Introduction and Concept of Management

Meaning of management:- Process of getting things done with the aim of achieving goals effectively and efficiently.

  • Effectiveness in management is concerned with doing the right task, completing activities and achieving goals.
  • In other words, it is concerned with the end result.


  • Means doing the task correctly and with minimum cost.
  • If by using less input resources (money, materials, equipment and persons) more benefits are derived (i.e., the outputs) then efficiency has increased.
  • Efficiency is also increased when for the same benefit or outputs with fewer resources are used and fewer costs are incurred.

Effective but not efficient:

Suppose, a company’s target production is 5000 units in a year. To achieve this target the manager has to operate on double shifts due to power failure most of the time. The manager is able to produce 5000 units but at a higher production cost. In this case, the manager was effective but not so efficient, since for the same output more inputs (labor cost, electricity costs) were used.

Efficient but not effective:

Businesses may concentrate more on producing goods with fewer resources i.e., cutting down costs but not achieving the target production. Due to which the goods do not reach the market and hence the demand for them declines and competitors enter the market this is a case of being efficient but not effective since the goods did not reach the market.

Characteristics & Importance of Management

Nature and Significance of Management

  1. Multidimensional:
  1. Management of work:Management translates the work in terms of goals to be achieved and assigns the means to achieve it.(by planning and organizing)
  2. Management of people:  make people work towards achieving the organization’s goals, by making their strengths effective and weakness irrelevant. (by staffing, directing, controlling)
  3. Management of operationsprovides a process that involves the flow of input material and transforming this input into the preferred output for consumption. (purchase, production, sales, finance, advertisement)
  1. Continuous process:
    • The management process is a series of continuous but separate functions (planning, organizing, directing, staffing and controlling which are together performed by all managers all the time.
  2. Group activity:
    • Inorganizationdifferent individuals have different needs.
    • Higher salary, promotion, learning
    • A common goal can be met through teamwork and coordination
  3. Dynamic function:
  • Adapt itself to the changing environment which is consists of various social, economic and political factors.
  • In order to be successful, an organization must change itself and its goals according to the needs of the environment.
  1. Goal-oriented process:
    • The different organizations have different goals
    • School to provide quality education, mobile company to increase the customer base
    • efforts of different individuals in the organization towards achieving these goals
  2.  Intangible force:
  • It does not have a physical shape that can be seen and touched,
  • Its presence can be felt when organization achieve goals, targets are met according to plans and employees are happy and satisfied.
  1. All pervasive:
    • Management is common to all organizations whether economic, social or political.
    • This difference is due to the differences in culture, tradition and history

Importance of Management

  1. Group goals:
    • Management gives a common direction to the individual departments (like finance, production, purchase) for achieving the overall goal of the organization.
    • It unites physical (material-machine-money) resources and human resources in one direction of profit –survival and growth.
  2. Useful in a dynamic organization:
  • All organizations have to function in an environment that is constantly changing(SLEPT)
  •  Management helps people adapt to these changes to survive and grow and able to maintain its competitive edge
  1. Increases efficiency:
    •  Managers try to reduce costs and increase productivity through better planning, organizing, directing, staffing and controlling the activities of the organization.
    • As a result per unit cost of production is reduced.
  2. Development of society:
    • Helps to provide good quality products and services, creates employment opportunities, adopts new technology for the benefit of the people and leads the path towards growth and development.
  3. Enhance personal objectives:
    • Through motivation and leadership, the management helps individuals to develop team spirit, cooperation and commitment to group success.
    • A manager motivates and leads his team in such a manner that individual members can achieve personal goals while contributing to the overall organizational objective.

Introduction and Concept of Principles of Management

Principal of management: - Broad and general guidelines for decision-making and behavior developed on the basis of observation and experimentation as well as personal experiences of the managers.

Feature & Importance of Management Principle

Nature of Principles of Management:

  1. Cause and effect relationships:
  • Form a cause and effect relationship and indicates the effect of a certain action. they can be used in similar situations in a large number of cases
  • The principles of management are less than perfect since they mainly apply to human behavior.
  • Example. In emergency autocratic style and in case of larger issues participative style can be followed
  1. Universal applicability
  • Applied to all types of organizations and levels, business as well as non-business, public sector as well as the private sector, manufacturing as well as the services sectors.
  • The top-level requires more planning than the middle level
  • Extent of their applicability would vary with the nature of the organization,
  1. Based on Human behavior
  • More emphasis is laid on human behavior
  • Also the understanding between human and material resources
  • Principal of order: - Proper relationship between man and material
  1. Flexible
  • Flexible and can be modified by the manager when the situation so demands.
  • For example, the degree of concentration of authority (centralization) or its distribution (decentralization) will depend upon the situations and circumstances of each enterprise.
  1. Contingent
  • Contingent or dependent upon the prevailing situation at a particular point in time.
  • The application of principles has to be changed as per requirements.
  • Wages are paid based on the skill of the employee, paying capacity of the organization and existing wage rate.
  1. Formed by practice and experimentation:
  • Formed by the experienced and collective knowledge of managers as well as experimentation.
  • Matter of common experience that discipline is necessary for accomplishing any purpose.
  1. General guidelines
  • Guidelines to decision-making but do not provide readymade solutions to all managerial problems.
  • Science not thumb rule increases efficiency managerial problems.

This is so because real business situations are very complex and dynamic and are a result of many facts.

Significance of Principles of Management

  1. Adapted changing environment requirements
  • General guidelines but they are modified and as such help managers meet changing requirements.
  • Management principles are flexible to adapt to a dynamic business environment.
  • Companies outsourced their non-core business and concentrate on core business
  1. Scientific decisions:
    • Principals are based on logic rather than blind faith  and free from personal bias
    • .Management decisions taken based on principles are free from bias and unfairness.
    • Differential wage systems differentiate between efficient and inefficient worker
  2. Social Responsibility:
    • Has increased the role of the business community toward greater social responsibility
    • So, if one were to talk of ‘equity’ today, it does not apply to wages alone.

Value to the customer, care for the environment, and dealings with business associates would all come under the purview of this principle

  1. Administration becomes effective
    • Resources both human and material available are limited.
    • Reduces the chances of trial-and-error method and their effective utilization
  2. Managerial growth
    • Brings the managers into real-world situations.
    • Increases their knowledge, ability and understanding of managerial situations.
    • By giving work to subordinates they can reduce their burden
  3. Management training, education and research
  • Basis for management training, education and research.

Professional courses such as MBA BBA teach these principles as part of their curriculum.

Introduction and Feature & Importance of Business Environment

Business Environment: Means the external forces influencing the business decisions. They can be forces of economic, social, political and technological factors. These factors are outside the control of the business.


  1. Complexity:
  • Environment is  easier to understand in parts but difficult to understand as a whole
  • Easier to understand the fall in demand but difficult to explain the reasons for fall
  1. Relativity:
  • Differs from country to country and even region to region. Political conditions in Gujarat are, different from Kashmir
  • Demand for woolen is high in north India and not in south India
  1. Dynamic nature:
  • Keeps on changing in terms of technological improvement, consumer preferences, or entry of new competition in the market.
  • Urbanization has increased the demand for housing
  1. External forces:
  • Sum total of all things external to business firms and, as such, is aggregative in nature
  1. Specific and general forces:
  • Specific forces (such as investors, customers, competitors and suppliers) affect individual enterprises directly.
  • General forces (such as social, political, legal and technological conditions) affect an individual firm indirectly.
  1. Inter-relatedness:
  • Different forces in a business environment are closely interrelated.
  • For example, health awareness has increased the demand for many health products like diet Coke, fat-free cooking oil, gyms, etc
  1. Uncertainty:
  • Business environment is largely uncertain as it is very difficult to predict future happenings, especially when environment changes are taking place too frequently as in the case of information tech­nology or fashion industries

Importance of Business Environment

  1. Recognize Opportunities To Get The First Mover Advantage

Early identification of opportunities helps an enterprise to be the first to exploit them instead of losing them to competitors.

    • Maruti Udyog became the leader in the small car market because it was the first to recognize the need for small cars in India.
  1. Assist In Improving Performance:
    • The enterprises continuously observing the environment can succeed in the market for a longer period. MCDONALS TIKKI CHTAT
    • A leading food service retailer with 155 restaurants in India, McDonald’s India caters to 3 lakh customers every single day
  2. Coping with rapid changes:
    •  All sizes and all types of enterprises are facing an increasingly dynamic environment.
    •  To cope with changes, managers must understand the environment and develop a suitable plan. Increasing traffic in Delhi led to the development METRO.
  3. Early Warning Signals And Threats
    • Threats refer to the external environment trends and changes that will hinder a firm’s performance.
    • Environmental awareness can help managers to identify various threats on time and serve as an

early warning signal

    • Indian firms can compete with foreign firms by improving the quality of the product, reducing the cost of production, engaging in aggressive advertising, and so on.

                                FMCG major GODREJ is competing with foreign giants like HUL, Pepsi

  1. Resources utilization
    • Environment is a source of various resources for running a business.
    • Business enterprise uses various resources called inputs like finance, machines, and raw materials
  2. Support In Planning And Policy Formulation
    • Environment brings both opportunities and threats for a business enterprise.
    • Its understanding can convert threats into opportunities.

Introduction and Feature & Importance of Planning


  1. Planning is deciding in advance what to do and how to do it. It is one of the basic managerial functions. Planning is the process of thinking before doing. Planning try to bridge the gap between where we are and where we want to go.


  1. Provides directions
    • Act as a guide for deciding what action should be taken and when
    • Without planning, employees would be working in different directions.
  2. Reduces the risks of uncertainty
    • Planning predicts advantages and disadvantages in future events and suggests suitable action.
    • Strength, Weakness, Opportunities and Threats are examine to determine the most suitable action
  3. Innovative ideas
    • Since planning is the first function of management, managers use new ways and means to achieve required goals
    • Managers use foresight, logical thinking and creativity to achieve goals
  4. Maintain standards for controlling
    • Provides standards against which actual performance is measured.
    • Controlling  makes the planning a base and compares actual performance with standards
  5. Enhances decision making
    • Make a choice from various alternatives.
    • The manager evaluates each alternative and selects the most suitable alternative
  6. Reduces wasteful activities
  • Clearly defined the activities and efforts of different divisions, departments and individuals.
  • Avoids confusion and misunderstanding to carry the work smoothly.

“Though planning is an important tool of management, yet it is not a remedy for all types of problems”. Do you agree with this statement? Give any five reasons in support of your answer.

Introduction and Organising Process.


Meaning: - Organizing is the process of defining and grouping the activities of the enterprise and establishing authority relationships among them.

Organizing is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority and establishing relationships for the purpose of accomplishing objectives.


