PRINCIPLES AND PRACTICES OF MANAGEMENT IIBM MBA EXAM ANSWER

PRINCIPLES AND PRACTICES OF MANAGEMENT IIBM MBA EXAM ANSWER 

Principles and Practices of Management

I. Management as a Science defines…..Tick the correct one.(1)

a) Perfection through practice

b) Practical Knowledge

c) Creativity

d) Test of Validity & Predictability

Ans: a) Perfection through practice

II. Indirect Reward involves: (1)

a. Wages

b. Provident Fund

c. Praise& Rewards

d. Incentives

Ans: c. Praise& Rewards

III. This is the part of the management process which actuates the organization members to work efficiently and effectively for the attainment of organizational objectives. Which management function describes this? (1)

a) Planning

b) Organizing

c) Staffing

d) Directing

e) Controlling

Ans: d) Directing

IV. It is the function of manning the organization structure and keeping it

manned. The main purpose is to put right man on right job i.e. square pegs in square holes and round pegs in round holes. (1)

a. Manpower Planning

b. Recruitment

c. Performance Appraisal

d. Staffing

e. Training & Development

Ans: d. Staffing

V. This type of Organization flows “Flat Hierarchy”. (1)

a. Traditional

b. Modern

c. None of them

d. All of them

Ans: b. Modern

VI. It is deciding in advance – what to do, when to do & how to do. It bridges the gap from where we are & where we want to be.(1)

a. Staffing

b. Organizing c

c. Planning

d. Directing

e. None of them

Ans: c. Planning

VII. Decentralization may lead to the problem of co-ordination at the level of an enterprise as the decision-making authority is not concentrated. (1)

a. True

b. False

Ans: a. True

VIII. “Understanding” is the essence of communication. This only happens when there is an intention of not understanding and not being understood by those involved in a communication situation. (1)

a. True

b. False

Ans: a. True

IX. Here delegation is not entrusted the work neither he is given the responsibility and authority formally. It does not create any obligation.(1)

a. Formal Delegation

b. Informal Delegation

c. None of them

d. All of them

Ans: d. All of them

X. The organization must have a supreme authority and a clear line of authority should run from that person (or group) down through the hierarchy, e.g., from the Chairman—the Managing Director—Plant Manager— Production Manager— Foreman-rank and file of employees. (1)

a. Principle of Delegation

b. Principle of Balance

c. Scalar Principle

d. Principle of change

Ans: c. Scalar Principle

Part B:

1. Define Administration. In which respect it is different from

Management?

The definition of administration refers to the group of individuals who are in charge of creating and enforcing rules and regulations, or those in leadership positions who complete important tasks.

The major key differences between management and administration are given below:

§  Management is an activity of business and functional level, whereas Administration is a high-level activity.

§  The administration defines as an act of administering the whole organization by a group of people. Whereas management is a system of managing people and things within the organization.

§  Administration focuses on making the best possible utilization of the organization’s resources. On the other hand, Management focuses on managing people and their work.

§  While management focuses on policy implementation, policy formulation performs the administration.

§  The administrator is responsible for the administration of the organization whereas the manager looks after the management of the organization.

§  Administration, whose role is decisive in nature. Unlike, management plays an executive role in the organization.

§  Functions of management are executive and governing. Conversely, functions of administration include legislation and determination.

§  The administration is concerned with framing policies and setting objectives. But, management is all about plans and actions.

§  Management makes decisions under the boundaries set by the administration. While the administration takes all the important decisions of the organization.

§  The Administration finds in government activities and hospitals, clubs, military offices, religious organizations and all the non-profit making enterprises. Conversely, the management can see in the profit-making organization like business enterprises.

§  Administration represents the owners of the organization. On the other hand, a group of persons, who are employees of the organization collectively knows as management.

2. What do you understand by the term “Level of Management”? Briefly describe the different levels of Management. 

The term “Levels of Management’ refers to a line of demarcation between various managerial positions in an organization. The number of levels in management increases when the size of the business and work force increases and vice versa. The level of management determines a chain of command, the amount of authority & status enjoyed by any managerial position. The levels of management can be classified in three broad categories:

1. Top level / Administrative level
2. Middle level / Executory
3. Low level / Supervisory / Operative / First-line managers

Managers at all these levels perform different functions. The role of managers at all the three levels is discussed below:

1. Top Level of Management

It consists of board of directors, chief executive or managing director. The top management is the ultimate source of authority and it manages goals and policies for an enterprise. It devotes more time on planning and coordinating functions.

