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IGNOU Solved Question Papers: ECO - 03 (June' 2010) | IGNOU B.Com Solved Question Paper

IGNOU B.Com Solved Question Paper

Term-End Examination: June, 2010



Time: 2 hours, Maximum Marks: 50

Note: Attempt both Sections A and B.


Attempt any three questions.

1. Discuss the basic principles of scientific management. What are their merits and limitations?  6+6

Ans: According to F.W.Taylor who is regarded as the father of scientific management, “Scientific Management is the art of knowing exactly what you want your men to do and seeing that they do it in the cheapest way”. He suggests the following principles of scientific management:

a)      Replacing rule of thumb with science: According to this principle, scientific investigation should be applied in the scientific management, which will replace the rule of thumb. Taylor had made study of every job and fixed the method and timing for performing the job so that the worker should know that what, when, and how is required to perform the job. This principle is the starting point of scientific.

b)      Harmony in group action: This principle states that there should be cooperation between the management and the workers. In order to achieve the best possible results from the business operations, it is essential that there should be harmonious relations between the management and the workers.

c)      Division of responsibility between workers and management: According to this principle there should proportionate division of the responsibility between the managers and the workers, clearly defined, and predetermined.

d)      Maximum Output: Scientific Management aims for the continuous production and productivity instead of restricting the productivity by the management or the workers. According to this principle management and the workers should try to increase the production at the minimum cost.

e)      Selection, training, and development of the workers in the scientific manner: According to this principle the right men is placed on the right job. The jobs are determined first for which the workers are required and then the qualifications required for the job are determined. On the basis of these standards the employees are selected.

Scientific management provides the following advantages:

a)      Reduction in the Cost of Production: It increases production with the help of mechanisation and latest technology used in producing the goods. On account of large scale production, per unit cost of production is considerably reduced.

b)      Better Quality Products: By resorting to the measures of standardisation and effective supervision, better quality products are ensured.

c)      Benefits of Division of Labour: The principle of specialisation adopted under scientific management ensures the benefits derived from the division of labour. The work is simplified and is carried out in most economical and efficient manner.

d)      Avoidance of Disputes between Labour and Management: Scientific management is instrumental in developing healthy cooperation between the management and the labour thereby encouraging cordial and harmonious relations between the two. This leads to reduction in industrial disputes and provides of industrial peace.

e)      Increased Wages: Scientific management aims at higher productivity and the workers get increased wages. Taylor suggested a differential incentive plan for increased wages to efficient workers.

Limitations of scientific management:

a)      It is based upon one best way and is applicable for simple organizations than that for today’s dynamic and complex organization

b)      It focuses on individual performance than group efforts and divides the workers into efficient and inefficient categories

c)      It is focused on specialization and repetition of jobs to increase the productivity which reduces innovation and creativity and promotes monotony

d)      It neglects human factor because it motivates workers to work for monetary benefits rather than human resource development and resources

e)      There is no scope for creativity of employees because they are developed by manager which promotes frustration.

2. What are the features of directing? Explain the principles of directing.         5+7

Ans: Direction may be defined as the function of management which is related with instructing, guiding and inspiring human factor in the organization to achieve organization objective. The direction is not merely issuing orders and instructions by a superior to his subordinates, but is includes the process of guiding and inspiring them. The analysis of definition reveals that direction function consists of three elements.

a)      Motivation

b)      Leadership

c)      Communication

Direction has the following characteristics

a)      Direction is an important managerial function. Through direction management can initiates actions in the organization.

b)      Direction function is performed at every level of management.

c)      Direction is a continuous process and it continuous through out the life of the organization.

d)      Direction initiates at the top level in the organization follows and bottom through there hierarchy. It emphasizes that a subordinates is to be directed by his own superior only.

Principles of direction: Direction is one of the most complex function of the management as it ideals with people whose nature itself is quite complex and unpredictable.

1. Principles of relating to the purpose of directing

a)      Principles of maximum individual contribution.

b)      Principle of harmony of objectives.

c)      Principle of efficiency of direction.

2. Principle relating to direction process:

a)      Principle of unity of command.

b)      Principle of appropriateness of direction technique.

c)      Principle of managerial communication.

d)      Principle of comprehension.

e)      Principle of use of informal organization.

f)       Principle of leadership.

g)      Principle of follow through.

Thus one of the basics functions of management is direction. Direction means the use of leadership and motivation to guide the performance of subordinates towards the achievement of the organization’s goals. Important requirements for effective direction are Harmony of objectives, Unity of command, direct supervision, efficient communication and follow-up.

