Factors of Production:

- The four factors of production are land, labor, capital, and enterprise.
- These factors are available in scarcity, so the company must use them efficiently and effectively.
- Operating Cost: It is the cost of acquiring these resources and using them to produce goods and services.

Classification of Industry:
- Primary Industry: Extracts raw materials. Coal-mining and farming.
- Secondary Industry: Processes and manufactures products using the raw materials. Car manufacturing,
and iron and steel industry.
- Tertiary Industry: Provides a service. Retailing, teaching and dentistry.
- Quaternary Industry: Involves a lot of research and technology, so only highly qualified people are
employed. Examples are biotechnology and computer programming.

Organisations:
- An organisation is a social system of people who are structured and managed to meet some goals.
- Each organisation should have a vision and a mission.
- Process: A series of logical actions in a system that convert the input to an output.
- Strategy: The grand plan. Specifies the way of achieving the mission and the vision.
- Structure: How the various departments are organised and how do they communicate with each other.
- System: The input, logical processes, and the output, together form the system.
- Vision: Clarifies the long term direction of a company, i.e, where the company is going. Example: “To
bring inspiration and innovation to every athlete in the world”.
- Mission: Statement of the basic purpose of a company’ existence and its values. Example: “To lead in
corporate citizenship through proactive programs that reflect caring for the world family of Nike, our
teammates, our consumers, and those who provide services to Nike”.

Management:
- Management is the art of getting things done through others.
- Nature of management: Universal process, continuous process, social process, group phenomenon,
multidisciplinary, creative, intangible, and purposeful.
- Management as a science provides principles and as an art helps in tackling situations.
- Five functions of management:
1) Planning: Bridges the gap between where we are and where we want to be.

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 2) Organising: Consists of grouping of tasks.
3) Staffing: Choosing the right people for the right job.
4) Directing: Involves leadership, communication, supervision, and motivation.
5) Controlling: Involves setting standards, evaluating performance based on the standards, and
taking corrective actions.

Henri Fayol’s 14 Principles:

- Division of Labor: The work is divided among different people based on their expertise.
- Authority and Responsibility: They co-exist. If authority is given to a person, than he should also be made
responsible.
- Unity of Command: Only one boss. A subordinate should receive orders and be accountable to only one
boss.
- Unity of Direction: There should be only one plan for a group of activities having similar objectives.
- Equity: Managers should be fair and impartial while dealing with their subordinates.
- Order: There should be a proper and systematic arrangement of things and people.
- Discipline: Sincerity, obedience, respect to authority, and follow rules and regulations.
- Initiative: Eagerness to initiate actions without being asked to do so.
- Fair-Remuneration: The payment should be fair, reasonable, and rewarding.
- Stability of Tenure: Do not move employees frequently from one job position to another.
- Scalar Chain: At the top is the ultimate authority. It is flexible.
- Subordination of Individual Interest over General Interest: An organization is much bigger than the
individual.
- Esprit de’ Corps: There should be mutual loyalty between the members of the group.
- Centralisation and De-centralisation: In centralisation, the top management retains most of the decision
making authority. In de-centralisation, the decision making authority is distributed across the different
levels of the organisation.

Functions of Managers:
- In Henry Mintzberg’s model, there are 10 managerial roles which fall into 3 different categories:
- Interpersonal Roles:
- Figurehead: Perform ceremonial duties.
- Leader: Responsible of the work of the people in his unit.
- Liaison: Spend time with people outside his unit.
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 - Informational Roles:
- Monitor: Scans his environment for information.
- Disseminator: Shares and distributes the above information.
- Spokesman: Sends information to people outside his unit.
- Decisional Roles:
- Entrepreneurial: Improve his unit and adapt to changing conditions.
- Disturbance Handler: Respond to pressure.
- Resource Allocator: Decide who will receive what in his unit.
- Negotiator: Perform the duties of the manager’s job.
- The top management requires more conceptual skills and human skills than technical skills.
- The middle management requires equal conceptual skills, human skills, and technical skills.
- The first-line management requires less conceptual skills and more human and technical skills.
- See skills requirement of managers diagram!!!
- See diagram in ppt!!!

IMPORTANT QUESTIONS:
1. Mr Anil Jumle a cricket team coach has set the target and made an approach for achieving
predetermined objectives for the team's practice session. He told his players to work towards
achieving team goal. What function of management is Anil performing?
He is performing the function of "Planning" in the management process. Planning involves setting goals and
objectives and then determining the actions and strategies necessary to achieve those goals. In this case, he
has defined what the team needs to achieve and provided direction to the players on how to work towards
achieving the team's goals.
2. The production manager instructs a salesperson to go slow in selling the product, whereas the
marketing manager insists on selling the product fast. Which function of management is violated
in this case?
The function of management violated in this case is directing. Directing involves guiding and leading
employees to achieve organisational goals. In the above case, the conflicting instructions from the
production manager and the marketing manager indicate a lack of clear direction to the salesperson. This can
lead to confusion, reduced employee morale, and a lack of focus.

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 PLANNING ORGANISING STAFFING DIRECTING CONTROLLING

DESCRIPTION Bridges the gap Identify and classify the Choosing the right Involves leadership, Set standards, evaluate
between where we are different activities into people for the right job. communication, performance based on
and where we want to groups and assign a motivation, and the standards, and take
be. manager to each group. supervision. corrective actions.

COMPONENTS Span of Control, Strategic HR planning, S u p e r v i s i o n ,

Division of Labour, recruitment, and motivation, leadership,
Delegation of Authority, selection. and communication.
and Departmentation.

STEPS Being aware of Identify the activities, Identify manpower Supervising employees, Establish standards, fix
organise the activities, decision making, the standards, compare
opportunities, setting requirements,
classification of the guiding the employees actual performance with
the objectives, authority, and build a recruitment, selection, through effective standard performance,
considering the relationship between orientation and leadership, and identify and
authority and communication and c o m m u n i c a t e
planning premises, responsibility. placement, training and motivation. deviations, and help
identify alternatives, d e v e l o p m e n t , employees correct
deviations.
compare alternatives, compensation, and
choose an alternative, performance appraisal.
formulate supporting
plans, numberize the
plans by making
budgets.

