Tuesday, 31 March 2015

EEM unit 6,7,1,2,



Q1 “Management is art as well as Science” – Explain
Art implies application of knowledge & skill to trying about desired results. An art may be defined as personalized application of general theoretical principles for achieving best possible results. Art has the following characters -
1.      Practical Knowledge: Every art requires practical knowledge therefore learning of theory is not sufficient. It is very important to know practical application of theoretical principles. E.g. to become a good painter, the person may not only be knowing different colour and brushes but different designs, dimensions, situations etc to use them appropriately. A manager can never be successful just by obtaining degree or diploma in management; he must have also know how to apply various principles in real situations by functioning in capacity of manager.
2.      Personal Skill: Although theoretical base may be same for every artist, but each one has his own style and approach towards his job. That is why the level of success and quality of performance differs from one person to another. E.g. there are several qualified painters but M.F. Hussain is recognized for his style. Similarly management as an art is also personalized. Every manager has his own way of managing things based on his knowledge, experience and personality, that is why some managers are known as good managers (like Aditya Birla, Rahul Bajaj) whereas others as bad.
3.      Creativity: Every artist has an element of creativity in line. That is why he aims at producing something that has never existed before which requires combination of intelligence & imagination. Management is also creative in nature like any other art. It combines human and non-human resources in useful way so as to achieve desired results. It tries to produce sweet music by combining chords in an efficient manner.
4.      Perfection through practice: Practice makes a man perfect. Every artist becomes more and more proficient through constant practice. Similarly managers learn through an art of trial and error initially but application of management principles over the years makes them perfect in the job of managing.
5.      Goal-Oriented: Every art is result oriented as it seeks to achieve concrete results. In the same manner, management is also directed towards accomplishment of pre-determined goals. Managers use various resources like men, money, material, machinery & methods to promote growth of an organization.
Thus, we can say that management is an art therefore it requires application of certain principles rather it is an art of highest order because it deals with moulding the attitude and behavior of people at work towards desired goals.
Management as both Science and Art
Management is both an art and a science. The above mentioned points clearly reveals that management combines features of both science as well as art. It is considered as a science because it has an organized body of knowledge which contains certain universal truth. It is called an art because managing requires certain skills which are personal possessions of managers. Science provides the knowledge & art deals with the application of knowledge and skills.
A manager to be successful in his profession must acquire the knowledge of science & the art of applying it. Therefore management is a judicious blend of science as well as an art because it proves the principles and the way these principles are applied is a matter of art. Science teaches to ’know’ and art teaches to ’do’. E.g. a person cannot become a good singer unless he has knowledge about various ragas & he also applies his personal skill in the art of singing. Same way it is not sufficient for manager to first know the principles but he must also apply them in solving various managerial problems that is why, science and art are not mutually exclusive but they are complementary to each other (like tea and biscuit, bread and butter etc.).
The old saying that “Manager are Born” has been rejected in favor of “Managers are Made”. It has been aptly remarked that management is the oldest of art and youngest of science. To conclude, we can say that science is the root and art is the fruit.

Q2.Mintzberg’s 10 Marginal Role
Management expert Professor Henry Mintzberg has argued that a manager’s work can be boiled down to ten common roles. According to Mintzberg, these roles, or expectations for a manager’s behavior, fall into three categories: informational (managing by information), interpersonal (managing through people), and decisional (managing through action).
This chart summarizes a manager’s ten roles:

Mintzberg’s Managerial Roles

Category

Role

Activity

Examples

Informational

Monitor

Seek and acquire work-related information

Scan/read trade press,  periodicals, reports; attend seminars and
training; maintain personal contacts


Disseminator

Communicate/ disseminate information to others within the organization

Send memos and reports; inform staffers and subordinates of decisions


Spokesperson

Communicate/transmit information to outsiders

Pass on memos, reports and informational materials; participate in
conferences/meetings and report progress





Interpersonal

Figurehead

Perform social and legal duties, act as symbolic leader

Greet visitors, sign legal documents, attend ribbon cutting ceremonies,
host receptions, etc.


Leader

Direct and motivate subordinates, select and train employees

Includes almost all interactions with subordinates


Liaison

Establish and maintain contacts within and outside the organization

Business correspondence, participation in meetings with representatives
of other divisions or organizations. 





Decisional

Entrepreneur

Identify new ideas and initiate improvement projects

Implement innovations; Plan for the future


Disturbance Handler

Deals with disputes or problems and takes corrective action

Settle conflicts between subordinates; Choose strategic alternatives;
 Overcome crisis situations


Resource Allocator

Decide where to apply resources

Draft and approve of plans, schedules, budgets; Set priorities


Negotiator

Defends business interests

Participates in and directs negotiations within team, department, and organization
In the real world, these roles overlap and a manager must learn to balance them in order to manage effectively. While a manager’s work can be analyzed by these individual roles, in practice they are intermixed and interdependent. According to Mintzberg: “The manager who only communicates or only conceives never gets anything done, while the manager who only ‘does’ ends up doing it all alone.”
Q3 Guide Line for Manager.

Manager's Guide to Performance Management

UNDERSTAND

Most employees want to be successful contributors to an organization. They want to know what is expected of them and how they can most effectively achieve those expectations. Performance management is the systematic process that a manager applies to involve employees in accomplishing a unit’s mission and goals, improving overall unit effectiveness, and helping employees understand the importance of their contributions. Effective performance management requires that the manager:
  • Identify the job duties that each employee is expected to accomplish.
  • Communicate the competencies (job knowledge and job skills) necessary to be successful in a position.
  • Ensure that employees have the required competencies, or that there is a process and plan by which they can acquire them.
  • Provide timely feedback on how effectively employees are applying job knowledge and skills to achieve the goals established for their position.
  • Reward effective performance.
In the event that performance does not meet established requirements, the manager must understand the corrective processes and methods that can help improve employee performance.
At the UW, a manager may supervise professional staff, classified staff covered by one or more collective bargaining agreements, classified staff covered by civil service rules, and temporary employees. While performance management principles are the same for all employees, the manager needs to be familiar with the performance requirements that apply to the employment programs.

