Principles of Management - Question Bank

Principles of Management S7 Mechanical 2008 scheme Kerala University
Kailas Sree Chandran Dept of Mechanical - STIST

S7 MECHANICAL
QUESTION BANK

Prepared by:
KAILAS SREE CHANDRAN
DEPT OF MECHANICAL - STIST

kailassreechandran@yahoo.co.in

KSC Dept of Mechanical - STIST
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QUESTION BANK
PRINCIPLES OF MANAGEMENT AND DECISION MODELLING (08.701)
S7 MECHANICAL
Module I
Part A (4 mark questions)
1. What is Management?
Management is concerned with human beings whose behavior is highly unpredictable. Ever since people
began forming groups to achieve goal, they could not achieve as individuals. Managing has been
essential to provide the coordination of individuals efforts. Management is found in every walk of life.
Management does not perform specific jobs. It motivates other people to perform specific jobs.
Management is not doing the work but getting the work done through the effort of others.
Management brings together basic resources popularly known as 6 Ms Men, Material, Machines,
Methods, Money and Market.
This helps to achieve the expected results quickly and economically in terms of
Production
Sales
Profit and
Goodwill in the Market

2. Explain the different Managerial Skills

Robert L Kartz identified three kinds of skills for administrators. To these fourth may be added as the
ability to design solutions.
They are as follows: -
1) Technical skills: -
It is the knowledge of a proficiency in activities involving methods, procedures and processes.
It involves working with tolls and specific techniques.
For example mechanics work with tools, the supervisors have ability to teach the juniors how to
use the tools.
Similarly accountants apply specific techniques.

2) Human Skills: It is the ability to work with people, its co-operative efforts; it is teamwork, creating
an environment full of security and able to freely express their opinions.

3) Conceptual skills: - It is to recognize significant elements in a situation, and to understand the
relationships among the elements.

4) Design skills: -
It is the ability to solve problems in ways that will benefit the enterprise.
Manager must have a foresight, the skill of a good design engineer in working out a practical
solution to a problem.
They must also have the valuable skill of being able to design a workable solution with rationality.
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3. Objectives of Scientific Management
Scientific utilization of various resources like human power, material etc.
To provide trained and efficient work force.
To provide standardize methods of work.
To provide a scientific base for selecting material, and equipment.
To provide extra wages to the worker for higher production.
Replace old rule of thumbs to new scientific methods.
To develop a good rapport between management and workers.
To achieve higher production, with reduce costs and maximum efficiency.
Less wastage.
4. Explain System Approach of Management.
The systems approach to management indicates the fourth major theory of management thought
called modern theory. Modern theory considers an organization as an adaptive system which has to
adjust to changes in its environment. An organization is now defined as a structured process in
which individuals interact for attaining objectives.
Meaning of "System": The word system is derived from the Greek word meaning to bring together or
to combine. A system is a set of interconnected and inter-related elements or component parts to
achieve certain goals. A system has three significant parts:
1. Every system is goal-oriented and it must have a purpose or objective to be attained.
2. In designing the system we must establish the necessary arrangement of components.
3. Inputs of information, material and energy are allocated for processing as per plan so that the outputs
can achieve the objective of the system.

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5. Differentiate Authority and Responsibility
Meaning of authority
Authority is the kind of right and power through which it guides and directs the actions of others so that
the organizational goals can be achieved. It is also related with decision making. It is vested in particular
position, not to the person because authority is given by an institution and therefore it is legal.
Meaning of responsibility
Authentic body of an organization is top level management, top level management direct the
subordinates. Departmental managers and other personnel take the direction from top level
management to perform the task. Authority is necessary to perform the work .only authority is not
provided to the people but obligation is also provided. So the obligation to perform the duties and task
is known as responsibility.
6. Explain the Principles of Delegation of Authority.
1. Principle of parity of authority and responsibility- parity of authority and responsibility is one of the
important principles of delegation of authority. There is equality in assigned task and power to do the
work. Authority to the subordinates is given by the superior on the basis of assigned task. So Authority
to the subordinates is given nether more or less than the task otherwise there can be improper
utilization of authority and mismanagement of task.
2. Principle of absoluteness of responsibility- according to it, responsibility cant be delegated. Only
authority can be delegated. The person who delegates authority is himself responsible for his seniors.
3. Principle of unity of command- according to it, subordinates must be commanded by one superior,
they should take their task from one superior and should be accountable fro their responsibility toward
the superior level of operation
4. Principle of functional definition of authority and responsibility- as per this principle. Duties and task
assigned by the superior and the authority given to fulfill the task should be clearly explained and
decided. Bt this subordinates can know about the limit of ones right, duties and responsibility.
5. The scalar chain- according to it, authority flows from top to bottom. So that scalar chain is the basis
of relationship between the superior and subordinates. It emphasizes the relation between superior and
subordinates by which delegation will be easier.
7. Which are the different kinds of partners in Partnership based organization?
A partnership firm can have different types of partners with different roles and liabilities. An
understanding of these types is important for a clear understanding of their rights and responsibilities.
These are described as follows:
(i) Active partner: An active partner is one who contributes capital, participates in the management of
the firm, shares its profits and losses, and is liable to an unlimited extent to the creditors of the firm.
These partners take actual part in carrying out business of the firm on behalf of other partners.
(ii) Sleeping or dormant partner: Partners who do not take part in the day to day activities of the
business are called sleeping partners. A sleeping partner, however, contributes capital to the firm,
shares its profits and losses, and has unlimited liability.
(iii) Secret partner: A secret partner is one whose association with the firm is unknown to the general
public. Other than this distinct feature, in all other aspects he is like the rest of the partners. He
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contributes to the capital of the firm, takes part in the management, shares its profits and losses, and
has unlimited liability towards the creditors.
(iv) Nominal partner: A nominal partner is one who allows the use of his/her name by a firm, but does
not contribute to its capital. He/she does not take active part in managing the firm, does not share its
profit or losses but is liable, like other partners, to the third parties, for the repayments of the firms
debts.
8. Difference between delegation and decentralization of authority

Bases Delegation of authority Decentralization of authority
Nature Process of transferring authority and
creation of responsibility between
superior and subordinates is called
delegation. It can take place without
decentralization
Decentralization is delegation of
and dispersion of authority. It is not
possible without delegation of
authority
Purpose It minimizes the burden of managers
of unit, departments or plant
It prepares the organizational
participants of the organization
Relationship Relationship is between superior and
immediate subordinates are
indicated
Relationship is between top level,
management, departments and
units
Techniques It is technique of management used
to get the things done through others
It is both philosophy and technique
of management
Parties It is confined to manager and
subordinates
It involves all managers at all level
and relates relationship between
departments, sections and units.
Responsibilities Authority is only delegated, not
responsibilities
Superior is relieved from
responsibilities too
Necessity Very important to management
process
It is optional and situational as per
the need
Control Control remains in hand of superior
who supervise the activities of
subordinates
Control is delegated and
decentralized to the departmental
managers
Withdrawal of
authority
It can be withdrawn by delegator at
any time
Withdrawal of authority is not
simple.
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Part B (10 mark questions)
1. Explain the importance of Management
The importance of management in business is universally accepted. It acts as a driving force in business.
Modern business is highly competitive and need efficient and capable management. It is through
management that business activities are organized and conducted efficiently and objectives are
achieved.
The following points will suggest the importance of management
1) Optimum use of resources: management facilities optimum utilization of available human and
physical resources, which leads to progress and prosperity of a business enterprise. Even
wastage of all types are eliminated or minimized.
2) Competitive strength: Management develops competitive strength in an enterprise. This
enables an enterprise to develop and expand its assets and profits.
3) Cordial industrial relations: Management develops cordial industrial relation, ensures better life
and welfare to employees and raises their morale through suitable incentives.
4) Motivates employees: It motivates employees to take more interest and initiative in the work
assigned and contributes for raising productivity and profitability of the enterprise.
5) New techniques: Management facilities the introduction of new machines and new methods in
the conduct of business activities. It also brings useful technologies developments and
innovation in the management of business activities.
6) Effective management: Society gets the benefits of efficient management in terms of industrial
development, justice to different social groups, consumers satisfaction and welfare and proper
discharge of social responsibilities.
7) Expansion of business: Expansion growth and diversification of a business unit are possible
through efficient management. It creates good corporate image to a business enterprise.
8) Stability and prosperity: Efficient management brings success stability and prosperity to a
business enterprise through cooperation and team spirit among employees.
9) Team spirit: Management develops team spirit and raises overall efficiency of a business
enterprise.
10) Effective use of managers: Management ensures effective use of managers so that the benefits
of their experience, skills and maturity are available to enterprise.
11) Smooth functioning: Management ensures smooth, orderly and continuous functioning of an
enterprise over a long period. It also raises the efficiency, productivity and profitability of an
enterprise.
12) Reduces turnover and absenteeism: It reduces Labour turnover and absenteeism and ensures
continuity in the business activities and operations.
13) Sound organization: A dynamic and progressive management guarantees development of sound
organization, which can face any situation favorable or unfavorable with ease and confidence.

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2. Henri Fayol 14 Principles of Management
Management Principles developed by Henri Fayol:

1. DIVISION OF WORK: Work should be divided among individuals and groups to ensure that
effort and attention are focused on special portions of the task. Fayol presented work
specialization as the best way to use the human resources of the organization.

2. AUTHORITY: The concepts of Authority and responsibility are closely related. Authority was
defined by Fayol as the right to give orders and the power to exact obedience. Responsibility
involves being accountable, and is therefore naturally associated with authority. Whoever
assumes authority also assumes responsibility.

3. DISCIPLINE: A successful organization requires the common effort of workers. Penalties should
be applied judiciously to encourage this common effort.

4. UNITY OF COMMAND: Workers should receive orders from only one manager.

5. UNITY OF DIRECTION: The entire organization should be moving towards a common objective
in a common direction.

6. SUBORDINATION OF INDIVIDUAL INTERESTS TO THE GENERAL INTERESTS: The interests of
one person should not take priority over the interests of the organization as a whole.
7. REMUNERATION: Many variables, such as cost of living, supply of qualified personnel, general
business conditions, and success of the business, should be considered in determining a workers
rate of pay.
8. CENTRALIZATION: Fayol defined centralization as lowering the importance of the subordinate
role. Decentralization is increasing the importance. The degree to which centralization or
decentralization should be adopted depends on the specific organization in which the manager
is working.
9. SCALAR CHAIN: Managers in hierarchies are part of a chain like authority scale. Each manager,
from the first line supervisor to the president, possess certain amounts of authority. The
President possesses the most authority; the first line supervisor the least. Lower level managers
should always keep upper level managers informed of their work activities. The existence of a
scalar chain and adherence to it are necessary if the organization is to be successful.
10. ORDER: For the sake of efficiency and coordination, all materials and people related to a
specific kind of work should be treated as equally as possible.
11. EQUITY: All employees should be treated as equally as possible.

12. STABILITY OF TENURE OF PERSONNEL: Retaining productive employees should always be a
high priority of management. Recruitment and Selection Costs, as well as increased product-
reject rates are usually associated with hiring new workers.

13. INITIATIVE: Management should take steps to encourage worker initiative, which is defined
as new or additional work activity undertaken through self direction.

14. ESPIRIT DE CORPS: Management should encourage harmony and general good feelings
among employees.
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3. Explain the concept of Management.
Management is an activity process composed of some basic functions, for getting the objective of any
enterprise accomplished through the efforts of its personnel. Wherever and whenever objectives are to
be achieved through organized and co-operative endeavour, management becomes essential for
directing and unifying the group efforts towards a common purpose. As human aims and beliefs are
mostly realized through the establishment of diverse associations in our society, management is
universally needed for operating all such organisation.
Management, viewed as a functional concept, is of equal necessity to the educational religious,
charitable and other non-business institutions as it is required for business Organizations. Furthermore,
the greatest and the most comprehensive of our social organizations, viz., the Government of all types
needs management as others require, perhaps more than all other social organizations. That the
Government without requires a management process has been apply pointed out in the statement: A
Government without good management is a house built on sand. Put in short, management is an
essential accompaniment of all social organizations, and it is to be found everywhere as a distinct,
separate and dominate activity. The nature and significance of the activity do not change even if it is
called administration in some social in situations and management in others.

Management is the only activating element of any enterprise for getting things done through it
personnel. The job of management is to provide dynamic leadership that combines the productive but
passive resources into a fruitful organization. Not only does it adapt itself to existing opportunities,
restrictions and pressures, but it exercises a positive influence as well as to make the future events
favourable for the enterprise. With a view to getting the expected results and seeing that things happen
as they should, management has to become a creator of the economy rather then its creature.
Management forges ahead through innovations in operating situation and the adoptian of far-sighted
planning. It visualize the future, initiates changes and achieves the purpose of any enterprise under
highly dynamic conditions. As an activity process, management plans the future course of action,
organizes people and their work, directs the operation an controls the performance, and thus ensures
the accomplishment of enterprise objectives. Adaptations and innovations permeate through each of
these phases of the management process.
Management acts as a creative and invigorating force in the organisation. It creates result that is bigger
than the sum total of efforts put in by the group. Management adds real plus value to the operation of
any enterprise by enlisting as little extra value out of each person. It provides new ideas, imaginations
and visions to the group working and integrates its efforts in such a manner as to account for better
results. It ensures a smooth flow of work in the organization by focusing on strong points, neutralizing
weak link, overcoming difficulties and establishing team spirit. Management strives to secure the
maximum result by the use of minimum resources.
4. Management is a combination of Arts, Science & Profession Explain fully.
It is very difficult to understand What is Management. Many tried and given different definitions of
management. But if you want to understand, understand its features. By which we know that,
management is universal, continuous, dynamic, creative etc. and can wonder, if there is proper
management.
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To understand its scope and nature, we have to understand its features, which can easily clarify the term
management. These features are Arts, Science & Profession, which combing makes MANAGEMENT.
Firstly we will take Arts and where it is in Management.
a. Art requires skills whereas in management requires conceptual, technical, human relations and
decision making skills.
b. Art requires knowledge whereas in management requires learning and acquiring knowledge
such as Marketing, Finance, Technical and production etc.
c. Art is creative whereas in management as a discipline is the function of creativity. In this
creativity is facing the challenges of competition. Consider if we want to introduce our new
product in market, then we must make our self-ready for competition, i.e. Competition in sale,
production, advertising and price. So that to survive in the market.
d. Art is personalized whereas in management different people do a particular task in a different
way. Every individual has its own management style. We can categories them as Democratic,
Autocratic, Paternalistic, Beurocratic etc.
e. Art is a performance whereas in management performance is seen by profit, growth and
development. These are the indicators, which decide the management as good or bad.
Now we come to science where it is in management.
a. Science is a body of organized knowledge whereas in management as Social
b. Science consists of history of management thought.
c. Science is developed over a period of time whereas management is also developed over a period
of time. As consider that in many companies, In 1950s the productivity is 50% but in 90s it
exceeds to 80% and in 2000 it exceeds to 95%. It is just due to management. In which changes
come in various disciplines like human relations, services, finance, technical etc. during the whole
interval.
d. Science establishes cause and effect relationship whereas in management if we put more worker
on work, than there will be more productivity. Here the cause is workers and the effect is in the
productivity.
e. Science has predictive power; in management also we can do predictions. Like if the stock
exchange rises then the rate of particular share may or may not rise.
f. Rules/Regulations are verified from time to time whereas in management new rules are
established and old rules are changed, so that to have full use of resources in a management.
At last we come to PROFESSION, and how it is related to management.
Before relating management and profession, we must know what is profession. As in profession we
require definite period of learning, it needs certificate of practice, centralized rule making authority and
social commitment/obligation/accountability.
These are in case of academic one that sometimes wont applicable in case of management like anyone
can become manager without any specific qualification or period of learning. It doesnt need any
certificate of practice. These are not in forcible under any law. If we come to practical approach of
profession, which is very close to practice of management. By these we can know the roles of profession
manager as:
a) Knowledge base decision instead of any intuition or predictions.
b) Based on experience and expertise in require field.
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c) Help in meeting compitiveness challenges.
d) Apply theories of management in solving organizational problems.
e) Separation of ownership from management.
At last by discussing the Arts, Science and Profession role in management. It is combination of all the
three and it should be a way of life.
5. Defi ne the del egati on of authori ty. What are the probl ems i n del egati on? Expl ai n
the pri nci pl es of effecti ve del egati on.
Del egate means to gi ve, offer, and al l ot a part of authori ty to subordi nate. Authori ty
i s ri ght to act or deci de. Even though you have del egated a task to some one el se, you
are sti l l responsi bl e for maki ng sure the task i s done on ti me and correctl y. There are
posi ti ve aspects al so i n del egati on l i ke:
a) Hi gher effi ci ency.
b) I ncreased moti vati on.
c) Devel ops the ski l l s of your team.
d) Better di stri buti on of work through the group.
The amount of authori ty you del egate i s up to you, al though i t shoul d be enough to
compl ete the task. There are vari ous degrees of del egati on l i ke:
a) Low degree of del egati on: I n these superi or states parti cul ar task to
subordi nates and tel l them to report back after i nvesti gati on on i t.
b) Moderate: I n these subordi nates has to report back wi th an acti on pl an.
c) Hi gh degree: i n these subordi nate reports back after taki ng acti on wi th resul ts
and reasons.
Functi onal Authori ty:
This is the right, which is delegated to an individual or a department to control a specified process,
practices, policies or other matters relating to activities undertaken by persons in other departments.
Functioning of a functional authority:
1. Clarifying the assignment:
i. What to be delegated.
ii. Whom to be delegated.
2. Specify the subordinates range of decision.
3. Allow the subordinates to participate.
4. Inform others that a delegation has occurred.
5. Establish feedback control.
There are many barri ers i n del egati on:
1) Li ke some manager bel i eve that i f they want to do thi nk ri ght, do thei r sel ves.
2) Lack of confi dence, trust on subordi nates.
3) Low sel f-confi dence and more over confi dence amongst the manager s mi ght
became a barri er.
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4) Fear among manager, that they wi l l l oose status.
5) I nstructi ons from above authori ty not to del egate further.
Pri nci pl es of del egati on.
1) I denti fy a sui tabl e subordi nate.
2) Expl ai n the del egati on (degree).
3) Keep l i nes of communi cati on open, so that subordi nate has f ul l feedback al so.
4) Expl ai n or trai n the task properl y.
5) Must have moni tori ng process and control .
6) Won t di sappear after del egati on.
7) Prai se/Acknowl edge a j ob wel l done.
8) I n case of emergency, subordi nate has to report you as f or authenti cati on,
di screti onary matter.
9) Encourage and boost moral e of subordi nates.
Task after del egati on so that to make i t more effecti ve.
a) Pl an: goal , meeti ng, tasks.
b) Di rect: your team keeps them on track.
c) Encourage: boost moral e.
6. Explain the different functions of Management
a) Planning
Planning involves selecting missions and objectives and the actions to achieve them, it requires decision
makin, that is, choosing future courses of action from among alternatives. No real plan exists until a
decision-a commitment of human or material resources or reputation has been made.
b) Organizing
Organizing involves establishing an intentional structure of roles for people to fill in an organization. It
is intentional in the sense of making sure that all the tasks necessary to accomplish goals are assigned
and, it is hoped, assigned to people who can do them best.
c) Staffing
Staffing involves filling and keeping filled the positions in the organization structure. This is done by
identifying workforce requirements; inventorying the people available; and recruiting, selecting,
placing, promoting, appraising, planning the careers of, compensating, and training or otherwise
developing both candidates and current job holders so that tasks are accomplished effectively and
efficiently.
d) Leading
Leading is influencing people so that they will contribute to organization and group goals; it has to do
predominantly with the interpersonal aspect of managing. Leading involves motivation, leadership
styles and approaches, and communication.
e) Controlling
Controlling is measuring and correcting individuals and organizational performance to ensure that
events conform to plans. It involves measuring performance against goals and plans, showing where
deviations from standards exist, and helping to correct them.
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f) Coordination
Coordination is the essence of manager ship, for it achieves harmony among individual efforts toward
the accomplishment of group goals. Each of the managerial functions is an exercise contributing to
coordination.
7. What do you understand by Matrix Organization, mention advantages and disadvantages of
Matrix Organization?
In a matrix organization, the functional and project of product patterns of departmentation are
combined in the same organization structure.
This kind of organization occurs frequently in marketing (for example, planning and executing an
advertising campaign for a major new product) in the installation of an electronic data processing
system, etc.
Functional departments are permanent fixture of the matrix organization; they retain authority
for the overall operation of their respective units. Product departments or project teams are created as
the need arises for them, that is, when a specific programme requires a high degree of technical skill in
a concentrated period of time. Members of a project team are assembled from the functional
departments and are placed under the direction of a project team are assembled from the functional
departments and are placed under the direction of a project manager. The manager for each project is
responsible and accountable for its success and has authority over the other team members for the
duration of the project. On the completion of the project, the members of the team, including the
project manager revert back to their respective departments until the next assignment to a project.
Advantages:-The problem of coordination is minimized because the project manager acts as an
integrator to relate personnel from diverse disciplines.
1. There is a reservoir of specialists which ensures availability of expertise to all projects on
the basis of their need.
2. There is economy in the cost. Each project is assigned only the number of people it needs,
avoiding unnecessary surplus.
3. There is an effective information decision system which enables members to respond
quickly to the change in product needs.
4. Is oriented towards end results.
5. Professional identification is maintained.
6. Pinpoints product profit responsibility.
Disadvantages
1. A state of conflict exists between functional and project managers, as both compete for
limited resources.
2. Role conflict, role ambiguity, and role overload may result in stress for the functional and
project managers as well as for the team members.
3. An imbalance of authority and power, as well as horizontal and vertical influence of the
project and functional managers, can also lead to problems in matrix organization.
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4. Because of the potential conflicts, managers may want to protect themselves against
blame by putting everything in writing, which increases administration cost.
5. Matrix organization requires many time consuming meetings.
8. Contributions of F.W Taylor
While working in Midvale Company as a manager Taylor observed that employees were not performing
as per their capacity of productivity. And he considered that this condition was occurring because of no
care towards the waste. Taylor worked towards the experiments at his work place to increase the
workers efficiency so that maximum output could be achieved by utilizing effort at maximum level.
1. Scientific task setting:- Taylor observed that the management does not know exactly the works
pieces of work- volume of works- which are to be performed by the workers during a fixed period of
time- which is called working day. In a working day how much work is to be dome by a worker but be
fixed by a manager and the task should be set everyday. The process of task setting requires scientific
technique. To make a worker do a quantity of work in a working day is called scientific task setting
2. Differential payment system:- under this system, a worker received the piece rate benefit which will
attract the workers to work more for more amount of wages and more incentives would be created to
raise the standardization of output to promote the workers to produce more and perform more task
than before and utilize waste time to earn more wages.
3. Reorganization of supervision:- concepts of separation of planning and doing and functional
foremanship were developed. Taylor opines that the workers should only emphasize in planning or in
doing. There should be 8 foreman in which 4 are for planning and 4for doing. For planning they were
route clerk, instruction cord clerk, time and cost clerk and disciplinarian. And for doing they were speed
boss, gang boss, repair boss and inspector.
4. Scientific recruiting and training:-staffs and workers should be selected and employed on scientific
basis. Management should develop and train every workers by providing proper knowledge and training
to increase their skills and make them effective
5. Economy:- efficient cost accounting system should be followed to control cost which can minimize
the wastages and thoroughly reduced and thus eliminated.
6. Mental revolution:- Taylor argued that both management and workers should try to understand
each other instead of quarreling for profits and benefits which would increase production, profit and
benefits.
9. What is mean by Span of Control? What are the factors affecting SOC?
Span of control refers to the number of immediate subordinate who report a manager.
Different level of organization level is also called span of control.
FACTORS DETERMINING AN EFFECTIVE SPAN
There are several factors which influence the span of management.
1- TRAINING OF SUBORDINATES
The better training of subordinates increases the necessary superior subordinates relationship.
Well trained subordinates require less time of their managers also they have less contact with
their managers. Training programs increase in new and more complex industries.

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2-CLARITY OF DELEGATION OF AUTHORITY
Although training enables managers to reduce the frequency of time consuming contact but
delegation of authority should be clear. If a manager clearly delegates authority to task with a
minimum of the managers time and attention. But if a manager delegates authority unclearly than
subordinate give his maximum.
3-CLARITY OF PLANS
If plans are well defined if they are workable, if the delegation of authority toward plan is clear,
if the subordinate understands what expected than little of a supervisor time will be required on the
other hand if plan cannot be drawn accurately and subordinates do much of their own planning,
they may require considerable guidance.
4- USE OF OBJECTIVE STANDARD
A manager must find out, either by personal observation or through the use of objective
standards, whether subordinates are following plans. Obviously, good objective standards enable
managers to avoid many time consuming contact.
5- RATE OF CHANGE
Certain enter rises change much more rapidly than others. The rate of change is very important in
formulating and maintaining policies. It may explain the organization structure of companys
railroad, banking and public utility companies.
6- COMMUNICATION TECNIQUES
Communication techniques also influence the span of management. If every plan, instruction,
order or direction has to be communicated by personal contact than managers time will be
heavily burdened. An ability to communicate plans and instructions clearly and concisely also tends
to increase a managers span.
7- AMOUNT OF PERSONAL CONTACT NEEDED
Many instances, face to face meetings are necessary. Many situations cannot be completely policy
statements planning documents or other communications that do not involves personal contact.
An executive may and valuable informations by meeting to subordinates and by discuss problems
with them. Some problems can be handled only in face to face meeting so the best way of
communicating problems, instructor, and subordinates is to spend time in personal contact.
8- VARIATION BY ORGANIZATION LEVEL
Several research projects have found that the size of the most effective span differs by organizational
level. For example, it was studied that when a greater number of specialties were supervised,
effective spans were narrower at lower and middle levels of organization but were increased at upper
levels.
9- COMPETENCY OF MANAGERS
A manager who is competent and well trained can effectively supervise more people than who is not.
10- MATURITY AND MOTIVATION OF SUBORDINATES
The more mature subordinates may delegate more authority, thus widening the span.

