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Definition - Management - Role of managers - Evolution of Management thought -
Organization and the environmental factors Trends and Challenges of Management in
Global Scenario
- as how the mind controls the human body and its function similar
management (mind) controls the various activities ( human body) in the
- Collection of physical equipments, 4 Ms in Organisation ! Men, Machine,
Materials, Money, and leads to nothing" #or efficient and profitable
functioning it is necessary that all these factors are put to wor$ in a co%
ordinated manner"
Management Definition
Management is the art of getting things done through others" &arold 'oont(
)ef as * Management is the process of designing and maintaining an environment in
which individuals, wor$ing together in groups efficiently to accomplish selected
Managers carry out their managerial function
,pplies to any $ind of Organisation
,pplies to managers at all Organisational levels
,im is to create a surplus
Concerned with productivity, implies effectiveness and efficiency
Mgt of 4 Ms in the Orgn ! Men, Machine, Materials - money
Characteristics of Management
Mgt is .niversal
Mgt is dynamic
Mgt is a group of managers
Mgt is /urposeful
Mgt is goal oriented
Mgt is integrative #unction
Mgt is a 0ocial process
Mgt is a Multi%faceted discipline
Mgt is a continuous process
Mgt is a system of authority
Mgt is a resource
Mgt is intangible
Mgt is profession, an art as well as a science
Basis of
Administration Management
/olicy and
)etermination of ob2ectives
- policies
3mplementation of /olicies
4egislative - determination
56ecutive #unction
/lanning, Organising staffing )irecting, Motivating,
Coordinating Controlling
/rovides a s$etch of the
/rovides the entire body
3nfluence 3nfluenced mainly by public
opinion - other outside force
3nfluenced mainly by
administrative function
4evels of
Mainly top level function
involves thin$ing - planning
Mainly middle level function
involves doing and acting
4evel of
Owners7 8oard of )irectors M), 9M - Managers
/osition ,cts as a principal ,cts as an agency
'nowledge :equires more admin ability
than technical ability
:equires more technical
ability than admin ability

Management as an Art
<he main elements of an art are !
/ersonal 0$ills
/ractical $now%how
,pplication of $nowledge
:esult orientation
Constant practice aimed at perfection
Management is basica! an art beca"se of the foo#ing reasons !
, manager applies his $nowledge and s$ills to coordinate the efforts of his
Mgt see$s to achieve concrete practical results
Mgt is creative" 3t brings out new situation and converts into output
5ffective Mgt lead to reali(ation of Organi(ational and other goals" Mastery in
Mgt requires a sufficiently long period of e6perience in, managing"
Management as Science
<he essential elements of 0cience
0ystematised body of 'nowledge
.nderlying principles and theories developed through continuous observation,
inquiry, e6perimentation and research"
.niversal truth and applicability"
Organised body of $nowledge can be taught and learnt in class room and
Mgt is a social science" 3t contains all the essentials of science" 3t is an ine6act
/5:<, C/M, Cost ,7C, #inance, M8O etc
<hus, the theory (0cience) and practice (art) of Mgt go side by side for the
efficient functioning of an organisation"
Management as a $rofession
<he essential attribute of a profession
, well%defined and organised body of $nowledge
4earning and 56perience
5ntry restricted by qualification
:ecognised national body
5thical code of conduct
)ominance of service motive
Mgt is not a f" fedged %rofession no# d"e to the foo#ing shortcomings
0$ills not fully developed
=o uniform method of entry
Ob2ective is monetary rather than service
5thical code is not strict
,ssociations are not statutory bodies
8ut in 3ndia it is developing into a profession and it will be achieved in due course"
Manageria S&is
Conceptual s$ills
&uman 0$ills
<echnical 0$ills
)esign 0$ills ! )ecision ma$ing
Need for Management
1" <o increase efficiency
1" <o crystalli(e the nature of Mgt 2ob
;" <o improve research in Mgt
4" <o attain social goals
'e(es of Management
)* To% 'e(e Mgt +
Board of Directors, MD, O#ners, Chief E-ec"ti(es
<o analyse, evaluate and deal with th environmental forces
<o establish overall long term goals and broad policies of the
company including the master budget
<o appoint departmental and other $ey e6ecutives
<o represent the company to the outside world
<o coordinate the activities and efforts of different department
.* Midde 'e(e Mgt +
Saes E-ec"ti(es, $rod"ction E-ec"ti(es, $rod"ction e-ec"ti(es etc*
<o interpret and e6plain the policies framed by top management
<o compile and issue detailed instruction regarding operations
<o Cooperate among themselves so as to integrate various parts of the
division or a department
<o motivate supervisory personnel to wor$ for Orgn goals
<o develop and train supervisory and operative personnel"

/* S"%er(isor! 0 O%erating 0 'o#er 'e(e Mgt +
S"%erintendents, Branch managers, Genera 1oremen
<o plan day to day production within the goals lay down by higher
<o assign 2obs to wor$ers and to ma$e arrangement for their training and
<o supervise and control wor$ers and to maintain personal contact with
Roes of a manager 2 Mint3berg4
1" Inter%ersona Roe % 3nteracting with people inside and outside the Orgn
1ig"rehead ! as a symbolic head of an organisation, the manager performs
routine duties of a legal nature
'eader ! &iring, <raining, motivating and guiding subordinates
'iason % 3nteracting with other managers outside the orgn to obtain favours
and information
1" Informationa Roe ! 0erving as a focal point for e6change of 3nformation
Monitor ! 0ee$s and receive information concerning internal and e6ternal
events so as to gain understanding of the Orgn and its environment"
Disseminator ! <ransmits information to subordinates, peers and superiors
within the Organisation
S%o&es%erson ! 0pea$ing on behalf of the Orgn and transmitting
information on Orgn plans, policies and actions to outsiders"
;" Decisiona Roe ! Ma$es important decision
Entre%rene"r ! 3nitiating changes or improvements in the activities of the
Dist"rbance hander% <a$ing charge and corrective action when Orgn faces
une6pected crises
Reso"rce aocator ! )istributing Orgns resources li$e money, time,
equipment and labour
Negotiator ! :epresenting the Orgn in bargaining and negotiations with
outsiders and insiders
Im%ortance of Management
Management is the dynamic life !giving element in every business" @ithout it the
resources of production remain resources and never become production" 0ound Management
provides the following benefits "
,chievement of group goals
Optimum utili(ation of resources
#ulfillment of social obligations
5conomic growth
&uman )evelopment
Meets the challenge of change
Cassification of manageria 1"nctions
1"nctions S"b 1"nctions
#orecasting, decision ma$ing,
strategy formulation, policy ma$ing,
programming, scheduling, budgeting,
problem%solving, innovation,
investigation and research"
9rouping of #unctions,
)epartmentation, delegation,
decentralisation, activity analysis,
tas$ allocation
Manpower planning, 2ob analysis,
:ecruitment, 0election, <raining,
/lacement, Compensation,
/romotion, appraisal, etc"
0upervision, Motivation,
communication, 4eadership, etc
#i6ation of standard, recording,
measurement, reporting corrective
E(o"tion of Management
1ather of Management + 5enr! 1a!o 2)67) + )8.94
&enry #ayol contributed 14 principles to Mgt which is widely applied in all the Orgn
1" )ivision of @or$
1" ,uthority and :esponsibility
;" )iscipline
4" .nity of Command
>" .nity of )irection
?" 0ubordination of individual interest to general interest
A" :emuneration of personnel
B" Centralisation
C" 0calar Chain
11"0tability of <enure of /ersonnel
Critica E(a"ation
<oo formal
=ot pay adequate attention to wor$ers
&is principle hinted but did not elaborate that mgt can and should be
- )espite these limitations, #ayol made a unique and outstanding
contribution to Mgt theory"
Scientific Management
1ather of Scientific Management 1*:* Ta!or 2)69; +)8)94
*<he art of $nowing e6actly what you want men to do and see that
they do it in the best and cheapest way"+
Mgt a 0cience based upon certain clearly defined principles
$rinci%es of Scientific Management
0cience not rule of thumb
&armony not discord
Co%operation not individualism
Ma6imum output in place of restricted output
)evelopment of each individual to his greatest efficiency and prosperity
Mental :evolution ! @or$ers and Management, @or$men towards their
wor$, their fellowmen and towards their employees" Mental attitude of the two
Techni<"es of Scientific Management
1" <ime 0tudy
1" Motion 0tudy
;" 0cientific tas$ /lanning
4" 0tandardi(ation and simplification
>" )ifferential piece rate system
?" #unctional foremanship ! ,ccording to <aylor, one supervisor cannot be
an e6pert in all aspects of wor$ supervision" 3n system of #unctional
#oremanship in which eight supervisors supervise a wor$ers 2ob"
i" :oute Cler$
ii" 3nstruction card cler$
iii" <ime and cost cler$
iv" 0hop disciplinarian
v" 9ang boss
vi" 0peed boss
vii" :epair boss
viii" 3nspector
Critica E(a"ation
Mechanistic ,pproach
.nrealistic ,ssumptions
=arrow Eiew
56ploitation of 4abour
George Eton Ma!o 2)66= + )8784
5a#throne E-%eriments
1" I"mination E-%eriments ( illumination affected /roductivity)
1" Rea! assemb! Test room E-%eriments ( @or$ing conditions and
/roductivity), piece wor$, rest pauses, shorter wor$ing hours,
;" Mass inter(ie#ing $rogramme ( )irect Fuestions), 9rievances, deep rooted
disturbance, satifactory level
@or$ers wor$ing in a group develop bond of relationships
8ehaviour at wor$place depens on their mental state, emotions and
5motional factors play an important role in determining
&uman and liberal attitude of supervisor helps in improving
Managerial s$ills and technical s$ills are not necessary to be a
successful leader"
5ENR> 'A?RENCE GANTT 2)6;) -)8)84
Contribution was famous, 9antt Chart, used for scheduling and control
of wor$"
<as$ and 8onus plan ( Minimum wages is guaranteed to all wor$ers
irrespective of output, 56tra wages are paid for e6tra wor$)
1RAN@ B?N@ER GI'BRET5 2)6;6 + )8.74
Motion study, time study
#atigue 0tudy
@or$ 0implification ! ; positional promotion plan ( present position,
the position to be held before promotion to his present position and the
