GUJARAT TECHNOLOGICAL UNIVERSITY
BE - SEMESTER–IV (NEW) EXAMINATION – SUMMER 2021
Subject Code:3140709 Date:08/09/2021
Subject Name:Principles of Economics and Management
Total Marks: 70
Summer 2021 Principles of Economics and Management (PEM) SEM 4 GTU Paper Solution :
Q.1 (a) Define Terms:
1. Economics :
Economy :
The state of a country or region in terms of
- Production and Consumption of Goods and Services
- Supply (flow) of Money
Economics : Economics is the science that studies economic activities.
It is understanding of economic activities that govern the production, distribution, and consumption of goods and services in an economy.
The term Economics has been derived from the Greek words “Oikoon” means House and “nomos” means Management. Which imply that economics is concerned with the management of Household Goods.
An example of economics is the study of the stock market.
2.Personal Income : Personal income refers to all of the income collectively received by all of the individuals or households in a country.
Personal income includes compensation from a number of sources including salaries, wages and bonuses received from employment or self-employment; dividends and distributions received from investments; rental receipts from real estate investments and profit-sharing from businesses.
3. Interest Rate : An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed.
For example, a loan of $100 with a nominal interest rate of 6% would accrue $6 in interest ($100 X 0.06).
(b) Differentiate Microeconomics & Macroeconomics with their significance in
assessing Economies.
(c) How the prices of goods are determined by market? Discuss significance of
demand and supply of goods in price determination.
Q.2 (a) List the factors that influence elasticity.
1. Nature or type of Good
- The Elasticity of Demand for a good is affected by its nature. Different goods can be a necessity good, a comfort good, or a luxury good for a person.
- There is one more thing that is a single good can be a necessity for one person, a comfort for the second person, and a luxury for a third person. So, we can say that a good’s nature is relative.
- Now, let us understand how nature affects the elasticity of demand.
- A necessity good like vegetables, food grains, medicines and drugs, has an inelastic demand. Such goods are required for human survival so their demand does not fluctuate much against a change in their price.
- A comfort good like a fan, refrigerator, washing machine, etc., has an elastic demand as their consumption can be postponed for a time period.
- A luxury good like AC, Cars, Diamond has a relatively high elasticity of demand when compared to comfort goods.
2. Availability of Substitutes
- The Price Elasticity of Demand for a good, with a large number of substitutes available, is very high.
- The possible reason behind this is that even a small rise in the price of such goods will induce its buyer to look for its substitutes. An example of this can be an FMCG product like a packet of chips. A rise of ₹2 on a packet of Lays will induce the buyer to go for Haldiram’s chips.
- Thus, the availability of a large number of close substitutes increases the sensitivity against change in price, or we can also say that this increases the Price Elasticity of Demand.
3. Price Level
- The price level of goods plays a major role in determining the price elasticity of demand. Goods that fall in a higher price segment are more likely to have high elasticity.
- A price rise will further push them in the higher segment while even a small decline in the price can put them in the affordable segment. An example of this can be mobile phones or laptops. A person with a budget of 15k won’t go for a phone that is 20% more costly.
- On the other hand, goods that belong to the low-price segment are generally inelastic or relatively less elastic. An example can be a packet of matchboxes. Even a sharp rise in its price won’t throw it into the high-price segment.
4. Income Levels
- Our society is divided into different classes based on incomes and lifestyle. Upper-class people generally have a higher income and live a lavish life whereas the lower class people can’t afford luxury items because they have a low income.
- Income levels have a considerable effect on the elasticity of demand. The Elasticity of Demand for a commodity is generally very low for higher income level groups. The change in prices does not bother people from such groups.
- Whereas the Price Elasticity of Demand of a commodity is very high for people belonging to low-income level groups. Poor people are highly affected by the change in the prices of commodities.
5. Time Period
- The price elasticity of demand varies directly with the time period. The given time period can be as shorts as a day and as long as several years.