PLANNING
- Steps in Planning:
1) Being aware of opportunities.
2) Set the objectives.
3) Consider the planning premises.
4) Identify alternatives.
5) Compare the alternatives.
6) Choose an alternative.
7) Formulate supporting plans.
8) Numberize the plans by making budgets.
- Types of Plans:
- Purpose/Vision/Mission: It identifies the basic functions of the organisation.
- Objective: It is the important end toward which the organisation activities are directed to.
- Strategy: It is a complete plan for achieving those objectives.
- Policies: They are also plans which help in the process of decision-making.
- Procedures: They are a sequence of activities that are needed to be performed in order.
- Rules: They define actions and non-actions.
- Budgets: They are the expected results expressed in numerical form.
- Programs

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- Classification of Plans:
- Based on Content:
- Strategical: Analyse competitions and threats. Carried out by upper-level managers.
- Tactical: Short-term and carried out by middle-level managers.
- Operational: Covers the goals and objectives.
- Based on Breadth:
- Strategical: Apply to entire organisation.
- Tactical: Apply to specific parts of the organisation.
- Based on Time Frame:
- Long-Term: Beyond 5 years.
- Short-Term: Upto 1 year.
- Based on Specificity:
- Directional: Flexible plans.
- Specific: No room for misinterpretation.
- Based on Frequency of Use:
- Single-Use: Plans for unique situations.
- Standing Plan: Ongoing plan.

Management by Objectives (MBO):

- MBO is a strategic management model that sets objectives that are agreed by both the managers and the
employees.
- Managers and employees define objectives for every department, project, and person.
- Non-verifiable objectives: To make a reasonable profit, to improve productivity, etc.
- Verifiable objectives: Achieve an ROI of 12% per year, to study for 6 hours per day, etc.
- Benefits of MBO: Encourages participative management, helps in job enrichment, provides good
feedback system.
- Weaknesses of MBO: Difficulty of setting goals, emphasises on short-run goals, and inflexibility.

Tools to Develop Strategies:

- We have 4 strategy development tools: critical question analysis, SWOT analysis, business portfolio
analysis, and porter’s model for industry analysis.
- Critical Question Analysis:
- In the critical question analysis, we have to answer the following questions.
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 - What is our business?
- Who are our customers?
- What do our customers want?
- How much will our customers buy and at what price?
- Do we wish to be a product leader?
- Do we wish to develop our own new products?
- SWOT Analysis:
- Strengths, weaknesses, opportunities, and threads.
- Strengths: The characteristics of a business that give it an advantage over others.
- Weaknesses: The characteristics of a business that give it a disadvantage of others.
- Opportunities: Chances to make greater profits in the environment.
- Threats: External elements in the environment that can cause trouble to the business.
- Do SWOT analysis for a car company venturing into EV sector.
- Strengths: Eco-friendly, silent engine, low cost of maintenance.
- Weaknesses: High costs, expensive to change batteries, lot of time to recharge.
- Opportunities: Lower taxes, rising fuel costs, government subsidies.
- Threats: Rise in cost of electricity, competitors, hybrid vehicles.
- TOWS Matrix:
- We link the internal strengths and weaknesses with the external opportunities and threats.
- We have 4 strategies: SO, ST, WO, and WT.
- The SO strategy (Maxi-Maxi) is the most successful strategy. We use the company’s
strengths to take advantage of opportunities.
- The ST strategy (Maxi-Mini) uses strengths to avoid or deal with threats.
- The WO strategy (Mini-Maxi) overcomes weaknesses to take advantage of opportunities.
- The WT strategy (Mini-Mini) minimises both weaknesses and threats.
- SO: Apple has a strong brand awareness and loyalty from its customers. These are the
internal strengths of Apple. Now, if there is a demand for smartphones, Apple can use its
strengths and take advantage of the opportunity.
- ST: A threat for Apple would be the European policy to have Type-C chargers. This leads
to the loss of revenue to Apple. But, Apple can provide its own Type-C charger, and use its
strengths to attract customers to buy their own Type-C charger.

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 - WO: Apple usually does not have a lot of different products. This is an internal weakness.
When the smartwatch demand was growing up, Apple did not immediately enter into that
trend. Eventually, Apple overcame its weakness and released the Apple Watch.
- WT: Apple introduced Apple TV+, which was a failure. The weakness of Apple is that it
does not provide many TV services at affordable prices, and the rest of the companies,
such as Netflix, provide more services than Apple and at a lower-cost.
- Strategic Business Units:
- Strategic Business Units basically means that a company has different product categories under
one roof. For example, we have LG, which makes refrigerators, ACs, TVs, etc.
- The Business Portfolio Analysis was developed by Boston Consulting Group.
- This analysis classifies a company’s business units into 4 categories:
- Stars: There is high growth and high market share. So, we need a lot of investment. It
involves high money consumption and generation. So, it requires a lot of money to
maintain but it also produces a lot of money.
- Question Marks: There is high growth and low market share. Startups are located here.
The investments are high. It is a question mark because it has potential to become a star
and eventually a cash cow, but it can also become a dog.
- Cash Cows: There is low growth and high market share. They are the stars of yesterday.
Here, we invest little money and generate a high of profit. Mature industry.
- Dogs: There is low growth and low market share. Businesses in the declining stage.
- See plot in ppt!!! Question marks are the introduction, stars are the growth, cash cows are
the maturity, and dogs are the decline.
- Porter’s Generic Model:
- Overall Cost Leadership Strategy: Here, a company that wants to gain competitive advantage, will
lower its costs below the costs of its competitors. If a company keeps its costs low, it will be able
so sell its products for a lower cost and still make more profit than its competitors. As an example,
we can take Timex, which makes low-cost watches and has a competitive advantage from others.
- Differentiation Strategy: Here, a company offers better quality in its products than its competitors.
These companies may charge more than their competitors because their customers are willing to
pay more because of the extra value. Example is Rolex, which offers gold watches and charges
much more. We also have Porsche.
- Focused Strategy: Here, a company focuses on a specific regional market, product line, or group
of buyers. Example is Longines, which sells high quality watches to only females.

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Stakeholders:
- Stakeholders are people who have a stake of the company.
- There can be internal and external stakeholders. Internal stakeholders are directors, managers, and
employees, whereas external stakeholders are customers and government.
- Fiscal Responsibility: A firm’s obligations to stock holders.
- Social Responsibility: A firm’s obligations to stake holders.