Steps in the process of organizing:

  1. Identifying and dividing the work into manageable activities so that duplication can be avoided.
  2. Departmentalization/ departmentation is when activities of similar nature are grouped together.
  3. Assignment of duties to job positions.
  4. Establishing reporting relationships so that each individual knows who he has to take orders from and to whom he is accountable

Describe the steps involved in the process of Organizing.

  1. Identification and division of work:
    • One individual cannot do the entire work.
    • Therefore Work is divided into small tasks called job
    • So that  burden of work can be shared
    • The repetitiveness of work  brings speculation
  2. Departmentalization:
    • Activities similar in nature are grouped together on the basis of their interdependence
    • Departments are formed
    • Example ( quality control, purchase, inventory management can be placed in the production department)
  3. Assignment of duties:
    • Defining the work of different job positions (defining responsibility and authority)
    • Jobs specification is prepared showing the type of competence required. (Age, experience, Education, Skills)
  4. . Establishing reporting relationships:
    • Establishment Reporting Relationships means
    • Who will work under whom
    • Who will get the order from whom
    • Creation of superior-subordinate relationship

Feature & Importance of Organising


Importance of Organizing

  1. Specialization:
    • Due to the division of task, every person performs a particular task.
    • Repetitive performances give them experience and bring specialization.
  2. Effective administration:
    • Provides a clear picture of jobs and related duties. 
    • Reduces overlapping and confusion and brings effectiveness in administration.
  3. Expansion and growth:
    • Helps in the growth and diversification by adding new departments, employees, and products
  4. Growth of personnel:
    • Delegation reduces the workload of managers by assigning routine jobs to their subordinates.
    • Managers can concentrate on important tasks.
  5. Optimum utilization of resources:
  • Well defined job helps each employee to know their role and duties
  • It reduces duplication of work  and  prevents confusion
  1. Adaptation to change:
    • When any employee retires or quit
    • It is easy for a new employee to adjust quickly because the job profile is clearly defined.

Organisation structure


Organization Structure:-Defined as the relationships between people, work and resources and can be shown in the organizational chart.

Factors affecting organizational structure

  1. Job design:-Total work is divided into various jobs like sales, finance, production, etc  and the results expected from it
  2. Departmentation:-Jobs are grouped together to form departments on the basis of similar tasks like per unit  cost,   quality control under the purchase department
  3. Span of management:-No of employees that can be effectively managed by superior
    1. Narrow span:- when the size of the organization is large
    2. Wide-span: - when the size of the organization is small
  4. Delegation of authority:-Sharing of authority between the superior and subordinate and clearly specifying who is responsible for whom

Types of Organization Structures

  1. Functional structure and
  2. Divisional structure


Functional structure

  • In a functional organization, all identical works are placed together under one functional head.
  • For example, production, marketing, finance, and marketing are considered essential functions of a manufacturing enterprise.

Suitability: It is most suitable when the size of the organization is large, has diversified activities and operations require a high degree of specialization.


  1. Specialization (Occupational):-Employees perform similar tasks within a department and get knowledge in a specific field. Sales, production, etc.
  2. Promotes control and coordination Within a department because of similarity in the tasks
  3. Improves employee training: Training of employees is easier due to limited work
  4. Cost-effective Leads to minimize duplication of effort which results in economies of scale
  5. Equal importance to all departments Provides equal attention and importance to different functions (department).


  1. Functional Empires Functional head may give importance to their own departments and stop thinking about the interest of the organization.
  2. Limited Growth Functional heads do not get training for top management positions because they work in a particular area (like production or sale).
  3. Inter-departmental Conflicts Can arise when the interests of two or more departments are not the same or regarding sharing of resources
  4. Problem of Responsibility. Functional head is responsible for a particulars function and if some things go wrong it becomes very difficult to fix responsibility.


Divisional Structure: -Organization structure comprises separate business units or divisions. Each unit has a divisional manager responsible for the performance and who has authority over the unit.

Suitability:-Suitable for those business enterprises where a large variety of products are manufactured using different productive resources.


  1. Responsibility fixing as divisional heads is accountable for profits. Revenues and costs related to different departments can be easily identified and assigned to them.
  2. Initiative and flexibility because each division functions as an independent unit which leads to faster decision making.
  3. Specialization (Product) helps in the development of different skills in a divisional head and this prepares him for higher positions.
  4. Expansion and growth as new divisions can be added without interrupting the existing operations.


  1. Conflict May arise among different divisions regarding the allocation of funds
  2. Add-In Costs Since there may be a duplication of activities across products
  3. Difficulty in Employee Training Due to various products training employees is quite difficult.

Distinguish between Functional and Divisional structure

Formal & Informal organisation


Deliberately Planned By the Top Management to Achieve the Specified Objectives Through the Network of Authority Responsibility Relationship


  • Created deliberately by management.
  • Results in the creation of a scalar chain.
  • Extra emphasis on work than on interpersonal relationships among employees.
  • Assigned a specific job to each individual and a fixed authority.
  • Motives to organizational goals.


  1. Avoid duplication of effort as each member knows their duties.
  2. Responsibility can be fixed due to well established authority responsibility relationship
  3. Establish unity of command through a chain of command.
  4. Accomplishment of goals by providing a structure where each employee knows their role
  5. Stability to the organization by well-defined job and ensure growth and survival


  1. Talent and creativity of worker is reduced  due to rigid policies
  2. Rigid structures do not allow deviation due to fixed roles assigned to employees
  3. Inter-personal relationship gaps between persons issuing orders and subordinates following orders
  4. Procedural delays increase the time taken for urgent decision-making.


Informal Organization: -Complex network of social relationships which appear unexpectedly to fulfill social and human needs. Features

  • Created automatically without any purposeful efforts by the management.
  • Originates from within the formal organization as a result of personal interactions among employees.
  • Does not follow any fixed path of authority.
  • Employee's behavior is based on convenience  with no definite structure.


  1. Fast:-Information travels very fast as  there is no procedural and language barrier
  2. Add flexibility: - Serves the purpose not fulfilled by the formal organization.
  3. Social needs of the members are fulfilled and give them a sense of belongingness in the organization.
  4. Timely feedback Prescribed lines of communication are not followed and quick feedback gets from informal channels.


  1. Opposition The management may not be successful in implementing changes if the informal organization opposes them.
  2. Promotes groups: - Compels members to agree with the group expectations. This can be harmful  if the rule set by the group are against organizational interests.
  3. Spread rumors: - Due to the fast flow of information it can spread rumors which may work against the goodwill of the formal organization

staffing as part of Human Resource Management


Staffing as a part of Human Resource Management

There is a conflict on the subject of whether staffing is part of human resource management or is a separate managerial function. Many modern thinkers stress that staffing is a part of human resource management. Staffing includes only

  1. Training employees to improve their performance, developing their abilities,
  2. Introducing new employees to the organization,
  3. Placing the right person on the right job,

Human resource management is a wider term and includes in itself the following:

  1. Handling grievances and complaints.
  2. Analyzing jobs, collecting information about jobs to prepare job descriptions.
  3. Recruitment i.e., search for people
  4. Defending the company in lawsuits and avoiding legal complications
  5. Training and development of employees for efficient perfor­mance and career growth.
  6. Improving and Maintaining labor relations and union-management relations
  7. Make incentive plans and develop compensation
  8. Employee's welfare and Providing for social security

Conclusion: -So above discussion makes it clear that staffing is one of the parts of human resource management.


  1. With the emergence of the industrial revolution, trade union activities became very active.
  2. The trade union activities forced management to appoint a person who could act as a link between owner and persons.
  3. This resulted in the appointment of a labor welfare officer. His role was limited to the welfare of employees only.
  4. With the introduction of the factory system, a large number of laborers were employed under one roof.
  5. This resulted in the appointment of one more person who was given the responsibility of recruitment, selection and placement of persons. This person was known as a personnel officer.
  6. Due to the importance of human relation approach and the dynamic environment and changes taking place there arose the need for training and developing the employees to update their knowledge as human relation approach recognizes human factor as most important.
  7.  This requirement for human relations approach led to the replacement of the personnel manager to human resource manager.

Introduction and Feature & Importance of Staffing


Staffing: - Managerial function of filling and keeping filled the positions in the organization structure.


Importance for staffing

  1. Structure filling
    • Needed to fill the job positions created by organizational structure by putting right person on the right job.
  2. Improve the morale of the employees.
    • Improves job satisfaction and morale of employees through appraisal and fair remuneration for their contribution.
  3. Key to the effectiveness of other functions.
    •  As all the functions are performed by human beings and human being joins the organization by staffing function only.
  4. Specialization.
    • Today the staffing function is not a routine job but a specialized department in the organization. includes  manpower planning, recruitment, training, remuneration, etc
  5. Human importance.
    • Gives more importance to human elements by selecting, appraising and training the employees. Helps in obtaining competent personnel for various jobs.
  6. Assist in competing.
    • Two organizations can easily acquire some type of physical and financial resources but the organization with efficient staff can easily win over its competitor

Staffing process



  1. Manpower Requirement analysis
    • Estimate manpower requirements according to demand to get the right number of qualified people at the right time.
    • through
  • Workload analysis estimation of the number and types of human resources necessary for the performance of various jobs.
  • Workforce analysis to know whether a firm is understaffed, overstaffed or optimally staffed.
  1. Recruitment:
    • Process of searching for prospective employees and motivating them to apply for jobs in an organization by using internal and external sources.
    • Positive Step
  2. Selection:
    • Choosing from among the applications the most suitable candidates to fill up the vacancies in the organization by comparing and evaluating candidates’ qualifications required to perform the job.
    • Negative step
  3. Placement
    • Asking the candidates to occupy the position in the organization for which they have been selected.
  4. Orientation
    • Taking the new employees in the office/plant and introducing them to all employees to adjust themselves to the work environment
    • Telling the rules and policies of the organization.
  5. Training
    • Providing the required knowledge and skills relating to their jobs.
    • Every new employee needs training in different departments to have sufficient knowledge of the work
    • Increases workers’ knowledge, ability, and competence & make them more useful.
  6. Performance Appraisal
  • Systematic evaluation of the employee’s performance on their job in order to determine their contribution
  1. Promotion of employees
    • Employees should be given promotions to higher positions according to both ability and seniority.

9. Compensation

    • Which employee receives in exchange for their contribution to the organization
    • Compensation includes monetary and non-monetary incentives.

Introduction and Feature & Importance of Directing


Meaning:- Process of instructing, guiding, counseling, motivating and leading people in the organization to achieve its organization objectives


Characteristics of Directing

  1. Initiate’s action: While other functions like planning, organizing, staffing prepare a setting for action, directing start action in the organization.
  2. Continuous process: It takes place throughout the life of the organization due to changes in the organization's needs and objectives.
  3. Essential at every level of management: Every manager, from the top executive to supervisor performs the function of directing. (pervasive function)
  4. Starts from top to bottom: directing function required and recognized at all levels of management hierarchy. At the Lower level, it is the most, at the middle level less and at the top levels the least.

