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1.

Principles and Practices of Management


Explain the different activity levels of Management.

Levels of Management refers to a line of demarcation between various managerial


positions in an organization. The level of management determines a chain of command,
the amount of authority & status enjoyed by any managerial position. It refers to a line of
demarcation between various managerial positions in an organization. The level of
management determines a chain of command, the amount of authority & status enjoyed
by any managerial position.
CATEGORIES OF MANAGEMENT
1. Top level / Administrative level
2. Middle level / Executory
3. Low level / Supervisory

LEVELS OF MANAGEMENT
Top Level of Management is the ultimate source of authority. It manages goals and
policies for an enterprise. It devotes more time on planning and coordinating functions.
It consists of board of directors, chief executive or managing director. The ultimate
source of authority manages goals and policies for an enterprise. It devotes more time
on planning and coordinating functions. The role of the top management is to lay down
the objectives and broad policies of the enterprise. It issues necessary instructions for
preparation of department budgets, procedures, schedules etc. It prepares strategic
plans & policies for the enterprise. It also lay down the objectives and broad policies of
the enterprise. It issues necessary instructions for preparation of department budgets,
procedures, schedules etc. It prepares strategic plans & policies for the enterprise. The
role of the top management is to appoint the executive for middle level i.e. departmental
managers. It controls & coordinates the activities of all the departments. It is also
responsible for maintaining a contact with the outside world. It appoints the executive for
middle level i.e. departmental managers. The top management is also responsible
towards the shareholders for the performance of the enterprise. The top management is
also responsible towards the shareholders for the performance of the enterprise.

Middle Level of Management is responsible to the top management for the functioning
of their department.
 Devote more time to organizational and directional functions.
 The branch managers and departmental managers constitute middle level.
 Responsible to the top management for the functioning of their department.
 The branch managers and departmental managers constitute middle level.
 Execute the plans of the organization in accordance with the policies and directives of
the top management.
 Make plans for the sub-units of the organization.
 Interpret and explain policies from top level management to lower level.
 Coordinates activities within the department.
 Sends important reports and other important data to top level management.
 Evaluate performance of junior managers.
 Inspires lower level managers towards better performance.
Lower Level of Management Also known as supervisory / operative level.
They are concerned with direction and controlling function of management. It consists of
supervisors, foreman, section officers, and superintendent. Also known as supervisory /
operative level. The Role of Lower Level Management are
 Assigns jobs and tasks to various workers.
 Guide and instruct workers for day to day activities.
 Responsible for the quality as well as quantity of production.
 Entrusted with the responsibility of maintaining good relation in the organization.
 Communicate workers’ problems, suggestions, and recommends to the higher level and
higher level goals and objectives to the workers.
 Solve the grievances of the workers.
 They supervise & guide the sub- ordinates.
 Provide training to the workers.
 Arrange necessary materials, machines, tools for getting the things done.
 Prepare periodical reports about the performance of the workers.
 Ensures discipline in the enterprise.
 Motivate workers.
 The image builders of the enterprise because they are in direct contact with the workers.

2. Human Resources Management


Explain the functions of Human Resources Management covering the major areas like
Personnel Administration, Employee Welfare and Functional Areas.

