Principles and Practices of Management Piyush

8/8/2019 Principles and Practices of Management Piyush

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Principles and Practices of Management

Forming of an organisation

Institution

Profit making

Non profit making

social

Levels of Management

Top Level of Management

It consists of board of directors, chief executive or managing director. The top management is the

ultimate source of authority and it manages goals and policies for an enterprise. It devotes more time on

planning and coordinating functions.

The role of the top management can be summarized as follows

Top management lays 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 appoints 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 provides guidance and direction.

The top management is also responsible towards the shareholders for the performance of the

enterprise.

Middle Level Management

The branch managers and departmental managers constitute middle level. They are responsibleto the top management for the functioning of their department. They devote more time to

organizational and directional functions. In small organization, there is only one layer of middle level of

management but in big enterprises, there may be senior and junior middle level management. Their role

can be emphasized as

They execute the plans of the organization in accordance with the policies and directives of the top

management.


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They make plans for the sub-units of the organization.

They participate in employment & training of lower level management.

They interpret and explain policies from top level management to lower level.

They are responsible for coordinating the activities within the division or department.

It also sends important reports and other important data to top level management.

They evaluate performance of junior managers.

They are also responsible for inspiring lower level managers towards better performance.

Lower Level of Management

Lower level is also known as supervisory / operative level of management. It consists of supervisors,

foreman, section officers, superintendent etc. According to R.C. Davis, Supervisory management refers

to those executives whose work has to be largely with personal oversight and direction of operative

employees. In other words, they are concerned with direction and controlling function of management.

Their activities include

Assigning of jobs and tasks to various workers.

They guide and instruct workers for day to day activities.

They are responsible for the quality as well as quantity of production.

They are also entrusted with the responsibility of maintaining good relation in the organization.

They communicate workers problems, suggestions, and recommendatory appeals etc to the higher level

and higher level goals and objectives to the workers.

They help to solve the grievances of the workers.

They supervise & guide the sub-ordinates.

They are responsible for providing training to the workers.

They arrange necessary materials, machines, tools etc for getting the things done.

They prepare periodical reports about the performance of the workers.

They ensure discipline in the enterprise.

They motivate workers.

They are the image builders of the enterprise because they are in direct contact with the workers.


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Difference between Management and Administration

Functions

Usage / Applicability

On the Basis of Functions: -

On the Basis of Usage: -

Levels of Management

Top Level

Middle Level

Bottom level

Evolution of Management thought

Taylor

Fayol,

Weber,

systems approach

F. W. Taylors Principles

1. Time study

2. Motion study

3. Standardisation

4. Functional foremanship

5. Differential piece rate plan

Henry Fayols Administrative Management

1) Division of work

2) Authority and responsibility

3) Discipline

4) Unity of command


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5) Unity of direction

6) Subordination of individual to general interest

7) Remuneration of personnel

Henry Fayols Administrative Management

8) Centralisation

9) Scalar chain

10)Order

11)Equity

12)Stability of tenure

13)Initiative

14)Spirit of cooperation

Max Webers Principles

1) Traditional domination

2) Charismatic domination

3) Bureaucratic (Legal domination)

Principles of a bureaucratic organization

1) official business is conducted on a continuous basis

2) official business is conducted with strict accordance to the following rules:

the duty of each official to do certain types of work is delimited in terms of impersonal criteria

the official is given the authority necessary to carry out his assigned functions

the means of coercion at his disposal are strictly limited and conditions of their use strictly defined

1) every official's responsibilities and authority are part of a vertical hierarchy of authority, with

respective rights of supervision and appeal

2) officials do not own the resources necessary for the performance of their assigned functions but

are accountable for their use of these resources

3) official and private business and income are strictly separated


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4) offices cannot be appropriated by their incumbents (inherited, sold, etc.)

5) official business is conducted on the basis of written documents

Elton Mayos

Human relations approach

1) Illuminating experiments

2) Relay assembly test room

3) Mass interviewing programme

4) Bank wiring observation room experiments

Systems approach

Open system

Closed system

Importance of Planning

1) To offset uncertainty and change

2) To focus of objectives

3) Help in coordination

4) Help in control

5) Increase organisational effeciency

Steps in Planning

1) Perception of opportunities

2) Establishing objectives

3) Planning premises

4) Identification of alternatives

5) Evaluation of alternatives

6) Choice of alternative

7) Formulation of supporting plans

8) Establishing sequence of activities


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Types of Planning

1) Corporate and functional planning

2) Strategic and tactical planning

3) Long term & short term planning

4) Proactive and reactive planning

5) Formal and Informal planning

Fundamentals of Organising

Design of organisation structure

Forms of organisation structure

Authority and responsibility

Conflict and coordination

Organisational Change

Staffing

Controlling

Business environment

Organisation Structure


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PPM

y Introduction to Management

y Management Key Concepts

y Resources of an organization

y The main goal for any organization

y Managerial Levels

y Four Functions of Management

Managerial Concerns

y Roles of managers

y Roles of managers (cont..)