- The price elasticity of demand is directly proportional to the time period. This means the elasticity for a shorter time period is always low or it can be even inelastic.
- The reason stated for this is the redundant human nature to change habits. We generally stick to a commodity and respond very late to the price changes. However, the elasticity of demand is high in a longer time period as our habit changes over time. We can substitute the original product if its price changes in the long run.
- These were the factors that affect the Price Elasticity of Demand. Let us now sum up the blog by looking at the key takeaways.
(b) An Automobile company wants to setup a new vehicle manufacturing plant in a particular region. List and Explain the various parameters which can influence unit cost of a car.
[SEM 4] Computer Engineering GTU Paper Solution | GTU Medium: Click Here
(c) What is Break-Even Analysis? Mr. ABC is the managerial accountant in charge of soft-drink Company XYZ. According to him, fixed costs of company XYZ consist of property taxes, a lease, and salaries of staff, which add up to Rs. 1,00,000. The variable cost associated with producing one soft- drink bottle is Rs. 2 per unit which is sold at a premium price of Rs. 12 per unit. Determine the Break-Even Quantity. What would be Break Even Quantity if production cost becomes Rs. 4 per bottle?
A break-even analysis is a financial calculation that weighs the costs of a new business, service or product against the unit sell price to determine the point at which you will break even. In other words, it reveals the point at which you will have sold enough units to cover all of your costs.Break-even analysis tells you how many units of a product must be sold to cover the fixed and variable costs of production. Essentially, it reveals the point at which business, or a new product, will become profitable.
Fixed Costs = Rs. 1,00,000
Variable Costs = Rs. 2 (per unit)
Sales Price = Rs. 12 (per unit)
Break-Even Point in Units = Fixed Costs ÷ (Sales price per unit – Variable costs per unit)
Rs. 1,00,000 ÷ (Rs. 12 - Rs. 2)
= Rs.10,000
OR
(c) List and Explain various type costs in production with suitable example.
Cost of production refers to the total cost incurred by a business to produce a specific quantity of a product or offer a service. Production costs may include things such as labor, raw materials, or consumable supplies.
Types of Costs of Production
There are various types of costs of production that businesses may incur in the course of manufacturing a product or offering a service. They include the following:
1. Fixed costs
Fixed costs are expenses that do not change with the amount of output produced. This means that the costs remain unchanged even when there is zero production or when the business has reached its maximum production capacity. For example, a restaurant business must pay its monthly, quarterly, or yearly rent regardless of the number of customers it serves. Other examples of fixed costs include salaries and equipment leases.
2. Variable costs
Variable costs are costs that change with the changes in the level of production. That is, they rise as the production volume increases and decrease as the production volume decreases. If the production volume is zero, then no variable costs are incurred. Examples of variable costs include sales commissions, utility costs, raw materials, and direct labor costs.
3. Total cost
Total cost encompasses both variable and fixed costs. It takes into account all the costs incurred in the production process or when offering a service. For example, assume that a textile company incurs a production cost of $9 per shirt, and it produced 1,000 units during the last month. The company also pays a rent of $1,500 per month. The total cost includes the variable cost of $9,000 ($9 x 1,000) and a fixed cost of $1,500 per month, bringing the total cost to $10,500.
4. Average cost
The average cost refers to the total cost of production divided by the number of units produced. It can also be obtained by summing the average variable costs and the average fixed costs. Management uses average costs to make decisions about pricing its products for maximum revenue or profit.
The goal of the company should be to minimize the average cost per unit so that it can increase the profit margin without increasing costs.
5. Marginal cost
Marginal cost is the cost of producing one additional unit of output. It shows the increase in total cost coming from the production of one more product unit. Since fixed costs remain constant regardless of any increase in output, marginal cost is mainly affected by changes in variable costs. The management of a company relies on marginal costing to make decisions on resource allocation, looking to allocate production resources in a way that is optimally profitable.
