UNIT-1 BasicsofManagementdte.karnataka.gov.in/Institutes/gptraichur/FileHandler/17-7854d6d4-5… ·...

INDUSTRIAL MANAGEMENT-15ME51T 2020-2021

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UNIT - 1

Basics of Management

Management -DefinitionThe term Management can be defined as the process of designing and maintaining an

environment (organization culture/organization climate) in which individuals

(employees, servants, experts, etc.) working together in groups, - collectively and

efficiently accomplish the organization's goals (aims or objectives)

Henry-Fayol's Principles of ManagementManagement thoughts of Fayol can be classified into the following three categories ;

1. Functions of Management

2. Principles of Management

3. Activities of Manageres.

Henry Fayol, the founder of the movement for better organization, in 1916

has suggested the following principles of Management

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 Personnel

8. Centralisation

9. Scalar chain

10. order

11. Equity

12. Stability

13.Initiative


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14.Esprit de crops

We shall discuss these Henry Fayol's principles of Management in brief:

1. Division of WorkIt permits all the work to be performed more effectively Since division of work

allows the work to be executed in limited space or area.

That is - due to division of work - a unit of work (chunk or slice) is small and

takes less time to complete it. Also, distribution of work, take place to all employees

of the organization so. No question of overload.

2 .Authority and Responsibility

It is observed that the authority and responsibility always go together hand-in-hand

like two faces of a coin. Authority means right to act, decide and

command. therefore - as and when a task is assigned to a manager, he or she must be

given Sufficient powers i.e., authority to exercise control in order to achieve the

specified(assigned) task

Where as the Responsibility is the obligations of a subordinate (co-worker) for the

performance of any job allocated by the superior (Boss).

3.DisciplineIt suggest to have obedience, energy, respect and application at the workplace. It is

observed that poor performance is due to lack of these 4 parameters.

4. Unity of CommandIt suggests that the co-worker or subordinate should receive order from

only one superior (single boss). There should not be more than one Boss for a

particular group of employees who have been assigned with particular work

Otherwise with multiple superiors/bosses the administrative discipline is disturbed,

the stability (c) is threatened and authority is undetermined or under estimated

according to Fayol.


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5. Unity of Direction

It suggests that there should be only one plan for every management objective.

6. Subordination of Individual Interest to General InterestIt suggests that the interest of the organization is more important over the

individual's interest.

7. Remuneration of PersonnelIt suggest that salary, perks, incentives, bonus etc., Like payments to

workers/employees must be fair enough and periodically on regular basis salary

(monthly/weekly/daily wages ) must be paid to theworking employees.

8. CentralisationIt suggest that there must be one (single) central point/key point in the organization

(Factory/office) that has an Overall control to monitor or supervise all wings/

components of the organization (say Control Room).

9. Scalar chainFayol thinks of this as a “chain of superiors” from the highest to lower ranks

10.OrderIt concern to material and social order .This is essentially a principle of management

in the arrangement of things and people.

11. EquityIt suggest that Management should execute its law and order over its

subordinates/employees with all reasonable kindness and social justice with such

equity treatment, there exists loyalty and devotion among all workers.

12. StabilityEfficiency can be achived by having stable work force.

13. InitiativeTo have sucees, plans should be well made before starting the actual work.


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14. Esprit de cropsThis is the principle that “in union there is strength” as well as an extension of the

principle of unity of command, emphasizing the need for team work is obtaining it.

Business organisation;Business Organization's can be defined as an enterprise engaged in production and

distribuion of goods/commodities for sale in Market or delivering services to

useofcustomers for a defined price

Classification of BusinessBusiness can be in the form of running an

Commerce

Industry

Trade

Business type as an Industrial Activity is concerned with production or

manufacturing where in raw materials are processed and/or fabricated into

Finished/Semi finished products.

Business type as Commerce Activity involve logistics i.e., transportation of

materials/goods, finance insurance and allied activities where in the requisite

goods/commodities are delivered to those customers Who are in need of it . those

who have placed orders

Business type as Trade or Trading activity suggests process of buying and selling of

Commodities

Types of Business Organisations:

Following are the types of business organisations:

1. Private sector :i) Individual ownership or sole proprietorship.


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ii) Partnership organisations

iii) Joint stock companies.

iv) Co-operative organisations.

v) Joint hindu family firm.

2. Public sector:i) Departmental organisations.

i) Public corporations (or statutory companies)

ii) Government companies.

3.Joint sector:Ownership and control shared by private enterpreneur, state and public.

Sole Proprietorship or Individual Ownership

Such type of business is owned by a single man called the proprietor of that

business.The businessman invests capital, employs labour and machines. This is the

Oldest and simplest form of business organization. In such business, the owner

supplies all the capital required to run the organisation. He produces only with his

Capital and labour, therefore owner alone enjoys the profits and suffers the losses in

his business and has unlimited freedom of action within legal jurisdiction.The overall

business control in single hand helps him to take quick decision efficient and

effective administration and working. In such organisation, owner

must be anxious to get valuable advice and guidance from other sources and the

owner himself responsible for all the liabilities. Therefore the creditor can collect the

money even from the personal property. Hence to have such type of business, it is not

the money alone of the debtor that is necessary to start but also it requires zeal,

enthusiasm, courage and faith of the person.

