ECO 03 Solved Assignment 2021 – 22

ECO 03 Solved Assignment 2021 – 22

GNOU B.Com Free Solved Assignment 2021 – 22






Maximum Marks: 100

Attempt all the questions:

1. What is controlling function of management? Discuss traditional and modern techniques of control. (20)

Ans: Controlling function of management: Control is one of the managerial functions. These functions start with planning and end at controlling. The other functions like organising, staffing, directing act as the connecting like between planning and controlling. Planning will be successful only if the progress planning and controlled, Planning involves setting up of goals and objectives while controlling seeks to ensure.

In the words of Koontz and O’Donnel, “The measurement and correction of the performance of activities of subordinates in order to make sure that enterprise objectives and plan devised to attain them are being accomplished.” The accomplishment of organisational goals is the main aim of every management. The performance of subordinates should be constantly watched to ensure proper implementation of plans. Co-ordination is the channel through which goals can be achieved and necessary.

According to Henry Fayol, “In an undertaking, control consists in verifying whether everything occurs in conformity with the plan adopted, the instructions issued and principles established. It has to point out weakness and errors in order to rectify them and prevent recurrence”.

Thus, controlling implies determining and stating specifically what is to be accomplished, then checking performance against such standards prescribed with a view to supplying the corrective action required to achieve the planned objectives. The end objective of controlling is, therefore, to ensure that the people’s effort in the   organisation is   continuously   directed   towards   the attainment of the predetermined objectives.

Techniques and modern techniques of Control or Methods of Establishing Control

A number of techniques or tools are used for the purpose of managerial control. Some of the techniques are used for the control of the overall performance of the organisation, and some are used for controlling specific areas or aspects like costs, sales, etc. The various techniques of control can be classified into categories, viz.,

(1) Traditional or Conventional techniques and

(2) Modern or Contemporary techniques.

Traditional Techniques

a. Budgetary Control: According to J.A. Scott, “Budgetary control is the system of management control and accounting in which all operations are forecasted and so far as possible planned ahead, and the actual results compared with the forecasted and planned ones”.

b. Standard Costing: According to the ICMA, England, “Standard cost is a pre-determined cost which is calculated from management’s standards of efficient operation and the relevant necessary expenditure”.

c. Break-even Analysis or Cost-Volume-Profit Analysis: Cost-Volume-Profit Analysis or Break-even Analysis is the study of the interrelationship between the cost (i.e., cost of production), volume (i.e., the volume of production and sales), the prices and the sales value, and the profits. In other words, it is the study of the inter-relationship between the cost (i.e., cost of production), volume (i.e., volume of production and sales), prices (i.e., selling prices) and profits.

d. Inventory Control: Inventory is the stock of raw materials, work-in-progress, finished goods, consumable stores and spare parts and components at any given point to time. So, inventory control means control over different items of inventory or stock. “It is defined as physical control of stock items and implementing the principles and policies relating thereto”.

e.  Internal Audit: Internal audit is a continuous and systematic review of the accounting, financial and other operations of a concern by the staff specially appointed by the management for the purpose. In other words, it is the auditing for the management conducted by the staff specially appointed for the purpose to ensure that the work of the concern is going on smoothly, efficiently and economically.

f.  Statistical Data Analysis: It is a technique under which statistical data of the past and the present relating to the important aspects of the business are used for managerial control. The statistical data are collected from books and registers of the concern and presented to the management in a systematic manner in the form of tables, charts, graphs, etc.,

g. Personal Observation: Under the technique of personal observation, the managers keep a close personal observation of the employees. In other words, the manager observes whether the workers are doing what they are expected to do.

h. Production Planning and Control: According to S. Elon, “Production planning and control may be defined as the direction and co-ordination of the firm’s material and physical facilities towards the attainment of pre-specified production goals in the most efficient and valuable way”.

