CBSE Class 12

Detailed, Step-by-Step NCERT Solutions for 12 Business Studies Chapter 8 Controlling Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.

Controlling NCERT Solutions for Class 12 Business Studies Chapter 8

Controlling Questions and Answers Class 12 Business Studies Chapter 8

Multiple Choice Question

For the following, choose the right answer.

Question 1.
An efficient control system helps to:
(a) Accomplish organisational objectives
(b) Boosts employee morale
(c) Judge accuracy of standards
(d) All of the above
Answer:
(d) All of the above.

Question 2.
Controlling function of an organisation is
(a) Forward looking
(h) Backward looking
(c) Forward as well as backward looking
(d) None of the above
Answer:
(c) Forward looking and backward looking function.

Question 3.
Management audit is a technique to keep a check on the performance of ……………
(a) Company
(b) Management of a company
(c) Shareholders
(d) Customers.
Answer:
(b) Management of the company.

Question 4.
Budgetary control requires the preparation of
(a) Training schedule
(b) Budgets
(c) Network diagram
(d) Responsibility centres
Answer:
(b) Budgets.

Question 5.
Which of the following is not applicable to restorability a courting.
(a) Investment center
(b) Andocentric center
(c) Profit center
(d) Cost center
Answer:
(c) Andocentric center.

Short Answer Type Questions

Question 1.
Explain the meaning of controlling.
Answer:
” An adequate control system should disclose where failures are occurring, who is responsible for them and what should be done about them.” – Konntz and O’Donnel!

Control is the last step in the Process of management because it arises need only after the other managerial steps like planning, organising and directing etc. Control is considered to,be an important means of administration since olden times. The managerial function of controlling involves the measurement of actual Performance, comparing it.

With the Planned standards and correcting deviations to ensure attainment of predetermined objectives. Thus, even though control is the last step in the Process of management, it is equally important for efficient, smooth, speedy and proper attainment of organizational goals.

Meaning and Definitions of Control : Control in context to management refers to initiating such action which make the actual process in accordance with the expected progress. It includes all those activities which direct and motivate the action to achieve the Predetermined objectives of the enterprise. It is not any means to put restrictions but it is a means through which a manager directs the behaviour of his subordinates in the desired direction by resorting to delegation and decentralisation with trust and confidence.

The modem managers believe that the meaning of control is not to establish an empire over the employees but it is a such an activity through which the activities of the. employees are directed and co-ordinated for the attainment of Pre-determined objectives. The essence of control is to see that all the activities are moving towards the attainment of desired goals or not. In other words, the meaning of control is to ensure that all the activities are Occurring according to the Plans.

Various Scholars have defined Control in different ways. Some of the important definitions are.
According to Henry Fayol, ” Control consists of verifying whether everything occurs in conformity in the plans adopted, the instruction issued and principles established. lt has for its object, to point out weakness and errors, in order to rectify them and prevent recurrence”.

• According to Joseph L. Massie,” Control is the process of taking steps to bring actual results and desired results closer together”.
• According to Philip Kotleiy “Control is the process of taking steps to bring actual result and desired result closer together.”
• According to Dale Henning, “Control is the process of bringing about Conformity of performance with planned action.”
• According to Marry Cushing Niles, “Control is the maintaining Of the balance between activities directed towards a goal or set of goals.”
• According to Billy E. Goetz, “Management Control seeks to compel events to conform to plans.”

On the basis of all the above definitions we can say that controlling includes verifying whether everything is happening properly, according to the plans, if not then finding out the obstacles and making efforts to remove them. For this purpose, the actual work progress is-measured and compared to the standard already determind in order to find out the deviations and remove such deviations by taking corrective action.

Question 2.
“Planning is looking ahead and controlling is looking back”. Comment.
Answer:
Planning is done always for the future. It is a well thought outline of the future events. According to George Terry, “Planning is oriented to and requires a feeling for the future. It is an investment of thought and time in the present for reaping the benefits in future. Some people believe’ that planning is unearthing the things for a better future.” It is called looking ahead because a well thought procedure is following in the future.

According to Allen, “Plan is a trap which is laid down to catch the future.” Thus it is clear that planning involves making estimates for the future, the more correct the estimates the more successful would.be the PlAnswer:Thus it is true that planing is looking in to the future.

It contrast to planning, control is called a looking back because a manager makes a comparison with the laid down standards Only after certain activity has been performed is compared with the- predetermined standards. Since both these activities have been already performed hence to compare them is in fact looking back. Looking back means, evaluating the work or performance which has already been done.

The thought of looking back in context to control is partially – correct. Control is not only looking back but also looking ahead. This has two reasons – First, the corrective action which is an important part of control is one of the measures of looking ahead. Second a good control system is the one which informs about the deviations even before their occurrence and prevents their reoccurrence. In other words, control is not only a remedial action but also a preventive action which reduces the possibilities of deviations.

Question 3.
“An effort to control everything may end up in controlling nothing”*. Explain. ‘ *
Answer:
Management control is that process of ensuring that actual activities conform to planned activities. Controlling helps in accomplishing organizational goals, judging accuracy of standards, ensuring different utilization of resources, but an effort to control everything sometimes create problems in controlling.

Controlling, suffers from certain limitations. An organization has no control over external function The control system of an organization may face resistance from its employees. Controlling also looses its effectiveness when standards cannot be defined in quatitative terms which makes the measurement of performance arid their comparison with standards a difficult task. Controlling is a costly affair as it involves lot of expenditure, time and effort. A small enterprise cannot afford to control an expensive control system.

Control is often resisted by employees. They see it as a curb to their freedom. External factors like government policies, technological changes, competition etc. cannot be controlled. Therefore, an effort to control everything is not justified. Overall organizational objectives should be kept in mind while controlling the activities in an organization.

Question 4.
Write a short note on budgetary control as a technique of managerial control.
Answer:
Budgetary control : Budgetary control is a system of management control in which all operation are planned ahead in the form of budgets and actual results are compared with budgetary Satandards and the necessary actions are taken to ensure attainment of organisational objectives.

According to G.R. Terry “Budgetary control is a process of comparing the actual results with the corresponding budget data in order to approve accomplishments or to remedy differences by either adjusting the budget estimate or correcting the cause of the differences”.

Thus, in budgetary control first of all, the budgets for all the activities of the Organisation are prepared, then the actual result are compared with these budgets and if any diviations are found on comparison then the reasons for them are located.

If the deviations are able to be remove on correcting the reasons then the same is done otherwise necessary amendements are made in the. Plans Before studying budgetary control in detail it is necessary to understand the three related terms : budget, budgeting and budgetary control Budget.

A budget’is a financial or quantitative expression of the plan of a action to be presumed in a definite future period. In other words, a budget presents financial or quantitative details of what is to be done in future.

Budgeting.

The process of preparing a budget is called budgeting. In other words, the process of collecting the necessary information and data and presenting them in the form of a statement in numerical terms is called budgeting.

Budgetary control
Budgetary control is a process of exercising control through budgets. It is a system of comparing actual result with the budgets and taking necessary steps to correct the deviations.

Characteristics of Budgetary Control
The main characteristics of budgetary control are as follows
(i) Process of Comparing : It is a process of comparing the actual results with the estimated figures.

(ii) Finding out the Deviations : On comparing the actual results with the estimated ones, certain deviations are found. Steps are taken to find out the causes for. such deviations.

(iii) Taking corrective action : After finding out the causes for deviations, corrective action is taken to remove the cause of such deviations.

(iv) Budgets are based on Forecasts : The budgets are the estimates which are based on scientific forecasts.

(v) Separate Budgets are prepared for all the Departments.

Different budgets are prepared for all the Departments or activities and later all these budgets^are included in the form of a common budget for the entire enterprise, which is called a master budget.
Requisites for success of Budgetary control . To make the budgetary control successful following factors must be considered.

(i) Full Support : The budgetary control must receive full support of the top executives of the enterprise.

(ii) Full participation : The budgetary control can be. successful only when all the executives associated with its emplementation actively participate in its formation.

(iii) Sound Organisation structure : The structure of the organisation should be according to the budget arrangements so that the specific responsibilities can be handed over to specific people.

(iv) Clear Defination of Budget authority and Responsibility: The authority must and responsibility of making and executing the budget must be clearly defined.

(v) Flexibility : A budget should be flexible enough to be changed according to . the changes in the situation.

(vi) Motivation : For the success of budgetary control it must have arrangement for rewarding the efficient employee and punishing the inefficient ones.

(vii) Feed back system : There must be proper arrangements of transmission of the progress report of various departments to the budget official. Also the opinion and suggestions of various officers responsible for implementing the budget must also reach the budget officials. This helps in bringing about improvements in the budget in the future.

(viii) Adequate Time : The decisions of the success or failure of the budgetary control cannot be taken in short time. It can be taken only after the passage of some time.

Question 5.
Explain how management audit serves as an effective technique of controlling.
Answer:
Management Audit : The quality of management is the main determinant for the success or failure of an organisation. Management audit focuses attention on evaluation of quality of management.

It is an independent and critical examination of total management process of planning, organising, staffing, directing and controlling. It helps in locating the deficiencies in the performance of these managerial functions and advice the top management for necessary adjustments in order to make the organisation more effective.

Management audit is nothing but an extension of financial audit and its functions begin from where the functions of financial audit end. According to Koontz and O’ Donnell, management audit, “Auditing the quality of managers through appraising them as individual managers and appraising the quality of the total system of managing in an enterprise.”

Thus, we can say that the main objectives of management audit is to conduct a systematic and unbiased analysis and evaluation of a entire management system. It makes a critical analysis of the organisational structure, its various departments, Plans of management, Policies, work-procedures, use of human and physical resources and various other achievements and failures with a view to determine the afficiency of the managers. So as to bring about improvement in them.

Procedure of Management Audit : The following Procedure is normally followed for conducting management audit.

(i) Preliminiary Decisions : First of all, the board of directors of the organisation or the managing director decides about the objectives of the management audit, what shall be included in it, when it shall be done and who shall be its auditors.

(ii) Audit : After making the initial decisions the actual work of the management audit begins. It includes various activites like determination of the’sources and means of information, making the audit Programme, inspection of necessary records and reports, interviewing the managers, making surveys, inspection of the organisation structure, inspection of various techniques of motivation, communication and control, considering their suitability, reporting the difficulties etc. Apart from this, he judges the quality of managerial decisions taken in various field of management.

(iii) Critical Appraisal : After obtaining all the necessary informations, the management auditor makes a critical evaluation of it and tries, to find out unneccessary activities, differentiate between the activities which are required and which are not required for the achievement of objectives, what are the various problem related with the implementation of various Policies, Procedures and decisions.

(iv) Suggestions for improvement : After making such analysis the auditor suggests the remedial actions which are based on his experience, suggestions of various executives and the directions of the top executives to bring about improvement in the management of the company.

Long Answer Type Questions

Question 1.
Explain the various steps involved in the Process of control.
Answer:
Control Process : The Process of control involves the setting of standards comparison of actual result with the standards, detection and correction, of the deviations if any.
Thus, the Process of Control involves four steps:-

• Setting standards
• Measurement of Actual Performance.
• Comparison of actual Performance with the standards and calculating Deviations.
• Taking corrective Action.

1. The Process of control can be presented by way of diagram as follows

Setting Standards : The first step in the control Process is the setting up of control standards. Standards Present the criteria against which actual Performance is measured. Standards serve as the bench marks because they reflect the desired results or Performance. The standard can be laid down in terms of physical terms like quantities of the Product, labour-hours, units of service, speed, etc. or in monetary terms like sales value, costs, capital espenditure or Profit etc.

These standards must be easily attainable through the available capability and resources. The standard must also be according to the Plans of Process of the enterprise. While setting the standards the managers should keep in mind that they are

• Simple and easily attainable
• definite
• measurable
• according to the objectives
• flexible
•  timely and
• economical.

To make standrds effective it should be ensured that different standards are laid down for different responsibility centers so that it becomes easier to motivate the employees of different centers.

The extent of deviations which shall be considered as normal should also be laid down because some deviations between the standards and actuals are inevitable. Thus, the limits up to which deviations shall be tolerated must be established. such limits must neither be too high nor too low.

2. Measurement of actual Performance : The next step in the Process of Control is the measurement of actual Performance. While measuring actual Performance it should be ensured that

• The date of Progress should be prepared regularly and constantly.
• So far as possible measurement should be done during the course of Performance.
• The figures of date of measurement should be accurate and reliable.
• Report regarding important deviations should reach the manager very quickly so that corrective action may be taken immediatey.

While Preparing the report maximum emphasis should be given to the deviations which are highly important because the top managers do not have must time and they are expected to concentrate only on important deviations. The managers may not pay need to the deviations which are with in the prescribed limits.

3. Comparison of Actual Performance with Standards and Calculations of Deviation . The third major step in the control.Process involves the comparison of actual Performance with the Standard Performance. Such comparison will reveal the deviations between actual and desired results. Steps are taken to find out the reasons for the deviations. There could be many reasons for the deviations like:

• Setting of wrong standards : Like wrong estimates of cost of production, sales, Profits etc.
• General Hurdles : Like short supply of raw materials, breaking of machines etc.
• Change in circumstances : Like entry of new competitors in the market, change in demand, fashion etc.
• Human Causes : Inefficiency in completing the work by different individuals or groups.

Here, managers should see that they concentrate only on major deviations because small deviation can be coincidental. Thus they need not be given much attention.

From the analytical viewpoint deviations can be divided into following two categories.
(i) Controllable Deviations : Ones which can be controlled, and
(ii) Uncontrollable Deviations : Ones which cannot be controlled but can be reduced with the help of good system of forecasting. For example entry of various competing firms in the market is an uncontrollable deviation. Corrective actions can rectify only the controllable deviations.

4. Taking Corrective Action
The final step in the control Process is taking corrective action. Actually corrective action is the soul of controll Process. Its main aim is to help in making actual process in accordance with the expected Progress. It includes two types in activities.

• To remove deviations in actual Progress.
• To Prevent reocurrence of the deviations.

The managers should consider four things while taking corrective actions.

• Corrective actions should be undertaken immediately
• Corrective actions should be based upon a careful inquiry into causes of deviations and not on any guesswork or hypothetical ideas.
• Corrective actions should be compatible with the Psychology of the related employees.
• Corrective actions should be initiated by the managers at the same level at which the deviations are recorded.

Question 2.
Explain the techniques of managerial control.
Answer:
Techniques of Managerial Control
The various techniques of managerial control may be classified in to two broad categories
(i) Traditional techniques and
(ii) Modern techniques.

(i) Traditional Techniques : Tradinational Techniques are those which have been used by the companies for a long time now. However, these techniques have not become obsolete and are still being used by companies. These include:
a. Personal observation
b. Statistical reports
c. Breakeven analysis
d. Budgetary control

(ii) Modern techniques : Modem Techniques of controlling are those which are of recent origin and are comparetively new in management literature. These techniques provides a refreshingly new thinking on the ways in which various aspects of an organisation can be controlled. These include

• Return on investment
• Ratio Analysis
• Responsibility accounting
• Management audit
• PERT and CPM
• Management information system.

Traditional Techniques

Personal Observation : This is the most traditional method of control. Personal observation enables the manager to collect first hand information. It also creates a Psychological pressure on the employees to perform well as they are aware that they are being observed personally on their job. However, it is a very time-consuming exercise and cannot effectively be used in all kinds of jobs.

Statistical Reports : Statistical Analysis in the form of averages, percentages, ratios, correlation, etc. Present useful information to the managers regarding performance of the Organisation in various areas. Such information when presented in the form of charts, graphs, tables, etc. enable in managers to read them more easily and allow a comparison to be made with performance’ in previous periods and also with the benchmarps.

Breakeven Analysis : Breakeven analysis is a technique used by managers to study the relationship between costs, volume and profits. It determines the probable profit and losses at different levels of activities. The sales volume at which there is no profit, no loss is known as breakeven point. It is a useful technique for the managers as it helps in estimating profits at different levels of activities.

Figure shows breakeven chart of a firm. Breakeven Point is determined by the intersection of Total Revenue and Total Cost curves. The figure show that the firm will break even at 50,000 units of output. At this point, there is no profit no loss. It is beyond this point that the firm will start earning profits.

Breakeven Point can be calculated with the help of the following formula
Breakeven Point = \(\frac{\text { Fixed Costs }}{\text { Selling Price Per unit – Variable cost per unit }}\)
Breakeven analysis helps a firm in keeping a close check over its variable costs and determines the level of activity of at which the firm can earn its target Profit.

Budgetary Control
Budgetary control is a technique of managerial control in which all operations are planned in advance in the form of budgets and actual results are compared with budgetary standards. This comparison reveals the necessary actions to be taken so that organisational objectives are accomplished.

Budgeting offers the following advantages.
1. Budgeting focuses on specific and time-bound targets and thus, helps in attainment of organisational objectives.

2. Budgeting is a source of motivation to the employees who know the standards against which their performance will be appraised and thus, enables them to perform better.

3. Budgeting helps in optimum utilization of resources by allocating them according to the requirements of different departments.

4. Budgeting is also used for achieving coordination amount different departments of an organisation and highlights the interdependence between them. For instance, sales budget cannot be prepared without knowing prodution programmes and schedules.

5. It facilities management by exception by stressing on those, operations which deviate from budgeted, Standards in a significant way. However, the effectiveness of budgeting depends on how accurately estimates have been made about future. Flexible budget should be prepared which can be adopted it forecasts about future turn out to be different, especially in the fact of changing environmental “forces, managers must remember that budgeting should not be viewed as an estimate but a means to achieve organisational objectives.

Modern Techniques

Return on Investment : Return on Investment (ROI) is a useful technique which provides the basic yardstick for measuring whether or not invested capital has been used effectively for generating resonable amount of return. ROI 1 can be used to measure overal 1 Performance of the organisation or of its individual departments or divisions. It can be calculated as under.
\(\mathrm{ROI}=\frac{\text { Sales }}{\text { Total Investment }} \times \frac{\text { Net Income }}{\text { Sales }}\)
Net Income before or after tax may be used for making comparisons. Total investment includes both working as well as fixed capital invested in business. According to this techniques, ROI can be increased either by increasing sales volume proportionately more than total investment or by reducing total investment without having any reductions in Sales Volume.

ROI provides top management an effective means of control for measuring and comparing performance of different departments. It also permits departmental managers to find out the problem which affects ROI in ait advers manner.

Ratio Analysis :
Ratio Analysis refers to analysis of financial statements through computation of ratios. The most commonly used ratios used by organisations can be classified into the following categories.

1. Liquidity RatiosLiquidity ratios are calculated to determine short-term solvency of business. Analysis of current position of liquid funds determines the ability of the business to pay the amount due to its state holders.

2. Solvency Ratios : Ratios which are Calculated to determine the long term Solvency of business are known as solvency Ratios. Thus, these ratios determine the ability of a business to service its indebtedness.

