Management Principles and Applications Solved Paper 2022, Gauhati University B.Com Solved Paper

Management Principles and Applications Solved Paper 2022
Gauhati University B.Com Solved Paper
2021 (Held in 2022)
COMMERCE (Honours)
Paper: COM-HC-3036
(Management Principles and Applications)
Full Marks: 80
Time: Three hours
The figures in the margin indicate full marks for the questions.

1. Choose the correct answers from the following:               1x10=10

1) Who among the following is not regarded as a thinker of the classical school of management?

a) Henry Fayol.

b) Max Weber.

c) F. W. Taylor.

d)A. H. Maslow.

Ans: a) Henry Fayol.

2) M.B.O. (Management by Objective) is also known as:

a) MBE (Management by Exception).

b) Management by Results.

c) Management of Change.

d)Professional Management.

Ans: b) Management by Results.

3) Organisation chart shows:

a) Communication channel.

b) Leadership styles.

c) Structure of relationship.

d) Span of control.

Ans: a) Communication channel.

4) Workers’ participation in management is best achieved with which of the following leadership styles?

a) Laissez-faire style.

b) Democratic type.

c) Autocratic type.

d) Contingency type.

Ans: b) Democratic type.

5) The exception principle to control means:

a) Control over all deviations.

b) Control over significant deviation.

c) Control over nominal deviation.

d) Control over no deviation.

Ans: b) Control over significant deviation.

6) Who advised substitution of functional organisation structure in place of line organisation structure?

a) Henry Fayol.

b) McFarland.

c) F. W. Taylor.

d) L. A. Allen.

Ans: c) F. W. Taylor.

7) The plan to achieve overall organisational goal is called:

a) Tactical plan.

b) Strategic plan.

c) Standing plan.

d) Operational plan.

Ans: b) Strategic plan.

8) To which theory ‘if’ and ‘then’ approach to management is associated with?

a) Operational theory.

b) Systems theory.

c) Quantitative theory.

d) Contingency theory.

Ans: d) Contingency theory.

9) Which one of the following is not a characteristic of new and dynamic organisation?

a) Permanent job.

b) Flexibility.

c) Skill focused manpower needs.

d) Diverse workforce.

Ans: a) Permanent job.

10) Which of the following aspects of human life may be adversely affected owing to overdependence upon electronic tools?

a) Personal life.

b) Family life.

c) Mental health.

d) All of the above.

Ans: d) All of the above.

2. Give very short answers to the following questions:        2x5=10

a) Mention two limitations of Weber’s Bureaucratic Model.

Ans: 1. Rules and regulations in bureaucratic model is rigid and inflexible. 2. Bureaucratic model focuses on mechanical method of doing work.

b) State two major distinctions between Management by Objectives and Traditional Goal Setting Plan.

Ans: 1. In MBO the objectives are evolved with the employee’s participation. All stages of management bring in the employee as a trusted partner. Traditionally management did not involve the employees in the various management functions.

2. Traditional objective setting is ‘top down’ only, while MBO is both a ‘top down’ and ‘bottom up’ process.

c) Mention two principles of delegation of authority.

Ans: 1. Principle of unity of command: This principle states that a subordinate should get instructions from only one superior and he is accountable only to the concerned superior.

2. Principle of parity of authority and responsibility: Authority should be commensurate with respon­sibility. Authority without responsibility will make the subordinate a careless person. On the other hand, responsibility without authority will make the subordinate an inefficient person.

d) What do you mean by management by exception?

Ans: Management by exception is an important principle of management control based on the belief that an attempt to control everything results in controlling nothing. Thus, only significant deviations which go beyond the permissible limit should be brought to the notice of management.

e) Give two comparisons between planning and forecasting.

Ans: 1. Planning Implies a Course of Action which is intended to be achieved in near future. Forecasting Simply Predicts What may happen in near future.

2. The process of planning is based on information, objectives and performance. The process of forecasting is based on assumptions, postulations and guesses.

3. Write short answers to the questions given below: (any four)         5x4=20

a) What are the activities of business as divided by Henry Fayol?