Importance of Directing

  1. Facilitates change: all organization operates in a changing environment. Direction facilitates organizational adjustment to cope with the changing condition through better communication and leadership.
  2. Initiate action: Supervisor through proper guidance and clarifying workers' doubts can help the worker to complete their work properly
  3. Leads  employees: Good leader tries to identify the hidden qualities of his employees and motivate them to work up to their full potential
  4. Means of motivation: Directing helps in motivating employees to work willingly to contribute their maximum efforts towards the achievement of organizational goals.
  5. Stability and balance: Managerial direction involves interpersonal communication, effective leadership and motivation, which help to maintain stability in the organization.

Principles of Directing

  1. Required communication: Managers should give clear instructions through various channels, and sure that subordinate understands their instructions clearly.
  2. Unity of Command: person should receive instructions from one superior only to avoid confusion
  3. Suitable direction technique: motivational methods should be used while directing the people based on subordinate needs, levels and attitudes
  4. Harmony of objectives: directing should convince the employee that  rewards and hard work  are complementary to each other by keeping in mind the objective of the organization
  5. Follow-through: Managers should follow instructions continuously so that their orders are being implemented accordingly.
  6. Offers Leadership: managers should act as a leader to influence their subordinates positively without disappointing them to work willingly
  7. Apply of informal organization: a manager should often use informal organizations for the fast decision making
  8. Maximum individual contribution: Directing methods must help every individual in the organization to contribute to his maximum for the organizational goals

Planning & Controlling


Relationship between Planning and Controlling:

Meaning: -Planning is deciding in advance what is to be done in the future (setting standards). Controlling measures the actual performance against standards and take corrective action if there is any deviation. Relationship

  1. Planning without controlling is meaningless and controlling is blind without planning: - Without a plan, there is no basis for controlling if the standards are not set in advance. Controlling measures the actual performance with standards and makes planning effective by taking corrective actions
  2. Planning is a thinking process and controlling is evaluative: - explain the path to achieve the objectives and controlling checks that decisions have been translated into action or not
  3. Both Planning and controlling are forward-looking: -.
  • Plans are prepared for the future called a forward-looking function.
  • Controlling examines past activities to find out deviations from the standard  is a backward-looking
  • Planning gets feedback and becomes better through controlling, as controlling suggests corrective measures through modification of plans

Conclusion - Both planning and controlling are inter related and interdependent

Introduction and Importance of Controlling


Controlling: - Controlling means that activities in an organization are performed as per the plans and if there is any difference then take immediate action.



Importance of Controlling

  1. Facilitating coordination in action:
    • Each department and employee performs a particular task.
    • Controlling coordinate the activities of various departments
  2. Accomplishing organizational goals:
    • Controlling measures progress towards the organizational goals and bring the deviations, if any, and take corrective action and ensure objectives are achieved.
  3. Accuracy of standards can be the judge
    • Work is performed as per predetermined standards and if there is any deviation immediate action is taken so that they do not occur again in the future.
  4. Motivation of employee
    • Every employee knows in advance what they have to do.
    • Employees performing as per targets  are rewarded/promoted get motivation
  5. Ensuring order and discipline:
    • Every employee is given targets and fixed work to maintain discipline.
    • They work as per rules and try to achieve the given targets within the fixed time

Elements of Directing



  1. Supervision
  2. Motivation
  3. Leadership
  4. Communication

Supervision and Motivation


Overseeing and observing the subordinates at work to check that work is according to the plan and policies. Foreman, Overseer, and Superintendent.

MOTIVATION:-Process of influencing human behavior to work willingly for achieving organizational goals by satisfying their needs through various monetary and non-monetary incentives.

Features of Motivation:

  1. Internal feeling:  Motivation is a desire of human being, which are internal and influence human behavior.
  2. Goal-directed behavior helps employees to improve performance and get their dreams fulfilled like promotion, high salary,
  3. Positive or negative:
    1. Positive motivations Provide positive rewards like an increase in pay, promotion, recognition, etc.
    2. Negative motivations use negative means like punishment, stopping increments, threatening, etc.
  4. Complex processes: Motivation methods depends from person to person and may have different effects on different persons

Importance of Motivation

  1. Brings peace and harmony: By fulfilling social needs tension and industrial disputes are reduced. Healthy and peaceful atmosphere brings harmony and teamwork to workplace
  2. Improves employee’s performance: Through monetary rewards, promotion, and recognition of work, management can get the cooperation of subordinates to contribute their best efforts towards the goals of the organization.
  3. Helps in organizational changes: In the fast-changing business environment, management convinces the employee to update their knowledge and skill to meet the challenges and employees are also ready to accept the changes.
  4. Alter negative attitudes of employees to positive attitudes: With suitable rewards, work recognition and positive organizational climate workers work with a positive attitude and forgot personal bitterness and disputes
  5. Reduce employee turnover: By getting incentives like bonuses,  employee stock options and perquisite employee work with the organization for a longer period and has reduced employee turnover

Process of motivation

  1. Unsatisfied need: - the starting point of motivation. For example, a person wants to earn a salary of Rs 60000 p.m. from the present salary of Rs 40000.
  2. Tension: - need is recognized tension will be created on how to increase the salary.
  3. Drive: -tensions force him to act to fulfill his need.
  4. Search behavior: - find different ways to satisfy needs.
    1.  Option 1st Remain in the firm work hard and get a promotion.
    2. Option 2nd Shift or join another organization offering a higher salary.
  5. Satisfied needs: - person chooses to shift to another firm and check that need has been satisfied or not.
  6. Reduction of tension: - when successfully satisfied needs he feels motivated and tension is reduced.

Maslow's Need Hierarchy Theory


His theory was based on human needs. He felt that within every human being, there exists a hierarchy of five needs. These are:

  1. Basic Physiological Needs: for survival in the hierarchy and include Hunger, Thirst, Shelter, and Sleep.
  2. Safety/Security Needs: includes
  • Physical security: includes protection against fire, accidents, disease, crime, etc.
  • Economical security: includes having a permanent job and money to fulfill basic needs permanently.
  • Social security: includes the need for security in old age, illness, disability, etc.
  1. Affiliation/Belonging Needs: Refer to affection, a sense of belongingness; acceptance and friendship can be achieved through teamwork and social interaction.
  2. Esteem Needs: desires of having self-respect and positive self-image and recognition, respect from others, etc. Can be achieved through good job titles, more challenging jobs, granting more authority
  3. Self Actualization Needs: desire to be being everything one is capable of being can be achieved through giving challenging jobs, risky decisions, encouraging creativity


  1. People’s behavior is based on their needs. Satisfaction with such needs influences their behavior.
  2. People’s needs are in hierarchical order, starting from basic needs to other higher-level needs.
  3. A satisfied need can no longer be motivated a person; only the next higher level need can motivate him.
  4. A person moves to the next higher level of the hierarchy only when the lower need is satisfied.

Financial Vs Non-Financial Incentives


Incentives: - They are the rewards or remuneration that employees received in consideration of the work and help in motivating them. Includes monetary and non-monetary incentives

Financial Incentives: They are monetary benefits paid in cash or kind or both. .It is generally used to motivate workers and non-managerial employees. Types

  1. Pay and allowances:
    • Salary is the major  monetary incentive
    • Includes basic pay, dearness allowance and also an annual increment in basic salary
  2. Productivity linked wage incentives:
    • Salary/wages are based on the performance to increase productivity at the individual or group level. Example.
      • 10% commission on sales of above Rs 5000000
      • 15% commission on sales above 1000000                 
  3. Bonus:
    • Incentives are offered in addition to the wages/salary of the employees.
    • May be paid in cash or kind.
    • Like Diwali gifts, holiday tours, cash reward
  4. Profit-Sharing:
    • Employees are responsible for higher profits
    • Companies provide some shares in the profits.
    • Motivates them for higher profits and contributes to an increase in profits.
  5. Co-partnership/ Stock option:
    • Offered company shares at a price that is lower than the market price.
    • Creates a feeling of ownership and encourages them for the growth of the organization.
  6. Retirement Benefits:
    • Employees are worried about life after retirement will there will be a source of income
    • Provident funds, pensions, and gratuity provide financial security to employees after their retirement.
  7. Perquisites (extra advantage.):
    • Gets free from employees and reduces employee turnover which
    • Includes allowances such as car allowance, housing, medical aid, and education for the children.

Non-Financial Incentives

  • They do not involve cash but satisfy ego and self-esteem.
  • They are generally used to motivate higher levels of management

Some of the important non-financial incentives are discussed below:

  1. Status:
  • Ranking of positions, good job title, separate cabin.
  • Fulfill Psychological, social and esteem needs.
  1. Career Advancement Opportunity:
    • Provide opportunities to employees to improve their skills and be promoted to higher-level jobs.
    • More on to a higher level.
  2. Job security:
    • Employees want their job to be secure.
    • Job security gives mental relief and reduces future worries
  3. Job Enrichment:
    • Job should include a greater variety of work content, require a higher level of knowledge and skill
    • Provide the opportunity for personal growth and work experience.
  4. Employee Recognition Programmers.

Means praise for good work by superiors to perform for future performance. Example

  • Congratulations on a good performance.
  • Displaying name on the notice board.
  • Certificate for best performance, mementos,
  1. Employee participation:
    • Employees should be encouraged to participate in management decisions.
    • If Good suggestions come from employees it should be accepted and implemented.
  2. Employee Empowerment:
    • More autonomy and powers to subordinates.
    • Managers feel proud and self-confident.
    • Managers learn to takes risky decisions within their powers.
  3. Organizational Climate:
    • Organization climate Distinguish the best organization from the normal organization.
    • Like better working conditions like green environment , canteen facilities, gym , crèche for children, consideration to employees

Nature of Management

Management as a profession

Profession: -An economic activity, which is conducted by a person, having specialized knowledge, acquired by a course of study and training for serving society.

  1. Service motive:
  • The motive of the legal and medical profession is to serve their client’s interests by rendering dedicated and committed service.
  • The basic purpose of management to help the organization achieve its goals by providing good quality products at reasonable prices, thereby serving society is increasing.
  •  So, presently this feature of the profession is not fully present in management.
  1. Well-defined body of knowledge:
    • All professions are based on a well-defined body of knowledge that can be acquired through instruction.
    • Management too is based on a systematic body of knowledge comprising well-defined principles. This feature of the profession is present in management.
  2. Ethical code of conduct:
    • Legal and medical professions are bound by a code of conduct that guides the behavior of its members. AIMA has devised a code of conduct.
    • But there is no statutory backing for this code. So, presently this feature of the profession is not present in management.
  3. Associations of Professionals:
    • Legal and medical professions are affiliated with a professional association like the bar council and medical council which regulates entry, and grants certificates of practice.
    • There is, however, no compulsion for managers to be members of such an association. So, presently this feature of the profession is not present in management.
  4. Restricted entry:
    • The entry to the above-stated profession is restricted through a prescribed qualification. But there is no restriction on anyone being appointed as a manager in any business enterprise.
    • So, presently this feature of the profession is not present in management.

