Principles of Management_Unit 1_2 Marks

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Principles of Management

1. Define Management.

According to KOONTZ & WEIHRICH, “Management is the process of designing and maintaining of an environment in which individuals working together in groups efficiently accomplish selected aims”.

“Management is the art of getting things through and with people in formally organized groups”.

Ex: Human Resource Management, Financial Management.

2. Is Management - an art or science?

Managing as practice is an art; the organized knowledge underlying the practice is a science.

Managing has the following features that make it an art.

• Creative

• Individual approach

• Application and dedication

• Initiative and

• Intelligence.

The following features make it a science.

• Systematic decision making

• Universal management process

• Situational output and

• Universally accepted management.

Thus management can be called both as an art and science.

3. What are the essential skills of Managers?

The major skills required or expected out of managers are:-

• Technical skills – Pertaining to knowledge and proficiency in activities involving methods and procedures;

• Human skills – Ability to work effectively with other persons and to build up cooperative group relations to accomplish organizational objectives;

• Conceptual skills – Ability to recognize significant elements in a situation; and to understand the relationship among those elements; and

4. Define Scientific Management.

Scientific management involves specific method of determination of facts through observation. The concept of scientific management was introduced by Frederick Winslow Taylor in the USA in the beginning of 20th century. It was further carried on by Frank and Lillian Gilbreth, Henry Gantt, etc. It was concerned essentially with improving the operational efficiency at the shop floor level.

“Scientific Management is concerned with knowing exactly what you want men to do and then see in that they do it best and cheapest way”.

6. List the contributions of Fayol towards Management.

Henry Fayol is a French industrialist whose contributions are termed as operational management or administrative management. He followed ‘The Classical Approach’ to the evolution of management thought. His contributions are given as follows:-

• Grouping of activities of an industrial organization into six groups, namely- Technical, commercial, financial, security, accounting and managerial;

• Identified six types of qualities of a manager are- Physical, mental, moral, educational, technical and experience;

• Fourteen principles of Management namely- Division of Work, Authority and responsibility and so on; and

• Five elements/functions of management- Planning, organizing, commanding, coordinating and controlling.

7. What are the Functions of management

• Planning

• Organizing

• Staffing

• Leading or Direction or Coordination

• Controlling

8. What are the different levels of Management and its functions.

• Top-level management

• Middle level management

• Lower level management

Top level management functions

1. To formulate goals and policies

2. To formulate budgets

3. To appoint top executives

Middle level management functions.

1. To train motives &develop supervisory level

2. To monitor and control the operations performance

Low level management

1. To train &develop workers

2. To assign job

3. To give orders and instructions

4. To report the information about the workers

9. What are the roles played by a Manager?

Interpersonal roles

1. Figurehead role

2. The leader role

3. The liaison role

Informational roles

4. The monitor role

5. The disseminator role

6. The spokesperson role

Decision roles

7. The entrepreneurial role

8. The disturbance-handler role

9. The resource allocator role

10. The negotiator role

10. Define ‘Sole proprietorship’.

A Business unit that is owned and controlled by a single individual is known as sole trading or sole proprietorship concern. He uses his own savings for running the business. The sole trader makes all purchases and sells on his own and maintains all the accounts. He alone enjoys all the profits and bears all the losses.

Ex: A Fancy store.

11. What do you mean by a ‘Partnership firm’?

A partnership is an association of two or more persons to carry on business and to share its profit and losses. The relation of a partnership arises from contract. The maximum number of partners is limited to 10 in the case of banking business and 20 in the case of other business.

Ex: Chand & Co.

12. What do you understand by the term ‘Joint Stock Company’?

“An association of many persons who contribute money or money’s worth to a common stock and employs it in some trade or business and also shares the profit and loss as the case may be arising there from”.

There are two types of Joint stock companies:-

* Private Limited company – Ex: M/s Key Media Pvt. Ltd.

* Public Limited company – Ex: M/s Pearl credits Ltd.

13. Who is (i) an active partner (ii) a sleeping partner?

Active partner: Any partner who is authorized by others to manage the business is known as active partner.

Sleeping partner: Any partner who does not express his intention to participate in the business can be called as a sleeping partner. He will be just an investor who has a right to share profits.

14. What is a Co-operative Enterprise?

A Co-operative enterprise is a voluntary association of persons for mutual benefit and its aims are accomplished through self-help and collective effort. It may be described as a protective device used by the relatively less strong sections of society to safeguard their economic interests in the face of exploitation by producers and sellers working solely for maximizing profits.

Ex: AAVIN Milk Federation Cooperative Society.

