avail them, objectives or goals are clearly defined in specific term along with priorities in all the key areas of operations.

3. Seeking Necessary Information All relevant facts and data are collected from internal and external sources. For example, availability of supplies, physical and human resources of the company, finances at disposal, relevant government policy, general economic conditions and relevant specific market situation. Then such investigated and collected information and factors are analyzed.

4. Premising or Establishing the Planning Premises In order to develop consistent and coordinated plans, it is necessary that planning is based upon carefully considered assumptions and predictions. Such assumptions and predictions are known as planning premises. 5. Identifying and Developing Alternative Courses of Action After establishing objectives or goals and taking other related steps, feasible alternative programmes or courses of action are searched out. Impossible or highly difficult propositions are left out. 6. Evaluating the Alternatives Probable consequences of each alternative course of action in terms of its pros and cons (e.g. costs, benefits, risks, etc) are assessed and than relative importance of each of them is found out by looking at their overall individual strengths and limitations especially in the light of the present objectives and the environment of the company. 7. Choosing the Most Appropriate Alternative Or Course of Action After weighing the pros and cons of each of the alternative courses of action and realizing their individual relative importance, the most appropriate alternative in the light of the overall consideration is selected to be followed. In other words, the alternative which appears to be most feasible and conducive to the accomplishment of company's predetermined objectives, is chosen as a final plan of action - as strategy. 8. Preparing the Derivative Plans Derivative plans involve short range, operating plans that are useful in day-to-day operation and provide a

working basis for such operations. Such plans are developed in the form of schedules, budgets, programmes, procedures, methods, rules, policies etc. Q4. Define Organizational Chart. Discuss the various forms of organizational structure, along with examples. Ans. An organization's structure is defined by its configuration and interrelationships of positions and departments. Organizational design is the creation or change of an organization's structure. The organizational design of a company reflects its efforts to respond to changes, integrate new elements, ensure collaboration, and allow flexibility. An organization chart is a diagram describing reporting relationships and the formal arrangement of work positions within an organization. Different Types of Organization StuctureLine organization is the most oldest and simplest method of administrative organization. According to this type of organization, the authority flows from top to bottom in a concern. The line of command is carried out from top to bottom. This is the reason for calling this organization as scalar organization which means scalar chain of command is a part and parcel of this type of administrative organization Line Organization(Chain of Command)

Line and Staff OrganizationIt is a combination of line and functional structures. In this organisation structure, the authority flows in a vertical line and get the help of staff specialist who are in advisory position . When the line executives need advice, information about any specific area, these staff specialists are consulted.

Functional Organization The organisation is divided into a number of functional areas. This organisation has grouping of activities in accordance with the functions of an organisation such as production, marketing, finance, human resource and so on.The specialist in charge of a functional department has the authority over all other employees for his function.

Matrix organization Matrix organisation combines two structures functional departmentation and project structure.Functional department is a permanent feature of the matrix structure and retains authority for overall operation of the functional units.Project teams are created whenever specific projects require a high degree of technical skill and other resources for a temporary period. Project team form the horizontal chain and functional departments create a vertical chain of command.

The project organization One goes for the project with the establishment of the temporary organization with a fixed end in mind. Anything that has a beginning and an end, is referred to as the project organization. The main responsibility of this type of the organization is to handle the complete project in a especial managerial way as the project is not going to be a continuous process at anytime. The specialized, skilled people are required at the different stages and also, in this type of the organization, the replacement of the specialized people can be done depending on the different types of the situations that may arise during the project. Virtual organization This type of the organization, does not look like to be physically operating but very well works like the one, due to the modern communication equipment which may include the following functions I. Digital mail II. Voice communication III. Cameras IV. Projection systemsV. Audio and video conferencing

Q5. Describe in detail the procedure of staffing to be adopted in big business concerns. Ans. The managerial function of staffing involves manning the organization structure through proper and effective selection, appraisal and development of the personnels to fill the roles assigned to the employers/workforce. According to Theo Haimann, Staffing pertains to recruitment, selection, development and compensation of subordinates. Steps involved in Staffing Process(Systefmatic Approach to Staffing) The various factors on which the efficient performance of staffing depends are discussed as follows:Manpower requirements(Human Resource Planning)- The very first step in staffing is to plan the manpower inventory required by a concern in order to match them with the job requirements and demands. Therefore, it involves forecasting and determining the future manpower needs of the concern. Recruitment- Once the requirements are notified, the concern invites and solicits applications according to the invitations made to the desirable candidates. Selection- This is the screening step of staffing in which the solicited applications are screened out and suitable candidates are appointed as per the requirements. Orientation and Placement- Once screening takes place, the appointed candidates are made familiar to the work units and work environment through the orientation programmes. placement takes place by putting right man on the right job. Training and Development- Training is a part of incentives given to the workers in order to develop and grow them within the concern. Training is generally given according to the nature of activities and scope of expansion in it. Along with it, the workers are developed by providing them extra benefits of in depth knowledge of their functional areas. Development also includes giving them key and important jobs as a test or examination in order to analyse their performances. Compensation(Remuneration-) It is a kind of compensation provided monetarily to the employees for their work performances. This is given according to the nature of job- skilled or unskilled, physical or mental, etc. Remuneration forms an important monetary incentive for the employees. Performance Evaluation- In order to keep a track or record of the behaviour, attitudes as well as opinions of the workers towards their jobs. For this regular assessment is done to evaluate and supervise different work units in a concern. It is basically concerning to know the development cycle and growth patterns of the employees in a concern. Promotion and transfer- Promotion is said to be a non- monetary incentive in which the worker is shifted from a higher job demanding bigger responsibilities as well as shifting the workers and transferring them to different work units and branches of the same organization. Thus, above mentioned steps are the factors which affects staffing process in an organization.

