Organization and Management: Leadership
BANKING DIPLOMA EXAMINATION Banking
Diploma Courses under The Institute of Bankers, Bangladesh (IBB)
Organization and Management-JAIBB
Q.1 What do you understand by Leadership? Discuss the functions of Leadership.
Ans.: Keith Davis - “Leadership is the ability to persuade others to seek defined objectives
enthusiastically. It is the human factor which binds the group together and motivates it towards
goal.”
Keys and Case – “Leadership is the process of influencing and supporting others to work
enthusiastically towards achieving objectives.”
Weihrich and Koontz – “Leadership is the art or process of influencing people so
that they will strive willingly and enthusiastically towards the achievement of group goals.”
Thus leadership is the process and the art influencing the behaviour, attitudes, activities of people
to work willingly and enthusiastically towards the accomplishment of group goals.
Functions of Leadership:
• Guides or Inspires or Motivates
• Boosts Morals
• Creates Confidence and Enthusiasm
• Develops Team Spirit
• Creates Vision and Initiative
• Transforms Potential into Reality
• Sincerity and Honesty
• Courage and Will Power
• Flexible and Dynamic
• Emotional Stability i.e. Maturity
• Sound Judgment
• Tact and Humour
• Education and Knowledge
• Conceptual Skills
• Administrative Skills
• Analytical Skills
• Human Relations Skills
• Technical Skills
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Q.2 Explain the various styles of Leadership.
Ans.: Leadership style is the general way or pattern of behaviour of a leader towards his
followers in order to influence their behaviour to attain a goal.
The main styles of leadership are as follows:-
(1) Autocratic and Authoritarian Leadership: An autocratic leader is one who centralizes power
and make all the decisions himself. He tells his followers what to do and expects to be obeyed
without questions. Thus, such a leader imposes his will on his followers.
Autocratic leaders may be of two types :-
(i) Pure Autocratic or Negative Leader : He is a director and makes all decisions himself. He
superimposes his decisions on his subordinates. He uses fear of punishment or penalty to carry
out his decisions. Thus, it is a negative leadership.
(ii) Benevolent Autocrat or Positive Leader : When an autocrat leader avoids negative coercive
power and uses reward power to influence his subordinates, he is called a benevolent autocrat
leader. Such a leader shows active concern for the feelings and welfare of his subordinates.
(2) Participative/Democrative Leadership: Participative leaders decentralize authority. Such
leaders involve subordinates in decision making process. The leaders and their group members
work as a social unit. They freely exchange their views and express opinions and suggestions.
(3) Free Rein or Laissez Faire Leadership Style : Such a leader completely delegates his
authority to his subordinates and allow them to make their own plans, procedures and decisions.
He simply aids his subordinates in performing their job. He exist as a contact person with the
subordinates external environment. Free rein leadership style is permissive and leader least
intervenes his subordinates. The leader remains passive observer but intervenes only during
the crisis. Free rein leadership is suitable where subordinates are highly competent and duty
conscious.
(4) Paternalistic Leadership: A paternalistic leadership is authoritarian by nature. It is heavily
work centered but has consideration after his subordinates the way father looks after his children.
Such a leader helps, guide and encourages his subordinates to work together as member of a
family. The subordinate in turn tend to remain submissive and faithful.
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Q.3 Discuss the different theories of Leadership.
Ans.: Several theories of leadership have been developed by management theoreticians. These
theories may be classified into three categories.
(1) Personality Theories
(2) Behavioral Theories
(3) Situational or Contingency Theories
(1) Personality Theories: Personality theories are theories that focus on the personal qualities or
traits of leader. Such theories include the following:-
(i) Great Man Theory (ii) Trait Theory
(i) Great Man theory of Leadership: Great man theory of leadership claims that “Leaders are
born, not made”. Leadership qualities are inherited or carried in genes. Leadership qualities
cannot be acquired or developed through education or training.
(ii) Trait Theory of Leadership: This theory states that there are certain unique traits or qualities
essential for successful leader. Any person who wants to be a successful leader must posses
those traits. This theory emphasizes that those traits need not necessarily be inborn but may be
acquired through education, training and practice.
(2) Behavioural Theory of Leadership: Behavioural theory focuses on what the leaders do i.e.
on the actual behaviour of the leader. Behavioural theory is based on the premise that effective
leadership is the result of effective behaviour of the leader. Success of leadership depends on the
behaviour of the leader and not on his traits.
A particular behaviour pattern of a leader (functional behaviour) makes him a successful
leader and its opposite (dysfunctional) would reject him as a leader. The functional dimensions
include setting goals, motivating employees towards achievement of goals, making effective
communication and interaction, building team spirit etc. The dysfunctional dimensions of leaders
behaviour include in ability to accept subordinates ideas, poor communication and ineffective
interaction, poor, human relations etc.
(3) Situational / Contingency Approach : The situational approach of a leadership emphasis that
emergence and success of a leader is largely determined by supranational factors This theory
stresses that a leadership behaviour which is effective under the particular situation may be
ineffective under the other. These are several different situational models of leadership have been
developed. Fiedler’s contingency model, path goal model, Blanchard’s model etc.
Organization and Management: Introduction to Business
BANKING DIPLOMA EXAMINATION Banking
Diploma Courses under The Institute of Bankers, Bangladesh (IBB)
Organization and Management-JAIBB
Introduction to Business
Q.1 Discuss the different concepts of Business that have emerged so far in World. Also
distinguish between the Traditional and Modern Concept of Business?
Ans.: Business activity has been conceptualized by many business persons, business managers
and academicians in the field of business management ever
since business emerged as an organised activity. Therefore the concept of business has changed
over the years of history of business. So far the following concept of business has emerged :-
(i) Profit Oriented Concept of Business
(ii) Customer Oriented Concept of Business
(iii) Social or Modern Eclectic Concept of Business
Profit Oriented Concept of Business : In the early age of the business, it was conceived to be a
wealthy producing or profit making economic activity. Any human activity directed towards the
acquisition of wealth or earning profit through production or exchange of goods was treated to
be a business. The profit oriented concept is also known as traditional concept of business. When
people started doing business by forming organization, than business used to be conceived as an
organization organised and operated to produce and provide goods and services to society under
the incentive of private gain or profit.
Assumptions :
(i) The sole objective of the business is to earn profits by production and/or distribution of
goods.
(ii) Customers will buy the products that are available in the market at the most competitive
rates.
(iii) There is hardly any need to think for customer service and satisfaction for running a
business.
Customer Oriented Concept of Business : This concept has came into existence around 1950’s
and gained momentum during the 1960’s and 1970’s. The business organization began to think
that business should earn profits through service and satisfaction of the customers Organization
were forced to regard customer as the king of the market.
Assumption :
(i) Business organizations should produce and provide the goods/ services that are needed by the
customers.
(ii) The products and services provided by the business should satisfy the needs of the
customers.
(iii) The business should earn the profits through the service and satisfaction of the customer.
Distinction between Traditional and Modern Concept :
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Q.2 What do you mean by Business. Explain clearly the role of Business in the Modern
World.
Ans.: The literal meaning of the term business is the ‘state of being busy’ or business. But when
the term is used in relation to the business world, it means much more specific. All the definition
to business may be classified under the following three categories.
Traditional Definitions : Traditionally, business was regarded as the institution organised for
production and /or distribution of goods/ services for earning profit.
Customer Oriented Definitions : Businessmen began to think about earning profits through
customer service and satisfactions. Hence the academicians and professional the term business
accordingly.
Hopkins, Duff et.cl – “Business is the organised activities designed to satisfy people’s wants for
goods and services.”
Urwick and Hunt – “Business is any enterprise which makes, distributes or provides any article
or service which other members of the community head and are able and willing to pay.”
Social Definitions/ Modern Eclectic Definitions : A few such modern definitions from social
point of view are reproduced as follows:-
Buskirk, Green and Rodgers - “Business is a system created to satisfy societies, need and
desires.”
Keith Davis and Blomstorm - “The term business refers to both private and public institutions
which develop and process economic values in a society.”
Significance/ Role of Business : The role or significance may be properly discussed under the
following heads : -
(i) Significance for Business Persons/ Institutions
(ii) Significance for Consumers
(iii) Significance for the Society
(iv) Significance for the Economy
(i) Significance for Business Persons :
· It helps in accomplishing their objectives.
· It helps in acquiring the knowledge and letter skills.
· Business persons may go for expansion and diversification of business.
· Get knowledge and feed back information from the middleman & customers
· They may by more emphasis on customer satisfaction.
· Create and maintain better relation with wholesalers, dealers, retailers, and other merchantile
intermediaries.
· Easily innovate and develop new product.
· More responsible to the society.
· Optimum utilization of resources in the most effective and efficient way.
· Enjoy a very high societal status.
(ii) Significance for Customers:
· Helps them to get right the product.
· It ensures satisfaction of the needs of consumers
· It ensures better facilities, better deal and after –sale services.
· Customers also get benefits under loyal customer schemes.
· Customer gets better products and services at lower costs.
· Customer also gets the joy of larger choice.
(iii) Significance for the Society:
· Members of society get better products and services at reasonable rates.
· Employment Opportunities.
· Better standard of living and quality of life.
· Security and welfare of their old age and raising days.
· Eradicate poverty, disease, ignorance, social evils through social welfare programmes.