Applications:Such type of organisations can be used:

1. In small enterprises requiring small capital which can be run by a single person.

2Where the risk required is not too heavy.


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3.Where the management by one man is possible.

Advantages:Following are the advantages of this form of organisation:

1. Easy to form and simple to run.

2 Owner is free from all leagal restrictions.

3. Owner's interest, efficiency and care directly affects the profit in the business.

4. Efforts and rewards are directly related.

5. Owner himself is in touch with customers and hence can know their likings

6. Less overhead cost and products can be sold cheaply.

7. Secrecy in the business can be maintained.

8. It offers full freedom of work and can show their talent.

9. Owner can enjoy the free life.

10. Owner can take quick decision without anybody's advice.

11. Owner can avail the full benefit.

Disadvantages:1. Amount of capital that can be invested is limited due to the single owner

2. Modern factory cannot be run with such form of organisation.

3. Owner cannot be the master of all techniques like, management, sales

engineering process, etc. Hence work suffers.

4. Due to unlimited liability owner cannot take risk to start a big industry

Partnership OrganisationsAccording to the Indian partnership act the partnership can defined as “the

relationship between persons who have agreed to share profit of the business concern

carried on by all or anyone of them acting for all” when two and upto twenty persons

in case of non banking business and uo to ten in case of banking business enter into a

contract to carry on a business allowed by law, with the object of marking profit, a

partnership is said to be formed


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Partnership is the relationship between the persons desirous of starting a

business and they combine or invite together to increase their resources, i.e.

capital,labour,skill and ability.the success of partnership depends upon mutual

confidence,understanding cooperation and adjustment of the members of

accommodate and appreciate each other view. Each of the partner should realise that

it is his business and he should work hard to earn greater and greater profit

Every partner is liable and responsible for the acts of other partners in that business.

To avoid any complication at a later stage, the constitution of the company may be

written in an agreement form. For the best partnership the number of partners should

not be more than six, the lesser the better. It generally happens that persons with a

good idea and experience of a business make partnership with money people. thus

money and knowledge both are combined to earn profit.

Advantages1. It can be formed without much legal formalities.

2. It can be formed without heavy expenditure of organisation and stamp

duty.

3. This organisation enjoys more freedom and is not subject to strict

government supervision.

4.The amount of capital that can be collected is more than that of sole trade

organisation.

5.In this type, the persons possessing different abilities and skills are chosen and

brought together. Therefore, the managerial ability of the firm as a whole would be

much greater than the sole trader.

6. the affairs of firm can easily be kept secret.

Disadvantages:Following are the disadvantages or limitations of the partnership organisation:

1.Due to unlimited liability risk involved is more.

2. After the death or retirement of any one partner, the partnership Organisation may

come to an end.

3. It can raise much less capital comparison to the joint stock company .Therefore, it

is unsuitable modern industries.


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4.Sometimes, due to some misunderstanding, friction may arise between the partners,

which may effect adversely on the business profit.

5. Sometimes mistakes of one Partner may cause a big loss to all Partner

Applications:

1. Used in medium scale Automobile Sector. Ex: Maruti-Suzuki

2. Used in power sector

3. Used in small scale industries.

Different Types of PartnersThe partners can be classified in the following ways :

1.General Partners: All the partners who are in the partnership known as generalpartners.

2. Active Partners: These are those partners who take active part in theses

management and help in the formulation of policies. These are also known as

working or managing Partners.

3. Sleeping and Silent Partners: Partners, who just invest money and do not

take any part in the management are known as sleeping or slient partners. Such

members after contributing their share of capital, wake up only either to share the

profits or to liquidate the business.

4. Nominal Partners: Partners, who do not invest money and do not take part inthe management, but they lend their reputed name for the company's reputation are

known as nominal partners. The nominal partners may, however associate themselves

only after ascertaining soundness of the business.

5.Secret Partners: These partners take part in the management secretly But

nowhere their names appear.

6.Minor Partners: A person who has not attained the age of 18 year and

associated with the business is known as a minor partner.such partner can be allowed

only with the consent of other members. His liability is limited to investment only

(i.e. limited liability).


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Joint Stock Company

As the name itself indicates that-Joint Stock Companies is a voluntary

association of individuals (called Share Holders) for profit, having a capital

accumulated divided into transferable Shares of different face Values

That is in joint stock companies-capital is contributed by a large number of

persons(Share holders).Persons who purchase the shares are Known as Share

Holders necessary fund or capital required to start an industry or business is

raised by selling shares of different values.

In case of joint stock companies-liability of share holder is limited to the extent

of the amount of shares held by him and he or she is free from the

responsibilities of the debts and Claims on the company beyond the values of

shares.

The managing authority (management) of Joint Stock companies is Called Board

of Directors, elected by the share holders. It is the board of directors responsible

for policy making. financial and technical decisions and smooth Working the

enterprise or business organization.

