“if there is any universal marks of a manager, it is decision-making.”

““IF THERE IS ANY UNIVERSAL IF THERE IS ANY UNIVERSAL MARKS OF A MANAGER, IT IS MARKS OF A MANAGER, IT IS

DECISION-MAKING.”DECISION-MAKING.”

Decision-Making and Decision-Making and Decision?Decision?

Decision making is a process and Decision making is a process and decision is the outcome of such a decision is the outcome of such a process.process.

Definitions of Decision-Definitions of Decision-MakingMaking

According to George R. Terry, According to George R. Terry, “Decision making us the selection “Decision making us the selection based on some criteria from two or based on some criteria from two or more possible alternatives.more possible alternatives.

Characteristics of Nature of Characteristics of Nature of Decision-MakingDecision-Making

It is a Process of selecting the best It is a Process of selecting the best from the alternatives.from the alternatives.

Decision-making is based on Rational Decision-making is based on Rational Thinking.Thinking.

Decision-making is always related to Decision-making is always related to some problem or conflict.some problem or conflict.

It involves the Evaluation of Various It involves the Evaluation of Various Available Alternatives.Available Alternatives.


Decision-making is aimed at achieving Decision-making is aimed at achieving organizational Goals.organizational Goals.

Decision-making involves Commitment.Decision-making involves Commitment. It is basically a Human Activity.It is basically a Human Activity. Decision-making is both a Managerial Decision-making is both a Managerial

Function and an Organizational Process.Function and an Organizational Process. Decision-making is the core of Planning.Decision-making is the core of Planning.


Decision Starts Action.Decision Starts Action. Uncertainty of Results.Uncertainty of Results. It is Universal Mark of a Manager.It is Universal Mark of a Manager. It may be Negative.It may be Negative.

MECHANISM PROCESSMECHANISM PROCESS

(1) Defining the Problem (2) Analysing the

Problem

(3) Development of Alternatives

Decision-Makijng Process (4) Evaluation of Alternatives

(7) Follow-up (6) Execution of the Decision

(5) Selection of the best Alternative

PROCESS IN DECISION PROCESS IN DECISION MAKINGMAKING

Defining the Problem.Defining the Problem. Analysing the Problem.Analysing the Problem. Development of Alternatives.Development of Alternatives. Evaluation of Alternatives.Evaluation of Alternatives. Selection of the Best Alternative.Selection of the Best Alternative.

PROCESS IN DECISION PROCESS IN DECISION MAKINGMAKING

Execution of the Decision :Execution of the Decision :

(i) Effective Communication.(i) Effective Communication.

(ii) Securing Employees.(ii) Securing Employees.

(iii) Correct Timing of Decision (iii) Correct Timing of Decision Execution.Execution.

Follow-up.Follow-up.

ECONOMIC MAN MODELECONOMIC MAN MODEL

Developed by the traditional Developed by the traditional economists. According to them, the economists. According to them, the managers make full use of their managers make full use of their reason while taking decision. Before reason while taking decision. Before taking the decision they find out taking the decision they find out different alternatives, evaluate them different alternatives, evaluate them and select only the most profitable and select only the most profitable alternative.alternative.

FEATURESFEATURES

CRITICISMSCRITICISMS

Certain conditions do not exist.Certain conditions do not exist. Limited Information Collecting Skill.Limited Information Collecting Skill. Based on Theory.Based on Theory. A Man’s Loyalty is not always High.A Man’s Loyalty is not always High.

ADMINISTRATIVE MAN ADMINISTRATIVE MAN MODELMODEL

Herbert A. Simon is of the view that it Herbert A. Simon is of the view that it is difficult to take decision with is difficult to take decision with absolute reason because decisions are absolute reason because decisions are taken in respect of future and future is taken in respect of future and future is uncertain. It is also not necessary that uncertain. It is also not necessary that the person taking decision may have the person taking decision may have the knowledge of all the alternatives the knowledge of all the alternatives and their possible consequences. and their possible consequences. Simon has talked about the Bounded Simon has talked about the Bounded Rationality instead of absolute reason.Rationality instead of absolute reason.

MEANING OF BOUNDED MEANING OF BOUNDED RATIONALITYRATIONALITY

Rationality means using limited reason Rationality means using limited reason while taking decisions.while taking decisions.

FEATURES :FEATURES : Provides Reasonable Satisfaction.Provides Reasonable Satisfaction. Sequential Search for AlternativesSequential Search for Alternatives Alternatives are guided by Experience.Alternatives are guided by Experience.

Decision Making Process as per Decision Making Process as per Administrative Man Model.Administrative Man Model.

Defining the problem.Defining the problem. Determining appropriate standard for Determining appropriate standard for

accepting the solution.accepting the solution. Using one’s experience for the Using one’s experience for the

search of alternatives to limit the search of alternatives to limit the range of search, and identifying the range of search, and identifying the solution to be applied to the problem.solution to be applied to the problem.