The functional areas of HR


includes recruiting and staffing, benefits, compensation, employee relations, HR
Compliance,organizational design, training and development, human resource informati
on systems (H.R.I.S.)and payroll. Human Resource Generalists, as they are frequently
referred to, should have a wide variety of experiences in all of the functional areas of HR,
so that they are better able to integrate all of those functions in with the mission, vision
and business objectives of an organization. Here is a brief description of what each of
those functional areas may require of an HR Generalist.
Recruiting and Staffing – The HR professional will work with the hiring managers
within an organization to develop an action plan for the hiring of a diverse
workforce. This may include, but may not limited to: sourcing for candidates in a creative
manner; posting open jobs; screening resumes and applications; conducting telephone
interviews; scheduling the in house interview; providing a tour of the facilities to the final
applicants; conducting the appropriate background checks; recommending the
appropriate compensation package; making the offer and preparing the offer letter and
benefits information; conducting the new employee orientation program; and making
sure that all new hires are enrolled in the company’s benefit programs.
Benefits – Coordination with the benefit brokers to annually review all employer-
sponsored benefit plans for renewal and compliance; conducting open enrollment
educational meetings with employees; making sure that employees are enrolled and
terminated from each benefit program with each vendor, as appropriate; assisting
managers with accident investigations and the coordination of workers’ compensation;
completing the OSHA logs, as needed and posting when required; and tracking all paid
time off, to include the paperwork for the Family and Medical Leave Act (FMLA) and
other related benefits.
Compensation – Assisting hiring managers with the writing and updating of job
descriptions and maintaining them annually; reviewing salary survey data to make sure
that the company is paying employees competitively within the market; maintaining
internal hierarchy with regards to pay; developing and maintaining a salary
administration plan for the organization; making recommendations with regards to pay,
merit increases, salary structure maintenance, etc.; writing and recommending variable
pay plans; making sure that the organization is compliant with the various wage and hour
laws; implementing and maintaining a creative performance evaluation system for all
employees.
Employee Relations – The HR Generalist is one who maintains confidentiality with all
employment-related matters within the organization. He/she promotes an “open door”
environment with all employees and is an active “listener” to their needs and concerns
without projecting a bias opinion or taking ownership for their issue. He/she works with
management to proactively resolve employee relations issues, conducts investigations
and makes recommendations for resolution. He/she works with management to
document disciplinary actions and makes recommendation with regards to nonmonetary
rewards and recognition. The HR Generalist is actively involved in employee
terminations and understands the unemployment claim and appeal process. Most conduct
exit interviews with terminating employees and provide information with regards to the
continuation of benefits after employment.
HR Compliance – The HR professional makes sure that the organization is compliant
with all employment-related laws and requirements from a federal, state and local
perspective. This may include making sure that the appropriate posters are posted and
up-to-date; preparation and maintenance of all employee policies within the employee
handbook; employee file maintenance; Employment Eligibility and Verification Form I-
9 maintenance; and completion of all verifications of employment, reference checks, etc.
for past and present employees.
Organizational Design – Strategically assisting the management team with furthering
the mission, vision and business goals of the organization through a solid organizational
structure is paramount. The HR professional will maintain all organizational charts;
make recommendations as to changes within the structure that would benefit the
organization; understand how to manage the “white space” on the organizational charts;
tracks turnover rates and reasons; develops career ladders within job classifications; is
involved with succession planning, and promotes active employee engagement activities
throughout the organization.
Training and Development – Recommends and may create and conduct training and
development programs for the entire organization to include: anti-harassment and
discrimination avoidance, diversity, customer service skills, business communication
skills, etc. Works with managers to create and implement on-the-job training
opportunities for all employees. Tracks all training programs and employee participation
and follows up with managers and employees to measure utilization of skills learned as
well as evaluating additional training resources or needs.
Human Resource Information Systems (H.R.I.S.) and Payroll – Continually reviews
the needs of the organization with regards to payroll and H.R.I.S. vendors and evaluates
the needs for upgrades, new systems, etc. Understands payroll laws and is able to process
payroll and utilize the H.R.I.S., to the fullest extent
While the functional areas, as listed above, are the primary HR-related areas, there are
others tasks within each area that could be added depending upon your organization. I
have definitely not listed them all here.
What competencies are represented by a good HR Generalist? Most would tell you that
it requires someone who likes people. I would tell you that the most important
competency is one who is able to recognize a problem and brings creative solutions to
management. The ability to work independently as well as within a team environment is
essential and the ability to pay attention to detail while utilizing excellent verbal and
written communication skills is required. The ability to maintain confidentiality, be a
good listener and possess strong coaching and counseling skills are all a given. Most
managers would tell you that a strong HR Generalist also has the ability to motivate and
train employees at all levels. CEOs, Presidents, CCOs and CFOs want someone who is
able to recognize that HR is not a cost center and is able to strategically provide a value
add to the bottom line financial results of the organization.

3. Financial Management
Explain the interface between finance and other functions.
Finance is the study of money management, the acquiring of funds (cash) and the
directing of these funds to meet particular objectives. Good financial management helps
businesses to maximize returns while simultaneously minimizing risks. Finance is the
lifeblood of business organizations, without finance the formation, establishment,
production, functioning or operating of big, medium or small business enterprise is not
possible.
Financial management is an integral part of overall management and not merely a staff
function. It is not only confined to fund raising operations but extends beyond it to cover
utilization of funds and monitoring its uses. These functions influence the operations of
other crucial functional areas of the firm such as production, marketing and human
resources. Hence, decisions in regard to financial matters must be taken after giving
thoughtful consideration to interests of various business activities. Finance manager has
to see things as a part of a whole and make financial decisions within the framework of
overall corporate objectives and policies.

Finance may be defined as the art and science of managing money. The major areas of
finance are:
1) Financial services and
2) Financial management
Financial Services is concerned with the design and delivery of products to individuals,
business and government within the areas of financial institutions, personal financial
planning, investments, real estate, and so on.
Financial management is concerned with the duties of the financial managers in the
business firm.
Marketing-Finance Interface
There are many decisions, which the Marketing Manager takes which have a significant
location, etc. In all these matters assessment of financial implications is inescapable
impact on the profitability of the firm. For example, he should have a clear understanding
of the impact the credit extended to the customers is going to have on the profits of the
company. Otherwise in his eagerness to meet the sales targets he is liable to extend liberal
terms of credit, which is likely to put the profit plans out of gear. Similarly, he should
weigh the benefits of keeping a large inventory of finished goods in anticipation of sales
against the costs of maintaining that inventory. Other key decisions of the Marketing
Manager, which have financial implications, are:
Pricing
Product promotion and advertisement
Choice of product mix
Distribution policy.