Ans: Six Activities of business according to Henry Fayol:

According to Fayol, all managerial tasks could be classified into one of the following six groups:

Technical (related to production);

Commercial (buying, selling and exchange);

Financial (search for capital and its optimum use);

Security (protection for property and person);

Accounting (recording and taking stock of costs, profits, and liabilities, keeping balance sheets, and compiling statistics);

Managerial (planning, organizing, commanding, coordinating and control);

b) State briefly the process of control in management.

Ans: Steps in Controlling Process: In order to perform his control functions, a manager follows three basic steps. First of all, he establishes the standards of performance to ensure that performance is in accordance with me plan. After this, the manager will appraise the performance and compare it with predetermined standards. This step will lead the manager to know whether the performance has come up to the expected standard or if there is any deviation. If the standards are not being met, the manager will take corrective actions, which is the final step in controlling.

1) Establishing standards: A standard acts as a reference line or basic of comparison of actual performance. Standards should be set precisely and preferably in quantitative terms. It should be noted that setting standards is also closely linked with and is an integral part of the planning process. Different standards of performance are set up for various operations at the planning stage, which serve as the basis of any control system. Establishment of standards in terms of quantity, quality or time is necessary for effective control. Standards should be accurate, precise, acceptable and workable. Standards should be flexible, i.e., capable of being changed when the circumstances require so.

2) Measurement of performance: This step involves measuring of actual performance of various individuals, groups or units and then comparing it with the standards, which have already been set up at the planning stage. The quantitative measurement should be done in cases where standards have been set in quantitative terms. In other cases, performance should be measured in terms of quantitative factors as in case of performance of industrial relations manager. Comparison of performance with standards is comparatively easier when the standards are expressed in quantitative terms.

3) Comparison: This is the core of the control process. This phase of control process involves checking to determine whether the actual performance meets the predetermined or planned performance. Manager must constantly seek to answer, “How well are we doing?” When a production supervisor checks the actual output or performance of his department with the production schedule, he is performing comparison aspect of control. When-an executive calculates the performance of his subordinates once in six months or   annuity, he is performing comparison aspect of control. Checking return on in investment is a comparison phase of control.

4) Taking corrective action: The final step in the control process is taking corrective actions so that deviations may not occur again and the objectives of the organisation are achieved. This will involve taking certain decision by the management like re-planning or redrawing of goals or standards, assignment of clarification of duties. It may also necessitate reforming the process of selection and the training of workers. Thus, control function may require change in all other managerial functions. If the standards are found to be defective, they will be modified in the light of the observations.

c) Discuss the importance of leadership in brief.

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.

d) Discuss the external factors that necessitate change.

Ans: External Factors Affecting Organizational Change

1. Political forces: Political forces within and outside the country have an important influence on large business houses. Particularly in translational corporations, the relationship between Government and business houses has become very complex in modern times.Generally, the interference of government in business has been tremendous in most countries.Many laws have been passed to regulate the activities of the corporate sector the organizations have no control over the political and legal forces, but they have to adapt to meet the pressures of these forces.

2. Market Conditions: Market conditions are no more static. They are in the process of rapid change is the needs, desires and expectations of the customers change frequently.So there is a tough competition between manufacturers and between suppliers in the market.The market is flooded with new products and innovations every day. New media of advertisement and publicity are being used for influencing the customers.All these factors put pressure on the modern organization to change its Technologies and marketing strategies.

3. Technology: Technology is the main external force that calls for the management of organizational change.The rate of technological change is better today than at any time in the past and technological changes are responsible for changing the nature of jobs working at all levels in the organization.Computer technology and automation have made A Remarkable impact on the functioning of organizations in recent times of technological advancement.

4. Social Changes: Because of the spread of education, knowledge explosion and government’s efforts social changes are taking place at a fast speed.Thus, the drive for social equality [the equal opportunity to women, equal pay for equal work] has passed new challenges for the management.The management has to follow social norms in shaping its employment, marketing, and other policies.

e) What are various barriers of delegation of authority from superiors’ viewpoint?

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.

f) Explain the principles of sound decision-making.