Modern Techniques

a. Financial Statement Analysis: Financial statements are a means of managerial control. They can be used by the management for measuring and controlling the profitability, liquidity and the financial position of the business. By comparing the financial statement of the current year with those of the previous years and also by comparing the financial statement of their concern with those of other concerns engaged in the same industry.

b. Return on Investment Control: Profits are the measure of overall efficiency of business. Profit earned in relation to the capital employed in a business is an important control device. ROI is used to measure the overall efficiency of a concern. It reveals how well the resources of a concern are used, higher the return better are the results.

A large number of companies have adopted it as their key measure of overall performance. This yardstick is the rate of return that a company or a division can earn on the capital allocated to it. This tool, therefore, regards profit not as an absolute but as a return on capital employed in the business. The goal of a business is seen, accordingly, not necessarily as optimizing profits but as optimizing returns from capital devoted to business purposes.

This standard recognizes the fundamental fact that capital is a critical factor in almost any enterprise and, through its scarcity, limits progress. It also emphasizes the fact that the job of managers is to make the best possible use of assets entrusted to them.

c. Management Information System (MIS): Management Information System (MIS) is an approach of providing timely, adequate and accurate information to the right person in the organisation which helps in taking right decisions. These are integrated programs for the collection, analysis and dissemination of information to support management decision making. The total MIS network is more than a machine; it contains human resources, hardware, software and intricate processes. Most MIS networks are computer based due to vast amount of number crunching to be done. That is why the ideal MIS provides accurate, condensed informational analysis to the appropriate manager in a timely manner.

d. Management Audit: Management audit is an investigation by an independent organisation to find out whether the management is carried out most effectively or not. In case there are drawbacks at any level then recommendations should be given to improve managerial efficiency.

e. Zero-Base Budgeting (ZBB): In the words of Peter A Pyher, “Zero-base budgeting is a planning and budgeting process which requires each manager to justify his entire budget request in detail from scratch and shifts the burden of proof to each manager to justify why he should spend money at all. The approach requires that all activities be analysed in ‘decision packages’ which are evaluated by systematic analysis and ranked in order of importance”. From his definition, it is clear that Zero-base budgeting is a technique of preparing the budget in which the previous year is not taken as the base, and every year is taken as a new year for preparing the current year’s budget.

f. Human Resources Accounting: The American Accounting Association has defined human resources accounting as “the process of identifying and measuring data about human resources and communicating this information to interested parties”.

g. Responsibility Accounting: Responsibility Accounting is defined as “a system designed to accumulate and report costs by individual levels of responsibility. Each supervisory area is charged only with the cost for which it is responsible and over which it has control.”

2. Discuss the meaning and importance of departmentation. Discuss line, functional and line and staff organization with their relative merits and demerits. (20)

Ans: Departmentation: The process of dividing activities into units and subunits is referred to as departmentation. The term departmentation is used in a generic sense n is not only confined to the creation of such units as are called departments, but it includes divisions, sections and jobs also.

Dividing up work calls or identification of total activities and classification of such activities into units and subunits. There are three bases for primary grouping of activities at the second level of the organisation just below the top level. Units at the second level are commonly called departments when business functions are adopted as the pattern of grouping activities. Such units go by the name of divisions when either products manufactured or territories are adopted as the means of classifying activities.

There are, however, two approaches to departmentation- top down and bottom-up approaches. In the top-down approach, activities are divided step by step downward form the chief executive’s job to the operating jobs. In the bottom-up approach, the division of activities is carried on in a reverse order. Starting form operating jobs, there arise sections form combining some correlated jobs, departments from combining some sections and finally the chief executive position form putting departments together. While the top-down approach gives emphasis on co-ordination and managerial action, the bottom-up approach gives emphasis on co-ordination and managerial action, the bottom-up approach focuses attention on employee performance. Although the top-down approach is easy for understanding the departmentation process, both the approaches are utilized in actual practice

Need and Significance of Departmentation

It is an established fact that there is a limitation on the member of personnel an enterprise or a supervisor can directly control. This limitation of control restricts the size of the enterprise unless it divides and groups its activities into departments. Departments comprise a framework for an organisation and enable it to expand indefinitely. Departmentation aims at (1) specialisation of activities for efficient performance; (2) simplifying the task of management within a workable span; and (3) maintaining co-ordination and control of the various activities. The various advantages of departmentation can be summed up as:

1. It increases the efficiency of the enterprise since the various activities are grouped into workable units.

2. It renders the task of fixation of accountability for results very easy since activities are well defined and responsibilities are clearly laid.