15. What is a Private limited company?

A Private limited company is a company which has a minimum paid up capital as may be prescribed. It can be incorporated with just two persons. It can have a maximum of 50 members. It cannot go in for a public issue. It restricts the transfer of its shares. It is particularly suitable for industrial ventures which can get many concessions in respect of income tax.

Ex: M/s Key Media Pvt. Ltd.

16. What is a Public limited company?

A Public limited company should have a minimum of 7 members and the maximum limit is unlimited. It can issue shares to the Public. The financial statement should be sent to all the members and to the Registrar of Companies. The shares of a public limited company can be transferred by the members to the others without any restriction by the company. Such transfers are made through organized markets called ‘stock markets’ or ‘stock exchanges’.

Ex: M/s Pearl credits Ltd.

17. What is a Public sector Enterprise?

Public enterprise or State enterprise is an undertaking owned and controlled by the local or state or central government. They are financed and managed by the government. They are started with a service motive.

Ex: NLC Ltd.

18. What is a Public Corporation?

A Public corporation is an autonomous body corporate created by a special statute of a state or central government. A public corporation is a separate legal entity created for a specific purpose.

Ex: LIC.

19.How management becomes a critical element in the economic growth of a country?

A country with enough capital, manpower and other natural resources can still be poor if it does not have competent managers to combine and coordinate these resources.  By bringing together the four factors of production (viz., men, money, material and machines), management enables a country to experience a substantial level of economic development.

20.How management becomes a dynamic, life-giving element in every organisation?

A good management can definitely become an organisation’s monopoly and give it a competitive edge over its rivals by effectively coordinating current organisational activities and planning future ones, arbitrating disputes and providing leadership and adapting organisation to its environment and often shaping the environment to make it more suitable to the organisation.

21.State the importance of management in the words of Claude S. George.

In the words of Claude S. George, management is “the central core of our national as well as personal activities, and the way me manage us and our institutions reflects with alarming clarity what we and our society will become.

22.What do you mean by planning?

Planning is the function that determines in advance what should be done.  It is looking ahead and preparing for the future.  It is a process of deciding the business objectives and charting out the methods of attaining those objectives.

23.Write a short note on organising?

Organising is the part of managing that involves in establishing an intentional structure of roles for people to fill in an organisation.

24.Write a short note on staffing?

Staffing involves filling, and keeping filled, the positions in the organisation structure.  It is the process by which managers select, train, promote and retire subordinates.

25.What do you mean by leading?

Leading is influencing people so that they will contribute to the organisation and group goals.  It involves motivation, leadership styles & approaches and communication.

26.Describe the term controlling.

Controlling is measuring and correcting individual and organisational performance to ensure that events conform to plans.

27.What do you mean by directing?

Directing is the process by which actual performance of subordinates is guided toward common goals.  Supervising is one aspect of this function at lower levels where physical overseeing of work is possible.

28.Explain the term conceptual skill.

The conceptual skill refers to the ability of a manager to take a broad and farsighted view of the organisation and its future, his ability to think in abstract, his ability to analyse the forces working in a situation, his creative and innovative ability to assess the environment and the changes taking place in it.

29.Write a short note on technical skill.

The technical sill is the managers’ understanding of the nature of job that people under him have to perform.  It refers to person’s knowledge and proficiency in any type of process or technique.

30.Write a short not on human relations skill.

Human relations skill is the ability to interact effectively with people at all levels.  This skill develops in the manager sufficient ability,

(a)    to recognise the feelings and sentiments of others

(b)   to judge the possible reactions to, and outcomes of various courses of action he may undertake; and

(c)    to examine his own concepts and values which may enable him to develop more useful attitudes about himself.

31.Define the terms Effectiveness and Efficiency.

Effectiveness is the achievement of objectives and Efficiency is the achievement of the ends with the least amount of resources.

32. Difference between efficiency and effectiveness


Do it right

Doing right things


Solve them

Creative  alternatives

3.Resources utilization

Safeguard resources

Optimize resource utilization


Discharge duties                   

Obtain results

5.Efficiency relates to the means through which you obtain the objective

Effectiveness is related to the ends i.e. the goal attainment.

33.How Sheldon, Spriegal and Milward differentiate administration and management.

According to Sheldon, Spriegal and Milward, administration involves ‘thinking’.  It is a top level function which centres around the determination of plans, policies and objective of a business enterprise.  On the other hand, management involves ‘doing’.  It is a lower level function which is concerned with the execution and direction of policies and operations.

34.How E.F.L. Brech and others differentiate administration and management.

According to E.F.L. Brech and others, the functions of management can be divided into two categories: (a) administrative management and (b) operative management.  The upper level of management is usually called administrative management (planning and controlling) and the lower level is known as operative management (organising and directing).

35.What is the basic difference between management and administration according to the view of Peter Drucker?