3. Profitability Ratios These ratios are calculated to analyse the Profitability Position of a business. Such ratios involve analysis of Profits in relation to sales or funds or capital employed.

4. Turnover RatiosTurnover ratios are calculated to determine the efficiency of operations based on effective utilisation of resources higher turnover means better utilisation of resources.

Responsibility Accounting :

Responsibility Accounting is a system of accounting in which different Section, divisions and departments of an organisation are set up as ‘Responsibility Centers. The head of the center is responsible for achieving the target set for his center.

Responsibility centers may be of the following types.
1. Cost Center:- A cost or expense center is a segment of an organisation in which managers are held responsible for the cost incurred in the center but not for the revenues. For example, in a manufacturing organisation, production department is classified as cost center.

2. Revenue Center : A revenue center is a segment of an organisation which is primarily responsible for generating revenue. For example, marketing departments of an organisation may be classified as a revenue center.

3. Profit Center : A Profit center is a segment of an organisation whose manager is responsible for both revenues and costs. For example, repair and maintenance departments of an organisation may be treated as a profit center if it is a allowed to bill other production departments for the services provided to them.

4. Investment Center : An investment center is responsible not only for profits but also for investments made in the center in the form of assets. The investment made in each center is separately ascertained and return on investment is used as a basis for judging the performance of the center.

Management Audit : Management audit refers to systematic appraisal of the overall v Performance of the management of an organisation. The purpose is to review the efficiency and effectiveness of management and to improve its performance in. future periods. It is helpful in identifying the deficiencies in, the Performance of management functions. Thus, Management audit may be defined as functioning, performance and effectiveness of management of an organisation.
PERT and CPM

PERT (Programme Evaluation and Review Techniques) and CPM (critical Path method) are important Network techniques useful in Planning and Control. These techniques are especially useful for planning, scheduling and implementing time bound projects involving performance of a variety of complex, diverse and interrelated activities.

These techniques deal with time scheduling and resource allocation, for these activities aim at effective execution of Projects with in given time schedule and structure of costs.

The steps involved in using PERT/CPM are as follows.
1. The Project is divided into a number of clearly indentifiable activities which are then arranged in a logical sequence.

2. A Network diagram is prepared to show the sequence of activities, the starting point and the termination Point of the Projects.

3. Time estimates are prepared for each activitiy. PERT requires the preparation of three time estimates – optimistic (or shotest time), pressimistic (br longest time) and most likely time. In CPM only one time estimate is prepared. In addition, CPM also requires making cost estimates for completion of Project.

4. The longest path in the network is identified as the critical path. It represents the sequence of those activities which are important for timely completion of Project and where no delays can be allowed without delaying the entire Projects. If required, the Plan is modified so that execution and timely completion of project is under control. PERT and CPM are used extensively in areas like ship- building, construction projects, aircraft manufacturing etc.

Question 3.
Explain the importance of controlling in an Organisation. What are the problems faced by the organisation in implementing an effective control system?
Answer:
Importance of Controlling : Control is an indispensable function of Management. Without Control the best of Plans can go away. A good control system helps an organisation in the following ways.

1. Accomplishing Organisational goals : The controlling function measures progress towards the organistional goals and brings to light the deviations, if any, and indicates corrective action. It thus, guides the Organisation and keeps it on the right track so that organisation goals might be achieved.

2. Judging accuracy of standards : A good control system enables management to verify whether the standards set are accurate and environment and helps to review and revise the standards in the light of such changes.

3. Making efficient use of resources : By exercising control, a manager seeks to reduce wastage and spoilage of resources. Each activity is performed in accordance with predetermined standards and ndrms. Thus ensures that resources are used in the must effective and efficient manner.

4. Improving employee motivation : A good control system ensures that employees know well in advance what they are expected to and what are the standards of performance on the basis of which they will be appraised. It, thus, motivates them and helps them to give better performance.

5. Ensuring order and discipline : Controlling creates an atmosphere of order and discipline in the organisation. It helps to minimize dishonest behaviour on the part of the employees by keeping a close check on their activities. Exhibit – It explains how an important export company was able to track dishonest employees by using computer monitoring as a part of their control system.

6. Facilitating coordination in action : Controlling provides direction to all activities and efforts for achieving organisational goals. Each department and employee is governed by predetermined standards which are well coordinated with one another. This ensures that overall organisational objectives are accomplished.

Limitation of Controlling : Although controlling is an important function of management, it suffers from the following limitations.

1. Difficulty in setting quatitative standards : Control system loses its effectiveness when standards connot be defined in quantitative terms. This makes measurement of performance and th,eir comparison with standards a difficult task. Employee moral, job satisfaction and human behaviour are such areas where this Problem might arise.

2. No Control on external factors : An enterprise cannot control external factors such as government policies, technological changes, competition etc.

3. Resistance from employees : Control is often resisted by employees. They see it as a curb to their freedom. For instance employees might object when they are kept under a strict watch with the help of CCTVs.

4. Costly affair : Control is a costly affair as it involves a lot of expenditure, time and effort. A small enterprise cannot effort to install an expensive control system. It cannot justify the expenses involved. Managers must ensure that the costs of installing and operating a control system should not exceed the benefits derived from it.

Question 4.
Discuss the relationship between planning and controlling.
Answer:
Control is Aimless without planning : Control is impossible without planning. Planning helps to determine which department and which individuals have to achieve what objectives, within how much time and at what costs. Thus, control becomes more effective because the,manager become aware and able to compare the actual progress of. each related department and individual with the desired standards.

If the actual progress is less than the desired standard then the managers cannot only analyse the reasons for it but also determine the responsibility of it. In the absense of planning the managers do not have such scientific standards against which they can evaluate the progress of the employees. That is why planning is said to be the life blood of control.

From the above mentioned discussion it is clear that the functions of control and planning are so must interlinked with each other that it is very difficult to seperate the two and one is incomplete without the other. Newman and Warren have rightly said, “Planning without corresponding control are apt to hollow hopes.”Planning without control is Meaningless exercise, Control is Aimless without Planning

Control and planning are closely related to each other. Planning is meaningless without control and control is aimless without. planning. Planning without control is merely a pipe dream or wishful thinking. The best .laid plans may go astray in the absense of an adquate control system. Planning is the basis of control. Control implies the existence of certain standards against which the actual results may be evaluated. These standards are.formed only on the . basis of planning.

(i) Planning without control is Meaningless Exercise : Through planning we decide as to what is to be done in the future. In it objectives are laid down for the desired future and necessary methods to achieve them are decided, It is a process through which the organisations bring about a harmony in their objectives and business oppurtunities with their available resources.

If plans are not executed properly then they shall remain a mere wishful thinking and will lead to misuse of the organisational resources and failure to achieve the organisational objectives. Thus planning becomes successful only when it is executed effectively. For this, control is essential.

If the activities are not performed according to plans than the reasons for the same are detected and corrective actions are taken immediately to remove then. Thus, planning becomes meaningless in the absence of control.

Application Type Questions Answers

Following are some behaviours that you and others might engage in on the job. For each item, choose the behaviour that management must keep a check to ensure an efficient control system.

Question 1.
Biased performance appraisals :
Answer:
The behaviour of immediate superior to subordinate is undesirable as the work of performance appraisal by immediate superior or boss should be made on merit and that must be free from any biasness.

Question 2.
Using company’s supplies for personal use :
Answer:
Using company’s supplies for personal use is an objectionable behaviour of personnel incharge of organizational supplies of materials etc. Such practices should be curbed immediately when comes to notice of the immediate senior. Manager should sack such erring official immediately or be transferred to other jobs where such type of check be maintained.

Question 3.
Asking a person to violate company’s rules :
Answer:
Asking a person to violate company’s rule is against the organizational norms and the behaviour of such employee is dangerous for organizational growth and progress. Management should ensure that strict observance of organization’s rules and policies by every employee. With the help of effective control, an atmosphere of order and discipline be created, which helps to minimise dishonest behaviour on the point of employee by keeping a close check on their activities.

Question 4.
Calling office to take a day off when one is sick :
Answer:
Calling office to take a day off when one is sick is a behaviour responsible to create an atmosphere pf restlessness in the minds of employee who worked sincerely and committedly. Controlling provides coordination among all employers and departments.

Question 5.
Overlooking boss’s error to prove loyalty :
Answer:
Overlooking boss’s error to prove loyality is a behaviour of flattering of the superior. Such type of personal or employee and their behaviour is a real danger to the organization and also create a stigma to the knowledge and capabilities of the superior. Management should make a rational judgement between wrong and write. Management should keep himself/herself of the above such things and make sure that such behaviour will not repeat in future.

Question 6.
Claiming credit for someone else’s work :
Answer:
Claiming credit for someone else’s work is a human distorted psychological behaviour. Management should take stern action against such employee. Management should also empower employees by giving them the responsibility and accountability for their performance, including the authority to halt production to correct the problems. He should also create work cells, that is within the company that manage their production with limited supervision.

Question 7.
Reporting a violation on noticing it:
Answer:
Reporting a violation on noticing it is also a positive behaviour and should not be avoided. Management must ensure that any violation of rules and, procedure in the organization not be tolerated and reported to the immediate superior.

Question 8.
Falsifying quality reports :
Answer:
Falsifying Quality Reports hinder to achieve the desired results. In such situation, measurement of actual perforfnance with the standard performance will never be possible. Management should pinpoint such officials and take necessary action so that such, occurrences will not be repeated in future.

Question 9.
Taking longer than necessary to do the job .
Answer:
Taking longer than necessary to do the job will make the controlling a costly affair as it involves a lot of expenditure time and effort. A small organization cannot afford such control system. The management should ensure that goals should be achieved within a stipulated time and costs of installing a control system should not exceed the benefits derived from it.

Question 10.
Setting standards in consultation with workers. You are also required to suggest the management how the undesirable behaviour can be controlled.
Answer:
Setting standards in consultation with workers is a desirable behaviour for better performance and control. At the time of setting standards manager should try to set standard’s in preuse quantitative terms which makes comparison with actual performance easier.

Case Problem -1

A company ‘M’ limited is manufacturing mobile phones both for domestic Indian market as well as for export. It had enjoyed a substantial market share and also had a loyal customer following. But lately it has been experiencing problems because its targets have not been met with regard to sales and customer satisfaction. Also mobile market in India has grown tremendously and new players have come with better technology and pricing. This is causing problems for the company. It is planning to revamp its controlling .system and take other steps neccessary to rectify the problems it is facing.

Question 1.
Identify the benefits the company will drive from a good control system.
Answer:
It will help in accomplishing its goals and will help in judging accuracy of standards. It will ensure efficient utilization of resources etc.

Question 2.
How can the company relate its planning with control in this line of business to ensure that its plans are actually implemented and targets attained.
Answer:
A good control system ensures that employees knew well in advance what they expected to do. It will create an atmosphere of order and discipline. When its employees know about the plan well in advance they will achieve their goal successfully.

Question 3.
Give the steps in the control process that company should follow to remove the problems it is facing.
Answer:
There are five main steps that company should follow
1. Setting performance standards
2. Measurement of actual performance
3. Comparison of actual performance with standards
4. Analysis deviation
5. . Taking corrective actions
4. What techniques of control can the company use?
Answer:
Company should use Traditional Techniques because it involves.
1. Personal observation
2. Statistical reports
3. Breakeven analysis
4. Budgetary control.

Detailed, Step-by-Step NCERT Solutions for 12 Business Studies Chapter 7 Directing Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.

Directing NCERT Solutions for Class 12 Business Studies Chapter 7

Directing Questions and Answers Class 12 Business Studies Chapter 7

Multiple Choice Questions

Question 1.
Which one of the following is not an element of direction?
(a) Motivation
(b) Communication
(c) Delegation
(d) Supervision.
Answer:
(c) Delegation.

Question 2.
The motivation theory which classifies needs in hierarchical order is developed by.
(a) Fred Luthans
(b) Scott
(c) Abraham Maslow
(d) F. Drucker
Answer:
(c) Abraham Maslow.

Question 3.
Which of the following is a financial incentive?
(a) Promotion
(b) Stock Incentive
(c) Job Security
(d) Employee Participation
Answer:
(b) Stock Incentive.

Question 4.
Which of the following is not an element of communication process?
(a) Decoding
(b) Communication
(c) Channel
(d) Receiver
Answer:
(b) Communication.

Question 5.
Grapevine is ………….
(a) Formal Communication
(b) Barrier of Communication
(c) La tern al Communication
(d) Informal Communication
Answer:
(d) Informal communication.

Question 6.
Status comes under the following type of barriers
(a) Semantic barrier
(b) Organisational barrier
(c) Non semantic barrier
(d) Psychological barrier
Answer:
(b) Organisation Barrier.

Question 7.
The software company promoted by Narayana Murthy is …..
(a) Wipro
(b) Infosys
(c) Satyam
(d) HCL
Answer:
(b) Infosys.

Question 8.
‘The highest level need in the need Hierarchy of Abraham Maslow.
(a) Safety Need
(b) Belongingness need
(c) Self actualisation need
(d) Prestige need
Answer:
(c) Self Actualisation Need.

Question 9.
The process of converting the message into communication symbols is known aS –
(a) Media
(b) Encoding
(c) Feed Back
(d) Decoding
Answer:
(b) Encoding.

Question 10.
The communication network in which all subordinates under a supervisor communicate through supervisor only is
(a) Single chain
(b) Inverted V
(c) Wheel
(d) Free flow
Answer:
(c) Wheel.

Short Answer Type Questions

Question 1.
Distinguish between leaders and managers.
Answer:
Sometimes leadership and management are used as synonymous terms. This is” not true. There are several differences between leadership and management.

1. Relationship : Management implies superior subordinate relationship. This relationship arises within organisational context.- On the other hand, ’leadership can occur anywhere within or without organisation content. For example, inform group have leader but no managers.

In other ‘ words, leadership is possible in both formally organised as well as ” unorganised groups. But management is possible only in formal and organised groups. The followers of a leader are not necessarily his juniors or subordinates. They may be leader’s peers, associates and even seniors.

2. Source of influence : A manager is appointed and he obtains authority from his position.He makes use of his formal authority to influence the behaviour of his subordinatprs. On the contrary, a leader is not always appointed and he drives his power from his followers who accept him their leader. A leader makes use of this power to influence the attitudes and behaviour of his followers.

3. Sanctions : A manager has command over the allocation and distribution of rewards (positive sanctions) e.g. promotion and punishments (negative sanction), e.g. demotion. On the other hand a leader has command over social satisfaction and related task rewards. Organisational sanctions exercised by a manager are geared to the physiological and security needs. But informal sanctions exercised by a leader are geared to social and ego need.

4. Basis of Following : Both managers and leaders have followers. But the people follow them for different reasons. People follow a manager because they are required to follow by their job description supported by a system of rewards and potenties. But a manager may be there even if there are no followers but only subordinates. A manager may continue in office so long as his performance is considered satisfactory. Whereas a leader can survive as long as followers accept him.

5. Accountability : A manager is accountable for his own behaviour as well as for the behaviour of his subordinates. His accountability of performance is clearly defined. But there is no clear-cut accountability relationship in leadership as a leader is accountable for his behaviour in the same way. A manager seeks to achieve organisational goals but a leader is ‘ more concerned with group goals and members satisfaction.

6. Functions : A manager performs all the functions of planning, organising, staffing, directing and controlling. On the other hand, the main job of a leader is to guide, inspite the efforts of his followers. Leadership in .one aspect or demand of directing function. Thus, management is a wider term then management. A manager is more than a leader. Managers are leaders but all leaders are not managers.

A leader does not require a managerial position. There can be leaders who are not appointed as managers of work groups. But by , virtue of their position, managers have to provide leadership to their subordinaties. Leadership of a manager depends on his personal qualities, attitudes of followers towards him and the situation in which they work. Non-managers can also be leaders of work group by influencing the behaviour of workers.

A strong leader can be weak manager just as a strong manager may be a weak leader. A leader need not be a manager but a good – manager must have the qualities of an effective leader. A managercan get worn done from his subordinates, because he has the authority to distribute reused and penalties to subordinates. But the can make full use of their potential only by inducing confidence and zeal among them. For this purpose a manager must posses leadership qualities.

Difference between Leadership and Management

Question 2 .
Define Motivation .
Answer:
Meaning of Motivation
The term ‘motivation’ has been derived from the word ‘motiv which means the urge to do or not to do sometings. Motive is ti.at force within an individual which compels him to act or not to act in certain way. Motives help and guide people to action. Motives, reflect need, wants, drive and impulses within people.

Motivation may, therefore, be defined as the process of stimulating or inducing people to take the desired of action. It is the act of inspiring employees to work hard to achieve the desired goals of the organisation. It involves arousing needs and desires in people so as to initiate and direct their behaviour in a purposive manner.

The aim of motivation is to influence the behaviour of subordinates for better performance and achieving the desired results. Some popular definitions of motivation are given below.

“Motivation means a process of stimulating people to accomplish desired goals.” – William Scott

“It refers to the way in which ways, drives, desires, aspirations, stirrings or needs direct, control or explain the behaviour of human beings.” – Daffon E. Mcfarland

“Motivation is an inspirational process which impels the members of the team to pull their weight effectively to give their loyalty to the group, to carry out properly the tasks that they have accepted and generally to play an effective part in the job that the group has under taken.” – E.F.L. Brech

Question 3.
What is informal communication?
Answer:
Informal Communication : Communication that takes place without following the formal lines of communication is said to be informal communication. Informed system of communication is generally referred to as the ‘grapevine’ because it spreads throughout the organisation with its branches going Out in all directions in utter disregard to the levels of authority.

The informal communication arises out of needs of employees to exchange their views, which cannot be done through formal channels. Workers chit chatting in a canteen about the behaviour of the superior, discussing about rumour that some employees are likely to transferred are some examples of informal communications. The grapevine/ informal communication spreads rapidly and sometimes gets distorted.

It is very difficult to detect the source of such communication. It also leads to generate rumors which are not authentic. People’s behaviours is a fected by rumors and informal discussions and sometimes may hamper work environment. Some times, grapevine channels may be helpful as they carry information rapidly and therefore may be useful to manager at times, informal channels are used by managers to transmit information to know the reactions of his subordinates.

An intelligent manager should make use of positive aspects of informal channels and minimize negative aspects of this channel of communication.

Question 4.
What are semantic barriers of communication?
Answer:
Barriers to Communication
It is generally observed that managers face several problems due to communication breakdowns or barriers. These barriers may prevent a communication or jitter part of it or carry incorrect meaning due to which misunderstandings may be created. Therefore, it is important for a manager to identify such barriers and take measures to over come them. The barriers to communication in the organizations can be broadly. grouped as semantic barriers, psychological barriers, organizational barriers, and personal barriers. These are briefly discussed below.