ne6t higher position)
Modern management has developed through several stages or approaches"
<hese approaches to the study of management may be classified as underG
1" Classical ,pproach
1" 8ehavioral ,pproach
;" Management 0cience ,pproach
4" 0ystem ,pproach
>" Contingency ,pproach

3=/.<0 <:,=0#O:M,<3O= O.</.<0
Manpower 9oods - services
Machinery 5mployment
Material <a6es
Method Others

0ystems approach is an improvement over classical and neoclassical theories
as it is closer to reality" <he traditional theorists viewed organi(ation as a closed
system while modern theorists treat it as open system" <he system approach
highlights the multidimensional and multidisciplinary nature of management" 3t
ta$es much wider and overall perspective of organi(ational functioning"
SOCIA' RES$ONSIVENESS ! <he ability of a corporation to elate its operations
and policies to the social environment in ways that are mutually beneficial to the
company and to society"
% :eaction or proaction
% <he role of government
% <he influence of values and performance
% Criteria on behaviour
Def " /eter )ruc$er * 0ocial :esponsibility requires managers to consider whether
their action is li$ely to promote the public good, to advance the basic beliefs of our
society, to contribute to its stability, strength and harmony"+
The Socia A"dit
<he 0ocial audit has been defined as * a commitment to systematic assessment of
and reporting on some meaningfulH, definable domain of companys activities that
have social impact"+
0ociety has become increasingly aware of the interdependence between the
business and its environment" ,s business grow in si(e and power, society e6pects
more from them several forces have led to the development of the concept of social
:esponsibility" 0ome of the forces are %
<rade .nion
/ublic Opinion
5nlightened 0elf 3nterest
:esponsibility of business to perform its basic economic function of producing
and supplying products and services in the most efficient manner so as to
ma6imi(e profits"
Socia Res%onsibiit! of B"siness
Ethics in Managing
% 5thics is defined as the discipline dealing with what is good and bad, with moral
duty and obligation"
% /ersonal 5thics has been referred to as * the rules by which an individual lives his
or her personal life"
% ,ccounting ethics pertains to the code that guides the /rofessional conduct of
B"siness Ethics is concerned with truth and 2ustice and has a variety of aspects such
as e6pectations of society, fair competition, advertising, public relations, 0ocial
responsibilities, Consumer autonomy and Corporate behaviour in the home country
as well as abroad"
Ethica Theories
% .tilitarian <heory suggests that plans and actions should be evaluated by their
% <heory based on rights holds that all people have basic rights"
% <heory of 2ustice demands that decision ma$ers be guided by fairness and equity,
as well as impartiality"
Instit"tionai3ing Ethics
<his means applying and integrating ethical concepts into daily action" <his can be
accomplished in ; ways%
1" 8y establishing appropriate company policy or a code of 5thics
1" 8y using a formally appointed ethics committee
;" 8y teaching ethics in Management development programs
A code is a statement of $oicies, %rinci%es, or r"es that g"ide beha(io"r*
The f"nctions of Ethics Committee inc"des-
1" holding regular meeting to discuss ethical issues
1" dealing with gray areas
;" Communicating the code to all members of the Organi(ation
4" Chec$ing for possible violations of the Code
>" 5nforcing the Code
?" :ewarding compliance and punishing violations
A" :eviewing and updating the code
B" reporting activities of the committee to the board of directors
1actors that raise Ethica Standards
)" /ublic disclosure and publicity
." <he increased concern of a well informed public"
9lobali(ation means covering or affecting the whole world" 3t means integration of
the domestic economy of a country with the international economy" :ecent
developments in information and communication technology have accelerated the
pace of globali(ation"
9lobalisation means the internationali(ation of trade" /articularly
product transaction and the integrating of economic and capital mar$ets
throughout the world"
<he integration ta$es place when trade e6ists freely among the different
countries, thus the world economy becomes a single mar$et or single
3n globali(ation there is no restriction of quota, license, tariff and other
administrative barrier for trade"
<he term globali(ation has four parametersG
:eduction of trade barriers, so as to permit free flow of goods across national
#ree flow of capital among nations"
#ree flow of technology among nations"
#ree movement of labour among different countries of the world"
Benefits of Gobaisation
3mproves efficiency
3mproves factor 3ncome
3mproves finance
9ains from Migrations
Dra#bac&s of Gobaisation
9lobalisation increases the problems of unemployment
)omestic 3ndustries finds difficulty in survival"
Only group of people who participate in the process of
9lobali(ation will be benefited, this creates income inequality
within the country
Control on domestic economy becomes more difficult
)eveloping country suffers from the problem of brain%drain
Internationa B"siness
% 3nvolves commercial activities that cross national frontiers
% 3t is a process of 5ntrepreneur conducting business activities across
national boundaries
% 3t consist of 56porting, 3mporting, licensing, opening of 0ales office
% <he activities necessary for ascertaining the need and want of target
consumer often ta$es place in more than one country" @hen an
5ntrepreneur e6ecutes his or her business model in more than one country
3nternational 8usiness Occurring"
Entr! into Internationa B"siness
<he method of entering or engaging in 3nternational 8usiness can be divided
into three categories
)* E-%orting
3ndirect 56porting
)irect 56porting
1" Non E<"it! arrangement ! )oing international business through an
arrangement that does not involve any investments"
% 4icensing % allowing someone else to use something of the
companys in return for the payment of royalty
% <urn $ey /ro2ects ! , foreign 5ntrepreneur build a factory or other
facility, training the wor$ers, train the management and then turn it
over to the local owners once the operation is completed, hence the
name turn $ey operation
% Management Contracts ! Contracting management techniques and
s$ills" <he management contracts allow the purchasing country to
gain foreign e6pertise without giving ownership of its resources to a
;" Direct 1oreign In(estments ! preferred mode of ownership
% Minority 3nterest ! &aving less than >DI Ownership /osition
% Joint Eentures ! Merger of two companies"
Gobai3ation in India
0ome ma2or aspects of the policy of globali(ation in 3ndia areG
i4'iberaisation of im%ortsA
Most imports has been put under open general licence (O94) where
automatic permission is granted to import goods"56port oriented units (5O.s)
have been allowed to import freely all types of goods require by the unit for
manufacturing, production or processing" <he 9overnment in its trade policy
announced on ;1
,ugust 1DD4 has permitted import of second hand capital
goods without any age restrictions"
ii) 56port promotion through rationali(ation of tariff structureG
<ariff structure refers to the pattern of custom duties levied on the
imports of various commodity groups" <he government initiated the process of
tariff reduction in 1CC1, to bring our tariff rates in line with the other
developing countriesG ma$ing 3ndian goods competitive in the world mar$et"
&igh quality and low cost goods can offer competition in the world mar$et
and improve 3ndias e6ports"
iii) #oreign direct investmentG
iv) #oreign technologyG
!ature and "ur"ose of "lanning - #lanning "rocess - T$"es of "lans Ob%ectives - -
Managing b$ ob%ective &M'O( Strategies - T$"es of strategies - #olicies - Decision
Ma)ing - T$"es of decision - Decision Ma)ing #rocess - Rational Decision Ma)ing
#rocess - Decision Ma)ing under different conditions
% )eciding in advance what to do, how to do, when to do and who is to do it"
% 8ridges the gap between where we are to where we want to go"
% <hin$ing before doing"
% 3ntellectual demanding process"
Nat"re of $anning
1" 3ts contribution to purpose and ob2ectives"
1" /rimacy of functions ! /lanning - control are inseparable
;" /ervasiveness of planning ! it is a function of all managers" Earies from
level to level
4" 5fficiency of plans ! /ans are efficient if they achieve their purpose at a
reasonable cost
T!%es 2sco%e4 of %ans
I $"r%oses or missionsG
% Meaningful e6istence ! special tas$
% 5lements are primary mar$et, profitability, management philosophy
and corporate image
5g" 1" )istribution of goods - services
% 3<C * 0atisfaction+
% )upont *better things through chemistry+
% &allmar$ *<he social e6pression business+
% 95C 7 .0& *@e are in energy business+
II ObBecti(esA
% 5nds towards which all activities are directed
% <hey are the most basic plan and all other plans are based on the
% <hey are multiple in nature"
% M8O
% Ob2ectives and goals are interchangeable
% <hey have hierarchy"
% <hey are verifiable
% <hey form a networ$"
% <hey differ in time span" 0ome are long term and short term"
% Ob2ectives may be general or specific"
% Classified into
56ternal institutional ob2ectives (to develop high degree of
corporate image ! <,<,)
3nternal Ob2ectives (profit7ma6imum rate of return)
III StrategiesA
% 9eneral program of action and deployment of resources to attain
Comprehensive ob2ectives"
% 0@O< analysis
5g 1" rural mar$eting
1" 56tension of )istribution width - 4ength
;" /ester power strategy, social mar$eting, co%branding,
% Contingent plan to meet the demands of a difficult situation"
% Mainly the 2ob of the top management"
IV $oiciesA
% 9eneral statements or understandings which guide or channel
thin$ing and ta$e actions in decision ma$ing"
% 9uidelines for decision ma$ing
% ,ll policies are statements, sometimes it is only practices
% ,llows for some discretion otherwise it becomes rules
% 3t is a means of encouraging discretion and initiative, but within
% /olicies are developed with the active participation of the
entire top level e6ecutives"
% /olicy is in writing" <hey ta$e concrete shape when they
are put in writing" <his will ensure uniformity in
application, continuity and greater conformity"

i" <op management provides guidelines to lower level managers"