Types of Joint Stock CompaniesJoint stock company can exist in main two types

1. Private Limited Company

2. Public Limited Company

1. Private Limited Company

It can have membership limited to 2 to 50 persons.

Buying and selling of shares is only among members and non-transferable to

general public

Only the member-share holders can receive company's balance sheet and

auditor's report.


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Government interference in the company's working is prohibited and persons

interested to keep their business private and secret can only subscribe or

participate

2. Public Limited (Ltd.) Company

It can have membership limited to a minimum of 7 persons but no upper limit

Shares buying and selling is open to all i.e., to general public through

advertisement.

Company activities are managed by "Board of Directors and under strict

supervision of government share holder's interests are protected.

To conclude-non-members of the company can buy-n-sale shares and shares are

transferable in part or full without requiring any prior approval.

Advantages of Joint Stock Company1. Limited liability and little or no risk attract more and more share holders to do

investments in these companies.Therefore more capital collection tendency leads to

start more and more modern sophisticated industry or business.

2. Due to large number of share holders (investors)

greater chances for company expansion (growth)

Activities of the company does not stop or close due to death or retirement of

few shareholders.

Risk or fear of losses if any. are equally divided among large number of share

holders thus average person can invest capital (money) without hesitation.

good salaries can be distributed to the agents, managers of the company therefore

good administration is expected.

Disadvantages of Joint Stock CompanyDue to lack of interest and no control by share Holders

Innocent shareholders may get deceived by actively involved managers Since

they only purchase profitable shares and stands in the front line to sell shares to

others that are prone to losses (losing profit or less profit margin).


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No proper relation between salary and efforts of the managers that leads to

wastage and efficiency losses to the company s day-to-day activities.

Difficult to maintain secrecy and more legal formalities required.

Co-Operative SocietiesIt is understood that co-operative societies are the most democratic form or business

organizations for extending benefit and welfare to the general public

For example

K.C.C Bank

K.M.F Milk Union

Co-operative Textile Mills

Co-operative Sugar Factory etc.,

Thus co-operative society is an association of persons formed for the purpose of

obtaining goods, commodities especially those items of daily use at the prices

lesser than that of market price.

In other words very purpose of co-operative societies is to help protect the

interests of the consumers small and independent producers

There by co-operative societies are intended to fight against capitalist and

monopolists

A cooperative society can be formed by a minimum of 10 members and should

be enrolled (registered) with Registrar of co-operative societies

For which an application (i.e., proposal to start a co-operative society) must be

submitted to the Registrar of co-operative society. Then the officers of this

department will attend the first general body meeting in which bye-laws are

formed to control the day-today transactions of the society and the directors of

the new society- are elected by share holders (members) of the society

Main Objectives of Co-operative Societies

The main object or intention of co-operative societies is to promote Self Help

and mutual assistance among the individual persons of moderate means and

incomes having needs and interests in common


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such individuals are industrial labours/workers, small artisans agriculturists and

middle class people

Other Main Objectives include :1. Co-operative Society is a voluntary organization and its objective is to serve the

members and to earn profit

2. A member of the co-operative society can continue his membership years

together and can withdraw his capital (invested money) and ceases to be a member

by giving a notice accordingly.

3. Co-operative society management suggest democratic basis of equality

Accordingly, every member can cast only one Vote irrespective of the number of

shares he/she has purchased from that society

4. Usually, there is no limit to its membership . Share's are usually having Rs.

10/each Face Value . Thus good number of people from wide categories can enroll

to become member of the society.

Types of Co-operative Societies

One can list out the following 5 types of co-operative societies in our country.

1. Producer's or Manufacturer's Co-operative Society

2. Consumer's Co-operative Society

3. Housing Co-operative Society

4. Co-operative Credit Society

5. Co-operative Farming

Advantages of Co-operative Societies:1. It promotes sense of co-operation among its members.

2 It benefits general public and tries to equalise money distribution.

3.Middleman's profit is eliminated (like comnrission). Because purchasing is

madedirectly from the manufacturer.

4. Selling of Products is at Cheaper Cost. Because there is no need to spend money

towards advertisement and publicity.


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5. Amount spent for management tasks, record keeping and auditing are minimum.

Because the members provide necessary honorary service (without expecting

money) for such tasks.

6. Society workers/members as employee's or wager's get good amount of money and

reasonable conditions of service.

7. Profits are shared equally and remaining amount i.e.balance is utilised for social

cause and development of locality such as gardens and play grounds for children,

medical aid, education promotion etc

8.There are provisions to take large amounts of loan as a capital for the society

(investment) from the government.

Disadvantages/Limitations of Co-operative Societies1.Rising capital is difficult. Because members of the society are all from the working

class (labours, daily wager) and middle class at large.thus society formation is

limited to small and medium sized under takings/establishments.

2. Management may be less competent and corrupt due to lack of experts and

experienced people

3. Members of the society may take undue advantages and thus there is need for

better and strict supervision.

4.Highly Qulified persons/experts services cannot be utilised for the society due to

limited financial sources

In all-to conclude on Co-operative societies They do not have an idea of earning profit but to benefit its members.