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10. Explain different Levels of Management.
Many managers work in an organisation. However, these managers do not work at the same level. They
work and operate at different positions. Hierarchy of these managerial positions is called Levels of
Management.
Three Levels of Management
Generally, there are Three Levels of Management,
Administrative or Top Level of Management.
Executive or Middle Level of Management.
Supervisory or Lower Level of Management.
At each level, individual manager has to carry out different roles and functions.

Top Level of Management
The Top Level Management consists of the Board of Directors (BOD) and the Chief Executive Officer
(CEO). The Chief Executive Officer is also called General Manager (GM) or Managing Director (MD) or
President. The Board of Directors are the representatives of the Shareholders, i.e. they are selected by
the Shareholders of the company. Similarly, the Chief Executive Officer is selected by the Board of
Directors of an organisation.
The main role of the top level management is summarized as follows :-
a. The top level management determines the objectives, policies and plans of the organisation.
b. They mobilises (assemble and bring together) available resources.
c. The top level management does mostly the work of thinking, planning and deciding. Therefore,
they are also called as the Administrators and the Brain of the organisation.
d. They spend more time in planning and organising.
e. They prepare long-term plans of the organisation which are generally made for 5 to 20 years.
f. The top level management has maximum authority and responsibility. They are the top or final
authority in the organisation. They are directly responsible to the Shareholders, Government and
the General Public. The success or failure of the organisation largely depends on their efficiency
and decision making.
g. They require more conceptual skills and less technical Skills.
Middle Level of Management
The Middle Level Management consists of the Departmental Heads (HOD), Branch Managers, and the
Junior Executives. The Departmental heads are Finance Managers, Purchase Managers, etc. The Branch
Managers are the head of a branch or local unit. The Junior Executives are Assistant Finance Managers,
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Assistant Purchase Managers, etc. The Middle level Management is selected by the Top Level
Management.
The middle level management emphasize more on following tasks :-
a. Middle level management gives recommendations (advice) to the top level management.
b. It executes (implements) the policies and plans which are made by the top level management.
c. It co-ordinate the activities of all the departments.
d. They also have to communicate with the top level Management and the lower level
management.
e. They spend more time in co-ordinating and communicating.
f. They prepare short-term plans of their departments which are generally made for 1 to 5 years.
g. The middle Level Management has limited authority and responsibility. They are intermediary
between top and lower management. They are directly responsible to the chief executive officer
and board of directors.
h. Require more managerial and technical skills and less conceptual skills.
Lower Level of Management
The lower level management consists of the Foremen and the Supervisors. They are selected by the
middle level management. It is also called Operative / Supervisory level or First Line of Management.
The lower level management performs following activities :-
a. Lower level management directs the workers / employees.
b. They develops morale in the workers.
c. It maintains a link between workers and the middle level management.
d. The lower level management informs the workers about the decisions which are taken by the
management. They also inform the management about the performance, difficulties, feelings,
demands, etc., of the workers.
e. They spend more time in directing and controlling.
f. The lower level managers make daily, weekly and monthly plans.
g. They have limited authority but important responsibility of getting the work done from the
workers. They regularly report and are directly responsible to the middle level management.
h. Along with the experience and basic management skills, they also require more technical and
communication skills.
11. Explain the Principles of Organization
1. Principle of unity of objectives: Organizational goals, departmental goals, and individual goals must
be clearly defined. All goals and objectives must have uniformity. When there is contradiction among
different level of goals desired goals cant be achieved. Therefore, unity of objectives is necessary
2. Principle of specialization: Sound and effective organization believes on organization. The term
specialization is related to work and employees. When an employee takes special type of knowledge
and skill in any area, it is known as specialization. Modern business organization needs the specialization,
skill and knowledge by this desired sector of economy and thus, efficiency would be established.
3. Principle of coordination: In an organization many equipment, tools are used. Coordination can be
obtained by group effort that emphasize on unity of action. Therefore, coordination facilitates in several
management concepts
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4. Principle of authority: Authority is the kind of right and power through which it guides and directs
the actions of others so that the organizational goals can be achieved. It is also related with decision
making. It is vested in particular position, not to the person because authority is given by an institution
and therefore it is legal. It generally flows from higher level to lowest level of management. There should
be unbroken line of authority.
5. Principle of responsibility: Authentic body of an organization is top level management, top level
management direct the subordinates. Departmental managers and other personnel take the direction
from top level management to perform the task. Authority is necessary to perform the work .only
authority is not provided to the people but obligation is also provided. So the obligation to perform the
duties and task is known as responsibility. Responsibility cant be delegated. It cant be avoided.
6. Principle of delegation: Process of transferring authority and creation of responsibility between
superior and subordinates to accomplish a certain task is called delegation of authority. Authority is only
delegated, not responsibilities in all levels of management. The authority delegated should be equal to
responsibility
7. Principle of efficiency: In enterprise different resources are used. Therese resources must be used in
effective manner. When the organization fulfill the objectives with minimum cost, it is effective.
Organization must always concentrate on efficiency.
8. Principle of unity of command: subordinates should receive orders from single superior at a time
and all subordinates should be accountable to that superior. More superior leads to confusion, delay
and so on.
9. Principle of span of control: unlimited subordinates cant be supervised by manager, this principle
thus helps to determine numerical limit if subordinates to be supervised by a manager. This improves
efficiency.
10. Principle of balance: the functional activities their establishment and other performances should be
balanced properly. Authority, centralization, decentralization must be balance equally. This is very
challenging job but efficient management must keep it.
11. Principle of communication: Communication is the process of transformation of information from
one person to another of different levels. It involves the systematic and continuous process of telling,
listening and understanding opinions ideas, feelings, information, views etc, in flow of information.
Effective communication is important
12. Principle of personal ability: for sound organization, human resources is important. Employees must
be capable. Able employees can perform higher. Mainly training and development programs must be
encouraged to develop the skill in the employees
13. Principle of flexibility: organizational structure must be flexible considering the environmental
dynamism. Sometimes, dramatically change may occur in the organization and in that condition,
organization should be ready to accept the change
14. Principle of simplicity: this principles emphasizes the simplicity of organizational structure, the
structure if organization should be simple with minimum number of levels do that its member an
understand duties and authorities.
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12. Explain different types of Organization Structures.
Organisational structure is defined as the

Relatively enduring allocation of work roles and administrative mechanisms that creates a pattern of
interrelated work activities and allows the organisation to conduct, co-ordinate and control its work
activities

To put it in simple words Organisational structure refers to the levels of management and division of
responsibilities within an organisation.

In an organization of any size or complexity, employees' responsibilities typically are defined by what
they do, who they report to, and for managers, who reports to them. Over time these definitions are
assigned to positions in the organization rather than to specific individuals. The relationships among
these positions are illustrated graphically in an organizational chart.

Types of Organisation Structure
Line Organisation
It is perhaps the oldest and the simples organisational structure. In this kind of structure every manager
exercise a direct authority over his subordinate who in turn directly reports to their superiors.
There is a hierarchical arrangement of authority.
Each department is self contained and works independently of other departments.
Lines of authority are vertical i.e. from top to bottom.
There are no staff specialists.

Advantages
Simple to establish and operate
Promotes prompt decision making.
Easy to control as the managers have direct control over their subordinates.
Communication is fast and easy as there is only vertical flow of communication.
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Disadvantages
Lack of specialisation
Managers might get overloaded with too many things to do.
Failure of one manager to take proper decisions might affect the whole organisation.
However, line structures are suitable for
small businesses where there are few subordinates
organisations where there is largely of routine nature and methods of operations are simple.
Functional Organisation
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.

Advantages
Is logical and reflection of functions
Follows principle of occupation specialisation
Simplifies training
Better control as the manger in charge of each functional department is usually an specialist.
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Disadvantages
Overspecialisation and narrow viewpoints of key personnel can limit the organisation growth.
Reduced coordination between functions.
Conflicts between different functions could be detrimental for the organisation as a whole.
Difficult for general managers to coordinate different departments.
However, it is much suitable for large organisations where there is ample scope for specialisation. Once
harmony and proper coordination among different functions is achieved, it could lead to sure success
for an organisation.
Line and Staff Organisation
It is a combination of line and functional structures. In this organisation a structure, the authority flows
in a vertical line and get the help of staff specialist who are in advisory. When the line executives need
advice, information about any specific area, these staff specialists are consulted.
For example Chief accountant has command authority over accountants and clerks in the accounts
departments but he has only advisory relationship with other departments like production or sales.

Advantages
Line managers are provided by expert advice by these specialists.
Staff managers provide specialist advice which can improve quality of decisions in various departments.
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Disadvantages
Line managers and staff managers might have conflicts on particular issues.
Line and staff managers might not be clear as to what the actual area of operations is and what is
expected of them. Co-ordination may be a problem.
Staff personnel are not accountable for the results and thus may not take tasks seriously.
However, Line and staff organisation is very suitable for large organisation.
Project Organisation
The project structure consists of a number of horizontal organisational units to complete projects of a
long duration. A team of specialists from different areas is created for each project. Usually this team is
managed by the project manager. The project staff is separate from and independent of the functional
departments.
Advantages
Special attention can be provided to meet the complex demand of the project.
It allows maximum use of specialist knowledge thus chances of failure are very less.
Project staff works as a team towards common goal which results in high motivation level for its
members.
Disadvantages
As the project staff consists of personnel from diverse fields, it might be quite challenging for the project
manager to coordinate among them.

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Matrix Organisation
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.
Members of a particular team are drawn from the functional departments and are placed under
the direction of a project manager who has the overall responsibility of a particular project.
Advantage
Is oriented towards end results.
Professional identification is maintained
Pinpoints product-profit responsibility
Disadvantages
Conflict in organisation authority exists.
Possibility of disunity of command exists
Requires manager effective in human relations
Matrix organisations is used in industries with highly complex product systems for example, aerospace
industry where project teams are created for specific space or weapon systems.

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13. What are the different forms of organisations? Explain Sole Proprietorship in detail.
If one is planning to start a business or is interested in expanding an existing one, an important decision
relates to the choice of the form of organisation. The most appropriate form is determined by weighing
the advantages and disadvantages of each type of organisation against ones own requirements.
Various forms of business organisations from which one can choose the right one include:
(a) Sole proprietorship,
(b) Partnership,
(c) Cooperative societies, and
(d) Joint stock company.
SOLE PROPRIETORSHIP
Sole proprietorship is a popular form of business organisation and is the most suitable form for small
businesses, especially in their initial years of operation. Sole proprietorship refers to a form of business
organisation which is owned, managed and controlled by an individual who is the recipient of all profits
and bearer of all risks. This is evident from the term itself. The word sole implies only, and
proprietor refers to owner. Hence, a sole proprietor is the one who is the only owner of a business.
This form of business is particularly common in areas of personalised services such as beauty parlours,
hair saloons and small scale activities like running a retail shop in a locality. payment of debts in case
the assets of the business are not sufficient to meet all the debts. As such the owners personal
possessions such as his/her personal car and other assets could be sold for repaying the debt. Suppose
the total outside liabilities of XYZ dry cleaner, a sole proprietorship firm, are Rs. 80,000 at the time of
dissolution, but its assets are Rs. 60,000 only. In such a situation the proprietor will have to bring in Rs.
20,000 from her personal sources even if she has to sell her personal property to repay the firms debts.
Sole trader is a type of business unit where a person is solely responsible for providing the capital, for
bearing the risk of the enterprise and for the management of business
J.L. Hansen
The individual proprietorship is the form of business organisation at the head of which stands an
individual as one who is responsible, who directs its operations and who alone runs the risk of failure.
L.H. Haney
Features
Salient characteristics of the sole proprietorship form of organisation are as follows:
(i) Formation and closure: Hardly any legal formalities are required to start a sole proprietary business,
though in some cases one may require a license. There is no separate law that governs sole
proprietorship. Closure of the business can also be done easily. Thus, there is ease in formation as well
as closure of business.
(ii) Liability: Sole proprietors have unlimited liability. This implies that the owner is personally
responsible for
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(iii) Sole risk bearer and profit recipient: The risk of failure of business is borne all alone by the sole
proprietor. However, if the business is successful, the proprietor enjoys all the benefits. He receives all
the business profits which become a direct reward for his risk bearing.
(iv) Control: The right to run the business and make all decisions lies absolutely with the sole proprietor.
He can carry outhis plans without any interference from others.
(v) No separate entity: In the eyes of the law, no distinction is made between the sole trader and his
business, as business does not have an identity separate from the owner. The owner is, therefore, held
responsible for all the activities of the business.
(vi) Lack of business continuity: Since the owner and business are one and the same entity, death,
insanity, imprisonment, physical ailment or bankruptcy of the sole proprietor will have a direct and
detrimental effect on the business and may even cause closure of the business.
Merits
Sole proprietorship offers many advantages. Some of the important ones are as follows:
(i) Quick decision making: A sole proprietor enjoys considerable degree of freedom in making business
decisions. Further the decision making is prompt because there is no need to of his/her efforts as he/she
is the sole recipient of all the profit. The need to share profits does not arise as he/she is the single
owner. This provides maximum incentive to the sole trader to work hard. consult others. This may lead
to timely capitalisation of market opportunities as and when they arise.
(ii) Confidentiality of information: Sole decision making authority enables the proprietor to keep all the
information related to business operations confidential and maintain secrecy. A sole trader is also not
bound by law to publish firms accounts.
(iii) Direct incentive: A sole proprietor directly reaps the benefits
(iv) Sense of accomplishment: There is a personal satisfaction involved in working for oneself. The
knowledge that one is responsible for the success of the business not only contributes to self-satisfaction
but also instils in the individual a sense of accomplishment and confidence in ones abilities.
(v) Ease of formation and closure: An important merit of sole proprietorship is the possibility of entering
into business with minimal legal formalities. There is no separate law that governs sole proprietorship.
As sole proprietorship is the least regulated form of business, it is easy to start and close the business
as per the wish of the owner.
Limitations
Notwithstanding various advantages, the sole proprietorship form of organisation is not free from
limitations. Some of the major limitations of sole proprietorship are as follows:
(i) Limited resources: Resources of a sole proprietor are limited to his/her personal savings and
borrowings from others. Banks and other lending institutions may hesitate to extend a long term loan
to a sole proprietor. Lack of resources is one of the major reasons why the size of the business rarely
grows much and generally remains small.
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(ii) Limited life of a business concern: In the eyes of the law the proprietorship and the owner are
considered one and the same. Death, insolvency or illness of a proprietor affects the business and can
lead to its closure.
(iii) Unlimited liability: A major disadvantage of sole proprietorship is that the owner has unlimited
liability. If the business fails, the creditors can recover their dues not merely from the business assets,
but also from the personal assets of the proprietor. A poor decision or an unfavourable circumstance
can create serious financial burden on the owners. That is why a sole proprietor is less inclined to take
risks in the form of innovation or expansion.
(iv) Limited managerial ability: The owner has to assume the responsibility of varied managerial tasks
such as purchasing, selling, financing, etc. It is rare to find an individual who excels in all these areas.
Thus decision making may not be balanced in all the cases. Also, due to limited resources, sole proprietor
may not be able to employ and retain talented and ambitious employees.
Though sole proprietorship suffers from various shortcomings, many entrepreneurs opt for this form of
organisation because of its inherent advantages. It requires less amount of capital. It is best suited for
businesses which are carried out on a small scale and where customers demand personalised services.
15. Explain Partnership based business organization. Mention the advantages and limitations also.
The inherent disadvantage of the sole proprietorship in financing and managing an expanding business
paved the way for partnership as a viable option. Partnership serves as an answer to the needs of greater
capital investment, varied skills and sharing of risks.
The Indian Partnership Act, 1932 defines partnership as the relation between persons who have agreed
to share the profit of the business carried on by all or any one of them acting for all.
Partnership is the relation between persons competent to make contracts who have agreed to carry on
a lawful business in common with a view to private gain.
L H Haney
Partnership is the relation which subsists between persons who have agreed to combine their property,
labour or skill in some business and to share the profits therefrom between them.
The Indian Contract Act
Features
Definitions given above point to the following major characteristics of the partnership form of business
organisation.
(i) Formation: The partnership form of business organisation is governed by the Indian Partnership Act,
1932. It comes into existence through a legal agreement wherein the terms and conditions governing
the relationship among the partners, sharing of profits and losses and the manner of conducting the
business are specified. It may be pointed out that the business must be lawful and run with the motive
of profit. Thus, two people coming together for charitable purposes will not constitute a partnership.
(ii) Liability: The partners of a firm have unlimited liability. Personal assets may be used for repaying
debts in case the business assets are insufficient. Further, the partners are jointly and individually liable
for payment of debts.
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Jointly, all the partners are responsible for the debts and they contribute in proportion to their share in
business and as such are liable to that extent. Individually too, each partner can be held responsible
repaying the debts of the business. However, such a partner can later recover from other partners an
amount of money equivalent to the shares in liability defined as per the partnership agreement.
(iii) Risk bearing: The partners bear the risks involved in running a business as a team. The reward comes
in the form of profits which are shared by the partners in an agreed ratio. However, they also share
losses in the same ratio in the event of the firm incurring losses.
(iv) Decision making and control: The partners share amongst themselves the responsibility of decision
making and control of day to day activities. Decisions are generally taken with mutual consent. Thus,
the activities of a partnership firm are managed through the joint efforts of all the partners.
(v) Continuity: Partnership is characterised by lack of continuity of business since the death, retirement,
insolvency or insanity of any partner can bring an end to the business. However, the remaining partners
may if they so desire continue the business on the basis of a new agreement.
(vi) Membership: The minimum number of members needed to start a partnership firm is two, while the
maximum number, in case of banking industry is ten and in case of other businesses it is twenty.
Merits
The following points describe the advantages of a partnership firm.
(i) Ease of formation and closure: A partnership firm can be formed easily by putting an agreement
between the prospective partners into place whereby they agree to carryout the business of the firm
and share risks. There is no compulsion with respect to registration of the firm. Closure of the firm too
is an easy task.
(ii) Balanced decision making: The partners can oversee different functions according to their areas of
expertise. Because an individual is not forced to handle different activities, this not only reduces the
burden of work but also leads to fewer errors in judgements. As a consequence, decisions are likely to
be more balanced.
(iii) More funds: In a partnership, the capital is contributed by a number of partners. This makes it
possible to raise larger amount of funds as compared to a sole proprietor and undertake additional
operations when needed.
(iv) Sharing of risks: The risks involved in running a partnership firm are shared by all the partners. This
reduces the anxiety, burden and stress on individual partners.
(v) Secrecy: A partnership firm is not legally required to publish its accounts and submit its reports.
Hence it is able to maintain confidentiality of information relating to its operations.
Limitations
A partnership firm of business organisation suffers from the following limitations:
(i) Unlimited liability: Partners are liable to repay debts even from their personal resources in case the
business assets are not sufficient to meet its debts. The liability of partners is both joint and several
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which may prove to be a drawback for those partners who have greater personal wealth. They will have
to repay the entire debt in case the other partners are unable to do so.
(ii) Limited resources: There is a restriction on the number of partners, and hence contribution in terms
of capital investment is usually not sufficient to support large scale business operations. As a result,
partnership firms face problems in expansion beyond a certain size.
(iii) Possibility of conflicts: Partnership is run by a group of persons wherein decision making authority
is shared. Difference in opinion on some issues may lead to disputes between partners. Further,
decisions of one partner are binding on other partners. Thus an unwise decision by some one may result
in financial ruin for all others. In case a partner desires to leave the firm, this can result in termination
of partnership as there is a restriction on transfer of ownership.
(iv) Lack of continuity: Partnership comes to an end with the death, retirement, insolvency or lunacy of
any partner. It may result in lack of continuity. However, the remaining partners can enter into a fresh
agreement and continue to run the business.
(v) Lack of public confidence: A partnership firm is not legally required to publish its financial reports or
make other related information public. It is, therefore, difficult for any member of the public to ascertain
the true financial status of a partnership firm. As a result, the confidence of the public in partnership
firms is generally low.
16. Describe about Cooperative Society organization with its different features.
The word cooperative means working together and with others for a common purpose. The cooperative
society is a voluntary association of persons, who join together with the motive of welfare of the
members. They are driven by the need to protect their economic interests in the face of possible
exploitation at the hands of middlemen obsessed with the desire to earn greater profits. The
cooperative society is compulsorily required to be registered under the Cooperative Societies Act 1912.
The process of setting up a cooperative society is simple enough and at the most what is required is the
consent of at least ten adult persons to form a society. The capital of a society is raised from its members
through issue of shares. The society acquires a distinct legal identity after its registration.
Cooperative is a form of organisation wherein persons voluntarily associate together as human beings
on the basis of equality for the promotion of an economic interest for themselves.
E. H.
Calvert Cooperative organisation is a society which has its objectives for the promotion of economic
interests of its members in accordance with cooperative principles.
The Indian Cooperative Societies Act 1912
Features
The characteristics of a cooperative society are listed below.
(i) Voluntary membership: The membership of a cooperative society is voluntary. A person is free to
join a cooperative society, and can also leave anytime as per his desire. There cannot be any compulsion
for him to join or quit a society. Although procedurally a member is required to serve a notice before
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leaving the society, there is no compulsion to remain a member. Membership is open to all, irrespective
of their religion, caste, and gender.
(ii) Legal status: Registration of a cooperative society is compulsory. This accords a separate identity to
the society which is distinct from its members. The society can enter into contracts and hold property
in its name, sue and be sued by others. As a result of being a separate legal entity, it is not affected by
the entry or exit of its members.
(iii) Limited liability: The liability of the members of a cooperative society is limited to the extent of the
amount contributed by them as capital. This defines the maximum risk that a member can be asked to
bear.
(iv) Control: In a cooperative society, the power to take decisions lies in the hands of an elected
managing committee. The right to vote gives the members a chance to choose the members who will
constitute the managing committee and this lends the cooperative society a democratic character.
(v) Service motive: The cooperative society through its purpose lays emphasis on the values of mutual
help and welfare. Hence, the motive of service dominates its working. If any surplus is generated as a
result of its operations, it is distributed amongst the members as dividend in conformity with the bye-
laws of the society.
Merits
The cooperative society offers many benefits to its members. Some of the advantages of the cooperative
form of organisation are as follows.
(i) Equality in voting status: The principle of one man one vote governs the cooperative society.
Irrespective of the amount of capital contribution by a member, each member is entitled to equal voting
rights.
(ii) Limited liability: The liability of members of a cooperative society is limited to the extent of their
capital contribution. The personal assets of the members are, therefore, safe from being used to repay
business debts.
(iii) Stable existence: Death, bankruptcy or insanity of the members do not affect continuity of a
cooperative society. A society, therefore, operates unaffected by any change in the membership.
(iv) Economy in operations: The members generally offer honorary services to the society. As the focus
is on elimination of middlemen, this helps in reducing costs. The customers or producers themselves are
members of the society, and hence the risk of bad debts is lower.
(v) Support from government: The cooperative society exemplifies the idea of democracy and hence
finds support from the Government in the form of low taxes, subsidies, and low interest rates on loans.
(vi) Ease of formation: The cooperative society can be started with a minimum of ten members. The
registration procedure is simple involving a few legal formalities. Its formation is governed by the
provisions of Cooperative Societies Act 1912.