Semantic barriers
Semantic is the branch of linguistics dealing with the meaning of words and sentences. Semantic barriers are concerned with problems and obstructions in the process of encoding and decoding of message into words or impressions. Normally such barriers result on account of use of wrong words, faulty translations, different interpretations  etc. These are discussed below

(i) Badly expressed message : Some times intended meaning may not be conveyed by a manager to his subordinates. These badly expressed messages may be an account of inadequate vocabulary usage of wrong words, commission of needed . words etc.

(ii) Symbols with difficult meanings : A work may have several meanings. Receiver has to perceive one such meanings for the word used by communicator. For example consider these three sentences where the work ‘value’ is used

• What is the value of this ring?
• I value of our friendship
• What is the value of learning computer skills?

You will find that the ‘value’ gives different meaning in different v contexts. Wrong perception leads to communication problems.

(iii) Faulty translations : Sometimes the communications originally drafted in one language (e.g. : English) need to be translated to the language understandable to workers (e.g.; Hindi). If translator is not proficient with both the languages, mistakes may creep in causing different meanings to the communication.

(iv) Unclarified assumption : Some communications may have certain assumptions which are subject to different interperetations. For example, a boss may instruct his subordinate, “Take care of our guest”. Boss may mean that subordinate should take care of transport, food, accommodation of the guest until he leaves the place. The subordinate may interpret that guest should be taken to hotel with care. Actually the guest suffers due to these unclarified assumptions.

(v) Technical Jargon : It is usually found that specialists use technical Jargon while explaining to persons who are not specialists in the concerned field. Therefore, they may not understand the actual meaning of many such words.

(vi) Body language and gesture decoding : Every movement of body communicates some meaning. The body movement and gestures of communicator matter so much in conveying the message. If there is no match between what is said and what is expressed in body movements, communications may be wrongly perceived.

Question 5.
Who is a supervisor?
Answer:
The supervisor occupies an intermediate position between management and operative employees. As the connecting link between management and workers, the supervisor bridges the grap between what the management expects and what the workers want. He acts as the medium of communication between higher level managers and the operatives. The supervisor holds a key position in the organisation.

He turns plans and policies of the organisation into actual result through the efforts of operatives. As the leader of his group or section he is responsible for both the quantity and quality of production. Supervisors are online executives with command authority. They perform all the basic functions of management. Their main task is to secure desired results from rank and file in accordance with predetermined standards of performance.

The quantity and quality of work depends to a large extent on the competence and character of supervisors. They quality of supervision determines not only the efficiency of operations but also the cooperation, team spirit and discipline among the employees. The supervisor is expected to secure efficient performance from employees and at the same time keep them happy and satisfied.

Supervision is needed due to the following reasons
(a) Every worker must clearly understand the nature of work he is expected to do and the manner in which he is to do it. He must be given clear and precise instructions so that he understands his duties properly and his performance can be up to the required level. It is the job of supervisor to provide such orders and instructions to workers.

(b) Every worker should be assigned duties keeping in view his knowledge, skills and experience. Mismatch between what the worker is capable of doing and what he is asked to do will lead to poor performance and frustration among employees. Supervisors ensure proper assignment of tasks to workers.

(c) In the course of doing their work, operative face problems. They need advice and guidance in performing their duties. Supervisors provide counselling and assistance to them.

(d) Workers may lose interest in their jobs and there may be lack of a sense of.direction and purpose among them. Supervisors can remind them about the usefulness of their work and performance expected from them. They can inspire workers to perform with devott on and zeal.

(e) It is necessary to continuously monitor the performance of operatives. Such monitoring provides useful feed back as to in what respects the performance is not upto the desired level and what corrective actions are required. The supervisor monitor performance and discourages indifference and negligence on the part of workers.

Question 6.
What are the elements of directing ?
Answer:
Elements Of Directing
Directing function of management includes the following elements:
(a) Supervision
(b) Leadership
(c) Motivation
(d) Communication

(a) Supervision : It refers to overseeing the work of the subordinates by their superior. It primarily deals with instructing and guiding the employees towards better level of performance.

(b) Leadership : It is an attempt aimed at influencing people directly towards the attainment of some goal. It is the process of influencing people so that they will strive willingly towards the goal.

(c) Motivation : Motivation may be defined as inspiring a person to intensify his willingness to work harder for the achievement of desired objectives.

(d) Communication : Communication is the process through which two or more persons exchange ideas and feelings among themselves. It involves a systematic and continuous process of under-standing. Thus we can say that all the four elements of directing are very important for an organisation and the organisation must adopt and work according to these elements.

Question 7.
Explain the process of motivation?
Answer:
Process of Motivation
Motivation is the result of interaction between human needs and incentives offered to satisfy them. The main steps in motivation process are given below.

1. Awareness of Need : The process of motivation beings with the awareness of a need. ‘ Feeling of a need creates anxiety or tension in the person.

2. Stimulas for Action : In order to satisfy the need and remove tension, a person takes some action. When a person feels hungry, for example, he takes steps to satisfy his hunger. He works to earn money with which he can buy food. If he gets no work he may beg for food or may even try to steal food.

3. Fulfilment of Need : In case the person is successful in satisfying his need he feels motivated. If the attempt is unsuccessful the need remains unsatisfied. In such a case the person may search for a different action.

4. Discovery of New Need :When one need is satisfied a new need arises and the process is repeated again.

Question 8.
Explain different networks of grapevine communications?
Answer:
Grapevine Network : Grapevine communication may follow different types of network. Some of those networks are shown below. Figure : Grapevine Communication Networks

In single strand network, each person communicates to the other in sequence. In gossip network, each person communicates with all non selective basis. In probability network, the individual communicates randomly w’ith other individual. In cluster, the individual communicates with only these people whom he trust of these four types of networks, cluster is the most popular in organizations.

Long Answer Type Questions

Question 1.
Explain the principles of Directing?
Answer:
Principles of Directing
Providing good and effective directing is a challenging task as it involves many complexities. A manager has to deal with people with diverse background, exactation. This implicates the directing process. Certain guiding principles of directing may help in directing process. These principles are briefly explained below

(i) Maximum individual contribution : This principle emphasizes that directing techniques must help every individual in the organization to contribute to his maximum potential for achievement of organizational objectives. It should bringout untappted energies of employees for the efficiency of organization, for example, a good motivation plan with suitable monetary and non-monetary rewards can motivate an employee to contribute his maximum efforts for the organisation as he or she may feel that their efforts will bring them suitable rewards.

(ii) Harmony of objectives : Very often, we find that individual objectives of employees and the organizational objectives understood as conflicting to each other. For example, an employee may expect attractive salary and monetary benefits to fulfil his personnel needs.

The organisation may expect employees to improve productivity to achieve expected profits. But good directing should provide harmony by convincing that employee rewards and work efficiency are complimentary to each other.

(iii) Unity of command : This principle insists that a person in the organization should receive instructions from one superior only. If instruction are received from more than one, it creates confusion, conflict and disorder in the
organization. Adherance to this principle ensures effective direction.

(v) Appropriateness of direction technique : According to this principle, appropriate .motivational and. leadership technique should be used while directing the people based on subordinate needs, capabilities, attitudes and other situational variables. For example, for some people money can act as powerful motivation while for others promotion may act as effective motivator.

(vi) Managerial communication : Effective managerial communication across all the levels in the organization makes direction effective. Directing should convey clear instructions to create total understanding to subordinates. Through proper feedback, the managers should ensure that subordinate understands his instructions clearly.

(vii) Use of informal Organization : A Manager should realize that informal group? or organization exist within every formal organization. He should spot and make use of such organizations for effective directing.

(viii) Leadership : While directing the subordinates, managers should exercise good leadership as it can influence, the subordinates positively without causing dissatisfaction among them.

(ix) Follow through : More giving of an order is not sufficient. Managers should follow . it up by reviewing continuously whether orders are being implemented accordingly or any problems are being encountered. If necessary, suitable modifications should be make in the directions.

Question 2.
Explain the qualities of a good leader? Do the qualities alone ensure leadership success?
Answer:
Qualities of A Good Leader
In order to be effective in securing the willing cooperation of the follows a leader must possess several qualities.
These qualities may be described as follow :

1. Sound Physic : A good leader must have good health and physical fitness. He requires tremendous stamina and vigour for hard work.

2. Intelligence : A leader should be intelligent enough to examine problems in the right perspective. He should have the ability to assess the pros and cons of his actions in a particular situation. He requires logical lent of mind and an mature outlook.

3. Empathy : Empathy means the ability to look at things from others’ point of view. A good leader must understand the needs, aspirations and feelings of his subordinates. ‘

4. Objectivity
A leader should have an objective outlook, free from bias and prejudice. He should form his opinion and judgement on the basis of facts alone. He needs an open mind, is willing to listen to others and adopt new ideas.

5. Emotional Stability : The leader should have a cool temperamehtancTemotional balance.
He should not be unduly moved by emotions and sentiments. He should not lose temper or show indecisiveness even in the face of heavy odds.

6. Self Confidence and Will Power : A good leader should have confidence, in his own ability to lead others. He also requires the will power to meet the needs of every situation. He can inspire others and win their trust only when he has full confidence is himself and a strong will to win.

7. Communication Skills : A good leader should be able to communicate clearly and precisely the goals and procedures to be followed. This is necessary for persuading and convincing people. The skills to listen potiently and understand is also necessary.

8. Knowledge of Work : A leader should have full knowledge of the work being performed “ by his subordinates. Only then can he guide and supervise his people and command their respect.

9. Vision and Foresight : A leader should be able to anticipate or visualise the future course of events. He needs a sound judgement and the ability to take right decisions at the right time.

10. Sense of Responsibility : A leader should be trustworthy so that subordinates can depends on him. He should’be willing assume responsibility for results. He needs a strong urge to accomplish the goals.

11. Human Relations Attitude : A good leader must be able to win the confidence and loyalty of people. He should have the capacity to create team spirity among his . followers. He should understand and respect the feelings and aspirations of his subordinates. A leader can develop friendly relations with his people only when he is conversant with human behaviour and maintains personal contact with them.

Question 3.
Discuss Maslow’s Need Hierarchy theory of motivation.
Answer:
Hierarchy Of Needs
Needs are the stating point in motivation. If the needs of the workers are identified and satisfied, they will feel happy and show higher productivity. The workers contribute their maximum to the organisational goals if their needs are satisfied. However, the needs of people are large in number as shown in fig. and some of the needs are more, complex than others. So it is not easy to satisfy all the management to satisfy the basic needs of workers such as food,clothing
and shelter. But the satisfaction of psychological needs of workers is a difficult job.

Maslow’s Hierarchy of Needs
Abraham Maslow, an eminent US psychologist, offered a general theory of motivation, called the ‘Need hierarchy theory.’ He felt that people have a wide range of needs which motivate them to strive for their fulfilment. As shown in fig., human needs can be categorised into five types : physiological needs, security needs, social needs, esteem needs and self actuaiisation needs.

Various types of human needs are discussed below :

1. Physiological Needs : These needs relate to the survival and maintenance of human life. They include such things as food, clothing, shelter, air, water and other necessities of life.

2. Security Needs : These needs are also important for most of the people. Everybody wants job security, protection against dangers, safety of property, etc.

3. Social of Affiliation Needs : Man is a social being. He is, therefore, interested in conversation, sociability, exchange of feelings, companionship, recognition, belongingness, etc.

4. Esteem or Status Needs : These needs embrance such things as self-confidence, independence, achievement,competence, knowledge, initiative and success. These needs are concerned with prestige and respect of the individuals.

5. Self-actualisation Needs : These are the needs of the highest order. They are generally found in persons whose first four needs have already been fulfilled.

They are concerned with achieving what a person consider to be his mission of life. For instance, getting India free from the British regine was the mission of Mahatma Gandhi. Sense of achievement may be concerned with making new discoveries and doing unique things.

Maslow felt that the above needs have a definite sequence of domination. Second need does not dominate until first need is reasonably satisfied and third need does not dominate until first two needs have been reasonably satisfied and so on. The other side of the need hierarchy is that man is wanting animal, he continues to want something or the other. He is never fully satisfied. If one need is satisfied, the ot,her need arises.

Thus, the management can get desired behaviour from the employees by satisfying their needs by offering incentives. Management can use two types of incentive, namely,

• financial, and
• non-financial.

Financial incentives like wages, commission, bonus, etc., can be used to satisfy the physiological, security and social needs of the workers. Monetary benefits can also satisfy a part of status needs Of the employees. But the needs of the biggest order, i.e., self-actualisation can be fulfilled by offering non-financial incentives such as job enrichment, job enlargement, challenging work, etc.

Question 4.
What are the common barriers to effective communication? Suggest measures to overcome them.
Answer:
Barriers to Effective Communication :Barriers or obstacles to communication cause break-downs, detriorate and inaccurate information. They plaque the daily life and depend upon the accurate transmission of the orders and information for efficient operations.

Whenever a communication is made, there is always a tendency on the part of the receiver to evaluate the message received and then decide to approve or disapprove the same. Another important barrier to communication lies in the layers and spans of management.

In large organisations, there are a number of obstacles which make transmission of message more difficult. In both upward and downward communication, it may happen that some of the persons in the intermediate layers withhold the whole or part of the information because they may feel that by withholding the information they will be better informed than those whom they lead.

It should be noted that although there is no such thing as perfect communication considerable . degree of perfection can be achieved in communication if the barriers to communication are overcome. The main barriers to communication . are discussed below :

1. Complex Organisation Structure : A The organisation structure has an important influence on the ability of the members of the organisation to communicate effectively. These days the organisation structure of most big enterprises is complex involving several layers of supervision and long communication lines Organisation structure creates problems because communication may break down at any level due to faulty transmission.

2. Status Differences : Status of an organisational member is determined by the position he holds in the organisation. This fact is quite apparent when the subordinate talks to his superior. Obstacle in communication occurs when the psychological distance between the two is created because’ of status symbols of the superior. Status symbols include high quality furniture, separate room facilities, etc. A sense of inferiority complex in the mind of the subordinate does not allow him to seek clarification from the superior.

3. Semantic Barriers : Semantic is the science of meaning, words seldom mean the same thing do two persons. Symbols or words usually have a variety of meanings. The sender and the receiver have to choose one meaning from among many. If both of them choose the same meaning, the communication will be perfect.

But this is not so always because of differences in formal education and social background of people and the type of situation faced. The same words may suggest quite different meanings to different people, e.g. ‘profits’ may mean to management efficiency and growth, whereas to employees, profits may suggest excess funds piled up through paying inadequate wages and benefits.

4. Screening or Filtering of Information : Sometimes, the sender screens the information for passing only
such information which will look favourable to the receiver; This is because of the simple reason that no one like to show his mistakes to someone else, especially to his boss. The boss, on the other hand, wants to obtain information about what is actually going on, especially those actions which need his attention.

5. Perceptual Errors : A person’s perception is determined by his needs, social environments, level of education, cultural factors, etc. Every persons tries to interpret the information he receives from his own angle or point of view. This may create complexities in the process of communication. Effective communication requires the willingness to see things through the eyes of others.

6. Predisposition or Closed Mind : Preconceived notions or opinions are a hurdle in communication. If the listener has closed mind, he will evaluate the things from his own point of view and will not be receptive to new ideas. Similarly, if a li stener is suffering from the mirage of too much knowledge, he will , be rigid and dogmatic in attitude.

7. Lack of Ability to Communicate : All persons do not have the skill to communicate. Skills to communicate may come naturally to some, but an average man may need some sort of training and practice by way of interviewing, public speaking, etc.

8. Poor Listening or inattention : Failure to read bulletins, notices, minutes and reports is common among many people. Similarly, verbal communication has no impact on those who are preoccupied or unwilling to listen. If people do not pay the required attention to listening and understanding messages they are supposed to receive, communication will lose its purpose.

Also, some people are too quick in reacting on information as it is being received from the sender, without waiting for full information. This may drive the sender to frustration and into a sense of futility. The sender may then learn to be different in transmitting messages to such premature evaluators.

9. Lack of Credibility of Source : If the receiver has trust and confidence in the words.and actions of the communicators, the message received will be considered credible. But if there is a gap between what the communicator says and what he does, the message from him will not create the desired response from the receiver. The receiver will not take the message seriously because of inconsistency of message and the incredibility of its source.

Overcoming Barriers to Communication :  An effective system is one that ensures smooth flow of information in the organisation and overcomes barriers to communication. Such a system has the following characteristics.

(i) Free Flow of Information : The system of communication should be so designed that it has short lines of information flows. There should be free movement of information both vertically and horizontally. The rigid organisation structure should not be allowed to come in the way of smooth and speedy flow of information. Moreover, delegation and decentralisation of authority should be encouraged to cut delays in decision-making and speed up communication.

(ii) Clarity of Message : The message must be as clear as possible. No ambiguity should creep into it. The message can be conveyed properly only if it is clearly formulated in the mind of the communicator. The message should’, be encoded in direct and simple language so that the receiver is able to understand it without much difficulty.

(iii) Positive Attitude : There should be change in the attitudes of superiors and subordinates so that there is open communication at all times various levels. They should overcome the; status barrier to create proper understanding. The superiors must keep the subordinates informed about the policies and programmes and also be in touch with subordinates regarding their problems, suggestions etc. This is necessary to achieve the organisational goals effectively.

(iv) Open Mind : The parties to communication must have open mind. They should not try to hold information just to serve their personal interests. They should attempt to interpret the information without any prejudice or bias. They should also be receptive to view ideas that may come across. They should not react before receiving and understanding the full message.

(v) Communication Skills : Every person should have the necessary skills to share information with superiors, peers and subordinates. This will improve human relations in the organisation and also help in ensuring greater productivity.

(vi) Effective Listening : The sender must listen to the receiver’s words attentively so that the receiver may also listen to the sender at the same time. It is also necessary for every-employee to update his knowledge by reading company notices, bulletins, reports, etc.

(vii) Receptive to new Ideas : The employees should be prepared to accept new ideas and change themselves accordingly. They should be willing to receive information from internal and external sources which calls for change in the organisation.

(viii) Flexibility : A good system should be flexible enough to adjust to the changing requirements. It should be able to carry extra loads of information without much strains. It should absorb new techniques of communications with little resistance. Use of a wide .range of media such as oral and written message, fact-to-face contacts, telephonic calls, group meetings, etc. should be encouraged without any hesitation.

Question 5.
Explain different financial and non-financial incentives used to motivate employees of a company.
Answer:
Meaning And Types of Incentives
Meaning of Incentives : An incentive is something that stimulates a person towards some goal. It activates human needs and creates the desire to work. Thus, an incentive is a means to motivation. Incentives generally have a direct influence on the degree of motivation.

