PRINCIPLES AND PRACTICE OF MANAGEMENT

1) What is management?

To manage is to forecast and plan, to organize, to command, to coordinate, and to

control-Henry Fayol.

Management is what manager does-Louis Allen.

Management is the art of getting things done through people-Mary Parker Follet.

2) Explain management as a profession?

Management has come to be recognized as a profession in the way medical. Law and
engineering are recognized. A professional need not necessarily work under an employer.
He can have his own clients and get remuneration from them directly. E.g.: Doctors,
Lawyers etc...On the other hand, a person working in an organization has to work under
an employer for his monthly salary. E.g.: Managers.

Management as a profession fulfills the following criteria of a profession:

 An organized body of knowledge.

 Educational qualification.

 Regulatory authority.

 Code of conduct.

 Serving the community.

3) What are the features of management?

o It is goal oriented.

o It is a group activity.

o It makes internal environment conducive to work.

o It establishes relationships among resources.

o It is a continuous process.

4) What are the functions of management or manager?

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The job of every manager involves what is known as the functions of management:
planning, organizing, staffing, directing and controlling. These functions are goal-
oriented, interrelated and interdependent.

5) What is management or managerial skills?

In order to perform the functions of management and to assume multiple roles, managers
must be skilled. The following 3 skills are essential to for a successful manager:

Technical skills: it involves process or technique knowledge and proficiency.

Human skills: it involves the ability of the manager to interact effectively with people.

Conceptual skills: it involves formulation of ideas.

6) What is the purpose and scope of management?

 Efficient use of resources.

 Satisfaction of customers.

 Satisfying workers.

 Earning adequate return on capital.

 Keeping and maintaining good working conditions.

 Maintaining good relations with suppliers.

 Contributing towards national goals.

7) What is scientific management?

Scientific management is the scientific approach to solve management problems.

F.W.Talyor is the father of scientific management. Scientific management is the art of
knowing exactly knowing what you want men to do and seeing that they do it in the best
and cheapest way. In short it si application of science to management.

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Techniques of scientific management:

 Work study

 Scientific task planning

 Scientific selection

 Standardizations and simplification

 Mental revolution.

8) What is unity of command?

According to fayol, an employee should receive orders from one superior only and is
accountable to him alone. If there are 2 superiors for an employee, he will not know
whom he should report to and whose orders he should carry out first. Dual command is a
source of conflict.

9) What is unity of direction?

This principle says that each group of activities having the same objective should have
one head and one plan. It is different from unity of direction. Unity of direction means
that the efforts of all the members of a department must be directed towards the
attainment of that departmental goal.

10) What is scalar chain?

It is the chain of superiors ranging from the highest to the lowest level in the
organization. Every communication should follow the prescribed line of authority. Scalar
chain refers to a number of levels in the hierarchy from the ultimate authority to the
lowest level of organization. It should not be over stretched and consists of too many
levels.

11) What are the steps in Hawthorne experiments?

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Elton mayo was the leader of the team that conducted the famous Hawthorne
experiments. These experiments where conducted at the h Hawthorne plant of western
electric company in Chicago. The Hawthorne experiments were conducted in four stages.
They are: 1) Illumination Experiments2) Relay assembly test room experiments.

3) Interview program.4) Bank wiring group observations.

12) What is Theory X?

Theory X adopts a negative approach towards workers. It assumes that workers dislike
their work basically and are not ambitious and creative. It further says that satisfaction of
basic needs alone is important for most workers and that the workers need to be closely
supervised while at work.

13) What Is Theory Y?

Theory Y is positive in its approach. It assumes that if the work environment is proper
workers will enjoy doing their work. It the workers are properly motivated, they will
certainly come forward to accept responsibility. Workers are creative and satisfaction of
basic needs alone is not their priority. Close supervision on the workers is not necessary.

14)What is Gantt contribution to management?

