MG2351 PRINCIPLES OF MANAGEMENT Two Marks Questions With Answers 2014

Anna University, Chennai







“Management is the process of designing and maintaining an environment in which individuals, working together in groups accomplish their aims effectively and efficiently”

“Art of getting things done through others”

A process of Planning, Organizing, Staffing, Leading and Controlling.

2. Characteristics of management:

Ø Management is goal oriented ( Mean to achieve goals)

Ø Management is universal ( Suitable for all Size of organizations & Activities

Ø Integrative force: Individual efforts à Converged in to organizational goals

Ø Management is a social process: Done by people, through people for people

Ø Management is a multidisciplinary: Depends on knowledge from several disciplines.

3. Objectives of management

Ø Organizational objectives: ROI, Survival and solvency of business, Growth, Goodwill and Market standing

Ø Personal objectives: Salary & Remuneration, Working conditions, Training &

development opportunities, Participation in management, Security of service.

4. Need & Importance of management

Ø To achieve Objectives & Goals

Ø Optimum utilization of resources

Ø Minimization of cost

5. Division of work: Every employee is assigned one particular work type

Authority and responsibility: Power & Commitment

6. Discipline: Rules, orders, instructions should be followed without any deviation or Choice.

7. Unity of command: One should get orders from only one superior.

8. Unity of direction: all activities should be focused towards common goals.

Subordination of Individual interest to general Interest: Adhering to Goals of organization.

9. Remuneration: Fair and reasonable payment to the contributions made

10. Centralization: Power 78 Authority sharing between Top level, Middle level & Bottom level and also across various functional divisions & Branches.

11. Scalar Chain: Un broken line of command from top to bottom level (G.M à DGM à

Managerà Asst. Managerà Supervisorà Senior employee à Skilled employee à Employee)

12. Order: Smooth flow of work and resource handling

13. Equity: Treat all employees with Justice, Similar way and Kindness

Stability of tenure of personnel: Job security

14. Initiative: Willingness to do things and also in a creative way

15. Esprit- de – corps: Team spirit and working in harmony

16. Contributions by Max weber – Bureaucratic organization:

Bureaucratic model is more efficient form of organization because it aims at high degree of precision efficiency, objectivity and rationality.

Characteristics of Weber model:

Ø Division of labour: Specialization

Ø Hierarchy of authority: Position and relationship with superiors & subordinates

Ø Rigidity in compliance with procedures and framework of rules: No deviation

Ø Impersonality: Formal and functional relationship

Ø Technical competence: Job requirements and skills

17. Behavioral approach (Neo Classical theory) Contributions of Hawthorne studies

George Elton Mayo conducted it

Conducted at Hawthorne plant of Western electronic company

1927 to 1932

Experiments conducted:

Ø Illumination experiment: To test the fact that more working comfort would ensure better performance. The lights that illuminated the factory were reduced in numbers.

Ø Relay assembly test room experiment: Changes in Supervision, Job rotation, More interaction, Flexible working hours, More wages

Ø Mass interviewing programme: Attitude towards their job, working conditions and supervision conditions

Ø Bank wiring experiments : Study on informal groups and its effectiveness in Internal

Target setting

18. Top level management:

Ø Corporate planning for the entire operations

Ø Critical, Important and Macro decisions

Ø Corporate Objectives & Goals

Ø Decide on structure of Organization, creating various positions

Ø Review , change decisions and control of all financial and operating results

19. Middle level management:

Ø Department plan, Goals, activities

Ø Means of achieving the goals

Ø To perform all managerial functions

Ø Issue detailed orders and instructions

Ø Interpret policy to sub ordinates and lower level employees.

20. Lower level management

Planning of day to day work

Orders & Instructions were issued, received & Implemented

Supervising & Guiding of employees

Discipline & Team work

Performance & Improvement

21. Sole trading

Business unit which is owned and controlled by a single individual is known as a sole trading concern.

