IGNOU B.Com Solved Question Paper
Term-End Examination (December,
2013)
ELECTIVE COURSE:
COMMERCE
ECO-3: MANAGEMENT THEORY
Time: 2 hours (Maximum
Marks: 50)
(Weightage: 70%)
Note: Attempt both
section-A and section-B. .
SECTION
- A
Attempt any three
questions:
1. Define 'Management'.
Briefly explain the functions of management. 5+7
Ans: Management: Management is the coordination of all
resources through the process of planning, organising, directing, staffing and
controlling in order to attain stated objectives effectively and
efficiently. Effectively means doing the
right task, completing activities and achieving goals and efficiently means to
attain objectives with least amount of resources at a minimum cost. This process starts at the top and continues
in more or less degree at every level of the organisation.
According
to Harold Koontz, “Management is an art of getting things done through others
and with formally organised groups."
According
to F.W. Taylor, “Management is an art of knowing what do you want to do and
then seeing that is is done in the best and cheapest way.”
According
to Henry Fayol, “To manage is to forecast, to plan, to organize, to command to
co-ordinate and control.
Functions/Elements of Management
According
to Henry Fayol, in every organisation manager perform certain functions to
achieve results. These functions are broadly classified under five categories:-
a)
Planning:
Planning is a process of making decision about future. It provides direction to
enterprise activities. Its work is to decide in advance what is to be done,
when and where it is to be done, how it is to be done and by whom. The main
functions of planning are Set up goals, Forecasting, Search for alternatives
source of action and Budgeting.
b)
Organising: It is
concerned with the arrangement of an organisation’s resources – people,
material, technology and finances in order to achieve enterprise objective. The
main functions of organising are Job design, Job specification and Authority
and responsibility.
c)
Staffing: Staffing
is the function of employing suitable personas for the enterprise. It may be
defined as an activity where people are recruited, selected, trained,
developed, motivated and compensated for manning various positions.
d)
Directing:
According to Dale, direction is telling people what to do and seeing that they
do it to the best of their ability. Directing is a function of guiding and
supervising the activities of sub ordinates. The three main elements of
directing are:-
1. Leadership: It is a process of influencing
the action of a person or a group to attain desired objectives. The success of
an organisation depends upon the quality of leadership shown by its managers.
2. Motivation: It is the process of
stimulating people to take desired courses of action. It is to inspire,
encourage and impel people to take required action.
3. Communication: It is a way of reaching
other with ideas, facts, and thoughts. Effective communication is important in
organisation because managers Can achieve very little without it.
e)
Controlling: It
is the management function concerned with monitoring employee’s activities,
keeping the organisation on track towards its goals, and making corrections as
required. It include four things:
Ø
setting standard
of performance;
Ø
measuring actual
performance;
Ø
comparing actual
performance against the standard ;
Ø
taking corrective
actions to ensure goal accomplishment.
2.
Explain the meaning and importance of Departmentation. What are the factors
taken into account 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.
Advantages
of Departmentation
1)
There is specialization in
Departmentation, as the work of the concern as a whole is divided into
different specialized functions like production, purchasing, marketing,
finance, personnel relations, etc. and each specialized function is entrusted
to a functional expert or specialist.
2)
In Departmentation, the line executive
receives instructions not only from his line boss but also from one or more
specialists.
3)
Under this system, the principle of
unity of command is not observed, as a single worker has to get instructions
from more than one specialist.
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.
3. (a) Critically
examine democratic style of leadership. 6+6
Ans:
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.
(b) Describe the important
functions of leadership.
Ans: Significance of Leadership: The importance of leadership are as follows:
1. It improves
motivation and morale: Through dynamic
leadership managers can improve motivation and morale of their subordinates. A
good leader influences the behaviour of an individual in such a manner that he
voluntarily works towards the achievement of enterprise goals.