Gantt developed the Gantt chart, which is used for scheduling multiple overlapping tasks
over a period of time.

He developed a pay incentive with guaranteed minimum wage and bonus systems for
people on fixed basis.

Gantt focused on the importance of the qualities of leadership and management skills in
building effective industrial organizations.

He also focused on motivational schemes, emphasizing the greater effectiveness of

reward for good work.

15)What is Chesturn Barnard contribution to management?

Chesturn Barnard has contributed two theories to management which are even helpful
today. They are:

Theory of authority: this theory states the for a communication to be from a boss to a
subordinate to be authorities, it must meet the following four conditions:

• It has to be understood by he subordinate

• It should be possible for the subordinate to fulfill

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 • Subordinate has to see incompatibility between the communication and
his/her goals

• Subordinate has to see no incompatibility between the communication and

the objectives of the organizations.

Theory of incentives: in the theory he states that there are two ways of convincing
subordinates to cooperate: tangible incentives and persuasion. He gives great importance
to persuasion.

16)What is management science?

Management science is the discipline of using mathematics, and other analytical

methods, to help make better business decisions. Management science is also known as
mathematical/ quantitative approach. Management science is often considered as
synonymous with operation research. Management science is also concerned so-called
“soft-operational analysis”.

17)What is decision theory approach?

Decision theory is an interdisciplinary area study, related to and of interest to

practitioners in all branches of science, engineering and in all human social activities. It is
concerned with how real or ideal decisions-makers make or should make decisions, and
how optimal decisions can be reached. This approach looks at the basic problem of
management around decision making, selection of suitable course of action out of given
alternatives.

18)What are closed and open systems?

Closed systems are those systems, which have no interaction with the internal and
external environment. These are self-contained and self-maintaining. These are generally
mechanical. Closed systems are those with little interaction and feedback fram their
environment.

Open systems are those, which interact with the environment. They import energy and
export output. These are characterized by negative entropy. Open systems are those
which have more interaction and feedback from their environment.

19)What are the 7S in McKinsey model?

The 7S model is better known as 7S McKinsey model. This is because two persons who
developed this model, tom peters and Robert waterman, have been consultants at
McKinsey & co at that time.

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The hard S’s: 1) strategy 2) structure 3) systems.

The soft S’s: 1) skills 2) shared values 3) staff 4) style.

20)What is ethics?

Ethics is two things. First, ethics refer to well based standards of right and wrong that
prescribe what humans ought to do, usually in terms of rights, obligations, benefits to
society, fairness. Secondly, ethics refer to the study and development of one’s ethical
standards. Few example of business ethics are:1) to chare fair prices from the customers
2) to pay taxes honestly.

21) What is business ethics?

Business ethics refer to the moral principles which should govern business activities.
These provide the code of conduct for managers. The purpose of business ethics is to
guide the managers and employees in performing their jobs. These lay down the norms of
behavior by the business. Few example of business ethics are:1) to chare fair prices from
the customers 2) to pay taxes honestly.

22) What is social responsibility?

Social responsibility is a doctrine that claims that an entity whether it is state,

government, corporation, organization or individual has a responsibility to society. Social
responsibility means eliminating corrupt, irresponsible or unethical behavior that might
bring harm to the community, its people, or the environment. Social responsibility can be
positive or negative. Social responsibility is voluntary.

23)What is planning?

Planning is a basic and foremost managerial function. It is a systematic activity which

answers that basic questions like what, when, how and by whom. It involves thinking
before doing. It bridges the gap between where we are and where we want to go.

“Planning is a mental predisposition to do things in an orderly way to think before acting

and to act in the light of the fact rather than guesses.”

24)What is the purpose of planning?

• It gives direction to the organization.

• It reduces the impact of change.

• It reduces uncertainty

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 • It reduces overlapping and wasteful activities..

• It establishes standards that are used in controlling.

• It establishes coordinated effort.

25)What are the types of plan?