3. It provides for fixation of standards for performance appraisal and thus ensures effective control.

4. It creates opportunities for the departmental heads to take initiative and thus develops managerial facilities.

Line Organisation – Meaning, Advantages and disadvantages

Line organisation or military organsiation is a direct type of internal organisation. It is the oldest and the simplest form of integral organisation. Line organisation is a type of internal organisation in which there are direct vertical authority relationships (i.e., superior-subordinate relationships), connecting the positions at each level with those above and those below in the hierarchy. In other word, it is a form of organisation in which the relationships between the various levels of management form a hierarchy of authority or chain of command.

Advantages of Line Organisation:

Line organisation has certain advantages. They are:

1. This system is simple to establish and operate.

2. Under this system, responsibility and authority are clearly defined. Every member of the organisation knows his exact position, to whom he is responsible and who are responsible to him. Because of the clear fixation of responsibility, no person can escape from his liability.

3. There is unity of command and control under this system. That is, a subordinate receives orders from only one superior and is responsible only to one superior.

4. The unified authority and control implicit in this system ensures better discipline among the employees.

5. The unification of authority and responsibility present in this system facilitates quick and prompt decisions.

Disadvantages of Line Organisation:

Line organisation is not free from defects. It suffers from several drawbacks. The main drawbacks are:

1.  Under this system, as only one executive manages all the activities in his department, there is no scope for specialization.

2.  As only one executive is required to manage all the activities in his department, he is over-burdened, As a result, he may not be able to direct and control the efforts of his subordinates, properly.

3. As all the decisions relating to a department are taken by only one executive, there is unitary administration. Consequently, the successful functioning of the department depends on the abilities of the departmental head.

4. Under this system, only one executive controls all the activities of department and gets undue importance. The importance of the other people in the department is not recognised. As a result, there may be lack of co-operation and team-spirit.

5.  Since only one executive controls all the activities in his department, there is much scope for nepotism and favouritism.

Functional Organisation – Meaning, Advantages and Disadvantages

Functional organisation is a type of organisation in which the work of the whole enterprise is divided into a number of specialized functions like production, purchasing, marketing, office management, personnel relations, etc. and each of these spcci~11ised functions is entrusted to a functional expert or specialist.

Advantages of Functional Organisation

Functional organisation has the following advantages:

1. Specialisation: This type of organisation has the benefit of having specialists in each area. The work is performed by those who have the specialist knowledge of that work. The workers have the advantage of getting instructions from specialists. This makes possible the fullest use of energy in the organisation.

2.  Increase in Efficiency: There is division of labour upto manager level. Planning and execution are also separated. This helps to increase the overall efficiency in the organisation. The workers get guidance from expert supervisors and this enhances their performance at work.

3.  Scope for Growth: The functional organisation provides wide scope for growth and mass production. The employment of specialists at various levels of work enables the organisation to grow as per the needs of the situation.

4.  Flexibility: Functional organisation allows changes in organisation without disturbing the whole work. The span of supervision can also be adjusted according to the requirements.

5.  Relief to Top executives: Top executives are not unnecessarily burdened as happens in line organisation. The line officer is supposed to be a jack of all trades and is burdened with all types of works. On the contrary a specialist is a master of his line and he has the expertise and capability of taking his own decisions.

Disadvantages of Functional Organisation

Following are the disadvantages of functional organisation:

1. Conflict in Authority: The principle of ‘unity of command’ is violated in functional organisation. A subordinate is answerable to many bosses. Every superior considers his work important and wants the workers to give to priority to his assignment. The workers fell confused and are unable to decide about the priorities of their work.