2. It acts as a
motive power to group efforts:
Leadership serves as a motive power to group efforts. It leads the group to a
higher level of performance through its persistent efforts and impact. On human
relations.
3. It acts as
an aid of authority: The use of
authority alone cannot always bring the desired results. Leadership acts as an
aid to authority by influencing, inspiring, and initiating action.
4. It is needed
at all levels of management: Leadership
plays a pivotal role at all levels of management because in the absence of
effective leadership no management can achieve the desired results.
5. It rectifies
the imperfectness of the formal organizational relationships: No organizational structure can provide all
types of relationships and people with common interest may work beyond the
confines of formal relationships. Such informal relationships are more
effective in controlling and regulating the behaviour of the subordinates.
Effective leadership uses these informal relationships to accomplish the
enterprise goals.
6. It provides
the basis of co-operations: Effective
leadership increases the understanding between the subordinates and the
management and promotes co-operation among them.
4. What do you mean by
supervision? Describe the qualities of a good supervisor. 3+9
Ans: The word supervision is the combination
of two words i.e., super+vision where super means over and above and vision
means seeing. Thus, supervision means overseeing the subordinates at work.
supervision refers to the direct and immediate guidance and control of
subordinates in performance of their task.
Qualities
of a Good Supervisor
a) Good Personality and self
confidence: A
good personality is a combination of physical, mental and social qualities.
Good personality helps a supervisor to influence his subordinates. Also he must have self confidence which is
necessary for facing challenging situations and for solving problems easily and
effectively.
b) Human Skills: A
good supervisor must have essential social and human skills. That is, he must
understand his subordinates. This quality is necessary for dealing with
different types of employees working in an organisation.
c)
Judgment skills: A good supervisor should be able to examine problems
in right perspective. His judgment and decision making abilities should be
superior to others. He should be able to form opinions and judge based on facts
and not be prejudiced
d)
Communication and technical skills: A good supervisor
should be able to communicate the goals and procedures of the organisation
clearly, precisely and effectively to the subordinates. He must also be
familiar with the technology used within the organisation.
e)
Listening skills: Employees just have a supervisor who does not
listen. Hence a good supervisor in one who can listen to his subordinates’
problems. He should be able to create a culture whereby subordinates can be
frank with him and give him information and also give him feedback about
himself, which can help him to improve himself.
f) Inspiring skills: A good supervisor
should be able to inspire his subordinates. He should not just command and
control but be able to inspire his subordinates and get them involved to work
together as a team.
g) Administrative Skills and
ability to develop organisation: A good supervisor must have an administrative
ability. This means, he must be able to get the work done through his
subordinates. He must know how to plan, organize and control the work of his
subordinates. He must also be able to develop an effective organisation that
meets current needs.
h) Discipline: A
good supervisor must be a disciplined person. This means he must have respect
for the rule and regulations of the organisation. This is because his
subordinates will follow his example.
5. (a) Explain the
elements of communication process. 6+6
Ans:
Process of Communication
The
process of communication is the inter relationship between several independent
components. It consists of a chain of related actions and reaction which
together result in exchange of information. In order to understand the process
of communication, it is necessary to describe each of these components. A model
of communication process is as follows:
1. Sender: The sender is the first component of the
process of c communication. The sender may be a speaker, a writer or any other
person. He is the one who has a message and wants it to share it for some
purpose.
2. Ideation: Ideation is the preliminary step in
communication where sender creates an idea to communicate. This idea is the
content and basis of the message to be communicated. Several ideas may generate
in the sender’s mind. The sender must identify, analyze and arrange the ideas
sequentially before transmitting them to the receiver.
3. Message: Message is the heart of communication. It is
what the sender wants to convey to the receiver. It may be verbal i.e. written
or spoken or non verbal i.e. body language, space language, etc.
4. Encoding: To encode is to put an idea into words. In
this step the communicator organizes his ideas into a series of symbols or
words which will be communicated to the intended receiver. Thus the ideas are
converted into words or symbols. The words and the symbols should be selected
carefully, it should be understandable and most of all it should be suitable
for transmission and reception.