The idea of co-operative society is to benefit the shareholders who are either

consumers or producers

To run a co-operative society Indian Central Government provides loans through

finance corporations say Bank thus it protects of small consumers/producers,

there by encouraging co-operative movement.

Organisation -Definition


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An organisation is a group of persons united in a structured manner to achieve

specific task or a set of goals of an Enterprise

Organisation will have to provide and/or accomplish every thing essential for

proper functioning and for which it combines human power (man power-skills)

with other resources in order to give desired output.

Indeed an organization is concerned with building, developing and maintaining a

structure of the working relationship for the very purpose of achieving

objectives/goals of the Enterprise

Functions of ManagementHenry Fayol, a french industrialist and manager suggested the functions of

management. These functions have been recognized as the main tasks of manager in

modern management theories.

Let's list out and discuss these functions of management

1. Forecasting

2. Planning

3. Organizing

4. Directing

5. Motivating

6. Coordinating

7. Controlling

8. Communication

9. Leadership

10. Decision Making.

1. ForecastingIt suggests the sales forecast, finance problems, cost expenditure, estimation of

quantities, profit or loss alternatives available and planning is started or yet to start

etc.

Forecasting is prediction about manufacturing.


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2. PlanningIt suggests activities to be conducted well before actual production and/or

manufacturing. It is something like "thinking before doing". Planning determines as

to what is to be produced and how much is to be manufactured, method used to

produce the goods, who should involve the production etc.

Such planning function is intended to eliminate the wastage of material, idleness

of workers, make effective usage of machinery and making economy

in production.

3. OrganizingIt suggests to organise men, machine and material for actual execution of

manufacturing

4. DirectingIt suggest the system of directing the plan to operation. The person (leader) who is

responsible for issuing instructions called "direction should have dynamic leader-ship

and must guide his subordinates/co-workers with clear instructions/guidelines

5. MotivatingIt suggest to motivate properly and in right direction such that a healthy sub ordinate

co-worker who is lagging behind the work must come forward and do necessary hard

work such that his/her output must be much higher than average or normal.

Motivating is to encourage the workers to do work by keeping high moral

6. Co-ordinatingIt suggest to co-ordinate i.e., integrate (assemble) and harmonise mass (group)

worker's groups engaged in manufacturing a particular product.Usually large

manufacturing plants will have an assembly of hundreds of thousands workers

together distributed at various capacities at different industrial sheds.

7. Controlling


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It suggest to monitor or supervise various activities such as to watch the actual

performance with the per-determined (approved) plans and to locate defective work

and rectify them .Also to prevent recurrence i.e. Controlling is a centralised key

function of the management some of the control types include:

Quality Control

Production Control

Cost Control

Material Control

8. CommunicationIt suggests to transmit the necessary periodical instructions and useful information to

the parties concerned i.e.. lo all its valued customers, suppliers. share holders, dealers,

stockists, distributors and to the general public. Therefore management must always

accommodate better communication system to Over come the chances of mistrust,

fear, threatening, miscommunication if any..

Through communication function : free exchange of thoughts over production and

distribution must be arranged via review work committee, sound communication and

joint consultations

9. Leadershiplt suggest managers must be equipped with leadership qualities since they are

connected with work supervision and/or monitoring of their concerned

departments/workshops.

10. Decision MakingIt suggest managers or leaders (supervisors) must take right and timely decision in

the interest of management.

Employees and to favour speed and quality of manufacturing and distribution of

the same to market (i.e., to end-users (consumers).


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Because managers must make frequent decisions. Since decision making

influence loss or profit, work efficiency, etc

Classification of Management:The management can be classified into

1. Top level management: Ex: Chairman, managing director or general

manager, deputy general manager etc.

2. Middle level management: Ex: Purchase officer, store officer, production manager,

etc.

3. Low level management: Ex: Foreman, supervisors, inspectors, etc.

AdministrationAdministration is the management of business operations and decision

making, as well as the efficient organisation of people and other resources, to direct

the activities towards the common goals and objectives.

Administration consists of determination of the goals and policies of the enterprise. It

is mainly concerned with decision making, policy making and making necessary

adjustment. The main elements of administration are:

1. The formulation of goals.

2.The selection of ways and means to achieve the goals.

3.Direction of people for the achievement of goals

Difference between Administration and Management

Administration Management

It determines the objectives and

policies of the enterprise.

It carries out these policies to achieve the

objectives of the enterprise.

It formulates the organisation structure. It works according to the organisation

Structure.

It is a directing function. It is an execution function.


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It focuses on administration of the

organisation.

It focuses on managing people and their

work.

It has a top level authority. It has middle and low level authority

It has a full control over the activities of

the organisation

It works under administration.

It is applicable to Government offices,

military, religious, or

educational organisations.

It is applicable to profit making

organizations i.e. business organisations

It is carried out by administrator. It is carried out by manager.

Types of OrganisationsIn accordance with different methods of distribution of authorities and

responsibilities ,the organisation structures fall into the following 5 types viz.