2. Lack of Co-ordination: The appointment of several specialists creates problems of co-ordination, especially when the advice of more than one is needed for taking decisions. Specialists try to give more importance to their work as compared to other areas. This creates conflicts among specialists and co-ordination becomes a problem.

3. Difficulty in Fixing Responsibility: Since there is no unity of command, it becomes difficult to fix responsibility for slackness in work. So many persons are involved in completing a work and everybody tries to blame others for low performance.

4. Delay in Taking Decisions: The involvement of more than one person in decision-making process slows down it. The speed or action tends to be hampered by the division of authority. Much time is taken in consulting different specialists prior to decision-making.

5. Poor Discipline: The division of authority creates problem of discipline. The workers have to obey many bosses; their loyalty becomes divided. Discipline tends to break down only among workers but also among lower level supervisors.

Line and Staff Organisation – Meaning, Advantages and Disadvantages

In line organisation, there is unity of command, hut there is no specialization. In functional organisation, there is extreme specialisation, hut there is no unity of command. To overcome the defects and to take advantage of the merits of both line organisation and functional organisation, line and staff organisation has been evolved. Line and staff organisation is the Usual form of organisation found in modern enterprise.

Line and staff organisation is a combination of line organisation and functional organisation. It is a type of organisation in which there are two sets of officers for administration, viz., (1) line officers who have the authority and command over the subordinates and are responsible for the accomplishment of the results, and-(2) staff officers or specialists who render expert’s advice to the line officers to help them to discharge their functions efficiently.

Advantages of Line and Staff Organisation

This organisation has the following advantages:

1. Specialisation: Line and staff organisation introduces specialisation in a systematic manner. Persons with specialised knowledge are appointed to help line officers. The planning part is generally undertaken by staff personnel and line officers are able to devote much time for execution.

2. Better Discipline: The unity of command is maintained in this type of organisation. The staff personnel do not interfere with the executive work of line officers. The workers get command from line personnel and are accountable directly to them for their performance. This creates better understanding and discipline among employees.

3. Balanced and Prompt Decisions: The functional managers have the advantage of expert advice when taking important decisions. The staff can also be used to investigate and advise on inter-departmental relationships. The line officers can take balanced and quick decisions.

4. Growth and Expansion: The life and staff organisation is quite suitable for growth and expansion. The burden of line staff is eased by the appointment of specialists. Line officers will be able to devote much time for future planning. The present staff will enable the expansion and growth of unit. Some assistant can be appointed to cope with the work if needed.

5. Development of Employees: This organisation provides scope for advancement of career to able and debited employees. There are more openings for those who have capabilities of going up. The separation of functions, of ‘planning’ and ‘doing’ also helps in creating more and more job opportunities. Promotional chances increase for deserving persons.

Disadvantages of Line and Staff Organisation

The line and staff organisation suffers from the following drawbacks:

1. Conflict between Line and Staff Personnel: There is a possibility of conflict between line and staff personnel. The responsibility for operations lies with line officers while staff officers only advise. The staff officers feel ignored at the hands of line officers. The line officers, on the other hand, complain of interference by staff persons in the day-to-day working. The conflict between line and staff officials adversely affects the work in the organisation.

2. Lack of Responsibility: There is a lack of responsibility for staff officials. They are not accountable for the actual results of operations. This may tempt them to give rash or theoretical advice. They may also be casual in their approach because the whole blame for non-performance lies with line.

3.  More Dependence on Staff: The line officers become habituated for advice on staff. They refer everything to staff for advice. Over-dependence on staff will make line officers less creative. They will not give much thought to any activity since advice will be available from staff.

4.  Lack of Co-ordination: There will be a lack of co-ordination between line and staff. The staff advice may be confused with line orders. The staff officers may also not be clear about their exact role. They may try to dominate the implementation part of their advice. Overlapping of functions will create confusion and disorder among employees.