Decision Making Process as per Decision Making Process as per Administrative Man ModelAdministrative Man Model

Lowering the standard of the solution to Lowering the standard of the solution to accept it, in case the solution to be applied accept it, in case the solution to be applied is not recognised.is not recognised.

Evaluate the solution, if the solution to be Evaluate the solution, if the solution to be applied has been recognised.applied has been recognised.

To implement the solution if it is acceptable.To implement the solution if it is acceptable. To search for the new solution, if it is not To search for the new solution, if it is not

acceptable. acceptable. To implement the solution.To implement the solution.

CAUSES OF BONDED CAUSES OF BONDED RATIONALITYRATIONALITY

Limited knowledge.Limited knowledge. Incomplete Information.Incomplete Information. Uncertain Conditions.Uncertain Conditions. Organisational Factors.Organisational Factors. Personal Preferences.Personal Preferences.

DECISION MAKING DECISION MAKING TECHNIQUESTECHNIQUES

Judgement Technique.Judgement Technique. Statistical Technique. Statistical Technique.

a. Theory of Probability.a. Theory of Probability.

b. Sampling Analysis.b. Sampling Analysis.

c. Correlation / Regression.c. Correlation / Regression.

d. Time Series Analysis.d. Time Series Analysis.

e. Ratio Analysis.e. Ratio Analysis.

f. Variance Analysis.f. Variance Analysis.

g. Statistical Quality Control etc. g. Statistical Quality Control etc.


Operations Research Techniques.Operations Research Techniques.

a. Linear Progamming.a. Linear Progamming.

b. Game Theory.b. Game Theory.

c. Network Analysis.c. Network Analysis.

d. Break-even Analysis.d. Break-even Analysis.

e. Waiting Line or Queuing Theory.e. Waiting Line or Queuing Theory.

f. Cost-Benefit Analysis etc.f. Cost-Benefit Analysis etc.


Model Building TechniqueModel Building Technique Behavioural Technique.Behavioural Technique. Principles of Management Technique.Principles of Management Technique. Intuition Technique.Intuition Technique.

IMPORTANCE OF DECISION-IMPORTANCE OF DECISION-MAKINGMAKING

Execution of all Managerial Functions.Execution of all Managerial Functions.

a. Importance in Planning.a. Importance in Planning.

b. Importance in Organising.b. Importance in Organising.

c. Importance in Staffing.c. Importance in Staffing.

d. Importing in Leading.d. Importing in Leading.

e. Importance in Controlling.e. Importance in Controlling. Basis of the Evaluation of Performance of Basis of the Evaluation of Performance of

Manager.Manager.

IMPORTANCE OF DECISION-IMPORTANCE OF DECISION-MAKINGMAKING

Continuous Change and Continuous Change and Complexities.Complexities.

Successful Running of the Enterprise.Successful Running of the Enterprise. Basis of Action.Basis of Action. Double Advantage to Manager.Double Advantage to Manager.

PRINCIPLES OF DECISION-PRINCIPLES OF DECISION-MAKINGMAKING

Principle of Adequate Information.Principle of Adequate Information. Principle of Limiting Factor.Principle of Limiting Factor. Principle of Considering Other’s Views.Principle of Considering Other’s Views. Principle of Maximisation of Profits.Principle of Maximisation of Profits. Principle of Human Reaction.Principle of Human Reaction. Principle of Self Interest.Principle of Self Interest. Principle of Proper Timing.Principle of Proper Timing. Principle of Employees’ Participation.Principle of Employees’ Participation. Principle of Proportionality of Resources.Principle of Proportionality of Resources. Principle of Changing Environment.Principle of Changing Environment.

OCCASIONS FOR DECISION-OCCASIONS FOR DECISION-MAKINGMAKING

At the Time of Getting Routine At the Time of Getting Routine Information.Information.

At the Time of Getting Special At the Time of Getting Special Information.Information.

At the Time of Initiative of the At the Time of Initiative of the Executive Concerned.Executive Concerned.

CHAPTER NO.8CHAPTER NO.8

MANAGEMENT BY MANAGEMENT BY OBJECTIVESOBJECTIVES

MEANING OF MBOMEANING OF MBO

Druker told the manager through the Druker told the manager through the medium of MBO that business medium of MBO that business performance requires that each job performance requires that each job be directed towards the objective of be directed towards the objective of the whole business. At the same time the whole business. At the same time he stressed the fact that the he stressed the fact that the determination of objectives should be determination of objectives should be collectively done by all the officials collectively done by all the officials concerned including the subordinates. concerned including the subordinates.

MBOMBO

MBO is such an attitude under which MBO is such an attitude under which the objectives are laid down with the the objectives are laid down with the help of the subordinates and an help of the subordinates and an efforts is made that every activity/ efforts is made that every activity/ job performed in the organisation job performed in the organisation should contribute to the attainment should contribute to the attainment of the objectives.of the objectives.