(iv) Significance for the Economy :
· Planned development in the economy.
· Efficient and effective utilization of national resources.
· Ensures regular process of production and distribution of goods and services.
· Increasing national productivity.
· Balanced Regional Development.
· Increase and provide employment opportunities.
· Foreign exchange reserves by way of exports of goods and services.
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Q.3 What are the forms of Business Ownership? State the main features of all of them.
Ans.: Different forms of ownership of business organization available to each sector they are as
follows :-
(1) Private Sector: In private sector, the following forms of ownership/organization are
available:
(a) Sole Proprietorship
(b) Partnership
(c) Joint Hindu Family Business firm
(d) Company
(e) Cooperative Society
(2) Public Sector: In public sector, the following are the main forms of ownership of business
organization:-
(a) Departmental Organization
(b) Corporations
(c) Government Company
Private Sector:
(i) Sole Proprietorship: Sole proprietorship is a form of business organization which is
established, owned controlled and usually operated by an individual and that individual also
assumes all the risks of the business and entitled to all the profits made from it.
Characteristics:
· The oldest form
· Sale ownership
· Unlimited liability
· Entitled to all profits
· No separate existence of the business
· Free from legal formalities
· Sole decisions and control
· Limited scope of operations
(ii) Partnership: A partnership is an association of two or more persons who agree to carry on
business for earning and sharing profit among them.
Characteristics:
· At least two persons
· Maximum number of partners – (Banking sector – 10 persons, Any other sector – 20 persons)
· Agreement
· Business
· Sharing of profit
· Mutual agency
· Unlimited liability
· Jointly and several liability
· Mutual trust and confidence
· Business in firm’s name
· No separate existence of the firms
· Registration not compulsory
· Unanimous decisions
· Contribution of capital
(iii) Hindu Undivided Family : When a Joint Hindu Family carries on a business, it is called
Joint Hindu Family Firm. The members of such firm are called co-partners Joint Hindu family
consist of all persons lineally descended from a common ancestor and includes their wives and
unmarried daughter. There are two schools of Hindu law namely ‘Dayalhagya’ and Mitakshra’.
According to ‘Dayalhagya’ school of Hindu law, each son acquires an interest in the ancestral
property only after the death of his father. According to Mitakshra school a son acquires such
interest by birth or by adoption.
(iv) Company: Company is a voluntary association of persons formal and registered under the
present Companies Act, or under any previous law. In the eyes of the law, it is an artificial
persons having separate entity from its members, with perpetual succession and a common
seal. The capital of the company is divided into transferable shares and shareholders are called
members.
Characteristics:
· Registered voluntary association
· At least seven persons in case of public company and two in case of a private company.
· Maximum number of member in a private company may be 50. No limit in case of public
company
· Company is an artificial person
· Separate legal entity
· Perpetual succession
· Limited liabilities
· Minimum paid up capital of BDT 5 lakh in case of public company and BDT 1 lakh in case of
private company
· Governance by majority
· Nationality
· It is not a citizen and has no fundamental rights
· Managed by board of directors
· Transferable shares
(v) Cooperative Organizations: A co-operative society or organization is one which has been
voluntarily formed by some persons for the promotion of their common economic interest.
Characteristics:
· Voluntary organization/association
· Registered under the co-operative societies
· Legal existence
· Limited liabilities
· Perpetual existence
· Every member contributes in its capitals
· Non transferable shares.
· One member - one vote
· Democratic management
· Equitable distribution of profit
· Service motives
· Based on principles of equality, justice and mutual help
Public Enterprises: A public enterprise refers to an industrial, commercial or service enterprise
which is owned and controlled by the government or by public authority/ government
organization for providing goods or services to the public.
(i) Departmental Organization: Departmental form of organization is the oldest form of
organizing public enterprises. Under this form of organization, an enterprise is put under the
control of a department. Such department is leaded by the concerned minister. Example:-
Railway Department.
Characteristics :
· Managed by a department of the government.
· Minister-in-charge of the department has the direct control.
· Financed by annual appropriations.
· Wholly owned and financed by the government.
· Accountable to the Lok Sabha, Rajya Sabha & Vidhan Sabha
· Employees are civil servants.
(ii) Public or Statutory Corporation : A public or statutory corporation is a body corporate
incorporated under a special Act of the Parliament or state legislature for the purpose of carrying
on certain industrial or commercial activities or rendering specific type of services.
Characteristics :
· Incorporated body under a statute enacted by a parliament or state legislature.
· Artificial person having all the rights of a person but not of a individual.
· Separate legal existence from the government.
· It can sue and be sued by the government.
· Wholly owned by the central and/ or state government.
· When ownership is shared by private entrepreneurs it is said to be a mixed corporations.
· It can enjoy independence in the matters of its financial management.
· Employees are not civil servants.
· Autonomy in its operation.
· Accountable to the parliament and/or state legislature.
(iv) Government Company: Government Company is one in which not less than 51% of the
paid-up capital is held by the central or state government; and/or by the government company
and/or by any public corporation, authorities.
Characteristics:
· It is registered or an incorporated body under the Indian companies Act, but all the provisions
of the act will not apply to it.
· Majority of shares are held by the central government on by the state government or by any
public corporation/authority or government company.
Organization and Management: Management
BANKING DIPLOMA EXAMINATION
Banking Diploma Courses under The Institute of Bankers, Bangladesh (IBB)
Organization and Management-JAIBB
Q.1 Discuss the nature of Management.
Ans.: The nature of management can be discussed as follows :-
(1) Multidisciplinary : Management draws knowledge and concepts from various disciplines. It
draws freely ideas and concepts from such disciplines as psychology, sociology, anthropology,
economics, ecology, statistics, operation research, history etc. Management integrates the idea
and present newer concepts which can be put into practice for managing the organisations.
(2) Dynamic Nature of Principles : Based on integration and supported by practical evidences.
Management has framed certain principles. These principles are flexible in nature and change
with the change in the environment in which an organisation exist.
(3) Relative, not Absolute Principles : A particular management principle has different strengths
in different condition. Therefore principles of management should be applied in the light of
prevailing conditions. Allowance must be made for different changing environment.
(4) Management - Science or Art : Management is both a science and an art. The process of
scientific theory construction and confirmation is used in the process of management. And has
to do with applying of knowledge.This is especially important in management because in many
instances, much creativity and adroitness in applying the managerial efforts are necessary to
achieve the desired results.
(5) Management as Projection : Management satisfies the requirement of a profession in the form
of existence of knowledge. The concept of management is still evolving and continuously new
principles are being developed.
(6) Universality of Management : Management is a universal phenomenon. Management
principles are not universally applicable but are to be modified according to the needs of the
situation.
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Q.2 What do you mean by principles of Management? Discuss the important principles of
Management.
Ans.: Management principles are those fundamental truths or statements of facts which serve as
guide to managers in thinking and doing their job of managing. Management principles may be
derived in any of the following ways :-
(i) By observation and analysis of managerial practices.
(ii) By conducting studies through system enjury, collection and analysis and testing of facts.
Some Important Principles of Management :
F. W. Taylor, Henry Fayol, Mary Parkeer Follett, Urwick, Koontz O’ Donnel, George R. Terry
etc. are the leading thinkers who have listed and described certain management principles :-
(1) Fayol’s Principles of Management : Henri Fayol, who is recognized as the father of modern
theory of management formulated a set of 14 principles.
(i) Division of Work : Division of work states that the total work should be subdivided into small
components / parts and each part of the work should be allocated to the worker who specializes
in that part of the work.
(ii) Authority and Responsibility : Authority creates responsibility whenever a person exercises
authority, responsibility arises. Responsibility is the essential counter part of authority.
(iii) Discipline : According to Fayol, discipline is absolutely essential for the smooth running of
business. Without it no business can prosper.
(iv) Unity of Command : The principle of unity of command states that each subordinate should
receive orders from only one boss or superior.
(v) Unity of Direction : The principle of unity of direction states that there should be “one head
and one plan” for a group of similar activities having the same objective. In other words, the
activities that have same objective should be directed by only one manager under one plan.
(vi) Subordination of Individual Interest to General Interest : Interest of organisation as a whole
must prevail over the individual interest wherever individual interest and the common interest
differ, efforts must be made to reconcile them.
(vii) Remuneration : Fayol stressed that the remuneration or compensation for work done should
be fair to both employers and the firm. It should neither be low nor high.
(viii) Centralization : Decreasing the role of subordinates in decision making is centralization
of authority and increasing their role in it is decentralization of authority. Fayol believed that
managers should retain final responsibility but should at the same time give their subordinates
enough authority to do their job properly.
(ix) Scalar Chain or Hierarchy of Authority : Scalar chain or hierarchy of authority refers to the
unbroken chain or line of authority running from the top management to the lowest levels of the
organisation.
(x) Order : The principle of order states that there should be a place for every think and for
every person. Material and people should be in the right place at the right time. People should be
assigned the jobs that are best suited to them.
(xi) Equity : According to this principle, the manager must install equity in the organisation. To
ensure this, manager should be friendly, fair and kind in dealing with their subordinates.
(xii) Stability of Personnel : This principle states that there should be reasonable stability of the
tenure of personnel in the firm. No employee must be removed from his position within a short
period of time.
(xiii) Initiative : This principle states that subordinates should be given the freedom to develop
and carry out their plans. But managers should do so within the limits of authority and discipline.