ii" 9ives managers to act at all levels without the need to consult the
superiors every time"
iii" 8etter ,dministrative control" /rovides rational basis for
evaluating the results"
iv" 8y setting up of policies, the management ensures that the
decisions made will be in tune with the ob2ectives and interests of
the organi(ation"
v" <hey save time and effort by pre%deciding problems in repetitive
situations" <hey save the management from the botheration of
repeating the e6pensive analysis required to ta$e the policy
decision every time"
% /olicy is formulated under particular preset conditions which do not
remain the same for all problems"
% :equires constant review and revision"
% =o formula for all problems
% 0erve as guides for thin$ing and action and do not provide solutions
to problems"
% <hey are not substitute for human 2udgment" <hey only point out the
limits within which the 2udgment is to be ta$en"
% <hey may stifle individual initiative and creativity"
T!%es of $oiciesG
a) Organi(ational and functional policies"
b) Originated, ,ppealed and 3mposed policies
c) 9eneral and 0pecific policies"
d) @ritten and 3mplied policies"
V $roced"resG
% 3t establishes a required method of handling future activities"
% <hey are guides to action, rather than to thin$ing"
% /rovides details of certain activity, the e6act manner in which it
must be achieved"
% Chronological order" (stated in steps)
% #ound in every level of an organi(ation"
% Minimi(es the burden of decision ma$ing
% 4eads to simplification of wor$ flow
% 5limination of unnecessary steps"
% )eveloped after careful analysis of various operations which are
necessary to bring co%ordination in organi(ation"
% .niformity and conformity of action
% ,id to communication ! steps to be followed to complete a
particular wor$"
% Medium of control to evaluate the performance of the subordinate
% :igidity% discourages improvement
% #i6ed way of doing a particular 2ob
% =eed to be reviewed and updated constantly
VI R"esA
% :ules spell out specific required action or non action, allowing no
scope for discretion"
% :ules Es /rocedures Es /olicies
% :ules ! no time sequence ! *=o smo$ing+
% 0equence of rules"
% )etailed recorded instructions
% .niform handling of events
% <o avoid repeated approval from higher levels for routine
% Offers definite direction to planning process
VII $rogramsA
% Combination of goals, policies, procedures, tas$ assignments,
steps to be ta$en resources to be employed to carry out a given
course of action"
% <ime element is introduced
% /lanning for future events and establishing a sequence of required
% 0upported by budgets"
% /rimary program - supporting programs"
VIII B"dgetsA
% 0tatement of e6pected results e6pressed in quantitative terms"
% 56pected income and e6penditure under different heads"
% 9ives clarity, direction and purpose in an organi(ation"
% Control device"
% #i6ed or variable (fle6ible) budget"
% #unctional budgets"
Ste%s in $anningG
1" 8eing aware of opportunities"
% 0@O< analysis
1" 5stablishing ob2ectives"
;" )eveloping premises
% /lanning premises are forecasts, applicable basic
policies, and e6isting company plans"
% <hey are assumptions about the environment in which
plan is to be carried out"
% #orecasting is important for premising"
% /remises should be ma$e practical what volume of
salesK @hat priceK
4" )etermining alternative courses of action
>" 5valuating alternative course of action
% Operation :esearch ! )ecision tree
?" 0electing a course of action
% )ecision ma$ing
A" #ormulating )erivative plans
% 0upporting plans for basic plan
B" =umerating plans by budgeting
% 3ncome and e6penses
@inds of %anning
1" 0hort term and long term planning
1" #inancial - non financial planning
;" #ormal -informal planning
4" 0pecific or :outine planning
>" Corporate planning and strategic planning
ObBecti(es 0 Im%ortance 0 Ad(antages of $anning
1" #ocuses attention on ob2ectives - results
1" :educes uncertainity and ris$
;" /rovides sense of direction
4" 5ncourages innovation - creativity
>" &elps in coordination
?" 9uides decision ma$ing
A" /rovides a basis for decentrali(ation
B" /rovides efficiency in operation
C" #acilitates control
1eat"res of a good %an
1" 8ased on clearly defined ob2ectives
1" 0imple, easily understandable
;" #le6ible or adaptable to changing conditions
4" must be balanced in all respects
>" must provide standards for the evaluation of performance and actions
?" 3t should be economical
A" 3t should be practicable
B" /repared with the consultation of concerned persons
C" 0hould be clear, specific and logical
1D"0hould be capable of being controlled
T!%es of $anning 2Time imit4
1" 4ong term plans (,bove > yrs)
1" Medium term plans (8etween 1 to > Lrs)
;" 0hort term plans ( 4ess than 1 yrs)
$anning can be cassified as +
1" Corporate /lanning
1" )ivisional /lanning
;" 0trategic /lanning
S*No Strategic $anning O%erationa $anning
1 4ays down ma2or goals and
/olicies of the Organisation
)ecides the use of resources in
day to day operations
1 )one at higher levels of
)one at lower level of
; 4ong term in nature 0hort term in nature
4 8road and general )etailed and specific
> 8ased on long term forecast and
appraisal of 5nvironment
8ased on past e6perience
Obstaces of Effecti(e $anning
1" 3nadequate inputs
1" 4ac$ of ability
;" 0udden emergencies
4" =eed for creativity
>" :esistance to Change
:a!s to O(ercome the Obstaces
1" Clear cut Ob2ectives
1" )evelop a sound Management 3nformation 0ystem
;" Create carefully planning premises
4" )evelop a dynamic outloo$ away manages
>" $eep plans fle6ible
?" provide required resources
A" .nderta$e a cost benefit analysis of all plans
Management b! ObBecti(es 2MBO4
* M8O is a comprehensive managerial system that integrates many $ey
managerial activities in a systematic manner and that is consciously directed towards
the effective and efficient achievement of Organisation and individual Ob2ectives"+
% @here superiors and subordinates 2ointly identify the goals of the
$rocess of MBO
1" 0etting preliminary Ob2ectives
1" Clarifying Organisational roles
;" 0etting subordinates Ob2ectives
4" :ecycling Ob2ectives
5o# to set ObBecti(es
1" Fuantitative - Fualitative
1" 0etting Ob2ectives in 9ovt
;" 9uidelines for setting Ob2ectives
Benefits of MBO
3mprovement of managing
Clarification of Organisation
5ncouragement of /ersonal commitment
)evelopment of 5ffective control
:ea&ness of MBO
#ailure to teach the philosophy of M8O
#ailure to give guidelines to goal setters
)ifficulty of setting goals
5mphasis on short run goals
)anger of 3nfle6ibility
$anning $remises
% , plan is based on certain assumptions called premises
% ,ssumptions or premises are for a future setting or happenings
% ,ssumptions based upon certain intuition or scientific forecasting
% <he assumptions about future derived from forecasting and used in
/lanning are $nown as planning premises
Def + @oont3 OCDonne
*/lanning premises are the anticipated environment in which plans are
e6pected to operate" <hey include assumptions or forecast of the future and $nown
conditions tht will affect the operations of plans" 5g as prevailing policies and
e6isting company plans that control the basic nature of supporting plans"
% /urpose of premises is to facilitate the planning process by guiding,
directing, simplifying and reducing the degree of uncertainty in it"
/remises guide planning"
$anning $remises Cassification
)* E-terna D Interna
5conomic 5nvironment
3ncludes the type of economic system that e6ist in the economy
<he nature and structure of the economy, the business cycle,the
fiscal, monetary and financial policies of the govt, foreign trade
and foreign investment policies of the govt"
<he type of economic system, that is socialist, capitalist or
mi6ed provides institutional framewor$ with in which business
firm have to wor$"
% Members of a society wields important influence over business
% ,ctivities of business firm may harm the physical environment and
impose heavy social costs"
% 8usiness should consider the social implication of their decisions"
% 0ocial responsiveness Mthe ability of a corporate firm to relate its
operations and policies to social environment in way that are
mutually beneficial to the company and society at large""
% 0ocial responsibility 7 social responsiveness related to ethics"
Closely related to government"
/olitical philosophy of the govt yields a great influences over
business policies"
<he nature of technology used for production of goods and
services in an important factor responsible for the success of a
business firm"
<he improvements in technology raises total factor
productivity of a firm and reduces unit cost of output"
<echnological environment affects the success of firms and
the need for technological advancement cannot be ignored"
3ncludes the si(e and growth of population, life e6pectancy of
the people rural urban distribution of population the
technological s$ills and educational levels of labour force"
0ince new wor$ers are recruited from outside the firm,
demographic factors are considered as parts of e6ternal
<he s$ills and ability of a firms wor$ers determine to a large
e6tent how well the orgn can achieve its mission"

3n the ultimate source of many inputs such as raw materials,
energy which business firms use in their productive activity"
,vailability of natural resources in a region a country is a basic
factor in determining business activity in it"
3t includes geographical and ecological factors such as minerals
and oil reserves, water and forest resources wealth and climatic
conditions, port facilities are all highly significant for various
business activities"
=ot the availability of natural resources alone but also the
technology and ability to being them in use that determines the
growth of business and the economy"
3nternal factors are to a good e6tent controllable factors because
the firm can change or modify these factors to improve its
Means the ethical beliefs that guides the organi(ation in achieving
its mission and ob2ective"
<he value system of a business orgn ma$es an important
contribution to its success and its prestige in the world of business"
Ealue system of a business firm has an important bearing on its
corporate culture and determines its behavior towards its
employees, shareholders and society at large"
3nfosys *Our corporate culture is to achieve our ob2ectives in