DEFINITIONS OF MBODEFINITIONS OF MBO

According to Peter.F.Drucker, According to Peter.F.Drucker, Management by objective is Management by objective is regarded as a system for improving regarded as a system for improving performance, both of the individual performance, both of the individual manager’s and the enterprise as a manager’s and the enterprise as a whole, by setting of objectives at the whole, by setting of objectives at the corporate department and individual corporate department and individual manager’s level.manager’s level.

FEATURES OF MBOFEATURES OF MBO

All Activities are goal-oriented.All Activities are goal-oriented. Integration among Organisational, Integration among Organisational,

Departmental and Personal Departmental and Personal Objectives.Objectives.

Organisational Objectives

Departmental Objectives

Personall Objectives

FEATURES OF MBOFEATURES OF MBO

MBO views organisation as Dynamic Entity.MBO views organisation as Dynamic Entity. MBO is a Participative Attempt.MBO is a Participative Attempt. MBO Matches the Objectives and ResourcesMBO Matches the Objectives and Resources MBO is a Philosophy and not a Technique.MBO is a Philosophy and not a Technique. MBO gives more weightage to Review and MBO gives more weightage to Review and

Performance Appraisal.Performance Appraisal. MBO provides more Freedom to MBO provides more Freedom to

Subordinates.Subordinates. MBO gives more weightage to results and not MBO gives more weightage to results and not

to work.to work.

PROCESS OF MBOPROCESS OF MBO

Organisational Objective Setting

Determination of Key Result Areas-KRAs

Subordinates’s Objective Setting

Matching Objective and Resources

Periodic Meetings

Final Performance Appraisal

ADVANTAGES AND ADVANTAGES AND IMPORTANCE OF MBOIMPORTANCE OF MBO

Incentive for subordinates.Incentive for subordinates. Improvement in Communication Network.Improvement in Communication Network. Better Management of Resources and Better Management of Resources and

Activities.Activities. Encourages Innovations.Encourages Innovations. Minimises AmbiguityMinimises Ambiguity Self-controlSelf-control Clarity of Key Result Areas-KRAs.Clarity of Key Result Areas-KRAs. Easier to Implement Change.Easier to Implement Change.

Limitations/ Problems/ Limitations/ Problems/ Weaknesses of MBO.Weaknesses of MBO.

More Pressure on Employees.More Pressure on Employees. Wastage of Time.Wastage of Time. Wastage of Valuable Resources.Wastage of Valuable Resources. Incomplete Support of Top Management.Incomplete Support of Top Management. Difficulty in Objective Setting.Difficulty in Objective Setting. More Importance to Short-Term Objectives.More Importance to Short-Term Objectives. Lack of Skilled Staff.Lack of Skilled Staff. Lack of Subordinates’ Participation.Lack of Subordinates’ Participation.

Suggestions for Improving the Suggestions for Improving the Effectiveness of MBOEffectiveness of MBO

To Release Pressure of Employees.To Release Pressure of Employees. To understate Value of Time.To understate Value of Time. To save Valuable Resources.To save Valuable Resources. To Provide Complete Support by Top To Provide Complete Support by Top

Management.Management. To Understand Subordinates Importance.To Understand Subordinates Importance. To give due Importance to Long-term To give due Importance to Long-term

Objectives.Objectives. To Arrange Training Programme for Staff.To Arrange Training Programme for Staff. To Develop Participative Nature.To Develop Participative Nature.


BUSINESS BUSINESS ENVIRONMENTENVIRONMENT

MEANING OF BUSINESS MEANING OF BUSINESS ENVIRONMENTENVIRONMENT

Business environment means the Business environment means the sum total of those factors which sum total of those factors which influence the business and over influence the business and over which the business has no control.which the business has no control.

Characteristics of Business Characteristics of Business EnvironmentEnvironment

Totalality of External Forces.Totalality of External Forces. Specific and General Forces.Specific and General Forces. Inter-relatedness.Inter-relatedness. Dynamic Nature.Dynamic Nature. Uncertainty.Uncertainty. Complexity.Complexity. Relativity.Relativity.

IMPORTANCE OF BUSINESS IMPORTANCE OF BUSINESS ENVIRONMENT.ENVIRONMENT.

First Mover Advantage.First Mover Advantage. Warning Signal.Warning Signal. Taping Useful Resources.Taping Useful Resources. Coping with Rapid Changes.Coping with Rapid Changes. Assisting in Planning and Policy.Assisting in Planning and Policy. Improvement in Performance.Improvement in Performance.

COMPONENTS OF BUSINESS COMPONENTS OF BUSINESS ENVIRONMENT.ENVIRONMENT.

Components of Business Environment

Internal Environment

Internal Environment

Micro Environment Or

Operating Environment

Macro Environment or

General Environment

1.Objectives 2.Policies 3.Organisation Structure. 4.Management Information System. 5.Production Method. 6.Production Capacity.

1.Objectives 2.Policies 3.Organisation Structure. 4.Management Information System. 5.Production Method. 6.Production Capacity.

1.Economic Environment. 2.Political Environment. 3.Social Environment. 4.Legal Regulatory Environment 5.Technological Environment.