(xiv) Esprit de Corps : This principle states that managers should promote esprit crops or team
spirit and a sense of unity among the employees.
Other Important Principles :
(xv) Principle of Objective : Koontz and O’Donnel suggest that “The organisation as a whole
and every part of it must contribute to the attainment of enterprise objectives.
(xvi) Principle of Planning : The principle of planning states that good planning is a prerequisite
for good management. Therefore managers should accurately plan the activities of their
organisation keeping in view the environmental factors.
(xvii) Principle of Span of Control : Span of control means the number of subordinates under the
direct supervision of the superior. According to this principle, a superior should supervise only
that number of subordinates which be can properly supervise directly under his control.
(xviii) Principle of Balance : This principle states that different parts or units of an organisation
should be in balance. This is essential in order to ensure proper development of business and its
efficiency.
(xix) Principle of Coordination : This principle states that human efforts and other resources
should be co-ordinated in order to achieve organisational goals effectively.
(xx) Principle of exception : The principle of exception states that every superior should set the
objectives and plan for their subordinates and delegate them appropriate amount of authority to
take all decisions to carry out the plans.
(xxi) Principle of Participation : This principle states that managers must encourage participation
of their subordinates in taking decisions on matters directly affecting them.
_________________________________________________________________
Q.3 Discuss the major functional area of Management.
Ans.: An acceptable and practical classification includes four broad functional areas :-
(i) Production : This area is normally kept under the control of a production manager who is
responsible for the performance of entire related activities.
This area may further be classified into major sub-activities :-
· Purchasing
· Material Management
· Research and Development
(ii) Marketing : This area involves the distribution of organisation’s product to the buyers. This
can be divided into following subareas :-
· Advertising
· Marketing Research
· Sales Management
(iii) Finance and Accounting : This area deals with the record keeping of various transactions
and management of financial resources :-
· Financial Accounting
· Management Accounting
· Costing
· Investment Management
· Taxation
(iv) Personnel : This aspect deals with the management of human beings in the organisation. It
includes following areas :-
· Recruitment and Selection
· Training and Development
· Wage and Salary Administration
· Industrial Relations
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Q.4 Discuss the major functions of management.
Ans.: A function is a group of similar activities. However what functions are undertaken by
managers in organisations, there is a divergence of views. But the major management functions
suggested by most of the authors are as follows :-
(i) Planning : Planning is the conscious determination of future course of action. This involves
why an action, what action, how to taken action, and when to take action. Thus planning includes
determination at specific objectives, determining projects and programmes, setting policies and
strategies, setting rules and procedures and preparing budgets.
(ii) Organising : Organising is a process of dividing work into convenient task or duties,
grouping of such duties in the form of positions, grouping of various positions into department
and sections, assigning duties to individual positions and delegating authority to each position so
that the work is carried out as planned.
(iii) Staffing : Staffing involves manning the various positions created by the organizing process.
It includes preparing inventory of personnel available and identifying the gap between manpower
required and available, identifying the sources from where people will be selected, selecting
people, training and development fixing financial compensation, appraising them periodically
etc.
(iv) Directing : Directing includes communicating, motivating and leading. When people are
working in an organisation, they must know what they are expected to do in the organisation.
Superior managers fulfill this requirement by communicating to subordinates about their
expected behaviour. The superiors have a continuous responsibility of guiding and leading them
for better work performance and motivating them to work with zeal and enthusiasm.
(v) Controlling : Controlling involves identification of actual results. Comparison of actual
results with expected results as set by planning process, identification of deviation between the
two, if any and taking of corrective action so that actual result match with expected results.
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Q.5 Classify the various approaches of the Management thought along with the origination
period and the major contributors.
Ans.: The various approaches to management can be divided into the following major schools :-
(A) The Classical Approach :
(i) Scientific Management : Time Period (1900 – 1930), Introduced by (F. W. Taylor).
(ii) Administrative or Functional Approach : Henry Fayol (1916 – 1940).
(iii) Organisational Theory Approach : Max Wabor, C. I. Bernard, H.
A. Simon.
(B) Neo Classical Approach :
(i) Human Relation Approach : George Elton Mayo (1924 -1932).
(ii) Behavioural Science Approach : Herzberg, Fred Fiedler, Mclellend, Likert etc. (1950 -1970)
(C) Modern Approach :
(i) Quantitative or Management Science Approach : (1950 -1960).
(ii) System Approach : Ludwig Von Bertalanffy (1960 onwards).
(iii) Contingency Approach : Tosi and Hammer (1970 onwards).
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Q.6 Assess the contribution of Scientific Management to the development of
Management thought.
Ans.: Scientific management approach is also known as the productivity or efficiency approach.
The credit for pioneering and developing scientific management approach is primarily given to
F. W. Taylor. He is recognised as the father of scientific management. The other individuals who
contributed to this school of management thought are Frank Gilkreth, Lillian Gillreth, Henry
Gantt and Harrington Emerson. Scientific management school concentrates on the process of
finding one best way of doing a thing in order to achieve maximum production and efficiency.
Philosophy and Principles of Taylor :
· Develop a science to replace rule of thumb
· Labour – Management Cooperation
· Maximization of output or production
· Equal division of responsibility
· Job specialization
· Scientific selection, training and development of workers.
· Planning and scheduling of work
· Standardisation
· Wage incentives
· Mental Revolution
Mechanism of Scientific Management : In order to blend philosophy and principles of scientific
management into practice, Taylor developed the following
techniques or mechanism :-
(1) Scientific Task Setting : The task of every worker for everyday should be
determined through scientific investigation.
(2) Experimentation or Work Study : Work Study means organised systematic and objective
analysis and assessment of the operational efficiency of all the elements connected with the
work. The main areas of work study are as follows :-
(i) Method Study : Survey of production process.
(ii) Motion Study : The study of movement of a worker or a machine in doing a job.
(iii) Time Study : Find out a standard time for doing the job.
(iv) Fatigue Study : Fatigue study is the study of the reduction of human energy in doing his job.
(3) Planning : Planning function should be separated from the doing function.
(4) Scientific Selection and Training of Worker.
(5) Specialization : Allocate the task according to their specialization.
(6) Standardisation : Taylor advocated for standardisation of material, tools equipment, method
etc..
(7) Efficient Costing System : To control cost of production and pricing.
(8) Incentive Wage Plan : Worker is to receive a bonus in addition to his wages if he completed
his jobs before the standard fixed time.
(9) Congenial Atmosphere of Work : The environment must also be cheerful
and psychologically satisfactory
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Q.7 Explain the various tasks conducted in the Hawthorne studies. Also discuss the
contribution of Hawthorne Experiments in the development of Managerial thinking.
Ans.: Harvard University research team conducted a series of studies. George Elton Mayo,
F. I. Roethlisberger, W. J. Dicton and others were the members of the team. The studies were
conducted at Hawthorne plant of the western electric company, Chicago (USA) between 1924
and 1932.
Four studies were conducted at the Hawthorne Plant :-
(1) Illumination or Test Room Study : The illumination study was conducted to determine the
relationship between light intensity and productivity of efficiency of workers. For this purpose,
three different experiments were conducted in which researchers changed light intensity. They
concluded that lighting was a minor factor affecting the productivity of workers.
(2) The Relay Assembly Test Room Study : The relay assembly test room study was conducted
to ascertain the factors other than the light intensity affecting the productivity. During the
test researcher change working condition and they concluded that most likely cause of higher
productivity was the change in social situation in the work group.
(3) Mass Interviewing Study : The third study was the mass interviewing programme. Under this
programme over 21,000 employees were interviewed. They have asked some direct question and
……… on some indirect questions. And finally the researchers reached in the conclusion that
work performance and the individual status in the organisation are determined not by the person
himself but by the group members, peers and their personal problems also effect the feeling
about his job.
(4) Bank Wiring Observation Room Study : In order to observe informal group behaviour more
accurately, band wiring observation room study was undertaken. The following conclusions were
drawn :-
(i) The group was restricting output by enforcing the norms or standards set by the group.
(ii) There existed internal cliques or groups which are not formed on the basis of occupation.
Conclusions / Contribution of Hawthorne Studies :
(i) Work is a group activity.
(ii) Workers form internal informal group.
(iii) Social groups influence the productivity.
(iv) Social groups determines informal norms.
(v) Group cooperation is planned.
(vi) Worker is not only rational economic being.
(vii) Supervisor behaviour affect the behaviour of worker.
(viii) Free flows of communication affects the attitude of workers towards work.
(ix) Complaints may not be statement of facts.
(x) Birth of human relation movements.
Organization and Management: Planning
BANKING DIPLOMA EXAMINATION
Banking Diploma Courses under The Institute of Bankers, Bangladesh (IBB)
Organization and Management-JAIBB
Q.1 What do you meant by Planning? Discuss its nature.
Ans.: Simply stated, planning means deciding future course of action i.e. making plans
for attaining organization’s objectives. Planning is the process of determination of
organization’s objectives and selecting the course of action i.e. plans for attaining them.
According to Weihrich and Koontz – “Planning involves selecting mission and objectives
and actions to achieve them. If requires decision making i.e. choosing from among
alternative future course of action.
According to Robert Albanese, “Planning is the process or activity of determining in
advance specifically what should be done in order to achieve particular goals, how it
should be done, when or where it should be done and who should do it.”