ACT

Ensure each employee has an up-to-date job description. Employees should have an opportunity to review their job description and obtain clarification on any elements they may not understand.
Develop a list of competencies for each position. If you find that some employees do not possess all of the competencies their positions require, develop training goals so that the desired level of competency can be achieved.
Decide how you can most effectively assess and provide feedback about performance. Be sure your employees understand the measures and/or methods you use to determine how well they are achieving the goals established for them.

Provide Feedback

It is important that feedback be timely. Acknowledge really good work just as readily as you would address work that needs improvement. It can be easy to take good performance for granted and only point out problems. Employees appreciate balance, honesty, and fairness.
At least annually, comprehensively review your employees’ performance. An annual review is an opportunity to accomplish the following:
1.      Sum up an overall assessment of how work has gone over the previous year.
2.      Identify goals that have been met and those where additional effort may be required.
3.      Determine whether the employee’s job description and competencies accurately reflect the reality of the position, and make updates as necessary.
4.      Identify performance, achievement and/or development goals for the upcoming year.
5.      Make sure that the employee has an opportunity to provide input before the review is finalized.
The annual review should be finalized, then reviewed and signed by the employee. The format of the review and its level of detail depend on the nature of the employee’s position and the employment program.
The following table summarizes and provides links to information about performance management requirements for UW staff.

Unsatisfactory Performance

If an employee’s job performance is not satisfactory and normal coaching, counseling and training have not brought performance to an acceptable level, corrective action may be necessary. Classified non-union staff, contract classified staff, and professional staff employment programs each have their own processes and requirements, with which you should be familiar before initiating corrective action.

Assistance

The Human Resources Consultant who serves your unit can advise you in your implementation of performance management practices. Contact your Human Resources Consultant if you believe that some form of corrective action may be appropriate.

EXPLORE

Learn more about performance management from Professional & Organizational Development (POD):
The employee assistance program, UW CareLink, offers support for employees having personal concerns that may be affecting job performance.

Q4. Five Functions of Management.
Effective management and leadership involve creative problem solving, motivating employees and making sure the organization accomplishes objectives and goals. There are five functions of management and leadership: planning, organizing, staffing, coordinating and controlling. These functions separate the management process from other business functions such as marketing, accounting and finance.

Planning

The planning function of management controls all the planning that allows the organization to run smoothly. Planning involves defining a goal and determining the most effective course of action needed to reach that goal. Typically, planning involves flexibility, as the planner must coordinate with all levels of management and leadership in the organization. Planning also involves knowledge of the company’s resources and the future objectives of the business.

Organizing

The organizing function of leadership controls the overall structure of the company. The organizational structure is the foundation of a company; without this structure, the day-to-day operation of the business becomes difficult and unsuccessful. Organizing involves designating tasks and responsibilities to employees with the specific skill sets needed to complete the tasks. Organizing also involves developing the organizational structure and chain of command within the company.

Staffing

The staffing function of management controls all recruitment and personnel needs of the organization. The main purpose of staffing is to hire the right people for the right jobs to achieve the objectives of the organization. Staffing involves more than just recruitment; staffing also encompasses training and development, performance appraisals, promotions and transfers. Without the staffing function, the business would fail because the business would not be properly staffed to meet its goals.

Leading / Coordinating

The coordinating function of leadership controls all the organizing, planning and staffing activities of the company and ensures all activities function together for the good of the organization. Coordinating typically takes place in meetings and other planning sessions with the department heads of the company to ensure all departments are on the same page in terms of objectives and goals. Coordinating involves communication, supervision and direction by management.

Controlling

The controlling function of management is useful for ensuring all other functions of the organization are in place and are operating successfully. Controlling involves establishing performance standards and monitoring the output of employees to ensure each employee’s performance meets those standards. The controlling process often leads to the identification of situations and problems that need to be addressed by creating new performance standards. The level of performance affects the success of all aspects of the organization.
Q5. Levels of Management.
Many managers work in an organisation. However, these managers do not work at the same level. They work and operate at different positions. Hierarchy of these managerial positions is called Levels of Management.

Three Levels of Management

Generally, there are Three Levels of Management, viz.,
1.      Administrative or Top Level of Management.
2.      Executive or Middle Level of Management.
3.      Supervisory or Lower Level of Management.
At each level, individual manager has to carry out different roles and functions.

Diagram of Levels of Mangement


Top Level of Management: The Top Level Management consists of the Board of Directors (BOD) and the Chief Executive Officer (CEO). The Chief Executive Officer is also called General Manager (GM) or Managing Director (MD) or President. The Board of Directors are the representatives of the Shareholders, i.e. they are selected by the Shareholders of the company. Similarly, the Chief Executive Officer is selected by the Board of Directors of an organisation.

The main role of the top level management is summarized as follows :-
1.      The top level management determines the objectives, policies and plans of the organisation.
2.      They mobilises (assemble and bring together) available resources.
3.      The top level management does mostly the work of thinking, planning and deciding. Therefore, they are also called as the Administrators and the Brain of the organisation.
4.      They spend more time in planning and organising.
5.      They prepare long-term plans of the organisation which are generally made for 5 to 20 years.
6.      The top level management has maximum authority and responsibility. They are the top or final authority in the organisation. They are directly responsible to the Shareholders, Government and the General Public. The success or failure of the organisation largely depends on their efficiency and decision making.
7.      They require more conceptual skills and less technical Skills.

Middle Level of Management: The Middle Level Management consists of the Departmental Heads (HOD), Branch Managers, and the Junior Executives. The Departmental heads are Finance Managers, Purchase Managers, etc. The Branch Managers are the head of a branch or local unit. The Junior Executives are Assistant Finance Managers, Assistant Purchase Managers, etc. The Middle level Management is selected by the Top Level Management.