In organisations, increase in incentive leads to better performance and vice versa. Generally, incentives induce individuals to respond in a desired manner. Both financial and non-financial incentives may be used by the management to motivate the workers. Financial incentives of v motivators are those which are associated with money. They include wages and. salaries, fringe benefits, bonus, retirement benefits, etc. Non-financial motivators are those which are not associated with monetary rewards.

They include intangible incentives like ego satisfaction, self-actualisation and responsibility. Management makes use of financial and non-financial incentives to satisfy the needs of the employees. The satisfied workers are group goals in a better way.

2. Job Security : Generally, workers prefer security of job. They may not prefer jobs with higher wages or salaries which do not carry security job security is an important non-financial incentive for most of the workers.

3. Recognition : Praise or appreciation satisfies one’s egoistic needs. Sometimes, praise is more effective than any financial incentive. However, this incentive should be used with greater .degree of care because praising an incompetent employee “would create resentment among the competent employees. Of course, occasionally, a pat on back on an incompetent employee may act as an incentive to him for improvement.

4. Challenging Job : For some people, challenging work acts as a great non-financial incentive. It inspires them to work hard and provides them job satisfaction. The management can use ‘job enrichment’ to make the jobs more interesting and challenging.

5. Knowledge of Results
Knowledge-of results leads to employee satisfaction. A worker likes to know the result of his performance. He gets satisfaction when his superior appreciates the work he has done.

6. Opportunity for Growth and Achievement : Opportunity for growth is another kind of incentive. If the employees are provided the opportunity for their advancement and growth and to develop their personality, they feel very must satisfied and become more committed to the organisational goals.

7. Opportunity for Participation : For some employees, opportunity for participation in the process of decision-making serves as a non-financial incentive. Active involvement of the subordinates in decision-making may be achieved by delegation of authority, increasing efficiency of workers.

People in higher positions are not motivated by monetary benefits. They may be motivated by money only if the increase is large enough to increase their standard of living and status in the society. But in case of employees at the operative levels, money certainly plays a significant role in motivating them because their basic needs have not been fulfilled.

Non-Monetory Incentives
Incentives which are not measurable in terms of money are knows as non-monetary or non-financial incentives.
Financial incentives do not work for even to motivate the people at work. The employees do not always run after money as it can’t satisfy all their needs. They want status and recognition in the society.

They want to satisfy their egoistic’needs and to achieve something in their lives. Management can use non-financial incentives to satisfy such needs of workers. Non-monetary incentives such as praise, recognition and opportunity for growth can be strong motivators for employees whose psychological needs are stronger.

Role of Non-Financial Incentives
Non financial or non-monetory incentives motivate the employees in the following ways ‘
(i) Non-monetory incentives such as recognition, office with good furniture, etc. satisfy the psychological needs of individuals.
(ii) They motivate the employees by enhancing their status in the organisation.
(iii) They can satisfy the higher level needs.of individuals, e.g., need for self-fulfilment, advancement, etc.

Types of Non-Financial Incentives
1. Competition
Competition is a kind of non-financial incentive. If there is a healthy competitionnmong the individuals employees or better motivated. Then productivity is also higher. Thus, the existence of incentive system plays an important role in motivating the employees and in increasing their efficiency.

2. Types of Incentives
Two kinds of incentives may be provided to the employees, namely,
(i) financial or monetory incentives, and
(ii) non-financial incentives. These are discussed below.

Monetory or Financial Incentives
Monetory incentives are associated with monetary or financial benefits to the employees. These benefits can be expressed in terms of money. Financial incentives are very commonly used in modem organisations to motivate the employees to increase their productivity. These include bonus, profit sharing, commission, insurance, medical allowance, housing facilities and retirement benefits. These are paid in terms of money.

It is generally said that higher the monetory benefits, higher is the productivity of workers. But this is not always so, Monetary benefits have only limited utility in increasing the motivation of employees. After .the basic needs have been met, the role of money in motivating the employees is generally decreased. The management has to make use of non-financial incentives also to motivate the employees.

The popular monetary incentives offered to employees are briefly discussed below
(i) Profit-sharing : Under profit sharing scheme, the employees are given a share in the profits of the company if the profits exceed the level fixed by the management and increase company’s profits so that they may collectively get a share in the increased profits.

(ii) Co-partnership : Under profit sharing, the employees get a share of profits and not the ownership right or shares in the company. But under co-partnership, the employees are issued shares in lieu of profit sharing. Thus, the employees gain the status of co-partners of the company where they are working.

(iii) Bonus : It is customary to distribute bonus to employees every year. The law provides payment of minimum of 8.33% of annual pay as bonus and it does not prescribe any upper limit. Thus, the rate of bonus is paid to the employees around Diwali every year.

(iv) Commission : Commission is the incentive offered to sales persons to motivate them to increase their sales. In addition to their monthly salary, the sales persons become entitled to a percentage of sales revenues (vaiying from I per cent to 5 per cent). This is called commission on sales.

(v) Cash Rewards For suggestions : Many companies have started suggestion schemes under which handsome rewards are given to the employees whose suggestions are implemented by the management. The suggestions may relate to improvement in techn ique and procedure to reduce cost of production. The amount of reward may depend upon the expected-savings is costs during a particular year because of the implementation of the suggestions.

Role of Monetary or Financial Incentives : Money plays an important role in motivation. Managements generally make use of financial incentives to motivate the workers.

The financial incentives can help increase the motivation of workers in the following ways
(i) Financial incentives fulfil the basic physiological needs (food, clothing and shelter) of the workers. Money is the real motivating factor for the workers where basic needs are not fulfilled.

(ii) Money helps in satisfying the social needs of the workers to some extent because money is often recongnised as a basis of status, respect and power.

(iii) Money is regarded as a basic incentive for individuals when economic rewards are based on productivity. It helps in information sharing, receiving suggestions, etc. Participation would increase the commitment and loyality of the workers to the organisation.

Suggestion System

Suggestion system satisfies the psychological needs of the employees. The organisation which don’t pay cash rewards for useful suggestions publish the worker’s name with his photograph in the company’s magazine. This motivates the employees to be in search for something which may be of great use to the organisation.

Application Type Questions Answers

Question 1.
The workers always try to show their inability when any new work in given to them. They are always unwilling to take up any kind of work. Due to sudden rise in demand a firm wants to meet excess orders. The supervisor is finding it difficult to coped up with the situation. Suggest ways.for the supervisor to handle ‘ the problem.
Answer:
Supervisor in the above problem plays a key role for maintaining group unity among the workers and ensures performance of work according to the targets set. He takes responsibility for task achievement and motivates the workers effectively. A supervisor with good leadership qualities can build up high morale among workers.

A skilled and knowledgeable supervisor can build efficient team of workers. In the above situation, the supervisor may set an example by doing himself the work and make sure that the image of the organization will not let down in the eyes of workers and persuade them to follow his actions or deeds.

Question 2.
Workers of a factory often seek guidance of Production Managers, The production manager finds Himself overburdened. Advise the way to relieve production manager.
Answer:
The production manager of an organization may direct, instruct, guide and council the workers for the attainment of organizational objectives. Production manager may delegate his authorities to immediate supervisor or foreman who may look after the problems of workers. Production manager guides the workers to fully realise their potential and capabilities by motivating and providing effective leadership.

Question 3.
In an organisation employees always feel they are under stress. They take least initiative and fear to express their problems before the manager. What do you think is wrong with the manager?
Answer:
In the above problem, manager centralised all the powers and authorities by himself. People in an organization work with diverse background and expectations which caused stress in the minds of workers. Manager should convey clear instructions to create local understanding to subordinates. Manager should promote informal groups within the organization to relieve stress among the employees or workers.

Question 4.
In an organisation all the employees take things easy and are free to approach anyone for minor queries and problems. This has resulted in everyone taking to each other and thus resulting in inefficiency in the office. It has also resulted in loss of secrecy and confidential information being leaked out. What system do you think the manager should adopt to improve communication.
Answer:
In the above problem, the informal or grapevine type of communicate creates problem to the extent that confidential information and matters of utmost secrecy are leaked between the subordinates. Grapevine comniunication spreads rapidly and sometimes gets distorted. An intelligent manager should make use of positive aspects of informal channels and minimise negative aspects of this channel of communication.

Along with informal communication management should use formal communication flow through official channels designed in the organization chart.

Case Problem -1

Y limited is a bank functioning in India. It is planning to diversify into insurance business. Lately the government of India has allowed the private sector to gain entry in the insurance business. Previously it was the prerogative of LIC and GIC to do insurance business. But now with liberalisation of the economy and to make the field competitive other companies have been given licenses to start insurance business under the regulation of ‘Insurance Regulatory and Development Authority’. Y limited plans to recuit high quality employees and agents and exercise effective direction to capture a substantial part of life and non life insurance business.

Question 1.
Identify how the company can supervise its employees and agents effectively. What benefits will the company derive from effective supervision?
Answer:
Y limited can supervise its employees and agents with the help of good direction, as directing concerns the total manner in which a manager influences the subordinates. It involves good supervision and motivation. Motivation means inspiring the subordinates with a zeal to work. The manager should motivate them and in return they will work with enthusiasm and company will get more insurance policies.

Question 2.
What financial and non-financial insentives can the company use for employees and agents to motivate them? What benefits will company get from them?
Answer:
It should be a company that actively promote freedom to work, freedom to innovate and even freedom to fail. The company should under go a revolutionary changes in terms of its works (policies) Company should give more insentives and freedom in the market to its employees so that, it could get more profits and name.

Question 3.
How can company ensure that higher order needs i.e. esteem and self-actualisation as specified by Abraham Maslow are met?
Answer:
As according to Abraham it is the highest level of need in the hierarchy. It refers to drive to become what one is capable of becoming. So company may assure with the help of following process.

Self Actualisation needs
∇
Esteem needs
∇
Affiliation/belongingness needs
∇
safety/security needs
∇
Basic phychoiogical needs

If the company will fulfill the above needs it will get success.

Question 4.
Identify the qualities of leadership in this line of business that the company managers must posses* to motivate employees and agents.
Answer:

• They must have quality to inspire and influence them.
• They must have the sense of responsibility and a desire to success.
• They must have full knowledge of the subject.
• They must be effective motivators.

Question 5.
Give a model of formal communication system that the company can follow. Identify the barriers in this model. How can they be removed?
Answer:
In the above problem, the business of banking and Insurance Sector due to entry of private players in the business, the effective system of communication between the various authorities or levels of management is essential. Various formal systems of communication like chain, wheel, circular, free flow and invested takes place in an organization. In the above case the communication channel of free low of information may be used in my opinion, which may be as unde

In this network, each person can communicate with others freely. The flow of communication is fast in this network.
Various Communication barriers like badly expressed messages, unclatified assumptions, Technical terms, loss by transmission and poor retention of information and messages and distrust between communicator and communicate acts as a barrier.

The barriers may be overcome and improve communication effectiveness by clarifying the ideas before communication ensure proper feedback, follow up communication and a feeling of trust and oneness in essential.

Question 6.
How can informal communication help to supplement formal communication model given by you in answer to questions 5?
Answer:
Information Communication system arises out of needs of employees to exchange their views. Sometimes, grapevine communication or informal communication may be helpful as it carry information rapidly and may be useful for managers.

An intelligent manager should make use of positive aspects of informal channels and minimise negative aspects of informal communication. Management should adopt the cluster type of grapevine communication because in such communication the individual communicates with only those people whom he trust. Cluster is the most popular system of communication in organization.

Detailed, Step-by-Step NCERT Solutions for 12 Business Studies Chapter 6 Staffing Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.

Staffing NCERT Solutions for Class 12 Business Studies Chapter 6

Staffing Questions and Answers Class 12 Business Studies Chapter 6

Question 1.
Briefly enumerate the important sources of recruitment.
Answer:
Recruitment refers to those set of activities an organization uses to attract job candidates possessing the appropriate characteristics to help the organization achieve its objectives. The sources of recruitment can b. iveniently classified into internal and external sources’.

Internal Sources
These-sources include the employees already on the pay role i.e.present work force. Whenever any new vacancy arises people from within the organization will be upgraded, promoted, transferred or demoted. The process of filling job openings by selecting from among the pool of present work force can be implemented by the following methods.

• Reviewing the personnel records.
• Job posting and job bidding.
• Inside moonlighting and employee’s friends.

Review of the personnel records and skills inventory provides adequate information for the personnel director to find suitable candidates for a particular position. Under job posting and bidding system the organisation notifies its present employees of openings using bulletin boards, and company publication etc. This is more an open approach where every one gets the same right to apply for a job . and bid for the same.

If the Labour shortage is of short-term nature and great amount of additional Labur is not necessary, then organization employs inside moonlighting.’ It is a technique where organization pays bonus of various types to people not on a time pay roll.

Overtime procedures are in many organizations developed for those on time pay roll. Further more, before going outside to recruit many organization ask the present employees to encourage friends and relatives- to apply.

The internal sources of recruitment have the following merits:

• Recruitment from within can have significant positive effect on employee motivation and moral when it creates promotion opportunities or premature Layoffs.
• Internal recruitment improves the moral of employee because they are sure that they would be preferred over the outside competitor’s.
• Internal recruitment will be easy for the employer as it is easy to evaluate the employees who are currently working.
• Employees need little training as they know the major operations and functions of the organization.
• The expenditure is relatively less when compared to outside sources of recruitment.

The internal sources of recruitment are fought with the following:
Limitations
1. It is not a healthy sign for the organization in the long run as it discourages new blood from entering the organization. The organization may be deprived and benifit of the young talent and experienced employees from outside firms.

2. One disadvantage of internal recruitment has been the widely Published Perier Principle i.e. successful people are promoted until they finally reach a level in which they are unable to perform adequately.

3. The skills of internal employees may become obsolete and the organization may have to resort to outside sources?

4. When promotion is bases on experience and seniority the danger is that really capable men may not be chosen.

5. A final danger involves the inbreeding of ideas when recruiting is only from internal sources precautions must be taken to ensure “we have never done it before like that”, “we do not want to take chance,” or “we do all right without it”.

External sources

When an organization has exhausted’internal sources or when it finals internal sources to be unsuitable, external sources are used. The methods of recruitment are many – walk-ins, public employment agencies, private employment agencies, Labour unions, educational institutions, professional associations, former employees, military services etc. Let us briefly study these external sources of recruitment.

1. Employment exchange
Employment exchanges and private employment agencies represent common sources of external recruitment. Employment exchanges maintain a detailed record of job-seekers and refers the candidate with appropriate qualifications to the required employers. In India it is obligatory to notify the vacancies Act. Employment exchanges are generally used for clerical and semi-skilled employees.

The exchanges match both the demand and supply forces of Labour, Employment exchanges are instrumental in increasing the mobility, of labour, in eliminating bribery and corruption and in providing occupational guidance, in conducting occupational (Personnel) research, etc.

These days, a large number of private employment agencies have been set up in india. These agencies act as consultants and are consulted for recruiting the technical, professonal and managerial personnel. Private employment agencies, also called search firms or ‘head-hunters’ are found more frequently in big cities.

These agencies usually charge a flat fee for their services or a percentage of the salary earned by the hired employee during the first year/month of the service. Generally private agencies offer specialized recruitment service than do the public (government) employment exchanges.

Employment exchanges are falling into disfavour now a days because the records of employment exchanges’are not kept up to date and many of the candidates referred by the employment exchanges may already have sodght employment else where. Further, the candidates, quite often do not care to inform the exchanges once they secure employment on their own else where. Organization, therefore, find it more expedient to meet their requirements from other sources.

2. Advertising
Companies normally advertise and select the’cream of the crop’. One of the most widly used methods of recruitment is the help- wanted advertisement. Advertisements are commonly placed in daily newspapers, employment news magazines, trade and professional publications. People in large numbers respond to the advertisements and somethings even unqualified and unsuitable people also apply. This method, though popular is therefore time – consuming and heavy expenditures involved in recruiting employees through this method.

3. Educational institutions
Also known as campus recruitment, this method represents recruiting on college and university. These days more and more organizations are relying on-campus recruiting. Organization send the employment circulars to various professional educational institutions to display them on the notice board so that potential candidates/students come to know about the vacancies.

Some professional management and technical institutions have placement cells which act as link between the recruiting firms and prospective student candidates.

4. Employee walkins :-
Another source of recruitment is employee walk-ins. Some people send unsolicited applications to the organization enjoying goodwill and reputation, Generally, the corporate image has a significant impact on the number and quality of people applying to an organization in this manner. The corporate image is highly influenced by

• Working conditions
• Compensation policies
• Employer – employee relation, and
• Workers participation in management etc. Walk-ins are not popular source of recruitment in India when compared to the developed countries.

Question 2.
What is meant by recruitment? How is it different from selection?
Answer:
Meaning of Recruitment:-
Recruitment may be defined as the process of publicising information about job vacancies in the organization and inducing the prospective candidates to offer themselves for appointment in the organization. It is the process of searching for prospective employees and encouraging them to apply for jobs in the organization.

It is an important part of staffing and it is an ongoing process. The objective of recruitment is to procure a sufficiently large number of qualified candidates so that the most eligible employees can be selected. Therefore recruitment is called a positive process.

Recruitment brings together the job giver (employer) and the job seekers (applicants). Recruitment can be done either from inside or from outside the organization.
Thus, recruitment involves the following steps :-

(a) identifying the sources of supply of adequate number and right type of personnel required.- 128 N. D. Study Material
(b) Publicising information about job vacacies in the organization.
(c) Assessing alternative sources of manpower and choosing the best source.
(d) Contacting the chosen sources of recruitment to secure, applications, e.g. advertisement for vacancies in a newspaper so as to stimulate the prospective candidates to offer themselves for employment.

Meaning of Selection
Selection is the process of carefully screening the candidates to choose the most suitable persons for the job vacancies to be filled. Under it the qualifications, experience and background of applicants are evaluated in the light of job requirements. It is the process of dividing the candidates into two categories, namely

• those who are to be employed, and
• those who are to be rejected.

It is called a negative process because unsuitable candidates are eliminted or rejected in order to identify the suitable candidates. The number of candidates rejected are much more than those actually selected.

More over, tests, interviews and other techniques of selection are more reliable for rejection of unsatisfactory candidates than for identifying the ideal candidates. Selection is always done after recruitment. The basic purpose of selection is to choose the right type of candidates to fill various positions in the organization.

Selection is a multistep process. It involves a series of steps by which candidates are screened to identify the most suitable persons for the job. Selection is difficult process as it involves discreation and judgement. The selectors have to find out the best possible fit between the job and the candidate. The candidate who meet the job requirements in the most satisfactory manner are finally selected.

Distinction between Recruitment and selection –
Selection is different from recruitment. Selection involves welding out or eliminating unsuitable candidates. Therefore it is a negative process. On the other hand, recruitment is a positive process because it involves attracting a sufficiently large number Of candidates so that the most eligible employees can be selected.

