MG1351 Apr08

APR/MAY-08/MG1351 Answer key
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B.E/B.Tech DEGREE EXAMINATION, APRIL/MAY 2008

MG 1351 PRINCIPLES OF MANAGEMENT

KEY

PART-A

1. Scientific Management:
The management which focuses on how to improve the productivity of
operative personnel.
Involves in worker and machine relationships.

2. Management Vs Administration:
Management:
! Management is a generic term that includes administration.
! It has two subdivisions namely
a. Administrative management
b. Operative management
! Brings the policies to effect/reality
Administration:
! Lists out the required policies

3. MBO:
! It is Management by Objectives.
! A style of managing an Organization which stresses on achievement of
results expressed in terms of objectives.

4. Quantitative forecasting techniques:
! Averaging
! Exponential smoothing
! Time series analysis
! Regression models
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! Economic indicators
! Substitution effect
! Econometric models

5. Effectiveness Vs Efficiency:
Effectiveness is the achievement of objectives.
Efficiency is the achievement of the ends with the least amount of resources.

6. Delegation of authority:
The process of assigning work to others and giving them with the necessary
authority to do it.

7. Job Enrichment:
! A job is designed such that it becomes challenging and interesting to perform
it.
! It gives more autonomy and responsibility for the person.
8. Noise in Communication:
Anything that hinders (causes disturbance) to the communication process (at
any stage) is termed to be noise.

9. Ethnocentric Organization:
Ethnocentrism is the belief that one's own culture is superior to that of other
cultures.
It is a form of reductionism that reduces the "other way" of life to a distorted
version of one's own.
This is particularly important in case of global dealings when a company or an
individual is imbued with the idea that methods, materials, or ideas that worked in
the home country will also work abroad. Environmental differences are, therefore,
ignored.

10. Similarities between International management and Regional management:
! Realities of the situation
! Individual and group behavior.
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PART-B