Nature of Planning:
(1) Primary or Basic Function: It is a primary function because it is the foundation on
which all other managerial function rest.
(2) Pervasive Function: Each and every manager has to perform this function regardless
of his level and area of specialization.
(3) Purposeful: Planning begins with some goals or objective that an organization
wishes to achieve.
(4) Interdependent Activity: Planning in one development is dependent on the planning
of other department.
(5) A Process: Planning is a process in which managers anticipate future by analyzing
environmental factors, set goals or objectives.
(6) Planning is a Path Finder Process: It is the process by which answers to questions
like where, when, how etc.
(7) It is a continuous and never ending process.
(8) It is a dynamic process.
(9) It is an intellectual process because it requires managers to think intelligently and
rationally before doing.
(10) Futuristic: Every plan is prepared to face and win over the future challenges and
threats.
(11) Time Bound: It is always time bound. It may be of short range or medium range or
long range.
(12) Planning involves Decision Making: It is a process of selecting one best course of
action out of the available alternatives.
(13) Planning and Action are Twins: Planning alone cannot serve any purpose. Planning
presupposes necessary action for its implementation. Both must go hand in hand.
(14) Planning and Controlling are Inseparable: Plans furnished the standards against
which actual performance is measured and controlled.
(15) Forecasting is the Basis of Planning: Future course of action are decided on the
basis of information and knowledge provided by forecasting.
_____________________________________________________________________________
____
Q.2 What are the essential elements of Planning?
Ans.: The main components or elements of planning are as follows:-
(1) Objectives: Objectives are the desired results that an organization wants to achieve
within a specified time period.
(2) Strategies: Strategy means the long range approach for dealing with the
organization’s competitive environment with a view to win over competitors in business.
(3) Policies: Policies are the guidelines set to provide direction in decision making.
These set the boundaries around which decisions are made.
(4) Procedures: Procedures are the chronological sequence of steps or actions to be
taken to accomplish a specific test or job.
(5) Method: A method is a prescribed way of completing a step in a procedure.
(6) Rules: Rules are guiding statements that direct action or behaviour of individuals in a
given situation.
(7) Standards: Standard is a measure against which the level of performance is
measured or evaluated.
(8) Programmes : A programme is a sequence of action steps arranged in the priority
necessary to accomplish an objective.
(9) Schedules: A Schedule is a plan which indicate the time of
(i) commencement of task.
(ii) passing through the different stages or processes.
(iii) Finalizing the task.
(10) Budgets: A budget is a numerical plan containing expected results in quantitative or
numerical terms.
(11) Projects: A project is a programme with less significant objectives, generally a
shorter period of time and usually less detail.
_____________________________________________________________________________
____
Q.3 What are the steps involved in the Planning Process?
Ans.: Steps in Planning:
(i) Environment Scanning
(ii) Setting Objectives
(iii) Establishing Planning Promises
(iv) Searching Alternatives
(v) Evaluating the Alternatives
(vi) Selecting the Most Appropriate Alternative or Plan
(vii) Formulating Derivative Plans
(viii) Budgeting i.e. Committing Resources
(ix) Implementing the Plans
(x) Follow-up Action
______________________________________________________________________________
___
Q.4 Write the essentials of an Effective Planning.
Ans.: Planning or a plan can be more effective if the following factors are taken into
consideration:-
(i) Well Defined Objectives
(ii) Simple and Easy to Understand
(iii) Comprehensive (Cover each and every aspect)
(iv) Flexible (Capable of being modified)
(v) Balanced (Balance between objectives and resources)
(vi) Economical
(vii) Stable
(viii) Continuity
(ix) Unity (Operate under one overall plan)
(x) Consistency
(xi) Written
(xii) Practicable
(xiii) Logical and Rational
(xiv) Accountability for Implementation
______________________________________________________________________________
____
Q.5 What is MBO? Explain its characteristics and objectives.
Ans.: MBO: The modern model of objective setting is known as the “Management by
Objectives” or “MBO”. This model was first discussed by Peter Drucker in 1954 in his
book – “The Practice of Management”.
Meaning and Definition of MBO: MBO is a process where by both superior and
subordinate managers jointly identify their common goals or their work unit and define
each employee major areas of responsibility and goals with his active participation.
Carlisle – “Management by Objective is a process by which the members of a work unit
individually meet with their superior to establish performance related goods.”
Boone and Koontz – “MBO is a prgramme designed to improve employee’s motivation
by having them participate in setting their own goals, letting them know in advance
precisely have they will be evaluated.”
Characteristics of MBO :
• A Philosophy of Management
• Goal Oriented Approach
• An Interactive Approach
• A Comprehensive Approach
• A System Approach
• Applies to Total Management System
• Aims at Optimum Results
• Simple Universal Approach
• Multiple Uses
• Participation and Involvement
• Common Objectives and Individual Goals
Assumptions:
• Mutual understanding between superior and subordinate.
• Employees know their expected efforts and their contribution in overall performance.
• Employees participate in formulation of the plan.
• Employees know the results of their efforts.
• Employees want to be fairly rewarded for their performance.
Objectives of MBO :
(i) To set organizational units and individual goals by active participation of the all
concerned.
(ii) To set verifiable and measurable goals.
(iii) To measure and judge performance.
(iv) To relate individual performances to organizational goals.
(v) To clarify both the job to be done and the expectation of accomplishment.
(vi) To foster the increasing competence and growth of subordinates.
(vii) To enhance communications between superiors and subordinates.
(viii) Serve as a basis for judgment about salary and promotion.
(ix) To stimulate the subordinates motivation.
(x) To serve as device for organizational control.
Organization and Management: Decision Making
BANKING DIPLOMA EXAMINATION Banking
Diploma Courses under The Institute of Bankers, Bangladesh (IBB)
Organization and Management-JAIBB
Decision Making
Q.1 Define Decision Making and give its characteristics.
Ans.: Decision making is the process of choosing or selecting any one option out of
several options to achieve some objectives.
Glueck – “Decision making is the process of thought and deliberation that leads to a
decision.”
Allen – “Decision making is the work a manager performs to arrive at a conclusion or
judgment”. Thus decision is a process of selecting a course of action from among the
available alternatives in order to achieve a desired goal in a given situation.
Characteristics/Nature of Decision Making :
(i) Decision making is a sequential process involves the searching, evaluative and
choosing a course of action.
(ii) It is an intellectual and logical process.
(iii) This process will take place in the human mind.
(iv) It is a human and social process.
(v) It is largely an intuitive process but can be formally structured.
(vi) There is an existence of alternatives.
(vii) Ascertainment of choice.
(viii) It aims at attaining some objectives.
(ix) Decision is directed to solve some problem.
(x) Decision making involves commitment.
(xi) It is influenced by environmental conditions.
(xii) Decision making is the essence of management.
_________________________________________________________________
Q.2 Discuss in brief the various techniques of Decision Making.
Ans.: The important techniques of decision making are as follows :-
(1) Experience or Judgment: In this technique, a manager makes decision on the basis
of his knowledge and experience gained through working in a particular position over
the years
(2) Intution : Intution or hunch is a knowledge based on instant inner feelings or spiritual
perception rather than reasoning. It is based on faith.
(3) Habbits : Established habits can be used as a technique of decision making.
Managers try to solve repetitive and routine problems through their established habits.
(4) Standing Plans and Procedures: There are standing plans and procedures in every
organization such as policies, rules, procedures, methods etc. They all serve as a
technique for decision making.
(5) Organization Structure: Organization structure make it clear who is responsible for
what and to whom. Therefore it can be used as a decision making technique.
(6) Principles of Management: The principle of management can serve as a useful guide
in making decisions.
(7) Economic and Financial Techniques: Marginal analysis, break even analysis, utility
analysis etc are some of the most important economic techniques of decision making.
Pay back analysis, inflow outflow analysis, ratio analysis are some of the financial
techniques of decision making.
(8) Linear Programming: It is a mathematical technique of limited resources. It helps in
making decisions regarding allocation of limited resources among various competing
demands in an optimum way.
(9) Game Theory: In this technique, one member chooses one such course of action
that frustrates and defeats the action of the competing member and help him in wining
the game. This technique used under competitive and conflicting situations.
(10) Waiting Line or Queuing Theory: This technique is used to decide problem of
waiting line in an organization with the help of the technique, manager decides optimum
rate of flow through service points by balancing the cost of making customers wait
against the cost of servicing them more rapidly.
(11) Simulation: Simulation is a technique for studying and analyzing behaviour of a
system under several alternative conditions in an artificial setting.
(12) Network Techniques: PERT and CPM are the techniques that helps managers in
deciding a logical sequence of activities required for completing a complex project.
(13) Heuristic Technique: It is an trial and error technique of finding solutions to a
complex problem by breaking it into small components.
(14) Participative Techniques: It is a technique of making decisions with the participation
of the employees. This technique encourages industrial democracy.
________________________________________________________________
Q.3 Draw a flow diagram of process of Decision Making.
Ans.: A flow diagram of process of Decision Making is as follows:
Steps in Decision Making Process:
1. Identification of Problem
2. Diagnosing the Problem
3. Establishing Specific Objectives
4. Identifying Limitations
5. Evaluating Alternatives
6. Selecting Appropriate Alternative 7. Implementing the Decision
8. Feedback
BANKING DIPLOMA EXAMINATION Banking
Diploma Courses under The Institute of Bankers, Bangladesh (IBB)
Organization and Management-JAIBB
Q.1 What do you understand by Leadership? Discuss the functions of Leadership.