environment of fairness, honesty, transparency and courtesy
towards our customers employees, vendors and society at large+

<he ob2ectives of all firms are assured to be ma6imisation of long
! run profits"
Mission is def as the overall purpose or reason for its e6istence
which guide and influences its business decision and economic
<he choice of business domain, direction of its development,
choice of business strategy and policies are all guided by the
overall mission of the company"
Reiance Ind"stries Mission *<o become a world class company
and to achieve global dominance" Ranba-! aboratories ! to
become a research based international pharma company"

Means such things as composition of board of directors, the number
of independent directors, the e6tent of professional management and
share holding pattern"0ignificant influence over decision ma$ing
process in an organi(ation"

Fuality of employees of a firm in an important factor of internal
environment of a firm
<he 0uccess of a business organi(ation depends to a great e6tent
on the s$ills, capabilities, attitudes and commitment of its
)ue to importance of &: for the success of a company these days
there is a special course for managers how to select and manage
efficiently &: of a company"
.nions collectively bargain with top managers regarding wages,
wor$ing conditions of different categories of employees"
0mooth wor$ing of a business organi(ation requires that there
should be good relations between mgt - labour union"
/hysical resources such as plant and equipment and technological
capabilities of a firm determine its competitive strength which is
an important factor determining its efficiency and unit cost of
:- ) capabilities of a company determine its ability to introduce
innovation which enhances productivity of wor$s"
.* Tangibe and Intangibe %remises
Tangibe ! those which can be quantified" 5g ! Money, .nits of
/roduction, etc
Intangibe $remises ! refers to the qualitative factors li$e /ublic
relations, company reputation, 5mployee morale, etc"
;" Controabe and ?ncontroabe 1actors
Controabe ! entirely within the control and realm of management
5g% /olicies, programmes, rules of the enterprises
?ncontroabe 1actors ! 5nterprises has absolutely no control are uncontrollable
premises" 5g ! @ar, natural calamities, new invention, population trends"
Effecti(e %remises
1" 0election of premises which bear materially on the programs
1" )evelopment of alternative premises for contingency planning
;" Eerification of the consistency of premises
4" Communication of the premises"
S:OT Ana!sis or 0 TO:S Matri-
Interna 1actors
E-terna 1actors
Interna Strengths 2S4
Eg* Strength in mgt,
o%eration, 1inance,
Mar&eting, RDD
:ea&nesses2:4 Eg*
:ea&nesses in areas
sho#n in the bo- of
O%%ort"nities 2O4
Consider ris& aso* Eg
C"rrent and f"t"re
Economic condition,
%oitica and socia
changes, Ne# %rod"ct
ser(ices and
SO strateg! Ma-i +
Ma-i " /otentially the
most successful
strategy, utili(ing the
Organisation strength to
ta$e advantage of
:O Strateg! Mini +
Ma-i 5g"
)evelopmental strategy
to overcome wea$ness
in order to ta$e
advantage of
E-terna Threats 2T4
Eg 'ac& of energ!,
com%etition and areas
simiar to those sho#n
ST Strateg! Ma-i +
Mini 5g" .se of
strengths to cope with
threats to avoid threats
:T strateg! Mini
Mini 5g" :etrenchment,
4iquidation , Joint
in O%%ort"nit! bo-
% /rocess of predicting future conditions, that will influence and guide the
activities, behaviour and performance of the Organisation"
Def ! * #orecasting is the formal process of predicting future events that will
significantly affect the functioning of the enterprises"
3nvolvement of #uture events
)epends upon past and present events
&appening of future events
Ma$e use of forecasting techniques
)eveloping the ground wor$
5stimating the future trends
Comparing actual with estimated results
:efining the forecast
'ey to planning
Means of coordination
8asis for control
56ecutive development
#acing 5nvironmental challenges
1orecasting Techni<"es
% Fualitative ( use of 0tatistical tools) and Fuantitative ( employ human
2udgments to predict future)
1" Time series Ana!sis ! involves decomposition of historical series into its
various components" Ei( ! trend, seasonal variations, cyclical variations and
random variations" , trend can be $nown over the period of time and
pro2ections can be made about future"
1" 5istorica Anaog! ! past history records
;" Correation ! to find the relationship between two variables" 5g" 8etween
advertising e6penditure and sales volume, #uture sales estimated on basis of
change in adv e6penditure
4" Regression ! <o measure the relationship between two variables" <o find the
relative movements of two or more interrelated series"
>" De%hi Techni<"e ! the minds of the e6perts in the concerned areas are
probed systematically"
;* In%"t o"t%"t ana!sis
T!%es of 1orecast
% )emand forecast 7 sales forecast
% 5conomic #orecast
% <echnological #orecast
Com%arison of $anning and 1orecasting
S*No $anning 1orecasting
1 /lanning is more
comprehensive, it involves
many sub processes and
elements in order to arrive at
#orecasting is the estimate
of future events and
provides parameters to the
1 :equires several decision
#orecasting does not
involve decision ma$ing
; #or planning top management
level is involved
#orecasting is usually
carried by middle or lower
level management
4 Commitment of action is the
basic motive of planning
#orecasting does not require
any commitment but helps
planning for future actions
Decision Ma&ing
% is the process of choosing a course of action from available alternatives
% Def * &aynes - Massie * )ecision ma$ing is a process of selection from
a set of alternative courses of action which is thought to fulfills the
ob2ective of the decision ! problem more satisfactorily than others"+
T!%es of Manageria Decisions
1" Organi(ational and /ersonal )ecisions
1" :outine and 0trategic )ecisions
;" /rogrammed and =on programmed )ecision
4" /olicy and Operating )ecision
>" 3ndividual and 9roup decision
Decision ma&ing $rocess
1" )efining the problem
1" ,nalysing the problem
;" )eveloping alternative solutions
4" 5valuating the ,lternatives
>" 0electing the best alternatives
?" 3mplementing the decision
1actors in(o(ed in Decision Ma&ing
1" Tangibe 1actors % things which can be measured, #i6ed cost, operating cost,
profits, machine, etc
1" Intangibe factors ! .nmeasurable elements" 5g" 5mployee morale, quality
of labour relations, Consumer behaviour, etc" ! /ersonal values - Orgn
Culture, 9roup decision ma$ing, Creative and innovation
$robems of Decision Ma&ing
1" 3ndecisiveness
1" <ime pressure
;" 4ac$ of 3nformation
4" confusing symptoms with causes
>" #ailure to evaluate correctly
?" 4ac$ of follow through
@e! to s"ccess in Decision Ma&ing
1" 8e problem oriented not 2ust solution oriented
1" 0et decision ma$ing goals
;" ,lways chec$ the accuracy of the information
4" )ont be afraid to develop innovative alternatives
>" 8e fle6ible
?" 9ain commitment for decision at an early stage
A" 5valuate and follow up the decision
!ature and "ur"ose of organizing - Organization structure - *ormal and informal grou"s I
organization - +ine and Staff authorit$ - De"artmentation - S"an of control -
Centralization and Decentralization - Delegation of authorit$ - Staffing - Selection and
Recruitment - Orientation - Career Develo"ment - Career stages Training - -
#erformance ,""raisal
,llen defines Organising as * the process of identifying and grouping of the wor$ to
be performed, defining and delegating responsibility and authority and establishing
relationships for the purpose of enabling people to wor$ most effectively together in
accomplishing their ob2ectives"+
@oont3 and OCDonne defines as * Organisation is the establishment of authority
and relationships with provision for coordination between them, both vertically and
hori(ontally in the enterprise structure"
% Organising is the tas$ of mobili(ing resources
% , structure involving a large number of people engaging themselves in
multiplicity of tas$s, a systematic and rational relationship with authority and
responsibility between individuals and groups"
$rocess of organi3ing
% the manager differentiates and intergrates the activities of his Organisation
% )ifferentiation % the process of departmentali(ation or segmentation of
activities on the basis of some similarity
% 3ntegration ! /rocess of achieving unity of effort among the various
1" 5stablishing 5nterprise Ob2ectives
1" #ormulating 0upporting ob2ectives, policies and /lans
;" 3dentifying and classifying the necessary to accomplish
4" 9rouping the activities in the light of human and material resources available
>" )elegating to the head of each group the activity necessary to perform
?" <ying the groups together hori(ontally and vertically through authority
relationship and information flows"
$rinci%es of Organising
1" Ob2ectives
1" 0pecialisation
;" 0pan of Control
4" 56ception ! the higher level have limited time, only e6ceptionally comple6
problem should be referred to them and routine matters be dealt by the
subordinates at the lower levels
>" 0calar /rinciple 7 Chain of command ! line of authority
?" .nity of Command
A" )elegation
B" :esponsibility
C" ,uthority
1;".nity of )irection
14"/ersonal ability
S%an of Management
1actors go(erning S%an of Management
% ,ppropriate span of Management must be determined by the specific of the
manager particular situation"
1" ,bility of the manager
1" ,bility of the 5mployees
;" <ype of wor$
4" @ell defined authority - :esponsibility
>" 9eographic locations
?" 4evel of Management
A" 5conomic Consideration
Orgn #ith Narro# s%an + superior with less number of subordinate to monitor
% Close supervision
% Close control
% #ast Communication, between communication between subordinates -
% 0uperiors tend to get too involved in subordinate wor$
% Many levels of Management
% &igh cost due to many levels
% 56cessive distance between lowest level and top level
Orgn #ith #ide s%an - superior with more number of subordinate to monitor
% 0uperiors are forced to delegate
% Clear policies must be made
% 0ubordinates must be carefully selected
% <endency of overloaded superiors to become decision bottlenec$s
% )anger of superiors loss of control
% :equires e6ceptional quality of managers
Organisation Chart
* ,n Organisation chart is a graphic of the various positions in the enterNprise
and the formal relationships among them+"