The middle level management emphasize more on following tasks :-
1.      Middle level management gives recommendations (advice) to the top level management.
2.      It executes (implements) the policies and plans which are made by the top level management.
3.      It co-ordinate the activities of all the departments.
4.      They also have to communicate with the top level Management and the lower level management.
5.      They spend more time in co-ordinating and communicating.
6.      They prepare short-term plans of their departments which are generally made for 1 to 5 years.
7.      The middle Level Management has limited authority and responsibility. They are intermediary between top and lower management. They are directly responsible to the chief executive officer and board of directors.
8.      Require more managerial and technical skills and less conceptual skills.

Lower Level of Management: The lower level management consists of the Foremen and the Supervisors. They are selected by the middle level management. It is also called Operative / Supervisory level or First Line of Management.

The lower level management performs following activities :-
1.      Lower level management directs the workers / employees.
2.      They develops morale in the workers.
3.      It maintains a link between workers and the middle level management.
4.      The lower level management informs the workers about the decisions which are taken by the management. They also inform the management about the performance, difficulties, feelings, demands, etc., of the workers.
5.      They spend more time in directing and controlling.
6.      The lower level managers make daily, weekly and monthly plans.
7.      They have limited authority but important responsibility of getting the work done from the workers. They regularly report and are directly responsible to the middle level management.
8.      Along with the experience and basic management skills, they also require more technical and communication skills.

What is Management? Definitions Meaning and Features

Definitions

ü  According to Harold Koontz,
"Management is the art of getting things done through and with people in formally organised groups."
Harold Koontz gave this definition of management in his book "The Management Theory Jungle".
ü  According to Henri Fayol,
"To manage is to forecast and to plan, to organise, to command, to co-ordinate and to control."
Henri Fayol gave this definition of management in his book "Industrial and General Administration".
ü  According to Peter Drucker,
"Management is a multi-purpose organ that manages business and manages managers and manages workers and work."
This definition of management was given by Peter Drucker in his book "The Principles of Management".
ü  According to Mary Parker Follet,
"Management is the art of getting things done through people."

Meaning of Management

According to Theo Heimann, management has three different meanings, viz.,
1. Management as a Noun : refers to a Group of Managers.
2.Management as a Process : refers to the Functions of Management i.e. Planning, Organising, Directing, Controlling, etc.
3.Management as a Discipline : refers to the Subject of Management.
Management is an individual or a group of individuals that accept responsibilities to run an organisation. They Plan, Organise, Direct and Control all the essential activities of the organisation. Management does not do the work themselves. They motivate others to do the work and co-ordinate (i.e. bring together) all the work for achieving the objectives of the organisation.
Management brings together all Six Ms i.e. Men and Women, Money, Machines, Materials, Methods and Markets. They use these resources for achieving the objectives of the organisation such as high sales, maximum profits, business expansion, etc.

Now let's briefly discuss each feature of management.
1. Continuous and never ending process:- Management is a Process. It includes four main functions, viz., Planning, Organising, Directing and Controlling. The manager has to Plan and Organise all the activities. He had to give proper Directions to his subordinates. He also has to Control all the activities. The manager has to perform these functions continuously. Therefore, management is a continuous and never ending process.
2. Getting things done through people:- The managers do not do the work themselves. They get the work done through the workers. The workers should not be treated like slaves. They should not be tricked, threatened or forced to do the work. A favourable work environment should be created and maintained.
3. Result oriented science and art:- Management is result oriented because it gives a lot of importance to "Results". Examples of Results like, increase in market share, increase in profits, etc. Management always wants to get the best results at all times.
4. Multidisciplinary in nature:- Management has to get the work done through people. It has to manage people. This is a very difficult job because different people have different emotions, feelings, aspirations, etc. Similarly, the same person may have different emotions at different times. So, management is a very complex job. Therefore, management uses knowledge from many different subjects such as Economics, Information Technology, Psychology, Sociology, etc. Therefore, it is multidisciplinary in nature.
 5. A group and not an individual activity:- Management is not an individual activity. It is a group activity. It uses group (employees) efforts to achieve group (owners) objectives. It tries to satisfy the needs and wants of a group (consumers). Nowadays, importance is given to the team (group) and not to individuals.
6. Follows established principles or rules:- Management follows established principles, such as division of work, discipline, unity of command, etc. These principles help to prevent and solve the problems in the organisation.
7. Aided but not replaced by computers:-Now-a-days, all managers use computers. Computers help the managers to take accurate decisions. However, computers can only help management. Computers cannot replace management. This is because management takes the final responsibility. Thus Management is aided (helped) but not replaced by computers.
8. Situational in nature:-Management makes plans, policies and decisions according to the situation. It changes its style according to the situation. It uses different plans, policies, decisions and styles for different situations.
The manager first studies the full present situation. Then he draws conclusions about the situation. Then he makes plans, decisions, etc., which are best for the present situation. This is called Situational Management.
9. Need not be an ownership:- In small organisations, management and ownership are one and the same. However, in large organisations, management is separate from ownership. The managers are highly qualified professionals who are hired from outside. The owners are the shareholders of the company.
10. Both an art and science:-Management is result-oriented. Therefore, it is an Art. Management conducts continuous research. Thus, it is also a Science.
11. Management is all pervasive:- Management is necessary for running a business. It is also essential for running business, educational, charitable and religious institutions. Management is a must for all activities, and therefore, it is all pervasive.
12. Management is intangible:- Management is intangible, i.e. it cannot be seen and touched, but it can be felt and realised by its results. The success or failure of management can be judged only by its results. If there is good discipline, good productivity, good profits, etc., then the management is successful and vice-versa.
13. Uses a professional approach in work:- Managers use a professional approach for getting the work done from their subordinates. They delegate (i.e. give) authority to their subordinates. They ask their subordinates to give suggestions for improving their work. They also encourage subordinates to take the initiative. Initiative means to do the right thing at the right time without being guided or helped by the superior.
14. Dynamic in nature:- Management is dynamic in nature. That is, management is creative and innovative. An organisation will survive and succeed only if it is dynamic. It must continuously bring in new and creative ideas, new products, new product features, new ads, new marketing techniques, etc.
 Robert Katz Managerial Skills

Introduction

Management is a challenging job. It requires certain skills to accomplish such a challenge. Thus, essential skills which every manager needs for doing a better management are called as Managerial Skills.
According to Professor Robert Katz, there are three managerial skills, viz.,
1.      Conceptual Skills,
2.      Human Relations Skills, and
3.      Technical Skills.
According to Prof. Robert Katz, all managers require above three managerial skills. However, the degree (amount) of these skills required varies (changes) from levels of management and from an organisation to organisation..