1. Line (or scalar) Organization

2. Functional Organization

3. Line and Staff Organization

4. Line, Staff and Functional Organization

5. Committee Organization.

We shall discuss the first 3 types one by one.

1. Line Organization Line organisation is also called as scalar or military or departmental type

organisation. Here the flow of authority (1.e.., giving directions or line of control)

move from top to bottom (down ward) in vertical lines, thus termed as line or

scalar organisation

Here it is observed that- no operation is under two (2) bosses or under two (2)

administrators. In such organization-a superior


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Like manager issues instructions/commands and there by exercises a direct

authority Over his subordinates (assistants) who are answerable to their work

performances directly to their immediate boss.

For instance consider an example of business activity in production line and/or

manufacturing as detailed in the chart below:

Here the line organisation consist of 3 major activities under General Manager's

supervision viz sales, production and ACcOunts/ Finance. Further each of these

departments are divided into self-contained departments or sections.

Each department head like sales Manager, Production Incharge, Accountant has

an exclusively control over his departmental activities and has necessary

authority to select his labours/workers staff, raw material procurement, store and

to finalise and or set production standards (i.e., output quality) etc.

Similarly, Foremans of each shop (say machine shop) train-up their new workers

and supervise the production quality and machine operations (processes of

production)

Advantages of Line Organisation1. It is simple to understand and Flexible to extend or contract.

2. It is strong in discipline and encourage Quick decisions.

3. In line organization Top-to-Bottom every one's responsibility is fixed. There fore

mistakes if any, can be detected easily.

4. As each and every one is accountable from top-to-bottom, production cost will be

less.


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5.Here no scope for shifting responsibility since there exist a clear-cut divsion of

authority and responsibility.

Disadvantages of Line Organization1. No provisions for rewarding good workers.

2. Foreman's are overloaded with works. So they may not be able to individual

attention and sufficient time for each job. So there could be wastage and error

3. Head of departments are over loaded with lot of routine jobs. So, there could be no

time for further expansion and planning

4. Lack of job expertise of multiple works by a single man may lead to accidents

wastage of material and labour.

5. Due to lengthy channel of administration, there could be delay in reaching the

orders of General Manager and other departmental heads up to the workers. Thus

introducing possible distortion

2. Functional Organization The problem of scarcity of finding a single Foreman with multiple skills in the

line organization is eliminated here. Such foreman's are replaced and/or assisted

and supervised by Field-Eperts or Specialists (like Chemist, Designers, Engineer,

Purchaser etc.) called Functionalised People.

This kind of Functional Organization is advantageous. Since each supervisor or

specialist in his field of work called subject expert attends to onc item of work in

every department of his specialization only!

Here specialists or Field Experts like Chemist, Designer, Engineer etc., are

working under Production Manager/ Supdt. They give their functionalised

/specialised advise to all other bosses called foremans/ Inspectors or also called

Unit Heads/Department Heads.

Further every foreman will go to individual workers and attend to their relevant

specitic functions with them (labours).

This organization is also termed as 1aylor's Organization as it was introduced by

him (E.w.Taylor).


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Advantages of Functional Organízation1) It promotes Mass Production due to specialisation and standards.

2) No over loading of responsibilities to a single person. Since suggestions/advises

flow continuously from functional Experts.

3) Individual workers/work inspectors / foreman's gets specialised knowledge or

domain expertise through specially appointed functionalised people (subject

experts)

4) Wastage material, labour and time will be eliminated due to expert's guidance for

every production operations.

5) Chances of improvement and/or modification in production till last minute and

expansion of the plant are all possible.

Disadvantages of Functional Organization


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1) Poor or little co-ordination of work among different departments and unit heads, as

almost every one working individually (decentralised manner).

2) Centrally control like Top-to-bottom as in case of line organization is difficult here

as there is no one man control/ supervision over workers.

3) Shifting of responsibility may happen.

4) Production cost increases due to the employment of specialists/experts

(functionalised people) for higher wages / salaries.

5). It is suitable only for large manufacturing activities and are planning for

expansion.

3. Line and Staff OrganizationIt is observed that in a large scale manufacturing and trading enterprise-line

organization discipline and stability and subject expertise (specialised) staff-both are

required.

Because managers cannot give full attention (oerer naba) to every function of

management. They may be busy in managing routines tasks of production and

selling.

The following figure illustrate an example chart of a line and staff organisation:


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Here in this type of orgaization to assist officers (administrators) in the

Top-to-Bottom line, a few specialised staff are employed to do field-specialised

activities such as research, investigatton, recording, planing and advising as well

to the managers

In other words, here line maintains discipline and stability where as staff (subject

experts/specialist) provides expert intormmation to that line of administrators

and there by helps to improve the overall efficiency.

It is to be noted that a staf has no adminiIstrative authority but he/she is an

expert(specialist) in any one operation or function of business. That is a staff

reports to an executive inthe line and shares his advise/opinion on the subject of

his specialization.

Advantages of Line and Staff Organization1) It is a planned specialised system hence wastage will be less.