% 3t is a blueprint of the company organi(ation structure"
% 9eorge <erry * ,n Organisational Chart is a diagrammatical form, which
shows important aspects of an Organisation including the ma2or functions and
the respective relationships, the channels of supervision and the relative
authority of each employee who is in change of each respective function"
1" a diagrammatical presentation
1" represent the formal Organisation structure
;" it shows the main lines of authority in the Organisation
4" indicates inter%play of various functions - relationships
>" indicates the channel of communication
T!%es of organi3ation Chart
1" Vertica Chart ! lines of command proceeding from top to bottom in vertical
1" 5ori3onta Chart ! &ighest position shown in left
;" Concentric or Circ"ar Chart
Contents of Organisation Chart
1" 8asic Organisation structure - flow of authority
1" ,uthority - :esponsibility of various e6ecutives
;" =ame of components of Organisation
4" /ositions of various office personnel
>" <otal number of person wor$ing in an Organisation
?" @ays of /romotions and salary particulars
/fiffner and 0herwood classifies into ; categories
1" 0$eleton ! a graphical presentation of the framewor$
% arranged in levels connected by various lines representing different
types of authority
1" #unctional ! consists of subunits wherin bo6es represent divisions and
;" /ersonal Chart ! some process of functional chart is used
but the bo6es here contain personnel information
5g% Job title, name of the position holder
Organisation Man"a
,n Organisation Manual is a small handboo$ or boo$let contained detailed
information about the Ob2ectives, /olicies, /rocedures, rules, etc of the enterprise
% 3t often includes Job descriptions which are factual statements of 2ob contents
in terms of duties and responsibilities"
Contents of organi3ationa Man"a
1" 3ntroductory
=ame of the Organisation
=ature of the Organisation
Ob2ectives of the Organisation
4ocation of the Organisation
/urpose of the manual
1" ,dministrative
Organisation 0tructure ! ma2or diision, departments, chain of command
Job descriptions
Organisation Chart
/olicies of the Management
:ules - regulations
;" /rocedural
Office procedures and practices
0pecimen form to be used
0tandard instructions regarding the performance of different 2obs
Methods relating to accounting, budgeting, etc"
T!%es of Organisation Man"a
1" /olicy Manual
1" Company Organisation Manual ! describes the duties and responsibilities of
various departments
% Outlines the formal chain of command and lines of promotion in the company
;" Operation Manual ! describes the established standards, procedures and
methods for various 2obs"
4" )epartment /ractice Manual ! detailed information about the Organisation
>" :ules - :egulation Manual ! prescribes rules regarding hours of wor$,
timing, leave cafeteria, library, recreation, etc"
% ,s the process of grouping individual 2obs in department" 3t involves grouping
of activities and employees into departments so as to facilitate the
accomplishment of Organisation Ob2ectives"
Need D Im%ortance of De%artment
1" 0pecialisation
1" 56pansion
;" ,utonomy
4" #i6ation of responsibility
>" ,ppraisal
?" Management development
A" ,dministrative control
Choosing a basis for De%artmentation
1" 0pecialisation
1" Coordination
;" Control
4" 5conomy
>" ,ttention
?" &uman Consideration
Basis of De%artmentation
1" De%artmentation b! 1"nctiona Basis ! 9rouping of activities in accordance
with the function of an enterprise" 5ach ma2or function of the enterprise is
grouped into a department"
o 3t is a logical and time proven method
o 3t follows the principles of speciali(ation
o ,uthority and responsibility can be clearly defined and fi6ed
o 0ince the top managers are responsible for the end results control shall
become effective
<his type of departmentation shall develop a loyalty towards the
functions and not towards the enterprise as whole"
Co%ordination of different function shall become difficult
Only the departmental heads are held responsible for defective wor$
1" De%artmentation b! Territoria basis ! , company may have separate
departments to serve the southern region, northern region etc" 3t has the
advantage of the intimate $nowledge of local conditions"
3t motivates each regional head to achieve high performance
/rovides each regional head an opportunity to adapt to his local
situation and customer need with speed and accuracy"
3t affords valuable top%management training and e6perience to
middle level e6ecutivesOenables the organi(ation to ta$e
advantage of locational factors, such as availability of raw
materials, labour, mar$et, etc"
5nables the Organisation to compare regional performances and
invest more resources in profitable regions and withdraw
resources from unprofitable ones"
May give rise to duplication of various activities" Many routine
and service functions performed by all the regional units can be
performed centrally b the head office very economically
Earious regional units may become so engrossed in short run
competition among themselves that they may forget the overall
interest of the total organi(ation"
;" De%artmentation b! $rocess basis ! is done on the basis of several discrete
stages in the process or technologies involved in the manufacture of a product"
, cotton te6tile mill have separate departments for ginning, spinning,
weaving, dyeing and printing and pac$ing and sales"
#acilitates the use of heavy and costly equipment in an efficient
3t follows the priniciple of speciali(ation ! each dept is engaged
in doing a special type of wor$" <his increases efficiency"
3t is suitable for Organisation which are engaged in the
manufacture of those product which involve a number of
)ifficult to compare the performance of different process based
4" De%artmentation b! $rod"ct basis ! suited for a large organi(ation
manufacturing a variety of products" #or each ma2or product a semi%
autonomous department is created and is put under the charge of a manager
who may also be made responsible for producing a profit of a given
magnitude" /roduct dept is the logical pattern to follow when each product
requires raw materials, manufacturing, technology and mar$eting methods and
that are mar$edly different from those used by other products in the
Organisation" 5g &44 manufacturing detergents, toiletries, Clearasil cream
and soap"
:elieves top management of operating tas$ responsibility" 3t can
therefore better concentrate on such centrali(ed activities li$e
finance, :- ) and control
5nables the top management to compare the performance of
different products and invest more resources in profitable
products and withdraw resources from unprofitable ones"
<hose who wor$ within a department derive greater satisfaction
from identification with a recogni(able goal"
:esults in duplication of staff and facilities
5mployment of large number of managerial personnel is required"
5quipment in each product department may not be fully used
>" De%artmentation b! C"stomer basis ! ,n enterprise may be divided into a
number of departments on the basis of the customers that it services" #or 5g"
,n educational institution may have separate departments for day, evening
and correspondence course to impart education to full time students, locally
employed students and autstation students respectively"
3t ensures full attention to ma2or customer groups and helps the
company to earn goodwill"
3t may result in under utili(ation of resources and facilities in
some department"
<here may be duplication of facilities
% /ower to ta$e decision
% :ight to get orders and obey orders
% /ower ! ,bility of individual to influence the action of other person
% ,uthority ! right in a position to e6ercise discretion in ma$ing decision
affecting others"
Bases of $o#er
1" 4egitimate
1" 56pertness
;" :eferrant
4" :eward
>" Coercive
Def * ,uthority may be defined as legitimate right to give orders and to get orders
obeyed" 3t denotes certain rights to ta$e decision and get them e6ecuted by their
/ t!%es of A"thorit!
'ine a"thorit! ! are those that have direct impact on the accomplishment of the
ob2ectives of the enterprises
% is the direct authority which a superior e6ercises over his subordinates to carry
out orders and instructions"
% <he flow of line authority is always downward, that is from a superior to a
% Creates a direct relationship between a superior and his subordinate
% 4ine authority is the direct authority which a superior e6ercises over his
subordinates to carry out orders and inspections such authority delegated top
those positions or elements of the organi(ation which have direct
responsibility for accomplishing the primary ob2ectives"
% 4ine relationship performs the following roles
a" as a chain of command
b" as a carrier of accountability (subordinate is answerable to his
c" as a channel of communication
Staff a"thorit! ! 0taff refers to those elements of the Organisation which help
the line to wor$ most effectively in accomplishing the primary ob2ectives of the
% are those that help the line person wor$ most effectively in accomplishing the
Difference bet#een 'ine and Staff A"thorit!
S*No 'ine A"thorit! Staff A"thorit!
) :ight to decide and command :ight to provide advice,
assistance and information
. Contributes directly to the
accomplishment of Organisational
,ssist line in the effective
accomplishment of Organisation
/ :elatively unlimited and general :elatively restricted to a
particular function
7 #low downward from a superior to
May flow in any direction
depending upon the need of
9 Creates superior and subordinate
56tension of line and support
; 56ercise control 3nvestigates and reports
H Ma$es operating decision /rovides idea for decision
6 8ears final responsibility for )oes not bear final responsibility
8 )oing functions <hin$ing function
)= /rovides channel of
=o channel of communication is
1"nctiona a"thorit! % is the right which an individual or department has delegated
to it over speciali(ed processes, practices, policies or other matters relating to
activities underta$en by personnel in department other than its own"
% generally relates to laying down systems and procedures" #or 5g" <he
personnel manager may lay down the grievances procedure to be followed in
all departments
% granted to a staff specialist to issue instruction to line e6ecutives directly in a
specific and limited area of operation"
Deegation of a"thorit!