Advantages of sole trading

1. It is easy to form and close the business

2. It is easy for decision making

22. Partnership

A partnership is an association of two or more person to carry on business and to share its profits and losses.

Advantages of partnership

1. Easy to formation

2. Registration is not compulsory

23. Inter personal roles

Ø The figurehead role ( Ceremonial head)

Ø The leader role (Lead the organization towards the objective)

Ø The Liaison ( Communicating on behalf of organization to outsiders)

24. Informational roles

Ø Recipient role (Receives information)

Ø The disseminator role ( Pass on communication to subordinates)

Ø The spokes person role ( Pass on information to public & Stake holders)

25. Decision Roles

Ø The entrepreneurial role ( Invest, Direct & venture in to business)

Ø The disturbance handler role ( Crisis management)

Ø The resource allocator role ( Planning & Budgeting of resources)

Ø The negotiator role (Bargaining & offering)

26. Effectiveness: Achievement of objectives

27. Efficiency: Achievements of ends/Goals with least amount of resources.

28. Planning:

*Determination of objectives

*Forecasting and choice of course of action

*Formulation of policies, Programmes, Budgets, Schedules etc to achieve objectives

*Laying down of procedures and standard of performance

29. Organizing:

* Deciding on various activities required to achieve a goal

* Grouping and arranging the activities

* Assigning duties of all individuals working

* Assigning authority to the various designations

* Fixing up responsibility and performance standards

* Establishing horizontal and Vertical relationship

Ø 30.Staffing

* Deciding on quality and Quantity of manpower requirement and ensuring their availability with readiness to perform

à Manpower planning

à Recruitment

à Selection

à Training & Development

à Compensation

à Maintenance of human resource

31. Directing

Communication with all levels in the management Motivation: Provide means for better involvement in the task Leadership: Means to get things done

32. Controlling

All activities are performed according to standards pre decided

Taking steps in order of deviations

Handling issues and problems

33. Planning

Unit 2

“The plan is the action that orient towards goal or objective through the line of action to be followed, the stages to go through and the methods to use. Deciding on Coordinated activities that could bring in achievement of desired results.

*Planning is the future course of action towards attains the goal.

34. Objectives or Goals: Ends towards which activities are aimed or focused.

35. Strategies: Integrated Programme to achieve comprehensive objectives

36. Policies (Majors & Minors) Specific Area, Framework and Important guidelines for carrying out various activities.

37. Procedures: A required method of handling future activities. activity oriented

38. Rules: Specific required actions or Non actions that could join to form procedures, Task oriented

39. Programs: Set of clear instructions in a logical sequence to perform a particular task.

40. Budgets: Statement of expected results expressed in numbers.

41. Long range planning: Long range planning sets Long term goals and formulate specific plan to achieve it.

42. Short range planning: Determination of short term activities to achieve short term goals, thereby enabling reaching of Long term Goals through successful implementation of other short term plans also.

43. Functional planning: Planned for functional areas like Production, Marketing, Finance, R & D, Systems and HRM.

44. Objectives and goals may be defined as a ‘Future destination or desired state of affairs which the organization wants to attain’

* Future direction towards organizational objectives

M C Farland: “Objectives are the goals, aims or purposes that organizations wish to achieve over varying periods of time’

Features of objectives:

(1) Basic plans : Objectives are the basis of all other plans

(2) Multiple in nature: In various functional areas and combine to bring success

(3) Arranged in hierarchy: Higher to lower level at various departments and divisions

(4) Objectives vary in time span : Long term & short span

(5) Objectives may be general or specific

· Maintenance * Operational * Productive * General

45. Concepts in MBO (Management by objectives)

Peter F Druker in 1954

Self control and Self direction

Performance appraisal – Central focus of MBO

Self appraisal and self development

The active involvement of subordinates in the appraisal process leads to commitment and creates an environment for motivation.

46. Process of MBO

Ø Setting preliminary objectives

Ø Fixing key result areas

Ø Setting subordinate’s objectives

Ø Recycling objective

Ø Matching resources with objectives

Ø Periodic performance review

Ø Appraisal.