5.  Ineffective Staff: The staff officers do not wield any power in the organisation. Without power they will not get prestige in the organisation. They will feel unimportant and the quality of advice will also be adversely affected.

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3. Write short notes on the following: (4 x 5) = 20

(a) Principles of Communication


Effective communication is one of the master skills to boost productivity. A communication is said effective when message will be received and understood the way we intended. A very helpful guideline to effective communication is given by the 7 C’s and 4 S’s. In any business environment, adherence to the 7C’s and 4S’s helps the sender in transmitting his message with ease and accuracy. The 7C’s are as follows:

1. Conciseness: The message to be communicated should be as brief and concise as possible. Only simple and brief statements should be made.

2. Concreteness: Concrete and specified expressions should be used in favour of vague and abstract expressions. The facts should also be specified. The level of message of the sender should be according to the receiver’s level of knowledge, understanding and educational background. Such communication builds confidence between sender and receiver.

3. Consistency: Communication approach must have consistency. Excessive vicissitudes might lead to confusion in the mind of the receiver. All the ideas and points must work in tandem and form an appropriate sequence. Such communication will minimise communication barriers.

4. Correctness: It is mandatory to send the message in a correct manner i.e. it must have supporting facts, figures, examples etc. This is done to ensure that if any idea has remained unclear to the receiver he may understand it more clearly, correctly and appropriately based on the supply of facts etc. The sender’s ideas must be balanced. The most important aspects of the message should be emphasised for increased attention of the receiver.

5. Clarity: Clarity of thought should precede a conversation. The message constructed by the sender should be unambiguous should adhere to a simple sentence structure. This permits the receiver to understand the message with little effort. Complete clarity of ideas facilitates ease of comprehension. Ideas should be conveyed in a manner that they are understood with simplicity.

6. Credibility: The above-mentioned points prove futile in the absence of the credibility factor because credibility depends on the trust factor between the sender and receiver. The sender should exude confidence that the receiver will receive the message being sent by him. Similarly, the receiver should maintain constant interaction with the sender and display trust in the sender’s credibility. He should accept the sender’s messages as the truth.

7. Courtesy: Courtesy follows credibility. Results beyond expectation can be achieved if tact, diplomacy and appreciation of people are woven in the message. Courtesy in expression is an effective and integral part of business world. Once the credibility of the sender has been established, attempts should be made at being courteous in expression. In the business world, being courteous can pave the way to success.

(b) Limitations of Planning

Ans: Limitations of planning: Planning is essential for a business organisation. It is difficult to manage operations without formal planning. It is important for the organisation to move towards achieving goals. But often things to not always go according to plan. Unforeseen events and changes, rise in costs and prices, environmental changes, government interventions, legal regulations, all affect our business plans. Plans then need to be modified. Therefore, planning might fail due to the following limitations:

a. Planning does not work in dynamic environment: The business environment is dynamic, nothing is constant. The environment consists of a number of dimensions— economic, political, technological, legal and social dimensions. The organisation has to constantly adapt itself to the changes in business environment. However, it is not always possible to accurately assess future trends in the environment.

i. Competition in the market can upset financial plans.

ii. Sales targets have to be revised and according is cash budgets also need to be modified since then are based on sales figures. Thus, planning cannot foresee everything and thus these are obstacles to effective planning.

b.  Planning is a time consuming process: Planning is a time consuming process. It requires collection of information, its analysis and interpretation. These activities may take considerable time. Sometimes plans to be drawn up take so much of time that there is not much time left for implementation of plans.

c.  Planning involves huge costs: Planning is an expensive process in terms of money. When plans are drawn up, huge costs are involved in the formulation of plans. If the costs are not justified by the benefits derived from the plan, it may have adverse effect on the enterprise. There are a number of incidental costs as well, like expenses on Board’s meetings, discussions with professional experts and preliminary investigations to find out the Viability of the plan.

d. Planning creates rigidity: Planning leads to rigid mode of functioning for managers. This has adverse effect on the initiative to be taken by them.

e.  Planning does not guarantee success: The success of an enterprise is possible only when plans are Properly drawn up implemental. Managers have a tendency to rely on previously tried and tested successful plans. But it is not always true that a plan which has worked before, will work effectively again.