11. (a) Taylors and Henri Fayols contributions:
Frederick Taylor - Scientific Management
Description
Frederick Taylor, with his theories of Scientific Management, started the era
of modern management. In the late nineteenth and early twentieth centuries,
Frederick Taylor was decrying the " awkward, inefficient, or ill-directed
movements of men" as a national loss. He advocated a change from the old
system of personal management to a new system of scientific management.
Under personal management, a captain of industry was expected to be
personally brilliant. Taylor claimed that a group of ordinary men, following
a scientific method would out perform the older "personally brilliant"
captains of industry.
Taylor consistently sought to overthrow management "by rule of thumb"
and replace it with actual timed observations leading to "the one best"
practice. Following this philosophy he also advocated the systematic
training of workers in "the one best practice" rather than allowing them
personal discretion in their tasks. He believed that " a spirit of hearty
cooperation" would develop between workers and management and that
cooperation would ensure that the workers would follow the "one best
practice." Under these philosophies Taylor further believed that the
workload would be evenly shared between the workers and management
with management performing the science and instruction and the workers
performing the labor, each group doing "the work for which it was best
suited."
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Taylor's strongest positive legacy was the concept of breaking a complex
task down in to a number of small subtasks, and optimizing the performance
of the subtasks. This positive legacy leads to the stop-watch measured time
trials which in turn lead to Taylor's strongest negative legacy. Many critics,
both historical and contemporary have pointed out that Taylor's theories
tend to "dehumanize" the workers. To modern readers, he stands convicted
by his own words:
" in almost all of the mechanic arts, the science which
underlies each act of each workman is so great and amounts to
so much that the workman who is best suited to actually doing
the work is incapable of fully understanding this science,
without the guidance and help of those who are working with
him or over him, either through lack of education or through
insufficient mental capacity."
And:
"to work according to scientific laws, the management must
takeover and perform much of the work which is now left to
the men; almost every act of the workman should be preceded
by one or more preparatory acts of the management which
enable him to do his work better and quicker than he otherwise
could."
The Principles of Scientific Management
Environment
Taylor's work was strongly influenced by his social/historical period. His
lifetime (1856-1915) was during the Industrial Revolution. The overall
industrial environment of this period is well documented by the Dicken's
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classic Hard Times or Sinclar's The Jungle. Autocratic management was the
norm. The manufacturing community had the idea of interchangeable parts
for almost a century. The sciences of physics and chemistry were bringing
forth new miracles on a monthly basis.
One can see Taylor turning to "science" as a solution to the inefficiencies
and injustices of the period. His idea of breaking a complex task into a
sequence of simple subtasks closely mirrors the interchangeable parts ideas
pioneered by Eli Whitney earlier in the century. Furthermore, the concepts
of training the workers and developing "a hearty cooperation" represented a
significant improvement over the feudal human relations of the time.
Successes
Scientific management met with significant success. Taylor's personal work
included papers on the science of cutting metal, coal shovel design, worker
incentive schemes and a piece rate system for shop management. Scientific
management's organizational influences can be seen in the development of
the fields of industrial engineering, personnel, and quality control.
From an economic standpoint, Taylorism was an extreme success.
Application of his methods yielded significant improvements in
productivity. Improvements such as Taylor's shovel work at Bethlehem
Steel Works (reducing the workers needed to shovel from 500 to 140) were
typical.
Human Relations Movement - Hawthorne Works Experiments
Description
If Taylor believed that science dictated that the highest productivity was
found in "the one best way" and that way could be obtained by controlled
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experiment, Elton Mayo's experiences in the Hawthorne Works Experiments
disproved those beliefs to the same extent that Michelson's experiments in
1926 disproved the existence of "ether." (And with results as startling as
Rutherford's.)
The Hawthorne Studies started in the early 1920's as an attempt to determine
the effects of lighting on worker productivity. When those experiments
showed no clear correlation between light level and productivity the
experiments then started looking at other factors. Working with a group of
women, the experimenters made a number of changes, rest breaks, no rest
breaks, free meals, no free meals, more hours in the work-day / work-week,
fewer hours in the work-day / work-week. Their productivity went up at
each change. Finally the women were put back to their original hours and
conditions, and they set a productivity record.
This strongly disproved Taylor's beliefs in three ways. First, the
experimenters determined that the women had become a team and that the
social dynamics of the team were a stronger force on productivity than doing
things "the one best way." Second, the women would vary their work
methods to avoid boredom without harming overall productivity. Finally the
group was not strongly supervised by management, but instead had a great
deal of freedom.
These results made it clear that the group dynamics and social makeup of an
organization were an extremely important force either for or against higher
productivity. This caused the call for greater participation for the workers,
greater trust and openness in the working environment and a greater
attention to teams and groups in the work place.
Environment
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The human relations movement that stemmed from Mayo's Hawthorne
Works Experiments was borne in a time of significant change. The
Newtonian science that supported "the one best way" of doing things was
being strongly challenged by the "new physics" results of Michalson,
Rutherford and Einstein. Suddenly, even in the realm of "hard science"
uncertainty and variation had found a place. In the work place there were
strong pressures for shorter hours and employee stock ownership. As the
effects of the 1929 stock market crash and following depression were felt,
employee unions started to form.
Successes
While Taylor's impacts were the establishment of the industrial engineering,
quality control and personnel departments, the human relations movement's
greatest impact came in what the organization's leadership and personnel
department were doing. The seemingly new concepts of "group dynamics",
"teamwork" and organizational "social systems" all stem from Mayo's work
in the mid-1920's.
Max Weber - Bureaucracy
Description
At roughly the same time, Max Weber was attempting to do for sociology
what Taylor had done for industrial operations. Weber postulated that
western civilization was shifting from "wertrational" (or value oriented)
thinking, affective action (action derived from emotions), and traditional
action (action derived from past precedent to "zweckational" (or
technocratic) thinking. He believed that civilization was changing to seek
technically optimal results at the expense of emotional or humanistic
content.
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Viewing the growth of large-scale organizations of all types during the late
nineteenth and early twentieth centuries, Weber developed a set of
principles for an "ideal" bureaucracy. These principles included: fixed and
official jurisdictional areas, a firmly ordered hierarchy of super and
subordination, management based on written records, thorough and expert
training, official activity taking priority over other activities and that
management of a given organization follows stable, knowable rules. The
bureaucracy was envisioned as a large machine for attaining its goals in the
most efficient manner possible.
Weber did not advocate bureaucracy, indeed, his writings show a strong
caution for its excesses:
"the more fully realized, the more bureaucracy
"depersonalizes" itself, i.e., the more completely it succeeds in
achieving the exclusion of love, hatred, and every purely
personal, especially irrational and incalculable, feeling from
the execution of official tasks"
or:
"By it the performance of each individual worker is
mathematically measured, each man becomes a little cog in the
machine and aware of this, his one preoccupation is whether he
can become a bigger cog."
Environment
Weber, as an economist and social historian, saw his environment
transitioning from older emotion and tradition driven values to technological
ones. It is unclear if he saw the tremendous growth in government, military
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and industrial size and complexity as a result of the efficiencies of
bureaucracy, or their growth driving those organizations to bureaucracy.
Successes
While Weber was fundamentally an observer rather than a designer, it is
clear that his predictions have come true. His principles of an ideal
bureaucracy still ring true today and many of the evils of today's
bureaucracies come from their deviating from those ideal principles.
Unfortunately, Weber was also successful in predicting that bureaucracies
would have extreme difficulties dealing with individual cases.
It would have been fascinating to see how Weber would have integrated
Mayo's results into his theories. It is probable that he would have seen the
"group dynamics" as "noise" in the system, limiting the bureaucracy's
potential for both efficiency and inhumanity.
Henri Fayol - Administration
Description
With two exceptions, Henri Fayols theories of administration
dovetail nicely into the bureaucratic superstructure described by Weber.
Henri Fayol focuses on the personal duties of management at a much more
granular level than Weber did. While Weber laid out principles for an ideal
bureaucratic organization Fayols work is more directed at the management
layer.
Fayol believed that management had five principle roles: to forecast
and plan, to organize, to command, to co-ordinate and to control.
Forecasting and planning was the act of anticipating the future and acting
accordingly. Organization was the development of the institution's
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resources, both material and human. Commanding was keeping the
institutions actions and processes running. Co-ordination was the alignment
and harmonization of the groups efforts. Finally, control meant that the
above activities were performed in accordance with appropriate rules and
procedures.
Fayol developed fourteen principles of administration to go along with
managements five primary roles. These principles are enumerated below:

! Specialization/division of labor
! Authority with responsibility
! Discipline
! Unity of command
! Unity of direction
! Subordination of individual interest to the general interest
! Remuneration of staff
! Centralization
! Scalar chain/line of authority
! Order
! Equity
! Stability of tenure
! Initiative
! Esprit de corps

The final two principles, initiative and esprit de corps, show a difference
between Fayols concept of an ideal organization and Webers. Weber
predicted a completely impersonal organization with little human level
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interaction between its members. Fayol clearly believed personal effort and
team dynamics were part of a "ideal" organization.
Environment
Fayol was a successful mining engineer and senior executive prior to
publishing his principles of "administrative science." It is not clear from the
literature reviewed if Fayols work was precipitated or influenced by
Taylors. From the timing, 1911 publication of Taylors "The Principles of
Scientific Management" to Fayols work in 1916, it is possible. Fayol was
not primarily a theorist, but rather a successful senior manager who sought
to bring order to his personal experiences.
Successes
Fayols five principle roles of management are still actively practiced
today. The author has found "Plan, Organize, Command, Co-ordinate and
Control" written on one than one managers whiteboard during his career.
The concept of giving appropriate authority with responsibility is also
widely commented on (if not well practiced.) Unfortunately his principles of
"unity of command" and "unity of direction" are consistently violated in
"matrix management" the structure of choice for many of todays
companies.
Conclusion
It is clear that modern organizations are strongly influenced by the
theories of Taylor, Mayo, Weber and Fayol. Their precepts have become
such a strong part of modern management that it is difficult to believe that
these concepts were original and new at some point in history. The modern
idea that these concepts are "common sense" is strong tribute to these
founders.
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(OR)

11. (b). Types of Business Organization: (16)
! Sole properitorship:
! Only one person invests the entire capital needed to run the
business.
! Easy to be established.
! Easy to dissolve.
! Highly flexible.
! Quick decision making

! Partnership:
! The relationship between persons who have agreed to share
profits of a business concern carried on by all or any one of
them acting for all.
! Agreement
! Requires faith & trust
! Unlimited liability
! Legally permitted business
! Sharing of profits/losses
! Contractual relationship

! Joint stock company:
! Limited capital can be raised.
! Risk factor is more for the owners.
! The project requires heavy capital investment.
! The project will take a long period to take a long period to
have a proper shape and yield returns.

12. (a). Importance of Planning: (16)
! Improves focus and flexibility
! Improves action orientation
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! Improves coordination
! Improves time management
! Improves control
! Reduces complexity
! To check the availability of resources
! To establish new criteria
! To formulate various strategies for production
! To have an overview of the financial outbreaks.
Types of plans:
! According to breadth : Strategic & Operational
! According to time frame : Long-term & Short-term
! According to specificity : Directional & Specific
! According to frequency of use : Single use & Standing

(OR)

12. (b). Decision making:
The Decision Making Process
Quite literally, organizations operate by people making decisions. A manager plans,
organizes, staffs, leads, and controls her team by executing decisions. The
effectiveness and quality of those decisions determine how successful a manager will
be.
Managers are constantly called upon to make decisions in order to solve problems.
Decision making and problem solving are ongoing processes of evaluating situations
or problems, considering alternatives, making choices, and following them up with
the necessary actions. Sometimes the decision-making process is extremely short, and
mental reflection is essentially instantaneous. In other situations, the process can drag
on for weeks or even months. The entire decision-making process is dependent upon
the right information being available to the right people at the right times.
The decision-making process involves the following steps:
1. Define the problem.
2. Identify limiting factors.
3. Develop potential alternatives.
4. Analyze the alternatives.
5. Select the best alternative.
6. Implement the decision.
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7. Establish a control and evaluation system.
Define the problem
The decision-making process begins when a manager identifies the real problem. The
accurate definition of the problem affects all the steps that follow; if the problem is
inaccurately defined, every step in the decision-making process will be based on an
incorrect starting point. One way that a manager can help determine the true problem
in a situation is by identifying the problem separately from its symptoms.
The most obviously troubling situations found in an organization can usually be
identified as symptoms of underlying problems. (See Table 1 for some examples of
symptoms.) These symptoms all indicate that something is wrong with an
organization, but they don't identify root causes. A successful manager doesn't just
attack symptoms; he works to uncover the factors that cause these symptoms.
TABLE 1 Symptoms and Their Real Causes
Symptoms Underlying Problem
Low profits and/or declining
sales
Poor market research
High costs Poor design process; poorly trained employees
Low morale Lack of communication between management and
subordinates
High employee turnover Rate of pay too low; job design not suitable
High rate of absenteeism Employees believe that they are not valued