Conclusion: -The above discussion shows that management does not satisfy all the criteria of a profession. Management is a profession but not a fully-fledged or a true profession.

Management as an Art

The skillful and personal application of existing knowledge to achieve desired results is called art’. In the light of this statement, describe whether management is an art or not.

Ans. “The skillful and personal application of existing knowledge to achieve desired results is called art”. Management is an art because of the following reasons:

  1. Personalized application:
  • Two managers use theoretical knowledge of management in totally different ways, like two singers or two painters.
  • In management too, a manager applies his acquired knowledge in a personalized and unique manner.
  • Students of management also apply these principles differently depending on how creative they are after long practice
  1. Existence of theoretical knowledge:
  • For example, literature on dancing, public speaking, acting, or music is widely recognized
  • As in art, in management too, there is a lot of literature available in various areas of management which the manager has to specialize in like finance, marketing, etc.
  1. Based on continuous practice and Creativity:
  • Like any other art, a manager after studying various situations formulates his theories for use in a given situation. This gives rise to different styles of management
  • Management satisfies these criteria as a manager gains experience through regular practice and becomes more effective.

Management is an art because it has various features of art

Management as a Science

Science: - Systematized body of knowledge that explains certain general truths or the operation of general laws

Ans. Yes, Management is a science but not an exact science. Because of the following reasons:

  1. Based on observation and experimentation:
    • Like science, management principles are derived through observation and repeated experimentation.
    • However, management deals with a human whose behavior is difficult to understand and is not capable of being accurately predicted.
    • Therefore, management can be called an inexact science or a social science
  2. Universal validity:
    • Principles of management like principles of pure science provide managers with certain standardized techniques that can be used in different situations.
    • However, since the principles of management have to be modified according to a given situation, their application and use are not universal. So, this feature of science is not fully present in management
  3. Systematized body of knowledge:
    • Like science, management is a systematic body of knowledge with theories and principles that have developed over a while.
    • So, this feature of science is present in management.

Objectives & Levels of Management

Levels of Management

Meaning:Every individual in the hierarchy is responsible for the successful completion of a particular task. Authority-responsibility relationship binds individuals as superiors and subordinates Give rise to different levels in an organization.

Top-level management:- Consists of the Board of Directors, Chief Executive and departmental heads.


  • Complex and stressful, demanding long hours and commitment to the organization.
  • Analyze the business environment and its implications for the survival of the firm.
  • Responsible for the welfare and survival of the organization.
  • Decide long-term goals of the organization and strategies for their achievement.

Middle level management:-Consists of departmental managers, divisional heads.


  • Making manpower planning to see that their department has the necessary personnel.
  • Assign necessary duties and responsibilities to them.
  • Co­-operate with other departments for smooth functioning of the organization.
  • Responsible for all the activities of first-line managers.
  • Outlook the policies framed by top management.

Operational management:-Consists of superintended, supervisors, section officers etc.


  • Solving workers’ problems and complaints, ensuring proper working environment and safety of workers, inviting.
  • The link between workers and middle-level managers, creating better human relations with workers.
  • Instructions of the middle management to the workers are passed.
  • Maintain Quality of output, wastage of materials is minimized and safety standards are maintained.

Objectives of Management

  1. Social objectives:
    • Using environmental friendly methods of production.
    • Giving employment opportunities to the disadvantaged sections of society.
    • Right quality goods should be provided to customers.                           
  2. Organizational Objectives:
    • Survivalto survive, an organization must earn enough revenues to cover costs, reducing wastage.
    • Profit: essential incentive for the successful operation of the enterprise and the reward for bearing the risks.
    • Growthincreasing sales volume, increase in the number of employees, the number of products or the increase in capital investment, etc.
  3. Personal objectives:
    • Management try to provide like good salary and a good working environment.
    • Chances of growth, promotion to an employee.
    • Good working conditions should be provided at the workplace.
    •  Employees should be rewarded for their good and hard work.

Functions of Management

Process means: - The activities that management performs to get things done with its functions like (POSDC).

  1. Planning: - This means setting goals in advance and developing a way of achieving them efficiently and effectively.
  2. Organizing:-function of assigning duties, grouping tasks, establishing authority and allocating resources required to carry out a specific plan.
  3. Staffing: - Aspect of management is to make sure that the right people with the right qualifications are available at the right places and times to accomplish the goals of the organization.
  4. Directing:- Involves leading, influencing and motivating employees to perform the tasks assigned to them. Involves leading, influencing and motivating employees to perform the tasks assigned to them.
  5. Controlling: - the management function of monitoring organizational performance towards the attainment of organizational goals.

Coordination-The essence of Management

Coordination: -The process by which a manager matches the activities of different departments is known as coordination. Coordination is the force that binds all the other functions of management.

Nature of Coordination

  1. Pervasive function:
    • Coordination is required at all levels of management due to the interdependent nature of activities of various departments.
    •  Without Coordination, there will be duplicity and confusion instead of harmony and integration of activities
  2. Responsibility of all managers:
    • Top-level managers coordinate with the middle level to ensure that the overall policies for the organization are duly carried out which in turn coordinates with both the top level and first-line managers.
  3. Integrates group efforts:
    • Coordination unites diverse interests into purposeful work activity and gives a common focus to a group effort.
    • It gives a common focus to a group effort to ensure that performance is as it was planned and scheduled
  4. Continuous process:
    • Coordination is not a one-time function but a continuous process
    • Coordination is all-time process that begins at the planning stage and continues till controlling.
  5. Ensures unity of action:
    • The purpose of coordination is to secure unity between departments and ensures that all action is aimed at achieving the goals of the organization.
    • It acts as the binding force between departments and ensures that all action is aimed at achieving the goals of the organization.
  6. Deliberate function:
    • The manager coordinates the efforts of different people in a mindful and planned manner so that the members of departments work willingly and cooperate.
    • Even where members of a department willingly cooperate and work, coordination gives direction to that willing spirit.

Importance of Coordination

  1. Growth in size:
    • As organizations grow in size, the number of people employed by the organization also Increases.
    • All individuals differ in their habits of work, background, approaches to situations and relationships with others
    • It becomes necessary to ensure that all individuals work towards the common goals of the organization through coordination
  2. Functional differentiation:
    • Functions of an organization are divided into departments, divisions and sections like finance, production, marketing, or human resources.
    • All these departments may have their own objectives and policies.
    • The process of linking the activities of various departments is accomplished by coordination.
  3. Specialization:
    • Modern organizations are famous for a high degree of specialization arising out of the Complexity of modern technology and the diversity of tasks to be performed.
    • This often leads to conflict amongst different specialists as well as others in the organization.
    • Therefore, some coordination is required by an independent person to reconcile the differences in approach, interest or opinion of the specialists

Henri Fayol's POM

Fayol’s principal

  1. Authority and Responsibility:
    • Authority refers to the right of an individual to command his subordinates.
    • Responsibility is the obligation of a subordinate to perform the assigned duty
    • Both should go side by side and should be well balanced.
    • A manager should have the right to punish a subordinate for willfully not obeying a legitimate order but only after sufficient opportunity has been given to a subordinate for presenting her/his case
  1. Centralization and decentralization
  • Decision-making authority is retained by higher management levels
  • Generally exists in a smaller organization
  • Process of giving authority at the lowest level of management to take decisions within their powers
  • Suitable for a large organization and complex organization
  1. Discipline
  • Discipline is the obedience to organizational rules and employment agreements that are necessary for the working of the organization.
  • Discipline requires good superiors at all levels, clear and fair agreements and careful application of penalties
  • That the workers and management both honor their commitments without any injustice towards one another
  1. Division of work: -
        • Every task should be divided into the small task and assigned to the right person who is capable of doing that job. 
        • A person doing the same job will over time specialize in that job
        • In business work can be performed more efficiently if it is divided into specialized tasks; each performed by a specialist or trained employee. This results in efficient and effective output
  1. Espirit –de-corps
  • There should be cooperation and teamwork among the members of an organization.
  • Management should promote teamwork, especially in large organizations because otherwise, Objectives would be difficult to realize.
  • A manager should replace I’ with ‘We’ in all his conversations with workers to encourage team spirit. This will give rise to a spirit of mutual trust and belongingness among team members. It will also minimize the need for using penalties.
  1. Equity:
  • Management should be kind, fair and impartial in its dealing with its subordinates.
  • Fayol does not rule out the use of force sometimes.
  • For example, there should be no discrimination about the position, sex, age, etc while granting medical leave to the employees
  1. Initiative
  • Workers should be encouraged to develop and carry out their plans for improvements
  • Freedom to think and execute a plan is known as initiative.
  • But it does not mean going against the established practices of the company for the sake of being different.
  • A good company should have an employee suggestion system whereby initiative/suggestions which result in substantial cost/time reduction should be rewarded
  1. Order
  • People and materials must be in suitable places at appropriate
  • Implies the right man to the right job and the right material in the right place.
  • if there is a fixed place for everything and it is present there, then there will be no hindrance in the activities of business/ factory
  1. Fair remuneration:
  • The employees should be paid fair wages, which should give them at least a reasonable standard of living.
  • It should be within the paying capacity of the company and the capability of the employee.
  • Organization Decide the most reasonable method of calculating wages
  1. Scalar Chain.
  • Chain of superiors ranging from top management to the lowest rank
  • There should be a clear line of authority from top to bottom linking all managers at all levels.

Gang plank

  • Subordinates may contact a superior or his superior in case of an emergency, disregarding the hierarchy of control.
  • This is a shorter route and has been provided so that communication is not delayed.
  • However, the immediate superiors must be informed about the matter

  1. Stability of Tenure
  • Employees should not be shifted from their position frequently.
  • It takes time for an employee to get used to his work and he cannot give useful service if he is removed before he gets familiar with the work assigned to him
  • They should be given reasonable time to show results.
  • Otherwise, it will create instability/insecurity among employees. They would tend to leave the organization.
  1. Subordination of individual interest to group/general interest
  • The management must put away personal interests and put company objectives first.
  •  Interests of goals of the organization must overcome the personal interests of individual’s pressure on the company.
  • A manager can ensure this by her/his excellent behavior.
  • A manager should not misuse her/his powers for individual/ family benefit at the cost of the larger general interest of the workers/company.
  1. . Unity of command
  • Employee should receive orders from only one superior.
  • If he gets orders from more than one superior at a time then he will be confused as to which superior’s orders should be carried out first.
  • Dual subordination should be avoided. This is to prevent confusion regarding tasks to be done
  1. Unity of direction:
  • There should be “one head and one plan for a group of activities having the same objective to pursue.”
  • An organization or group having different plans and more than one head cannot achieve the desired results.