DIMENSIONS OF BUSINESS DIMENSIONS OF BUSINESS ENVIRONMENTENVIRONMENT

Economic Environment.Economic Environment. Political Environment.Political Environment. Social Environment.Social Environment. Legal Regulatory Environment.Legal Regulatory Environment. Technological Environment.Technological Environment.

ECONOMIC ENVIRONMENTECONOMIC ENVIRONMENT

Economic System.Economic System. Economic Policies.Economic Policies. Economic Conditions.Economic Conditions.

ECONOMIC SYSTEMECONOMIC SYSTEM

Socialistic Economic System.Socialistic Economic System. Capitalistic Economic System.Capitalistic Economic System. Mixed Economic System.Mixed Economic System.

ECONOMIC POLICIESECONOMIC POLICIES

Export Import Policy.Export Import Policy. Employment Policy.Employment Policy. Taxation Policy.Taxation Policy. Industrial Policy.Industrial Policy. Public Expenditure Policy.Public Expenditure Policy. Public Debt Policy.Public Debt Policy. Agriculture Policy.Agriculture Policy. Foreign Investment Policy.Foreign Investment Policy.

ECONOMIC CONDITIONSECONOMIC CONDITIONS

Foreign Capital.Foreign Capital. Supply of Natural Resources.Supply of Natural Resources. Level of Economic Development.Level of Economic Development. Rate of Interest.Rate of Interest. National Income.National Income. Industrial Development.Industrial Development. Foreign Trade.Foreign Trade. General Price Level.General Price Level.

IMPACT OF ECONOMIC IMPACT OF ECONOMIC ENVIRONMENT ON BUSINESS.ENVIRONMENT ON BUSINESS.

After reforms were introduced in the After reforms were introduced in the banking sector, the bank loans were banking sector, the bank loans were allowed on easy terms. It also led to allowed on easy terms. It also led to better services. It helped really fast better services. It helped really fast development of business.development of business.

The change in the economic The change in the economic environment resulted in the environment resulted in the establishment of Leasing, Companies, establishment of Leasing, Companies, Mutual Funds and Venture Capital Mutual Funds and Venture Capital Business.Business.

POLITICAL ENVIRONMENTPOLITICAL ENVIRONMENT

IMPACT OF POLITICAL ENVIRONMENT ON IMPACT OF POLITICAL ENVIRONMENT ON BUSINESS.BUSINESS.

a. In the year 1977, the Janata a. In the year 1977, the Janata Government adopted a stringent attitude Government adopted a stringent attitude towards the multinational companies. towards the multinational companies.

b. Government encouraged the b. Government encouraged the multinational companies for investment in multinational companies for investment in India.India.

c. Because of the political interest that c. Because of the political interest that Hyderabad came to be known as Cyberabad.Hyderabad came to be known as Cyberabad.

SOCIAL ENVIRONMENTSOCIAL ENVIRONMENT

IMPACT OF SOCIAL ENVIRONMENT IMPACT OF SOCIAL ENVIRONMENT ON BUSINESS.ON BUSINESS.

The production of things The production of things should be according to the fashion.should be according to the fashion.

LEGAL REGULATORY LEGAL REGULATORY ENVIRONMENT.ENVIRONMENT.

The following Acts have been passed in The following Acts have been passed in connection with the above business activities :connection with the above business activities :

a. Sale of Goods Act.a. Sale of Goods Act. b. Industrial Disputes Act.b. Industrial Disputes Act. c. Minimum Wages Act.c. Minimum Wages Act. d. Indian Partnership Act.d. Indian Partnership Act. e. Companies Act.e. Companies Act. f. Foreign Exchange Management Act.f. Foreign Exchange Management Act. g. Trade Mark Act.g. Trade Mark Act. h. Essential Commodities Act.h. Essential Commodities Act. i. Consumer Protection Act.i. Consumer Protection Act. j. Standards of Weights and Measures Act.j. Standards of Weights and Measures Act.

IMPACT OF LEGAL IMPACT OF LEGAL REGULATORY ENVIRONMENT REGULATORY ENVIRONMENT

ON BUSINESS.ON BUSINESS. By removing control on the capital By removing control on the capital

market, a huge amount of capital was market, a huge amount of capital was collected by issuing various new collected by issuing various new issues in the primary market.issues in the primary market.

Relaxation in Foreign Direct Relaxation in Foreign Direct Investment (FDI) and foreign Investment (FDI) and foreign Exchange, may multinational Exchange, may multinational companies entered the Indian Market.companies entered the Indian Market.

TECHNOLOGICAL TECHNOLOGICAL ENVIRONMENTENVIRONMENT

New Method of production of goods, New Method of production of goods, services and discovery of new services and discovery of new implements.implements.

IMPACT OF TECHNOLOGICAL IMPACT OF TECHNOLOGICAL ENVIRONMENT ON BUSINESS.ENVIRONMENT ON BUSINESS.