Ans: Principles of Sound decision making are listed below:

a) Proper Communication System of information:Effective decision-making requires a proper communication of information to all responsibility centres in the organisation. In the absence of such communication system, ignorance of decision or ill-informed decision may occur which result in misunderstanding and mis-communication amongst the subordinates.

b) Flexibility in Organisational Structure:The organisational structure have a significant impact on decision making. If the organisational structure is highly centralised and less flexible, decision-making authority will remain in the hands of the top management level which may result in delayed and confused decision.

On the other hand, if the organisational structure is decentralised, decision-making will be flexible and the decision-making authority will be close to the subordinates. In such a situation, decision-making will be prompt and expected to be more effective and acceptable.

c) Analysis of the Objectives and Policies of the business:Proper analysis of the objectives and policies of the business is important before decision-making. These objectives and policies of the business forms the basis that guides the direction of decision-making. Without this basis, decision-making will be aimless.

d) Time:Effective decision-making requires sufficient time. It is a matter of common experience that it is usually helpful to think over various ideas and possibilities of a problem for the purpose of identifying and evaluating it properly. But in no case a decision can be delayed for an indefinite period, rather it should be completed well in advance of the scheduled dates.

4. How is Scientific Management approach different from Human relations approach of management? Critically explain.           10

Ans: Scientific Management Approach: Scientific school of management is a management theory that was developed by F.W. Taylor in the year 1880. This helps to enhance labour productivity and thus increases the economy of the country. This model is also known seen from the classical perspective of Taylorism.

In the year 1909, Taylor published "The Principles of Scientific Management". In this school of management Taylor proposed that productivity could be increased if the jobs are more simplified and optimized. Here the workers and managers were asked to cooperate with each other. Workers did not earn any incentives from the work and there was no motivation at work. Taylor believed that money was the main motivator to work so he introduced the idea of "a fair day's pay for a fair day's work." This means if a worker did not work enough then he was not entitled to pay.

Human Relations Approach of Management: Human relations basically deal with the analysis of human nature, people's issues that occur due to organizational and interpersonal relationships. This approach stands to be very critical part for an organization's success. This approach was coined by Elton Mayo and his colleague Fritz Roethlisberger from Harvard University.

This study constituted about Hawthorne experiments which were conducted at the Western Electric factory in Chicago. The study depicted that lighting levels would have an impact on productivity of the workers and they thought that more light would increase more productivity of the workers (Accel-team.com, 2015). Later on they realized that lighting had no impact on worker’s performance. Instead they saw that the presence of researchers on the field allowed more employee productivity. They also decided to evaluate on the rest periods and hours of work of the workers.Later on they came up with a conclusion that it was because of the attitudes of the employees that there was an increase in the work productivity of the employees. The findings of the study were known as the Hawthorne Effect.

Difference Between the Two Approaches:

The Comparison and contrast is based on the worker’s thoughts and viewpoints that differs from individual to individual. The differences also depend on the way that how they control the workforce so that they can accomplish their task accordingly. If there is availability of proper coordination and effective on job relations, then individuals can work even under high pressure. It is always believed that an organization always depends on mutual cooperation and coordination; there must be a two-way interaction present in the organization. It is also necessary for the management to stay alert about the psychological needs of individuals. There should not be any dominancy by the higher authority. Orders are meant for execution. It is to be clearly understood that the subordinates are to give them tasks and not orders and the workers are meant to execute them. The major differences can be illustrated in the following points:

Human Relations Model emerged in the social era on where there is involvement of government and the economy and the classical management theory of Taylor was developed to lower the efficiencies of large scale production which had availability of presence of immigrant workforce who were not so qualified. The human relations model had a stable environment while the classical management theory had mostly implicit assumptions. Human approach forwarded their work by building cooperative systems for efficiency. While the scientific school had the control for efficiency. The human relations school had informal relations with their workers while the scientific school of management had structural organization design and job enrichment for workers were provided.

