Dibrugarh University B. Com 3rd Sem Solved Question
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3 SEM TDC MP & A (CBCS) C 307
Management Principles and Application MPA Solved Question Paper’
2021
(Held in January/February, 2022)
COMMERCE (Core) Paper: C-307
Full Marks: 80
Pass Marks: 32
Time: 3 hours
The figures
in the margin indicate full marks for the questions
1. (a) State whether the following statements are True or False: 1x4=4
a) Middle-level management includes Board
of Directors and Chief Executives.
Ans: False
b) Henri Fayol developed his idea regarding
the functions of management.
Ans: True
c) Strategic plans provide the framework
and direction for lower-level planning.
Ans: False, Top level plan
d) Tactical plans govern the day-to-day
operations of a business.
Ans: True
(b) Choose the correct answer from the
given alternatives: 1x4=4
1. Management deals with
a) Interval environment.
b) External environment.
c) Both internal and external environments.
Ans: c) Both internal and external
environments.
2. _______ is about grouping of jobs.
a) Organizing.
b) Directing.
c) Planning.
Ans: a) Organizing.
3. Which of the following is not a
limitation of planning?
a) Costing process.
b) Rigidity.
c) Top management approach.
Ans: c) Top management approach.
4. The basic role of strategic is to
provide
a) Setting procedure.
b) Direction of control.
c) Direction of action.
Ans: c) Direction of action.
2.
Write short notes on any three of the following: 4x3=12
a) Formal
organization.
Ans: MEANING OF
FORMAL ORAGANISATION: The formal organization refers to the
structure of jobs and positions with clearly defined functions and
relationships as prescribed by the top management. This type of organization is
built by the management to realize objectives of an enterprise and is bound by
rules, systems and procedures. Everybody is assigned a certain responsibility
for the performance of the given task and given the required amount of
authority for carrying it out.
In the words of Chester Barnard, "An organisation is formal
when the activities of two or more persons are consciously coordinated towards
a common objective".
Features
of Formal Organisation: The main features of formal
organisation are:
(a)
In a formal organisation, the
position, authority, responsibilities, accountability of each level are clearly
defined.
(b)
It prescribes the relationships
amongst the people working in the organisation.
(c)
The formal relations in the
organisation arise from the pattern of responsibilities that are created by the
management.
(d)
The structure is consciously designed
to enable the people of the organisation to work together for accomplishing the
common objectives of the enterprise.
(e)
A formal organisation is bound by
rules) regulation and procedures.
(f)
It is deliberately impersonal.
b) Delegation
of authority.
Ans: With
the allocation of duties and responsibilities, there must logically be the
grant of necessary authority to the subordinates so as to enable him to perform
his duties efficiently. The Principle of delegation of authority emphasizes
that the organisation structure should provide for the delegation of authority
to the subordinates.
Since so
many individuals work in the same organization, it is the responsibility of
management to lay down structure of relationship in the organization. Authority
without responsibility is a dangerous thing and similarly responsibility
without authority is an empty vessel. Everybody should clearly know to whom he
is accountable; corresponding to the responsibility authority is delegated to
the subordinates for enabling them to show work performance. This will help in
the smooth working of the enterprise by facilitating delegation of
responsibility and authority.
c) Extrinsic
motivation.
Ans: Extrinsic
motivation refers to motivation that comes from outside an individual. The motivating
factors are external, or outside, rewards such as money or grades. These
rewards provide satisfaction and pleasure that the task itself may not provide.
An extrinsically motivated person will work on a task even when they have
little interest in it because of the anticipated satisfaction they will get
from some reward. The rewards can be something as minor as a smiley face to
something major like fame or fortune.
For example, an
extrinsically motivated person who dislikes math may work hard on a math
equation because he wants the reward for completing it. In the case of a
student, the reward would be a good grade on an assignment or in the class.
Extrinsic
motivation does not mean, however, that a person will not get any pleasure from
working on or completing a task. It just means that the pleasure they
anticipate from some external reward will continue to be a motivator even when
the task to be done holds little or no interest.