47. MBO Benefits

Ø Improvement of managing : Involvement and Motivated

Ø Clarification of organization: No misunderstanding

Ø Encouragement of personal commitment: Opportunity to contribute their ideas

Ø Development of effective controls: Verifiable Goals.

48. Strategies

“It is a complex plan for bringing organization from a given posture to a desired position in a future period of time”.

49. Characteristics of strategy:

Ø Comprehensive and integrated action plan drawn for achieving objectives

Ø Strategy is based on situational analysis of organization and environmental analysis


Ø Maximizing the performance and output with limited and minimum resources.

Ø Flexible enough to make changes and exploit new opportunities

Ø Flexible and dynamic in nature

Ø Long period of time plans with short term operational plans also

Ø Imposed externally by political, social, Legal and economical forces.

Ø It is interpretative planning formulated to interpret the meaning of the policies.

50. Policies:

Formulation, communication and implementation of policies.

“A policy is a general standing plan guiding the management in the conduct of enterprise management operations”

51. Characteristics of policies:

Ø Formulated in the context of objectives and seeks to contribute to the organizational objectives.

Ø Communicated to all managers.

Ø Broad guideline to the thinking and action

Ø Expression of top management to facilitate managerial decisions.

Ø Restrictive and permissive in nature.

52. Importance of policies:

Ø Speed up decision making

Ø Better delegation and decentralization of authority

Ø Coordination: Creates unity of efforts and uniformity of action and it focuses attention on organizational objectives.

Ø Simplifies control: Helps to prevent unwarranted deviations from planned course of action.

Ø Accomplishment of objectives

53. Planning premises

Planning premises are the anticipated environment in which plans are expected to operate.

Classification of planning premises

1. Internal and external premises

2. Tangible and intangible premises

3. Controllable and uncontrollable premises.

54. Decision making

Selection of a course of action from or among alternatives” Choosing from available alternatives

55. Components of decision making process

Ø Decision maker

Ø Decision problem

Ø Environment around the problem

Ø Objectives of decision maker

Ø Alternative course of action

Ø Outcomes expected from various alternatives

Ø Final choice

56. Routine and strategic decisions

Routine: Regular, Normal, day to day, less significance, No deviations

Strategic: Critical, high value, responsible for success/failure of the organization.

57. Policy and operating decisions

Policy: Vital importance and taken by top management

Operating decisions: Lower levels of management, activities, tasks and processes.

58.Organizational and Personal decision

Organizational: Official capacity

Personal decisions: Individual

59. Programmed and non programmed decisions:

Programmed: Routine and Repetitive

Non programmed decisions : Situational, Accidental and Contingency

60. Individual and Group decisions Individual: Decisions of own by Leaders Group: Collective decisions

Ø Quantitative techniques:

1. Time series analysis ; Adjusted to trend, seasonal variations

2. Extrapolation: Future projection based on past & Present trends

3. Regression analysis : Relative movements of one more interrelated series.

4. Input – output analysis : Cause- effect estimation

5. Econometric model: Expressing in quantitative terms the relationship between different variables that could influence.

61. Organization:

Unit 3

“Different things ( Roles and responsibilities) to different people ( Individuals in the organization)”.

Ø Formalized intentional structure of roles and positions.

62. Organizing means

Ø Identification and classification of required activities.

Ø Grouping of activities necessary to attain objectives.

Ø Assignment and delegation of authority to implement it

Ø Horizontal and vertical coordination and control. Organizational structure: designed to

Clarifies who is to do what tasks and who is responsible for what results. To remove obstacles to performance.

To make decisions and communicating it to all levels of management.

63. Formal and Informal organization:

Formal organization: the intentional structure of roles in a formally organized enterprise- A structure in which each individuals would deliver duties and responsibilities. Not a voluntary structure for employees.

Informal organization: A network of personal and social relations not established or required by the formal organization but arising spontaneously as people associate with one another”.

