IGNOU B.Com Solved Question Paper
Term-End Examination (June,
2012)
ELECTIVE COURSE:
COMMERCE
ECO-03: MANAGEMENT
THEORY
Time:
2 hours (Maximum Marks: 50)
Weightage:
70%
Note: Attempt both
sections A and B.
SECTION-A
Attempt any three of the
following questions.
1. What do you
understand by 'Functional Organisation? Explain its merits and demerits. 3+9
Ans: Meaning
of Functional Organisation:
Functional
organisation is a type of organisation in which the work of the whole
enterprise is divided into a number of specialized functions like production,
purchasing, marketing, office management, personnel relations, etc. and each of these specialized functions is
entrusted to a functional expert or specialist.
In
this type of organisation, the line executive receives instructions not only
from his line boss but also from one or more specialists.
Merits
of Functional Organisation:
Functional
organisation has certain advantages. They are:
1.
This
system ensures maximum use of the principle of specialisation at every work
point and helps the enterprise to enjoy the benefits of specialisation of
functions.
2.
As
the workers have to perform only a limited number of functions under this type
of organisation, this system contributes to higher efficiency of the workers.
3. As there is no scope for one-man control in this form of organisation, this system ensures co-operation and team-work among the workers.
4.
Under
this system, the line officers are freed from the worries of technical problems
faced by the workers, as instruction regarding the technical problems flow to
the workers directly from the specialists.
5.
This
system is flexible, in the sense that any change in the organisation can be
introduced without disturbing the whole organisation.
6.
This
system is quite suitable for training young specialists.
7.
This
system ensures the separation of mental functions (i.e., planning) from manual
functions (i.e., functions at the workshop), and thereby, simplifies managerial
control.
Limitations of Functional organisation:
Functional
organisation suffers from some drawbacks. They are:
1.
Under
this type of organisation,' there is many supervisory staff of equal rank. This
may lead to conflicts among them.
2.
As
the workers have to work under many bosses under this system, it is difficult
to maintain discipline among the workers.
3.
As
there are several functional experts in the organisation under this system,
there may be the difficult or co-ordination.
4.
The
speed of action may be hampered under this system, as the control is divided
among several specialists.
5.
As
there are several functional experts under this system, the top management may
find it difficult to fix responsibility, when there is unsatisfactory progress.
6.
As
a large number of specialists, there experts are required to be appointed under
this type organisation, this system is very expensive.
7.
It
is very difficult to put this system into operation.
8.
This
system makes relationship more complex.
2. What are the barriers to effective
delegation? Suggest various means of effective delegation. 5+7
Ans: Barriers in delegation of authority
a) Reluctance to
delegate: - In many cases managers will not be interested to delegate to
authority. They will not be willing to give authority to subordinates. They
will not make any plan to delegate authority.
b) Fear of
subordinates: - Managers in many cases fear from subordinates because they
think that when there is delegated authority their performance will be superior
to the performance of manager and subordinate may pose challenge to the
manager.
c) Lack of
trust: - Managers may lack confident or trust on subordinates. They do not
think or believe that after delegating authority, subordinates will do better
or their performance will improve.
d) Incompetence
of subordinates: - Subordinates must be competent enough for effective
delegation of authority. Subordinate must be willing and competent to accept
delegated authority. In many organizations due to the incompetency of
subordinates delegation of authority is affected.
e) Lack of
control: - When employees are delegated authority, they will be free to
work. They will work autonomously; managers cannot exercise effective control
over them. Delegation is affected.