An extrinsically
motivated student, for example, may dislike an assignment, may find it boring,
or may have no interest in the subject, but the possibility of a good grade
will be enough to keep the student motivated in order for him or her to put
forth the effort to do well on a task. Extrinsic motivation is likely to
involve the concept of rewarded behaviour.
d) Formal
communication.
Ans: Formal Communication:
Communication takes place through the formal channels of the organization
structure along the lines of authority established by the management is called
Formal Communication. It is that route of communication which is
institutionally determined and is associated with status or position of the
receiver and sender. The formal channels are deliberately related to ensure
that accurate information flows smoothly and timely. Such communications are
generally in writing and may take any of the forms; policy; manuals: procedures
and rule books; memoranda; official meetings; reports, etc.
Characteristics: Following are the chief characteristics of the
formal communication
(1) Written and Oral:
Formal
communication can both be written and oral. Daily works are handled through
oral communication, while the policy matters require written communication.
(2) Formal Relations:
This
communication is adopted among those employees where formal relations have been
established by the organisation. The sender and the receiver have some sort of
organisational relations.
(3) Prescribed Path:
The communication
has to pass through a definite channel while moving from one person to another.
For example, to convey the feelings of a worker to the manager, the foreman’s
help has to be sought.
(4) Organisational Message:
This channel is
concerned with the authorised organisational messages only and the personal
messages are out of its jurisdiction.
(5) Deliberate Effort:
This channel of
communication is not established automatically but effort has to be made for
its creation. It is decided keeping in view the objectives of the organisation.
3.
(a) Discuss the functions of management. “Coordination is wider than
cooperation.” Why? 8+4=12
Ans: 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 four 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 includes 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.
Importance
of co- ordination (Essence of Management):
Co-ordination is an integral element or
ingredient of all the managerial functions as discussed below: -
a)
Coordination
through Planning: Planning facilitates co-ordination by integrating the various
plans through mutual discussion, exchange of ideas. e.g. - co-ordination
between finance budget and purchases budget.
b)
Co-ordination
through Organizing - Mooney considers co-ordination as the very essence of
organizing. In fact, when a manager groups and assigns various activities to
subordinates, and when he creates department’s co-ordination uppermost in his
mind.
c)
Co-ordination
through Staffing - A manager should bear in mind that the right no. of
personnel in various positions with right type of education and skills are
taken which will ensure right men on the right job.
d)
Co-ordination
through Directing - The purpose of giving orders, instructions &
guidance to the subordinates is served only when there is a harmony between
superiors & subordinates.
e)
Co-ordination
through Controlling - Manager ensures that there should be co-ordination
between actual performance & standard performance to achieve organizational
goals.
Now we can conclude that all the functions of management are
affected by coordination. Hence coordination is essential for achieving the
objectives of the organisation. It is also required for the survival, growth
and profitability of the organisation. Coordination encourages team spirit,
gives right direction, motivates employees, and makes proper utilisation of
resources. Therefore, Coordination is rightly called the "Essence of
Management".
Or
(b)
Write a full note on ‘Hawthorne experiment.’ 12
Ans: Available in our mobile application
(Member’s only)
4.
(a) Discuss the importance of planning functions in management. 12
Ans:
Planning is the primary function of management.
Planning concentrates on setting and achieving objectives through
optimum use of available resources.
Planning is necessary for any organisation for its survival growth and prosperity
under competitive and dynamic environment.
Planning is a continuous process to keep organisation as a successful
going concern.
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.
Or
(b)
What do you understand by the term ‘planning’? Discuss about the various
techniques of planning. 4+8=12
Ans: Introduction of Planning
Planning is the primary function of management. Planning concentrates on setting and
achieving objectives through optimum use of available resources. Planning is necessary for any organisation
for its survival growth and prosperity under competitive and dynamic
environment. Planning is a continuous
process to keep organisation as a successful going concern.
In the
words of: Koontz and O’Donnel – “Planning is deciding in
advance, what to do, how to do it, when to do it, and who is to do it. It bridges the gap from where we are to where
we want to go.”
Allen – “Management planning involves the development of
forecasts, objectives, policies programmes, procedures, schedules and budgets.”