(c) Objectives

Ans: Objectives are the goals established to guide the efforts of the management. Objectives are the ends towards which all the managerial activities are directed. Objective should be measurable and must be achievable within a given time limit. Examples of objective: Increase in sales revenue by 10% by reducing prices. Objectives determine the final goal of the enterprise. Objectives are determined by the top level of management. Objectives determine what is to be done and also the way in which a specific way is to be done.

(d) Fayol’s Administrative Theory

Ans: Henry Fayol’s Administrative policy

Henry Fayol was born in Finance in 1841. He graduated in 1860 and joined as a mining engineer in a French Mining Company (Commentry-Fourchambault-Decanzevile) and rose to the position of its Chief Managing Director because of his outstanding abilities in 1888. From 1888 to 1918 he was the Managing Director of the company. Through his long practical experience as a successful industrialist, Fayol developed a general theory of management. In 1916, he published the book Administration Industrielle et Generate in French which was translated into English in 1929 under the title, General and Industrial Management. But only a few hundred copies were published and it was only in 1946 that the English edition of this important book was freely available in the United States.

Fayol’s major contribution was:

1.  To identify and classify business activities.

2.  To identify management as separate set of skills or functions.

3.  To classify functions of management into five elements.

4.  To develop universal principles of management.

5.  To emphasise managerial qualities.

Fayol classified all industrial or business activities into six groups as given below:

1.  Technical activities consisting of production or manufacture.

2.  Commercial activities consisting of buying, selling and exchange.

3.  Financial activities concerning search for optimum use of capital.

4.  Security activities concerning protection of property and persons.

5.  Accounting activities concerning with maintenance of accounts including statistics.

6.  Managerial activities consisting of planning, organising, commanding, coordinating and controlling.

Although business or industrial undertakings differ from one another in nature, size or complexity of operations, yet these six activities are common to all enterprises. According to Fayol, the first five activities are quite well known, and, therefore, he has concentrated on the analysis of the sixth, i.e., managerial activities.

4. Differentiate between the following: (4 x 5) = 20

(a) Coordination and Cooperation

Ans: Difference between Co-ordination and Co-operation




1. Meaning

It refers to bringing together the activities of an organisation.

It refers to voluntary efforts of individuals to work together and help each other.

2. Nature

It is a conscious and deliberate effort of manager.

It is a voluntary effort of employees.

3. Scope

It includes co-operation and hence has a wider scope.

It has a narrow scope as it is towards establishing co-ordination.

4. Requirement

Co-ordination is essential for achievement of organisational goal.

Co-operation is voluntary in nature.

5. Relations

Co-ordination arises out of both formal and informal relations.

It arises out of informal relations.

(b) Delegation of Authority and Decentralisation

Ans: Difference between delegation of authority and decentralisation:


Delegation of Authority



Sharing of the task with the subordinate and granting authority in a prescribed limit by the superior is Delegation.

The systematic delegation to the lowest level of management is called decentralization.


It becomes compulsory in all the organizations as the complete task cannot be performed by the superior.

It becomes compulsory in the large organisations.

Freedom in action

Less freedom to the subordinate Final authority lies with the delegator.

More freedom given to the subordinate.


This is a process done as a result of Division of work.

This is the result of the policies framed by higher officials.


It depicts limited distribution of work, so has a limited scope.

It depicts broader distribution of authority so has a wider scope.


Its purpose is reduction of workload of the officer.

The purpose is expansion of the authority in the organization.