Taylor's POM

Taylor’s Contribution to Scientific Management

  1. Science not Rule of Thumb:
  • It states that there was only one best method to maximize efficiency.
  • This method can be developed through scientific study and analysis of each element of a job and should substitute ‘Rule of Thumb’.
  •  This standard method should be followed throughout the organization. Involved investigation of traditional methods through work-study, and develop one best method to maximize efficiency
  • Adopt the best practices to  save human energy, wastage of time and materials 
  • Example - Sending information by e-mail instead of a post is more effective
  1. Harmony, Not Discord:
  • There should be absolute understanding and harmony between workers and management.
  • Both should realize that each one is important
  • Management should share the gains of the company with the workers.
  • In return, workers should work hard with discipline and loyalty
  • Prosperity for the employer cannot exist for a long time unless it is accompanied by prosperity for the employees and vice versa’
  1. Cooperation, Not Individualism:
  • Extension of principle of ‘Harmony not discord.
  • Competition should be replaced by cooperation.
  • Management should award workers for giving valuable suggestions and involves in decision making
  • Workers should avoid making unreasonable demands and strikes
  • The employer takes care of the needs of employees, which would prevail as in the case of Japanese companies.
  1. Development of Each and Every Person to His or Her Greatest Efficiency and Prosperity:
  • Industrial efficiency depends upon the efficiency of workers. Workers' efficiency depends upon proper training and their selection
  • Employees with the required qualification and experience should be selected.
  • Provide training to the selected employees to make them fit and confident in doing their duties.
  • Assign work that suits her/his physical, mental and intellectual ability
  • Efficient employees would produce more and earn more. This will ensure the greatest efficiency and prosperity for both company and workers

Studies of Taylor

Functional Foremanship:-Separation of planning and execution functions which is extended to the lowest level of the shop floor

  • Extension of the principle of division of work.
  • Each worker will have to take orders from the eight foremen
  • Under the factory manager, there was planning in charge and production in charge.

Planning in charge: In the planning officer, four foremen exist according to Taylor.

  1. Route clerk: specify the route of production
  2. Card and instruction clerk:  issue various instructions to workers to carry on the job
  3. Time and cost clerk:  fix the time for starting and completing of job and prepares a cost sheet.
  4. Disciplinarian:  maintains discipline among the employee.

Production in charge: In the production officer four specialist bosses are existing.

  1. Gang boss: makes arrangements for machinery, material, tools etc. for the job
  2. Speed boss: checks the speed of work and investigates the cause for delays and removes them.
  3. Repair boss: maintains the machinery and other equipment and makes proper repairs.
  4. Inspector: checks the quality of work.

Standardization of Work

Standardization refers to the process of setting standards for every business activity. The company establishes a standard such as product dimensions, size, quality and then the company produces products based on that standard

Process of setting standards for every business activity; it can be standardization of process, raw material, time, product, machinery, methods, or working conditions.

The objectives

  1. Establish standards of quality in materials.
  2. Establish standards of performance of men and machines.
  3. To reduce a given line or product to fixed types, sizes and characteristics.

Simplification of Work

  • Aims at removing unnecessary varieties, sizes and dimensions
  • Simplification aims at eliminating unnecessary diversity of products.
  • It results in savings of costs on labor, machines and tools.
  • It implies reduced inventories, fuller utilization of equipment and increasing turnover.

Method Study

  • Meaning: -find out one best way of doing the job out of various methods
  • Objectives The objective of the whole exercise is to minimize the cost of production and maximize the quality and satisfaction
  • Benefits: - Minimize the cost of production and maximize the quality of the customer
  • Instrument used: process charts and operations research etc

Motion study

  • Meaning:-Motion study refers to the study of movements like lifting, putting objects, sitting and changing positions etc., which are undertaken while doing a typical job. Unnecessary movements are sought to be eliminated so that it takes less time to complete the job efficiently.
  • Purpose:- Possible to find out  motions that are productive  and which are unproductive
  • Benefits:- Unnecessary movements are can be removed so to complete the job efficiently
  • Instruments used:- stopwatches and various symbols and colors

Time Study

Meaning:-Analysis the time taken by each worker to finish a standard

Objective:-Determine number of workers to be employed Determine cost of labor Frame suitable incentive schemes

Benefits: - improving the efficiency of workers by creating time awareness

Example - standard time 1 hour @ 3 boxes, total working hour 7 hour

Instruments used: - stopwatches

Fatigue study

  • There should be proper rest intervals between two work spans.
  • A person will feel tired physically and mentally if she/he does not rest while working.
  • Help workers regain stamina and work again with the same capacity.
  • There can be many causes for fatigue like long working hours, doing unsuitable work, having cordial relations with the boss or bad working conditions, etc.

Differential Piece Wage System

  • Efficient workers are paid at a higher rate for their entire output and a less efficient worker is to be paid less when the production falls below the standard.


  • Standard output per day = 20 units
  • Wage rate for efficient workers =  Rs 50 for standard output/more than standard

Wage rate for inefficient workers.

Fayol versus Taylor-A comparison

Dimensions of Business Environment

Enterprises that continuously monitor the environment and adopt suitable business practices are the ones that not only improve their present performance but also continue to succeed in the market for a longer period. Businesses must get the resources to convert input into outputs.

Macro Business Environment

Economic environment

  • Consist of Interest rates, inflation rates, changes in disposable income of people; stock market indices and the value of rupee
  • For Example, in the case of construction companies and automobile manufacturers, low longer-term rates are beneficial because they result in increased spending by consumers for buying homes and cars on borrowed money.
  • Rise in the disposable income of people creates an increasing demand for products.
  • High inflation rates generally result in constraints on business enterprises as they increase the various costs of business such as the purchase of raw materials or machinery and payment of wages and salaries to employees.

Social environment

  • Include the social forces like customs and traditions, values, social trends, society’s expectations from business, etc.
  •  For example, the celebration of festivals provides opportunities for greetings card companies, sweets or confectionery manufacturers, etc
  • Social trends present various opportunities and threats to business enterprises.
  • For example, the health-and-fitness trend has become popular among a large number of urban dwellers. This has created a demand for products like organic food, diet soft drinks, gyms, bottled (mineral) water and food supplements.
  • This trend has, however, harmed business in other industries like dairy processing, tobacco and liquor.

Technological Environment:

  • Includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business.
  • .Airline companies have Internet and World Wide Web pages where customers can look for flight times, destinations and fares and book their tickets online.
  • Shifts in demand for electric engines, from fountain pens to ballpoint, from propeller airplanes to jets, and from typewriters to computer-based word processors, have all been responsible and creating new business.

Political Environment:

  • Political conditions such as general stability and peace in the country and specific attitudes that elected government representatives hold towards business.
  • On the other hand, there may be uncertainty in business activities due to political unrest and threats to law and order.
  • Political stability, thus, builds up confidence among business people to invest in long-term projects for the growth of the economy.
  •  Similarly, the attitudes of government officials towards business may have either positive or negative impacts on business.
  • For example, even after opening up our economy in 1991, foreign companies found it extremely difficult to cut through the bureaucratic red tape to get permits for doing business in India.

Legal Environment:

  • Various legislation passed by the Government administrative, orders issued by government authorities, court judgments as well as the decisions rendered by various commissions and agencies at every level of the government— center, state or local.
  • Adequate knowledge of rules and regulations framed by the Government is a requirement for better business performance.
  • Non-compliance with laws can land the business enterprise into legal problems.
  • Knowledge of Companies Act 1956 Consumer Protection Act, 1986, Competition Act, 2012-2013
  • For example, the advertisement of alcoholic beverages is prohibited. Advertisements, including packets of cigarettes, carry the statutory warning ‘Cigarette smoking is injurious to health’.


  1. Liberalizing the Indian business and industry from all unnecessary controls and ending the license-permit-quota raj.
  2. Freedom in fixing the prices of goods and services.
  3. Abolishing licensing requirements in most industries.
  4. Reduction in tax rates and lifting of unnecessary controls over the economy.
  5. Making it easier to attract foreign capital and technology to India.
  6. Simplifying procedures for imports and experts.


  • Giving a greater role to the private sector and a reduced role to the public sector.
  • To improve the efficiency of PSUs by giving them autonomy
  • Transferring the public sector enterprises to the private sector by disinvestment


  • Mixing the economy of the country with the world economy.
  • Creation of networks and activities to go beyond economic, social and geographical boundaries.
  • Increased level of interaction and interdependence among the various nations of the global economy.

Impact of Government changes on Business & Industry

Impact of Government Policy Changes on Business and Industry

  1. Market orientation
  • Earlier firms used to produce first and go to the market for sale later.
  • Now firms have to study and analyze the market first and produce goods according to customer needs
  • McDonald TIKKI Chat in Indian context
  1. Increasing competition:
  • New industrial licensing and entry of foreign firms have increase competition for Indian firms in service industries like telecommunications, airlines, banking, and insurance.
  • Maruti is facing competition from both Tata Motors and Hyundai
  1. Reduction of budgetary support to the public sector :
  • The central government’s budgetary support for financing the public sector  has declined
  • To survive and grow, PSU’s will have to be more efficient and generate their resources
  1. Important for change:
  • After 1991, firms have to continuously modify their operations through mergers, acquisitions, takeovers to grow
  • Understanding the needs of Indian customers CoKe takeover thumbs up, Limca from
  1. Need for developing human resources:
  • Need for developing human resources: Indian enterprises have suffered for a long with inadequately trained personnel.
  • The new market conditions require people with higher competence and greater commi­tment. Hence the need for developing human resources.
  1. Demanding customers:
  • With awareness and Increased competition in the market
  • Customers have a wider choice in purchasing better quality goods and services.
  • Price war in the telecom sector
  1. Adopt the Rapidly changing technological environment:
  • Increased competition forces the firms to develop new ways to survive and grow in the market. New technologies make it possible to improve machines, processes, products and services.
  • The rapidly changing technological environment creates tough challenges before a smaller firm



  • The Government of India, made an announcement on November 8, 2016 with thoughtful implications for the Indian economy.
  • The two largest denomination notes,   Rs 500 Rs 1,000, were ‘demonetized’ with immediate effect, ceasing to be legal tender except for a few specified purposes such as paying utility bills.
  • This led to eighty six per cent of the money in circulation invalid. The people of India had to deposit the invalid currency in the banks which came along with the restrictions placed on cash withdrawals.