Haynes and Massie - Planning is a decision making process of a
special kind. It is an intellectual
process in which creative thinking and imagination is essential.”
Alfred and Beatty - “Planning is the thinking process, the
organized foresight, the vision based on fact and experience that is required
for intelligent action.
Various
Techniques of Planning (Available in our mobile application - Member’s only)
5.
(a) What is informal organization? Discuss the nature of informal organization.
4+8=12
Ans: MEANING OF INFORMAL ORAGANISATION: Man
is a social being and wants social interaction.
Formal organisations are joined by people to satisfy their needs but these
organisations cannot satisfy all the needs of people because of their
nature. Hence informal organisation
emerges in all the formal organisations.
Informal organisation is natural or spontaneous network of
personal and social relationships between individuals formed on the basis of
personal attitudes values emotions, friendships prejudices, interest’s likes
and dislikes, regional affinity, common work place etc. Informal organisation is all pervasive and is
found at all levels of management. It
consists of small informal groups with their own behavioral patterns, status
systems, beliefs and goals.
According to Davis informal organisations is” that network of
personal and social relations which is not established or required by formal
organisation. It is a shadow
organisation”.
Causes of Emergence of informal Groups:
1)
To satisfy social needs which are not
satisfied by formal organisations.
2)
To enjoy sense of belongingness and
identification.
3)
To get knowledge of approved behaviour
determined by the informal organisation.
4)
To get outlet of employees’
frustration.
5)
To achieve objectives which is not
possible in formal organisations.
6)
To get opportunities for influence and
creativity.
7)
To perpetuate cultural values.
8)
To promote communication and obtain
information.
Features and
Nature of Informal Organisation: The chief features of informal
organisation are:
1)
Informal Organisation is not
established by any formal authority. It arises from the personal and social
relations amongst the people working in the organisation.
2)
Informal Organisation arises
spontaneously, and not by deliberate or conscious efforts.
3)
It is influenced by the personal
attitudes, emotions, whims, likes and dislikes, etc. of the people in the
organisation.
4)
It is based on rules, regulations and
procedures.
5)
The inter-relations amongst the people
in an informal organisation cannot be charted (i.e., cannot be shown in an
organisation chart).
(Full
topic covered in our mobile application – Member’s only)
Or
(b) What do you mean by
the term ‘authority’? Describe the main characteristics of authority.
Differentiate between authority and responsibility. 2+6+4=12
Ans: Authority: Authority means power to take decision. To carry on
the responsibilities every employee need to have some authority. So, when
managers are passing their responsibilities to the subordinates, they also pass
some of the authority to the subordinates. The delegating authority is the
second step of organising process. While sharing the authority managers keep in
mind that the authority matching to the responsibility should only be
delegated. They shall not pass all their authority to their subordinates.
Features or
characteristics of Authority:
1. Legal Power to take decisions: Authority is a legal
power of superior which helps him to take decision and influence and guide
others.
2. Right to take Decision: Authority ensures the right to make
decision in favour of the organization.
3. Right to Command subordinates and lower level
management: Authority is a legal power to command subordinate level employees.
4. Dominance: Authority is dominance by nature because it gives
command to the leader over their subordinates.
5. Right to Control: Authority is a right to control
subordinates and other organizational functions in order to get better result.
6. Accountability: The person possessing authority is
also accountable to higher level authority. So, he should be accountable for
his work.
7. Direction of flow: Authority always flows downward from superior
to subordinates.
Difference between
Authority and Responsibility
Responsibility means the work assigned to an individual. It includes
all the physical and mental activities to be performed by the employees at a
particular job position. The process of delegation begins when manager passes
some of his responsibilities to his subordinates which means responsibility can
be delegated.
Responsibility is different from authority in the following manner:
|
Basis |
Authority |
Responsibility |
|
Meaning |
Authority is the power or right to take decision. |
It is the duty or task to be performed by an individual. |
|
Origin |
Authority arises because of a formal position in the organisation. |
Responsibility arises from the superior-subordinated relationship. |
|
Direction of
flow |
Authority
always flows downward from superior to subordinated. |
Responsibility
flows upward as superior assigns task or responsibility to subordinates. |
|
Delegation |
Authority can
be delegated. |
Responsibility
can be fully delegated. |
6.