Long range & short range plans: long range plans are those which are formatted to
achieve the long term objectives of the organization. This long term plans are normally
the mission of the organization for which they are formed. Short term plans re those
which are formed to achieve short term goal or strategy.

Standing plans: the standing plans are made to be used time and again. Once formulated
this plans would be used for long period of time. They are formed to guide managerial
decisions& actions on problems which are recurring in nature. E.g. objectives, mission,
strategies, policies, rules, procedures.

Single use plans: single use plans are formulated to handle non-recurring problems.
These are also known as specific plans as they are tailored to fit specific situations. Once
achieved these are to be formulated again. It becomes obsolete after its purpose has been
achieved. E.g. budgets, targets, quotas.

26)What are the limitations of planning?

Planning is expensive not only in terms of time but also in terms of efforts and money.

Planning is uncertain. Plans are made for future and future is unpredictable.

Planning does not give scope for individuals to display there skills.

Planning ignore the interest, preference, capabilities and attitudes of the employee.

27)What are the steps in planning?

 Identifying business opportunities

 Establishment of objectives

 Determination of planning premises

 Identifying the alternative courses of action

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  Evaluating the alternative courses of action

 Selecting the best course of action

 Formulation of derivative plans

 Periodic evaluation and review

28)What steps can be taken to reduce obstacles of planning?

Planning staff: it is a small group of individual who assist top level managers in
developing the various components of the planning process. The staff should focus on
helping rather than taking over the planning process.

Contingency planning: it is the development of alternative plans for use in the event that
environmental conditions evolve differently than anticipated, rendering original plans
unwise or unfeasible.

29)What is objective?

Objective or goals are the end results towards which the activities are aimed. Objectives
are the aims which the company wants to achieve over the period of time.

“Objectives are the goals or aims that organizations want to achieve over varying periods
of time.”

The ultimate Objective of all enterprise is profit maximization, the following can also be
considered as objective:1) higher market share 2) customer satisfaction 3) innovation 4)
cost control 5) product diversification, etc.

30)What are the guidelines for setting of objective?

 Objective must be clearly specified.

 These must be set keeping in mind all the factors.

 Should be consistent with organizational mission.

 Should be realistic and rational.

 Should yield specific results when achieved.

 Should be consistent over the period of time.

 Should be periodically reviewed.

31)Explain the concept of management by objectives?

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Management by Objectives (MBO) is a process of agreeing upon objectives within an
organization so that management and employees agree to the objectives and understand what they
are in the organization. The essence of MBO is participative goal setting, choosing course of
actions and decision making. An important part of the MBO is the measurement and the
comparison of the employee’s actual performance with the standards set. Ideally, when
employees themselves have been involved with the goal setting and the choosing the course of
action to be followed by them, they are more likely to fulfill their responsibilities.

32)What are the features of MBO?

MBO is concerned with goal setting and planning for individual managers and their units.

The essence of MBO is a process of joint goal setting between a supervisor and a
subordinate.

Managers work along with subordinates to reach the objectives.

MBO focuses attention on appropriate goals and plans.

33)What are strategies and policies?

Strategy is the pattern of objectives, purposes, or goals, stated in such a way as to

determine what business the company is in or to be in and the kind of company it is or is
to be.

In business, strategy is nothing but a tactics adopted to counter competitors. Strategies

can be of 5 types:1) stability strategy 2) growth strategy 3) vertical integration strategy 4)
merger strategy 5) product elimination strategy…

Policy is the statement or general understanding which provides guidelines in decision

making to the members of the organization in respect to course of action. Policy prescribe
the limits within which the organizational decisions have to be made. Business policies
may be of the following types:1) external policies 2) internal policies 3) appealed policies
4) explicit policies and 5) implicit policies.

34)What is strategic planning?

Strategic planning is a disciplined effort to produce fundamental decisions and actions

that shape and guide what an organization is, what it does and why it does it, with a focus
on the future. Strategic planning identifies and develops a competitive advantage and
even provides a sense of direction.