The above picture or diagram shows the managerial skills which are required by managers working at different levels of management. The top-level managers require more conceptual skills and less technical skills. The lower-level managers require more technical skills and fewer conceptual skills. Human relations skills are required equally by all three levels of management.
1. Conceptual Skills:- Conceptual skill is the ability to visualise (see) the organisation as a whole. It includes Analytical, Creative and Initiative skills. It helps the manager to identify the causes of the problems and not the symptoms. It helps him to solve the problems for the benefit of the entire organisation. It helps the manager to fix goals for the whole organisation and to plan for every situation. According to Prof. Robert Katz, conceptual skills are mostly required by the top-level management because they spend more time in planning, organising and problem solving.
2. Human Relations Skills: Human relations skills are also called Interpersonal skills. It is an ability to work with people. It helps the managers to understand, communicate and work with others. It also helps the managers to lead, motivate and develop team spirit. Human relations skills are required by all managers at all levels of management. This is so, since all managers have to interact and work with people.
3. Technical Skills: A technical skill is the ability to perform the given job. Technical skills help the managers to use different machines and tools. It also helps them to use various procedures and techniques. The low-level managers require more technical skills. This is because they are incharge of the actual operations.
Apart from Prof. Robert Katz's three managerial skills, a manager also needs (requires) following additional managerial skills.
4. Communication Skills: Communication skills are required equally at all three levels of management. A manager must be able to communicate the plans and policies to the workers. Similarly, he must listen and solve the problems of the workers. He must encourage a free-flow of communication in the organisation.
5. Administrative Skills: Administrative skills are required at the top-level management. The top-level managers should know how to make plans and policies. They should also know how to get the work done. They should be able to co-ordinate different activities of the organisation. They should also be able to control the full organisation.
6. Leadership Skills: Leadership skill is the ability to influence human behaviour. A manager requires leadership skills to motivate the workers. These skills help the Manager to get the work done through the workers.
7. Problem Solving Skills: Problem solving skills are also called as Design skills. A manager should know how to identify a problem. He should also possess an ability to find a best solution for solving any specific problem. This requires intelligence, experience and up-to-date knowledge of the latest developments.
8. Decision Making Skills: Decision-making skills are required at all levels of management. However, it is required more at the top-level of management. A manager must be able to take quick and correct decisions. He must also be able to implement his decision wisely. The success or failure of a manager depends upon the correctness of his decisions.

Difference between Management and Administration

Key difference: Administration frames the objectives and policies of an organization. Management implements these policies and objectives.

Management and administration are at times used interchangeably; however, they are two different levels of the organization. The administration is the top level of the organization with the decisive functions. They are responsible for determining the policies and objectives of the organization or the firm. Management, on the other hand is the middle level executive function. They implement the policies and objectives as decided by the administration.
The administration includes the people who are either owners or partners of the firm. They usually contribute to the firm’s capital and earn profits or returns on their investment. The main administrative function is handling the business aspects of the firm, such as finance. Other administrative functions usually include planning, organizing, staffing, directing, controlling and budgeting. Administration must integrate leadership and vision, to organize the people and resources, in order to achieve common goals and objectives for the organization.
Management usually incorporates the employees of the firm who use their skills for the firm in return for remuneration. Management is responsible for carrying out the strategies of the administration. Motivation is the key factor of a management. Management must motivate and handle the employees. It can be said that management is directly under the control of administration. 
Further comparison between management and administration:
Management
Administration
Definition
Art of getting things done through others by directing their efforts towards achievement of pre-determined goals.
Formulation of broad objectives, plans & policies.
Nature
executing function, doing function
decision-making function, thinking function
Scope
Decisions within the framework set by the administration.
Major decisions of an enterprise as a whole.
Level of authority
Middle level activity
Top level activity
Status
Group of managerial personnel who use their specialized knowledge to fulfill the objectives of an enterprise.
Consists of owners who invest capital in and receive profits from an enterprise.
Usage
Used in business enterprises.
Popular with government, military, educational, and religious organizations.
Influence
Decisions are influenced by the values, opinions, beliefs and decisions of the managers.
Influenced by public opinion, government policies, customs etc.
Main functions
Motivating and controlling
Planning and organizing
Abilities
Handles the employees.
Handles the business aspects such as finance.
Principles of Scientific Management
Introduction : An early 20th century school of management thought concerned primarily with the physical efficiency of an individual worker.
Scientific management is based on the work of the US engineer Frederick Winslow Taylor (1856-1915) who in his 1911 book The Principles Of Scientific Management laid down the fundamental principles of large-scale manufacturing through assembly-line factories. It emphasizes rationalization and standardization of work through division of labor, time and motion studies, work measurement, and piece-rate wages. See also Taylorism.

Frederick Taylor and Scientific Management


In 1911, Frederick Winslow Taylor published his work, The Principles of Scientific Management, in which he described how the application of the scientific method to the management of workers greatly could improve productivity. Scientific management methods called for optimizing the way that tasks were performed and simplifying the jobs enough so that workers could be trained to perform their specialized sequence of motions in the one "best" way.
Prior to scientific management, work was performed by skilled craftsmen who had learned their jobs in lengthy apprenticeships. They made their own decisions about how their job was to be performed. Scientific management took away much of this autonomy and converted skilled crafts into a series of simplified jobs that could be performed by unskilled workers who easily could be trained for the tasks.
Taylor became interested in improving worker productivity early in his career when he observed gross inefficiencies during his contact with steel workers.