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Limitations
The cooperative form of organisation suffers from the following limitations:
(i) Limited resources: Resources of a cooperative society consists of capital contributions of the
members with limited means. The low rate of dividend offered on investment also acts as a deterrent
in attracting membership or more capital from the members.
(ii) Inefficiency in management: Cooperative societies are unable to attract and employ expert
managers because of their inability to pay them high salaries. The members who offer honorary services
on a voluntary basis are generally not professionally equipped to handle the management functions
effectively.
(iii) Lack of secrecy: As a result of open discussions in the meetings of members as well as disclosure
obligations as per the Societies Act (7), it is difficult to maintain secrecy about the operations of a
cooperative society.
(iv) Government control: In return of the privileges offered by the government, cooperative societies
have to comply with several rules and regulations related to auditing of accounts, submission of
accounts, etc. Interference in the functioning of the cooperative organisation through the control
exercised by the state cooperative departments also negatively affects its freedom of operation.
(v) Differences of opinion: Internal quarrels arising as a result of contrary viewpoints may lead to
difficulties in decision making. Personal interests may start to dominate the welfare motive and the
benefit of other members may take a backseat if personal gain is given preference by certain members.
17. Explain about Joint Stock Companies with its merits and demerits.
A company is an association of persons formed for carrying out business activities and has a legal status
independent of its members. The company form of organisation is governed by The Companies Act,
1956. A company can be described as an artificial person having a separate legal entity, perpetual
succession and a common seal. The shareholders are the owners of the company while the Board of
Directors is the chief managing body elected by the shareholders. Usually, the owners exercise an
indirect control over the business. The capital of the company is divided into smaller parts called shares
which can be transferred freely from one shareholder to another person (except in a private company).
Joint stock company is a voluntary association of individuals for profit, having a capital divided into
transferable shares, the ownership of which is the condition of membership.
Prof. Haney
Features
The definition of a joint stock company highlights the following features of a company.
(i) Artificial person: A company is a creation of law and exists independent of its members. Like natural
persons, a company can own property, incur debts, borrow money, enter into contracts, sue and be
sued but unlike them it cannot breathe, eat, run, talk and so on. It is, therefore, called an artificial person.
(ii) Separate legal entity: From the day of its incorporation, a company acquires an identity, distinct
from its members. Its assets and liabilities are separate from those of its owners. The law does not
recognise the business and owners to be one and the same.
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(iii) Formation: The formation of a company is a time consuming, expensive and complicated process.
It involves the preparation of several documents and compliance with several legal requirements before
it can start functioning. Registration of a company is compulsory as provided under the Indian
Companies Act, 1956.
(iv) Perpetual succession: A company being a creation of the law, can be brought to an end only by law.
It will only cease to exist when a specific procedure for its closure, called winding up, is completed.
Members may come and members may go, but the company continues to exist.
(v) Control: The management and control of the affairs of the company is undertaken by the Board of
Directors, which appoints the top management officials for running the business. The directors hold a
position of immense significance as they are directly accountable to the shareholders for the working of
the company. The shareholders, however, do not have the right to be involved in the day-to-day running
of the business.
(vi) Liability: The liability of the members is limited to the extent of the capital contributed by them in a
company. The creditors can use only the assets of the company to settle their claims since it is the
company and not the members that owes the debt. The members can be asked to contribute to the loss
only to the extent of the unpaid amount of share held by them. Suppose Akshay is a shareholder in a
company holding 2,000 shares of Rs.10 each on which he has already paid Rs. 7 per share. His liability in
the event of losses or companys failure to pay debts can be only up to Rs. 6,000 the unpaid amount
of his share capital (Rs. 3 per share on 2,000 shares held in the company). Beyond this, he is not liable
to pay anything towards the debts or losses of the company.
(vii) Common seal: The company being an artificial person acts through its Board of Directors. The Board
of Directors enters into an agreement with others by indicating the companys approval through a
common seal. The common seal is the engraved equivalent of an official signature. Any agreement
which does not have the company seal put on it is not legally binding on the company.
(viii) Risk bearing: The risk of losses in a company is borne by all the share holders. This is unlike the
case of sole proprietorship or partnership firm where one or few persons respectively bear the losses.
In the face of financial difficulties, all shareholders in a company have to contribute to the debts to the
extent of their shares in the companys capital. The risk of loss thus gets spread over a large number of
shareholders.
Merits
The company form of organisation offers a multitude of advantages, some of which are discussed below.
(i) Limited liability: The shareholders are liable to the extent of the amount unpaid on the shares held
by them. Also, only the assets of the company can be used to settle the debts, leaving the owners
personal property free from any charge. This reduces the degree of risk borne by an investor.
(ii) Transfer of interest: The ease of transfer of ownership adds to the advantage of investing in a
company as the share of a public limited company can be sold in the market and as such can be easily
converted into cash in case the need arises. This avoids blockage of investment and presents the
company as a favourable avenue for investment purposes.
(iii) Perpetual existence: Existence of a company is not affected by the death, retirement, resignation,
insolvency or insanity of its members as it has a separate entity from its members. A company will
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continue to exist even if all the members die. It can be liquidated only as per the provisions of the
Companies Act.
(iv) Scope for expansion: As compared to the sole proprietorship and partnership forms of organisation,
a company has large financial resources. Further, capital can be attracted from the public as well as
through loans from banks and financial institutions. Thus there is greater scope for expansion. The
investors are inclined to invest in shares because of the limited liability, transferable ownership and
possibility of high returns in a company.
(v) Professional management: A company can afford to pay higher salaries to specialists and
professionals. It can, therefore, employ people who are experts in their area of specialisations. The scale
of operations in a company leads to division of work. Each department deals with a particular activity
and is headed by an expert. This leads to balanced decision making as well as greater efficiency in the
companys operations. Limitations The major limitations of a company form of organisation are as
follows:
(i) Complexity in formation: The formation of a company requires greater time, effort and extensive
knowledge of legal requirements and the procedures involved. As compared to sole proprietorship and
partnership form of organisations, formation of a company is more complex.
(ii) Lack of secrecy: The Companies Act requires each public company to provide from time-to-time a
lot of information to the office of the registrar of companies. Such information is available to the general
public also. It is, therefore, difficult to maintain complete secrecy about the operations of company.
(iii) Impersonal work environment: Separation of ownership and management leads to situations in
which there is lack of effort as well as personal involvement on the part of the officers of a company.
The large size of a company further makes it difficult for the owners and top management to maintain
personal contact with the employees, customers and creditors.
(iv) Numerous regulations: The functioning of a company is subject to many legal provisions and
compulsions. A company is burdened with numerous restrictions in respect of aspects including audit,
voting, filing of reports and preparation of documents, and is required to obtain various certificates from
different agencies, viz., registrar, SEBI, etc. This reduces the freedom of operations of a company and
takes away a lot of time, effort and money.
(v) Delay in decision making: Companies are democratically managed through the Board of Directors
which is followed by the top management, middle management and lower level management.
Communication as well as approval of various proposals may cause delays not only in taking decisions
but also in acting upon them.
(vi) Oligarchic management: In theory, a company is a democratic institution wherein the Board of
Directors are representatives of the shareholders who are the owners. In practice, however, in most
large sized organisations having a multitude of shareholders; the owners have minimal influence in
terms of controlling or running the business. It is so because the shareholders are spread all over the
country and a very small percentage attend the general meetings. The Board of Directors as such enjoy
considerable freedom in exercising their power which they sometimes use even contrary to the interests
of the shareholders. Dissatisfied shareholders in such a situation have no option but to sell their shares
and exit the company. As the directors virtually enjoy the rights to take all major decisions, it leads to
rule by a few.
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(vii) Conflict in interests: There may be conflict of interest amongst various stakeholders of a company.
The employees, for example, may be interested in higher salaries, consumers desire higher quality
products at lower prices, and the shareholders want higher returns in the form of dividends and increase
in the intrinsic value of their shares. These demands pose problems in managing the company as it often
becomes difficult to satisfy such diverse interests.
18. Explain the different types of Cooperative Societies.
Various types of cooperative societies based on the nature of their operations are described below:
(i) Consumers cooperative societies: The consumer cooperative societies are formed to protect the
interests of consumers. The members comprise of consumers desirous of obtaining good quality
products at reasonable prices. The society aims at eliminating middlemen to achieve economy in
operations. It purchases goods in bulk directly from the wholesalers and sells goods to the members,
thereby eliminating the middlemen. Profits, if any, are distributed on the basis of either their capital
contributions to the society or purchases made by individual members.
(ii) Producers cooperative societies: These societies are set up to protect the interest of small
producers. The members comprise of producers desirous of procuring inputs for production of goods to
meet the demands of consumers. The society aims to fight against the big capitalists and enhance the
bargaining power of the small producers. It supplies raw materials, equipment and other inputs to the
members and also buys their output for sale. Profits among the members are generally distributed on
the basis of their contributions to the total pool of goods produced or sold by the society.
(iii) Marketing cooperative societies: Such societies are established to help small producers in selling
their products. The members consist of producers who wish to obtain reasonable prices for their output.
The society aims to eliminate middlemen and improve competitive position of its members by securing
a favourable market for the products. It pools the output of individual members and performs marketing
functions like transportation, warehousing, packaging, etc., to sell the output at the best possible price.
Profits are distributed according to each members contribution to the pool of output.
(iv) Farmers cooperative societies: These societies are established to protect the interests of farmers
by providing better inputs at a reasonable cost. The members comprise of farmers who wish to jointly
take up farming activities. The aim is to gain the benefits of large scale farming and increase the
productivity. Such societies provide better quality seeds, fertilisers, machinery and other modern
techniques for use in the cultivation of crops. This helps not only in improving the yield and returns to
the farmers, but also solves the problems associate with the farming on fragmented land holdings.
(v) Credit cooperative societies: Credit cooperative societies are established for providing easy credit
on reasonable terms to the members. The members comprise of persons who seek financial help in the
form of loans. The aim of such societies is to protect the members from the exploitation of lenders who
charge high rates of interest on loans. Such societies provide loans to members out of the amounts
collected as capital and deposits from the members and charge low rates of interest.
(vi) Cooperative housing societies: Cooperative housing societies are established to help people with
limited income to construct houses at reasonable costs. The members of these societies consist of
people who are desirous of procuring residential accommodation at lower costs. The aim is to solve the
housing problems of the members by constructing houses and giving the option of paying in instalments.
These societies construct flats or provide plots to members on which the members themselves can
construct the houses as per their choice.
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19. Explain the factors which decide the choice of form of business organization.
After studying various forms of business organisations, it is evident that each form has certain
advantages as well as disadvantages. It, therefore, becomes vital that certain basic considerations are
kept in mind while choosing an appropriate form of organisation. The important factors determining the
choice of organisation are discussed below:
(i) Cost and ease in setting up the organisation: As far as initial business setting-up costs are concerned,
sole proprietorship is the most inexpensive way of starting a business. However, the legal requirements
are minimum and the scale of operations is small. In case of partnership also, the advantage of less legal
formalities and lower cost is there because of limited scale of operations. Cooperative societies and
companies have to be compulsorily registered. Formation of a company involves a lengthy and
expensive legal procedure. From the point of view of initial cost, therefore, sole proprietorship is the
preferred form as it involves least expenditure. Company form of organisation, on the other hand, is
more complex and involves greater costs.
(ii) Liability: In case of sole proprietorship and partnership firms, the liability of the owners/partners is
unlimited. This may call for paying the debt from personal assets of the owners. In joint Hindu family
business, only the karta has unlimited liability. In cooperative societies and companies, however, liability
is limited and creditors can force payment of their claims only to the extent of the companys assets.
Hence, from the point of view of investors, the company form of organisation is more suitable as the
risk involved is limited.
(iii) Continuity: The continuity of sole proprietorship and partnership firms is affected by such events as
death, insolvency or insanity of the owners. However, such factors do not affect the continuity of
business in the case of organisations like joint Hindu family business, cooperative societies and
companies. In case the business needs a permanent structure, company form is more suitable. For short
term ventures, proprietorship or partnership may be preferred.
(iv) Management ability: A sole proprietor may find it difficult to have expertise in all functional areas
of management. In other forms of organisations like partnership and company, there is no such problem.
Division of work among the members in such organisations allows the managers to specialise in specific
areas, leading to better decision making. But this may lead to situations of conflicts because of
differences of opinion amongst people. Further, if the organisations operations are complex in nature
and require professionalised management, company form of organisation is a better alternative.
Proprietorship or partnership may be suitable, where simplicity of operations allow even people with
limited skills to run the business. Thus, the nature of operations and the need for professionalised
management affect the choice of the form of organisation.
(v) Capital considerations: Companies are in a better position to collect large amounts of capital by
issuing shares to a large number of investors. Partnership firms also have the advantage of combined
resources of all partners. But the resources of a sole proprietor are limited. Thus, if the scale of
operations is large, company form may be suitable whereas for medium and small sized business one
can opt for partnership or sole proprietorship. Further, from the point of view of expansion, a company
is more suitable because of its capability to raise more funds and invest in expansion plans. It is precisely
for this purpose that in our opening case Nehas father suggested she should consider switching over to
the company form of organisation.
(vi) Degree of control: If direct control over operations and absolute decision making power is required,
proprietorship may be preferred. But if the owners do not mind sharing control and decision making,
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partnership or company form of organisation can be adopted. The added advantage in the case of
company form of organisation is that there is complete separation of ownership and management and
it is professionals who are appointed to independently manage the affairs of a company.
(vii) Nature of business: If direct personal contact is needed with the customers such as in the case of a
grocery store, proprietorship may be more suitable. For large manufacturing units, however, when
direct personal contact with the customer is not required, the company form of organisation may be
adopted. Similarly, in cases where services of a professional nature are required, partnership form is
much more suitable. It would not be out of place to mention here that the factors stated above are
inter-related. Factors like capital contribution and risk vary with the size and nature of business, and
hence a form of business organisation that is suitable from the point of view of the risks for a given
business when run on a small scale might not be appropriate when the same business is carried on a
large scale. It is, therefore, suggested that all the relevant factors must be taken into consideration while
making a decision with respect to the form of organisation that should be adopted.
20. Explain different types of Joint Stock companies.

Public Limited Company
A public limited company is a voluntary association of members which is incorporated and, therefore
has a separate legal existence and the liability of whose members is limited. Its main features are :-
The company has a separate legal existence apart from its members who compose it.
Its formation, working and its winding up, in fact, all its activities are strictly governed by laws,
rules and regulations. The Indian Companies Act, 1956 contains the provisions regarding the legal
formalities for setting up of a public limited company. Registrars of Companies (ROC) appointed
under the Companies Act covering the various States and Union Territories are vested with the
primary duty of registering companies floated in the respective states and the Union Territories.
A company must have a minimum of seven members but there is no limit as regards the
maximum number.
The company collects its capital by the sale of its shares and those who buy the shares are called
the members. The amount so collected is called the share capital.
The shares of a company are freely transferable and that too without the prior consent of other
shareholders or without subsequent notice to the company.
The liability of a member of a company is limited to the face value of the shares he owns. Once
he has paid the whole of the face value, he has no obligation to contribute anything to pay off
the creditors of the company.
The shareholders of a company do not have the right to participate in the day-to-day
management of the business of a company. This ensures separation of ownership from
management. The power of decision making in a company is vested in the Board of Directors,
and all policy decisions are taken at the Board level by the majority rule. This ensures a unity of
direction in management.
As a company is an independent legal person, its existence is not affected by the death,
retirement or insolvency of any of its shareholders.
Advantages
Continuity of existence
Larger amount of capital
Unity of direction
Efficient management
Limited liability
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Disadvantages
Scope for promotional frauds
Undemocratic control
Scope for directors for personal profit
Subjected to strict regulations

Private Limited Company
A private limited company is a voluntary association of not less than two and not more than fifty
members, whose liability is limited, the transfer of whose shares is limited to its members and who is
not allowed to invite the general public to subscribe to its shares or debentures. Its main features are :-
It has an independent legal existence. The Indian Companies Act,1956 contains the provisions
regarding the legal formalities for setting up of a private limited company. Registrars of
Companies (ROC) appointed under the Companies Act covering the various States and Union
Territories are vested with the primary duty of registering companies floated in the respective
states and the Union Territories.
It is relatively less cumbersome to organise and operate it as it has been exempted from many
regulations and restrictions to which a public limited company is subjected to. Some of them are
:-
it need not file a prospectus with the Registrar.
it need not obtain the Certificate for Commencement of business.
it need not hold the statutory general meeting nor need it file the statutory report.
restrictions placed on the directors of the public limited company do not apply to its
directors.
The liability of its members is limited.
The shares allotted to it's members are also not freely transferable between them. These
companies are not allowed to invite public to subscribe to its shares and debentures.
It enjoys continuity of existence i.e. it continues to exist even if all its members die or desert it.
Hence, a private company is preferred by those who wish to take the advantage of limited liability but
at the same time desire to keep control over the business within a limited circle and maintain the privacy
of their business.
Advantages
Continuity of existence
Limited liability
Less legal restrictions
Disadvantages
Shares are not freely transferable
Not allowed to invite public to subscribe to its shares
Scope for promotional frauds
Undemocratic control

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Module II
1. List the objectives of Personnel Management
The objectives of personnel management/HRM in any industrial organization can be summarized as
under.
(1) To attain maximum individual development (self-development) of the members of an organization
and also to utilize available human resources (with the organization) fully and effectively.
(2) To mould effectively the human resources.
(3) To establish desirable working relationships between employer and employees and between
groups of employees.
(4) To ensure satisfaction to the workers so that they are freely ready to work.
(5) To improve the service rendered by the enterprise to the society through better employee morale,
which leads to more efficient individual and group performance.
(6) To establish and maintain a productive and self respecting relationship among all the members of
an organization.
(7) To ensure the availability of a competent and willing workforce to the organization for its progress
and prosperity.
(8) To hel p organi zati on to achi eve i ts goal s by provi di ng wel l trai ned, effi ci ent and
properl y moti vated empl oyees.
(9) To maintain high morale and good human relations within the organization for the benefit of
employer and employees.
(10) To secure the integration of all the individuals and groups with the organization by reconciling
individual/group goals with those of an organization.

2. State some standard definitions of Personnel Management.
The term personnel management is defined in different ways. The following definitions are worth
noting:
(1) According to Edwin Flippo" Personnel management is the planning, organizing, directing, and
controlling of the procurement, development, compensation, integration, maintenance, and
separation of human resources to the end that individual, organizational and societal objectives are
accomplished".
(2) According to George R. Terry, "Personnel management is concerned with the obtaining and
maintaining of a satisfactory and satisfied, work force".
(3) According to Walter D. Scott, "Personnel management is concerned with the attaining of maximum
individual development; desirable working relationship between employer and employees, and an
effective moulding of human resources as contrasted with physical resources".
(4) According to British Institute of Personnel Management, London, "Personnel Management is that
part of management which is concerned with the people at work and with their relationship within an
enterprise".
3. What is the meaning and definition of Human Resource Planning?
Meaning:
HRP is the process of forecasting an organisations future demand for, and the supply of, the
right type of people in the right number. It is only after this that the HRM department can initiate
a recruitment and selection process.
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It is a sub-system in the total organisational planning.
It facilitates the realisation of the companys objectives by providing the right type and the right
number of personnel.
HRP is variously called manpower planning, personnel planning or employment planning.
A few definitions of HRP are:
HRP includes the estimation of how many qualified people are necessary to carry out the
assigned activities, how many people will be available, and what, if anything must be done to
ensure that personnel supply equals personnel demand at the appropriate point in the future.
Human resources planning is the process by which an organisation ensures that it has the right
number and kind of people, at the right place, at the right time, capable of effectively and
efficiently completing those tasks that will help the organisation achieve its overall objectives.
Human resources planning, then, translates the organisations objectives and plans into the
number of workers needed to meet those objectives. Without a clear-cut planning, estimation
of an organisations human resource need is reduced to mere guesswork.

4. List the purposes and importance of Recruitment
The general purpose of recruitment is to provide a pool of potentially qualified job candidates.
Specifically, the purposes are to:
Determine the present and future requirements of the organization in conjunction with its
personnel planning and job analysis activities
Increase the pool of job candidates at minimum cost
Help increase the success rate of the selection process by reducing the number of visibly, under
qualified or overqualified job applicants
Help reduce the probability that job applicants, once recruited and selected, will leave the
organization only after a short period of time
Meet the organizations legal and social obligations regarding the composition of its workforce
Begin identifying and preparing potential job applicants who will be appropriate candidates
Increase organizational and individual effectiveness in the short term and long term
Evaluate the effectiveness of various recruiting techniques and sources for all types of job
applicants

5. What are the merits and demerits of external recruitment?
The meri ts are-
The organi zati on wi l l have the benefi t of new ski l l s, new tal ents and new
experi ences, i f peopl e are hi red from external sources.
The management wi l l be abl e to ful fi l l reservati on requi rements i n favour of
the di sadvantaged secti ons of the soci ety.
Scope for resentment, heartburn and j eal ousy can be avoi ded by recrui ti ng
from outsi de.
The demeri ts are-
Better moti vati on and i ncreased moral e associ ated wi th promoti ng own
empl oyees re l ost to the organi zati on.
External recrui tment i s costl y.
I f recrui tment and sel ecti on processes are not properl y carri ed out, chances
of ri ght candi dates bei ng rej ected and wrong appl i cants bei ng sel ected occur.
Hi gh trai ni ng ti me i s associ ated wi th external recrui tment.
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6. What are the objectives of Training and Development
Training and development programs are designed to keep an organization at the front of its industry
maximize performance and energize every level of the organization. Training and Development is also
seen to strengthen the tie between employee development and strategic operation objectives.
The objectives of Training and Development are as follows: -
Efficiency: Employees become efficient after undergoing training. Efficient employees contribute to
the growth of the organization.
Fewer accidents: Accidents, scrap and damage to machinery and equipment can be avoided or
minimized through training. Even dissatisfaction, complaints, absenteeism, and turnover can be
reduced if employees are trained well.
Meeting manpower needs: Future needs of employees will be met through training and
development programmes. Training serves as an effective source of recruitment. Training is an
investment in human resource with promise of better returns in future.
Improves quality: Better-informed workers are likely to make less operational mistakes. Quality of
products or services will definitely increase. This can be well measured through the reduction in
rejections.
Personal growth: Training programmes also deal with personality development of the employees
(through goal setting, motivation, leadership skills, etc.) thus they personally gain through exposure
to training programmes.
Obsolescence prevention: Training and development programs foster the initiative and the creativity
of the employees and help to prevent the manpower obsolescence, which may be due to age,
temperament, or the inability of the person to adapt himself to technological changes.
Versatility in operations: Training makes the employees versatile in operations. All rounders can be
transferred to any job. Flexibility is therefore ensured. Growth indicates prosperity, which is
reflected in profits every year.
Employee stability: Training contributes to employee stability in at least 2 ways. Employees become
efficient after undergoing training. Efficient employees contribute to the growth of the organization.
Growth renders stability to the work force. Further trained employees tend to stay with the
organization.

7. Write short notes on Industrial Safety and Health
1. Occupational health and safety encompasses the social, mental and physical well-being of
workers in all occupations.
2. Poor working conditions have the potential to affect a worker's health and safety.
3. Unhealthy or unsafe working conditions can be found anywhere, whether the workplace is
indoors or outdoors.
4. Poor working conditions can affect the environment workers live in. This means that workers,
their families, other people in the community, and the physical environment around the
workplace, can all be at risk from exposure to workplace hazards.
5. Employers have a moral and often legal responsibility to protect workers.
6. Work-related accidents and diseases are common in all parts of the world and often have many
direct and indirect negative consequences for workers and their families. A single accident or
illness can mean enormous financial loss to both workers and employers.
7. Effective workplace health and safety programmes can help to save the lives of workers by
reducing hazards and their consequences. Effective programmes can also have positive effects
on both worker morale and productivity, and can save employers a great deal of money.
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8. List the objectives of Labour Welfare
Several objectives of Labour welfare are mentioned below:
1. Labour welfare provides social comfort to employees.
2. It provides intellectual improvement of employees.
3. To develop sense of responsibility and belongingness among employees.
4. To ensures that the working conditions for employees are of higher standard.
5. To build stable work force.
6. To reduce absenteeism and labour turnover.
7. To make employees lives good and worth living.
8. To boost productivity and efficiency at the workplace.
9. To provide healthy and proper working conditions.
10. To ensure well being of employees and families.
9. List the principles of Labour Welfare
Following are some of the principles of labour welfare.
1. Welfare activities will be carried out at all levels in the organisation.
2. It will be provided over and above regular wages.
3. Adequate and full co-operation shall be provided from management level.
4. Periodic assesment of labour welfare measures is essential.
5. It shall emphasize on physical, mental, moral and emotional well being of employees.
6. It can be a social concept which relates to welfare of employees, their families and
community as a whole.
10. State some standard definitions of Labour Welfare
According to Arthur James Todd:
Labour welfare means anything done for the comfort and improvement, intellectual and social, of the
employees over and above the wages paid which is not a necessity of the Industry.
According to Industrial Labour Organisation (ILO)
Labour welfare may be understood and including such services facilities and amenities which may be
established in vicinity of undertaking to perform their work in healthy and congenial environment and
to avail of facilities which improve their health and bring high morale.
11. Write about Labour Welfare in India
Labour welfare is an important dimension of industrial relation, labour welfare includes overall welfare
facilities designed to take care of well bieng of employee's and in order to increase their living standard.
It do not generally constitutes monetery benefits nor these are provided by employers alone, it can also
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be provided by government, non government agencies and trade unions. Industrialization,
mechanisation and globalisation has increased importance of labour welfare in industries.
The importance of labour in industrialization and economic development has been recognised globally.
In global scenario need and importance of labour welfare has been increasingly appreciated.
History of Labour Welfare
In India the labour welfare started sometime during the 1
st
world war (1914-1918). Till then wellbeing
of workers in factories was hardly thought by anybody. Since, 1
st
world war labour welfare has been
expanding on voluntary basis. Industrial Labour Organization has played a very significant role for labour
welfare. Many labour legislations have been formed by Indian central government and state
governments for welfare of labours in Industries.
Government has laid down minimum standards for employment and working conditions in
organizations.
Besides the government, the employers, trade unions and various social organizations also function as
agencies for implementation of labour welfare measures.
A Industrial labour organization (ILO) is an advisory body so it cannot force any country to introduce any
welfare measures. The need of labour welfare was powerfully felt by the Royal Commision of Labour far
back in 1931, Indian constitution emphasized this need under its directive principles of state policy.
12. What is mean by Industrial Psychology?
Industrial and organisational psychology (also known as I-O psychology or work psychology) is the
scientific study of employees, workplaces, and organizations. Industrial and organizational psychologists
contribute to an organization's success by improving the performance, satisfaction, and well-being of its
employees. An I-O psychologist conducts research on employee behaviors and attitudes, and how these
can be improved through hiring practices, training programs, feedback, and management systems.
13. List some of the functional areas of Industrial Psychology.
Governing Boards' Professional Development
Job performance appraisal system(s)
Job analysis/competency modeling
Personnel recruitment and selection
Student/educational selection (admissions) and assessment (testing)
Judgment and decision making
Performance appraisal/management
Individual assessment (knowledge, skills, and ability testing, personality assessment, work
sample tests, assessment centers)
Psychometrics
Compensation
Professional Staff, Faculty, and Administrators Training Design, Development, Implementation,
and evaluation
Laws and regulations applicable to personnel decisions
Work motivation
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Job attitudes (e.g., job satisfaction, commitment, organizational citizenship, and retaliation)
Occupational health and safety
Work/life balance
Human factors and decision making
Organizational culture/climate
Organizational surveys
Leadership and executive coaching
Ethics
Diversity
Job design
Human resources
Organizational development (OD)
Organizational Research Methods
Technology in the workplace
Group/team performance
Team composition
14. What is mean by Labour Legislation? Explain the need for Labour Legislation in India.
The term `labour legislation is used to cover all the laws which have been enacted to deal with
employment and non-employment wages, working conditions, industrial relations, social security and
welfare of persons employed in industries.
Need for labour legislation in India:
=> Organized industry in a planned economy calls for the spirit of co-operation and mutual dependence
for attaining the common purpose of greater, better and cheaper production.
=> Since this has not been happening voluntarily, the need for State intervention.
=> In India, labour legislation is treated as an arm of the State for the regulation of working and living
conditions of workers.
The need for labour legislation may be summarized as under:
o Necessary for the health, safety, and welfare of workers;
o Necessary to protect workers against oppressive terms as individual worker is economically weak and
has little bargaining power;
o To encourage and facilitate the workers in the organization;
o To deal with industrial disputes;
o To enforce social insurance and labour welfare schemes.