% <o delegate means to entrust authority to a subordinate
% ,ssigns some part of his wor$ to his subordinate and also gives the necessary
authority to ma$e decision within the area of their assigned duties
Def " 'oont( and O)onnel, * <he entire process of delegation involves the
determination of results e6pected, the assignment of tas$s, the delegation of authority
for accomplishment of these tas$s, and the e6action of responsibility for their
T!%es of deegation
1" 9eneral or 0pecific
1" #ormal or 3nformal
;" @ritten or oral
4" )ownward and sideward
$rocess of Deegation
1" )etermination of results e6pected
1" ,ssignment of duties
;" 9ranting of authority
4" creating accountability for performance
Acco"ntabiit! ! is the obligation to carry out responsibility and e6ercise
authority in terms of performance standard established by the superior
% Once a subordinate is assigned a duty and given the necessary authority to
complete it, he becomes answerable for the results" <hus accountability is a
derivative of responsibility"
$rinci%es of Deegation
1" )elegation to conform to desired ob2ectives
1" :esponsibility not delegatable
;" ,uthority to match duties
4" .nity of command
>" 4imits to authority to well%defined
1" 8asis of effective functioning
1" :eduction in managerial load
;" 8enefits of speciali(ed service
4" 5fficient running of branches
>" ,id to employee development
?" ,id to e6pansion and diversification of business
Effecti(e Deegation
1" )efine assignments and delegate authority in the light of results e6pected
1" 0elect the person in the light of the 2ob
;" Maintain open lines communication
4" 5stablish proper control
>" :eward effective and successful assumption of authority
- #illing and $eeping filled, positions in the Organisation structure"
- )ef ! 'oont( and O)onnell * <he managerial functions of staffing
involves manning the Organisational structure through proper and effective
selection, appraisal and development of personnel to fill the roles designed
into structure"
1"nctions of Staffing
)* $roc"rement
! Job analysis
! Man power planning
! :ecruitment
! 0election
! /lacement
.* De(eo%ment
- /erformance appraisal
- <raining
- Management )evelopment
- Career /lanning - )evelopment
- /romotion
/* Com%ensation
! Job evaluation
! @age and 0alary administration
! 3ncentives
! #ringe 8enefits
! 0ocial security measures
7* 5"man Reations
- is an area of management in integrating people into wor$ situation in a way
that motivates them to wor$ together productively, co%operatively and with
economic, psychological and social satisfaction"
Se<"ence of acti(it! in Staffing
$reem%o!ment acti(ities % :equisitioning, :ecruiting - 0electing
$ost em%o!ment acti(ities % <raining, appraising, /romoting and
Compensating, /roviding miscellaneous services"
$"r%ose and Im%ortance
1" 3ncreasing si(e of Organisation
1" ,dvancement of technology
;" 4ong range needs of manpower
4" &igh wage bill
>" <rade unionism
?" &uman relations movement
Recr"itment D Seection
- 1
0tage, continues with selection and stops with the placement of the
- Pve it stimulates people to apply for 2obs to increase the hiring ration" i"e"
the number of applicants for a 2ob
- 9oal of :ecruitment is to create a large pool of persons available and
wiling to wor$"
- 0electing the person overall
- )ef"% 5dwin - #lippo ! * :ecruitment is the process of searching for
prospective employees and stimulating them to apply for 2obs in the Orgn"
So"rces of Recr"itment
1" Interna so"rces ! 3t includes personnel already on the payroll of an
Organisation, presenting wor$ing force"
- 4ess e6pense
- 8uilds loyalty
- 5nsures stability
- 0ense of security
- 4ower level to loo$ forward to rising to higher levels
- Morale of the employees (0hows more 5nthusiasm)
- /romotion based on seniority, inefficient people may also be promoted this
will ultimately ruin the prospects of the firm"
- <here will not be any any creativity
- 4ac$ of <echnical s$ills
1" E-terna So"rces ! #resh flood should be in2ected so as to ma$e it more
- freshers from college
- unemployed with a wide range of s$ills and abilities
- retired e6perienced person
- required s$ills
- )o ob2ective selections (since people are recruited from a large mar$et, the
best selection can be made without any distinctions of caste, colour,
- May b economical in the long run (training is not required)
%8rain )rain ! 56perienced persons or raided or hunted by other concerns
Methods or Techni<"es of Recr"itment
1" Direct Method ! campus recruitment
1" Indirect Method ! use advertisements for recruitment in newspaper, 2ournal,
- 8lind advertisement ! without company name the advertisement been
/* Third $art! method
a" /rivate 5mployment agency
b" /ublic 5mployment agency
c" &ead hunters (/rofessional :ecruiting agencies)
d" 5mployee :eferrals (:ecommendations)
e" <rade .nions
f" ,pplicant at the gate
g" Eoluntary Organisation
h" Computer data ban$
Recr"itment $oic! 9 Eements
1" 3dentification of :ecruitment needs
1" /referred sources of :ecruitment
;" Criteria of selection and selection techniques
4" Cost of :ecruitment
>" :ole, if any assigned to the union in the formulation and implementation of
recruitment and selection policies"
- /rocess of discovering the most suitable and promising candidates to fll up
the vacancies
- <he goal of selection is to sort out or eliminate those 2udged unqualified to
meet the 2ob and organi(ational requirements
- %ve action, after receiving the application select a particular person
- :ecruitment is a method while selection is a procedure"
- 0uccessive hurdles techniques
Ste%s in Seection
- , process of re2ecting the unwanted applicant
1" :eceiving application
1" /reliminary screening 7 3nterview
;" ,pplication blan$
4" /sychological test
>" 3nterview
?" :eference chec$
A" /hysical 56amination
B" #inal 3nterview
<he 3nterview is the most frequent method of selection" <he 3nterview is a face
to face conversation between an applicant and the employer" <he purpose of
3nterview is to collect information on behaviour, attitudes, opinions, maturity,
emotional stability, enthusiasm, confidence, response and other commercial
1actors considered in Inter(ie#
@or$ 56perience
5motional 0tability
T!%es of Inter(ie#
1" Str"ct"red Inter(ie# ! is also called as patterned interview" <he interviewers
are trained in the process to be used" , list of questions on analysis of the 2ob
specification is prepared" <he 3nterviewing process attempts to predict how
candidates will perform in the wor$ situations"
1" Gro"% or Disc"ssion Inter(ie# ! <he interviewees are given certain
problems and are as$ed to reach a specific decision within a particular time
limit" <he applicants enter into group discussion, $nowing that the interview is
a test, but do not $now which qualities are being measured or tested" <he
ob2ect is to see how individuals perform on a particular tas$ or in a particular
;" $ane or Board Inter(ie# ! Candidate is interviewed by a number of
interviewers" Fuestions may be as$ed in turn or as$ed in random order as
they arise on any topic"
4" Stress Inter(ie# ! <he 3nterview assumes a hostile role toward the applicant"
&e deliberately puts him on the defensive by trying to any, embarrass or
frustrate him" <he purpose is to find out how a candidate behaves in a stress
situation whether he loses his temper, gets confused or frightened"
<he /lacement of the individual on the new 2ob and orienting him to the
Organisation" /lacement may be defined as the determination of the 2ob to which an
accepted candidate is to be assigned to that 2ob" , proper placement of a wor$er
reduces 5mployee turnover, absenteeism and accident rates and improve morale"
,fter the selection, the employee is generally put on a probationary period
ranging from one to two years after his employment to regulari(ed, provided that
during this period, his wor$ has been found to be satisfactory"
56ecutive )evelopment
Orientation 0 Ind"ction 0 Indoctrination
3nduction is a technique by which a new employee is rehabilitated into the
changed surroundings and introduced to the practices, policies and purposes of the
The Main ObBects of Orientation
1" Clarifying the 2ob
1" )eveloping realistic e6pectation about the Organisation
;" :educing the amount of stress of new employee
4" :educing startup costs
>" 0trengthening the relationships between new employee, his superiors and
, formal orientation programme generally provides information regarding the
following G
1" <he history of the Organisation
1" /roducts and services of the Company
;" Organisation structure of the enterprise
4" 4ocation of departments and .nits
>" /ersonnel policies and practices
?" 5mployees facilities and services
A" :ules and :egulations
B" 9rievance procedures
C" 0afety Measures
% <raining is an organi(ed process for increasing the $nowledge and s$ills of
people for definite purpose"
Training D Ed"cation
% <raining and 5ducation is concerned with imparting specific s$ills for
particular purpose
% /urpose of <raining is to bring about improvement in the /erformance of
% 3ncludes the learning of such s$ills as are required to do a specific 2ob in a
better way
Training D De(eo%ment
% )evelopment involves the growth of the individual in all respects
% <raining is 2ob centered whereas development is career bound
% ,ims at increasing the capacity for further tas$s of greater difficulty
% Contents and techniques of employee training may differ from those of
Management )evelopment"
Training D De(eo%ment $rocess
1" )etermining <raining =eeds
a" Organi(ational analysis ! ( analy(ing the present and future needs of the
total Organi(ation)
b" Operational analysis ! (need of a specific group of 2obs)
c" 3ndividual analysis ! (analy(ing the need of the specific 5mployee)
1" )eciding the purpose of <raining
;" Choosing <raining method
4" 5valuating <raining 5ffectiveness
Need for Training arises on the acco"nt of foo#ing reasons !
