4UNIT-I

PRINCIPLES OF MANAGEMENT

MEANING OF MANAGEMENT:
Management is the process of getting work done by others with the aim of
achieving goals effectively and efficiently.
Management means organisation and coordination of the activities of a business
in order to achieve defined objectives.

DEFINITION OF MANAGEMENT:
ACCORDING TO George R Terry ‘Management is a distinctive process
consisting of planning, organising, actuating and controlling, performed to determine and
accomplish the objectives by the use of people and resources.

NATURE AND CHARACTERSTICS OF MANAGEMENT:

1. Management is a Goal Oriented Process
2. It is a Group Activity
3. Intangible Force
4. It is a Continuous Process
5. Management is Multi-Dimensional
1. Management of Work
2 .Management of People
3. Management of Operations
6. Management is all Pervasive
7. Management is a Dynamic function
8. Management is Science as well as Arts
9. Management is a Profession
10. Management is a system of Authority
11. Management involves Decision Making
12. Management is required at all levels of the organisation
13. Management is characterised by the Quality of leadership
14. Management is different from Ownership
15. Management has got a Separate Entity

SCOPE OF MANAGEMENT: (IT COVERS 3 IMPORTANT ASPECTS)

1. Subject matter of Management
2. Functional areas of Management
1. Financial Management ‘
2. Purchases Management
3. Production Management
4. Marketing Management
5. Transport Management
6. Personnel Management
7. Office Management
 3. Inter-Disciplinary Management
4. Principles of Management
5. Approaches to Management
6. Systems management

OTHER SCOPE OF MANAGEMENT:

1. Government Organisation
2. Non-Profit Organisation
3. Educational Institutions
4. Hospitals
5. Private Enterprises and Organisations
6. Hotels

ADMINISTRATION:
MEANING:
It refers to the group of Individuals who are in charge of creating and enforcing rules
and regulations or those in leadership positions who compete important tasks.
It is defined as act of managing duties, responsibilities or rules.

ORGANISATION:
MEANING:
An organisation is the combination of the necessary human beings, materials, tools,
equipment’s, working space in a systematic and effective correlation to accomplish some
desired object.

DIFFERENCE BETWEEN MANAGEMENT AND ADMINISTRATION:

BASIS MANAGEMENT ADMINISTRATION
Meaning An organised way of The process of
managing people and things Administrating an
of a business organisation is organisation by a group of
called as management. people is called
Administration.
Authority Middle Level Management Top Level Management
and Lower Level
Management
Role Executive Role Decisive Role
Concerned with Policy Implementation Policy Formulation
Area of Operation It works under It has full control over the
administration activities of the organisation
Applicable To Profit Making Organisations Government offices,
i.e. Business Organisations Military Clubs, Hospitals,
Educational organisations
Decides Who will do the work? What should be done?
How will it be done When should be done?
Work Putting plans and policies Formulation of plans,
into actions Framing of policies and
objectives
 Focus on Managing Work Making Best possible
allocation of limited
Resources
Keep Person Manager Administrator
Represents Employees who work for Owner, who get a return on
Remuneration the capital invested by them
Function It is a doing function It is a thinking function

OBJECTIVES OF MANAGEMENT OR IMPORTANCE OF MANAGEMENT:

1. Optimum utilisation of resources
2. Achievement of group goals
3. Minimising Cost
4. Management directs the organisation
5. Coordination and team spirit
6. More profits to enterprise
7. Provides Innovation
8. Promotion of Research and Development
9. Mobilisation of Best Talents
10. Growth and Development
11. Solution to Business problems
12. National stability and Prosperity.

MANAGERIAL SKILLS:
MEANING:
Managerial skills are the knowledge and ability of the Individuals in a managerial
position to fulfil some specific management activities or tasks.

THREE TYPES OF MANAGERIAL SKILLS:

1. Technical skills:
These skills are the abilities and knowledge needed to perform specific tasks.
They are practical and often relate to mechanical, IT, mathematical or scientific tasks.
Ex: 1. Management 5. Marketing
2. Business analyst 6. Graphic design
3. Accounting 7. Engineering
4. Project manager 8. Nursing

2. Conceptual Skills:
The ability to think creatively about, analyse and understand complicated and
Understand complicated and abstract ideas.
Ex: 1. Analysis 5. Problem solving
2. Communication 6. Decision making
3. Creative thinking 7. Motivation
4. Leadership 8. Multi-tasking

3. Managerial Skills: (Human Relation)

It refers to the ability of the manager to work with others and win full
cooperation from those working under him in the group.
 Ex: 1. Communication 5. Ethical
2. Conflict resolution 6. Problem Solving
3. Stress management 7. Team Building
4. Decision Making 8. Verbal Communication

RESPONSIBILITIES OF MANAGEMENT:
1. Responsibilities to Shareholders
2. Responsibilities to Employees
3. Responsibilities to Consumers
4. Responsibilities towards the Society.

LEVELS OF MANAGEMENT:
1. Top Level Management
2. Middle Level Management
3. Lower Level Management

1. Top Level Management: (Thinking Function)

1. Owners or Shareholders
2. Board of Directors
3. Chairman
4. Managing Director
5. Executive Committee

FUNCTIONS OF TOP LEVEL MANAGEMENT:

1. Top management lays down the objectives and board policies of the enterprise
2. It issues necessary instructions for preparation of development budgets, procedures,
schedules
3. It prepares strategic plans and policies for the enterprise
4. It appoints department managers
5. It controls and coordinates the activities of all departments
6. It provides guidance and direction
7. It is also responsible for maintaining contact with outside world
8. It controls the operations through the organisation
9. It assembles resources
10. It issues instructions.

2. Middle Level Management: (Implementing Function)

1. Department Heads
2. Marketing, Finance, Production, Accounts, Technical, Human resource.

FUNCTIONS OF MIDDLE LEVEL MANAGEMENT:

1. They execute the plans of the organisation in accordance with the policies of top level
management
2. They make plans for the sub units of organisation
3. They participate in employment and training of lower level management
 4. They interpret and explain policies from top level management to lower level
management
5. They are responsible for coordinating the activities within the division
6. They evaluate the performance of junior managers
7. They are also responsible for inspiring managers towards better performance
8. Assigning the duties to lower level managers and workers
9. Motivation to lower level Managers and workers
10. Suggesting top executives.

3. Lower Level Management: (Doing Function)

1. Superintendents
2. Foreman
3. Supervisors

FUNCTIONS OF LOWER LEVEL MANAGEMENT:

1. Assigning of jobs and tasks to various workers
2. They guide and instruct workers fir day to day activities
3. They are responsible for the quality as well as quantity of production
4. They are also entrusted with the responsibility of maintaining good relation in the
organisation
5. They help to solve the problems of workers
6. They help the supervisors and guide subordinates
7. They are responsible for providing training to workers
8. Providing tools and equipment’s
9. Maintaining Discipline
10. Suggesting middle level managers.