ORGANIZING
- An organisation is a group of people who pursue some defined objectives.
- Steps in organising process:
1. Identifying the activities of the organization
2. Organising the activities
3. Classifying the authority
4. Building a relationship between authority and responsibility
- Formal Organisation: Here, we have well defined jobs, each with its own authority and responsibility
assigned. Each person is responsible for his performance.
- Informal Organisation: Here, the relationships are built on likes, dislikes, and emotions, such as friend
groups.

Span of Control:
- Number of subordinates that receive orders and are accountable directly to a supervisor.
- An optimal span of control is narrow enough so that the supervisor can maintain control over his
subordinates and wide enough so that interfering is minimised.

FORMAL ORGANISATION INFORMAL ORGANISATION

Designed and created by the top management. Comes up on its own.

A planned one. Not a planned one, it is created spontaneously.

Authority and responsibility are defined and fixed. Authority is based on personal acceptance.

It has a fixed, rigid, written constitution. Does not have a fixed, rigid, written constitution.

Requires an office to function. Functions through people.

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- Tall Organisation: Tall organisations have many levels of authority and narrow spans of control.
- Flat Organisation: Flat organisations have fewer levels of authority and broader spans of control.

Principles of Organising by Urwick:

1) Principle of Unity of Objectives: Individuals should be able to contribute to the objectives.
2) Principle of Organisational Efficiency: The objectives should be achieved with minimum cost.
3) Principle of Specialisation: Work is divided among subordinates.
4) Principle of Span of Management: There is a limit in the number of span of control.
5) Principle of Scalar Chain: Clarifies who reports to whom.
6) Principle of Unity of Command: Every subordinate answers to and is accountable to one boss.
7) Principle of Delegation: Authority is delegated as far down as possible.
8) Principle of Parity of Authority and Responsibility: The responsibility for the actions cannot be greater
than the authority delegated.
9) Principle of Flexibility: The organisation structure should be simple to understand and flexible.
10) Principle of Functional Definition: Every position in the organisation should have a clear result
expected.

DEPARTMENTATION
- Patterns of Departmentation:
1. Departmentation by Simple Numbers: Here, we group all the people who perform similar duties and
functions in the same group and assign a manager to this group.
2. Departmentation by Time: Here, we group people based on time and shifts. Example is doctors and
nurses in hospitals. The advantages of this method is that the process can continue 24/7 without the need
of stopping. Also, employees that go to school in the morning can work in the night. The disadvantages
are fatigue and in the night there is lesser supervision.
3. Departmentation by Function: Here, we group people based on the jobs to be done. The advantage is
that it helps to accomplish functional goals. The disadvantage is that it leads to less innovation.
4. Departmentation by Territory: Here, we group the activities based on territory. It is suitable if the
company has customers all around the world. For example, Coca Cola divided its activities to 3
categories, North America, Europe, and the rest. The advantage is that there is better understanding of
local interests. The disadvantage is that it requires more people at the top management level.

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5. Departmentation by Equipment: Here, we group the activities and employees based on the equipment
they use/manage.
6. Departmentation by Customer: Here, we group the activities based on the types of customers. The
customers in each group have similar needs. Foreign customers, local customers, retail customers, and
wholesale customers.
7. Departmentation by Product: Here, we group the activities based on the services. Two wheeler, three
wheel, four wheel departments.
8. Departmentation by Matrix Structure: Here, we group the employees based on what each department
needs, i.e., the type of employee, HR, Finance, IT, Marketing, Operations, etc. that each department
needs.

Line Organisation: Here, we place at the top of the diagram the people that have higher decision-making
authority, and we place at the bottom the people that have the lowest decision-making authority. The line of
authority flows from top to bottom.
Line and Staff Organisation: Here, the power of command lies with the line executives, but the staff guide
and advice the line executives. Here, we add staff inside separated boxes with double edges and connect
them to the line of authority using dotted lines.

CONTROLLING
- Controlling consist of verifying that everything is going according to plan.
- It consists of detecting and rectifying errors and measuring and correcting performance.

- Steps in Controlling:
1. Establish Standards
2. Actual Performance
3. Measure Actual Performance
4. Compare Actual Performance with the Established Standards
5. Identify Deviations
6. Analyse the Causes of the Deviations
7. Determine the Corrective Actions
8. Implement the Corrective Actions

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- Establish Standards:
- Physical Standards: They are non-monetary measurements at the operating level. Examples are
goods produced, labour employed, and materials used.
- Cost Standards: They are monetary measurements at the operating level. Examples are cost per
machine hour, cost per unit produced, labour cost per unit.
- Capital Standards: They are related to the capital that is invested in the firm. More related to the
balance sheet than the income statement. Most widely used capital standard is Return On
Investment (ROI). Examples are debt to net worth ratio and size and turnover of inventory.
- Revenue Standards: They attach monetary values to sales. Examples are average sales per
salesman, and revenue per bus passenger per mile.
- Program Standards: They include the variable budgets needed to develop new products.
- Intangible Standards: They cannot be expressed neither in monetary nor physical measurements.
Examples are is the public relations program successful, are the supervisors loyal to the
company’s objectives.
- Goals as Standards: Quantitative goals that are tangible can be used as standards.
- Strategic Plans as Standards: Strategic plans of a company can be used as standards.

- Types of Control:
- There are 3 types of control: Feedforward, concurrent, and feedback controls.
- Feedforward Control: Occurs at the input stage, where the problems are anticipated before they
arise. It is used by managers to anticipate problems before they arise.
- Concurrent Control: Occurs at the processes stage, where we correct problems as they arise. It is
used by managers to receive immediate feedback on how efficiently are the inputs being
converted into outputs of the processes.
- Feedback Control: Occurs at the output stage, where we correct problems after they arise. It is
used by managers to receive information regarding the customer reactions about their goods.

- Management Control Techniques:

- There are 3 types of Management Control Techniques: Budgetary Controls, Non-Budgetary
Controls, and Network Techniques.
- Budgetary Controls:
- Here, we compare the actual results with the budgeted results.