Production-Finance Interface
As we all know in any manufacturing firm, the Production Manager controls a major part
of the investment in the form of equipment, materials and men. He should so organize his
department that the equipments under his control are used most productively, the
inventory of work-in-process or unfinished goods and stores and spares is optimized and
the idle time and work stoppages are minimized. If the production manager can achieve
this, he would be holding the cost of the output under control and thereby help in
maximizing profits. He has to appreciate the fact that whereas the price at which the
output can be sold is largely determined by factors external to the firm like competition,
government regulations, etc. the cost of production is more amenable to his control.
Similarly, he would have to make decisions regarding make or buy, buy or lease etc. for
which he has to evaluate the financial implications before arriving at a decision.

Top Management-Finance Interface


The top management, which is interested in ensuring that the firm’s long-term goals are
met, finds it convenient to use the financial statements as a means for keeping itself
informed of the overall effectiveness of the organization. We have so far briefly reviewed
the interface of finance with the non-finance functional disciplines like production,
marketing etc. Besides these, the finance function also has a strong linkage with the
functions of the top management. Strategic planning and management control are two
important functions of the top management. Finance function provides the basic inputs
needed for undertaking these activities.

Accounting – Finance Interface


The firm’s finance (treasurer) and accounting (controller) activities are typically within
the control of the financial vice president (CFO). These functions are closely related and
generally overlap; indeed, managerial finance and accounting are often not easily
distinguishable. In small firms the controller often carries out the finance function, and
in large firms many accountants are closely involved in various finance activities.
However, there are two basic differences between finance and accounting; one relates to
the emphasis on cash flows and the other to decision making.

Business finance is required for the establishment of every business organization. With
the growth in activities, financial needs also grow. Funds are required for the purchase of
land and building, machinery and other fixed assets. Besides this, money is also needed
to meet day-to- day expenses e.g. purchase of raw material, payment of wages and
salaries, electricity bills, telephone bills etc. We are aware that production continues in
anticipation of demand. Expenses continue to be incurred until the goods are sold and
money is recovered. Money is required to bridge the time gap between production and
sales. Besides producers, may be necessary to change the office set up in order to install
computers. Renovation of facilities can be taken up only when adequate funds are
available.
To meet contingencies Funds are always required to meet the ups and downs of business
and unforeseen problems. Suppose, some manufacturer anticipates shortage of raw
materials after a period. Obviously he would like to stock raw materials. But he will be
able to do so only when money would be available.
To promote sales in this era of competition, lot of money is required to be spent on
activities for promoting sales like advertisement, personal selling, home delivery of goods
etc.
To avail of business opportunities Funds are also required to avail of business
opportunities. Suppose a company wants to submit a tender but some minimum amount
is required to be deposited along with the application. In the case of non-availability of
funds it would not be possible for the company to apply.
The decision function of financial management can be broken down into three major
areas: the investment, financing, and asset management decisions.
Investment Decision
The investment decision is the most important of the firm's three major decisions when it
comes to the value creation. Investment decision relates to the determination of total
amount of assets to be held in the firm, the composition of these assets like the amount
of fixed assets, current assets and the extent of business risk involved by the investors.
The investment decisions can be classified in to two groups: (1) Long-term investment
decision or capital budgeting and (2) Short-term decision or Working capital decision.
Financing Decision
Financing decision follows the Investment decision. The Finance manager now has to
decide how much of finance is required to meet the long-term and short-term investment
decisions, what are the sources of financing these investment decisions, what is the
composition of these finance and what should be the financial mix and so on.
Asset Management Decision
The third important decision of the firm is the asset management decision. Once assets
have been acquired and appropriate financing provided, these assets must still be
managed efficiently. The finance manager has more responsibility in managing the
current assets than fixed assets. A large share of the responsibility of managing the fixed
assets would reside in the hands of operating managers of the company.