Aim of demonetization

  • To curb corruption,
  • Counterfeit the use of high denomination notes for illegal activities; and especially the accumulation of ‘black money’ generated by income that has not been declared to the tax authorities.


  1. Tax administration measure. Cash holdings arising from declared income was readily deposited in banks and exchanged for new notes. But those with black money had to declare their unaccounted wealth and pay taxes at a penalty rate.
  2. Check on tax evasion: - Demonetization is also interpreted as a shift on the part of the government indicating that tax evasion will no longer be tolerated or accepted.
  3. Channelizing savings into the formal financial system. Though, much of the cash that has been deposited in the banking system is bound to be withdrawn but some of the new deposits schemes offered by the banks will continue to provide a base loan, at lower interest rates.
  4. Create a less-cash or cash-lite economy:-  channeling more savings through the formal financial system and improving tax compliance. Though there are arguments against this as digital transactions require use of cell phones for customers and Point-of-Sale (PoS) machines for merchants, which will only work if there is internet connectivity.

Impact of demonetization


Limitations of Planning


  1. Time-consuming process:
    • Sometimes top-level management consumes a lot of time in formulating the plans, as a result of which very less time is left for them to implement these plans.
  2. Involves huge costs:
    • Huge cost is involved in the formation of plans.
    • This cost is in terms of money and time. For example, a lot of time is involved in scientific calculations to ascertain facts and figures and to check the accuracy of facts while formulating a plan.
    • Likewise, a lot of money was spent on boardroom meetings, discussions with experts and preliminary investigation to find out the effectiveness of the plans.
    • Moreover sometimes are cost incurred in formulating plans is higher than the benefits received from these plans.
  3. May not work in a dynamic (changing) environment:
    • The various forces of the business environment like social, political, technological and legal keep on changing and the organization has to adapt themselves to these changes.
    • Thus, it becomes very difficult to forecast when there is a change in government policies, natural calamity, political instability in the country, etc.
  4. Inflexibility
    • Usually in an organization planning function is performed by the top management and the rest of the members are required to implement these plans.
    • As a result, middle management and other members are neither allowed to deviate from plans nor granted authority to act on their own.
    • Hence most of their initiative and creativity in them gets reduced.
  5. Does not guarantee success:
    • An organization is successful when the plans are effectively drawn and implemented.
    • Managers are in the habit of depending on previously tried and tested successful plans, but this practice sometimes does not work and may lead to failure instead of success.

Planning process


  1. Setting Objectives:
    • End  goals  for which  organization works
    • Should be well defined, specific, quantitative, and realistic.
    • Maximum people must  participate in the objective of the setting process
  2. Developing Premises:
    • Consists of forecasting future conditions likely to have an influence on goals like demand for good cost of raw materials, state of technology, govt. Policies etc.
    • Known as planning premises.
  3. Identifying alternative courses of action:
    • Many ways to act and achieve objectives and alternative courses of action should be identified.
    • Action can adapt by involving more people and sharing their ideas.

                        Sales can be increased by either reducing the price, improving quality, or more promotions.

  1. Evaluating alternative courses:
    • The positive and negative aspects of each proposal need to be evaluated according to the need of the organization

                        Example: - Reducing price will affect revenue

  1. Choosing an alternative:
      • Best plan has to be adopted and implemented.
      • Would be the most possible, profitable and with the least negative consequences.
      • Understanding customer needs can be a better option.
  2. Implement the plan:
    • Concerned with putting the plan into action
    • For example, to increase sales then more advertisement and sales promotional methods are required
  3. Follow-up action:
    • To see whether plans are being implemented and activities are performed according to schedule.
    • Once a plan is implemented it requires continuous monitoring



Delegation:-Delegation is the process a manager shares some of his routine work with his subordinates so that he can concentrate on an important issue which requires his active role.

  • Note: -The manager still is accountable for the performance of the assigned tasks.
  • The authority granted can be taken back and re-delegated to another person.

Elements of Delegation


  1. Right of an individual to command his subordinates and to take action within his powers
  2. Flows from top to bottom, i.e., the superior has authority over the subordinate.
  3. Maintain order in the organization by giving the managers the right to give directions.
  4. Determines the superior-subordinate relationship wherein the superior communicates his decision to the subordinate, expecting fulfillment from him.


  1. The obligation of a subordinate to properly perform the assigned duty.
  2. Arises from a superior-subordinate relationship because the subordinate is bound to perform the duty assigned to him by his superior.
  3. Flows upwards i.e., a subordinate will always be responsible to his superior.
  4. Delegation the authority must be equal to the assigned responsibility. If authority granted is more than responsibility, it may lead to misuse of authority, and if responsibility assigned is more than authority it may make a person ineffective.

Accountability (answerability):

  1. Means being answerable for the final outcome. Once authority has been delegated and responsibility accepted, one cannot refuse accountability.
  2. Cannot be delegated and flows upwards i.e., a subordinate will be accountable to a superior for satisfactory performance of work.
  3. Generally forced through regular feedback on the amount of work done.

Differences in the elements of delegation

“Authority can be delegated but responsibility cannot”. Explain the statement in brief–

According to the principle of absolute responsibility, authority can be delegated but responsibility and accountability cannot be delegated by a manager. The manager is responsible or accountable to his own superior for both, the tasks that he has assigned his subordinates and the acts of his subordinates. In other words, only authority can be delegated but responsibility and accountability are absolute.

For example: if a foreman fails to get 100 units produced by the workers on any day, he is responsible to his superior. He cannot escape by saying that the workers were at fault. Similarly, the factory manager remains responsible to his superior for the work he entrusted to this foreman. He cannot escape from the responsibility by passing on the blame to his foreman.

Importance of delegation

  1. Basis of management hierarchy:
    • Establishes superior-subordinate relationships, which are the basis of the hierarchy of management which in long run facilitates decentralization
  2. Effective management:
    • By delegating routine tasks managers can concentrate on important tasks and concentrate in new areas.
  3. Coordination:
    • Help to define the powers, duties and answerability related to the various positions in an organization
    • Which reduces duplication of effort
  4. Assist In growth:
    • Subordinate gets to experience new areas for the work assigned to them
    • When new products and new departments are created they can be appointed.
  5. Motivation of employees:
    • Trust on the part of the superior and commitment on the part of the subordinate motivate the subordinate to perform better and improve his confidence
  6. Employee development:
    • Employees get opportunities to  gain experience and develop them for higher positions



Decentralization:-delegating authority at all management levels and all departments of the organization to take decisions and appropriate action on tasks assigned to them within their powers.

Centralization:-Decision-making authority is retained by higher management levels

 Difference between delegation and decentralization

Importance of decentralization

  1. Decision making becomes fast
    • Decisions are taken to the nearest points of action and there is no requirement for approval from many levels
    • Information sent is cleared because it doesn’t have to go through long channels
  2. Relief to top management
    • Reduces direct supervision by a superior
    • Top management can concentrate on major policy decisions instead to day to day work
  3. Enhance initiative among subordinates
    • Promotes confidence among the subordinates due to freedom to make their own decisions
    • Brings more creativity and new ideas to the organization.
  4. Assist in growth
    • Awards greater independence to divisional or departmental heads.
    • This allows them to develop team spirit and a sense of competition amongst the departments.
  5. Managerial talent for the future develops
    • Gives employees a chance to prove their abilities in their own working
    • Helps to develop multi-skills talents due to greater autonomy
  6. Smooth control
    • Decentralization evaluates performance at each level and can be accountable for their results.
    • Organization goals can be effectively achieved

Elements of Staffing



  • Process of searching for future employees and motivating them to apply for jobs in an organization by using internal and external sources.
  • Positive Step

Internal and External Recruitmnet



  1. Transfers:
  • Horizontal shifting of an employee from one job to another, one department to another without a change in the responsibilities and status of the employee.
  • Shortage of personnel in one branch may be filled.
  • Useful in the training of employees for learning different jobs
  1. Promotions:
    • Vertical shifting an employee to a higher position, carrying higher responsibilities, status and pay
    • Improve the motivation, loyalty and satisfaction level of employees.

Merits of Internal Sources

  1. Simplifies the process of selecting existing candidates working in the enterprise can be evaluated more accurately because they  are  known to the working environment of the organization
  2. avoids orientation:- Employee people recruited from within the organization do not need induction training
  3. Facilitates Motivation A promotion at a higher level may lead to a chain of promotion at lower levels in the organization. This motivates the employees to improve their performance
  4. Economical there is no cost on advertisement and selection process
  5. Reduces imbalance Transfer helps in shifting the workforce from the surplus departments to those where there is a shortage of staff

Limitations of Internal Sources

  1. Promote laziness employees may become lazy if they are sure of time-bound promotions.
  2. Less chance to fresh talent Scope for the introduction of fresh talent is reduced.
  3. Avoid Competition – there is no competition from outsiders because all the vacancy is filled internally
  4. Narrow scope: - A new enterprise cannot use internal sources of recruitment. No organization can fill all its vacancies from internal sources.
  5. Trim down productivity regular transfers of employees may often reduce the productivity of the organization.


  1. Direct Recruitment:
  • Notice is placed on the notice board of the firm
  • Unemployed people gather outside on the specified date and are selected on the spot
  • Generally for casual vacancies of unskilled or semi-skilled jobs.
  • Economical method
  1. Casual Callers:
  • Many organizations keep a database of unwanted applicants with them
  • A list of such candidates can be prepared and can be screened to fill the vacancies as they arise.
  • Economical method
  1. Advertisement:
  • Used when a wider choice is required by using  electronic and print media
  • More information about the organization and job can be given in the advertisement.
  1. Employment Exchange:
  • Run by the Government for unskilled and skilled jobs.
  • Compulsory notification of vacancies to employment exchange is required by law.
  • Economical method
  1. Placement Agencies and Management Consultants:
    • Placement agencies provide a nationwide service.
    • Collect the bio-data of a large number of candidates and recommend suitable names to their clients.
    • Charge fee for their service.
  2. Campus Recruitment:
    •  Colleges and institutes of management and technology have become a popular source of recruitment for technical, professional and managerial jobs.
    • Organizations maintain close contact with the universities and management institutes to recruit qualified personnel.
  1. Recommendations of Employees:
    • Applicants are introduced by present employees, or their friends and relatives.
    • Such applicants are expected to be good employees because their background is sufficiently known.
  2. Labor Contractors.
    • Labor contractors maintain close contact with a large number of laborers
    • They Provide the required number of unskilled workers at short notice.
  3. Web Publishing:
  •    Internet is now the fastest source of recruitment.
  •   Certain websites like and provide information about both candidates and recruiters.