(a) What is motivation? Discuss the importance of motivation as a tool of
supervision. 4+8=12
Ans: Motivation: The word motivation is derived from
‘motive', which means an active form of a desire, craving or need that must be
satisfied. Motivation is the key to organisational effectiveness. The manager
in general has to get the work done through others. These 'others' are human
resources who need to be motivated to attain organisational objectives.
According to George R. Terry, "Motivation is the desire
within an individual that stimulates him or her to action."
According to Berelson and Steiner “A
motive is an inner state that energizes activates, or moves and directs or
channels behavior goals".
According to Lills "It
is the stimulation of any emotion or desire operating upon one's will and
promoting or driving it to action".
According to Encyclopedia of Management “Motivation refers to the
degree of readiness of an organism to pursue some designated goals and implies
the determination of the nature and locus of force inducing a degree of
readiness."
Importance of
Motivation
a)
High Performance: - Motivated
employee’s writ put maximum efforts for achieving organisational goals. The
untapped reservoirs of physical and mental abilities are taped to the maximum.
Better performance will also result in higher productivity. The cost of
production can also be brought down if productivity is raised.
b)
Low employee Turnover and
Absenteeism: -When the employees are not satisfied with their job then they
will leave it whenever they get an alternative offer. The dissatisfaction among
employees also increases absenteeism. The employment training of new employee’s
costs dearly to the organisation.
c)
Better Organisational Images:
-Those enterprises which offer better monetary and non-monetary facilities to
their employees have a better image among them. Such concerns are successful in
attracting better qualified and experienced persons. Since there is a better
man-power to development programme, the employees will like to join such
organisations. Motivational efforts will simplify personnel functions also.
d)
Better Industrial Relations: -A
good motivational system will create job satisfaction among employees. The
employment will offer them better service conditions and various other
incentives. There will be an atmosphere of confidence among employers and
employees. There will be no reason for conflict and cordial relations among
both sides will create a healthy atmosphere. So motivation among employees will
lead to better industrial relations.
e)
Acceptability to Change: -The
changing social an industrial situation will require changes and improvements
in the working of enterprises. There will be a need to introduce new and better
methods of work from time to time. Generally, employees resist changes for fear
of an adverse effect on their employment.
Or
(b)
Define leadership. Are there any traits which seem to be common to all
successful leaders? 2+10=12
Ans: Introduction to Leadership
Leadership is the ability to build up confidence and deal among
people and to create an urge in them to be led. To be a successful leader, a
manager must possess the qualities of foresight, drive, initiative,
self-confidence and personal integrity. Different situations may demand
different types of leadership.
Leadership means influencing the behaviour of the people at work
towards realizing the specified goals. It is the ability to use non-coercive
(no force) influence on the motivation, activities and goals (MAG) of others in
order to achieve the objectives of the organisation.
Koontz and 0' Donnel “Leadership is the ability of a
manager to induce subordinates to work with confidence and zeal”.
George R Terry “Leadership is the activity of influencing people
to strive willingly for group objectives”.
Traits
and Qualities of a Good Leader
1.
Patience:
Patience is the capacity to face difficult situations, hardships or
inconvenience without making a single complaint. A good leader must show
patience while waiting for expected results, facing difficult situations and
taking important decisions. He must avoid taking hasty decisions and actions.
2.
Good
Personality: A good personality is a combination of
physical, mental and social qualities. Good personality helps a leader to
influence his followers. Attractive physique and good manners add an advantage
to the leader's personality.
3.
Self-confidence:
A good leader must have self-confidence. This quality is necessary
for facing challenging situations and for solving problems easily and
effectively.
4.
Human
Skills: A good leader must have essential social and human skills. That
is, he must understand people. This quality is necessary for dealing with
different types of persons and social groups.
5. Judgment skills: A good leader 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
6. Communication
skills: A good leader
should be able to communicate the goals and procedures of the organisation
clearly, precisely and effectively to the subordinates. Only then will it be
possible for him to convince, persuade and stimulate subordinates to action.