5. Transmission: Next in the process of communication is
transmission of the message as encoded messages are transmitted through various
media and channels of communication connects the sender and the receiver. The
channel and media should be selected keeping in mind the requirement of the
receiver, the communication to be effective and efficient the channel should be
appropriate.
6. Receiver: Receiver is the person or group for whom the
message is meant. He may be a listener, a reader or a viewer. Any neglect on
the part of the receiver may make the communication ineffective. Receiver is
thus the ultimate destination of the message. It the message does not reach the
receiver the communication is said to be incomplete.
7. Decoding: Decoding means translation of symbols encoded
by the sender into ideas for understanding. Understanding the message by
receiver is the key to the decoding process. The message should be accurately
reproduced in the receiver’s mind. If the receiver is unable to understand the
message correctly the communication is ineffective.
8. Behaviour of the
receiver: It refers to the response by the
receiver of the communication received from the sender. He may like to ignore
the message or to store the information received or to perform the task
assigned by the sender. Thus communication is complete as soon as the receiver
responses.
9. Feedback: Feedback indicates the result of
communication. It is the key element in the communication and is the only way
of judging the effectiveness of communication. It enables the sender to know
whether his message has been properly interpreted or not. Systematic use of
feedback helps to improve future message. Feedback, like the message could be
oral, written or non verbal. It has to be collected from the receiver.
(b) How can communication
be made effective? State with examples.
Ans: Communication becomes
effective when the receiver understands the meaning of the message as the
sender intends. To make
communication effective, the following rules should be involved:
1. Specific Purpose: The sender must be clear
about the specific purpose that he wants to communicate to the receiver.
2. Study the Listener: The sender must study the
interest and attitude of the receiver to make communication
effective more.
3. Organization of Idea or Thought: The communicator must make up
a plan about how he is going to communicate. He must organize his thoughts and
ideas in advance.
4. Proper Transmission of Message: The message must be
transmitted in such a way that it is accepted by the listener or reader with
interest.
5. Personal Touch: The personal element is the
keynote of communication. Sender's sincerity & sympathy influence the
listener a lot.
6. Mutual Understanding: A mutual understanding should
be established between the sender and receiver of the message.
6. Do you feel that
external sources of recruitment are better than the internal sources of
recruitment? If so why? 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 includes
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.
SECTION - B
7. Write explanatory
notes on any two of the following. 7+7
(a) Break - Even
Analysis.
Ans: Break
even analysis: The study of cost-volume-profit
analysis is often referred to as “Break even analysis “and the two terms are
used interchangeably by many. This is why break even analysis is a known form
of cost-volume-profit analysis. The term break even analysis is used in two
sense – narrow sense and broad sense. In its broad sense, break even analysis
refers to the study of relationship between cost, volume and profit. In its
narrow sense, it refers to a technique of determining that level of operations
where total revenue equal total expenses i.e., breakeven point.
The
main Features (Characteristics) of Break even analysis are as follows:
1. Cost Classification: This technique makes a
sharp distinction between variable costs and fixed costs. It is the variable
cost on the basis of which production and sales policies are designed by a
firm.
2. Managerial Decisions: It is a technique of
analysis and presentation of costs which help management in taking many
managerial decisions such as make or buy decision, selling price decisions etc.
3. Inventory Valuation: Under break even
analysis technique, inventory for profit measurement is valued at marginal cost
only.
4. Price Determination: Prices are determined
on the basis of marginal cost by adding contribution which is the excess of
selling price over variable costs of sales.
5. Contribution: Break even analysis makes use
of Contribution for taking various decisions. Contribution is the difference
between sales and marginal cost. It forms the basis for judging the
profitability of different products or departments.
(b) Positive and Negative Motivation
(c) Unity of command
(d) Means of effective delegation
Ans: 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.
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