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 - A budget is a single use financial plan that includes the resources that an organisation
needs to complete a project.
- Types of Budget:
- Financial Budget: It includes the amount of cash that an organisation is expecting to
get during a specific period of time and how it plans to use it. Examples are balance
sheet budget, capital expenditure, and cash flow.
- Operating Budget: It includes the budget needed for the operations of an organisation.
Examples are sales budget, expense budget, and profit budget.
- Non-Monetary Budget: It includes space budget, labour budget, and production
budget.
- Variable Budget: It includes budgets that vary according to the volume of sales.
- Zero-Based Budget: Here, we divide the different programs of an organisation into
packages and we calculate the budget of each package separately.
- Non-Budgetary Controls:
- Statistical Data: It shows trends so that the managers can see where the company is
heading towards. It is represented in graphical form, such as using charts.
- Special Reports and Analysis: They are used to show information regarding how is the
money being spent.
- Operational Audit: It is an appraisal of the operations of an organisation. It is done
internally by the organisation. You compare the actual results with the planned ones.
- Personal Observation: It is also known as “managing by walking around”.
- Network Techniques:
- Here, we show the time relationships between the different events, such as when each
activity begins, how long is each activity, and whether there is any overlap in activities.
- Represented using Gantt Charts, where the left side represents the activities and the top
represents a timeline/duration. Each activity has a bar representing its start, end, and
duration.

- Overall Control Devices:

- There are 3 types of overall control devices: Budget Summaries and Reports, Profit and Loss
Control, and Return on Investment.

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 - Budget Summaries and Reports: It is a resume of the individual budgets of an organisation. It is
used to show the top-level management how well is the company as a whole meeting its
objectives. It reflects the company’s plans, profits, costs, ROI, and sales volume.
- Profit and Loss Control: Here, the income statements are used to summarise the results of a
business operation. Here, the performance is based on the ability to generate profit. Each
department must maintain information regarding their profit and loss, and they should frequently
update their profit and loss values. Each department can have their own accounting group to
generate the income statements, or they can use the company’s centralised accounting group.
- Return on Investment: Here, we need to calculate the ratio between the earnings and the capital
invested. The profit is a return percentage on the capital invested. The advantage is that it makes it
easier to locate the weaknesses.

- Direct Control and Preventive Control:

- Direct Control: Here, if there are unsatisfactory results, we need to trace out the causes of those
results and make the people responsible for it to correct their actions.
- Preventive Control: Here, the higher the quality of the managers, the lesser the errors made. If
we have more qualified and experienced managers, there will be lesser need for direct control.
This leads to higher accuracy because it is easier to prevent errors rather than correcting them after
they occur.

ENTREPRENEURSHIP
- Entrepreneurship: Strategic thinking and risk-taking behaviour that creates new opportunities for
individuals.
- Entrepreneur: Risk-taking individual that takes advantage of opportunities that other people treat as
threats. Creates a new product or founds a business that becomes large.
- Entrepreneur comes from the French work entreprendre, which means undertake.

- Types of Entrepreneurs:
- According to the Type of Business:
- Business Entrepreneurs: They conceive the idea of a new product.
- Trade Entrepreneurs: They are more related to trading activities rather that manufacture.
- Industrial Entrepreneurs: They set up an industrial unit.
- Corporate Entrepreneurs: They plan, develop, and manage corporate bodies.
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 - Agricultural Entrepreneurs: They are more related to agricultural activities.
- According to the Motivation:
- Pure Entrepreneurs: They are motivated by the monetary rewards and profits.
- Induced Entrepreneurs: They are motivated by the incentives, facilities, and subsidies
offered by the government.
- According to the Use of Technology:
- Technical Entrepreneurs: They are more concerned with the technical activities, such as
the production, rather than marketing.
- Non-Technical Entrepreneurs: They concentrate more on planning and developing
strategies for marketing and distribution.
- Professional Entrepreneurs: They do not operate nor manage any business.
- According to the Stages of Development:
- First Generation Entrepreneur: Does not have any entrepreneurial background.
- Second Generation Entrepreneur: Inherits the family business. The business is passed from
one generation to another.
- Classical Entrepreneur: Entrepreneur that only wants his/her business to survive. Does not
want any element of growth.
- According to the Capital Ownership:
- Private Entrepreneur: Entrepreneur that sets up his/her own business, provides finance, and
bears all the risks.
- State Entrepreneur: Businesses that are undertaken by the government.
- Joint Entrepreneur: Combines both private and state entrepreneurs.
- According to the Gender and Age:
- Male and Female Entrepreneurs.
- Young-age, middle-age, old-age entrepreneurs.
- According to the Area:
- Urban and Rural Entrepreneurs.
- According to the Scale:
- Large-Scale, Medium-Scale, and Small-Scale Industry Entrepreneurs.
- According to the Clarence Danhof:
- Innovative Entrepreneurs: They are clever and aggressive.
- Imitative Entrepreneurs: They adopt successful innovations made by other entrepreneurs.
- Fabian Entrepreneurs: They are cautious while making decisions.
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 - Drone Entrepreneurs: They refuse to adopt new opportunities.

- Intrapreneur:
- An entrepreneur starts his own venture, bears all the risks, and is fully-independent. On the other
hand, an intrapreneur is sponsored by the corporation he works in, does not bear the risks, and is
partially-independent.
- An entrepreneur needs to raise the capital, but an intrapreneur does not.
- An entrepreneur is not related to any organisation, whereas an intrapreneur operates within the
organisation he/she works in.

- Entrepreneurs versus Managers:

- An entrepreneur is the owner, whereas a manager is an employee.
- An entrepreneur sets up a venture, whereas a manager provides services to an enterprise that is set
up by someone else.
- An entrepreneur takes long-term decisions, whereas a manager takes short-term and medium-term
decisions.
- Wrong decisions taken by entrepreneurs cannot be rectified, whereas wrong decisions taken by
managers can be rectified by the entrepreneurs.
- Entrepreneurs need to innovate, whereas managers do not.
- Entrepreneurs bear all the risks, whereas managers do not.
- Skills required for entrepreneurs are creativity and innovation, whereas skills required for
managers are public-dealing capabilities.
- Managers need to have a management degree, whereas entrepreneurs do not.
- Entrepreneurs get rewarded by the profits, whereas managers get their monthly salary.

- Theory Z:
- It combines both Japanese and American business practices.
- The Japanese business practice consists of collective decision-making.
- The American business practice consists of individual responsibility.
- Theory Z increases the loyalty of the employees by providing them a job for life and ensuring
their well-being both on and off the job. This increases the morale and satisfaction fo the
employees, which increases the productivity.