Ans.: Keith Davis - “Leadership is the ability to persuade others to seek defined objectives
enthusiastically. It is the human factor which binds the group together and motivates it towards
goal.”
Keys and Case – “Leadership is the process of influencing and supporting others to work
enthusiastically towards achieving objectives.”
Weihrich and Koontz – “Leadership is the art or process of influencing people so
that they will strive willingly and enthusiastically towards the achievement of group goals.”
Thus leadership is the process and the art influencing the behaviour, attitudes, activities of people
to work willingly and enthusiastically towards the accomplishment of group goals.
Functions of Leadership:
• Guides or Inspires or Motivates
• Boosts Morals
• Creates Confidence and Enthusiasm
• Develops Team Spirit
• Creates Vision and Initiative
• Transforms Potential into Reality
• Sincerity and Honesty
• Courage and Will Power
• Flexible and Dynamic
• Emotional Stability i.e. Maturity
• Sound Judgment
• Tact and Humour
• Education and Knowledge
• Conceptual Skills
• Administrative Skills
• Analytical Skills
• Human Relations Skills
• Technical Skills
_________________________________________________________________
Q.2 Explain the various styles of Leadership.
Ans.: Leadership style is the general way or pattern of behaviour of a leader towards his
followers in order to influence their behaviour to attain a goal.
The main styles of leadership are as follows:-
(1) Autocratic and Authoritarian Leadership: An autocratic leader is one who centralizes power
and make all the decisions himself. He tells his followers what to do and expects to be obeyed
without questions. Thus, such a leader imposes his will on his followers.
Autocratic leaders may be of two types :-
(i) Pure Autocratic or Negative Leader : He is a director and makes all decisions himself. He
superimposes his decisions on his subordinates. He uses fear of punishment or penalty to carry
out his decisions. Thus, it is a negative leadership.
(ii) Benevolent Autocrat or Positive Leader : When an autocrat leader avoids negative coercive
power and uses reward power to influence his subordinates, he is called a benevolent autocrat
leader. Such a leader shows active concern for the feelings and welfare of his subordinates.
(2) Participative/Democrative Leadership: Participative leaders decentralize authority. Such
leaders involve subordinates in decision making process. The leaders and their group members
work as a social unit. They freely exchange their views and express opinions and suggestions.
(3) Free Rein or Laissez Faire Leadership Style : Such a leader completely delegates his
authority to his subordinates and allow them to make their own plans, procedures and decisions.
He simply aids his subordinates in performing their job. He exist as a contact person with the
subordinates external environment. Free rein leadership style is permissive and leader least
intervenes his subordinates. The leader remains passive observer but intervenes only during
the crisis. Free rein leadership is suitable where subordinates are highly competent and duty
conscious.
(4) Paternalistic Leadership: A paternalistic leadership is authoritarian by nature. It is heavily
work centered but has consideration after his subordinates the way father looks after his children.
Such a leader helps, guide and encourages his subordinates to work together as member of a
family. The subordinate in turn tend to remain submissive and faithful.
_________________________________________________________________
Q.3 Discuss the different theories of Leadership.
Ans.: Several theories of leadership have been developed by management theoreticians. These
theories may be classified into three categories.
(1) Personality Theories
(2) Behavioral Theories
(3) Situational or Contingency Theories
(1) Personality Theories: Personality theories are theories that focus on the personal qualities or
traits of leader. Such theories include the following:-
(i) Great Man Theory (ii) Trait Theory
(i) Great Man theory of Leadership: Great man theory of leadership claims that “Leaders are
born, not made”. Leadership qualities are inherited or carried in genes. Leadership qualities
cannot be acquired or developed through education or training.
(ii) Trait Theory of Leadership: This theory states that there are certain unique traits or qualities
essential for successful leader. Any person who wants to be a successful leader must posses
those traits. This theory emphasizes that those traits need not necessarily be inborn but may be
acquired through education, training and practice.
(2) Behavioural Theory of Leadership: Behavioural theory focuses on what the leaders do i.e.
on the actual behaviour of the leader. Behavioural theory is based on the premise that effective
leadership is the result of effective behaviour of the leader. Success of leadership depends on the
behaviour of the leader and not on his traits.
A particular behaviour pattern of a leader (functional behaviour) makes him a successful
leader and its opposite (dysfunctional) would reject him as a leader. The functional dimensions
include setting goals, motivating employees towards achievement of goals, making effective
communication and interaction, building team spirit etc. The dysfunctional dimensions of leaders
behaviour include in ability to accept subordinates ideas, poor communication and ineffective
interaction, poor, human relations etc.
(3) Situational / Contingency Approach : The situational approach of a leadership emphasis that
emergence and success of a leader is largely determined by supranational factors This theory
stresses that a leadership behaviour which is effective under the particular situation may be
ineffective under the other. These are several different situational models of leadership have been
developed. Fiedler’s contingency model, path goal model, Blanchard’s model etc.
Organization and Management: Introduction to Business
BANKING DIPLOMA EXAMINATION Banking
Diploma Courses under The Institute of Bankers, Bangladesh (IBB)
Organization and Management-JAIBB
Introduction to Business
Q.1 Discuss the different concepts of Business that have emerged so far in World. Also
distinguish between the Traditional and Modern Concept of Business?
Ans.: Business activity has been conceptualized by many business persons, business managers
and academicians in the field of business management ever
since business emerged as an organised activity. Therefore the concept of business has changed
over the years of history of business. So far the following concept of business has emerged :-
(i) Profit Oriented Concept of Business
(ii) Customer Oriented Concept of Business
(iii) Social or Modern Eclectic Concept of Business
Profit Oriented Concept of Business : In the early age of the business, it was conceived to be a
wealthy producing or profit making economic activity. Any human activity directed towards the
acquisition of wealth or earning profit through production or exchange of goods was treated to
be a business. The profit oriented concept is also known as traditional concept of business. When
people started doing business by forming organization, than business used to be conceived as an
organization organised and operated to produce and provide goods and services to society under
the incentive of private gain or profit.
Assumptions :
(i) The sole objective of the business is to earn profits by production and/or distribution of
goods.
(ii) Customers will buy the products that are available in the market at the most competitive
rates.
(iii) There is hardly any need to think for customer service and satisfaction for running a
business.
Customer Oriented Concept of Business : This concept has came into existence around 1950’s
and gained momentum during the 1960’s and 1970’s. The business organization began to think
that business should earn profits through service and satisfaction of the customers Organization
were forced to regard customer as the king of the market.
Assumption :
(i) Business organizations should produce and provide the goods/ services that are needed by the
customers.
(ii) The products and services provided by the business should satisfy the needs of the
customers.
(iii) The business should earn the profits through the service and satisfaction of the customer.
Distinction between Traditional and Modern Concept :
________________________________________________________________
Q.2 What do you mean by Business. Explain clearly the role of Business in the Modern
World.
Ans.: The literal meaning of the term business is the ‘state of being busy’ or business. But when
the term is used in relation to the business world, it means much more specific. All the definition
to business may be classified under the following three categories.
Traditional Definitions : Traditionally, business was regarded as the institution organised for
production and /or distribution of goods/ services for earning profit.
Customer Oriented Definitions : Businessmen began to think about earning profits through
customer service and satisfactions. Hence the academicians and professional the term business
accordingly.
Hopkins, Duff et.cl – “Business is the organised activities designed to satisfy people’s wants for
goods and services.”
Urwick and Hunt – “Business is any enterprise which makes, distributes or provides any article
or service which other members of the community head and are able and willing to pay.”
Social Definitions/ Modern Eclectic Definitions : A few such modern definitions from social
point of view are reproduced as follows:-
Buskirk, Green and Rodgers - “Business is a system created to satisfy societies, need and
desires.”
Keith Davis and Blomstorm - “The term business refers to both private and public institutions
which develop and process economic values in a society.”
Significance/ Role of Business : The role or significance may be properly discussed under the
following heads : -
(i) Significance for Business Persons/ Institutions
(ii) Significance for Consumers
(iii) Significance for the Society
(iv) Significance for the Economy
(i) Significance for Business Persons :
· It helps in accomplishing their objectives.
· It helps in acquiring the knowledge and letter skills.
· Business persons may go for expansion and diversification of business.
· Get knowledge and feed back information from the middleman & customers
· They may by more emphasis on customer satisfaction.
· Create and maintain better relation with wholesalers, dealers, retailers, and other merchantile
intermediaries.
· Easily innovate and develop new product.
· More responsible to the society.
· Optimum utilization of resources in the most effective and efficient way.
· Enjoy a very high societal status.
(ii) Significance for Customers:
· Helps them to get right the product.
· It ensures satisfaction of the needs of consumers
· It ensures better facilities, better deal and after –sale services.
· Customers also get benefits under loyal customer schemes.
· Customer gets better products and services at lower costs.
· Customer also gets the joy of larger choice.
(iii) Significance for the Society:
· Members of society get better products and services at reasonable rates.
· Employment Opportunities.
· Better standard of living and quality of life.
· Security and welfare of their old age and raising days.
· Eradicate poverty, disease, ignorance, social evils through social welfare programmes.
(iv) Significance for the Economy :
· Planned development in the economy.