Principles
of Effective Delegation of Authority or how barriers can be removed or Elements
of delegation:
a) Knowledge of
Objectives: Before delegating authority, the subordinates should be made to
understand their duties and responsibilities. In addition, knowledge of
objectives and policies of the enterprise should be provided to them.
b) Parity of
Authority and Responsibility: This principle of delegation suggests that when
authority is delegated, it should be commensurate with the responsibility of
the subordinate.
c) Unity of
Command: This principle of delegation suggests that everyone should have only
one boss. A subordinate should get orders and instructions from one superior
and should be made accountable to one superior only.
d) The Scalar
Principle: The scalar principle of delegation maintains that there should be
clear and direct lines of authority in the Organisation, running from the top
to the bottom. The subordinate should know who delegates authority to him and
to whom he should contact for matters beyond his authority.
e) Clarity of
Delegation: The principle of clarity of delegation suggests that while
delegating authority to subordinates, they should be made to understand the
limits of authority so that they know the area of their operation and the
extent of freedom of action available to them. Such clarity guides subordinates
while performing their jobs.
3. What do you mean by leadership
style? Explain various leadership styles with suitable examples. 2+10
Ans: Ans: Leadership Style: A leadership
style is a leader's style of providing direction, implementing
plans, and motivating people. There are many different leadership
styles that can be exhibited by leaders in the political,
business or other fields.
Leadership Styles or Types of Leaders
1.
Autocratic or
Authoritarian Style leader: An
autocratic also known as authoritarian style of leadership implies wielding
absolute power. Under this style, the leader expects complete obedience from
his subordinates and all decision-making power is centralized in the leader. No
suggestions or initiative from subordinates is entertained. The leader forces
the subordinates to obey him without questioning. An autocratic leader is, in
fact, no leader. He is merely the formal head of the organisation and is
generally disliked by the subordinates who feel comfortable to depend
completely on the leader.
Advantages:
a) Reduced
stress due to increased control
b) A more
productive group ‘while the leader is watching’
c) Improved
logistics of operations
d) Faster
decision making
Disadvantages:
a) Short-termistic
approach to management.
b) Manager perceived
as having poor leadership skills
c) Increased
workload for the manager
d) People
dislike being ordered around
e) Teams become
dependent upon their leader
2.
Laissez-faire or
Free-rein Style Leader: Under
this type of leadership, maximum freedom is allowed to subordinates. They are
given free hand in deciding their own policies and methods and to make
independent decisions. The leader provides help only when required by his
subordinates otherwise he does not interfere in their work. The style of
leadership creates self-confidence in the workers and provides them an
opportunity to develop their talents. But it may not work under all situations
with all the workers, may bring problems of indiscipline. Such leadership can
be employed with success where workers are competent, sincere and
self-disciplined.
Advantages:
a) No work for
the leader
b) Frustration
may force others into leadership roles
c) Allows the
visionary worker the opportunity to do what they want, free from interference
d) Empowers the
group
Disadvantages:
a)
It makes employees feel insecure at the unavailability of a
manager.
b)
The manager cannot provide regular feedback to let employees know
how well they are doing.
c)
Managers are unable to thank employees for their good work.
d)
The manager doesn’t understand his or her responsibilities and is
hoping the employees can cover for him or her.
3.
Democratic or
Participative Style leader: The
democratic or participative style of leadership implies compromise between the
two extremes of autocratic and laissez-fair style of leadership. Under this
style, the supervisor acts according to the mutual consent and the decisions
reached after consulting the subordinates. Subordinates are encouraged to make
suggestions and take initiative. It provides necessary motivation to the workers
by ensuring their participation and acceptance of work methods. Mutual trust
and confidence is also created resulting in job satisfaction and improved
morale of workers. It reduces the number of complaints, employee's grievances,
industrial unrest and strikes. But this style of leadership may sometimes cause
delay in decisions and lead to indiscipline in workers.
Advantages
a) Positive work
environment
b) Successful
initiatives
c) Creative
thinking
d) Reduction of
friction and office politics
e) Reduced
employee turnover
Disadvantages:
a) Takes long
time to take decisions
b) Danger of
pseudo participation
c) Like the
other styles, the democratic style is not always appropriate. It is most
successful
d) When used
with highly skilled or experienced employees or when implementing operational
changes or resolving individual or group problems.
4.