35) What is the process of strategic planning?

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  Mission & objectives

 Environmental scanning

 Strategy formulation

 Strategy implementation

 Evaluation & control

36) What is SWOT analysis?

A SWOT analysis is a strategic planning tool used to evaluate the strengths, weakness,
opportunities and threats involved in a project or in a business venture or in any situation
requiring a decision. SWOT analysis is a tool for auditing an organization and its
environment. In this analysis, strengths and weakness are internal factors. Opportunities
and threats are external factors.

37) What is BCG or portfolio matrix?

According to Boston consulting group matrix, a company should have a portfolio of

products that contains both high-growth products in need of cash inputs and low growth
products that generate a lot of cash. It has 2 dimensions: market share and market
growth. The basic idea behind it is that the bigger the market share a product has or the
faster the products market grows the better it is for the company.

38) What is premising or planning premises?

Premising or planning premises are the anticipated environments in which plans are
expected to operate. They include assumptions or forecast of the future and known
conditions that will affect the plan.

Premising or planning premises can be classified into 2:

External Premises: Relates to external constraints and facilitators.

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Internal Premises: Relates to events occurring within the organization.

39) What is forecasting?

Forecasting is the process which helps in estimating the relevant events of future, based on the
analysis of their past& present behavior. It helps in promotion of organization. Forecasting is the
process of estimation in unknown situations. There are 3 methods of forecasting:

• Quantitative forecasting.

 Time-series methods.

 Explanatory or causal methods.

• Technological forecasting.

• Judgmental forecasting.

40) What are the drawbacks of strategic planning?

A drawback of this approach is that it may not be responsive enough for rapidly changing
competitive environments. Another drawback of that this is strategic planning model assumes
fairly accurate forecasting and does not take into account unexpected event.

41) What is decision making?

Decision making is the process leading to the selection of a course of action among alternatives.
Every decision making process produces a final choice called a decision. It can be an action or an
opinion. Decision making is a reasoning process which can be rational or irrational, and can be
based on explicit or implicit assumptions.

“A decision in its simplest form is a selection of alternatives.”

42) What are the steps in decision making?

1. Defining the problem

2. Analyzing the problem

3. Establishing criteria by which it can be evaluated

4. Identifying alternative solutions

5. Selecting the best one

6. Implementing the decision

7. Evaluating the decision

8. Developing alternatives

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43) What is decision making under certainty?

It is a situation in which the decision maker has enough information to predict with cent percent the
outcome of his decision. The outcome may be positive or negative. If it is positive the decision maker
may implement the decision and if negative, he may not consider the decision worthwhile. It is also
known as programmed decision making.

For example: a decision to cut the wages of the employees will be certainly opposed by them. The
outcome of such a decision, obviously, negative and therefore may not be favorable considered.

44) What is decision making under uncertainty?

In this situation, the decision maker does not know the outcome of his decision. The basis of knowing the
probability of occurrence does not exist. The factors unknown are too many and the decision maker
cannot predict the outcome. It is also known as non-programmed decision making.

For example: the decision to introduce new product in the market or a major change in marketing
strategy is a decision made under conditions of uncertainty.

45) What are types of decision making? Refer page no. 88 of PTU book.

46) What are the types of problems in decision making?

 Well structured problems: They are straightforward, familiar and easily defined situations. In
handling this situation, a manger can use a programmed decision, which is a repetitive decision
that can be handled by a routine approach.

 Poorly structured problems: These are new or unusual problems in which information is
ambiguous or incomplete. These problems are best handled by a non-programmed decision that is
unique decision that requires a custom-made solution.

47) What is a rational decision or rationality in decision making?

A rational decision is one that helps to attain the desired goal in the most efficient and effective
manner. Perfect knowledge of the consequences of the alternative courses of action is necessary
for evolving rational decisions. Experts have laid down 3 criteria to determine rationality in
decisions. They are: 1) the extent to which a given action satisfies human interest.
2) Feasibility of means to the given end. 3) Consistency.