For example, if the company wants to increase production capacity, it will compare the marginal cost vis-à-vis the marginal revenue that will be realized by producing one more unit of output. Marginal costs vary with the volume of output being produced. They are affected by various factors, such as price discrimination, externalities, information asymmetry, and transaction costs.
Q.3 (a) List and Explain Characteristics of “Perfect Competition” type markets.
The four key characteristics of perfect competition are: (1) a large number of small firms, (2) identical products sold by all firms, (3) perfect resource mobility or the freedom of entry into and exit out of the industry, and (4) perfect knowledge of prices and technology.
1. Large Number of Small Firms
A perfectly competitive market or industry contains a large number of small firms, each of which is relatively small compared to the overall size of the market. This ensures that no single firm can exert market control over price or quantity. If one firm decides to double its output or stop producing entirely, the market is unaffected. The price does not change and there is no discernible change in the quantity exchanged.
2. Identical Goods
Each firm in a perfectly competitive market sells an identical product, which is also commonly termed "homogeneous goods." The essential feature of this characteristic is not so much that the goods themselves are exactly, perfectly the same, but that buyers are unable to discern any difference. In particular, buyers cannot tell which firm produces a given product. There are no brand names or distinguishing features that differentiate products by firm.
This characteristic means that every perfectly competitive firm produces a good that is a perfect substitute for the output of every other firm in the market. As such, no firm can charge a different price than that received by other firms. If they should try to charge a higher price, then buyers would immediately switch to other goods that are perfect substitutes.
3. Perfect Resource Mobility
Perfectly competitive firms are free to enter and exit an industry. They are not restricted by government rules and regulations, start-up cost, or other barriers to entry. While some firms incur high start-up cost or need government permits to enter an industry, this is not the case for perfectly competitive firms. Likewise, a perfectly competitive firm is not prevented from leaving an industry as is the case for government-regulated public utilities.
Perfectly competitive firms can acquire whatever labor, capital, and other resources that they need without delay and without restrictions. There is no racial, ethnic, or sexual discrimination.
4. Perfect Knowledge
In perfect competition, buyers are completely aware of sellers' prices, such that one firm cannot sell its good at a higher price than other firms. Each seller also has complete information about the prices charged by other sellers so they do not inadvertently charge less than the going market price. Perfect knowledge also extends to technology. All perfectly competitive firms have access to the same production techniques. No firm can produce its output faster, better, or cheaper because of special knowledge of information.
(b) Compare and Contrast Monopoly and Perfect Competition markets.
| Basis of Difference | Perfect Competition | Monopoly |
| Meaning | It refers to the market in which there are many firms selling a certain homogenous product. | A monopoly market is a market structure in which a single firm is a sole producer of a product for which there are no close substitutes available in the market |
Output | Price is equal to the marginal cost at the equilibrium output. | Price is greater than the average cost at equilibrium output. |
| Equilibrium | It is possible only when MR=MC and MC cut the MR curve from below. | Equilibrium can be realized whether the MC is rising, constant, or falling. |
Barriers for entry of new firms | Here, there are no restrictions or barriers for new firms to enter the market. | It has strong restrictions for the entry of new firms into the market. |
Price Discrimination | There is no price discrimination by sellers as the prices are determined by supply and demand forces. | The monopolist can charge different prices from different groups of buyers. |
Supply Curve | Here, the supply curve can be identified as all firms sell the desired quantity at the prevailing price. | In a monopoly, the supply curve cannot be known because of price discrimination. |
Control over Price | Here, the sellers don’t have any control over the price. | In this market, the seller has full control over the price. |
Sellers are known as | In this market, the sellers are known as price takers. | In this market, the sellers are price makers. |
Degree of Competition | This market has strong competition in the market. | There is no competition in the market. |
Close Substitutes | In this market, close substitutes are available. | There are no close substitutes for the products in this market. |
Number of sellers | There are a large number of sellers with a large number of Buyers offering homogenous products. | There is only one single seller of a commodity with a large number of buyers. |
(c) How the size of economy of a nation/region can be measured? Which are the various factors which can be helpful to attract foreign investments?