2) Staff Expert knowledge is available hence product quality is better.

3) Here General Manager gets good amount of time for future planning and

expansion.

4) Due to line relationship, discipline problem does not arise

Disadvantages of Line and Staff Organization1) Production overhead cost usually increases due to highly paid staff salary

2) Stop-Gap of any staff/section/department will definitely disturb the whole working

(climate).

3) Full-pledged expert knowledge/advise is not available as is available with

functiona organization type.

4) At higher levels of administration, lack of responsibility if any.may cause (lead to)

poor discipline

LeadershipDefinition: Leadership can be defined as the process of influencing the subordinates

so that they co-operate enthusiastically in the achievement of group goals effectively

and efficiently.


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Leadership can also be defined as a psychological process of influencing the

followers or subordinates and providing guidance to them in their activities to

achieve the enterprise goals effectively and efficiently.

Leadership is an ability to get desirable action, voluntarily and without force from the

followers. The success of leader depends upon his qualities and characteristics.

Characteristics of Leadership:

1. It is the process of influencing the group members.

2. It is related to a situation.

3. Leadership helps in attaining the common goals.

4. Leadership is a function of motivating the people to strive willingly to attain the

enterprise goals.

5. Leadership satisty the employees in all respect while attaining the group goals

Types of Leaders (Acording to their Style of Leadership)Following are the different types of leaders we can find in an organisation:

1.Authoritarian or Autocratic leaders.

2 Democratic or consultative leaders.

3.Persuasive leaders.

4. Functional leaders.

5. Free-rain leaders.

1. Authoritarian or Autocratic leaders: This type of leaders lead their group

through command and by developing faith in their followers. Such leaders give

orders, assign duties and responsibilities without consulting the employees or Caring

for their opinion. Such leaders never like to delegate their powers.


MECHANICAL ENGG 25

2. Democratic or Consultative leaders: These leaders always work according to

the wishes of their followers. They frame the policies and procedures in consultation

with them but sometimes such leaders also work as a moderator of the ideas and

suggestions.

3. Persuasive leaders: Such leaders influence their followers due to his personal

contact to join with him in getting things done. He gives directions personally and

whole of the gang responds to his call, because they love and respect him and full

confidence in him.

4. Functional leaders : Such leaders lead because of their expert knowledge and

win the confidence of their followers by their superior knowledge


MECHANICAL ENGG 26

5.Free-Reign leaders: A free reign or Laissez Faire leader goes not lead,but leaves

the group entirely to itself. Such leaders use very little power and gives a high degree

of independence in their working. These leaders are dependent on subordinates to set

their own goals.

Practical experience has shown that the authoritarian leadership produces hostility

towards their leader and whenever the leader is out, production drops to a minimum.

But in the democratic leadership the difference in production during the absence of

leader is very less. It tends to increase the production because it wins the confidence,

co-operation, loyalty and initiative from his followers.

Qualities of Good Leader

Following are the qualities of good leader

1. Intelligence and technical knowledge : A good leader must have an intelligence

which is more than that of his followers. He must be able to understand and solve

the problem in accordance with the prevailing situation.

2. Initiative: He must initiate good activities and must be capable of taking initiative.

3. persuasiveness:persuance is also a good quality of a leader.It also helps him in

implementing his decisions,orders etc.

4.Decisiveness: A leader must be able to make proper decision at proper time and

must stick to it,as lack of decisiveness result in the loss of efficiency generally

ability to decide comes from self condidence.

5.Ability to inspire:Aleader cannot do whole of the work himself .He has to inspire

his men so as to get the work done from them.Generally best inspiration is from the

conduct and personality of the leader and the standards set by him.

6.Responsibility:A leader must be able to know and feel his responsibilities.He must

not shirk his responsibilities and must be in position to take the burden of decisions

on his shoulders.

7.social consciousness:He must always realise that he is dealing with human

beings,who are also having feelings of social status and sense of respect.

8.Positive attitude:He should always have a positive attitude towards the problems

of the industry or workers.

9. Other qualities:


MECHANICAL ENGG 27

a) Faith and respect from followers

b) Enthusiasm

c) Affection

d) Skill in imparting instruction

e)Maturity

f)Vigilant

g) Adjustable to changing conditions

h) Open mindedness

i)Possesses foresightedness

j)Good health

k) Knowledge of human relations

l) Communicating skills

m) Teaching ability

n) Good attitude

o) Creative thinking.

Motivation:

Definition:

Motivation can be defined as the process of influencing the person to inspire or impel

to intensify his willingness to use his capabilities and potentialities for achieving

goals of the organisation in which he works.

Motivation can also be defined as a psychological act which attracts the workers

to do more work and instigates.

If the workers are instigated, they will try to do more than the standard work and earn

more for themselves which increases there living standard.

Instigation may be positive i.e. by encouraging to do work or may be negative ie. by

punishing for the wrong work. Heré both schemes are to increase the production and

productivity. Motivation of the workers is very important when a supervisor wants to

get things accomplished by them at right time, in right quantity

and of right quality.