15. List the objectives of Labour Legislation
Labour legislation in India has sought to achieve the following objectives:
1. Establishment of justice - Social, Political and Economic.
2. Provision of opportunities to all workers; irrespective of caste, creed, religion, beliefs; for the
development of their personality.
3. Protection of weaker sections in the community.
4. Maintenance of Industrial Peace.
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5. Creation of conditions for economic growth.
6. Protection and improvement of labour standards.
7. Protect workers from exploitation.
8. Guarantee right of workmen to combine and form association or unions.
9. Ensure right of workmen to bargain collectively for the betterment of their service conditions.
10. Make state interfere as protector of social well being than to remain an onlooker.
11. Ensure human rights and human dignity.
16. State some important definitions of Marketing.
According to American Marketing Association, "Marketing is an organisational function and a set of
processes for creating, communicating and delivering value to customers and for managing customer
relationships in ways that benefit the organisation and its stakeholders."
According to Harold Koontz, "Management is the art of getting things done through and with people in
formally organised groups."

Management consists of the interlocking functions of creating corporate policy and organising, planning,
controlling, directing an organisation's resources in order to achieve the objectives of the policy.
According to Philip Kotler, "Marketing Management is the analysis, planning, implementation and
control of programmes designed to bring about desired exchanges with target audiences for the purpose
of personal and of mutual gain. It relies heavily on the adoption and coordination of product, price,
promotion and place for achieving responses.".

Marketing management is a business process, to manage marketing activities in profit seeking and non
profit organisations at different levels of management. Marketing management decisions are based on
strong knowledge of marketing functions and clear understanding and application of supervisory and
managerial techniques.

17. Nature of Marketing Management.
It Combines the Fields of Marketing and Management
As the name implies, marketing management combines the fields of marketing and management.
Marketing consists of discovering consumer needs and wants, creating the goods and services that meet
those needs and wants; and pricing, promoting, and delivering those goods and services. Doing so
requires attention to six major areas - markets, products, prices, places, promotion, and people.
Management is getting things done through other people. Managers engage in five key activities -
planning, organising, staffing, directing, and controlling. Marketing management implies the integration
of these concepts.

Marketing Management is a Business Process
Marketing management is a business process, to manage marketing activities in profit seeking and non
profit organisations at different levels of management, i.e. supervisory, middle-management, and
executive levels. Marketing management decisions are based on strong knowledge of marketing
functions and clear understanding and application of supervisory and managerial techniques. Marketing
managers and product managers are there to execute the processes of marketing management. We, as
customers, see the results of such process in the form of products, prices, advertisements, promotions,
etc.
Marketing Management is Both Science and Art
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Marketing management is art and science of choosing target markets and getting, keeping and growing
customers through creating, delivering and communicating superior customer value. (Kotler, 2006).
Marketing management is a science because it follows general principles that guides the marketing
managers in decision making. The Art of Marketing management consists in tackling every situation in
an creative and effective manner. Marketing Management is thus a science as well as an art.

18. Scope of Marketing
1. Study of Consumer Wants and Needs
Goods are produced to satisfy consumer wants. Therefore study is done to identify consumer needs and
wants. These needs and wants motivates consumer to purchase.

2. Study of Consumer behaviour
Marketers performs study of consumer behaviour. Analysis of buyer behaviour helps marketer in market
segmentation and targeting.

3. Production planning and development
Product planning and development starts with the generation of product idea and ends with the product
development and commercialisation. Product planning includes everything from branding and
packaging to product line expansion and contraction.

4. Pricing Policies
Marketer has to determine pricing policies for their products. Pricing policies differs form product to
product. It depends on the level of competition, product life cycle, marketing goals and objectives, etc.

5. Distribution
Study of distribution channel is important in marketing. For maximum sales and profit goods are
required to be distributed to the maximum consumers at minimum cost.

6. Promotion
Promotion includes personal selling, sales promotion, and advertising. Right promotion mix is crucial in
accomplishment of marketing goals.

7. Consumer Satisfaction
The product or service offered must satisfy consumer. Consumer satisfaction is the major objective of
marketing.

8. Marketing Control
Marketing audit is done to control the marketing activities.

19. What is Marketing Environment?
The term Marketing Environment refers to the forces and factors that affects the organisation ability to
built and maintain good relationship with its customers. Marketing environment surrounds the
organisation and it impacts upon the organisation. Marketers have to interact with internal and external
people at micro and macro level and builds internal and external relationships. The key elements of
marketing environment are as follows :-
1. Internal Environment,
2. Micro Environment, and
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3. Macro Environment.
Internal Environment
Internal factors like men, machine, money, material, etc., on which marketing decision depends consists
internal marketing environment. The internal environment refers to the forces that are within the
organisation and affects its ability to serve its customers. It includes marketing managers, sales
representatives, marketing budget, marketing plans, procedures, inventory, logistics, and anything
within organisation which affects marketing decisions, and its relationship with its customers.

Micro Environment
Individuals and organisations that are close to the marketing organisation and directly impacts its ability
to serve its customers, makes Marketing Micro Environment. The micro environment refers to the forces
that are close to the marketing organisation and directly impact the customer experience. It includes
the organisation itself, its suppliers, marketing intermediaries, customers, markets or segments,
competitors, and publics. Happenings in micro environment is relatively controllable for the marketing
organisation.

Macro Environment
Macro environment refers to all forces that are part of the larger society and affects the micro
environment. It includes demography, economy, politics, culture, technology, and natural forces. Macro
environment is less controllable.

20. What are the duties of a Sales manager?
The sales manager holds a unique position in the sales organisation. He plans, organises, directs, staffs
and coordinates the whole of the sales organisation. There are several connotations of the sales
manager like sales executive, sales director, marketing manager, marketing executive, etc. He is the
person who steers the wheels of sales organisation. His status and power depends on the size of the
organisation in his charge. In small firms the general manager or managing director performs the duties
of the sales manager. But in big manufacturing firms there usually a sales manger. Here the sales
manager. Here the sales manager is appointed by the top management and he is responsible to them.
In giant sized companies for some territories and/or products sales managers are appointed. Whatever
the position of the sales manager, he is the guiding and driving force of the sales organisation.
21. What are the different patterns of demand?
The first step in making a forecast consists of gathering information from the past. One should collect
statistical data recorded at successive intervals of time. Such a data is usually referred to as time series.
Analysts plot demand data on a time scale, study the plot and look for consistent shapes and patterns.
A time series of demand may have constant, trend, or seasonal pattern ( Figure 1 ) or some combination
of these patterns. The forecaster tries to understand the reasons for such changes, such as,
Changes that have occurred as a result of general tendency of the data to increase or decrease,
known as secular movements.
Changes that have taken place during a period of 12 months as a result in changes in climate,
weather conditions, festivals etc. are called as seasonal changes.
Changes that have taken place as a result of booms and depressions are called as cyclical
variations.
Changes that have taken place as a result of such forces that could not be predicted (like flood,
earthquake etc.) are called as irregular or erratic variations.
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22. What are the different methods for accessing the accuracy of forecasting?
Measures of Accuracy
o Mean Absolute Deviation (MAD)
o Mean Squared Error (MSE)
o Mean Absolute Percentage Error (MAPE)
Forecast Control Measure
o Tracking Signal

Mean Absolute Deviation (MAD)
n
Forecast Actual
MAD

Mean Squared Error (or Deviation) (MSE)
1
) (
2
n
Forecast Actual
MSE

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Mean Square Percentage Error (MAPE)
n
X
Actual
Forecast Actual
MAPE
100

Tracking Signal
MAD
Forecast Actual
) (
Signal Tracking

23. What are the factors affecting the facility location?
Location studies are normally made in two phases,
(1) The general territory selection phase and
(2) The exact site selection phase
The important factors to be considered for the selection of territory and subsequent selection of a
particular site are:
Market: It is a very important factor with respect to both phases of location studies. If product is
fragile and susceptible to spoilage, proximity of the facility to the market is critical. If the product is
relatively cheap and transportation cost is high, a location close to the markets is desirable.
Raw material and supplies: The facility in general should be near to the vendors / suppliers. This will
further reduce the transportation cost of incoming materials and the lead-time of the inventory
replenishment.
Transportation facilities: Transportation facilities must be available.
Climate: Climate is another important factor to be considered for the facility location especially in
industries where special constraints are needed, for example the textile industry requires a high
humidity zone.
Site size: The plot of land must be large enough to hold the facilities required by the proposed facility.
Sometimes a good site may not have the required area.
Community attitude: Community attitude is difficult to evaluate. Normally communities provide the
overwhelming support to new industries, because this generates significant employment opportunities
to the local people. Moreover, infrastructure development of the city or town progresses very rapidly.
In some cases, when there is a fear of generation of pollution, community attitude goes in the reverse.
Other factors that may also affect the facility location decisions are manpower availability, land cost,
waste disposal, and pollution.

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24. Mention the Layout Design Procedure.
The major steps that needed to be followed in the layout design are :
Statement of the problem in terms of its objective, scope and factors to be considered.
Collection of basic data on sales forecast, production volume, production schedules, part lists,
operations to be performed etc.
Calculation of production rate and equipment requirements
Data analysis and its presentation in the form of various charts .
Calculations of space requirements and allocation of activity areas
Development of block plan, plot plan, and detailed layout.
Evaluation , selection , and installation of layout.
25. What are the different types of Flow Patterns ?
In the facilities layout problem, the decision regarding placement of the machines is typically made.
Depending on the application and availability of space, the machines are placed in one of the following
pattern
Straight line pattern,
U-shaped pattern,
S-shaped pattern and
W- shaped pattern
A pictorial representation of flow patterns is given in Figure.

Figure: Flow Patterns
Straight line pattern
The straight-line pattern is normally used when products are produced in large quantities and the
number of steps required for their production is few. Moreover, the shipping and receiving sections are
on the opposite sides.
U-shaped pattern
U-shaped patterns are often used when it is necessary to keep the beginning (receiving) and end
(shipping) of the line at the same side and same end of the plant . U-shaped patterns are also preferred
in just-in-time layouts. Workers are generally placed in the center of the U. From there they can monitor
more than one machine at a time.
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S-shaped pattern
S-shaped patterns are used for long assembly processes that have to fit in the same area as well as when
it is necessary to keep the receiving and shipping ends on the opposite sides.
W-shaped pattern
W-shaped pattern, like the S-shaped pattern is also used for long assembly processes, which have to fit
in the same area. When it is also necessary to keep the receiving and shipping ends on the same side,
the W-shaped pattern is preferred.
26. Write short notes on Computerized Layout Planning.
Computerized layout algorithms can be classified according to the way final layout is generated.
Construction algorithms consist of the successive selection and placement of activities [departments]
until a layout design is achieved. The second type of an algorithm is of the improvement type. In this
case complete existing layout is required initially, and locations of activities [departments are
interchanged as so to improve the layout design.
A few known and most widely available computer programmes are ALDEP, COFAD, COMP2,
COMPROPLAN, COMSBUL, CORELAP, COSFAD, RAFT, GRASP, IMAGE, MAT, OFFICE, PLANET, RAMA
COMPI, SUMI, etc.
CRAFT [Computerized Relative Allocation of Facility Techniques]
ALDEP [Automated Layout Design Program]
CORELAP [Computerized Relationship Layout Planning]
COFAD [Computerized Facilities And Design]
PLANET [Plant Layout Evaluation Technique]

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1. Explain the HRM Model?
The HRM model contains all HR activities. When these activities are discharged effectively, they will result in a
competent and willing workforce who will help realize organizational goals. There is another variable in the model
environment. It may be stated that the HR function does not operate in vacuum. It is influenced by several
internal and external forces like economic, technological, political, legal, organizational, and professional
conditions.
HRM: is a management function that helps managers recruit, select, train, and develop members for an
organization.
Human Resource Planning: is understood as the process of forecasting an organizations future demand for, and
supply of, the right type of people in the right number.
Job Analysis: is the process of studying and collecting information relating to the operations and responsibilities
of a specific job. The immediate products of this analysis are job descriptions and job specification.
Recruitment: is the process of finding and attracting capable applicants for employment. The process begins
when new recruits are sought and ends when their applications are submitted. The result is a pool of applicants
from which new employees are selected.
Selection: is the process of differentiating between applicants in order to identify (and hire) those with greater
likelihood of success in a job.
Placement: is understood as the allocation of people to jobs. It is the assignment or re-assignment of an employee
to a new or different job.
Training and development: it is an attempt to improve current or future employee performance by increasing an
employees ability to perform through learning, usually by changing the employees attitude or increasing his or
her skills and knowledge. The need for training and development is determined by employees performance
deficiency, computed as follows:
Training and development need = Standard performance Actual performance
Remuneration: is the compensation an employee receives in return for his or her contribution to the organization.
Motivation: is a process that starts with a psychological or physiological deficiency or need that activates behavior
or a drive that is aimed at a goal or an incentive.
Participative management: Workers participation may broadly be taken to cover all terms of association of
workers and their representatives with the decision making process, ranging from exchange of information,
consultations, decisions and negotiations to more institutionalized forms such as the presence of workers
members on management or supervisory boards or even management by workers themselves as practiced in
Yugoslavia. ((ILO)
Communication: may be understood as the process of exchanging information, and understanding among
people.
Safety and health: Safety means freedom from the occurrence or risk of injury or loss. In order to ensure the
continuing good health of their employees, the HRM focuses on the need for healthy workers and health services.

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Welfare: as defined by ILO at its Asian Regional Conference, defined labour welfare as a term which is understood
to include such services, facilities, and amenities as may be established in or in the vicinity of undertakings to
enable the person employed in them to perform their work in healthy, congenial surroundings and to provide
them with amenities conducive to good health and high morale.
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Promotions: means an improvement in pay, prestige, position and responsibilities of an employee within his or
her organization.
Transfer: involves a change in the job (accompanied by a change in the place of the job) of an employee without
a change in the responsibilities or remuneration.
Separations: Lay-offs, resignations and dismissals separate employees from the employers.
Industrial relations: is concerned with the systems, rules and procedures used by unions and employers to
determine the reward for effort and other conditions of employment, to protect the interests of the employed
and their employers, and to regulate the ways in which employers treat their employees.
Trade Unions: are voluntary organizations of workers or employers formed to promote and protect their interests
through collective action.
Disputes and their settlement: Industrial disputes mean any dispute or difference between employers and
employers, or between employers and workmen, or between workmen and workmen, which is connected with
the employment or non-employment or terms of employment or with the conditions of labour of any person.
2. Difference between Personnel Management and HRM
Dimension Personnel Management HRM
1. Employment contract
Careful delineation of written
contracts
Aims to go beyond contract.
2. Rules
Importance of devising clear
rules
Can do, outlook, impatience with
rule
3. Guide to management
action
Procedures Business need
4. Behaviour referent Norms/ customs and practices Values/mission
5. Managerial task vis--vis
labour
Monitoring Nurturing
6. Key relations Labour management Customer
7. Initiatives Piecemeal Integrated
8. Speed of decision Slow Fast
9. Management role Transactional Transformational leadership
10. Communication Indirect Direct
11. Prized management skills Negotiation Facilitation
12. Selection Separate, marginal task Integrated, key task
13. Pay Job evaluation Performance related
14. Conditions Separately negotiated Harmonization
15. Labour management Collective-bargaining contracts Individual contracts
16. Job categories and grades Many Few
17. Job design Division of labour Team work
18. Conflict handling Reach temporary truce Manage climate and culture
19. Training and development Controlled access to courses Learning companies
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20. Focus of attention for
interventions
Personnel procedures
Wide ranging cultural, structural
and personnel strategies
21. Respect for employees
Labour is treated as a tool
which is expendable and
replaceable
People are treated as assets to be
used for the benefit of an
organization, its employees and the
society as a whole
22. Shared interest
Interests of the organization
are uppermost
Mutuality of interests
23. Evolution Precedes HRM
Latest in the evolution of the
subject

3. Explain the functions of HRM.
A personnel manager has to perform the basic functions of management. These managerial functions include'
planning, organizing, directing and controlling personnel. The operative functions of the department are:
procurement of staff, development of staff through training, payment of compensation to staff i.e. wages and
salaries, integration of manpower i.e. fair reconciliation of individual, social and organizational goals and interests
and maintenance of staff i.e. providing them safety at the work place and also to offer welfare facilities and
conveniences to employees. In brief, personnel management involves the following operational functions:
(1) Procurement of manpower: Procurement means acquiring the manpower required by an organization
from time-to-time. The basic Principle in procurement is "right man for the right job". The procurement
function includes manpower planning and forecasting, recruitment, selection, appointment, placement
and induction of employees so as to have a team of efficient and capable employees for the benefits of
the organization. Even promotions and transfers are covered by this broad personnel function.
(2) Development of manpower: Development of manpower (human resource development) means planning
and execution of the training programmes for all categories of employees in order to develop new skills
and qualities required for working at the higher level. Manpower development is possible through
training and career development programmes and not simply by offering attractive wages to workers.
Executive development programmes are introduced for the benefit of higher-level managers Similarly;
future manpower requirement will be, met internally through HRD programmes. It aims at educating and
training employees for the improvement of overall performance of an organization. HRD (Human
Resource Development) programmes are for education, training and development of existing manpower
in an organization. This is for facing new problems and challenges likely to develop in the near future.
(3) Compensation payment to manpower employed: One function of HRM is to pay compensation (in
monetary form) to employees for the services rendered. For this, a fair system of remuneration payment
(wages and salaries) needs to be introduced. Remuneration to employees should be attractive so that
the labour force will be satisfied and disputes, etc. will be minimized. Fair wage payment acts as a
motivating factor.
(4) Integration of interests of manpower and the organization: Manpower is interested in wage payment
while organization is interested in higher profits, consumer loyalty, market reputation and so on. HRM
has to reconcile the interests of the individual members of the organization with those of the
organization.
(5) Maintenance of manpower: This manpower function relating to maintaining satisfied manpower in the
organization through the provision of welfare facilities. For this, attention needs to be given to health
and safety measures, maintenance of proper working conditions at the work place, provision of welfare
facilities and other non-monetary benefits so as to create efficient and satisfied labour force with high
morale. Even collective bargaining and workers participation come within this broad personnel function.
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(6) Provision of welfare facilities: Employees are offered various welfare facilities. They include medical,
educational, recreation, housing, transport and so on.
(7) Misc. functions: Misc functions under HRM include maintenance of service records of employees (which
are used for promotions/transfers performance appraisal, etc.), promotions and transfers of employees,
maintaining cordial industrial relations, introduction of rational grievance procedure, performance
evaluation of employees, career planning of employees, maintenance of discipline, administering the
policies with regard to disciplinary action and compliance of various labour laws.
4. Explain the evolution of HRM in India
The importance of personnel/human resources management is now universally accepted and India
is not an exception to this rule. In India, large business enterprises, public sector enterprises and
even medium and small enterprises appoint personnel manager or human resources development
(HRD) manager to look after the personnel functions such as recruitment, promotions and transfers,
training and manpower development, provision of welfare facilities, compensation management
and so on. The term HRM is a relatively new term emerged during the 1970s. It is now used as a
better and meaningful substitute to personnel management. HRM is wider in scope and has its
distinct philosophy.
The process of industrial development started in India rather late. It was during the British Rule and
that too after the First World War that textile, jute, iron and steel and other organised industries
started in India. Recruitment, wage payment, welfare facilities and other personnel problems were
noted only when labour class was employed on a large scale in the industrial sector. This is the
starting period for personnel management in India. In the early British period and prior to that
personnel management and personnel functions were absent, (Reference to some personnel
functions and systematic management of resources was made in Kautilya's Arthashastra during the
4th century Be.) as industrial activities were extremely limited. They were also conducted on a small
scale. As compared to India, the industrial growth was rapid in Europe. As a result, the concept of
personnel functions and personnel management made rapid progress. The concept of personnel
management function in India is based on similar concept developed in Europe much earlier.
The personnel function in India has been the product(outcome) of various factors such as industrial
growth, labour, legislation, exploitation of workers in the early period and their demand for certain
basic necessities of life. (e.g. fair wage, weekly, holiday, essential facilities at the work place)The
need for labour officers in Indian industry was felt/realized as early as 1929 for the protection of
labour force in industrial units.
In 1931, the members of Bombay Mill owners' Association appointed Labour Officers in their textile
mills (on voluntary basis) for the settlement of grievances and disputes of employees. Similar
arrangement was introduced in the jute mills in Bengal (under the leadership of Jute Mills
Association). The labour welfare officers were given the responsibility to promote sports and welfare
activities and provide food shops (canteen facility) to workers.
After Independence, many pro labour legislations were made for the protection and welfare of
workers. The scope of personnel management function was made more broad and liberal. Many
provisions regarding recruitment, salary payment and conditions of service were laid down. This
gave recognition to the personnel management function in the industrial establishments.
Gradually, the need of personnel management and its role in cordial labour relations and fair
treatment to employees need were recognized by industrial organizations. Personnel departments
under the leadership of personnel managers were started in the companies. Liberal welfare facilities
were introduced for the benefit of employees. Such measures taken for the protection and welfare
of employees enlarged the scope of personnel management. Even training and manpower
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development programmes added new dimensions to the activities of personnel management. Many
companies have now, prepared well-defined personnel policies, grievance and other procedures and
liberal package of welfare facilities. Such additional activities/functions under personnel
management raised the importance and popularity of personnel department.
5. Explain the Recruitment process
Recruitment is a process of finding and attracting capable applicants for employment. The process
begins when new recruits are sought and ends when their applications are submitted. The result is a
pool of applicants from which new employees are selected. A well-planned and well-managed recruiting
effort will result in high quality applicants, whereas a haphazard and piecemeal effort will result in a
mediocre once. Several factors such as external factors like supply an demand unemployment rate,
labour markets and political and legal considerations, internal factors like recruiting policy, size, cost of
recruiting etc govern the recruiting process.
The process comprises of 5 inter related stages: -
1. Planning
2. Strategy development
3. Searching
4. Screening
5. Evaluation and control

I Planning

The first stage in recruitment process is planning. Planning involves translation of likely
job vacancies and information about the nature of these jobs into a set of objectives or targets
that specify the number and the type of applicants to be contacted.
Number of contacts: organisations always plan to attract more applicants than they plan to
hire. Some of those contacted will be uninterested unqualified or both. Each time a recruitment
process is contemplated, one task is to estimate the number of applicants necessary to fill all the
vacancies with qualified people.
Type of contacts: this refers to the type of people to be informed about the job openings.
The types of people depend on the tasks and responsibilities involved and the qualifications and
experience expected. These details are available through job description and job specification.

II Strategy development

Once it is known how many and what type of recruits are required, consideration needs
to be given to make or buy employees, technical sophistication of recruitment and selection
devices, geographic distribution of labour markets comprising job seekers, sources of
recruitment, and sequencing the activities in the recruitment process.
Make or buy refers to hire less skilled employees ad to invest in training and education
programmes or hire skilled professionals. The second decision in strategic relates to the methods
used in recruitment and selection. The advent of computers has made it possible for employers
to scan national and international applicants qualifications. It has also made possible for job
seekers to gain better access. In order to reduce costs, companies look into the national markets
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for managerial employees, regional or local markets for technical employees, and local markets
for clerical and blue-collar employees.
The sources for recruitment may be internal or external. The internal sources would be
present employees, referrals given by the employees, former employees or previous applicants.
Whereas the external sources would be consultants, headhunters, advertisements, employee
exchanges, campus recruitment, contractors, displaced persons, radio and television,
acquisitions and mergers, competitors, international recruitment etc. then both the sources of
recruitment are evaluated. Both have their own advantages and disadvantages.