(c) Herzberg’s theory and Maslow’s theory

Ans: Difference between Maslow’s Need Hierarchy theory and Herzberg’s motivation Hygiene Theory

1. Meaning:

Maslow’s theory is based on the concept of human needs and their satisfaction.

Hertzberg’s theory is based on the use of motivators which include achievement, recognition and opportunity for growth.

2. Basis of Theory:

Maslow’s theory is based on the hierarchy of human needs. He identified five sets of human needs (on priority basis) and their satisfaction in motivating employees.

Hertzberg refers to hygiene factors and motivating factors in his theory. Hygiene factors are dissatisfying while motivating factors motivate subordinates. Hierarchical arrangement of needs is not given.

3. Nature of Theory:

Maslow’s theory is rather simple and descriptive. The theory is based long experience about human needs.

Hertzberg’s theory is more prescriptive. It suggests the motivating factors which can be used effectively. This theory is based on actual information collected by Hertzberg by interviewing 200 engineers and accountants.

4. Applicability of Theory:

Maslow’s theory is most popular and widely cited theory of motivation and has wide applicability. It is mostly applicable to poor and developing countries where money is still a big motivating factor.

Herzberg’s theory is an extension of Maslow’s theory of motivation. Its applicability is narrow. It is applicable to rich and developed countries where money is less important motivating factor.

5. Descriptive or Prescriptive:

Maslow’s theory or model is descriptive in nature.

Herzberg’s theory or model is prescriptive in nature.

6. Motivators:

According to Maslow’s model, any need can act as motivator provided it is not satisfied or relatively less satisfied.

In the dual factor model of Hertzberg, hygiene factors (lower level needs) do not act as motivators. Only the higher order needs (achievement, recognition, challenging work) act as motivators.

(d) Autocratic and Democratic Leadership Style

Ans: Autocratic or Authoritarian Style leader: An autocratic also known as authoritarian style of leadership implies wielding absolute power. Under this style, the leader expects complete obedience from his subordinates and all decision-making power is centralized in the leader. No suggestions or initiative from subordinates is entertained. The leader forces the subordinates to obey him without questioning. An autocratic leader is, in fact, no leader. He is merely the formal head of the organisation and is generally disliked by the subordinates who feel comfortable to depend completely on the leader.

Democratic or Participative Style leader: The democratic or participative style of leadership implies compromise between the two extremes of autocratic and laissez-fair style of leadership. Under this style, the supervisor acts according to the mutual consent and the decisions reached after consulting the subordinates. Subordinates are encouraged to make suggestions and take initiative. It provides necessary motivation to the workers by ensuring their participation and acceptance of work methods. Mutual trust and confidence is also created resulting in job satisfaction and improved morale of workers. It reduces the number of complaints, employee’s grievances, industrial unrest and strikes. But this style of leadership may sometimes cause delay in decisions and lead to indiscipline in workers.

5. Comment briefly on the following statement: (4 x 5) = 20

(a) Selection is followed by placement and orientation of the selected personnel.

Ans: Selection can be defined as discovering most promising and most suitable candidate to fill the vacant job position in the organisation. The selection starts after candidates for jobs have submitted their application.

The selection process usually includes a number of steps:

1. Preliminary screening: In this step the candidates who do not fulfill the required basic qualification are eliminated.

2. Selection test: Though these tests, ability and skill of the candidates are measured. Common types of tests conducted by organisation are Intelligence test, Aptitude test, Personality test, Trade test, Interest test.

a)  Intelligence test is conducted to check the efficiency level of the employee in performing the job.

b) Personality test is conducted to find out the human behaviour of the candidate.

c)  Trade test is conducted to check the basic knowledge and skill of the candidate related to vacant job position.

d) Interest test is conducted to find out the type of job in which candidate has more interest.

e) Aptitude test is conducted to find the potential of learning new jobs and techniques.

3. Employment interview: The candidates who qualify the test are called for interview.

4. References & background checks: After the candidate declared successful in the interview then information related to back ground, social relation, and character are identified.