According to view expressed by Peter Drucker, the basic difference between management and administration lies in the use of these words in different fields.  The governance of non-business institutions (such as government, army, church, etc.) is generally called administration while the governance of business enterprises where the economic performance becomes the chief dimension is called management.

36.Explain Taylor’s time and motion study.

Under time and motion study, each motion of a job was to be timed with the help of a stop watch and shorter and fewer motions were to be developed.  Thus the best way of doing a job was found.  This replaced the old rule-of-thumb-knowledge of the workman.

37.Give two contributions of scientific management.

(d)   The stress which scientific management placed on scientific selection of workers has made us recognise that without ability and training a person cannot be expected to do his job properly.

(e)    The importance that scientific management gave to work design encouraged managers to seek that “one best way” of doing a job.

38.Write a short note on division of work.

Division of work in the management process produces more and better work with the same effort.  Various functions of management like planning, organising, directing and controlling cannot be performed efficiently by a group of directors.  They must be entrusted to specialists in related fields.

39.Write a short note on authority and responsibility.

As a management consists of getting the work done through others, it implies that the manager should have the right to give orders and power to exact obedience.  A manager may exercise formal authority and also personal power.  Formal authority is derived from his official position, while personal power is the result of intelligence, experience, moral worth, ability to lead, past service, etc.  Responsibility is closely related to authority and it arises wherever authority is exercised.

40.What do you mean by discipline in managerial context?

By discipline we mean, the obedience to authority, observance of the rules of service and norms of performance, respect for agreements, sincere efforts for completing the given job, respect for superiors, etc.

41.What are the best means of maintaining discipline in an organisation?

The best means of maintaining discipline are

(f)    good supervisors at all levels

(g)   clear and fair agreements between the employees and the employer, and

(h)   judicious application of penalties.

42.Explain Henry Fayol’s principle of unity of command

The unity of command principle requires that each employee should receive instructions about a particular work from one superior only.

43.What do you mean by unity of direction?

Unity of direction means that there should be complete identity between individual and organisational goals on the one hand and between departmental goals inter se on the other. They should not pull in different directions.

44.What do you mean by scalar chain?

Scalar chain means the hierarchy of authority from the highest executive to the lowest one for the purpose of communication.  It states superior-subordinate relationship and the authority of superiors in relation to subordinates at various levels.

45.What is gang plank?

As per the principle of scalar chain, the orders or communications should pass through the proper channels of authority along the scalar chain.  But in case there is need for swift action, the proper channels of authority may be short-circuited by making direct contact which is called gang plank with the concerned authority.

46.What are the important features of bureaucratic administration?

1.      There is insistence on following standard rules

2.      There is a systematic division of work

3.      Principle of hierarchy is followed

4.      It is necessary for the individual to have knowledge of and training in the application of rules

5.      Administrative acts, decisions and rules are recorded in writing

6.      There is rational personnel administration.

47.What do you mean by buck-passing in bureaucracy?

In a bureaucratic organisation the employees’ initiative is stifled.  In situations where there are no rules, employees are afraid of taking decisions independently lest they may be punished for the wrong decisions.  They, therefore, either shift decisions to others or postpone them.

48.Explain the principle of Esprit de Corps.

Esprit de corps is the principle that “in union there is strength,” as well as an extension of the principle of unity of command, emphasising the need for teamwork and the importance of communication in obtaining it.

49.Write a short note on Quantitative Approach.

The quantitative approach is also called the management science approach.  A mixed team of specialists from relevant disciplines is called in to analyse the problem and to propose a course of action to the management.  The focus of the quantitative approach is on decision-making – to provide quantitative tools and techniques for making objectively rational decisions.

50.What do you mean by an open system and a closed system?

An open system is one which interacts with its environment.  A closed system is one which is independent of the environment.

51.What do you mean by synergy in organisational context?

In organisational terms, synergy means that as separate departments within organisation cooperate and interact, they become more productive than if they had acted in isolation.

52.What is known as a throughput?

The transformation process which changes the inputs of a business organisation such as raw materials, power, finance, equipment, human effort, technology and information about market, new products, government policies, etc. into outputs of goods, services and satisfaction is known as “throughput”.

53.What are the seven S’s of McKinsey’s framework?

The seven S’s of McKinsey’s framework are Strategy, Structure, Systems, Style, Staff, Shared values, and Skills.

54.Write a short note on contingency approach to management.

The contingency approach to management is also called the situational approach assumes that there is no one best way to manage and that to be effective, planning, organizing, leading, and controlling because organisations, people, and situations vary and change over time. Thus, the right thing to do depends on a complex variety of critical environmental and internal contingencies.

     55.Explain the terms on which the domestic and international business differs?