7. Listening skills: People tend to avoid a leader who does not listen.
Hence a good leader in one who can listen to other people’s problems. He should
be able to create a culture whereby people can be frank with him and give him
information and also give him feedback about himself, which can help him to
improve himself.
8.
Inspiring skills: A good leader should be able to inspire people to
deal with the “why” question. He should not just command and control but be
able to lead the people and get them involved to work together as a team.
9.
Administrative
Skills: A good leader must have an administrative ability. This means, he
must be able to get the work done through his followers. He must know how to
plan, organize and control the work of his followers.
10.
Discipline:
A good leader must be a disciplined person. This means he must
have respect for the rule and regulations of the organisation. This is because
his followers will follow his example.
11.
Initiative:
A good leader must always take an initiative. This means he should
do the right thing at the right time without being told by others. He must be
able to construct and implement his own plan.
12.
Intelligence:
A good leader must be smart and intelligent. That is, he should
have a good educational background and sound technical knowledge. He should be
more intelligent than his followers. If not, his followers will not respect
him. This will have a bad effect on his performance.
13.
Innovative: A good leader must have an art of
innovation. That is, he must have a good imagination and visualization skills.
He must develop new ideas and tactics to solve problems. He must combine the
new ideas with the old ideas.
7.
(a) (1) “Planning and controlling are two inseparable functions of management.”
Discuss. 6
Ans: Relationship between Planning and Controlling
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, organising, staffing, directing and controlling
happens to be the last step.
(2)
Write a detailed note on traditional techniques of managerial control. 6
Ans: Techniques of Control or Methods
of Establishing Control
A number of techniques or tools are used for the purpose of
managerial control. Some of the techniques are used for the control of the
overall performance of the organisation, and some are used for controlling
specific areas or aspects like costs, sales, etc. The various techniques of
control can be classified into categories, viz.,
(1) Traditional or Conventional techniques and
(2) Modern or Contemporary techniques.
Traditional
Techniques
1. Budgetary
Control: A budget is a
planning and controlling device. Budgetary control is a technique of managerial
control through budgets. It is the essence of financial control. Budgetary
control is done for all aspects of a business such as income, expenditure,
production, capital and revenue. Budgetary control is done by the budget
committee.
According to J.A. Scott, “Budgetary control is the
system of management control and accounting in which all operations are
forecasted and so far as possible planned ahead, and the actual results
compared with the forecasted and planned ones”.
2. 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”. The
technique of standard cost study comprises of:
Ø Pre-determination
of standard costs;
Ø Use
of standard costs;
Ø Comparison
of actual cost with the standard costs;
Ø Find
out and analyse reasons for variances;
Ø Reporting
to management for proper action to maximize efficiency.
3. Break-even
Analysis or Cost-Volume-Profit Analysis:
Cost-Volume-Profit Analysis or Break-even Analysis is the study of the
interrelationship between the cost (i.e., cost of production), volume (i.e.,
the volume of production and sales), the prices and the sales value, and the
profits. In other words, it is the study of the inter-relationship between the
cost (i.e., cost of production), volume (i.e., volume of production and sales),
prices (i.e., selling prices) and profits.
4. Inventory
Control: Inventory is the stock of raw materials,
work-in-progress, finished goods, consumable stores and spare parts and
components at any given point to time. So, inventory control means control over
different items of inventory or stock. “It is defined as physical control of
stock items and implementing the principles and policies relating thereto”.
5. Internal
Audit: Internal audit is a continuous and
systematic review of the accounting, financial and other operations of a
concern by the staff specially appointed by the management for the purpose. In
other words, it is the auditing for the management conducted by the staff
specially appointed for the purpose to ensure that the work of the concern is
going on smoothly, efficiently and economically.
6. Statistical
Data Analysis: It is a technique under which
statistical data of the past and the present relating to the important aspects
of the business are used for managerial control. The statistical data are
collected from books and registers of the concern and presented to the
management in a systematic manner in the form of tables, charts, graphs, etc.,
7. Direct Supervision and
Observation:
'Direct Supervision and Observation' is the oldest technique of controlling.