BASIC FUNCTIONS OF MANAGEMENT OR MANAGEMENT PROCESS

(PODSCORB):
1. Planning
2. Organising
3. Directing
4. Staffing
5. Coordination
6. Reporting
7. Budgeting
8. Controlling

HENRY FAYOLS 14 PRINCIPLES OF MANAGEMENT:

1. Division of work:
 This principle suggests that total work should be divided into small parts. Each
part of work should be allocated who is expert in that part of the work.
 This leads to Specialisation
 Less Wastage
 Reduces Risk
2. Authority and Responsibility:
 Authority means power to take decisions
 Responsibility means obligation to complete the assigned job on time
 Authority comes from official and personnel factors
 Official authority comes from managers position
 Personnel authority comes from qualities like Intelligence, Experience, and
Moral worth
 Authority without Responsibility results in irresponsible behaviour
 Responsibility without Authority makes people Ineffective
 Both must go together.

3. Discipline:
 It is obedience, application, energy, behaviour and respect shown by the
employees.
 Discipline is of two types: 1.Self Employed Discipline 2.Command Discipline
 Self Employed Discipline: Comes from within the Individual.
 Command Discipline: Comes from some authority, expressed through rules,
regulations and customs.\
 All the personnel serving in the organisation should be disciplined.

4. Unity of Command:
 It means that a person should get orders/instructions from only one superior.
 An Individual cannot serve 2 bosses at the same time
 This leads to confusion, misunderstandings and conflicts.

5. Unity of Direction:
 Each group of activities with the same objectives must have one head and one
plan.
 Unity of command talks about the reporting relationship of the personnel at all
levels
 Unity of direction talks about functioning of organisation in terms of grouping
of activities.

6. Subordination of Individual Interest to General Interest:

 Interest of the organisation should take priority over individual interest
 If Individual and organisational interests are different then managers must try
to convince them
 If not the individual interest should be sacrificed.
 Factors like Laziness, Ambition, Selfishness and Carelessness tend to reduce
organisational interest.

7. Remuneration:
 It should be fair, reasonable and satisfactory.
 It should provide maximum satisfaction to employees and employers.
 Dissatisfaction will lead to increase in employee turnover.
8. Centralisation and Decentralisation:
 Everything which goes to increase the importance of subordinate’s role is
Decentralisation.
 Everything which goes to decrease the importance of subordinate’s role is
Centralisation.
 In smaller firms usually centralisation can be observed, but in large firms a
series of intermediaries are required.
 Its degree varies due to:
1. Character of manager
2. His moral worth
3. Reliability of his subordinates
4. Conditions of the business

9. Scalar Chain:
 There should be scalar chain of authority and communication ranging from the
highest to the lowest.
 Each communication going up or coming down must flow through each
position in the line of authority.
 Fayol also suggested the concept ‘GANGPLANK;
 It is suggested that the scalar chain can be short circuited in special cases when
rigid following of the scalar chain can get detrimental to the organisation.

10. Order:
 This principle relates to arrangement of things and people.
 These should be a place for everything and everything should be in place
likewise right man should be in right place
 Bigger the organisation, more difficult the order.

11. Equity:
 It is a combination of justice and kindness.
 Equity in treatment and behaviour is liked by everyone
 It brings loyalty to the organisation
 Its application requires good sense, experience and good nature.

12. Stability of Tenure:

 No employee should be removed within short time.
 There should be reasonable job security
 Unnecessary turnover is bad for the organisation.
 Stability in tenure is important to get employee accustomed to new work and
succeed in doing well.

13. Initiative:
 Managers should encourage their subordinates to take initiative within the
limits of authority and discipline.
  Initiative is concerned with thinking out of execution of a plan
 It encourages energy zeal.

14. Espirit De Corps: (French Word)

 This is the principle of ‘UNITY IS STRENGTH’ or ‘TEAM SPIRIT’
 The manager must encourage espirit de corps among his employees
 Every employee in the organisation must consider him as a part of a team and
try to achieve the team goals because team contribution is always better than
individual contribution.

EVOLUTION OF MANAGEMENT THOUGHT:

1. Pre Scientific Management (Before 1880)
2. Scientific Management ( 1880-1930)
3. Human Relation Era (1930-1950)
4. Behavioural Science Era (1950 onwards)
5. Management Science Era (1950 onwards)
6. Systems Approach (Management thought today)

PRE-SCIENTIFIC MANAGEMENT:
(ROBERT OWEN AND CHARLES BABBAGE)

Robert Owen believed and practiced the Idea that workers should be treated as Human
Beings.
 PROVISIONS:

1. Shorter working hours

2. Housing facilities
3. Education of workers and children
4. Provisions of shops
5. A system of discipline.

DISADVANTAGES OF PRE-SCIENTIFIC MANAGEMENT:

1. Underutilisation of resources
2. Rule of Thumb, No science
3. No scientific effort
4. No division of responsibilities
5. Restrictions on output
6. Lack of efficiency of workers
7. Lack of knowledge
8. How much work and how much in a day.

This was based on Rule of Thumb; which means without any law or principles. It was
based on Trial or Error method or Hit or Miss. Application of Traditional methods decided by
manger based on his past experience.
SCIENTIFIC MANAGEMENT:
1. FREDRIC WINSLOW TAYLOR: [FATHER OF MODERN MANAGEMENT]
2. HENRY FAYOL [REAL ORIGINATOR OF MANAGEMENT SCIENCE]

SCIENTIFIC MANAGEMENT MEANS APPLICATION OF SCIENCE TO

MANAGEMENT

DEFINITION:
According to F.W.Taylor “Scientific management means knowing exactly what you
want men to do and see in that they do it in the best and cheapest way.

FEATURES OF SCIENTIFIC MANAGEMENT:

1. Separation of planning from doing
2. Functional foremanship
3. Job analysis
4. Standardisation of tools and equipment’s
5. Scientific selection, placement and training of workers
6. Financial incentives to workers
7. Management to plan the work to be done in advance
8. Mental revolution

PRINCIPLES OF SCIENTIFIC MANAGEMENT:

1. Replacing rule of thumb with science
2. Harmony not discord
3. Cooperation not individualism
4. Maximum output in place of restricted output
5. Scientific selection, training of workers
6. Development of each man to his greatest efficiency and prosperity
7. Division of work and responsibility
8. Standardisation

ADVANTAGES OF SCIENTIFIC MANAGEMENT:

1. Enhanced production
2. Ability to control
3. Decreases inaccuracy
4. Decreased autocracy
5. Cost of production id reduced
6. Pay system
7. Quick decision making
8. Benefit to customers
9. Efficiency increased
10. Best use of resources
11. Less production time
12. Good working conditions
13. Avoids labour and management disputes
14. Owners and investors benefited
DISADVANTAGES OF SCIENTIFIC MANAGEMENT (CRITICS):
1. Requires huge capital
2. Management takes control
3. Planning reduces productivity
4. Demotivating approach
5. Overly bureaucratic
6. Mechanistic
7. Not suitable for teams
8. Work division
9. Avoids bargaining
10. Unemployment
11. Stress
12. Time consuming

HUMAN RELATION ERA:

According to this approach, Management is the study of behaviour of people at work.
It is a study of the behaviour of workmen and his relationship to the company, to the job and
his fellow workers.