Grape vine: An informal way of communication taking place inside the organization through rumors.

64. Process of organizing involves:

Ø Determining activities, Grouping activities, Assigning duties

Ø Delegating authority and Coordinating activities

65. Line organization: Scalar organization

Ø Direct lines of authority flowing from top to bottom levels of organization.

Ø Features:

Ø Scalar chain from top to bottom

Ø No provision for staff experts

Ø Orders flow directly from superiors to subordinate

Ø Subordinate responsible for achieving work to the superior.

Ø Each superior is independent and takes decisions in his own area

Ø Each individual responsible for executive only

Ø Direct vertical flow of authority

Ø Authority-Highest at the top and reduces towards lower level.

Ø Planning and doing by same person

66. Functional organization

Organization in which various activities are classified in to a number of functions such as production, Marketing, Finance, Personnel, etc and each function is placed under the charge of functional expert.


Entire work of organization is divided in to major functions. Every function is under the charge of a specialist

Every functional expert is given functional authority to command people of other departments concerning his function.

Every subordinate receives instructions from a group of specialist.

67. Line and staff organization

“Designed to maintain a proper balance between centralization (Line organization) and divisions of control (Functional organization).


Ø Line authority are used

Ø Direct chain of command

Ø Staff experts play a supportive role

Ø Specialized activities and basic activities are separated

Ø Unity of command is maintained.

67. Matrix Organization:

Hybrid structure combining functional departmentation and project structure.

Functional structure is a permanent feature of the matrix organization and retains authority for the overall operation of functional units. Project departments and project teams are created when ever specific projects require a high degree of technical skill and other resources for a temporary period.

Developed to meet the needs of large and complex organizations which require a structure more flexible and technically oriented rather than the functional structures.


Ø Helps focused attention , talent, resource usage – Better control

Ø More flexible-Effective communication

Ø Professionals can test their competence and make maximum contributions.

Ø Motivate the staff to work for completion of project- Priority

Ø Physical resources are assigned, Better balance and job security.

68. Departmentation

Grouping of similar activities of the business into departmentation, division units.

Departmentation by different strategies

1. Department by numbers

2. Department by time

3. Department by enterprise function

4. Department by Territory

5. Department by Customers

6. Department by process

7. Department by product or service.

69. Delegation of authority

Ø The process by which a manager shares some of his functions and authority with subordinates is called delegation of authority.

Ø Delegation involves assigning duties, entrusting authority and imposing responsibility on subordinates.

Ø Delegation is always done within certain limit.

Ø After delegation , the manager should have the responsibility to follow it up.

Ø Delegated authority could be taken back at the time by higher official.

Ø Supervisor exercises control over operations of authority

Ø Routine works are delegated and the manager con focus on other important matters.

Ø Delegation of authority based on division of work

Ø Systematic process.

70. Process of delegation:

Ø Assignment of duties: Defines the tasks to be performed by the subordinates.

Ø Granting of authority: Providing authority to perform tasks or activities.

Ø Creating of responsibility: Subordinates become accountable for the performance of their duties..

71. Authority: Implies right and power of a person to exercise discretion to make decisions, to issue orders, to use organizational resources and to hire and fire employees.

Hendry fayol on Authority “ The right to give order and the power to exact obedience”.

72. Responsibility: Obligation to perform the given task to the best of one’s abilities.

73. Centralization: Centralization of authority refers to systematic and consistent retention or concentration of authority for decision making at higher levels of management.

74. Decentralization: Systematic dispersal of authority in all departments and at all levels of management. An organization said to be decentralized when managers at middle and lower levels are given the authority to take decisions on matters referring to their functions.