With the advent of television in the market, With the advent of television in the market, the cinema and radio industry were the cinema and radio industry were adversely affected.adversely affected.

With the arrival of the photostat machines With the arrival of the photostat machines in the market, the carbon paper industry in the market, the carbon paper industry suffered a setback.suffered a setback.

With the entry of synthetic thread in the With the entry of synthetic thread in the market, the cotton cloth industry was market, the cotton cloth industry was badly affected.badly affected.

The digital watches have almost eliminated The digital watches have almost eliminated the market of the traditional watches.the market of the traditional watches.

ANALYSIS AND DIAGNOSIS OF ANALYSIS AND DIAGNOSIS OF BUSINESS ENVIRONMENT.BUSINESS ENVIRONMENT.

CHANGESCHANGES a. Change in the taste of the customers.a. Change in the taste of the customers. b. Change in the attitude or conduct of the b. Change in the attitude or conduct of the

suppliers.suppliers. c. Change in the form or nature of competition c. Change in the form or nature of competition

because of the entry of many competitors in the because of the entry of many competitors in the market.market.

d. Change in the attitude of the general public.d. Change in the attitude of the general public. e. Change in the expectation of the people from e. Change in the expectation of the people from

business.business. f. Change in the political structure.f. Change in the political structure. g. Change in the economic policies.g. Change in the economic policies. h. Change in the legal regulations. h. Change in the legal regulations.


ORGANISING CONCEPT, ORGANISING CONCEPT, NATURE AND PROCESS.NATURE AND PROCESS.

MEANING OF ORGANISINGMEANING OF ORGANISING

The word organising is derived from The word organising is derived from the word ‘organism which means the word ‘organism which means that a unit with many parts and each that a unit with many parts and each part of it, even though working part of it, even though working independently, has a definite independently, has a definite relationship with the main unit.relationship with the main unit.

DEFINITIONS OF DEFINITIONS OF ORGANISINGORGANISING

According to Haney, “Organisation is According to Haney, “Organisation is harmonious adjustment of specialised parts harmonious adjustment of specialised parts for the accomplishment of some common for the accomplishment of some common purpose or purposes.”purpose or purposes.”

According to Haiman, “Organisation is the According to Haiman, “Organisation is the process of defining and grouping the process of defining and grouping the activities of the enterprise and establishing activities of the enterprise and establishing the authority relationship among them.”the authority relationship among them.”

According to McFarland, “An identifiable According to McFarland, “An identifiable group of people contributing their efforts group of people contributing their efforts towards the attainment of goals is called towards the attainment of goals is called organisation.organisation.

NATURE OR CHARACTERISTICS NATURE OR CHARACTERISTICS OF ORGANISINGOF ORGANISING

Division of Work.Division of Work. Coordination.Coordination. Plurality of Persons.Plurality of Persons. Common Objectives.Common Objectives. Well-defined Authority and Responsibility.Well-defined Authority and Responsibility. Organisation is a Structure of Relationship.Organisation is a Structure of Relationship. Organisation is a Machine of Management.Organisation is a Machine of Management. Organisation is a Universal Process.Organisation is a Universal Process. Organisation is a Dynamic Process.Organisation is a Dynamic Process.

CONCEPT OF ORGANISINGCONCEPT OF ORGANISING

Organising as a Process.Organising as a Process. Organising as a Structure of Organising as a Structure of

Relationship.Relationship.

ORGANISING PROCESS.ORGANISING PROCESS.

Knowing the Objectives of the Enterprise.Knowing the Objectives of the Enterprise. Determining Various Activities.Determining Various Activities. Grouping of Activities.Grouping of Activities. Determining Key Activities.Determining Key Activities. Assigning of Responsibilities.Assigning of Responsibilities. Delegating of Authority.Delegating of Authority. Defining Inter-relationshipDefining Inter-relationship Providing Right Environment.Providing Right Environment.

FORMAL AND INFORMAL FORMAL AND INFORMAL ORGANISATION.ORGANISATION.

FORMAL ORGANISATION.FORMAL ORGANISATION. a. Main Characteristics of Formal a. Main Characteristics of Formal

Organisation.Organisation. 1. It is deliberately created.1. It is deliberately created.

2. It is based on Rules and Procedures.2. It is based on Rules and Procedures.3. It is Impersonal.3. It is Impersonal.4. Authority.4. Authority.5. It is based on Division of Work.5. It is based on Division of Work.6. Defined Inter-relationship.6. Defined Inter-relationship.7. It is more stable.7. It is more stable.

ADVANTAGES OF FORMAL ADVANTAGES OF FORMAL ORGANISATION.ORGANISATION.

1.1. Specialisation Possible.Specialisation Possible.2.2. More Coordination.More Coordination.3.3. Good Human RelationshipGood Human Relationship4.4. Easy to find out Inefficient Easy to find out Inefficient

Employees.Employees.5.5. No overlapping of Work.No overlapping of Work.6.6. Less Chances of Partiality.Less Chances of Partiality.7.7. Easy to get Objectives.Easy to get Objectives.8.8. Easy Control.Easy Control.