FEATURES OF HUMAN RELATION ERA:

1. Removing conflict
2. The consent and participation of employees
3. Leadership
4. Management as a profession
5. Coordination

BEHAVIOURAL SCIENCE ERA:

In this approach: It considers the behaviour of human beings as the focal point of
the management action. It doesn’t view management strictly as a technical process.
Findings of behavioural science such as psychology, sociology, psychiatry, economics,
cultural philosophy. It is said that human element is the key factor in success or failure of any
organisation.

FEATURES OF BEHAVIOURAL SCIENCE ERA:

1. Participation of employees in decision making process
2. Better wages to workers
3. Development of organisational climate more conducive to the satisfaction of human
needs
4. Change in traditional methods of control
5. Better working conditions

MANAGEMENT SCIENCE ERA:

A. DECISION THEORY SCHOOL
B. MATHEMATICAL SCHOOL
 1. Decision Theory:
The progress of an organisation ids determined by the cumulative effect of
thousands of decision made by managers at all levels.

2. Mathematical School:
Management involves a rational and logical pattern, the pattern can best be
expressed through the use of mathematics which is also logically based.
TECHNIQUES:
1. Operational research
2. Linear programming
3. Break even analysis
4. Critical path method

SYSTEMS APPROACH:
I this approach: It is primarily concerned with integrating the findings of scientific
management, principles of management and human relations movements.

SIX CATEGORIES OF BUSNIESS UNIT:

1. Technical (production and manufacturing)
2. Commercial (buying and selling)
3. Financial (securing capital)
4. Security (protecting property and persons)
5. Accounting (financial statements)
6. Managerial (functions)

QUALITIES OF SUCCESSFUL MANAGER:

1. Physical
2. Mental
3. Moral
4. Education
5. Technical
6. Experience

MANAGEMENT IS SCIENCE AS WELL AS ARTS:

Arts and Science cannot be separated completely from each other.

ART SCIENCE
1. Art is the ability, skills, creativity and Science is the logic, reason and factual
imagination analysis
2. Art is the ability or skills associated to do Science is the logic and reasoning of ‘why’
a particular task behind every task, something which can be
proved on the basis of experiments
Ex: Ability or Skills such as: Ex: Logic or Reasoning such as:
Photography, Ability to cook tasty food, How mobiles work? How aeroplanes fly in
Crafting, painting, Creativity. the air? Why pressure cooker cooks faster?
COMBINATION OF ART AND SCIENCE:

SKILLS LOGIC
1. Art of cooking tasty food  How to cook food to make it tasty?
2. Art of making Jewellery  How to make ornaments?
3. Art of making beautiful multi  Concrete, steel, combination and
Storey building building design structure.
4. Martial arts  where and how to hit at body for
Self-defence?

MAJOR SCHOOLS OF MANAGEMENT THOUGHT:

1. Management process school
2. Empirical school
3. Human behaviour school
4. Social systems school
5. Decision theory school
6. Mathematical school
7. Systems management school
8. Contingency school

1. Management process school: According to this school of thought, management is

the process of getting things done through others. The management process consisting
of 5 broad categories of functions which is:
A. Planning
B. Organising
C. Staffing
D. Directing
E. Controlling

2. The empirical school: this school was based on the premise that management
problems could be solved better by drawing up on the experience of the managers.
Management is the study of the experience of men who direct the operations of the
enterprise. Management is the study of experience.

3. Human behaviour school: According to this school of thought, Management is the

study of behaviour of the people at work. A manager should have a basic
understanding of human behaviour in all aspects.
People being regarded as people is more important in increasing the productivity of
the workers than the factors such as rest period and money.

4. Social system school: According to this school of thought human element is the key
factor in the success or failure of any organisation.
Cooperation and team spirit among the members of the groups is essential for the
accomplishment of the common objectives of the organisation.
5. Decision theory school: This school of thought concentrates its attention on decision
making and treats the various aspects of decision making as constituting the scope of
the study of management.
Management is regarded as decision making, manager is a decision maker and
problem solver. This school emphasises the significance of decision making in the
process of management.

6. The mathematical school: This school emphasised that management is a set of

mathematical models and symbols. Management must take or make use of
mathematical tools, equipment’s and techniques for solving business problems.
Mathematics is now being used in management to study various problems and analyse
them and also to find out suitable rational solutions to these problems.

7. System approach school: According to this approach school, attention must be paid
to the overall effectiveness of the system rather than the effectiveness of a system in
isolation from the subsystem. Organisation may be viewed as a system made up of
different parts in the form of departments.

8. The contingency school: The basic idea of contingency approach is that there cannot
be a particular management action which will be suitable for all situations. There are
many ways of performing different functions of management in different situations
because there is no one best way of performing or doing things in all situations.
 UNIT-II
PLANNING AND DECISION MAKING
PLANNING:
MEANING:
Planning is a process which involves anticipation of future course of events and
deciding the best course of action. It is a process of thinking before doing.

DEFINITION:
According to Alfred and Beatty “Planning is the thinking process, the organised
foresight, the vision based on facts and experience that is required intelligent action.

FEATURES OF PLANNING:
1. Planning contributes to objectives
2. Planning is primary function of management
3. Planning is pervasive in nature
4. Planning is futuristic
5. Planning is a continuous process
6. Planning involves decision making
7. Planning is a mental exercise
8. Planning is flexible

IMPORTANCE OR ADVANTAGES OF PLANNING:

1. Planning provides direction
2. It reduces risks and uncertainties
3. Educes wasteful activities
4. Promotes innovative ideas
5. Facilitates decision making
6. Establishes standards for controlling
7. Focuses on objectives of the company
8. It coordinates activities
9. It helps in implementing the future programmes systematically
10. It helps in performing all functions of management
11. It promotes team spirit in the organisation
12. It helps to adopt latest technology

LIMITATIONS OR DISADVANTAGES OF PLANNING:

1. Planning leads to rigidity
2. Planning may not work in dynamic environment
3. It reduces creativity
4. It involves huge cost
5. It is time consuming process
6. Planning doesn’t give guaranteed success
7. Lack of reliable data
8. Adverse effects of outside forces
9. Resistance to changes
10. Mental attitude of management
STEPS OR PROCESS OF PLANNING:
1. Determination of objectives
2. Establishing planning premises
3. Determining alternative course of action
4. Evaluation of alternatives
5. Selection of best course of action
6. Developing derivative plans
7. Setting up of schedules and sequence of activities
8. Follow up action