Recruitment is the first stage whereas selection is the second stage in the procurement of employees. The distinction between Recruitment and selection is explained in the following table

Distinction between Recruitment and Selection

Question 3.
Define Training. How is it different from education?
Answer:
Meaning of Training
Training is the process of improving the job knowledge and skills of employees so as to enable them to perform well. It is an organised or systematic activity where in people acquire knowledge and skills for doing a specific job. It is a two-way process because there must be someone to learn and someone to teach.

The purpose of training is to mould the behaviour of people so that they can do their jobs in a better way. In order to achieve this purpose, a training programme is used to improve the knowledge, skills and attitudes of employees. Training is the process of imparting information and knowledge to the employees. As an organised activity, training is designed to create a change in the thinking and behaviour of people.

Training is continues
process, because there is no end to learning and a person, has to learn continuously – new technology, new patterns of behaviour and new life styles. Training is necessary for both new as well as existing employees so that they may peform their jobs property. Training also helps employees to make progress in their careers.

Several on – the – job and off – the – job methods are used for training employees. New employees need training to adopt themselves to the new environment and to perform their jobs efficiently. Old workers require in – service – training to update their knowledge and to learn new methods and techniques of doing work. Thus training is a continuous or never- ending process. There is no end to learning.

Distinction Between Training and Education:-

Traning and Education
Training should be differentiated from education though both are elements of the learnings process. Education involves improving the general knowledge and developing on over all under standing of the total environment. For example, a mechanic who repairs the car better than an engineer is only trained. He is not educated because he does not know the principles of engineering.

Therefore, the scope of education is wider than’ that of training. Secondly the purpose of education is general whereas training has a specific and immediate purpose of making a person proficient in a particular job. The aim of education is to develop the over all understanding and mental capabilities, where as the purpose of training is to improve the knowledge and skills of an individual in doing a particular job more efficiently.

Thirdly education involves formal instruction in a school or college whereas training can be given on the job itself. Fourthly education is generally theoretical whereas training is practical in nature. Lastly, the cost of education is generally paid by the Government and the student. On the other hand, the cost of training is generally borne by the employer.

Question 4.
Distinguish between training and development.
Answer:
Training should also be differentiated from Development. Training is the act of improving the knowledge and skills for doing a specific job. On the other hand, development involves growth of a person in all respects. It is the process by which managers and executives acquire not only skills and competence in their present jobs but also capabilities for future tasks of increasing difficulty and scope.

Secondly training aims at improving current job performance whereas development seeks to improve future job performance. In other words training is job centered while development is career-band. For instance, an employee may receive training to operate a computer. But he may attend a management course develop leadership skills.

Training and development programmes may be beneficial to both managers and workers but the contents of the programmes are likely to differ, managers receive instructions in developing leadership skills whereas workers are trained in technical skills.

Question 5.
Why are internal sources of recruitment considered to be more economical?
Answer:
Internal sources of recruitment considered to be more economical because
1. There are two important sources of internal recruitment transfers and promotion both are economic. As it simplifies the process of selection and placement. The candidates that are already in the working the interprise can be evaluated more accurately and economically.

2. Transfer is a toll of training the employees to prepare them for higher jobs. Also people recruited from within the organisation do not need induction training.

3. Transfer has the benefit of shifting work fore from the surplus departments to those where there is shortage of staff.

4. Filling of jobs internally is cheaper as compared to getting candidates from external sources.

5. Employees are motivated to improve their performance. A promotional at a higher level may lead to a chain of promotion at lower levels in the organisation. This motivates the employees to improve their performance through learning and practice. Employees work their commitment and loyalty and remain satisfied within jobs. Also peace prevails in the enterprise because of promotional avenues.

Question 6.
What is the importance of staffing function in todays environment?
Answer:
The need and importance of the staffing function of management are as follows.
1. Key function
Staffing is regarded as key function because it deals with human beings. It has been recognised that human resources is one of the most valuables assets for an organisation.

2. Helps in building sound human organisation
Staffing helps in searching for qualified and competent persons, stimulating them to join the organisation.

3. Ensures maximum productivity
By placing the right man at the right job staffing ensures maximum production at minimum of time, effort and cost.

4. Provides job satisfaction
Staffing provides job satisfaction to the workers by assigning them the job most- suited to their capability and potential.
.
5. Prepares for future challenges
Through staffing, the management can foreseen and plan its future staff requirements and accordinagly train and develop its workers for assuming future responsibilities.

Long Answer Type Questions

Question 1.
Define the staffing process and the various steps involved in it?
Answer:
Staffing Process – Steps in staffing process.

The various steps in the staffing process as shown in the above figure are as follows

(i) Prior to staffing :
Before the actual function of staffing starts, a minimum preparation is required. A definite idea should be made of the person who will be responsibly for the staffing function. In formation should also be gathered about the working of the internal and external environment of the business.

(ii) Staffing Plan :
Before the actual work of recruiting and selecting employees takes place a staffing plan should be prepared by the organisation. Human Resource Planning (HRP) is the process by which managers ensure that they have the right numbers and kinds of people in the right places, and at the right times, who are capable of effectively and efficiently performing the assigned tasks. The two most important tabs of Human Resource Planning therefore are

• assessing current human resources; and
• assessing future human resources needs and developing a programme to meet those future needs.

(iii) Appropriate Qualifications :
Staffing involves matching the requirements of the job with the qualifications of the persons to be recruited. Hence job requirements are minutely studies and appropriate qualifications for the same are determined in advance.

(iv) Developing Assessment Tests :
On the basis of the qualifications assessment tests are to be developed to measure whether these qualifications are actually poessessed by the candidates. The Assessment Tests should be so devised that they do not focus on single abstract ability and should not create bias in the assessment.

(v) Locating Potential Applications :
The next step involves locating the potential candidates or determining the sources of potential candidates. Both internal as well as external sources explored may be tolocate the potential candidates for the specified jobs.

(vi) Advertising the job :
Internal sources of finding potential candidates can be used to a limited extent. For fresh talent and wider choice external sources of recruitment are greatly relied upon, for which advertising is a necessary next step.

(vii) Selection Test/Interview :
The next step in the staffing process is to screen the candidates through different methods such as selection test, interviews etc. The objective -of the selection process to find the most suitable person for – the job.

(viii) Deciding and Notifying Applicants :
A final list of candidates who are provisionally selected is prepared for further verification, like price verification character verification, reference check etc. which is necessary for contacting important in formation about them before making a decision in this regard.

(ix) Final selection and placement :
The next step is making a final selection and communicating with the candidates. The selected candidates are then placed in the job. Placement is the process of assiging a specific job to each of the selected candidates. It involves assiging a specific rank and responsibility to an individual and implies matching the requirements of a job with the qualifications of a candidate.

(x) Orientation/Induction :
Orientation is a planned introduction of employees to their jobs their co-workers and the organisation. An initial training programme is provided to all new persons touring an organisation so as to-induct them to the job. It is important to make the new persons comfortable to carry out the assigned job smoothly.

(xi) Training :
There is a continuous need for up gradation of the skills and knowledge of the employees so that they can adopt to the sort changing business environment. It is an attempt to improve the performance of the employee’s by improving their knowledge skills and attitudes.

Question 2.
Explain the procedure for selection of employees.
Answer:
Selection is a process of weeding out unsuitable candidates and finally arriving at the most suitable candidates. Thus while recruitment is considered as a positive process (or attracting job applicants), selection is a negative process (or rejecting or filtering the applicants).

The main function of the personnel department is to see how personnel are recruited and selected.-Selection is an important process because employees may remain with the firm for a long period of time. Organization spend large amounts in the selection process. There is full justification for such expenditure. The costs of recruitment and training-are considered as investment in ’Personnel’ the return for which will be in the form of contribution made by them toward the output. Selection thus involves drawing a cost-benefit analysis.

Selection procedure is like a sequence of hurdles. Actually . selection is a negative process. It is negative because more will be turned away than hired. Successful candidates leap over the hurdles and arrive at the finish line, whereas the unsuccessful candidates do not. Selection is, thus carried on by this successive hurdles technique. Some times selection is carried by the multiple – correlation technique also.

The multiple correclation technique, which is, less commonly used is based on the assumption that a deficiency in one factor can be ‘ counter balanced by an excess amount of other. That is to say when a battery of tests are conducted by the management in the selection of t employees a low score on the test can be counter balanced by the high score on the other.

Selection process reveals the following steps

1. Recruitment :
Recruitment refers to those activities of an organization used to attract job candidates possessing the appropriate characteristics to . help the organization reach its objectives. Recruitment determines the total number of applicants applying for each position in the organistion.

The recruitment efforts of an organization are continuous. A logical starting point in recruitment is to look within the organisation carefully. Employees who are satisfied with the organisation will feel like recommending their friends, relatives, neighbours etc. But normally organizations try to recruit employees from out side the organization.

There are a number of ways of recruitment of potential employees – such as private employment ” agencies, public employment agencies, school and colleges, adverting, walk-in (walk-ins mean the people who show upto the gate unsolicited) write in (write-ins means the unsolicted job-seeking letters}, applicant files, field recruitment trips, professional associations for placement of employees etc.

2. The Screening Interview :
A brief screening interview is conducted in the early selection process by a big organization. This is-of short duration and may last for about fifteen to twenty minutes. The employment specialist generally asks ‘knock out’ questions and answering these questions in a particular fashion disqualifies the applicant immediately.

For example ‘are you prepared to work overtime is a vital question if the job under consideration involves unexpected increase in the demand for product. If the applicant gets success in the screening interview he will be given a blank application form to fill it up.

3. Blank Application Form :
Another indispensable part of the selection is the job application form. The application blank is essentially a personal history questionnaire. A full-fledged application form furnishes information , about the candidate’s schooling, qualification, experience, special abilities, attitudes, tastes and preferences etc.

The prescribed application form in addition to providing biographical information,also provides some information related to success on the job. How a person complete the form also might give some clues about the person’s organizational ability and intelligence. For instance, a blank completed in a disorganised fashion (i.e. rough writing, may crosscuts, excessive writing in margins, careless hand writing etc.)

might suggest sloppy work habits of the candidate. Though it is not always true, a carefully designed and skilfully interpreted application form is a potent source of information about an individual’s attitudes, his basic motivation drives his emotional adjustment, his relation with other people and his over all ability to function satisfactorily on the job.

4. Psychological Tests :
Though the psychological tests are not the sole method of selection, they are mose frequently employed in almost all organizations. A psychological test is a systematic procedure for sampling human behaviour.

If is designd to measure alertness, achievement special aptitude and physical dexterity etc. of the candidates. The psychological tests are valuable in placing the available candidates in the most suitable jobs.’ These tests take into account such factors as verbal comprehension, numerical comprehension, pursuit, perceptual speed, visualisation inductive reasoning, word fluency, and syntactic evalution. Syntatic evaluation implies the.ability to apply principles to arrive at a unique solution.

5. Evaluation Interview :
An evalution is perhaps the most important part in the selection process. It attempts to make a careful assessment of the candidates qualifications for the particular task (job). The interview time may range from thirty to fifty minutes. The purpose of interview is to have a good overview of the candidate’s strengths and weaknesses for the position.

Selection interviews are normally conducted in the privacy of an office or a conference room so that the room is quiet and free from interruptions. To relax the candidate and establish support, it is justiciable to spend some time (at least three to five minutes) in warm- up conversation on the part of the interviewer.

An effective interviewer provides the interviewer the reinforcement and encouragement by asking such questions as demographic details (native place and address etc.) and also sports, college experience, etc. after the warm-up period the interviewer shifts to more job-related and subjective questions such as ‘why are you interested in our organization?’ why did you leave the previous job? etc.

As a follow up to these, the interviewer often probes deep into facts by digging for additional details. At the end of the interview each and every candidate (successful as well as unsuccessful) will be thanked for their interest and will be informed that they will be hearing from the organization soon. The organization sends regret letters to the unsuccessful candidates (in some cases they – keep silent about the results) and positive letters of acceptance to the successful counter parts.

6. Background Investigation
Another important part in the selection process is the verification of information obtained from the candidate’s blank application from, selection interview, and the resume he prepares at the end of interview. Normally the candidate is required to state some references (at least two) at the time of filling up the blank application form. Almost all organisation perform some background investigation either by writing or making phone call to the refrees. Background investigation acts as a reference check on the employees.

7. The physical Examination
Medical examination of all the candidates before employment is
a necessary step in the selection process. Nobody is consideted as hired until he has successfully passed every setp of recruitment and selection process. Medical examination is one such step. This step is neccessary for three vital reasons

• To assure that the applicant is fit to work in the organization (for example, a person with a multitude of hypochondriacla complaints (fits) might not be able to meet the attendance standards of the organization.)
• To asure that the candidate is physically fit forplacement in a particular job.
• To provide base against which later physical examination may be compared (this is particularly important disability’ claims that may occur during the job assignments).

8. Placement
After the physical examination is over, the candidate will be given a fitness certificate. The final step, then in the selection process is to give the employment letter to the candidate specifying the place of work gross employments, hours of work etc. It also mentions about the promotional avenues, the rate of increment over a particular time period and the saturated level of pay etc.

Question 3.
What are the advantages of training to the individual and to the organization?
Answer:
The need for training of employees arises due to the following factors
(i) Higher Productivity :
It is essential to increase productivity and reduce cost of production for meeting competition in the market. Effective training can help increase productivity of the workers by importing the required skills.

(ii) Quality Improvement :
The customers have become quality conscious and their requirements keep on changing. To satisfy the customers, quality of products must be continuously improved through training of workers.

(iii) Reduction of learning Time :
Systematic training through trained instructors is essential to reduce the learning period. If the workers learn through trail and error, they will take a longer time and even may not be able to learn right methods of doing work.

(iv) Industrial safety :
Trained workers can handle the machines safely. They also know the use of various safety devices in the factory. Thus they are less prone to industrial accidents.

(v) Reduction of Turnover and Absenteeism :
Training treat safeeling confidence in the mindsof the worker.lt gives them a security at the work place. As a result labour turnover and absenteeism rates are redueced.

(vi) Technology Update :
Technology is changing at pace. The workers must learn new techniques to make use of advanced technology. Thus training should be treated as a continuous process to update the employees in the new methods and procedures.

(vii) Effective Management :
Training can be used as an effective tool of planning and control. It develops skills among workers and prepares them for handling present and future jobs. It helps in reducing the costs of super vision, wastages and industrial accidents. It also helps increase productivity and quality which are the cherished goals of any modern organisation.

Benefits of Training to the Organisation
Training is beneficial for the organisation as discussed below
(i) Economy in Operations
Trained personnel will be able to make better and economical use of materials and equipments. Wastage will be low. In addition, the rate of accidents and damage to machinery and equipment will be kept to the minimum by the well-trained employees. These will lead to less cost of production per unit.

(ii) Greater Productivity :
A well-trained employee usually shows greater productivity and higher quality of work output than an untrained employee. Training increase the skills of the employees in the performance of a particular job. An increase in the skills usually helps to increase both quantity and quality of out put.

(iii) Uniformity of Procedures :
With the help of training the best available methods of work can be standardised and made available to all employees. Standardisation will make high levels of performance rule rather than the exception.

(iv) Less supervision :
If the employees are given proper training the responsibility of supervision is lessened. Training does not-eliminate, the need for supervision, but it reduces the need for detailed and constant supervision.

(v) Systematic Imparting of Skills :
A systematic training programme helps to reduce the learning time to reach the acceptable level of performance. The employees need not learn by trial and error or by observing other and waste time if the formal training programme exists in the organisation.

(vi) Creation of Inventory of Skills :
When totally new skills are required by an organisation. It has to face great difficulties in employment. Training can be used in spotting out promising men and in removing defects in the selection process. It is better to select and train employees from within the organisation rather than seek the skilled employees from outside sources.

Question 4.
The staffing function is performed by every manager and not necessarily by a separate department. Explain. ‘
Answer:
Yes, It is a function which all managers need to performIt is a separate and specialised function and there are many aspects of human relations to be considered. It is the job of managers to fill position in their organisation and to make sure that they remain occupied with qualified people.

Staffing is closely linked to organising since after the structure and position have been decided, people are ‘ required to work in these positions subsequently, they need to be trained and motivated to work in harmony with the goals of the organisation thus staffing is seen as an important function of management.

The staffing function deals with the human element of management. Managing the human component of an organisation is the most important task because the performance of an organisation depends upon how will this function is performed. The success of ah organisation in achieving its goal in determined to,a great extent on the competence, motivation and performance of its human resources.

It is responsibility of all managers to directly deal with the select ‘ people to work for the organisation. When the manager performs the staffing function his role is slightly limited. Some of these responsibilities will include placing the right person on the right job, introducing new employees to the organisation, training employees improving their performance, developing their ability, maintaining their moral and protecting their health and physical conditions.

In small organisations, managers may perform all duties related to employees salaries welfare and working conditions.
But as organisation grow and number of persons employed increases, a separate department called the human resource department is formed which has specialists in managing people.

The management of human resources is a specialised area which requires the expertise of many people. The number of human resource specialists and size of this department gives an indication of the size of the business as well.Thus it is true that staffing is a function of every manager.

Application Type Questions Answers

Question 1.
The workers of a factory are -unable to work on new machines and always demand for help of supervisor. The Supervisor is overburdened with their frequent calls. Suggest the remedy.
Answer:
Supervisor in an organization which acts as a link between workers and management. Supervisor handles the problems of the workers and helps to avoid misunderstanding and conflict between management and workers. But in the above problem, supervisor is4 busy man not in a position for immediate solution to worker to make workable on the new machines installed in the factory.

A skilled and knowledgable supervisor can build efficient team of workers which in his/her absence performed responsibly. A supervisor with good leadership qualities can build up high morale among workers.

Question 2.
The workers of a factory remain idle because of lack of knowledge of hi-tech machines. Frequent visit of engineer is .made which causes high overhead charges. How can this problem be removed.
Answer:
In this situation, the workers should be trained in such a way that in the absence of engineer, they may handle the high-tech machines. Certain techniques of training like T-Group training, Sensitivity training, programmed instruction can enhance the skills, aptitudes and abilities of workers to perform specific jobs requiring . high-tech know-how.

Question 3.
The quality of Production is not as per standards. On investigation it was observed that most of the workers were not fully aware of the proper operation of the machinery. What could be the way to improve the accuracy?
Answer:
Staffing function must be performed efficiently. If right kind of workers are not available or unaware of the changed targets or standards as in the above situation will lead to wastage of materials, time, effort and energy, resulting in iower productivity and poor quality of products. Workers should be given adequate train ing so that wastage is minimum. Workers should be induced to show higher productivity and quality by offering them proper incentives.

Question 4.
An organisation provides security services. It requires * such candidates who are reliable and don’t leak out the secrets of their clients. What step should be incorporated in selection process?
Answer:
Selection is the process of identifying and choosing the best person out of a number of prospective candidates for a job. In the above problem, candidates should be reliable and kept the secret of the services performed by him as the nature of job required. ‘ Various steps at the time of selecting such candidates are needed such as previous experience of the job, Intelligence tests, aptitude test, trade tests and interest tests, reference and background checks etc.