III Searching

Once a recruitment plan and strategy are worked out, the search process can begin. It
involves two steps:
1. Source aviation
2. Selling
1. Source Aviation:
Typically sources and search methods are activated by issuances of an employee requisition.
This means that no actual recruiting takes place until line managers have verified that a vacancy
does exist or will exist. If the organisation has planned well and done a good job of developing its
sources and search methods, activation soon results in a flood of applications and/or resumes.
The application received must be screened. Those who pass have to be contacted, and invited
for interview. Unsuccessful applicants must be sent letters of regret.
2. Selling
The second issue to be addressed in the searching process concerns communication. Here,
contacts are tightrope. On tone hand they want as many applications and on the other hand
they must resist overselling of their virtues. In selling the organisation both message and the
media need attention. Selection of medium or media has to be done with lot of care.
IV Screening
Screening of applicants can be regarded as an integral part of recruiting process. The
selection process will begin after the applicants have been scrutinized and short-listed.
Applications received in response to advertisement are screened and only the eligible
applicants are called for interview.
The purpose of screening is to remove from the recruiting process, at an early stage those
applicants who are visibly unqualified for the job. Effective screening can save a great deal of
time and money. Care must be taken that potentially good employees are not lost and women
and minorities receive full and fair consideration.
In screening, clear job specifications are invaluable. Applications are judged on the basis
of their knowledge, skills, abilities, and interests required to do the job. The techniques used to
screen applicants vary depending on the candidate sources and recruiting methods used.
Interviews and application blanks are used to screen walk ins. Campus recruiters and agency
representatives use in interviews and resumes. References checks are also useful in screening.
V Evaluation and control
Evaluation and control is necessary as considerable costs are incurred in the recruitment
process. The costs generally incurred are
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Salaries for recruiters
Management and professional time spent on preparing job description, job
specification, advertisements, agency liaison, and so forth
The cost of advertisement and other recruitment methods like agency fees
Cost of producing supporting literature
Recruitment overheads and administrative expenses
Cost of overtime and outsourcing while the vacancies are remain unfilled
Cost of recruiting unsuitable candidates for selection process

Questions should always be asked as to whether the recruitment methods used are valid
and whether the recruitment process itself is valid. Statistical information on the cost of
advertisements, time taken for the process etc should be gathered and evaluated. However,
exercises seem to be seldom carried out in practice.
Evaluation of recruitment process:
The recruitment process has the objective of searching for and obtaining applications from job
seekers in sufficient numbers and quality. Keeping in mind these objectives, the evaluation
might include:
Return rate of application sent out
Number of suitable candidates for selection
Retention and performance of the candidates selected
Cost of recruitment process
Time lapsed data
Comments on image projected

6. Explain the Selection process.
Selection is the process of picking individuals with requisite qualifications and competence to fill
jobs in the organization. A formal definition of selection is it is the process of differentiating between
applicants in order to identify those with a greater likelihood of success.
Selection is significant as it has its impact on work performance and employee cost. Selection is
generally done by the HR department often in consultation with the line managers.
Selection Process
Selection is a long process, commencing from the preliminary interview of the applicants and
ending with the contract of employment. In practice, the process differs among organizations and
between two different jobs within the same organization. Selection procedure for senior managers will
be long-drawn and rigorous, but it is simple and short while hiring shop-floor workers.
Environmental Factors Affecting Selection
Selection is influenced by several factors. More prominent among them are supply and demand
of specific skills in the labour market, unemployment rate, labour-market conditions, legal and political
considerations, companys image, companys policy, HRP, and cost of hiring. The last three constitute
the internal environment and the remaining form the external environment of the selection process.

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1. Preliminary Interview
The applications received from job seekers are subject to scrutiny so as to eliminate
unqualified applicants. This is usually followed by a preliminary interview the purpose of which is
more or less the same as scrutiny of applications, that is, elimination of unqualified applications.
Scrutiny enables the HR specialists to eliminate unqualified jobseekers based on the information
supplied in their applications forms. Preliminary interview, on the other hand, helps reject misfits
for reasons, which did not appear in the application forms. Besides, preliminary interview, often
called courtesy interview, is a good public relations exercise.
2. Selection Tests
Job seekers who pass the screening and the preliminary interview are called for tests. Different
types of tests may be administered, depending on the job and the company. Generally, tests are
used to determine the applicants ability, aptitude and personality. Ability tests assist in
determining how well an individual can perform tasks related to the job. An excellent example of
this is the typing test given to a prospective employee for a secretarial job. An aptitude test helps
to determine a persons potential to learn in a given area. An example of such a test is the General
Management Aptitude Test which many business students take prior to gaining admission to a
graduate business school programme.
Personality tests are given to measure a prospective employees motivation to function in a
particular working environment.
There are various tests designed to assess a candidates personality. The Bersenter
Personality Inventory, for example, measures ones self-sufficiency, neurotic tendency, sociability,
introversion and extroversion, locus of control, and self-confidence. The Thematic Apperception test
(TAT) assesses an individuals achievement and motivational levels. Other personality tests, such as
the California Psychological Inventory (CPI), the Thurstone Temperament Survey (TTS), Minnesota
Multiphasic Personality Inventory (MMPI), and Guildford-Zimmerman Temperament Survey, have
been designed to assess specific personality traits.
Aptitude tests indicate the ability or fitness of an individual to engage successfully in any number of
specialized activities. They cover such areas as clerical aptitude, numerical aptitude, mechanical
aptitude, motor-coordination, finger dexterity and manual dexterity.
Interest tests are used to measure an individuals activity preferences. These tests are particularly
useful for students considering many careers or employees deciding upon career changes.
Graphology test is designed to analyse the handwriting of an individual. It has been said that an
individuals handwriting can suggest the degree of energy, inhibitions and spontaneity, as well as
disclose the idiosyncracies, and elements of balance and control. For example, big letters and
emphasis on capital letters indicate a tendency towards domination and competitiveness. A slant to
the right, moderate pressure and good legibility show leadership potential. Employers usually
consult graphologists to supplement their usual personnel recruitment procedures. Polygraph tests
are designed to ensure accuracy of the information given in the applications. Department stores,
treasury offices and jewellery shops that is those highly vulnerable to theft or swindling may find
polygraph tests useful.

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3. Employment Interview
The next step in the selection process is employment interview. An interview is conducted at the
beginning and at the end of the selection process. The emphasis here is on the latter.
Interview is a formal, in-depth conversation conducted to evaluate the applicants acceptability.
It is considered to be an excellent selection device. Its popularity stems from its flexibility.
Interview can be adapted to unskilled, skilled, managerial and professional employees. It allows a
two-way exchange of information, the interviewers learn about the applicant, and the applicant
learns about the employer.
However, interviews do have shortcomings. Absence of reliability is one limitation. No two
interviewers offer similar scoring after interviewing an applicant. Lack of validity is another
limitation. This is because, few departments use standardized questions upon which validation
studies can be conducted. Finally, biases of interviewers may cloud the objectivity of interviews.
The employment interview can be one-to-one, sequential or panel. In one-to-one interview, there
are only two participants the interviewer and the interviewee. This can be the same as the
preliminary interview discussed earlier. The sequential interview takes the one-to-one a step
further and involves a series of interviews, usually utilizing the strength and knowledge-base of
each interviewer, so that each interviewer can ask questions in relation to his subject area of each
candidate, as the candidate moves from room to room.
The panel interview consists of two or more interviewers and the figure may go up to as many as 15.
Any panel interview is less intimate and more formal than the one-to-one, but if handled and
organized well, it can provide a wealth of information. If not handled carefully, the panel interview
can make the candidate feel ill at ease and confused about whose question to answer and whom to
address. Interviewers themselves are likely to experience nightmare, not knowing who will ask which
question and in what order.
4. Reference & Background Checks
Many employers request names, addresses, and telephone numbers of references, for the purpose
of verifying information and perhaps, gaining additional background information on an applicant.
Although listed on the application form, references are not usually checked until an applicant has
successfully reached the fourth stage of a sequential selection process. When the labour market is
very tight, organizations sometimes hire applicants before checking references.
Previous employers, known public figures, university professors, neighbours or friends can act as
references. Previous employers are preferable because they are already aware of the applicants
performance. But, the problem with the reference is the tendency on the part of the previous
employer to over-rate the applicants performance just to get rid of the person.
Organizations normally seek letters of references or telephone references. The latter is
advantageous because of its accuracy and low cost. The telephone reference also has the advantage
of soliciting immediate, relatively candid comments, and attitudes can sometimes be inferred from
hesitations and inflections in speech.
It may be stated that the information gathered through references hardly influence selection
decisions. The reasons are obvious:

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The candidate approaches only those persons who would speak well about him.
People may write favourably about the candidate in order to get rid of him.
People may not like to divulge the truth about a candidate, lest it might damage or ruin his
career.
In several cases, references are a formality and are seldom verified by the employer.
5. Selection Decision
After obtaining information through the preceding steps, selection decision the most critical of
all the steps must be made. The other stages in the selection process have been used to narrow
the number of candidates. The final decision has to be made from the pool of individuals who pass
the tests, interviews and reference checks.
The views of the line manager will be generally considered in the final selection because it is he who
is responsible for the performance of the employee. The HR manager plays a critical role in the final
selection.
6. Physical Examination
After the selection decision and before the job offer is made, the candidate is required to undergo
a physical fitness test. A job offer is, often, contingent upon the candidate being declared fit after
the physical examination. The results of the medical fitness test are recorded in a statement and are
preserved in the personnel records. There are several objectives behind a physical test. Obviously,
one reason for a physical test is to detect if the individual carries any infectious diseases. Secondly,
the test assists in determining whether an applicant is physically fit to perform the work. Third, the
physical examination information may be used to determine if there are certain physical capabilities
which differentiate successful and less successful employees. Fourth, medical check-up protects
applicants with health defects from undertaking work that could be detrimental to themselves or
might otherwise endanger the employers property. Finally, such an examination will protect the
employer from workers compensation claims that are not valid because the injuries or illnesses
were present when employee was hired.
7. Job Offer
The next step in the selection process is job offer to those applicants who have crossed all the
previous hurdles. Job offer is made through a letter of appointment. Such a letter generally contains
a date by which the appointee must report on duty. The appointee must be given reasonable time
for reporting. This is particularly necessary when he is already in employment, in which case the
appointee is required to obtain a relieving certificate from the previous employer. Again, a new job
may require movement to another city which means considerable preparation and movement of
property.
The company may also want the individual to delay the date of reporting on duty. If the new
employees first job upon joining the company is to go on training, the organization may request
that the individual delays joining the company until perhaps a week before such training begins.
Naturally this practice cannot be abused especially if the individual is unemployed and does not have
sufficient finances.
Decency demands that the rejected applicants be informed about their non-selection. Their
applications may be preserved for future use, if any. It needs no emphasis that the applications of
selected candidates must also be preserved for future references.
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8. Contracts of Employment
After the job offer has been made and the candidates accept the offer, certain documents need
to be executed by the employer and the candidate. One such document is the attestation form.
This form contains certain vital details about the candidate which are authenticated and attested
by him. Attestation form will be a valid record for future reference. There is also a need for
preparing a contract of employment. The basic information that should be included in a written
contract of employment will vary according to the level of the job, but the following checklist
sets out the typical headings.
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Job Title
Duties, including a phrase such as The employee will perform such duties and will be
responsible to such a person as the company may from time to time direct.
Date when continuous employment starts and the basis for calculating service
Rate of pay, allowances, overtime and shift rates, method of payments
Hours of work including lunch break and overtime and shift arrangements
Holiday arrangements
Length of notice due to and from employee
Grievance procedure
Disciplinary procedure
Work Rules
Arrangements for terminating employment
Arrangements for union membership
Special terms relating to rights to patents and designs, confidential information and
restraints on trade after termination of employment
Employers right to vary terms of the contract subject to proper notification being given
Alternatively called employment agreements or simply bonds, contracts of employment serve many
useful purposes. Such contracts seek to restrain job hopers, to protect knowledge and information
that might be vital to a companys health bottom line, and to prevent competitors from poaching
highly valued employees.
Great care is taken to draft the contract forms. Often, services of law firms are engaged to get the
forms drafted and finalized.
Most employers insist on agreements being signed by newly hired employees. But high employee
turnover sectors such as software, advertising and media are more prone to use such contracts.
The drawback with the contracts is that it is impossible to enforce them. A determined employee is
bound to leave the organization, contract or no contract. The employee is prepared to pay the
penalty for breaching the agreement or the new employer will provide compensations. It is for this
reason that several companies have scrapped the contracts altogether. Lintas and Ogilvy and Mather
are examples.
Concluding the Selection Process
Contrary to popular perception, the selection process will not end with executing the
employment contract. There is another step a more sensitive one- reassuring those candidates who
have not been selected. Such candidates must be told that they were not selected not because of any
serious deficiencies in their personalities, but because their profiles did not match the requirements
of the organization. They must be told that those who were selected were done purely on relative
merit.
9. Evaluation of the Selection Programme
The broad test of the effectiveness of the selection process is the quality of the personnel hired. An
organization must have competent and committed personnel. The selection process if properly done
will ensure availability of such employees. How to evaluate the effectiveness of a selection
programme? A periodic audit is the answer. Audit must be conducted by people who work
independent of the HR department.
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Two alternative methods of selection are participative selection and employee leasing. In
participative selection, subordinates participate in selection of their co-employees. Employee
leasing represents the leasing of employees by a client company from a third party.
In our country, selection of blue-collared and white-collared employees is unsystematic. However,
in case of managerial personnel, the process is fairly systematic. International hiring is assuming
greater relevance these days.
7. What are the Sources of Recruitment?
The sources of recruitment can be broadly categorized into internal and external sources-
(I) Internal Recruitment Internal recruitment seeks applicants for positions from within the
company. The various internal sources include
a. Promotions and Transfers
Promoti on i s an effecti ve means usi ng j ob posti ng and personnel records.
Job posti ng requi res noti fyi ng vacant posi ti ons by posti ng noti ces, ci rcul ati ng
publ i cati ons or announci ng at staff meeti ngs and i nvi ti ng empl oyees to appl y.
Personnel records hel p di scover empl oyees who are doi ng j obs bel ow thei r
educati onal qual i f i cati ons or ski l l l evel s. Promoti ons has many advantages l i ke i t i s
good publ i c rel ati ons, bui l ds moral e, encourages competent i ndi vi dual s who are
ambi ti ous, i mproves the probabi l i t y of good sel ecti on si nce i nformati on on the
i ndi vi dual s performance i s readi l y avai l abl e, i s cheaper than goi ng outsi de to
recrui t, those chosen i nternal l y are fami l i ar wi th the organi zati on thus reduci ng the
ori entati on ti me and energy and al so acts as a trai ni ng devi ce for devel opi ng
mi ddl e-l evel and top-l evel managers. However, promoti ons restri ct the fi el d of
sel ecti on preventi ng fresh bl ood & i deas from enteri ng the organi zati on. I t al so
l eads to i nbreedi ng i n the organi zati on. Transfers are al so i mportant i n provi di ng
empl oyees wi th a broad-based vi ew of the organi zati on, necessary for future
promoti ons.
b. Empl oyee referral s-
Empl oyees can devel op good prospects for thei r fami l i es and fri ends by
acquai nti ng them wi th the advantages of a j ob wi th the company, furni shi ng them
wi th i ntroducti on and encouragi ng them to appl y. Thi s i s a very effecti ve means as
many qual i fi ed peopl e can be reached at a very l ow cost to the company. The other
advantages are that the empl oyees woul d bri ng onl y thos e referral s that they feel
woul d be abl e to f i t i n the organi zati on based on thei r own experi ence. The
organi zati on can be assured of the rel i abi l i ty and the character of the referral s. I n
thi s way, the organi zati on can al so ful fi l l soci al obl i gati ons and create goodwi l l .
c. Former Empl oyees-
These i ncl ude reti red empl oyees who are wi l l i ng to work on a part -ti me
basi s, i ndi vi dual s who l eft work and are wi l l i ng to come back for hi gher
compensati ons. Even retrenched empl oyees are taken up once agai n. The
advantage here i s that the peopl e are al ready known to the organi zati on and there
i s no need to f i nd out thei r past performance and character. Al so, there i s no need
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of an ori entati on programme for them, si nce they are fami l i ar wi th the
organi zati on.
d. Dependents of deceased empl oyees-
Usual l y, banks fol l ow thi s pol i cy. I f an empl oyee di es, hi s / her spouse or
son or daughter are recrui ted i n thei r pl ace. Thi s i s usual l y an effecti ve way to ful fi l l
soci al obl i gati on and create goodwi l l .
(II) External Recruitment External recruitment seeks applicants for positions from sources outside the
company. They have outnumbered the internal methods. The various external sources include
a. Professi onal or Trade Associ ati ons
Many associ ati ons provi de pl acement servi ce to i ts members. I t
consi sts of compi l i ng j ob seeker s l i sts and provi di ng access to members duri ng
regi onal or nati onal conventi ons. Al so, the publ i cati ons of these associ ati ons
carry cl assi fi ed adverti sements from empl oyers i nterested i n recrui ti n g thei r
members. These are parti cul arl y useful for attracti ng hi ghl y educated,
experi enced or ski l l ed personnel . Al so, the recrui ters can zero on i n speci fi c j ob
seekers, especi al l y f or hard-to-fi l l techni cal posts.
b. Adverti sements -
I t i s a popul ar method of seeki ng recrui ts, as many recrui ters prefer
adverti sements because of thei r wi de reach. Want ads descri be the j ob benefi ts,
i denti fy the empl oyer and tel l those i nterested how to appl y. Newspaper i s the
most common medi um but for hi ghl y speci al i zed recrui ts, adverti sements may
be pl aced i n professi onal or busi ness j ournal s.
Adverti sements must contai n proper i nformati on l i ke the j ob content,
worki ng condi ti ons, l ocati on of j ob, compensati on i ncl udi ng fri nge benefi ts, j ob
speci fi cati ons, growth aspects, etc. The adverti sement has to sel l the i dea that
the company and j ob are perfect for the candi date. Recrui tment adverti sements
can al so serve as corporate adverti sements to bui l d company i mage. I t al so cost
effecti ve.
c. Empl oyment Exchanges-
Empl oyment Exchanges have been set up al l over the country i n
deference to the provi si on of the Empl oyment Exchanges (Compul sory
Noti fi cati on of Vacanci es) Act, 1959. The Act appl i es to al l i ndustri al
establ i shments havi ng 25 workers or more each. The Act requi res al l the
i ndustri al establ i shments to noti fy the vacanci es before they are fi l l ed. The
maj or functi ons of the exchanges are to i ncrease the pool of possi bl e appl i cants
and to do the prel i mi nary screeni ng. Thus, empl oyment exchanges act as a l i nk
between the empl oyers and the prospecti ve empl oyees. These offi ces are
parti cul arl y useful to i n recrui ti ng bl ue-col l ar, whi te col l ar and techni cal
workers.
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d. Campus Recrui tments-
Col l eges, uni versi ti es, research l aboratori es, sports fi el ds and
i nsti tutes are ferti l e ground for recrui ters, parti cul arl y the i nsti tutes. Campus
Recrui tment i s goi ng gl obal wi th compani es l i ke HLL, Ci ti bank, HCL -HP, ANZ
Gri ndl ays, L&T, Motorol a and Rel i ance l ooki ng for gl oba l markets. Some
compani es recrui t a gi ven number of candi dates from these i nsti tutes every
year. Campus recrui tment i s so much sought after that each col l ege; uni versi ty
department or i nsti tute wi l l have a pl acement offi cer to handl e recrui tment
functi ons. However, i t i s often an expensi ve process, even i f recrui ti ng process
produces j ob offers and acceptances eventual l y. A maj ori ty l eave the
organi zati on wi thi n the fi rst fi ve years of thei r empl oyment. Yet, i t i s a maj or
source of recrui tment for presti gi ous compani es.
e. Wal k-i ns, Wri te-i ns and Tal k-i ns-
The most common and l east expensi ve approach for candi dates i s di rect
appl i cati ons, i n whi ch j ob seekers submi t unsol i ci ted appl i cati on l etters or resumes.
Di rect appl i cati ons can al so provi de a pool of potenti al empl oyees to meet future
needs. From empl oyees vi ewpoi nt, wal k-i ns are preferabl e as they are free from
the hassl es associ ated wi th other methods of recrui tment. Whi l e di rect appl i cati ons
are parti cul arl y effecti ve i n fi l l i ng entry-l evel and unski l l ed vacanci es, some
organi zati ons compi l e pool s of potenti al empl oyees from di rect appl i cati ons for
ski l l ed posi ti ons. Wri te-i ns are those who send wri tten enqui ri es. These j obseekers
are asked to compl ete appl i cati on forms for further processi ng. Tal k- i ns i nvol ves
the j ob aspi rants meeti ng the recrui ter (on an appropri ated date) for detai l ed tal ks.
No appl i cati on i s requi red to be submi tted to the recrui ter.
f. Contractors-
They are used to recrui t casual workers. The names of the workers are not
entered i n the company records and, to thi s extent; di ffi cul ti es experi enced i n
mai ntai ni ng permanent workers are avoi ded.
g. Consul tants-
They are i n the professi on for recrui ti ng and sel ecti ng manageri al and
executi ve personnel . They are useful as they have nati onwi de contacts and l end
professi onal i sm to the hi ri ng process. They al so keep prospecti ve empl oyer and
empl oyee anonymous. However, the cost can be a deterrent f actor.
h. Head Hunters-
They are useful i n speci al i zed and ski l l ed candi date worki ng i n a parti cul ar
company. An agent i s sent to represent the recrui ti ng company and offer i s made
to the candi date. Thi s i s a useful source when both the compani es i nvol ved are i n
the same fi el d, and the empl oyee i s rel uctant to take the offer si nce he fears, that
hi s company i s testi ng hi s l oyal ty.
i . Radi o, Tel evi si on and I nternet -
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Radi o and tel evi si on are used to reach certai n types of j ob appl i cants
such as ski l l ed workers. Radi o and tel evi si on are used but spari ngl y, and that
too, by government departments onl y. Compani es i n the pri vate sector are
hesi tant to use the medi a because of hi gh costs and al so because they fear that
such adverti si ng wi l l make the compani es l ook desperate and damage thei r
conservati ve i mage. However, there i s nothi ng i nherentl y desperate about usi ng
radi o and tel evi si on. I t depends upon what i s sai d and how i t i s del i vered.
I nternet i s becomi ng a popul ar opti on for recrui tment today. There re
speci al i zed si tes l i ke naukri . com. Al so, websi tes of compani es have a separate
secti on wherei n; aspi rants can submi t thei r resumes and appl i cati ons. T hi s
provi des a wi der reach.
j . Competi tors-
Thi s method i s popul arl y known as poachi ng or rai di ng whi ch
i nvol ves i denti f yi ng the ri ght peopl e i n ri val compani es, offeri ng them better
terms and l uri ng them away. For i nstance, several executi ves of HMT l eft to j oi n
Ti tan Watch Company. There are l egal and ethi cal i ssues i nvol ved i n rai di ng ri val
fi rms for potenti al candi dates. From the l egal poi nt of vi ew, an empl oyee i s
expected to j oi n a new organi zati on onl y after obtai ni ng a no obj e cti on
certi fi cate from hi s/ her present empl oyer. Vi ol ati ng thi s requi rement shal l bi nd
the empl oyee to pay a few months sal ary to hi s/ her present empl oyer as a
puni shment. However, there are many ethi cal i ssues attached to i t.
k. Mergers and Acqui si ti ons-
When organi zati ons combi ne, they have a pool of empl oyees, out of
whom some may not be necessary any l onger. As a resul t, the new organi zati on
has, i n effect, a pool of qual i fi ed j ob appl i cants. As a resul t, new j obs may be
created. Both new and ol d j obs may be readi l y staffed by drawi ng the best -
qual i fi ed appl i cants from thi s empl oyee pool . Thi s method faci l i tates the
i mmedi ate i mpl ementati on of an organi zati on s strategi c pl an. I t enabl es an
organi zati on to pursue a busi ness pl an, However, the need to di spl ace
empl oyees and to i ntegrate a l arge number of them rather qui ckl y i nto a new
organi zati on means that the personnel -pl anni ng and sel ecti on process becomes
cri ti cal more than ever.
8. Explain different methods and techniques of training.
A multitude of techniques are used to train employees. Training techniques represent the medium of
imparting skills and knowledge to employees. Training techniques are means employed in the training
methods. They are basically of two types.
1. Lectures: It is the verbal presentation of information by an instructor to a large audience. The
lecturer is presumed to possess knowledge about the subject. A virtue in this method is that it
can be used for large groups and hence the cost of training per employee is very low. However,
this method violates the principle of learning by practice. Also this type of communication is a
one-way communication and there is no feedback from the audience because in case of very
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2. Audio Visuals: This is an extension of the lecture method. This method includes slides, OHPs,
video tapes and films. They can be used to provide a range of realistic examples examples of job
conditions and situations in the condensed period of time. It also improves the quality of
presentation to a great extent.
Methods and Techniques of Training

3. On- the Job- Training: It is used primarily to teach workers how to do their present jobs.
Majority of the industrial training is on the job training. It is conducted at the work site and in
the context of the job. Often, it is informal, as when experienced worker shows a trainee how to
perform tasks. In this method, the focus of trainers focus is on making a good product and not
on good training technique. It has several steps, the trainee first receives an overview of the job,
its purpose and the desired outcomes. The trainer then demonstrates how the job is to be
performed and to give trainee a model to copy. And since a model is given to the trainee, the
transferability to the job is very high. Then the employee is allowed to mimic the trainers
example. The trainee repeats these jobs until the job is mastered.
4. Programmed Instruction (PI): In this method, training is offered without the intervention of the
trainer. Information is provided to the employee in blocks, in form of books or through teaching
machine. After going through each block of material, the trainee goes through a test/ answers a
question. Feedback in the form of correct answers is provided after each response. Thus PI
involves:
Presenting questions, facts, and problems to the learner.
Allowing the person to respond
Providing feedback on the accuracy of the answers
If the answers are correct, he proceeds to the next block or else, repeats the same.
However it is an impersonal method and the scope of learning is less as compared to other
methods of training. Also the cost of preparing books, manuals and machinery is very high.
5. Computer Assisted Instruction (CAI): This is an extension of the PI method. In this method, the learners
response determines the frequency and difficulty level of the next frame. This is possible thanks to the
speed, memory and the data manipulation capabilities of the computer.
6. Simulation: It is any equipment or technique that duplicates as nearly as the possible the actual
conditions encountered at the job. It is an attempt to create a realistic for decision-making. This
method is most widely used in Aeronautical Industry.
On the Job Techniques Off the Job Techniques
Methods applied in the
workplace while the
employee is working.
Away from the
workplace
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7. Vestibule Training: This method utilizes equipment which closely resemble the actual ones used
in the job. It is performed in a special area set aside for the purpose and not at the workplace.
The emphasis is placed on learning skills than on production. It is however difficult to duplicate
pressures and realities of actual situations. Even though the kind of tension or pressure may be
the same but the employee know it is just a technique and not a real situation. Also the
employees behave differently in real situations than in simulations. Also additional investment
is required for the equipment.
8. Case study: It is a written description of an actual situation in the business, which provokes the
reader to think and make decisions/ suggestions. The trainees read the case, analyse it and
develop alternative solutions, select the best one and implement it. It is an ideal method to
promote decision making skills. They also provide transference to an extent. They allow
participation through dicussion. This is the most effective method of developing problem solving
skills.
The method /approach to analysis may not be given importance. Many a times only the
result at the end of the case may be considered and not the line of thinking to approach it. This
is a major disadvantage since case studies must primarily be used to influence or mend the
attitude or thinking of an individual.
9. Role Playing and Behavior Modeling: This method mainly focuses on emotional (human
relation) issues than other ones. The essence is on creating a real life situation and have trainees
assume parts of specific personalities (mostly interchanged roles of boss and subordinate to
create empathy for one another). The consequence is better understanding of issues from the
others point of view. Concept of Behavior Modeling:
Fundamental psychological process by which new patterns of behavior can be acquired
and existing ones can be altered.
Vicarious process learning takes place not by own experience but by observation or
imagination of others action.
It is referred to as copying, observational learning or imitation implying that it a
behavior is learned or modified through observation of others experiences.
This change may be videotaped and showed to the trainee and he can review and critique
it.
It also helps him see the negative consequences that result from not using the behavior
as recommended.
10. Sensitivity Training: it uses small number of trainees usually less than 12 in a group. They meet
with a passive trainer and get an insight into their own behavior and that of others. These
meetings have no agenda and take place away from the workplace. The discussions focus on
why participants behave the way they do and how others perceive them. The objective is to
provide the participants with increased awareness of their own behavior, the perception of
others about them and increased understanding of group process. Examples: Laboratory
training, encounter groups. Laboratory training is a form of group training primarily used to
enhance interpersonal skills. It can be used to develop desired behaviors for future job
responsibilities. A trained professional serves as a facilitator. However once the training is over
employees get back to being the way they are.
11. Apprenticeships and Coaching: It is involved learning from more experienced employee/s. This
method may be supplemented with other off-the-job methods for effectiveness. It is applied in
cases of most craft workers, carpenters, plumbers and mechanics. This approach uses high levels
of participation and facilitates transferability. Coaching is similar to apprenticeships. But it is
always handled by a supervisor and not by the HR department. The person being trained is called
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understudy. It is very similar to on the job training method. But in that case, more stress is laid
on productivity, whereas here, the focus is on learning.