Identify limiting factors
All managers want to make the best decisions. To do so, managers need to have the
ideal resources information, time, personnel, equipment, and supplies and
identify any limiting factors. Realistically, managers operate in an environment that
normally doesn't provide ideal resources. For example, they may lack the proper
budget or may not have the most accurate information or any extra time. So, they
must choose to satisfice to make the best decision possible with the information,
resources, and time available.
Develop potential alternatives
Time pressures frequently cause a manager to move forward after considering only
the first or most obvious answers. However, successful problem solving requires
thorough examination of the challenge, and a quick answer may not result in a
permanent solution. Thus, a manager should think through and investigate several
alternative solutions to a single problem before making a quick decision.
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One of the best known methods for developing alternatives is through brainstorming,
where a group works together to generate ideas and alternative solutions. The
assumption behind brainstorming is that the group dynamic stimulates thinking
one person's ideas, no matter how outrageous, can generate ideas from the others in
the group. Ideally, this spawning of ideas is contagious, and before long, lots of
suggestions and ideas flow. Brainstorming usually requires 30 minutes to an hour.
The following specific rules should be followed during brainstorming sessions:
! Concentrate on the problem at hand. This rule keeps the discussion very
specific and avoids the group's tendency to address the events leading up to
the current problem.
! Entertain all ideas. In fact, the more ideas that come up, the better. In other
words, there are no bad ideas. Encouragement of the group to freely offer all
thoughts on the subject is important. Participants should be encouraged to
present ideas no matter how ridiculous they seem, because such ideas may
spark a creative thought on the part of someone else.
! Refrain from allowing members to evaluate others' ideas on the spot. All
judgments should be deferred until all thoughts are presented, and the group
concurs on the best ideas.
Although brainstorming is the most common technique to develop alternative
solutions, managers can use several other ways to help develop solutions. Here are
some examples:
! Nominal group technique. This method involves the use of a highly
structured meeting, complete with an agenda, and restricts discussion or
interpersonal communication during the decision-making process. This
technique is useful because it ensures that every group member has equal input
in the decision-making process. It also avoids some of the pitfalls, such as
pressure to conform, group dominance, hostility, and conflict, that can plague
a more interactive, spontaneous, unstructured forum such as brainstorming.
! Delphi technique. With this technique, participants never meet, but a group
leader uses written questionnaires to conduct the decision making.
No matter what technique is used, group decision making has clear advantages and
disadvantages when compared with individual decision making. The following are
among the advantages:
! Groups provide a broader perspective.
! Employees are more likely to be satisfied and to support the final decision.
! Opportunities for discussion help to answer questions and reduce uncertainties
for the decision makers.
These points are among the disadvantages:
! This method can be more time-consuming than one individual making the
decision on his own.
! The decision reached could be a compromise rather than the optimal solution.
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! Individuals become guilty of groupthink the tendency of members of a
group to conform to the prevailing opinions of the group.
! Groups may have difficulty performing tasks because the group, rather than a
single individual, makes the decision, resulting in confusion when it comes
time to implement and evaluate the decision.
The results of dozens of individual-versus-group performance studies indicate that
groups not only tend to make better decisions than a person acting alone, but also that
groups tend to inspire star performers to even higher levels of productivity.
So, are two (or more) heads better than one? The answer depends on several factors,
such as the nature of the task, the abilities of the group members, and the form of
interaction. Because a manager often has a choice between making a decision
independently or including others in the decision making, she needs to understand the
advantages and disadvantages of group decision making.
Analyze the alternatives
The purpose of this step is to decide the relative merits of each idea. Managers must
identify the advantages and disadvantages of each alternative solution before making
a final decision.
Evaluating the alternatives can be done in numerous ways. Here are a few
possibilities:
! Determine the pros and cons of each alternative.
! Perform a cost-benefit analysis for each alternative.
! Weight each factor important in the decision, ranking each alternative relative
to its ability to meet each factor, and then multiply by a probability factor to
provide a final value for each alternative.
Regardless of the method used, a manager needs to evaluate each alternative in terms
of its
! Feasibility Can it be done?
! Effectiveness How well does it resolve the problem situation?
! Consequences What will be its costs (financial and nonfinancial) to the
organization?
Select the best alternative
After a manager has analyzed all the alternatives, she must decide on the best one.
The best alternative is the one that produces the most advantages and the fewest
serious disadvantages. Sometimes, the selection process can be fairly straightforward,
such as the alternative with the most pros and fewest cons. Other times, the optimal
solution is a combination of several alternatives.
Sometimes, though, the best alternative may not be obvious. That's when a manager
must decide which alternative is the most feasible and effective, coupled with which
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carries the lowest costs to the organization. (See the preceding section.) Probability
estimates, where analysis of each alternative's chances of success takes place, often
come into play at this point in the decision-making process. In those cases, a manager
simply selects the alternative with the highest probability of success.
Implement the decision
Managers are paid to make decisions, but they are also paid to get results from these
decisions. Positive results must follow decisions. Everyone involved with the decision
must know his or her role in ensuring a successful outcome. To make certain that
employees understand their roles, managers must thoughtfully devise programs,
procedures, rules, or policies to help aid them in the problem-solving process.
Establish a control and evaluation system
Ongoing actions need to be monitored. An evaluation system should provide feedback
on how well the decision is being implemented, what the results are, and what
adjustments are necessary to get the results that were intended when the solution was
chosen.
In order for a manager to evaluate his decision, he needs to gather information to
determine its effectiveness. Was the original problem resolved? If not, is he closer to
the desired situation than he was at the beginning of the decision-making process?
If a manager's plan hasn't resolved the problem, he needs to figure out what went
wrong. A manager may accomplish this by asking the following questions:
! Was the wrong alternative selected? If so, one of the other alternatives
generated in the decision-making process may be a wiser choice.
! Was the correct alternative selected, but implemented improperly? If so, a
manager should focus attention solely on the implementation step to ensure
that the chosen alternative is implemented successfully.
! Was the original problem identified incorrectly? If so, the decision-making
process needs to begin again, starting with a revised identification step.
! Has the implemented alternative been given enough time to be successful?
If not, a manager should give the process more time and re-evaluate at a later
date.