Question 5.
A company is manufacturing paper plates and bowls. It produces 100000 plates and bowls each day. Due to local festival, it got an urgent order of extra 50,000 plates bowls. Advise how the company will fulfill its order and which method of recruitment would yop suggest.
Answer:
in the problem under scanning due to festival offer of enhanced output of paper plates and bowls on daily basis, the recruitment of Casual Callers can be a valuable source of recruitment. From the list of such job-seekers can be screened to fill the vacancies due to urgency of the matter as it reduces the cost of recruitment workforce. Another method of recruitment of Direct-workers with the help of notice-board be made on the spot as casual or badli workers.

Case Problem 1

1. A Company X limited is setting up a new plant in India for manufacturing auto components. India is a highly competitive and cost effective production base, in the sector. Many reputed car manufacturers source their auto components from here. X limited is planning to capture about 40% of the market share in India and also export to the tune of at least $5 million in about 2 years of its planned Operation. To achieve these targets it requires a highly trained and motivated work force. You have been retained by the company to advise it in this matter. While giving answers keep in mind the sector the company is operating.

Questions 1.
Outline the process of staffing the company should follow.
Answer:
As we know and aware, the prime concern of the staffing function in the management process is the timely fulfillment of the manpower requirement within an organisation. These requirements may arise epesodically as in case of starting a new business. The company X limited should follow the following process.

Estimating manpower requirements .
∇
Recruitment
∇
Selecting from among the applicants
∇
Placement and orientation
∇
Training and Development

Questions 2.
Which sources of recruitment the company si auld rely upon? Give reasons for your recomendations.
Answer:
The company should use ‘situation vacant’ advertisement in National news papers and it should be flashed in electronic media also.By giving their advertisement in news papers and on T. V. Company will ’be able to find best brains and talents for the work which they want. Through this source company will be able to find trained persons which will be beneficial for it.

Questions 3.
Outline the process of selection the company should follow with reasons.
Answer:
The company should follow the following :

• Training
• Education
• Development
• Market study
• On the job methods
• Off the job methods.

Questions 4.
Which methods of training and development should be company initiate? Explain.
Answer:
As company X limited is setting up a new plant in India. So it will be better for the company to adopt “off Job method”, because it includes the following which all are needed for new employees.
1. Classroom lectures/con frences
2. Films
3. Care study
4. Computer modelling
5. VestibuIetrainiñg
6. Programmed Instructions.

Case Problem 2

2. A major insurances company handled all recruiting, screening and training, processes for data entry/customer service representatives. Their competitor was attracting most of the qualified, potential employees in their market. Recruiting was made even more difficult by the strong economy and the ‘job seeker’s market.’ This resulted in the client having to choose from – candidates who had the ‘soft’ skills needed for the job, but lacked the proper ‘hard’ skills and training.

Question 1.
As an HR manager what problems do you see in the company?
Answer:
It is a case of lack of training. So correct training process- should take place.so the person who is in need of’soft’ skills should t; trained for the same.

Question 2.
How do you think it can be resolved?
Answer:
He should give training through off the job method and should be trained with the help of films and case study. As Films can provide information and explicitly demonstrate skills that are not-easily represented by other techniques. It will be very effective method in this case.

Case Problem 3

3. A Public transport corporation has hired 1000 buses for the different routes for the passengers of metropolitan city. Most of the 3000 crewmen (drivers, conductors, helpers etc.) of these buses have been found to be wanting in satisfactorily dealing with public and daily commuters. They seem to be little interested in the job and the job seem to have lost all meaning to them.

Question 1.
As manager of the public transport company what measures do you suggest to improve the working of crewman in question?
Answer:
As a manager it is suggested that the employees should give more insentives and should give a handsome increase in their salaries so that should take proper interest in their work.

Question 2.
Is it possible to modify their behaviour by planning a suitable type of training? Suggest one.
Answer:
Yes, they should give some training programmes as it is to enable the employee to do the job better. It will be better for them to give a training of job rotation.

Case Problem 4

Ms. Jayshree recently completed her Post Graduate Diploma in Human Resource Management. A few months from now a large steel manufacturing company appointed her .as its human resource manager. As of now, the company employs 800 persons and has an expansion plan in hand which may require another 200 persons for various types of additional requirements. Ms. Jayshree has been given complete charge of the company’s Human Resource Department.

Questions
1. Point out, what functions is she supposed to perform?
2. What problems do you foresee in her job?
3. What steps is she going to take to perform her job efficiently?
4. How significant is her role in the organisation?
Answer:
For students practice.

Detailed, Step-by-Step NCERT Solutions for 12 Business Studies Chapter 4 Planning Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.

Planning NCERT Solutions for Class 12 Business Studies Chapter 4

Planning Questions and Answers Class 12 Business Studies Chapter 4

Short Answer Type Questions 

Question 1.
What are the main points in the definition of planning?
Answer:
Planning is what managers at all levels do. It requires taking decisions since it involves making a choice from alternative courses of action. Planning, thus involves setting objectives and developing appropriate courses of action to achieve these objectives. Objectives provide direction for all managerial decisions and action. Planning provides a rational approach for achieving predetermined objectives. All members, therefore need to work towards achieving organisational goals.

Question 2.
How does planning provide direction?
Answer:
Planning provides direction by stating in advance how Work is to be done planning provides direction for action. Planning ensures that the goals or objectives are clearly stated so that they act as a guide for deciding what action should be taken and in which direction.

If goals are will defined, employees are aware of what the organisation has to do and what they must to do achieve those goals. Departments and individuals in the organisation are able to work in coordination If there was no planning, employees would be working in different directions and the organisation would not be able to achieve its desired goals.

Question 3.
Do you think planning can work in a changing environment?
Answer:
No, planning.cannot work in a changing environment. The business environment is dynamic, nothing is constant. The environment consists of a number of dimensions, economic political, physical, legal and social dimensions. The organisation has to constantly adopt itself to change.

It becomes difficult to accurately assess future trends in the environment if economic policies are modified or political conditions in the country are not stable or there is a natural calamity. Competition in the market can also upset financial plans, sales targets may have to be revised and accordingly.

Cash budgets alsoneed to be modified since they are based on sales figures. Planning cannot foresee everything and thus, there may be obstacles to effective planning.

Question 4.
If planning involves working out details for the future, why does it not ensure success?
Answer:
Yes, only planning does not guarantee success. The success of an enterprise is possible only when plans are properly drawn up and implemented. Any plan needs to be translated into action or becomes meaningless. Managers have a tendency to rely on previously tried and tasted successful plans.

It is not always true that just because a plan has worked before it will work again. Besides there are so many other unknown factors to be considered. This kind of complacency and false sense of security may actually lead to failure instead of success.

However, despite its limitations, planning is not a useless exercise. It is a tool to be used with caution. It provides a base for analysing future courses of action. But, it is not a solution to all problems.

Question 5.
Why are rules considered to be plans?
Answer:
A rule is a guide to action. It specifies what is to be done and what is not to be done and thus leaving the concerned person with no direction. Rules are specific statements that inform what is to be done.

They do not allow for any flexibility or discretion. It reflects a managerial decision that a certain action must or must not be, taken they are usually the simplest type of plans because there is no compromise or change unless a policy decision is taken. These are important for an organisation because

• It is a code of conduct governing human behaviour.
• It is used to maintain discipline and command.
• Rules are authoritative in nature.
• It is the result of managerial values and thinking.

Question 6.
What kind of strategic decisions are taken by business organisations?
Answer:
A strategy provides the broad contours of an organisation’s business. It will also refer to future decisions defining the organisations direction and scope in the long run. Thus, we can say a strategy is a comprehensive plan for complishing an organisation objectives.

Whenever a strategy is formulated the business environment needs to be taken into consideration. The changes in the economic, policital, social, legal and technological environment will affect an organisations strategy. Strategies usually take the course of forming the organisations identity in the business environment.

Major strategic decisions will include decision like whether the organisation will continue to be in the same line of business or combine new lines of activity with the existing business or seek to acquire a dominant position in the same market.

Long Answer Type Questions

Question 1.
Why is it that organisations are not always able to accomplish all their objectives?
Answer:
Planning is essential for business organisation. It is difficult to manage operations without formal planning. It is important for an organisation to move towards achieving goals. But in our daily lives also we have seen that things do not always go according to plan.

Unforeseen events and changes, rise in costs and prices, environmental changes, government intervention, All affect our business plans thus organisations are not always able to accomplish all their objectives as they have certain limitations such as :

1. Planning leads to rigidity
In an organisation a well-defined plan is drawn up with specific goals to be achieved within a specific timeframe. But rigidity in plans may create difficulty. Managers need to be given some flexibility.

2. Planning may not work in a dynamic environment
The business environment is dynamic, nothing is constant. It consists of a number of demensions, economic, political, legal and social dimensions competition may also upset financial plans.

3. Planning reduces creativity
Planning is an activity which is done by the top management. Usually the rest of the members just implement these plans. As a result, middle management and others decision makers are neither allowed to deviate from plans nor are they permitted to act on their own. thus must of the initiative inherent in them also gets lost or reduced.

4. Planning involves huge costs
When plans are drawn up huge costs are involved in their formulation. These may be in terms of time and money. Like expencison boards room meeting, discussions with professional experts to find out the viability of the plan.

5. Planning is a time consuming process Some time, plans to be drawn up take so much of time that there is not much time left for their implementation.

6. Planning does not guarantee success
The success of an enterprise is possible only when plans are properly drawn up and implemented any plan needs to be translated into action or becomes meaningless. Besides, there are so many other factors to be considered. This kind of complacency may actually lead to failure instead of success.

Question 2.
What are the main features to be considered by the management while planning?
Answer:
Features of planning
The planning function of the management has certain special features. These features throw light on its nature and scope.
1. Planning focuses on achieving objectives
Organisations are set up with a general purpose in view. Specific goals are set out in the plans along with the activities to be undertaken to achieve the goals.

2. Planning is a primary function of management
Planning lays down the base for other functions of management. All other managerial functions are performed within the framework of the plans drawn and planning provides the basis of all other functions.

3. Planning is pervasive
Planning is required at all levels of management as well as in all departments of the organisation, it is not only for top management but it differs at different,levels and among different departments.

4. Planning is continuous
Plans are prepared for a specific period of time, may be for a month, a quarter or a year. At the end of that period there is need for a new plans to be drawn on the basis of new requirements and future conditions. Hence it is q continuous process.

5. Planning is futuristic
Planning essentially involves looking ahead and preparing for the future the purpose of planning is to meet future events effectively to the best advantage of an organisation. Therefore it is regarded as a forward looking function based on forecasting.

6. Planning involves decision making
It essentially involves choice from among various alternatives and activities. If there is only one possible goal there is no need for planning because there is no choice.

7. Planning is a mental exercise
Planning requires Application Of the mind involving foresight, intelligent imagination and sound judgement. It is basically an intellectual activity of thinking rather than doing in other words thinking for planning must be orderly and based on the analysis of facts and forecasts.

Question 3.
What are the steps taken by management in the planning process ?
Answer:
Planning Process
Plannirig is deciding in advance what to do and how to do. It is a process of decision making. Since it is an activity there are certain logical steps for every manager to follow.

1. Setting objectives
The first and formost step is setting objectives every organisation must’have certain objectives. Objectives may be set for the entire organisation and each department within the organisation.

2. Developing premises
Planning is concerned with the future which is uncertain and every planner is using conjucture about what might happen in future. Therefore the manager is required to make certain assumption about the future. These assumptions are called premises. They must be some for all anci there should be total agreement on them.

3. Identifying alternative courses of action
Once objectives are set assumptions are made. Then the next step would be to act upon them. There may be many ways to act and achieve objectives.

4. Evaluating alternative courses
The next step is to weight the pros and cons of each alternative. Each course will have many variables which have to be weighed against each other, the positive and negative aspects of each proposal need to be evaluated in the light of the objective to be achieved.

5. Selecting an alternative
This is the real point of decision making. The best plan has to be adopted and implemented. The ideal plan of course would be the most feasible profitable and with least negative consequences.

6. Implement the plan
This is the step where other managerial function also come into the Picture. The step is concerned with putting the plan into action i.e. doing what is required.

7. Follow-up action
I’m see whether plans are being implemented and activities are performed according to schedule is that part of planning process.

Question 4.
Is planning actually worth the huge costs involved? Explain.
Answer:
Planning is certainly important as it tells us where to go, it provides direction and reduces the risk of uncertainity by preparing forecasts. The major benefits are as follows :

1. Planning provides direction
By stating in advance how work is to be done planning provides direction for action. It ensures that the goals or objectives are clearly stated so that they act as a guide for deciding about actions.

2. Planning reduces the risks of uncertainity
Planning an activity which enables a manager to look ahead and anticipate changes. By deciding in .advance the tasks to be performed planning shows the way to deal with changes and uncertain events.

3. Planning reduces overlapping
It serves as basis of coordinating the activities and efforts of different divisions and individuals. It helps in avoiding confusion and misunderstanding.

4. Planning promotes innovative ideas
Since it is the first function of management new ideas can take the shape of concrete plAnswer:It is the most challenging activity for the management.

5. Planning facilitates decision making
Planning helps the manager to look into the future and made a choice from amongest various alternative courses of action.

6. Planning establishes standards for controlling
Planning involves setting of goals. The entire managerial process is concerned with accomplishing predetermined goals through planning, organising, staffing, directing and controlling. Therefore we can say that planning is a prerequisite for controlling it is not a costly affair.

Case Problem

An auto company C Ltd. is facing a problem of declining market share due to increased competition from other new and existing players in the market. Its competitors are introducing lower priced models for mass consumers who are price sensitive. For quality conscious consumers, the company is introducing new models with added features and new technological advancements.

Question 1.
Prepare a model business plan for C Ltd. to meet the exsiting challenge. You need not be very specific about quantitative parameters. You may specify which type of plan you are preparing.
Answer:
New Plans of ‘C Ltd.’
‘C’ Ltd which has had a monopoly in the auto world is set to see some tough competitions fn the coming days. Many new companies are now in the market with new models and lower prices, the new chairman shares his thoughts on how he plans to take the company ahead.

Main priorities
Now the companies priority is to meet the challenge with new technology and low prices. So the consumer 9an easily get the car. Thus C Ltd. should adopt the planning which is based on future.

Question 2.
Identify the limitations of such plans.
Answer:
The limitations of this plan are these, that, they might be a costly affair and even than success is not assure

Question 3.
How will you seek to remove these limitations?
Answer:
Before entering and adopting new technology the company should arrange proper funds so that success can be achieved without any problem.

Detailed, Step-by-Step NCERT Solutions for 12 Business Studies Chapter 3 Business Environment Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.

Business Environment NCERT Solutions for Class 12 Business Studies Chapter 3

Business Environment Questions and Answers Class 12 Business Studies Chapter 3

Multiple Choice Questions

Question 1.
Which of the following does not characterise the business environment?
(a) Uncertainty
(b) Employees
(c) Relativity
(d) Complexity
Answer:
(b) Employees.

Question 2.
Which of the following best indicates the importance of business environment?
(a) Identification
(b) Improvement in performance
(c) Coping with rapid changes
(d) AI1 of them
Answer:
(d) All of them.

Question 3.
Which of the following is an example of social environment?
(a) Money supply in the economy
(b) Consumer protection Act
(c) The constitution of the country
(d) Composition of family
Answer:
(d) Composition of family.

Question 4.
Liberalisation means ………….
(a) Integration among economies
(b) Reduced government controls and restrictions
(c) Policy of planned disinvestments
(d) none of them
Answer:
(b) Reduced government controls and restrictions.

Question 5.
Which of the following does not explain the impact of government policy changes on business and industry?
(a) More demanding customers
(b) Increasing Competition
(c) Change in agricultural prices
(d) Market Orientation
Answer:
(c) Change in agricultural prices.

Short Answer Type Questions

Question 1.
What do you understand by business environment?
Answer:
Definition and Meaning of Business Environment According to Arthur M. Weimer, “Business environment encompasses the ’Climate’ or set of conditions, economic, social, political or institutional in which business operations are conducted.”

The business environment is the collection of all conditions and forces surrounding the business enterprise. It is required of every manager to take steps to Understand, face and control all these conditions of the environment and bring about a change in the enterprise accordingly, otherwise it cannot survive and grow. Different components of business environment can be shown by means of the following diagram

Question 2.
Why it is important for business enterprises to understand their environment? Explain briefly.
Answer:
Importance or Benefits of study of Business Environment
Business environment is highly dynamic and uncontrollable. It keeps the entire business active and prudent. It is necessary that there should be congenial and harmonious social, economic and political environment around the business environment. Thus business environment has following benefits.

(1) Helpful in Formulating Future Strategies
A study of changing business environment is helpful in formulating future strategies. .

(2) Helpful in Adapting to Environment
A study of environment reveals various internal and external environment factors affecting the enterprise. Effect of each such factor can be separately identified and changes can.be made in the enterprise accordingly. . .

(3) Helpful in-Recognising Opportunities
A study of business environment helps us to ascertain whether the change in environment will provide some good opportunities for business or not.

(4) Helpful in Recognising Threats, Hostilities and Dangers
A study-of business environment helps to recognise the threats, challenges, risks and dangers likely to.be faced by at) enterprise. By getting a prior knowledge it can prepare itself to overcome the same.

(5) Helpful in Providing Infomation Relating to Strong Points and Weak Points
A study of business environment reveals the strong points weak – points of the business to face the business environment. Management ( can then identify the areas which need immediate attention.

(6) Helpful in Estimating the Expectations of Various Groups:-
Many groups both within and outside the enterprise, Contribute to the well-being of the enterprise. As such, they have various expectations also from the enterprise. These groups may be employees, customers, suppliers, financiers, shareholders, government and the society in general. A study of business environment helps to know the expectations of these groups so that they may be reasonably fulfilled.

Question 3
Mention the various dimensions of business environment.
Answer:

Dimensions of Business Environment

(i) Economic Environment
Economic environment is of great significance to the business. It consists of macro-level factor related to the means of production and distributution of wealth. It includes all such forces of economic development which effect the marketing scope of the enterprise. The important constituents of the economic environment are

(a) Economic Conditions Economic Conditions are those conditions which are related to the possibilities of the economic development of a country.

(b) Economic PoliciesThe economic policies are laid down to provide direction to the economic activities.

(c) Economic Systems Knowledge of economic system helps in understanding the economic environment of the country. Economic system is of three types.

• Capitalistic System
• Socialistic System
• Mixed System

(ii) Socio-Culture Environment The social environment of business includes social institutions, social groups population and its composition, social beliefs and customs, education system, literacy level, cultural heritage etc.