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 - The differences between Japanese and American types or organisation are the following. Lifetime
employment versus short-term employment. Collective decision-making versus individual
decision-making. Collective responsibility versus individual responsibility. Implicit control
mechanisms versus explicit control mechanisms. Non-specialised career path versus specialised
career path. Slow evaluation and promotion versus rapid evaluation and promotion. Holistic
concern towards employee as person versus segmented concern for employee as person.

- Market Analysis and Strategy:

- It involves the allocation of the resources to develop and sell products or services that the
customers will perceive provide more valuable that the competitive goods.
- Situation Analysis:
- Analyse the customers. You need to identify their needs and challenges.
- Check the resources of the company. Ensure that the company can match/satisfy the
demands of the customers.
- Identify the current and potential competitors.
- Identify the current and potential collaborators.
- Perform context analysis using PEST analysis.
- Strategy Development:
- First, do market segmentation. Segment the market into groups of similar people.
Grouping can be done based on geographical, demographical, psychological, and
behavioural factors.
- Then, do target market selection. Select segments of the market.
- Finally, do positioning. Receive information regarding how the customers perceive your
product in their heart and mind.
- Marketing Mix:
- Product, Place, Price, and Promotion.
- PEST Analysis:
- Political Factors: How will the government regulations affect the market and the business?
- Economical Factors: What are the economic issues that might affect the company? Such as
inflation, economic growth, and interest.
- Societal Trends: Customer’s demography, culture, lifestyle and education.
- Technological Developments: The role of the internet and technology advancements.

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- Business Plan:
- Introductory Page: Here, you need to place the name and the address of the business, the name
and the address of the owners/founders, and the statement of financing needed.
- Executive Summary: Here, you need to describe the business model, specify why this model is
unique, who are the individuals starting the business and how will they make money and how
much.
- Environmental and Industry Analysis: Here, you need to analyse the competitors, the market,
and industry.
- Description of Venture: Here, you need to specify the products, the services, the size of the
business, the equipment needed, the personnel, and the background of the entrepreneurs.
- Production Plan: Here, you need to specify the physical plant, the equipment needed, the
machinery needed, and the suppliers of the raw materials.
- Operational Plan: Here, you need to describe the flow of the operations of the business and the
use of technology.
- Marketing Plan: Here, you need to specify the pricing, promotion, and distribution.
- Organisational Plan: Here, you need to specify the form of ownership and list the partners and
stakeholders.
- Assessment of Risks: Here, you need to identify the weaknesses of the business.
- Financial Plan: Here, you need to include the income statement, the cash flow projections, and
the balance sheet.
- Appendix: Here, you need to include backup material.

MOTIVATION
- Motivation: It is the drive and effort to satisfy a want or a need.
- Maslow’s Hierarchy of Needs:
- It is used to show that the employees can be motivated by satisfying their needs.
- There are two types of needs, higher-order needs and lower-order needs.
- Higher-Order Needs:
- Self-Actualisation: The company should allow their employees to have skill development.
They should also allow their employees to be creative. They should also give promotions.
- Esteem: The company should allow their employees to be part of the decision-making
process. They should give more salary based on merit.

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 - Social: Here, the company should allow their employees to interact and make friends.
They should organise picnics, parties, trips, and sports activities.
- Lower-Order Needs:
- Safety: Here, the employees should be given job security, medical insurance, sick pay, and
pensions.
- Physiological: Here, the employees should be given adequate salary and work breaks.
- McGregor’s Theory X and Theory Y:
- Both of these theories are used by managers to motivate their employees.
- Theory X focuses more on supervision, whereas Theory Y focuses on rewards and recognition.
- Theory X: Here, it is assumed that the employees do not like their work, so they try to avoid it.
They must be compelled or warned. The managers keep close supervision. Managers should
follow a dictatorial style.
- Theory Y: Here, the employees find their job relaxing and natural, so they do not need to be
warned or compelled, since they have self-direction and self-control.
- Comparison between Theory X and Theory Y:
1) Meaning: In theory X, there should be high supervision and control. In theory Y, there is
self-direction and self-control.
2) Work: In theory X, employees do not like their work, whereas in theory Y, employees
feel their work as normal.
3) Ambition: In theory X, the employees have little to no ambition, whereas in theory Y ,
the employees have high ambition.
4) Responsibility: In theory X, the employees avoid responsibility, whereas in theory Y, the
employees accept the responsibility.
5) Leadership Style: Theory X has a autocratic leadership style, whereas theory Y has a
democratic leadership style.
6) Control: In theory X, there is tight control, whereas in theory Y, there is a lenient control.
7) Direction: In theory X, there is a need for direction, whereas in theory Y, there is no need
for direction.
8) Authority: In theory X, there is a centralised authority, whereas in theory Y, there is a de-
centralised authority.
9) Self-Motivation: In theory X, the employees do not have self-motivation, whereas in
theory Y, the employees have self-motivation.

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 10) Focuses On: Theory X focuses on lower-order needs, that is, physiological and safety
needs. Theory Y focuses on higher-order needs, that is, social, esteem, and self-
actualisation needs.
- Herzberg’s Two Factor Theory:
- Satisfiers: Also known as motivators. Improving these factors will increase the job satisfaction.
Examples are achievement, recognition, and personal growth.
- Dissatisfiers: Also knows as hygiene factors. Improving these factors will decrease the job
dissatisfaction. Examples are salary, working conditions, and physical workspace.