4. Marketing Management
Explain the different Marketing Environments and the role of culture and sub culture.

Rather than establishing what the organization can produce, then going out, and ‘selling’
it, the marketing-oriented firm first finds out the genuine needs and wants of consumers
and then attempts to produce products and services that satisfy these requirements. In a
wider sense, the marketing concept is more an attitude of mind or a customer-oriented
business philosophy, rather than merely a functional area of management. Although a
clear understanding of consumer’s requirements is of paramount importance in putting
such a business philosophy into practice, there are also other factors to consider. The
marketing firm operates within a complex, dynamic, external macro-environment. It is
the task of the marketing –oriented firm to link the resources of the organization to the
requirements of consumers within the framework of opportunities and threats presented
by this macro-environment. Hence, the marketing firm not only has to put consumer’s
requirements at the top of its list of priorities, but it also needs continually to adjust to
environmental factors. Kotler defines the general marketing environment as follows: a
company is marketing environment consists of the actors and forces that affect the
company’s ability to develop and maintain successful transactions with its target
customers. Such a definition includes all environmental forces outside of the firm’s
marketing management function. This would also include inter-departmental influences.
Russ and Kirkpatrick call the interaction between the marketing department and other
functional areas of management the intra-firm environment. It is important, in order to
understand the influences of external environment forces, to appreciate that, although the
marketing function is the channel through which the firm adapts to change in external
conditions, marketing’s ability to carry out this role is also influenced by internal factors.
The general marketing environment, therefore, consists of all the factors and forces
influencing the marketing function. This includes both internal and external forces.
Internal forces, i.e., the intra –firm environment, are largely within the control of the firm.
The generally uncontrollable forces outside the firm in the macro-environment pose the
most important sources of opportunities and threats to the company. Kotler reserves the
term ‘macro-environment’ to denote other external forces such as demographic,
economic, political, technological, and socio-cultural forces. The term ‘macro-
environment’ denotes all these forces and agencies external to the marketing firm. Some
of these outside factors and forces will be somewhat ‘closer’ to the firm than others, for
example immediate suppliers and competitors.

A variety of environmental forces influence a company’s marketing system. Some of


them are controllable while some others are uncontrollable. It is the responsibility of the
marketing manager to change the company’s policies along with the changing
environment.
According to Philip Kotler, “A company’s marketing environment consists of the internal
factors & forces, which affect the company’s ability to develop & maintain successful
transactions & relationships with the company’s target customers”.

The Environmental Factors may be classified as:

 Internal Factor

 External Factor

External Factors may be further classified into:

External Micro Factors & External Macro Factors

Company’s Internal Environmental Factors:


A Company’s marketing system is influenced by its capabilities regarding production,
financial & other factors. Hence, the marketing management/manager must take into
consideration these departments before finalizing marketing decisions. The Research &
Development Department, the Personnel Department, the Accounting Department also
have an impact on the Marketing Department. It is the responsibility of a manager to
company-ordinate all department by setting up unified objectives.

External Micro Factors:

Suppliers: They are the people who provide necessary resources needed to produce goods
& services. Policies of the suppliers have a significant influence over the marketing
manager’s decisions because, it is laborers, etc. A company must build cordial & long-
term relationship with suppliers.
Marketing Intermediaries: They are the people who assist the flow of products from the
producers to the consumers; they include wholesalers, retailers, agents, etc. These people
create place & time utility. A company must select an effective chain of middlemen, so
as to make the goods reach the market in time. The middlemen give necessary
information to the manufacturers about the market. If a company does not satisfy the
middlemen, they neglect its products & may push the competitor’s product.
Consumers: The main aim of production is to meet the demands of the consumers. Hence,
the consumers are the center point of all marketing activities. If they are not taken into
consideration, before taking the decisions, the company is bound to fail in achieving its
objectives. A company’s marketing strategy is influenced by its target consumer. Eg: If
a manufacturer wants to sell to the wholesaler, he may directly sell to them, if he wants
to sell to another manufacturer, he may sell through his agent or if he wants to sell to
ultimate consumer he may sell through wholesalers or retailers. Hence each type of
consumer has a unique feature, which influences a company’s marketing decision.
Competitors: A prudent marketing manager has to be in constant touch regarding the
information relating to the competitor’s strategies. He has to identify his competitor’s
strategies, build his plans to overtake them in the market to attract competitor’s
consumers towards his products.
Any company faces three types of competition:
Brand Competition: It is a competition between various companies producing similar
products. Eg: The competition between BPL & Videcon companies.
The Product Form Competition: It is a competition between companies manufacturing
products, which are substitutes to each other Eg: Competition between coffee & Tea.
The Desire Competition: It is the competition with all other companies to attract
consumers towards the company. Eg: The competition between the manufacturers of TV
sets & all other companies manufacturing various products like automobiles, washing
machines, etc.
Hence, to understand the competitive situation, a company must understand the nature of
market & the nature of customers. Nature of the market may be as follows:
Perfect Market
Oligopoly
Monopoly
Monopolistic Market
Duopoly
Public: A Company’s obligation is not only to meet the requirements of its customers,
but also to satisfy the various groups. A public is defined as “any group that has an actual
or potential ability to achieve its objectives”. The significance of the influence of the
public on the company can be understood by the fact that almost all companies maintain
a public relation department. A positive interaction with the public increase its goodwill
irrespective of the nature of the public. A company has to maintain cordial relation with
all groups, public may or may not be interested in the company, but the company must
be interested in the views of the public.
Public may be various types. They are:
Press: This is one of the most important group, which may make or break a company. It
includes journalists, radio, television, etc. Press people are often referred to as unwelcome
public. A marketing manager must always strive to get a positive coverage from the press
people.
Financial Public: These are the institutions, which supply money to the company. Eg:
Banks, insurance companies, stock exchange, etc. A company cannot work without the
assistance of these institutions. It has to give necessary information to these public
whenever demanded to ensure that timely finance is supplied.
Government: Politicians often interfere in the business for the welfare of the society &
for other reasons. A prudent manager has to maintain good relation with all politicians
irrespective of their party affiliations. If any law is to be passed, which is against the
interest of the company, he may get their support to stop that law from being passed in
the parliament or legislature.
General Public: This includes organisations such as consumer councils,
environmentalists, etc. as the present day concept of marketing deals with social welfare,
a company must satisfy these groups to be successful.