The role of the top management can be summarized as follows -

1. Top management lays down the objectives and broad policies of the enterprise.
2. It issues necessary instructions for preparation of department budgets, procedures, schedules etc.
3. It prepares strategic plans & policies for the enterprise.
4. It appoints the executive for middle level i.e. departmental managers.
5. It controls & coordinates the activities of all the departments.
6. It is also responsible for maintaining a contact with the outside world.
7. It provides guidance and direction.
8. The top management is also responsible towards the shareholders for the performance of the enterprise.

2. Middle Level of Management

The branch managers and departmental managers constitute middle level. They are responsible to the top management for the functioning of their department. They devote more time to organizational and directional functions. In small organization, there is only one layer of middle level of management but in big enterprises, there may be senior and junior middle level management. Their role can be emphasized as -

1. They execute the plans of the organization in accordance with the policies and directives of the top management.
2. They make plans for the sub-units of the organization.
3. They participate in employment & training of lower level management.
4. They interpret and explain policies from top level management to lower level.
5. They are responsible for coordinating the activities within the division or department.
6. It also sends important reports and other important data to top level management.
7. They evaluate performance of junior managers.
8. They are also responsible for inspiring lower level managers towards better performance.

3. Lower Level of Management

Lower level is also known as supervisory / operative level of management. It consists of supervisors, foreman, section officers, superintendent etc. According to R.C. Davis, “Supervisory management refers to those executives whose work has to be largely with personal oversight and direction of operative employees”. In other words, they are concerned with direction and controlling function of management. Their activities include -

1. Assigning of jobs and tasks to various workers.
2. They guide and instruct workers for 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 organization.
5. They communicate workers problems, suggestions, and recommendatory appeals etc to the higher level and higher level goals and objectives to the workers.
6. They help to solve the grievances of the workers.
7. They supervise & guide the sub-ordinates.
8. They are responsible for providing training to the workers.
9. They arrange necessary materials, machines, tools etc for getting the things done.
10. They prepare periodical reports about the performance of the workers.
11. They ensure discipline in the enterprise.
12. They motivate workers.
13. They are the image builders of the enterprise because they are in direct contact with the workers.

3.Factors involved in Decentralization of Authority.

Factors involved in Decentralization of Authority are

1. The costliness of the Decision

Perhaps the overriding factor determining the extent of decentralization is, as in other aspects of policy, the criterion of costliness.

As a general rule, the more costly the action to be decided is, the more probable it is that the decision will be made at the upper levels of management.

The fact that the cost of a mistake affects decentralization is not necessarily based on the assumption that top managers make fewer mistakes than subordinates.

They may make fewer mistakes since they are probably better trained and in possession of more facts, but the controlling reason is the weight of responsibility.

As already discussed, delegating authority is not delegating responsibility. Therefore, managers typically prefer not to delegate authority for crucial decisions.

2. Uniformity of policy

Another, and somewhat related factor favoring the centralization of authority is the desire to obtain a uniform policy. Those who value consistency above all are invariably in favor of centralized authority since this is the easiest road to such a goal.

They may wish to ensure that customers will be treated alike with respect to quality, price, credit, delivery, and service; that the same policies will be followed in dealing with suppliers; or that public relations policies will be standardized.

Uniform policy also has certain internal advantages.

For example;

Standardized accounting, statistics, and financial records make it easier to compare relative efficiencies of departments and keep down costs.

The administration of a union contract is facilitated through a uniform policy with respect to wages, promotions, vacations, dismissals, and similar matters.

Taxes and government regulations entail fewer worries and chances for mistakes with uniform policies.

3. Size

The larger the organization, the more decisions to be made and the more places in which they must be made, the more difficult it is to coordinate them.

These complexities of the organization may require policy questions to be passed up the line and discussed not only with many managers in the chain of command but also with many managers at each level, since horizontal agreement may be as necessary as vertical clearance.

Slow decisions—slow because of the number of specialists and managers who must be consulted—are costly. To minimize this cost, the authority should be decentralized wherever feasible.

Indeed, the large enterprise that prides itself on the right kind of decentralization recognizes the inevitable, although the extent and effectiveness of decentralization may differ widely among companies, depending largely upon the quality of their management.