Soldiering Working in the steel industry, Taylor had observed the phenomenon of workers' purposely operating well below their capacity, that is, soldiering. He attributed soldiering to three causes:

1. The almost universally held belief among workers that if they became more productive, fewer of them would be needed and jobs would be eliminated.
2.  Non-incentive wage systems encourage low productivity if the employee will receive the same pay regardless of how much is produced, assuming the employee can convince the employer that the slow pace really is a good pace for the job. Employees take great care never to work at a good pace for fear that this faster pace would become the new standard. If employees are paid by the quantity they produce, they fear that management will decrease their per-unit pay if the quantity increases.
3.    Workers waste much of their effort by relying on rule-of-thumb methods rather than on optimal work methods that can be determined by scientific study of the task.

To counter soldiering and to improve efficiency, Taylor began to conduct experiments to determine the best level of performance for certain jobs, and what was necessary to achieve this performance.

Time Studies Taylor argued that even the most basic, mindless tasks could be planned in a way that dramatically would increase productivity, and that scientific management of the work was more effective than the "initiative and incentive" method of motivating workers. The initiative and incentive method offered an incentive to increase productivity but placed the responsibility on the worker to figure out how to do it.

To scientifically determine the optimal way to perform a job, Taylor performed experiments that he called time studies, (also known as time and motion studies). These studies were characterized by the use of a stopwatch to time a worker's sequence of motions, with the goal of determining the one best way to perform a job.
The following are examples of some of the time-and-motion studies that were performed by Taylor and others in the era of scientific management.
Pig Iron :If workers were moving 12 1/2 tons of pig iron per day and they could be incentivized to try to move 47 1/2 tons per day, left to their own wits they probably would become exhausted after a few hours and fail to reach their goal. However, by first conducting experiments to determine the amount of resting that was necessary, the worker's manager could determine the optimal timing of lifting and resting so that the worker could move the 47 1/2 tons per day without tiring.
Not all workers were physically capable of moving 47 1/2 tons per day; perhaps only 1/8 of the pig iron handlers were capable of doing so. While these 1/8 were not extraordinary people who were highly prized by society, their physical capabilities were well-suited to moving pig iron. This example suggests that workers should be selected according to how well they are suited for a particular job.
The Science of Shoveling:- In another study of the "science of shoveling", Taylor ran time studies to determine that the optimal weight that a worker should lift in a shovel was 21 pounds. Since there is a wide range of densities of materials, the shovel should be sized so that it would hold 21 pounds of the substance being shoveled. The firm provided the workers with optimal shovels. The result was a three to four fold increase in productivity and workers were rewarded with pay increases. Prior to scientific management, workers used their own shovels and rarely had the optimal one for the job.
Bricklaying: Others performed experiments that focused on specific motions, such as Gilbreth's bricklaying experiments that resulted in a dramatic decrease in the number of motions required to lay bricks. The husband and wife Gilbreth team used motion picture technology to study the motions of the workers in some of their experiments.

Taylor's 4 Principles of Scientific Management:- After years of various experiments to determine optimal work methods, Taylor proposed the following four principles of scientific management:

1. Replace rule-of-thumb work methods with methods based on a scientific study of the tasks.
2.Scientifically select, train, and develop each worker rather than passively leaving them to train themselves.
3.Cooperate with the workers to ensure that the scientifically developed methods are being followed.
4.Divide work nearly equally between managers and workers, so that the managers apply scientific management principles to planning the work and the workers actually perform the tasks.
These principles were implemented in many factories, often increasing productivity by a factor of three or more. Henry Ford applied Taylor's principles in his automobile factories, and families even began to perform their household tasks based on the results of time and motion studies.

Drawbacks of Scientific Management

While scientific management principles improved productivity and had a substantial impact on industry, they also increased the monotony of work. The core job dimensions of skill variety, task identity, task significance, autonomy, and feedback all were missing from the picture of scientific management.
While in many cases the new ways of working were accepted by the workers, in some cases they were not. The use of stopwatches often was a protested issue and led to a strike at one factory where "Taylorism" was being tested. Complaints that Taylorism was dehumanizing led to an investigation by the United States Congress. Despite its controversy, scientific management changed the way that work was done, and forms of it continue to be used today.

 Henry Fayol Administrative Theory

Principles of management

1.Division of labor - Fayol presented work specialization as the best way to use the human resources of the organization.
2.Authority - Managers must be able to give orders. Authority gives them this right. Note that responsibility arises wherever authority is exercised.
3.Discipline - Employees must obey and respect the rules that govern the organization. Good discipline is the result of effective leadership.
4.Unity of command - Every employee should receive orders from only one superior.
5.Unity of direction - Each group of organizational activities that have the same objective should be directed by one manager using one plan for achievement of one common goal.
6.Subordination - The interests of any one employee or group of employees should not take precedence over the interests of the organization as a whole.
7. Remuneration - Workers must be paid a fair wage for their services.
8.Centralization - Centralization refers to the degree to which subordinates are involved in decision making.
9.Scalar chain - The line of authority from top management to the lowest ranks represents the scalar chain. Communications should follow this chain.
10.Order - this principle is concerned with systematic arrangement of men, machine, material etc. there should be a specific place for every employee in an organization
11 Equity - Managers should be kind and fair to their subordinates.
12.Stability of tenure of personnel - High employee turnover is inefficient. Management should provide orderly personnel planning and ensure that replacements are available to fill vacancies.
13.Initiative - Employees who are allowed to originate and carry out plans will exert high levels of effort.
14.Esprit de corps - Promoting team spirit will build harmony and unity within the organization.

Unit-1 Theory of Demand and Supply

Definition:-   In microeconomics, supply and demand is an economic model of price determination in a market. 