Decision making tools:

! Simulation techniques
* Use of mathematical models.
* Used to solve problems which have a no. of variables.
* It is tried to duplicate the behavior of the system under study.
* The result of simulated model is to be subjected to
appropriate tests of statistical analysis.
! Breakeven analysis:
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* To determine the point of activity, at which the total cost will
be equal to the total revenue.
* It is done algebraically or graphically.
* the fixed cost line will be parallel to the output or units.

13. (a). Centralization and Decentralization: (16)
Decentralised governance

Decentralizationthe transfer of authority and responsibility for public functions
from the central government to subordinate or quasi-independent government
organizations and/or the private sector[1]is a complex and multifaceted concept. It
embraces a variety of concepts. Different types of decentralization shows different
characteristics, policy implications, and conditions for success.

Typologies of decentralization have flourished (Dubois & Fattore 2009). For example,
political, administrative, fiscal, and market decentralization are the types of
decentralization[2]. Drawing distinctions between these various concepts is useful for
highlighting the many dimensions of successful decentralization and the need for
coordination among them. Nevertheless, there is clearly overlap in defining these
terms and the precise definitions are not as important as the need for a comprehensive
approach (see Sharma, 2006). Political, administrative, fiscal and market
decentralization can also appear in different forms and combinations across countries,
within countries and even within sectors.

Political decentralization

Political decentralization aims to give citizens or their elected representatives more
power in public decision-making. It is often associated with pluralistic politics and
representative government, but it can also support democratization by giving citizens,
or their representatives, more influence in the formulation and implementation of
policies. Advocates of political decentralization assume that decisions made with
greater participation will be better informed and more relevant to diverse interests in
society than those made only by national political authorities. The concept implies
that the selection of representatives from local electoral constituency allows citizens
to know better their political representatives and allows elected officials to know
better the needs and desires of their constituents. Political decentralization often
requires constitutional or statutory reforms, creation of local political units, and the
encouragement of effective public interest groups.

Administrative decentralization

Administrative decentralization seeks to redistribute authority, responsibility and
financial resources for providing public services among different levels of
governance. It is the transfer of responsibility for the planning, financing and
management of public functions from the central government or regional governments
and its agencies to local governments, semi-autonomous public authorities or
corporations, or area-wide, regional or functional authorities. The three major forms
of administrative decentralization -- deconcentration, delegation, and devolution --
each have different characteristics.
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Deconcentration

Deconcentration is the weakest form of decentralization and is used most
frequently in unitary states-- redistributes decision making authority and financial and
management responsibilities among different levels of the national government. It can
merely shift responsibilities from central government officials in the capital city to
those working in regions, provinces or districts, or it can create strong field
administration or local administrative capacity under the supervision of central
government ministries.

Delegation

Delegation is a more extensive form of decentralization. Through delegation
central governments transfer responsibility for decision-making and administration of
public functions to semi-autonomous organizations not wholly controlled by the
central government, but ultimately accountable to it.
Governments delegate responsibilities when they create public enterprises or
corporations, housing authorities, transportation authorities, special service districts,
semi-autonomous school districts, regional development corporations, or special
project implementation units. Usually these organizations have a great deal of
discretion in decision-making. They may be exempted from constraints on regular
civil service personnel and may be able to charge users directly for services.