MEASURES TO MAKE PLANNING EFFECTIVE:

1. Cleary defined objectives
2. Efficient information system
3. Careful planning
4. Careful forecasting
5. Dynamic managers
6. Flexibility
7. Cost benefit analysis

ELEMENTS OR COMPONENTS OF PLANNING:

1. Objectives
2. Policies
3. Programmes
4. Procedures
5. Methods
6. Budgets
7. Strategies

TYPES OF PLANNING:

1. Financial planning and Physical planning

2. Formal planning and Informal planning
3. Specific planning and Routine planning\
4. Profit planning
5. Short range planning and Long range planning

TYPES OF PLANS:

1. Standing Plans: These are the plans which are used repeatedly in situations of a
similar nature (Repeated use plans)
Ex: Mission, Objectives, Strategies< policies and Procedures, Rules

2. Single Use Plans: These are the plans used only once and then are discarded. These
are designed to meet the demand of specific situation.
Ex: Programmes, Projects, Schedules, Budgets, standards.
PLANNING PREMISES:
MEANING:
The forecast or assumptions about future which provide a base for planning in present
are known as planning premises.

TYPES OF PLANNING: (3 TYPES)

1. Uncontrollable Premises
2. Semi Controllable Premises
3. Controllable Premises

ESSENTIALS OF GOOD PLAN:

1. Simple and Easy
2. Flexible
3. Rational Approach
4. Balanced
5. Well Defined Objectives
6. Coordination
7. Provide Appropriate Action
8. Free from Personal Bias
9. Proper Analysis
10. Minimize the Wastages

DECISION MAKING:
MEANING:
It is a process resulting in the selection of a course of action among several alternative
possibilities. Decision making is a blend of thinking, deciding and action. It is said ‘Whatever
a manager does, he does through decision making.’

DEFINITION:
According to George R Terry “Decision making is the selection based on some criteria
from two or more possible alternatives.”

FEATURES NATURE OF DECISION MAKING:

1. Decision making is a goal oriented process
2. It is a Continuous process
3. It is selection between different alternatives
4. It is intellectual process
5. It is a dynamic process
6. It may be positive or negative
7. It is means to an end

TYPES OF DECISION MAKING:

1. Organisational and Personnel Decisions
2. Routine and Strategic Decisions
3. Major and Minor Decisions
4. Programmed and Non Programmed Decisions
 5. Policy and Operating Decisions
6. Departmental and Inter Departmental Decisions
7. Long term Decisions
8. Non-Economic Decisions

STEPS IN DECISION MAKING:

1. Identifying the problem

2. Analysing the problem
3. Developing alternative solution to problem
4. Selecting the best alternative
5. Implementation of a decision
6. Follow up and feedback

TECHNIQUES OF DECISION MAKING:

1. Break even analysis

2. Operation research
3. Linear programming
4. Economic order quantity
5. Programme evaluation and review technique
6. Game theory
7. Decision tree
8. Queuing theory

ADMINISTRATIVE PROBLEMS IN DECISION MAKING PROCESS or HOW TO

MAKE DECISION MAKING PROCESS MORE EFFECTIVE?

1. Defining scope of problem

2. Proper authority
3. Timing of decisions
4. Identification of problems
5. Correctness of decisions
6. Goal oriented process
7. Decision environment
8. Participation in decision making
9. Communication of decisions
10. Implementation of decision

APPROACHES TO DECISION MAKING: (3 TYPES)

1. Intuitive approach
2. Judgemental approach
3. Rational approach
MANAGEMENT BY OBJECTIVE:
MEANING:
It is a process whereby superiors and subordinates jointly identify the common
objectives and goals.
Set results that should be achieved by the subordinates assess the contribution of each
individual and integrate individuals with the organisation as to make best use of
organisational resources.
 UNIT-III
ORGANISATION
MEANING OF ORGANISATION:
Organisation is a process which integrates different type of activities to achieve
organisational goals, to achieve these goals there must be competent management providing
them all those factors to perform their job effectively and efficiently.\

DEFINITION OF ORGANISATION:
According to Henri Fayol “Organisation is to organise a business Is to provide it
with everything useful to its functioning raw materials, tools, capital and personnel.

FEATURES OF ORGANISATION:
1. Division of labour
2. Coordination
3. Accomplishment of goals and objectives
4. System of cooperative activity
5. Authority and Responsibility

IMPORTANCE OF ORGANISATION:
1. Facilitates administration
2. Facilitates growth and development
3. It provides for optimum use of technology
4. It ensures optimum use of human resources
5. It facilitates coordination
6. It ensures Cooperation amongst workers
7. It stimulates creativity
8. It facilitates stability

STEPS IN ORGANISATION:
1. Determination of activities
2. Grouping of activities
3. Allocation of duties and fixation of responsibilities
4. Delegation of authority
5. Evaluation of control

PRINCIPLES OF ORGANISATION:
1. Unity of objectives
2. Unity of actions
3. Division of work and specialisation
4. Principle of coordination
5. Scalar principle
6. Authority and responsibility
7. Unity of command
8. Unity of Direction
9. Principle of exception
10. Principle efficiency
 11. Principle of balance
12. Span of control
13. Communication
14. Definition of jobs
15. Principle of flexibility
16. Leadership

FORMAL AND INFORMAL ORGANISATION:

1. Formal organisation: (Exist in all organisation) It is a group of people working

together in cooperation under authority towards common objectives for the mutual
benefits of the participants.

2. Informal organisation: It refers to the relationship between people in the

organisation based not on procedures and regulations laid down in the organisation
but on personnel attitudes, friendship or some common interest which may or may not
be work related.

DIFFERENCE BETWEEN FORMAL AND INFORMAL ORGANISATION:

BASIS FORMAL INFORMAL

Meaning An organisation type in which An organisation formed within the
the job of each member is formal organisation as a network
clearly defined, whose authority of interpersonal relationship when
responsibility are fixed is formal people interact with each other is
organisation known as informal organisation.
Creation Deliberately by top level Spontaneously by members
management
Purpose To fulfil the ultimate objectives To satisfy their social and
of the organisation psychological needs
Nature Stable, It is continuous for a Not stable
long time
Communication Official communication Grapevine
Control Rules and Regulations Norms, values and beliefs
Mechanism
Focus on Work performance Interpersonal relationship
Authority Members are bound by All members are equal
hierarchical structure
Size Large Small
Importance It gives to efficiency, discipline It gives to relative freedom and
and control homeliness

ORGANISATION CHARTS:
MEANING:
An organisational chart is a diagrammatical form which shows important aspects of an
organisation including the major functions and their respective relationships.
TYPES OF ORGANISATION CHARTS:
1. Top Down chart or Vertical chart
2. Left to Right chart or Horizontal chart
3. Circular chart

ORGANISATION MANUAL:
MEANING:
Organisation manual is a small book or booklet containing information about the
organisational objectives, authority and responsibility of various positions and methods and
procedures to be followed.