DISADVANTAGES OF FORMAL DISADVANTAGES OF FORMAL ORGANISATION.ORGANISATION.

1.1. Lack of Initiatives.Lack of Initiatives.

2.2. Pressure of Officers’ Autocracy on Pressure of Officers’ Autocracy on Employees.Employees.

3.3. Delay in Work.Delay in Work.

4.4. Mechanisation of Relations.Mechanisation of Relations.

INFORMAL ORGANISATIONINFORMAL ORGANISATION

Main Characteristics of Informal Organisation.Main Characteristics of Informal Organisation.

1.1. It is not deliberately Created.It is not deliberately Created.

2.2. No Written Rules and Procedures.No Written Rules and Procedures.

3.3. It is personal.It is personal.

4.4. Authority.Authority.

5.5. No Defined Inter-relationship.No Defined Inter-relationship.

6.6. Lack of Stability.Lack of Stability.

7.7. No place on Organisation Chart.No place on Organisation Chart.

ADVANTAGES OF INFORMAL ADVANTAGES OF INFORMAL ORGANISATION.ORGANISATION.

1.1. Increase in initiative.Increase in initiative.

2.2. Decrease in Pressure of Officers.Decrease in Pressure of Officers.

3.3. Effective Communication.Effective Communication.

4.4. It makes the Formal Organisation It makes the Formal Organisation Strong.Strong.

5.5. Quick Solution of the Problems.Quick Solution of the Problems.

DISADVANTAGES OF INFORMAL DISADVANTAGES OF INFORMAL ORGANISATION.ORGANISATION.

1.1. Specialisation not Possible.Specialisation not Possible.

2.2. It resists Change.It resists Change.

3.3. Sometimes it Creates Hurdle in Sometimes it Creates Hurdle in Management.Management.

PRINCIPLES OF PRINCIPLES OF ORGANISING.ORGANISING.

1.1. Principle of Unity Objectives.Principle of Unity Objectives.2.2. Principle of Specialisation.Principle of Specialisation.3.3. Principle of Coordination.Principle of Coordination.4.4. Principle of Parity of Authority and Principle of Parity of Authority and

Responsibility.Responsibility.5.5. Principle of Absoluteness of Principle of Absoluteness of

Responsibility.Responsibility.6.6. Principle of Exception.Principle of Exception.7.7. Principle of Span of Control.Principle of Span of Control.8.8. Principle of the FlexibilityPrinciple of the Flexibility

PRINCIPLES OF PRINCIPLES OF ORGANISING.ORGANISING.

9.9. Principle of Full Clarity.Principle of Full Clarity.10.10. Principle of Balance.Principle of Balance.11.11. Principle of Unity of Command.Principle of Unity of Command.12.12. Scalar Principle.Scalar Principle.13.13. Principle of Simplicity.Principle of Simplicity.14.14. Principle of Continuity.Principle of Continuity.15.15. Principle of Regular Checks.Principle of Regular Checks.16.16. Principle of Efficiency.Principle of Efficiency.17.17. Principle of Participation.Principle of Participation.

SIGNIFICANCE OR SIGNIFICANCE OR ADVANTAGES OF ORGANISING.ADVANTAGES OF ORGANISING.

1.1. Increase in Managerial Efficiency.Increase in Managerial Efficiency.2.2. Proper Utilisation of Resources.Proper Utilisation of Resources.3.3. Sound Communication Possible.Sound Communication Possible.4.4. Facilities Coordination.Facilities Coordination.5.5. Increase in Specialisation.Increase in Specialisation.6.6. Helpful in Expansion.Helpful in Expansion.7.7. Check on Corrupt Practices.Check on Corrupt Practices.8.8. Decreases Employees’ Turnover.Decreases Employees’ Turnover.9.9. Better Human Relations.Better Human Relations.10.10. Training and Development of Personal.Training and Development of Personal.11.11. Development of New Ideas.Development of New Ideas.12.12. Facilitates Promotions.Facilitates Promotions.


FORMS OF ORGANISATION FORMS OF ORGANISATION STRUCTURE AND STRUCTURE AND

CONTINGENCY FACTORS.CONTINGENCY FACTORS.

MEANING OF ORGANISATION MEANING OF ORGANISATION STRUCTURESTRUCTURE

It means establishing posts in an It means establishing posts in an enterprise and defining relations enterprise and defining relations among them.among them.

DEFINITIONS OF DEFINITIONS OF ORGANISATION STRUCTUREORGANISATION STRUCTURE

According to Hurley, “Organisation According to Hurley, “Organisation structures are patterns of structures are patterns of relationship among the various relationship among the various positions in a firm and among the positions in a firm and among the various people occupying the various people occupying the positions.positions.

According to William H. Newman, According to William H. Newman, “Organisation structure deals with “Organisation structure deals with the overall organisational the overall organisational arrangement in an enterprise.arrangement in an enterprise.