9. Explain the Training Procedure.
(1) Organizational Objectives and Strategies:
The first step in the training process in an organization is the assessment of its objectives and
strategies. What business are we in? At what level of quality do we wish to provide this product or
service? Where do we want to be in the future? It is only after answering these and other related
questions that the organization must assess the strengths and weaknesses of its human resources.

THE TRAINING PROCESS

(2) Assessment of Training Needs:
Organizations spend vast sums of money on training and development. Before committing such huge
resources, organizations would do well to assess the training needs of the employees. Organizations
that implement training programmes without conducting needs assessment may be making errors.
Needs assessment occurs at two levels:
a) Individual
b) Group
Organizational Objectives and
Strategies
Assessment of Training Needs
Establishment of Training
Goals
Devising Training Programme
Implementation of Training
programme
Evaluation of Results
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Individual:
An individual obviously needs training when his or her training falls short of standards, that is, when
there is performance deficiency. Inadequacy in performance may be due to lack of skill or knowledge or
any other problem. The problem of performance deficiency is caused by absence of skills or knowledge
can be remedied by training. Faulty selection, poor job design, uninspiring supervision or some personal
problem may also result in poor performance. Transfer, job redesign, improving quality of supervision,
or discharge will solve the problem.
Individuals may also require new skills because of possible job transfers. Although job transfers are as
common as organizational personal demands vary, they do not necessarily require elaborate training
efforts. Employees commonly require an orientation to new facilities and jobs. Recently, however,
economic forces have necessitated significant retraining efforts in order to assure continuous
employment for many individuals.
Group:
Assessment of training needs occurs at group level too. Any change in the organizations strategy
necessitates training groups of employees. For example, when the organization decides to introduce a
new line of products, sales personnel and production workers have to be trained to produce, sell and
service the new products. Training can also be used when high scrap or accident rates, low morale and
motivation, or other problems are diagnosed.
Needs Assessment Methods:
Several assessment methods for are available for assessing training needs. Some are useful for
organizational level needs assessment and others for individual needs assessment.

NEEDS ASSESSMENT METHODS
Groupanalysis
Organizational goals and objectives
Personnel/skills inventories
Organizational climate indices
Efficiency indices
Exit interviews
MBO or work planning systems
Quality circles
Customer survey/satisfaction data
Consideration of current and
projected changes
Individual analysis
Performance Appraisal
Work sampling
Interviews
Questionnaires
Attitude survey
Training progress
Rating scales
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Benefits of Needs Assessment:
Needs assessment helps diagnose the cause of performance deficiency of employees. Causes require
remedial actions. There are specific benefits of needs assessment.
Trainers may be informed about the broader needs of the training group and their sponsoring
organizations.
The sponsoring organizations are able to reduce the perception gap between the participant and his
or her boss about their needs and expectations from the training programme.
Trainers are able to pitch their course inputs closer to the specific needs of the participants.
(3) Establishment of Training Goals:
Once the training needs are assessed, training and developmental goals must be established. With out
clearly set goals, it is not possible to design a training and development programme and, after it has
been implemented, there will be no way of measuring its effectiveness. Goals must be tangible,
verifiable, and measurable. This is easy where skill training is involved. For example, the successful
trainee will be expected to type 55 words per minute with two or three errors per page. But behavioral
objectives like attitudinal changes can be more difficult to state. Nevertheless, clear behavioral
standards of expected results are necessary so that the programme can be effectively designed and
results can be evaluated.

(4) Devising the Training and Development Programme
Every training and development programme must address the following vital issues:

Who are the trainees?
Trainees are selected on the basis of:
Self Nomination
Recommendations of the Supervisor
By the HR Department itself
Whatever is the basis, it is advisable to have two or more target audiences. For example, rank-and-file
employees and their supervisors may effectively learn together about a new process and their
respective roles. It also helps facilitate group processes such as problem solving and decision making.
Training and development may be done by:
Immediate
Supervisors
Co workers
Personnel Staff
Specialists in other parts of the company
Outside Consultants
Industry Associations
Faculty Members at Universities
Who are the
trainees?
Who are the
trainers?
What methods &
techniques?
Where to conduct
the program?
What principles
of learning?
What should be the
level of training?

Kailas Sree Chandran Dept of Mechanical - STIST

Who among these are selected to teach, often depends on where the program is held and the skill that
is being taught.
What Methods and Techniques of Training should be used?
A multitude of methods and techniques is used to train employees. Training techniques are the means
employed in the training methods. Training methods are categorized into two groups on-the-job
methods and off-the-job methods. The most commonly used techniques are shown in the table given
below.
On-the-Job Method (OJT):
Majority of industrial training is on the job training type. OJT method is mainly adopted while
orienting new employees, introducing innovations in products & services and in special skills
training. OJT is conducted at the work site and in the context of the job. Often, it is informal, as when
an experienced worker shows a trainee how to perform the job tasks.
Off-the-Job Training Method:
Off-the-job training is mainly adopted for orienting new employees, introducing innovations in
products and services, special skills training, safety education, creative, technical & professional
education and sales, administrative, supervisory and managerial education. The advantages and
disadvantages of some of the important techniques of off-the-job methods are listed below:

a) Lectures:
Lecture is a verbal presentation of information by an instructor to a large audience. This method can
be made effective when combined with other means of training.
b) Audio-Visuals:
These include television slides, overheads, video-types, films and LCD Projectors.
c) Programmed Instruction (PI):
Training is offered without the intervention of the trainer. Information is provided to the trainee in
blocks, either in a book form or through a teaching machine. PI involves:
1. Presenting questions, facts, or problems to the learner.
2. Allowing the person to respond.
3. Providing feedback on the accuracy of his or her answers.
4. If the answers are correct, the learner proceeds to the next block.

METHODS & TECHNIQUES OF TRAINING
On-the-Job Method Off-the-Job Method
Orientation Training
Job-Instruction Training
Job Rotation
Coaching

Simulation

Lecture
Films & Television
Conference/Discussion
Programmed Instruction

Case Study
Vestibule
Role Play
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d) Simulations:
A simulator is any kind of equipment or technique that duplicates as nearly as possible the actual
conditions encountered on the job. It is an attempt to create a realistic decision making
environment for the trainee. The advantage of simulation is the opportunity to create an
environment similar to real situations the managers incur, but without the high costs involved
should the actions prove undesirable.
The other techniques of training are:
Leadership games: exercises to teach different styles of leadership.
Skill Games: Tests to develop analytical skills.
Communication Games: exercises to build bias free listening and talking.
Strategic Planners: Games to test ability to plan ahead.
Team building games: Exercises requiring collaborative efforts.
Lateral Thinking: thinking randomly to come up with new ideas.
Cross cultural training: Programmes to teach specifics of varied cultures.

(5) Implementation of the Programme:
Once the training programme has been designed, it needs to be implemented. Implementation is beset
with certain problems:
a) Most managers are action oriented and frequently say they are too busy to engage in training
efforts.
b) Availability of trainers is a problem. In addition to possessing communication skills, the trainers must
know the companys philosophy, its objectives, its formal and informal organizations, and the goals
of the training programme. Training requires a higher degree of creativity than, perhaps, any other
personnel specialty.
c) Scheduling training around the present work is another problem.

Programme implementation involves action on the following lines:
a) Deciding the location and organizing training and other facilities
b) Scheduling the training programme
c) Conducting the programme
d) Monitoring the progress of trainees

(6) Evaluation of the Programme:
The last stage in the training and development process is the evaluation of results. Since huge sums of
money are spent in training and development, how far the programme has been successful must be
judged or determined. Evaluation helps determine the results of the training and development
programme. In practice, however, organizations either overlook or lack facilities for evaluation.
Need for Evaluation:
The main objective of evaluating the training programmes is to determine if they are accomplishing
specific training objectives, that is, correcting performance deficiencies. A second reason for evaluation
is to ensure that any changes in trainee capabilities are due to the training programme and not due to
any other conditions. Training programmes should be evaluated to determine their cost effectiveness.
Evaluation is useful to explain programme failure, should it occur. Finally, credibility of training and
development is greatly enhanced when it is proved that the organization has benefited tangibly from it.
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Principles of Evaluation:
Evaluation of the training programme must be based on the following programmes:
a) Evaluation specialists must be clear about the goals and purpose of evaluation
b) Evaluation must be continuous
c) Evaluation must be specific
d) Evaluation must provide the means and focus for trainers to be able to appraise themselves, their
practices, and their products.
e) Evaluation must be based on objective methods and standards.
f) Realistic target dates must be set for each face of the evaluation process. A sense of urgency must
be developed, but deadlines that are unreasonably high will result in poor evaluation.
There are various approaches to training evaluation. To get a valid measure of training effectiveness,
the personnel manager should accurately assess trainees job performance two to four months after
completion of training.
Two writers have suggested that four basic categories of outcome can be measured.
a) Reaction: evaluate the trainees reaction to the programme. Did he like the programme? Did he
think it worthwhile?
b) Learning: did the trainee learn the principles, skills and the fact that the supervisor or the trainee
wanted him to learn?
c) Behavior: Whether the trainees behavior on the job changed because of the training programme?
d) Results: what final results have been achieved? Did he learn how to work on machine? Did scrappage
costs decrease? Was turnover reduced? Are productions quotas have been met?
10. What is occupational health and safety?
Occupational health and safety is a discipline with a broad scope involving many specialized fields. In its
broadest sense, it should aim at:
the promotion and maintenance of the highest degree of physical, mental and social well-being
of workers in all occupations;
the prevention among workers of adverse effects on health caused by their working conditions;
the protection of workers in their employment from risks resulting from factors adverse to
health;
the placing and maintenance of workers in an occupational environment adapted to physical and
mental needs;
the adaptation of work to humans.
In other words, occupational health and safety encompasses the social, mental and physical well-being
of workers, that is the whole person.
Successful occupational health and safety practice requires the collaboration and participation of both
employers and workers in health and safety programmes, and involves the consideration of issues
relating to occupational medicine, industrial hygiene, toxicology, education, engineering safety,
ergonomics, psychology, etc.
Occupational health issues are often given less attention than occupational safety issues because the
former are generally more difficult to confront. However, when health is addressed, so is safety, because
a healthy workplace is by definition also a safe workplace. The converse, though, may not be true - a so-
called safe workplace is not necessarily also a healthy workplace. The important point is that issues of
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both health and safety must be addressed in every workplace. By and large, the definition of
occupational health and safety given above encompasses both health and safety in their broadest
contexts.
Poor working conditions affect worker health and safety
Poor working conditions of any type have the potential to affect a worker's health and safety.
Unhealthy or unsafe working conditions are not limited to factories they can be found
anywhere, whether the workplace is indoors or outdoors. For many workers, such as agricultural
workers or miners, the workplace is outdoors and can pose many health and safety hazards.
Poor working conditions can also affect the environment workers live in, since the working and
living environments are the same for many workers. This means that occupational hazards can
have harmful effects on workers, their families, and other people in the community, as well as
on the physical environment around the workplace. A classic example is the use of pesticides in
agricultural work. Workers can be exposed to toxic chemicals in a number of ways when spraying
pesticides: they can inhale the chemicals during and after spraying, the chemicals can be
absorbed through the skin, and the workers can ingest the chemicals if they eat, drink, or smoke
without first washing their hands, or if drinking water has become contaminated with the
chemicals. The workers' families can also be exposed in a number of ways: they can inhale the
pesticides which may linger in the air, they can drink contaminated water, or they can be exposed
to residues which may be on the worker's clothes. Other people in the community can all be
exposed in the same ways as well. When the chemicals get absorbed into the soil or leach into
groundwater supplies, the adverse effects on the natural environment can be permanent.
Overall, efforts in occupational health and safety must aim to prevent industrial accidents and diseases,
and at the same time recognize the connection between worker health and safety, the workplace, and
the environment outside the workplace.
11. Descri be about the costs associ ated wi th I ndustri al safety and heal th.
Work-related accidents or diseases are very costly and can have many serious direct and indirect effects
on the lives of workers and their families. For workers some of the direct costs of an injury or illness are:
the pain and suffering of the injury or illness;
the loss of income;
the possible loss of a job;
health-care costs.
It has been estimated that the indirect costs of an accident or illness can be four to ten times greater
than the direct costs, or even more. An occupational illness or accident can have so many indirect costs
to workers that it is often difficult to measure them. One of the most obvious indirect costs is the human
suffering caused to workers' families, which cannot be compensated with money.
The costs to employers of occupational accidents or illnesses are also estimated to be enormous. For a
small business, the cost of even one accident can be a financial disaster. For employers, some of the
direct costs are:
payment for work not performed;
medical and compensation payments;
repair or replacement of damaged machinery and equipment;
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reduction or a temporary halt in production;
increased training expenses and administration costs;
possible reduction in the quality of work;
negative effect on morale in other workers.
Some of the indirect costs for employers are:
the injured/ill worker has to be replaced;
a new worker has to be trained and given time to adjust;
it takes time before the new worker is producing at the rate of the original worker;
time must be devoted to obligatory investigations, to the writing of reports and filling out of
forms;
accidents often arouse the concern of fellow workers and influence labour relations in a negative
way;
poor health and safety conditions in the workplace can also result in poor public relations.
Overall, the costs of most work-related accidents or illnesses to workers and their families and to
employers are very high.
On a national scale, the estimated costs of occupational accidents and illnesses can be as high as three
to four per cent of a country's gross national product. In reality, no one really knows the total costs of
work-related accidents or diseases because there are a multitude of indirect costs which are difficult to
measure besides the more obvious direct costs.
12. Write about Labour Legislation in India.
The main objective of the regulative legislation is to regulate the relations between employees and
employers and to provide for methods and manners of settling industrial disputes. Such laws also
regulate the relationship between the workers and their trade unions, the rights and obligations of the
organisations of employers and workers as well as their mutual relationships.
The Trade Unions Act, 1926
Trade unions are primarily formed to regulate the relations between workmen and employers. The Act
provides for registration of trade unions, which also includes association of employers. Upon
registration, trade unions enjoy certain protection and privileges under the law. In addition, the Act also
provides for imposing restrictions on the conduct of any trade or business. Registration of a trade union
is not compulsory but a registered union enjoys certain rights and privileges under the Act, it is always
desirable to get a trade union registered. The Act requires that at least 50 per cent of the office bearers
of a union should be actually engaged or employed in the industry. A registered trade union is a body
corporate with perpetual entity under a common seal. It can acquire, hold, sell or transfer any movable
or immovable property and can be party to contracts. It can sue or can be sued in his own name. From
the HR manager's point of view, it is essential to invite registered trade unions of the unit only for
collective bargaining and also form participative forums like works committee, etc., from their
nominated representative.
The Industrial Disputes Act, 1947
The Industrial Disputes Act, 1947 primarily regulates industrial relations in India. The Act provides a
machinery and procedure for settlement of industrial disputes by negotiation, without resorting to
strikes and lockouts. The scope of the Act extends to the whole of India for every industrial
establishment carrying on any business, trade, irrespective of the number of people employed.
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However, the Act is not applicable for people employed in managerial or administrative capacity and for
those who are employed in Army, Air
Force and Navy, Police Services and Prison Services. The Act defines industrial dispute as any dispute or
difference between employers and employees or between workmen and workmen, which is connected
with the employment or non-employment or the terms and conditions of employment. A tentative list
of disputes, covered under this Act is reproduced below:
o The propriety or legality of standing orders.
o Discharge or dismissal
o Matters pertaining to reinstatement or grant of relief for wrongful dismissal.
o Matters pertaining to withdrawal of any concession or privilege.
o Matters pertaining to strike or lockout
o Payment of wages, including periodicity and mode of payment.
o Leave and hours of work
o Holidays
o Bonus
o Retirement benefits
o Discipline
Industrial Employment (Standing Orders) Act, 1946
This Act requires employers to clarify conditions of employment so as to enable the workmen (employed
by them) to understand the rules of conduct pertaining to working hours, holidays, attendance, leave,
termination of employment, suspension or dismissal, misconduct, etc. The Act is applicable to industrial
establishments, employing 100 or more workmen. Under this Act, employers are required to submit a
draft of standing orders to the certifying officer for certification. Upon certification it receive the force
of law and employers are required to display the text in the language of the workmen and in English
prominently. Once certified, employers cannot modify the standing orders without the approval of the
certifying officer. Model standing orders cover following areas:
Basis of classification of workman permanent, probationers, temporary, casual, apprentices,
badlis
Information on working time
Information on holidays and paydays
Wage rates
Shift work
Attendance and late coming
Leave
Payment of wages
Stoppage of work
Termination of employment
Act of misconduct, which is liable for disciplinary action, etc.
The Payment of Wages Act, 1936
The Act is intended to regulate payment of wages in a particular form at regular intervals without any
unauthorised deductions. It is applicable to the employees receiving wages below Rs.1,600 per month.
As per the Act, employers are responsible for payment of wages to the employees duly fixing the wage
periods (which in no case should exceed one month), deciding about time of payment as per the norms
(which requires payment within seven days of the expiry of the wage period for establishment where
less than 1,000 people are employed and in other cases within ten days of the expiry of wage period),
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mode of payment (in cash or by cheque or by crediting to employee's bank account with prior consent)
and ensuring no unauthorised deductions. All these aspects must be known to the HR manager.
The Minimum Wages Act, 1948
The Act provides for minimum statutory wages for scheduled employment. The Act also stipulates
maximum daily working hours, weekly rest and overtime. It prevails over the rates fixed under any award
agreement. The Act empowers the State Government to fix minimum wages, failing which they cease
the right to engage labour and run the industry. Wages, as per the Act, include all remuneration capable
of being expressed in terms of money including house rent allowance. However, it excludes the value of
housing accommodation, supply of light, water, medical attendance, employer's contribution to
provident fund and pension fund, travelling allowances or the value of travelling concession, gratuity
payable on discharge or any other payments made to defray special expenses.
For HR managers it is important to consider all these aspects while designing compensation package.
The Payment of Bonus Act, 1965
The Payment of Bonus Act, 1965 imposes statutory liability on employers (covered under the Act) to pay
bonus to employees according to the prescribed formula, linking the bonus with profits or productivity.
Bonus is payable to every employee receiving salary or wages up to Rs. 3,500 per month, provided the
employee has worked at least for 30 days in that year, save and except those employees who have been
dismissed from service for fraud, riotous or violent behaviour, or theft, misappropriation or sabotage of
any property of the establishment. Such employees ceases the right to get bonus even for previous
unpaid years, irrespective of the fact that they have committed such acts in the present year. Employers
can deduct from the bonus any customary payment made to the employees (festival or interim bonus)
earlier. Employers can also recover and financial loss caused for the misconduct of the employees.
The Workmens Compensation Act, 1923
Factories and establishments which are not covered under the Employees State Insurance Act, are
covered under this Act to provide relief to workmen and/or their dependents in case of accidents arising
out of and in the course of employment causing either death or disablement of workmen. The
workmen's compensation (Amendment) Act, 2000 w.e.f. 8-12-2000 has brought all the workmen within
the limit of this Act, irrespective of their nature of employment. Under the Act, the employers are under
obligation to pay compensation for any accident suffered by an employee in the course of employment,
failing which the Act provides for penalties. There must be some causal connection with employment to
become eligible for compensation, which may not necessarily be inside the workplace. Causal
relationship is established by the circumstantial evidence, which my be even in cases where workmen
sustain injury while coming to work or while going to his house after completion of work.
The Employees State Insurance Act, 1948
The principal objective of this Act is to provide to the workers medical relief, cash benefits for sickness,
compensation for employment injuries (which also covers occupational diseases), pension to the
dependents of deceased workers and maternity benefits to women workers. All these benefits are given
from a contributory fund. Once workmen are covered under ESI Scheme, compensation under
Workmen's Compensation Act for employment injuries are not payable. The Act is applicable to all
factories (excluding seasonal factories) employing ten or more (when manufacturing process is carried
out using power). For factories carrying out the manufacturing process without the aid of power, the
said number is 20 or more persons. The scope of the Act covers every employee, including those
engaged as casual or by a contractor, provided they do not receive wages not exceeding Rs.6,500 per
month. Apprentices engaged under the Apprentices Act are not eligible for ESI benefits. The Act requires
registration of eligible factories and establishments within a prescribed time limit. Similarly entitled
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employees are also required to be insured in a prescribed manner under the Act. Since the nature of
insurance is contributory, employers are required to pay @ 4.75 per cent and employees are required
to contribute @ 1.75 per cent of the wages. However, such employees who are drawing less than Rs.40
as daily wages are exempted from the requirement of contribution. The Act provide benefits at
prescribed rate and imposes penalty for violation up to 5 years imprisonment and fine upto Rs. 25,000.
Payment of Gratuity Act, 1972
This Act is also a social security measure to provide retirement benefit to the workmen, who have
rendered long and unblemished service to the employer. Employees are entitled to receive gratuity
under the Act, provided they have rendered continuous 5 years service or more at the rate of 15 days
wages for each completed year, subject to a maximum of Rs.3,50,000. The gratuity may be wholly or
partly forfeited by the employer if termination of services of an employee is due to his riotous or
disorderly conduct or any other act of violence or any offence, including moral turpitude committed in
the course of his employment.
13. Explain Product Life Cycle (PLC)
We define a product as "anything that is capable of satisfying customer needs. This definition includes
both physical products (e.g. cars, washing machines, DVD players) as well as services (e.g. insurance,
banking, private health care).
Businesses should manage their products carefully over time to ensure that they deliver products that
continue to meet customer wants. The process of managing groups of brands and product lines is called
portfolio planning.
The stages through which individual products develop over time is called commonly known as the
"Product Life Cycle".
The classic product life cycle has four stages (illustrated in the diagram below): introduction; growth;
maturity and decline

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Introduction Stage
At the Introduction (or development) Stage market size and growth is slight. it is possible that substantial
research and development costs have been incurred in getting the product to this stage. In addition,
marketing costs may be high in order to test the market, undergo launch promotion and set up
distribution channels. It is highly unlikely that companies will make profits on products at the
Introduction Stage. Products at this stage have to be carefully monitored to ensure that they start to
grow. Otherwise, the best option may be to withdraw or end the product.
Growth Stage
The Growth Stage is characterised by rapid growth in sales and profits. Profits arise due to an increase
in output (economies of scale)and possibly better prices. At this stage, it is cheaper for businesses to
invest in increasing their market share as well as enjoying the overall growth of the market. Accordingly,
significant promotional resources are traditionally invested in products that are firmly in the Growth
Stage.
Maturity Stage
The Maturity Stage is, perhaps, the most common stage for all markets. it is in this stage that
competition is most intense as companies fight to maintain their market share. Here, both marketing
and finance become key activities. Marketing spend has to be monitored carefully, since any significant
moves are likely to be copied by competitors. The Maturity Stage is the time when most profit is earned
by the market as a whole. Any expenditure on research and development is likely to be restricted to
product modification and improvement and perhaps to improve production efficiency and quality.
Decline Stage
In the Decline Stage, the market is shrinking, reducing the overall amount of profit that can be shared
amongst the remaining competitors. At this stage, great care has to be taken to manage the product
carefully. It may be possible to take out some production cost, to transfer production to a cheaper
facility, sell the product into other, cheaper markets. Care should be taken to control the amount of
stocks of the product. Ultimately, depending on whether the product remains profitable, a company
may decide to end the product.
Examples
Set out below are some suggested examples of products that are currently at different stages of the
product life-cycle:
INTRODUCTION GROWTH MATURITY DECLINE
Third generation mobile
phones
Portable DVD Players Personal Computers Typewriters
E-conferencing Email Faxes
Handwritten
letters
All-in-one racing skin-suits
Breathable synthetic
fabrics
Cotton t-shirts Shell Suits
iris-based personal
identity cards
Smart cards Credit cards Cheque books
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14. What is Marketing Mix? Explain.
Introduction to Marketing Mix
Marketing is the process of identifying, anticipating, and satisfying customers' requirements with the
purpose to make profits. In this process marketing managers and marketing representatives have to
take various marketing decisions to make the operations profitable. They have to decide what
combination of marketing policies and procedures be adopted to bring about desired behaviour of trade
and consumers at minimum cost. They have to decide how can advertising, personal selling, pricing,
packaging, channels, warehousing, and the other elements of marketing be manipulated and mixed to
make marketing operations profitable. More specifically, they have to decide a marketing mix - a
decision making method in relation with the product, price, promotion, and distribution.