Q5. What do you understand by motivation? Describe the main techniques of motivation? Ans. The success of an organisation depends on how effectively managers are able to motivate their subordinates. According to Allen, "poorly motivated people can nullify the soundest organisation". People will give their best to an organisation when their personal goals are in sync with organisational demands, when they are able to achieve goals that they perceive as important, utilizing their competencies to the fullest possible extent. Employee-hungry companies in the 21st century, not surprisingly, are trying every trick through appropriate human resource policies Motivation is a predisposition to act in a specific goal directed manner.Motivation is a goal directed behaviour characterised by the process of selecting & directing certain actions, among voluntary activities to achieve goals.Motives are expressions of a persons needs, hence they are personal & internal. Techniques of Motivation-

Motivation T echniques

R eward

E mployee Involvement

J ob E nrichment

Q uality of W ork Life

1.WHY REWARD SYSTEM?: The only way employees will fulfill your dream is to share in the dream . Reward systems are the mechanism that make this happen.

Two Basic Categories of Rewards:

Two Basic Categories of Rewards Extrinsic Rewards: It covers the basic needs of income to survive , a feeling of stability and consistency and recognition Intrinsic Rewards: Those beneficial factors related to the work situation and well-being of each employees. job satisfaction, a feeling of completing challenges competently, enjoyment, and even perhaps the social interactions which arise from the workplace Merit Reward System: Under Merit Reward System Pay is awarded to employees on the basis of the relative value of their contribution to the organization. Employees get annual salary increases depending on their overall job performance.

Incentive Reward System: One-shot rewards that do not become a permanent part of an employees base compensation. Monetary incentives -Piece-rate incentive plans that pay a certain amount of money for every unit the employee produces. Nonmonetary incentives- Days off, additional paid vacation time

Team and Group Reward System: Gain sharing Sharing the cost savings that result from productivity improvements. Profit sharing plans Provide an organization wide incentive in the form of an annual bonus to all employees based on corporate profits. 2.EMPLOYEE INVOLVEMENT: A Participative process that uses the entire capacity of employees and is designed to encourage increased commitment to the organizations success. Following are the ways with which the employees can be involvedParticipative management - A process in which subordinates share a significant degree of decision making power with their immediate superiors. Representative participation - Workers participate in organizational decision making through a small group of represen - tative employees. Works council -Groups of nominated or elected employees who must be consulted when management makes decisions involving personnel. Boards representatives -A form of representative participation; employees sit on a company board of directors and represents the interests of the firms employees.

Quality circle -A work group of employees who meet regularly to discuss their quality problems, investigate causes, recommend solutions and take corrective actions. Employee stock ownership plans Company established benefit plans in which employees acquire stock as part of their benefits. 3.Job Enrichment A job design technique that is a variation on the concept of job enlargement. Job enrichment adds new sources of job satisfaction by increasing the level of responsibility of the employee. While job enlargement is considered a horizontal restructuring method, job enrichment is a vertical restructuring method by virtue of giving the employee additional authority, autonomy, and control over the way the job is accomplished. Also called job enhancement or vertical job expansion. 4.Quality of work life Quality of work life is concerned about the impact of work on people as well as on organisation effectiveness, and the idea of participation in organisational problem solving and decision making. Concerned with the overall climate of the work Purpose is to interface Human-Technological-Organisational for better quality of life

Q6. What is communication? Describe the barriers and process of communication? Ans. Communication refers to the process of passing information and understanding from one person to another. It involves an exchange of facts, ideas, opinions or emotions by two or more individuals. According to L. A. Allen, Communication is the sum of all the things one person does when he wants to create understanding in the mind of another. The essential features of communication are given below: Two People Sequential Process Continuous activity Pervasive function Transference of Meaning and Understanding Receiver oriented Process of Communication Communication process involves the sender, the transmission of a message through a selected channel, and the receiver. Message Source: senders intended meaning