MECHANICAL ENGG 28

If the workers are not properly motivated, they may not mentally accept the orders or

directions, with the result that the company goals may not be achieved effectively

and effiçiently. Therefore, motivation is an idea or emotion which prompts

an-individual to take a certain course of action. Motivation influences the behaviour

of an individual.

MASLOW’S THEORY OF MOTIVATION : HIERARCHY OF

NEEDS:

Maslow’s hierarchy of needs is a theory in psychologhy proposed by Abraham

maslowand it states that, we must satisfy each need in turn,starting with the

first,which deals with the most obvious needs for survival itself.

Maslow’s hierarchy of needs is in the form of pyramid diagram with the five

stages .Maslow proposed that human needs can be arranged in an particular order

from the lower to the higher order.

Maslow defines human effctiveness as function of matching man’s opportunity with

the appropriate position on hierarchy of needs.process of motivation begins with an

assumption that behaviour,atleast in part,is directed towards the achievement of

satisfaction of needs.


MECHANICAL ENGG 29

The need hierarchy is as follows;

1. Basic physiological needs:The needs that are taken as the strating point for

motivation theory are the so called physiological needs.These needs include such

thingd as food,clothing,shelter,air,water,and other necessaries of life.

2. Safety and security needs:After satisfying the physiological needs,people want

the assurance of retaining a given economic level.They want job security,personal

bodily security of source of income,provision for old age,insurance against risk,etc.

3. Social needs :Man is a social being. He is, therefore, interested in conversation,

sociability, exchange of feeling and grievances, companionship, recognition,

belongingness, etc.

4. Esteem and status needs : These needs embrace such things as self-confidence,

independence, achievement, competence, knowledge, initiative and success. These

needs are concerned with the prestige and respect of the individuals,

5. Self fulfilment needs: The final step under the need priority model is the need for

self-fulfilment or a need to fulfilment what a person considers to be his mission in

life. It involves realising one's potentialities for continued self-development and for

being creative in the broadest sense of the word. After his other needs are fulfilled, a

man has the desire for personal achievement. He wants to do something which is

challenging and since this challenge gives him enough dash and initiative to work, it

is beneficial to him in particular and the society in general. The sense of achievement

gives him satisfaction.

The above mentioned 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 needs hierarchy is that man is a wanting animal, he continues to

want something or the other. He is never fully satisfied. If one needs is satistied,the

other needs arise. As said above, (according to Maslow), needs arise in a certain

order of preference and not randomly. Thus if one's lower level needs (physiological

and security needs) are unsatistied, he can be motivated only by satisting his lower

level needs and not by satistying his higher level needs, Another point to note is


MECHANICAL ENGG 30

that once a need or a certain order of needs is Satistied, it ceases to be a motivating

factor.

Communication:

Communication is a general phenomenon. Wherever life exists, the communication

does exist and we know that the revolutionary changes that are taking place in

corporate world are due to this communication and it is becoming an important tool

in the management analysis.

The communication has become a vital aspect of managerial process and infact the

success of any business depends mainly on a proper and effective communication

system.

Definition of Communication

It is defined as the "process of transfer of information from sender to receiver, with

the information being understood by the receiver".

"Communication is an exchange of facts, ideas, opinions or emotion by two or more

persons"

It can also be defined as the "process of meaningful interaction among individuals".

The communication can also be defined as the transfer of information from one

person to another.

Special Features of Communication

The special features of communication are

1. Communication is a two-way traffic.

2. Communication is unavoidable.

3.Communication is a social process.

4 Communication is a continuous process.

5.Communication is universal.


MECHANICAL ENGG 31

Communication Process:

The communication process is the guide towards realizing effective communication.

The communication process helps in sharing of common meaning between sender

and receiver; and individuals that follow the commuication process will have the

opportunity to become more productive in every aspect of

their profession.

The communication process as involves the sender who transmits a message through

a selected channel to the receiver.

Following are the elements of communication:

1.Sender

2. Message

3. Encoding

4 Transmission channel

5.Receiver

6. Decoding

7. Feedback

8 Noise.

SenderThe communication process begins with the sender, who is wishing to send a

message to the receiver.


MECHANICAL ENGG 32

Message:A message may be an idea or thought, the sender wants to convey to the receiver.

Encoding:Encoding is putting a message into words or images, that can be understood by both

sender and receiver.

Transmission channel:The channel is the medium through which the message can be transmitted from one

person to another.

ReceiverThe receiver is a person or group to whom message is to be transmitted.

Decoding:Decoding is the process by which the receiver interprets the message and translates it

into meaningful information.

Feedback :Feedback is the reaction, without it, the sender of the message cannot know whether

the recipient has received the entire message.

Noise:Noise may disturbance that obscures, reduces or confuses the clarity or quality of the

message being transmitted.

Channels of Communication:

The communication channels are the means of transmitting the message from sender

to receiver. Some suggested channels or communication are listed below.If you


MECHANICAL ENGG 33

present your message with class and dignity, you will get the desired response. The

some important communication channels are:

Use of mobile.

Use of telephone.

Use of television.

Use of news letter.