LEADERSHIP
- It is the process of influencing people so that they work towards the achievement of a goal or an
objective.
- There are 3 types of leaders based on the use of authority: autocratic, democratic, and free-reign.
- Autocratic Leadership:
- The leaders are commanding.
- The leaders expect compliance.
- The leaders give punishments and rewards.
- The leaders tell their employees what they want and how to accomplish it, but they don’t take any
advice from the employees.
- This style is used when the leaders have complete information about how to solve a problem but
the don’t have enough time to do so.
- The leaders have the full authority for decision-making, they don’t take any input from the team.
- This style is used in the military, manufacturing, and construction.
- Democratic/Participative Leadership:
- Here, the leaders consult their subordinates and encourage participation.
- The employees are included in the decision-making process, but the leaders have the final
decision-making authority.
- This style is used when the leaders have come part of the information needed to solve a problem
and the employees have the other parts.
- There is mutual benefit. The employees are included in the team and are part of the decision-
making process. The leaders are able to take better decisions.
- Free-Reign/Delegative Leadership:
- Here, the leaders use little of his/her power.
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 - The employees have more independence.
- The employees have the full decision-making authority, but the leader is responsible for the
decisions taken by the employees.
- The factors that influence the style to be followed are:
- Time available.
- Who has the information?
- Internal conflicts.
- See diagrams in notes!!!
- Likert’s 4 Systems of Managing:
- Exploitative Authoritative:
- Here, the managers have no trust or confidence on their subordinates.
- Motivation is achieved through fear and punishments.
- Responsibility is only at the top-level of the hierarchy.
- There is no upward communication, only downward communication.
- Benevolent Authoritative:
- Here, the managers consider themselves better than their subordinates.
- Motivation is achieved through rewards.
- We allow some upward communication.
- Consultative:
- Here, the managers have little trust and confidence on their subordinates.
- Motivation is achieved through rewards and job involvement.
- Responsibility is spread out through all the levels of the hierarchy.
- We allow both upward and downward communication.
- Participative:
- Here, the managers have complete trust and confidence on their subordinates.
- We allow both upward and downward communication.
- There is high teamwork, participation, and communication
- Managerial Grid:
- It is used to identify the style of a manager or leader.
- Concern Towards Production: It is represented on the horizontal axis with a 9-point scale. 1
represents low concern and 9 represents high concern.
- Concern Towards People: It is represented on the vertical axis with a 9-point scale. 1 represents
low concern and 9 represents high concern.

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 - 1.1 Management:
- Also called as Impoverished Management.
- There is low concern towards production and low concern towards people.
- The managers have basically left their jobs and they only communicate. Managers have
little job involvement.
- 1.9 Management:
- Also called as Country Club Management.
- There is low concern towards production and high concern towards people.
- It leads to a friendly and happy work environment, but there is little concern towards the
achievement of the objectives.
- 5.5 Management:
- Also called as Middle of the Roads Management.
- There is medium concern towards production and medium concern towards people.
- 9.1 Management:
- Also called as Autocratic Task Management.
- There is high concern towards production and low concern towards people.
- It follows an autocratic leadership style.
- 9.9 Management:
- Also called as Team Management.
- There is high concern towards production and high concern towards people.
- These managers are the real team managers.
- See diagram in notes!!!

COMMUNICATION
- Communication is the means by which people are linked together in an organisation.
- There are two categories of communication: internal and external communication.
- Internal Communication: This type of communication is used by the managers to perform their
managerial functions of planning, organising, controlling, leading, and staffing.
- External Communication: This type of communication is used by the managers to obtain information
external to the organisation, from the outside environment, such as availability of suppliers, customer
needs, government regulations, and stockholders opinions.
- Types of Communication:
- Formal Communication:
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 - It is a formally created procedure.
- Examples are speeches, meetings, conferences, presentations, and one-on-one interviews.
- Informal Communication:
- It is a communication outside the already formed communication system.
- Can be between workers or gossip.
- There are 3 types: single-strand, cluster, and probability chain.
- Single-Strand: Each person communicates with another person in a single sequence.
- Cluster: Here, a group of people communicate together.
- Probability Chain: Here, a person tells a random person the same piece of information.
- Downward Communication:
- This is the communication between the higher-level of the hierarchy communicating with
the lower-level of the hierarchy.
- Pamphlets, loud speakers, and policy statements.
- The problem with this is that information is lost as it goes down the command chain.
- This type of communication is present in an autocratic leadership style.
- Upward Communication:
- This is the communication between the lower-level of the hierarchy communicating with
the higher-level of the hierarchy.
- Here, subordinates communicate with their superiors.
- Managers filter the messages before they pass them up the command chain.
- This type of communication is present in a democratic/participative leadership style.
- Crosswise Communication:
- Also known as Horizontal Communication.
- Here, people at the same level of hierarchy communicate with each other.
- Example is communication between HOD’s of different departments.
- Diagonal Flow Communication:
- This is the communication between people at different levels of the hierarchy with no
direct reporting-relationship.
- Example is communication between a ECE professor and the HOD of CSE.
- Written Communication:
- This type of communication provides records and references.
- The advantage is that it can be used for legal defence.
- The disadvantage is that it creates a lot of papers.
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 - Oral Communication:
- This is a face-to-face communication.
- The advantage is that there is an immediate feedback and a speedy interchange.
- Non-Verbal Communication:
- This type of communication is based on body gestures and facial expressions.

STAFFING
- Staffing involves manning the organisation structure through proper and effective appraisal, selection,
and development of people to fill the roles design into the structure.
- Staffing is also known as Human Resource Management. It is the managerial function that a acquires,
trains, appraises, and compensates employees.

- Components of Staffing:
- Strategic HR Planning: Here, you need to identify the current and the future HR needs of an
organisation in order to achieve its goals.
- Recruitment: It is the process of attracting, screening, and selecting people that are qualified for a
job.
- Selection: Consists of putting the right men into the right job. You match the organisational
requirements with the qualifications and the skills of the people.

- Activities of Staffing:
1) Manpower planning
2) Recruiting
3) Selecting
4) Training
5) Placing
6) Orienting
7) Promoting
8) Appraising

- Human Resource Management:

- It is the integration of the processes in an organisation that ensure that the staff is acquired and
used in an effective way.

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 - HR is multidisciplinary, it applies the disciplines of economics, psychology, sociology, and law.
- Job: A collection of tasks that are needed to be performed in order for an organisation to achieve
its goals.
- Position: A collection of tasks and responsibilities that are needed to be performed by a single
person. Each person in an organisation has a position.
- Job Analysis: Process of determining the skills and the knowledge required for a particular job in
an organisation.
- Job Description: Document that contains information regarding the tasks, duties, and
responsibilities of a specific job.
- Job Specification: Contains the minimum qualifications required to perform a particular job.
- See diagram!!! Job analysis includes the preparation of the job description and job specification.

- Job Description and Job Specification:

- Job Description: Job Title, Job Location, Job Summary, Reporting To, Job Duties, Hazards,
Working Conditions, and Machines to be Used.
- Job Specification: Qualifications, Skills, Responsibilities, Experience, Training, Emotional
Characteristics, and Sensory Demands.