 Economic forces fundamental to the price mechanism in a free market system. They determine the price of a good or service offered, and are in turn determined by the price obtainable. It is a largely self-regulatory mechanism generally resulting in market equilibrium where products demanded at a price are equaled by products supplied at that price

Meaning of Demand & Supply
The Concept of Demand:- Used in the vernacular to mean almost any kind of wish or desire or need. But to an economist, demand refers to both willingness and ability to pay.

Quantity demanded is the total amount of a good that buyers would choose to Purchase under given conditions.

The given conditions include:
•price of the good
•income and wealth
•prices of substitutes and complements
•population
•preferences (tastes)
•expectations of future prices

We refer to all of these things except the price of the good as determinants of demand. We could talk about the relationship between quantity demanded and any one of these things. But when we talk about a demand curve, we are focusing on the relationship between quantities demanded and price (while holding all the others fixed).

The Concept of Supply:- Used in the vernacular to mean a fixed amount, such as the total amount of petroleum in the world. Again, economists think of it differently. Supply is not just the amount of something there, but the willingness and abilityof potential sellers to produce and sell it Quantity supplied(Qs) is the total amount of a good that sellers would choose to produce and sell under given conditions.

The given conditions include:
•price of the good
•prices of factors of production (labor, capital)
•prices of alternative products the firm could produce
•technology productive capacity
•expectations of future prices
We refer to all of these, with the exception of the price of the good, as determinants of supply. When we talk about Supply, we’re talking about the relationship between quantity supplied and the price of the good, while holding everything else constant.

Determinants of Demand
  • Income.
  • Tastes & preferences.
  • Prices of related goods and services.
  • Consumers' expectations about future prices and incomes that can be checked.
  • Number of potential consumers.
 Determinants of Supply:- Supply is the amount of a good or service that a supplier is willing to provide to the market. Innumerable factors and circumstances could affect a seller's willingness or ability to produce and sell a good. Some of the more common factors are:
  • Good's own price: An increase in price will induce an increase in the quantity supplied.
  • Prices of related goods: For purposes of supply analysis, related goods refer to goods from which inputs are derived to be used in the production of the primary good.
  • Conditions of production: The most significant factor here is the state of technology. If there is a technological advancement related to the production of the good, the supply increases.
  • Expectations: Sellers' expectations concerning future market conditions can directly affect supply. 
  • Price of inputs: If the price of inputs increases the supply curve will shift left as sellers are less willing or able to sell goods at any given price. Inputs include land, labor, energy and raw materials. 
  • Number of suppliers:  As more firms enter the industry the market supply curve will shift out driving down prices. The market supply curve is the horizontal summation of the individual supply curves.
  • Government policies and regulations: Government intervention can take many forms including environmental and health regulations, hour and wage laws, taxes, electrical and natural gas rates and zoning and land use regulations and can have a significant impact on supply decisions.
Evaluating these externalities as well as others not listed, in light of the profit incentive of suppliers, provides insight into the movement of the supply of a good or service to the market.
Suppliers will shift production for non-price changes related to the determinants of supply and will slide production levels across the supply curve for price related movements . 
The Law of Supply and Demand:- For a market economy to function, producers must supply the goods that consumers want. This is known as the law of supply and demand. “Supply” refers to the amount of goods a market can produce, while “demand” refers to the amount of goods consumers are willing to buy. Together, these two powerful market forces form the main principle that underlies all economic theory.
The law of supply and demand explains how prices are set for the sale of goods. The process starts with consumers demanding goods. When demand is high, producers can charge high prices for goods. The promise of earning large profits from high prices inspires producers to manufacture goods to meet the demand. However, the law of demand states that if prices are too high, only a few consumers will purchase the goods and demand will go unmet. To fully meet demand, producers must charge a price that will result in the required amount of sales while still generating profits for themselves.
For example, assume that a cell phone manufacturing company perceives demand for new cell phones. The company invests in market research to produce the exact cell phone that consumers want. The company then produces 5,000 units and puts them up for sale at $300 each. Consumers who find the phone to be valuable pay the full $300, and half of the units are soon sold.
Because of the high price, however, sales gradually begin to drop off. Many consumers still want the phone, but are unwilling or unable to pay $300 for one. Because the cell phone company loses money on unsold products, it reduces the phone’s price to $250 in hopes of increasing sales. Consumers begin buying again. The process continues until a price is reached that will both meet demand and maximize the company’s profits. That price is known as the “market-clearing price.”
When supply becomes balanced with demand, the market is said to have reached equilibrium. At equilibrium, resources are used at their maximum efficiency. The study of economics is largely a study in how market economies can best achieve equilibrium, which is why economists spend a great deal of time analyzing the relationship between supply and demand.
The law of supply and demand explains why people behave in certain ways within a market economy, and can even be used to predict behavior and, thereby, economic outcomes. Manufacturers who want the highest price possible for their products, utilize inventory management protocols and invest in advertising to encourage consumers to buy. Consumers who value a low price over the quality or popularity of a product shop at outlets and discount stores, while those who favor popularity over price purchase goods from retail stores at the height of the market.
The law of supply and demand is not just limited to the sale of products, however. It can be used to explain almost any economic phenomenon, such as a rise or drop in employment, increased or decreased enrollment in colleges, the expansion or shrinking of government programs, and increases or reductions in available resources. Therefore, the law of supply and demand is not only vital to economic theory, it is the foundation of economics itself.

Equilibrium between Demand & Supply

Definition of Equilibrium:- A state of serenity and balance in economic conditions due to the lack of outside forces causing disruption. It occurs at the point where quantity demanded and quantity supplied are equal.
 See PPT……

Elasticity

What is Elasticity?

Elasticity refers to the degree of responsiveness in supply or demand in relation to changes in price. If a curve is more elastic, then small changes in price will cause large changes in quantity consumed. If a curve is less elastic, then it will take large changes in price to effect a change in quantity consumed. Graphically, elasticity can be represented by the appearance of the supply or demand curve. A more elastic curve will be horizontal, and a less elastic curve will tilt more vertically. When talking about elasticity, the term "flat" refers to curves that are horizontal; a "flatter" elastic curve is closer to perfectly horizontal. 