DESIGN/FORMS/TYPES OF DESIGN/FORMS/TYPES OF ORGANISATION STRUCTUREORGANISATION STRUCTURE

1.1. Line Organisation.Line Organisation.

2.2. Line and Staff Organisation.Line and Staff Organisation.

3.3. Functional Organisation.Functional Organisation.

4.4. Committee Organisation.Committee Organisation.

LINE ORGANISATIONLINE ORGANISATION

It is called line organisation because in it It is called line organisation because in it the authority and responsibility move from the authority and responsibility move from top to bottom in a straight line. The topmost top to bottom in a straight line. The topmost officer is the general manager who gives officer is the general manager who gives orders to the departmental managers, the orders to the departmental managers, the department manages give orders to the department manages give orders to the superintendent of their department, the superintendent of their department, the superintendent orders his subordinate, the superintendent orders his subordinate, the foreman, and the foreman orders the foreman, and the foreman orders the workers.workers.

CHARACTERISTICS OF LINE CHARACTERISTICS OF LINE ORGANISATIONORGANISATION

Orders move from top to bottom in a Orders move from top to bottom in a straight line.straight line.

Complaints and suggestions mvoe Complaints and suggestions mvoe from bottom to top in a straight line.from bottom to top in a straight line.

Every employee receives his orders Every employee receives his orders from his nearest superior.from his nearest superior.

Every employee is answerable only Every employee is answerable only his nearest superior.his nearest superior.

CHARACTERISTICS OF LINE CHARACTERISTICS OF LINE ORGANISATIONORGANISATION

Every superior has a limited number Every superior has a limited number of subordinates.of subordinates.

Authority is concentrated in the Authority is concentrated in the hands of top level officer.hands of top level officer.

The responsibility for the success or The responsibility for the success or failure of the organisation lies failure of the organisation lies entirely on the top level officer.entirely on the top level officer.

TYPES OF LINE TYPES OF LINE ORGANISATIONORGANISATION

Pure Line Organisation.Pure Line Organisation. Departmental Line Organisation.Departmental Line Organisation.

EVALUTION OF LINE EVALUTION OF LINE ORGANISATIONORGANISATION

MERITS OF LINE ORGANISATION.MERITS OF LINE ORGANISATION.1.1. Easy to Establish.Easy to Establish.2.2. Unity of Command.Unity of Command.3.3. Clear Division of Authority and Clear Division of Authority and Responsibility.Responsibility.4.4. Speedy Action.Speedy Action.5.5. Coordination.Coordination.6.6. Easy to find out Defaulter.Easy to find out Defaulter.7.7. Flexibility.Flexibility.8.8. Less Expansive Form.Less Expansive Form.9.9. More Chances of Development.More Chances of Development.10.10. Quick Solution of Probles.Quick Solution of Probles.

EVALUTION OF LINE EVALUTION OF LINE ORGANISATIONORGANISATION

DEMERITS OF LINE ORGANISATION.DEMERITS OF LINE ORGANISATION.

1.1. Overloding of Key Men.Overloding of Key Men.

2.2. Lack of SpecialityLack of Speciality

3.3. Inadequate Communication.Inadequate Communication.

4.4. Lack of Initiative.Lack of Initiative.

5.5. Possibility of Favourtism.Possibility of Favourtism.

6.6. Excessive Dependence.Excessive Dependence.

7.7. Monopoly Over Decisions.Monopoly Over Decisions.

LINE AND STAFF LINE AND STAFF ORGANISATIONORGANISATION

MEANING OF LINE AND STAFF MEANING OF LINE AND STAFF ORGANISTIONORGANISTION

DEFINITION OF LINE AND DEFINITION OF LINE AND STAFF ORGANISTION.STAFF ORGANISTION.

According to Louis A Allen, “Staff refers to According to Louis A Allen, “Staff refers to those elements of the organisation which those elements of the organisation which provide advice and service to the line.”provide advice and service to the line.”

According to Newman, “Staff work is that part According to Newman, “Staff work is that part of managerial work that an executive assigns of managerial work that an executive assigns to someone outside the chain of command.to someone outside the chain of command.

According to Earnest Dale, “Line executives According to Earnest Dale, “Line executives are those incharge of function that contribute are those incharge of function that contribute directly to the main objective of business, directly to the main objective of business, staff executives are those who contribute staff executives are those who contribute counsel and special services to the line.counsel and special services to the line.

CHARACTERISTICS OF LINE CHARACTERISTICS OF LINE AND STAFF ORGANISATIONAND STAFF ORGANISATION

1.1. The work of thinking and execution The work of thinking and execution is divided into two parts. The staff is divided into two parts. The staff executive do thinking while the line executive do thinking while the line executives translate this thinking executives translate this thinking into reality.into reality.

2.2. The line of the organisation remains The line of the organisation remains intact and the benefit of the advice intact and the benefit of the advice of the experts becomes available.of the experts becomes available.