Paternalistic
Style leader: This style of leadership is based
upon sentiments and emotions of people. A paternalistic leader is like a father
to these subordinates. He looks after the subordinates like a father looks
after his family. He helps guides and protects all of his subordinates but
under him no one grows. The subordinates become dependent upon the leader.
4. Discuss the meaning and importance
of Departmentation. What are the factors to be considered while selecting a
suitable basis of Departmentation? 3+4+5
Ans: Departmentation: The process of
dividing activities into units and subunits is referred to as departmentation.
The term departmentation is used in a generic sense n is not only confined to
the creation of such units as are called departments, but it includes
divisions, sections and jobs also.
Dividing up work
calls or identification of total activities and classification of such
activities into units and subunits. There are three bases for primary grouping
of activities at the second level of the organisation just below the top level.
Units at the second level are commonly called departments when business
functions are adopted as the pattern of grouping activities. Such units go by
the name of divisions when either product manufactured or territories are
adopted as the means of classifying activities.
Choice of
bases for departmentation Or DETERMINANTS OF DEPARTMENTATION
The
selection of bases for departmentation involves a consideration of the relative
advantages of each base for the organisation. Ideally speaking, a suitable
basis of departmentation is one which facilitates the performance of
organisational functions efficiently and effectively so that its objective is
achieved.
1) Specialization:
While assigning activities into departments, care must be taken to ensure that
the benefits of specialization are achieved.
2) Control: One
of the primary aims of departmentation is to facilitate control. Departments
should be so created as to fix clear responsibilities so as to enable effective
control.
3) Coordination:
Coordination involves that all the related activities are performed in a way
that their performance is synchronized so that each activity contributes to
others.
4) Economy: A
balance should be maintained between the cost of creating a department and its
contribution. The existence of a department is desirable only when it
contributes more than its cost.
5) Focus on
Result: Those activities which contribute to the achievement to these results
should be given proper attention.
6) Human
Considerations: Departments should be created on the basis of availability of
personnel, their aspirations and value systems, informal work groups and
attitudes of people towards various forms of organisation structure.
7) Emphasis on
Local Conditions: while assigning activities proper emphasis should be given to
local conditions at the places concerned, viz. the personality of the
individuals who may be given the responsibilities, the nature of informal
relationship among the people, the attitude of the people, etc.
8) Economy:
Another important factor to be considered while creating separate departments
is the expense involved and economy in its operations.
9) Key
Activities: there are certain activities which are very crucial. Such
activities should be placed in separate divisions.
5. Do you
think that external sources of recruitment are better than internal sources of
recruitment? Give your view with an argument. 12
Ans: The sources of recruitment may be
classified into internal sources and External Sources.
Internal
Sources: Internal sources are considered to be
more important and reliable sources. It
includes the employees of the organization, the employed who had left the
organization but desire to join the organization again, or those to whom the
company may like to rehire as they had left voluntarily or those on production
lay off.
External
Sources: These are sources, which lie outside
the organization. These sources include
new entry in the labour force especially young energetic inexperienced
potential employees like college students. This method of recruitment is
considered to be more suitable because of the following reasons:
a) Recruitment
of internals leads to inbreeding and discourages new blood with new ideas from
entering into the organization.
b) It is
possible that internal sources ultimately dry up and hence it may be difficult
to find suitable persons from within the organization.
c) In case of
certain jobs such as advertising, style, designing, basic research etc
recruitment from within is not desirable.
d) In many
organizations promotion is based on seniority and there is a danger that right
type of man may not be chosen.
e) Likes and
dislikes of management may affect the process of selection of persons.
f) External
sources provide huge scope for selecting required type of personnel for the
organization, having necessary skill, abilities, education, training upto
required standard.
g) Since few
people are to be selected from very large market, it becomes possible to select
best persons irrespective of caste, sex, religion etc.
h) In the long
run to external sources are more economical because potential employees may not
need extra training for their jobs.