Devolution

Devolution is an administrative type of decentralisation. When governments
devolve functions, they transfer authority for decision-making, finance, and
management to quasi-autonomous units of local government with corporate status.
Devolution usually transfers responsibilities for services to local governments
that elect their own elected functionaries and councils, raise their own revenues, and
have independent authority to make investment decisions.
In a devolved system, local governments have clear and legally recognized
geographical boundaries over which they exercise authority and within which they
perform public functions. Administrative decentralization always underlies most cases
of political decentralization.

Fiscal decentralization

Dispersal of financial responsibility is a core component of decentralisation. If
local governments and private organizations are to carry out decentralized functions
effectively, they must have an adequate level of revenues either raised locally or
transferred from the central government as well as the authority to make decisions
about expenditures.
Fiscal decentralization can take many forms, including self-financing or cost
recovery through user charges, co-financing or co-production arrangements through
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which the users participate in providing services and infrastructure through monetary
or labor contributions; expansion of local revenues through property or sales taxes, or
indirect charges; intergovernmental transfers that shift general revenues from taxes
collected by the central government to local governments for general or specific uses;
and
authorization of municipal borrowing and the mobilization of either national or local
government resources through loan guarantees.

In many developing countries local governments or administrative units
possess the legal authority to impose taxes, but the tax base is so weak and the
dependence on central government subsidies so ingrained that no attempt is made to
exercise that authority.

13. (b). Selection process in IT profession:
! Call for applications through advertisements
- Through newspapers or websites.
- Periodical advertisements
! Short listing the eligible candidates
- Based on academic eligibility criteria
- Based on previous work experience
! Written/Aptitude test
- To test the logical reasoning
- To test the time management
! Technical interview
- Questions based on software languages / tools
- To test the skill possessed by the candidate
! Personal / HR interview.
- Verification of Certificates
- To test the candidates personal attitude, etc.
! Selection and Orientation
- Issuing appointment order
- Training on a specific platform
14. (a). Leadership styles:
Leadership styles

Leadership styles refer to a leaders behaviour. It is the result of the philosophy,
personality and experience of the leader.

Kurt Lewin's Leadership styles

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Kurt Lewin and colleagues identified different styles of leadership [29]:
! Dictator
! Autocratic
! Participative
! Laissez Faire

Dictator Leaders

A leader who uses fear and threats to get the jobs done. As similar with a leader who
uses an autocratic style of leadership, this style of leader also makes all the decisions.

Autocratic or Authoritarian Leaders

Under the autocratic leadership styles, all decision-making powers are centralized in
the leader as shown such leaders are dictators.

They do not entertain any suggestions or initiative from subordinates. The autocratic
management has been successful as it provides strong motivation to the manger. It
permits quick decision-making as only one person decides for the whole group, and
keeps it to themselves until they feel it is needed by the rest of the group. An
autocratic leader does not trust anybody.

Participative or Democratic Leaders

The democratic leadership style favors decision-making by the group as shown, such
as leader gives instruction after consulting the group.

He can win the cooperation of his group and can motivate them effectively and
positively. The decisions of the democratic leader are not unilateral as with the
autocrat because they arise from consultation with the group members and
participation by them.

Laissez Faire or Free Rein Leaders

A free rein leader does not lead, but leaves the group entirely to itself as shown; such
a leader allows maximum freedom to subordinates.

They are given a freehand in deciding their own policies and methods. Free rein
leadership style is considered better than the authoritarian style. But it is not as
effective as the democratic style.
Leadership performance

In the past, some researchers have argued that the actual influence of leaders
on organizational outcomes is overrated and romanticized as a result of biased
attributions about leaders (Meindl & Ehrlich, 1987).
Despite these assertions however, it is largely recognized and accepted by
practitioners and researchers that leadership is important, and research supports the
notion that leaders do contribute to key organizational outcomes (Day & Lord, 1988;
22
Kaiser, Hogan, & Craig, 2008). In order to facilitate successful performance it is
important to understand and accurately measure leadership performance.

Job performance generally refers to behavior that is expected to contribute to
organizational success (Campbell, 1990). Campbell identified a number of specific
types of performance dimensions; leadership was one of the dimensions that he
identified.
There is no consistent, overall definition of leadership performance (Yukl,
2006). Many distinct conceptualizations are often lumped together under the umbrella
of leadership performance, including outcomes such as leader effectiveness, leader
advancement, and leader emergence (Kaiser et al., 2008).
For instance, leadership performance may be used to refer to the career
success of the individual leader, performance of the group or organization, or even
leader emergence. Each of these measures can be considered conceptually distinct.
While these aspects may be related, they are different outcomes and their inclusion
should depend on the applied/research focus.

Leadership in organizations

An organization that is established as an instrument or means for achieving
defined objectives has been referred to as a formal organization. Its design specifies
how goals are subdivided and reflected in subdivisions of the organization. Divisions,
departments, sections, positions, jobs, and tasks make up this work structure. Thus,
the formal organization is expected to behave impersonally in regard to relationships
with clients or with its members.
According to Weber's definition, entry and subsequent advancement is by
merit or seniority. Each employee receives a salary and enjoys a degree of tenure that
safeguards him from the arbitrary influence of superiors or of powerful clients.
The higher his position in the hierarchy, the greater his presumed expertise in
adjudicating problems that may arise in the course of the work carried out at lower
levels of the organization.
It is this bureaucratic structure that forms the basis for the appointment of
heads or chiefs of administrative subdivisions in the organization and endows them
with the authority attached to their position.