Encoding: The message converted to symbolic form Channel: The medium through which the message travels Decoding: The receivers retranslation of the message Noise: Disturbances that interfere with communications

Communication and electronic media go hand in hand. In this technology oriented era the use of electronic communication is inevitable. The role and importance of electronic communication can't be overlooked. Electronic information interchange is necessary for the survival in current era. Information is the back bone of the economy of a Nation. Electronic media has improved communication numerous ways. Communication through electronic media such as mobile phone, paging devises, lap top computers, Email, fax machines, and electronic notice boards Messages can be delivered instantly, over long distances, and to a large number of people. But not all people have can access to the media. Barriers to Effective Communication Several factors may disrupt the communication process or come in the way of effective communication. These can be listed thus: Semantic Barriers Many of our communication problems are semantic in nature, as the same word may convey a different meaning to different people. Studies of the Oxford English Dictionary show an average of over 25 different meanings for each of the 500 most frequently used words in the English language. The word productivity for example, may mean effective usage of resources for managers but for workers it may mean doing more work to get the same amount of salary. Filtering The deliberate manipulation of information to make it appear more favorable to the receiver. Emotions-Disregarding rational and objective thinking processes and substituting emotional judgments when interpreting messages.

Information Overload-Being confronted with a quantity of information that exceeds an individuals capacity to process it. Defensiveness-When threatened, reacting in a way that reduces the ability to achieve mutual understanding. Language-The different meanings of and specialized ways in which senders use words can cause receivers to misinterpret their messages. National Culture-Culture influences the form, formality, openness, patterns and use of information in communications.
Interpersonal Communication Barriers
Filtering Emotions

National Culture


Interpersonal Communication

Information Overload


Q6.What are the various forces and need for change? Discuss the new trends in Organizational Change. Ans. Organisational change refers to relatively enduring alteration of the present state of an organisation or its components or interrelation amongst the components and their differential and integrated functions in totality in order to attain greater viability in line context of the present and anticipated future environment. Forces for Change /factors of organisational change Organisational changes do not occur spontaneously. (They occur when the forces encouraging change become more powerful than those resisting change). These forces to change can be either internal (emanating from within an organisation) or external forces (coming from outside an organisation). External factors:1. Technology: - The adoption of new technologies, such as computers, telecommunication systems, robotics and flexible. Manufacturing operations have a profound impact on Organisations that adopt them. 2. Social changes:- After globalisation there is a radical change shift In one value placed on higher education, lifestyle, views on marriage, joint family system and shopping preferences.

3. Marketing conditions:- The need, wants, appreciations, liking, disliking and preferences of customers are changing frequently. Consumer is emerging as a king who is a actually deciding factor of market forces. 4. Globalisation:- Global economy refers that competitors ae likely to come from different countries. Organisations will encounter a wide variety of dynamic changes merger, acquisition, down rising etc. 5. Political forces:- As long as currencies fluctuate and some economies outperform other, assets will flow across borders. Internal forces:1. Changes is managerial personnel:- Changes in the functioning of top level professional manager bring changes in one organisation in terms of organisation design, delegation of authority, allocation of work, firing responsibility and installation of supervision and contact etc. 2. Shift in social cultural values:- workers are more educated, less conservative and more women are joining the work force. They place greater emphasis on human values, such as dignity recognition, social status, equality etc. 3. To have a dynamic environment:- if one organisation is not moving forward, then it will not survive and grow. Flexibility, specialisation, standardisation, modernisation and automation are the necessities of the time. Required changes should be incorporated so that employees modify their attitude towards changes. 4. Deficiency in the existing structures:- Changes may be required in the present setup of the organisation to meet the challenges imposed by the workforces and technology. These deficiencies may be in the form of more no of levels, lack of cooperation and coordination, poor system of committee, lack of uniform policy decisions, multiplicity of committee autocracy in decision making, centralisation and so on. New Trends in Organizational changeOrganizations have entered a new era characterized by rapid, dramatic and turbulent changes. The accelerated pace of change has transformed how work is performed by employees in diverse organizations. Change has truly become an inherent and integral part of organizational life. Several emerging trends are impacting organizational life. Of these emerging trends, five will be examined: globalization, diversity, flexibility, flat, and networks. These five emerging trends create tensions for organizational leaders and employees as they go through waves of changes in their organizations. These tensions present opportunities as well as threats, and if these tensions are not managed well, they will result in dysfunctional and dire organizational outcomes at the end of any change process.

Trends 1. Globalization 2. Diversity 3. Flexibility 4. Flat 5. Networks

Tensions Global versus Local Heterogeneity versus Homogeneity Flexibility versus Stability Centralization versus Decentralization Interdependence versus Independence