· Efficient and effective utilization of national resources.
· Ensures regular process of production and distribution of goods and services.
· Increasing national productivity.
· Balanced Regional Development.
· Increase and provide employment opportunities.
· Foreign exchange reserves by way of exports of goods and services.
_________________________________________________________________
Q.3 What are the forms of Business Ownership? State the main features of all of them.
Ans.: Different forms of ownership of business organization available to each sector they are as
follows :-
(1) Private Sector: In private sector, the following forms of ownership/organization are
available:
(a) Sole Proprietorship
(b) Partnership
(c) Joint Hindu Family Business firm
(d) Company
(e) Cooperative Society
(2) Public Sector: In public sector, the following are the main forms of ownership of business
organization:-
(a) Departmental Organization
(b) Corporations
(c) Government Company
Private Sector:
(i) Sole Proprietorship: Sole proprietorship is a form of business organization which is
established, owned controlled and usually operated by an individual and that individual also
assumes all the risks of the business and entitled to all the profits made from it.
Characteristics:
· The oldest form
· Sale ownership
· Unlimited liability
· Entitled to all profits
· No separate existence of the business
· Free from legal formalities
· Sole decisions and control
· Limited scope of operations
(ii) Partnership: A partnership is an association of two or more persons who agree to carry on
business for earning and sharing profit among them.
Characteristics:
· At least two persons
· Maximum number of partners – (Banking sector – 10 persons, Any other sector – 20 persons)
· Agreement
· Business
· Sharing of profit
· Mutual agency
· Unlimited liability
· Jointly and several liability
· Mutual trust and confidence
· Business in firm’s name
· No separate existence of the firms
· Registration not compulsory
· Unanimous decisions
· Contribution of capital
(iii) Hindu Undivided Family : When a Joint Hindu Family carries on a business, it is called
Joint Hindu Family Firm. The members of such firm are called co-partners Joint Hindu family
consist of all persons lineally descended from a common ancestor and includes their wives and
unmarried daughter. There are two schools of Hindu law namely ‘Dayalhagya’ and Mitakshra’.
According to ‘Dayalhagya’ school of Hindu law, each son acquires an interest in the ancestral
property only after the death of his father. According to Mitakshra school a son acquires such
interest by birth or by adoption.
(iv) Company: Company is a voluntary association of persons formal and registered under the
present Companies Act, or under any previous law. In the eyes of the law, it is an artificial
persons having separate entity from its members, with perpetual succession and a common
seal. The capital of the company is divided into transferable shares and shareholders are called
members.
Characteristics:
· Registered voluntary association
· At least seven persons in case of public company and two in case of a private company.
· Maximum number of member in a private company may be 50. No limit in case of public
company
· Company is an artificial person
· Separate legal entity
· Perpetual succession
· Limited liabilities
· Minimum paid up capital of BDT 5 lakh in case of public company and BDT 1 lakh in case of
private company
· Governance by majority
· Nationality
· It is not a citizen and has no fundamental rights
· Managed by board of directors
· Transferable shares
(v) Cooperative Organizations: A co-operative society or organization is one which has been
voluntarily formed by some persons for the promotion of their common economic interest.
Characteristics:
· Voluntary organization/association
· Registered under the co-operative societies
· Legal existence
· Limited liabilities
· Perpetual existence
· Every member contributes in its capitals
· Non transferable shares.
· One member - one vote
· Democratic management
· Equitable distribution of profit
· Service motives
· Based on principles of equality, justice and mutual help
Public Enterprises: A public enterprise refers to an industrial, commercial or service enterprise
which is owned and controlled by the government or by public authority/ government
organization for providing goods or services to the public.
(i) Departmental Organization: Departmental form of organization is the oldest form of
organizing public enterprises. Under this form of organization, an enterprise is put under the
control of a department. Such department is leaded by the concerned minister. Example:-
Railway Department.
Characteristics :
· Managed by a department of the government.
· Minister-in-charge of the department has the direct control.
· Financed by annual appropriations.
· Wholly owned and financed by the government.
· Accountable to the Lok Sabha, Rajya Sabha & Vidhan Sabha
· Employees are civil servants.
(ii) Public or Statutory Corporation : A public or statutory corporation is a body corporate
incorporated under a special Act of the Parliament or state legislature for the purpose of carrying
on certain industrial or commercial activities or rendering specific type of services.
Characteristics :
· Incorporated body under a statute enacted by a parliament or state legislature.
· Artificial person having all the rights of a person but not of a individual.
· Separate legal existence from the government.
· It can sue and be sued by the government.
· Wholly owned by the central and/ or state government.
· When ownership is shared by private entrepreneurs it is said to be a mixed corporations.
· It can enjoy independence in the matters of its financial management.
· Employees are not civil servants.
· Autonomy in its operation.
· Accountable to the parliament and/or state legislature.
(iv) Government Company: Government Company is one in which not less than 51% of the
paid-up capital is held by the central or state government; and/or by the government company
and/or by any public corporation, authorities.
Characteristics:
· It is registered or an incorporated body under the Indian companies Act, but all the provisions
of the act will not apply to it.
· Majority of shares are held by the central government on by the state government or by any
public corporation/authority or government company.
Organization and Management: Management
BANKING DIPLOMA EXAMINATION
Banking Diploma Courses under The Institute of Bankers, Bangladesh (IBB)
Organization and Management-JAIBB
Q.1 Discuss the nature of Management.
Ans.: The nature of management can be discussed as follows :-
(1) Multidisciplinary : Management draws knowledge and concepts from various disciplines. It
draws freely ideas and concepts from such disciplines as psychology, sociology, anthropology,
economics, ecology, statistics, operation research, history etc. Management integrates the idea
and present newer concepts which can be put into practice for managing the organisations.
(2) Dynamic Nature of Principles : Based on integration and supported by practical evidences.
Management has framed certain principles. These principles are flexible in nature and change
with the change in the environment in which an organisation exist.
(3) Relative, not Absolute Principles : A particular management principle has different strengths
in different condition. Therefore principles of management should be applied in the light of
prevailing conditions. Allowance must be made for different changing environment.
(4) Management - Science or Art : Management is both a science and an art. The process of
scientific theory construction and confirmation is used in the process of management. And has
to do with applying of knowledge.This is especially important in management because in many
instances, much creativity and adroitness in applying the managerial efforts are necessary to
achieve the desired results.
(5) Management as Projection : Management satisfies the requirement of a profession in the form
of existence of knowledge. The concept of management is still evolving and continuously new
principles are being developed.
(6) Universality of Management : Management is a universal phenomenon. Management
principles are not universally applicable but are to be modified according to the needs of the
situation.
_________________________________________________________________
Q.2 What do you mean by principles of Management? Discuss the important principles of
Management.
Ans.: Management principles are those fundamental truths or statements of facts which serve as
guide to managers in thinking and doing their job of managing. Management principles may be
derived in any of the following ways :-
(i) By observation and analysis of managerial practices.
(ii) By conducting studies through system enjury, collection and analysis and testing of facts.
Some Important Principles of Management :
F. W. Taylor, Henry Fayol, Mary Parkeer Follett, Urwick, Koontz O’ Donnel, George R. Terry
etc. are the leading thinkers who have listed and described certain management principles :-
(1) Fayol’s Principles of Management : Henri Fayol, who is recognized as the father of modern
theory of management formulated a set of 14 principles.
(i) Division of Work : Division of work states that the total work should be subdivided into small
components / parts and each part of the work should be allocated to the worker who specializes
in that part of the work.
(ii) Authority and Responsibility : Authority creates responsibility whenever a person exercises
authority, responsibility arises. Responsibility is the essential counter part of authority.
(iii) Discipline : According to Fayol, discipline is absolutely essential for the smooth running of
business. Without it no business can prosper.
(iv) Unity of Command : The principle of unity of command states that each subordinate should
receive orders from only one boss or superior.
(v) Unity of Direction : The principle of unity of direction states that there should be “one head
and one plan” for a group of similar activities having the same objective. In other words, the
activities that have same objective should be directed by only one manager under one plan.
(vi) Subordination of Individual Interest to General Interest : Interest of organisation as a whole
must prevail over the individual interest wherever individual interest and the common interest
differ, efforts must be made to reconcile them.
(vii) Remuneration : Fayol stressed that the remuneration or compensation for work done should
be fair to both employers and the firm. It should neither be low nor high.
(viii) Centralization : Decreasing the role of subordinates in decision making is centralization
of authority and increasing their role in it is decentralization of authority. Fayol believed that
managers should retain final responsibility but should at the same time give their subordinates
enough authority to do their job properly.
(ix) Scalar Chain or Hierarchy of Authority : Scalar chain or hierarchy of authority refers to the
unbroken chain or line of authority running from the top management to the lowest levels of the
organisation.
(x) Order : The principle of order states that there should be a place for every think and for
every person. Material and people should be in the right place at the right time. People should be
assigned the jobs that are best suited to them.
(xi) Equity : According to this principle, the manager must install equity in the organisation. To
ensure this, manager should be friendly, fair and kind in dealing with their subordinates.
(xii) Stability of Personnel : This principle states that there should be reasonable stability of the
tenure of personnel in the firm. No employee must be removed from his position within a short
period of time.
(xiii) Initiative : This principle states that subordinates should be given the freedom to develop
and carry out their plans. But managers should do so within the limits of authority and discipline.