Difference in terms of

—  currency, exchange rate fluctuations

—  Customs, language,

—  Government regulations

—  Taxation system

—  Management practices can be fine tuned

56.What are the different trade related modes of entering into global business?

—  Exporting/Importing

—  International sub contracting

—  Counter trade

57.What are the different transfer related modes of entering into global business?

—  International leasing

—  International licensing

—  International franchising

—  Build-operate-transfer

58.What are the different FDI related modes of entering into global business?

—  Branch office

—  Co-operative joint venture

—  Equity joint venture

—  Wholly owned subsidiary

59.Define international Licensing

Under the license agreement,one firm permits another to use its intellectual property for a compensation called royalty,It actually amounts exporting intangibles.the property includes such assets as patents,trademarks,copyrights,technology,business skills, etc.,

60.What are the disadvantages of international licensing

·         Possible loss of quality control

·         Inviting the potential competitor in third country markets

·         Possible improvement of te technology by the licensee who may enter licensor’s home market

·         Risk of pirating the technology

·         High agency costs

61. Define international leasing

Leasing transaction occurs when the owner of the company (leasor)leases it out to other party(leasee).The leasor company retains the ownership and the lease firm obtains the possession of the property.

62. Define international franchising

Franchising involves the granting of right by a company(Franchisor) to another(Franchisee) to do business in a specified manner. This right can take the form of selling the franchisor’s producs, using its name, production and marketing techniques, or using business models. Franchising fosters longer commitments, offer greater control over overseas operations and includes a greaer package of rights and resources.

63.Define Wholly owned subsidiary

–     This mode involves 100 percent ownership by an MNC’s in a venture located in a host country.Such a firm can come into being in either of two ways: setting up a totally new project or acquisition of an exixting company.The MNC can establish a totally new facility in which case it is called as greenfiled project and the finance is called as Greenfield investment.

64. Define Mergers and acquisition

–     A merger is a voluntary and permanent combination of business whereby one or more firms integrate their operations and identities with those of another and work under a common name and in the interests of the newly formed amalgamation. whereas, the acquisition is a takeover situation whereby one business buys a majority shareholding in another company against the wishes of the latter’s management.

65. Define Alliance and joint venture:

–     Alliance

•      Any type of cooperative relationship among different firms.

–     International joint venture (IJV)

•      An agreement under which two or more partners from different countries own or control a business

–     Advantages of IJV

•      Improvement of efficiency

•      Access to knowledge

•      Political factors

•      Collusion or restriction in competition

66. What are the factors to be considered before choosing the entry mode?

Entry Mode Variables

•      Environmental variables - resource commitment

–     Country risk

–     Location familiarity

–     Demand conditions

–     Volatility of competition

•      Strategic variables - control

–     Extent of national differences

–     Extent of scale economies

–     Global concentration

•      Transaction Variables - risk

–     Value of firm specific know-how

–     Tacit nature of know-how

67. Define ethnocentric orientation:

•      An MNC with an ethnocentric orientation will rely on the values and interests of the parent country in formulating and implementing the strategic plan. Primary emphasis is on profitability and the firm will try to run its operations overseas in the same way they run at home

68. Define Polycentric disposition:

•      An MNC with a polycentric disposition will tailor its strategic plan to meet the needs of host country culture. If the firm operates in more than one country an overall plan will be adopted to meet the specific needs of the host country. Each subsidiary will decide on the objectives it wants to pursue depending on local needs. Profits will be invested back to the host country for expansion and growth of business operations.

69. Define Regiocentric predisposition:

•      An MNC with a regiocentric predisposition will be interested in both profit as well as public acceptance. The firm will use such a strategy in order to address both local and regional needs.

70. Define geocentric orientation:

•      An MNC with a geocentric approach will view operations from a global perspective. Such firms offer global products with local variations and their employees belong to different parts of the globe.

71. Define the following

·         Multidomestic Strategy

-Under this strategy, product offerings and competitive approaches of MNC varies from country to country.

•      Global Strategy

•      Under this strategy, an MNC employs the same basic competitive approach in all countries where the firm operates.

•      Transnational Strategy

•      It is a think-global, act-local approach that incorporates elements of both multidomestic and global strategies.

75. What is Esprit-de-corps?

This means union is strength. In organization employees should be harmony and unity.All the employees of an organisation are put together as a team inorder to achive the objectives of teh organisation. If there is any misunderstanding or difference of opinion or distressed on other employees, the management should take corrective steps to resolve the issue. The management should not follow the policy of divide and rule.

76. What is MBO?

MBO is a process whereby the superior and the superior and the subordinate manager of an enterprise jointly identify its common goals, define each individuals major areas of responsibility in terms of result expected of him, and use these measures as guides for operating the unit and the contribution of each of its members is assessed.

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