External Macro Environment:

These are the factors/forces on which the company has no control. Hence, it has to frame
its policies within the limits set by these forces:
Demography: It is defined as the statistical study of the human population & its
distribution. This is one of the most influencing factors because it deals with the people
who form the market. A company should study the population, its distribution, age
composition, etc before deciding the marketing strategies. Each group of population
behaves differently depending upon various factors such as age, status, etc. if these factors
are considered, a company can produce only those products which suits the requirement
of the consumers. In this regard, it is said that “to understand the market you must
understand its demography”.
Economic Environment: A company can successfully sell its products only when people
have enough money to spend. The economic environment affects a consumer’s
purchasing behaviour either by increasing his disposable income or by reducing it. Eg:
During the time of inflation, the value of money comes down. Hence, it is difficult for
them to purchase more products. Income of the consumer must also be taken into account.
Eg: In a market where both husband & wife work, their purchasing power will be more.
Hence, companies may sell their products quite easily.
Physical Environment or Natural Forces: A company has to adopt its policies within the
limits set by nature. A man can improve the nature but cannot find an alternative for it.
Nature offers resources, but in a limited manner. A product manager utilizes it efficiently.
Companies must find the best combination of production for the sake of efficient
utilization of the available resources. Otherwise, they may face acute shortage of
resources. Eg: Petroleum products, power, water, etc.
Technological Factors: From customer’s point of view, improvement in technology
means improvement in the standard of living. In this regard, it is said that “Technologies
shape a Person’s Life”.
Every new invention builds a new market & a new group of customers. A new technology
improves our lifestyle & at the same time creates many problems. Eg: Invention of
various consumer comforts like washing machines, mixers, etc have resulted in
improving our lifestyle but it has created severe problems like power shortage.
Eg: Introduction to automobiles has improved transportation but it has resulted in the
problems like air & noise pollution, increased accidents, etc. In simple words, following
are the impacts of technological factors on the market:
They create new wants
They create new industries
They may destroy old industries
They may increase the cost of Research & Development.
Social & Cultural Factors: Most of us purchase because of the influence of social &
cultural factors. The lifestyle, values, believes, etc are determined among other things by
the society in which we live. Each society has its own culture. Culture is a combination
of various factors which are transferred from older generations & which are acquired.
Our behaviour is guided by our culture, family, educational institutions, languages, etc.
The society is a combination of various groups with different cultures & subcultures.
Each society has its own behaviour. A marketing manager must study the society in which
he operates.
Consumer’s attitude is also affected by their society within a society, there will be various
small groups, each having its own culture.
Eg: In India, we have different cultural groups such as Assamese, Punjabis, Kashmiris,
etc. The marketing manager should take note of these differences before finalizing the
marketing strategies.
Culture changes over a period of time. He must try to anticipate the changes new
marketing opportunities.