3.3. The experts have only the right to tender The experts have only the right to tender advice, its rejection or acceptance advice, its rejection or acceptance depends on the line executives.depends on the line executives.

4.4. The subordinates of the line executives The subordinates of the line executives remain their subordinates alone and they remain their subordinates alone and they cannot be treated as the subordinates of cannot be treated as the subordinates of the staff executives.the staff executives.

5.5. The principle of the unity of command The principle of the unity of command remains implemented because the orders remains implemented because the orders are received only through a single officer.are received only through a single officer.


6.6. The movement of authority is from The movement of authority is from top to bottom.top to bottom.

7.7. The movement of suggestions and The movement of suggestions and complaints is from bottom to top.complaints is from bottom to top.

EVALUATION OF LINE AND EVALUATION OF LINE AND STAFF ORGANISATION.STAFF ORGANISATION.

MERITS.MERITS.1.1. Sound Decision.Sound Decision.2.2. Increase in Efficiency.Increase in Efficiency.3.3. Specialisation Possible.Specialisation Possible.4.4. Advantage of Line Organisation.Advantage of Line Organisation.5.5. Research Facilities.Research Facilities.6.6. More Facility of Expansion.More Facility of Expansion.7.7. Decrease in Production Costs.Decrease in Production Costs.8.8. Discipline.Discipline.

EVALUATION OF LINE AND EVALUATION OF LINE AND STAFF ORGANISATION.STAFF ORGANISATION.

DEMERITS.DEMERITS.

1.1. More Administrative Costs.More Administrative Costs.

2.2. Lack of Responsibility of Experts.Lack of Responsibility of Experts.

3.3. Conflict between Line and Staff Conflict between Line and Staff Authority.Authority.

4.4. Advantage of Line Organisation.Advantage of Line Organisation.

5.5. Research Facilities.Research Facilities.

6.6. More Facility of Expansion.More Facility of Expansion.

7.7. Decrease in Production Costs.Decrease in Production Costs.

8.8. Discipline.Discipline.

EVALUATION OF LINE AND EVALUATION OF LINE AND STAFF ORGANISATIONSTAFF ORGANISATION

DEMERITSDEMERITS

1.1. More Administrative Costs.More Administrative Costs.

2.2. Lack of Responsibility of Experts.Lack of Responsibility of Experts.

3.3. Conflict between Line and Staff Conflict between Line and Staff Authority.Authority.

4.4. Only Theoretical Advice.Only Theoretical Advice.

5.5. Lengthy Decision-making process.Lengthy Decision-making process.

6.6. Ambiguity Regarding Authorities.Ambiguity Regarding Authorities.

7.7. Dependence of Exports.Dependence of Exports.

FUNCTIONAL FUNCTIONAL ORGANISATIONORGANISATION

SPECIALISTS OF EXPERTS OF PLANNING SPECIALISTS OF EXPERTS OF PLANNING DEPARTMENT AND THEIR FUNCTIONS.DEPARTMENT AND THEIR FUNCTIONS.1.1. Route Clerk.Route Clerk.2.2. Instruction Card Clerk.Instruction Card Clerk.3.3. Time and Cost Clerk.Time and Cost Clerk.

SPECIALISTS OF PRODUCTION SPECIALISTS OF PRODUCTION DEPARTMENT AND THEIR FUNCTIONS.DEPARTMENT AND THEIR FUNCTIONS.1.1. Gang Boss.Gang Boss.2.2. Speed Boss.Speed Boss.3.3. Repair Boss.Repair Boss.4.4. Inspector.Inspector.

CHARACTERISTICS OF CHARACTERISTICS OF FUNCTIONAL ORGANISATION.FUNCTIONAL ORGANISATION.

1.1. The chief characteristics of this The chief characteristics of this organisation is that the experts have the organisation is that the experts have the authority of taking action alongwith authority of taking action alongwith giving advice or consultancy.giving advice or consultancy.

2.2. The work is divided into eight groups The work is divided into eight groups which yield the benefit of specialisation.which yield the benefit of specialisation.

3.3. In this organisation the work of the In this organisation the work of the factory is divided into two department –factory is divided into two department –Planning and Production.Planning and Production.

4.4. In this organisation the principle of ‘Unity In this organisation the principle of ‘Unity of Command’ is violated.of Command’ is violated.

EVALUTIONEVALUTION

MERITS.MERITS.

1.1. Full use of Experts’ Knowledge.Full use of Experts’ Knowledge.

2.2. Efficiency is Increased.Efficiency is Increased.

3.3. Mass Production Possible.Mass Production Possible.

4.4. Better Organisation.Better Organisation.

5.5. More Flexibility.More Flexibility.

6.6. Easy Tranining.Easy Tranining.

DEMERITSDEMERITS

1.1. Violation of the Principle of Unity Violation of the Principle of Unity of of

Command.Command.

2.2. Lack of coordination.Lack of coordination.

3.3. Difficult to Fix responsibility.Difficult to Fix responsibility.

“if there is any universal marks of a manager, it is decision-making.”

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