5. Selection decision: The candidate who passed the test, interview, reference check is included in selection list & the manager’s select most suitable candidate from the list.

6. Medical examination: Before giving appointment letter, the candidates are selected for medical fitness.

7 Job offer: For job offer the appointment letter in hand over & a date in the appointment letter is mentioned on which one has to report for the duty.

8. Contract of employment: After the acceptance of job offer by a selected candidate required to sign various documents. Even after going through the rigorous procedure of selection as explained above, the selection process is not complete. The placement and orientation of the employee is also an important step in this direction. The selected candidates should be given copies of rule, regulations, procedures, etc. followed in the company. He should be given a detailed description of the job he is going to be assigned. He should be introduced to his immediate superior and subordinate and also told about his authority-responsibility relationship. Besides job-orientation the selected candidate should be given proper information about the working of the company also.

(b) Organisations are made up of components, each of which has unique properties, capabilities and mutual relationships.

Ans: System concepts recognize that organizations are made up of components each of which has unique properties, capabilities and mutual relationship. The constituent element of a system is linked together in such complex ways that actions taken by one producer have far reaching effect on others.

This approach studies the organisation in its totality. The mutually dependent variables are properly analysed. Both internal and external variables are studies in analysing the nature or organisation. Though this theory passes a much higher conceptual level as compared to earlier theories but different writers have given varied views of the system.

Organisation as a system can well be understood by identifying various sub-systems within it. Each sub-system may be identified by certain processes, roles structures and norms of conduct. Seiler has classified four components in an organisation, human inputs, technological inputs, organisational inputs, and social structure and norms.

Katz and Kahu have identified five sub-systems of organisation:

1.   Technical sub-system concerned with the work that gets done;

2.   Supportive sub-system of procurement, disposal and institutional relations;

3.   Maintenance of sub-systems for tying people into their functional roles;

4.   Adaptive sub-systems concerned with organisational changes; and

5.   Managerial sub-systems for direction, adjudication and control of the many sub-systems and the activities of the structure.

(c) The leader is a person in a group who is capable of influencing the group to work willingly.

Ans: Leadership is the ability to build up confidence and deal among people and to create an urge in them to be led. To be a successful leader, a manager must possess the qualities of foresight, drive, initiative, self-confidence and personal integrity. Different situations may demand different types of leadership.

Leadership means influencing the behaviour of the people at work towards realizing the specified goals. It is the ability to use non-coercive (no force) influence on the motivation, activities and goals (MAG) of others in order to achieve the objectives of the organisation.

Koontz and 0′ Donnel “Leadership is the ability of a manager to induce subordinates to work with confidence and zeal”.

George R Terry “Leadership is the activity of influencing people to strive willingly for group objectives”.

An analysis of the definitions cited above reveals the following important characteristics of leadership.

a)   Leadership is a personal quality.

b)  It exists only with followers. If there are no followers, there is no leadership?

c)   It is the willingness of people to follow that makes a person a leader.

d)  Leadership is a process of influence. A leader must be able to influence the behaviour, attitude and beliefs of his subordinates.

e)  It exists only for the realization of common goals.

f)    It involves readiness to accept complete responsibility in all situations.

g)   Leadership is the function of stimulating the followers to strive willingly to attain organisational objectives.

(d) Subordinates may not perceive the organisational goals in absence of direction.

Ans: Directing is telling the people what to do and seeing that they do it in best of their ability. This function of management is concerned with guiding the employees in the organisation to achieve organisational goal. The employees in the organisation start working only when they get instructions and directions from their superiors. In the directing function the superiors direct the actions of employees toward the predetermined goals of the organisation. Directing function does not mean giving orders only but through directions and instructions the superiors try to motivate the employees to perform to their best ability. In the organisation numbers of employees are working at different levels and in different job positions. The employees may differ in their levels of authority and the type of job assigned. The directing function tries to create balance in the organisation. Generally, when the employees are working at different levels they develop different attitudes and the balance between their attitudes is
made by directing function.


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