3. Briefly explain the principles of planning. What is the difference between plans and policies?      8+4

Ans: Principles of Planning: A number of fundamental principles have been devised over the year for guiding managers undertaking planning. Some of these principles are discussed as under,

a)      Principle of contribution to objective: All types of plans are prepared to achieve the objectives of the organization. Both major and derivative plans are prepared to contribute to the objectives of the enterprise. Planning is used as a means to reach the goals.


b)      Principles of primacy of Planning: This principle states that planning is the first or primary function of every manager; He has to plan first and then proceed to carry out other functions. Other managerial functions are organized to reach the objectives se in planning.


c)      Principle of Planning Premises: In order to make planning effective, some premises or presumptions have to be made on the basis of which planning has to be undertaken. Plans are, generally not properly structures. The reason being that planning premises are not properly developed. This principle lays emphasis on properly analyzing the situation which is going to occur in future.


d)      Principle of Alternatives: Planning process involves developing of many alternatives and then selecting one which will help in achieving desired business goals. In the absence of various alternatives proper planning will be difficult.

e)      Principle of Timing: Plans can contribute effectively to the attainment of business goals if they are property timed. Planning premises and policies are useless without proper timing.


f)       Principle of Flexibility: This principle suggests flexibility in plans if some contingencies arise. The plans should be adjusted to incorporate new situations. The dangers of flexibility should be kept in mind. The changes may upset the earlier commitments. So the cost of changes should be compared to the benefits of flexibility.


g)      Principle of Commitment: There should be a time frame for meeting the commitments made. This will ensure the achieving of targets in time.


h)      Principle of Competitive Strategies: While formulating own. Plans a manager should keep in mind the plans of competitors. The plans should be framed by thinking of what the. Competitors will do in similar situations.

4. Discuss briefly the importance of leadership in an organisation. Explain the concept of 'managerial grid' and its purpose.                     6+6

Ans: Ans: Leadership is an important function of management which helps to maximize efficiency and to achieve organizational goals. The following points justify the importance of leadership in a concern:

a)      Initiates action: Leader is a person who starts the work by communicating the policies and plans to the subordinates from where the work actually starts.

b)      Motivation: A leader proves to be playing an incentive role in the concern’s working. He motivates the employees with economic and non-economic rewards and thereby gets the work from the subordinates.

c)      Providing guidance: A leader has to not only supervise but also play a guiding role for the subordinates. Guidance here means instructing the subordinates the way they have to perform their work effectively and efficiently.

d)      Creating confidence: Confidence is an important factor which can be achieved through expressing the work efforts to the subordinates, explaining them clearly their role and giving them guidelines to achieve the goals effectively. It is also important to hear the employees with regards to their complaints and problems.

e)      Building morale: Morale denotes willing co-operation of the employees towards their work and getting them into confidence and winning their trust. A leader can be a morale booster by achieving full co-operation so that they perform with best of their abilities as they work to achieve goals.

f)       Co-ordination: Co-ordination can be achieved through reconciling personal interests with organizational goals. This synchronization can be achieved through proper and effective co-ordination which should be primary motive of a leader.

Managerial Grid: Robert Blake and Jane Mouton (1960s) proposed a graphic portrayal of leadership styles through a managerial grid (sometimes called leadership grid). The grid depicted two dimensions of leader behavior, concern for people (accommodating people’s needs and giving them priority) on y-axis and concern for production (keeping tight schedules) on x-axis, with each dimension ranging from low (1) to high (9), thus creating 81 different positions in which the leader’s style may fall. The Managerial or Leadership Grid is used to help managers analyze their own leadership styles through a technique known as grid training. This is done by administering a questionnaire that helps managers identify how they stand with respect to their concern for production and people. The training is aimed at basically helping leaders reach to the ideal state of 9, 9. The purpose of it is to identify the five leaderships styles and to determine which one is best for the highest production but which is also the best option for the people.

5. Do you think that external sources of recruitment are better than internal sources of recruitment? Give your argument and also state the advantages of internal sources.                     6+6

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.

Advantages of Internal sources of recruitment:

a)      Internal recruitment tends to improve the morale of the employees  because they realize that they are preferred over outsiders when  there are vacancies in the organization.

b)      It is easier to evaluate those who are already employed than outside persons.  Because the company keeps a record of the progress, experience training, service etc of all its employees.

c)      It also promotes loyalty among the employees as it gives them a sense of job security and opportunities for career development.

d)      The persons employed by the company are fully aware and well acquainted with its policies procedures etc.  So they require little training and their chances to remain with the organization are relatively higher them those of outsiders.

e)      They are tried and hence reliable people recruitment of internal of cheaper and time saving.

6. What are the characteristics of a good control system? "Planning without control is meaningless". Do you agree with the statement? Why?                6+6

Ans: Essentials of a goo control system: The following are the essentials or basic requirements of an effectively control system:

1)      Suitable: The control system must be suitable for the kind of activity intended to serve. Apart from differences in the systems of control in different business, they also vary from department to department and from one level in the organization to the other.