Merits of External Sources

  1. Wider Choice: When vacancies are advertised a large number of applicants from outside the organization apply.
  2. Attract Experienced Personnel: Management can attract more qualified and trained people to apply for vacant jobs in the organization.
  3. New Talent:  External recruitment provides wider choice and brings new talent to the organization.
  4. Top performance Existing staff has to compete with the outsiders. They will work harder to show better performance.

Limitations of External Sources

  1. Lengthy process: The selection process and orientation process is time-consuming.
  2. Expensive process: A lot of money is spent on the advertisement and processing of applications.
  3. Dissatisfaction among existing staff: May gives dissatisfaction and frustration among existing employees as their chances of promotion are reduced.



Selection: Choosing from the applications the most suitable candidates to fill up the vacancies in the organization by comparing and evaluating candidates’ qualifications required to perform the job.

Process of Selection

  1. Preliminary Screening: Candidates not fulfilling minimum requirements are not considered further based on the information supplied in the application forms and are sent a letter of regret.
  2. Selection Tests: An employment test is to measure certain characteristics of individuals. Various test are
    1. Intelligence Tests: an indicator of a person’s learning ability or the ability to make decisions and judgments.
    2. The aptitude test: is a measure of an individual’s potential for learning new skills.
    3. Personality Tests: provide clues to a person’s emotions, reactions, maturity and value system, etc.
    4. Trade Test: Measure the existing skills of the individual. They measure the level of knowledge and proficiency in the area of professions or technical training.
    5. Interest Tests: Know the interests or involvement of a person in a job
  3. Employment Interview:
    • Interview is a formal, in-depth conversation to evaluate the applicant’s suitability for the job.
    • The role of the interviewer is to ask job-related and other general questions.
  4. Reference and Background Checks:
  • Employers may ask for names, addresses, and telephone numbers of references to verify and get additional information about an applicant.
  • Previous employers, known persons, teachers and university professors can act as references.
  1. Selection Decision:
  • The final decision has to be made from among the candidates who pass the tests, interviews and reference checks.
  1. Medical Examination:
  • In certain jobs, candidates are required to get compulsory physical and mentally fitness certificates. Like defense services, astronauts.

Job Offer:

    • Applicant who has passed all the barriers is given a letter of appointment.
    • Contains a date to report on the job.
  1. Contract of Employment: Contains two important Documents
      • Attestation form:- Contains certain essential details about the candidate for future             reference
      • Contract of employment:-includes basic information like Job Title Duties, Responsibilities, allowances, hours of work, termination of employment, etc.



The ability of an individual to maintain good interpersonal relations with followers and motivate them to contribute to achieving organizational objectives.

Importance of Leadership

  1. Creates confidence: creates confidence among individuals to recognize their qualities and capabilities.
  2. Assigns tasks and provides psychological support: Assigns tasks and provides psychological support to his subordinates by ensuring that people have proper material support to accomplish their jobs.
  3. Necessary guiding and inspiring employees:  creates needs in the employees to perform high and helps in the attainment of organizational goals.
  4. Developing team spirit: People in organizations are involved in different activities. Leadership mixes individual goals with group goals.
  5. Link between management and workers: Explains the goals of the organization to the workers and recommends their cases for reward, promotion, etc.
  6. Ensures required changes in the organization: Overcomes the problem of resistance to change and introduces it with minimum dissatisfaction. He persuades, clarifies and inspires people to accept changes wholeheartedly.

Type of leadership style

Autocratic Leadership Style:

  • Manager keeps maximum power and decisions.
  • Does not consult staff nor allowed to give any suggestions
  • Staff obeys orders without receiving any explanations.

Required When:

  • New untrained staff.
  • Limited time to make a decision

Not used

  • When staff becomes tense and fearful.
  • Staff expect their opinions heard
  • Low staff morale, high turnover and absenteeism.

Democratic Leadership Style/ participative style

  • Encourages staff to be a part of the decision-making.
  • Keeps staff informed about everything and shares decision making

Required When

  • To keep staff informed about matters that affect them.
  • Wants to provide opportunities for staff to develop a high sense and job satisfaction.
  • Staff want to encourage team building and participation

Should not be used

  • When not enough time to get everyone’s input easier.
  • Manager feels threatened by this type of leadership.

Delegative/Free Rein Leadership / Laissez Faire

  1. Leader gives complete freedom to the subordinates and Avoids the use of power.
  2. Depends largely upon the group to establish its own goals and work out its problems.

Required When

  • Employees are highly skilled, experienced, educated, trustworthy and experienced
  • Employees have confidence in their work and can complete ​​​​​​​

Should not be used

  • If the manager cannot provide regular feedback to let employees know how well subordinates are doing.
  • When manager escapes responsibility and is hopes the employees do the task



Meaning: - Means exchange of ideas, opinions, facts, information, instructions messages between two or more persons may be conveyed in words, pictures, and actions or gestures

Communication process

  1. Sender: person who conveys his thoughts or ideas to the receiver.
  2. Message: content of ideas, feelings, suggestions, order to be communicated.
  3. Encoding: the process of converting the message into communication symbols such as words, pictures, and gestures.
  4. Media: It is the path through which encoded message is transmitted to the receiver. The channel may be in written form, face-to-face, phone call, internet, etc.
  5. Decoding: the process of converting encoded symbols of the sender.
  6. Receiver: The person who receives communication from the sender.
  7. Feedback: It includes all those actions of the receiver indicating that he has received and understood the message
  8. Noise:  some barrier or hindrance to communication caused to sender, message, or receiver. Some examples of noise are:
  • Unclear symbols lead to faulty encoding.
  • A poor telephone connection.
  • An inattentive receiver.
  • Faulty decoding (attaching wrong meanings to message).

Importance of Communication

  1. Systematic motivationBoth formal and informal communication help the workers boost the morale of employees
    1. Informal help to fulfill the social part of work.
    2. Formal communication helps in a greater participative and democratic model of management.
  2. Promotes cooperation and industrial peace: Effective communication helps management in maintaining good relations with workers, customers, suppliers, shareholders, government and the community at large.
  3. Increases managerial efficiency: It is only through communication that management conveys its goals and desires, issues instructions and orders, allocates jobs and responsibilities, and evaluates the performance of subordinates.
  4. Decision making: Proper and timely information helps managers to take decisions in important areas like
    1. Getting timely sales reports to fix targets
    2. Performance appraisal to fix salary
  5. Establishes effective leadership: leader with effective  communication skills can only influence subordinates to work for the organization's goal
  6. Root of coordination: through accurate explanation of organizational goals, the manner of their achievement and inter relationships between different individuals and department  communication improves coordination

Controlling Process



  1. Setting Performance Standards:
  • Standards are set-to compare with the actual performance
  • They can be set in both quantitative as well as qualitative terms. I
  • Example:- producing 300 units in a month
  1. Measurement of Actual Performance:
  • Actual Performance is measured using controlling techniques like personal observation, sample checking, and ratio analysis.
  • Example:- Actual production may comes:-  290,250,310,300 units,
  1. Comparing Actual Performance with Standards:
  • Comparison will tell the difference  between actual performance and standards
  • If actual production is 290 unit and standards was 300 units (already fixed). Difference is = -10 units
  1. Examine Deviations:
  • Finding the extent of deviation and causes of deviations
  • Deviations can be observed by using
    1. Critical path control: - focus should on deviation in important areas.
    2. Management by exception:- minor deviation should be avoided
  1. Taking Corrective Action:
  • When the deviations are minor no corrective action is required
  • When differences are major immediate actions are required. For example
    • Training of employees
    • Adding more workers and machines
    • Increasing no of working hours



 (a) Critical Point Control

  • Critical Point Control’ helps in controlling processes by focusing on key result areas which are critical to the success of an organization.
  • The key result areas are set as critical points since it is neither economical nor easy to keep a check on each activity of the organization.

(b) Management by Exception

  • Management by Exception helps in the controlling process by identifying only significant deviations which go beyond the permissible limit and bringing them to the notice of the management.
  • It is based on the belief that any attempt to control everything results in controlling nothing

Advantages of Critical path control and Management by exception

  1. Saves the time and efforts of managers as they deal with only major deviations.
  2. Identifies critical problems which keep the organization right on track.
  3. Management by exception promotes delegation of authority and increases the morale of the employees

Nature of Controlling/Features of Controlling

  1. Controlling is a goal-oriented function: Controlling as a function of management ensures that the overall directions of individuals and groups are consistent with short and long-range plans of the organization. So it is completely a goal-oriented function.
  2. Controlling is an all-pervasive function: Controlling is a function that applies to all types of organizations and at all levels. Top managers are concerned with administrative control, which is exercised through broad policies, plans and other directives. The middle-level managers are concerned with executive control to get the plans, policies, and programs executed. At the lower level, supervisors exercise operational control to ensure the successful performance of actual operations.
  3. Controlling is a continuous function: Control is not a one-time activity. Rather, it is a dynamic process that involves constant analysis of actual and planned performance. The resultant deviations, if any, are correct as per the need of the situation.
  4. Controlling is both a backward-looking as well as forward-looking function: Effective control is not possible without analyzing our past mistakes. So from this point of view, we can call it backward-looking. But the business environment is ever-changing and controlling helps bring in changes in the organization in a conducive manner. So we cannot ignore the forward-looking aspect of it as well.
  5. Controlling is a dynamic process: Since controlling requires taking reviewable methods, changes have to be made wherever possible.
  6. Controlling is a positive process.
  • Controlling should never be viewed as being negative – as a hurdle in getting objectives won.
  • Controlling is a managerial necessity and help, not an impediment or a hindrance.


Standing Plan and Single Use Plan


Single-Use Plan & Standing Plan

Single-use plan

  • Single-use plans apply to activities that do not recur or repeat.
  • Such Plan is developed to meet the needs of a unique situation.
  • The length of a single-use plan differs greatly depending on the project in question, as a single event plan may only last one day while a single project may last weeks or months.
  • Includes:-  - Budget , Programs

Standing plans – known as repeat use plans

  • Are used over and over again because they focus on organizational situations that occur repeatedly.
  • Usually made once and retain their value over years
  • That is why they are also called repeated use plans.
  • Includes:-  Policies, Procedures, Methods And Rules

Differences between standing and single-use plans


  • Objectives are the ends towards which the physical & human energies of the enterprise are channelized.
  • All individuals, groups, and depts. are integrated, coordinated and directed to achieve this end.
  • Objectives can be major, minor, collateral. They are set by the top-level management.


  • Strategy is a comprehensive plan for accomplishing an organization‘s objectives.
  • This comprehensive plan will include (3 dimensions):
  1. Determining long term objectives
  2. Adopting a particular course of action
  3. Allocating resources necessary to achieve objectives


  • Organization general response to a particular problem/ situation.
  • These are general statements/ understandings, which guide thinking & decision-making. A policy is an Organization's intention to act in certain ways when specific types of circumstances arise.
  • Policies define the boundaries within which decisions can be made and they direct decisions towards the accomplishment of objectives.