In contrast to the appointed head or chief of an administrative unit, a leader
emerges within the context of the informal organization that underlies the formal
structure. The informal organization expresses the personal objectives and goals of the
individual membership. Their objectives and goals may or may not coincide with
those of the formal organization. The informal organization represents an extension of
the social structures that generally characterize human life the spontaneous
emergence of groups and organizations as ends in themselves.

In prehistoric times, man was preoccupied with his personal security,
maintenance, protection, and survival. Now man spends a major portion of his waking
hours working for organizations.
His need to identify with a community that provides security, protection,
maintenance, and a feeling of belonging continues unchanged from prehistoric times.
This need is met by the informal organization and its emergent, or unofficial, leaders.
23

Leaders emerge from within the structure of the informal organization. Their
personal qualities, the demands of the situation, or a combination of these and other
factors attract followers who accept their leadership within one or several overlay
structures.
Instead of the authority of position held by an appointed head or chief, the
emergent leader wields influence or power. Influence is the ability of a person to gain
co-operation from others by means of persuasion or control over rewards. Power is a
stronger form of influence because it reflects a person's ability to enforce action
through the control of a means of punishment.

A leader is a person who influences a group of people towards a specific
result. It is not dependent on title or formal authority. (elevos, paraphrased from
Leaders, Bennis, and Leadership Presence, Halpern & Lubar). Leaders are recognized
by their capacity for caring for others, clear communication, and a commitment to
persist.
An individual who is appointed to a managerial position has the right to
command and enforce obedience by virtue of the authority of his position. However,
he must possess adequate personal attributes to match his authority, because authority
is only potentially available to him. In the absence of sufficient personal competence,
a manager may be confronted by an emergent leader who can challenge his role in the
organization and reduce it to that of a figurehead.
However, only authority of position has the backing of formal sanctions. It
follows that whoever wields personal influence and power can legitimize this only by
gaining a formal position in the hierarchy, with commensurate authority.
Leadership can be defined as one's ability to get others to willingly follow.
Every organization needs leaders at every level.

Leadership versus management

Over the years the terms "management" and "leadership" have, in the
organisational context, been used both as synonyms and with clearly differentiated
meanings. Debate is fairly common about whether the use of these terms should be
restricted, and generally reflects an awareness of the distinction made by Burns
(1978) between "transactional" leadership (characterised by eg emphasis on
procedures, contingent reward, management by exception) and "transformational"
leadership (characterised by eg charisma, personal relationships, creativity). That
those two adjectives are in fact used equally well with the noun "management" as
with the noun "leadership" indicates that there is such a messy overlap between the
two in academic practice that attempts to pontificate about their differences are
largely a waste of time.

(OR)

14. (b) Communication:
Communication is a process of transferring information from one entity to
another. Communication processes are sign-mediated interactions between at least
two agents which share a repertoire of signs and semiotic rules. Communication is
24
commonly defined as "the imparting or interchange of thoughts, opinions, or
information by speech, writing, or signs".
Although there is such a thing as one-way communication, communication
can be perceived better as a two-way process in which there is an exchange and
progression of thoughts, feelings or ideas (energy) towards a mutually accepted goal
or direction (information).

Nonverbal communication

Nonverbal communication is the process of communicating through sending
and receiving wordless messages. Such messages can be communicated through
gesture, body language or posture; facial expression and eye contact, object
communication such as clothing, hairstyles or even architecture, or symbols and
infographics, as well as through an aggregate of the above, such as behavioral
communication. Nonverbal communication plays a key role in every person's day to
day life, from employment to romantic engagements.

Speech may also contain nonverbal elements known as paralanguage,
including voice quality, emotion and speaking style, as well as prosodic features such
as rhythm, intonation and stress. Likewise, written texts have nonverbal elements such
as handwriting style, spatial arrangement of words, or the use of emoticons. A
portmanteau of the English words emotion (or emote) and icon, an emoticon is a
symbol or combination of symbols used to convey emotional content in written or
message form.

Other communication channels such as telegraphy fit into this category,
whereby signals travel from person to person by an alternative means. These signals
can in themselves be representative of words, objects or merely be state projections.
Trials ave shown that humans can communicate directly in this way[5] without body
language, voice tonality or words.

Categories and Features G. W. Porter divides non-verbal communication into four
broad categories:

Physical. This is the personal type of communication. It includes facial expressions,
tone of voice, sense of touch, sense of smell, and body motions.

Aesthetic. This is the type of communication that takes place through creative
expressions: playing instrumental music, dancing, painting and sculpturing.