75. Staffing

Staffing basically involves matching jobs and individuals

76. Role of staffing

1. Increase in the number of employees

2. Changing employee roles and values

3.Increasing the percentage of woman employees

4. Widening the functions of the management

5. Effective attainment of organization goals

6. Provision of job satisfaction to employees.

77. Factors affecting staffing

1. Political factors

2. Economic factors

3. Social factors

4. Legal factors

5. Customers

6. Technological factors

78. Job specification: Formal statement of the minimum acceptable human qualities required for the successful performance of a job.

o Qualification required

Educational qualification



Physical standards Communication abilities Degree of initiative

Judgment & Decision making

Human attributes (i.e) Behavioral an emotional aspects

Manager (Finance) Identification: MG (F) 31/2002

Designation: Manager ( Finance)

Age limit : 40 to 50 ( Relaxable by 5 years in exceptional cases) Educational qualification: CA/ ICWA

Degree or Diploma in financial management

Desirable: MBA or Mcom. From any recognized university. Experience: Relevant Industry : Minimum 3 years

Other Industry : Minimum 5 years

Physique: Height, Weight, General health and ailment

Special skills : Ability to work in computerized environment

Position in Organization: Middle level management to report to direct ( Finance).

79.Recruitment:Process of searching for prospective employees and stimulating them (motivate them) to apply for jobs in the organization.

80.Sources of Recruitment

Promotion, Training & Personal contact, Placement services,

Development & Transfer Advertisement, On campus recruitment, Educational Institution, Factory gate appointment, Labour contractors

81. Directing

Unit 4

Directing is a managerial function which primarily concerned with influencing, guiding, supervising and inspiring subordinates in a planned manner.

“ All those activities which are designed to encourage subordinates to work efficiently and effectively in both the short and long run”.

82. Process of directing involves

Ø Orders about work to subordinates

Ø Guiding, Counseling, and educating subordinates

Ø Supervising the work being performed

Ø Maintaining discipline and rewarding efficient workers

Ø Motivating and inspiring the subordinates

83. Nature of directing

Ø Directing is a sub function between organizing, Staffing and Controlling

Ø It is an initiating function. Giving orders and instructions for converting decisions in to actions.

Ø Continuous process

Ø Performed by all managers at every level of organization.

Ø The time for directing will increase when we move down the level in organization

Ø Action oriented items converting objectives in to achievement of objectives.

Ø It connects planning, Organizing, staffing and Controlling

Ø Issuing orders, Instructions and activity to subordinates.

84. Motivation:

S R S Performance = Ability X Motivation X Technology

Motive : An inner state that activates energizes or moves an individual and channelizes his behavior towards goals.

Motivation is a process of stimulating people to action in order to accomplish desired goals.

85. Importance of motivation:

Ø Effective use of resources

Ø Higher efficiency

Ø Accomplishment of organizational goals

Ø Reduced labor turnover and absenteeism

Ø Healthy Industrial relation

Ø Improved corporate image

86. Maslow’s Hierarchy Need hierarchy theory

Ø Hierarchical placement of human needs from lower to higher order

If a given level of needs are satisfied fully, by providing these needs will not motivate him. He goes to next higher level of needs.

87. Herzberg’s motivation Hygiene theory (Two factor theory)

But unlike Maslow’s theory that the movement to next level shall happen when lower level is achieved is not practical because there is overlapping of needs

Dissatisfiers (Hygiene factors) Satisfactors (Motivational factors) Dissatifiers: Satisfactors:

Policy, administration, Supervision, Achievement, Recognition, Challenging

Working conditions, Interpersonal relations, work, advancement

Salary, Status, Job security, personal life


Hygiene factors are the needs that would not be felt as a motivator when it is present, but when it is absent the dissatisfaction is felt (Maintenance factors). i.e. Electricity & Salary

The motivational factors are the needs that would motivate an employee to perform.

Herzberg was able to recommend the importance of satisfiers which can motivate the employees.

88. Expectancy theory of motivation: Victor H Vroom

“People will be motivated to do things to reach goal if they believe in the worth of that goal and if they can see that what they do will help them in achieving it”.

Force = Valence & Expectancy

Valance: Strength of an individual’s preference for an outcome

Expectancy: Probability that a particular action will lead to a desired outcome.