DEPARTMENTATION:
MEANING:
Depart mentation is the process of dividing and grouping the activities of an enterprise
into various units for the purpose of administration.

DEFINITION:
According to Koontz and O’Donnell “it is a distinct area, division of an enterprise over
which a manager has authority for the performance of specified activities.

NEED AND IMPORTANCE OF DEPARTMENTATION:

1. Systematic division of work
2. Specialisation
3. Enhance efficiency and productivity
4. Facilitates communication, coordination and control
5. Chance of expansion
6. Helps in measuring the performance of individuals and departments
7. Feeling of autonomy and freedom
8. Development of managers

BASIS FOR DEPARTMENTATION:

1. By Functions
2. By Products
3. By Process
4. By Customers
5. By Area

SPAN OF MANAGEMENT or SPAN OF CONTROL:

MEANING:
The concept span of management refers to the number of subordinates that a manager
can manage effectively and efficiently.

TYPES OF SPAN OF MANAGEMENT:

1. Wide span of management
2. Narrow span of management
FACTORS DETERMINING SPAN OF MANAGEMENT:

1. Capacity of superior
2. Capacity of subordinates
3. Nature of work
4. Degree of Centralisation
5. Effectiveness of communication
6. Staff assistance

AUTHORITY AND RESPONSIBILITY:

1. Authority is the right to give orders and powers to exact obedience.

2. Responsibility is the obligation of a subordinate to perform the duty.
3. Accountability: Answerability to superior for completion of a task as per order is
accountability.

DELEGATION:
MEANING:
Delegation means assigning work to others and giving them authority to do so.
Delegation is the ability to get results through others.

ADVANTAGES OR IMPORTANCE OF DELEGATION:

1. Effective management
2. Employees management
3. Motivation of employees
4. Facilitates organisational growth
5. Better coordination
6. Reduces the work load of managers
7. Basis of superior-subordinate relationship

PROCESS OF DELEGATION:

1. Assignment of responsibility
2. Delegation of authority
3. Creation of an obligation or exacting responsibility

PRINCIPLES OF DELEGATION:

1. Delegation by result expected

2. Principle of parity of authority and responsibility
3. Principle of absoluteness of responsibility
4. Principle of unity of command
5. Authority level principle
6. Principle of functional depart mentation
7. Principle of proper personal attitude
STEPS TO MAKE DELEGATION MORE EFFECTIVE:
1. Establishment of objectives
2. Definite responsibility
3. Proper selection of person
4. Motivating the subordinates
5. Training the subordinates
6. Establish adequate control

CENTRALISATION AND DECENTRALISATION:

MEANING OF CENTRALISATION:
Centralisation of authority means concentration of authority and decision making
power in a single individual or the board.

ADVANTAGES OF CENTRALISATION:

1. It facilitates personal leadership

2. It facilitates uniformity of action
3. It may result in to lowering the costs
4. It provides for integration
5. It is suitable in times of emergency
6. It facilitates standardisation of procedures and system.

DISADVANTAGES OF CENTRALISATION:

1. It is not suitable in large scale industries

2. It doesn’t provide scope for specialisation
3. Lack of initiative and enterprising spirit
4. It makes administration unsystematic
5. It widens the gap between customers and the management

MEANING OF DECENTRALISATION:
Decentralisation means wide distribution of authority throughout the organisation so
that managers at various levels have adequate authority to make their job related decisions.

ADVANTAGES OF DECENTRALISATION:

1. It reduces the burden of top executives

2. It facilitates development of managers
3. It facilitates diversification
4. It provides product and market emphasis
5. It promotes motivation
6. It minimises the risk
7. It fosters initiative
8. It leads to effective supervision and control
DISADVANTAGES OF DECENTRALISATION:

1. Absence of uniform policies and procedures

2. It may increase administrative expenses
3. It ignores general interest of enterprise
4. Not easy to take decisions in emergency
5. It may create problems in coordination and control

INTERNAL ORGANISATION:
MEANING:
Internal organisation is the structural framework of duties and responsibilities required
of personnel in performing various functions within the company.

TYPES OF INTERNAL ORGANISATION:

1. Line and military organisation
2. Line and staff organisation
3. Functional organisation
4. Committee organisation

1. Line Organisation: It refers to the fixing of authority and responsibility in a direct

chain of command.
Types of line organisation:
I. Pure line organisation
II. Departmental organisation

Advantages of line organisation:

1. Simplicity
2. Unified control
3. Fixed responsibility
4. No confusion
5. Discipline
6. Prompt decision
7. Economical
8. Coordination
9. Flexibility

Disadvantages of line organisation:

1. Over loading
2. Lack of specialisation
3. Lack of Initiative
4. Lack of coordination
5. Autocratic approach
6. Instability
7. Scope for favouritism
8. Not suitable for large scale industries
 2. Line and Staff Organisation: Organisation in which there is normal depart mentation
of the regular business operations and there is functional specialist to perform specialised
activities.

Advantages of Line and staff organisation:

1. It increases the operational efficiency
2. It ensures discipline and unified control
3. It maintains unity of control
4. It reduces burden of the line organisation
5. It provides training to personnel’s
6. It ensures flexibility

Disadvantages of line and staff organisation:

1. It creates confusion
2. Conflict of interest
3. Staff officers may become ineffective
4. Carelessness on the part of the staff
5. Dominance of line and staff officers
6. Too much dependent on staff

Line and Staff organisation by F.W. TAYLOR: (SPECIALISTS)

1. Route clerk
2. Instruction clerk
3. Time and cost clerk
4. Disciplinarian
5. Gang boss
6. Repair boss
7. Speed boss
8. Inspector

3. Functional Organisation: It is a type of organisation structure that uses the principle

of specialisation based on function or role.

Advantages of functional organisation:

1. Division of labour and specialisation
2. Expert knowledge of specialists
3. Less burden
4. Facilitates mass production
5. Development of staff
6. Higher degree of efficiency

Disadvantages of functional organisation:

1. No unity of command
2. It creates confusion
 3. Difficult to achieve coordination
4. Difficulty in administration
5. It may lead to conflict
6. It leads to narrow specialisation

4. Committee Organisation: A group of competent and interested persons polling their

thoughts and actions in the facilitation of decision making process.

Advantages of committee organisation:

1. Group decisions
2. Better coordination
3. New ideas
4. Democratic decisions
5. Integration
6. Educative value

Disadvantages of committee organisation:

1. Delay in decision making
2. Controversies
3. Unrealistic decisions
4. Lack of initiative and accountability
5. Compromise decision
6. Expensive
UNIT-IV
STAFFING, COORDINATION AND COMMUNICATION

MEANING OF STAFFING:
Staffing is the process of obtaining and maintaining capable and competent people to fill
all positions from top management to lower management.