Signs. This is the mechanical type of communication, which includes the use of signal
flags, the 21-gun salute, horns, and sirens.

Symbolic. This is the type of communication that makes use of religious, status, or
ego-building symbols.

Static Features

25
Distance. The distance one stands from another frequently conveys a non-verbal
message. In some cultures it is a sign of attraction, while in others it may reflect status
or the intensity of the exchange.

Orientation. People may present themselves in various ways: face-to-face, side-to-
side, or even back-to-back. For example, cooperating people are likely to sit side-by-
side while competitors frequently face one another.

Posture. Obviously one can be lying down, seated, or standing. These are not the
elements of posture that convey messages. Are we slouched or erect ? Are our legs
crossed or our arms folded ? Such postures convey a degree of formality and the
degree of relaxation in the communication exchange.

Physical Contact. Shaking hands, touching, holding, embracing, pushing, or patting
on the back all convey messages. They reflect an element of intimacy or a feeling of
(or lack of) attraction.

Dynamic Features

Facial Expressions. A smile, frown, raised eyebrow, yawn, and sneer all convey
information. Facial expressions continually change during interaction and are
monitored constantly by the recipient. There is evidence that the meaning of these
expressions may be similar across cultures.

Gestures. One of the most frequently observed, but least understood, cues is a hand
movement. Most people use hand movements regularly when talking. While some
gestures (e.g., a clenched fist) have universal meanings, most of the others are
individually learned idiosyncratic.

Looking. A major feature of social communication is eye contact. It can convey
emotion, signal when to talk or finish, or aversion. The frequency of contact may
suggest either interest or boredom

Types of Communication:
! Formal
* Oral & written
! Informal
* Gestures and body languages.

15. (a) Characteristics of a Budget:
! Participation
! Comprehensiveness
! Standards
! Flexibility
! Feedback
! Analysis of costs and revenues

Types of Budget:

26
Sales budget: The sales budget is an estimate of future sales, often broken down into
both units and dollars. It is used to create company sales goals.

Production budget: Product oriented companies create a production budget which
estimates the number of units that must be manufactured to meet the sales goals. The
production budget also estimates the various costs involved with manufacturing those
units, including labor and material.

Cash Flow/Cash budget: The cash flow budget is a prediction of future cash receipts
and expenditures for a particular time period. It usually covers a period in the short
term future. The cash flow budget helps the business determine when income will be
sufficient to cover expenses and when the company will need to seek outside
financing.

Marketing budget: The marketing budget is an estimate of the funds needed for
promotion, advertising, and public relations in order to market the product or service.

Project budget: The project budget is a prediction of the costs associated with a
particular company project. These costs include labor, materials, and other related
expenses. The project budget is often broken down into specific tasks, with task
budgets assigned to each.

Revenue budget: The Revenue Budget consists of revenue receipts of government
and the expenditure met from these revenues. Tax revenues are made up of taxes and
other duties that the government levies.

Expenditure budget: A budget type which include of spending data items.

(OR)

15. (b). Productivity:
Productivity enhancement an essential part of management

Enhancing productivity has become a survival strategy for most hospitals.
Productivity is the key to controlling costs and improving the price competitiveness of
hospitals.

Despite this overwhelming priority, department managers and vice presidents seldom
take the initiative to improve productivity. Instead, productivity improvements are
usually mandated by the chief executive officer (CEO) in response to declining
patient volume and financial margins. This usually results in involuntary across-the-
board staff reductions.

Faced with the constant challenge to make ends meet with limited resources, the
department manager must develop and implement strategies to improve productivity
on an ongoing basis. Productivity enhancement must become a routine component of
hospital management.

27
The first and most important aspect of productivity enhancement addresses the
critical but infrequently asked question: "Are we doing the right things?" Almost
every department has some employees doing work with high efficiency, but the need
for that work may no longer exist. Benjamin Franklin said, "`Tis far better to do the
right thing middling well than to do the wrong thing with great dispatch."

Hospitals must avoid the "activity trap"--hiring new staff and providing
services that do not contribute to the workload performed. Two steps that
management could take to ensure that their departments are doing the right things are:

Step 1. Set priorities for the major functions of the department and estimate the time
spent by each employee on these functions. This analysis will help the manager to
pinpoint: * Costs of these functions compared to their priorities; * Activities
performed and staff utilized that do not contribute to the major departmental
functions; * Inappropriate use of employee skills in which people are doing the wrong
jobs; * Work that is performed by too many employees and lends itself to
specialization; and * Work that is performed by too few employees and lends itself to
wider distribution.

It is important to recognize that improving efficiency by doing things right is a
necessary but insufficient step to improve productivity and service delivery. Reducing
the time to perform an X-ray, for example, results in productivity improvement only
when management acts to increase workload or reduce hours worked in the
department. Without this management action, efficiency improvement will simply
increase idle capacity.

Productivity enhancement is not only the responsibility of the CEO. It is a
critical responsibility that must be shared by all hospital management and made an
integral part of how hospitals are managed.

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