89. Porter and Lawler model

Amount of effort à depends on Value of reward + Amount of effort + Probability of actually getting a reward

90. Equity theory by J.Stacy Adams

Outcomes by a person = Outcomes by another person/ Inputs by another person

Individual’s subjective judgements about the fairness of the reward she or he got, relative to the inputs (which include many factors such as effort, experience and education) in comparison with the rewards of other.

91. Reinforcement theory : BK. Skinner

Positive reinforcement or behaviour modification.

“Individuals can be motivated by proper design of their work environment and praise for their performance and that punishment for poor performance produces negative results.

MC Gregor’s participation theory

(Theory X and Theory Y)

Theory X (Traditional theory) Negative assumptions about human behavior

(1) People are by nature indolent ( want to work as little as possible)

(2) People lack ambition, dislike responsibility and prefer to be directed by others.

(3) People are inherently self centered and indifferent to organizational needs and goals. (4) People are generally gullible (not sharp and bright).

This approach leads to

Close supervision, centralized structure, autocratic leadership and tight controls.

Management is responsible for organizing the elements of production Management involves directing their efforts, motivating and controlling them. Active intervention needed for accomplishing results.

Theory Y

(1) People are not by nature passive or resistant to organizational goals. (2) The want to assume responsibility.

(3) They want their organization to succeed.

(4) People are capable of directing their own behavior. (5) They have need for achievement

This approach leads to

Ø Democratic leadership.

Ø Participation in decision making

Ø Self control

Ø Management by objectives

Ø Job enrichment

Ø Decentralization

Ø Employees are treated as naturally responsible and self motivated.

92.Mc clelland’s Needs theory of motivation:

Three basic motivating needs n/Pwr à Need for power

n/ Aff à Need for affiliation

n/ Ach à Need for achievement

Need for power : People with high need for power have a great concern for exercising influence and control –Forceful, outspoken, hard headed and demanding.

Need for affiliation: Usually derive pleasure from being loved and tend to avoid the pain of being rejected.

Need for achievement: Need for achievement have an intense desire for success and an equally intense fear of failure – risk taking, energetic and hardworking.

93. Leadership:

Ø Influence, art or process of enabling people to strive willingly and enthusiastically towards the achievement of group goals.

Ø Ability to persuade others to seek defined objectives enthusiastically. It is the human factor which binds a group together and motivates it towards goals.

94. Nature and Features

Ø Leadership is basically a personal quality

Ø Ability to form a group and enable them to follow his instructions without hesitation.

Ø Leadership pre supposes (assumes) a group of followers, who will follow

Ø Leadership is a process of inert- personal influence by which leader influences the followers in a situation to strive willingly towards realization of common goals.

Ø Community of interests between the leader and his followers.

Ø Continues process of influencing behavior.

Ø Leadership is exercised in a particular situation at a given point of time and under a specific set of circumstances.

Ø Leadership is a reciprocal relationship.

95. Leadership skills

1. Visionary skills 2. Communication skills 3. Sensitivity skills 4. Self awareness skills

96. Qualities of a good leader

1. intelligence 2. Physical features 3. Maturity 4. Vision and foresight 5.Inner motivation 6. Sense of responsibility 7. Empathy 8. Human relations attitude 9. Emotional balance

97. Autocratic or authoritarian leadership:

Leader centralizes power and decision making in himself. Commands complete control over subordinates.

Ø Strict autocrat leader: Penalties criticism and coercion

Ø Blue violent autocrat leader : Centralizes decision making power in him and offer positive motivation style in the room of taking in to account the feelings and needs of subordinates

Ø In competent autocrat leader : He adopts an autocratic style just to hide his incompetence.


Ø Provides strong motivation and reward to the self centered leader

Ø Permits quick decisions

Ø Incompetent subordinates can work, as their role in decision making is negligible

98. Democratic or Participative style:

Leaders take decision in consultation with the subordinates. Advantages:

Ø Provides subordinates to develop their potential abilities and greater responsibilities

Ø Improves job satisfaction & Morale of subordinates

Ø Subordinates participation would improve the quality of decisions.