y Roles of managers (cont..)

y Skills of managers

y Skills Needed at Different Management Levels

y The Main Goal For Any Organization

y Development of Major Management Theories

y Major Approaches to Management

y Scientific Management

y General Administrative Theory

y Quantitative Management

y Organizational Behavior

y Systems Approach

y Contingency Approach

y Scientific Management


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y Fredrick Winslow Taylor

y The father of scientific management

y Using scientific methods to define the one best way for a job to be done:

y Putting the right person on the job with the correct tools and

equipment.

y Having a standardized method of doing the job.

y Providing an economic incentive to the worker.

y Taylors Five Principles of Management

y General Administrative Theorists

y Henri Fayol

y Believed that the practice of management was distinct from other organizational

functions

y Developed fourteen principles of management that applied to all organizational

situations

y Max Weber

y Developed a theory of authority based on an ideal type of organization (bureaucracy)

y

Emphasized rationality, predictability, impersonality, technical competence, andauthoritarianism

y Fayols 14 Principles of Management

y Webers Ideal Bureaucracy

y The Systems Approach

y System Defined

y A set of interrelated and interdependent parts arranged in a manner that produces a

unified whole.

y Basic Types of Systems

y Closed systems

y Are not influenced by and do not interact with their environment (all system

input and output is internal).


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y Open systems

y Dynamically interact to their environments by taking in inputs and transforming

them into outputs that are distributed into their environments.

y The Organization as an Open System

y Implications of the Systems Approach

y Coordination of the organizations parts is essential for proper functioning of the entire

organization.

y Decisions and actions taken in one area of the organization will have an effect in other areas of

the organization.

y Organizations are not self-contained and, therefore, must adapt to changes in their external

environment.

y The Contingency Approach

y Contingency Approach Defined

y Also sometimes called the situational approach.

y There is no one universally applicable set of management principles (rules) by which to

manage organizations.

y Organizations are individually different, face different situations (contingency variables),

and require different ways of managing.

y Popular Contingency Variables

y Current Trends and Issues

y Globalization

y Ethics

y Workforce Diversity

y Entrepreneurship

y E-business

y Knowledge Management

y Learning Organizations

y Quality Management


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y Current Trends and Issues (contd)

y Globalization

y Management in international organizations

y Political and cultural challenges of operating in a global market

y Ethics

y Increased creation and use of codes of ethics by businesses

y A Process for Addressing Ethical Dilemmas


y Workforce Diversity

y Increasing heterogeneity in the workforce

y Gender, minority, ethnic, and other forms of diversity in employees

y Aging workforce

y Older employees who work longer and do not retire


y Entrepreneurship

y Pursuit of opportunities

y Innovation in products, services, or business methods

y Desire for continual growth of the organization


y E-Business (Electronic Business)

y The work preformed by an organization using electronic linkages to its key

constituencies

y E-commerce: the sales and marketing component of an e-business


y Knowledge Management


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y The cultivation of a learning culture where organizational members systematically

gather and share knowledge with others in order to achieve better performance.

y Learning Organization

y An organization that has developed the capacity to continuously learn, adapt, and

change.


y Quality Management

y A philosophy of management driven by continual improvement in the quality of

work processes and responding to customer needs and expectations

y What is Management Quality?

y

Understanding Organizational Behavior

y Organizational Behavior (OB)

y The study of the actions of people at work; people are the most important asset

of an organization

y The Hawthorne Studies

y A series of productivity experiments conducted at Western Electric from 1927 to 1932.

y Experimental findings

y Productivity unexpectedly increased under imposed adverse working

conditions.

y The effect of incentive plans was less than expected.

y Research conclusion

y Social norms, group standards and attitudes more strongly influence individual

output and work behavior than do monetary incentives.


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Ethics

BUDGET

What do you mean by Budget

Micro Economics..

List of all planned expenses and revenues.

It is a plan for saving and spending.

Macro Economics..

It is an organizational plan stated in monetary terms

Purpose of Budgeting

Provide a forecast of revenues and expenditure.

Enable actual financial operation of a business to be measured against the forecast.

CHALLENGES

To quickly revert to the high GDP growth path of 9 per cent and then find the means to cross the

double digit growth barrier.

To harness economic growth to consolidate the recent gains in making development more inclusive.

AgricultureGrowth

a) Agricultural production

Rs. 400 crores provided to extend the green revolution to the eastern region of the country

comprising Chattisgarh, Jharkhand, Eastern UP, West Bengal ,Odisa & Bihar.