5. Organizational Behaviour
Explain Organizational Behaviour and its different major aspects.

Organizations are as old as the human race. As time passed, the people realized that they
could collectively satisfy their wants in a much effective manner. Thus, they got together
to satisfy their needs and wants. Individuals who feel that they have skills, talents and
knowledge form groups to produce the goods and services. Organization is a group of
people who work together to achieve some purpose. The people working together expect
each other to complete certain tasks in an organized way. Organizations are an inevitable
part of human life. Organization help to increase specialization and division of labour,
use large scale technology, manage the external environment, helps to economize on
transaction costs and to exert power and control. Globalization has presented many
challenges and opportunities for Organisations. It is imperative that the Organisations
function effectively. Organisational effectiveness requires that they should provide good
quality goods and services at reasonable cost. Besides, every organisation must satisfy
the stake of its stakeholders. The extent of satisfaction derived by stakeholders shows the
effectiveness of the organisation. It is the responsibility of the managers to keep the
interest holders satisfied. Managers are responsible for the functioning of the
organisation. They get the work done through people. They allocate the resources, direct
the activities of others, and take decisions to attain organisational goals. It is here that
organisational behaviour comes into play. Organizational behaviour helps the managers
in achieving organisational effectiveness. It helps to harness the necessary expertise,
skills and knowledge to achieve organisational goals.
Organisation- A consciously coordinated social unit, composed of two or more
people,that functions on a relatively continuous basis to achieve a common goal or set of
goals. According to Stephen P Robins, “ Organisational Behaviour as a systematic study
of the actions and attitudes that people exhibit within the organisations.”
Disciplines that Contribute to the Field of Organisational Behaviour Organisational
Behaviour is an applied behavioural science and involves integration of studies
undertaken in behavioural disciplines such as psychology, sociology, anthropology, soc
Organisational Behaviour and its Role in Management of Business. Contribution of
psychology has enriched the field of organisational behaviour greatly. Sociology- It is the
study of group behaviour. Sociology has enriched organisational behaviour in the field
of leadership, group dynamics, communication, formal and informal organisations, group
process and decision making. Anthropology- It is the study of human race and its culture.
Organisations have their own culture. Culture influences human behaviour. An
employee’s perception about things and his functioning is influenced by the culture of his
organisation. Anthropology is more relevant to organisational behaviour today due to
globalisation, mergers and acquisitions of various industries. Today the people have to
work in organisations having work force diversity. Social Psychology- This subject is a
blend of the concepts from psychology and sociology. It focuses on the influence of
people on one another and tries to achieve better human behaviour in the organisation.
One of the key areas which it has helped to manage is ‘Change’ – how to implement it
successfully and reduce the resistance to it. Political Science-Organisations are political
entities and it is political science which helps in understanding behaviours of individuals
within a political environment. Government rules and regulations play a decisive role in
growth of the organisations.
Role of Organisational Behaviour in Management of Business Organisational behaviour
provides solution as well as insight towards solution to many challenges which are faced
by the organisations. Some of the important roles performed by organisational behaviour
in management of business are as follows:-
1. Globalisation- Due to globalisation, organisations are no longer confined to one
particular country. The Manager’s job is changing with the expansion of the organisations
across the national borders. Example, Volkswagen builds its cars in Mexico, Mercedes
and BMW in South Africa. Due to globalisation, the management has to deal with the
problems of unfamiliar languages, laws, work ethics, management styles etc. The
functions of hiring, training, etc must acquire a global perspective. Organisational
Behaviour helps the management to become flexible, and proactive and enables it to
execute the organisation on a global scale.
2. Managing work Force Diversity- Organisations are a hetrogeneous mix of people in
terms of age, gender, race etc. Managing the workforce diversity has become a global
concern. Managers have to deal with individuals and groups belonging to different ethnic
cultures. They have to exercise control and channelize behaviour in the desired direction.
Organisational behaviour help the managers to effectively deal with work force diversity
by promoting its awareness, increasing diversity skills, encouraging culture and gender
diversity.
3. Improving Quality and Productivity- Industries are facing the problem of excess
supply. This has increased competition to a large extent. Almost every Manager is
confronting the same problem of improving the productivity, quality of the goods and
services their organisation is providing. Programmes such as business process
reengineering, and total Quality Management are being implemented to achieve these
ends. Organisational Behaviour helps the Managers to empower their employees, as they
are the major forces for implementing this change.
4. Improving customer service-Most of the employees work in service sector. The jobs
in the service sector, is very demanding. It requires continuous interaction with the
organisations clients i.e. the customers. Management has to ensure that the employees do
everything to satisfy the customers of the organisation. The attitude and behaviour of an
employee affects the customer satisfaction. Organisational Behaviour helps the managers
to improve customer service and organisational performance.
5. Improving people skills- Organisational Behaviour helps in better management of
business as it helps in improving the skills of the people. It provides insight into the skills
that the employees can use on the job such as designing jobs and creating effective teams.
6. Innovation and Change- Organisational Behaviour helps in stimulating innovation and
change. Employees can either be a hurdle or an instrument of change. It is organisational
behaviour which fosters ideas and techniques to promote innovation and change by
improving employees creativity.
7. Work life balance- Organisations that do not help employees to achieve work life
balance will not be able to retain their most talented employees. Organisational behaviour
helps in designing flexible jobs which can help employees deal with work life balance
issues.
8. Promoting ethical Behaviour- Sometimes the organisations are in a situation of ethical
dilemma where they have to define right and wrong. It is Organisational Behaviour which
helps an important role by helping the management to create such a woek environment
which is ethically healthy and increases work productivity, job satisfaction and
organisational citizenship behaviour.
9. Creating a positive Work Environment.- Organisational behaviour helps in creating a
positive work environment in today’s where competitive pressures are stronger than
before. OB helps to develop resilience, human strength, and it fosters vitality.