While there are a number of different ways to measure economic growth, the best-known and most frequently tracked and reported measure is gross domestic product (GDP).Generally, the most common measure of the size of national economies is gross domestic product (GDP)—defined as the sum total of all goods and services produced within the borders of a nation less the value of the goods and services used up in production.
GDP can be measured in three different ways: the value added approach, the income approach (how much is earned as income on resources used to make stuff), and the expenditures approach (how much is spent on stuff).
Political stability, lower wages rate, lower production cost, easy communication, good exchange rate, host country‟s policy about foreign investment etc are the influential factors to attract the foreign investor.
1. Stability of the Government:
A stable Government is an essential prerequisite for any investment. The investor will always look for a government which is supporting investment and which will not take any steps that are anti-investment. The investor should not have any fear of take over by the government. This will enable him to go for expansion.
2. Wage rates
A major incentive for a multinational to invest abroad is to outsource labour-intensive production to countries with lower wages. If average wages in the US are $15 an hour, but $1 an hour in the Indian sub-continent, costs can be reduced by outsourcing production. This is why many Western firms have invested in clothing factories in the Indian sub-continent.
However, wage rates alone do not determine FDI, countries with high wage rates can still attract higher tech investment. A firm may be reluctant to invest in Sub-Saharan Africa because low wages are outweighed by other drawbacks, such as lack of infrastructure and transport links.
3. Tax rates
Large multinationals, such as Apple, Google and Microsoft have sought to invest in countries with lower corporation tax rates. For example, Ireland has been successful in attracting investment from Google and Microsoft. In fact, it has been controversial because Google has tried to funnel all profits through Ireland, despite having operations in all European countries.
4. Transport and infrastructure
A key factor in the desirability of investment are the transport costs and levels of infrastructure. A country may have low labour costs, but if there is then high transport costs to get the goods onto the world market, this is a drawback. Countries with access to the sea are at an advantage to landlocked countries, who will have higher costs to ship goods.
5. Size of economy / potential for growth
Foreign direct investment is often targeted to selling goods directly to the country involved in attracting the investment. Therefore, the size of the population and scope for economic growth will be important for attracting investment. For example, Eastern European countries, with a large population, e.g. Poland offers scope for new markets. This may attract foreign car firms, e.g. Volkswagen, Fiat to invest and build factories in Poland to sell to the growing consumer class. Small countries may be at a disadvantage because it is not worth investing for a small population. China will be a target for foreign investment as the newly emerging Chinese middle class could have a very strong demand for the goods and services of multinationals.
6. Exchange rate
A weak exchange rate in the host country can attract more FDI because it will be cheaper for the multinational to purchase assets. However, exchange rate volatility could discourage investment.
7. Labour skills
Some industries require higher skilled labour, for example pharmaceuticals and electronics. Therefore, multinationals will invest in those countries with a combination of low wages, but high labour productivity and skills. For example, India has attracted significant investment in call centres, because a high percentage of the population speak English, but wages are low. This makes it an attractive place for outsourcing and therefore attracts investment.
Q.3 (a) “Inflation is an unaccounted Tax on citizens”, is it True? Justify your answer with suitable arguments.
Inflation is the rate of increase in prices over a given period of time. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country.
Inflation is a real tax, just as real and at times nearly as important as the individual income tax. While inflation clearly does reduce the purchasing power of your earnings and fixed-income asset values, it also redistributes purchasing power from businesses and households to the federal government. And in today’s economy, with inflation running at 5.4 percent, the inflation tax is no small matter. The amount the government will collect from the inflation tax in 2021 exceeds $1.9 trillion.
(b) “World is a global village”, is it true? Justify in terms of economic activities.
The world has become a global village in more ways than one.
If we talk about the technological progress in the world, we can say that the world has become a global village through the World Wide Web revolution.
It’s made it possible to connect people regardless of where their geographical location.
