PRINCIPLES AND PRACTICES OF MANAGEMENT IIBM MBA EXAM ANSWER
Principles and Practices of Management
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:
- Top level / Administrative level
- Middle level / Executory
- 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:
- 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 -
- Top management lays down the objectives and
broad policies of the enterprise.
- It issues necessary instructions for
preparation of department budgets, procedures, schedules etc.
- It prepares strategic plans & policies
for the enterprise.
- It appoints the executive for middle level
i.e. departmental managers.
- It controls & coordinates the activities
of all the departments.
- It is also responsible for maintaining a
contact with the outside world.
- It provides guidance and direction.
- The top management is also responsible
towards the shareholders for the performance of the enterprise.
- 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 -
- They execute the plans of the organization in
accordance with the policies and directives of the top management.
- They make plans for the sub-units of the
organization.
- They participate in employment & training
of lower level management.
- They interpret and explain policies from top
level management to lower level.
- They are responsible for coordinating the
activities within the division or department.
- It also sends important reports and other
important data to top level management.
- They evaluate performance of junior managers.
- They are also responsible for inspiring lower
level managers towards better performance.
- 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 -
- Assigning of jobs and tasks to various
workers.
- They guide and instruct workers for day to
day activities.
- They are responsible for the quality as well
as quantity of production.
- They are also entrusted with the
responsibility of maintaining good relation in the organization.
- They communicate workers problems,
suggestions, and recommendatory appeals etc to the higher level and
higher level goals and objectives to the workers.
- They help to solve the grievances of the
workers.
- They supervise & guide the sub-ordinates.
- They are responsible for providing training
to the workers.
- They arrange necessary materials, machines,
tools etc for getting the things done.
- They prepare periodical reports about the
performance of the workers.
- They ensure discipline in the enterprise.
- They motivate workers.
- 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.
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