DEFINITION OF STAFFING:
According to Koontz O Donnell “Staffing is the executive function which involves the
recruitment, selection, compensating, training, promotion and retirement of subordinate
managers.”

FEATURES OF STAFFING:
1. It is a process of estimation
2. It is a continuous process
3. Staffing covers wide range of functions
4. It is a logical process
5. Staffing deals with both present and future requirements
6. Staffing function is difficult to perform
7. It involves development of future managers

PROCESS OF STAFFING:
1. Manpower planning
2. Recruitment, Selection, Training and Promotion
3. Job analysis, Job description, Job specification
4. Performance appraisal
5. Job evaluation
6. Merit rating
7. Management development

MANPOWER PLANNING:
MEANING:
Manpower planning is a process by which a firm ensures that it has the right number of
people and the right kind of people at the right places and at the right time doing things in the
organisation.

PROCESS OF MANPOWER PLANNING:

1. Determine organisational objectives
2. Determining the skill, expertise required
3. Determining the net additional manpower requirements
4. Developing action plan

JOB ANALYSIS:
Job analysis is the process of collecting information regarding skill, qualifications,
training, responsibilities and duties and analysing it.
JOB DESCRIPTION:
It is a document that reveals the information regarding the name or tittle of the position,
department, grade, the immediate superior under whom the person has to work, the duties and
responsibilities.

JOB SPECIFICATION:
It is a statement of employee characteristics and qualifications required for satisfactory
performance of defined duties and tasks comprising a specific job.

RECRUITMENT:
MEANING:
Recruitment is the process of searching for prospective employees and stimulating and
encouraging them to apply for jobs in the organisation.

DEFINITION:
According to Edwin. B. Flippo “Recruitment is the process of searching the candidates
for employment and stimulating them to apply for jobs in the organisation.”

SOURCES OF RECRUITMENT:
1. Internal Sources
2. External Sources

1. Internal Sources: The sources which are available within the organisation>
Ex. Transfer, Promotion, Recommendation of present employees.

Advantages of Internal Sources:

1. Motivates the employees
2. Increases the morale of the employees
3. It prevails industrial peace
4. Filling of jobs internally is cheaper as compared to getting candidates from external
sources

2. External Sources: The sources which are available outside the organisation.
Ex: Direct recruitment, Advertisements< Unsolicited applicants, Employment
Agencies, educational institutes, labour contractors, Employee recommendations.

Advantages of External Sources:

1. Recruitment of suitable personnel’s
2. Attracting new talents
3. Economical

SELECTION:
Selection is the process of discovering the most suitable and promising candidates to fill
up the positions vacant.
PROCEDURE FOR RECRUITMENT AND SELECTION:
1. Applications
2. Preliminary interview
3. Application blank
4. Employment test
5. Interviews
6. Checking references
7. Medical examination
8. Final selection
9. Placement and induction

COORDINATION:
Coordination is the orderly arrangement of group efforts to provide unity of action in the
pursuit of a common purpose.

FEATURES OF COORDINATION:
1. Coordination integrates group effort
2. Ensures unity of effort
3. Continuous process
4. Coordination is a pervasive function
5. Coordination is the responsibility of all managers
6. Coordination is a deliberate function.

OBJECTIVES OF COORDINATION:
1. Harmony of goals
2. Total accomplishment
3. Efficiency
4. Good social relations

SIGNIFICANCE OR IMPORTANCE OF COORDINATION:

1. Cordial personnel relations
2. Unity OF ACTION
3. Efficiency and economy
4. Integration of goals
5. Total achievement
6. Retention of managerial and other personnel
7. Team spirit
8. Facilitates motivates
9. It gives proper direction
10. Improves goodwill of the organisation.

TECHNIQUES OF EFFECTIVE COORDINATION:

1. Clearly defined goals
2. Formulating clear-cut policies
3. Simplified organisation
4. Clear definition of authority and responsibility
 5. Effective communication
6. Checking and observation
7. Leadership and supervision
8. Liaison officers

TYPES OF COORDINATION:
1. Horizontal coordination
2. Vertical coordination
3. External coordination
4. Internal coordination

PRINCIPLES OF COORDINATION:
1. Principle of direct contract
2. Principle of early start
3. Principle of reciprocity
4. Principle of continuity

ELEMENTS OF COORDINATION:
1. Balancing
2. Timing
3. Integration

COMMUNICATION:
MEANING:
Communication is a systematic and continuous process of telling, listening and
understanding. Communication stands for sharing of ideas, objectives, instructions and
suggestions.

DEFINITION:
According to Keith Davis “Communication is the process of passing information and
understanding from one person to another person.”

FEATURES OF COMMUNICATION:
1. Communication is a vital process to all managerial actions
2. Communication is a two way channel
3. It is a never ending or continuous process
4. It is Pervasive activity
5. Its main objective is to create mutual understanding

ELEMENTS OF COMMUNICATION:
1. Sender
2. Message
3. Communication channel
4. Encoding or Communication channel
5. Receiver
6. Feedback or Response
COMMUNICATION PROCESS:
1. The Communicator
2. Encoding
3. Message
4. Media or Channel
5. Receiver
6. Decoding
7. Understanding
8. Feedback or Response

IMPORTANCE OF COMMUNCIATION:
1. Smooth and unrestricted working
2. Quick decisions and implementation
3. Proper coordination
4. Maximum production
5. Democratic management

TYPES OF COMMUNICATION:
1. On the basis of organisation
2. On the basis of direction or flow
3. On the basis of media or methods

1. On the basis of organisation structure:

A. Formal
B. Informal

2. On the basis of direction or flow:

A. Downward
B. Upward
C. Horizontal or sideward
D. Diagonal

3. On the basis of media or methods:

A. Oral
B. Written
C. Gestural or Non Verbal

BARRIERS TO COMMUNICATION:
1. Physical barriers
2. Personnel barriers
3. Language barriers
4. Organisation structure barriers
5. Status and position barriers
6. Inadequate attention barriers
7. Emotional attitude barriers
8. Premature evaluation barriers
 9. Resistance to change barriers
10. Lack of Mutual trust barrier.

STEPS TO OVERCOME BARRIERS:

1. Clarity of information
2. Prompt information
3. Effective listening
4. Action speaks louder than words
5. Participation
6. Feedback
7. Efficient channels
8. Cordial relations
9. Proper transmission
10. Consistency or Courteous

TRAINING:
Training is the act of increasing the knowledge and skill of an employee for doing a
particular job.