The costs of a large size may be reduced by organizing an enterprise into a number of units. Considerable increases in efficiency are likely to result from making the unit small enough for its top executives to be near the point where decisions are made.

This makes possible speedy decisions, keeps executives from spending time coordinating their decisions with many others, reduces the amount of paperwork, and improves the quality of decisions by reducing their magnitude to manageable proportions.

Exactly what this size it cannot be arbitrarily stated.

Some managers believe it to be 1000 persons, others believe it to be closer to 100 or 250, and some would hold that 2500 employees can be grouped into manageable divisions, each with considerable decentralized authority.

In any case, there is evidence that where the unit exceeds a certain size, the distance from top to bottom may impair the quality and speed of decision-making.

In the zeal to overcome the disadvantages of size by reducing the decision-making unit, certain shortcomings of decentralization should not be overlooked.

When authority is decentralized, a lack of policy uniformity and coordination may follow.

The branch, product division, or another self-sufficient unit may be as preoccupied with its objectives as to lose sight of those of the enterprise as a whole.

What headquarters executive is there that has not had the feeling that a division or a branch is at times “running away with the company?”

4. History of the enterprise

Whether or not authority will be frequently decentralized depends upon, the way the organization has been built or established.

On the other hand, enterprises that represent mergers and consolidations are likely to show, at least at first, a definite tendency to retain decentralized authority, especially if the unit acquired is operating profitably.

To be sure, this tendency not to rock the boat may be politically inspired rather than based on pure managerial considerations.

Certainly, the claim of independence of the once-independent units is especially strong, and a full managerial generation may have to pass before the chief executive of the consolidated company dares materially to reduce the degree of decentralization.

5. Management philosophy

The character of top executives and their philosophy have an important influence on the extent to which authority is decentralized.

Sometimes top managers are despotic, brooking no interference with the authority and information they jealously hoard.

At other times, top managers keep authority not merely to gratify a desire for status or power but because they simply cannot give up the activities and authorities they enjoyed before they reached the top or before the business expanded from an owner-manager shop.

Conversely, some people find decentralization a means to make the big business work.

In those cases, top managers may see decentralization as a way of organizational life that takes advantage of the innate desire of people to create, to be free, and to have status.

6. Desire for independence

It is a characteristic of individuals and of groups to desire a degree of independence.

Individuals may become frustrated by the delay in getting decisions, by long lines of communication, and by the great game of passing the buck.

7. Availability of managers

A real shortage of managerial manpower would limit the extent of decentralization of authority, as a delegation of decision-making assumes the availability of trained managers.

But too often the lamentable scarcity of good managers is used as an excuse for centralizing authority; executives who complain that they have no one to whom they can delegate authority often try to magnify their own value to the firm or confess to a failure to develop subordinates.

There are managers, also, who believe that a firm should centralize authority because it will then need very few good managers.

One difficulty is that the firm that so centralizes its authority may not be able to train managers to take over the duties of top executives, and external sources must be relied upon to furnish necessary replacements.

Thus the key to safe decentralization is adequate training of managers. By the same token, decentralization is perhaps the most important key to training.

8. Control techniques

Another factor affecting the degree of decentralization is the state of development of control techniques.

One cannot expect a good manager at any level of the organization to delegate authority without having some way of knowing whether it will be used properly.

Coupled with a manager’s need to understand and use appropriate control techniques is the state of their development.

Improvements in statistical devices, accounting controls, and other techniques have helped make possible the current trend towards considerable managerial decentralization.

To decentralize is not to lose control, and to push decision-making down into the organization is not to walk away from responsibility.

9. Decentralized performance

This is basically a technical matter depending upon such factors as the economics of division of labor, the opportunities for using machines and the nature of the work to be performed.

10. The pace of change

The fast-moving character of an enterprise also affects the degree to which authority may be decentralized.

If a business is growing fast and facing the complex problems of expansion, its managers, particularly those responsible for top policy, may be forced to make a large share of the decision.

But, strangely enough, this very dynamic condition may force these managers to delegate authority and take a calculated risk on the costs of error.

Generally, this dilemma is resolved in the direction of the delegation, and, in order to avoid relegation to untrained subordinates, close attention is given to the rapid formation of policies and the acceleration of training in management.