- Job Evaluation:
- Process of determining how much a job should be paid.
- There should be a balance between internal and external equity.
- Internal Equity: You need to pay different jobs differently, based on what the job entails.
- External Equity: You need to pay a job based on what the market is paying.

- Recruitment:
- Recruitment is the process of attracting, screening, and selecting people that are qualified for a
job.
- Sources of Recruitment:
- Internal Sources: Promotions, demotions, and transfers. People that are already in the
payroll of the organisation.
- External Sources: Universities, private job agencies, field trips, trade unions, ex-
employees, and waiting lists.
- Methods of Recruitment:
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 - Direct: Consists of sending recruits to educational institutions and professional institutions.
It also includes contacts of the employees.
- Indirect: Here, you advertise in newspapers, radio, television, or technical magazines.
- Third-Party: You use private employment agencies, recruiting firms, or placement offices
of schools.

- Selection:
- Is the process of putting the right men into the right job. You need to match the requirements of
an organisation with the qualifications of the people.
- The selection procedure consists of the following 6 steps.
1) Initial or Preliminary Interview: Here, the candidates are asked why are they
applying, the salary requirements, their experience, and education. Unqualified or
undesirable candidates are screened out.
2) Application Form: It contains factual information using which the recruiters can
decide whether the candidate is suitable for the job or not.
3) Reference Checks: Here, the candidate is asked to mention the name and address of
previous employers and 2 or 3 people that are known but not related. References are
checked in order to know more about the candidate.
4) Employment Tests: Here, the candidate’s abilities are tested in order to ensure that
they match with the job specification. These tests can be aptitude tests, achievement
tests, situational tests, interest tests, personality tests, and multi-dimensional tests.
5) Interview: Here, the employer is able to determine the abilities, skills, and behaviour
of the candidate by having a face-to-face contact.
6) Selection Decision: Here, the hiring manager will narrow the pool down to the
person that is the best fit for the job.

- Training:
- It consists of increasing the knowledge and the skills of an employee in order to perform a
particular job.
- Traditional Training Methods: On the job training methods, off the job training methods, and
interactive training methods.
- Modern Training Methods: Social learning methods, online training methods, and outdoor
training methods.

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 - On the Job Training Methods:
- Training on a specific job. It can be of two types. The first one is experienced workmen.
Here, the new worker can learn from experienced workers and then copy them. The
experienced workers can provide help whenever needed. The second one is training by a
supervisor. Here, the supervisor trains the new worker when they are sent to his
department.
- Vestibule Schools: A schooling facility is made available within an industrial plant to teach
specific skills to new workers.

- Induction:
- It consists of welcoming the new hires into the organisation and helping them transition into their
new role, providing support while they adjust.
- Induction provides new employees with the information that they require in order to settle down
comfortably and efficiently in the firm.
- Types of Induction:
- Formal Induction:
- Here, the organisation has a structured programme which is executed when new
employees join the firm.
- Informal Induction:
- First, the new employees should report to the HR department. It should last for an
hour.
- Here, the new employees are put directly on the job and are expected to adjust
themselves.

IMPORTANT QUESTIONS

1. Define Theory X and Theory Y.

Both these theories are used by managers to motivate their employees. Theory X is based on the argument
that the employees do not like their job and they try to avoid it. So, they must be compelled and warned.
Here, the manager must maintain close supervision and he/she must follow a dictatorial style. Theory Y
assumes that the employees find their jobs relaxing and normal. Here, the employees need not be compelled
since they have self-direction and self-control. There are some differences between them. In Theory X there
is high-supervision and high-control, whereas in Theory Y there is self-direction and self-control. In Theory

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X the employees dislike their work, whereas in Theory Y the employees find their work normal and
relaxing. X avoid responsibilities, whereas Y accept and seek responsibility. X has no ambition, whereas Y
has ambition. X follows a autocratic leadership style, Y follows a democratic leadership style. X has tight
control, Y has lenient control. In X there is a need for direction, whereas in Y there is not. In X the authority
is centralised, whereas in Y it is decentralised. In X, there is no motivation, whereas in Y there is motivation.
X focuses on physiological and safety needs, whereas Y focuses in social, esteem and self-actualisation
needs.

2. List Likert’s 4 systems of management.

Likert’s 4 systems of management are the following. First, you have a exploitative authoritative. Here, the
manager has no confidence nor trust on their subordinates. Motivation is obtained using fear and
punishments. Here, responsibility is only at the top-level of the management. There is only downward
communication, no upward. Then, we have benevolent authoritative. Here, the manager considers himself
better than his/her subordinates. Here, motivation is achieved using rewards. We allow some upward
communication. Then, we have consultative, where the managers have little trust and confidence on their
subordinates. Here, motivation is achieved through rewards and job involvement. Here, the responsibility is
spread across all the levels of hierarchy. We allow both upward and downward communication. Finally, we
have participative, where the managers have compels trust and confidence on their subordinates. There is
both upward and downward communication. There is participation, communication, and teamwork.

3. List the different types of departmentation.

First, we have departmentation by simple numbers, where we group people that perform similar duties into
the same group, and assign a manager to each group. Then, departmentation by time, where we group people
based on time and shifts, such as doctors and nurses in hospitals. Then, departmentation by function, where
we group people and the activities based on the job to be done. Then, we have departmentation by territory,
where we group the people and the activities based on the territory. This is useful for companies that have
customers all around the world, such as Coca Cola. Then, we have departmentation by product, where we
group the people and the activities based on the service being provided, such as two-wheeler, three-wheeler,
and four-wheeler. Then, we have departmentation by customer, where we group the activities based on the
type of customers that they are targeting, such as foreign customers, local customers, retail customers, and
wholesale customers. Then, we have departmentation by equipment, where we group people and activities
based on the machines that they are going to manage or use. Finally, we have departmentation by matrix

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structure, where we group the employees based on the needs of each department, that is, what type of
employee does each person need, such as graphical designer, backend developer, frontend developer, etc.

4. How to draw a departmentalisation structure?

There are two types of departmentalisation structure. First, we have line organisation, where we place the
people that have higher decision making authority at the top and the people that have lower decision making
authority at the bottom. It is the simplest form of organisation. The line of authority flows from top to
bottom. As an example, we have the managing director at the top, the next level has a finance manager, a
work manager, and a staff manager. The work manager has a plant superintendent, which further has 3
workers. In line and staff organisation, we add advisers in boxes with double edges and red outside edge
and dotted lines towards the line organisation. Example is personal assistant for managing director, quality
control inspector and repairs and maintenance officer for the plant superintendent.