TYPES OF TRAINING:
1. Induction training
2. Job training
3. Training for promotion
4. Refresher training

METHODS OF TRAINING:
1. On the job training
2. Vestibule training
3. Apprenticeship training
4. Internship training
5. Learner training

PROMOTION AND TRANSFER:

MEANING OF PROMOTION:
Promotion involves placement of an employees to a position having higher pay,
increased responsibilities and more prestige or status, needs greater skills and brings
increased rate of pay or salary.
Types of Promotion:
1. On the basis of Seniority
2. On the basis of Merit

MEANING OF TRANSFER:
It refers to the movement of an employee from one job to another job. It involves
shifting of an employee from one job to another job without special reference to change in
responsibilities or compensation.
TYPES OF TRANSFERS:
1. Production transfers
2. Replacement transfers
3. Versatility transfers
4. Shift transfers
5. Remedial transfers

MANAGEMENT EXECUTIVE DEVELOPMENT:

MEANING:
It is a systematic process of training and growth by which managerial personnel gain and
apply skills, knowledge, attitudes and insights to manage the workforce in their organisation
effectively and efficiently.

NEED FOR MANAGEMENT DEVELOPMENT:

1. Technical and social changes
2. To meet the future demands
3. To prevent managerial obsolescence
4. To face the future and new challenges
5. Recognition of social and public responsibility

METHODS OF MANAGEMENT EXECUTIVE DEVELOPMENT:

1. On the job methods
2. Off the job methods

1. On the job:
A. Coaching
B. Job rotation
C. Special projects
D. Committee assignments

2. Off the job:

A. SPECIAL COURSES AND LECTURES
B. Role playing
C. Case study
D. Conference and seminars
E. Multiple management
F. Management games
G. Sensitivity training
H. Brain storming
I. In basket exercise.

JOB EVALUATION:
It is a systematic procedure for determining the relative worth of jobs within an
organisation and for establishing an adequate wage structure.
METHODS OF JOB EVALUATION:
1. Ranking method
2. Grading method
3. Factors comparison method
4. Point method

PERFORMANCE APPRAISAL:
It is the systematic, periodic and an impartial rating of an employee’s excellence in
matters pertaining to his present job and to his potentialities for a better job.

METHODS OF PERFORMANCE APPRAISAL OR MERIT RATING:

1. Traditional methods
2. Modern methods

1. Traditional methods:
A. Ranking
B. Paired comparison
C. Grading
D. Graphic scales
E. Check lists
F. Forced distribution
G. Critical Incident
H. Free from evaluation

2. Modern methods:
A. Management by objective
B. Behaviourally anchored rating scales (BARS)
 UNIT-V
DIRECTING, MOTIVATION AND CONTROL
MEANING OF DIRECTING:
Directing means giving instructions, guiding, counselling, motivating and leading the
staff in an organisation in doing work to achieve organisational process.
It is said to be process in which the managers instruct, guide and oversee the
performance of the workers to achieve predetermined goals.

DEFINITION:
According to Koontz and O’Donnell “Direction is a complex function that includes all
those activities which are designed to encourage subordinates to work effectively and
efficiently in both short and long run.

NATURE AND FEATURES OF DIRECTING:

1. Direction is a managerial function
2. Direction is Issuing orders
3. Direction as guiding and teaching
4. Direction involves supervision
5. It is a continuous activity
6. It includes motivation
7. It includes leadership

IMPORTANCE OF DIRECTING:
1. Direction initiates action
2. Direction integrates individual and organisational goals
3. Direction motivates employees
4. It facilitates change in the organisation
5. Direction is necessary for survival and growth of the organisation
6. Effective utilisation of resources

PRINCIPLES OF DIRECTION:
1. Unity of command
2. Efficiency of direction
3. Direct supervision
4. Principle of appropriateness of direction technique
5. Principle of communication
6. Principle of comprehension
7. Principle of information
8. Maximum contribution
9. Harmony of objectives
10. Use of informal organisation
11. Principle of leadership
12. Principle of follow up
TECHNIQUES OF DIRECTION:
1. Consultative direction
2. Free rein direction
3. Autocratic direction

ELEMENTS OR COMPONENTS OF DIRECTION:

1. Issuing orders and instructions
2. Supervision
3. Delegation
4. Leadership
5. Communication
6. Motivation

MEANING OF SUPERVISION:
Supervision is the function of assuring that the work is being done in accordance with the
plan and instructions.

MEANING OF MOTIVATION:
Motivation is psychological technique of inspiring the personnel to do their work
efficiently and effectively and cooperate with the management for the accomplishment if the
common objectives.

DEFINITION OF MOTIVATION:
According to Koontz and O’Donnell “Motivation is a general term applying to the entire
class of drives, desires, needs wishes and similar forces that induce an individual or group to
work.

NATURE AND FEATURES OF MOTIVATION:

1. Motivation is an internal feeling
2. It is a continuous process
3. Motivation produces goal oriented behaviour
4. It can be either positive or negative
5. Motivation is a complete process
6. Motivation means bargaining
7. Motivations change
8. Individuals differ in their motivation
9. Essence of performance
10. Psychological phenomenon

IMPORTANCE OF MOTIVATION:
1. High performance level
2. It helps in reducing employee turnover
3. It attracts right type of work force
4. Increase in efficiency and production
5. Easy achievement of organisational goal
6. Helps to change negative attitudes of employees
 7. Helps to reduce absenteeism
8. Job satisfaction

TYPES OR KINDS OF MOTIVATION:

1. Positive or negative motivation
2. Financial and non-financial motivation

STEPS IN MOTOIVATION:
1. Scientific selection
2. Good communication system
3. Congenial and cordial atmosphere
4. Participation
5. Good working conditions
6. Recognition of merit and efficiency
7. Social security measures

FACTORS OR MEASURES OF MOTIVATION:

1. Recognition of individual status
2. Security of job
3. Fair treatment
4. Scope for better prospects
5. Cooperative colleagues
6. Congenial working conditions
7. Fair wages
8. Suitable incentives
9. Pride in work
10. Interest and helpful attitude of the management in the welfare of the workers.

THEORIES OF MOTIVATION:
1. A.H Maslow’s Needs Hierarchy Theory
2. Herzberg’s Motivation Hygiene Theory
3. Douglas McGregor’s Theory X and Y
4. Vrooms Valence Expectation Theory

I] Maslow’s Theory: [Need Hierarchy]

1. Psychological needs
2. Safety needs
3. Social needs
4. Self-esteem and ego needs
5. Self-fulfilment needs

II] Herzberg’s motivation hygiene theory:

A. Hygiene or maintenance factors:
1. Technical supervision
2. Company policies and administrations
3. Working conditions
 4. Inter personnel relationship with superior’s
5. Inter personnel relationship with peers and subordinates
6. Salary or pay
7. Personnel life
8. Status

B. Motivators (Factors)
1. Work itself
2. Recognition
3. Advancement
4. Possibility of growth
5. Responsibility
6. Achievement

MEANING OF MORALE:
Morale is the degree of enthusiasm and willingness with which individual workers of a
group set out to perform the assigned work with zeal, sincerity resulting in good teamwork.