The supervisor himself observes the employees and their work. This brings him
in direct contact with the workers. So, many problems are solved during supervision.
The supervisor gets first-hand information, and he has better understanding
with the workers. Production Planning and Control:
According to S. Elon, “Production planning and control may be defined as the
direction and co-ordination of the firm’s material and physical facilities
towards the attainment of pre-specified production goals in the most efficient
and valuable way”.
8. Self-Control:
Self-Control means self-directed control. A person is given freedom to set his
own targets, evaluate his own performance and take corrective measures as and
when required. Self-control is especially required for top level managers
because they do not like external control. The subordinates must be encouraged
to use self-control because it is not good for the superior to control each and
everything. However, self-control does not mean no control by the superiors.
The superiors must control the important activities of the subordinates.
Or
(b)
Explain the following: 6x2=12
1. Zero-base
budgeting.
Ans: ZBB is defined as ‘a method of budgeting which requires each
cost element to be specifically justified, as though the activities to which
the budget relates were being undertaken for the first time. Without approval,
the budget allowance is zero’.
Zero – base budgeting is so called because it requires
each budget to be prepared and justified from zero, instead of simple using
last year’s budget as a base. In Zero Based budgeting no reference is made to
previous level expenditure. Zero based budgeting is completely indifferent to
whether total budget is increasing or decreasing.
‘Zero base budgeting’ was originally developed by
Peter A. Pyher at Texas Instruments. Peter A. Pyher has defined ZBB as “an
operating, planning and budgeting process which requires each manager to
justify his entire budget request in detail from scratch (hence zero base) and
shifts the burden of proof to each manager to justify why we should spend any
money at all”.
CIMA has defined it “as a method of budgeting whereby
all activities are revaluated each time a budget is set."
The major benefits of the use of zero base
budgeting can be the following:
a) Zero base budgeting examines all existing and new programmes and
activities. It also makes the managers analyse their functions, establish
priorities and rank them. This exercise helps in identifying inefficient or obsolete
functions within the area of responsibility. In this way resources are allocated from
low priority programmes to high priority programmes.
b) This system facilitates identification of duplication of efforts
among organisational units. Such inefficient activities are eliminated and some other
activities are merged.
c) All expenditures, under this system are critically reviewed and
justified and all operations activities are evaluated in greater detail in terms of
their cost- effectiveness and cost-benefits. This requires managers to find
alternative ways of performing their activities which may result in more efficient
procedures.
2. Management
audit.
Ans: Management audit is a method of independent and
systematic evaluation of the management activities at .all levels of management
to ascertain the functions, efficiency and achievement of' the management (i.e.
policies) as compared to standards set by the company.
According to L. R. Howard, "Management audit
is an investigation of business from the highest level downward in order to
ascertain whether sound management prevails throughout, thus facilitating the
most effective relationship with outside world and smooth running of internal
organization."
As per Taylor and Perry; "Management
auditing is a method to evaluate the efficiency of management at all levels
throughout the organization, or more specifically, it comprises the
investigation of a business by an independent body from the highest executive
level downwards, in order to ascertain whether sound management prevails
through and to report as to its efficiency or otherwise with recommendations to
ensure its effectiveness where such is not the case."
The scope of management audit is much wider than
financial audit because management audit evaluates not only financial audit but
also other aspects of the business. It is the method of evaluating the total
efficiency of the management from the top level to the lowest level. Therefore, the main scope of management audit
is:
(i) Evaluate the efficiency of the management:
Management· audit evaluates and appraise the efficiency of the management at
all levels.
(ii) Implementation of principles and policies of
the management: Management audit review whether principles and policies
formulated by the management have been successfully implemented or not.
(iii) Find variances: It detects the variances in
efficiency with the standards set by the management. .
(iv) Analyze the reasons for variances:
Management audit analyze the reasons for inefficiencies of the management for
not fulfilling the targets.
(v) Recommend suggestions for improvement: It
gives suggestions for improvement in the areas e.g. production, sales, purchase,
finance, human resources, administration etc.
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