Definition Elasticity of Demand:- The degree to which demand for a good or service varies with its price. Normally, sales increase with drop in prices and decrease with rise in prices. As a general rule, appliances, cars, confectionary and other non-essentials show elasticity of demand whereas most necessities (food, medicine, basic clothing) show inelasticity of demand (do not sell significantly more or less with changes in price). Also called price demand elasticity.
Price Elasticity meaning:- Price elasticity of demand  is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price, ceteris paribus.
How it works/Example: Price elasticity of demand, also known simply as "price elasticity," is more specific to price changes than the general term known as "elasticity of demand."

The formula for price elasticity is:
Price Elasticity = (% Change in Quantity) / (% Change in Price)
Let's look at an example. Assume that when gas prices increase by 50%, gas purchases fall by 25%. Using the formula above, we can calculate that the price elasticity of gasoline is:
Price Elasticity = (-25%) / (50%) = -0.50
Thus, we can say that for every percentage point that gas prices increase, the quantity of gas purchased decreases by half a percentage point.
Price elasticity is usually negative, as shown in the above example. That means that it follows the law of demand; as price increases quantity demanded decreases. As gas price goes up, the quantity of gas demanded will go down.
Price elasticity that is positive is uncommon. An example of a good with positive price elasticity is caviar. The buyers of caviar are generally wealthy individuals who believe that the more expensive the caviar, the better it must be. Thus, as the price of caviar goes up, the quantity of caviar demanded by wealthy people goes up as well.

Income Elasticity:- In economics, income elasticity of demand measures the responsiveness of the demand for a good to a change in the income of the people demanding the good, ceteris paribus. It is calculated as the ratio of the percentage change in demand to the percentage change in income.
How it works/Example: :- The formula for income elasticity is:
Income Elasticity = (% change in quantity demanded) / (% change in income)
An example of a product with positive income elasticity could be Ferraris. Let's say the economy is booming and everyone's income rises by 400%. Because people have extra money, the quantity of Ferraris demanded increases by 15%.
We can use the formula to figure out the income elasticity for this Italian sports car:
Income Elasticity = 15% / 400% = 0.0375
An example of a good with negative income elasticity could be cheap shoes. Let's again assume the economy is doing well and everyone's income rises by 30%. Because people have extra money and can afford nicer shoes, the quantity of cheap shoes demanded decreases by 10%.
The income elasticity of cheap shoes is:
Income Elasticity = -10% / 30% = -0.33
Cross Elasticity:- In economics, the cross elasticity of demand or cross-price elasticity of demand measures the responsiveness of the demand for a good to a change in the price of another good. It is measured as the percentage change in demand for the first good that occurs in response to a percentage change in price of the second good.
Formula
                   Cross Elasticity of Demand EA, B =
% increase in quantity demanded of A
% increase in price of product B
Percentage changes in the above formula are calculated using the mid-point formula which divides actual change by average of initial and final values.The formula to calculate cross elasticity thus becomes:
EA, B =
Qf − Qi
÷
Pf − Pi
(Qf + Qi) ÷ 2
(Pf + Pi) ÷ 2
Where,
 Qf and Qi are the final and initial quantities demanded of product A, respectively; and
Pf and Pi are the final and initial prices of product B.
Example 1: The quantity demanded or product A has increased by 12% in response to a 15% increase in price of product B. Calculate the cross elasticity of demand and tell whether the product pair is (a) apples and oranges, or (b) cars and gas.
Cross elasticity of demand = % change in quantity demanded of A ÷ % change in price of B = 12%/15% = 0.67.
Since the cross elasticity of demand is positive, product A and B are substitute goods. They are most likely apples and oranges.


Unit-2 Theory of Production
Definition of Production:

  • Production is a process of combining various material inputs and immaterial inputs (plans, know-how) in order to make something for consumption (the output). It is the act of creating output, a good or service which has value and contributes to the utility of individuals.[1]

  • the action of making or manufacturing from components or raw materials, or the process of being so manufactured.

Function of Production/ Definitions
In general, economic output is not a (mathematical) function of input, because any given set of inputs can be used to produce a range of outputs. To satisfy the mathematical definition of a function, a production function is customarily assumed to specify the maximum output obtainable from a given set of inputs.
1. production and planning department :- will set standards and targets for each section of the production process. The quantity and quality of products coming off a production line will be closely monitored. In businesses focusing on lean production, quality will be monitored by all employees at every stage of production, rather than at the end as is the case for businesses using a quality control approach.
2. purchasing department will be responsible for providing the materials, components and equipment required to keep the production process running smoothly. A vital aspect of this role is ensuring stocks arrive on time and to the right quality.
3. stores department:- will be responsible for stocking all the necessary tools, spares, raw materials and equipment required to service the manufacturing process. Where sourcing is unreliable, buffer stocks will need to be kept and the use of computerised stock control systems helps keep stcoks at a minimal but necessary level for production to continue unhindered.
4.design and technical support department will be responsible for researching new products or modifications to existing ones, estimating costs for producing in different quantities and by using different methods. It will also be responsible for the design and testing of new product processes and product types, together with the development of prototypes through to the final product. The technical support department may also be responsible for work study and suggestions as to how working practices can be improved.
5. works department will be concerned with the manufacture of products. This will include the maintenance of the production line and other necessary repairs. The works department may also have responsibility for quality control and inspection.
A key aspect of modern production is ensuring quality. The term quality means fitness for purpose i.e. a product, process or service should do exactly what is expected of it.

Factors of Production / Definition

Factors of production are the resources used by a company to produce goods and services. The universally recognized factors of production include land, labor, and capital. Some scholars include enterprise - entrepreneurship - as a fourth factor, while many argue that it should fall under labor.

Importance of Production

As the Greek philosopher Parmesans said, 'Nothing comes from nothing.' Factors of production are the resources that allow us to create finished products and perform services. You cannot create a product out of nothing. You can't even perform a service without labor, which is also a factor of production. A modern economy, along with our modern society, cannot exist without factors of production, which makes them pretty darn important.