6. (a) Distinguish between 'formal'
and 'informal' communication. 6+6
Ans:
Difference between Formal and Informal Communication Channel
|
Basis |
Formal Communication |
Informal Communication |
|
01. Rules |
In Formal
communication, Organizational rules are strictly followed. |
It does not
generally follow the rules of organization |
|
02. Recognition |
Such
communication requires official’s recognition. |
In informal
communication, It does not require any official’s recognition. |
|
03. Flexibility |
It is
inflexible in nature as it cannot be changed when desired. |
Being flexible,
It can be changed easily. |
|
04. Secrecy |
Such Communication is not free and open to all. So,
Secrecy is maintained here. |
It is free and
open to all, So it is very difficult to maintain secrecy here. i.e. Grapevine
communication which spread
informally. |
|
05. Time &
Cost |
It follows
various rules of organization. So, It requires much time and cost. |
Informal
communication does not bother for the formalities of organization and
therefore it requires less time and cost. |
|
06. Record
Keeping |
This type of
communication involves written procedure, So record can be kept in formal
communication. |
Permanent
record is impossible here because almost nothing is written here. |
(b) What are the common barriers to
effective communication in an organisation?
Ans: Types of Barriers in communication: The barriers to communication in an
organization may be broadly categorized into following groups:
1.
Physical barriers (RECEIVER’S ORIENTED)
2.
Socio- psychological or personal barriers (RECEIVER’S ORIENTED)
3.
Organizational barriers (SENDER’S ORIENTED)
4.
Semantic barriers (SENDER’S ORIENTED)
5.
Mechanical barriers (SENDER’S ORIENTED)
However,
such a classification does not suggest that these are mutually exclusive.
Rather, it is helpful in understanding the nature of communication barriers.
1.
Physical Barriers: There are the
environmental factors that also obstruct or reduces the sending and receiving
of communication, such as physical distance distracting noises and other interferences
difficulty arises in communicating a message, when the physical distance
increases:-
Noise:
Noise is first and foremost barrier to effective communication. Noise may be
caused by machines, equipment, communication device, disturbances in the time
of transmission etc. noise also encompasses many other factors such as the
sender may use ambiguous or confusing signal. The receiver may misinterpret the
message. Thus communication is likely to be spoilt due to noise.
Time
and distance: Time and distance also acts as a barrier in smooth flow of
communication. Distance between the sender and receiver acts as a hurdle.
Although this barrier can be overcome by technology but still in case of
breakdown, this exists. Different timing of shifts at workplace also acts as
barriers in imparting on vital information.
2. Socio-psychological or personal Barriers:
There are certain socio psychological factors which restrict the free flow of
communication. They are the attitude and opinions, status consciousness, ones
relations with fellow workers, seniors, and junior’s etc. family background.
These restrict participative communication:
I.
Motives, attitudes, judgments, emotions, and social values of people from the
part of the personal barriers. Psychological distance is also developed with
this.
II.
Individual Differences: There are differences in the motives, attitudes and
sentiments of the people. So this causes problems in encoding and decoding
other’s sentiments, attitudes and motives.
III.
Differences in interest: The interest of people also differs. A problem may be
important for one person but may not carry weight for another. The ideas,
question, attitudes, feelings etc of other party may represent an obstacle to
one’s own personal goal.
IV.
Division of People: Communication is ideas and viewpoint also gets affected by
the division of people into classes, castes and communities.
V.
Difference of viewpoints: Communication suffers when there are differences in
view point of the different people.
VI.
Lack of planning: Good communication never happens but has to be planned. When
people take it lightly and communicate without planning it turns into
miscommunication or mal communication.
VII.
Cultural barriers: Due to difference in the cultural background the same word,
phrases, symbols, actions etc. may mean different to different group of people.
Mis understanding may take place due to this.
3. Organizational Barriers:
Organisational barriers arise due to defects in the organization structure and
the communication system of an organization:
I.