The global village isn’t limited to just one technology but also includes social media.
Social media allows you to connect with other people regardless of their geographical location.
You can use social media platforms to interact with people around the world and discuss various topics, from politics and sports to music and movies.
It won’t be long before we feel that people in other parts of the world are our neighbors.
(c) Unemployment, Poverty, Poor Education, and Poor Public Health Infrastructure, How these social problems are interlinked? Discuss with reasonable arguments.
Poverty is a major cause of ill health and a barrier to accessing health care when needed. This relationship is financial: the poor cannot afford to purchase those things that are needed for good health, including sufficient quantities of quality food and health care.
Unemployment leads to poverty and poverty in turn leads to unemployment. An unemployed person has no means to earn money and cannot fulfill his own and his family's basic needs. He and his family cannot avail quality education, medical facilities and has no means to create income-earning assets.
Good Education typically leads to better jobs, more money and many other benefits, including better health insurance, which leads to better access to quality health care. Higher earnings also allow workers to afford homes in safer neighborhoods as well as healthier diets.Education equips people to achieve stable employment, have a secure income, live in adequate housing, provide for families and cope with ill health by assisting them to make informed health care choices.
Q.4 (a) What is role of Central Bank in economy of a nation?
A key role of central banks is to conduct monetary policy to achieve price stability (low and stable inflation) and to help manage economic fluctuations. The policy frameworks within which central banks operate have been subject to major changes over recent decades.
India's central bank is known as the Reserve Bank of India (RBI). Its role is to foster financial stability and regulate India's currency and credit. Founded in 1935, the bank sets monetary policy for the country. It is fully owned by the government of India and is run by a government-appointed board of directors.
Three primary functions: Maintaining an effective, reliable payment system; supervising and regulating bank operations; and establishing monetary policies.
(b) What is money? List and Explain various characteristics of money.
Money is a medium of exchange; it allows people to obtain what they need to live.medium of exchange such as notes, coins, and demand deposits, used to pay for commodities and services. The value or price of item or service is paid for using money. The US dollar is the official currency of the United States of America.
Let's compare two examples of possible forms of money:
- A cow. Cattle have been used as money at different points in history.
- A stack of U.S. 20-dollar bills equal to the value of one cow.
Let's run down our list of characteristics to see how they stack up.
Durability. A cow is fairly durable, but a long trip to market runs the risk of sickness or death for the cow and can severely reduce its value. Twenty-dollar bills are fairly durable and can be easily replaced if they become worn. Even better, a long trip to market does not threaten the health or value of the bill.
Portability. While the cow is difficult to transport to the store, the currency can be easily put in my pocket.
Divisibility. A 20-dollar bill can be exchanged for other denominations, say a 10, a 5, four 1s, and 4 quarters. A cow, on the other hand, is not very divisible.
Uniformity. Cows come in many sizes and shapes and each has a different value; cows are not a very uniform form of money. Twenty-dollar bills are all the same size and shape and value; they are very uniform.
Limited supply. In order to maintain its value, money must have a limited supply. While the supply of cows is fairly limited, if they were used as money, you can bet ranchers would do their best to increase the supply of cows, which would decrease their value. The supply, and therefore the value, of 20-dollar bills—and money in general—are regulated by the Federal Reserve so that the money retains its value over time.
Acceptability. Even though cows have intrinsic value, some people may not accept cattle as money. In contrast, people are more than willing to accept 20-dollar bills. In fact, the U.S. government protects your right to use U.S. currency to pay your bills.
(c) Compare and Contrast Monetary Policy and Fiscal Policy.