Or

What are the stages of evolution of management thoughts? Discuss the important features of classical theories of management.                 5+5=10

Ans: Evolution of management thoughts

The practice of management is as old as human civilization. The ancient civilizations of Egypt (the great pyramids), Greece (leadership and war tactics of Alexander the great) and Rome displayed the marvelous results of good management practices. The origin of management as a discipline was developed in the late 19th century. Over time, management thinkers have sought ways to organize and classify the voluminous information about management that has been collected and disseminated. These attempts at classification have resulted in the identification of management approaches. The approaches of management are theoretical frameworks for the study of management. Each of the approaches of management are based on somewhat different assumptions about human beings and the organisations for which they work. The different approaches of management are:

a) Early management approaches represented by scientific management (Classical approach or Theories)

b) Modern management approaches represented by behavioral science movement, quantitative approach, systems approach and Contingency approach (Neo-classical approach or theories)

a) THE CLASSICAL APPROACH: The classical approach is the oldest formal approach of management thought. Its roots pre-date the twentieth century. The classical approach of thought generally concerns ways to manage work and organisations more efficiently. Three areas of study that can be grouped under the classical approach are scientific management, administrative management, and bureaucratic management.

b) Neo-classical approach: It can be studied under the following headings:

a) THE BEHAVIORAL Or SITUATIONAL APPROACH: The behavioral approach of management thought developed, in part, because of perceived weaknesses in the assumptions of the classical approach. The classical approach emphasized efficiency, process, and principles. Some felt that this emphasis disregarded important aspects of organisational life, particularly as it related to human behavior. Thus, the behavioral approach focused on trying to understand the factors that affect human behavior at work.

b) THE QUANTITATIVE APPROACH: The quantitative approach focuses on improving decision making via the application of quantitative techniques. Its roots can be traced back to scientific management.

c) SYSTEMS APPROACH: The systems approach focuses on understanding the organisation as an open system that transforms inputs into outputs. The systems approach began to have a strong impact on management thought in the 1960s as a way of thinking about managing techniques that would allow managers to relate different specialties and parts of the company to one another, as well as to external environmental factors. The systems approach focuses on the organisation as a whole, its interaction with the environment, and its need to achieve equilibrium.

d) CONTINGENCY APPROACH: The contingency approach focuses on applying management principles and processes as dictated by the unique characteristics of each situation. It emphasizes that there is no one best way to manage and that it depends on various situational factors, such as the external environment, technology, organisational characteristics, characteristics of the manager, and characteristics of the subordinates. Contingency theorists often implicitly or explicitly criticize the classical approach for its emphasis on the universality of management principles; however, most classical writers recognized the need to consider aspects of the situation when applying management principles.

5. What are various types of plans? Also state the characteristics of a good plan.          5+5=10

Ans: Different types of plans are framed by the managers at different levels which are given below:

a) Objectives: Objectives are the goals established to guide the efforts of the management. Objectives are the ends towards which all the managerial activities are directed. Objective should be measurable and must be achievable within a given time limit. Example of increase in sales revenue by 10% by reducing prices.

b) Policies: Policy can be defined as organisation’s general response to a particular problem. In simple words, it is the organisation’s own way of handling the problems. Example: Different business firms may follow different sales policies as stated below: “We don’t sell on credit”; “It is our policy to deal with wholesalers only.

c) Procedures: Procedure can be defined as the exact manner in which an activity has to be accomplished. Procedures give details of how things are to be done. Example of procedure: Procedure of filing forms to get admission in a particular school.

d) Methods: Methods can be defined as formalized or systematic way of doing routine or repetitive jobs. The managers decide in advance the common way of doing a job. For example: Method of charging depreciation, methods for valuation of stock FIFO or LIFO.

e) Rules: Rules are specific statements that tell what is to be done. Rules are to be enforced rigidly. They do not allow for any flexibility or discretion. For example: No smoking in the business premise.               

f) Strategy: A strategy is a comprehensive plan to achieve the organisational objectives. It is a general programme of action and a deployment of resources towards the attainment of comprehensive objectives.

g) Programmes: Programmes are the combination of goals, policies, procedures and rules. All these plans together form a program.

h) Budget: Budget is the monetary and quantitative expressions of business plans and policies to be pursued in the future period of time. The term budgeting is used for preparing budgets and other procedures for planning, co-ordination and control of business enterprises.