Hierarchical distance: Downward communication promotes hierarchical distance.
The chances of information being filtered are more at this structure, because
there are several layers. Information received from the top may not reach at
bottom in the same shape. The information gets coloured which brings
hierarchical distance.
II.
Diversion: Diversion of information is also one of the causes which brings
barrier to communication process. For example sometimes a manager diverts the
information meant for one person or group to another.
III.
Colouring: Information are also coloured by the manager intentionally with a
view to twist the situation in their favour. For example, an office may quote
his subordinate wrongly, to spoil his career or his chance of promotion or his
image in the eyes of the boss.
IV.
Status barriers: Status is a barrier of communication in a formal organization.
Organizational interaction and communication are influenced by the status and
the expectations.
V.
Goal conflicts: Goal conflict acts as communication reducers. Different goal
lead to bifurcation of interest. Due to this communication suffers.
4.
Semantic Barriers: Semantic means
the relationships of signs of their reference. Semantic barrier arises from the
disadvantages of the symbolic system. Symbols have got number of meaning and
one has to choose any one of them according to the requirement of
communication. Symbol or the language is the most important tool of
communication which has to be used very carefully:-
I.
Words with different meaning: Some words convey more than one meaning. When the
receiver assigns a different meaning to a word than what the sender intended,
there occurs miscommunication.
II.
Denotation and connotation: Words have two types of meaning = Denotation and
connotation. Denotation is the literal meaning of the words connotation are the
suggestive meaning of the words. Connotation is the suggestive meanings of the
words. Connotation may be positive or negative.
III.
Offensive style of communication: Badly expressed messages lose their impact.
Offensive style of communication leads to communication breakdown causing loss
of time and money.
IV.
Wrong assumptions: Communication should not be based on assumption as it may
lead to wrong interpretation. All possible efforts should be made to clarify
assumptions.
V.
Selective perception: many a time the message is decoded by the receiver in a
way which may be selective. In other words most of the receivers protect their
own interest and expectations leading to a particular type of feedback which
becomes a communication problem.
5.
Mechanical Barriers: Mechanical
barriers include inadequate arrangement for transmission of news, facts and
figures. Example poor office layout and defective procedure and the use of
wrong media led to poor communication.
I.
Information overload: Excess of communication is called information overload.
Brevity is the soul of communication. The receiver cannot comprehend and absorb
beyond his mental capacity. His mind will remain closed for the excess part of
the communication. Therefore one should be brief and to the point.
II.
Loss of transmission: When messages are transmitted from person to person they
are filtered. In other words they are diluted and distorted on the way. In oral
communication about 30% of the information is lost in each transmission.
SECTION-B
7. Write explanatory notes on any two
of the following:
(a) Standard Costing
Ans: Standard Costing: Standard Costing is defined by I.C.M.A. Terminology as, “The preparation and
use of standard costs, their comparison with actual costs and the analysis of
variances to their causes and points of incidence”. Standard costing is a
method of ascertaining the costs whereby statistics are prepared to show:
(a)
The standard cost
(b)
The actual cost
(c)
The difference between these costs, which is termed
the variance” says Wheldon.
Thus the technique of standard cost study
comprises of:
a)
Pre-determination of standard costs;
b)
Use of standard costs;
c)
Comparison of actual cost with the standard costs;
d)
Find out and analyse reasons for variances;
e)
Reporting to management for proper action to maximize
efficiency.
(b) Span of Control
Ans: In the words of Spriegal, "Span of
control means the number of people reporting directly to an authority. The
principle of span of control implies that no single executive should have more
people looking to him for guidance and leadership than he can reasonably be
expected to serve. The span of supervision is also known as span of control,
span of management, span of responsibility, span of authority and span of
direction.
Factors
influencing the span of Management
There
are number of factors that influence or determine the span of Management in a
particular organisation, the most important of these are as follows:
1.