(xiv) Esprit de Corps : This principle states that managers should promote esprit crops or team
spirit and a sense of unity among the employees.
Other Important Principles :
(xv) Principle of Objective : Koontz and O’Donnel suggest that “The organisation as a whole
and every part of it must contribute to the attainment of enterprise objectives.
(xvi) Principle of Planning : The principle of planning states that good planning is a prerequisite
for good management. Therefore managers should accurately plan the activities of their
organisation keeping in view the environmental factors.
(xvii) Principle of Span of Control : Span of control means the number of subordinates under the
direct supervision of the superior. According to this principle, a superior should supervise only
that number of subordinates which be can properly supervise directly under his control.
(xviii) Principle of Balance : This principle states that different parts or units of an organisation
should be in balance. This is essential in order to ensure proper development of business and its
efficiency.
(xix) Principle of Coordination : This principle states that human efforts and other resources
should be co-ordinated in order to achieve organisational goals effectively.
(xx) Principle of exception : The principle of exception states that every superior should set the
objectives and plan for their subordinates and delegate them appropriate amount of authority to
take all decisions to carry out the plans.
(xxi) Principle of Participation : This principle states that managers must encourage participation
of their subordinates in taking decisions on matters directly affecting them.
_________________________________________________________________
Q.3 Discuss the major functional area of Management.
Ans.: An acceptable and practical classification includes four broad functional areas :-
(i) Production : This area is normally kept under the control of a production manager who is
responsible for the performance of entire related activities.
This area may further be classified into major sub-activities :-
· Purchasing
· Material Management
· Research and Development
(ii) Marketing : This area involves the distribution of organisation’s product to the buyers. This
can be divided into following subareas :-
· Advertising
· Marketing Research
· Sales Management
(iii) Finance and Accounting : This area deals with the record keeping of various transactions
and management of financial resources :-
· Financial Accounting
· Management Accounting
· Costing
· Investment Management
· Taxation
(iv) Personnel : This aspect deals with the management of human beings in the organisation. It
includes following areas :-
· Recruitment and Selection
· Training and Development
· Wage and Salary Administration
· Industrial Relations
_________________________________________________________________
Q.4 Discuss the major functions of management.
Ans.: A function is a group of similar activities. However what functions are undertaken by
managers in organisations, there is a divergence of views. But the major management functions
suggested by most of the authors are as follows :-
(i) Planning : Planning is the conscious determination of future course of action. This involves
why an action, what action, how to taken action, and when to take action. Thus planning includes
determination at specific objectives, determining projects and programmes, setting policies and
strategies, setting rules and procedures and preparing budgets.
(ii) Organising : Organising is a process of dividing work into convenient task or duties,
grouping of such duties in the form of positions, grouping of various positions into department
and sections, assigning duties to individual positions and delegating authority to each position so
that the work is carried out as planned.
(iii) Staffing : Staffing involves manning the various positions created by the organizing process.
It includes preparing inventory of personnel available and identifying the gap between manpower
required and available, identifying the sources from where people will be selected, selecting
people, training and development fixing financial compensation, appraising them periodically
etc.
(iv) Directing : Directing includes communicating, motivating and leading. When people are
working in an organisation, they must know what they are expected to do in the organisation.
Superior managers fulfill this requirement by communicating to subordinates about their
expected behaviour. The superiors have a continuous responsibility of guiding and leading them
for better work performance and motivating them to work with zeal and enthusiasm.
(v) Controlling : Controlling involves identification of actual results. Comparison of actual
results with expected results as set by planning process, identification of deviation between the
two, if any and taking of corrective action so that actual result match with expected results.
_________________________________________________________________
Q.5 Classify the various approaches of the Management thought along with the origination
period and the major contributors.
Ans.: The various approaches to management can be divided into the following major schools :-
(A) The Classical Approach :
(i) Scientific Management : Time Period (1900 – 1930), Introduced by (F. W. Taylor).
(ii) Administrative or Functional Approach : Henry Fayol (1916 – 1940).
(iii) Organisational Theory Approach : Max Wabor, C. I. Bernard, H.
A. Simon.
(B) Neo Classical Approach :
(i) Human Relation Approach : George Elton Mayo (1924 -1932).
(ii) Behavioural Science Approach : Herzberg, Fred Fiedler, Mclellend, Likert etc. (1950 -1970)
(C) Modern Approach :
(i) Quantitative or Management Science Approach : (1950 -1960).
(ii) System Approach : Ludwig Von Bertalanffy (1960 onwards).
(iii) Contingency Approach : Tosi and Hammer (1970 onwards).
_________________________________________________________________
Q.6 Assess the contribution of Scientific Management to the development of
Management thought.
Ans.: Scientific management approach is also known as the productivity or efficiency approach.
The credit for pioneering and developing scientific management approach is primarily given to
F. W. Taylor. He is recognised as the father of scientific management. The other individuals who
contributed to this school of management thought are Frank Gilkreth, Lillian Gillreth, Henry
Gantt and Harrington Emerson. Scientific management school concentrates on the process of
finding one best way of doing a thing in order to achieve maximum production and efficiency.
Philosophy and Principles of Taylor :
· Develop a science to replace rule of thumb
· Labour – Management Cooperation
· Maximization of output or production
· Equal division of responsibility
· Job specialization
· Scientific selection, training and development of workers.
· Planning and scheduling of work
· Standardisation
· Wage incentives
· Mental Revolution
Mechanism of Scientific Management : In order to blend philosophy and principles of scientific
management into practice, Taylor developed the following
techniques or mechanism :-
(1) Scientific Task Setting : The task of every worker for everyday should be
determined through scientific investigation.
(2) Experimentation or Work Study : Work Study means organised systematic and objective
analysis and assessment of the operational efficiency of all the elements connected with the
work. The main areas of work study are as follows :-
(i) Method Study : Survey of production process.
(ii) Motion Study : The study of movement of a worker or a machine in doing a job.
(iii) Time Study : Find out a standard time for doing the job.
(iv) Fatigue Study : Fatigue study is the study of the reduction of human energy in doing his job.
(3) Planning : Planning function should be separated from the doing function.
(4) Scientific Selection and Training of Worker.
(5) Specialization : Allocate the task according to their specialization.
(6) Standardisation : Taylor advocated for standardisation of material, tools equipment, method
etc..
(7) Efficient Costing System : To control cost of production and pricing.
(8) Incentive Wage Plan : Worker is to receive a bonus in addition to his wages if he completed
his jobs before the standard fixed time.
(9) Congenial Atmosphere of Work : The environment must also be cheerful
and psychologically satisfactory
________________________________________________________________
Q.7 Explain the various tasks conducted in the Hawthorne studies. Also discuss the
contribution of Hawthorne Experiments in the development of Managerial thinking.
Ans.: Harvard University research team conducted a series of studies. George Elton Mayo,
F. I. Roethlisberger, W. J. Dicton and others were the members of the team. The studies were
conducted at Hawthorne plant of the western electric company, Chicago (USA) between 1924
and 1932.
Four studies were conducted at the Hawthorne Plant :-
(1) Illumination or Test Room Study : The illumination study was conducted to determine the
relationship between light intensity and productivity of efficiency of workers. For this purpose,
three different experiments were conducted in which researchers changed light intensity. They
concluded that lighting was a minor factor affecting the productivity of workers.
(2) The Relay Assembly Test Room Study : The relay assembly test room study was conducted
to ascertain the factors other than the light intensity affecting the productivity. During the
test researcher change working condition and they concluded that most likely cause of higher
productivity was the change in social situation in the work group.
(3) Mass Interviewing Study : The third study was the mass interviewing programme. Under this
programme over 21,000 employees were interviewed. They have asked some direct question and
……… on some indirect questions. And finally the researchers reached in the conclusion that
work performance and the individual status in the organisation are determined not by the person
himself but by the group members, peers and their personal problems also effect the feeling
about his job.
(4) Bank Wiring Observation Room Study : In order to observe informal group behaviour more
accurately, band wiring observation room study was undertaken. The following conclusions were
drawn :-
(i) The group was restricting output by enforcing the norms or standards set by the group.
(ii) There existed internal cliques or groups which are not formed on the basis of occupation.
Conclusions / Contribution of Hawthorne Studies :
(i) Work is a group activity.
(ii) Workers form internal informal group.
(iii) Social groups influence the productivity.
(iv) Social groups determines informal norms.
(v) Group cooperation is planned.
(vi) Worker is not only rational economic being.
(vii) Supervisor behaviour affect the behaviour of worker.
(viii) Free flows of communication affects the attitude of workers towards work.
(ix) Complaints may not be statement of facts.
(x) Birth of human relation movements.
Organization and Management: Planning
BANKING DIPLOMA EXAMINATION
Banking Diploma Courses under The Institute of Bankers, Bangladesh (IBB)
Organization and Management-JAIBB
Q.1 What do you meant by Planning? Discuss its nature.
Ans.: Simply stated, planning means deciding future course of action i.e. making plans
for attaining organization’s objectives. Planning is the process of determination of
organization’s objectives and selecting the course of action i.e. plans for attaining them.
According to Weihrich and Koontz – “Planning involves selecting mission and objectives
and actions to achieve them. If requires decision making i.e. choosing from among
alternative future course of action.
According to Robert Albanese, “Planning is the process or activity of determining in
advance specifically what should be done in order to achieve particular goals, how it
should be done, when or where it should be done and who should do it.”