Nature and Characteristics of Planning or Essentials of a good plan

a) Primacy of planning or primary function: Planning is a primary function. That is, it is a primary requisite to the managerial functions of organising, staffing directing, motivating, coordinating, communicating and controlling. A manager must do planning before he can undertake the other managerial functions.

b) Goal-oriented or focus on objectives: Planning is goal-oriented. That is, planning is linked with certain goals or objectives. A plan starts with the setting of objectives; and then, develops policies, procedures, strategies, etc. to achieve the objectives.

c) Pervasiveness of planning: Planning pervades all levels of management. That is planning is done at all levels of management. In other words, every manager, whether he is at the top, in the middle or at the bottom or organisational structure, plans.

d) Essentially a decision-making process: Planning is essentially a decision-making process, since it involves careful analysis of various alternative courses of action and choosing the best.

e) Integrated process: Planning is an integrated process. That is it facilitates and integrates all other functions of management.

f) Selective Process: Planning is a selective process. That is, it involves the selection of the best course of action after a careful analysis of the various alternative courses of action.

g) Flexible: Planning must be flexible. That is, generally, the process of pi3nning must be capable of being adapted to the changes in the environment. In fact, successful planning should be flexible.

h) Formation of premises: Planning requires the formation of premises (i.e., assumptions). It is only on the basis of premises or assumptions regarding the future (i.e., the future political, social and economic environments) that the plans will be ultimately formulated.

i) Directed towards efficiency: The main purpose of planning is to increase the efficiency of the enterprise. That means, planning is directed towards efficiency.

j) Continuous Process: Planning is a continuous process. That is, the management has to keep itself engaged in planning at the times because of the uncertainties of the future.

Or

Discuss the process of ‘Management by Objectives’. Also state the merits of Management by Objectives (MBO).            5+5=10

Ans: Process of MBO

MBO is a process for accomplishing enterprise objectives, enhancement of employee’s commitment and participation. This process consists of a number of steps. They are:

1. Setting of organisational objectives: The first step in MBO is to set verifiable objectives for the organisation. The objectives that are set also indicate the measures for achieving the objectives. The objective setting usually commences at the top level of the organisation and moves downwards to the lowest managerial levels. It goes in sequence like this:

        (a) Defining the purpose of the organisation

        (b) Long-range and strategic objectives

        (c) Short-range organisational objectives

        (d) Departmental objectives

        (e) Individual manager’s objectives.

2. Setting of subordinates’ objectives: Since organisational objectives are accomplished through individuals, each individual manager should know in advance what he is expected to accomplish. The objectives of the subordinates are set by the superior with their consultation and agreement. This process makes them committed.

3. Matching resources with objectives: When objectives are set, there should be a connection between objectives and resources. This helps the organisation in allocating the resources in an economical manner.

4. Appraisal: Appraisal is the periodical review of performance to measure whether the subordinate is accomplishing his objective or not. If not, what are the problems and how these problems can be overcome?

5. Recycling: The process of objective setting involves recycling. It means that first of all objectives are set in consultation with the subordinates, and then the subordinates set objectives for their subordinates, and so on. Thus, objective setting is a joint process through interaction between the superior and the subordinates. The three aspects involved in the recycling process consist of setting of objectives at various levels, action planning in the context of those objectives, and performance review. Each of these aspects provides the base for others.

The main benefits of MBO are as follows:

1. Improved Planning: MBO involves participative decision-making which makes objectives explicit and plans more realistic. It focuses attention on goals in key result areas. MBO forces managers to think in terms of results rather than activities. It encourages people to set specific pleasurable goals instead of depending on hunches or guesswork. An integrated hierarchy of objectives is created throughout the organisation. Precise performance objectives and measures indicating goal accomplishment are laid down. There is a time bound programme.

2. Co-ordination:MBO helps to clarify the structure and goals of the organisation. Harmony of objectives enables individuals at various levels to have a common direction. Every individual knows clearly his role in the organisation, his area of operation and the results expected of him. MBO result in clarification of organisational roles and structure. It promotes and integrated view of management and helps interdepartmental co-ordination.