It is a financial tool that is used by the central banks in regulating the flow of money and the interest rates in an economy | It is a financial tool that is used by the central government in managing tax revenues and policies related to expenditure for the benefit of the economy |
Central Bank of an economy | Ministry of Finance of an economy |
It measures the interest rates applicable for lending money in the economy | It measures the capital expenditure and taxes of an economy |
Stability of an economy | Growth of an economy |
Exchange rates improve when there is higher interest rates | It has no impact on the exchange rates |
Monetary policy targets inflation in an economy | Fiscal policy does not have any specific target |
Monetary policy has an impact on the borrowing in an economy | Fiscal policy has an impact on the budget deficit |
OR
Q.4 (a) Differentiate Management and Administration.
| Basic Terms | Management | Administration |
| Meaning | It is the skill of organizing people, resources and getting work done | It is the process of setting up objectives and crucial policies |
| Authority | Both middle and lower level | Strictly upper level |
| Core function | Policy implementation | Policy formulation |
| Role | Executive | Decisive |
| Area of Operation | Work under administration | Fully control over activities |
| Key Person | Manager | Administrator |
| Function | Governing and executive | Legislative and determinative |
| Main Focus | Managing work | Making policies and assembling resources |
| Application | Profit-making organizations | Government offices, business enterprises, military, religious, hospitals, clubs, and educational organizations. |
| Decides on | Who will do the work? And How will it be done? | What should be done? And when should it be done? |
(b) Discuss 4 P’s of Marketing.
The four P's of marketing are:
- Product: What you sell. Could be a physical good, services, consulting, etc.
- Price: How much do you charge and how does that impact how your customers view your brand?
- Place: Where do you promote your product or service? Where do your ideal customers go to find information about your industry?
- Promotion: How do your customers find out about you? What strategies do you use, and are they effective?
1. Product
The product is what the company sells.
It might be a product like a soft drink in the beverage industry or dresses in a clothing store. Or these days it may even be software.
2. Price
Price is the amount that consumers will be willing to pay for a product. Marketers must link the price to the product's real and perceived value, while also considering supply costs, seasonal discounts, competitors' prices, and retail markup.
3. Place
Place is the consideration of where the product should be available, in brick-and-mortar stores and online, and how it will be displayed.
4. Promotion
The goal of promotion is to communicate to consumers that they need this product and that it is priced appropriately. Promotion encompasses advertising, public relations, and the overall media strategy for introducing a product.
Marketers tend to tie promotion and placement elements together to reach their core audiences. For example, In the digital age, the "place" and "promotion" factors are as much online as offline. Specifically, where a product appears on a company's web page or social media, as well as which types of search functions will trigger targeted ads for the product.
(c) “Management is combination of a Science and Art.” Justify the statement.
Management can be considered as both science as well as an art.
Management is science because of several reasons like - it has universally accepted principles, it has cause and effect relationship etc, and at the same time it is art because it requires perfection through practice, practical knowledge, creativity, personal skills etc.
It is considered as a science because it has an organized body of knowledge which contains certain universal truth. It is called an art because managing requires certain skills which are personal possessions of managers. Science provides the knowledge & art deals with the application of knowledge and skills.
A manager to be successful in his profession must acquire the knowledge of science & the art of applying it. Therefore management is a judicious blend of science as well as an art because it proves the principles and the way these principles are applied is a matter of art. Science teaches to ‘know’ and art teaches to ‘do’. E.g. A person cannot become a good singer unless he has knowledge about various ragas & he also applies his personal skill in the art of singing. Same way it is not sufficient for manager to first know the principles but he must also apply them in solving various managerial problems that is why, science and art are not mutually exclusive but they are complementary to each other (like tea and biscuit, bread and butter etc.).
Q.5 (a) What is the importance of Human Resource Management?
HRM can be defined as the effective management of people in an organisation. HR management helps bridge the gap between employees’ performance and the organisation’s strategic objectives. Moreover, an efficient HR management team can give firms an edge over their competition.
Importance of HR managers in organisations
- Strategy management: This is an important aspect of any organisation and plays a vital role in human resource management. HR managers manage strategies to ensure the organisation reaches its business goals, as well as contributing significantly to the corporate decision-making process, which includes assessments for current employees and predictions for future ones based on business demands.