(iii) political Environment Every business operates within the laws and regulations determined by the political system. The political system provides the framework within which the business functions.

(iv) Legal Environment Legal environment consists of the framework of laws, regulations and court decisions which guide and control business activities.

(v) Technological Environment Science and technology exercise a direct influence on business. New techniques of production and distribution have implications on operating casts and capital investment.

Question 4.
Briefly explain the following’.
(a) Liberalisation
(b) Privatisation
(c) Globlisation
Answer:
Liberalisation
The economic reforms that were introduced were aimed at liberating the Indian business and industry from all unnecessary controls and restrictions. Liberalisation of the Indian industry has taken place with respect to :

• Abolishing licensing requirement in most of the industries except a short list.
• Freedom in deciding the scale of business activities i.e. no restrictions on expansions or contraction of business activities.
• Removal of restrictions on the movement of goods and services.
• Freedom in fixing the prices of goods an services.
• Reduction in tax rates and lifting of unnecessary controls over the economy.
• Simplifying procedures for imports and experts, and
• Making it easier to attract-foreign capital and technology to India.

Privatisation :
The new set of economic reforms aimed at giving greater role to the private sector in the nation building process and a reduced role to the public sector. This was a reversal of the development strategy pursued so far by the Indian planners.

To achieve this, the government redefined the role of public sector in the New Industrial Policy of 1991, adopted the policy of planned disinvestments of the public sector and decided to refer the loss making and sick enterprises to the board of Industrial and financial Reconstraction.

The term disinvestments used here means transfer in the public sector enterprises to the private sector. It results in dilution of Government in the public enterprise. If there is dilution of Government Ownership beyond 51 percent, it would resection transfer of ownership and management of the enterprise to the private sector.

GlobalisationGlobalisation means the integration of the various economies of the world leading towards the emergence of a cohesive global economy. Till 1991 the government of India had followed a policy of strictly regulating imports in value and volume terms. These regulations were with respect to

• licensing of imports
• tariff restrictions and
• quantitative restrictions.

The new economic reforms : aimed at trade liberalisation were directed towards import liberalisation, export promotion through rationalisation of the tariff structure and reforms with respect to foreign exchange so that the country does not remain isolated from the rest of the work’. Globalisation involves an increased level of interaction and interdependence among the various nations of the global economies.

Physical geographical gap or political boundaries no longer remain barriers for a business enterprise to serve a customer in a distant geographical market. This has been made possible by the rapid . advancement in technology and liberal trade policies by government. Through the policy of 1991, the government of India moved the country to this globalisation pattern.

Question 5.
Briefly discuss the impact of Government policy changes on business and industry.
Answer:
Impact of Government Policy changes On Business and Industry
The government policy ofTiberalisation, privatisation and globalisation has made a definite impact on the working of enterprises in business and industry. Indian corporate sector has come face-to- face with.several challeges due to government policy changes. These challanges can be explained as follows :

• Increasing competition
• More demanding customers
• Rapidly changing technological environment
• Necessity for change
• Need for developing human resource
• Market Orientation

(i) Loss of budgetary support to the public sector .On the whole, the impact of Government policy changes particularly in respect of liberalisation, privatisation and globalisation has been positive as the Indian business and industry has shown great resilience in dealing with one new economic order. Indian enterprises have developed strategies and adopted business processes and procedures to meet the challenge of competition.

Long Answer Type Questions

Question 1.
How would you characterise Business Environment? Explain, with examples, the difference between general and specific environment.
Answer:
Characteristics of Business Environment
(a) Totality of External forces The term business environment
is the sum total of all things external to business firms and, as such, is aggregative in nature.

(b) Specific and general forces Business environment includes
both specific and general forces. Specific forces (such as investors, customers, competitors and suppliers) affect individual enterprises directly and immediately in their day-to-day working. General forces (such as social, political, legal and technological conditions) have impact on all business enterprises and thus may effect an individual firm only indirectly. ‘

(c) Inter-relatedness Different elements or parts of business environment are closely inter-related. For example increased life expectancy of people and increased awareness for health care have increased the demand of many health products and services like diet coke, fat-free, cooking oil, and health resorts New health products and services have, in turn, changed peoples life style.

(d) Dynamic Nature Business environment is dynamic in’ nature that it keeps on changing whether in terms of technological improvements, shifts in consumer preferences or entry of new competitions in the market.

(e) Uncertainity Business environment is largely uncertain as it is very difficult to predict the future happenings, especially when environment changes are taking place too frequently as in the case of informtion technology or fashion industries.

(f) Complexity Since business environment consists of numerous interrelated and dynamic conditions on force which arise from different sources,’ it becomes difficult to comprehend at once what exactly constitutes a given environment. In other words, environment is a complex phenomenon that is relatively easier to understand in parts but difficult to graspin its totality. For example, it may be difficult to know the extent of the relative impact of the social, economic, political technological or legal factors an change in demand of a product in the market.

(g) Relativity Business environment is a relative concept since it differs from country to country and even region to region. Political conditions in U.S. A, for instance differ from those in China or Pakistan. Similarly demand for sarees may be fairly high in India whereas it may be almost nonexistent in France.

Question 2.
How would you argue that the sucess of a business enterprise is significantly,influenced by its environment?
Answer:
Importance of Business Environment Just like human beings, business enterprises do not exist in isolation. Each business firms is not an island into itself; it exists, survises and grows within the context of the element and forces of its environment.

While the individuals firms may be able to do little or nothing to change or control these forces it has no alternative to responding on adapting according to them. A good understanding of environment by business managers enables them not only to identify and evaluate, but also to react to the forces external to their firms.

(i) Enabling the identification of opportunities and getting the first mover advantage Opportunities refer to the positive external trends or changes.that will help a firm to improve its performance. Environment provides numerous opportunities for business success. Early identification of oppotunities helps an enterprise to be the first to exploit them instead of losing them to competitors.

(ii) Helping in the identification of threats and early warning signals. Threats refer to the external environment trends and changes that will hinder the firms performance. Besides opportunities environment happens to be the source of many threats. Environmental awareness can help manager to identify various threats on time and serve as an early warning signal.

(iii) Tapping Useful Resources Environment is a source of various resources for running a business. To engage in any type of activity, a business enterprise assembles various resources called inputs like finance, machines, raw materials, power and water, labour etc; from its including financer, government and suppliers decide to provide these resources with their own expectation to get something in return from the enterprise.

The business enterprise supplies the environment with its outputs such as goods and survices for customers, payment of taxes to government, return on financial investment to investors and so on.

(iv) Coping with Rapid changes Today’s business environment is getting increasingly dynamic where changes are taking place at a fast pace. It is not the fact of change itself that is so important as the pace of change. Turbulent market conditions, less brand loyality, divisions and sub-divisions (fragmentation) of markets, more demanding customers, rapid changes in technology and intense global competition are just a few of the imges used to describe today’s business environment.

(v) Assisting In Planning And Policy Since environment is a source of both opportunities and threats for a business enterprise, its understanding and analysis can be the basis for deciding the future course of action (planning) or guidelines for decisions making (policy).

Question 3.
Explain with examples, the various dimensions of business environment?
Answer:
Dimensions of, or the factors constituting the business environment include economic, social, technological, political and legal conditions which are considered relevant for decision making and improving the performance of an erlterprise. In contrast to the specific environment these factors explain the general environment which mostly influence many enterprises at the same time.

However, management of every enterprise can benefit from being aware of these dimensions instead of being disinterested in them. For instance, scientific research has discovered a technology that makes it possible to produce an energy efficient light bulb that lasts at least twenty, times as long as a standard bulb. A brief discussion of the various factors constituting the general environment of business is given below:

(a) Economic Environment Interest rates, inflation rates, changes in disposable income of people, stock market indices and the value of rupee are some of the economic factors in the general environment that can affect management practices in a business enterprise.

Short and long term interest rates significantly affect the demand for product and services. For example, in case of construction companies and automobile manufacturers low longer-term rates are beneficial because they result in increased spending by consumers for buying homes and cars on borrowed money.

(b) Social Environment Included in the social environment are social forces like traditions, values, social trends society’s expectations of business, and so on. Traditions define social practices that have lasted for decades or even centuries. For example, the celebration of Diwali, ID, Christmas and Guru Parv in India provides significant financial opportunities for Card companies, sweets or confectionary shops, tailoring, outlets and many other related business.

(c) Technological EnvironmentTechnological environment includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business.

For example recent technological, advances in computers and electronics have modified the ways in which companies advertise their products. From propeller airplanes to jets, and from typewriters to computer-based word processors, have all been responsible and creating new business.

(d) Political Environment
Political environment includes political conditions such as general stability and peace in the country and specific attitudes that elected government representative hold towards business. The significance of political conditions in business sucess lies in the Predictability of business activities under stable political conditions.

On the other hand, these may be uncertainly of business activities due to political unrest and threats to law and order. Political stability, thus, builds up confidence among business people to invest in the long term projects for the growth of the economy.

(e) Legal EnvironmentLegal Environment includes various legislations passed by the government administrative orders issued by government authorities, court, judgements as well as the decisions rendered by various commissions and agencies at every level of the government-centre state or local.

In India, a working knowledge of Companies Act 1956; Industries (Development & Regulations) Act 1951; Foreign Exchange Management Act and the Imports and Export act (Control Act) 1947; Factories Act 1948; Industrial Disputes Act 1947; Trade Union Act 1926; Workmen’s Compensation Act 1923; Consumer Protection Act 1986; Competition Act 2002 and host of such other legal enactments as amended from time to time by parliament, is important for doing business Impact of legal environment can be illustrated with the help of government regulations to protect consumers interests.

Question 4.
What economic changes were initiated by the Government under the Industrial Policy, 1991? What impact have these changes made on business and industry?
Answer:
Economic Environment In India The economic environment in India consists of various macro level factors related to the means of production and distribution of wealth which have imform on the business and industry. These include:
(a) Stage of economic development of the country.
(b) The economic structure in the form of mixed economy which recognises the role of both public and private sectors.
(c) Economic policies of the Government including industrial monetary and fiscal policies.
(d) Economic planning including five year plans, annual budgets and so on.
(e) Economic indices like national income, distribution of income, rate and growth of GNP, per capita income, disposal personal income, rate of savings and investments, value of exports and imports, balances of payment and so on.
(f) Infrastructural factors, such as, financial institutions, banks – modes of transportation,communication facilities, and so on. As a part of economic reforms, the Government of India announced a new industrial policy in July 1991.

The broad features of this policy are as follows :

• The Government reduced the number of industries under compulsory licensing to six.
• Many of the industries reserved for the public sector under the earlier policy, were dereserved. The role of public sector was limited only to four industries of strategic importance.
• Disinvestments was carried out in case of many public sector industrial enterprises.
• Policy towards foreign capital was liberalized. The share of foreign equity participation was increased and in many activities 100 percent foreign direct investment (FDI) was permitted.
• Automatic permission was now granted for technology agreements with foreign companies.
• Foreign Investment Promotion Board (FIPB) was set up to promote and channelise foreign investment in India.

Question 5.
What are the essential features of
(i) Liberalisation
(ii) Privatisation
(iii) Globalisation.
Answer:
(i) Economic Liberalisation: The process of economic liberalization began in India in July 1991 . when a package of economic reforms has been introduced for market mechanism like deregulation, greater autonomy of private investment, less restrictions on the convertability of the, rupee etc. The purpose of economic liberalization is to unlock the economic potential of the country by encouraging private sector and mutinational corporations to invest and expend. Economic liberalization comprises both privatization and Globalization.

(ii) Privatization : Privatization aims at disinvestment of equity of public sector understandings and to subject there udertakings of competition. Privatization is the process of reducing the role of public sector in economic activities of a country. It involves induction of private ownership, private management and control in public sector enterprises. It includes de-nationalization and Transfer of control and management of public sector undertakings to private sector. It also covers dilution of government equity in public enterprises.

Management of concerned enterprise should be taken in confidence at the time of disinvestment. The interests of workers and consumers should be legitimately protected.

(iii) Globalization :
Globalization means “to make Global” havings the entire world as one market. It is a process of increasing economic integration and growing economic inter-dependence between countries in the world economy. It involves not only cross-border movement of goods and services, capital, technology, Information and personal, but also an organisation of economic activities which crosses national boundaries. Globalization is essential due to following reasons:-

• Technological restrictions
• Growing similarities of countries in terms of basic infrastructure, distribution channels and marketing approaches.
• Restructing the ‘production and trade’ pattern in favour of labour intensive goods and technologies.
• International competition between the firms takes place due to globalization.
• It increase the inflow of foreign capital and technology and stimulate exports.
• Employment opportunities will also be increased in the long run due to opening of foreign banks and financial institutions.

Case problem

1. Lately many companies have planned for significant investment in organised retailing in India. Several factors have prompted their decisions in this regard.Customer income is rising. People have developed a taste for better quality products even though they may have to pay more. The aspiration levels have increased. The government has also liberalised its economic policies in this regard and permitted even cent percent foreign direct investment in some sectors of retailing.

Question 1.
Identify changes in business environment under different heads – economic, social, technological, political and legal that have facilitated the companies decisions to plan significant investments in organised retailing.
Answer:
Economic Environment :
The business enterprises in India do realise the importance of economic environment so company has decided to invest and organised retailing.

Social Environment :
As it includes social forces like social trends. The aspiration level of customers have also increased so the company realised the importance and has planed to invest in retailing.

Technological Environment :
It relates to scientific improvements which provide new ways of producing so foreigners have planed invest in retailing.

Political and legal Environment : Now general stability and peace is there in India and various legislations passed by the government administrative orders issued by government so the foreigners have decided to do trade with India and invest inretailing.

Question 2.
What has been the impact of these changes with regard to globalisation and privatisation?
Answer:
Impact of globalisation and Privatisation . The new set of economic reforms aimed at giving greater role to the private sector in the nation building process. On the other hand till 1991 the government of India had followed a policy of strictly regulating imports in value and volume terms, these regulations are with respect to licensing, tariff restrictions etc.

The new economic reforms aimed at trade liberalisation and gave export promotion. This has been made possible by the liberal trade policy by the government so the foreign trade with India and to invest in retailing has a great impact on Indian economy.

Detailed, Step-by-Step NCERT Solutions for 12 Business Studies Chapter 2 Principles of Management Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.

Principles of Management NCERT Solutions for Class 12 Business Studies Chapter 2

Principles of Management Questions and Answers Class 12 Business Studies Chapter 2

Multiple Choice Questions 

Question 1.
Principles of Management are NOT
(a) Universal
(b) Flexible
(c) Absolute
(d) Behavioural
Answer:
(c) Absolute.

Question 2.
How are principles of Management formed ?
(a) In a loboratory
(b) By experiences of Managers
(c) By experiences of customers
(d) By propagation of social scientists.
Answer:
(b) By experiences of Managers.

Question 3.
The principles of management are significant because of’
(a) Increase in efficiency
(b) Initiative
(c) Optimum utilisation of resources
(d) Adaptation to changing technology
Answer:
(a) Increase in efficiency.

Question 4.
Henri Fayol was a
(a) Social scientist
(b) Mining Engineer
(c) Accountant
(d) Production Engineer
Answer:
(b) Mining Engineer.

Question 5.
Which of the following statement best describes the principle of ‘Division of Work’
(a) Work should be divided into small tasks
(b) Labour should be divided
(c) Resources should be divided among jobs
(d) It leads to specialisation
Answer:
(a) Work should be divided into small tasks.

Question 6.
‘She/he keeps machines, materials, tools etc. ready for operations by concerned workers.’ Whose work is described by this sentence under functional foremanship
(a) Instruction card clerk
(b) Repair Boss
(c) Gang Boss
(d) Route clerk
Answer:
(c) Gang Boss.

Question 7.
Which of the following is NOT a Principle of management given by Taylor?
(a) Science, not rule of the Thumb
(b) Functional foremanship
(c) Maximum not restricted output
(d) Harmony not discord
Answer:
(b) Functional Foremanship.

Question 8.
Management should find ‘one best way’ to perform a task. Which technique of Scientific management is defined in this sentence
(a) Time Study
(b) Motion Study
(c) Fatigue Study
(d) Method Study
Answer:
(d) Method study.

Question 9.
Which of the following statements best describes ‘Mental Revolution’?
(a) It implies change of attitude.
(b) The Management and workers should not play the game of one upmanship
(c) Both management and workers require each other.
(d) Workers should be paid more wages.
Answer:
(a) It implies change of attitude.

Question 10.
Which of the following statement is FALSE about Taylor and Fayol
(a) Fayol was a mining engineer whereas Taylor was a mechanical engineer
(b) Fayol’s principles are applicable in specialised situations whereas Taylor’s principles have universal application
(c) Fayol’s principles were formed through personal experience whereas Taylor’s principles were formed through experimentation
(d) Fayol’s principles are applicable at the top level of management whereas Taylor’s principles are applicable at the shop floor.
Answer:
(b) Fayol’s principles are applicable in specialised situations whereas Taylor’s principles have universal application.

Short Answer Type Questions 

Question 1.
How is the principle of ‘Unity of command’ useful to management? Explain briefly.
Answer:
Unity of Command:-
According to this principle, every employee should get orders and directions only from one superior and he should be accountable to that superior alone. It is essential to avoid duality of command. If a subordinate gets orders from two superiors, in such a situation he would not be able to decide which superior’s orders should be carried out first.

The superiod whose orders are not carried out might become annoyed or develop a feeling of jealousy and bitterness towards the other superior. According to Fayol.” as soon as two superiors yield their authority over the same person or department, uneasiness makes itself felt.”

Fayol further writes that if there are two or more superiors as regards any employee, it will only undermine authority, put discipline in jeopordy, disturb order and threaten stability of organisation.

Question 2.
Define scientific management. State any three of its principles.
Answer:
Scientific Management
The Scientific Management school stimulated by F.W. Taylor and carried on by others through the years, suggested a totally revolutionary way of thinking about the problems of work and organizations. The Major theme of scientific Management was that work could be studied scientifically.

Taylor retentlessly pursued the idea that efficiency at work could be improved through careful ‘scientific’ analysis. He advocated an inductive, empirical, detailed study of each job to determine the ‘one best way’ to organize work. The primary emphasis was on the application of scientific methods to the solutions of managerial and organizational problems. Tosi and Corroll summarized the principles of scientific management thus

(i) Current Management practice was inefficient. Most scientific management writers believed that the way Management was practiced in their time was inefficient.

(ii) Management must adopt the scientific methods in industry. The scientific methods involves solving problems by research rather than relying or experience or intuition. It demands evalution of alternatives by making systematic and objective comparisons among them to see which is best. Taylor and his colleagues believed there is ‘one best way’ to organize work and this could be ascertained through scientific method.