3. Motivation and Commitment: Participation of subordinates in goal setting and performance reviews tend to improve their commit­ment to performance. The corporate goals are converted into personal goals at all levels to integrate the individual with the organisation. Timely feedback on performance creates a feeling of accomplishment Job enrichment and sense of achievement help to improve job satisfac­tion and morale. Improved communication and sense of involvement provides psychological satisfaction and stimulates them for hard work. MBO ensures perfor­mance by converting objective needs into personal goals and by providing freedom to subordinates.

4. Accurate Appraisal: MBO replaces trait based appraisal by per­formance based appraisal. Quantitative targets for every individual ena­ble him to evaluate his own performance. Performance under MBO is innovative and future oriented. It is positive, more objective and par­ticipative. Emphasis is on job requirements rather than on personality. MBO provides an objective criterion for evaluation of actual performance. "Indeed one of the major contributions of MBO is that it enables us to substitute management by self-control, for management by domina­tion.

5. Executive Development: The MBO strategy is a kind of self-discipline whereby shortcomings and development needs are easily iden­tified. It stresses upon a long term perspective and self-development. MBO releases potential by providing opportunities for learning, innova­tion and creativity. It encourages initiative and growth by stretching capabilities of executives.

6. Organisational Change and Development: MBO provides a frame­ work for planned changes. It enables managers to initiate and manage change. It helps to identify short-comings in organisational structure and processes. In this way, MBO improves the capacity of the organisation to cope with its changing environment. When an organisation is managed by objectives, it becomes performance-oriented and socially-useful.

Originally MBO was developed for business organisations but now it is being used by social welfare organisations also. But MBO might not be very successful in welfare organisations because of the abstract nature of the values to be measured in specific and quantified terms, general unwillingness on the part of personnel to subject their efforts to precise evaluations and lack of measuring instruments which could generate valid and reliable data. MBO has special significance in the areas of long range planning and performance appraisal.

6. Distinguish between delegation and decentralisation. Why and when decentralisation becomes necessary?            5+5=10

Ans: Difference between delegation and decentralisation

Basis

Delegation of Authority

Decentralisation

Meaning/Name

Sharing of the task with the subordinate and granting authority in a prescribed limit by the superior is Delegation.

The systematic delegation to the lowest level of management is called decentralization.

Nature

It becomes compulsory in all the organizations as the complete task cannot be performed by the superior.

It becomes compulsory in the large organisations.

Freedom in action

Less freedom to the subordinate Final authority lies with the delegator.

More freedom given to the subordinate.

 Status

This is a process done as a result of Division of work.

This is the result of the policies framed by higher officials.

Scope/Authority

It depicts limited distribution of work, so has a limited scope.

It depicts broader distribution of authority so has a wider scope.

Purpose

Its purpose is reduction of workload of the officer.

The purpose is expansion of the authority in the organization.

Why and When decentralisation becomes necessary?

a) Quicker and better decisions: it disperses decision making authority close to unit managers who execute decisions. It reduces problems of communication and red tape. This leads to quicker and better decision making

b) Diversification: decentralization facilitates diversification of products, activities and markets. Profit centers can be established with independence in decision making.

c) Competitive organizational climate: Decentralization promotes competitive climate for improving performance among divisions and profit centers.

d) Management development: decentralization encourages managers to exercise freedom and independence in decision making. They learn to make decisions and exercise judgment. This develops managerial competency.

e) Environmental adaptation: Decentralization helps organizations to adapt to fast-changing environment.

f) Relieves burden of top management: Top managers are relieved from making routine decisions. They can concentrate on important issues of strategic relevance.

Higher motivation and morale: Decentralization provides power, prestige and status to subordinates. This increases motivation and morale of subordinates

Or

What do you mean by span of management? Explain in this connection, the factors that determine ad ideal span of control.                3+7=10

Ans: SPAN OF MANAGEMENT OR SPAN OF CONTROL

Literally, the word 'span' means distance between the tip of a person's thumb and the little finger when stretched out, while the world 'control' means power or authority to direct, order or restrain. In Public Administration, span of control refers to the number of subordinates whom an officer can effectively control. It also means the number of subordinates an officer can direct. It may be also said, that the span of control means, simply, the number of subordinates or the units of work that an administrator can personally direct.