6. Principles of Economics
How economics work and discuss the relations between the main economic.

An economy is a system of organizations and institutions that either facilitate or play a


role in the production and distribution of goods and services in a society. Economies
determine how resources are distributed among members of a society; they determine the
value of goods or services; and they even determine what sorts of things can be traded or
bartered for those services and goods.
How a society structures its economic system is largely a political and social issue. The
political and legal structure of a society will govern how wealth can be accumulated, how
wealth and resources are distributed, and the manner of competition permitted between
different participants in the economy.
Economic systems fall into one of two categories:
 Market systems
 Command systems.
In a market system, individual people own the factors of production (land, capital and
labour), and they can do whatever they want to do with what they own, subject to
minimum legal constraints. This might sound familiar if you live in the United States,
because the U.S. is a market economy. You are able to bargain your labour for wages,
and use your property as you see fit (so long as it's not illegal).
In a market system, the law of supply and demand governs the economy. If there is a high
demand for a product, resource or skill and a low supply of it, it will demand a high price
to purchase it. Alternatively, if there is a low demand and a high supply, the price will be
low. In other words, the market sets the price of goods, services, and labour. Demand will
also determine how much of a product will be produced, or even if it will be produced at
all. In a market system, you can engage in any type of lawful economic activity that you
want, so long as you can pay for it.
A command system is an economic system where economic decision-making is
centralized and usually in the hands of the state. The government controls the factors of
production and makes the decisions about what to produce, how much to produce, and to
whom the products ultimately go. In theory, the idea is that all production and distribution
is directed towards socially-desirable goals. Classic examples of command systems
include the economy of the old Soviet Union and the current Chinese economy.
Types of Economic Systems
Types of economic systems are defined either by the way that stuff is produced or by how
that stuff is allocated to people. For example, in primitive agrarian societies, people tend
to self-produce all of their needs and wants at the level of the household or tribe. Family
members would build their own dwellings, grow their own crops, hunt their own game,
fashion their own clothes, bake their own bread, etc. This self-sufficient economic system
is defined by very little division of labor and is also based on reciprocal exchange with
other family or tribe members. In such a primitive society, the concept of private property
didn’t typically exist as the needs of the community were produced by all for the sake of
all.
Later, as society developed, economies based on production by social class emerged such
as feudalism and slavery. Slavery involved production by enslaved individuals who
lacked personal freedom or rights and existed as the property of their owner. Feudalism
was a system where a class of nobility, known as lords, owned all of the land and leased
out small parcels to peasants to farm, with peasants handing over much of their
production to the lord. In return, the lord offered the peasants relative safety and security
including a place to live and food to eat.
Capitalism emerged with the advent of industrialization. Capitalism is defined as a
system of production whereby business owners (capitalists) produce goods for sale in
order to make a profit and not for personal consumption. In capitalism, capitalists own
the business including the tools used for production as well as the finished product.
Workers are hired in return for wages, and the worker owns neither the tools he uses in
the production process nor the finished product when it’s complete. If you work at a shoe
factory and you take home a pair of shoes at the end of the day, that’s stealing even though
you made them with your own hands. This is because capitalist economies rely on the
concept of private property to distinguish who legally owns what.
Capitalist production relies on the market for the allocation and distribution of the goods
that are produced for sale. A market is a venue that brings together buyers and sellers,
and where prices are established that determine who gets what and how much of it. The
United States and much of the developed world today can be described as capitalist
market economies.
Two alternatives to capitalist production are worth noting.
Socialism is a system of production whereby workers collectively own the business, the
tools of production, the finished product, and share the profits – instead of having
business owners who retain private ownership of all of the business and simply hire
workers in return for wages. Socialist production often does produce for profits and
utilizes the market to distribute goods and services. In the U.S., worker coops are an
example of socialist production organized under a broader capitalist system.
Communism is a system of production where private property ceases to exist and the
people of a society collectively own the tools of production. Communism does not use a
market system, but instead relies on a central planner who organizes production (tells
people who will work in what job) and distributes goods and services to consumers based
on need. Sometimes this is called a command economy.
Scarcity
Scarcity, a concept we already implicitly discussed in the introduction to this tutorial,
refers to the tension between our limited resources and our unlimited wants and needs.
For an individual, resources include time, money and skill. For a country, limited
resources include natural resources, capital, its labour force and its level of technology.