99. Laiseez – Faire ( Free Rein Leadership)

Allows group to establish its own goals and work out its own problems. The entire decision making power is entrusted to subordinates and leader do not direct them.


Higher involvement and responsibility

Career development is successful

100. Creativity

Ability to produce new and useful ideas through the combination of known principles and components in novel and non obvious ways.

101. Creative process

1. Saturation

2. Preparation

3. Frustration and incubation

4. Inspiration

5. Verification

Unit 5


102. Elements of control system –Stanley De J. Osberne

Ø Planning: Plan is a pre requisite for effective control

Ø Organizational structure: Clearly defining the duties and responsibilities of each individual.

Ø Proper operating policy: Policy in realistic and broad in scope based on calculated action.

Ø Delegation or decentralization of authority: People down the line must be given right to make normal decision and normal errors to accomplish the objectives set before.

Ø Up to date procedures: Maintenance of up to date procedures and ensuring that these procedures are followed.

Ø Communication: Appraisal of results and guide for forward planning

Ø Personal ability of the controller:

Ø Proper assignment of authority and responsibility

103.8 areas of control – Peter F Drukker

-Marketing, Innovation, Productivity, Human organization, financial resources, Physical resources, Profitability and Social responsibility.

104. Holden’s 13 areas of control

Policies, Organization, Personnel, wages and salaries, Cost, Methods and manpower, Capital expenditure, service dept. efforts, Line of products, Research & Development, foreign operations, External relations and over all control.

105. Functional budget: One that relates to a function of the business i.e. Sales, Promotion etc.

106.Master budget: It is the summary budget incorporating its component functional budgets consolidated department and functional budget.

107.Fixed budget: Budget designed to remain unchanged irrespective of the level of activity actually attained.

108.Flexible budget: Designed to adjust permitted cost levels to suit the level of activity actually attained.

109.Zero based budget: (ZBB) Each manager has to justify the resources for each activity afresh for the accomplishment of objectives.

110.CPM : Critical path method : It is similar to PERT in attempt to integrate all activities involved in a project.

111.The differences between PERT and CPM are

Ø CPM assumes that the duration of each activity is constant. PERT allows uncertainty in the duration of activities.

Ø PERT is event oriented, CPM is activity oriented.

Ø CPM assumes some previous work experience essential for the completion of each activity. For PERT previous work experience is not essential.

Ø Cost and time estimates are used in CPM, but only time estimate is used in PERT.

112.Network techniques:

PERT : Program evaluation and review techniques.

PERT is a time event network analysis system in which various event in a program or project are identified, with a planned time established for each. These events are placed in a network showing the relationship of each event to the others.

à Events

Circles are number in an order of occurrence

Arrow represents an activity

Three time estimates are used

1. Most likely time

2. Optimistic time

3. Pessimistic time

Critical path : The sequence of events which takes the longest time and which has Zero ( or the least) slack time.

Strengths :

Ø Forces the manager to plan

Ø Planning is done all the way down the line

Ø Concentrates attention on critical elements that may need correction

Ø Makes possible a kind of forward looking control

Ø Network systems with sub systems enables a manager to aim reports and pressure for action at the right spot.

113.Quality control: Group of voluntary representation from each departments, who are working on continuous improvement of performance.


It is a measure of how much input is required to produce a given input. productivity=output/ input


The government attitude towards the business has undergone a drastic change beginning from the later years of eighties. This change can be seen from the various policies announced by the government particularly.

Ø Industrial policy statement

Ø Long term fiscal policy

Ø Exim policy

115. Liberalisation:

It eliminates licensing quantitative restrictions and other regulatory and discretionary controls.

The liberalization has enormously expanded the scope of the private sector. Now only a small number a industries are reserved. The liberalization of the policies towards foreign capital and technology and import liberalization have given further growth and competition.