Use of personal letter

Use of post cards.

Use of formal printed invitation.

Use of mail news or magazine articles

Use of questionnaries.

Use of newspaper column.

Use of face to face contact by salesman or mediator etc.

Importance of Communication:

The commnunication has got many importances in the present business scenario and

some importances of communications are listed below

1.It improves the employees and employer relationship.

2.It motivates the employees.

3.It increases the employee morale.

4.It increases the productivity.

5.It increases the efficiency.

6.It satisfies the stakeholders.

7.It helps in effective planning, organizing, staffing leading and controlling

8.It increases the sales.

For individuals : It helps in

Expressing oneselt.

Satistying one's needs.

Building human relations.


MECHANICAL ENGG 34

Career advancement.

Barriers to Communication:

Though the communication appears to be simple, it is not so in reality due to

Complexities of people involved, and the surroundings, hence the communication

cannot be complete and perfect. There are some barriers which make communication

incomplete, unforceful, ineffective and imperfect. These barrier are:

1. Physical barriers: Separate working areas for people of different status,

2.Perpectual barriers :It depends on how our thoughts, assumptions and perceptions

shape our own realities about a person, people, thin8 job etc.

3.Emotiona barriers: The communication should be free and open and it should riot

be influenced by emotions like fear, mistrust and suspicion.

4.Cultural brrriers: The people have to work with different culture having a

different behaviour to remain in it and sooner or later you need to adopt the

behavioural patterns of the group.

5. Language barriers: To improve our personality, we need to learn the different

languages, so as to work with different people in the universal market.

6.Gender barriers:We have to work on a common platform and both men and

women are treated equal in the present market scenario.

6. Interpersonal barriers: These are due to less contact with people,

rituals,working activities, honesty, etc. lead to maintain the distance themselves from

others.

In short the barriers of communications are


MECHANICAL ENGG 35

Semantic: -

unknown language

unknown word

unknown symbols

unknown signs

unknown pronunciation

Physical:

Noise

Improper time

Distance

Inadequacy

Overload

Phychological

Perception

Egotism

Emotion

Attitude

Premature opinion

Organizational

Organization rules

Organizational culture

Hierarchy

Poor timing

Poor choice of ehannel.

Barriers on the part of aender


MECHANICAL ENGG 36

Faulty planning

Vague presumption

Semantics

Emotions

Deliberate filtering

Status ego.

Barriers on the part of receiver:

Destruction

Poor listening

Instant interpretation

Emotions

Filtering

Distrust

Barriers on part of organization;

Insufficient time

Hierarchy

Organization rules

Organization culture

Poor choice of channel

Tips for Effective Communication

The tips for eífective communication are:

1. Knovw yourself : A good communicator knows what he/she is talking about or

writing about.

2.Be focussed : should be clear, crisp and to the point.


MECHANICAL ENGG 37

3.Brevity is the soul of wit: Say what you want to say in short, straight and simple

sentence.

4.Know your audience: Know the audience to whom you are talking and accordingly

you have to change style and adopt the content.

5.Infuse your words with an earthiness that will appeal to a wider audience.

6. A good communicator never forgets the need to create right ambience

7. Be sincere in your utterances.

8. Be positive, believe in yourself.

9.Bring alive and exploit the magic in words.

10.Bridge the gap between yourself and your audience.

11. Keep in mind the seven CS.

Clear

Candid

Concise

Complete

Concrete

Correct

Courteous

Candid -be straight forward, free and frank.

Clear- have clarity both in words and thought.

Complete - Avoid misunderstanding and misinterpretation

Concise and Concrete Keep it short and sweet.

Correct Should be accurate in all respect.

Courteous Manners make a man, be in right frame of mind.


MECHANICAL ENGG 38

QUESTION BANK

1. List Henry Fayol's principles of management.

2 List the types of Business Organisation.

5. Define sole proprietorship and list advantages and disadvantages of proprietorship

4. List the applications of proprietorship

5.Deine Partnership Organization and mention the applications of partnership

Organization.

6. List the advantages and disadvantages of Partnership Organization

7.List the advantages and disadvantages of Joint Stock Company

8. List the advantages and disadvantages of Co-operative society

9. Define planning and mention objectives of planning

10. List the advantages and limitations of planning

11. Define organization and list the týpes of organization.

12. Define leadership and explain types of leaders.

13. List the qualities of good leader.

14. Define motivation and state Maslow's theory of motivation.

15. Define communication and mention the elements of communication.

16. What are the barriers for effective communication?

17. What are the functions of management?

18. Explain management.

19. Explain administration.

20. Explain the formation of partnership and List the types of partners for Partnership

Organization.

21. Explain about Joint Stock company.

22. Explain two types of Joint Stock Company

a) Private limited company and b) Public limited company.

23. Explain Co-operative society and state the objectives of Co-operative society.

24. Explain line organization and mention its advantages and limitations.

25. Explain functional organization and mention its advantages and limitations.

26. Explain line and staff organization and mention its advantages and disadvantages

27. Explain the process of communication.


MECHANICAL ENGG 39

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