The term Marketing Mix was introduced by Neil H. Borden in his article - "The Concept of Marketing
Mix". He learned about it in a research bulletin on the management of marketing costs, written by his
associate, Prof. James Culliton. in 1948. In this study of manufacturers' marketing costs he described the
business executive as a "decider," an "artist" - a "mixer of ingredients," who sometimes follows a recipe
prepared by others, sometimes prepares his own recipe as he goes along, sometimes adapts a recipe to
the ingredients immediately available, and sometimes experiments with or invents ingredients no one
else has tried.

Definition of Marketing Mix
According to Philip Kotler - "Marketing Mix is the combination of four elements, called the 4P's (product,
Price, Promotion, and Place), that every company has the option of adding, subtracting, or modifying in
order to create a desired marketing strategy"

According to Principles of Marketing, 14e, Kotler and Armstrong, 2012 - "The Marketing Mix is the set
of tactical marketing tools - Product, Price, Promotion, and Place - that the firm blends to produce the
response it wants in the target market."

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Meaning of Marketing Mix
The Marketing Mix is a marketing tool used by marketing professionals. It is often crucial when
determining product or brand's offering, and it is also called as 4P's (Product, Price, Promotion, and
Place) of marketing. However, in case of services of different nature the 4 P's have been expanded to
7P's or 8P's.
In recent times, giving more importance to customer a new concept have been introduced, i.e. Concept
of 4C's. The Concept of 4C's is more customer-driven replacement of 4P's. According to Lauterborn's the
4C's are - Consumer, Cost, Communication, and Convenience. According to Shimizu's the 4C's are -
Commodity, Cost, Communication, and Channel.
4P's - Producer-oriented Model of Marketing Mix
Product - Products are offerings that a marketer offers to the target audience to satisfy their
needs and wants. Product can be tangible good or intangible service. Tangible products are
goods like - cellphone, television, or motor car, whereas intangible products are services like -
financial service in a bank, health treatment by a doctor, legal advice of a lawyer.
Price - Price is the amount that is charged by marketer of his offerings or the amount that is paid
by consumer for the use or consumption of the product. Price is crucial in determining the
organisation's profit and survival. Adjustments in price affects the demand and sales of the
product. Marketers are required to be aware of the customer perceived value of the product to
set the right price.
Promotion - Promotion represents the different methods of communication that are used by
marketer to inform target audience about the product. promotion includes - advertising,
personal selling, public relation, and sales promotion.
Place - Place or distribution refers to making the product available for customers
at convenient and accessible places.
In case of services, the producer-oriented model of marketing mix is consists of 7P's. Including the above
4P's there are additional 3P's - Physical Evidence, People, and Process. Physical evidence refers to
elements like uniform of employees, signboards, and etc. People refers to the employees of the
organisation comes in contact with the customers in the process of marketing. Process refers to the
systems and processes followed within organisation.
4C's - Consumer-oriented model of marketing Mix
Consumer - In this model the Product is replaced by Consumer. Marketers focuses more on
consumer satisfaction. The product is designed and produced keeping in consideration the
requirements of consumer.
Cost - Price is replaced by Cost. Here the cost refers to the total cost of owning a product. It
includes cost to use the product, cost to change the product, and cost of not choosing the
competitor's product.
Communication - Promotion is replaced by Communication. Communication includes
advertising, public relation, personal selling, and any method that can be used for proper,timely,
and accurate communication between marketer and consumer.
Convenience - Place is replaced by Convenience. it focuses on ease of buying, convenience in
reaching to the store/product, and convenience in getting product information.
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15. What is marketing? Define and explain marketing on the basis of different approaches.
In today's world of marketing, everywhere you go you are being marketed to in one form or another.
Marketing is with you each second of your walking life. From morning to night you are exposed to
thousands of marketing messages everyday. Marketing is something that affects you even though you
may not necessarily be conscious of it.
After reading this you'll understand - what exactly the marketing is, different definitions of marketing,
and what are the different approaches of marketing.
Definition and Meaning of Marketing
According to American Marketing Association (1948) - "Marketing is the performance of business
activities directed toward, and incident to, the flow of goods and services from producer to consumer or
user."

AMA (1960) - "Marketing is the performance of business activities that direct the flow of goods and
services from producer to consumer or user."

The above definitions are based on the economic approach of marketing. Marketing embraces all the
business activities involved in getting goods and services , from the hands of producers into the hands
of final consumers. The business steps through which goods progress on their way to final consumers is
the concern of marketing.

Consumer's Approach of Marketing
According to Star et al. (1977) - "Marketing is that process through which a business enterprise,
institution, or organisation 1. selects target customers or constituents, 2. assesses the needs or wants of
such target customers, and 3. manages its resources to satisfy those customer needs or wants."
The above definition is based on the consumer's approach of marketing. According to this approach
marketing consists of four general activities:-
1. Identifying and selecting the type of customer, understanding their needs and desires;
2. Designing product or services that suits the customers' desires;
3. Persuading customers to buy at the firm's offerings; and
4. Storing, moving, and displaying goods after they leave the production site.
Societal Approach of Marketing
According to Mazur (1947) - "Marketing is the delivery of a standard of living to society."

This definition is based on the societal approach of marketing. According to Cunningham and
Cunningham (1981) societal marketing performs three essential functions:-
1. Knowing and understanding the consumer's changing needs and wants;
2. Efficiently and effectively managing the supply and demand of products and services; and
3. Efficient provision of distribution and payment processing systems.

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Managerial or Systems Approach
According to Eldridge (1970) - "Marketing is the combination of activities designed to produce profit
through ascertaining, creating, stimulating, and satisfying the needs and/or wants of a selected segment
of the market."
The above definition is based on the managerial or systems approach of marketing. According to this
approach the emphasis is on how the individual organisation processes marketing and develops the
strategic dimensions of marketing activities.
A Broader Approach of Marketing
According to Kotler (2000) - "A societal process by which individuals and groups obtain what they need
and want through creating, offering, and freely exchanging products and services of value with others."
According to AMA (2004) - "Marketing is an organisational function and set of processes for creating,
communicating and delivering value to customers and for managing relationships in a way that benefits
both the organisation and the stakeholder."
16. Define the term 'Marketing Planning'. Outline the steps involved in marketing planning process.
Marketing is a process of developing and implementing plans to identify and satisfy customer needs and
wants with the objective of customer satisfaction and profits making. The main elements of marketing
planning are - market research to identify and anticipate customer needs and wants; and planning of
appropriate marketing mix to meet market requirements/demands.

Definition of Marketing Planning
"Marketing Planning is the process of developing marketing plan incorporating overall marketing
objectives, strategies, and programs of actions designed to achieve these objectives."

Marketing Planning involves setting objectives and targets, and communicating these targets to people
responsible to achieve them. It also involves careful examination of all strategic issues, including the
business environment, the market itself, the corporate mission statement, competitors, and
organisational capabilities.

Marketing Planning Process
Marketing planning process is a series of stages that are usually followed in a sequence. Organisations
can adapt their marketing plan to suit the circumstances and their requirements. Marketing planning
process involves both the development of objectives and specifications for how to achieve the
objectives. Following are the steps involved in a marketing plan.

1) Mission
Mission is the reason for which an organisation exists. Mission statement is a straightforward statement
that shows why an organisation is in business, provides basic guidelines for further planning, and
establishes broad parameters for the future. Many of the useful mission statements motivates staff and
customers.

2) Corporate Objectives
Objectives are the set of goals to be achieved within a specified period of time. Corporate objectives are
most important goals the organisation as a whole wishes to achieve within a specified period of time,
say one or five years.

All the departments of an organisation including marketing department works in harmony to achieve
the corporate objectives of the organisation. Marketing department must appreciate the corporate
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objectives and ensure its actions and decisions support the overall objectives of the organisation.

Mission statement and corporate objectives are determined by the top level management (including
Board of Directors) of the organisation. The rest of the steps of marketing planning process are
performed by marketing department. All the actions and decisions of the marketing department must
be directed to achieve organisation mission and its corporate objectives.

3) Marketing Audit
Marketing audit helps in analysing and evaluating the marketing strategies, activities, problems, goals,
and results. Marketing audit is done to check all the aspects of business directly related to marketing
department. It is done not only at the beginning of the marketing planning process but, also at a series
of points during the implementation of plan. The marketing audit clarifies opportunities and threats, so
that required alterations can be done to the plan if necessary.

4) SWOT Analysis
The information gathered through the marketing audit process is used in development of SWOT
Analysis. It is a look at organisation's marketing efforts, and its strengths, weaknesses, opportunities,
and threats related to marketing functions.
Strengths and Weaknesses are factors inside the organisation that can be controlled by the
organisation. USP of a product can be the example of strength, whereas lack of innovation can
be the example of weakness.
Opportunities and Threats are factors outside the organisation which are beyond the direct
control of an organisation. Festive season can be an example of opportunity to make maximum
sales, whereas increasing FDI in a nation can be the example of threat to domestic players of
that nation.
5) Marketing Assumptions
A good marketing plan is based on deep customer understanding and knowledge, but it is not possible
to know everything about the customer, so lot of different things are assumed about customer.
For example :-
Target Buyer Assumptions - assumptions about who the target buyers are.
Messaging/Offering Assumptions - assumptions about what customers think are the most
important features of product to be offered.
6) Marketing Objectives and Strategies
After identification of opportunities and challenges, the next step is to develop marketing objectives
that indicate the end state to achieve. Marketing objective reflects what an organisation can accomplish
through marketing in the coming years.

Objective identify the end point to achieve. Marketing strategies are formed to achieve the marketing
objectives. Marketing strategies are formed to determine how to achieve those end points. Strategies
are broad statements of activities to be performed to achieve those end points.

7) Forecast the Expected Results
Marketing managers have to forecast the expected results. They have to project the future numbers,
characteristics, and trends in the target market. Without proper forecasting, the marketing plan could
have unrealistic goals or fall short on what is promised to deliver.
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Forecasting Customer Response - Marketing managers have to forecast the response that the
average customers will have to marketing efforts. Without some idea how the marketing will be
received, managers can't accurately plan the promotions.
Forecasting Marketing cost - To make the marketing plan stronger, accurate forecast of
marketing cost is required to be done.
Forecasting the Market - To accurately forecast the market, marketing managers have to gain
an intimate understanding of customers, their buying behaviour, and tendencies.
Forecasting the Competition - Forecast of competition like - what they market, how they market,
what incentives they use in their marketing can help to counter what they are doing.
8) Create Alternative Plan
A alternate marketing plan is created and kept ready to be implement at the place of primary marketing
plan if the whole or some part of the primary marketing plan is dropped.

9) Marketing Budget
The marketing budget is the process of documenting the expected costs of the proposed marketing plan.
One common method to allocate marketing budgeting is based on a percentage of revenue. Other
methods are - comparative, all you can afford, and task method.

10) Implementation and Evaluation
At this stage the marketing team is ready to actually start putting their plans into action. This may involve
spending money on advertising, launching new products, interacting with potential new customers,
opening new retail outlets etc.

The marketing planning process is required to be evaluated and updated regular. Regular evaluation of
marketing efforts helps in achieving marketing goals.

17. What is product mix? Explain product mix decisions.
Meaning of Product Mix
Product mix or product assortment refers to the number of product lines that an organisation offers to
its customers. Product line is a group of related products manufactured or marketed by a single
company. Such products function in similar manner, sold to the same customer group, sold through the
same type of outlets, and fall within a same price range .

Product mix consists of various product lines that an organisation offers, an organisation may have just
one product line in its product mix and it may also have multiple product lines. These product lines may
be fairly similar or totally different, for example - Dish washing detergent liquid and Powder are two
similar product lines, both are used for cleaning and based on same technology; whereas Deodorants
and Laundry are totally different product lines.
An organisation's product mix has following four dimensions :-
1. Width,
2. Length,
3. Depth, and
4. Consistency.

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Width
The width of an organisation's product mix pertains to the number of product lines that the
organisation is offering. For example, Hindustan Uni Lever offers wide width of its home care,
personal care and beverage products. Width of HUL product mix includes Personal wash, Laundry,
Skin care, Hair care, Oral care, Deodorants, Tea, and Coffee.
Length
The length of an organisation's product mix pertains to the total number of products or items in the
product mix. As in the given diagram of Hindustan Uni Lever product mix, there are 23 products,
hence, the length of product mix is 23.

Depth
The depth of an organisation's product mix pertains to the total number of variants of each product
offered in the line. Variants includes size, colour, flavors, and other distinguishing characteristics. For
example, Close-up, brand of HUL is available in three formations and in three sizes. Hence, the depth of
Close-up brand is 3*3 = 9.
Consistency
The consistency of an organisation's product mix refers to how closely related the various product lines
are in use, production, distribution, or in any other manner.
Product Mix Decision
Product mix decision refers to the decisions regarding adding a new or eliminating any existing product
from the product mix, adding a new product line, lengthening any existing line, or bringing new variants
of a brand to expand the business and to increase the profitability.
Product Line Decision - Product line managers takes product line decisions considering the sales
and profit of each items in the line and comparing their product line with the competitors'
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product lines in the same markets. Marketing managers have to decide the optimal length of the
product line by adding new items or dropping existing items from the line.
Line Stretching Decision - Line stretching means lengthening a product line beyond its current
range. An organisation can stretch its product line downward, upward, or both way.
1. Downward Stretching means adding low-end items in the product line, for example in Indian car
market, watching the success of Maruti-Suzuki in small car segment, Toyota and Honda also
entered the segment.
2. Upward Stretching means adding high-end items in the product line, for example Maruti-Suzuki
initially entered small car segment, but later entered higher end segment.
3. Two-way Stretching means stretching the line in both directions if an organisation is in the
middle range of the market.
Line Filling Decision - It means adding more items within the present range of the product line.
Line filling can be done to reach for incremental profits, or to utilise excess capacity.
18. Explain Market Segmentation
Market segmentation is the identification of portions of the market that are different from one another.
Segmentation allows the firm to better satisfy the needs of its potential customers.
The Need for Market Segmentation
The marketing concept calls for understanding customers and satisfying their needs better than the
competition. But different customers have different needs, and it rarely is possible to satisfy all
customers by treating them alike.
Mass marketing refers to treatment of the market as a homogenous group and offering the same
marketing mix to all customers. Mass marketing allows economies of scale to be realized through mass
production, mass distribution, and mass communication. The drawback of mass marketing is that
customer needs and preferences differ and the same offering is unlikely to be viewed as optimal by all
customers. If firms ignored the differing customer needs, another firm likely would enter the market
with a product that serves a specific group, and the incumbant firms would lose those customers.
Target marketing on the other hand recognizes the diversity of customers and does not try to please all
of them with the same offering. The first step in target marketing is to identify different market
segments and their needs.
Requirements of Market Segments
In addition to having different needs, for segments to be practical they should be evaluated against the
following criteria:
Identifiable: the differentiating attributes of the segments must be measurable so that they can
be identified.
Accessible: the segments must be reachable through communication and distribution channels.
Substantial: the segments should be sufficiently large to justify the resources required to target
them.
Unique needs: to justify separate offerings, the segments must respond differently to the
different marketing mixes.
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Durable: the segments should be relatively stable to minimize the cost of frequent changes.
A good market segmentation will result in segment members that are internally homogenous and
externally heterogeneous; that is, as similar as possible within the segment, and as different as possible
between segments.
Bases for Segmentation in Consumer Markets
Consumer markets can be segmented on the following customer characteristics.
Geographic
Demographic
Psychographic
Behavioralistic
Geographic Segmentation
The following are some examples of geographic variables often used in segmentation.
Region: by continent, country, state, or even neighborhood
Size of metropolitan area: segmented according to size of population
Population density: often classified as urban, suburban, or rural
Climate: according to weather patterns common to certain geographic regions
Demographic Segmentation
Some demographic segmentation variables include:
Age
Gender
Family size
Family lifecycle
Generation: baby-boomers, Generation X, etc.
Income
Occupation
Education
Ethnicity
Nationality
Religion
Social class
Many of these variables have standard categories for their values. For example, family lifecycle often is
expressed as bachelor, married with no children (DINKS: Double Income, No Kids), full-nest, empty-nest,
or solitary survivor. Some of these categories have several stages, for example, full-nest I, II, or III
depending on the age of the children.

Psychographic Segmentation
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Psychographic segmentation groups customers according to their lifestyle. Activities, interests, and
opinions (AIO) surveys are one tool for measuring lifestyle. Some psychographic variables include:
Activities
Interests
Opinions
Attitudes
Values
Behavioralistic Segmentation
Behavioral segmentation is based on actual customer behavior toward products. Some behavioralistic
variables include:
Benefits sought
Usage rate
Brand loyalty
User status: potential, first-time, regular, etc.
Readiness to buy
Occasions: holidays and events that stimulate purchases
Behavioral segmentation has the advantage of using variables that are closely related to the product
itself. It is a fairly direct starting point for market segmentation.
Bases for Segmentation in Industrial Markets
In contrast to consumers, industrial customers tend to be fewer in number and purchase larger
quantities. They evaluate offerings in more detail, and the decision process usually involves more than
one person. These characteristics apply to organizations such as manufacturers and service providers,
as well as resellers, governments, and institutions.
Many of the consumer market segmentation variables can be applied to industrial markets. Industrial
markets might be segmented on characteristics such as:
Location
Company type
Behavioral characteristics
Location
In industrial markets, customer location may be important in some cases. Shipping costs may be a
purchase factor for vendor selection for products having a high bulk to value ratio, so distance from the
vendor may be critical. In some industries firms tend to cluster together geographically and therefore
may have similar needs within a region.
Company Type
Business customers can be classified according to type as follows:
Company size
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Industry
Decision making unit
Purchase Criteria
Behavioral Characteristics
In industrial markets, patterns of purchase behavior can be a basis for segmentation. Such behavioral
characteristics may include:
Usage rate
Buying status: potential, first-time, regular, etc.
Purchase procedure: sealed bids, negotiations, etc.
19. What are the different quantitative techniques used in Demand forcasting?
Most of the quantitative techniques calculate demand forecast as an average from the past
demand. The following are the important demand forecasting techniques.
Simple average method: A simple average of demands occurring in all previous time periods is taken as
the demand forecast for the next time period in this method.
e.g. A XYZ television supplier found a demand of 200 sets in July, 225 sets in August & 245 sets in
September. Find the demand forecast for the month of october using simple average method.
The average demand for the month of October is

Simple moving average method: In this method, the average of the demands from several of the most
recent periods is taken as the demand forecast for the next time period. The number of past periods to
be used in calculations is selected in the beginning and is kept constant (such as 3-period moving
average).
e.g. A XYZ refrigerator supplier has experienced the following demand for refrigerator during past five
months.
Month Demand
February 20
March 30
April 40
May 60
June 45
Find out the demand forecast for the month of July using five-period moving average & three-period
moving average using simple moving average method.
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Weighted moving average method: In this method, unequal weights are assigned to the past demand
data while calculating simple moving average as the demand forecast for next time period. Usually most
recent data is assigned the highest weight factor.
e.g. The manager of a restaurant wants to make decision on inventory and overall cost. He wants to
forecast demand for some of the items based on weighted moving average method. For the past three
months he experienced a demand for pizzas as follows:
Month Demand
October 400
November 480
December 550
Find the demand for the month of January by assuming suitable weights to demand data.

Exponential smoothing method: In this method, weights are assigned in exponential order. The weights
decrease exponentially from most recent demand data to older demand data.
e.g. One of the two wheeler manufacturing company experienced irregular but usually increasing
demand for three products. The demand was found to be 420 bikes for June and 440 bikes for July. They
use a forecasting method which takes average of past year to forecast future demand. Using the simple
average method demand forecast for June is found as 320 bikes (Use a smoothing coefficient 0.7 to
weight the recent demand most heavily) and find the demand forecast for August.
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Regression analysis method: In this method, past demand data is usedto establish a functional
relationship between two variables. Onevariable is known or assumed to be known; and used to forecast
the valueof other unknown variable (i.e. demand).
e.g. Farewell Corporation manufactures Integrated Circuit boards(I.C board) for electronics devices. The
planning department knows that the sales of their client goods depends on how much they spend on
advertising, on account of which they receive in advance of expenditure. The planning department wish
to find out the relationship between their clients advertising and sales, so as to find demand for I.C
board.
The money spend by the client on advertising and sales (in dollar) is given for different periods in
following table :

Period(t)
Advertising
(Xt)
$(1,00,000)
Sales (Dt)
$(1,000.000)
Dt
2
Xt
2
XtDt
1 20 6 36 400 120
2 25 8 64 625 200
3 15 7 49 225 105
4 18 7 49 324 126
5 22 8 64 484 176
6 25 9 81 625 225
7 27 10 100 729 270
8 23 7 49 529 161
9 16 6 36 256 96
10 20 8 64 400 120

211 76 592 4597 1599
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20. What are the different types of Plant Layouts?
The basic types of layouts are:
Product layout
Process layout
Fixed position layout
Cellular layout
Product layout
This type of layout is generally used in systems where a product has to be manufactured or assembled
in large quantities. In product layout the machinery and auxiliary services are located according to the
processing sequence of the product without any buffer storage within the line itself. A pictorial
representation of a product type of layout is given in Figure 1. The advantages and disadvantages are
given in Table 1.

Figure 1: A Pictorial Representation of Product Type of Layout
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Table 1: Advantages And Disadvantages of Product Type of Layout
ADVANTAGES DISADVANTAGES
Low material handling cost per
unit
Less work in process
Total production time per unit is
short
Low unit cost due to high volume
Less skill is required for
personnel
Smooth, simple, logical, and
direct flow
Inspection can be reduced
Delays are reduced
Effective supervision and control
Machine stoppage stops the line
Product design change or
process change causes the layout
to become obsolete
Slowest station paces the line
Higher equipment investment
usually results
Less machine utilization
Less flexible
Process layout
In a process layout, (also referred to as a job shop layout) similar machines and services are located
together. Therefore, in a process type of layout all drills are located in one area of the layout and all
milling machines are located in another area. A manufacturing example of a process layout is a machine
shop. Process layouts are also quite common in non-manufacturing environments. Examples include
hospitals, colleges, banks, auto repair shops, and public libraries ( Muther, R, Systematic Layout
Planning, Second Edition , CBI Publishing Company, Inc. Boston, 1973 ).
A pictorial representation of a process type of layout is given in Figure 2. The advantages and
disadvantages are given in Table 2.

Figure 2: A Pictorial Representation of Process Type of Layout

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Table 2: Advantages And Disadvantages of Process Type of Layout
Better machine utilization
Highly flexible in allocating
personnel and equipment
because general purpose
machines are used.
Diversity of tasks for personnel
Greater incentives to individual
worker
Change in Product design and
process design can be
incorporated easily
More continuity of production in
unforeseen conditions like
breakdown, shortages,
absenteeism
Increased material handling
Increased work in process
Longer production lines
Critical delays can occur if the
part obtained from previous
operation is faulty
Routing and scheduling pose
continual challenges
Fixed location layout
In this type of layout, the product is kept at a fixed position and all other material; components, tools,
machines, workers, etc. are brought and arranged around it. Then assembly or fabrication is carried out.
The layout of the fixed material location department involves the sequencing and placement of
workstations around the material or product. It is used in aircraft assembly, shipbuilding, and most
construction projects. A pictorial representation of a fixed location type of layout is given in Figure 3.
The advantages and disadvantages are detailed in Table 3.

Figure 3: A Pictorial Representation of Fixed Location Type of Layout
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Table 3: Advantages And Disadvantages of Fixed Location Type of Layout
Material movement is reduced
Promotes pride and quality
because an individual can
complete the whole job
Highly flexible; can
accommodate changes in
product design, product mix, and
production volume
May result in increase space and
greater work in process
Requires greater skill for
personnel
Personnel and equipment
movement is increased
Requires close control and
coordination in production and
personnel scheduling
Cellular type layout
This type of layout is based on the grouping of parts to form product / part families. Similar parts may
be grouped into families based on common processing sequences, shapes, tooling requirements, and so
on. The processing equipment required for a particular product family are grouped together and placed
in a manufacturing cell. The cells become, in effect, miniature versions of product layouts. The cells may
have movements of parts between machines via conveyors or have a flow line connected by a conveyor.
This type of layout is used when various products have to be produced in medium to large quantities. A
pictorial representation of a cellular type of layout is given in Figure 4. The advantages and
disadvantages are given in Table 4.