Rs. 200 crores provided for sustaining the gains already made in the green revolution areas

through conservation farming, which involves concurrent attention to soil health, waterconservation and preservation of biodiversity.

b) Credit support to farmers

Banks have been consistently meeting the targets set for agriculture credit flow in the past few years.

For the year 2010-11, the target has been set at Rs.3,75,000 crore.


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c) Impetus to the food processing sector

In addition to the ten mega food park projects already being set up, the Government has decided to

set up five more such parks.

Infrastructure

Rs 1,73,552 crore provided for infrastructure development which accounts for over 46 per cent of the

total plan allocation.

India Railways

Rs 16,752 crore provided for Railways, which is about Rs.950 crore more than last year.

Energy

Plan allocation for power sector excluding RGGVY doubled from Rs.2230 crore in 2009-10 to

Rs.5,130 crore in 2010-11.

A Coal Regulatory Authority to create a level playing field in the coal sector proposed to be

set up.

Plan outlay for the Ministry of New and Renewable Energy increased by 61 per cent from

Rs.620 crore in 2009-10 to Rs.1,000 crore in 2010-11.

Health

An Annual Health Survey to prepare the DistrictHealth Profile of all Districts shall be conducted in

2010-11.

Plan allocation to Ministry ofHealth & Family Welfare increased from Rs 19,534 crore in 2009-10 to Rs

22,300 crore for 2010-11.

Social Welfare

Plan outlay for Women and Child Development stepped up by almost 50 per cent.

Sakshar Bharat to further improve female literacy rate launched with a targetof 7 crore

non-literate adults which includes 6 crore women.

Plan allocation for the Ministry of Minority Affairs increased by 50 per cent from Rs.1,740crore to Rs.2,600 crore for the year 2010-11.

Defense

This year Central government of India allocated 11,08,749 Crores towards defense.

Which is, 9% of the total expenditure of business year 2010-11.


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As compare to last year allocation increases to 4%.

Thank you

Fiscal Policy

What do you mean by Fiscal Policy

Means by which a government adjusts its levels of spending in order to monitor and influence a nation's

economy.

Can be contrasted with the other main type of macroeconomic policy, monetary policy, which attempts

to stabilize the economy by controlling interest rates and the supply of money.

Instruments of Fiscal Policy

Government Expenditure

Taxation

Government Expenditure

There are three types

Government final consumption expenditure

Government gross capita formation

Transfer payments

Productive expenditures

Educational expenditure

Health expenditure

Housing expenditure

Economic affairs (includes transport).

Unproductive expenditures

Social security andwelfare expenditure

Expenditure on recreation, culture, andreligion

Expenditure on economic services


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General public services expenditure

Other Expenditures

Defense expenditure

Public order andsafety

Other expenditures.

Taxation

Taxation in India

Revenue to the Govt.

Economic development by aiding public expenditure & infrastructure development.

Economic stability by bridging gap between two strata's of society.

(Progressive Policy)

Types of Taxation

Divided In Two Major Categories

Direct Tax

Indirect Tax

Direct Tax

Impact & Incidence on one person.

It is directly charged to a person.

Evasion is possible.

E.g.:Income Tax, Wealth Tax etc.

Indirect Tax

Impact & incidence on different persons.

Has to be paid by the manufacturer or the provider of the good or service.

Manufacturer passes the tax liability on the consumer

E.g.:Excise & Customs Duty, Sales tax, Service Tax etc.


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Difference

Direct Tax-

Applicable on Person.

Indirect Tax-

Applicable on Goods & Services.

Some of the taxes

Income Tax

Provisions are contained in the Income-Tax Act, 1961, which extends to the whole of India & is

operative from the 1st April, 1962.

Provides for determination of taxable income, tax liability, procedures for assessment, appeals,

penalties, interest levies, the tax payment schedules & its determination, refunds & prosecutions.

Income consists of

Profits & gains of Business or Profession

Capital gains (or losses)

Income from Salary

Income from House Property

Income from other Sources

Dividends, Winning from lotteries, races etc.

Interest on securities, bank deposits and loans.

Some of the other Taxes

Service Tax

As per rule 6(1) ofThe Service Tax Rules, service tax is required to be paid on payments received,

towards the value of taxable services.

Customs Duty:

Custom Duty is on Import into India & Export out of India.

The Customs Act, 1962, empowers Central Govt. to make the rules & The Customs Tariff Act, 1975,

prescribes the rate of duty.


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Benefits of the Customs Act (Duty)

Raises Revenue for the CentralGovernment.

Regulates Import & Exports.

Protects Indian Industries from Dumping.