Factors of production: :- Resources required for generation of goods or services, generally classified into four major groups:

1.      Land (including all natural resources),
2.      Labor (including all human resources),
3.      Capital (including all man-made resources), and
4.      Enterprise (which brings all the previous resources together for production).
These factors are classified also as management, machines, materials, and money (this, the 4 Ms), or other such nomenclature. More recently, knowledge has come to be recognized as distinct from labor, and as a factor of production in its own right.
Law of Variable Proportions:
"in a given state of technology, when the units of  variable factor of production (L) are increased within the units of other fixed factors, the marginal productivity increases at increasing rate up to a point, after this point. it will become less and less"
Assumptions:
The assumptions of the law of variable proportion are given as below:
1.      It is assumed that the technique of production should remain constant during production.
2.      It operates in the short-run because in the long run, fixed inputs become variable.
3.      Some inputs must be kept constant.
4.      The various factors are not to be used in rigidly fixed proportions but the law is based upon the possibility of varying proportions. It is also called the law of proportionality.
5.      It is assumed that all the units of variable factors of production are homogeneous in amount and quality.
6.      It is assumed that labor is a single variable factor.

Law of returns Scale/ Definition
Long run relationship between inputs and output of a firm is explained by the Laws of returns to scale. The term returns to scale arises in the context of a firm's Production Function.In the long run production function, all factors are variable.

Definition

The law of returns to scale describes the relationship between outputs and the scale of inputs in the long-run when all the inputs are increased in the same proportion.
According to the Roger Miller, the law of returns to scale refers “to the relationship between the changes in output and proportionate change in all factors of production”. The firm increases its scale of production by using more space, more machines and labourers (as a input) in the factory, to meet a long-run change in demand.

Assumptions


1.      All factors (inputs) are variable but enterprise is fixed.
2.      A worker works with given tools and implements.
3.      Technological changes are absent.
4.      There is perfect competition.
5.      The product is measured in quantities.

COST

 Definition:- An amount that has to be paid or given up in order to get something.
In business, cost is usually a monetary valuation of (1) effort, (2) material, (3) resources, (4) time and utilities consumed, (5) risks incurred, and (6) opportunity forgone in production and delivery of a good or service. All expenses are costs, but not all costs (such as those incurred in acquisition of an income-generating asset) are expenses.

Short-Run Cost Definition




  • In economics, it is the concept that within a certain period of time, in the future, at least one input is fixed while others are variable. The short run is not a definite period of time, but rather varies based on the length of the firm's contracts.

Long-Run Cost Definition

  • a long period of time after the beginning of something

  • Invest for the long run [=the long term], not to see what you can earn in a few months.
  • Your solution may cause more problems over the long run.

  • usually used in the phrase in the long run

  • It may be our best option in the long run. [=when a greater amount of time has passed]
  • This deal will cost you more in the long run. [=in the long term]
  • long-run benefits [=benefits that will exist or continue over a long period of time]

What is Fixed Cost?

A periodic cost that remains more or less unchanged irrespective of the output level or sales revenue, such as depreciation, insurance, interest, rent, salaries, and wages.
 
While in practice, all costs vary over time and no cost is a purely fixed cost, the concept of fixed costs is necessary in short term cost accounting. Organizations with high fixed costs are significantly different from those with high variable costs. This difference affects the financial structure of the organization as well as its pricing and profits. The breakeven point in such organizations (in comparison with high variable cost organizations) is typically at a much higher level of output, and their marginal profit (rate of contribution) is also much higher.
What is Variable Cost?
A periodic cost that varies in step with the output or the sales revenue of a company.

Variable costs include raw material, energy usage, labor, distribution costs, etc. Companies with high variable costs are significantly different from those with high fixed costs. This difference affects the financial structure of the company as well as its pricing and profits. The breakeven point in such companies (in comparison with high fixed cost companies) is typically at a much lower level of output, but their marginal profit (rate of contribution) is also much lower.
What is Total Cost?

The addition of all costs-direct and indirect, or (2) how much an investor paid to acquire an investment. The cost includes commissions and trading fees.

What is Average Cost?

Production cost per unit of output, computed by dividing the total of fixed costs and variable costs by the number of total units produced (total output). Lower average costs are a potent competitive advantage. Also called unit cost. Formula: (Fixed costs + Variable costs) ÷ Total output.

What is Marginal Cost?

The increase or decrease in the total cost of a production run for making one additional unit of an item. It is computed in situations where the breakeven point has been reached: the fixed costs have already been absorbed by the already produced items and only the direct (variable) costs have to be accounted for.

Marginal costs are variable costs consisting of labor and material costs, plus an estimated portion of fixed costs (such as administration overheads and selling expenses). In companies where average costs are fairly constant, marginal cost is usually equal to average cost. However, in industries that require heavy capital investment (automobile plants, airlines, mines) and have high average costs, it is comparatively very low. The concept of marginal cost is critically important in resource allocation because, for optimum results, management must concentrate its resources where the excess of marginal revenue over the marginal cost is maximum. Also called choice cost, differential cost, or incremental cost.

What is Opportunity Cost?

A benefit, profit, or value of something that must be given up to acquire or achieve something else. Since every resource (land, money, time, etc.) can be put to alternative uses, every action, choice, or decision has an associated opportunity cost.
Opportunity costs are fundamental costs in economics, and are used in computing cost benefit analysis of a project. Such costs, however, are not recorded in the account books but are recognized in decision making by computing the cash outlays and their resulting profit or loss.
BREAK-EVEN ANALYSIS

Definition

Study of the mathematical relationship between costs and sales revenue, under a given set of assumptions regarding the firm's fixed costs and variable costs. In this financial analysis, the objective is to determine (in manufacturing) number of products that must be sold at a given price to cover the costs, or (in project financing) number of months or years required by the forecasted total net cash flow to equal estimated total project cost. An integral part of financial planning, it is performed either by using a breakeven-formula or by drawing a breakeven graph. 
See PPT....











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