- Benefits analysis: HR managers work towards reducing costs, such as with recruitment and retention. HR professionals are trained to conduct efficient negotiations with potential and existing employees, as well as being well-versed with employee benefits that are likely to attract quality candidates and retaining the existing workforce.
- Training and development: Since HR managers contribute significantly to training and development programmes, they also play a pivotal role in strengthening employer-employee relationships. This contributes to the growth of employees within the company, hence enhancing employee satisfaction and productivity.
- Interactivity within employees: HR managers are responsible for conducting activities, events and celebrations in the organisation which gives way to team building opportunities. Moreover, it enhances interactivity within employees and instils a sense of trust and respect among peers.
- Conflict management: The department to go to when any kind of professional conflict arises between employees is HR. They ensure that issues and conflicts are resolved effectively, approaching the problem with an unbiased attitude and encouraging effective communication to reach a solution. In addition, they help employees understand various ways of developing effective work relationships and the importance of not letting personal judgement affect their behaviour.
- Establishing a healthy work culture: A healthy work culture is pivotal in bringing out the best in employees. HR managers contribute significantly in setting up a healthy and friendly work culture, which further translates into better productivity among employees.
- Compliance: HR professionals work towards making the organisation compliant with employment laws, as well as maintaining records of hiring processes and applicants’ log.
(b) Compare role of Leader, Administrator, and Manager in organization.
Sergiovanni (1991) defined administration as a process of working with and through others to accomplish goals efficiently. According to this definition, an administrator is one who is responsible for planning, organizing, leading and controlling.
Managers also plan, coordinate, delineate objectives, and evaluate the performance of others. Therefore, the roles of administrators and managers share similarities.
In contrast, leadership is the exercise of high-level conceptual skills and decisiveness. The actions of a leader, as described by Cannon and Griffith (2007), “are often a critical determinant of whether the group (organization) moves toward its potential, stagnates, or drifts into a dysfunctional spiral”.
Administrators and Managers
- Maintain the day-to-day operation of a department or function
- Represent the planning, organizing, staffing, and controlling that are needed to achieve a goal or produce an output
Leaders
- Deal with creating a vision and strategic direction of an organization, or group of people
- Establish a culture and create conditions that facilitate the journey
Although the roles and responsibilities of leaders in contrast to the roles and responsibilities of administrators and managers may be more admirable to some, especially those who are being led, the combined roles and responsibilities of administrators, managers, and leaders contribute to the organization’s effectiveness. Therefore, successful leaders must be able to maintain the day-to-day operation as well as create a vision and strategic direction for it. They must be able to plan, organize, staff, and exert the control needed to achieve a goal as well as establish a culture and create conditions that facilitate change.
(c) List and Explain Various Functions of Management.
Management is defined as the procedure of organising, directing, planning and controlling the efforts of organisational members and of managing organisational sources to accomplish particular goals.
Planning is the purpose of ascertaining in advance what is supposed to be done and who has to do it. This signifies establishing goals in advance and promoting a way of delivering them effectively and efficiently. In an establishment, the aim is the obtainment and sale of conventional Indian handloom and workmanship articles. They trade furnishings, readymades, household items and fabrics made out of classical Indian textiles.
Organising is the administrative operation of specifying grouping tasks, duties, authorising power and designating resources needed to carry out a particular system. Once a definite plan has been set for the completion of an organisational intent, the organising party reviews the actions and resources expected to execute the program. It ascertains what actions and resources are needed. It determines who will do a distinct job, where and when it will be done.
Staffing is obtaining the best resources for the right job. A significant perspective of management is to make certain that the appropriate people with the apt skills are obtainable in the proper places and times to achieve the goals of the company. This is also called the human resource operations and it includes activities such as selection, placement, recruitment and coaching of employees.
Directing involves directing, leading and encouraging the employees to complete the tasks allocated to them. This entails building an environment that inspires employees to do their best. Motivation and leadership are 2 chief elements of direction. Directing also includes communicating efficiently as well as managing employees at the workplace. Motivating workers means simply building an atmosphere that urges them to want to work. Leadership is inspiring others to do what the manager wants them to do.