Nature of Planning:
(1) Primary or Basic Function: It is a primary function because it is the foundation on
which all other managerial function rest.
(2) Pervasive Function: Each and every manager has to perform this function regardless
of his level and area of specialization.
(3) Purposeful: Planning begins with some goals or objective that an organization
wishes to achieve.
(4) Interdependent Activity: Planning in one development is dependent on the planning
of other department.
(5) A Process: Planning is a process in which managers anticipate future by analyzing
environmental factors, set goals or objectives.
(6) Planning is a Path Finder Process: It is the process by which answers to questions
like where, when, how etc.
(7) It is a continuous and never ending process.
(8) It is a dynamic process.
(9) It is an intellectual process because it requires managers to think intelligently and
rationally before doing.
(10) Futuristic: Every plan is prepared to face and win over the future challenges and
threats.
(11) Time Bound: It is always time bound. It may be of short range or medium range or
long range.
(12) Planning involves Decision Making: It is a process of selecting one best course of
action out of the available alternatives.
(13) Planning and Action are Twins: Planning alone cannot serve any purpose. Planning
presupposes necessary action for its implementation. Both must go hand in hand.
(14) Planning and Controlling are Inseparable: Plans furnished the standards against
which actual performance is measured and controlled.
(15) Forecasting is the Basis of Planning: Future course of action are decided on the
basis of information and knowledge provided by forecasting.
_____________________________________________________________________________
____
Q.2 What are the essential elements of Planning?
Ans.: The main components or elements of planning are as follows:-
(1) Objectives: Objectives are the desired results that an organization wants to achieve
within a specified time period.
(2) Strategies: Strategy means the long range approach for dealing with the
organization’s competitive environment with a view to win over competitors in business.
(3) Policies: Policies are the guidelines set to provide direction in decision making.
These set the boundaries around which decisions are made.
(4) Procedures: Procedures are the chronological sequence of steps or actions to be
taken to accomplish a specific test or job.
(5) Method: A method is a prescribed way of completing a step in a procedure.
(6) Rules: Rules are guiding statements that direct action or behaviour of individuals in a
given situation.
(7) Standards: Standard is a measure against which the level of performance is
measured or evaluated.
(8) Programmes : A programme is a sequence of action steps arranged in the priority
necessary to accomplish an objective.
(9) Schedules: A Schedule is a plan which indicate the time of
(i) commencement of task.
(ii) passing through the different stages or processes.
(iii) Finalizing the task.
(10) Budgets: A budget is a numerical plan containing expected results in quantitative or
numerical terms.
(11) Projects: A project is a programme with less significant objectives, generally a
shorter period of time and usually less detail.
_____________________________________________________________________________
____
Q.3 What are the steps involved in the Planning Process?
Ans.: Steps in Planning:
(i) Environment Scanning
(ii) Setting Objectives
(iii) Establishing Planning Promises
(iv) Searching Alternatives
(v) Evaluating the Alternatives
(vi) Selecting the Most Appropriate Alternative or Plan
(vii) Formulating Derivative Plans
(viii) Budgeting i.e. Committing Resources
(ix) Implementing the Plans
(x) Follow-up Action
______________________________________________________________________________
___
Q.4 Write the essentials of an Effective Planning.
Ans.: Planning or a plan can be more effective if the following factors are taken into
consideration:-
(i) Well Defined Objectives
(ii) Simple and Easy to Understand
(iii) Comprehensive (Cover each and every aspect)
(iv) Flexible (Capable of being modified)
(v) Balanced (Balance between objectives and resources)
(vi) Economical
(vii) Stable
(viii) Continuity
(ix) Unity (Operate under one overall plan)
(x) Consistency
(xi) Written
(xii) Practicable
(xiii) Logical and Rational
(xiv) Accountability for Implementation
______________________________________________________________________________
____
Q.5 What is MBO? Explain its characteristics and objectives.
Ans.: MBO: The modern model of objective setting is known as the “Management by
Objectives” or “MBO”. This model was first discussed by Peter Drucker in 1954 in his
book – “The Practice of Management”.
Meaning and Definition of MBO: MBO is a process where by both superior and
subordinate managers jointly identify their common goals or their work unit and define
each employee major areas of responsibility and goals with his active participation.
Carlisle – “Management by Objective is a process by which the members of a work unit
individually meet with their superior to establish performance related goods.”
Boone and Koontz – “MBO is a prgramme designed to improve employee’s motivation
by having them participate in setting their own goals, letting them know in advance
precisely have they will be evaluated.”
Characteristics of MBO :
• A Philosophy of Management
• Goal Oriented Approach
• An Interactive Approach
• A Comprehensive Approach
• A System Approach
• Applies to Total Management System
• Aims at Optimum Results
• Simple Universal Approach
• Multiple Uses
• Participation and Involvement
• Common Objectives and Individual Goals
Assumptions:
• Mutual understanding between superior and subordinate.
• Employees know their expected efforts and their contribution in overall performance.
• Employees participate in formulation of the plan.
• Employees know the results of their efforts.
• Employees want to be fairly rewarded for their performance.
Objectives of MBO :
(i) To set organizational units and individual goals by active participation of the all
concerned.
(ii) To set verifiable and measurable goals.
(iii) To measure and judge performance.
(iv) To relate individual performances to organizational goals.
(v) To clarify both the job to be done and the expectation of accomplishment.
(vi) To foster the increasing competence and growth of subordinates.
(vii) To enhance communications between superiors and subordinates.
(viii) Serve as a basis for judgment about salary and promotion.
(ix) To stimulate the subordinates motivation.
(x) To serve as device for organizational control.
Organization and Management: Decision Making
BANKING DIPLOMA EXAMINATION Banking
Diploma Courses under The Institute of Bankers, Bangladesh (IBB)
Organization and Management-JAIBB
Decision Making
Q.1 Define Decision Making and give its characteristics.
Ans.: Decision making is the process of choosing or selecting any one option out of
several options to achieve some objectives.
Glueck – “Decision making is the process of thought and deliberation that leads to a
decision.”
Allen – “Decision making is the work a manager performs to arrive at a conclusion or
judgment”. Thus decision is a process of selecting a course of action from among the
available alternatives in order to achieve a desired goal in a given situation.
Characteristics/Nature of Decision Making :
(i) Decision making is a sequential process involves the searching, evaluative and
choosing a course of action.
(ii) It is an intellectual and logical process.
(iii) This process will take place in the human mind.
(iv) It is a human and social process.
(v) It is largely an intuitive process but can be formally structured.
(vi) There is an existence of alternatives.
(vii) Ascertainment of choice.
(viii) It aims at attaining some objectives.
(ix) Decision is directed to solve some problem.
(x) Decision making involves commitment.
(xi) It is influenced by environmental conditions.
(xii) Decision making is the essence of management.
_________________________________________________________________
Q.2 Discuss in brief the various techniques of Decision Making.
Ans.: The important techniques of decision making are as follows :-
(1) Experience or Judgment: In this technique, a manager makes decision on the basis
of his knowledge and experience gained through working in a particular position over
the years
(2) Intution : Intution or hunch is a knowledge based on instant inner feelings or spiritual
perception rather than reasoning. It is based on faith.
(3) Habbits : Established habits can be used as a technique of decision making.
Managers try to solve repetitive and routine problems through their established habits.
(4) Standing Plans and Procedures: There are standing plans and procedures in every
organization such as policies, rules, procedures, methods etc. They all serve as a
technique for decision making.
(5) Organization Structure: Organization structure make it clear who is responsible for
what and to whom. Therefore it can be used as a decision making technique.
(6) Principles of Management: The principle of management can serve as a useful guide
in making decisions.
(7) Economic and Financial Techniques: Marginal analysis, break even analysis, utility
analysis etc are some of the most important economic techniques of decision making.
Pay back analysis, inflow outflow analysis, ratio analysis are some of the financial
techniques of decision making.
(8) Linear Programming: It is a mathematical technique of limited resources. It helps in
making decisions regarding allocation of limited resources among various competing
demands in an optimum way.
(9) Game Theory: In this technique, one member chooses one such course of action
that frustrates and defeats the action of the competing member and help him in wining
the game. This technique used under competitive and conflicting situations.
(10) Waiting Line or Queuing Theory: This technique is used to decide problem of
waiting line in an organization with the help of the technique, manager decides optimum
rate of flow through service points by balancing the cost of making customers wait
against the cost of servicing them more rapidly.
(11) Simulation: Simulation is a technique for studying and analyzing behaviour of a
system under several alternative conditions in an artificial setting.
(12) Network Techniques: PERT and CPM are the techniques that helps managers in
deciding a logical sequence of activities required for completing a complex project.
(13) Heuristic Technique: It is an trial and error technique of finding solutions to a
complex problem by breaking it into small components.
(14) Participative Techniques: It is a technique of making decisions with the participation
of the employees. This technique encourages industrial democracy.
________________________________________________________________
Q.3 Draw a flow diagram of process of Decision Making.
Ans.: A flow diagram of process of Decision Making is as follows:
Steps in Decision Making Process:
1. Identification of Problem
2. Diagnosing the Problem
3. Establishing Specific Objectives
4. Identifying Limitations
5. Evaluating Alternatives
6. Selecting Appropriate Alternative 7. Implementing the Decision
8. Feedback
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