If scarcity didn’t exist, economics wouldn’t matter since everybody would be able to
provision all of their needs and wants at all times, and for free.
Because, our resources are limited in comparison to all of our wants and needs,
individuals, firms, and nations have to make decisions regarding what goods and services
they buy or produce and which ones they must forgo. For example, if you choose to buy
one new video game as opposed to two old games, you must give up owning a second
game of inferior technology in exchange for the higher quality of the newer one.
Likewise, a company that produces video games must decide how to allocate its
workforce, time, and money to produce a small number of high quality games or a large
number of lower quality products. Because of scarcity, people, firms, and nations must
all make decisions over how to allocate their individual resources. Economics, in turn,
aims to study why we make these decisions and how we allocate our resources most
efficiently.
Macro and Microeconomics
Macro- and microeconomics are the two main vantage points from which the economy is
studied. Macroeconomics looks at the economy on a national and international level. It
examines total output of a nation (GDP) and the way the nation allocates its limited
resources of land, labor supply and capital. Macroeconomics is concerned with
international trade, a nation’s fiscal and monetary policy, the level of inflation and interest
rates, national unemployment, and more.
Microeconomics studies the level of the individual and the firms within the economy.
Analyzing certain aspects of human behavior, microeconomics shows us how individuals
and firms respond to changes in price and why they demand what they do at particular
price levels. Microeconomics tries to explain how and why different goods command
different values, how individuals make financial decisions, and how individual’s best
coordinate and cooperate with one another.
Micro- and macroeconomics are intertwined; as economists gain understanding of certain
phenomena, they can help us make more informed decisions when allocating resources.
Many people believe that the micro foundations of individuals and firms acting in
aggregate constitute macroeconomic phenomena.
Political ideology influencing economic thought
Many economic issues are seen through the eyes of political beliefs. For example, some
people are instinctively more suspicious of government intervention. Therefore, they
prefer economic policies which seek to reduce government interference in the economy.
For example, supply side economics, which concentrates on deregulation, privatisation
and tax cuts. On the other hand, economists may have a preference for promoting greater
equality in society and be more willing to encourage government intervention to pursue
that end.
If you set different economists to report on the desirability of income tax cuts for the rich,
their policy proposals are likely to reflect their political preferences. You can always find
some evidence to support the benefits of tax cuts, you can always find some evidence to
support the benefits of higher tax.
Some economists may be scrupulously neutral and not have any political leanings (though
I haven’t met too many). They may produce a paper that perhaps challenges their previous
views. Despite their preferences, they may find there is no case for rail privatisation, or
perhaps they find tax cuts do actually increase economic welfare.
However, for a politician, they can use those economists and economic research which
backs their political view. Mrs Thatcher and Ronald Reagan were great champions of
supply side economists like Milton Friedman, Keith Joseph, and Friedrich Hayek. When
Reagan was attempting to ‘roll back the frontiers of the state’ – there was no shortage of
economists who were able to provide a theoretical justification for the political
experiment. There were just as many economists suggesting this was not a good idea, but
economists can be promoted by their political sponsors. In the US, the Paul Ryan budget
proposals were welcomed by many Republicans because they promised tax cuts for better
off, cutting welfare benefits and balancing the budget. (1) A popular selection of policies
for Republicans.
Economic thought independent of politics
On the other hand, economists who stick to data and avoid cherry picking favourable
statistics may well come up with conclusions and recommendations that don’t necessarily
fit it with pre-conceived political issues.
Many economists may be generally supportive of the EU and European co-operation, but
the evidence from the Euro single currency is that it caused many economic problems of
low growth, deflation and trade imbalances.
Economics needs political support
If you study economics, you can make quite a convincing case for a Pigovian tax – a tax
which makes people pay the full social cost of the good, and not just the private cost. This
principle of making the polluter pay provides a case for Carbon Tax, congestion charges,
alcohol tax, and tobacco tax e.t.c.
However, whether these policies get implemented depends on whether there is political
support for them. For example, a congestion charge was proposed for Manchester, but it
was very heavily defeated in a referendum. A new tax is rarely popular. As an economist,
I would like to see more congestion charging because it makes economic sense. But, what
can make ‘sense’ to an economist can be politically unpopular.
The political appeal of austerity
Another interesting example is the political appeal of austerity. After the credit crunch,
there was a strong economic case for expansionary fiscal policy to fill in the gap of
aggregate demand. Politically, it can be hard to push a policy which results in more
government debt. There may be an economic logic to Keynesian demand management in
a recession – but a politician appealing to the need to ‘tighten belts’ and ‘get on top of
debt’ can be easier slogans to sell the general public, rather than slightly more obtuse
‘multiplier theories of Keynes’.

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