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.

5. Degree of Decentralization and Extent of Delegation: If a manager clearly delegates authority to undertake a well-defined task, a well-trained subordinate can do it with a minimum of supervisor's time and attention.

6. Effectiveness of communication system: Faulty communication puts a heavy burden on manager's time and reduces the span of control.

7. Quality of Planning: Effective planning helps to reduce frequent calls on the superior for explanation, instructions and guidance and thereby saves in time available at the disposal of the superior enabling him to have a wider span.

8. Degree of Physical Dispersion: If all persons to be supervised are located at the same place and within the direct supervision of the manager, he can supervise relatively more people as compared to the one who has to supervise people located at different places.

9. Assistance of Experts: the span of supervision may be wide where the services of experts are available to the subordinate on various aspects of work. In case such services are not provided in the organisation, the supervisor has to spend a lot of time in providing assistance to the workers himself and as such the span of control would be narrow.

7. How is communication important for effective management performance? Also state the advantages and limitations of informal communication.             5+5=10

Ans: Significance (Need) of Business communication

Communication is the life blood of business. It is an all pervasive function of management. Today the organizational structure is designed on the basis of specialization and division of labour. Large number of people work together who are functionally related to each other. Thus, coordination is must amongst the workmen. Co ordination can be achieved only when there is mutual trust and understanding between them. This understanding is created by effective communication. Thus communication is an essential ingredient for effective management. Further the role of communication may be summed up as:

1. The objectives, plans and policies of the organization are cleared to the workers through communication.

2. It provides unity of direction to various activities of the enterprise.

3. It helps in controlling and coordinating the various activities of the organization.

4. It helps in motivating the workers of an organization.

5. It helps the managers to develop their managerial skill.

According to Sir John Harvey-Jones, “Communication is the single most essential skill. Effective   communication is the need of the day.” In recent times communication has become all more essential due to the following reasons:

1. Growth in the size of the business organization:An efficient system of communication is required because the business organizations are growing tremendously. Thousands of people work in the organization. Organizations have factories or offices in different parts of the country or even world.

2. Advance technology:Day by day rapid changes are taking place in science and technology leading to obsolescence of old technology. Thus in order to upgrade or modernize technology proper communication between the superior and subordinate in an organization is a must.

3. Tough competition in the market:Globalization and liberalization have resulted in cut throat competition. Thus to survive such competition, persuasive communication in form of advertisement, publicity, personal contacts are essential.

4. Growing specialization:Division of work paved way for specialists to work in different department’s sound communication is thus essential for ensuring mutual cooperation and understanding between different departments.

5. Trade union movement:trade union movement is on its growth. Management now has to consult trade unions on various matters. A strong and meaningful relation between management and trade union is possible only by effective communication.

Informal Communication

Communication arising out of all those channels of communication that fall outside the formal channels is known as informal communication. Informal communication does not flow lines of authority as is the case of formal communication. It arises due to the personal needs of the members of an organization. At times, in informal communication, it is difficult to fix responsibility about accuracy of information. Such communication is usually oral and may be covered even by simple glance, gesture or smile or silence.

Informal communication is known as grapevine. Grapevine arises because of the desire of the people to communicate without following the formal channel of communication. It follows no setlines, nor any definite rules, but spreads like grapevine, in any direction anywhere.

Advantages of Informal Communication

Informal communication is free from maintaining rules and regulations, procedures and others. Such communication bears low cost than formal communication. Although informal communication does not follow any set rules or principle but it offers some advantages which are as follows:

1. Alternative System: There are some messages which cannot be sent through formal way and therefore requires some alternative. Such alternative can be informal communication. 

2. Interpretation: Message sent to subordinates requires explanation or interpretation and informal communication is the valuable means here. 

3. To Present Grievances: Employees can't make any complaints to superiors through formal communication. But informal communication gives the employees a better opportunity to raise their complaints, grievances or claim. Sometimes, in this way, as an informal communication system, grapevine affects much. 

4. Increase Efficiency: Employees can freely exchange their opinions in terms of informal communication. They can ask any question without any hesitation. Thus a cordial communication environment is created to increase the efficiency of employees. 