  • The general response to a particular problem: guide managers in view of the repeated appearance of similar problems/situations
  • Basis for objectives: Policies provide the routes to objectives.
  • Provide guidelines for thinking/ action.
  • Discretionary: provide scope for executive judgment.
  • Top management‘s intention: generally formulated by top management. For operational purposes, managers at all levels also formulate their own policies

Examples: Recruitment policy, Pricing policy (for the elite segment); We don‘t sell on the credit's a policy of the sales dept.


  • A procedure is a series of related tasks that make up the chronological sequence & the established way of performing work to be accomplished.
  • It gives a series of actions directed towards a goal.
  • It specifies tasks to be performed /done sequentially for completing a piece of work


  • Defines steps of doing different jobs/methods in routine. So it saves time.
  • Helps to improve efficiency by providing standards and the best manner of doing work.
  • Cuts across all dept. lines (e.g. execution of a sales order concerns sales, finance, production depts.)
  • Help in the implementation of policies


Admission procedure, the Selection procedure for employees, Passport/Visa, Procedure for placing an order.


A method is a type of management plan that specifies the detailed and the best manner of performing a particular step, comprised in a procedure.


  • Methods are formalized/-standardized ways of doing routine jobs
  • These are standard ways of doing jobs, though there is no penalty for violation of methods
  • These are defined to increase efficiency
  • They are usually manual/ mechanical ways to perform an operation


  • Depreciation methods: Straight line method, written down value method
  • Methods of stocktaking: LIFO, FIFO, Training methods (e.g. orientation programs, lectures, etc.)


  • A rule requires that a specific action be taken for a situation.
  • Rules are prescriptive directives to people in the org. and elsewhere to do or not to do things, to behave or not to behave in particular ways.


  • Rules indicate limits of acceptable behavior to the members of the org.
  • They help to improve efficiency
  • Help in maintaining discipline in the org.


•No smoking, No admission without permission


A budget is a plan which states the expected results of a given future period in numerical terms. It may be expressed in time, money, or physical units.


  • Presents the objectives of the enterprise in financial/Quantitative terms.
  • Helps in financial control: provides standards by which actual performance can be measured.
  • Coordinates activities of various depts. of a big enterprise by adjusting the departmental budgets into the master plan.

Since budgets specify measurable goals to be achieved within a specific period (usually one year), they inject a sense of clarity in directing and performing the activities of the org.

Examples -

Cash budget determines cash inflows and outflows, so that management knows how much cash it

should hold at all points of time for various purposes.


  • It is a comprehensive plan designed to implement the policies and accomplish objectives.
  • It is a combination of goals, policies, task assignments, resource flows, etc.
  • It is a concrete or well-designed scheme designed to accomplish a specific objective.
  • It spells out the steps to be taken, resources to be used and the time taken to complete the task.
  • It also indicates who should do what and how?

Features -

  • Single-use abut comprehensive
  • Action-based
  • Result oriented
  • Designed to ensure smooth and efficient functioning of the organization
  • Great risk of failure due to changes in the environment


  • Launching a new product.
  • Training program.
  • Advertising program.
  • Expansion program.

Training & Development


Training: - refers to the process designed to maintain and improve current job positions.

Development: - refers to the process designed to develop necessary skills for future work activities.

Difference between Training and Development

Benefits to the organization

  1. Reduces wastage: -Systematic learning is always better than hit and trial methods and reduces wastage of efforts and money.
  2. Orientation:-Induction Training helps the employee to know the working conditions in the organization
  3. Adaptation:-Helps adjust to fast-changing  technological and Economic environment by learning the latest technique
  4. Motivation:- Increases employee morale and reduces absenteeism and employee turnover
  5. Employee productivity: -improves employee productivity both in terms of quantity and quality, leading to higher profits.
  6. Realistic application Employees apply theoretical knowledge to practical use, especially in the case of new employees

Benefits to the Employee

  1. Skills and knowledge Improved led to a better career for the individual when learning a new skill
  2. Accident Reduced makes the employee more efficient to handle machines which reduce the chances of accidents.
  3. More earning training Increases the performance of the employees which helps them to earn more.
  4. Employee Morale Increases the satisfaction and morale of employees the employee and makes them independent and happy.

Methods of Training



  1. On-the-job method of training: -Where employees work in the actual work environment. Means learning while doing. Simple and economical method. Methods
    1. Apprenticeship Programmers
    2. Internship Training
    3. Induction training
  2. Off-the-job method of training. Methods are used away from the workplace. Means learning before doing. Expensive method of training. Methods
    1. Vestibule Training

Training Methods

On the Job Methods: On-the-Job methods refer to the methods that are applied to the workplace, while the employee is working

  1. Apprenticeship Programmers (On job method of training)
    • Meaning:-Practical form of training where the trainee is placed under an experienced supervisor for an agreed amount of time.
    • Advantage: - Trainee learns valuable skills which are in high demand in the market. Candidate may be paid, unpaid or partially paid.
    • Includes:-Plumbers, electricians, iron-workers.
  1. Internship Training: (on job method of training)
    • Meaning: - Joint program in which educational institutions and business firms cooperate.
    • Candidates work free to gain experience in a particular field.
    • Advantage organization gets experienced candidates and needless training when they begin full-time regular employment.
    • Includes  Medical representatives, law, accounting and finance
  2. Induction training(On job method of training)
  • Meaning: Provide  new employees by the employer to help in adjusting to their new job by
    • Introduction to the business/department and its personnel/management structure
    • Outline of the factory  buildings factory  and offices
    • Business rules and procedures
  • Advantage: - Help a new employee settle down quickly into the job by becoming familiar with the people, the surroundings, the job and the business
  • Includes–New employees
  1. Vestibule Training: (Off job method of training)
    • Meaning: Training is conducted away from the actual work floor and employees use the same materials and equipment.
    • Advantages: - relax from fear of mishandling sophisticated, costly machinery by untrained staff. Training is provided by experienced and expert staff
    • Includes:- A highly technical job like astronauts, train pilots and cabin attendants

Formal and Informal Communication


Formal Communication

  • Flows through official channels designed in the organization chart.
  • Take place between a superior and subordinate or among same level employees or managers.
  • Two types: - Vertical and Horizontal.

Vertical and Horizontal

  • Vertical communication
  • Flows vertically i.e. upwards or downwards through normal channels.
  • Upward communications refer to the flow of communication from subordinate to superior including application for grant of leave, submission of progress report, request for grants, etc.
  • Downward communications refer to the flow of communication from a superior to a subordinate. Sending notice to employees to attend a meeting, ordering subordinates to complete assigned work, passing on guidelines framed by top management to the subordinates, etc.
  • Horizontal or lateral communication takes place between one division and another. For example, a production manager may contact the marketing manager to discuss the schedule of product delivery, product design, quality, etc.


Informal Communication/grapevine

  • Communication that takes place without following the formal lines of communication
  • Arises out of the needs of employees to exchange their views, which cannot be done through normal channels.

Barriers to Communication


Communication barriers: - Barriers are the factors that obstruct the effectiveness of   communication and can occur at any stage of the communication process

Semantic barriers:-concerned with problems in the process of encoding and decoding messages into words or impressions.

  1. Symbols with Differ meanings: A word may have several meanings. Receiver fails to identify the meaning of the word used by the communicator. Right, write. 
  2. Unqualified/unprofessional assumptions: Some messages may have certain assumptions which are subject to a different understanding.
  3. Body language and gesture decode: If  no match between what is said and what is expressed in body movements, communications may be wrongly understood (laughing in anger)
  4. Language translation: If the translator  fails to translate the exact meaning of  one language to another may cause different meanings (English to Hindi)
  5. Badly expressed message: due to insufficient vocabulary, usage of wrong words, omission of needed words, etc.
  6. Technical language: If the sender uses technical/difficult words, the receiver may not understand the actual meaning of such words. notwithstanding

Psychological barriers: Arises on account of the emotional and psychological status of both sender and receiver of the message. Includes

  1. Loss by transmission and poor retention:  in the case of oral communication  when information  passes through various levels message results in loss of, or transmission of inaccurate information
  2. Inattention: For example an employee explains his problems to the boss who is pre-occupied with an important file before him
  1. Mistrust between communicator and communicate: if the parties do not believe each other, they cannot understand each other’s message in its original sense.
  2. Early estimation: Sometimes people evaluate the meaning of a message before the sender completes his message.

Organizational barriers: when communication passes through various levels certain factors like organizational structure, authority relationships, rules and regulations may act as barriers to effective communication. Includes

  1. Status: A person in a high position  also may not allow his subordinates to express their feelings freely
  2. Hurdle in organization struc­ture: In a large organization due to a large number of managerial levels, communication gets de­layed and unclear.
  3. Absence of Organizational facilities: Facilities like frequent meetings, suggestion boxes, poor telephone and internet facilities, the social and cultural gatherings may discourage the free flow of communication
  4. Rules and regulations: Rigid rules and procedures may result in delays. Example:- Written application for minor things
  5. Policy of Organizational: Highly centralized organization does not support a free flow of communication. People may not be encouraged to have free communication.

Personal barriers The personal reasons of both sender and receiver may act as a barrier to the communication. Includes

  1. Fear of challenges to authority: If a superior sees that a par­ticular communication may badly affect his authority, he or she may do not communicate.
  1. Unwillingness to communicate: subordinates may not communicate with their superiors, if they affect that it may adversely affect their interests
  2. Lack of confidence of superior in his subordinates: If superiors do not have confidence in the com­petency of their subordinates, they may not take their advice or opinions.
  3. Lack of proper incentives: If there is no motivation or incentive for communication, subordinates may not take initiative to communicate.

Improving Communication Effectiveness

  1. Clarify the ideas before com­munication: The message communicated to others should be clear, studied in detail and can be understood by the subordinates. (oral, written, gestural )
  2. Opinions of other participants: While making policies subordinates may be mixed up to get their approval and cooperation. (like fixing the working hours )
  3. Convey things of help to listeners: Interests and needs of listeners should be kept in mind before delivering the message. (age factor can be considered)
  4. According to the needs of the receiver: The sender should communicate according to the education and understanding levels of subordinates. (Use of Local language)
  5. Communications follow up: There should be regular follow up and review of the instructions given to subordinates to remove the weakness in any due to organizational policy, status differences, or language barriers
  6. Offering feedback: Check whether the receiver has understood the message or not, especially in the case of written communication
  7. Listening skills: The manager should be a good listener to listen to the problem of other people patiently.
  8. Aware of languages, tone, and content of a message: The language used should be understandable to the receiver and should not upset the sentiments of listeners. (using wrong words  against certain community)