The
capacity and ability of the executive: The
characteristics and abilities such as leadership, administrative capabilities;
ability to communicate, to judge, to listen, to guide and inspire, physical
vigour, etc. differ from person to person. A person having better abilities can
manage effectively a large number of subordinates as compared to the one who
has lesser capabilities.
2.
Competence
and training of subordinates: Subordinates who
are skilled, efficient, knowledgeable, trained and competent require less
supervision, and therefore, the supervisor may have a wider span in such cases
as compared to inexperienced and untrained subordinates who requires greater
supervision.
3.
Nature
of Work: Nature and importance of work to be
supervised is another factor that influences the span of supervision. The work
involving routine, repetitive, unskilled and standardized operations will not
call much attention and time on the part of the supervisor.
4.
Time
available for supervision: The capacity of a person to supervise
and control a large number of persons is also limited on account of time
available at his disposal to supervise them. The span of control would be generally
narrow at the higher level of management because top manager have to spend
their major time on planning, organising, directing and controlling and the
time available at their disposal for supervision will be less.
(c) Limitations of management principles.
Ans: Principles of Management are the statements of
fundamental truth which provide guidelines which help management to take
decisions and action. They are derived from observation and experimental
studies. Some
of the limitations of management principles are listed below:
a) Universal
Application is a myth: Though management principles are considered to be
universally applicable, it is a well known fact that all the principles are not
applicable in every situation. Universal applicability of management principles
is a myth.
b) Employees
will suffer in long run: a Management principle promotes specialisation which
can be a problem for employees in the long run because present business
situation is diversified and expertise in various fields in now a must for
every employee.
c) Delay in
decision making: Complete Centralisation of powers and decision making some
times causes unnecessary delay in decision making.
d) Misuse of
authority: Complete decentralisation will result in misuse of authority.
(d) Importance of planning.
Ans:
Importance and Advantages of Planning
Planning
is of vital importance in the managerial process. No enterprise can achieve its
objectives without systematic planning. “Planning is the heart of management”
The following points highlight the importance of planning function of
management:
a. Planning provides directions: By stating i n advance how work
is to be done, planning provide direction for action. If goals are well
defined, employees are aware of what the organisation has to do and what they
must do to achieve those goals. Departments and individuals in the organisation
are able to work in coordination. Planning keeps the organisation on the right
path. If there was no planning, employees would be working in different
directions and the organisation would not be able to achieve its goals efficiently.
b. Planning reduces the risks of uncertainty: Business
enterprises operate in an uncertain environment and face several types of
risks. Planning enables these enterprises to predict future events and prepare
to face the unexpected events. With the help of planning, managers can identify
potential dangers and take steps to overcome them. Thus, planning helps risk
and uncertainty.
c. Planning facilitates decision-making:
Decision-making involves searching for various alternative courses of action,
evaluating them and selecting the best course of action. Under planning,
targets are laid down. With the help of these targets, managers can better
evaluate alternative courses of action and select the best alternative. Plans
lay down in advance what is to be done and how it is to be done.
Therefore, decisions can be taken with greater confidence.
d. Planning reduces overlapping and wasteful activities: Since
planning ensures clarity in thought and action, work is carried on smoothly
without interruptions. There is no confusion and misunderstanding. Useless and
redundant activities are minimized or eliminated. It is easier to detect
inefficiencies and take corrective measures to deal with them.
e. Planning promotes innovative ideas: Planning is
thinking in advance and, therefore, there is scope of finding better ideas and
better methods and procedures to reach the objectives/goals of the enterprise.
This forces managers to think differently about the future of the organisations
from the present. Thus, planning makes the managers innovative and creative.
f.
Planning
establishes standards for controlling: Planning provides the goals or standards against which the actual
performance can be measured and evaluated. A comparison of actual performance
with the standards helps to identify the deviations and to take corrective
action. Planning makes control meaningful and effective. ‘Control
is blind without planning.” Thus,
planning provides the basis of control.
Post a Comment
Kindly give your valuable feedback to improve this website.