1" =ew 5nvironment
1" 4ac$ of <rained /ersonnel
;" ,dvancement in <echnology
4" #aculty Methods
>" /revention of accidents
?" Career )evelopment"
Need for Training
1" <o improve 2ob related s$ills
1" <o update 'nowledge and s$ills
;" <o prepare for higher responsibilities and tas$
4" <o develop proper 2ob related attitudes
>" <o in2ect motivation and morale
?" <o mould personnel to adapt and ad2ust to Organi(ational change
Ad(antages of Training
1" 3ncreased productivity
1" Job 0atisfaction
;" :eduction in accidents
4" 8etter use of :esources
>" :educed 0upervision
?" 9reater #le6ibility
A" Management by 56ception
B" 0tability and 9rowth
Essentia of a good Training $rogramme
, good training programme must satisfy the following conditions
1" Clear /urpose
1" <raining =eeds
;" :elevance
4" 3ndividual )ifferences
>" ,ppropriate incentives
?" Management 0upport
A" 8alance between theory and practice"
Training $roced"re
1" /reparing the 3nstructor
% $now the 2ob or sub2ect he is attempting to teach
% &ave the aptitude and ability to teach
% &ave willingness towards the profession
% /leasing /ersonality and capacity for leadership
% 'nowledge of teaching /rinciples and methods
1" /reparing the <rainee
;" 9etting ready to teach
4" /resenting the Operation
>" <ry out the <rainees performance
?" #ollow % up
Methods and Techni<"es of Training
1" On the Job <raining
a" Coaching
b" .nderstudy
c" Job :otation
1" Eestibule <raining ! ( )ummy Machine set up )
;" ,pprenticeship <raining
4" Classroom <raining
E-ec"ti(e De(eo%ment 0 Management De(eo%ment
* )eveloping a manager is a progressive process in the same sense that educating a
person it" =either development nor 5ducation should be thought of as something that
can ever be completed, for there are no $nown limits to the degree to which one may
be developed or educated+
Methods of E-ec"ti(e De(eo%ment
)* On the Fob Method
a" Coaching and .nderstudy
b" /osition rotation
c" 0pecial pro2ects and tas$ forces
d" Committee assignments
e" Multiple Management
.* Off the Fob Method
a" 0pecial courses
b" Conferences and 0eminars
c" Case study
d" 0elective :eadings
e" 8rain 0torming
f" 0imulation , role /laying and Management 9ames
g" 0ensitivity <raining
Creativit$ and -nnovation - Motivation and Satisfaction - Motivation Theories -
+eadershi" St$les - +eadershi" theories - Communication - 'arriers to effective
communication - Organization Culture - Elements and t$"es of culture - Managing
cultural diversit$
)irecting concerns the total manner in which a manager influences the actions of
subordinates" 3t is the final action of a manager in getting others to act after all
preparations have been completed" 3t consist of the following elementsG
1" issuing orders and instructions
1" continuing guidance and supervision of subordinates
;" motivating subordinates to wor$ hard for meeting the e6pectation of
4" maintaining discipline and rewarding those who perform well
>" providing leadership to subordinates
1" 5lements of Management
1" Continuing #unction
;" /ervasive #unction
4" Creative #unction
>" 4in$ing function
?" Management of &uman #actor
1" 3nitiates action
1" 5nsures coordination
;" 3mproves efficiency
4" #acilitates change
>" ,ssists stability and growth
1" &armony of ob2ectives
1" Ma6imum individual contribution
;" .nity of command
4" ,ppropriate techniques
>" )irect 0upervision
?" 0trategic use of 3nformal Organi(ation
A" Managerial Communication
B" 5ffective 4eadership
C" /rinciple of #ollow up through
1" )elegation
1" 0upervision
;" Orders and instructions
4" Motivation
>" 4eadership
?" Communication
0upervision implies e6ert overseeing of people at wor$ in order to ensure
compliance with established plans and procedures" 5very e6ecutive has to
supervise the wor$ of his subordinates" ,t the operating level, supervision is the
most significant part of the manager 2ob" <he supervisor is in direct touch with
the wor$ers" &e teaches proper wor$ methods, maintains discipline and wor$
standards and solve wor$ers grievances or problems"
1" <o schedule wor$ so as to ensure an even and steady flow"
1" <o assign wor$ to different individuals
;" <o provide proper wor$ing conditions
4" <o issue orders and instructions
>" <o prescribe wor$ methods and procedures
?" <o guide, train and inspire wor$ers in the efficient performance of wor$"
1" 'nowledge of @or$
1" 'nowledge of the Organi(ation
;" Communication 0$ill
4" &uman :elation of 0$ill
>" )ecisiveness
1" /lanning the wor$
1" Organising the :esources
;" 0taffing the units
4" Maintaining discipline
>" 5nforcing safety measures
?" &andling 9rievances
A" ,ppraising performance
1" /lanning the wor$
1" <ime management and delegation
;" Organising the resources
4" 0taffing the .nits
>" <rianing and development of 5mployees
?" )isciplining the @or$ers
A" ,ppraising the performance of 5mployees
B" Controlling the results
C" 4abour relations and 9rievance procedures
4eadership is defined as influence, the art or process of influencing people so that
they will strive willingly and enthusiastically toward the achievement of group goals"
% 4eaders act to help a group attain ob2ectives through the ma6imum
application of its capabilities"
% 4eaders must instill values ! whether it be concern for quality, honesty and
calculated ris$ ta$ing or for employees and customers"
1" <he ability to use power effectively and in a responsible manner
1" <he ability to comprehend that human beings have different motivation forces
at different times and in different situations
;" <he ability to inspire
4" <he ability to act in a manner that will develop a climate conductive to
responding to and arousing motivations"
>" #undamental understanding of /eople
?" ability to inspire followers to apply their full capabilities to a pro2ect
'eadershi% St!es
1" A"tocratic 'eader !Commands and e6pects compliance, is dogmatic and
positive, and leads by the ability to withhold or give rewards and punishment"
1" Democratic or $artici%ati(e ! consults with subordinates on proposed
actions and decision and encourage participation from there
;" 1ree-rein eader 0 aisse3-faire 'eadershi% ! uses his or her power very
little, giving a high degree of 3nterdepence in their operations" 4eaders depend
largely on subordinates to set their own goals and the means of achieving
them, and they see their role as one of aiding the operation of followers by
furnishing them with information and acting primarily as a contact with the
groups e6ternal 5nvironment"
4" $aternaistic 'eadershi% ! 0erves as the head of the family and treats his
followers li$e his family members" &e assumes a paternal or fatherly role to
help, guide and protect the followers"
1" 9oal )etermination
1" Motivating #ollowers
;" )irection
4" Coordination
>" :epresentation
Im%ortance of 'eadershi%
1" ,id to authority
1" Motive power to group efforts
;" 8asis for co operation
4" 3ntegration of #ormal and 3nformal Organi(ation"
1" Trait Theor! ! , 4eader is a one who has got a enthusiastic loo$, courageous
loo$ ! describes the e6ternal qualities of a person
1" Beha(iora Theor! ! , person who intend to be leader, they do not have any
qualities li$e <rait <heory
/* Contigenc! Theor! +
a* 1ieder Mode
b* 'i&ert Mode
c* Manageria Grid Theor!
1ieder Mode % 4eaders can be classified as two %
a" :elationship Oriented
b" <as$ Oriented
; 0ituations been given to find the performance of two types of 4eader%
! 4eader member :elationships
% <as$ 0tructure
% /osition /ower
5mployees under :elationship oriented 4eader seems to achieve more performance
than the other"
'i&erts Mode
0ystem 1 ! 56ploitive ,utocratic 4eader (oriented towards tas$ alone)
0ystem 1 ! 8enevolent ,utocratic 4eader (tas$ oriented but has the quality of
opposing if things are good)
0ystem ; ! /articipative 4eader (concerns the employees for a particular $ind of
wor$, though he concern decision will be ta$en only by him"
0ystem 4 ! )emocratic 4eader
; 0ituations
1" Confidence 7 <rust in 5mployees
1" 0ubordinates feeling of freedom
;" Managers see$ing involvement with 0ubordinates
:atings of the 4eaders by their employees at different situations
Manageria Grid Theor!
/roposed by 8la$e and Mounton
1 'inds of 4eader
1" 4eaders concerned for /eople
1" 4eader concerned for production 7 <as$
'eader st!es
1" <as$ Manager 5g )efence , Concerned only on tas$
1" <eam 8uilders ! leaders high concern for production as well as people
;" 3mpoverished 0tyle ! .nfit for 4eadership qualities, less concern for people as
well as production
4" Country club Manager 5g ! <rade union, high concern for people than
Communication is derived from the 4atin word Communis which implies
common" Communication is the interchange of thoughts and information"
1" 0ender
1" Message ! <he 0ub2ect matter of Communication
;" 5ncoding ! act of translating he msg into words, pictures, symbols
4" Channel ! Media used
>" :eceiver !
?" )ecoding ! interprets the msg to draw meaning from it" &e converts symbols,
signs or pictures into meaning
A" #eedbac$ !