5. List one advantage and one disadvantage of both types of departmentalisation.

The disadvantage of line organisation is that it does not included specialised and supportive services. The
advantage of line organisation is that it makes communication be efficient and it brings stability. The
disadvantage of line and staff organisation is that the line and staff functions frequently overlap. The
advantage of line and staff organisation is that it allows specialised services.

6. List the managerial roles/functions.

According to Henry Mintzberg’s model, there are 10 managerial functions which are classified into 3
categories. In interpersonal roles, we have figurehead (performs ceremonial duties), leader (is responsible
for the people in his unit), and liaison (spends time with people outside his unit). In informational roles, we
have monitor (scans the environment for information), disseminator (distributes the above information to all
the people in his unit), and spokesman (sends the information to people outside his unit). In decisional roles,
we have entrepreneurial, resource allocator, disturbance handler, and negotiator.

7. Explain the steps in the staffing process.

Staffing consists of 3 steps. The first step is Strategic HR Planning. Here, we need to identify the current and
the future HR needs of an organisation in order to reach a goal or an objective. Then, we have Recruitment,
which consists of attracting, screening, and selecting people that are qualified or suitable for the job. Then,
we have Selection. Here, we need to put the right men into the right job. We basically have to match the
organisation’s requirements with the qualifications of the candidates.

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8. Differentiate between US and Japanese styles of management.
There are 7 differences between the US and Japanese styles of management. In the Japanese style, there is a
job for lifetime, whereas in US there is only a short-term job. Collective decision-making versus individual
decision-making. Collective responsibility versus individual responsibility. Slow evaluation and promotion
versus rapid evaluation and promotion. Implicit control mechanisms versus explicit control mechanisms.
Non-specialised career path versus specialised career path. Holistic concern of employee as person versus
segmented concern of employee as person.

9. Explain Porter’s 3 generic strategies, i.e., Porter’s Model for Industry Analysis.
First, we have the overall cost leadership strategy. Here, if a company wants to get an advantage over its
competitors, it should lower its costs. If a company is able to lower its costs, it would be able to sell its
products at a lower price, and still make more profit than its competitors. An example is Timex, which sells
cheap watches but still has a lot of profit. Then, we have the differentiation strategy. Here, a company should
give a higher quality to its products and sell them at higher costs. It would still attract a lot of customers that
are willing to pay for the extra value. An example is Rolex, which sells high-end luxury watches for a high
price but still attracts a lot of customers. Finally, we have focused strategy. Here, a company should focus on
a specific regional market, product line, or customer segment. An example is Longines, which sells luxury
watches only for women.

10. Explain the classification of businesses based on Business Portfolio Analysis.

In the business portfolio analysis, we classify the business units into 4 different categories. The first one is
star. Here, there is high growth and high market share. There is a lot of investment needed. There is a high
consumption but also there is high generation. It needs a lot of money to maintain but generates a lot of
profit. Then, you have question mark. Here, there is high growth but low market share. Startups are located
here. Needs a high investment. It is called a question mark because it can be a star and eventually a cash
cow, but it can also be a dog. Then, you have cash cows. Here, there is low growth but high market share.
You need little investment but still generate a lot of profit. They are the stars of yesterday. Then, you have
the dogs. Here, there is low growth and low market share. These are the businesses that are in the declining
stage. The diagram has on the left side the market growth rate, and at the bottom it has relative market share.

11. Explain Systems Approach to Staffing.

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12. List the communication types between supervisors and subordinates.
The types of communication between supervisors and subordinates are: formal, informal, downward,
upward, crosswise, diagonal flow, written, oral, and non-verbal communication.

13. What are the difficulties of upward communication?

One of the difficulties of upward communication is that the managers filter the messages that are being sent
by their subordinates before passing them up the command chain. This may cause the loss of valuable
information that the subordinates want the higher-level of the command chain to know. Managers also try to
remove information that is against them from the messages.

14. List the criteria of classification of entrepreneurs.

Based on type of business you have business entrepreneurs, trade entrepreneurs, industrial entrepreneurs,
corporate entrepreneurs, and agricultural entrepreneurs. Based on motivation you have pure entrepreneurs
and induced entrepreneurs. Based on use of technology you have technical entrepreneurs, non-technical
entrepreneurs, and professional entrepreneurs. Based on stages of development you have first generation
entrepreneurs, second generation entrepreneurs, and classical entrepreneurs Based on capital ownership you
have private entrepreneurs, state entrepreneurs, and joint entrepreneurs. Based on gender and age you have
male, female, young-aged, middle-aged, and old-aged entrepreneurs. Based on area you have urban
entrepreneurs and rural entrepreneurs. Based on scale you long-scale, medium-scale, and short-scale
industry entrepreneurs. Based on Clarence Danhof you have innovative entrepreneurs, imitative
entrepreneurs, fabian entrepreneurs, and drone entrepreneurs.

15. Discuss the contents of business plan.

16. Explain the types of budgets.

The types of budgets are the following. First, there is financial budget, which includes the amount of cash
that an organisation is expecting to get during a specific period of time and how it plans to use it. Examples
are balance sheet budget, cash flow, and capital expenditure. Then, you have operating budget, which
includes the budget needed for the operations of the organisation, such as sales budget, expense budget, and
profit budget. Then, you have non-monetary budget, which is budget that cannot be expressed in terms of
monetary value, such as space budget, labour budget, and production budget, and space-allocation. Then,

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you have variable budget, which is budget that varies according the volume of sales. Finally, you have zero-
based budget, where you divide all the programs in an organisation into packages and calculate each of their
budgets separately.

17. List Urwick’s principles.

The organisation principles of Urwick are Principle of Unity of Objectives, Principle of Organisational
Efficiency, Principle of Specialisation, Principle of Scalar Chain, Principle of Span of Management,
Principle of Unity of Command, Principle of Delegation, Principle of Parity of Authority and Responsibility,
Principle of Flexibility, and Principle of Functional Definition.

18. Explain the 3 categories of moral issues or problems that may arise in a profession.

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