Controlling is the management operation of controlling organisational achievement towards the accomplishment of organisational intentions. The job of controlling comprises ascertaining criteria of performance, computing the current performance, comparing this with organised rules and taking remedial action where any divergence is observed. Here management should ascertain what activities and outputs are important to progress, how and where they can be regulated and who should have the power to take remedial response.
OR
Q.5 (a) How CSR can provide benefits to society?
Benefits of CSR :
- CSR increases employee engagement
- CSR improves bottom-line financials
- CSR supports local and global communities
- Contributes to the United Nations’ 17 Sustainable Development Goals
- Increases investment opportunities
- Presents press opportunities
- Increases customer retention and loyalty
- CSR improves employer branding
(b) How Ethical Processes are useful in establishing Brand?
(c) Discuss the external and internal sources of recruitment in detail.
Internal Sources
Internal sources of recruitment refers to the recruitment of employees who are already a part of the existing payroll of the organisation. The vacancy for the position can be informed to the employee through internal communication.
There are different types of internal hiring in the organisation and they are as follows:
1. Promotion: Promotion is referred to as the change of designation of the employee. It involves shifting of the existing employee to a higher position within the organisation and providing that employee with more responsibility and a raise in pay.
Promotion helps in motivating the other employees of the organisation to work hard so that they also become eligible for promotion.
2. Transfer: Transfer refers to the shifting of an existing employee from one department to another department in an organisation.
3. Employee Referrals: It can happen that the organisation in an effort to cut down costs on hiring is looking for employee referral. The employees are well aware of the job roles in the organisation for which manpower is required. These employees will refer potential candidates by screening them based on their suitability to the position.
4. Former employees: Some organisations have the provision of hiring retired employees willing to work part time/full time for the organisation.
Advantages of Internal Sources
Following are the advantages of the internal sources:
1. The organisation saves money on hiring programmes which translates to higher revenue for business.
2. It makes selection and transfer of employees very easy.
3. Internal source of recruitment serves as a morale booster for the existing employees.
4. It provides a sense of loyalty towards the business which results in improved productivity.
5. As existing employees will be aware of the working pattern of the organisation, therefore it will take much less time for the re-hires to get adapted to working conditions.
Disadvantages of Internal Sources
Following are some of the disadvantages of the internal sources:
1. Internal recruitment causes reduction in the morale of those employees who are not selected or considered for appraisal.
2. It discourages capable persons from outside to join to work in the company.
3. It can lead to conflict if one employee is selected for promotion, while the others are not considered.
External Sources
External sources of recruitment seek to employ candidates that have not been recruited anytime before in the organisation.
Introduction of fresh talent among the workforce leads to growth and development of the business.
Following are the some of the external sources of recruitment:
1. Advertisement: Advertisements serve as a great source of information regarding any job opportunities. This type of source is used for recruitment of middle level employees, or high level employees.
2. Employment Exchanges: Employment exchanges serve as a source of recruitment for the people as it is run by the government.
3. Employment portals: In this age of technology, development in the field of hiring has taken place. Nowadays many employment portals are open where one can find information about job openings.
4. Educational Institutions: Educational institutions also serve as a good source of recruitment as many students or say resources will be available at once under one roof.
5. Recommendation: This can also be a good source of recruitment as an existing employee will be able to provide better recommendation for other candidates.
Advantages of External Source
Following are some of the advantages of external sources.
1. It helps in availability of proper skilled labour.
2. There will be availability of new ideas from employees hired using external sources.
3. The employees join as knowledgeable persons which reduces the training time required for new hires.
Disadvantages of External Source
1. It can lead to unhappy employees as the existing employees may feel that they deserved an opportunity for growth.
2. It can lead to lack of cooperation between the new hires and the existing employees.
3. It is a lengthy process where the employee needs to appear for many rounds.
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