Value Added Tax

Its similar to sales tax

It is a tax on the estimated market value added to a product or material at each stage of its manufacture

or distribution, ultimately passed on to the consumer.

Some of the major taxation laws

1. Finance Act

2. Wealth Tax Act

3. CentralExcise Act, 1944

4. Central Sales Tax, 1956

5. Customs Act, 1962

Thank You

MONETARY POLICY

What is monetary policy?

Credit controlling measure of central bank of a country

Government interfere in economy to control money supply.

Definition:

Monetary policy is defined as the deliberate effort by the central bank to influence economic

activity by variations in the money supply in the availability of credit or interest rates consist

with specific national objective.

Or


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Any conscious action undertaken by the monetary authorities to change the quantity,

availability or cost of money.

Objectives of Monetary policy:

1. Full Employment

2. Economic Growth

3. Price Stability

4. Exchange Stability

5. Neutrality of Money

Full Employment:

It is a foremost objective of any economic policy.

It is difficult to have full employment.

Monetary policy solve this problem by creating an environment for saving & investment

Economic Growth:

Sustainable rise in per capita income with reduction in equalities

Two ways to achieve monetary policy

1) Balance between aggregate monetary demand & supply of goods & services

2) Creating favorable environment for saving & investment

Price Stability:

Fluctuation in price creates uncertainty & make economy unstable

Some amount of flexibility is allowed but wide range fluctuation must be avoided.

To achieve price stability proper monetary policy must be applied.

Exchange Rate Stability:

Stable exchange rate is vital for smoothness in international business

To maintain exchange rate stability country must achieve equilibrium in balance of payment of

the country

Neutrality of Money:


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It is very important factors it directly related to inflation & deflation.

The monetary authority has to keep the quantity of money stable.

This policy can not solve problem of dynamic modern economy.

Conflicts in Policy Objective:

1) Full Employment & Economic Growth:

- Full employment is static concept

- Economic growth is dynamic concept

- it very difficult to achieve both at a time

- Both are interrelated to each other

- If economy is grows then price is bound to increase

- can not expect price stability during economic growth

3) Full Employment & Price Stability

- Full employment & Price stability are incompatible.

- Full employment is achieve by inflation while price stability can be achieved by less

employment.

4) Full Employment & Exchange Stability:

- With increase in employment exchange rate also increases which causes domestic

inflation

THANK YOU

NATIONAL INCOME

BY.- GAURAVSINGH

HIMANSHU BHARADWAJ


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By meaning, the National Income can be defined as the aggregate money value of all the final (not

intermediate) goods and services produced and sold within a country in a year.

According to Marshall;s, National Income represents a total value of production

Y=C+I+G+(X-M)

CIRCULAR FLOWOFINCOMEWITHIN THEECONOMY

2 SECTOR

In this economy, Household and Firm are the 2 sector trading together.

Land, Labour and Capital

Goods and Service

Wages,Saleries,Interest and Profit

Payment for Goods and Services

3 SECTOR ECONOMY

Addition to 2 sector, It includes Government and Financial Institution

Taxes Taxes

Subsidies

Govt. Expenditure

Interest

Personal Savings

Investment Loan

Interest


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PROCEEDURE FOR EVALUATING N.I.

=GDP at MP ( GROSS NATIONAL INCOME)

+NFIA

= NDP atMP

-Depreciation

=NNP at MP

-Indrt Taxes

=NNP at FC (Actual Output of the country)

METHODS OF MEASURING N.I.

1). Aggregate output Method.

Is also referred as Inventory or Census of production method. It approaches N.I. from output.

According to this method, economy is divided into different sectors like- agriculture, mining,

manufacturing, transport, communication etc.

N.I. GDP (mp) + (X-M)

= NDP(mp) Dep.

= NNP (fc) Indirect Taxes

= NNP (fc)

2). Aggregate Income Method.

Approaches N.I. from distribution side. Also known as factor cost method. It is obtained by

aggregating the income (rent, wages, salaries, interest and profit) of all individuals of a economy, which

they receive for services they have rendered for the production of goods and services.

NNP (fc) =Rent+Wages+Interest+profit+Income fromGovt.+

(X-M)

3). Aggregate expenditure Method


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Under this method, N.I. is calculated by adding up all the expenditures ( Consumption + Investment)

made on Goods and Services during a year.

Y(Income)= C+I+G+(X-M) Indirect Taxes Dep.

Where,

C=Consumption

I= Investment

G= Govt. Expenditure

X= Export

M= Import

Limitations in calculation of N.I.

1). Insufficient statistical data .

2). Lack of Knowledge.

3). Goods and Services to be included while calculating N.I.

4). Complicated calculation.

Questions?

Thank You!

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Principles and Practices of Management Piyush

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