CONTROL OR CONTROLLING:
MEANING OF CONTROLLING:
Controlling measures the deviation of actual performance from the standard
performance, discovers the causes of such deviations and helps in taking corrective actions.

DEFINITION OF CONTROLLING:
According to Koontz and O’Donnell “Controlling implies measurement of
accomplishment of goals set in the plans and the correction of deviations to assure attainment
of objectives according to plans.”

FEATURES OF CONTROLLING:
1. Control is a continuous process
2. Control is a dynamic process
3. Control is an end function
4. Control is linked with other management functions
5. Control is forward looking
6. Control is action based
7. Control is a pervasive function
8. Control is exercise at all levels of management

STEPS OR CONTROL PROCESS:

1. Setting of standards of performance
2. Measurement of actual performance
3. Comparison of actual performance with standards
4. Taking corrective action if necessary
IMPORTANCE OF CONTROL:
1. Control forms a base for future action
2. Control ensures coordination
3. Control helps in decision making
4. Control ensures quality improvement
5. Control provides discipline
6. Control enhances the goodwill of the enterprise
7. Control improves the efficiency of the employees
8. It helps in comparing actual performance with standards
9. It puts psychological pressure on employees
10. It helps in taking corrective actions

LIMITATIONS OF CONTROL:

1. Difficulty in controlling external factors

2. Controlling is an expensive process
3. Employees oppose to control system
4. Ineffectiveness of control system
5. Control system cannot establish quantitative standards for intangible activities.

TYPES OF CONTROL:

1. Historical or Feedback control

2. Concurrent or Premonitory control
3. Predictive or Feed Forward control

ESSENTIALS OF EFFECTIVE CONTROL:

1. Suitability
2. Focus on objectives
3. Understandable
4. Timeliness
5. Flexibility
6. Economical
7. Forward looking
8. Acceptable to members of the organisation
9. Focused on strategic control points
10. Objective standards
11. Control by exception
12. Corrective action

HUMAN RESISTANCE TO CONTROL:

I. CAUSES:
1. It increases the strain on the workers
2. It may affect the freedom and independence of the workers
3. Exploitation by management
 4. Lack of information
5. Lack of innovation
II. EFFECTS:
1. Compliance
2. Purposeful deviation
3. Aggressive attack
4. Absenteeism
5. Resignation
6. Lack of interest
7. Transfer
8. Join labour union

III. REMEDIES:
1. Considering the employees likes and dislikes
2. Developing mutual interest
3. Providing information about control measures
4. Automatic adjustment of control system
5. Proper motivation

TECHNIQUES OF CONTROL:
1. Budget and Budgetary control
2. Non Budgetary control
3. Modern Techniques of control

MEANING OF BUDGET:
A Budget can be defined as a numerical statement expressing the plans, policies and
goals of an organisation for a definite period in future.

TYPES OF BUDGETS:
1. Functional budgets
2. Master budgets

I. Types of functional budgets:

1. Sales budget
2. Production budget
3. Production cost budget
4. Administrative budget
5. Capital expenditure budget
6. Cash budget

II. Master budget:

1. Zero based budgeting

BUDGETARY CONTROL:
MEANING:
 Budgetary control is a process of controlling the activities through budget. Budgetary
control is the comparing of actual operations with the budget to determine if the plans are
being carried out and if not, to ascertain the reason for deviation.

ADVANTAGES OF BUDGETARY CONTROL:

1. It helps in effective controlling of activities
2. It coordinates various activities
3. It makes possible the management by exception
4. It helps in fixing responsibilities
5. It helps in optimum utilisation of resources
6. It assists in measuring performance
7. It is useful in profit planning
8. It promotes cooperation
9. It provides long term and short term plans
10. It promotes efficiency

LIMITATIONS OF BUDGETARY CONTROL:

1. Budgets are based on forecasts
2. Uncertainty about future
3. Time consuming and costly device
4. It is not suitable for management
5. Cooperation not understanding

ESSENTIALS OF EFFECTIVE BUDGETARY SYSTEM:

1. Well planned organisational structure
2. Prompt reporting
3. Frequent comparison
4. Effective plan
5. Participation
6. Flexibility
7. Support of top management
8. Incentives and penalties
9. Authority and responsibility
10. Prompt corrective actions

NON BUDGETARY CONTROL:

1. Statistical data and charts
2. Internal audit control
3. Break even analysis
4. Marketing control
5. Production control
6. Quality control
7. Inventory control
8. Cost control
9. Financial control
10. Information control

MODERN TECHNOIQUES OF CONTROL:

1. Return on investment
2. Information system
 3. Network analysis
A. Critical path method
B. Programme evaluation and review technique
4. Management audit
MANAGEMENT BY EXCEPTION:
MEANING:
MBE is a control process enables the management to concentrate on those only where
the work carried out deviates from the standards laid down.
In other words MBE is a management strategy in which managers will only step in
when there are significant deviations from planned actions.

ELEMENTS OF MANAGEMENT BY EXCEPTION:

1. Measurement
2. Projection
3. Selection
4. Observation
5. Comparison
6. Decision making

BENEFITS OF MANAGEMENT BY EXCEPTION:

1. It saves executives time
2. It enables executives to concentrate on major [problems
3. It facilitates better delegation of authority
4. It helps in better identification of crises
5. It helps in performance appraisal
6. It enhances the degree of communication

LEADERSHIP:
MEANING:
Leadership is an art of motivating a group of people to act towards achieving a common
goals.

DEFINITION:
According to Koontz and O’Donnell “Leadership is the ability of a manager to induce the
subordinates to work with confidence and zeal.

FEATURES OF LEADERSHIP:
1. A leader must have followers
2. A leader himself must be an active participant
3. A leader must poses good conduct
4. Leadership is related to a situation
5. There must be a community of interest between the leader and his followers

LEADERSHIP STYLES:
1. Autocratic or Directive style
2. Democratic style
3. Free Rein style
4. Intellectual Leader
5. Institutional Leader
6. Persuasive Leader
 7. Creative Leader

THEORIES OF LEADERSHIP:
1. Trait theory
2. Behavioural theory
3. Situational theory

TECHNIQUES OF LEADERSHIP:
1. Securing cooperation
2. The use of power
3. Coordination and command
4. Maintaining discipline
5. Developing high group morale

FUNCTIONS OF A LEADER:
1. To take lead
2. To develop team work
3. To represent the firm
4. To guide and direct
5. To use power properly
6. To encourage team work
7. To inspire subordinates
8. To build morale

QUALITIES OF A LEADER:
1. Quality to take lead and initiative
2. Quality to accept responsibility
3. Quality of quick grasp and power of judgement
4. Quality of morality
5. Flexibility
6. Intellectual capacity and technical competence
7. Quality to integrate and inspire
8. Emotional stability and enthusiasm