(iii) Specialization should be practiced. Taylor advocated the division of the entire work of an organization into managerial and non-managerial categories. He favoured a complete separation of planning function from doing function. He proposed using specialization experts, called as functional foremen, each of whom was to be responsible for some specific portion of the worker’s job like inspection of work, ascertaining the machine speed etc. He firmly believed that vertical specialization would improve job performance.

(iv) Planning and scheduling were essential. In scientific management everything was to be done according to a plan. To improve performance, plans for a whole organization were to be broken down into plans for smaller units, and even further to individuals. Writers like Gantt developed charts (Gantt chart) which helped a Manager to make optimum use of his resources by carefully schedulingjobs among available equipment and resources.

Question 3.
If an organisation does not provide the right place for physical and human resources in an organisation, which principle is violated? What are the consequences of it?
Answer:
When the organisation does not provide the right place for physical and human resources it violate the principles of division of work propounded by Henri Fayol. The Principle of division of work may be explained in brief as follows.

Division of work

This principle tells us that as far as possible the whole work should be divided into parts and each employee should be assigned only one part of the work according to his ability and attitude.

When that employee performs that part of the work repeatedly, he will become specialised in doing that particular part of the work, consequently, the benefits of the specialisations will be achieved. According to Fayol, the principles of division of work is applicable to all kinds of work – technical as well as Managerial.

Question 4.
Explain any four points regarding significance of Principles of management?
Answer:
Need and Importance of principles of Management : A principal is a fundamental statement of truth that provides a guide to thought and action. The technique and nature of Management may be based on the defined principles. By abiding the principles of Management a manager may escape from committing errors. The need and importance of Management principles may be highlighted in the following ways

(i) To Increase the Managerial Efficiency :
The principles of Management have been developed on the basis of experiences of professional Managers. These principles instruct a Manager as to how to act in various situations so that the mistakes committed by the previous Manager are not repeated. Application of Management principles avoid the need for trial and error-method. They ‘ can make decisions on the basis of predetermind principles and thereby increase the Managerial efficiency.

(ii) Helpful in Managerial Training :
The principles of Management present a detailed schedule of training for the new managers. By acquiring the knowledge as to which principle is to be used in a particular situation they can learn the art of Management quickly.

(iii) To Improve Research :
The principles of Management provide new ideas, new thoughts and new vision to managers and researchers. Since the principles are flexible in nature they motivate the managers to do further research in the field of Management and thus they are helpful in increasing the horizons of knowledge.

(iv) Helpful in understanding the Nature of Management :
The principles of management explain the nature and functions of Management. Thus, they are helpful in understanding the nature and functions of Management.

(v) To Allain Social Goals
The standard of living of the people in a society depends on the quality of Management. Only the development of Managerial principles enables more efficient utilisation of human and material resources. Thus, Management principles are helpful in the attainment of social and cultural goal such as better quality products at resonable rates, more employment opportunities, increase in wages etc.

Question 5.
Explain the principle of ‘Scalar Chain’ and gang plank.
Answer:
Scalar chain According to the principle, there is a scalar chain of authority in the organisation which moves in a straight line from the highest authority to the lowest level subordinates. According.to Fayol each communication from top to lower level and vice versa should flow through each executive along the scalar chain. Fayol has explained this scalar chain with the help of the following diagram :

Above diagram depicts that A is the seniormost executive and BCDEFG and LMNOPQ are his subordinates. Normally, each communication from top to lower level will flow from A to B, B to C, C to D and will trickle down from F to G. Similarly, every communication from lower level to top will flow G to F, F to E, E to D and will finally reach A from B. If suppose F wants to communicative with P then according to scalar chain such a message will first reach A through E,D,C,B and then it will reach P through L,M,N,0.

According to Fayol the process of scalar chain results in unnecessary delay and if it is essential to communiate immediately, a gangplank may be created between F and P without breaking the scalar chain. This gangplank allows the two employees to communicate directly with each other, but for this it is necessary for F to take prior permission from his immediate superior E and similarly P has to take prior permission from his imediate superior Q, and each must provide the details of their conversations to these superiors.

Long Answer Type Questions 

Question 1.
Explain the principles of scientific Management given by Taylor?
Answer:
Taylor’s Scientific Management :
It refers to an important stream of one of the earlier schools of thought of management referred to as the classical school. Taylor thought that by scientifically analysing work.it would be possible to find ‘one best way’ to do it. He believed that contemporary management was amateurish and should be studied as a discipline.

He is known for coinage of the term scientific management’ In the words of Taylor, scientific management means “knowing exactly what you want men to do and seeing that they do it in the best and cheapest way” thus the principles are

1. Science not Rule of Thumb
Taylor pioneered the introduction of the method of scientific inquiry into a domain of management practice. He believed that there was only one best method to maximise efficiency.

This method can be developed through study and analysis. According to Taylor even a small production activity like loading pigs of iron into boxcars can be scientifically planned and managed. It will save time and energy both.

2. Harmony, Not Discord
Factory system of production implied that managers served as a link between the owners and the workers. Taylor recognised that this conflict helped none the workers, the managers or factory owners. He emphasised that there should be complete harmony between the management and workers.

To achieve this state Taylor called for complete mental revolution on the past of both. According to Taylor, “Scientific management has for its foundation the firm conviction that the true interests of the two are one and the same.”

3. Co-operation, Not Individualism
There should be complete cooperation between the labour and the management instead of individualism. This principle is an extension of principle of “Harmony not discord”. According to Taylor, ‘there should be an almost equal division of work and responsibility between workers and management.

4. Development of Each and Every person to his or her greatest efficiency and prosperity Industrial efficiency depends to large extent on personnel competencies. As such scientific management also stood for workers development workers training was essential also to learn the “best method” developed the scientific approach. Thus each person should be scientifically selected, they should be given required training. Thus we can say that Taylor was an ardent supporter of use of scientific method in business.

Question 2.
Explain the following Principles of management given by Fayol with examples
(a) Unity of direction
(b) Equity
(c) Espirit de corps
(d) Order
(e) Centralisation and decentralisation
(f) Initiative
Answer:
(a) Unity of Direction
According to this principles, each group of activities having the same objective must have one head and one plan. Observance of this principles provides great help to the management in maintaining co-ordination among various functions of an organisations. Unity of direction is essential for achiveving unity of action. To ensure success in any group effort, it is necessary that authority for directing the group action is concentrated in just one person and above all, the entire group has the same plan to act upon, otherwise there would be duplication of activities and uncessary wastage of resources.

(b) Equity
Equity implies that employees should be treated with justice and kindness. Managers should be fair and impartial in their dealings with subordinates. They should adopt a sympathetic and unbaised attitude towards employees. Equity helps to create cordial relations between management and employees and the employees become loyal to the organisation whereas partiality breeds frustrations which adversely affects their efficiency.

(c) Espirit De corps or Team spirit
It is a French word which means that there should be team spirit in the organisation. In other words, all the persons working in the organisation should have harmony and mutual understanding. Union is strength, unity in the staff is the foundation of success in any organisation. Management should not follow the policy of’divide and rule’ rather it should strive to maintain team-spirit and co-operation among employees so that they can work together as a team. According to Fayol only those organisations succeed where all the persons work unitedly as a group.

(d) Order
According to Fayol these are two aspects to an order namely material order and social order. Material order means, there should be a proper place for everything and everything should be in its proper place. Social order means, there should be proper place for everyone and everyone should be in his or her proper place. By following these two orders every person would know the exact place of his work and would know the place from where he would get the things needed by him.

(e) Centralisation and decentralisation
Everything which increases the importance of subordinates role is decentralisation and everything that reduce the importance of subordinates role is centralisation. According to him there should be optimum degree of centralisation and decentralisation must be determined separately for each organisation according to its circumstances.

Small firms for example, are likely to have absolute centralisation, because in this case the managers order are directly transmitted to subordinates. However, in the case of a large firm, there is lesser degree of centralisation because the manager’s order have to pass through a number of intermediaries to reach the subordinates. Management must, therefore, strike out a balance between centralisation and decentralisation.

(f) Initiative
According to Fayol, each employee has natural capability of thinking out a plan, decision making and implementation of that plan, this is called initiative. Managers should utilise the initiative of their subordinate to the maximum extent. Employees at all levels should be given the opportunity to take initiative and exercise judgement in the formulation and execution of plAnswer:It develops the attitude of employees towards the plans.

Question 3.
Explain the technique of ‘Functional Foremanship’ and the concept of ‘Mental Revolution’ as enunciated by Taylor.
Answer:
Functional Organisation
This form of organisational structure was originated by F.W. Taylor, to bring about specialization in management. According to Taylor, “The functional organistion consists of so dividing the management that each man, down from the assistant suprentendent, shall have as few functions as possible to perform. If practicable, the work of each man in the management should be confined to the performance of single leading function”.

Taylor believes that a foreman is not a specialist in all the fields. He can be made only to execute the work. Thus functional organistion is based on the concept of F.W. Taylor’s “Functional Foremanship” under which instead of foreman, the whole work in the factory is controlled and guided by eights-specialists : four concerned with planning of work at the office level and four with its execution at the factory level.

Mental Revolution
Taylor described, “The really great problem” involved the change “consists of the complete revolution in the mental attitude and habits of all those engaged in the management, as well of workmen.

Mental revolution involves a change in the attitude of the workers and management towards one another from completion to cooperation. Both should realise that they require one another. Both should aim to increase the size of surplus. This would eliminate the need for any agitation.

Management should share the part of surplus-with workers. Workers should also contribute their might, so that company makes profits. This attitude will be good for both of them and also for the company. In the long run only worker well-being will ensure prosperioty of the business.

Question 4.
Discuss the following techniques of Scientific Work Study
(a) Time Study
(b) Motion Study
(c) Fatigue Study
(d) Method Study
(e) Simplification and standardisation of work
Answer:
(a) Time Study
It determines the standard time taken to perform a well-defined job. Time measuring devices are used for each element of task. The standard time is fixed for the whole of the task by taking several readings. The methods of time study will depend upon volume and frequency of the task, the cycle time of the operation and time measurements costs.

The objectives of time study is to determine the number of workers to be employed, frame suitable incentives schemes and determine labour costs. For example on the basis of several observation it is determined that standard time taken by the worker to make one cardboard box is 20 minutes. So in one hour she/he will make 3 boxes.

Assuming that a worker has to put in 8 hours of work in a shift and deducting one hour rest and lunch it is determined that in 7 hours a worker makes 21 boxes @ 3 boxes per hour. Now this is the standard task a worker has to do. Wages can be decided accordingly.

(b) Motion study
Motion study refers to the study of movements like lifting, putting objects, sitting and changing positions etc. which are undertaken while doing typical job. Unnecessary movements are sought tp be eliminated so that it takes less time to complete the job efficiently For example Taylor and his associate Frank Gail Berth were able to reduce motions in brick layering from 18 to just 5.Taylor demonstrated that productivity increased to about 4 times by this process.

On close examination of body motions for example it is possible to find out

• Motions which are productive
• Motions which are incidental (e.g. going to stores)
• Which is unproductive.

(c) Fatigue study
A person is bound to feel tired physically and mentally if she/he does not rest while working. The rest intervals will help he to regain stamina and work again with the same capacity. This will result in increased productivity. Fatique study seeks to determine the Amount  and frequency of rest intervals in completing a task.

For examples, normally in a plant, work takes place in three shifting of 8 hours each. Even in single shift a worker has to be given some rest interval to take her/his lunch etq. If the work 8 involves heavy manual labour then small pauses have to be frequently given to the worker so that she/he can recharge energy her/his energy level for optimum contribution.

(d) Method study
The objective of method study is to find put one best way of doing the job. There are various methods of doing the job. To determine the best way there are several parameters. Right from procurement of raw materials till when the final product is delivered to the customer is part of method study. Taylor devised the concept of assembly line by using method study. Ford Motor company used this concept very 5* successfully, Even now auto companies are using it.

The objective of the whole exercise is to minimise cost of production and maximise the quality and satisfaction of the customer. For this purpqse many techniques like process chart and operations research etc. are used.

(e) Simplification and Standardisation of work Taylor was an ardent supporter of standardisation. According to . him, scientific method should be used to analyse methods of production prevalent under rule of thumb. The best practice can be kept and further refined to develop a standard, which should be followed throughout the organisation. This can be done through work-study techniques, which include time study, Motion study, Fatigue study and Method study.

Standardisation refers to process of setting standard for every business activity, it can be standardisation of process, raw material, time product, machinery, methods and working conditions. These standards are the benchmarks, which must be adhered to during production. The objectives of standardisation are

• To reduce a given line or product to fixed types, sizes and characteristics.
• To establish interchange ability of manufactured parts and products.
• To establish standards of excellence and quality in materials.
• To establish standards of performance of men and machines.

It is important to have a re-look at the-techniques of scientific
management as comprising a unified while of Taylorian prescription of efficiency. Search for efficiency requires the search for one best method, the chosen method must lead to the determination of the fair day’s work, therefore, the sum and substance of Taylorism lies not in the disjointed description of principles and techniques of scientific . Management.

Question 5.
Discuss the differences between the contributions of Taylor and Fayol.
Answer:
Fayol versus Taylor – A comparison
Both of them have contributed immensely to the knowledge of Management, which has formed a basis for further practice by managers.

Question 6.
Discuss the relevance of Taylor and Fayol’s contribution in the contemporary business environment
Answer:
Contribution of Taylor and Fayol :
Taylor thought that by scientifically analysis work it would be possible to find “One best way” to do it. He is most remembered for his time and motion studies. He would break ajob into its component parts and measure each to the second.

Taylor believed that contemporary management was amateurish and should be studied, as a discipline. He also wanted that workers should cooperate with management and thus there would be no need of trade unions. The best results would come from the partnership between a trained and qualified management and a cooperative and innovating work force. Each side needed the other.

On the other hand in the development of classical school, of management thought Fayol’s administrative theory provides an important link. While Taylor succeeded in revolutioniring the working of factory shop floor in terms of devising the best method, face day’s work.

Fayol explaired what amount to a manager work and what principles should be followed in doing this work. Fayol’s theories concerning scientific organisation of labour were widely influential in the beginning of twentieth century.

His theories deal with organisation of production in the context of a competitive enterprice that has to controlists”production costs. Fayol was the first to identify four functions of management, Planning, Organising, Directing and Controlling. For his contribution he is also known as the “Father of General Management”. He has given the 14 principles of management.

These are as follows
1. Division of work
2. Authority and Responsibility
3. Discipline
4. Unity of Command
5. Unity of Direction
6. Subordination of Individual interest to general interest
7. Remuneration of employees
8. Centralisation and Decentralisation
9. Scalar chain
10. Order
11. Equality
12. Slubility of personnel
13. Initiative
14. Espirit-De-Corps.

Project work

Question 1.
From business magazines annual reports, newspapers or internet find out what changes ar£ taking place in companies relating to corporate governance, production practices etc. Prepare a scrapbook. Discuss these cases with your teacher and friends. Prepare a report of the same.
Answer:
Guidelines to Project work
Topic :  Annual Reports of companies
Introduction : To find out the records of the companies with the help of different magazines and newspapers.

Case Problem
Problem I
‘F’ limited was engaged in the business of food processing and selling its products under a popular brand. Lately the business was expanding due to good quality and reasonable prices. Also with more people working in the market for processed food was increasing. New players were also coming to cash in on the new trend. In order to keep its market share in the short run the company directed its existing workforce to work overtime.

But this resulted in many problems. Due to increased pressure of work the efficiency of the workers declined. Sometimes the ‘ subordinates had to work for more than one superior resulting in declining efficiency. The divisions that were previously working on one product were also made to work on two or more products. This- resulted in a lot of overlapping and Wastage.

The workers were becoming undisciplined. The spirit of teamwork, which had characterised the company, previously was beginning to wane. Workers were feeling cheated and initiative was declining. The quality of the products was beginning to decline and market share i was on the verge of decrease. ‘ Actually the company had implemented changes without creating the required infrastructure.

Question 1.
Identify the Principles of Management (out of 14 given by Henry Fayol) that were being violated by the company.
Answer:
The principles of Management that were being violated by the company are as, follows.

• Division of work
• Unity of Command
• Discipline
• Espirit De Corps
• Remuneration.

Question 2.
Explain these principles in brief.
Answer:
(a) Division of work
This is the principle of specialisation which applies to all kinds of work. The more people specialise the more efficiently they can perform their work. Specialisation increases output by making employees more efficient.

(b) Unity of Command
Every employee should receive orders and instructions from only one superior. Dual command is a perpeetual source of conflict. Dual command, as propagate by Taylor in his principle of functional foremanship, undermines authority and puts discipline in jeopordy. If a person receives orders from more than one superior, it would lead to confusion from more than one superior, it would lead to confusion and chaos.

(c) Discipline
The essence of discipline is obedience to agreements reached between parties in the organisation. Employees need to obey and respect the rules that govern the organisation. Good discipline is the result of effective leadership.

(d) Espirit De Corps
This principle states that “Union is Strength” Fayol defined Espirit de Corps as unity of effort through harmony of interest. Promoting team spirit will give the organisation a serve of unity.

(e) Remuneration
Workers should be paid fair wage for their services. The method of wage payment should provide maximum possible satisfaction to both employee and employer.

Question 3.
What steps should the company management take in relation to the above principles to restore the company to its past glory?
Answer:
The company now realised its folly. In order to rectify the situation ‘F’ limited recommended the following changes.
The company should introduce scientific management with regard to production. In order to separate planning from operational management functional foremanship should be introduced. Work study should be undertaken to optimise the use of resources to motivate the workers ‘Differential piece Rate system’ should be implemented.

Problem II (Related to case problem – I)

The management of Company ‘F’ Limited now realised its folly. In order to rectify the situation it appointed a management consultant .’M’ consultants to recommend a restructure plan to bring the company back on the rails. M’ Consultants undertook a study of the production process at the plant of the company ‘F’ limited and recommended the following changes
1. The company should introduce scientific management with regard to production.
2. Production Planning including routing, scheduling dispatching and feedback should be implemented.
3. In order to separate planning from operational management ‘Functional foremanship’ should be introduced.
4. ‘Word study’ should be undertaken to optimise the use of resources.
5. ‘Standardisation’ of all activities should be implemented to increase efficiency and accountability.
6. To motivate the workers ‘Differential Piece Rate System’
should be implemented.
7. The above changes should, be introduced apart from the steps recommended in case problem-1 (as an answer to question no 3 of that case problem). It was expected that the changes will bring about a radical transformation in the working of the company and it will regain its pristine glory.

Question 1.
Do you think that introduction of scientific management as recommended by M consultants will result in intended outcome?
Answer:
Yes, to some extent the changes can be brought.

Question 2.
What precautions Should the company undertake to implement the changes?
Answer:
The company can undertake the following changes

• Production planning
• Routing
• Scheduling
• Dispatching
• Feedback
• Optimise the use of resources.