2)      Understandable: The system must be understandable, i.e., the control information supplied should be capable of being understood by those who use it. A control system that a manager cannot understand is bound to remain ineffective.

3)      Economical: The system must be economical in operation, i.e., the cost of a control system should not exceed the possible savings from its use. The extent of control necessary should be decided by the standard of accuracy or quality required. A very high degree or standard of accuracy or quality may not really be-necessary.

4)      Flexible: The system of control must be flexible, i.e. workable even if the plans have to be changed. A good control system would be sufficiently flexible to permit the changes so necessitated.

5)      Forward Looking: The control system must be forward looking, as the manager cannot control the past. In fact, the control system should be so designed so as to anticipate possible deviations, or problems. Thus deviations can be forecast so that corrections can be incorporated even before the problem occurs.

6)      Suggestive Of Corrective Action: An adequate control system should not only detect failures must also disclose where they are occurring, who is responsible for them and what should be done to correct them. Overall summary information can cover up certain fault areas.

Planning without control is meaningless:

Planning and Controlling are closely related. The relationship between planning and controlling can be divided into the following two parts.

(i) Interdependence between Planning and Controlling.

(ii) Difference between Planning and Controlling.

(i) Interdependence between Planning and Controlling. Planning is meaningless without controlling and controlling is blind without Planning. Both the aspects of the interdependence of planning and control have been discussed below:

(a) Planning is meaningless without Controlling: if the process of controlling is taken away from management no person working in the enterprise will take it seriously to work according to the plans and consequently, the plans will fail.

(b) Controlling is blind without Planning: Under the system of controlling actual work performance is compared with the standards. Hence, if the standards are not determined there is no justification left for control and the standards are determined under planning.

(ii) Difference between Planning and Controlling: Yes, planning and controlling are incomplete and ineffective without each other but it doesn’t mean that both are not independent. Reasons are:

(a) Planning is looking Ahead whereas Controlling is Looking Back: Plans are always formulated for future and determined the future course of action for the achievement of objectives laid down. On the contrary, controlling is looking back because under it a manager tries to find out, after the work is completed, whether it has been done according to the standards or not.

(b) Planning is the first function and Controlling is the last function of Managerial Process: the managerial process moves in a definite sequence- like planning, organizing, staffing, directing and controlling happens to be the last step.


7. Write notes on any two of the following: 7+7

a) Morale: Out of Syllabus

b) Importance of communication

Ans: Communication is a process of understanding between the persons through exchange of ideas, messages, suggestions etc. It is important due to the following reasons –

a)  It facilitates Planning: Participation of all the executives in planning is a pre requisite for getting the task done. This participation is possible only when the managers and employees interact with each other. There should be no communication gap.

b) It helps in decision making. Most of the decisions are taken up by the top level management. But for decision making, right type of information is required from different persons. It is through communication that people come together in a firm, managers can identify the problems faced by the employees, so that he can take the decisions effectively.

c) It helps in the process of motivation: Sharing of the information with the subordinate gains their confidence and willing cooperation. Discussion on common interest of the management and workers is a source of satisfaction for the employees as it gives them recognition. It increases their morale of doing work.

d) It is a basis of effective leadership. A good communicator is a good leader. Through good communication skill, the manager comes closer to his subordinates and removes the misunderstanding. Thus it is the basis of leadership.

c) Objectives of coordination

Ans: Objectives of Co-Ordination:

1. Harmony of Goals: The most important objective of co-ordination is to create harmony of objectives in the minds of the employees.

2. Total Accomplishment: The other main objective of the co-ordination is to achieve total accomplishment rather than individual effort. It has been proved beyond doubt that total accomplishment is always much more than the sum of the individual efforts.

3. Economy and Efficiency: Another important objective of co-ordination is economy and efficiency. The co-ordination among the various resources of input results in economy and efficiency in the organisation.

4. Good social Relations: Integration of individual interests and organisational goals is the primary objective of the co-ordination. It provides job satisfaction and boosts morale of the employees and also establishes goods human relations in the enterprise.

d) Programme Evaluation and Review Technique (PERT).

Ans: PERT: Programme Evaluation and Review Technique is based on network analysis which uses estimates of time required to complete tasks for scheduling and controlling execution of projects. PERT is basically used for projects which are one time and may not be repeated. It helps in fixing the time and cost parameters of the project.

PERT was first developed as a Management Aid for completing Polaris Ballistic Missile Project in USA in October 1958. It worked well in expediting the completion of the project from 7 years to 5 years. Since then, PERT has become very popular technique used for project planning and control. In nutshell, it schedules the sequence of activities to be completed in order to accomplish the project within a short period of time. It helps reduce both the time and cost of the project.



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