Disadvantages of Informal Communication

Although informal communication creates so many advantages but they are not free from drawbacks or limitations. Some significant demerits or disadvantages of informal communication system are as follows:

1. Distortion: Informal communication networks do not follow any set of rules, definite liners or ways. So it can transmit any kind of information to any person without any respect or fear. It may spread wrong or distorted news which may sometimes prove harmful even to the employees. So, it is the one of most considerable disadvantages of informal communication.

2. Lack of Secrecy: In informal communication, everybody can freely interact as there are no restrictions or rules. Any secret matter is likely to be flashed without any problem or hesitation. This may cause a huge damage to any organization.

3. Incomplete Information: Information released from such communication network is usually incomplete. So, there is each and every chance of it to be misunderstood or misinterpreted.

4. Non-Co-Operation: Sometimes, confusion develops among the persons involved in informal communication. As a result, they may remain separate without any co-operation. 

Or

Explain the major areas which require managerial control in an undertaking. Also discuss the limitations of control system.                6+4=10

Ans: Areas which requires managerial control in an undertaking:

(1) Managerial Control over Policies:The success of any business organisation to a large extent, depend upon that how far its policies are implemented. Hence, the need of control over policies is self-evident. In many enterprises, policies are controlled through policy manuals.

(2) Control over Organisation:Control over organisation is accomplished through the development of organisation chart and organisation manual. Organisation manual attempts at solving organisational problems and conflicts, making long- range organisation planning possible, enabling rationalization of organisation structure, helping in proper designing of organisation and departments.

(3) Control over Personnel:All employees working at different levels, must perform their assigned duties well and direction of their efforts and controlling their behaviour in the process of control over personnel. Personnel director or personnel manager perhaps control plan for having control over personnel.

(4) Control over Costs:Cost control is exercised by the cost accountant by setting cost standards for materials, labour and overheads and making comparison of actual cost-data with standard cost. Cost control is supplemented by budgetary control system.

(5) Control over Methods:This method is accomplished by conducting periodic analysis of activities of each department. The functions performed method adopted and time devoted by every employee is studied with a view to eliminate non-essential motions, function and methods.

(6) Control over Wages and Salaries:Such type of control is done by having programme of job evaluation and wage and salary analysis. This work is done either by personnel department or industrial engineering department. Often a wage and salary committee is constituted to help these departments in the task of controlling wages and salaries.

(7) Control over Capital Expenditure:It is exercised through a system or evaluation of projects, ranking of projects in terms of their ranking power and appropriating capital to various projects. A capital budget committee reviews the projects proposed and approves the projects of advantages to the firm. Capital budgeting, project analysis, break-even analysis, study of cost of capital etc., are some popular techniques of control over capital expenditures.

(8) Control over Production:Control over production is effected through studies about market needs, attitudes of customers and revision in product lines. Efforts are made to simplify and rationalize the line of products. Such efforts serve as control measures; Routing, Scheduling, Dispatching, Follow-up, Inventory Control, Inspection and Quality Control are some popular techniques of production control.

(9) Control over External Relations:Public Relations department is responsible for controlling the external relations of the enterprise. It may prescribe certain measures for other operating departments which are instrumental in improving external relations.

(10) Control over Research and Development:Such activities are highly technical in nature so no direct control is possible over them. By improving the ability and judgement of research, staff through training programmes and other devices, an indirect control is exercised on them. It is also exercised by having a research budget in the business.

(11) Overall Control is Also Essential:It is effected through budgetary control. Master plan is prepared for overall control and all the departments are involved in this. For effective control through the master plan, active support of top management is also essential.

Limitations of Controlling:

(i) Difficulty in setting quantitative standards: Control system loses some of its effectiveness when standards cannot be defined in quantitative terms. Employee morale, job satisfaction and human behaviors are such areas where this problem might arise.

(ii) Little control on external factors: Generally, an enterprise cannot control external factors such as government policies, technological changes, competition etc.

(iii) Resistance from employees: Control is often resisted by employees. They see it as restriction on their freedom.

(iv) Costly affairs: Control is a costly affair as it involves a lot of expenditure, time and efforts.

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