48) What are the conditions for evolving rational decision?

The following conditions should be fulfilled for making rational decisions:

• The decision-maker must be able to define his goal clearly.

• He must have perfect knowledge of the alternative courses by which the given end
can be reached.

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 • He must be able to evaluate each alternative course of action by seeing its pros and
cons.

• After evaluation, he must select the best course of action.

49) What is decision tree?

A decision tree is a graphical presentation of the alternatives available in a given decision situation
together with the outcome of each alternative. With the help of probability, the payoffs are calculated.
The alternative with the highest payoff may be finally selected. Decision tree are of 3 types:

• Classification tree: it is a term used to predict the outcome in the class to which the data belongs.

• Regression tree: it is used when the predicted outcome can be considered a real number.

• CART: it is a term used to refer both of the above procedures. It is an acronym from the
classification and regression tree.

50) What is group decision?

These are decisions made by a group of persons.ian, an organization there may exist a committee
consisting of the representation of both workers and the management. When there is nay dispute between
the workers and the management, the matter will be referred to the committee. The committee may
conduct an enquiry and announce its decision which is binding on both the workers and the management.

51) What is Delphi technique?

The Delphi mentioned is a structured approach to gain the judgments of a number of experts on a specific
issue relating to the future. In this, members don’t have face to face interaction for decision making.
Decisions are arrived at through written communication in the form of questionnaires and mails.

52) What is nominal group technique?

Nominal group technique is a means of enhancing creativity and decision making that integrates both
individual work and group interaction within certain grouped rules. It is structures group meeting which
restricts the verbal communication among members. Recent research suggests that NGT is superior to
brainstorming groups in generating ideas but not so when compared to computer assisted brainstorming.

53) What is creativity?

Creativity is the cognitive process to developing an idea, concept, commodity, or discovery that is viewed
as novel by its creator or a target audience. Creativity requires both convergent and divergent thinking.

• Convergent thinking: it is effort to solve problems by beginning with a problem and attempting
to move logically to a solution. Divergent thinking: it is effort to solve problems by generating
new ways of viewing a problem and seeking novel alternatives.

54) What is co-ordination?

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Coordination is regarded as essence of management. It aims at creating harmonious relationship between
the department, employees, and managers and between workers& management. It is the process of
directing the efforts/actions of the individuals towards the common goal. Its purpose is to create team
work.

55) What are the important and problems of co-ordination?

IMPORTANT: 1) proper co-ordination pulls all the functions &activities together so that each function
& activity becomes complementary to each other. 2) Co-ordination brings satisfaction to the people in the
organization.3) it ensures smooth flow of information & resources into the productive units to bring the
required quantity & quality of outputs.

PROBLEMS:

 Presence of constant change.

 Weak leadership.

 Functional differentiation.

 Large number of employees: increasing number of personnel involved in large organizations

complicates the problem of coordination.

 Specialization: every organization appoints large number of specialists. More the number of
specialists, higher the problem of co-ordination them

56) What is control? State its importance n steps in control process?

Control is the process of taking steps to bring actual results and desired results together. Control
provides the basic for future action. It reduces the chances of mistakes being repeated in future by
employing and suggesting preventing steps. It facilities decision-making and goes hand in hand with
planning.

Importance;

 Control enables the manager to cope up with uncertainty.

 Control help managers detect undesirable irregularities, such as product defects or cost
overruns.

 Control alert managers to possible opportunities by highlighting situations in which things are
going better than expected.

 Control enables manager to handle complex situations by enhancing coordination within

large organizations.

Steps in controlling process:

1. Establish performance standards.

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2. Measure actual performance

3. Compare measured performance against established standards

4. Take corrective action

5. Human response to control

• Nature of control

• Perception of people

• Action by participants

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