Figure 4: A Pictorial Representation Of Cellular Type Of Layout
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Table 4: Advantages And Disadvantages Of Cellular Type Of Layout
Advantages Disadvantages
Higher machine utilization
Smoother flow lines and shorter
travel distances are expected
than for process layout
Offers some benefits of both
product and process type of
layout because it is a
compromise between the two
Encourages consideration of
general purpose equipment
Greater labor skills required
Flow balance required in each
cell
Has some of the disadvantages
of product and process type of
layout; it is a compromise
between the two

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Module III
1. What are the advantages of Linear Programming?
Following are certain advantages of linear programming.
1. Linear programming helps in attaining the optimum use of productive resources. It also indicates
how a decision-maker can employ his productive factors effectively by selecting and distributing
(allocating) these resources.
2. Linear programming techniques improve the quality of decisions. The decision-making approach
of the user of this technique becomes more objective and less subjective.
3. Linear programming techniques provide possible and practical solutions since there might be
other constraints operating outside the problem which must be taken into account. Just because
we can produce so many units docs not mean that they can be sold. Thus, necessary modification
of its mathematical solution is required for the sake of convenience to the decision-maker.
4. Highlighting of bottlenecks in the production processes is the most significant advantage of this
technique. For example, when a bottleneck occurs, some machines cannot meet demand while
other remains idle for some of the time.
5. Linear programming also helps in re-evaluation of a basic plan for changing conditions. If
conditions change when the plan is partly carried out, they can be determined so as to adjust the
remainder of the plan for best results.

2. What are the limitations of Linear Programming?
In spite of having many advantages and wide areas of applications, there are some limitations
associated with this technique. These are given below. Linear programming treats all relationships
among decision variables as linear. However, generally, neither the objective functions nor the
constraints in real-life situations concerning business and industrial problems are linearly related to the
variables.
1. While solving an LP model, there is no guarantee that we will get integer valued solutions. For
example, in finding out how many men and machines would be required to perform a particular
job, a non-integer valued solution will be meaningless. Rounding off the solution to the nearest
integer will not yield an optimal solution. In such cases, integer programming is used to ensure
integer value to the decision variables.
2. Linear programming model does not take into consideration the effect of time and uncertainty.
Thus, the LP model should be defined in such a way that any change due to internal as well as
external factors can be incorporated.
3. Sometimes large-scale problems can be solved with linear programming techniques even when
assistance of computer is available. For it, the main problem can be fragmented into several small
problems and solving each one separately.
4. Parameters appearing in the model are assumed to be constant but in real-life situations, they are
frequently neither known nor constant.
It deals with only single objective, whereas in real-life situations we may come across conflicting multi-
objective problems. In such cases, instead of the LP model, a goal programming model is used to get
satisfactory values of these objectives.
3. What are the different types of solutions in Linear Programming?
(a) Solution. Values of decision variables xj (j = 1, 2, 3, .n) which satisfy the constraints of the general
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L. P. P., is called the solution to that L. P. P.
(b) Feasible solution. Any solution that also satisfies the nonnegative restrictions of the general L. P. P. is
called a feasible solution.
(c) Basic Solution. For a set of m simultaneous equations in n unknowns (n> m). a
solution obtained by setting (n - m) of the variables equal to zero and solving the remaining m
equations in m unknowns is called a basic solution. Zero variables (n - m) are called non-basic
variables and remaining m are called basic variables and constitute a basic solution.
(d) Basic Feasible Solution. A feasible solution to a general L.P.P. which is also basic
solution is called a basic feasible solution.
(e) Optimum Feasible Solution. Any basic feasible solution which optimizes (maximizes or minimizes) the
objective function of a general L.P.P. is known as an optimum feasible solution to that L.P.P.
(f) Degenerate Solution. A basic solution to the system of equations is called degenerate if one or more
of the basic variables become equal to zero.

4. What are the different kinds of Floats in Network analysis?
Total float of an activity
The total activity float is equal to the difference between the earliest and latest allowable start or finish
times for the activity in question. Thus, for an activity (i-j), the total float is given by:
TFij = LST EST or TFij = LFT EFT
In other words, it is the difference between the maximum time available for the activity and the actual
time it takes to complete. Thus, total float indicates the amount of time by which the actual completion
of an activity can exceed its earliest expected completion time without causing any delay in the project
duration.
Free float
It is defined as that portion of the total float within which an activity can be manipulated without
affecting the float of the succeeding activities. It can be determined by subtracting the head event slack
from the total float of an activity.
i.e. FFij = TFij (slack of event j)
The free float indicates the value by which an activity in question can be delayed beyond the earliest
starting point without affecting the earliest start, and therefore the total float of the activities following
it.
Independent float
It is defined as that portion of the total float within which an activity can be delayed for start without
affecting float of the preceding activities. It is computed by subtracting the tail event slack from the free
float.
i.e. IFij = FFij (slack of event i)
The independent float is always either equal to a less than the free float of an activity. If a negative value
is obtained, the independent float is taken to be 0.
Interfering float
Utilisation of the float of an activity can affect the float of subsequent activities in the network. Thus,
interfering float can be defined as that part of the total float which causes a reduction in the float of the
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successor activities. In other words, it can be defined as the difference between the latest finish time of
the activity under consideration and the earliest start time of the following activity, or 0, whichever is
larger. Thus, interfering float refers to that portion of the activity float which cannot be consumed
without affecting adversely the float of the subsequent activity or activities.
5. What are the three time estimates in PERT?
(a) The optimistic time estimate: this is the estimate of the shortest possible time in which an activity
can be completed on the ideal conditions. For this estimate, no provision for delays of setbacks are
made. We shall denote this estimate by to.
(b) The pessimistic time estimate: this is the maximum possible time equity to accomplish the job. If
everything went long and normal situations prevailed, this would be the time estimate. It is denoted by
tp.
(c) The most likely time estimate: this is the time which lies between the optimistic and pessimistic time
estimates. It assumes that things go in a normal way with few setbacks. It is represented by tm.
6. Differentiate CPM and PERT.
The PERT and CPM models are similar in terms of their basic structure, rationale and mode of analysis.
However, there are certain distinctions between pert and CPM networks which are ennumerated below.
1. CPM is activity oriented that is CPM network is built on the basis of activities. Also results of
various calculations are considered in terms of activities of the project. On the other hand, PERT
is event oriented.
2. CPM is a deterministic model that is it does not take into account the uncertainties involved in
the estimation of time for execution of a job or an activity. It completely ignores the probabilistic
element of the problem. Pert, however is the probabilistic model. It uses three estimates of the
activity time; optimistic, pessimistic and most likely; with a view to take into account time
uncertainty. Thus, the expected duration of each activity is probabilistic and expected duration
indicates that there is 50% probability of getting the job done within that time.
3. CPM places dual emphasis on time and cost and evaluates the trade-off between project cost
and project time. By deploying additional resources, it allows the critical path project manager
to manipulate project duration within certain limits so that project duration can be shortened at
an optimal cost. On the other hand, pert is primarily concerned with time. It helps the manager
to schedule and coordinate various activities so that the project can be completed on schedule
time.
4. CPM is commonly used for those projects which are repetitive in nature and where one has prior
experience of handling similar projects. What is generally used for those projects with time
required to complete various activities are not known before hand. Thus, pert is widely used for
planning and scheduling research and development projects.

7. Write short notes on Transportation Problem.
The transportati on probl em consi sts of three components. Fi rst we can formul ate a
l i near obj ecti ve functi on, whi ch i s to be mi ni mi zed. Thi s functi on wi l l represent the
total shi ppi ng cost of al l the goods to be sent to al l the desti nati ons. Second we can
wri te a tabl e of constrai nts. Of the seven constrai nts of thi s probl em, three (one for
each row) wi l l gi ve the rel ati onshi ps between the ori gi n capaci ti es and the goods to
be recei ved by di fferent desti nati ons. These ar e cal l ed capaci ty constrai nts. The other
four constrai nts (one for each col umn) wi l l rel ati onshi ps between desti nati on
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requi rements and the goods to be shi pped from di fferent ori gi ns. These are cal l ed as
requi rement constrai nts. Thi rd we can speci fy a set of non-negati vi ty constrai nts for
the structural vari abl es xi j . They wi l l state that no negati ve shi pments be permi tted.
The general correspondence between a typi cal l i near programmi ng probl em and the
transportati on probl em i s thus compl ete.
8. Write short notes on Assignment Problem.
The name assignment problem originates from the classical problems where the objective is to assign a
number of origins (jobs) to the equal number of destinations (persons) t a minimum cost or at maximum
profit. To explain the nature of assignment problem, suppose there are n jobs to be performed and n
persons are available for doing these jobs. Assume that each person can do each job at a time, though
with varying degree of efficiency. Let cij be the cost (payment) if the ith person is assigned the jth job,
the problem is to find the assignment (which job should be assigned to which person) so that the total
cost for performing all jobs is minimum. Problems of this kind are known as assignment problems.
9. List the rules for drawing network diagram.
Rule 1: Each activity is represented by one and only one arrow in the network.
Rule 2: No two activities can be identified by the same end events.

Rule 3: Precedence relationships among all activities must always be maintained.
Rule 4: Dummy activities can be used to maintain precedence relationships only when actually required.
Their use should be minimized in the network diagram.

Rule 5: Looping among the activities must be avoided.
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10. Write short notes on Decision Tree
Decision tree is one of the devices of representing a diagrammatic presentation of sequential and multi
dimensional aspects of a particular decision problem for systematic analysis and evaluation. Under this
method, the decision problem alternative courses of action, states of nature and the likely outcomes of
alternatives are diagrammatically organically depicted as if they are branches and sub branches of
horizontal tree.
The decision tree consists of nodes and branches. The nodes are two types, decision node and chance
node courses of action or straegies) originate from the decision nodes as the main branches at the
terminal of each main branch, there is a chance of node From these chance nodes, chance events
emanate in the form of subbranches The respective offs and the probabilities associated with alternative
pay courses and the chance events are shown along the sub branches at the terminal of the sub branches
are shown the expected values of the outcome.

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11. Write short notes on GAME theory.
Many practical problems require decision making in a competetive situation where there are two or
more opposing parties with conflicting interests and where the action of one depends upon the action
taken by the opponent. Such a situation is termed as a competitive situation
A great variety of competitive situations are seen in every day life Competitive situations occur
frequently on Economic and Business activities. Management and Labour relations, Political battles and
elections, war etc., are some of the examples of competitive situations. Game theory is a theory of
conflict and it is a mathematical theory which deals with competitive situations. It is a type of decision
theory which is concerned with the decision making in situations where two or more rational opponents
are involved under conditions of competition and conflicting interests.
Theory of games became popular when Newman along with Morgenstern published the book titled
Theory of Games and Economic behaviour in 1944.
Game:
Game is defined as an activity between two or more persons according to a set of rules at the end of
which each person receives some benefit or satisfaction or suffers loss
Therefore in a game there are two or more opposite parties with conflicting interests. They know the
objectives and the rules of the game. An experienced player usually predicts with accuracy how his
opponent will react if a particular strategy is adopted. When one player wins, his opponent loses.
Characteristics (features) of a competitive game:
A competitive situation is called a game if it has the following properties or characteristics.
1. There are finite number of competitors called players.
2 Each player has a list of finite number of possible courses of action
3. A play is said to be played when each of the players chooses a single course of action from the list of
courses of action available to him
4. Every play is associated with an outcome known as pay off. It determines a set of payments.
5. The possible gain or loss of each player depends not only on the choice made by him but also the
choice made by his opponent.

12. What are the assumptions and limitations of Game theory?
Assumptions:
1. The players act rationally and intelligently.
2. Each player has a finite set of possible courses of action
3. The players attempt to maximise gains or minimise losses.
4. All relevant information are known to each player.
5. The players make individual decisions
6. The players simultaneously select their respective courses of action.
7. The pay off is fixed and determined in advance.
Limitations:
1. In fact, a player may have infinite number of strategies. But we assume that there are only
finite number of strategies.
2. It is assumed that each player has the knowledge of opponent's strategies. But it is not
necessary in all cases.
3. The assumption that gain of one person is the loss of his opponent need not be true in all
situations.

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4. Game theory usually ignores the presence of risk and uncertainty.
5. It is assumed that pay off is always known in advance. But sometimes it is impossible to know
the pay off accurately.
6. It is assumed that the two persons involved in the game have equal intelligence. But it need
not be.

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1. What are the applications of Linear Programming?
Linear programming is the most widely used technique of decision-making in business and Industry and in
various other fields. In this section, we will discuss a few of the broad application areas of linear
programming.
Agricultural Applications
These applications fall into categories of farm economics and farm management. The former deals with
agricultural economy of a nation or region, while the latter is concerned with the problems of the
individual farm.
The study of farm economics deals with inter-regional competition and optimum allocation of crop
production. Efficient production patterns can be specified by a linear programming model under
regional land resources and national demand constraints.
Linear programming can be applied in agricultural planning, e.g. allocation of limited resources
such as acreage, labour, water supply and working capital, etc. in a way so as to maximise net
revenue.
Military Applications
Military applications include the problem of selecting an air weapon system against enemy so as to
keep them pinned down and at the same time minimising the amount of aviation gasoline used. A
variation of the transportation problem that maximises the total tonnage of bombs dropped on a set of
targets and the problem of community defence against disaster, the solution of which yields the
number of defence units that should be used in a given attack in order to provide the required level
of protection at the lowest possible cost.
Production Management
(i) Product mix A company can produce several different products, each of which requires the
use of limited production resources. In such cases, it is essential to determine the quantity of
each product to be produced knowing its marginal contribution and amount of available
resource used by it. The objective is to maximise the total contribution, subject to all
constraints.
(ii) Production planning This deals with the determination of minimum cost production plan over
planning period of an item with a fluctuating demand, considering the initial number of units in
inventory, production capacity, constraints on production, manpower and all relevant cost
factors. The objective is to minimise total operation costs.
(iii) Assembly-line balancing This problem is likely to arise when an item can be made by assembling
different components. The process of assembling requires some specified sequcnce(s). The
objective is to minimise the total elapse time.
(iv) Blending problems These problems arise when a product can be made from a variety of available
raw materials, each of which has a particular composition and price. The objective here is to
determine the minimum cost blend, subject to availability of the raw materials, and minimum and
maximum constraints on certain product constituents.
(v) Trim loss When an item is made to a standard size (e.g. glass, paper sheet), the problem that
arises is to determine which combination of requirements should be produced from standard
materials in order to minimise the trim loss.
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Financial Management
(i) Portfolio selection This deals with the selection of specific investment activity among
several other activities. The objective is to find the allocation which maximises the total
expected return or minimises risk under certain limitations.
(ii) Profit planning This deals with the maximisation of the profit margin from investment in plant
facilities and equipment, cash in hand and inventory.
Marketing Management
(i) Media selection Linear programming technique helps in determining the advertising media
mix so as to maximise the effective exposure, subject to limitation of budget, specified
exposure rates to different market segments, specified minimum and maximum number of
advertisements in various media.
(if) Travelling salesman problem The problem of salesman is to find the shortest route from a given
city, visiting each of the specified cities and then returning to the original point of departure,
provided no city shall be visited twice during the tour. Such type of problems can be solved with
the help of the modified assignment technique.
Cm) Physical distribution Linear programming determines the most economic and efficient manner of
locating manufacturing plants and distribution centres for physical distribution.
Personnel Management
a) Staffing problem Linear programming is used to allocate optimum manpower to a particular
job so as to minimise the total overtime cost or total manpower.
b) Determination of equitable salaries Linear programming technique has been used in determining
equitable salaries and sales incentives.
c) Job evaluation and selection Selection of suitable person for a specified job and evaluation of
job in organisations has been done with the help of linear programming technique.
Other applications of linear programming lie in the area of administration, education, fleet
utilisation, awarding contracts, hospital administration and capital budgeting, etc.
2. What is mean by Project Crashing?
In some cases, there are compelling reasons to complete a project earlier than the originally estimated
time duration of the critical path computed on the basis of normal activity times, by employing extra
resources. An example would be introduction of a new project. The motives in hastening the project
might be to ensure that the competitors do not steal a march. Increase or decrease in the total duration
of the completion time for project is closely associated with cost considerations. In such cases when the
total time duration is reduced, the project cost increases, but in some exceptional cases project cost is
reduced as well. Production cost occurs in the cases of those projects which make use of a certain type
of resources for example a machine and whose time is more valuable than the operators time.
Some definitions:
Activity cost: it is defined as the cost of performing and completing a particular activity or task.
Crash cost, Cc: this is the direct cost that is anticipated in completing an activity within the crash time.
Crash time, Ct: This is the minimum time required to complete an activity.
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Normal cost Nc: this is the lowest possible direct cost required to complete an activity.
Normal time Nt: this is the minimum time required to complete an activity at normal cost.
Activity costs slope: the costs slope indicates the additional cost incurred per unit of time saved in
reducing the duration of an activity.

Let OA represent the normal duration of completing a job and OC the normal cost involved to complete
the job. Assume that the management wish to reduce the time of completing the job to OB from normal
time OA. Therefore under such a situation the cost of the project increases and it goes upto say OD
(Crash Cost). This only amounts to saving that by reducing the time period by BA the cost has increased
by the amount CD. The rate of increase in the cost of activity per unit decrease in time is known as cost
slope and is described as follows.

Activity cost slope =

=
Optimum duration: the total project cost is the sum of the direct and indirect costs. In case the direct
cost varies with the project duration time, the total cost would have the shape as indicated in the above
figure.
At Point A, the cost will be minimum. The time corresponding to this point Point A is called the optimum
duration and the cost as optimum cost for the project.

OB OA
OC OD
AB
CD
Crashtime Normaltime
NormalCost t Crash
cos
Crash
cost
Normal
cost
Crash
Time
Normal
Time
COST
DURATION FOR THE JOB
D E
C
F
A B O
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3. In the project network given in figure below, activities and their durations are specified at the
activities. Find the critical path and the project duration.

Ans: Calculations in Network Analysis
The following calculations are required in network analysis in order to prepare a schedule of the project.
a. Total completion time of the project
b. Earliest time when each activity can start (i.e. earlist start time)
c. Earliest time when each activity can finish (i.e. earlist finished time)
d. Latest time when each activity can be started without delaying the project (i.e. latest start time)
e. Latest time when each activity can be finished without delaying the project (i.e. latest finish time)
COST
A
O
TOTAL PROJECT COST
DIRECT COST
INDIRECT COST
Crash Normal Optimal
TIME
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f. Float on each activity (i.e. time by which the completion of an activity can be delayed without
delaying the project)
g. Critical activity and critical path
The symbols used in the calculations are shown in table below.
Symbol Description
Ei Earliest occurance time of event i
Lj Latest allowable occurance time of event
j
tE
i-j
Estimated completion time of activity
(i,j)
(EST)ij Earliest starting time of activity (i,j)
(EFT)ij Earliest finishing time of activity (i,j)
(LST)ij Latest starting time of activity (i,j)
(LFT)ij Latest finishing time of activity (i,j)

The computations are made in following steps.
(a) Forward Pass Computations :

(b) Backward Pass Computations :

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(c) Calculation of Slack:
Event slack is defined as the difference between the latest event and earlist event times.
Slack for head event = Lj - Ej
Slack for tail event = Li - Ei
The calculations for the above taken example network are summarised below in the table.
Predecessor
Event i
Successor Event
j
tE
i-j
(EST)ij (EFT)ij (LST)ij (LFT)ij
S(i)
Slack
5 10 7 0 7 0 7 0
5 15 12 0 12 7 19 -
5 20 17 0 17 5 22 -
10 20 15 7 22 7 22 0
10 25 9 7 16 21 30 -
15 30 11 12 23 19 30 7
20 25 5 22 27 25 30 -
20 30 8 22 30 22 30 0
25 35 10 27 37 30 40 3
25 45 15 27 42 35 50 -
30 35 10 30 40 30 40 0
30 40 8 30 38 35 43 -
35 45 10 40 50 40 50 0
40 45 7 38 45 43 50 5
(d) Determination of Critical Path:
The sequance of critical activities in a network is called the critical path. The activities with zero slack of
head event and zero slack for tail event, are called as crititcal activities. In the taken network, the
following activities are critical activities: 5 - 10, 10 - 20, 20 - 30, 30 - 35, 35 - 45.
Thus the critical path is A - E - G - K - M.
Critical path duration is 7 + 15 + 8 + 10 + 10 = 50.
4. In the network of figure below, the PERT time estimates of the activities are written along the
activity arrows in the order to-tm-tp. Compute the expected time and variance for each activity. Also
compute the expected duration and standard deviation for the following paths of the network.
(a) 10-20-50-80-90
(b) 10-30-50-70-90
(c) 10-40-60-80-90
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Ans: The computation of expected times and variances for different activities are carried in a table given
below.
Activity
i j
Time Estimates
to tm tp
Expected Time
tE
Variance
2

10 20 6 9 12 9.00 1.00
10 30 3 5 9 5.33 1.00
10 40 10 14 18 14.00 1.78
20 50 7 10 13 10.00 1.00
20 70 3 4 8 4.5 0.69
30 50 4 10 12 9.33 1.78
40 50 8 11 14 11.00 1.00
40 60 5 10 15 10.00 2.78
50 70 3 4 5 4.00 0.11
50 80 11 15 17 14.67 1.00
60 80 7 9 12 9.17 0.69
70 90 4 8 10 7.67 1.00
80 90 6 7 9 7.17 0.25

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5. Dorian makes luxury cars and jeeps for high-income men and women. It wishes to advertise with
1 minute spots in comedy shows and football games. Each comedy spot costs $50K and is seen by
7M high-income women and 2M high-income men. Each football spot costs $100K and is seen
by 2M high-income women and 12M high-income men. How can Dorian reach 28M high-income
women and 24M high- income men at the least cost.
Answer: The decision variables are
x
1 = the number of comedy spots
x
2
= the number of football spots.
Giving the problem
min z = 50x
1 + 100x
2

st

7x
1
+ 2x
2

28

2x
1
+ 12x
2

24

x
1
, x
2
0

The graphical solution is z = 320 when (x
1,
x
2
) = (3.6,1.4). From the graph, in this problem rounding up
to (x
1
,x
2
) = (4,2) gives the best integer solution.
Report: The minimum cost of reaching the target audience is $400K, with 4 comedy spots and 2
football slots. The model is dubious as it does not allow for saturation after repeated viewings.

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6. Ms. Fidans diet requires that all the food she eats come from one of the four basic food groups.
At present, the following four foods are available for consumption: brownies, chocolate ice cream,
cola, and pineapple cheesecake. Each brownie costs 0.5$, each scoop of chocolate ice cream costs
0.2$, each bottle of cola costs 0.3$, and each pineapple cheesecake costs 0.8$. Each day, she must
ingest at least 500 calories, 6 oz of chocolate, 10 oz of sugar, and 8 oz of fat. The nutritional content
per unit of each food is shown in Table. Formulate an LP model that can be used to satisfy her
daily nutritional requirements at minimum cost.

Calories Chocolate
(ounces)
Sugar
(ounces)
Fat
(ounces)
Brownie 400 3 2 2
Choc. ice cream (1 scoop) 200 2 2 4
Cola (1 bottle) 150 0 4 1
Pineapple cheesecake (1 piece) 500 0 4 5

Answer

The decision variables:

x
1
: number of brownies eaten daily

x
2
: number of scoops of chocolate ice cream eaten daily x
3
: bottles
of cola drunk daily
x
4
: pieces of pineapple cheesecake eaten daily

The objective function (the total cost of the diet in cents):

min w = 50 x
1
+ 20 x
2
+ 30 x
3
+ 80 x
4

Constraints:

400 x
1
+ 200 x
2
+ 150 x
3
+ 500 x
4
> 500 (daily calorie intake)

3 x
1
+ 2 x
2
> 6 (daily chocolate intake)

2 x
1
+ 2 x
2
+ 4 x
3
+ 4 x
4
> 10 (daily sugar intake)

2 x
1
+ 4 x
2
+ x
3
+ 5 x
4
> 8 (daily fat intake)

x
i
> 0, i = 1, 2, 3, 4 (Sign restrictions!)
Report:
The minimum cost diet incurs a daily cost of 90 cents by eating 3 scoops of chocolate and drinking
1 bottle of cola (w=90, x
2
=3, x
3
=1)
7. A PO requires different numbers of employees on different days of the week. Union rules state
each employee must work 5 consecutive days and then receive two days off. Find the minimum
number of employees needed.

Mon Tue Wed Thur Fri Sat Sun
Staff Needed 17 13 15 19 14 16 11
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Answer: The decision variables are x
i
(# of employees starting on day i)
Mathematically we must

min z = x
1
+x
2
+x
3
+x
4
+x
5
+x
6
+x
7

x
1
+x
4
+x
5
+x
6
+x
7
17 x
1
+x
2
+x
5
+x
6
+x
7
13 x
1
+x
2
+x
3
+x
6
+x
7
15
x
1
+x
2
+x
3
+x
4
+x
7
19 x
1
+x
2
+x
3
+x
4
+x
5
14
+x
2
+x
3
+x
4
+x
5
+x
6
16
+x
3
+x
4
+x
5
+x
6
+x
7 11

The solution is (x
i
) = (4/3,10/3,2,22/3,0,10/3,5) giving z = 67/3. We could round this up to (x
i
) =
(2,4,2,8,0,4,5) giving z = 25. However restricting the decision var.s to be integers and using Lindo
again gives (x
i
) = (4,4,2,6,0,4,3) giving z = 23

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Principles of Management S7 Mechanical 2008 scheme Kerala University

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