So"nd Comm"nication %ro(ides the foo#ing ad(antage
1" 3mproves Mangerial /erformance
1" #acilitates 4eadership
;" 3ncreases 2ob 0atisfaction
4" :educes time and efforts
>" 5nhances coordination
?" &elp public relations
1" 1orma Comm"nication ! follows the route formally laid down in the
organi(ation structure
a" Do#n#ard Comm"nication ! flow of communication from superior
to subordinate
b" ?%#ard Comm"nication % flow of communication from subordinate
to superior
c" 5ori3onta Comm"nication ! transmission of information among the
positions at the same level of he Organi(ation"
1" Informa Comm"nication or Gra%e(ine ! Communication among people
through informal contacts or relations"
Disting"ish bet#een Do#n#ard and ?%#ard Comm"nication
Do#n #ard ?%#ard
#rom higher to lower levels #rom lower to higher levels
#low is downward #low is upward
)irective in nature =on%directive
/urpose is to get plans implemented /urpose is to provide feedbac$ on
<ravels fast <ravels slowly
Orders, instructions, lectures,
manuals, handboo$s, etc are the main
:eports, suggestions, grievances,
protests, surveys are the main
Distinction bet#een 1orma and Informa Comm"nication
1orma Comm"nication Informa Comm"nication
Official Channel .nofficial Channel
)eliberately /lanned and 0ystematic .nplanned and 0pontaneous
/art of Organi(ation 0tructure Cuts across formal relationships
Oriented towards goals and tas$ of
the enterprises
)irected towards goals and need
satisfaction of individuals
3mpersonal /ersonal and social
0table and rigid #le6ible and instable
0low and 0tructured #ast and .nstructured
Gra%e(ine Merits and Demerits
Merits Demerits
.seful for developing group
8ased on rumors
0erves as an emotional safety value Misleads /eople
5ffective source of $nowledge
feelings and attitudes of 5mployees
May breed against particular
0upplements the channels of official
May lead to more tal$ and less wor$
<ells mgt when to be firm and when
to yield
May distort official channels of
1" Oral Communication
1" @ritten Communication
;" 9estural Communication
Oral Communication involves e6change of messages through spo$en words" 3t may
ta$e place" i) by face% to face contacts ii) through mechanical devices li$e
Oral or Eerbal communication offers the following advantagesG
1" 5conomical
1" /ersonal touch
;" 0peed
4" #le6ibility
>" Fuic$ response
Oral Communication suffers from the following wea$nesses%
1" 4ac$ of record
1" <ime Consuming
;" 4engthy message
4" /hysical distance
>" Misunderstanding
@ritten Communication is transmitted through written words in the form of letter,
circular, memos, bulletins, instruction cards, manuals, handboo$s, reports, returns,
1" 5ffectiveness
1" 4engthy messages
;" 5conomical
4" :epetition
>" /ermanent record
?" 8etter response
1" <ime Consuming
1" 56pensive
;" 3nfle6ibility
4" 4ittle secrecy
>" 4ac$ of personal touch
?" Misunderstanding
1" Circle =etwor$
1" Chain =etwor$
;" @heel =etwor$
4" ,ll Channel =etwor$
a* Organisationa Barriers
1" ,mbiguous policies, rules and procedures
1" 0tatus patterns
;" 4ong chain of Command
4" 3nadequate #acilities
b*Mechanica Barriers
1" Overloading
1" 0emantic barriers
;" =oise
c*$ersona Barriers
1" 4ac$ of attention or interest
1" #ailure to Communicate
;" &asty Conclusion
4" )istrust of communicator
>" 3mproper state of mind"
1" 0ound Organi(ation 0tructure
1" Clear messages
;" <wo%way Communication
4" Multiple Channels
>" 9ood 4istening
?" 5ffective Control
A" Modern 3nstrument
B" &uman :elations attitude
1" Clarity of messages
1" Completeness of message
;" Consistency of message
4" proper timing
>" Credibility
?" 5mpathy
A" #ollow%up
B" 5conomy
#rocess of controlling - T$"es of control - 'udgetar$ and non-budgetar$ control
techni.ues - Managing #roductivit$ - Cost Control - #urchase Control - Maintenance
Control - /ualit$ Control - #lanning o"erations
% as the process of analy(ing actual operations and seeing that actual
performance is guided towards e6pected performance"
% Comparing operating results with plans and ta$ing corrective actin when
results deviate from plans
% )ef" 'oont( and O)onnell * <he managerial function of controlling is the
measurement and correction of the performance of activities of
subordinates in order to ma$e sure that enterprise ob2ectives and the plans
devised to attain them are being accomplished"
Nat"re D $"r%ose of Contro
1" Control is an essential function of management
1" Control is an ongoing process
;" Control is forward ! wor$ing because pas cannot be controlled
4" Control involves measurement
>" <he essence of control is action
?" Control is an integrated system
Eements of Contro
1" /lanning
1" 3nformation #eedbac$
;" )elegation of ,uthority
4" :emedial action
Control /rocess
1" #i6ation of 0tandard
1" Measurement of /erformance
;" Comparing performance with standards
4" Correction of )eviations
$robems in the Contro $rocess
Magnitude of Change
<ime rate of Change
5rroneous standard ( Mista$es in setting standard)
@or$ers :esistance
Communication /roblems
Characteristic of an idea Contro s!stem
#orward loo$ing
0trategic point control
Techni<"es of Manageria Contro
Traditiona Techni<"es
1" $ersona Obser(ation ( #or 5g" , #actory manager goes around the plant,
observes the performance of 5mployees and Machines)
.* Good Organisation Str"ct"re
/* ?nit! of $ans
7* Statistica Contro Re%orts
>" B"dgetar! contro ! 0tatement e6pressed in financial terms
a" Master budget
b" #unctional 8udget % 0ales budget, /roduction budget, Material
budget, 4abour budget, Cash budget, ,dministrative Overhead
c" Capital - :evenue budget
d" #i6ed and #le6ible 8udget
e" Qero base budgeting ( the budget proposals are considered from
the ground up ( (ero base) or from scratch
ObBecti(es of B"dgetar! Contro
a" /lanning
b" Coordination
c" Control
d" Motivation
e" 5fficiency
Optimum use of resources
#i6ation of :esponsibility
5ffective coordination
/lanned approach
;* $rofit D oss contro
H* E-terna a"dit Contro
6* O(era Contro criteria 2 BE$ Ana!sis4
8* Ret"rn on In(estment Contro
)=*Management A"dit
Organisation 0tructure
56ecutive appraisal
#unctioning of the management board
0oundness of 5arning
5conomic #unctioning
0ervice to stoc$ holders
: - )
#iscal /olicy
/roduction 5fficiency
))*Res%onsibiit! acco"nting
Cost centre
/rofit centre
3nvestment centre

Techni<"es of Management
M8/ ! Management by /articipation implies the mental and emotional
involvement of employees, share holders, investors, consumers and
other sta$e holders in the decision ma$ing process"
1" @or$ Committee
1" Joint Management Councils
;" @or$er )irectors
4" Co%partnership
$rod"cti(it! D O%erations Management
/roductivity which accounts for profitable operations of an enterprises
and provides opportunities to an enterprise for remaining competitive
and successful in an area of global competition
Output ! input ratio, within a given time period - with due
consideration for quality of /erformance
$robems in Meas"ring $rod"cti(it! of @no#edge #or&ers
% Measurement of the productivity of s$ill wor$ers is easier but it becomes
more difficult to measure the productivity of $nowledge wor$ers
% 9reatest scope for increasing productivity lies in the wor$ performed by
$nowledge wor$ers 5g" Managers, 5ngineers, Cost accountant, etc"
O%eration Management
% is the design and operation of systems" @or$ing of Operation Management"
In%"t Transformation 0 O"t%"t
Con(ersion %rocess
:aw Materials
Main /ower /lanning, operating - /roduct
Management Controlling production 0ervices
/hysical #actors ( li$e land, 0ystem
8uilding, Machines, etc)
1eedbac& 56ternal 5nvironment
De(eo%ing E-ceent Managers + The &e! to %re(enti(e contro
a" 5fforts required on the part of managers themselves
@illingness to learn
/lanning for 3nnovation - 3nventions
<ailoring 3nformation
b" 5fforts required on the part of the Organisation
,cceleration of Managerial )evelopment programmes
Measuring Managerial programmes and rewarding it
=eed for management : - )
=eed for 3ntellectual 4eadership
9lobalisation means the internationali(ation of trade" /articularly
product transaction and the integrating of economic and capital mar$ets
throughout the world"
<he integration ta$es place when trade e6ists freely among the different
countries, thus the world economy becomes a single mar$et or single
3n globali(ation there is no restriction of quota, license, tariff and other
administrative barrier for trade"
Benefits of Gobaisation
3mproves efficiency
3mproves factor 3ncome
3mproves finance
9ains from Migrations
Dra#bac&s of Gobaisation
9lobalisation increases the problems of unemployment
1" )omestic 3ndustries finds difficulty in survival
Only group of people who participate in the process of 9lobali(ation will be
benifitted, this creates income inequality within the country
1" Control on domestic economy becomes more difficult
;" )eveloping country suffers from the problem of brain%drain
Internationa B"siness
% 3nvolves commercial activities that cross national frontiers
% 3t is a process of 5ntrepreneur conducting business activities across
national boundaries
% 3t consist of 56porting, 3mporting, l3censing, opening of 0ales office
% <he activities necessary for ascertaining the need and want of target
consumer often ta$es place in more than one country" @hen an
5ntrepreneur e6ecutes his or her business model in more than one country
3nternational 8usiness Occuring"
Entr! into Internationa B"siness
<he method of entering or engaging in 3nternational 8usiness can be divided
into three categories
o 3ndirect 56porting
o )irect 56porting
Non E<"it! arrangement ! )oing international business through an
arrangement that does not involve any investments"
% 4icensing % allowing someone else to use something of
the companys in return for the payment of royalty
% <urn $ey /ro2ects ! , foreign 5ntrepreneur build a
factory or other facility, training the wor$ers, train the
management and then turn it over to the local owners
once the operation is completed, hence the name turn
$ey operation
% Management Contracts ! Contracting management
techniques and s$ills" <he management contracts allows
the purchasing country to gain foreign e6pertise without
giving ownership of its resources to a foreigner"
Direct 1oreign In(estments ! preferred mode of ownership
a" Minority 3nterest ! &aving less than >DI Ownership /osition
b" Joint Eentures ! Merger of two companies